'David suffering for Goliath's sins;' also, 2 in top Bauer rank
There are two fewer locally based banks in the North Bay than there were at this time last year.
Tamalpais Bank was shut down by the Federal Deposit Insurance Corp. and purchased by Union Bank. Napa Community Bank, previously under the parent company of Capitol Bancorp Limited of Lansing, Mich., was sold to Rabobank, a Roseville-based community bank.
The changes, which both allowed a larger institution to gain a presence in markets where they saw potential, come as community banks are under increasing pressure from regulators that many say is depressing lending.
“David is paying for Goliath's sins,” said Ray Byrne, president and chief executive officer at North Coast Bank in Santa Rosa.
He said community banks, which traditionally have been given more freedom to operate in the local markets they know best, are being monitored more, required to issue more reports and are subjected to added inspection and examinations.
“Creating more governmental monitoring will eventually cost the consumer more money in the long run to pay for the greed on Wall Street,” he said.
He stressed community bankers are being restrained from working with clients they know. He said the regulators are not seeing the difference between a good business owner with longstanding credit history and a bad loan made by a careless loan officer.
“There is no room to think like a community bank,” he said.
Other financial industry veterans are seeing the same thing.
“When I think of financial institutions and the business owners I deal with and the problem of access to capital, I realize how difficult it is out there,” said Linda Kachiu, partner at Zainer Rinehart Clarke, a CPA firm in Santa Rosa.
“Because of the big guy regulation, the regulators are making lending so hard and it is from the top-level banks that the squeeze is coming from.”
The trend toward fewer local institutions is widespread.
Since the beginning of 2008, 252 banks have been shut down by the FDIC. Each bank was purchased by another institution, many of which have purchased multiple smaller banks.
In comparison, from 2000 to the end of 2007, 27 banks were closed.
In the North Bay, there are several other banks that are under pressure from their regulators, both locally based and banks that just lend here.
Sonoma Valley Bank has been given strict deadlines of when its regulators want to see certain capital ratios as has Sonoma Bank’s parent company, Sterling Financial, based in Spokane, Wash.
Bauer Financial Inc. has been analyzing and reporting on the financial condition of the nation's banking industry since 1983. Bauer gives a rating of zero to five stars to banks based on financial information in quarterly reports.