For the first time, a Minnesota bank has failed without another bank to take it over.
The Federal Deposit Insurance Corporation closed Home Savings of America in Little Falls on Friday.
The bank was insolvent, FDIC spokesman Greg Hernandez said, so the federal government asked other financial institutions to submit bids to take it over. Home Savings of America held more than $434 million in total assets, and $432 million in deposits.
By law, the FDIC must select a bidder that offers more than the bank's liquidation value, Hernandez said. There were no sufficient bids in this instance, he said.
"There was just no interest in the franchise, because there was one branch in Minnesota and three scattered in California," Hernandez said. "At that time, the FDIC just determined that no one was going to acquire this bank."
Deposits will be paid out by check to account holders. The FDIC will contact those who have security deposit boxes at the bank.
The number of uninsured deposits in Home Savings is yet to be determined, Hernandez said. The FDIC limit for insured deposits is $250,000.
Hernandez said that because now the bank is in receivership, physical assets, such as the building, furniture and fixtures will be sold to pay creditors of record — in this case, the depositors.