Snohomish County’s locally based community banks are doing well, their CEOs and top executives report, with 2012 shaping up as a time of economic improvement in their view.
Unable to weather the challenges of a recession-bound marketplace and bad loan portfolios, four familiar Snohomish County bank names vanished in FDIC-forced sales in 2011. First Heritage Bank, North County Bank, City Bank and Cascade Bank all folded their operations and were absorbed by outside banks.
The local survivors are Everett-based Coastal Community Bank and Mountain Pacific Bank; Lynnwood-based The Bank of Washington, Prime Pacific Bank, Unibank and Pacific Crest Bank; and 1st Security Bank in Mountlake Terrace.
Coastal Community Bank
“Things are going exceptionally well,” said CEO Eric Sprenk. “We’re ranked as the second-fastest growing, loan-producing bank in the county and the state, which is quite different than some of the other local banks.”
Sprenk said the bank has been raising significant capital, hiring new lenders and making loans, which were are up 29.7 percent over the past 12 months, totaling $48 million. The loans cover a wide selection of needs but they are predominantly business loans.
“It’s basically due to relationship banking, what community banks do best, learning what people’s needs are and how we can help them,” he said. “Our core deposits, including savings and checking, are up 90 percent over the last two years. Customers are tired of being treated poorly. They want local banks who care about them.”
Sprenk said more than 50 percent of his bank’s new accounts have come from customers of the four largest banks in Snohomish County.
He said Coastal Community Bank would continue to focus on building customer relationships and investing in the community, where Coastal officers and employees are involved in “almost every nonprofit board or volunteering their help. I believe that’s what community banks should do.”
Sprenk said some of his employees have family members working at the Kimberly-Clark paper mill that the company said it would close in early 2012 after talks with a potential buyer broke down over environmental cleanup issues.
“I think the Western Washington economy is stabilizing as a whole and we’re encouraged by things that are happening in the economy,” he said. “It still has some issues but we’re excited that Snohomish County is making progress toward a stable economy.”
Helping that economy along, Sprenk said Coastal has purchased a new branch site, taking over the former North County Bank offices at Smokey Point in Arlington. The move “shows our commitment to growth. The Arlington and Smokey Point market is very important to Coastal.”
Mountain Pacific Bank
At Mountain Pacific Bank, with headquarters in Everett and a branch in Lynnwood, President Mark Duffy said the bank is in a position for growth, thanks to a fresh $4 million capital investment from a local source.
“Before, there were 13 locally based banks, now there are seven with their headquarters in Snohomish County,” he said. “I think the failure of many banks and the changing ownership by big banks has driven a lot of customers to smaller, local banks. Many of the big banks got rid of a lot of local employees. As a local bank we’re attracting more of those customers who want a local bank. We are continuing nice, steady growth in customers, a lot of them from Union Bank, Columbia Bank and others.”
Looking ahead to 2012, Duffy said growth projections are “looking good” and believes “we’ve turned the corner locally.” He expects Mountain Pacific Bank to be profitable in 2012.
“With Boeing’s good news (deciding to build the 737 MAX in Washington), we feel we’re going into next year with an improved economy,” Duffy said. “Nothing dramatic planned next year but we expect to be one of the few local banks remaining.”
The Bank of Washington
Bruce Clawson, president and chief operating officer of The Bank of Washington, said the bank “isn’t growing now but we’re holding our own and beginning to move forward, which is great.”
Fifteen years ago, he said, the bank opened its first branch in Edmonds and since then has added branches in Lynnwood, Mukilteo, Everett, Redmond and Issaquah.
“We’re upgrading our facilities, adding improvements, and making some real progress in the marketplace. We’re very fortunate to be active lenders and providers of small-business lines of credit and term loans,” he said.
The bank makes loans for income properties such as apartments and office buildings and is very competitive in that market, he said.
“In 2012, we’ll begin making single-family mortgage loans again but we’ll hold the loans here in our portfolio, not sell them off to somewhere else,” Clawson said.
He said the bank has been getting commercial and retail customers from those who have “become frustrated with the larger banks. That’s our competitive advantage, we are a community bank with 400 community shareholders. We’re not owned by some larger bank.”
He believes 2012 will bring continued improvement to the economy and the bank and expects that next year the bank will begin growing again by adding commercial lending and home mortgages.
“With Boeing’s growth and its stabilizing hiring, we’re very bullish on our market looking a few years out,” Clawson said.
Prime Pacific Bank
Headquartered in Lynnwood, the bank has four offices, including two in Lynnwood, one in Kenmore and one in Mill Creek. Prime Pacific Bank specializes in the financial needs of its business-oriented customers, President and CEO Glenn Deutsch said.
“We not growing right now; in fact, we’ve shrunk a bit over the past 12 months but we’re at a level now that we’re looking to maintain,” he said. “It’s still a rough economic environment, but with Boeing and getting a replacement carrier in Everett for the USS Lincoln, those are some good signs, along with the booming business in the Alderwood mall.”
Deutsch said his bank provides many services to smaller to mid-sized businesses, including new entrepreneurial businesses and capital for operations and equipment.
“The larger institutions sometimes have cookie cutter, one-size-fits-all programs but we’re able to provide customized services,” he said. “Community banks are important and our staff is involved in their communities.”
Financially, Deutsch said Prime Pacific is still trying to recover from the economic doldrums and the 2011 shakeup in the county’s banking industry, but “we’re seeing improvements … it takes time for the healing. We’re already getting customer deposits from those who used to go to the big banks.”
Deutsch said he hopes to see more stability in the 2012 economy, although he knows things won’t return to the 2005-2007 boom years. In the third quarter of 2012, he said, the bank could see a slight increase in valuation.
“As for the unemployment picture, I think people who are working are feeling more comfortable in their positions, despite the awful news about the closing of the Kimberly-Clark mill in Everett (on Dec. 8, 2011),” he said. “We’re beginning to see some improvements in consumer spending, too. It’s a cycle we have to go through, and it’s still a little scary.”
At Unibank, headquartered in Lynnwood, the future looks bright, in great measure because it’ primarily serves the area’s Korean communities. Anyone can become a customer though.
“We have offices in Lynnwood, Tacoma and Federal Way and in 2012 we’re opening a new branch in Bellevue, the first ethnic Korean bank for that community,” said Stephanie Yoon, the bank’s vice president and senior planning officer. “Also, we’ll be moving our Tacoma branch to a larger location because we’ve been growing so much as that market grows.”
Being an ethnic-oriented bank, Unibank hasn’t had a large influx of disgruntled customers from the big banks since most of their customers were already attracted to the ethnicity of Unibank.
“Koreans feel more comfortable in our bank because we understand their culture,” she said. “Also, many of them are business owners but they need help from the bank to operate and we understand the language, who they are and about their culture. Many of them are first-generation immigrants in the United States and they’re more comfortable with us compared to, for instance, Bank of America.”
The bank is also special to the Korean community’s business clientele because the bank specializes in Small Business Administration loans.
“We are a sound bank and they like that,” Yoon said. “Even those who are not Korean have come here in the past couple of years because they know we are sound and not like the larger banks. Also, we know our customers by name and we know them well and know their businesses,” she said.
In 2012, the new Bellevue branch will be a big step but the bank is very conservative and plans well. Unibank has posted profits for the past four years by doing good business and looking for future opportunities, Yoon said. When the books close on 2011, Unibank expects to post another profit, positioning it well for future growth.
1st Security Bank of Washington
Joe Adams, CEO of 1st Security Bank of Washington, declined to comment for this story since he is in a Federal Trade Commission-imposed “quiet period” for the bank’s upcoming initial public offering of shares. Adams is not allowed to comment publicly on the bank since it might be interpreted as an attempt to influence the IPO.
According to the bank’s website, Mountlake Terrace-based 1st Security has offices in Lynnwood, Edmonds, Canyon Park, Overlake, Poulsbo and Puyallup.
Pacific Crest Savings Bank
Known as Phoenix Savings Bank years ago, Pacific Crest Saving’s headquarters and only office is in Lynnwood.
President Sheryl Nilson says the bank is in “a slow growth mode, like many other banks that had a lot of real estate, construction and land development loans, but our capital ratios are up where they should be and, sadly, a lot of our peers’ ratios aren’t,” she said.
The bank is attracting customers on the lending side and it still offers a lending portfolio for small commercial, multifamily and single-family homes.
“We’ve also gotten customers moving over from larger banks,” she said. “People really do want to be able to sit down and talk with their bankers. We work very hard for our customers and we’re a $160 million asset bank.”
Nilson believes Pacific Crest Savings Bank will begin growing again in 2012 in deposits and checking. She plans to expand business lending as much as possible, including construction and small-business loans, which she thinks will make the bank profitable next year and improve its capital ratio.