Federal regulators shut down Marshall Bank of Hallock late Friday and sold all of its assets and deposits to a larger bank in North Dakota.
Marshall, which has $60 million in assets and branches in Hallock, Lancaster and Kennedy, Minn., was buried by syndicated commercial real estate loans made by its South Dakota affiliate. It is the the ninth bank in this state to be shuttered since the economic crisis began more than two years ago.
The Federal Deposit Insurance Corp. was appointed receiver of the bank late Friday and sold the institution to United Valley Bank of Cavalier, N.D., which has $154 million in assets. Marshall's three branches will reopen Monday as branches of United Valley.
Duane Lyberg, president of Marshall, did not return calls Friday.
Founded in 1943, Marshall was a subsidiary of Marshall BankFirst Corp., a two-bank holding company that ran into trouble after one of its subsidiaries, BankFirst of Sioux Falls, S.D., made hundreds of millions of dollars of syndicated commercial real estate loans. BankFirst sold pieces of these syndicated loans to banks all over the Midwest, many of which are struggling with large write-downs on them.
Last year, BankFirst, which had $277 million in assets and an office in Minneapolis, was closed by regulators after years of aggressive lending.
FDIC ombudsman Booker Shorter said Marshall's collapse was the result of "deterioration in syndicated loans" the bank bought from BankFirst and other entities. He declined to estimate how much of these troubled syndicated loans Marshall had on its books.
However, Marshall's decline was unusually swift, suggesting the bank only recently took losses on a number of these syndicated loans.
