A bank that seeks growth has two main options: add branches one by one in existing or new markets; or acquire another bank that already has presence in a desired market.
Novato-based Bank of Marin, with some $2.1 billion in assets, on July 31 announced plans to acquire Bank of Napa, which has $246 million in assets. In an all-stock deal valued at $51 million and slated to close by November, Bank of Marin will add two branches to its foothold in Napa.
To close, the deal must gain regulatory approval along with two-thirds yes votes from Bank of Napa shareholders, expected in September or October. Upon approval, Bank of Napa will cease to exist. Bank of Marin will add one director from the dissolved Bank of Napa. That director will be picked by the Bank of Marin board from nominations by the board of Bank of Napa.
Bank of Napa shares traded on over-the-counter bulletin boards at about $13.25 a share before the deal was announced. Three weeks later on Aug. 22, shares traded above $19, up nearly $6. The OTCBB, a minor exchange started in 1990, is an electronic trading service of the National Association of Securities Dealers.
Insolvent Charter Oak purchase
In 2011, Bank of Marin made a very different deal to gain its first Napa branch. After the California Department of Financial Institutions shut down the insolvent Napa-based Charter Oak Bank and appointed the Federal Deposit Insurance Corp. as receiver, Bank of Marin assumed all $105 million in deposits of Charter Oak Bank, which had total assets of $121 million. The bank was reopened as part of Bank of Marin. The branch is located in northeast Napa at 600 Trancas St., and will remain open when the Bank of Napa deal closes.
Bank of Alameda, $34.5 million
In 2013 Bank of Marin acquired Bank of Alameda, which had four branches, in a deal worth $34.5 million. That purchase, at about two-thirds the value of the Bank of Napa acquisition, involved buying NorCal Community Bancorp, parent of Bank of Alameda. The transaction brought $230 million in deposits to Bank of Marin, along with $170 million worth of loans.
Bank of Alameda had brought in private equity money to help resolve some credit issues, according to Russ Colombo, CEO of Bank of Marin.
“Private equity decided it was time to exit,” he said. “That was driven by them. They bid it out to a bunch of people,” including Bank of Marin.
In its first quarter of 2013, Bank of Alameda reported earnings of $6.6 million, though the bank lost $522,000 in the full year of 2012. At the end of November 2013 when the Alameda deal consummated, Bank of Marin’s assets rose to $1.7 billion.
Bank of Marin also has a branch in San Francisco at 345 California Street in the heart of the Financial District between Sansome and Battery streets.
New Healdsburg branch
At the close of the Bank of Napa deal, Bank of Marin will have 23 branches, including one opened in August in Healdsburg. That temporary location, on the second floor of a building, has a Mexican café on the first floor, so business-banking customers can grab a taco while they discuss loan particulars. With that branch, Bank of Marin has six Sonoma County branches. The others are in Petaluma, Sonoma and Santa Rosa.
Bank of Marin markets
Napa: 80,000 population
Marin Co.: 260,000
Napa Co.: 142,000
Sonoma Co.: 500,000
St. Helena: 6,000 (possible future branch)
Healdsburg: 12,000 (Bank of Marin opens a new branch here in August.)
$51 million acquisition price
All stock deal, about .3 shares of Bank of Marin for each Bank of Napa share
$2.1 billion assets, Bank of Marin
$246 million assets, Bank of Napa
Shareholders vote expected September 2017
Boards of both banks already voted, unanimous yes
Deal expected to close November 2017
Regulators (approval expected, required before deal closes): Office of Comptroller of Currency (Bank Napa); Office of Business Oversight (California agency, Bank of Marin); Federal Deposit Insurance Corporation; Securities and Exchange Commission
Publicly traded community banks, North Bay
Bank of Marin (22 branches, if the deal closes): Napa (3); Petaluma (3); Santa Rosa, Healdsburg, Sonoma, Novato (3), San Rafael (2), Tiburon, Mill Valley, Sausalito, Oakland, Alameda, Greenbrae, Corte Madera, San Francisco.
Exchange Bank (18 branches): Santa Rosa (9 plus 4 ATMs), Petaluma (2), Cloverdale, Cotati, Healdsburg, Sebastopol, Sonoma, Windsor, Rohnert Park. Satellite offices in Roseville, San Jose, Lafayette, San Rafael.
Summit State Bank (5 branches): Santa Rosa (2), Petaluma, Rohnert Park, Healdsburg