Snohomish bank seeks ‘organic growth’

  • By Bryan Corliss / Herald Writer
  • Thursday, September 16, 2004 9:00pm
  • Business

SNOHOMISH – First Heritage Bank has started a new marketing effort to draw attention to some of its more humble services – checking and savings accounts.

The Snohomish-based bank has hired a deposits expert away from Washington Mutual Bank and has launched its first advertising campaigns that promote deposit accounts.

The goal is to boost the amount of deposits coming in so the bank has more money to lend, said Dan Craven, First Heritage’s new vice president for deposit strategy and product management.

“We want organic growth,” he said. “We want our existing customers to deposit more money with us.”

After a long period of record-low interest rates, slumping stock markets and recession, things are starting to change for community banks. More businesses are borrowing money to buy equipment or expand, so the Federal Reserve is inching up the prime rate in hopes of keeping inflation in check.

But that also means higher rates on deposits. A year ago, Snohomish County banks typically paid 1.4 percent to 1.7 percent interest on six-month certificates of deposit. Last week, rates were closer to 1.75 percent to 2.25 percent.

“In a rising rate environment, your loan rates become higher but your deposit rates also become higher, and become a lot more attractive,” said Craven, who joined First Heritage in June.

That provides a challenge.

One of the advantages community banks have is that their customers tend to be less likely to jump ship, said Erika Hill, a senior research analyst who covers banking for Ragen MacKenzie.

But now, with interest rates rising, even content customers are looking around for higher interest rate deposit accounts, she said. So it makes sense for a community bank to launch a marketing campaign now, to “retain the deposits you have, and possibly get some other deposits as well.”

That’s what First Heritage is aiming at, Craven said.

The bank next month will roll out a suite of new banking services, including free checking accounts, club checking accounts that charge fees but help customers receive discounts on things like travel or insurance, and premium accounts, which pay higher rates to those who make larger deposits.

All are intended to make depositing money with First Heritage more attractive, Craven said.

The bank also has begun advertising its basic services – CDs, personal savings accounts and basic business checking and savings – with ads in a weekly Snohomish newspaper.

Before, First Heritage put its energy and money into advertising its loan services, said Rachel Mills, the bank’s marketing director.

The results were encouraging, Craven said. New CD deposits grew by 7.2 percent in August, and its savings accounts grew by 4.8 percent, even though competitor Cascade Bank opened a new branch in Snohomish, First Heritage’s home town.

“For a first-run campaign, the results were spectacular,” Mills said.

If First Heritage sustains that growth, it would mean an extra $3 million this year in new deposits, which is money that can be used make more loans or to raise loan limits, Craven said.

Reporter Bryan Corliss: 425-339-3454 or

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