In another sign of deepening financial crisis, Stearns Bank will acquire the failed Georgia-based Alpha Bank and Trust, making it the 16th American bank to fall this year.
On Friday, the US authorities seized the operations of Alpha Bank.
"Alpha Bank and Trust, Alpharetta, Georgia, was closed today by the Georgia Department of Banking and Finance, and the Federal Deposit Insurance Corporation was named receiver.
"To protect the depositors, the FDIC entered into a purchase and assumption agreement with Stearns Bank, National Association, St Cloud, Minnesota, to assume the insured deposits of Alpha Bank & Trust," the FDIC said in a statement on Friday.
The statement noted that Alpha Bank is the 16th FDIC-insured institution to be closed this year and added that the cost to its Deposit Insurance Fund would be $158.1 million.
In a separate statement on Friday, Stearns Bank's Chief Executive Norman C Skalicky said the current capital position of the bank is about $250 million.
"We have over 23 per cent capital in our banking system today. This is three times the average capital of all commercial banks in the United States, four times what is considered being well capitalised, and almost ten times what some of the investment banks have or had."
"We have a very sound and diversified asset portfolio spread between six different financial products. We are pleased to bring the safety and soundness of Stearns Bank to the former depositors of Alpha Bank & Trust," Norman C Skalicky said.
Minnesota-based Stearns Bank has more than $1 billion in assets.
In addition to assuming the failed bank's insured deposits, Stearns Bank would purchase approximately $38.9 million of Alpha's assets. The FDIC would retain the remaining assets for later disposition.
As of September 30, 2008, Alpha Bank had total assets worth $354.1 million and total deposits of $346.2 million.
Further, the FDIC statement added that Stearns Bank did not pay the regulatory authority a premium for the right to assume the Alpha Bank's insured deposits.
According to the statement, depositors of the failed bank would automatically become depositors of Stearns Bank and the deposits would continue to be insured by the FDIC.
"At the time of closing, there were approximately $3.1 million in uninsured deposits held in approximately 59 accounts that potentially exceeded the insurance limits. This amount is an estimate that is likely to change once the FDIC obtains additional information from these customers."
Alpha Bank & Trust also had approximately $16.8 million in brokered deposits that are not part of today's transaction. The FDIC will pay the brokers directly for the amount of their insured funds, FDIC said.