Republic Bank Buys Failed Bloomington Bank, Eyes Growth in Mpls.

Republic Bank & Trust Company has acquired First Commercial Bank in Bloomington, and its chief executive said that the bank plans to grow its presence in the Twin Cities.

First Commercial Bank in Bloomington—which was shuttered Friday by federal regulators—reopened Monday as a branch of Republic Bank & Trust Company, marking the Louisville, Kentucky-based bank’s first expansion into Minnesota.

And Republic’s chief executive says the bank expects to grow its presence in the Twin Cities market.

The Minnesota Department of Commerce on Friday announced the closure of First Commercial Bank, which as of June 30 had $215.9 million in total assets and $206.8 million in deposits. In a deal facilitated by the Federal Deposit Insurance Corporation (FDIC), Republic Bank assumed First Commercial Bank’s deposits and agreed to purchase “essentially all” of the bank’s assets, the Commerce Department said.

Republic Bancorp, Inc., the holding company of Republic Bank & Trust, said Friday that in addition to assuming First Commercial Bank’s deposits, it paid $115 million to acquire $194 million worth of loans and real estate.

Republic Bancorp Chairman and CEO Steve Trager told Twin Cities Business on Tuesday that the process of acquiring a failed bank from the FDIC occurs rapidly, and it is too early for Republic to outline formal plans for additional expansion in the Twin Cities. But he said the company plans to eventually grow its presence in the market through both acquisitions and the opening of new branches.

“Like any market we go into, we go into it to grow, not to shrink,” he said.

Republic Bancorp, which had $3.3 billion in assets as of June 30, has 43 locations in Kentucky, Indiana, Ohio, Florida, and Tennessee. For the six months that ended June 30, the company reported $92.1 million in net income.

First Commercial Bank is the 41st FDIC-insured institution in the nation to fail this year, and the fourth in Minnesota. Forest Lake-based Patriot Bank Minnesota closed in January, followed by Little Falls-based Home Savings of America in February and Maple Grove-based Inter Savings Bank in April.

In 2011 (following a year in which eight banks in the state were shuttered), only two Minnesota financial institutions failed.

As of June 30, First National Bank had a total risk-based capital ratio of 3.09 percent—significantly below the 10 percent threshold that regulators typically consider “well-capitalized.” Founded in 1999, the bank was ordered by the FDIC in 2009 to clean up its books, and a dispute between the FDIC and former Chairman Stu Voigt ended this summer when Voigt agreed to pay $15,000 to settle allegations of illegal activity, according to a report by the Star Tribune.

Republic Bancorp expects the acquisition of First Commercial Bank to be immediately accretive to its net income and earnings per share. Republic Bank & Trust will continue to be “well capitalized” under regulatory standards and will require no additional capital to complete the deal, the company said.

“We welcome [First Commercial Bank]’s clients to the Republic family,” Trager said in a statement. “We are excited and committed to serving our new clients in the Minneapolis area with the same level of accountability and responsiveness that we have built the Republic name upon.”

The acquisition of First Commercial Bank represents Republic Bank & Trust’s second purchase from the FDIC this year: In January, it acquired Tennessee Commerce Bank in Franklin, Tennessee.