UPDATE 3-U.S. regulators seize a bank to bankers

* Silverton had 1,400 client banks, 400 shareholder banks

* Bank partners seen unaffected by the failure

* Soured commercial real estate loans blamed

* Silverton failure will cost FDIC fund about $1.3 billion (Recasts, adds further details, quote on banking impact)

By John Poirier

WASHINGTON, May 1 (Reuters) - U.S. regulators seized Silverton Bank of Atlanta on Friday, a bank that provided services to other banks and the biggest bank failure so far this year, but officials said the impact would be minimal.

Silverton had about 1,400 client banks in 44 states and provided services that included credit card operations, clearing accounts and trading of loans, including the real estate loans that were its undoing.

The Federal Deposit Insurance Corp said it had created a bridge bank to take over Silverton, saying this would allow its client banks to maintain their relationship with the least amount of disruption.

"This is not going to change the financial make-up of any of the institutions doing business" with Silverton, said Mitchell Glassman, who heads the FDIC's resolutions and receiverships division.

Silverton, with about $4.1 billion in assets and $3.3 billion deposits, was the largest failure since Downey Savings and Loan was seized in November with about $12.8 billion in assets.

The FDIC said the failure is expected to cost its deposit insurance fund about $1.3 billion.

Silverton's seizure was the 30th U.S. bank failure so far in 2009 and was followed by news that the FDIC had closed a 31st institution: Citizens Community Bank of Ridgewood, New Jersey with assets of about $45.1 million.

An FDIC official blamed Silverton's collapse on about $1 billion in soured commercial real estate loans.

"Those loans experienced significant losses due to credit quality deteriorating," Pamela Farwig, associate director of the FDIC's receivership unit, told a conference call with reporters.

As a so-called correspondent bank, Silverton did not take deposits directly from the general public nor did it make loans to consumers. It was owned by about 400 shareholder banks, described by the FDIC as mostly small, community banks.

The FDIC said it will hold a conference call with Silverton's client banks on Saturday.

Silverton is one of about 20 U.S. banks that provide services to other banks. Although it is the first such bank to fail, its woes echo those of two wholesale credit unions seized by U.S. officials in March.

Silverton changed its primary regulator from the Federal Reserve to the U.S. Office of the Comptroller of the Currency (OCC) in August 2007 allowing it expand its activities.

During the U.S. housing boom, Silverton began selling pieces of larger loans to smaller bank customers. It created a large loan portfolio that was concentrated in residential construction and development lending, regulators said.

In February, the OCC ordered Silverton to adopt a sweeping restructuring plan. It also demanded the bank lower its loan risk and better manage its earnings, performance and capital.

Silverton announced in late April it received a number of equity investment proposals for recapitalization. It also said FBR Capital Markets & Co was helping it evaluate the proposals as well as other strategic alternatives.

The FDIC said it hired Independent BankersBank of Irving, Texas, to provide operational management at Silverton. (Reporting by John Poirier, additional reporting by Karey Wutkowski; Editing by Tim Dobbyn)