Patriot Bank Minnesota Closed By Regulators

Minnesota, which had only two banking failures during 2011, got off to a fast start for 2012 with the closing of a small locally owned community bank.

Patriot Bank Minnesota, Forest Lake, Minnesota, was closed by state regulators who appointed the FDIC as receiver.  The failed bank was sold by the FDIC to First Resource Bank, Savage, MN, which will assume all deposits of Patriot Bank.

Patriot Bank had been in business since 1998.  According to the Bank’s website, the Bank was founded under the premise that “customer service is a part of community banking which will never go out of style”.

Patriot Bank came under scrutiny by regulators well over a year ago when the Bank signed a consent order on September 29, 2010 relating to charges of “unsafe or unsound banking practices”.  Patriot Bank was cited for a litany of operational and financial deficiencies and ordered to raise additional capital.  Unable to comply with the terms of the consent order, regulators had no choice but to close Patriot Bank.

All three branches of Patriot Bank will reopen on Saturday as branches of First Resource Bank and depositors will maintain their FDIC deposit insurance up to applicable limits.  Customers of Patriot Bank will also have full access to their money over the weekend through the use of checks, ATM and debit cards.

At September 30, 2011, Patriot Bank had total assets of $111.3 million and total deposits of $108.3 million.  In addition to assuming Patriot Bank deposits, First Resource Bank will purchase all of the assets of the failed bank.

The asset pool acquired by First Resource will be protected from a percentage of potential future losses through a loss-share agreement between the FDIC and First Resource.  The loss-share transaction will cover $79.4 million of the failed banking assets acquired by First Resource.  According to the FDIC, the use of loss-share transactions reduces ultimate losses by keeping the failed banking assets in the private sector and by minimizing disruption to loan customers.

The estimate loss to the FDIC Deposit Insurance Fund for the failure of Patriot Bank is $32.6 million.  Patriot Bank Minnesota is the sixth bank failure of the year and the first in Minnesota.

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