1st National Bank of Nevada fails

Sam Morris

1st National Bank of Nevada was taken over by the Treasury Department’s Comptroller of the Currency Office.

Published Friday, July 25, 2008 | 6:53 p.m.

Updated Sunday, July 27, 2008 | 11:58 a.m.

A Nevada bank is the latest casualty in the financial crunch affecting banks across the country.

1st National Bank of Nevada was taken over by the Treasury Department's Comptroller of the Currency Office, federal banking officials announced this evening.

1st National merged with 1st National Bank of Arizona in late June. It had $3.4 billion in assets and $3 billion in deposits. The bank's holding company is headquartered in Scottsdale, Ariz.

The comptroller office "acted after finding that the bank was undercapitalized and had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices," according to a news release. Those practices, the release said, "weakened the bank’s condition."

The most recent major bank casualty was California-based IndyMac Bank, which failed July 11.

1st National is nationally chartered and will be managed by Mutual of Omaha Bank, Federal Deposit Insurance Corp. spokesman David Barr said. It will reopen Monday.

1st National, based in Reno, has 10 branches, including five in Las Vegas.

Because the bank is FDIC-insured, individuals with $100,000 or less in a single account, or joint accounts up to $200,000, are fully insured by the federal government.

The FDIC also insures other accounts, such as individual retirement accounts, up to specified limits.

Barr described the takeover as a FDIC-facilitated change of ownership.

"(Customers) should view this as a positive," he said. "We're taking an unhealthy bank out of the system and replacing it with a healthy one."

Depositors have all been protected and can continue to write checks, use their debit cards and conduct other bank business, he said. Customers can phone the FDIC at (877)275-3342 or (866)806-5919 for information regarding the takeover.

Bank customers can find out more about the bank at this Web site. Mutual of Omaha says the transition for customers "will be seamless."

The last Nevada FDIC bank to fail was Dec. 14, 1990, when Frontier Savings Association, Las Vegas, failed. This year, seven FDIC banks have closed across the nation, according to the FDIC.

(Editor's note: This story has been corrected. In an earlier version it said the Comptroller of the Currency Office was part of the FDIC instead of the Treasury Department.)

Discussion: 2 comments so far…

By goldonomic

7/26/08 at 12:14 p.m.

Suggest removal

This is the direct result of Fractional Reserve Banking and the Creation of money out of thin air. It has resulted in a misallocation of funds into the Real Estate markets and a subsequent Credit Crunch followed by a garage sale. More on goldonomic.com under academics.
By orientalobserver

7/27/08 at 9:12 a.m.

Suggest removal

The reference to "the Federal Deposit Insurance Corp.'s Comptroller of the Currency Office" is incorrect. The Office of the Comptroller of the Currency is a bureau of the Department of the Treasury that charters, regulates, examines, and if necessary due to a failure (i.e. the value of a bank's assets are less than the value of its liabilities), closes "national" banks. You can tell if a bank is regulated by the Comptroller: it will have the word "national" in its name. All national banks by law have their deposits insured by the Federal Deposit Insurance Corporation up to $100,000 per person.

The Federal Deposit Insurance Corporation is an independent agency within the executive branch of government. The Comptroller of the Currency sits on the 5-member FDIC Board of Directors, as the the Director of the Office of Thrift Supervision, another Treasury Department bureau that regulates savings and loans.

Whenever the Comptroller of the Currency closes a national bank, it appoints the Federal Deposit Insurance Corporation as the receiver of the bank. As receiver, the FDIC usually sells all a failed bank's assets and liabilities (including deposits) to another bank over a weekend. Sometimes the FDIC pays off only the insured deposits and liquidates the assets itself. And there are several in-between ways they handle the corpse of a bank that combine the various tools.

The same happens when the Office of Thrift Supervision closes a failed savings and loan.