Dream First Bank Assumes All of the Deposits of Heartland Tri-State Bank

[kasey_junk]

Worth noting this bank is an order of magnitude off of the 250th biggest bank in the US. It’s actually small enough that it’s hard to figure out where in the ~4K US banks it is, but it’s in the backend.

Also, this year is still small on the “number of failed banks” list. Banks fail fairly often and this one failing would be no news normally.

[pard68]

For this reason, this is actually big news. Small banks are the back bone of the US financial system. They are conservative where big ones are not. They are historically the ones that keep afloat.

Too early to call, but this might be a signal of things to come.

[taeric]

Would love to see how these numbers square up. 139 million in assets over 130 million in deposits. And costing the insurance 54 million.

Naive read is that the bank just had 54 million in withdrawals that it couldn't cover?

Guessing that isn't correct. Curious on details. Was this a surprise?

[wbl]

The bank that acquires does so with a haircut and a hit to the balance sheet from the overall entity having all the liabilities of the combination and the assets. So the insurer throws in some money to recapitalize. Remember everyone needs this deal to be smooth and the new entity toppling is not smooth.

[petarb]

What caused this bank to go under?

[LapsangGuzzler]

> The FDIC and Dream First Bank, National Association, are also entering into a commercial shared-loss agreement on the loans it purchased of the former Heartland Tri-State Bank.

Sounds like they had some bad loans on the books, smaller banks in rural communities often struggle to adequately assess loan risk because talent is hard to find.

[bob1029]

I'd say that asset size is small. There are a lot of things that could trip up a bank that scale. Bad IT/compliance, etc.

[hansjorg]

You've got to appreciate the preciness of the language, and the assuredeness it's meant to instill, in press releases like this.