Regulators seized Oakdale-based Prosperan Bank this evening and turned its assets and deposits over to a bank in North Dakota -- ending its 11-year history as a community bank in Washington County.
The Minnesota Department of Commerce closed Prosperan, which has three branches and $200 million in assets, after the close of business and immediately named the Federal Deposit Insurance Corp. (FDIC) as receiver. The bank was then sold to Alerus Financial of Grand Forks, N.D., which has assumed all of the deposits and most of the assets of Prosperan.
The Oakdale and Maplewood branches of Prosperan will re-open Saturday as Alerus, while the Prosperan branch in Minnetonka will re-open Monday as Alerus.
Prosperan depositors will automatically shift to Alerus, according to a statement issued by Alerus. Prosperan is the 118th FDIC-insured institution to fail this year, and the seventh to fail in Minnesota since the start of the credit crisis two years ago.
This is Alerus' second acquisition of a failed banking institution in the Twin Cities this year. The 76-year-old North Dakota bank, which has $1.09 billion in assets, in July acquired the deposits from the failed BankFirst in Minneapolis.
Prosperan's collapse was rapid and largely unexpected. The bank's financial ratios looked solid as of June 30, 2009, the end of its second quarter. But on Oct. 30, the bank revised its third-quarter financial statements to reflect a $12 million charge to increase its loan-loss reserves, according to a filing with the FDIC. Largely because of that charge, Prosperan reported total equity of negative $4 million -- effectively making the bank insolvent.
The FDIC and Alerus have entered into a loss-share agreement on about $173.9 million of Prosperan's assets, which means the two institutions will share in the losses on these loans. The FDIC estimates that the cost to its insurance fund will be $60.1 million.
Chris Serres • 612-673-4308