Dream First Bank assumes Heartland Tri-State Bank’s deposits


The Federal Deposit Insurance Corp. announced Friday night that Kansas-based Dream First Bank would be acquiring all deposits and most of the assets of shuttered Tri-State Bank.

Bloomberg News

The Federal Deposit Insurance Corp. announced Friday that it had entered into a purchase and assumption agreement with Dream First Bank of Syracuse, Kan., to assume all of the deposits of Heartland Tri-State Bank of Elkhart, Kan. 

The announcement came shortly after the Kansas Office of the State Bank Commissioner shuttered Heartland and appointed the FDIC as receiver. The FDIC said the agreement will cause a $54.2 million hit to the Deposit Insurance Fund, which it says is the least costly resolution.

FDIC said Heartland Tri-State Bank branches will reopen normally under the Dream First Bank name on Monday, July 31, and customer accounts will automatically transfer over to the new company.

“Customers do not need to change their banking relationship in order to retain their deposit insurance coverage,” the FDIC said in a statement. “Customers of Heartland Tri-State Bank should continue to use their existing branch until they receive notice from Dream First Bank, National Association, that it has completed system changes to allow its branch offices to process their accounts as well.”

As of March 31, 2023, FDIC said, Heartland Tri-State Bank had approximately $139 million in total assets and $130 million in deposits. Dream First Bank will assume virtually all of the failed bank’s assets as part of the agreement.

The FDIC and Dream First Bank say they have struck a loss-sharing agreement on the loans they purchased from the now-dissolved bank.

The move is the fourth time this year that the FDIC has taken control — known as receivership —  of a bank to protect depositors and find a buyer, the other instances being the failures of Silicon Valley Bank, Signature Bank and First Republic Bank

The FDIC is obligated by statute to transfer operations to a healthy bank through purchase and assumption, or, failing that, to liquidate a failed bank’s assets to repay depositors and creditors. The FDIC is required to take whatever course results in the lowest cost to the Deposit Insurance Fund. 

Friday’s announcement is far less impactful on the DIF than the bank failures from earlier this year. The Silicon Valley Bank and Signature failures represented an estimated $15.8 billion loss to the DIF, while First Republic’s sale to JPMorgan Chase resulted in a $13 billion loss. 

As recently as two months ago, Heartland Tri-State’s CEO, Shan Hanes, expressed confidence that this spring’s bank failures would leave his institution untouched.

“I think for most of us, it’s become a nonevent,” Hanes said. “This year most likely won’t be as good as 2022, but we’re open for business and generally positive.”

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