About a year after assuming control of the failed Citizens Bank, the leader of Tri-Counties Bank addressed the Nevada County business community during a regular meeting of the Economic Resource Council.
Rick Smith, CEO of Tri-Counties, delivered a comprehensive speech detailing how the September 2011 takeover of Citizens Bank, which was judged by the FDIC to be insolvent in the autumn of last year, has affected his operations and how he envisions his financial institution becoming an indispensable thread in the fabric of the county’s business community.
Tri-Counties Bank took over Citizens Sept. 23, 2011, after the FDIC determined the bank was no longer operational and seized the bank’s assets and liabilities, Smith said.
Upon seizure, the FDIC then collected bids from interested financial institutions.
Tri-Counties was the low bidder and agreed to buy a portion of the bank’s assets and liabilities at a discounted rate.
“We bought certain assets and liabilities of Citizens,” Smith said. “We did not buy the company itself.”
Most of the assets and liabilities consisted of Citizens’ loans and deposits.
The assets and liabilities of the bank have since paid dividends for Tri-Counties despite being damaged, largely because Tri-Counties was able to purchase the items at a discounted rate, Smith said.
“It’s been a very good transaction for us financially,” Smith said.
The transition from one bank to another resulted in a net loss of jobs in Nevada County. Tri-Counties is headquartered in Chico, and most of its upper-level executives live and work in that community.
Citizens was owned and operated locally.
“Obviously, the president of Citizens is not the president of Citizens any more,” Smith said. “And there are others in other positions (who have moved on), but we certainly looked out for good people we could place in other positions in our company, and we have gone through that process.”
Nevada County is lucky in that Tri-Counties, which is still a small, community-minded bank, took over Citizens, as opposed to a large multi-national financial corporation, Smith asserted.
“If Bank X headquartered in New York took over, I don’t think the CEO would be here today,” he said.
Smith touted the financial health of his institution, saying that it is well positioned from a capital assets and liquidity standpoint.
“We are strongly positioned to lend money,” he said, adding that the most important role for a community bank is to provide capital to entrepreneurial enterprises that can drive the local economy and create jobs.
“We will continue to lend money as it is the lifeblood of the economy,” Smith said. “Now, we are not going to lend money to anybody who asks for it, as our main goal is to protect our depositors, but we will use good judgement.”
The future of business in rural areas like Nevada County lies in the technology sector, as traditional economic drivers, such as resource extraction industries, have gone the way of the dinosaur under the aegis of California’s insistence on environmental regulation, Smith said.
Smith lambasted the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law in 2010, saying the law has created overly burdensome layers of regulation, which pass along an enormous cost to independent banks, which were not responsible for the financial malfeasances that resulted in the economic tumult that began in 2006 and 2007.
“The Dodd-Frank legislation is 3,000 pages of legislation and only one-third of the rules have been written yet,” Smith said. “So we are a long way from doing what is required of us.”
Bankers made serious and grave missteps in the mid-2000s, and the legislation came as a result, but a lot of smaller banks that did not partake in some of the irresponsible and sometimes criminal lending practices have been unduly punished, Smith said.
“That’s typical of government regulation,” he said. “When it comes out, it is one size fits all.”
He further characterized the state of California as “dead last” in terms of its approach to business.
“I don’t think businesses are treated well in this state,” Smith said. “If I could pick up a company and move, why wouldn’t I?”
To contact Staff Writer Matthew Renda, email firstname.lastname@example.org or call (530) 477-4239.
“I don’t think businesses are treated well in this state.”
— RIck Smith,
CEO of Tri-Counties Bank