On Friday, the Minnesota Department of Commerce closed Mainstreet Bank, headquartered in Forest Lake, Minnesota, and the FDIC was named as receiver. The FDIC entered into a purchase and assumption agreement with Central Bank, headquartered in Stillwater, Minnesota, to assume all the deposits of Mainstreet Bank for a 0.10 percent premium.

As of June 30, 2009, Mainstreet Bank had total assets of $459 million and total deposits of approximately $434 million. In addition to assuming all of the deposits of the failed bank, Central Bank also agreed to purchase nearly all of the asset’s of Mainstreet Bank. The FDIC and Central Bank entered into a loss-share transaction on approximately $268 million of the failed bank’s assets.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $95 million. This is the 83rd bank in the nation this year and the 2nd in Minnesota.