Bank failure likely to leave investors high and dry
| Monday, Oct 19 2009 05:40 PM
Last Updated Monday, Oct 19 2009 05:45 PM
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Felix Adamo/ The Californian Both lanes of the drive thru tellers were busy at San Joaquin Bank on the corner of 17th and L Streets.
Henry A. Barrios / The Californian Members of the news media gather outside the San Joaquin Bank 17th Street headquarters in downtown Bakersfield after regulators shut down the bank Oct. 16. The bank reopened Oct.19 as Citizens Business Bank.
If you had money deposited at now-failed San Joaquin Bank, you're safe.
Investors, though, are likely to take it on the chin.
That's because Friday's deal between bank regulators and the institution that agreed to buy most of San Joaquin's loans and deposits concerned only the bank -- not San Joaquin's holding company.
For most, the difference between a bank and its holding company is of little concern.
For anyone who holds shares of San Joaquin Bancorp, though, that distinction is now fiscally painful.
Until Friday, the holding company had one major asset: the bank.
Now?
"The holding company remains, but is probably left holding nothing -- like a beggar with an empty tin can," said David Friedensohn, chief executive of The Wall Street Transcript, a market research publication for investors.
Shareholders Monday agreed: stock price plummeted 96 percent, closing at 9 cents. More than a million shares traded hands, compared to typical volume of less than 5,000.
The company has about 3.9 million shares outstanding, according to Bloomberg.com.
In the past year, share price has been as high as $28.10. In October 2006, it peaked at $38.86.
San Joaquin's failure is "a tragedy" for shareholders, said Jim Holly, chief executive of Porterville-based Bank of the Sierra, a $1.3 billion institution with a strong Bakersfield presence.
It's too early to say how much the holding company has on its own, Holly said, since the only publicly available financial information is in reports consolidated with bank earnings. Remaining money, if any, will eventually be distributed to shareholders, he said.
For depositors, the picture is brighter.
Almost all accounts, including those exceeding levels insured by the Federal Deposit Insurance Corp., are OK, said David Barr, FDIC spokesman.
Citizens Business Bank, which bought San Joaquin's loans and deposits and is now operating its former branches, agreed to pick up all deposits except one batch of brokered wholesale accounts, something that won't impact local customers.
In other developments Monday, federal filings posted by San Joaquin announced the Friday resignations of Stephen Annis, San Joaquin's chief operating officer, and Mark Taylor, chief financial officer.
