North Bay Business Journal visited Bank of Marin’s Novato headquarters to interview Russ Colombo, the bank chief executive for more than a decade.

You have a wildlands view out of your office. See a lot of wildlife?

RUSS COLOMBO: We do. It’s great. Deer wander by all the time, occasionally turkeys and a bobcat or two. A lot of squirrels live in these trees. One time during a board meeting downstairs, this squirrel ran back and forth along a ledge then stopped, put its paws up and looked in, checking out what was going on. Everybody stopped. Was it a spy (from a competing bank)?

Bank of Marin is at $2 billion in assets. Your goal is to try to build this bank?

COLOMBO: That’s right. No question about it. Our whole philosophy is disciplined growth. As a public company, we have to continue to provide a good return to investors. We have to grow to do that, without risking our future.

That’s hard to do in the financial world?

COLOMBO: Indeed. You can get off the rails if you’re not careful. We stay within our markets, which now include five counties. We do things we know how to do, not lending that we don’t understand, keep it narrow and disciplined about how we underwrite and manage relationships.

What’s the total number of employees with all 20 branches?

COLOMBO: Just under 270 employees.

You’re still in acquisition mode since the bank acquired Bank of Alameda in 2013?

COLOMBO: Yes. We continue to look, have a number of opportunities.

That can be tricky if an acquisition target has troubled assets?

COLOMBO: It can bring you down. These things are tricky, not only financials, where you price accordingly. We have a model we use. Beyond that, there’s cultural integration, which is more difficult. You can make the numbers work, hoping to uncover any potential landmines out there. More importantly, if you don’t have cultural alignment, that makes it difficult. Alameda worked really well.

You are talking about employee culture?

COLOMBO: Yes. And discipline. We do things a certain way. If we buy a bank that’s half a billion dollars (in assets), we need to integrate them into our culture. It’s hard to meld cultures.

Banking history has some horrendous examples (such as Wells Fargo buying First Interstate, 1996)?

COLOMBO: Yes, there are a lot of them. We want to avoid those types of problems. We built a bank based on solid fundamentals over 26 years. We have to remember what we’re good at, how we do business, not do things we don’t understand. That’s where you get into trouble.

When you looked at Bank of Alameda, what aspects of its culture did you find attractive, that fit with Bank of Marin?

COLOMBO: Their commitment to the Alameda community, branches they had there, was similar to us. They had had some financial difficulties. We went in and gave back even more to the community. But their being in touch with that community, understanding how it operated, was really helpful on the branch side. We liked the branches, good deposit-gatherers, and a commercial banking office in Oakland fit into our structure.

That’s what you were after?

COLOMBO: Yes. We got both. The branches gave us core deposits, a good deposit base that fit well with us. The commercial banking office in Oakland gave us the kind of business we do.

Now that you have that East Bay foothold, do you see adding branches there, reaching farther east?

COLOMBO: We have looked at potential acquisitions there, haven’t done anything yet. We would love to do more than we have. We are in Oakland. We’d like to go south in the corridor.


COLOMBO: Yes, Fremont, San Jose eventually. Certainly, Walnut Creek. The Diablo Valley corridor is very attractive. There’s lots of competition there. The situation has to be perfect.

Financially, Walnut Creek is a powerhouse?

COLOMBO: It certainly is. Contra Costa County, from a demographics viewpoint, looks somewhat like Marin, with a lot of professional services. That’s what we do a lot of here. Ultimately, that would be a great place for us.

Taking the name Bank of Marin into other regions such as Alameda, how do you swap out the names and not have a loss of community feel?

COLOMBO: Initially people say, Bank of Marin? In Alameda? What we’re doing is building a brand based on community commitment and discipline. That brings some cachet to it. In Alameda, it took a little time. They have adopted pretty nicely. The question is whether you go with Bank of Marin or with a generic name that doesn’t say anything about you.

Certain words are more easily branded, such as GMC naming a truck “Sonoma,” which works throughout the country. Is Marin close to that or better? Do people associate “Marin” with wealth and the San Francisco Bay Area?

COLOMBO: Yes. That’s what we’re trying to capture and maintain. Marin has so many attributes — affluence, certainly. Also the beauty of this county, proximity to San Francisco. It stirs thoughts that are good, positive. Another name might not carry that marketing power, branding. Our logo is two diamonds meant to look like Mount Tamalpais. That’s what we’re trying to sell, the whole Marin cachet. “Marin” has a positive connotation. We’re going to spread that.

The association with money is the most powerful, along with films made here?

COLOMBO: Yes. That’s right. George Lucas. If investors don’t know about Marin, I tell them it’s the golden side of the Golden Gate Bridge, San Francisco on one side and Marin on the other.

You have a branch in San Francisco?

COLOMBO: We have one, primarily commercial banking, in the Financial District on California Street.

Is that a strong office?

COLOMBO: It doesn’t have a lot of people, but it is a very strong office, $160 million in outstanding loans, continues to grow. It started about seven years ago. Initially we focused on business owners who lived in Marin. They know the bank. We don’t consciously do that anymore; we go after anything we can.

You worked in San Francisco?

COLOMBO: That was me for 30 years. Born and raised in Marin. I live in Lucas Valley. I worked for Union Bank, Comerica, Security Pacific over 28 years. I commuted every day.

It’s tough to grow a bank of this size in the city, with huge competitors?

COLOMBO: There, we don’t need huge market share. If we can do $150 million to $200 million in loans, you are going to make really good money. You have a small office. It doesn’t even show up on market share against Wells, BofA, which have huge share. You can fly a little bit under the radar.

In Marin, we are at 11 percent market share, battling everybody all the time. Everybody wants this market, particularly on the retail side — Umpqua, Union Bank. They haven’t made a dent.

How does that compare to Alameda?

COLOMBO: We have John Jacobs, a fifth-generation Alamedan, who runs one of the branches there. He is the retail presence, out there talking to businesses. It’s important to get those types of people in an acquisition. They know people.

Jacobs becomes the face of the bank?

COLOMBO: That’s right. People know him really well. He was the face of Bank of Alameda, now the face of Bank of Marin. We have market managers for the retail side. We have a market manager in southern Marin, Mike Son. In central Marin, we have Renee Rymer.

In Novato, we have Rafelina Maglio, and Britt Cooper in Sonoma. Marck Zuehlsdorff has the town of Sonoma and Napa. Janet Hayward is market manager in San Rafael. Their responsibility is knowing their markets on the retail side. On the commercial-lending side we also have managers, such as Charlie Clifford in San Francisco, Pat Young in the East Bay, Ruth Edwards in Napa and Sonoma. In Marin we have Misako Stewart, who runs business banking.

You have been here for a dozen years, and CEO for 10. You seem to still have good energy for this?

COLOMBO: Yes. I get up in the morning, do my workouts, then come in here.

You’re an athlete?

COLOMBO: I love to run and bike. I have run eight marathons, the Vineman (triathlon) in Sonoma County. I’m planning on doing the Marine Corps. marathon in Washington, D.C., in October. It’s a great bank, a fun job. I love doing it. I’m 63 years old. The biggest question I get is, when am I going to retire? I don’t know. I’m having a good time, lots of energy. I want to continue.

How many miles a week do you run?

COLOMBO: I’m between 20 and 25. I have one or two bike days, sometimes 40-plus miles. I run more than I bike.

That fitness and energy spills over to people who work with you at the bank?

COLOMBO: That’s right. I hope I encourage people to exercise. You’re more engaged in your work if you’re fit. It’s more fun. I have been in this industry for 40-plus years. It is constantly changing. Those who think they know everything are the ones in trouble. We are dealing with so many different businesses in many different industries. Banking is not boring. What’s the next new thing?

In what sense is banking delivered differently today than years ago?

COLOMBO: In a number of senses. I look at technology as tremendous tools that save time. It allows us to spend more time face-to-face with clients. I caution people, don’t think email and texts are communicating. They are misunderstood all the time. We need to talk to clients. Our job is to understand businesses, their financing needs.

For new customers, do you look for startups, for mid-range companies already in place for a decade?

COLOMBO: We’re looking primarily for established companies with history. Startups — that’s specialized. You have to understand venture capital. It’s not our terrain. The businesses we’re in, there’s so little margin, a thin net-interest margin. We have to be very confident about decisions we make. We don’t take risk; we manage risk. That’s the differentiation. Here’s the loan. If everything doesn’t go as we expected, what’s behind it? Collateral or liquidity of the guarantors. You can’t make many mistakes in our business, as we have seen with many banks in the crisis. You can get lulled into that. We don’t get paid enough to take that kind of risk. We have to be careful and disciplined.

Is there a range of revenue you look for in new business customers?

COLOMBO: We have products for under $1 million in revenue. Business banking is $1 million to $10 million. We do a lot of business in that range. Over $10 million is middle-market banking.

The interest-rate market is challenging right now, especially the flat yield curve. How do you manage your bank in relation to that?

COLOMBO: Yes, even long-term. It’s spooky. It’s a great question. We are asset-sensitive. When rates rise, we do better. I don’t see rate increases in the near future. Fifty percent of government debt of $18 trillion is floating-rate. If they raise rates one percent, they have to pay more. It makes a bigger deficit. The dollar is already strong, frankly a problem. Raise rates more, we’re not going to export much. I don’t see rates rising in the near future. Lots of banks are doing very long-term low-rate loans. It’s difficult to compete. Our cost of funds is very low, eight basis points, with 45 percent of our deposits non-interest-bearing. The market is dictating longer-term, lower-rate transactions — seven, 10, 15 years, fixed rates in the high threes. It’s scary. Who knows what’s going to happen in five years. We do some of it, but we’re very careful.

Other banks are taking those risks?

COLOMBO: We see fin-tech companies doing P-to-P lending (peer-to-peer). In my view, it’s another form of subprime lending. If we have another recession, that’s going to be the new issue, the next big potential problem. Will the default rate go from 5 percent to 50 (percent)? I’m concerned. A lot of that is directed to consumers. We are more commercial. And we know our customers.