Shocked to Read that Sonoma Valley Bank Failed!

Now living in Florida so not up on the Sonoma news and was shocked to receive a welcome to Westamerica Bank letter saying on August 20 they "assumed all deposits, loans and operation formerly held by Sonoma Valley Bank". WOW! What happened??

Not sure why I got the letter as I no longer have any funds there but am wondering, did folks loose money in this deal or does the FDIC cover that?

Here's an August 23, 2010 article and comments from the Wall Street Journal:

August 23, 2010, 11:13 AM ET.

Fifth TARP Bank Fails, Likely Wiping Out Taxpayer Stake

http://blogs.wsj.com/washwire/2010/08/23/fifth-tarp-bank-fails-likely-wiping-out-taxpayer-stake/

By Damian Paletta

Sonoma Valley Bank in northern California failed on Friday, the fifth financial institution that failed despite having received federal bailout funds. The failure likely wipes out the $8.7 million taxpayer investment that was made in the bank in early 2009 as part of the controversial Troubled Asset Relief Program.

Several hundred banks that received funding under TARP, a program approved by Congress in 2008 to help financial institutions and other companies in the wake of the global financial crisis, have either paid back the money or are expected to within several years. But there is a growing group of banks that continued to struggle after getting bailouts, or have already been seized by regulators.

Officials who designed the program had said the money was intended to go to companies that weren’t at risk of toppling, and regulators have sought to downplay the failures of TARP-connected banks.

Sonoma Valley Bank joins CIT Group Inc., Pacific Coast National Bank, United Commercial Bank, and Midwest Bank and Trust Co., which all failed shortly after receiving the federal bailout funds. Three of the five banks were headquartered in California. Combined, the losses to taxpayers from these failures are expected to total slightly less than $3 billion.

It is unclear how many TARP banks might ultimately fail. Banks that received TARP funds are supposed to periodically pay dividends or interest payments to the Treasury Department, but about 100 have skipped at least some of these payments. These missed payments total $146 million, the Treasury Department estimated, compared with the $9.5 billion in dividends it has collected.

The eight bank failures this week brought the 2010 total to 118, nearing the 140 that failed in 2009. Only a handful of these banks had received TARP funds, though many had requested the money from regulators and were rejected.

COMMENTS

3:24 pm August 23, 2010
Linus Wilson wrote:
Sonoma Valley Bancorp was one of the “TARP’s Deadbeat Banks”. See page 39 of my paper at
http://ssrn.com/abstract=1527270

4:31 pm August 23, 2010
LC wrote:
Good to see this is working so well. Better jack our taxes some more to pay for another go round. Geniuses just pure genius. Dont put in price control, dont hammer product coming in the country,dont reel in the drug companies the hospitals and any other crook stealing from the public. Just throw more money you dont have at the problem that will fix it. What the hell are you people thinking or our your buddies getting filthy rich on this game your playing? I put my vote on the game they are playing. Boy is the general public blind or what?

8:29 am August 24, 2010
Bones wrote:
Was wondering if this was one of Rep. Maxine Waters’ banks? Hope she got her or her family’s money out before it failed, she’ll need that money to defend herself eventually.

9:21 am August 24, 2010
Beeker wrote:
@Bones
Even if the bank failed, there is a deposit insurance that protects depositors from losses due to bank failure. Typical lack of knowledge how insurance works.

I’m not surprised that the bank failed. It is most likely through loan losses as with other banks that are facing the same issue.

11:22 am August 24, 2010
Dick wrote:
The loss to the taxpayers in the Sonoma Valley Bank failure is restricted to the TARP loss. This bank was sold to Westamerica under what is known as a negative bid. The FDIC paid $10,000,000 to Westamerica and it was merged out. The FDIC fund gets it’s money from the banks not the government. The banks pay an insurance premium each quarter to cover the costs of insurance and failed banks. The government provides an overall guarantee and a line of credit but that has not been drawn on.

12:26 pm August 24, 2010
bankalchemist wrote:
Ca has several more Dead Beat Tarp Banks on the list…not if just when, bankalchemistl

5:36 pm August 24, 2010
get real wrote:
A combined loss of $3 Billion on the banks that have thus far failed is a much smaller amout than I would have expected, especially when the gov’t is running the thing. The entire TARP was about 700 Billion so the 3 Billion loss is only a loss of less than .4%!

Also, the missed dividend and interest payments by banks was less than .2% (146 million missed vs. 9.5 Billion paid).

The TARP program which was designed under the Bush admin has worked well, unlike the Billions of dollars of stimulus money thrown out the window by the Obama admin. How much of that will tax payers recoup?

Yeah, I know. Not a dime.