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North Bay Business Journal

Monday, May 18, 2009, 1:07 pm

Banking & Finance: Presidio Bank grows Santa Rosa office

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    Jenna LoceffPresidio Bank has expanded its North Bay offerings. Once only a loan production office, now the branch is fully equipped to take deposits and serve its corporate clients.

    “We continue to grow and have no non-performing loans,” said Steve Heitel, president of the San Francisco-based bank.

    “To be that far ahead of the game this far into the recession is a good thing,” he continued. “This is a crummy time economically, but it is fraught with opportunity.”

    Will Curran, a Sonoma County resident for more than 16 years, joined the bank to run the Santa Rosa office April 16 of this year.

    Mr. Curran, the Sonoma market manager has been in banking for 22 years, most recently holding the position of commercial banking director for Citibank out of San Francisco.

    He is excited about joining the bank not only because he feels there is opportunity in the North Bay but because he wants to get back to relationship banking.

    “I really had no intention of leaving Citi,” he said. “But you are always looking. I am looking forward to getting back close with my clients.”

    He said he is excited about the opportunity. “There is room for Presidio here, we will get our share of the market,” he said.

    ***

    After studying about globalization in a course in the Hutchins Program at Sonoma State University, Amihan Makayan decided for her senior project she would participate in a micro lending program in order to help bring opportunity to entrepreneurs worldwide. She is from the Philippines, and while her family didn’t have a lot, she saw her grandmother, who was an entrepreneur, build something from nothing

    “I think the opportunity for people born poor is small,” she said.

    She feels that giving people a small capital infusion can get them to a place where they can take care of themselves.

    With micro lending, she said, “You are helping, but you are providing them with the tools to make their lives better. It is not just a handout. I give to charities as well, but the two meet different needs.”

    She is participating through Kiva, a San Francisco-based micro lending collective whose mission is “to connect people through lending for the sake of alleviating poverty.”

    According to its Web site, Kiva is the world’s first person-to-person micro-lending Web site. Its goal is to empower individuals to lend directly to unique entrepreneurs around the globe.

    The site enables prospective lenders to look at profiles of people who are in need of a loan, then loan the money. Anyone can see on the site the progress made by the borrower in terms of how much they have paid back. Multiple people can fund an individual for as little as $25.

    Ms. Makayan has lent about $600 so far, re-loaning the money as she gets paid back.

    After graduating, Ms. Makayan is moving on to graduate school to pursue a degree in public administration. She is choosing between San Francisco State University and University of San Francisco. She has been accepted to both.

    ***

    Hennessy Advisors Inc. announced a fully diluted loss per share for of $0.02 for the second quarter, which ended March 31, compared with earnings of $0.07 per share for the same period last year.

    “Certainly we are not pleased to report a loss for the quarter,” President and Chief Executive Officer Neil Hennessy said. “But we firmly believe that it is much more important to allocate resources to build the company for the future than it is to avoid a very small loss per share in the short term.”

    The decline in earnings is primarily attributable to decreased mutual fund assets under management in the year-over-year period, he said, which was caused in large part by market depreciation.

    Assets under management were reported at $699 million as compared with the more than $1 billion reported at the end of the same quarter in 2008.

    “I foresee steady and sustainable economic growth in the coming months that will come from fundamental financial improvement in well-run companies. It is my opinion that investors learned an important lesson about leverage and will resume investing in high-quality stocks and mutual funds as confidence in the markets is restored,” said Mr. Hennessy.

    “I believe that the recovery actually started in November with the first injection of government TARP spending and that the lows the market hit in March are behind us. As in any type of recovery, it will take time for the fix to work its way through the system,” he said.

    ***

    Some banks are set to face a possible increase of their required risk-based capital ratio to 12 percent, up from the 10 percent currently required by the Federal Deposit Insurance Corp.

    Since June of last year, roughly 50 United State banks have closed, twice the amount that have were shut down since 2000, causing regulatory departments to be more concerned about the health of the institutions.

    For the largest 19 banks, there recently was mandatory stress testing, and the rest of the banks are being forced to hold more in their loan loss reserves and take more cautions lending.

    While banks are being told to loan, and there are programs being set up by groups like the Small Business Administration to help them lend more, these same banks are being told by auditors they must maintain a stronger capital base.

    Assessing the risk a bank takes when making a loan and setting money aside to cover a potential loss is part of the business of banking. Depending on the strength of a loan, the amount is greater or smaller.

    In addition to the actual strength of the loan, there are other factors to be taken into consideration. In economically challenging times, there is more of an assumed risk, and therefore loan loss reserves will be greater, experts said.

    The loan loss provision “is a reserve for known and anticipated losses,” said William Schrader, president of Exchange Bank in Santa Rosa. “When entering a time of uncertainty, you are going to put aside an additional amount, some that is not necessarily dedicated to anything, but is just a general reserve. In today’s economy with an epic loss, you are seeing that reserve grow significantly.”

    Exchange Bank reported a loss of $10.3 million for the first quarter of 2009. The bank took a charge of $20 million as a provision for loan losses, which was reflected in the statement for the quarter. Net interest income was at $16.2 million and non-interest income at $4.7 million, representing 99 percent and 96 percent of the prior year amounts, respectively.

    “It is an imperfect art,” said Mr. Schrader of coming up with the amount to set aside. “And currently, you are trying to gauge a situation without historical precedent. None of us have seen anything like this.”

    ***

    Bank of Napa announced the introduction of its Green Lending Program. The program offers financing for retrofitting and energy improvements to both residential and commercial facilities.

    The loans are specific to the construction budget of the project.

    “There are longer terms and softer fees on any other loans I offer,” said Diane Bishofberger, senior vice president and bank sales manager. “And lower rates,” she added.

    “We are really excited about putting something together that makes sense for the community.”

    Loans so far are targeting solar. For residential solar that is in the $20,000 to $30,000 range, but, Ms. Bishofberger said, for commercial, that can be up to half a million.

    The bank is offering an interest-only ramp-up period and timelines that makes sense for cash flow.

    “This program makes sense,” said Tom LeMasters, president and chief executive officer of the bank. “Our desire to make loans, together with the need to help our community, is good for everyone. This is what sets our bank apart and allows us to help improve the Napa Valley one loan at a time.”

    Information regarding Bank of Napa’s Green Lending program is available by calling at 707-257-7777 or by visiting www.thebankofnapa.com.

    •••

    Submit items for this column to Jenna V. Loceff at jloceff@busjrnl.com, 707-521-4259 or fax 707-521-5292.

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