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New Cascade Bank owner aims for vibrant bank system in West

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By Mike Benbow
Herald Writer
Published:
All the bank buyouts and closures in the West are a sign that the banking system here is broken, said Stephen Gordon.
And he'd like to be part of the solution.
"One third of the banking institutions in the state of Washington are under some sort of regulatory order," said Gordon, who leads the bank that is buying Everett-based Cascade Bank's parent company. "Some have recapitalized, others have failed."
Even banks without regulatory orders are having difficulty finding the money needed to make new loans, he said, adding that the credit crunch is stifling the economy.
"If you can't expand, you can't hire and you can't generate tax revenues," Gordon said of businesses that need loans. "It's like a death spiral."
Having money to lend isn't a problem for Gordon, chairman and chief executive officer of Opus Bank of Irvine, Calif, which announced last week that it was buying Everett's Cascade Financial Corp., the parent company of Cascade Bank.
He and a group of investors took over Opus last September, providing it with the $40 million in new capital it needed and $420 million more. His plan is to use the money to build a new regional bank in the West, first in Washington, Oregon, and California and eventually in Arizona and Nevada.
Cascade, founded in 1912, was Snohomish County's oldest and largest local bank. Opus paid $21.75 million for Cascade, including an agreement to pay back $16.25 million of the $39 million in Troubled Asset Relief Funds the federal government loaned the bank. Taxpayers will account for the rest.
Gordon wants to use the Cascade territory as a hub in western Washington, expanding Opus to the north and the south of Cascade's existing territory. Carol Nelson, Cascade's CEO, will become president of Opus in Washington.
She and Gordon said that Cascade's name will change, but they intend to operate it with the same people and with a similar attitude.
"We want to be the premier community bank in this market," Nelson said.
Asked how he intends to do that, Gordon said his vision goes back to older days when banks respected their clients and were economic leaders in the community, not businesses focused only the number of storefronts they operate.
"We want to do our part to step up and turn the economy around," he said. "We will continue to look for those opportunities."
Gordon said community banking is about understanding clients, knowing their business and being flexible.
The New York investment banker started Commercial Capital Bancorp in California in 1998, taking it public in Irvine in 2002, according to the Orange County Business Journal. The Journal said he raised $43 million in the initial public offering and built the bank into $6 billion in assets before selling it to Washington Mutual in 2006 for $1 billion. WaMu was later taken over by JP Morgan Chase.
Because of all the takeovers and the poor economy, community banking has been disappearing, but the concept isn't gone, Gordon said.
Nelson said Opus hopes to merge the best ideas between Cascade and Opus.
Gordon noted that at its peak, Cascade had about $180 million to lend, adding that now it has "north of $400 million.''
He said the difference with that amount of money is that at smaller banks, customers could grow to a certain point, then they had to go to a larger bank for the next loan.
Opus will be able to expand those loans, he added.
The bank now has $2.5 billion in total assets and 27 offices, 22 of those being former Cascade offices. In an interview last fall, Gordon told the Orange County Business Journal that he'd like to expand to 75 branches.
He said in a Monday interview that he plans to look for other banks to purchase and to look for ways to expand and to pump new capital into the former Cascade territory.
Nelson, who came to Cascade from Bank of America, said her employees are starting to get excited about the idea of having money to lend again and to spend on community events.
"For the last two years, we've been cutting back," she said of sponsorships. "That will be restored."

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