Published Friday, Sept. 5, 2008 | 6:51 p.m.
Updated Friday, Sept. 5, 2008 | 8 p.m.
The state’s Financial Institutions Division seized Henderson-based Silver State Bank on Friday, placing the Federal Deposit Insurance Corp. in receivership of the failed bank.
The bank was deemed insolvent by the state and couldn't meet the demands of depositors.
Nevada State Bank will be taking over the bank’s insured deposits for a premium of 1.3 percent, an Federal Deposit Insurance Corp. news release said.
“Silver State Bank’s demise is of significant concern to our state’s financial industry, and because of its condition, it was necessary to take possession of the bank and appoint the FDIC as receiver,” said the state division’s Commissioner George E. Burns in a statement. “Our goal is to protect depositors, minimize disruption to business and to preserve employees’ jobs as much as possible.”
There was $20 million in uninsured funds that Nevada State Bank did not acquire, the release said. Potentially 500 accounts exceed the insured limit.
Nevada State Bank purchased $650 million in insured deposits from the FDIC, the bank's chairman and chief executive Dallas Haun said in a company release.
The acquisition is an "opportunity to expand" for the bank, the release said.
“Our first order of business is to welcome Silver State clients to Nevada State Bank and to assure them that their insured deposits are safe, sound and readily accessible,” Haun said in the release. “Their deposits will automatically transition to Nevada State Bank effective immediately. We look forward to welcoming both Silver State Bank employees and clients when we open our new Nevada State Bank branches for business on the morning of Monday, September 8.”
Statewide, Nevada State, a subsidiary of Salt Lake City-based Zions Bancorporation, has 72 locations, not including Silver State's locations.
Silver State customers can continue to access their money by writing check or using their ATM and debit cards, the FDIC said.
“It’s very important that Nevadans know that their insured deposits are secure,” Burns said in his statement. “Bank customers should remember that their deposits are insured by the FDIC for up to $100,000 per depositor, per type of account ownership, and up to $250,000 for certain retirement accounts, such as IRAs (Individual Retirement Accounts).”
Silver State merged with Scottsdale-based Choice Bank earlier this year. Silver State Bank customers in Arizona will become depositors of National Bank of Arizona, also a Zions subsidiary.
Last month, the Silver State Bank reported its nonperforming loans -- those overdue by 90 days or more - increased to $252 million, from the $78 million reported in its first quarter report on March 31. Those loans represented 16.23 percent of the bank’s loans. The company, in a release at the time, blamed poor residential construction and land loans, not subprime mortgages, which the company said it has never issued.
“Despite these difficult economic times, our capital position remains adequate to support our balance sheet, our allowance for loan losses is adequate to protect against probable losses in our loan portfolio and we enhanced our liquidity position to support our customers’ needs,” Chief Financial Officer Michael Threet said in the company’s release at the time.
Andrew K. McCain, the son of Republican Presidential nominee John McCain abruptly resigned from the bank’s board of directors and his position on its audit committee July 26. His term wasn’t due to expire until 2011.
Auditing committee members are assigned the task of assisting the board in its oversight of risk management policies and the “safety and soundness” of the bank, according to the charter posted on the company’s Web site.
Immediately preceding the release of its second-quarter earnings, the bank had announced the resignation of its chief executive, Corey Johnson, and chairman, Bryan Norby, both co-founders of the bank in 1996. Both continued to serve on the company’s board.
Michael Thorell was named acting chief executive and Philip Peckman, was named acting board chairman. Later, Peckman was also named chairman of the auditing committee, filling the seat vacated by Andrew McCain.
Silver State, a subsidiary of Silver State Bancorp, operated 13 branches in Nevada and four in Arizona.
The last Nevada bank to be taken over was 1st National Bank of Nevada July 25. The FDIC sold that bank’s assets to Mutual of Omaha Bank.
Since then, the FDIC has seized two other banks: Integrity Bank in Georgia and the Columbian Bank and Trust Co. in Topeka, Kansas.
Silver State Bank customers can call the FDIC at (877) 275-3342 or (866) 806-5919 or visit its Web site for more information.
Customers with more than $100,000 in their accounts should contact the FDIC at (800)523-8177 to set up an appointment to discuss their deposits.