Community National Bank failure is Minnesota's 8th this year

Article by: DAN BROWNING , Star Tribune
Updated: December 17, 2010 - 8:08 PM

Community National Bank, which has branches in Lino Lakes and Vadnais Heights, was closed Friday by the Comptroller of the Currency and will be taken over by Farmers & Merchants Savings Bank of Manchester, Iowa.

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Both branches of the bank will reopen Saturday under the new ownership, with the Federal Deposit Insurance Corp. (FDIC) acting as a receiver for Community National. Customer accounts automatically will transfer to Farmers & Merchants and will continue to be insured by the FDIC, so customers don't need to make any changes, the agency said in a press release.

Community National Bank opened in 1980. At the end of the third quarter, it had $31.6 million in assets and $28.8 million in deposits. Out of 405 banks in Minnesota, it ranked 333rd by assets.

The bank reported a loss of $1.8 million for the third quarter, but its total risk-based capital ratio -- a measure of bank health -- was 12.1 percent, above the 10 percent threshold the FDIC uses to classify a bank "well capitalized."

Representatives of the bank could not be reached for comment Friday.

Several former executives have pleaded guilty to federal crimes after helping themselves to its money. They include Curtis Martinson of Eden Prairie, former bank president Bill Sandison of North Branch, and his son, Ross, of Grant, who siphoned bank funds from a $35 million failed real estate development known as the Ramsey Town Center project.

Farmers & Merchants assumed Community National's deposits without paying a premium, and it agreed to buy essentially all of the failed bank's assets, the FDIC said.

Community National is among 157 banks that failed nationwide this year, and the eighth in Minnesota. The FDIC estimates the failure will cost the Deposit Insurance Fund $3.7 million.

Dan Browning • 612-673-4493