Regulators close small Minn. bank

1st American State Bank of Minnesota in Hancock, Minn., was closed Friday by the Minnesota Department of Commerce, and the FDIC has brokered a purchase and assumption agreement with Community Development Bank of Ogema, Minn., to assume all of its deposits.

1st American is the second Minnesota bank closed as a result of syndicated loans purchased from BankFirst, a failed bank that was based in Sioux Falls, S.D., the (Minneapolis) Star Tribune reported. It said concerns are high that more banks may follow.

BankFirst itself was closed last summer.

1st American chief financial officer Warren Smith, who joined the bank in 2007 after the bad loans were made, told the newspaper he estimates the bank bought $4 million in loans from BankFirst, more than half of which are now uncollectable.

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