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Riverview Community Bank, an Otsego firm that attracted national media attention several years ago for espousing prayer in the workplace, has been shut down by state regulators.
The six-year-old bank, which has $108 million in assets and branches in Otsego and Anoka, was an aggressive real estate lender, once boasting the fourth-highest concentration of real estate loans-to-capital among community banks in the state. The bank was hard hit by the wave of foreclosures that began hitting Wright County in mid-2007.
The Federal Deposit Insurance Corp., which insures bank deposits, was named receiver late Friday and has arranged for all of Riverview's assets and deposits to be sold to Central Bank of Stillwater, which has been buying up failed banks across the state. The two branches of Riverview will open Saturday as branches of Central Bank.
Central Bank, which has $430 million in assets, has recently acquired two failed banks - Mainstreet Bank of Forest Lake and Jennings State Bank of Spring Grove, Minn.
Riverview is the sixth Minnesota bank to be closed by regulators since the financial crisis began two years ago, and the 105th bank to be shut down nationwide since the start of the year. The Minnesota Commerce Department, which closed Riverview, said earlier this month that its "watch list" of banks at greater risk of failure has reached 71 institutions, up from 50 at the start of the year. The state doesn't disclose which banks are on the list.
Riverview's closing has been anticipated for months. Losses on loans backed by real estate had drained much of its capital. In the second quarter, three of the bank's key capital ratios fell below minimums set by federal bank regulators. With the market for new bank capital all but dried up, many local bankers said it was just a matter of time before regulators pulled the plug.
The bank and its parent company have been hit with two public enforcement actions since April. On Oct. 9, Riverview's holding company, American Eagle Financial Corp. of Otsego, reached an agreement with the Minneapolis Federal Reserve to cease paying dividends and to correct violations of law spelled out in a May letter from the Federal Reserve. The order does not identify what laws were broken.
Early in its life, Riverview had a reputation for mixing faith and finance. Chuck Ripka, one of the bank's founders, once told the Star Tribune that God spoke to him and said, "Chuck, if you pastor the bank, I'll take care of the bottom line." Ripka and his staff would pray with customers in the bank's Otsego branch and even at the drive-up window. In a 2004 New York Times story, Ripka said he occasionally slipped up and said, "Come on over to the church -- I mean the bank."
Riverview was among a slew of small community banks that got their start earlier this decade and expanded aggressively. Another of these upstart firms, Brickwell Community Bank of Woodbury, was shut down in September.
The FDIC and Central Bank have entered into an agreement in which the federal agency and the bank will share in the losses on about $75 million of Riverview's assets. The FDIC said it estimates the cost to its insurance fund will be $20 million.
Riverview was one of at least seven banks shut down nationwide Friday.
Chris Serres • 612-673-4308