Oregon Regulators Close Small Bank

The Oregon Department of Consumer and Business Services closed Silver Falls Bank of Silverton, Ore. Friday, bringing the total number of U.S. banks and savings and loans closed during 2009 to fourteen.

The Federal Deposit Insurance Corp. was appointed receiver. It arranged for Citizens Bank of Corvallis, Ore. to acquire all of the failed bank's deposits.

Please see TheStreet.com's new Bank Failure Map for an interactive summary of all previous bank and S&L failures during 2008 and 2009.

Silver Falls Bank

In a press release announcing the failure of Silver Falls Bank, the Oregon Department of Consumer and Business Services cited the institution's heavy concentration of nonperforming commercial construction loans and its critically low level of capital. David Tatman, the regulator's Finance & Corporate Securities administrator, said that despite a recent stock offering, "Silver Falls Bank management was not able to address these significant problems in a timely manner."

Since the institution lacked a significant capital cushion before the real estate crisis came to a head, mounting losses from provisions for loan loss reserves left Silver Falls Bank significantly undercapitalized as of Dec. 31, with a tier 1 leverage ratio of 2.05% and a risk-based capital ratio of 3.87%, according to preliminary call report data provided by Highline Financial.

These ratios need to be at least 5% and 10%, respectively, for an institution to be considered well-capitalized, and Silver Falls Bank slipped below the well-capitalized designation in the first quarter of 2008.

Silver Falls Bank was included in TheStreet.com's list of undercapitalized banks published Feb. 6. An updated list of undercapitalized banks was included in Friday's analysis of undercapitalized thrifts.