Bank reports $62.7 million loss, replaces key officials

Silver State Bancorp, the $2 billion-asset holding company for the similarly named Henderson bank, lost $62.7 million in the second quarter and replaced its CEO as the number of bad loans grew huge.

Michael Thorell, 42, former president of an Arizona bank that Silver State acquired, was named acting CEO, replacing Corey Johnson, 50, who resigned.

The board named Phillip Peckman, 59, acting board chairman to replace Bryan Norby, 51, of Boise, Idaho.

The board decided it would be better to name a local businessman to serve as chairman, Thorell said.

Thorell declined to comment on Johnson's resignation. Attempts to reach Johnson were unsuccessful.

Peckman, former CEO of the Greenspun Corp., is a former lawyer and certified public accountant who owns a billboard company.

Norby and Johnson remain directors of the company.

Silver State shares dropped 30 percent, or 38 cents, to 90 cents in heavy trading on Nasdaq following the announcements. Its shares hit a 52-week high of $24.10 last summer.

Despite the turmoil on Wall Street, Thorell said Silver State branches were quiet Friday.

Michael Threet, chief operating officer and chief financial officer, said the quarter's financial numbers stem from "the severe economic downturn in our nation, in our region and in the real estate values in the markets we serve."

Silver State specifically attributed its loss to a $58.2 million provision for loan losses, including $30.9 million in loan charge-offs.

The bank lost $4.15 per share, compared with earnings of 44 cents a share a year ago when it reported $6.2 million in net income.

Nonperforming assets total $268 million, including $252 million in nonperforming loans and $16 million in repossessed real estate, which previously was collateral for loans. Nonperforming loans totaled $77 million in the first quarter and repossessed real estate was negligible in the first quarter.

Silver State's nonperforming assets, which include bad loans, were 83 percent larger than the total of reserves it set aside for problem loans plus its tangible equity or ownership interest in the company.

"We've taken what are believed to be very aggressive steps (to deal with problem loans)," Thorell said.

The bank is developing a strategic plan for turning around its fortunes, Thorell said.

Silver State is focused on raising more capital, building more "core deposits" from local customers and dealing with nonperforming assets.

The bank holding company reported 9.5 percent in total risk-based capital and said bank regulators consider this "adequately capitalized." Silver State was ranked higher at "well capitalized" in the first quarter, Thorell said.

The company has been trying to raise $40 million in additional capital since June 5. It has been difficult to raise capital, because "all of the capital raised in the first quarter (for commercial and investment banks) is under water," Threet said.

"We are still exploring all options for the increase in capital that we feel is necessary on an ongoing basis," Thorell said.

While depositors are expressing concern about sums that exceed the federal deposit insurance limit, generally $100,000, Thorell said depositors also are questioning other community banks about the safety of their accounts.

To increase deposits, the bank recently offered 4.25 percent on some certificates of deposit.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.