• Heartland Tri-State Bank of Elkhart, Kansas failed on July 28th with $139 million in total assets and $130 million in total deposits.
• JPMorgan Chase, Bank of America, Citigroup and Wells Fargo have lost $262 billion due to deposit flight compared to the same period last year.
• The FDIC and Dream First Bank, National Association entered into a commercial shared-loss agreement on loans purchased from the former Heartland Tri-State Bank.
Heartland Tri-State Bank Closure
The Federal Deposit Insurance Corporation (FDIC) has revealed that Heartland Tri-State Bank of Elkhart, Kansas closed its doors on July 28th with approximately $139 million in total assets and $130 million in total deposits. All customer deposits were transferred to Dream First Bank, National Association (N.A.), also based in Kansas.
Deposit Decline for Big Banks
A new report reveals that JPMorgan Chase, Bank of America, Citigroup and Wells Fargo have lost a staggering $262 billion due to customers withdrawing their deposits over the past year. CFRA equity analyst Alexander Yokum claims that smaller banks are winning the deposit battle because they are willing to pay more for their customers. Despite this drop in deposits, JPMorgan Chase reported impressive Q2 profits of $14.47 billion during this period – indicating that the big banks are still prevailing against the smaller institutions despite diminishing deposits.
Shared Loss Agreement
The FDIC and Dream First Bank, National Association agreed to enter into a commercial shared-loss agreement on loans purchased from Heartland Tri-State bank as part of its closure process. The agreement is expected to maximize recoveries by keeping these assets within the private sector while minimizing disruption for loan customers at the same time.
Impact Analysis
Yokum’s analysis suggests that big banks are overpowering smaller institutions despite customer withdrawals while JPMorgan’s Q2 results serve as an indication that they can remain profitable even amid diminishing deposits – suggesting long term stability for these larger firms despite short term turbulence caused by closure of regional banks like Heartland Tri-State.
Conclusion
The collapse of Heartland Tri-State shows how vulnerable small regional banks can be when compared to bigger firms who are able to withstand deposit losses better as indicated by JPMorgan’s performance during this period; however it also highlights how important it is for both large and small entities alike to ensure customer funds are secure through agreements such as those reached between FDIC and Dream First Bank above which aim to minimize disruptions while maximizing potential recoveries from failed financial institutions..