In a year when Federal Deposit Insurance Corp. intervention in banks has skyrocketed, odds are favorable that two North Bay institutions receiving cease and desist orders can be successful in meeting FDIC requirements.

Tamalpais Bank in San Rafael and Sterling Financial Corp. in Spokane, Wash., owner of Sonoma Bank, are just two of 219 banks that have been placed under orders from the FDIC this year.

Of these 219 banks, only 13 percent did not meet the FDIC goals.

Officials at both banks have stated that they are working in full compliance with the FDIC.

“Sterling has been working closely with its regulators since the start of this economic cycle to ensure that we are maintaining safe and sound banking practices. Our agreement formalizes steps that already are underway and that we and our regulators feel are necessary to maintain Sterling’s financial health and its ability to provide high levels of service to our customers and the communities we serve throughout the Pacific Northwest,” said chairman of Sterling’s board, William Eisenhart.

By Dec. 15, Sterling is to have raised $300 million in tier 1 capital, after which the bank is not to have its capital ratio fall below 10 percent, the standard number the FDIC considers an institution to be well-capitalized.

Tamalpais Bank is much smaller than the almost $12 billion Sterling. Its assets were roughly $700 million at the end of the second quarter.

Tamalpais’ requirements from the FDIC include presenting a written capital plan within 60 days. The bank must achieve and thereafter maintain a tier 1 capital ratio of not less than 9 percent and a total risk-based capital ratio of not less than 12 percent by Dec. 31.

The capital plan must include a contingency plan in the event that the bank has not adequately complied with the requirements.

In 2008, there were 142 cease and desist orders given, the majority of which were issued in the second half of the year.

The previous five years saw an average of 65 cease and desist orders per year. Ten banks closed from 2003 to 2005.


American AgCredit will complete its merger with Farm Credit of the Heartland based in Wichita, Kan., effective Nov. 30.

The merger will make the joint association the seventh-largest Farm Credit cooperative in the U.S., totaling $4.8 billion in assets with a combined customer base of 6,430 members. The headquarters will stay in Santa Rosa and maintain the name American AgCredit.

The boards of directors of both organizations released the following statement supporting the merger.

“We believe the combined organization will be financially and operationally stronger than either association individually. Combined, they will be better positioned to deliver competitively priced credit and related services, continue a cash dividend and provide a well-capitalized association that can withstand cyclical downturns, adverse weather conditions or other factors that depress the profits of our members.”

This is the fourth merger since 2000 for the Santa Rosa-based American AgCredit, which has continued to grow its capital and loan portfolio despite the financial challenges in the lending marketplace.

“It is our fundamental goal to ensure that the association remains a safe, well-diversified organization that can meet the needs of a marketplace that is constantly changing. The merger with Heartland will diversify our risk and at the same time strengthens our core structure, allowing us to respond to regulatory and competitive demands more efficiently,” said Ron Carli, chief executive officer of American AgCredit.


Submit items for this column to Jenna V. Loceff at jloceff@busjrnl.com, 707-521-4259 or fax 707-521-5292.