SONOMA, Calif., Feb. 19 /PRNewswire-FirstCall/ -- Sonoma Valley Bancorp (BULLETIN BOARD: SBNK) , the holding company for Sonoma Valley Bank, said today that it would revise its financial results for the three and nine months ended September 30, 2009. The Company intends to amend its Form 10-Q for the quarter ended September 30, 2009 no later than March 31, 2010.
The Company said its Board of Directors, after consultation with its outside accountants, had determined the action was necessary based on the outcome of a bank regulatory examination that occurred after the filing of the original Form 10-Q for the third quarter. As a result of that examination, the Company was advised that certain impaired loans that had been restructured by the Bank should be valued using collateral values that had declined due to market conditions, which is resulting in additional loan charge-offs and provisions for loan losses related to the reclassified loans. In addition, the Company was advised that certain restructured loans should be placed on non-accrual status and that interest income previously recognized on these loans be reversed.
"As is the case with many other community banks, we are facing the challenges of the current economic environment, particularly its impact on the commercial real estate sector. The majority of the issues related to this action involve a small number of relationships. The steps we are announcing today reflect a conservative approach on the part of our Board and management and recommendations by the regulators. We do not believe that these actions will require any material adjustments beyond the third quarter of 2009 and we look forward to resolving these issues so that we can resume our growth and continue to serve the needs of our customers and community," said Sean Cutting, Sonoma Valley Bank President and CEO.
As a result of the actions announced today, the Company has been notified by the Federal Deposit Insurance Corporation (FDIC) that it will need to prepare and file a capital restoration plan and comply with certain restrictions on asset growth, acquisitions, dividends, management fees and any other capital distributions. Cutting said the Bank is working with professional advisers to identify available options to address this need.
Based on the revisions announced today, the provision for loan and lease losses for the third quarter of 2009 will increase from $2.6 million to approximately $24.5 million and from $7.4 million to approximately $29.3 million for the nine months ended September 30, 2009. Interest income for loans and leases for the third quarter of 2009 is expected to decrease from $4.6 million to approximately $4.4 million and from $13.5 million to approximately $13.3 million for the nine months ended September 30, 2009. Net interest income for the two periods is expected to decrease from $3.8 million to $3.6 million and from $11.0 million to $10.8 million, respectively.
The Company's net loss for common stockholders for the three months ended September 30, 2009 will increase from $495,000 to approximately $19.0 million, and the loss per share will increase from $0.22 to $8.27. For the nine months ended September 30, 2009, the net loss for common stockholders will increase from $1.6 million to approximately $20.1 million, and the loss per share will increase from $0.70 to approximately $8.75.
As of September 30, 2009, loans and lease financing receivables, net of unearned income will decline to approximately $270.9 million from $286.0 million, and total assets will decline to $335.6 million from $354.2 million. Additionally, the allowance for loan and lease losses will increase to $12.8 million from the previously reported $6.0 million. As a result of these revisions, total shareholders' equity at September 30, 2009 will decline by $18.5 million to approximately $19.2 million versus the previously reported amount of $37.7 million.
The Company plans to report complete revised results for the third quarter and nine months ended September 30, 2009, and final results for the fourth quarter and full year ended December 31, 2009, by March 31, 2010.
Given the Bank's knowledge of its local market, its liquidity, deposit growth and strong net interest income, it is well positioned to continue to serve the community's financial needs and provide long-term profitability to the holding company and its shareholders as the economy and real estate markets recover.
Sonoma Valley Bancorp shares are listed on the OTC Bulletin Board (OTCBB) and the stock symbol is SBNK.
Forward Looking Statements
This press release contains "forward looking statements" that involve uncertainties and risks. There can be no assurance that actual results will not differ materially from the Company's expectations or any results expressed or implied by such forward looking statements. Factors that could cause materially different results include, among others, the risk that the revised accounting treatment described herein changes, as may be determined by the Company and/or as required by the Securities and Exchange Commission or other regulatory agencies; the risk that the Company is negatively impacted in future periods by the same factors that caused the Company to adjust results for the third quarter of 2009; the risk that the Company is less profitable than expected in future periods; the risk that these matters could adversely affect the Company's ability to make timely filings with the Commission; the risk of damage to the Company's business and reputation arising from these matters; and other risks and uncertainties discussed more fully in the Company's SEC filings, including those discussed under Item 1A, "Risk Factors," in the Company's annual report on Form 10-K for the year ended December 31, 2008, and in subsequent quarterly reports on Form 10-Q. The Company disclaims any obligation to update or correct any forward looking statements made herein due to the occurrence of events after the issuance of this release, except as required under federal securities laws.
Sonoma Valley Bancorp
CONTACT: Sean Cutting, President and CEO of Sonoma Valley Bancorp,
+1-707-935-3200
Web Site: http://www.sovy.com/
