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Member Profile: ARC Advances Help Sonoma National Bank Manage Interest Rate Risk Sonoma National BankSanta Rosa, California Asset Size: $1 billion Founded in January 1985, Sonoma National Bank is an independent community bank that serves small- and medium-sized businesses, the real estate industry, professionals, and consumers in Sonoma, Marin, Contra Costa and Sacramento Counties, and Phoenix, Arizona. The bank emphasizes commercial and residential real estate lending, and was among the top 25 Small Business Administration lenders in America in 2003. Sonoma National Bank is committed to being a premier independent community bank emphasizing personalized customer service and community involvement. Sonoma National Bank is dedicated to finding innovative ways to meet the financial and banking needs of its customers. FHLBank San Francisco advances aid them in that goal. "Bank advances are a low cost source of funds from an operating expense standpoint when compared with deposits," says Larry Sorensen, Executive Vice President of Sonoma National Bank. "That cost advantage translates into attractive loan pricing for the people and communities we serve." "Bank advances are also a very responsive funding source. They help us match the timing of funding needs with funding sources," says Mr. Sorensen. "For all these reasons, Bank advances are an important component of our liquidity and balance sheet funding strategy." Bank advances also help Sonoma National manage interest rate risk. With an array of interest rate indices and wide range of maturities, the Bank’s Adjustable Rate Credit (ARC) advance has been an especially useful tool for Sonoma National. "The variety of FHLBank San Francisco advances allows a more customized funding approach than our deposit resources often provide," says Mr. Sorensen. "We can’t always raise deposits to match exactly the pricing and rate adjustment behaviors of our loan products. But we can take down advances that mirror closely the characteristics of our loan products. Because advances are available in varying maturities, priced to various indices, and have flexible re-pricing dates, we’re better able to meet our specific funding needs." December 2004 Back to Member Profiles |
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