On Friday, the Minnesota Department of Commerce closed 1st American State Bank of Minnesota, headquartered in Hancock, Minnesota, and the FDIC was named receiver. As receiver, the FDIC entered into a purchase and assumption agreement with Community Development Bank, FSB headquartered in Ogemaw, Minnesota, to assume all of the deposits of 1st American State Bank of Minnesota. FSB did not pay the FDIC a premium to assume all of the deposits of 1st American State Bank of Minnesota.

As of December 31, 2009, 1st American State Bank of Minnesota had approximately $18.2 million in total assets and $16.3 million in total deposits. Community Development Bank, In addition to assuming all of the deposits, Community Development Bank, FSB agreed to purchase essentially all of the failed bank's assets. The FDIC and Community Development Bank, FSB entered into a loss-share transaction on $11.7 million of 1st American State Bank of Minnesota's assets. The FDIC estimates that the cost to the Deposit Insurance Fund will be $3.1 million.

1st American State Bank of Minnesota is the 16th FDIC-insured institution to fail in the nation this year, and the third in Minnesota.