December 21, 2022

Walt Disney

Investing in the little fellows                                                                             

On this day in 1965, the United Nations adopted the International Convention on the Elimination of All Forms of Racial Discrimination. It was ratified by 177 nations who must report regularly on their progress and compels its signatories to, among other things, pursue all appropriate means and policies to eliminate racial discrimination without delay, condemn colonialism and apartheid, and guarantee equality before the law-criminalizing hate speech, hate crimes and racist activities.   

Given all the acts of racial discrimination we experience and observe on a daily basis in all reaches of the planet, it would be easy to dismiss this Convention as another total failure of the ideals put forth by our global world order. However, in the early 1960’s when this Convention was conceived of and debated in the international community, there was great civil unrest underway in many parts of the world. Countries across Africa and in the developing world were demanding independence from colonialism, South African apartheid was a stain that could not be ignored, and Americans were rioting in the streets and passed the Civil Rights Act shortly before this Convention.

More than half a century later, we recognize that there is perhaps an endless road ahead to achieve the goal of eliminating all forms of racial discrimination and there are times when it appears that the battle is entirely lost. Such ideals must be fought for on a daily basis, on all fronts, inch-by-inch with never-ending persistence. There is simply no other option.  On this matter, we can pause to acknowledge the world is far improved from 1960, but so so short of where it needs to be.

On a different note, on this day in 1937, Walt Disney released its first animated feature film, which was the first full-length animated film in history and for which Walt himself received an honorary Oscar. Snow White and the Seven Dwarfs broke the record at the time for the highest grossing sound film, and adjusted for inflation, remains the highest grossing animated film and one of the top 10 box office hits in North America. The American Film Institute has ranked it the greatest American animated film and among the 100 greatest American films.

However, in creating Snow White, Walt Disney was short on funds and mortgaged his home to produce the film.  When the production substantially exceeded budget, he pitched Bank of America for a loan. Later, the profits from Snow White were used to finance a new studio in Burbank, the location of Walt Disney Studios to this day.  Never again would he need to operate from his uncle’s garage.

Disney’s loan was approved by A.P. Giannini, BofA’s founder and known as the banker for “the little fellows.” One of the early bankers to the nascent motion picture industry in Hollywood, I mentioned him in my celebration of the anniversary of the Golden Gate Bridge last year, which was only possible due to Mr. Giannini’s financing to build the bridge following the failed bond offering at the height of the Great Depression.  His was the only bank to remain in operations in the immediate aftermath of San Francisco’s 1906 earthquake, as he personally lent cash from a garbage wagon in North Beach. He pioneered branch banking, founded Transamerica Corporation, nurtured the startup wine industry in Napa Valley, supported the UC’s and financed the formation of Hewlett-Packard, the seminal event in the birth of Silicon Valley. One cannot overstate how one modest banker, focused on serving immigrants and unserved small business owners, could contribute so much to the transformation of California.

This is our last Board meeting of 2022.  We are pleased to report that from many perspectives, it has been the most productive year of IBank’s history. This year, we:

  • Strengthened each core program and added several new ones to serve the pressing needs of the state
  • Climate Catalyst:
    • Went to market with the Forest Resilience program
    • Approved the SmartAg program
    • Statute to collaborate with the Energy Commission on federal Department of Energy finance opportunities
    • Bringing the transmission line finance plan for approval today
  • SBFC:
    • Updated our Directives & Requirements, increasing loan guarantee cap to $5M
    • Launched statewide Climate Tech guarantees
    • Completed the CA Rebuilding Fund COVID funding to CDFI’s
    • Received US Treasury SSBCI approval and the $357M first tranche
    • Launched the state Venture Capital program for the underrepresented
    • Completed full encumbrance of the $120M small business COVID emergency appropriations, which supported over $700M of loans to over 3,600 small business during a critical time.
  • ISRF:
    • Updated Criteria, Priorities and Guidelines, increasing loan cap from $25M to $65M
    • Upgraded monitoring, pricing and credit processes
    • Emerged from the pandemic crisis with 0 defaults, 0 missed payments
    • Issued $117M tax exempt bond with AAA rating
  • Signed an Interagency Agreement with Public Utilities Commission to administer a $750M broadband infrastructure program
  • Exceeded $1B of balance sheet assets
  • Filled out our full executive team with key talent
  • Nearly complete in modernizing IBank for maximum impact, with a front and back-end enterprise technology upgrade to become an all-digital, hybrid institution.

Our model of applying new funds as seed capital for building sustainable, long-term programs to serve the state well into the future remains intact. For example, by leveraging $162M of net capital from the state General Fund 24 years ago, ISRF is approaching $1B of municipal infrastructure loans. Also, with $84M of federal funds in 2011 plus modest legacy funding long before the SBLGP’s adoption by IBank, we have supported over $1.8B of small business loans and over 115K jobs in less than a decade. We intend to apply the same principles to our climate programs, venture capital and the other new initiatives.

IBank is unquestionably larger and stronger than at any time of our 28-year history. We’ve emerged from the pandemic and economic crisis with more programs and better financial results than ever before achieved – the highest balance sheet growth, interest spreads, operating income, bond issuances, small business activity and inflow of state and federal capital.

We know that we have many challenges ahead, and so much more to do, but we are better positioned to tackle anything that comes our way and will continue to fight, on a daily basis, on all fronts, inch-by-inch with never-ending persistence to serve our mission.  We wish you all a wonderful holiday season and look forward to delivering more for the communities of California in the new year.

Scott Wu

S. Wu Signature