FDIC suing former Silver State Bank executives

Four former bankers from Silver State Bank were grossly negligent and approved Arizona and Nevada land loans in violation of the bank’s lending policies that ultimately caused the bank’s failure, according to a lawsuit filed by the Federal Deposit Insurance Corp. in February. Silver State was based in Henderson, Nev., but had four branches in Arizona. The FDIC is suing for $86 million tied to losses incurred by Silver State as a result of what the agency described as risky land loans made to developers in Arizona and Nevada. Regulators accuse the bank’s CEO and chairman, Corey Johnson, and ex-Vice President of Real Estate Lending Douglas French, of hiring a loan officer, Timothy Kirby, who had no experience in credit analysis or appraisal review. The lawsuit paints a picture of a Phoenix banker who sought help from his superiors and became increasingly desperate when he couldn’t get the professional training he needed. Despite that knowledge, he continued to collect lucrative commissions on the land loans he made. Former Senior Vice President Gary Gardner was an experienced loan officer at Silver State Bank, but continually violated the bank’s policies in his lending practices, the FDIC alleged in its complaint. Loan officers also were rewarded with hefty commissions, usually about 10 percent, on the bank’s fee income for all loans they originated. That created a culture that put profit before sound underwriting practices, regulators alleged.

Click here to view this article from its source.