State Bank of Aurora, Aurora, Minnesota, which was established on January 1st 1906, was ordered closed by the Minnesota Department of Commerce on Friday.

The Federal Deposit Insurance Corporation (FDIC) was engaged as receiver. To protect the depositors of the 104-year old bank, the FDIC entered into a purchase and assumption agreement with Northern State Bank, Ashland, Wisconsin, to assume all of the deposits of State Bank of Aurora.

The sole branch of State Bank of Aurora will reopen on Monday as a branch of Northern State Bank. Depositors of State Bank of Aurora will automatically become depositors of Northern State Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage, the FDIC said. Customers should continue to use their former State Bank of Aurora branch until they receive notice from Northern State Bank that it has completed systems changes to allow other Northern State Bank branches to process their accounts as well, the FDIC statement said.

Over the weekend, depositors of State Bank of Aurora can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of December 31, 2009, State Bank of Aurora had approximately $28.2 million in total assets and $27.8 million in total deposits. Northern State Bank will pay the FDIC a premium of 0.5 percent to assume all of the deposits of State Bank of Aurora. In addition to assuming all of the deposits, Northern State Bank agreed to purchase essentially all of the failed bank's assets.


The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $4.2 million. Northern State Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. State Bank of Aurora is the 37th FDIC-insured institution to fail in the nation this year, and the fourth in Minnesota. The last FDIC-insured institution closed in the state was 1st American State Bank of Minnesota, Hancock, on February 5, 2010.