Silver State Bancorp insolvent; board evaluating wind-down options, including Chapter 7 bankruptcy

By Caroline Salls

Pittsburgh, Sept. 18 - Silver State Bancorp's board of directors has hired special counsel to evaluate the company's options for winding down its affairs based on its current financial condition, according to an 8-K filed with the Securities and Exchange Commission.

Silver State said its options include making a Chapter 7 bankruptcy filing.

As of Sept. 16, Silver State said its primary asset, excluding its investment in Silver State Bank and its investments in Silver State Capital Trusts II, III, IV, V and VI, consisted primarily of $490,000 in cash and cash equivalents.

Meanwhile, Silver State said it had $69.6 million in junior subordinated debt, $575,400 in interest debt and $214,000 of accounts payable debt, rendering the company insolvent.

According to the 8-K, Silver State wholly owned subsidiary Silver State Bank was closed by the State of Nevada Department of Business and Industry's financial institutions division on Sept. 5 and the Federal Deposit Insurance Corp. was appointed as receiver of the bank, triggering an event of default on the company's outstanding junior subordinated debt securities and related trust preferred securities of Silver State Capital Trust V.

Upon the occurrence of the event of default, Silver State said the trust preferred securities of Silver State Capital Trust V became immediately due and payable.

In addition, the appointment of a receiver for the bank has also resulted in an event of default under the terms of the company's outstanding junior subordinated debt securities and related trust preferred securities of Silver State Capital Trust IV, which allows the holders of the trust preferred securities to accelerate the outstanding balance on those securities.

As of Sept. 5, the outstanding balance of trust preferred securities of Silver State Capital Trust IV was $20 million, plus $154,022 in interest.

Silver State said the acceleration of the junior subordinated debt securities relating to the trust preferred securities of Silver State Capital Trust V has also resulted in an event of default under the terms of the company's outstanding junior subordinated debt securities and related trust preferred securities of Silver State Capital Trust II, Silver State Capital Trust III and Silver State Capital Trust VI.

Silver State Bancorp is a Henderson, Nev., holding company for Silver State Bank.

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