On Friday, Jan. 24, the telephone rang on the desk of Six Rivers Bank President John Burger. It was Ted Mason, president of Humboldt Bank, calling from across town.
"I was told we were going to get a letter, hand delivered, containing an offer for our bank, and that we had four days to respond," Burger said.
"We were expected to sign a letter of intent ... and if the letter were not signed, Humboldt Bank was prepared to issue their own press release announcing the offer."
Because of the short time frame, Burger said he considered it a "hostile takeover" attempt, a charge Mason denies.
"That's so far from the truth," said Mason. "In 'merger-speak,' it was an unsolicited, friendly offer. We didn't try to low-ball them. We didn't try to buy up their stock. We didn't try to get a seat on their board of directors.
"We just wanted a chance to present an offer to the real owners of Six Rivers -- the stockholders."
Mason said Humboldt Bank had approached Six Rivers Bank informally in 1994 to suggest a merger. A second attempt was made last summer in a formal letter to the Six Rivers board. Both offers were declined.
The latest offer in January -- one share of Humboldt Bank stock for each share of Six Rivers -- Mason called "extremely generous." But Burger disagreed.
"To them, it was a good offer. To us, it didn't make sense because it was a stock-for-stock deal ... a piece of paper," he said. "If it's cash, it's a good deal if you don't have a company with growth potential. Our company does." Burger also estimated the offer cost his company between $75,000-100,000 to prepare a formal response.
"We had to hire special legal representation, a financial investment consultant, specialists ... to appraise the merits of the offer," he said. "It's our duty to our stockholders."
In a full-page ad in the Times-Standard Feb. 16, Humboldt Bank Board Chairman Ronald Angell said the market value of Humboldt stock at the time of the offer was trading at $21.75 while Six Rivers was $15.50. Humboldt Bank's assets are two times greater than Six Rivers and yearly profits, four times; and the performance differences were widening, the ad stated.
Even if the two companies were to compare book value (net worth divided by number of shares outstanding), Humboldt was offering Six Rivers stockholders 2.08 times the bank's current book value of $10.50.
"Book value by itself is only relevant if you are liquidating," Mason said. "It's how many times book value that's important. At 2.08 times book, this offer was the fifth most generous in the state over the last 25 months.
"It's unfortunate. An in-market merger such as this would make sense," he continued. "There are redundancies we can eliminate, duplications ...
"This merger would provide a stronger, independent local bank to compete against the giants. Our real competition is Bank of America, Wells Fargo, Coast Central," he said.
But after the most recent rejection, Mason said his bank is shelving merger talk for now.
"We don't anticipate that this will ever come to a vote (of Six Rivers stockholders) unless their management recommends it."
Ironically, the two banks came into being at the same time, in the late 1989, just one year after the area's only local bank, Bank of Loleta, sold to U.S. Bankcorp.
Coast Central Credit Union is the only other locally owned financial institution.
Pacific Lumber Co. suffered a major legal defeat in February when the U.S. Supreme Court refused to hear the company's appeal of a lower court ruling that prevented it from logging in its Owl Creek Grove.
The decision was hailed as a victory by environmental groups, saying it affirms the protection of habitat for endangered species, in this case the marbled murrelet.
But the decision is also likely to add weight to the arguments of agriculture and timber industry representatives who will seek to modify the Endangered Species Act again this year in Congress.
In related news, the California Public Employees Retirement System (CALPERS) urged Pacific Lumber's corporate owner, Maxxam, to commit to a permanent moratorium on logging ancient redwoods in the primary 3,000-acre Headwaters Grove, even if negotiations for public purchase of the grove should fail. CALPERS is a major stockholder in Maxxam.
According to reports in the Santa Rosa Press Democrat, CALPERS stopped short of doing what several of its member unions have asked it to do: urge Maxxam to relinquish the 60,000 acres that environmental activists have dubbed the Headwaters Forest Complex.
The federal and state agencies negotiating with Maxxam/PALCO to purchase the main Headwaters grove and adjoining buffer groves held hearings throughout the state in February to give the public an opportunity to comment before environmental assessments are prepared.
In Eureka, three hearings were held on Feb. 5 at Redwood Acres. Scores of people spoke, and most of the arguments were ones that have become familiar to North Coast residents.
But a new concern was raised by local government officials who raised the demand for economic aid to offset lost jobs and tax revenue associated with the removal from timberlands from private ownership.
Humboldt State University economics professor Daniel Ihara estimated that the removal of $380 million worth of timber (the figures agreed upon by Maxxam/PALCO and the government) would ultimately mean a loss of $200 million in timber industry wages. Including taxes and other monies, he put the total wage and tax impact on the county at $294 million.
Food For People, the county's largest free-food provider and a food bank for other North Coast pantries, closed escrow on its new "Harvest Home" in January. This month, the agency expects to begin remodeling the former painting contractor's warehouse at 14th and Summer in Eureka.
When it's completed, the facility will allow Food For People to stockpile more food and feed more needy people. "Last summer we had to turn away fresh produce and frozen products (due to a lack of space," said Cynthia Chason, Food For People director. "We're looking forward to being able to store more food efficiently and to increase our food distribution to groups throughout the county."
In February, rumors spread that Humboldt State University was contemplating the elimination of its football program. The anxiety mounted among fans and players after two of HSU's football rivals -- Sonoma and Chico state universities -- dropped their football programs this winter and several others abandoned the Northern California Athletic Conference.
But HSU administrators reaffirmed their commit to football in a press conference Feb. 6. "Football has received strong support from the North Coast community," said Athletic Director Scott Nelson. "That support has been crucial to helping us survive while others have been unable to."
Another factor making football secure at HSU is the fact that the school has equalized athletic opportunities for men and women with the addition of new sports for women. Both Chico and Sonoma had not met gender equity requirements, although a number of other factors contributed to the demise of those schools' football programs.
With the loss of football at Chico and Sonoma, HSU is the only California team remaining in the "scheduling alliance" of Oregon and Washington teams that HSU will join next fall.
An Arcata teacher accused of child molestation will return to court March 11 for a preliminary hearing to determine if enough evidence exists to take the case to trial.
Last month 34-year-old Michael Scott Shaddix, who is on administrative leave from Sunny Brae Middle School, pleaded innocent to 11 felony counts alleging sexual abuse between 1988 and 1991. The female students, now both 19, have not been identified.
Judge Bruce Watson also issued a "stay-away" order stating Shaddix may not contact the alleged victims or their families. Shaddix's attorney, Greg Rael, objected to the order, however Watson said it was routine in cases of alleged molestation of children.
Shaddix remains free on his own recognizance.
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