Silver State Bank seized and sold

State and federal bank regulators late Friday announced the seizure and sale of Henderson-based Silver State Bank, which bet its future on Las Vegas real estate values and lost.

The bank had $1.7 billion in deposits. Nevada State Bank is taking over the deposits insured by the Federal Deposit Insurance Corp., leaving only $20 million in uninsured deposits, which may not be wholly recovered.

Following the bank takeover, when called by a reporter, Silver State Bank President Calvin Regan said he had “no comment” and hung up the telephone.

“It would be premature at this point to comment on the situation,” Silver State spokesman Steve Stern said.

Silver State Bank branches in Nevada will open Monday as part of Nevada State Bank.

“We look forward to welcoming both Silver State Bank employees and clients when we open our new Nevada State Bank branches for business,” Nevada State Bank Chairman and Chief Executive Officer Dallas Haun said in a statement.

Western Alliance Bancorp, the holding company for Bank of Nevada, was an unsuccessful bidder, Western Alliance Chief Financial Officer Dale Gibbons said. Nevada State, which is part of Zions Bancorporation, paid a 1.3 percent premium for some deposits at Silver State in Nevada and took over 13 branches.

National Bank of Arizona, another Zions subsidiary, will take over four Silver State branches in Arizona.

“It’s a very good strategic move for Nevada State Bank,” said Bill Martin, president of Service1st Bank and former CEO of Nevada State. “They pick up branches. They pick up deposits.”

Martin said it was good that Silver State was taken over with no more than $20 million in uninsured deposits. The FDIC typically insures deposits up to $100,000.

Silver State became the sixth bank to fail in Nevada since the Great Depression and the 11th bank failure in the country this year.

Federal regulators in July closed $3 billion-asset First National Bank of Nevada, which also operated in Arizona and had a small affiliate bank in California.

“Clearly, Silver State and First National were the most stressed of the institutions in Nevada,” Gibbons said. “I’m glad that these issues are being resolved.”

News of bank failures is causing concern for depositors at community banks, said Timothy Coffey, vice president of research at FIG Partners, a broker dealer specializing in financial institutions.

“It puts significant pressure on other community banks in the Las Vegas region to show depositors that they have the financial strength to survive,” Coffey said.

FIG Partners has noticed some marginal movement to larger banks that seem safer than smaller banks, but no massive flight of cash so far.

FDIC Chairwoman Sheila Bair told Florida bankers on Friday that “more (banks) will fail and others will go on the ‘problem’ list.”

Bank results this year are “pretty dismal,” Bair said.

“You simply must accept that the credit downturn is far from over,” she said. “It’s a tough slog, but there’s no easy way out.”

The Silver State failure looms as a higher-profile story than First National although Silver State, with $2 billion in assets, is smaller.

Andrew McCain, son of Republican presidential nominee John McCain, joined Silver State’s board in February but resigned for unspecified personal reasons in late July.

Also, Silver State Bancorp, the bank’s holding company, is publicly owned and its failure affects numerous investors. First National was privately held.

Silver State shot across the Southern Nevada banking scene like a comet, posting some of the highest profit margins among banks before fading after the collapse of the area’s real estate values.

A year ago, the bank was charging more than 10 percent on average for loans, compared with 7.8 percent for comparable banks. Many of its borrowers provided raw land for collateral, leaving the bank exposed to losses when land values plummeted and borrowers began defaulting.

Silver State Bank was organized in 1996. Tom Nicholson and the Yanke family, both of Idaho, were key initial investors, having profited from early investments in Micron Technology.

In 2006, SNL Financial, a research firm in Charlottesville, Va., reported that Silver State was the second most profitable publicly owned bank in the country as measured by return on equity, which is profit divided by shareholder equity. Silver State had been the top Small Business Administration lender in dollar terms for seven consecutive years.

Last year, many Southern Nevada banks started bleeding red ink as borrowers started defaulting on real estate loans, but not Silver State.

In the last three months of 2007, Silver State reported that profits increased to $5.9 million from $5.7 million in the last quarter of the previous year and nonperforming loans remained low.

The banking company gave $1.4 million in bonuses for 2007 to five senior executives who also received increases in base pay.

Silver State recorded a $14.4 million loss in the first quarter. Yet, the bank continued to pump out more loans. The bank boosted its total outstanding loans to $1.6 million, up $68.4 million from the year-end — an annualized rate of $274 million.

Meanwhile, Douglas French, executive vice president of Silver State and a key lending officer, had sold 168,000 shares of Silver State stock in several transactions for $2 million. He said he had to pay loans secured by the stock as the stock price dropped. He resigned in May.

The company reported on Aug. 1 that Johnson and board Chairman Bryan Norby resigned. Michael Thorell, former CEO at Choice Bank, became acting chief executive and Phillip Peckman was named acting board chairman.

A few days later, the banking company said it lost $73 million in this year’s second quarter. Silver State said it might not be able to continue as a “going concern.”

Johnson didn’t return calls for comment Friday. Attempts to reach acting bank chairman Peckman and Thorell failed.

The company failure comes a little more than a year after the bank completed an initial public offering of stock at $20 a share. Shares closed on Friday at 56 cents, unchanged from the prior day, on the Nasdaq National Market.

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

ad-high_impact_4
Business
Sunrise Hospital celebrates 60 years
Sunrise Hospital opened its doors to patients on Dec. 15, 1958. Employees of more than 35 years celebrated at a luncheon Wednesday, Dec. 12, 2018. Jessie Bekker/ Las Vegas Review-Journal.
Maya Cinemas to open soon in North Las Vegas
Moctesuma Esparza, CEO of Maya Cinemas, talks about the newest location in North Las Vegas, set to open Jan. 10. The aim of the theatre chain is to serve latino-centric, underserved communities.
Holiday shopping and returns make this the busiest time of year for UPS
The UPS Las Vegas South facility is the company's busiest pre-load operation in the country, and it's even busier this time of year. (K.M. Cannon/Las Vegas Review-Journal)
Primm’s outlet mall has fallen on hard times
The mall, attached to Primm Valley Resort, opened in 1998. Back then, it was a “textbook, perfect outlet-center location." But now, Primm’s outlet mall has fallen on hard times. Las Vegas Boulevard has endless shopping spots. And there are other outlet malls that don’t require a hefty drive to the state line. Its mortgage-holder foreclosed on the mall in late September.
Miltary auction at Ritchie Bros. Auctioneers
Humvees, ammo cans, construction equipment, field gear and more is on the auction block Friday and Saturday at Ritchie Bros. Auctioneers. About 10,000 items in all are for sale in what GovPlanet bills as the largest auction of its kind.
Las Vegas residents discuss avoiding holiday scams
Las Vegas residents discuss their donation habits and how they avoid giving money to scam charities during the holiday season. (Bailey Schulz/Las Vegas Review-Journal)
Tesla’s Nevada Gigafactory ahead of economic impact expectations
The Tesla Gigafactory’s economic impact on Nevada has exceeded projections, bringing in more than 7,000 jobs. In 2014, Nevada agreed to give the automotive and energy company $1.3 billion in tax abatements. In return, Tesla promised to meet certain requirements in areas like employment and capital investment. As of June, Tesla has brought in a total of $6.05 billion in capital investment, surpassing the $4.95 billion projection. The original contract gave the company until 2024 to make $3.5 billion in capital investments in Nevada. Derek Armstrong, deputy director of the Governor’s Office of Economic Development.
Land sales near the Las Vegas Raiders stadium
Land around the Las Vegas stadium site has been selling for high prices. A few months before the stadium’s groundbreaking, Global Trust Group acquired a 2.5-acre parcel just north of the stadium site. The property sold for $7.25 million, or $2.9 million an acre. Osprey Real Estate Capital and Huntington Hotel Group acquired a 2-acre industrial site just west of the stadium site in late November. The property sold for $6.5 million, or $3.15 million per acre. That's roughly 12 times the average price of land in the valley this year as tracked by Colliers International.
T-Mobile Tech Experience Truck parks in Toshiba Plaza at T-Mobile Arena
The Tech Experience Truck is a state-of-the-art showroom on wheels, with demonstrations that put connected drones, smart cities, augmented/virtual reality and smart tracking. The exhibit shows new wireless technology – including 5G and the Internet of Things (IoT). (K.M. Cannon/Las Vegas Review-Journal)
Steve Siegel, CEO of the Siegel Group, speaks about helping families and other needy residents
Steve Siegel, CEO of the Siegel Group, speaks about helping families and other needy residents to keep them from teetering off into homelessness. Bizuayehu Tesfaye/Las Vrgas Review-Journal @bizutesfaye
Crowds camp out for Chick-fil-A opening
Dozens of customers camped out 24 hours ahead of the 6 a.m. Thursday opening of the new Chick-fil-A on Rainbow Blvd.
Cheapest listings for sale in Las Vegas
Listed for $39,990, 585 S. Royal Crest Circle, Unit #9 is one of the cheapest homes currently listed for sale in Las Vegas. (Caroline Brehman/Las Vegas Review-Journal)
MGM's sports betting deals
MGM Resorts International signed a sports betting sponsorship agreement with the NBA in July It was the first professional sports league to have official ties with a legal sports betting house. The deal came just two months after the U.S. Supreme Court overturned a law prohibiting sports betting in most states. In October, MGM became the first gaming company to sign a sports betting partnership with the NHL. In November, MGM became the first gaming company to sign a sports betting partnership with the MLB. Financial terms of Tuesday’s deal and earlier partnerships have not been announced.
Terry Miller discusses Convention Center
Project Manager Terry Miller explains the phases of Convention Center construction.
Zappos treats their team members on Cyber Monday
Zappos rolls out a variety of food, drinks and special activities for all team members at their downtown Las Vegas headquarters for Cyber Monday. (K.M. Cannon/Las Vegas Review-Journal)
Team Hybrid at the 2019-Model Motor Trend International Auto Show
Among the companies showing off the 2019 model cars, Team Hybrid shows off its modified cars. Las Vegas resident David David talks about the team, which is in its ninth year exhibiting at the show, and his show car.
Black Friday Shoppers at downtown Summerlin and at the Arsenal
Black Friday shoppers at downtown Summerlin and at the Arsenal. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfYe
Black Friday shopping in Las Vegas
Black Friday sale shopers express their shopping experience. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Las Vegas Livestock recycling Strip food waste
Las Vegas Livestock collects and recycles food from many Las Vegas Strip companies. (Nicole Raz/Las Vegas Review-Journal)
Black Friday at Fry's
Shoppers line up for deals early on Black Friday at Fry's Electronics on Las Vegas Boulevard South. (Mat Luschek/Las Vegas Review-Journal)
Black Friday shoppers at Best Buy at 5 am
Black Friday shoppers at Best Buy at 5 am on Nov. 23. (Mat Luschek/Las Vegas Review-Journal
Black Friday - 1am Closing Time
Quiet night.
Black Friday - 12:30am - Best Buy Arroyo Crossing
Sam's Town Holiday Lighting Ceremony
On Wednesday, Nov. 21, 2018, Mystic Falls Park opened with its annual tree lighting ceremony, hosted by Boyd Gaming Executive Chairman Bill Boyd. The attraction features a Winter Wonderland theme and holiday-inspired laser light show, available daily Nov. 23 to Jan. 1. (Mat Luschek/Las Vegas Review-Journal)
What Is A Smart City?
George Karayannis, vice president of CityNow, Panasonic’s smart-city arm, explains. (Nicole Raz/Las Vegas Review-Journal)
Walmart uses virtual reality to train employees
Walmart Academy Facilitator demonstrates the VR training program being used by Walmart stores across the country.
With holidays around the corner, department stores hiring extra staff
J.C. Penny hired 72 seasonal workers this year at the Galleria at Sunset mall in Henderson in order to handle the heavy traffic of the holiday shopping season. (Rachel Aston/Las Vegas Review-Journal)
Startup Weekend fosters new businesses
With the help of entrepreneurial peers and an expert panel of mentors, Techstars Startup Weekend fosters the ideas of attendees into marketable business plans. (Rachel Aston/Las Vegas Review-Journal)
Mecum Car Auction in Las Vegas
The Mecum Auctions is held at the Las Vegas Convention Center. Bizuayehu Tesfaye/ Las Vegas Review-Journal @bizutesfaye
Construction underway for new Google Data Center
Henderson is slated to be home to a new Google data center in December 2020. The Governor’s Office of Economic Development approved $25.2 million in tax abatements for Design LLC, a wholly-owned subsidiary of Google. The company plans to build the data center on 64 acres of land on Warm Springs Road west of Boulder Highway.
TOP NEWS
News Headlines
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like