Silverton failed: Why did Silverton, N.A. fail?
Silverton failed due to significant loan losses which eroded its capital position and reduced its ability to maintain adequate liquidity. Problem assets centered in Acquisition, Development, and Construction loans and non-owner occupied Consumer Real Estate loans. Silverton's efforts to raise capital were unsuccessful.
Bridge Bank: What is bridge bank, how does
A bridge bank is a new national bank chartered by the Office of the
Comptroller of the Currency (OCC) and controlled by the FDIC in accordance
with section 11(n) of the Federal Deposit Insurance Act.
Creating a bridge bank permits parallel functions to continue.
First, the bridge bank allows client banks to maintain their
correspondent banking relationship with the least amount of disruption.
The Silverton Bridge Bank, N.A. will be the name of the bridge bank.
Secondly, operating a bridge bank allows FDIC's preexisting efforts
to market the bank to continue. Thirdly, operating the bridge bank
time for the failed bank to be liquidated in an orderly fashion if marketing
efforts are unsuccessful.
Bridge Bank closed: How long will the bridge
bank be operational and what happens when it is closed? Will it be
Silverton Bridge Bank, N.A. will be operational for a period of time sufficient
to allow client banks to transition correspondent services. When the bridge bank is ultimately terminated, no additional
services will be offered by Silverton Bridge Bank, N.A. Current asset
portfolios will be serviced, managed, and marketed through the
Level of Service: Will my bank continue
to operate at the same level of services as provided before? Will you
continue to provide these services as expected by my customers?
Silverton Bridge Bank, N.A. will continue to operate correspondent services
in a business as usual manner. However, loans
and other assets will be handled by the Receiver as per FDIC policies.
Communication Plan: How do you plan to communicate with the client banks about the status of this closing?
The FDIC’s plan to communicate with Silverton’s client banks
is as follows:
- A press release (www.fdic.gov/news/news/press/2009/pr09061.html) has been prepared to discuss the closing
of Silverton Bank, N.A.
- A conference call is scheduled for Saturday,
May 2, 2009, at 3:00pm EST. The affected customers have been notified of the number
to call. Please refer to the Silverton
Bank, N.A. Conference Call Agenda for details.
- If you were unable to dial-in, a replay of the call
can be accessed by calling 1-800-867-1927. The replay will
be available 1 hour after the conclusion of the conference
call. The 1-800-867-1927 number will be operable
until 3:00pm EST May 8, 2009. This is a call for
clients of Silverton Bank and is not meant for the media. If
representatives of the press access this replay, there
should be no attribution or use of this information in any
of your reporting. If you have any questions regarding media
issues, please contact David Barr at (202) 898-6992 at
written transcript is also available.
- We have created a web site where you may submit
questions at any time. You may submit your questions by clicking the following
Silverton's failures impact on other banker's bank: What impact, if any, do you think Silverton's failure will have on the remaining banker's banks?
Since the FDIC created the bridge bank to take over Silverton Bank operations,
there is not expected to be any meaningful impact on Silverton’s
clients or the other banker’s banks. While FDIC continues to
market Silverton, operating the bridge bank allows correspondent services
provided to client banks to continue without disruption.
What will happen to the holders of subordinated
debentures issued by Silverton Bank? What will happen to my
investment in Silverton stock?
Holders of subordinated debt of Silverton Bank, N.A., will
need to file a claim with the FDIC as Receiver for Silverton
Silverton Stocks: What will happen to my
investment in Silverton Financial Services, Inc.?
All the stock of Silverton Bank, N.A., was owned by the bank holding company,
Silverton Financial Services, Inc. Shareholders of equity stock, trust
preferred securities, and subordinated debt of Silverton Financial Services,
direct inquiries to:
770-867-9111 – Office
Company debt: How will my company's debt, stock loans and/or borrowings be disposed of?
Bank stock loans will be independently reviewed and each borrower will
be contacted to determine the various options available to them and the
FDIC. The Receiver does not intend to package these loans to sell; however,
it will continue to manage them until they are resolved.
The receiver’s role is to maintain integrity and loan values in order
to return the loans to the private sector as quickly as possible
(with the exception of the bank stock loans). The process includes
packaging the loans and offering them for sale. Typically the marketing
process is completed several months after a bank’s failure.
UPDATE: The Receiver is charged with winding up the affairs of the failed institution and disposing of the failed institution's assets in a cost-effective and time-efficient manner. 12 U.S.C §1821(c)(2)(A)(ii). After careful consideration, the FDIC, as Receiver of Silverton, is now evaluating final resolution options for this portfolio that may likely include an Asset Marketing initiative and ultimate sale of this portfolio
Continuation of services: Have arrangements
been made to provide for a continuation of services and/or disaster
Silverton Bridge Bank, N.A. will continue to provide correspondent services
in a business as usual manner. Please continue to use your customary account
manager for guidance on how to address your specific needs.
Working with the same Silverton representative: Will
we continue to work with the same person we did prior to resolution?
Yes. The bridge bank will continue to employ key personnel
during its tenure.
Customer communication: What communication
is going to be provided that I can give my customers?
See the answer to question 5 above.
Discontinuing use of Silverton's name:
Do we need to discontinue the use of anything bearing Silverton’s
You can continue to use anything that bears the Silverton name. Silverton
Bridge Bank, N.A. will maintain Silverton Bank ’s
New correspondent relationships: What guidance
is available regarding the procedures and requirements to establish
a new correspondent relationship? How do I find out
if a particular
correspondent may be at risk of resolution?
Guidance on obtaining correspondent services is provided on the Federal
Reserve Board’s website (www.federalreserve.gov). The FDIC does not
comment on open, insured financial institutions.
Bank funds at risk: Are any of our bank
funds at risk?
Silverton Bridge Bank, N.A. is a newly chartered institution. The FDIC
is the sole shareholder, and insured deposits continue to be
Returned deposit items: Will the process
I use to receive my RDI Cash Letters (Returned Deposited Items) be changed?
TBB Connect will remain active and processing cash items and
return items will remain unchanged.
Using TBB Connect/ACH origination: If I use
TBB Connect today for ACH origination will I continue to use this
TBB Connect will remain active and can be used to initiate ACH transactions.
All warehoused and in-process ACH transactions will settle as scheduled.
Routing number change: Will any routing
Silverton Bridge Bank, N.A. will use the same ABA routing number
as Silverton Bank. Silverton Bridge Bank, N.A.
Continuation of wires: Will Silverton
continue to do wires or will member banks need to perform this
During its tenure, Silverton Bridge Bank, N.A. will continue to initiate
and process wires.
Clearing account: Do I need to move
my clearing account?
During its tenure, the bridge bank will continue to provide this service.
At the same time, FDIC is continuing with efforts to market the Silverton
Bank N. A. franchise over the next few weeks. If the marketing efforts
are unsuccessful, the bridge bank will continue to operate to allow sufficient
time for client banks to transition services to another institution in
an orderly manner. Currently, client banks can begin evaluating potential
providers for correspondent services.
ACH changes: What will change with ACH,
ACH settlement, rejects?
During the tenure of the bridge bank there will be no change
to ACH processing.
Silverton reports: How do I get reports and
other output previously provided by Silverton?
Account Information reporting will continue to be accessible via
TBB Connect. Daily, weekly and monthly Account Summary statements
will be available. Customized Cash Letter Availability Reports
will continue to be available to all clearing customers via TBB
Connect. Silverton Bridge Bank, N.A. will provide balance confirmations
needed for your financial institution’s internal and external
Customer changes: What changes will my customers
see (statements, notices, etc.)?
There should be no change since Silverton Bridge Bank, N.A. will continue
operate all systems of Silverton Bank.
Pass-through reserves: Will my pass-through reserves for the current week be credited?
Yes. The bridge bank enables the FDIC to continue providing this service to
Originating credit/debit: Through Silverton
Bank, I am an originator of credit/debit ACH services for clients. Will those
occur on a timely basis on Monday?
Yes. Silverton Bridge Bank, N.A., operations will continue to operate these
services business as usual.
Deposit broker: I am a deposit broker
or I have brokered deposits. What do I need to do?
Depository Trust & Clearing Company (DTCC) brokered deposits
will be paid out directly by the FDIC. Brokers will not need to
provide documentation to the FDIC. If you are a DTCC participant
broker, you must contact DTCC with any questions. If you are a
customer who has a Silverton Bank, N.A. deposit through a
broker, you must contact your broker with any questions.
How will Fed Funds be paid: How will
I be paid for the Federal Funds sold to Silverton Bank (as principal)?
Will this include interest through repayment date?
Silverton Bank terminated purchasing unsecured Federal Funds
for internal use effective April 28, 2009. Any Federal Funds
purchased remaining on Silverton Bank's books was deposited into
the client bank's DDA on April 29, 2009. Silverton Bridge Bank,
N.A. will not re-offer this product.
Silverton Bridge Bank, N.A. will continue accepting Federal
Funds from client banks and selling those funds to your approved
upstream purchasing banks.
Federal Reserve arrangements: If I am not
paid immediately for my Federal Funds sold, have any arrangements
been made with the Federal Reserve for short term borrowings
by the respondent banks?
No. All monies, including interest have been deposited by Silverton Bank,
into your account on April 29, 2009.
Purchasing Fed Funds: Will I be able to
purchase Federal Funds and how? Will my agent Federal Funds continue with
interest? On Monday, will my Federal Funds credit line be available?
Silverton Bridge Bank, N.A. will not purchase Federal Funds from client
banks. However, we will continue to sell funds to clients who
have established lines of credit from the former Silverton
Bank, N.A. We discontinued the agent agreement
effective April 28, 2009.
Honoring purchase/sale commitments: I
have a pending purchase/sale of securities that are to be settled
on Monday. How will the commitment be honored? Will we continue
to buy bonds the same
way after resolution?
If securities trades have not yet settled, we expect to complete the settlement
of those trades. Also, at present we do not anticipate any changes in the
way trades are settled. If a customer needs to put on new trades, we expect
to do so as needed, during tenure of the bridge bank.
SAFEKEEPING AND BOND ACCOUNTING
Length of bond accounting and safekeeping services:
How long will the bridge bank provide bond accounting services
and safekeeping services?
All accounting and correspondent services will be business as usual during
the tenure of the bridge bank.
Payments on participating loans: Will investors
continue to receive their share of payments collected
on participated loans?
Silverton Bridge Bank, N.A. will continue to service participated loans and provide the downstream payments to the participants using the client banks' clearing account. Investors will receive their share of the payments without interruption.
Advances on loans: Will advances be
allowed (and under what circumstances) for any loans (personal
All requests for the advance of funds will be reviewed individually to
determine the current status of each loan, the reason for the advance,
determine if all inspections have been completed to verify work performed
as billed, and all necessary documentation is current.
Proportionate share on advances: If advances
are allowed, will the proportionate
share be requested from an investor in that loan?
Yes, the Receiver will only address any unfunded portion that was a commitment
on the part of Silverton.
Collection efforts: For any litigation efforts
Silverton is currently involved in, will those efforts continue and under
Any current or pending litigation actions initiated by Silverton
Bank, N.A., may be stayed for up to 90 days. This will allow
time to review each situation on a case-by-case basis.
Maturing loans: On loans reaching maturity
that have a good pay record, and that we have agreed to renew in
the past – what
process do we follow for them?
The Receiver will independently review any request for an extension at
Promissory note with different pricing scenarios:
If a promissory note states that a client can convert part of their
note to a different pricing scenario, i.e. variable to fixed under
do we honor such requests or is there a process to follow to process
The Receiver and Silverton Bridge Bank, N.A. will maintain the same process
established by the bank with respect to adjustments to rates if
the terms of
the note allow for the adjustments and all other terms of the note
have been maintained in a current status.
Credit bureau reporting: Will
credit bureau reporting continue and if so, under what entity?
The Receiver does not report to credit bureaus. However, Silverton Bridge Bank, N.A, will continue to report to credit bureaus.
Silverton Bank, N.A. participation: Will Silverton Bridge Bank, N.A. honor a commitment that Silverton Bank had on a loan participation that will close soon?
Each transaction will require independent review; however, it is likely
that if a loan has not been booked on the records of Silverton
Bank, N.A., prior to closing the Receiver will not advance funds for any
Funding for unfunded loan portion: Will
funding continue on the unfunded portion of a client bank's loan?
Requests for additional funding will be addressed immediately. FDIC will
conduct a thorough analysis and may require additional information to perform
its analysis and make a fact-based decision. Such information can include
current financial statements and recent tax returns from borrowers and
guarantors, and third party reports such as feasibility studies, market
analyses, and appraisals. All requests will be reviewed individually to
determine the loan status, the reason for the advance, and whether the
funding is in the best interest of the receivership. FDIC will discuss
funding decisions with participants.
Card program customer service: Who will
perform Customer Service support for my Card program?
There will be no changes to customer service support. Employees will continue
to field customer service calls 8am – 6pm, and service partners will
continue to provide customer service during non-banking hours.
Card program incentives: Will monthly/quarterly
incentives on the card program continue as normal?
Yes. There will be no changes to incentives.
Card program feature changes: Will any
of the card program features change (e.g. rewards)?
There will be no immediate changes to card program features. Program features
will be reviewed by the FDIC as Receiver. There may be changes once the
card program is sold to another card issuer.
Contact for card program accounts: Who will
credit card clients contact for questions about my credit card program/accounts?
Continue to use the contact information previously provided.
Market the credit cards: Can client banks continue
to market the credit cards to new customers?
Yes, you may continue to market cards to your customers.
Re-issuing cards: Will client banks need
to re-issue anything?
There is no need to re-issue cards at this time. The FDIC plans to sell
the portfolio and the next issuer will then issue new cards.
Visa/MasterCard sponsor: Silverton Bank, N.A.
was my principal sponsor for MasterCard or Visa. Will the cards continue
Yes. The FDIC has made arrangements with MasterCard and Visa to ensure that
the cards will continue to function.
Gift cards/travel cards value: Will the cards
that I have issued to customers (gift cards, travel cards) still
Prepaid cards will continue to have value.
Outstanding card stock: What should be done
with the outstanding card stock that I have on hand that has
not been sold?
Continue to secure the card stock using previously established guidelines.
Once a final determination is made on the prepaid program additional information
will be provided.
Continue to sell cards: Can the client banks
continue to sell cards?
Yes, you may continue to sell cards and forward the funds as previously
Ordering more cards: Can more cards be ordered
and has the process changed?
Yes. The credit card program will continue to operate business as usual.
Card issuer going forward: Who will the
issuer of cards be going forward?
The process is just beginning, so we have no information at this time.
Replacing existing cards: Will any existing
cards in customer hands require replacement?
No. Expired cards will be replaced through the normal