SAN RAFAEL -- Tamalpais Bancorp, parent company for Tamalpais Bank, reported more than $50 million in its loan loss provision for 2009 compared with just more than $3 million for the year before, according to its 10-K annual report.
For the past six months the bank has been attempting to comply with requirements set forth by a cease and desist order with the Federal Deposit Insurance Corp. and the Department of Financial Institutions.
[See today's story, "Regulators seize Tam Bank; Union Bank purchases deposits"]
The 10-K, signed by Mark Garwood, the chief executive officer; Karry Bryan, interim chief financial officer; and the directors, states that the bank has “not achieved the Tier I Capital or total risk-based capital ratios required under the Order by Dec. 31, 2009, nor have we reduced the bank’s assets classified as ‘substandard’ in relation to Tier I Capital plus the allowance for loan losses to not more than 100 percent by March 12, 2010.”
It goes on to say that the failure to comply could result in “significant enforcement actions against the bank of increasing severity, up to and including a regulatory takeover of the bank.” In the 10-K's management discussion section, the bank notes, "our independent accountants believe there is substantial doubt about out ability to continue as a going concern."
The 10-K notes that the bank had embarked on “a business strategy of developing a business-based banking approach as a means of increasing market share in Marin County.”
The 10-K states that the company’s strategy of focusing on business owners and individuals residing in the company’s market area and providing them with financial services and advice to help them grow and prosper incorporates a relationship-based approach to customer service and marketing. The hope was to use this to increase capital and market share.
The 10-K also noted that that late last year the bank was notified by Pacific Coast Bankers Bank it was "in default under the terms of our business loan agreements with PCBB. As a result of this default, PCBB has the option to, among other things, declare the $5.7 million principal amount outstanding under the loan agreements immediately due and payable or foreclose on the collateral securing the loans, which includes the stock of the bank."
Additionally, said the 10-K, “we are in technical default under the terms of the advances and security agreement with the Federal Home Loan Bank of San Francisco.”
In the fourth quarter of 2009, the holding company was unable to make its payment obligations to PCBB, and “a cross-default provision in the agreement with the FHLBSF was triggered,” according to the 10-K.
As a result of this default, FHLBSF can declare the $119.1 million principal amount of advances outstanding under the advances and security agreement immediately due and payable or foreclose on the securities and loans pledged as collateral securing the advances.
If PCBB or the FHLBSF were to declare a default under this agreement and proceed to exercise their available remedies, “our business and financial condition will be materially adversely affected,” according to the 10-K.