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| Troubled Mainstreet Bank acquired by Stillwater bank |
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| Tuesday, 01 September 2009 | |
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Cliff Buchan News Editor Even banks with years of experience and deep roots are not immune from the national banking crisis. Add Mainstreet Bank to the list. The Forest Lake-based bank which dates its origins to 1906 as the County Bank of Center City, is no more. The bank was closed late on Friday by Minnesota Department of Commerce, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Central Bank, Stillwater, to assume all of the deposits of Mainstreet Bank. The action by the state agency and the FDIC means that the eight branches of Mainstreet Bank now become branches of Central Bank. Depositors of Mainstreet Bank automatically become depositors of Central Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage, the FDIC said in a release. Customers may continue to use their existing branches until Central Bank can fully integrate the deposit records of Mainstreet Bank. “There is no change,” said Larry Albert, senior vice president with Central Bank. “Customer checks, ATM cards and debit cards all work. Customers won’t feel a thing.” Albert said the Stillwater-based operation was pleased to move into the markets previously served by Mainstreet Bank. “We’re happy to be there,” he added. “The banks are quite similar.” Along with no change in the operations, the staffs of the eight Mainstreet locations are being retained. The former operation counted about 100 employees, including 15 in Forest Lake, he said. Central Bank staff will be sent to each Mainstreet location this week to help answer questions from the public, Albert said. “Hopefully, people won’t regard this as a negative,” Albert said. “We want to keep the bank local.” The FDIC estimates that the cost to the Deposit Insurance Fund will be $95 million. Central Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to alternatives, the FDIC said. Mainstreet Bank is the 83rd FDIC-insured institution to fail in the nation this year, and the second in Minnesota. The last FDIC-insured institution to be closed in the state was Horizon Bank, Pine City, on June 26, 2009. Horizon also operated in North Branch. More Detail As of June 30, 2009, Mainstreet Bank had total assets of $459 million and total deposits of approximately $434 million. Central Bank will pay the FDIC a premium of 0.10 percent to assume all of the deposits of Mainstreet Bank. In addition to assuming all of the deposits of the failed bank, Central Bank agreed to purchase essentially all of the assets. By coming together, Central Bank will now have some $850 million in total assets. Prior to acquistion, Central Bank reported $425 million in assets, Albert said. According to the FDIC, the FDIC and Central Bank entered into a loss-share transaction on approximately $268 million of Mainstreet Bank’s assets. Central Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement is expected to minimize disruptions for loan customers. Customers who have questions about the transaction can call the FDIC toll-free at 1-800-405-7869. The number is operational from 8 a.m. to 8 p.m., CDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/mainstreet-mn.html. Mainstreet Bank had been placed under a cease-and-desist order in December in attempts to correct its problematic loan portfolio that had been hit hard by bad real estate loans. In addition to Forest Lake, Mainstreet Bank had branch offices in Center City, Centerville, Cottage Grove, Newport, Woodbury, South St. Paul, Minneapolis and Hudson, WI. The name change from County Bank of Mainstreet Bank took place in 2002. The bank moved its charter to Forest Lake in 1994. The Central Bank of Stillwater essentially started in 1988 when a failed bank in Oak Park Heights was acquired. Today, Central Bank of Stillwater has additional offices in White Bear Lake, Golden Valley, Eden Prairie, Coon Rapids and St. Michael. Social Bookmarking ...       |
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