Heartland Tri-State Bank in Kansas, USA was forced by regulators to suspend operations on July 28 after becoming insolvent.

The Kansas State Banking Commissioner’s Office closed Heartland Tri-State Bank and appointed the Federal Deposit Insurance Corporation (FDIC) to take over the bank. The FDIC said the deal would cost the Deposit Insurance Fund $54.2 million, but it was the least expensive option.

To protect Heartland's customers, the FDIC agreed to take over all of the bank's deposits and transfer them to Dream First Bank, also in Kansas.

This means that four Heartland Tri-State branches will reopen under the Dream First name on July 31, and customer accounts will automatically transfer to the new bank.

The FDIC said Heartland Tri-State Bank had total assets of about $139 million and total deposits of $130 million as of March 31, 2023. Dream First Bank also agreed to purchase “substantially all” of Heartland Tri-State’s failed assets.

Lender customers also won't be largely affected, because the FDIC and Dream First Bank are entering into an agreement to share losses, according to the FDIC.

According to the Kansas State Banking Commissioner's Office, the insolvency of Heartland Tri-State Bank was an isolated incident that did not impact the banking sector in Kansas, and Kansas banks remain very stable.

The collapse of Heartland Tri-State Bank is the fifth bank failure in the United States in 2023. On May 1, regulators seized First Republic Bank and sold all of its deposits and assets to JPMorgan Chase, the largest bank in the United States. Notably, First Republic collapsed despite receiving a $30 billion bailout from 11 of the nation’s largest banks in mid-March.

Previously, crypto bank Silvergate also announced plans for voluntary liquidation on March 8 due to prolonged losses caused by the failure of cryptocurrency exchange FTX.

Silicon Valley Bank (SVB), a prominent bank for tech startups and venture capital in the San Francisco Bay Area, was also shut down by US regulators two days later.

New York officials closed Signature Bank on March 12 to quell a financial crisis exacerbated by the Silicon Valley bank's closure.

After Washington Mutual failed in the 2008 global financial crisis and was acquired by JPMorgan, First Republic, Silicon Valley Bank and Signature Bank became the second, third and fourth largest banks to fail in US history, respectively.

The failure of Heartland Tri-State Bank is costing the Deposit Insurance Fund (DIF) less than the bank failures earlier this year. Silicon Valley Bank and Signature Bank each caused an estimated $15.8 billion in losses to the DIF. Meanwhile, First Republic caused a $13 billion loss .

Nguyen Tuyet (According to Cryptopolitan, American Banker, CNN)