The doors are open, but Sonoma Valley Bank is no more.
Founded in 1988, the publicly owned bank grew to three locations and was trading as high as $31 a share three years ago. On Friday federal regulators announced it had failed, and San Rafael-based Westamerica Bank was taking over.
“Customers can rest assured their deposits are safe and sound at Westamerica, which is well-capitalized and highly profitable,” said Chairman, President and CEO David Payne.
Sonoma Valley Bank had been on notice since May that major loses on bad loans had left it with insufficient reserves. The bank failed to meet the government directive to raise $20 million by August 15.
To keep the institution open, the FDIC then brokered the deal with Westamerica, which has nearly 100 branches throughout Northern and Central California. Westgate reportedly purchased SVB asserts totaling $256 million and loans totaling $241 million.
Some 2.2 million shares of SVB stock are now worthless and the board of directors has been dissolved.
Sonoma Valley Bank employees were gathered Friday to hear the news. For now, other than a new logo, it’s business as usual. All deposits are safe and loan contracts remain in place.
“We are pleased to welcome the customers of Sonoma Valley Bank as valued customers of Westamerica,” Payne stated. The new owner and the FDIC will work diligently with current employees to ensure a smooth transition, he said.
Staff cuts are likely at the upper management level, a former federal regulator told The Sun. Jobs that can be consolidated at corporate headquarters, such as human resources and auditing, are also vulnerable.
