Forest Lake–based Mainstreet Bank was shut down by the Minnesota Department of Commerce on Friday, making it the 83rd FDIC-insured bank to fail in 2009. All eight Mainstreet locations in the metro area will stay open, but as part of Central Bank of Stillwater, which will assume the bank’s desposits. Minneapolis-St. Paul Business Journal reports that Mainstreet was hit hard by the mortgage crisis: “Out of a residential real estate construction portfolio of $43.5 million, $16.9 million was in default by the end of the second quarter of 2009, meaning it was no longer accruing interest for the bank.” Racking up bad debt, the bank kept losing money: $42.3 million last year, and $17.3 million in the second quarter alone.
The bank’s failure was the second of the day Friday and the second in Minnesota this year.
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