Federal Regulators Close Rosemount National Bank

Federal regulators closed Rosemount National Bank on Friday after giving the bank more than a year to improve its financial health.

The U.S. Comptroller of the Currency ordered the bank, located at 15055 Chippendale Ave. S., closed as of the end of the day Friday. The comptroller appointed the Federal Deposit Insurance Corp. (FDIC) as receiver, and the bank’s assets and deposits were acquired by Central Bank of Stillwater.

The Rosemount bank’s parking lot was lined with cars Saturday morning, most of them belonging to FDIC officials. Customers trickled in and conducted business as usual at the counter as a Minnesota state trooper perched on a couch in the lobby and FDIC representatives pored over bank records.

“It’s standard FDIC procedure,” said Larry Albert, Central Bank’s CEO. “The FDIC hires security. It’s all part of the weekend process.”

Banks being transferred are customarily closed Fridays to give the FDIC a weekend to work on the handover.

“It’s totally seamless,” Albert said. “Everything’s coordinated. We assume all the deposits, and no customers will be losing any money.”

The FDIC’s deposit insurance fund, on the other hand, will lose $3.6 million as a result of the bank closing.

The Rosemount bank was the fifth acquired by Central Bank, which previously took over Main Street Bank in Forest Lake, Riverview Community Bank in Otsego, Jennings State Bank in Stillwater and Spring Grove, as well as a bank in Fort Myers, Fla.

Rosemount National was one of six banks closed Friday and was the nation’s 33^rd banking failure so far this year.

“You see it all across the country,” Albert said. “Banks are often the barometers of the economy.”

Rosemount National has been in financial straits for the last few years. It lost $917,000 in 2008, $2.5 million in 2009 and $1.8 million in 2010. At the end of last year, it reported assets of about $38 million.

The last year in which the bank showed a profit was 2006, when it made $520,000.

Last month, Rosemount National sold its only other branch, in east St. Paul, to St. Paul-based University National Bank.

Early in 2009, the Office of the Comptroller of the Currency ordered the bank to develop a plan to identify problem loans and move toward clearing them from its balance sheet. Last April, Rosemount National signed an agreement in which it promised not to increase its debt or pay any dividends without approval from federal regulators.

By the end of 2010, the bank’s risk-based capital ratio had dropped to 4.15 percent, far below the 10 percent level required by the FDIC for a bank to be considered well-capitalized.

Independent research firm Weiss Ratings gave the bank an E-minus financial strength rating at the end of 2010. E is the lowest possible grade, and the minus indicated that the bank fell in the lower third of that grade.

“This institution currently demonstrates what we consider to be significant weaknesses, and has also failed some of the basic tests we use to identify fiscal stability,” Weiss Ratings’ latest report on Rosemount National said. “Therefore, even in a favorable economic environment, it is our opinion that depositors or creditors could incur significant risks.”

Customers with questions can call (877) 367-2719. More information is also available on the FDIC’s website, http://www.fdic.gov/bank/individual/failed/rosemount.html.