Silver State Bank

Silver State Bank was an American community and commercial bank headquartered in Nevada. Founded in 1996, it initially focused on the Las Vegas metropolitan area and later expanded into Arizona through the acquisition of Choice Bank. By the time of its failure, the institution operated 17 branches in the Las Vegas and Phoenix metropolitan areas and maintained lending operations across parts of the western United States. The bank was controlled by Silver State Bancorp, its holding company. On September 5, 2006, Silver State Bancorp acquired Choice Bank, which operated in the Phoenix and Scottsdale region. The acquisition gave Silver State Bank a larger Arizona presence and broadened its branch network beyond Nevada. The two operations were subsequently merged in 2008. Silver State Bank's business model became heavily exposed to real-estate lending, particularly loans connected with undeveloped land intended for future residential construction. When the United States housing market deteriorated and the housing bubble collapsed, many development projects became economically unviable. The resulting deterioration in the bank's real-estate loan portfolio weakened its capital position and contributed to its failure. On September 5, 2008, the Nevada Financial Institutions Division closed Silver State Bank and the Federal Deposit Insurance Corporation placed it into receivership. Nonbrokered, FDIC-insured deposits in Nevada were transferred to Nevada State Bank, while qualifying deposits in Arizona were transferred to National Bank of Arizona. Both successor institutions were operating subsidiaries of Zions Bancorporation. The closure made Silver State Bank the 11th insured commercial bank in the United States to fail during 2008, a year in which bank failures increased sharply compared with the three failures recorded in 2007. The FDIC estimated that the failure could require approximately $450 million to $550 million from the Deposit Insurance Fund. Although insured deposits were transferred, some customers incurred losses because they had deposits above applicable FDIC insurance limits or misunderstood how those limits applied. Approximately $20 million in uninsured deposits were reported across about 500 accounts. In January 2009, Silver State Bancorp sought protection under Chapter 11 of the United States Bankruptcy Code. The bank itself did not resume operations, and its brand ceased to function as an active banking institution.

Silver State Bank was established in 1996 as a community bank serving the Las Vegas metropolitan area. Its initial business was built around conventional community-banking activities, including deposit taking, business banking, and lending to customers and enterprises in the surrounding region. Over time, the institution developed a substantial exposure to real-estate finance, including loans connected with land acquisition and residential development. The bank expanded outside Nevada through its holding company, Silver State Bancorp. On September 5, 2006, the holding company acquired Choice Bank in the Phoenix and Scottsdale area of Arizona. The transaction extended Silver State's geographic reach and gave it a second major metropolitan market. The acquired Arizona operations were later combined with Silver State Bank's existing business, with the merger taking place in 2008. At its peak, the bank had 17 branches in the Las Vegas and Phoenix metropolitan areas and also conducted loan operations elsewhere in the western United States. The expansion took place during a period when real-estate development and residential construction were strong in much of the American Southwest. Silver State Bank's lending portfolio included financing for undeveloped land purchased with the expectation that it would eventually support home construction. When the United States housing market weakened, those assumptions deteriorated. The collapse of the housing bubble reduced the value and marketability of undeveloped property, while numerous planned construction projects were delayed or abandoned. The bank's concentration in these loans left it vulnerable to rising credit losses and falling collateral values. Regulators closed the institution on September 5, 2008. The Nevada Financial Institutions Division took the closing action, and the Federal Deposit Insurance Corporation placed the bank into receivership. Deposit transfers were arranged by geography: nonbrokered FDIC-insured accounts in Nevada moved to Nevada State Bank, and qualifying accounts in Arizona moved to National Bank of Arizona. Both receiving banks were subsidiaries of Zions Bancorporation. The transfer allowed insured customer accounts and banking relationships to continue under successor institutions while the failed bank's assets and liabilities were handled through the receivership process. Silver State Bank was the 11th insured commercial bank in the United States to fail during 2008. The year marked a significant escalation in bank failures compared with 2007, when three insured commercial banks failed. The FDIC estimated that the failure could cost the Deposit Insurance Fund between $450 million and $550 million. Some depositors nevertheless experienced losses because their balances exceeded insurance limits or because they misunderstood which deposits were protected. Reports associated with the closure identified approximately $20 million in uninsured deposits held in about 500 accounts. The bank's failure also received attention because Andrew McCain, son of Republican presidential candidate John McCain, had served on its board during 2008. He resigned on July 26 after approximately five months, giving personal reasons for his departure. The available reference material does not establish that his board service caused or contributed to the bank's collapse. In January 2009, Silver State Bancorp filed for Chapter 11 bankruptcy protection. The bank's operations were not revived under the Silver State Bank name, making the institution a defunct regional bank whose assets and customer relationships were absorbed through the FDIC resolution process.

• 2009

  Silver State Bancorp seeks Chapter 11 protection

  [1]Silver State Banken.wikipedia.org

  The bank's holding company files for Chapter 11 bankruptcy protection in January.

• 2008

  Nevada and Arizona operations are merged

  [1]Silver State Banken.wikipedia.org

  The bank combines the operations associated with its Nevada business and the acquired Arizona franchise.

• 2008

  Silver State Bank is closed

  [1]Silver State Banken.wikipedia.org

  On September 5, Nevada regulators close the bank and the FDIC places it into receivership.

• 2006

  Silver State Bancorp acquires Choice Bank

  [1]Silver State Banken.wikipedia.org

  On September 5, Silver State Bancorp acquires Choice Bank in the Phoenix and Scottsdale region of Arizona, expanding the group's regional footprint.

• 1996

  Silver State Bank is founded

  [1]Silver State Banken.wikipedia.org

  Silver State Bank begins operations as a community bank serving the Las Vegas metropolitan area.

A regional community and commercial bank serving Nevada and Arizona, with a significant emphasis on real-estate-related lending.

• Banking services · 1996

  Community banking

  Silver State Bank operated as a regional community and commercial bank, providing deposit and banking services to customers in the Las Vegas and Phoenix metropolitan areas. Its branch-based model served local consumers and businesses before the institution was closed and placed into FDIC receivership in 2008.

• Commercial lending

  Real-estate lending

  Real-estate finance was a major part of the bank's lending activity. The portfolio included loans on undeveloped land acquired for prospective residential construction. The collapse of the housing market impaired the viability and value of many such projects and was identified as the underlying cause of the bank's failure.

• Deposits · 1996

  Deposit accounts

  The bank accepted deposits from customers in its service areas, including accounts eligible for FDIC insurance. Following the closure, nonbrokered insured accounts were transferred by state to successor banks, while some customers with balances above insurance limits faced uninsured losses.

• 2008

  Regulatory closure and FDIC resolutionOther

  Background

  The bank became overexposed to risky real-estate loans, especially financing for undeveloped land intended for residential construction, after the housing market deteriorated.

  Action taken

  The Nevada Financial Institutions Division closed Silver State Bank on September 5, 2008, and the FDIC placed it into receivership. Insured deposits were transferred to Nevada State Bank in Nevada and National Bank of Arizona in Arizona.

  Aftermath

  The Silver State Bank brand ceased operating. The FDIC estimated a cost of approximately $450 million to $550 million to the Deposit Insurance Fund, while around $20 million in uninsured deposits across approximately 500 accounts were reported.

  Estimated FDIC Deposit Insurance Fund cost. $450 million-$550 million estimated exposure (2008 bank failure resolution)

  Source

• 2006

  Acquisition of Choice BankM&A

  Background

  Silver State Bancorp sought to expand the Silver State banking franchise into the Phoenix and Scottsdale market.

  Action taken

  The holding company acquired Choice Bank on September 5, 2006, adding an Arizona operation that was later merged with Silver State Bank.

  Aftermath

  The transaction expanded the bank's branch presence into Arizona. The combined operations were in place before the institution failed in 2008.

  Source

• 2009

  Silver State Bancorp files for Chapter 11 protection[1]Silver State Banken.wikipedia.org

  Bankruptcy

  Silver State Bancorp, the bank's holding company, filed for Chapter 11 bankruptcy protection in January 2009 after the bank's closure and receivership.

• 2008

  Silver State Bank closed and placed into FDIC receivership[1]Silver State Banken.wikipedia.org

  Bankruptcy · Regulation · Other

  Nevada regulators closed Silver State Bank on September 5, 2008, and the FDIC assumed receivership. Deposits in Nevada were transferred to Nevada State Bank, while deposits in Arizona were transferred to National Bank of Arizona.

• 2008

  Silver State Bank becomes the 11th insured commercial-bank failure of 2008[1]Silver State Banken.wikipedia.org

  Bankruptcy · Regulation · Other

  The bank's closure occurred amid a sharp increase in United States bank failures during the housing and financial crisis. The FDIC estimated a potential Deposit Insurance Fund cost of approximately $450 million to $550 million.

• 2008

  Andrew McCain resigns from Silver State Bank board[1]Silver State Banken.wikipedia.org

  Leadership change · Other

  Andrew McCain, the son of Republican presidential candidate John McCain, served on Silver State Bank's board for approximately five months in 2008 and resigned on July 26, citing personal reasons.

1. 1Silver State Banken.wikipedia.org