Second Nevada Bank Fails

Silver State Bank of Henderson, Nev., was shuttered on Friday by the Nevada Financial Institutions Division, which cited "extremely unsafe and unsound practices and conditions."

The $2 billion bank was the second Nevada institution to fail this year, bringing the national total of bank and thrift failures to 11.

Silver State's insured deposits were acquired by Nevada State Bank of Las Vegas, which is held by Zions Bancorp (ZION).

TheStreet.com Ratings had assigned Silver State Bank of Henderson a financial strength rating of D (Weak) on the basis of first-quarter financial results.

Uninsured deposits totaled about $20 million in 500 customer accounts. When a bank is closed down and the FDIC appointed receiver, customers with uninsured deposits become creditors to the receivership for the amount of their uninsured balances. After a failed institution's assets are disposed of, the uninsured depositors may receive partial or full payments called "dividends." Unlike depositors at several other banks that closed this year, Silver State's uninsured depositors received no advance dividends from the FDIC.

The previous Nevada bank failure was First National Bank of Nevada, which was shuttered by the Office of the Comptroller of the Currency on July 25.

As with so many failed institutions this year, the main problem was an over-concentration in construction and development loans, which comprised 55% of Silver State's total assets as of June 30. For the second quarter, Silver State reported a net loss of $72.7 million and was considered below well-capitalized as of June 30, since its risk-based capital ratio dropped to 8.86%. This ratio needs to be at least 10% for a bank or thrift to be considered well-capitalized according to regulatory guidelines.