Access Bank, a small bank in Champlin that loaned aggressively to Twin Cities home buyers during the residential real estate boom, was shut down Friday by state regulators, becoming Minnesota's 12th bank failure in two years.
In a deal brokered by the Federal Deposit Insurance Corp., the bank's $32 million in deposits and most of its assets were taken over by PrinsBank of Prinsburg, Minn., about 100 miles west of the Twin Cities.
Access, formerly known as Northwest Community Bank, got its start 64 years ago in tiny Plummer, Minn., about 280 miles northwest of Minneapolis. In 2001, the bank opened a branch in Champlin, a suburb north of Minneapolis, and ramped up its lending. The bank's assets more than doubled from $19.9 million in 2002 to $41.7 million in 2007, just as the housing market began to sour.
For a bank of its size, Access had an unusually high concentration of housing loans. Mortgages and home equity loans made up about 35 percent of its loan portfolio as of March 31, according to Foresight Analytics, an Oakland, Calif.-based research firm. But the bank began to incur heavy losses on this portfolio in 2007, and lost money for three consecutive years before its capital ran out early this year, according to FDIC data.
The demise of Access is a reminder that many of Minnesota's 420 banks remain under stress from souring real estate loans. The Minnesota Department of Commerce said its watch list of problem banks at greater risk of failure has grown to 98 institutions, up from 50 a year ago.
Another six banks across the state are undercapitalized by federal regulatory standards, according to FDIC data. They include Pinehurst Bank of St. Paul; Community Security Bank of New Prague; First Resource Bank of Savage; White Rock Bank of Cannon Falls; Lake Country Community Bank of Morristown, and Americana Community Bank of Sleepy Eye.
The FDIC estimates that Access Bank's failure will cost the national insurance fund $5.5 million. Access is the 66th bank to fail nationally since the start of the year. The pace of bank failures has accelerated despite signs of an economic recovery. Last year at this time, only 33 banks had failed.
Chris Serres • 612-673-4308