SILVERTON - Citizens Bank of Corvallis took over the failed Silverton-based Silver Falls Bank on Friday after Silver Falls officials announced that bank had become insolvent.

State officials said the bank will reopen Monday under Citizens Bank's management. Citizens Bank is taking over Silver Falls' branches in Silverton, Salem and Oregon City and buying about $13 million in assets, including cash, securities and overdraft loans.

All deposits will be available. Over the weekend, customers will continue to have access to their money through automated teller machines.

Oregon Bankers Association President & CEO Linda Navarro said Friday in a press release that although the closure of Silver Falls Bank was unfortunate, "the fact that there are strong, healthy local banks like Citizens Bank in a position to step up and purchase all of the bank's deposits is good news -. The customers of Silver Falls Bank will enjoy the sound, community-oriented banking services delivered by Citizens Bank."

Citizens Bank, founded in 1957, already has 11 branches in the mid-Willamette Valley.

Silver Falls Bank was the 14th federally insured institution to fail this year. It's a community bank with branches in Salem and Oregon City that opened in May 2000. It had $131.4 million in assets and $116.3 million in deposits as of Feb. 9. Pinnacle Bank of Beaverton was closed by federal regulators earlier this month. It was the first Oregon bank to fail since 1991.

The Federal Deposit Insurance Corp., appointed receiver of Silver Falls Bank, will retain the bank's remaining assets. The FDIC estimated that the cost of Silver Falls Bank's failure to the federal deposit insurance fund will be $50 million. Regular deposit accounts are insured up to $250,000.

David Tatman, administrator of the Oregon Department of Consumer and Business Services Division of Finance & Corporate Securities, said Silver Falls Bank's problems resulted primarily from a heavy dependence on commercial construction loans, many of which were of poorer quality and were not performing or being repaid when the economy deteriorated.