Great Basin Bank fails, Nevada State Bank takes over

By Steve Green

Published Friday, April 17, 2009 | 6:50 p.m.

Updated Friday, April 17, 2009 | 10 p.m.

A bank in the Northern Nevada town of Elko failed today and its deposits were taken over by Nevada State Bank.

Great Basin Bank of Nevada was closed by the Nevada Financial Institutions Division, which appointed the Federal Deposit Insurance Corporation as receiver.

Under a purchase and assumption agreement with Nevada State Bank, the five offices of Great Basin Bank of Nevada will reopen on Monday as branches of Nevada State Bank. The offices are in Elko, Fallon, Winnemucca and Spring Creek.

"We want Nevadans to know that their deposits are safe," state Financial Institutions Division Commissioner George E. Burns said in a statement.

"Deposits are now insured by the FDIC for up to $250,000 per depositor, per type of account ownership. All deposits of Great Basin Bank of Nevada, insured and uninsured, will be assumed by Nevada State Bank," he said, adding the bank had to be closed because of inadequate capital and mounting loan losses.

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.

"Customers of both banks should continue to use their existing branches until Nevada State Bank can fully integrate the deposit records of Great Basin Bank of Nevada,'' the FDIC said.

Over the weekend, depositors of Great Basin Bank of Nevada 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 Dec. 31, Great Basin Bank of Nevada had loans and other assets of $270.9 million and deposits of $221.4 million. In addition to assuming all of the deposits of the failed bank, Nevada State Bank agreed to purchase approximately $252.3 million of assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and Nevada State Bank entered into a loss-share transaction on approximately $143.4 million of Great Basin Bank's assets. Nevada State Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector, the FDIC said.

“Under the terms of the transaction, the FDIC will make an initial payment to Nevada State Bank and assume 80 percent of the first $40 million of credit losses. Any credit losses in excess of $40 million are borne 95 percent by the FDIC,” Nevada State Bank President Dallas Haun said in a statement.

“Our first order of business is to welcome Great Basin clients to Nevada State Bank and to assure them that their deposits are safe, sound and readily accessible,” Haun said. “Nevada State Bank is healthy, with a strong balance sheet and capital ratios, as well as a history of serving our Nevada communities. We look forward to welcoming our new clients when we open our new Nevada State Bank branches for business as usual on Monday morning.”

Haun said Nevada State Bank is a locally managed, community-focused bank and that the deal enables Nevada State to expand its reach and network of freestanding branches throughout the state, especially in rural Nevada.

Prior to today's deal, Nevada State Bank had assets of more than $4 billion and 54 branches statewide. Nevada State Bank, which acquired the assets of Silver State Bank when it failed last fall, is owned by Zions Bancorporation of Salt Lake City.