Skip to main content

Nine former Columbian Bank and Trust Co. branches in Kansas and Missouri reopened Monday as branches of Citizens Bank and Trust, after federal regulators on Friday shut down the ailing institution.

Columbian Bank and Trust is the ninth institution to fail so far in 2008. Columbian had total assets of $752 million and total deposits of $622 million as of June 30, according to the Federal Deposit Insurance Corp., which was appointed receiver. Citizens Bank and Trust, of Chillicothe, Mo., agreed to assume the insured deposits for a 1.125% premium and buy $85.5 million of Columbian's assets, consisting mainly of cash.

"Through a bidding process, Citizens was deemed to be the least costly to the insurance fund," according to David Barr, a spokesman for the FDIC.

Since the acquisition, Citizens now operates 29 community banks in Missouri and Kansas with a total of more than $1 billion in assets.

"This acquisition advances our strategy to organically grow Commercial Banking and Wealth Management services in Kansas and Missouri and quickly builds our Community Banking network," Citizens CEO Roger Arwood said in a company statement.

About $46 million in uninsured deposits in 610 accounts exceeded the insurance limit and were not assumed by Citizens. In most bank failures, depositors become creditors to the receivership for the amount of any uninsured funds. These creditors then receive "dividends" when the FDIC disposes of the failed institution's assets. According to Barr, no early dividends are being paid to Columbian's uninsured depositors.

Columbian also had about $268 million in brokered deposits that are not part of today's transaction. The FDIC said it will pay the amount of their insured funds to brokers directly.

Early second-quarter reports showed that Columbian suffered a $5.2 million loss, wiping out all of its first-quarter profits. By June 30, nonperforming loans had more than doubled since the previous quarter, growing to $92.1 million, representing 153% of core capital and loan-loss reserves, compared with first-quarter nonperformers of $43.5 million, or 72% of core capital and reserves.

Columbian had just been added to the FDIC's "watch list" in May and was not among the original 90 troubled institutions that the agency had indicated were on the list, said Barr.

Columbian had a

financial strength rating of D-minus (weak) on the basis of first-quarter data, the most recent finalized data available.

Columbian Corporation of Overland Park, Kan., the holding company of Columbian Bank and Trust, also owns an institution in Texas called The Bank. The Bank was not affected by the closure of its sister institution. The Bank has a D (weak) financial strength rating from

TheStreet Recommends


Ratings issues financial strength ratings on each of the nation's 8,600 banks and savings and loans. They are available at no charge on the

Banks and Thrifts Screener

. In addition, the Financial Strength Ratings for 4,000 life, health, annuity and property/casualty insurers are available on the

Insurers & HMOs Screener


Melissa Gannon is director of insurance and bank ratings for Ratings, formerly Weiss Ratings, where she directs the operations of the company's insurance and bank ratings division.

In keeping with TSC?s Investment Policy, employees of Ratings with access to pre-publication ratings data must pre-clear any potential trade through the legal department, and are prohibited from trading any security that is the subject of an unpublished rating revision until the second business day after the rating is published.

While Gannon cannot provide investment advice or recommendations, she appreciates your feedback;

click here

to send her an email.