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Regulators Shut Down The RiverBank in North Hudson

Six RiverBank branches will reopen Saturday as a branches of Central Bank, which is headquartered in Stillwater.

Customers of in North Hudson will notice some changes the next time they do business at the bank. Their bank has been shut down by federal regulators, and will reopen Saturday as a branch of Central Bank.

The Federal Deposit Insurance Corporation (FDIC) issued the following press release Friday:

Central Bank, Stillwater, Minnesota, Assumes All of the Deposits of the RiverBank, Wyoming, Minnesota 

The RiverBank, Wyoming, Minnesota, was closed today by the Minnesota Department of Commerce, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Central Bank, Stillwater, Minnesota, to assume all of the deposits of The RiverBank.

The six branches of The RiverBank will reopen on Saturday as branches of Central Bank. Depositors of The RiverBank will automatically become depositors of Central Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of The RiverBank should continue to use their existing branch until they receive notice from Central Bank that it has completed systems changes to allow other Central Bank branches to process their accounts as well.

This evening and over the weekend, depositors of The RiverBank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of June 30, 2011, The RiverBank had approximately $417.4 million in total assets and $379.3 million in total deposits. In addition to assuming all of the deposits of the failed bank, Central Bank agreed to purchase essentially all of the assets.

The FDIC and Central Bank entered into a loss-share transaction on $339.3 million of The RiverBank's assets. Central Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. For more information on loss share, please visit: http://www.fdic.gov/bank/individual/failed/lossshare/index.html.

Customers with questions about today's transaction should call the FDIC toll-free at 1-877-367-2717. The phone number will be operational this evening until 9:00 p.m., Central Daylight Time (CDT); on Saturday from 9:00 a.m. to 6:00 p.m., CDT; on Sunday from noon to 6:00 p.m., CDT; and thereafter from 8:00 a.m. to 8:00 p.m., CDT. Interested parties also can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/riverbank.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $71.4 million. Compared to other alternatives, Central Bank's acquisition was the least costly resolution for the FDIC's DIF. The RiverBank is the 75th FDIC-insured institution to fail in the nation this year, and the second in Minnesota. The last FDIC-insured institution closed in the state was Rosemount National Bank, Rosemount, on April 15, 2011.

KTinWI October 08, 2011 at 01:33 PM
And Senator Johnson is calling for deregulation.
country boy October 08, 2011 at 03:02 PM
The Riverbank failure came from poor real estate investments before the economy tanked. One large contributor to this debacle for the bank was a very dishonest builder/developer that played a shell game with the money the bank lent him in good faith. Screwed the bank and a lot of people in the process. Filed bankruptcy...a couple of months later back in businees under a different name...same owner. Maybe blaming the "deregulation" gets your jollies. Prosecuting the crooked business practices by questionable individuals and not allowing them to go right back into business under another name is a start. Keep grinding your axe and you will end up with nothing left.
KTinWI October 08, 2011 at 03:09 PM
I wasn't grinding any axe, country boy. Simmer down. I just think it's ironic that the FDIC (a/k/a a "regulator") had to swoop in to protect the bank's customers locally just one day after Senator Johnson made a huge public statement for deregulation. And why would you assume I wouldn't agree the developer should be held accountable?
Micheal Foley October 08, 2011 at 05:21 PM
Just to be clear, the Minnesota Department of Commerce was the regulating agency at work here. The FDIC is the safety net that guarantees the customers' deposits.
Kyle Anfinson October 10, 2011 at 12:54 PM
Additionally, the FDIC is a government run insurance company. It would indeed be run more effectively in private hands, especially with competition.
Dan BV October 10, 2011 at 02:08 PM
And private insurance companies are the best at managing risk, like AIG for instance? Think about your argument - the bank made a bad risk call, either didn't do some due diligence or totally missed something, and now the "crook" needs to be procescuted? Absolutely he does, but absent governement-enforced laws and those nasty "regulations" - what can he be charged with? "He should be sued," "he should be prosecuted" and "there aught'a be a law" are functionally the same statement in this case.
Dirk A. October 10, 2011 at 04:18 PM
Does anyone have the cajones to name the crook that's being referred to?
milw0615 October 10, 2011 at 04:24 PM
If you think this shut down was a result of one deal you are crazy. They lost $19.8 Million in 2009, $14.8 million in 2010 and through June 2011 had lost $8 Million. This wasn't a over night situation either. They were received a cease-and-desist order from regulators in 2009. They made poor business decisions time and time again, they put all of their eggs in one basket (real estate) and they paid the price. The blame lays squarely on the shoulders of The Riverbank, nobody else. There is no conspiracy here, just bad business.
Thurston Howell III October 11, 2011 at 03:19 PM
Milw0615.... Correction: They put all the DEPOSITORS eggs in one basket!
Thurston Howell III October 11, 2011 at 03:21 PM
Just wondering which basket didn't get it's eggs scrambled in Fall of '08?
Thurston Howell III October 11, 2011 at 03:34 PM
Wall Street is full of crooks. Which one's should be should the jail first? "Maybe blaming the "deregulation" gets your jollies" Yeah I'll bet this was a barrel of fun for Alan Greenspan! http://online.wsj.com/article/SB122476545437862295.html http://www.washingtonpost.com/wp-dyn/content/article/2008/10/23/AR2008102300193.html http://www.pbs.org/newshour/bb/business/july-dec08/crisishearing_10-23.html

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