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Jefferson has thoughts on what could be going on with the bank and why it is askew. 

“In 2013 Charles Chrietzberg of Monterey County Bank's ratios were basically the same as they are now, and we needed up buying his trust preferreds at a discount because the CDO was liquidated and we could buy them at a discount. He defers for five years, which he can do, and then he comes up with the money not through the banks, because he’s not allowed to make the payments, but through some outside source. But what I find just appalling is his non-interest expenses, for things like rent and compensation, are some of the highest of banks in the country, he could be the highest paid bank executive of you looked at it on an asset basis in the country. And who else does he pay? His children. So this is some sort of crazy estate planning of taking all the assets out of the bank and then one day he’s going to call us up and say I’m declaring bankruptcy because I’ve just stolen all the money out of the bank.”

Of course that is not known at all, but it’s also why Jefferson is asking for information, oversight and assistance. He’s trying to ensure his investments get the maximum return. This is a world he knows well as he has years of experience with trust preferreds, a type of debt this involves. I asked him what a trust preferred is and he explained.

“It’s a form of debt that banks could count as equity. It was created in 1996 and every bank went out and issued as much as they possibly could. Because if you thinks about it, if you’re a bank and you need to have 10% in what’s called tier one capital and that’s equity, they were basically saying 25% of your tier one capital could be in this new instrument. And what the regulators made these banks do, what the trust preferred is, it needs to be 30 years in 10 years, and if you have a problem you have to be allowed to defer for five years before going into debt, normally you’d have 30 days.”

“In 2010-2016 there were 1400 banks in the universe with these CDO’s, 400 of them were deferred and most because regulators told them to defer…”

“And it’s also appalling that the FDIC,who can’t be busy right now, because there’s only 10 banks that have a problem, it’s not like 2010 through 2014 when there were 500 banks in the country with a problem…I don’t really know what he’s looking to do but I think it’s very shady what’s going on.”

“So I’m sitting here saying like when are we going toget to the point where it’s you call us one day, oh hey, we’ve declared bankruptcy because we’ve taken the money out of the bank. Which, we’ve seen that story before.”