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Linda Baumeister/Review
Alerus Financial recently took over Prosperan Bank, with local branches in Oakdale and Maplewood. |
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Prosperan Bank folds, acquired by new owner
Katy Zillmer
staff writer
Prosperan Bank, with branches in Oakdale, Maplewood and Minnetonka, is now under the ownership of Alerus Financial, based in Grand Forks, N.D.
Due to recent losses, Prosperan Bank was the latest community bank in the Twin Cities to fail and be placed under the control of the Federal Deposit Insurance Corporation (FDIC).
In August, Prosperan Bank's total assets were $199.5 million and deposits were recorded at approximately $175.6 million, according to a press release from the FDIC. Alerus Financial acquired all of the deposits of Prosperan Bank, and agreed to purchase approximately $173.9 million of its assets, according to the FDIC.
Prosperan Bank has operated in the east metro since 1999, when the Oakdale office opened. At the time, it was named Washington County Bank. A branch bank was built a few years later in Maplewood, and when the Minnetonka branch opened in 2007, the name was changed to Prosperan.
"What was attractive to us about Prosperan is they have two good locations on the east side of the metro and those locations represent a true community-banking model," said Chip Norris, the Twin Cities market president for Alerus Financial.
Alerus will now assume responsibility for the issues with the bank's loan portfolio, Norris said.
Alerus Financial has entered into a loss share agreement with the FDIC. Under the agreement, the FDIC will protect any losses to Alerus Financial while it works to improve the loan portfolio.
Banking challenges
"The banking business, especially since last fall, has been a real challenging road (and) more so for some institutions than others," Norris said.
When the FDIC took control of Prosperan Bank recently, Norris said it was as a result of the state of the commercial real-estate market.
"If you were highly concentrated in investor-developer commercial real estate ... a lot of those loans stopped performing," Norris said. "Some banks were healthy, and six months later the FDIC was in charge."
The trends in commercial real estate caused banks' capital to decrease and in that situation the FDIC will intervene, Norris added. "That would be the case with Prosperan and many like them."
Alerus Financial acquired the deposits and loans of Prosperan Bank starting on Nov. 6. The Maplewood and Oakdale branches closed at the normal time on that Friday, and reopened as Alerus Financial Saturday morning.
"From my perspective, it went very smoothly. At this point there has not been any changes. I thought the transition was very organized and we were all treated with great respect, which made it easier than it could have been," said Katie Nordstrom, vice president of retail banking at the former branch of Prosperan Bank in Oakdale. Nordstrom has worked there for three years.
"It has not impacted our customers in the least," Nordstrom said. It's business as usual. The same employees that waited on them before are still here and that was our customers' main concern."
Customers will not see any big changes in the bank's day-to-day operations, Norris said, and their deposits are secure with Alerus Financial, which is insured by the FDIC through 2013.
Customers, employees
Norris said he has individually been meeting with all the former Prosperan employees as well as customers.
"There is always going to be job duplication in an acquisition, but there are other areas where there are probably going to be some original hirings," he said.
Rich Sandquist was the chief executive officer at Prosperan Bank in Oakdale. A representative of the bank said Sandquist is no longer employed there.
"That was part of the acquisition," Norris said. "There is no easier way to say it."
There has been no change in the existing management at the Maplewood branch on White Bear Avenue, Norris added. There are approximately 25 employees there, 18 in Oakdale and four in Minnetonka, he said.
During an interview last year, Sandquist told the Review that Prosperan's employees focused on offering customers technological convenience and said the financial institution took pride in its good service to medium-sized commercial businesses.
The transition to completely change the banks from Prosperan to Alerus Financial will take three to six months, said Missy Keney, Alerus' corporate communications manager.
Customers can continue to visit any branch and use their ATM, debit card and checks as they have in the past.
Loan customers should continue to make their payments on the same schedule.
While there is always risk of losing some customers in the changeover, Norris said he hopes Alerus' stronger base of wealth-management products will be appealing. "It takes a little while for people to realize that this is a good thing for both the employees and the customers," he said.
"It appeared (Prosperan) Bank had good community roots and supported a lot of things in the community, which we would fully intend on continuing."
Katy Zillmer can be reached at kzillmer@lillienews.com or at 651-748-7822.
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