ShoreBank Pacific looks stronger after merger

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Dave Williams, ShoreBank Pacific

ShoreBank Pacific will emerge as a stronger institution following its Aug. 21 purchase by OneCalifornia Bank.

The Ilwaco-based community bank, known for its focus on sustainable businesses and nonprofits, will maintain its Northwest presence and won’t lay off employees, said David Williams, ShoreBank Pacific CEO.

Questions arose Aug. 20, after the Federal Deposit Insurance Corp. shut ShoreBank Pacific’s Chicago-based parent, ShoreBank. Thanks to its solid capital ratio and liquidity levels, ShoreBank Pacific was not included in the seizure.

ShoreBank Pacific, which has $190 million in assets and 30 employees, announced the next day that it had been acquired by OneCalifornia Bank, a community bank based in Oakland that focuses on lower-income communities.

The purchase, subject to regulatory and other approvals, will result in a bank with around $300 million in assets.

Williams said the sale will make it easier for ShoreBank Pacific customers to find capital. The lender’s Chicago parent recently hadn’t provided enough financial backing to ShoreBank Pacific to offer its customers more credit.

Federal regulators exempted ShoreBank Pacific from the Chicago lenders’ takeover after signing off on the Ilwaco bank’s balance sheets.

ShoreBank Pacific’s risk-based capital ratio is 8.58 percent, short of the 10 percent level that regulators consider healthy but easily exceeding levels considered “troubled.”

ShoreBank Pacific’s 42 percent liquidity level — measured in terms of liquid deposits — is also well above the regulatory danger zone.

During the regulatory actions, the Federal Deposit Insurance Corp. gave ShoreBank Pacific what Williams called a "waiver" that spared his operation from having to cover the Chicago operation’s losses.

The waiver signaled to Williams that ShoreBank Pacific should begin seeking buyers.

Williams said five lenders and a group of investors were the most serious candidates.

OneCalifornia will help ShoreBank target a new geographic market of alternative energy providers and energy-efficiency startups.

"OneCalifornia was best attracted to our mission and what we do," Williams said. "They’re hoping to get more people focused on the sustainability aspect of food production (in Northern California). And we’re planning to get more involved with their work in struggling communities."

The banks are still deciding how to structure executive teams and other staff positions.

ShoreBank Pacific’s survival eased concerns that the bank — which has its largest office in Portland — would abandon the market. Some 70 percent of ShoreBank Pacific’s current $100 million loan portfolio funds sustainable business ventures.

"There’s no question that sustainability is a big part of ShoreBank’s mission," said David Griswold, founder and president of coffee importer Sustainable Harvest Inc. "They work with triple-bottom-line businesses. That’s not something you can say about all banks."

The term "triple-bottom-line" is a sustainability buzzword that refers to meeting environmental, fiduciary and social mission goals.

Griswold credited ShoreBank Pacific with helping grow his company’s revenue by 108 percent each year between 2005 and 2009. The $25 million, 30-employee company links buyers to farmers who produce high-quality coffees but operate in remote areas.

"We switched from a more mainstream bank to ShoreBank Pacific at an important time in our growth," Griswold said. "We were concerned about (the sale) but I’ve been on the phone with Dave Williams and we feel confident things will be OK."

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