Fifth US bank collapses, Federal Deposit Insurance Agency steps in

On July 28, Heartland Tri-State Bank in Elkhart, Kansas announced that it had become insolvent.

This year, the FDIC has been involved in five US bank failures. (Source: AFP/Getty Images)

This is the fifth US bank to collapse this year, following First Republic, Silicon Valley Bank, Signature Bank and Silvergate Bank. This consecutive collapse has shocked the US banking industry, especially when in 2021 and 2022, the country did not witness any bank failures.

Faced with that situation, the country's lawmakers are introducing a series of new measures to protect customer deposits and stabilize the financial system.

The Federal Deposit Insurance Corporation (FDIC) has taken over the bank, agreeing to take over all of Heartland Tri-State Bank’s deposits to protect customers. The agency has since reached an agreement to sell the bank to Dream First Bank, a bank based in Syracuse, Kansas.

As such, four Heartland Tri-State Bank branches will resume operations as Dream First Bank branches effective July 31.

At this time, the FDIC says Heartland Tri-State Bank customers can get their money back by writing a check, using an ATM or debit card. Customers also don’t need to change banks, as they will automatically become customers of Dream First Bank.

According to the FDIC, Heartland Tri-State Bank had total assets of about $139 million and total deposits of about $130 million. Dream First Bank also agreed to purchase “substantially all” of the failed bank’s assets.

The FDIC also clarified that Heartland Tri-State Bank borrowers will not be affected because the agency and Dream First Bank will enter into an agreement to share losses and share responsibility for debt collection.

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