Dream First acquires Heartland Tri-State in Kansas bank failure

Dive Brief:

Syracuse, Kansas-based Dream First Bank agreed to assume all of the deposits and essentially all of the assets of Heartland Tri-State Bank, the Federal Deposit Insurance Corp. announced Friday.
The Kansas Office of the State Bank Commissioner closed the Elkhart, Kansas-based lender earlier Friday and appointed the FDIC as receiver. The move marked the first failure this year of a U.S. bank with less than $100 billion in assets.
The failure is expected to represent a $54.2 million cost to the Deposit Insurance Fund, the FDIC said.

Dive Insight:

Friday’s purchase-and-assumption deal adds nearly $139 million in assets and $130 million in deposits to Dream First’s total. It also adds four branches to its six-location footprint. The Heartland locations were set to reopen Monday under the Dream First banner.

Kansas’ regulator said Heartland “became insolvent due to an isolated event” based upon an ongoing review.

“Overall, the Kansas banking industry is unaffected by this event, and Kansas banks remain strong,” the OSBC said.

The FDIC and Dream First have consented to a loss-sharing agreement on Heartland’s loans. The transaction is meant to maximize recoveries of the assets while keeping them in the private sector, the FDIC said.

“We understand this is unexpected news for Heartland Tri-State Bank customers. Most importantly, I want to confirm that the Heartland Tri-State Bank employee jobs, deposits and banking relationships are not affected by today’s news,” Dream First CEO Chris Floyd said in a statement Sunday. “Dream First staff will continue to provide exceptional customer service and be available to answer questions that employees and customers may have.”

Heartland’s closure marks the fourth time this year the FDIC has stepped in to take control of a bank. It took over Silicon Valley Bank and Signature Bank over a weekend in March, then stood as receiver for First Republic Bank in May before selling it to JPMorgan Chase.

As recently as May, Heartland CEO Shan Hanes acknowledged to American Banker that the banking crisis "got everybody's attention" but added, “I think for most of us, it's become a nonevent,”

“This year most likely won't be as good as 2022, but we're open for business and generally positive,” Hanes said at the time.

The $54.2 million estimated cost of Heartland’s closure is far below the $15.8 billion hit the DIF is expected to take for the Signature and SVB failures, and the $13 billion from the First Republic deal.