On Friday, the Minnesota Department of Commerce closed St. Stephen State Bank, headquartered in St. Stephens, Minnesota, and the FDIC was named receiver. As receiver, the FDIC entered into a purchase and assumption agreement with First State Bank of St. Joseph, headquartered in St. Joseph, Minnesota, to assume all of the deposits of St. Stephen State Bank. First State Bank of St. Joseph did not pay a premium for the deposits of the failed bank.

As of September 30, 2009, St. Stephen State Bank had approximately $24.7 million in total assets and $23.4 million in total deposits. First State Bank of St. Joseph also agreed to purchase essentially all of the assets of the failed bank. The FDIC and First State Bank of St. Joseph entered into a loss-share transaction on $20.4 million of St. Stephen State Bank’s assets.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $7.2 million. St. Stephen’s State Bank is the third FDIC-insured institution to fail in the nation this year and the first in Minnesota since Prosperan Bank in November 2009.