economy:

Great Basin Bank fails, Nevada State Bank takes over

Published Friday, April 17, 2009 | 6:50 p.m.

Updated Friday, April 17, 2009 | 10 p.m.

Sun business and economy coverage

A bank in the Northern Nevada town of Elko failed today and its deposits were taken over by Nevada State Bank.

Great Basin Bank of Nevada was closed by the Nevada Financial Institutions Division, which appointed the Federal Deposit Insurance Corporation as receiver.

Under a purchase and assumption agreement with Nevada State Bank, the five offices of Great Basin Bank of Nevada will reopen on Monday as branches of Nevada State Bank. The offices are in Elko, Fallon, Winnemucca and Spring Creek.

"We want Nevadans to know that their deposits are safe," state Financial Institutions Division Commissioner George E. Burns said in a statement.

"Deposits are now insured by the FDIC for up to $250,000 per depositor, per type of account ownership. All deposits of Great Basin Bank of Nevada, insured and uninsured, will be assumed by Nevada State Bank," he said, adding the bank had to be closed because of inadequate capital and mounting loan losses.

Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage.

"Customers of both banks should continue to use their existing branches until Nevada State Bank can fully integrate the deposit records of Great Basin Bank of Nevada,'' the FDIC said.

Over the weekend, depositors of Great Basin Bank of Nevada can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of Dec. 31, Great Basin Bank of Nevada had loans and other assets of $270.9 million and deposits of $221.4 million. In addition to assuming all of the deposits of the failed bank, Nevada State Bank agreed to purchase approximately $252.3 million of assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and Nevada State Bank entered into a loss-share transaction on approximately $143.4 million of Great Basin Bank's assets. Nevada State Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector, the FDIC said.

“Under the terms of the transaction, the FDIC will make an initial payment to Nevada State Bank and assume 80 percent of the first $40 million of credit losses. Any credit losses in excess of $40 million are borne 95 percent by the FDIC,” Nevada State Bank President Dallas Haun said in a statement.

“Our first order of business is to welcome Great Basin clients to Nevada State Bank and to assure them that their deposits are safe, sound and readily accessible,” Haun said. “Nevada State Bank is healthy, with a strong balance sheet and capital ratios, as well as a history of serving our Nevada communities. We look forward to welcoming our new clients when we open our new Nevada State Bank branches for business as usual on Monday morning.”

Haun said Nevada State Bank is a locally managed, community-focused bank and that the deal enables Nevada State to expand its reach and network of freestanding branches throughout the state, especially in rural Nevada.

Prior to today's deal, Nevada State Bank had assets of more than $4 billion and 54 branches statewide. Nevada State Bank, which acquired the assets of Silver State Bank when it failed last fall, is owned by Zions Bancorporation of Salt Lake City.

Discussion: 5 comments so far…

By neiman1

4/17/09 at 8:29 p.m.

Suggest removal

Nevada will be down to two or three banks before this is over.
By LasVegas2009

4/17/09 at 9:25 p.m.

Suggest removal

Im using my mattress.
By opinion101

4/18/09 at 1:28 p.m.

Suggest removal

I can bet my last dollar that if what Mr. George Burns said above is true " he said, adding the bank had to be closed because of inadequate capital and mounting loan losses", then the whole banking system is ready to go down. Elko County has the best economy in the WEST. Las Vegas, Reno Area and of course California has tremendously higher percentages of loan losses then Elko County. Everyone is still working in Elko County (Mining)and no one that I know as any bad loans. Something is up.
By pravin404

4/18/09 at 2:39 p.m.

Suggest removal

2 more banks failed this week.

50 banks failed since 2008, 25 each in 2008 and 2009 till now.

Friday means FDIC is in action on some bank.

Last week also FDIC closed 2 banks.

"American Sterling Bank,Sugar Creek, MO" and "Great Basin Bank of Nevada, Elko, NV" were closed on Friday making the count to 25 for this year and 50 since start of 2008 for the failed banks in US.

Check the list of all the failed banks at :
http://portalseven.com/Failed-Banks-2009...

And on google map see where the banks are failing at :
http://portalseven.com/finance/Failed_Ba...

Also layoff tracker at :
http://portalseven.com/finance/FinanceHo...

Do check it.
By classyladynv

5/6/09 at 10:13 a.m.

Suggest removal

Elko used to be a local town. Great Basin Bank was established by locals, primarily businessmen, to make local money available to other locals, on the premise that big banks would not typically loan to smaller local businesses.

Elko has become a corporate town. The same City Fathers who let in the big box stores are the same types who invested in a local bank. Some of them got kickbacks from selling or leasing land to the big box stores, or just a really good return on a land investment from someone willing to pay.

When the "Mom and Pop" stores are forced out because they let in so many big box stores, who take their money out of the economy, there is no money being reinvested back into the local businesses. No money circling 'round means asset problems at the local bank.

Meanwhile, the town's economy is based on gold mining, which is cyclical. Last year one of the first gold mines who started the town's growth closed without warning, and 400 people were sent packing. Some of them were absorbed into the two largest gold mines, but about 150 women are still competing for jobs in the local economy, which Elko also being a gambling and ranching town, has also felt the recession in tourism.

Things are not as right in Elko as they would have you believe.

The big boxes brought in many people who didn't used to live here and who are paid $8/hr. or less. Even the managers don't make more than $12/hr. They are expected to pay the same rents as those who make $40,000 to $80,000 a year at the mines.

The local economy is teetering. Local businesses are closing every day.

What did those City Fathers expect? Now you get WalMart quality for everything you want, and no expertise or specialized selection or quality from different vendors, that the Mom and Pops used to provide.

It is just a matter of time. Elko's economy sends all of their money out of town. Elko is just a corporate town now, residents pay the top of the scale for the big box prices, Elko is a 10 (highest priced scale) compared to other neighboring cities. We miss it when it was smaller, and actually got service from locals who tried hard and knew their customers, and knew what they were doing!

The City Fathers who brought in these national chains are now reaping what they have sown. But the rest of the citizens pay for it, in what is now available in the town.

Expect more bank closures and failed local businesses. The real estate market is also tanking. People have to move away when they close mines and businesses fail.

No, things are not what they would have you believe in Elko.