Another Bank in Minnesota Closes Doors

The Federal Deposit Insurance Corp. said Citizens State Bank, a small-town farm bank in Eagle Bend, Minn., was closed Friday by the state and will open Monday as a branch of another bank.

An FDIC spokesman said people who hold accounts with Citizens State, the third bank to fail in Minnesota this year, will become customers of Lake Country Bank, headquartered in Long Prairie, Minn.

“The failed bank’s customers will have the benefit of continuous uninterrupted service,” the spokesman said, pending expected court approval.

The United States is in the midst of its worst wave of bank failures since the Great Depression. Banks and savings institutions in oil and farm states have been hardest hit because of lower oil prices and a crisis in farming.

The FDIC, which insures bank accounts up to $100,000, said Citizens State had total assets of $9.4 million. The federal agency was named as receiver after Michael Hatch, the state commissioner of commerce, ordered it closed Friday.

“Lake Country State Bank will assume about $9.3 million in 3,000 deposit accounts and will purchase $9.2 billion of the failed bank’s assets at a discount of $1,481,000,” an FDIC statement said.

In many cases, when a bank takes over a failed institution, the FDIC assumes most, if not all, of its bad loans. But in the case of Citizens State, Lake Country agreed to assume most of the risky loans and was granted a substantial discount on the purchase price, the spokesman added.

The failure of Citizens State brings to 49 the number of banks that have failed across the United States this year, the FDIC said. In 1987, 184 banks failed. Citizens State is also the 10th agricultural bank to fail this year, the federal agency said.