Sonoma Valley Bank earnings drop 46 percent

Sonoma Valley Bank?s earnings fell 45.7 percent during the first quarter of 2009 compared with a year ago after it nearly doubled its reserves to cover loan losses.

The bank reported 2.18 percent of its loans were delinquent at the end of the first quarter, up from 0.37 percent a year ago.

But Sonoma Valley Bank remained profitable, posting $557,886 in earnings, and improved in a key benchmark used by regulators to assess stability. The bank increased its rating for total risk-based capital to 14.3 in the first quarter. Banks with a rating over 10 are considered well-capitalized by regulators.

An $8.5 million infusion from the U.S. Treasury Department helped significantly. Bolstered by the federal funds, Sonoma Valley Bank?s total assets rose to $332 million at the end of the first quarter, an 11.3 percent increase from a year ago.

The federal government is purchasing stock in banks across the nation to stimulate lending and cover losses as the recession worsens. Two other banks based in Sonoma County have also received the federal funds: Exchange Bank took in $43 million and Summit State Bank received $8.5 million.

Loans net of reserves reached $275 million, up 10.7 percent from a year earlier. Deposits totaled $264 million, a 9.8 increase over a year ago.