• Heartland Tri-State Bank closed on July 28th with $139 million in total assets and $130 million in total deposits.
• JPMorgan Chase, Bank of America, Citigroup and Wells Fargo lost a combined $262 billion due to deposit flight compared to the same period last year.
• The FDIC transferred all customer deposits from Heartland Tri-State Bank to Dream First Bank, National Association (N.A.), based in Kansas.
Heartland Tri-State Bank Closes
The Federal Deposit Insurance Corporation (FDIC) says Heartland Tri-State Bank of Elkhart, Kansas, failed on July 28th. All customer deposits have been transferred to Dream First Bank, National Association (N.A.), also based in Kansas. As of March 31, 2023, Heartland Tri-State Bank had approximately $139 million in total assets and $130 million in total deposits.
Deposit Flight from Big Banks
A new report reveals the amount of cash that customers have taken out of the four largest banks in the US – JPMorgan Chase, Bank of America, Citigroup and Wells Fargo – has totaled a loss of $262 billion due to deposit flight compared to the same period last year. CFRA equity analyst Alexander Yokum says that smaller banks are winning the deposit battle because they’re willing to pay more for their customers despite JPMorgan recording a 67% rise in quarterly profits to $14.47 billion in the quarter ended June 30th despite this decline.
Asset Transfer Agreement
In addition to assuming all of the deposits, Dream First Bank agreed to purchase essentially all of the failed bank’s assets as this was found by the FDIC as being more cost efficient than using their insurance fund compensation for customers directly. The FDIC and Dream First Bank also entered into a commercial shared-loss agreement on the loans it purchased from former Heartland Tri-State Bank which is expected will maximize recoveries on these assets by keeping them within private sector institutions while minimizing disruption for loan customers too.
Impact on Economy
The collapse comes as big banks are witnessing contraction through sharp decline in customer deposits but at same time paradoxically show how they are overpowering smaller institutions due to their financial strength . This could have an impact on overall economy if this trend continues as regional banks become less attractive option when considering where people put their money or take out loans from given higher rates they offer versus bigger players who can offset losses due competitive advantage held over them .
Overall it appears that larger banks such as JPMorgan Chase ,Bank Of America ,Citigroup & Wells Fargo may be taking some hits due customer deposit exits however still remain dominant force within banking industry . Although regional banks seem appealing with higher interest rates ,the risk associated with them does appear greater given potential closure like seen here so caution must be exercised when dealing with them .