American Marine: ‘Old Faithful Gone Bad’
Former American Marine employees: Remember to keep me updated. Thank you. Rachel Pritchett, reporter, (360) 475-3783
By Rachel Pritchett
rpritchett@kitsapsun.com
BAINBRIDGE ISLAND
When American Marine Bank failed, Bainbridge Islanders took it personally.
The bank had been at their side in the decades since post World War II, their steady partner as they turned an island of patchwork farms into a premier Seattle suburb.
No one felt the Jan. 29 closing more deeply than business owners who’d gotten sustenance from the bank to grow.
“American Marine has been our bank since Day 1,” said Larry Nakata, president of Town & County Markets Inc. Regularly during the past 52 years, his company got American Marine loans as it expanded its premium grocery stores off the island into Poulsbo and greater Seattle.
Winslow Paint Company owner Mary Hall remembers that it was former American Marine CEO Bess Alpaugh who believed in her and Ken Schuricht when they took over Winslow Hardware in 1994. The bank didn’t forget them later when they opened Winslow Paint Company on Hildebrand Lane.
“We’re very, very, very connected with them,” Hall said.
Movie theater and public-relations man Jeff Brein figures he and partners had more than 10 accounts with the bank when it closed. Over the years, they used American Marine loans to buy land for the Pavilion, and to outfit the interiors of their theaters.
“So they were with us from the very, very beginning,” Brein said.
Gloria Goller, 94, was at Lou Goller’s side when he opened the bank in 1948.
“He would have been horrified, certainly,” she said when asked how her husband would have felt about the failure of the bank.
“Old Faithful gone bad,” she added.
It had been a family affair for the Gollers, with all three of their sons helping at the bank at one point in their lives, and two going into finance careers.
Much of the blame for the end of the 12-branch bank is being put on Rex Townsend, who served as president and CEO from 1998 to 2009. Also blamed are possible policies in place before Townsend that allowed the bank to take on a heavy load of risky real-estate and commercial loans.
Townsend did not return a phone call, but Brein came to his defense.
“Unfortunately, as the number-one guy at the bank, you’ve got to take some of the screen credit,” Brein said.
Bremerton Mayor Patty Lent, who said she resigned from the bank’s board of directors when she became mayor, admitted that there were oversights. She said that information presented to the board wasn’t clearly enough defined for members to make best decisions.
All that made it difficult to “keep the finger on the pulse,” she said.
At the end, the fall was dramatic. The bank lost $30.5 million in 2009. Loans that dried up included the $6 million for the uncompleted White Horse development in Kingston.
A key measure of a bank’s financial strength, Tier 1 leverage capital, declined from 8.25 percent at the end of 2008 to .76 percent a year later, according to the Federal Financial Institutions Examination Council. Ten percent is considered normal for a well-capitalized bank.
Its balance at the end of 2009 was a mere $2.4 million.
“American Marine Bank experienced significant losses in its acquisition, development and construction and commercial real estate loan portfolios,” said Greg Hernandez, a spokesman for the Federal Deposit Insurance Corp.
In 2009, as the weak real-estate market bore on, regulators circled tighter, and at the end gave the bank 30 days to find new capital or merge.
Efforts to find capital were not successful.
With the closure, the hundreds of American Marine stockholders, many of them local, have lost their money. It remains to be seen whether they sue.
Also uncertain is the future of the bank’s 120 employees jobs and pensions. JoAnne Coy, spokeswoman for the bank that took over American Marine, Columbia State Bank of Tacoma, said it is committed to giving employees certainty about their jobs as soon as possible.
Judy Thorpe, senior vice president of community banking and marketing, resigned after the takeover.
Both of Washington’s U.S. senators are working to get capital flowing through troubled banks like American Marine that have not yet failed.
Sen. Maria Cantwell, D-Wash., and Sen. John McCain, R-Ariz., have introduced legislation to separate commercial and investment banking. Cantwell also has urged the Obama administration to use funds from the Troubled Asset Relief Program to infuse capital into small community banks for small-business lending.
Sen. Patty Murray, D-Wash., has introduced legislation to build public-private partnerships to remove troubled assets from community bank balance sheets.
“The closing of American Marine Bank is just the latest example of what we are seeing throughout the country and particularly in the Pacific Northwest,” she said.
As of Friday afternoon, 16 banks had failed in the United States since the beginning of the year, a fourth of them in Washington and Oregon.
Community members appear grateful that a regional bank like Columbia took over American Marine.
“I’m glad it was a Northwest company,” said Lois Boubong, president of the Bainbridge Island Chamber of Commerce.
Gloria Goller, widow of the American Marine founder, agreed.
“I’m very grateful for the fact that it’s a regional bank that took it over, that community-wise, it has deep meaning for people.”
But in the end, it was a final good-bye to a friend that had been with them through thick and thin.
“It felt like a death, you know,” Goller said.
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