To Our Clients, Colleagues and Friends, 

• Earlier today we met with officials from the Federal Reserve. We’ve been advising a mortgage banker client on buying a bank, and because the bank he’s buying is regulated by the Fed, they will have to approve his application.  In any case, the people we met with said it would take them only 30-60 days to approve the application.  We’re still in shock at how quickly they can move. 
• And why is our client buying a bank?  The #1 reason is just plain access to funding.  It’s scary these days, wondering whether your lines will get renewed.

• What do Ken Holtzman, Earl Hamilton, and Sam Jones have in common?  They were the only three pitchers to ever toss a no hitter without recording a single strike out!

• Two good guys who died way too young:  Jackie Robinson at 53 and Yale President and Baseball Commissioner Bart Giamatti at 51.
• The median price for homes sold in Detroit this past December was $7,500.  That’s not a typo.  Motor City had 1.6 million people fifty years ago.  Today it has 800,000.  There is not a single major grocery store chain in the city, and only two movie theaters. 
• We got the website wrong last week for CalCap.  It should have been www.calcapadvisors.com.  This is the private lender on income property loans.  A good goal for 2009 is to develop an income property division.  By the way, we know the guys running it.  Good guys, and smart guys

• Did you know that 9.6% of all advertising dollars are spent on the web?
• Does anyone recall our writing about CityBank, which we considered the most profitable bank in America ?  This Seattle area bank consistently generated a Return on Assets in excess of 3%.  Now, they’ve disclosed that fully 51% of their loans are non-performing, mostly construction loans.  Live by the sword, die by the sword. 
• Did you see that Citigroup’s preferred stocks are all yielding round 30%?  Not a good sign.  Wells Fargo’s are all in the mid-teens.  Not a good sign, but not as scary.
• Last Friday we mentioned the name of the person to contact at the Prieston Group.  We had also said quite a bit about Friday being the anniversary of the fall of the Alamo .  We got about a dozen e-mails asking if the person at Prieston was the same guy who’d been the starting Quarterback at Cal a few years ago, and yes, it’s the same person. But not one letter about the Alamo .  Gotta love our sense of history.  By the way, who is buried in Grant’s tomb?
• For those looking for work, here’s something from friend who’s working for a bank that’s been seized by the FDIC:  “The FDIC has big time hiring needs right now….  It’s a good place to work - the pay is relatively good (especially at the mid levels), they have terrific benefits, there’s obviously plenty of work right now, and it’s good resume building/networking for the future when the market stabilizes and grows.  I’ve also found them a be good group of people.”
  
• In the Owners-Who-Care department:  In 1974, The San Diego Padres played a horrible game, and in the 8^th inning, owner Ray Kroc grabbed the public address microphone and announced to the crowd ‘Ladies and gentlemen, I suffer with you. I’ve never seen such horrible baseball in my life.”  What a cool owner.
• We always thought of LOS company PCLender as oriented slightly more toward Credit Unions, but we saw a list of the lenders they’ve been signing up lately. They seem to be doing business now with a whole lot of mortgage bankers.
• Now that everyone is making money, perhaps you can spend a few minutes thinking about having a Disaster Recovery Plan.  Try to imagine that your main headquarters burns to the ground.  Start there.  It’s just not enough to simply back up your data every night.
• Are you doing well, making money, growing – but you’re a subsidiary of a bank or bank holding company that appears to be going down the drain?  We’ve seen this.  We think it calls for some contingency planning, and probably for going to the parent first and asking if they approve your going out to find new ownership.  When things get ugly, companies will sell anything to stay afloat, and wouldn’t you rather shop your company than have it sold in an act of desperation by your current owner?
• Weird names from the Office of Vital Records in Mexico , babies named: Burger King, Adolpho Hitler Flores de Valgas, Vick Vaporub, Alka Seltzer, Usmail (as in U.S. Mail), and in Connecticut , baby was recently named ESPN.  In New Zealand , a girl went to court to change her name from “Talua Does the Hula from Hawaii ”.

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Joe Garrett and Corky Watts   -   Garrett, Watts & Co.   -   510-469-8633   

“Helping mortgage lenders increase revenues, control costs, and better manage risk.”