Article
Friday, April 17, 2009 9:24 PM ET
Inadequate capital, mounting loan losses lead to Great Basin
Bank of Nevada failure
By Tim Zawacki
Zions Bancorp. unit Nevada State Bank will assume all deposits of Great Basin Financial Corp. unit Great Basin Bank of Nevada after the Nevada Financial
Institutions Division closed the Elko, Nev.-based bank and appointed the FDIC receiver.
The Nevada regulator cited inadequate capital and mounting loan losses for its action. Regulatory data indicates that Great Basin Bank reported a net loss of
$11.6 million in 2008, and it ended the year with a Tier 1 ratio of 3.16%, a total risk-based capital ratio of 4.45% and a leverage ratio of 2.04%. Asset quality
deteriorated sharply over the course of 2008, and Great Basin Bank's ratio of noncurrent loans (representing loans 90-plus days past due or in nonaccrual
status) to total loans was 7.10% as of Dec. 31, 2008, up from 2.52% on the same date in 2007.
According to the FDIC, Great Basin Bank had total assets of $270.9 million and total deposits of $221.4 million as of Dec. 31, 2008. Nevada State Bank will
assume all deposits, regardless of whether they are insured or uninsured. It will also purchase approximately $252.3 million of Great Basin Bank's assets, of
which $143.4 million will be included as part of a loss-sharing transaction between Nevada State Bank and the FDIC. The FDIC will retain the remaining
assets for later disposition. The failure is estimated to cost the FDIC's Deposit Insurance Fund $42 million.
Great Basin Bank of Nevada is the 25th FDIC-insured institution to fail in the nation in 2009, and the
date in 2009 in Nevada, following the Feb. 27
closure of Security Savings Bank.
second to fail April 17. The failure is the second to
Source: S&P Global Market Intelligence | Page 1 of 1