Heartland Tri-State Bank is the first bank to collapse since troubled First Republic Bank was acquired by J.P. Morgan in May.
, with both banks seemingly looking to shore up amidst the banking industry turmoil.
Behind the bank's failures is believed to be the rising interest rates in the United States along with poor risk management from financial institutions. The Federal Reserveits benchmark rate over the past year to more than 5.25% in July — the highest rate since 2007 — in an effort to curb inflation in the country. In June, the inflation rate in the U.S. was 4.1% year-over-year.
Heartland Tri-State Bank had approximately $139 million in total assets and $130 million in total deposits as of March. Along with deposits, Dream First Bank agreed to purchase all the failed bank’s assets. The FDIC estimates that the cost to the Deposit Insurance Fund will be $54.2 million. The DIF is an insurance fund created by Congress in 1933 and managed by the FDIC to protect the deposits at the nation’s banks."Compared to other alternatives, Dream First Bank, National Association’s, acquisition was the least costly resolution for the DIF," said the FDIC.
Democrats with the House Financial Services Committee have introduced several bills in June in what they described as the “first wave” of legislation“The failures of Silicon Valley Bank, Signature Bank, and First Republic Bank make clear that it is past time for legislation aimed at strengthening the safety and soundness of our banking system and enhancing bank executive accountability,” said at the time Congresswoman Maxine Waters. “Congress must not sit idly by.
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