Friday, Aug. 1, 2008 | 10:25 a.m.
A Henderson-based bank is feeling the strain of the “most severe downturn ever manifest” in the Nevada economy, its chief financial officer said in a release detailing the company’s second quarter report.
Silver State Bancorp and its subsidiary, Silver State Bank reported a net loss of $62.7 million in its second quarter report, released today.
The bank’s nonperforming loans – those overdue by 90 days or more – increased to $252 million, from $78 million reported March 31. Those loans, which represent 16.23 percent of the bank’s gross loans, stem from lending in residential construction and land, the company’s news release said, not subprime mortgages, which the company has said it never issued.
An independent third party reviewed the bank’s loan portfolio to identify its weaknesses, the news release said.
“Despite these difficult economic times, our capital position remains adequate to support our balance sheet, our allowance for loan losses is adequate to protect against probable losses in our loan portfolio and we enhanced our liquidity position to support our customers' needs,” Chief Financial Officer Michael Threet said in the company’s release.
The company also owns $16.3 million worth of real estate from collateral of defaulted loans, an increase of $15.1 million since the first quarter, the release said.
“The company's senior management is aggressively executing its directive to manage risk, cut expenses, strengthen our balance sheet and generate capital,” Threet said. “However, safety and soundness is our number one priority at this time. The increase in our loan loss provision, while certainly impacting our financial results, categorically does not have an impact on our depositors' funds. In addition, our depositors' funds are insured by the Federal Deposit Insurance Corporation, up to the applicable limits."
In the release, the company said it is “adequately capitalized,” a risk-based premium system the Federal Deposit Insurance Corp. uses. Those that are deemed a higher risk – banks can also be classified well-capitalized or undercapitalized – are required to pay higher premiums into the FDIC’s Deposit Insurance Fund.
The bank did experience a 10.2 percent increase of deposits during the quarter, reporting $1.73 billion in deposits, as of June 30.
Immediately preceding the release of second quarter earnings, the bank announced the resignation of its chief executive, Corey Johnson, and chairman, Bryan Norby, both co-founders of the bank in 1996. Both men will continue to serve on the company’s board.
Johnson had been chief executive since the bank’s founding. Norby had been chairman since 2006.
Michael Thorell took over Johnson’s previous position, now leading as acting chief executive and president of the holding company and chief executive of the bank. He had been promoted earlier this year to chief lending officer.
Phillip Peckman, chief executive of Peckman Outdoor Media, was promoted to chairman of the company. In 2006, he resigned as chief executive of the Greenspun Corp. The Greenspun family owns the Las Vegas Sun.
On July 26, Andrew “Andy” McCain, 46, son of Republican presidential candidate John McCain, resigned his position on the bank’s board of directors. In a bank release that day, it cited “personal reasons” for his immediate resignation. His term was to expire in 2011.
Andrew McCain, chief financial officer for Phoenix-based beer distribution company Hensley & Co., was also on the bank’s auditing committee. The company’s chairwoman is Cindy Hensley McCain, John McCain’s wife.
He recently began a one-year term as chairman for the Greater Phoenix Chamber of Commerce.
Members of the auditing committee assist the board in its oversight of risk management policies and the “safety and soundness” of the bank, according to the charter posted on the company’s Web site.
In late May, Douglas French, then the executive vice president of commercial real estate lending, resigned, also citing personal reasons. He’s an associate editor of the conservative Liberty Watch magazine.
Silver State Bank has 13 branches in Southern Nevada and four in the Phoenix area.
Earlier this year Silver State acquired Scottsdale, Ariz.-based Choice Bank. That bank took on the Silver State Bank name.
The bank’s Web site also lists loan production offices in Nevada, as well as California, Washington, Oregon, Utah, Colorado and Florida.