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Nevada bank fails and is shut

Silver State Bank's insured deposits will be assumed by Nevada State Bank.

September 06, 2008|From the Associated Press

Nevada regulators have shut down Silver State Bank. It was the 11th failure of a federally insured bank this year.

The Federal Deposit Insurance Corp. was appointed receiver of the bank, located in Henderson, Nev. It had $2 billion in assets and $1.7 billion in deposits as of June 30.

The FDIC said Friday that the bank's insured deposits would be assumed by Nevada State Bank of Las Vegas. Its branches will reopen Monday as offices of Nevada State Bank in Nevada and National Bank of Arizona in Arizona.

The agency said depositors of Silver State Bank would continue to have full access to their deposits.

The 11 failures so far this year compare with three for all of 2007, and federal banking officials have said that more banks are in danger of collapse.

Silver State Bank has operated 12 branches in Nevada and Arizona as well as loan offices in Nevada, Utah, Colorado, Washington, Oregon, California and Florida.

The FDIC estimated its resolution would cost the deposit insurance fund between $450 million and $550 million.

Regular deposit accounts are insured up to $100,000; for some individual retirement accounts, the limit is $250,000.

There was about $20 million in uninsured deposits held in roughly 500 accounts at Silver State that potentially exceeded the insurance limit, the FDIC said.

Concern over the solvency of some banks has been growing amid the housing slump and the steep slide in the mortgage market. The pressures of tighter credit, tumbling home prices and rising foreclosures have battered many banks, large and small, across the nation.

The largest bank failure by far this year has been that of savings and loan IndyMac Bank, which was seized by regulators July 11 with about $32 billion in assets and deposits of $19 billion.

The seizure of Pasadena-based IndyMac, which was the largest regulated thrift to fail in the United States, prompted hundreds of angry customers to line up for hours in Southern California to demand their money.

The FDIC has been operating the bank, now called IndyMac Federal Bank, under a conservatorship.

The FDIC plans to raise insurance premiums paid by banks and thrifts to replenish its reserve fund after paying out billions of dollars to depositors at IndyMac.

Federal officials expect turbulence in the banking industry to continue well into next year and more banks to appear on the FDIC's internal list of troubled institutions.

Of the 8,500 or so FDIC-insured banks in the country, 117 were considered to be in trouble in the second quarter -- the highest level in about five years and up from 90 in the first quarter. The agency doesn't disclose the banks' names.

Only 13% of banks that make the list have failed, on average, and most have been nursed back to health or acquired by stronger institutions, according to the FDIC.

Federally insured banks and thrifts set aside a record $50.2 billion to cover losses from soured mortgages and other loans in the April-June quarter, when profits plunged 86% from a year earlier.

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