SONOMA -- Sonoma Valley Bancorp (Bulletin Board: SBNK), the the parent of Sonoma Valley Bank, this afternoon said it expects to significantly expand its third-quarter and nine-month reported losses following a regulatory review of bank filings.
Federal regulators, after reviewing filings for the quarter, advised the bank's board of directors to expand loan and lease loss provisions because the value of underlying collateral had declined with the economy.
Sean Cutting, bank president and chief executive officer, said the problem largely comes from "a small number of relationships."
"As is the case with many other community banks, we are facing the challenges of the current economic environment, particularly its impact on the commercial real estate sector," he said.
On Monday, Tamalpais Bancorp reported a nearly $38 million loss for 2009 because of a greatly increased provision for loan losses, particularly from commercial real estate.
Mr. Cutting added that the "conservative" adjustment to the Sonoma Valley Bancorp's third-quarter financial statements would be not be repeated.
"We do not believe that these actions will require any material adjustments beyond the third quarter of 2009 and we look forward to resolving these issues so that we can resume our growth and continue to serve the needs of our customers and community," he said.
Revised financial statements to be resubmitted by March 31.
At the request of the Federal Deposit Insurance Corp., the bank also is working on preparing a capital-restoration plan and comply with certain restrictions on asset growth, acquisitions, dividends, management fees and any other capital distributions.
The bank is expanding its third-quarter loan and lease loss provisions for its third quarter, which ended Sept. 30, to about $24.5 million from $2.6 million, based on regulatory review of the bank's quarterly statement. The provision for the first nine months of 2009 would be increased to $29.3 million from $7.4 million.
Based on that revised valuation of the bank's loan and lease portfolio, interest income for them is expected to decrease to about $4.4 million from $4.6 million for the quarter and to approximately $13.3 million from $13.5 million for the first three quarters.
Net interest income is projected to be revised to $3.6 million from $3.8 million for the third quarter and to $10.8 million from $11.0 million for the nine-month period.
That would expand the quarterly net loss to $19.0 million from $495,000, or $8.27 per common share rather than the previously reported 22 cents a share.
Net loss for common stockholders would increase to $20.1 million for the first nine months of 2009 from $1.6 million, and the loss per share to $8.75 from 70 cents .
Loans and lease financing receivables, net of unearned income, is expected to be revised to $270.9 million from $286.0 million. Adjusted total assets would be $335.6 million, rather than $354.2 million.
On top of that, allowance for loan and lease losses will be $12.8 million instead of $6.0 million.
As a result of these revisions, third-quarter total shareholders' equity would be $18.5 million to $19.2 million rather than the previously reported $37.7 million.