On Aug. 20, Sonoma lost one of its leading community members – Sonoma Valley Bank. It was 22 years old and far too young for its untimely and unnecessary demise. It carried the reputation of being one of the most generous, helpful, caring and supportive institutions in town.
The employees, management and we, the board, were in shock as the FDIC arrived as receivers on that Friday at 6 pm. The executive team and the board had been working for eight months to raise the needed capital and were weeks away from consummating an agreement with an investor. We requested a delay from the Department of Financial Institutions, which was in control, but it chose instead to move forward with closure.
The bank demonstrated that it was stable with good liquidity. It had strong assets, showed a profit in the second quarter of 2010 and was continuing to bolster needed capital ratios. The reserve was healthy and the problem loans (which echoed the real estate collapse in our country) were being addressed. By the end of the fourth quarter we believe we would have satisfied the DFI requirements.
One of the leading attorneys in America's banking industry who reviewed the consent order, our financials and the requests of the FDIC stated: "Never in the history of banking, to my knowledge, has a bank with the capital ratios of Sonoma Valley Bank and with the trends of the bank, been closed by its primary regulator."
The executive team, our employees and the board of directors of Sonoma Valley Bank are devastated with the decision of closure. Our pain for the community, its shareholders and its customers is immeasurable. We all lost a great friend, a generous provider, a caring lender and a leader in both the banking world and Sonoma community. Unfortunately, all of us who held stock in the bank lost the value of that investment on Aug. 20. For that, the board of Sonoma Valley Bank is overwhelmingly sorry for the outcome. It is devastating to each and every one of us, and we feel the pain, as you may, and a numbness that is pervasive.
There's now a new name on our building, and all our employees and the new owner are working hard to make the transition as smooth as possible. It doesn't replace the giant loss however, as we all try to understand the regulator's reasoning and absorb the process.
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Sean Cutting was president and CEO of Sonoma Valley Bank. The article also was signed by Mel Switzer, former president and CEO; board Chair Suzanne Brangham; and directors Dale Downing, Bob Hitchcock, Bob Nicholas, Steve Page, Valerie Pistole and Angelo Sangiacomo.
