Gorham will manage new Rabobank branch

Posted on October 12, 2010 by Sonoma Valley Sun
The branch at 10 Maple St. will be the county’s first.

One of the financial institutions that bid on the failed Sonoma Valley Bank will soon open its own branch in Sonoma. Rabobank N.A plans to be open for business at 10 Maple Street before the end of the year.

Cathleen Gorham has been named branch manager, according to Andy Frokjer, the company’s director of communications. She had served as chief operating officer at Sonoma Valley Bank.

“The aim is to hire locally,” he said. “We’re looking for people who know the community, and the community knows them.”

The branch, between Broadway and First St. W., will be the firm’s first in Sonoma County.

“Rabobank has wanted to expand our presence in the Wine Country for some time,” said CEO Ronald Blok in a statement.

Rabobank N.A. is a California-based subsidiary of the Netherlands bank. It has 120 braches statewide, primarily in rural areas with a strong agricultural base.

“Our community banking and agricultural heritage are a perfect fit for Sonoma,” Blok said.

With its May acquisition of the Napa Community Bank, the Rabobank Group has a lending portfolio of more than $500 million, primarily to wineries and others in the food and agribusiness industry, he said.

In August, the bank bid to the FDIC on three failed banks. While it did not acquire Sonoma Valley Bank (now Westamerica), it was successful in obtaining nine branches of the former Pacific State Bank, based in Stockton, and 14 branches of the former Butte Community Bank, based in Chico.

The bank is also slated to open two new branches in Bakersfield and one each in Visalia and Tulare later this year.

“Our long-term strategy is to grow our branch network in California,” Said Blok. “Because of our financial strength, we are able to do so even during these challenging economic times.”

Rabobank, N.A. has assets of more than $11 billion and had a capital ratio of 16.20 percent as of June 30, 2010. Federal regulators consider banks well capitalized when the ratio is 10 percent or greater.

“We are proud to say that we are well capitalized and can meet the lending needs of our customers without government assistance,” said Blok. “Our reputation as a safe, sound and secure bank is built on conservative policies and prudent decision-making.”

Frokjer said the bank supports the activities of local non-profit and civic organizations through donations and sponsorships.

5 thoughts on “Gorham will manage new Rabobank branch

  1. Now that former President/CEO Sean Cutting signed on announced October 15th, there is an interesting dynamic going on with Gorham managing and her former superior officer Cutting working out of the branch. I understand their job levels are such that there is some tension among who manages/outranks who.

    Funny they (Gorham and Cutting) were said to have marketed themselves as a package to another bank expected to come into The Valley with a new office soon and that also bid on the failed Sonoma Valley Bank where they both hail from. However, this deal doesn’t appear to have been a package from the outside perspective as Gorham led the way and now with Cutting coming onboard and the tension jockying for position seems otherwise.

    My guess is Gorham manages the customer service staff and operates the branch, and Cutting will report to some regional commercial/agri-business development unit out of say Napa or other regional hub and just use the Sonoma office as a place to meet with prospects or close loans.

    Rumor has it another of the former lending staff from SVB is petitioning Cutting to bring them onboard despite the fact they already committed to another institution and has enjoyed big color ads announcing their affiliation after fleeing Westamerica Bank just 4-6 weeks ago evidently missing their old “clique” from SVB.

    Its beginning to look like a Class Reunion at RaboBank in Sonoma except Gorham is from “The Other Valley” (Napa) I believe, and not Sonoma.

  2. I still find it puzzling that Sonoma Valley Bank where both Cutting and Gorham worked for approx the last decade, only had 1% of assets invested in Agri-Business loans which is RaboBank’s primary market. Further, RaboBank typically goes for much larger loan size and customers than SVB serviced so it doesn’t seem to me their book of business they might bring over would be a match?

    SVB customers were often referrals from shareholders or fleeing from other large banks disgruntled about the lack of personal customer service. The vast majority of Sonoman’s also despise large corporate businesses (Starbucks, Franchises, WalMart, Casinos, etc.) so the fact that RaboBank is large and is foreign owned doesn’t fit the business model either?

    Don’t get me wrong, I am a big fan of RaboBank and wish them nothing but success in the niche they operate in namely the larger Agriculture and Agri-Business sector (vineyard owner-operators and Wineries and suppliers thereof) but any way you slice it, they are not catering to the consumer and small retail markets as SVB did previously.

  3. While trying to analyze about how Gorham was involved and shared in the failure of SVB reminds me as Chief Operations Officer (COO) she likely was involved as BSA Officer or even Ethics Officer. Most banks share similar Corporate Governance structures. SEC Proxy Statement May 2010 indicates Director Hitchcock was Chairman of the Audit Committee and designated the “Financial Expert” (which we will come back to later), Downing, Nicholas and Pistole round out the Committee. The funny thing is Pistole is the only member of this committee and at least of all the Directors being nominated who “graduated” from the California Independent Bankers Association Directors Certified program which means she was considered to have had a proficiency in corporate governance, compliance, command of fiduciary responsibility and the like. Yet none of the other Directors had the requisite training. Seems to me the entire Board and Executive Management team would have benefitted from a little training and better understanding of their responsibility then they might have understood Corporate Governance, Compliance, Risk Management, Internal Controls, Fiduciary Responsibility, Role of Boards and Regulators,

    Anyway, this Audit Committee should have been the group that would deal with suspicious activity and monitoring ethics. I obtained the Ethics Policy off the Parent Company website. Let’s outline some suspicious activity that should have been seriously considered for filing Suspicious Activity Reports (aka SAR’s). This responsibility would have rested on Gorham’s shoulders and she would have been responsible for escalating to Hitchcock and the Audit Committee and them all to ensure SAR’s were filed with FinCEN part of the US Treasury (Financial Crimes Enforcement Network). 18 USC 1005 and 1007 require that bankers and customers are properly reported and provide accurate information and if they fail are subject to as much as $1 million fine and 30 years imprisonment. So its very serious suspicious activity be referred.

    According to FDIC 12 USC 93a, 1818, 1881-84 and 3401-22 persons and entities reporting such referrals are granted immunity under Safe Harbor 31 USC 5318(g)(3) provides that none of these individuals up the food chain from Gorham to the Committee and the entire Board are held liable for any State o Federal persecution that could be brought to them even if their suspicion proved incorrect. They are granted such to encourage reporting so then FinCEN can sort out the issues and prove out the facts.

    Often times suspicious activity in one bank is connected to a chain of issues in other banks making it “systemic.” If SVB did its homework they would have known the Marin partner had a criminal record, licenses revoked, was part of the failed IndyMac bank and was being prosecuted by the FDIC as many as 2 years prior to the bank failure, and that the borrowers were being sued in a host of venues from SoCal to Northbay to Nevada for several issues some of which were declared to be FRAUD. (Marin, LA, and NV court records research cited). So in fact an SAR by SVB would have actually assisted Federal Investigations and continued the case as a systemic issue reaching far beyond little Sonoma Valley. A such, I certainly hope they didn’t bury their heads in the sand and imagine the problems would go away…because now they infected at least two other Napa banks (One on the “ropes” fighting for its life believed to have the same orders from the FDIC as SVB had the Napa Valley Register article being quoted as saying they have 4 months to raise $12 million). It’s a systemic bank issues ranging from IndyMac in Pasadena to Sonoma and now Napa for sure and Court records from Reno to Sonoma to Southern California.

  4. Please read the related blog I just posted on The Sun online article titled “Another SVB Exec Joins RaboBank” October 29, 2010 at 9:14 am to tie in more facts on suspicious activity that is seemingly worthy of filing a SAR with FinCEN Treasury Department and Ethics Committee Policies at SVB.

  5. So here (along with the blog on the related follow-up article “Another SVB Exec Joins RaboBank”) are several suspicious activities not to mention suspected paperwork in the loan files, accurately disclosing financial holdings, and any host of things not accessible here that I would highly suspect are in file. Reviewing the SAR form (down loaded from the Treasury FinCEN website) examples that could have been present and clearly are required to report are: Bribery/Gratuity, Check Fraud, Check Kiting (overdrafts), False Statements, Misuse of Position and Self Dealing, Loan Fraud, and Wire Transfer Fraud. These are but a few things I would hope Cutting, his loan officer, and others reported to Gorham if present and she then escalated to the Audit Committee Chairman Hitchcock as required by law otherwise the whole food-chain could be considered in violation of their obligations or worse yet make it look like they are covering up something regardless of what their Attorney might have advised them that advice doesn’t absolve them. The Ethics Policy claims a duty to disclose clearly to the Ethics Officer and Chairman of the Ethics/Audit Committee.

    As for Hitchcock, here is a guy with an undergrad degree in History (as reported in the SEC 14A Proxy) and an MBA. He was the President of his family Turkey business but hardly a CFO or accountant and not in a particular accounting laden business like CPA firm, financial intermediary or other. He was designated the “Financial Expert” according to Section 407 of The Sarbanes-Oxley Act of 2002 (aka “SOX” and resulting from The Enron scandal fallout) requires publically traded companies like SVB to designate a Financial Expert. Most banks designate a CPA Accountant or other expert in General Accepted Accounting Rules and Internal Controls. Hitchcock had none of these skills and experiences and no other Director I can see in the SEC 14A Proxy did either (not all Directors were up for re-election so complete bios are not available for all). Hitchcock accepted approx $25,000 for his duties as Board and Committee work stated in the Proxy.

    Obviously Hitchcock was unaware of standard practice to hire a bank qualified external Accounting/Audit/Tax firm one that had many other clients as peer banks and certainly many of which were publically traded. Surely he would have also known its not cool to keep the same accounting firm for longer than 3-5 years before rotating out and getting a fresh pair of eyes. The SEC 14A Proxy says they voted yet again to retain Richardson & Company a very small Sacramento CPA firm known to have few if any other bank clients and certainly not a big filer of publically traded complex companies, indicated Hitchcock and the Board retained their same CPA since 1993 which is 17 years running or 3-5x longer than safe & sound prudent banking practices would suggest.

    What in the world was the relationship here with this firm? Was the firm a friend of Switzer who is quoted as being the primary decision maker in the company since its inception. In all my 23 years in the banking business I have never seen a CPA firm stay with a bank for more than a half dozen years before rotating out. It’s just not prudent and looks odd to say the least.

    Finally, the Ethics Policy requires the Ethics/Audit Committee to be completely independent of the influence of Executive Management but from what I see like commented earlier, the Board seems to have been “hand-picked” and acted more like a “rubber-stamp” board merely approving all that the two Executive Managers wanted done so I really question “Independence.”

    Both these Executive Officers (Cutting and Gorham) had their parts to play as did the rest of Executive Management and the Board. Yet less than 60 days after they failed a Federally Insured financial institution they are off to another, well before the investigations have “cleared” them. Time will tell but from the outside and reviewing publically available documents there seem to be outstanding issues and many questions that the public will want answers for and will result in a “Scarlet Letter” for sometime to come.

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