Heartland Tri-State Bank of Kansas Becomes Fourth US Bank to Fail in 2023
In a concerning development for the US banking industry, federal regulators announced the closure of Heartland Tri-State Bank of Kansas on Friday. This marks the fourth bank collapse in the country so far this year. The Federal Deposit Insurance Corporation (FDIC) confirmed the closure and stated that Dream First Bank, National Association, will take over all deposit accounts and a majority of the failed bank’s assets.
The FDIC assured customers that all four Heartland Tri-State Bank branches will reopen as Dream First Bank branches starting Monday, July 31, during normal business hours. In the meantime, depositors can access their funds through checks, ATMs, or debit cards. The FDIC encouraged loan customers to continue making their payments as usual.
As of March 31, 2023, Heartland Tri-State Bank held approximately $139 million in total assets and $130 million in total deposits. Along with assuming the deposits, Dream First Bank, National Association, has agreed to purchase a significant portion of the failed bank’s assets. Furthermore, the FDIC and Dream First Bank have entered into a commercial loss-sharing agreement to minimize disruptions for loan clients.
The collapse of Heartland Tri-State Bank has further exacerbated concerns within the banking industry, impacting the stock market. Experts are urging investors to remain calm amidst these uncertainties. This event follows the collapses of First Republic, Silicon Valley Bank, and Signature Bank, prompting lawmakers to introduce protective legislation for customer deposits and the stabilization of the financial system.
Heartland Tri-State Bank’s failure comes after the collapse of First Republic, the second-largest bank failure in the nation, earlier this year. Silicon Valley Bank’s collapse was attributed to difficulties faced by tech companies in recent months and aggressive interest rate hikes by the Federal Reserve to combat inflation.
The bank held substantial investments in Treasury bonds and securities, a common practice among banks as they are considered safe investments. However, the value of previously issued bonds has dipped as they yield less interest compared to newly issued bonds sold amidst the raised rates set by the central bank.
The banking industry and regulators are now tasked with addressing these failures and implementing safeguards to prevent further bank collapses.