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Monday, January 31, 2011, 4:20 am

Banking & Finance: Charter Oak shareholders OK merger; Daulton moves to Exchange

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    Also: Bank of Marin reports 6.2% rise in earnings for 2010

    Jenna LoceffCharter Oak Bank shareholders have approved the bank’s previously announced merger agreement with Bay Commercial Bank. The merger transaction remains subject to regulatory approvals.

    Pending these approvals, the merger should take place early this year according to Brian Kelly, the current president and chief executive officer of Charter Oak. He will remain with the bank and be the director of the North Bay region.

    “Were it not for Brian staying with the bank, we would not have gone through with the deal,” said George Guarini, president and CEO of Bay Commercial. “Brian was the key.”

    Charter Oak Bank last quarter had a capital ratio of 5 percent, half of the 10 percent considered healthy by regulators.

    Most of the nonperforming loans were real estate-oriented, Mr. Kelly said.

    “We attempted several measures before considering being acquired,” he said. “We feel with this route, we will have better product lines for clients.”

    ***

    Howard Daulton

    Howard Daulton

    Long-time North Bay banking veteran Howard Daulton has joined Exchange Bank in a newly created position of senior vice president and manager of corporate business development.

    Most recently, Mr. Daulton was the senior vice president and commercial loan officer area manager covering five counties with Wells Fargo Bank for roughly two years.

    At Exchange Bank, Mr. Daulton will have a varied role, including strategic planning as well as business development.

    “Howard is a proven positive leader in banking and business in the local Sonoma County market,” said Bill Schrader, president and chief executive officer of the bank.

    Mr. Daulton assumed the position Jan. 18.

    A resident and native of Santa Rosa, Mr. Daulton graduated from Montgomery High School. He resides in Santa Rosa with his wife, Kathy.

    Prior to joining Wells Fargo, he was the president and chief executive officer of Bank of Petaluma, which was purchased by Wells in 2007.

    Mr. Daulton studied economics at San Jose State University and his first position was with Union Bank as a business development officer.

    ***

    Bank of Marin Bancorp announced 2010 earnings increased 6.2 percent from the year before.

    Earnings for 2010 were $13.6 million, an increase of $787,000 from $12.8 million in 2009.

    Fourth-quarter earnings totaled $3.9 million, an increase of $1.1 million or 39.5 percent from $2.8 million at the end of 2009.

    Russ Colombo

    “We are pleased to end the year with record earnings,” said Russell Colombo, bank president and chief executive officer. “Earnings growth reflects a lower level of credit losses, continued focus on cost controls and loan growth in our two newest markets, San Francisco and Santa Rosa.”

    Deposits grew $71.7 million, or 7.6 percent, over a year ago. Demand deposits grew $51.6 million or 22.4 percent over a year ago and comprised 27.8 percent of total deposits at Dec. 31, 2010.

    In the fourth quarter, the bancorp declared and paid an increased quarterly cash dividend of 16 cents per share, up from 15 cents in the previous quarter.

    Total loans reached $941.4 million on Dec. 31, 2010, representing an increase of $23.7 million or 2.6 percent from a year before.

    Non-performing loans were reported at 1.37 percent of total loans. The total risk-based capital ratio grew to 13.3 percent, up from 12.9 percent on Sept. 30 and 12.3 percent on Dec. 31, 2009. However, the bank said it continues to be well above industry requirements for a well-capitalized institution.

    In the fourth quarter of last year, the bank’s loan-loss provision totaled $1.1 million, down $350,000 from the prior quarter and down $1.5 million from the same quarter a year ago. The provision totaled $5.4 million and $5.5 million in 2010 and 2009, respectively.

    Total deposits grew $71.7 million, or 7.6 percent, from a year ago to $1.0 billion. The higher level of deposits reflects growth in most deposit categories, most notably in demand deposits of $51.6 million, or 22.4 percent, according to the bank.

    “We have built a strong core deposit base reflecting the continued trust our customers place in us,” Mr. Colombo said. “Our high level of demand deposits is attributable to the relationships we have built and the personalized service we provide.”

    Net interest income of $14.1 million in the fourth quarter of 2010 increased $669,000, or 5.0 percent, from the same period last year.

    The bancorp’s assets currently exceed $1 billion. Bank of Marin, its sole subsidiary, is the largest community lender in Marin County with has sixteen offices in Marin, San Francisco and Sonoma counties.

    •••

    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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