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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

#11

Post by berbec »

kikokikokiko wrote: post #8
toomuchtodo wrote: post #7

Earlier 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…

My naive, and cynical, understanding of this type of policy, is the point is to kick the can down to the next generation. It didn't start this way (I hope), but I view it as an accepted solution to make sure the bomb's timer is my_age+1yr.

See [social security] & [climate change], et. al.

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

#12

Post by SoftTalker »

LapsangGuzzler wrote: post #5
petarb wrote: post #2

What 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.

Crop loans that went bad due to storm damage? Seems possible in that part of the country. Though I'd presume those are insured?

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

#13

Post by [deleted] »

taeric wrote: post #9

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?

[deleted]

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

#14

Post by wbl »

taeric wrote: post #9

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?

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.

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

#15

Post by dylan604 »

SoftTalker wrote: post #12
LapsangGuzzler wrote: post #5

Earlier quoted context omitted.

> 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.

Crop loans that went bad due to storm damage? Seems possible in that part of the country. Though I'd presume those are insured?

It wouldn't surprise me if insurance weasels out of payouts either though which would leave the farmers no way of paying the note.

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

#16

Post by User23 »

LapsangGuzzler wrote: post #5
petarb wrote: post #2

What 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.

Another problem is the cash flow that can be generated from farmland varies wildly. You might lease it out for $100 an acre, On the other hand you might be making $5,000 an acre if you're farming something specialized.

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

#17

Post by User23 »

SoftTalker wrote: post #12
LapsangGuzzler wrote: post #5

Earlier quoted context omitted.

> 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.

Crop loans that went bad due to storm damage? Seems possible in that part of the country. Though I'd presume those are insured?

Crop insurance isn't an economically viable thing for any of the small farmers that I personally know anymore. It might still be feasible if you qualify for the beginner subsidies.

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

#18

Post by dylan604 »

kikokikokiko wrote: post #8
toomuchtodo wrote: post #7

Earlier 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…

> but let's say, Bank of America?

4 simple words: Too big to fail.

We've already seen this play. It looked like TAARP bailouts. I'm sure congress will be lobbied and something similar will play out if it comes again

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

#19

Post by 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.

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

#20

Post by landemva »

wbl wrote: post #14
taeric wrote: post #9

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?

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.

The buyer gets to sniff around and accept the offer for the accounts and balance sheet. The insurer, FDIC or sometimes NCUA, takes the difference.
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