Editor’s note: I’m reposting this item from last year — the first week of August, ironically — because it is as relevant now as then:
Citizens Bank has never been for sale. It was formed in 1995 to provide a strong commitment to the community.
Local long-timers make up the board, and many civic and political leaders are investors and borrowers.
But as the Nevada City-based bank approaches its 15th year, it faces some major challenges.
Recent examinations of its loan portfolio, including the deterioration of collateral values and borrowers’ financial conditions, has led to the restatement of earnings.
The earnings still haven’t been restated — almost two months after the June 17 announcement.
If Citizens’ financial situation deteriorates, the bank might be forced to sell itself.
I’m sure Westamerica would be interested. Ed Sylvester, co-founder of SCO Planning & Engineering Inc. and chairman of KNCO, is a longtime Westamerica board member. (Westamerica acquired Gold Country Bank of our county in 1979).
There’s a longtime rivalry between Westamerica and Citizens.
Meanwhile, a big management shakeup has occurred at Citizens. The chief credit officer is gone, and chief executive officer Judy Hess has been replaced.
Gary Gall, the bank’s new chief executive, is no stranger to engineering banking mergers.
As chief executive of Western Sierra Bancorp, Gall negotiated and completed the merger of six other community banks between 1999 and 2005.
In 2006, Western Sierra itself was sold to Oregon-based Umpqua Hondings for $352 million. The deal more than tripled Umpqua’s branch count in and around Sacramento.
A lot of local shareholders are feeling the pain of the decline. I know some of them.
Citizens is a cautionary tale in owning a regional bank stock: The stock is only as good as the regional economy.
During the boom here, people forgot the underlying problem: We do not have enough jobs to sustain our economy or justify what had been highly inflated real-estate prices.
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