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* Silverton had 1,400 client banks, 400 shareholder
banks
* Bank partners seen unaffected by the failure
* Soured commercial real estate loans blamed
* Silverton failure will cost FDIC fund about $1.3
billion (Recasts, adds further details, quote on
banking impact)
By John Poirier
WASHINGTON, May 1 (Reuters) - U.S. regulators
seized Silverton Bank of Atlanta on Friday, a bank
that provided services to other banks and the biggest
bank failure so far this year, but officials said the
impact would be minimal.
Silverton had about 1,400 client banks in 44 states
and provided services that included credit card
operations, clearing accounts and trading of loans,
including the real estate loans that were its undoing.
The Federal Deposit Insurance Corp said it had
created a bridge bank to take over Silverton, saying
this would allow its client banks to maintain their
relationship with the least amount of disruption.
"This is not going to change the financial
make-up of any of the institutions doing
business" with Silverton, said Mitchell Glassman,
who heads the FDIC's resolutions and receiverships
division.
Silverton, with about $4.1 billion in assets and
$3.3 billion deposits, was the largest failure since
Downey Savings and Loan was seized in November with
about $12.8 billion in assets.
The FDIC said the failure is expected to cost its
deposit insurance fund about $1.3 billion.
Silverton's seizure was the 30th U.S. bank failure
so far in 2009 and was followed by news that the FDIC
had closed a 31st institution: Citizens Community Bank
of Ridgewood, New Jersey with assets of about $45.1
million.
An FDIC official blamed Silverton's collapse on
about $1 billion in soured commercial real estate
loans.
"Those loans experienced significant losses
due to credit quality deteriorating," Pamela
Farwig, associate director of the FDIC's receivership
unit, told a conference call with reporters.
As a so-called correspondent bank, Silverton did
not take deposits directly from the general public nor
did it make loans to consumers. It was owned by about
400 shareholder banks, described by the FDIC as mostly
small, community banks.
The FDIC said it will hold a conference call with
Silverton's client banks on Saturday. Continued...
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