Thursday, April 9, 2009
Federal Reserve tightens control on San Joaquin Bank; stock tumbles on news
It's yet another sign of the difficulty of the times when a local institution like San Joaquin Bank comes under the thumb of the Federal Reserve. All banks are under an intense Fed microscope these days as they struggle with bad loans made in the go-go days, and San Joaquin is no exception. Now it turns out, revealed today, that San Joaquin has entered into a 15-page agreement on tightened controls with the Federal Reserve. (read one version of the story here) Among other things the Fed is demanding a plan to strengthen board oversight of management and operations of the bank. Within 60 days, the bank must also submit a plan to strengthen credit risk management practices. The bank's board reads like a "who's who" of local business leaders including my boss, Ginger Moorhouse, publisher of The Californian, local accounting firm owner Lou Barbich, and Rogers Brandon, coowner of American General Media, a radio group. Also on the board are property manager Mel Atkinson, farmer Jerry Chicca and of course bank president Bart Hill and bank chairman Bruce Maclin.
Within a couple hours of the announcement, San Joaquin's stock fell from $6.50 to $4.22 at midday. No doubt that the new upstart competitor in town, Valley Republic Bank, will seek to use this to its advantage.