top of page
  • Writer's pictureKansas News Service

‘Huge scam’ in rural Kansas town fells fourth U.S. bank in 2023

Updated: Aug 15

Kansas bank commissioner David Herndon, seen here before a legislative committee in January 2022, says Heartland Tri-State Bank closed because of a “huge scam,” and while he doesn’t know details, no other banks were affected. (Sherman Smith/Kansas Reflector)

By Sam Bailey, Kansas Reflector

TOPEKA — Heartland Tri-State Bank of Elkhart on July 28 became the fourth U.S. bank to fail in 2023 and the second Kansas bank to fail in three years.

David Herndon, Kansas banking commissioner, closed the southwest Kansas bank after it became insolvent because it was “apparently the victim of a huge scam,” he said. Herndon said he doesn’t know what the scam was, but he said other banks in the state were not affected.

“Kansas banks are strong and healthy,” he said. “They are well-capitalized, have strong reserves, are profitable and maintain record levels of loan reserves.”

Herndon named the Federal Deposit Insurance Corporation as receiver, allowing the FDIC to take control of the bank’s affairs. The FDIC then brokered a deal for Dream First Bank, National Association of Syracuse, Kansas to take over customers of Heartland Tri-State Bank.

On July 31, all four branches of Heartland Tri-State Bank were reopened as branches of Dream First Bank. Herndon said the transfer didn’t result in any disruptions to customers, who were protected from risk of loss.

“It was a terribly unfortunate event, but the system did work, and people had no interruption in accessing their accounts,” he said. “Sometimes businesses fail. This time it was a bank. But the depositors were protected.”

As of March 31, Heartland Tri-State Bank had $139 million in total assets and $130 million in total deposits, according to a FDIC news release.

Dream First Bank assumed all deposits and agreed to purchase “essentially all of the failed bank’s assets,” the FDIC said. The regulator and Dream First Bank entered a shared-loss agreement on the loans purchased from Heartland Tri-State Bank to share the losses and potentially recover assets.

The bank is the smallest to fail in the past year, with the next closest in size being Signature Bank in New York. It failed March 12 with assets totaling $110 billion and deposits totaling $88.6 billion, according to the FDIC.

In 2020, Almena State Bank in Almena, Kan., failed with approximately $70 million in assets and $68.7 million in total deposits.

Bank history

While Heartland Tri-State Bank is under new ownership, an employee of the bank who declined to give their name said the Elkhart location is still in full operation and they have no information about the scam.

The employee told Kansas Reflector all workers are still employed at the location, but Shan Hanes, the president and CEO, is no longer there. They did not know any other information on the details of his departure or potential for return.

Hanes did not respond to an email interview request.

He was first employed by the bank as an agriculture loan officer and information technology officer in 1993, and he was promoted to president and CEO in 2008, according to a U.S. Congress biography.

When Hanes was first hired at the bank, it was under the name First National Bank of Elkhart. That bank was opened in 1985.

According to Hanes’ biography, in 2011, he put a “local investment group together” and purchased the bank from its former holding company. Hanes was then named president and CEO.

In 2017, the bank was converted to a state chartered bank and renamed Heartland Tri-State Bank.

The FDIC also reported in 2019 the branch was purchased from a Citizens State Bank office in Wisner, Nebraska, and moved to the current main office in Elkhart.

This article was reprinted with permission from the Kansas Reflector. The Kansas Reflector is a non-profit online news organization serving Kansas. For more information on the organization, go to its website at

27 views0 comments
bottom of page