Rosemount National Bank Sells St. Paul Branch

St. Paul-based University National Bank has acquired Rosemount National Bank's branch in east St. Paul. Terms of the deal were not disclosed.

The 4,000-square-foot branch at 1351 Arcade St. in St. Paul, is now open under the University Bank name and will be one of eight bank branches operated by the bank holding company Sunrise Community Banks. Sunrise also owns banks operating under the names Franklin National Bank of Minneapolis and Park Midway Bank.

Following this deal, Rosemount National Bank is left with just its main branch, which is located at 15055 Chippendale Ave. S. in Rosemount.

The deal offers two contrasting stories in the community bank business.

University National grew more than ten percent in 2010, finishing the year with $195 million in assets and $2.3 million in profits.

Rosemount National has struggled in recent years and at the end of 2010 reported assets of about $38 million. The bank lost $917,000 in 2008, $2.533 million in 2009 and $1.8 million in 2010. The last year the bank showed a profit was in 2006, when it made $520,000.

At the end of 2010, the bank's risk-based capital ratio had dipped to 4.15 percent, well below the ten percent level the Federal Deposit Insurance Corporation (FDIC) requires for a bank to be considered "well-capitalized."

Click here to read the FDIC summary of Rosemount National Bank's finances.

Independent research firm Weiss Ratings rated the bank's financial strength rating as an "E-" at the end of 2010. An "E" rating is the lowest grade possible and the "-" indicated the bank falls in the lower third of the grade.

In its latest report on Rosemount National, Weiss Ratings also pointed to "a current level of 146.5 percent of nonperforming loans to core capital combined with 67.5 percent from a year earlier" as a major factor in the bank's low rating.

The summary of the report said "this institution currently demonstrates what we consider to be significant weaknesses and has also failed some of the basic tests we use to identify fiscal stability. Therefore, even in a favorable economic environment, it is our opinion that depositors or creditors could incur significant risks."

In early 2009, the Office of the Comptroller of the Currency ordered Rosemount National to develop a plan to identify problem loans and move towards clearing them off the bank's balance sheet. In April 2010, the bank signed an agreement promising it would not increase its debt or pay any dividends without approval from regulators.

Officials from Rosemount National have not returned calls requesting a comment.

Rosemount Patch will continue to update this story as it develops.