Tim Jorstad, principal of Jorstad Inc. in San Rafael, is a CPA who launched more than one bank, and worked as a receiver to turn around a large and struggling real estate company in San Francisco. Then there’s Jorstad’s little side career in the music industry, where he managed the Grateful Dead, Journey, the Doobie Brothers and many other artists, profiled in this week’s cover story.
You are chairman of AltaPacific Bank, based in Santa Rosa?
I’m happy to be headquartered in Santa Rosa. We’re a quiet bank, primarily a business bank. No car loans or consumer-related banking products.
Growth was primarily by word-of-mouth?
Yes. We established relationships with a group of builders. They have sustained us over a long time.
You co-founded AltaPacific?
Charlie (Hall, CEO) and I started the bank after we sold Business Bank of California in 2004 (to Union Bank). We had to be 15 miles as the crow flies from any branch. The Petaluma branch placed us in north Santa Rosa (as the closest place they could locate offices and compete in banking).
Assets of Business Bank of California were roughly $750 million when you sold?
They were. We got a very fortuitous offer from Union Bank.
What was the selling price?
We sold it for 3.25 times tangible book (value). The deal was over $100 million. Banks today aren’t getting those multiples and may never get them. They have to keep more capital on the books. But prices are finally normalizing, getting closer to the true value of a bank.
You already knew Charlie?
Charlie came to me. He was doing consulting for Focus (Business) Bank in San Jose before it started. (Focus, started in 2007, had about $390 million in assets in 2014, was acquired by Heritage Commerce Corp. for $54.8 million in 2015.) I didn’t think they had any intention of hiring him as CEO.
He was drifting there?
Yes. He was. I was providing help to him, thinking maybe I could get on the bank board. I wasn’t interested in starting another bank at that time, but banks were going huckleybuck in 2006. (“Hucklebuck” was a dance tune from Paul Williams, 1949, covered by many: “Everybody Huckle Bucking … jump back, jump up, jump back, jump up-up-up-up.”)
I watched Charlie spend all this time, wasting intellectual capital. I asked him if it was something he and I could do together (start a bank). He looked at me and slid a business plan over to me. He was just waiting. I had to figure out if I could raise the money, $15 million or $20 million. My role would be to recruit the board and raise the money. After one weekend, I had $15 million in pledges.
You went for it?
We needed four Santa Rosa directors. (Currently, the bank has Charles Hall, CEO, Petaluma; Randy DeCaminada, Cloverdale, former PG&E manager; Richard Dowd, Santa Rosa engineer and partner at Pinnacle Homes Land Development; Robin Goble, Windsor; and Joseph Zils, Santa Rosa, former JDSU executive.)
We hired Hedley Lawson (Aligned Growth Partners, former vice president, human resources, SOLA International, Petaluma). He brought Joe Zils and Dick Dowd. I was looking for directors who had the experience to be on a company that would grow to $1 billion. I limited the amount of money anybody could invest — $2 million.
That was the cap?
Yes, for anybody else. I put $1.5 million in to start. I have way more than that in now. I asked all directors to put $250,000 in — a lot of liquid money. I wanted them to have enough skin in the game to pay attention.
With Charlie as CEO?
Charlie is the reason I sleep well at night in banking.
With Business Bancorp, you had other partners?
There was a whole group of us, (initially) called the Meadow Club Bank (after Meadow Club golf course in Fairfax, Marin County), starting Marin Community Bank in 1989. We didn’t know about banking. We had a former regulator who was CEO. He was the only one who had a clue.
You merged the bank?
We had several deals. Charlie is very experienced in mergers and acquisitions. We did a merger of equals in 2002 (with Business Bancorp, parent of Business Bank of California in San Bernardino. MCB became Metro Commerce Bank). It was the most difficult thing I have done in my business life. I underestimated the difference in cultures between banks.
Our group was pretty much all professionals. We had a good idea what governance meant — not micromanaging. It was the opposite with the bank in southern California. Directors were running the bank.
They wanted to scrutinize everything?
Right. They were actually hiring a marketing director, unbeknownst to the CEO. A couple of large shareholders wanted to orchestrate all the business dealings in a backroom setting. Every month before the board meeting, I would get calls from a couple of rabble-rousers. It took everything I had to manage them.
You had to give reins to the CEO?
We did. We went in as equals, but we were a smaller bank by $100 million (in assets). But we were far more profitable. We made them give us about $7 million or $8 million of their capital — for nothing — because we had earnings momentum. We agreed to put the banks together. My condition was that Charlie be CEO of the bank.
Of the merged entity?
Yes. Their CEO was CEO of the holding company, and their chairman became chairman of the (merged) bank. I was chairman of the holding company. Their chairman was a lot older than me. He looked at me and said, “You’re going to be my boss?” That’s how it happened.
It worked out?
It did. We had two CEOs, but Charlie is an operational guy. Their CEO was more business development. The board would have pulled the bank apart if I hadn’t sold it.
Where a company has a genius (in leading people), there may be no genius in the organization once the genius leaves, such as Lee Iacocca (at Ford, later reviving Chrysler). Businesses that do well over time are run by men like Charlie. He wasn’t oriented to money for himself, but to growing the organization.
You have been a receiver for San Francisco courts?
The biggest receivership was with some Irish builders who were fighting. As they fought, their properties were being neglected.
Their empire was falling apart?
It was. Their attorneys convinced them that somebody needed to tend the shop. I was appointed receiver, took over their entire holdings of real estate.
In the North Bay?
Primarily San Francisco. The biggest assemblage (of properties) was where the Zion hospital (UCSF Medical Center at Mount Zion) is on Divisadero and Geary. There were properties in foreclosure, that needed refinancing, that had 20 percent-rate loans.
The empire was several hundred million dollars?
Yes. I was able to preserve all of that assemblage where the Zion hospital was built. That alone was a $200 million deal. These were ramshackle properties — houses.
Residential, not just commercial?
Correct. They were filled with tenants who could barely pay the rent. I felt a bit like a slumlord.
How long did you run the company?
I was receiver on that for well over 20 years, in court every two weeks with Judge Ira Brown (20 years in San Francisco, lived in Calistoga, presided over a huge asbestos-liability case).
A bankruptcy receivership?
No. It could have gone there easily. Being an officer of the court, I was able to come in with authority. (I asked for help from) Jim Barnett, who used to run New Horizons Savings and Loan. I had loans that had matured, 20 percent interest rate. He spent a day in the city with me. We drove around. He took pictures and notes, came back and did an entire package of refinancing.
About 20 properties?
Yes. He bailed me out as a lender. I had breathing room to work on these properties.
Financing was half a billion dollars?
It wasn’t that much. There wasn’t that much debt, just crap debt, all individual loans, hot money, knee-popper kind of loans. That’s how we met the Irish builder community.
One of the partners was Joe O’Donoghue, (former) president, Residential Builders Association. Our bank joined the organization. He introduced me and our lenders to the members. We have been banking these Irish builders for 25 years.
After you left the receivership role?
When did that end?
About 2005. I had been in the land development and home-building business for a couple of years. Between 1980 and 1982, I was executive vice president of a large home-building company out of Los Gatos (Osterlund Enterprises). We bought and built out Plumas Pines Golf Resort (north of Truckee). We had a NASCAR racing operation in Charlotte. Dale Earnhardt (Sr.) was our driver. I ran that for a couple of years.
For Jorstad’s amazing music career, see our cover story.
James Dunn covers technology, biotech, law, the food industry, and banking and finance. Reach him at firstname.lastname@example.org or 707-521-4257.