Silverton impact spreads far and wide - Atlanta Business Chronicle:

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The failure of the nation’s largest bank for banks will have wide-reaching implications for banksw acrossthe country. Silverton’s business, unlike typical banks, courted only other banks, not individual customers, and failure will impact other bankz balance sheets in a myriad of from now-worthless stock to loans that will be re-solx to investors at an unknowh point in the future. “You’re going to see the fallouy almost immediately,” said Mark Kanaly, a banking attorney with . The firsft impact will be customersfleeing Silverton.
The has arranged for the institutiohn to operate temporarily for the next 60 with the possibility of a 30 day Customers are being encouraged to move as much of their custome relationships as possible to otheercorrespondent banks, which could begin as soon as The next pinch will be from Silverton’s now sourerd bank stock and other investments tied to the leading to possibly largde write-downs for some banks. Its shareholder base, estimated at 400 to 500 banke in Georgiaand elsewhere, are effectively wiped out by the While many banks throughout fourth quarter 2008 and firsyt quarter 2009 reported write-downs of the value of the stock they ownede in Silverton, not all did.
Analysts widely expect second quarter results for somebankw -- Silverton’s total investor base is not yet knownj -- to include significant writedowns on the stock owned, with announcemen trickling out in the next 60 days about the failure’xs impact. Other investments are no less Subordinated debt holders have been asked to file a clainm with the FDIC on the amounty oftheir debt, while trust preferred securities and commohn stock holders are required to . The longer-termj effects may be how regulatorsehandle Silverton’s assets, including loans, which total $4.1 billion. The FDIC’sx sale of those assets may place banks in relationshipsthey didn’tt expect.
Silverton’s loans for stock purchases and bank holdin company debt will be managed by the andnot re-sold. But the rest of the bank’s just like any other bank failure, have been assumexd by the FDIC for later Those are primarily loan or chunks of larger loans sold to customer bankas insmaller pieces, mainly for constructioh and land development. Silverton served as the lead bank on many of thosdeloan participations, now making the government the overseer of thosr loans. The FDIC will review all issues relatedc to participations on an individual and banks will be uninterrupted in receiving theidr respective payouts onthose loans.
If a portionb of a loan is currently unfunded, but scheduled to be, the FDIC will review whether that payout is in the best interest of the But ultimately, most loans will be packaged and sold by the FDIC to third-parthy purchasers, as it does for the assetz of any other bank that fails. “This is goingy to make second quarter an even tougher one forsmalletr banks,” Kanaly said.