The Silver State Bank failure is the 11th this year and in typical fashion the FDIC announcement came after trading Friday blaming the bank’s overexposure to commercial and real estate development mortgage loans in the two most depressed markets in the US, namely Arizona and Nevada.

The FDIC also stated depositor assets will transfer to Zion Bancorporation (NASDAQ: ZION) subsidiary, Nevada State Bank.

Silver State Bank Failure

Silver State Bank had about $800 Million of insured deposits with 13 branch banks in Nevada and 4 in Arizona due to the merger with Choice Bank. Silver State Bank had $2 Billion in total assets. Total liabilities were unreported by the FDIC.

I am surprised as bad as the market is in Nevada, yet Silver State Bank is only the second bank failure in Nevada in 2008. The first Nevada bank failure for 2008 was First National Bank of Nevada in Reno which failed in July.

Mortgages going bad whether they be subprime or prime residential or real estate development mortgages will be the backdrop of all bank failures in the coming months.

It’s not over by a long shot!

Good Luck!

UPDATE 9-08-2008: CEO and President Mike Thorell resigned as did the Director, Mark S. Bosco. Soon the Nasdaq is likely to delist Silver State Bancorp. common stock.

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