Regulators late Friday closed Forest Lake-based Patriot Bank Minnesota, a small bank with $111 million in assets that has struggled for some time.
It was the state's first bank failure for 2012.
In a minnow-swallows-small-fish deal, Savage-based First Resource Bank is buying Patriot's assets and assuming Patriot's $108 million in deposits in a loss-share transaction with the Federal Deposit Insurance Corp. (FDIC).
Patriot's branches will reopen Saturday as branches of First Resource Bank, a relatively new bank with just $15 million in assets.
The purchase more than quadruples First Resource Bank -- exactly the plan, said CEO David Grandstrand. First Resource needed the critical mass to cross the line into profitability, he said.
"We have crossed that line with this acquisition," said Grandstrand. "We are thrilled to obtain not only their customers, but also their staff and their infrastructure."
Founded in 2005, First Resource was ailing when John Falkner III of Falkner Farms, a cucumber grower, bought it in 2010. Falkner put $10 million of capital into the bank, Grandstrand said.
The FDIC estimated Patriot's closure will cost its deposit insurance fund about $32.6 million.
The last bank to close in the state was the Riverbank in Wyoming, Minn. It shut in October.
U.S. Bank acquires BankEast
Patriot was one of four banks closed by regulators around the country Friday. One of the others, BankEast in Knoxville, Tenn., was snapped up by Minneapolis-based U.S. Bank.
BankEast had about $272.6 million in assets and $268.8 million in deposits, according to the FDIC. Its 10 branches will reopen Monday as branches of U.S. Bank.
U.S. Bank spokesman Tom Joyce called it a small but "strategically important" acquisition because U.S. Bank wants to grow in Eastern markets.
U.S. Bank already has 1,100 employees in Knoxville, where the bank has a merchant processing servicing center for credit cards. The BankEast addition brings U.S. Bank's total branch count in Tennessee to 91.
Jennifer Bjorhus • 612-673-4683