It looks like Andrew McCain got out just in the nick of time.
McCain 46, the son of GOP presidential nominee John McCain, resigned as a director of troubled Silver State Bank and its parent company, Silver State Bancorp, on July 26, citing “personal reasons” – just five weeks before regulators shut down the federally-insured bank.
Regulators announced Friday that they had seized the Nevada bank and sold it, blaming its failure on soured loans in commercial real estate and land development, mainly in Los Vegas.
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Andrew McCain had served on the company’s three-person auditing committee since joining the board in February, 2008, but there is no indication he committed any wrongdoing, or that his father had any knowledge or involvement in the bank’s difficulties
Still, his involvement in a failed bank is politically awkward for his father’s campaign since it conjures memories of John McCain’s role in the 1980s savings and loan scandals when he was accused of improperly aiding Charles H. Keating, Jr., chairman of the failed Lincoln Savings and Loan Association.
After a lengthy investigation, the Senate Ethics Committee cleared John McCain of impropriety, but chastised him for exercising poor judgment in helping Keating. Three other senators – Alan Cranston, Dennis DeConcini, and Donald Riegle – were found to have improperly interfered with a federal investigation.
In Andrew McCain’s case, he had been appointed to the boards of Silver State and its holding company in February, and resigned five months later. Silver State issued a July 26 press release announcing his immediate resignation for “personal reasons.”
Only a week afterward, the company announced a $62.7 million net loss for the second quarter of the year – along with the resignations of its CEO and chairman, Corey Johnson and Bryan Norby, both of whom had co-founded the bank in 1996.
The bank said in a subsequent regulatory filing that its second-quarter net loss was actually more than $10 million higher than what it had originally announced. It also said in the filing that its worsening financial condition meant there is “uncertainty about the company’s ability to continue as a going concern.”
The holding company has 13 bank branches in Southern Nevada and four around Phoenix.
Silver State had $1.7 billion in deposits, according to the Las Vegas Review-Journal. Nevada State Bank is taking over the deposits insured by the Federal Deposit Insurance Corp., leaving $20 million in uninsured deposits, which may not be wholly recovered. Silver State became the 11th federally insured bank to fail in 2008.
A Wall Street Journal story looking into Andrew McCain’s sudden exit suggested he had resigned at the urging of those who felt his position on the board could become a liability in his father’s presidential bid. The younger McCain, who is CFO of Phoenix-based Hensley & Co., the distributorship owned by his stepmother Cindy McCain, had also recently agreed to lead the Greater Phoenix Chamber of Commerce, and had concerns about balancing his responsibilities, according to the Journal .
In any case, he was not the first to leave the beleaguered bank.
Douglas French, then the executive vice president of commercial real estate lending, had resigned in May, also citing personal reasons. French is an associate editor of the conservative Liberty Watch magazine, which counts Bill O’Reilly and John Stossel among its contributing writers.
The younger McCain, who is one of two sons from his father’s first marriage, had previously served as a director of Choice Bank in Scottsdale, Arizona, from 2006 to April 1, 2008, when it was acquired by Silver State Bancorp
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