State regulators closed one bank and one thrift Friday, bringing the total number of U.S. bank and thrift failures during 2009 to 25. The thrift had been an acquisition target of a life insurer that was hoping to qualify for a capital infusion from the federal government via the Troubled Assets Relief Program (TARP), but the deal was never completed.

Please see's Bank Failure Map for an interactive summary of all previous bank and thrift failures during 2008 and 2009.

The Office of Thrift Supervision closed American Sterling Bank of Sugar Creek, Mo. and appointed the Federal Deposit Insurance Corp. receiver. The FDIC then arranged for Metcalf Bank of Lee's Summit, Mo. to acquire all the deposits of the failed institution and most of its assets.

Meanwhile, The Nevada Financial Institutions Division took over Great Basin Bank of Nevada of Elko, Nev., and the FDIC was appointed receiver. The FDIC entered into an agreement whereby Nevada State Bank (a subsidiary of Zions Bancorporation ( ZION)) acquired all of the failed bank's deposits and most of its assets.

American Sterling Bank

American Sterling Bank had total assets of $181 million and total deposits of about $172 million. Metcalf Bank agreed to acquire all of the failed institution's deposits and $174 million of its assets. The FDIC entered into a loss-sharing agreement with Metcalf Bank, agreeing to share in losses on $100 million of the acquired assets.

American Sterling had three branches in Missouri, and one each in Arizona and California. The Missouri branches were set to reopen as Metcalf Bank branches Saturday morning, and the other two branches were to reopen Monday.

On Jan. 15, the OTS had approved a nonbinding agreement for life insurer Phoenix Companies ( PNX) to acquire American Sterling Bank as part of Phoenix's bid to become a thrift holding company and thus qualify to apply for TARP aid. However, the deal was never consummated.

American Sterling was considered significantly undercapitalized as of Dec. 31 under regulatory guidelines and was included in's list of undercapitalized banks and thrifts. Ratings had assigned American Sterling Bank an E-minus (Very Weak) rating back in March 2008, based on Dec. 31, 2007 financial information. The rating reflected a net loss of $3.7 million for 2007 and a high level of capital exposure to nonperforming loans.

American Sterling's core business of originating mortgages in 42 states and selling most of them backfired when the residential real estate market collapsed. With the bank writing down held-for-sale mortgages by $9.9 million and reporting a net loss of $11.7 million in the third quarter of 2008, it was considered undercapitalized as of Sep. 30.

By Dec. 31, with a fourth-quarter net loss of $3.5 million, American Sterling was critically undercapitalized with negative capital ratios. The tier 1 leverage ratio was minus-1.12%, and the total risk-based capital ratio was minus-2.31%. The regulator capital ratios were negative because deferred tax assets of $14.2 million were required to be excluded from the bank's tier 1 capital.

Great Basin Bank of Nevada

Great Basin Bank of Nevada had total assets of about $271 million and total deposits of $221 million. The FDIC arranged for Nevada State Bank to acquire all of the failed institution's deposits and $252 million of its assets. The FDIC agreed to share in losses on approximately $143 million of the acquired assets.

Great Basin Bank's five offices were scheduled to reopen Monday as branches of Nevada State Bank.

George E. Burns, commissioner of the Nevada Division of Financial Institutions, cited "inadequate capital and mounting loan losses" in the regulator's announcement of the bank failure. Ratings had assigned Great Basin Bank of Nevada an E-minus rating in December, based on Sept. 30 financial information.

The institution was also included in's recent list of undercapitalized banks and thrifts.

Great Basin Bank of Nevada was the second failed institution to have its deposits acquired by Nevada State Bank. In September, Nevada State Bank purchased the insured deposits of Silver State Bank of Henderson, Nev.

For Nevada State's holding company, Zions Bancorporation, this was the third such acquisition. Another Zions subsidiary, California Bank & Trust, acquired all the deposits of Alliance Bank of Culver City, Calif. on Feb. 6.

Of the 48 bank or thrift failures during 2008 and 2009, four have occurred in Nevada. The state now ranks third for the most bank failures, tied with Florida and Illinois. Georgia is No. 1, with nine failures, followed by California, with eight.

Bank and Thrift Financial Strength Ratings

This week's two failures turned out well for depositors, since the FDIC was able to arrange for other banks to acquire all of the closed institutions' deposits. However, the agency does not always find a buyer.

The FDIC has temporarily increased the basic individual deposit insurance limit to $250,000 on nonretirement balances and has waived insurance limits on non-interest-bearing checking accounts, but the waiver is set to expire at the end of the year, with most other balances reverting to their usual $100,000 limit.

Another thing to consider is that even if your personal deposits are under FDIC insurance limits, you or someone you know are probably associated with a business, organization or government entity (such as a school district) with large deposits of somebody else's money in a local bank. In this environment, it is a very good idea to look into the health of your bank. Ratings issues independent and very conservative financial strength ratings on each of the nation's 8,500 banks and savings and loans. They are available at no charge on the Banks & Thrifts Screener. In addition, the Financial Strength Ratings for 4,000 life, health, annuity, and property/casualty insurers are available on the Insurers & HMOs Screener.

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Philip W. van Doorn joined Ratings., Inc., in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a Bachelor of Science in business administration from Long Island University.