Heartland Tri-State Bank Fails; Dream First Bank Set to Acquire Operations

• Clients of the failed bank will be transitioned to Dream First Bank.
• The Kansas Office of the State Bank Commissioner has shut down Heartland Tri-State Bank.

The Kansas Office of the State Bank Commissioner closed Heartland Tri-State Bank of Elkhart on July 29; subsequently, the FDIC took over management. The FDIC announced on July 31 that the four former locations of Heartland Tri-State Bank will reopen as branches of Dream First Bank the next day.

Clients of the failed bank will be transitioned to Dream First Bank, and all future deposits, withdrawals, and loan transactions will be managed by Dream First Bank. Until the transition is finalized, Heartland Tri-State Bank clients should continue to use their usual branches.

Ongoing Challenges for the Banking Sector

Following the acquisition of the failing First Republic Bank by J.P. Morgan, Heartland Tri-State Bank marks the first bank failure. This event came after the March collapse of Silicon Valley Bank, which caused significant turmoil in the U.S. financial sector for several days.

The collapse of Heartland Tri-State Bank is the second financial institution to fail this week. Amid the turmoil in the banking sector, on July 25, PacWest merged with Banc of California.

Increasing interest rates in the United States and inadequate risk management practices by banks are cited as reasons for these failures. In an effort to curb inflation, the Federal Reserve raised its benchmark rate to over 5.25% in July, the highest level since 2007. The U.S. annual inflation rate was recorded at 4.1% in June.

In March, Heartland Tri-State Bank reported total assets valued at $139 million and a deposit base of $130 million. Dream First Bank also acquired all assets of the failed bank, along with its deposits.

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