Dedicated to Deposits: Deals, Data, and Discussion

Bank Closure: Silver State Bank of Nevada

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Silver State Bank of Henderson, Nevada was closed yesterday by Nevada regulators and the FDIC was named receiver. Here's the FDIC's press release link, and here's a summary of the closure:
  • Closed Bank: Silver State Bank
  • Location: Henderson, NV
  • Size: 18 branches (4 in AZ & 14 in NV), $2 billion assets, $1.7 billion deposits
  • Possible Uninsured Deposits: $20 million in 500 accounts
  • Acquiring Bank: Nevada State Bank, Las Vegas, NV
  • Cost to Deposit Insurance Fund: $450 million to $550 million (estimated)
  • 2008 closures: 11th bank to be closed this year
  • Financial Ratings: 2 stars at BauerFinancial, 1 star at Bankrate.com
No Luck for Those with Uninsured Deposits

I don't see any mention at the FDIC documentation that the FDIC is covering any uninsured deposits. Last week all uninsured deposits were transferred to the new bank after Integrity Bank failed. For IndyMac's failure, the FDIC immediately paid out only 50% of uninsured deposits.

Brokered Deposits

According to the FDIC Silver State Bank had approximately $700 million in brokered deposits that were not part of yesterday's transaction. People with brokered deposits will likely have to wait several weeks before they receive their deposits. I posted on this issue when ANB Financial failed earlier in the year (see post).

Silver State CDs

I've posted on Silver State CD deals several times this year. They've had some good 6 and 12-month CD specials. For those who have these CDs, please let us know if the new bank will allow you to keep the CDs to maturity. According to this FDIC FAQ, you are allowed to close CDs without early withdrawal penalties.

There are often concerns about accrued interest when a bank is closed. Here's what the FDIC states for this case:
All interest on insured deposits accrued through Friday, September 5, 2008 will be paid at your same rate. Nevada State Bank and National Bank of Arizona will be reviewing rates and will provide further information soon.


Silver State Bank History

This WSJ article has some background on Silver State Bank and the reasons for its closure:
Founded in 1996, Silver State specialized in construction and land-development loans to finance real-estate projects in Nevada and Arizona.
...
The business unraveled this year. By June 30, borrowers had fallen behind on about $252 million worth of loans, compared to about $11.5 million six months earlier, according to the Federal Deposit Insurance Corp.


FDIC Overview

Here's the FDIC list of all the recent bank failures. For more info on FDIC coverage, please refer to my Facts about FDIC and NCUA post. For issues on FDIC and NCUA coverage above $100K, please refer to this recent post.

Thanks to the readers who notified me of this news.
  Tags: Nevada, Arizona

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Comments
9 comments.
Comment #1 by marc (anonymous) posted on
marc
I predict an average of 1 closure a week for the rest of the year.

I'm curious what the guidelines are for how the FDIC determines what they do with the uninsured deposits when they shut down a bank. It seems arbitrary, but probably just because I don't know the details of their decision process.

1
Comment #2 by Anonymous posted on
Anonymous
I never exceed the fdic limit on deposit's and anyone who does is a card short of a full deck. So the question I am asking here does not concern me directly, but unless I am reading some of the posts wrong here it seems that in some cases the fdic pays all of the deposits even the ones that exceed the limit and in othr cases they don't. This seems very unfair. Can anyone advise what determines how the excess deposits are treated.

1
Comment #3 by Banking Guy (anonymous) posted on
Banking Guy
It appears it depends on the acquiring bank. In the case of Integrity Bank failure, Regions bank was willing to pay a premium of 1.012 percent on Integrity’s deposits (both insured and uninsured). So uninsured depositors didn't lose anything. I'm not sure of the reasons why the acquiring bank would want to pay for the uninsured deposits.

1
Comment #4 by Anonymous posted on
Anonymous
I had 2 accounts at Silver State bank. One was under 100k and titled in my personal name with my brother as beneficiary. That account was released today with no problem.

The 2nd account was over 100k and listed in the name of a revocable trust. I had 3 qualified benificiaries listed and the key is that they were of UNEQUAL interest so the account is NOT insured for 100k each. Since the largest bene was 70% you divide 100k by .7 and you get the insured amount $142,857.00. My account was under that so I am OK.

I can tell you that multiple banks did not understand that, my estate lawyer didn't, friends disagreed with me so if you have a trust and your bene's are of unequal interest recalculate your insurance and adjust accounts accordingly.

After realizing this I went to the bank and broke up my CD and put it into separate CD's titled properly.

Also the new rate on the CD's will continue under the new rate by Nevada State bank which I believe was 3.60%

This is my first time blogging so I hope this is helpful to others - it sure saved me a lot of money.

1
Comment #5 by Banking Guy (anonymous) posted on
Banking Guy
Thanks for the info. Glad to read that your account was under the insured limit.

I don't think the FDIC coverage calculator can even handle beneficiaries with unequal interest. I have a link to this calculator with some examples in this post.

1
Comment #6 by iweepforthefuture (anonymous) posted on
iweepforthefuture
test

1
Comment #7 by iweepforthefuture (anonymous) posted on
iweepforthefuture
HI, I still have 195K in silver state as of 4PM today. The FDIC rep informed me everthing looks fine because of the way the qualifying bens and POD designation was on the account title.I asked and was informed they will also look at sig cards and account deposit reciepts,such as CDs and passbooks for proper titling, in case of a problem.

1
Comment #8 by Anonymous posted on
Anonymous
No the FDIC calculator kicks you out as soon as you select that they are unequal interest and gives you a phone number to call to speak to an agent.

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Comment #9 by iweepforthefuture (anonymous) posted on
iweepforthefuture
To the ANON at 5:15, your first account with one bennie is only covered up to 100K. Please everyone go to the FDIC website and READ IT. If you would have titled one account in your name only= 100K ins.Open another account at same bank and add your brother=another 100K.Total for you is..... wait for it, 200K!!!!!! So glad to help.

1