Citizens Bank of Northern California Closed By Regulators

Citizens Bank of Northern California, Nevada City, CA, founded in 1995, was closed today by the California Department of Financial Institutions.  The FDIC, acting as receiver, sold the failed bank to Tri Counties Bank, Chico, CA.

Citizens Bank had seven branches which will reopen on Monday as branches of Tri Counties Bank.  Depositors of failed Citizens Bank will have access to their money over the weekend through the use of checks, debit cards and ATMs.  All depositors of Citizens Bank will automatically become depositors of Tri Counties Bank.

Citizens was founded as a community bank in 1995 by 100 local investors.  The Bank prospered in an expanding California economy which saw nonstop increases in property values until the financial meltdown of 2008.  Loan defaults increased steadily from early 2009 resulting in large losses which impaired the bank’s capital positions.

The Bank was given $10.4 million through the TARP program in May 2009 and made only one interest payment before defaulting.  At the time of closing, Citizens Bank still owed the U.S. Treasury $10.4 million plus past due interest.

Citizens Bank was owned by holding company Citizens Bancorp which traded on the pink sheets, closing Friday at 35 cents per share.  During 2007, Citizens Bancorp traded as high as $24 dollars a share before collapsing under the weight of bad loans.  Shareholders, who once collectively owned stock valued at a total of $56 million are now holding worthless stock certificates.

Citizens Bancorp - courtesy


At June 30, 2011, Citizens Bank had total assets of $288.8 million and total deposits of $253.1.  Tri Counties Bank will assume all deposits and purchase all assets of failed Citizens Bank.

Tri Counties Bank had previously acquired another failed bank, Granite Community Bank of Granite Bay, CA, in May 2010.  Tri Counties Bank, owned by holding company TriCo Bancshares, was founded in 1974 and operates 34 branches in California.  Tri Counties Bank is the largest community bank in the Sacramento Valley, is profitable, well capitalized and has $2.2 billion in assets.

Citizens Bank of Northern California becomes the nation’s 73rd banking failure of 2011 and the 4th banking failure in California.   The failure of Citizens Bank will cost the FDIC deposit insurance fund $37.2 million.

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