Pete Q. Davis and Frank Mercardante, two successful retired bankers, apparently aren’t content with retired life and returned last month to take board positions on local banks.
Davis, 71, was voted as one of four new members to a newly constituted Coronado First Bank board of directors. Mercardante, 63, joined the board of San Diego Private Bank.
Davis’ spot is still contingent on banking regulators approving the sale of CFB to Embarcadero Bank, but most indications are the deal will sail through. Last week, CFB shareholders approved selling their bank to healthier Embarcadero in a stock and cash deal that amounts to about $9 million based on June 30 financials of both banks.
The combined $150 million bank, which takes on the Coronado First name, would have more than $25 million in core capital.
Davis is best known as the chief executive at the Bank of Commerce, which was acquired by U.S. Bank in 1999 for $314 million in stock. He served on the board of Torrey Pines Bank for five years ending in 2008, and has also served on the boards of San Diego Unified Port District and the Centre City Development Corp., the city’s arm for downtown redevelopment. Davis also had higher aspirations, and ran twice for mayor of San Diego, coming in third place both times in 2000 and 2004.
Mercardante has more than 44 years in the financial services industry, last serving as chief executive at Discovery Bancorp in San Marcos before that bank was sold to Irvine-based CommerceWest Bank in 2009. Prior to that, he was CEO at Placer Sierra Bank, which was sold to Wells Fargo in 2007, and Southwest Community Bancorp in Carlsbad before it was sold to Placer Sierra in 2006.
Mercardante has headed up several failed savings and loans as a managing agent for the Resolution Trust Corp. in the early 1990s, including one of the nation’s largest, Franklin Savings & Loan in Kansas, which had about $12 billion in assets.
Along with Mercardante, San Diego Private Bank announced hiring of two other staffers, Marie Bruning as vice president, private banker; and Liz Martin, client services specialist.
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S.D. Private Bank’s Next Phase: Given its recent hires, San Diego Private Bank is apparently stepping up its lending after going through a transitional phase. At June 30, total assets fell to $116.8 million, from $131.5 million in June 2010. Loans were down to $69.4 million, from $76.3 million in the prior year’s June.
Net income was $90,000 in the second quarter, up from a net loss of $1.5 million in the like quarter of 2010. For the half, SDPB reported net income of $17,000 compared with a net loss of $1.75 million in the prior year’s first half.
The bank’s problem loans expanded to $3.77 million as of June 2011, compared with $460,000 in June 2010. The ratio of problem loans to total assets was 3.33 percent.
The bank has two offices in University Towne Center and Rancho Santa Fe.
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More Detail on Embarcadero/Coronado First Deal: Dissident shareholders at Coronado First Bank objected to both the price and the combined bank’s management, according to a proxy report on the transaction.
Led by former directors Todd Anson, William Huck and Larry Kurmel, the group also persuaded two of the bank’s outside large investors, Service Equity Partners LP and Starboard Fund for New Banks, to support changing the original agreement announced in March. Before a special meeting June 16, the group was able to negotiate an additional $300,000 in cash plus excluding CFB’s chief executive, Bruce Ives, from a job at the newly merged bank.
The group also got CFB’s board to agree to hold an election of four directors on the new board joining seven directors from Embarcadero Bank.
The elected directors selected from a slate of seven candidates are Whitney Benzian, 31, executive director for the San Diego division of the California Apartment Association; Pete Davis; David Engleman, 73, a private investor who has served on many corporate boards; and C. Danny Payne, 65, a former Texas banker.
Ives, CFB’s founding CEO who was supposed to be the new bank’s chief operating officer, agreed to resign when the merger is completed upon receiving certain benefits.
In the proxy report, Ives is eligible to receive about two weeks salary for each of his six years of employment, plus continued health benefits in a package estimated at $50,000.
A call to Ives for comment was not returned.
Another loser in the renegotiated sale is CFB’s Chairman Barbara DeMichele, 57, who was slated to be the merged bank’s chairman in the original pact. However, she didn’t garner sufficient votes at the special shareholders meeting Aug. 23, and won’t be part of the new board. Who exactly the chairman will be is uncertain.
Several local bankers said they had never seen a current bank executive written out of any bank deal the way that Ives was.
Larry Hartwig, CEO at California Community Bank, said the fact that Ives’ severance package needed approval from federal and state regulators prompts questions about CFB having the ability to pay him a more common severance package of about 24 months salary.
While the actual price Embarcadero is paying for CFB won’t be known until after Sept. 30, it should be about $9 million. Using March 31 financial data, it would have been $9.4 million, but since then, CFB lost $752,000, decreasing its tangible book value. CFB shareholders can take stock or cash.
Send any news about locally based financial institutions to Mike Allen via email at email@example.com. He can be reached at 858-277-6359.