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Stock in Nevada City-based Citizens Bancorp plunged Friday to 55 cents a share, as subsidiary Citizens Bank of Northern California continues to struggle against financial losses.
Shares were down 42 percent from Thursday's closing price of 95 cents, according to the Wall Street Journal's www.MarketWatch.com site (the sticker symbol is CZNB). Trading was extremely thin: Fewer than 1,700 shares, according to Yahoo Finance.
Both figures are far below the $3 a share the bank had set in its bid to raise at least $12 million in capital — and, officials had hoped, as much as $20 million — to shore up capital reserves. The stock's 52-week high was $5.99, according to Yahoo Finance. The stock opened 2011 at $2 a share.
Losses of nearly $32 million over three years and several foreclosures on large loans have plagued the bank. Established in 1995 and headquartered in Nevada City, Citizens Bank includes six branches and 76 full-time employees.
Despite the challenges, bank officials expressed optimism: Citizens Bank had $28.2 million in cash and cash equivalents and $19.2 million in time deposits at other banks, CEO Gary Gall told The Union in May.
Gall and board Chairman Kenneth Baker could not be reached Friday for comment.
In a consent order bank officials signed in February 2010 with government banking regulators, they agreed to raise capital, bringing levels to healthier ratios compared to average assets. Their goal was a 9 percent ratio by July 2010, according to bank documents.
But by the end of 2010, the ratio of capital to average assets was 4.8 percent, according to an April 2011 audit obtained by The Union.
“These matters raise substantial doubt about the ability of Citizens Bancorp and subsidiary to continue as a going concern,” wrote auditor Perry-Smith of Sacramento.
Federal seizure of the bank could result, the auditor warned.
“Failure to meet the regulatory capital requirements and capital targets included in the (February 2010) capital plan exposes the bank and the company to regulatory sanctions that may include restrictions on operations and growth, mandatory asset dispositions and seizure of the bank,” Perry-Smith wrote.
Shares were down 42 percent from Thursday's closing price of 95 cents, according to the Wall Street Journal's www.MarketWatch.com site (the sticker symbol is CZNB). Trading was extremely thin: Fewer than 1,700 shares, according to Yahoo Finance.
Both figures are far below the $3 a share the bank had set in its bid to raise at least $12 million in capital — and, officials had hoped, as much as $20 million — to shore up capital reserves. The stock's 52-week high was $5.99, according to Yahoo Finance. The stock opened 2011 at $2 a share.
Losses of nearly $32 million over three years and several foreclosures on large loans have plagued the bank. Established in 1995 and headquartered in Nevada City, Citizens Bank includes six branches and 76 full-time employees.
Despite the challenges, bank officials expressed optimism: Citizens Bank had $28.2 million in cash and cash equivalents and $19.2 million in time deposits at other banks, CEO Gary Gall told The Union in May.
Gall and board Chairman Kenneth Baker could not be reached Friday for comment.
In a consent order bank officials signed in February 2010 with government banking regulators, they agreed to raise capital, bringing levels to healthier ratios compared to average assets. Their goal was a 9 percent ratio by July 2010, according to bank documents.
But by the end of 2010, the ratio of capital to average assets was 4.8 percent, according to an April 2011 audit obtained by The Union.
“These matters raise substantial doubt about the ability of Citizens Bancorp and subsidiary to continue as a going concern,” wrote auditor Perry-Smith of Sacramento.
Federal seizure of the bank could result, the auditor warned.
“Failure to meet the regulatory capital requirements and capital targets included in the (February 2010) capital plan exposes the bank and the company to regulatory sanctions that may include restrictions on operations and growth, mandatory asset dispositions and seizure of the bank,” Perry-Smith wrote.
Loans to directors common
Among the bank's headaches are nonperforming loans, including a multimillion-dollar loan for Gateway Industrial Park in Penn Valley, now in foreclosure. The park owes nearly $2.8 million to the bank and is for sale, but no buyers have come forward, as reported in The Union this week.
The loan was made to a limited partnership that includes a former bank director. The business development consists of three buildings and an empty lot on Commercial Avenue off Pleasant Valley Road in Penn Valley.
Robert H. Nix is chief executive officer of Gateway Industrial Park LLC, consisting of 16 partners, according to documents from the California Secretary of State's Office.
Nix retired from the board of directors of Citizens Bancorp, according to bank documents.
Loans to directors is a common occurrence at the bank, according to a 2010 statement to shareholders for Citizens Bancorp.
“During 2009, almost all of our directors, as well as some of their respective family members and/or affiliated entities, engaged in loan transactions and/or had extensions of credit in the ordinary course of business with Citizens Bank,” reads a May 2010 audit of Citizens Bancorp.
Loans to bank directors and executive officers are legal, but they are limited under the California Financial Code and the Federal Reserve System.
“Such loans, in the aggregate, must not exceed 2.5 percent of the bank's unimpaired capital and unimpaired surplus or $25,000, whichever is larger; in no event may the total exceed $100,000,” reads the Federal Reserve's Regulation O.
State law applies the rules only to companies in which an executive officer is a majority owner. It was unclear whether directors are included in that restriction, and it was unclear whether Nix is a majority owner of the Gateway partnership.
Gateway Industrial Park is the latest in a growing list of Citizens Bank foreclosures. Another was the landmark Holbrooke Hotel in downtown Grass Valley, which earlier this year was bought by local musician Ian Garfinkle.
Others include a $2.2 million loan on the North Star property south of Grass Valley; developer Sandy Sanderson's North Star/Grass Valley LLC filed Chapter 11 bankruptcy in 2008.
Grass Valley Highlands, a development of small houses off East Main Street, also went into foreclosure on an $8 million loan in 2008; new owners were trying to sell the houses.
Among the bank's headaches are nonperforming loans, including a multimillion-dollar loan for Gateway Industrial Park in Penn Valley, now in foreclosure. The park owes nearly $2.8 million to the bank and is for sale, but no buyers have come forward, as reported in The Union this week.
The loan was made to a limited partnership that includes a former bank director. The business development consists of three buildings and an empty lot on Commercial Avenue off Pleasant Valley Road in Penn Valley.
Robert H. Nix is chief executive officer of Gateway Industrial Park LLC, consisting of 16 partners, according to documents from the California Secretary of State's Office.
Nix retired from the board of directors of Citizens Bancorp, according to bank documents.
Loans to directors is a common occurrence at the bank, according to a 2010 statement to shareholders for Citizens Bancorp.
“During 2009, almost all of our directors, as well as some of their respective family members and/or affiliated entities, engaged in loan transactions and/or had extensions of credit in the ordinary course of business with Citizens Bank,” reads a May 2010 audit of Citizens Bancorp.
Loans to bank directors and executive officers are legal, but they are limited under the California Financial Code and the Federal Reserve System.
“Such loans, in the aggregate, must not exceed 2.5 percent of the bank's unimpaired capital and unimpaired surplus or $25,000, whichever is larger; in no event may the total exceed $100,000,” reads the Federal Reserve's Regulation O.
State law applies the rules only to companies in which an executive officer is a majority owner. It was unclear whether directors are included in that restriction, and it was unclear whether Nix is a majority owner of the Gateway partnership.
Gateway Industrial Park is the latest in a growing list of Citizens Bank foreclosures. Another was the landmark Holbrooke Hotel in downtown Grass Valley, which earlier this year was bought by local musician Ian Garfinkle.
Others include a $2.2 million loan on the North Star property south of Grass Valley; developer Sandy Sanderson's North Star/Grass Valley LLC filed Chapter 11 bankruptcy in 2008.
Grass Valley Highlands, a development of small houses off East Main Street, also went into foreclosure on an $8 million loan in 2008; new owners were trying to sell the houses.
Losses slowing
Citizens Bank continues to lose money, although losses have slowed, bank officials have said.The bank lost $3.6 million in the fourth quarter of 2010, compared to losses of $11.8 million, Citizens reported in May. The bank lost $8.2 million for 2010, compared to $13.2 million for 2009, officials reported.
Citizens received $10.4 million in bank bailout money under the federal Troubled Asset Relief Program, signed by President George W. Bush in 2008.
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To contact Senior Staff Writer Trina Kleist, e-mail tkleist@theunion.com or call (530) 477-4230.
