Bank of Marin is celebrating its 20th anniversary this year, and while 20 years isn’t a lifetime, it’s nothing to sneeze at—especially considering 140 banks failed last year and projections of more failures run as high as 750 before a full economic recovery takes hold. And while Bank of Marin’s earnings for the fourth quarter were essentially flat, the bank picked up a cool $92 million in deposits. Some of that deposit increase likely came at the expense of Tamalpais Bank, which is battling its own demons these days.
Bank of Marin CEO Russ Colombo is happy with the progress: “It’s nice to be 20 years old and performing well.” While other banks have looked to make loans in areas beyond their own geographical footprint, Colombo’s bank is, for the most part, trying to do its business in its own backyard. “We try to do three things,” he says. “We stick to what we know, we practice relationship banking, and we’re committed to our communities.”
The bank’s books show 54 percent of its loans are tied to commercial real estate, a dangerous proposition these days. But, Colombo points out, 17 percent of those loans are for owner-occupied properties, which rely upon the businesses’ cash flow for repayment and not the performance of the underlying real estate.
While the bank would like to grow its business into the East Bay as well as the Peninsula, most of the real growth efforts will happen in Sonoma County, where it already has three branches, all in Petaluma. And don’t be surprised if Bank of Marin makes a bid for another bank as industry consolidations begin to take hold. “From our perspective, we’re open to all possibilities,” Colombo says.
Circle Bank of Novato also reported its fourth quarter results, which showed deposits grew by $5 million and that the bank posted a $590,000 profit. Circle Bank is counting on a new branch in San Francisco as well as its SBA program to pump up the bottom line.
Meanwhile, Tamalpais Bank entered into a formal agreement with the FDIC to essentially follow the cease-and-desist order the FDIC posted on the bank last September. Basically, Tam can’t pay out stock dividends, take on new debt or buy back any stock without the Feds issuing a permission slip. The bank also has two months to submit a plan to the FDIC outlining how it will maintain capital levels as well as where it plans to access cash for debt service and operations for the rest of the year.
Marin IJ parent files bankruptcy
Affiliated Media (now called The Cross Agency), the company that owns the Marin Independent Journal and 53 other daily newspapers nationwide, has filed for a “prepackaged” bankruptcy. The filing in Delaware states Affiliated has between $100 million and $500 million in assets and between $500 million and $1 billion in debt. It seems Affiliated let the bottom line go astray while it was on a shopping spree for more publications—a spree bankrolled with debt from Bank of America, among other lenders. Affiliated also owns 100 non-daily papers.
The company line is that the prepackaged bankruptcy won’t affect operation of the papers at all. The advantage of the “prepackage” is that those holding debt are invited to the bargaining table before a filing is done. In this case, lenders holding $590 million in debt are trading it in for an 88 percent equity stake and a $150 million loan. At the end of the process, Affiliated Media will owe $179 million instead of $930 million. Bond investors that hold $326 million in notes will be offered warrants to buy stock in the new and improved Affiliated Media. The in-place management, including CEO Dean Singleton—the same management that overleveraged the company and took it into bankruptcy—will be awarded the remaining 12 percent of company stock.
The old shareholders in Affiliated? Well, they’re left holding large bags filled with plenty of nothing, as the new plan wipes out all existing equity: Thanks for playing; we have some parting gifts for you. Among those getting the greased pole? The Hearst Corporation, owners of the San Francisco Chronicle. Hearst held 30 percent of the equity in Affiliated.
In the Bay Area, the papers that had to break the bankruptcy news to readers include the San Jose Mercury, the Oakland Tribune, the Contra Costa Times, the San Mateo County Times and the Daily News in Palo Alto. In the spirit of making best use of corporate resources, the IJ decided the optimum way to let readers know its parent was filing for bankruptcy protection was to run a story from the Associated Press…on Saturday, the day with the lowest paid circulation.
The upside is that 154 newspapers across the country will continue to publish. Those communities will continue to have a local paper and, no matter the quality of the newspaper, that’s a local resource worth having.
The downside? Affiliated Media will now answer to lenders who don’t know much about newspapers, and that’s not a good thing for people working for newspapers nor for people who read newspapers.
Corbet’s Hardware gets to move…finally
It only took two years for Corbet’s Hardware in Larkspur to receive permission to move less than one mile down Magnolia Avenue. It’s a lucky thing Corbet’s didn’t want to move across town, or else the city might have tied them up for the better part of a decade.
For those of you who’ve been busy for the last couple years, Corbet’s wanted to move to a building that was formerly a bank, but the new location required an amendment to the administrative professional district. It needed a use permit. It also required a vote of the city council on the merits and it passed 5-0. Finally, it required an environmental impact report that only cost $50,000.
Corbet’s, which is much beloved in the town, came under fire from nearby neighbors concerned that the new location would cause traffic problems, parking woes and even noise from delivery trucks.
While process is king in Marin, in this case, his majesty was doing the full Monty.
