Dream First Bank Assumes All of the Deposits of Heartland Tri-State Bank
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Re: Dream First Bank Assumes All of the Deposits of Heartland Tri-State Bank
#2What caused this bank to go under?
Re: Dream First Bank Assumes All of the Deposits of Heartland Tri-State Bank
#3You've got to appreciate the preciness of the language, and the assuredeness it's meant to instill, in press releases like this.
Re: Dream First Bank Assumes All of the Deposits of Heartland Tri-State Bank
#4What caused this bank to go under?
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.
Re: Dream First Bank Assumes All of the Deposits of Heartland Tri-State Bank
#5What caused this bank to go under?
> 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.
Re: Dream First Bank Assumes All of the Deposits of Heartland Tri-State Bank
#6What caused this bank to go under?
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.
I think the most obvious explanation is that this bank may be another victim of the "sudden" rise in interest rates we're seeing in the last couple of years. This time it was 300 million in assets plus deposits, and the FDIC allegedly will lose 50 million on the rescue operation. The US have thousands of banks of similar size to this one. May be down the road the number of 50 million losses will become unbearable, who knows.
Re: Dream First Bank Assumes All of the Deposits of Heartland Tri-State Bank
#7Earlier quoted context omitted.
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.
I think the most obvious explanation is that this bank may be another victim of the "sudden" rise in interest rates we're seeing in the last couple of years. This time it was 300 million in assets plus deposits, and the FDIC allegedly will lose 50 million on the rescue operation. The US have thousands of banks of similar size to this one. May be down the road the number of 50 million losses will become unbearable, wh…
FDIC can surcharge remaining banks through their assessments (FDIC insurance premiums). It’s a broadly distributed tax on bank customers in aggregate. So long as US banking exists, there will be banks to charge to keep the fund solvent.
They just need to kick the can long enough to give impairments caused by rapid rate increases time to burn off.
Re: Dream First Bank Assumes All of the Deposits of Heartland Tri-State Bank
#8Earlier quoted context omitted.
I think the most obvious explanation is that this bank may be another victim of the "sudden" rise in interest rates we're seeing in the last couple of years. This time it was 300 million in assets plus deposits, and the FDIC allegedly will lose 50 million on the rescue operation. The US have thousands of banks of similar size to this one. May be down the road the number of 50 million losses will become unbearable, wh…
FDIC can surcharge remaining banks through their assessments (FDIC insurance premiums). It’s a broadly distributed tax on bank customers in aggregate. So long as US banking exists, there will be banks to charge to keep the fund solvent. They just need to kick the can long enough to give impairments caused by rapid rate increases time to burn off.
And what happens if these impairments start to gradually become more and more realized losses, as their due dates come? I can't see the FED making a 180 anytime soon, in fact I've been buying treasuries for the most part. Everybody in the world may want (and need) lower rates, but it's like fighting against the sunrise, if it's time for it it's time and that's it. What will happen when it's not Heartland Bank from Bumf*ck Arkansas that is going under from betting on the wrong macroeconomic path, but let's say, Bank of America? Would the other banks have the cash to bail this one out? Or will the FED in the end have to print piles and piles of colored paper, raising inflation and then having to raise rates, bla bla bla. It's going to be interesting to see what happens in the next few years.
Re: Dream First Bank Assumes All of the Deposits of Heartland Tri-State Bank
#9Would 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?
Re: Dream First Bank Assumes All of the Deposits of Heartland Tri-State Bank
#10Earlier quoted context omitted.
FDIC can surcharge remaining banks through their assessments (FDIC insurance premiums). It’s a broadly distributed tax on bank customers in aggregate. So long as US banking exists, there will be banks to charge to keep the fund solvent. They just need to kick the can long enough to give impairments caused by rapid rate increases time to burn off.
And what happens if these impairments start to gradually become more and more realized losses, as their due dates come? I can't see the FED making a 180 anytime soon, in fact I've been buying treasuries for the most part. Everybody in the world may want (and need) lower rates, but it's like fighting against the sunrise, if it's time for it it's time and that's it. What will happen when it's not Heartland Bank from Bu…
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