Community Bank of Nevada’s parent plans Chapter 7

By Steve Green

Friday, Aug. 28, 2009 | 6:48 p.m.

The parent company of the failed Community Bank of Nevada said Friday it intends to file for Chapter 7 bankruptcy liquidation in the near future.

Las Vegas-based Community Bancorp Inc.'s stockholders have already been hit by the failure, and Community Bancorp indicated its creditors too are facing steep losses.

On Aug. 14, regulators closed Community Bank of Nevada as well as another subsidiary, Community Bank of Arizona.

Community Bancorp had been hurt by the recession and its reliance on real estate loans -- many financed with high-rate brokered deposits.

The Federal Deposit Insurance Corp. said that as of June 30, Community Bank of Nevada had loans and other assets of $1.52 billion and deposits of about $1.38 billion.

The deposits of Community Bank of Arizona, based in Phoenix, were taken over by MidFirst Bank of Oklahoma City.

But the FDIC was unable to sell Community Bank of Nevada. So the FDIC created a temporary bank to assist Community Bank of Nevada customers in transferring their accounts to other banks.

Customers have been advised to move their money from the temporary bank, the Deposit Insurance National Bank of Las Vegas, to other banks by mid-September.

"The company has ceased all business activity and operations since the banks were the company’s only source of revenue. Upon filing of the (bankruptcy) petition, the court will appoint a bankruptcy trustee who will be responsible for liquidating the company," Community Bancorp said Friday in a filing with the Securities and Exchange Commission.

The Nasdaq Stock Market this week delisted the company's stock because of the closure of the banks. The stock, which recently traded as high as $1.14 on Aug. 10, traded at about 11 cents Friday in over the counter trading.

Community Bancorp said that as of Aug. 17 it had about $746,000 in cash assets and that its liabilities totaled about $77.2 million.

The liabilities include $70 million of securities issued by the company’s special purpose business trusts, $2.4 million in unpaid interest on the securities and $4.8 million for an installment loan

The company said its investments in the banks and in the business trusts are expected to be written off completely.