The Public Eye

Reports from the Bee's investigative team

June 8, 2010
Ratings agency cites local banks with weaknesses

Several Sacramento-area banks, hit hard by the financial crisis, continue to struggle. A new report by an independent rating agency shows a handful with severe weaknesses placing them at greater risk of failure because of ongoing problems in the residential and commercial mortgage markets.

Granite Community Bank in Granite Bay, cited in a recent Bee investigation as severely stressed, was among local banks cited by Weiss Ratings, a Florida-based financial analysis firm, in its recent list of the nation's weakest lenders.

At the end of May, Granite became the first area bank seized by federal regulators in the current economic crisis. Its operations were assumed by Tri Counties Bank in Chico. Depositors will have full access to their funds.

Weiss described Granite, among other local banks, as "'vulnerable' to future financial difficulties or even failure, based on our analysis of their capital, asset quality, earnings, liquidity and other factors."

Granite Bancshares Inc., parent company of Granite, reported a $345,000 loss for the first quarter of this year, compared to a loss of $196,000 in the quarter a year before. Loans and deposits plummeted in the same period.

Also among the region's weakest banks, Weiss said, is Community Banks of Northern California. The Tracy-based lender has a Sacramento branch. It's owned by Community Bankshares Inc. in Colorado.

It recently was merged into Community Banks of Colorado to respond to some of the problems cited by rating agencies, said Donald Woods, chief executive of Community Bankshares.

But the Colorado bank faces similar problems: Rating agencies gave it low marks and ranked it lower than 97 percent of similarly sized banks nationwide.

Gold Country Bank in Marysville - cited in a Bee investigation last year as deeply troubled, and poorly rated by Weiss and other experts - recently was acquired by Sacramento-based Golden Pacific Bancorp, Inc.

-- Charles Piller

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