State Bank of Aurora is the Latest U.S. Failed Bank

Several U.S. banks continue to fail-evidence of a continuing challenging economy-the latest being a small financial institution in Minnesota. According to the Federal Deposit Insurance Corporation's (FDIC) website, on March 19, 2010, State Bank of Aurora, based in Aurora, MN, was closed by the Minnesota Department of Commerce, and the FDIC was named receiver. State Bank of Aurora is the 37th FDIC-insured institution to fail in the nation this year, and the fourth in Minnesota. The FDIC did not disclose any specific reasons around the bank failure.

As of December 31, 2009, State Bank of Aurora had approximately $28.2 million in total assets and $27.8 million in total deposits. All customer deposit accounts have been transferred to Northern State Bank, based in Ashland, Wisconsin, and are immediately available to customers. On Monday, March 22, 2010, the sole location of the former State Bank of Aurora reopened as a branch of Northern State Bank.

According to the Bank's website, Northern State Bank (NSB) is a small community bank, providing a full range of financial services to Northern Wisconsin communities since 1933. Prior to expanding to Minnesota with its most recent bank acquisition, NSB offered six banking locations throughout Northern Wisconsin.

To protect the depositors of State Bank of Aurora, the FDIC entered into a purchase and assumption agreement with Northern State Bank to assume all of the deposits of State Bank of Aurora. Depositors of State Bank of Aurora automatically became depositors of Northern State Bank.

Customer deposits continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should also continue to use their existing branch until they receive notice from Northern State Bank that it has completed systems changes, which will allow other NSB branches to process their accounts as well.

The FDIC and Northern State Bank entered into a loss-share transaction on $21.3 million of State Bank of Aurora's assets. Northern State Bank will share in the losses on the asset pools covered under the loss-share agreement. Under loss sharing, the FDIC agrees to absorb a portion of the loss on a specified pool of assets in order to maximize asset recoveries and minimize FDIC losses. Loss sharing reduces the immediate cash needs of the FDIC, is operationally simpler and more seamless to failed bank customers. This process also moves assets quickly into the private sector.

Customers who have questions about this transaction can call the FDIC directly toll-free at 1-800-830-4705. For a complete list of failed U.S. banks, take a look at the "Failed Banks List" located on the FDIC's website at http://www.fdic.gov/bank/individual/failed/banklist.html.

Sources:

www.FDIC.gov

www.nsbashland.com