State banking regulators declared Sandy State Bank insolvent Friday and the institution will reopen May 31 as branches of Zions First National Bank.

George Sutton, state commissioner of financial institutions, said a regulatory exam last February showed the small bank reaching a crisis when its troubled loans equaled more than 200 percent of the value of its capital."No bank in the country has survived from those conditions," he said, noting the small bank owned by several thousand shareholders had struggled since it opened in 1977.

Sandy State's two offices at 140 W. 90th South and 1170 E. 21st South will open Tuesday as branches of Zions First National Bank.

Zions will assume $9 million in deposit liabilities in return for an undisclosed number of the bank's loans and cash from the Federal Deposit Insurance Corp.