Silver State of Nevada Is 11th U.S. Bank Collapse This Year

By Alison Vekshin and Ari Levy

Sept. 6 (Bloomberg) — Silver State Bank of Henderson, Nevada was closed by U.S. regulators, the 11th bank to collapse this year amid a surge in soured real-estate loans stemming from the worst housing slump since the Depression.

Silver State, with $2 billion in assets and $1.7 billion in deposits, was shut by the Nevada Financial Institutions Division and the Federal Deposit Insurance Corp., the FDIC said yesterday in a statement. Nevada State Bank in Las Vegas will assume the deposits from Silver State, which was run by Silver State Bancorp. The failed bank’s offices will open Sept. 8 as branches of Nevada State and National Bank of Arizona, the FDIC said.

“Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship,” the FDIC said.

Banks are being closed at the fastest pace in 14 years and regulators have publicly ordered dozens of institutions to shore up capital or restrict their business. California lender IndyMac Bancorp Inc., which had $32 billion in assets, was closed July 11 in the third-largest bank seizure, contributing to a 14 percent drop in the U.S. deposit insurance fund that had $45.2 billion at the end of the second quarter.

In July, Silver State announced the resignation of Andrew McCain as a director of the bank. McCain, who had served on the audit committee and was a director for five months, is the son of Republican presidential nominee John McCain. A call to the campaign’s press line last night wasn’t immediately returned.

Nevada State

Nevada State will buy insured deposits for a 1.3 percent premium, the FDIC said. Silver State had about $20 million in uninsured deposits in 500 accounts, the FDIC said. The FDIC insures deposits of up to $100,000 per depositor per bank, and up to $250,000 for some retirement accounts at 8,451 institutions with $13.3 trillion in assets.

The FDIC last week said 117 banks were classified as “problem” in the second quarter, a 30 percent jump from the first quarter. The agency doesn’t identify “problem” lenders.

“More banks will come on the list as credit problems worsen,” FDIC Chairman Sheila Bair said at an Aug. 26 Washington news conference.

Before yesterday’s action, the FDIC had closed 37 banks since October 2000, according to a list at fdic.gov. In 1994, the government had closed a dozen institutions by the end of August.

U.S. regulators this year also closed Integrity Bank of Alpharetta, Georgia, Columbian Bank and Trust of Topeka, Kansas, and First Priority Bank of Bradenton, Florida, in August; Reno- based First National Bank of Nevada and Newport Beach, California-based First Heritage Bank in July; Staples, Minnesota-based First Integrity Bank and ANB Financial in Bentonville, Arkansas, in May; Hume Bank in Hume, Missouri, in March; and Douglass National Bank in Kansas City, Missouri, in January.

Silver State’s shares were unchanged at 56 cents in regular trading on the Nasdaq Stock Market yesterday and have tumbled 97 percent in the past year. The bank operates 13 branches in Nevada and four in Arizona, according to its Web site.

To contact the reporters on this story: Alison Vekshin in Washington at avekshin@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net

Last Updated: September 6, 2008 00:00 EDT

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