Nevada Commerce Bank in Las Vegas has failed and its deposits and branches are being taken over by City National Bank, the state Financial Institutions Division said today.
"Due to inadequate capital and mounting loan losses, it was necessary to close Nevada Commerce Bank and appoint the Federal Deposit Insurance Corp. as receiver," said state Financial Institutions Division Commissioner George Burns. "We are committed to protecting the public interest and ensuring that Nevada’s banking system continues to be fundamentally safe and sound."
Nevada Commerce Bank lost $5.4 million last year, records show. It generated $6 million in interest and fee income on loans, but was hurt by $2.2 million in loan and lease losses and $1 million in losses on real estate it was holding.
The losses left the bank with just $3.4 million in equity capital at year end, down from $8.5 million at the end of 2009.
In October, the FDIC made public an order requiring the bank to improve its finances and the bank said it was working on a capital infusion at the time.
Today's failure is the first of a bank in Nevada this year.
Other banks with Southern Nevada operations that closed during the recession included Southwest USA Bank, Sun West Bank, Community Bank of Nevada, Security Savings Bank, Silver State Bank and First National Bank of Nevada.
As of Dec. 31, Nevada Commerce Bank had loans and other assets of about $144 million and deposits of about $136 million. Nevada Commerce Bank had two branch offices in Las Vegas.
"Nevadans can be confident that their deposits are safe," said Burns. "Deposits are insured by the FDIC for up to $250,000 per depositor, per insured bank, for each account ownership category. All deposits of Nevada Commerce Bank will be assumed by City National Bank."
The FDIC said that in addition to paying a premium of 0.71 percent to assume all of the deposits of the failed bank, City National Bank agreed to purchase essentially all of the failed bank's loans and other assets.
The FDIC and City National Bank entered into a "loss-share" transaction for Nevada Commerce Bank's assets. City National Bank will share in the loan losses on the asset pools covered under the loss-share agreement.
"The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector," the FDIC said.
In a statement, City National Bank said: "This acquisition underscores City National’s commitment to Nevada, while further enhancing its ability to serve a greater number of entrepreneurs, professionals and small and mid-size businesses in Las Vegas."
Customers of Nevada Commerce Bank may phone the FDIC at 1-877-275-3342 for additional information about their deposits and the receivership of the bank.
Nevada Commerce Bank customers will continue to have access to banking services over the weekend, and normal business hours and access to banking services will continue on Monday as branches of City National Bank.
Over the weekend, Nevada Commerce Bank’s depositors can access their deposits 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.