Silver Falls Bank, based in Silverton, Oregon State in the US is the latest bank to be closed by the US Regulators, falling prey to the deteriorating financial turmoil in the world's largest economy, the US. This is the 14th bank to be closed by the US Financial Regulators in this year.
On Friday, the Oregon Department of Consumer and Business Services closed the Bank and named the Federal Deposit Insurance Corporation, or FDIC, as the Receiver. As as is the case with regard to closure of financial institutions, public have not been intimated through advance notice regarding the closure of the Silver Falls Bank.
The FDIC has stated that at the end of February 9, Silver Falls Bank had $131.4 million in assets and $116.3 million in deposits. Heavy dependence on commercial construction loans, which, of late, have been not performing or turned bad, forcing the FDIC to acquire the bank.
Another Bank in the Oregon State, Citizens Bank of Corvallis has agreed to assume deposits from Silver Falls Bank.
FDIC further stated that all the three offices of Silver Falls Bank would open on Monday, 23 October 2009, and conduct normal business activities in the name of Citizens Bank. The automated teller machines will be functioning normally and the customers need not panic, the FDIC added.
The recent closure of the Silver Falls Bank will cost an estimated $50 million to the FDIC deposit insurance fund, FDIC added.
The turmoil in the financial industry, triggered by the sharp fall in home prices, has taken a heavy toll on the economy. As many as 25 banks were acquired by the FDIC in the year 2008, compared to a mere 3 banks in the year 2007, which mirrors the pain in the financial sector.
Severe liquidity issues and escalating mortgages have been attributed as primary reasons for the failure of the banks, and there is no discrimination between the big banks and small banks in this turmoil. Seattle-based Washington Mutual, considered to be one of the biggest banks in the US, also fell prey to the crisis and was forced to close down in September 2008.
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