The Wisconsin Department of Financial Institutions Friday closed down North Milwaukee State Bank, which has two branches on Milwaukee’s northwest side.
The Federal Deposit Insurance Corp. was appointed as receiver, and arranged for another bank to purchase NMSB to protect depositors, according to an FDIC release. Raleigh, N.C.-based First-Citizens Bank & Trust Co. will assume all the deposits of NMSB, which will continue to be insured by the FDIC, and most of the assets of the bank.
North Milwaukee State Bank was founded in 1971 to provide more access to financial growth for the minority community. It was the first full-service minority-owned bank in Wisconsin, with branches at 5630 W. Fond Du Lac Ave. and 8200 W. Brown Deer Road.
As of December 31, the bank has about $67.1 million in total assets, including gross loans of $41.5 million, and $61.5 million in total deposits. Usually a bank fails when it is unable to meet its obligations to depositors and others.
Under the purchase and assumption agreement, First-Citizens has reopened the branches under the name North Milwaukee State Bank, a division of First-Citizens Bank & Trust Co. This is the eighth bank First-Citizens has acquired from the FDIC since 2009. It was chosen through a competitive bidding process.
"At First Citizens, we've grown both organically and through select mergers and acquisitions with other banks," said Frank Holding, Jr., chairman and chief executive officer of First Citizens Bank. "Our strength and soundness have allowed us to enter into these types of transactions. We assure customers of North Milwaukee State Bank that their deposits are safe, sound and readily accessible, and they can continue to bank with no disruption in service."
Customers should continue to use their usual NMSB branches. They will continue to have access to their money by writing checks or using ATM or debit cards, and checks drawn on the bank will be processed. Loan customers should continue with their payments as scheduled.
“Right now it’s business as usual,” said Barbara Thompson, a spokesperson for First Citizens Bank. “No decisions related to the associates have been made at this time.”
First Citizens will conduct a review of the operations, employees and branches at NMSB and then make any decisions about changes, she said. It will take several months to complete the conversion of the bank’s systems.
“We didn’t get in until Friday night so we’ve been working diligently throughout the weekend and meeting with various departments at North Milwaukee State and the employees, so it does take some time to go through everything,” Thompson said.
The cost of this closure and sale to the Deposit Insurance Fund is about $9.6 million, which the FDIC said was the least expensive of the options available. The Deposit Insurance Fund, which is funded by the banking industry, insures customers’ deposits up to $250,000. NMSB is the first FDIC-insured bank to fail this year.
Rose Oswald Poels, president and chief executive officer of the Wisconsin Bankers Association, said this is the first Wisconsin bank closed since 2013. It is the 16th federally insured depository closed by regulators in Wisconsin since the financial downturn began in 2008.
NMSB was unable to recover along with most other financial institutions after the financial crisis subsided, Oswald Poels said.
“Recent numbers from the FDIC show Wisconsin banks continue to improve and grow in the role of helping businesses grow and families prosper. The industry as a whole is very strong and stable,” she said. “Wisconsin's banking community expresses its support to the affected employees of the North Milwaukee State Bank."