Banks are shifting away from branch offices, closing or consolidating thousands of them across the U.S. in recent years.
Consumers are becoming more comfortable with online banking, and one survey found that one in five hadn’t even visited in a branch in over a year.
But First Financial Northwest Bank is adding — not closing — branches.
The Renton-based bank went from one location just two years ago to 10, including adding five in Snohomish County.
First Financial sees the branch system as a way to grow in new communities, said chief deposit officer Dalen Harrison. Customers still want to sit across from a banker when opening an account, she said.
“They will use online sources to do research, but more accounts are actually opened in an eye-to-eye experience with a person,” Harrison said. “If you want to grow in a community, it’s important that you have locations where somebody can come in and do that.”
The approach has been working, Harrison said.
“We’re delighted with Snohomish County,” she said. “We love Snohomish County. Our branches are growing faster than the national average.”
Starting without branches actually helped First Financial, said Rich Jacobson, the bank’s chief financial and chief operating officer.
For the most part, all of the branches are between 1,200 to 2,000 square feet and include fewer than three employees — all bankers and no tellers.
“This is how most people would build branches now,” Jacobson said. “In the past, we would build 4,000- to 5,000-square-foot branches with a dozen employees. That’s a tremendous amount of overhead, from a CFO perspective. This is a far more cost effective way to build a branch network.”
The branches rely heavily on technology.
“They’re a little bit more like an Apple store than a bank,” Harrison said. “We issue debit cards there and then we show you how to actually activate the card and use it. We’ll go over, with an iPad, things such as how do you sign onto online banking.”
First Financial opened its first branch in Snohomish County in Mill Creek in 2015 and added another in Edmonds in 2016.
This summer, the bank purchased four branches from Opus Bank, including three in Snohomish County — one in Smokey Point-Arlington, another in Snohomish-Clearview and the last in Lake Stevens.
The bank is one of the smallest in the county in terms of deposits, according to an FDIC report, although that was before the addition of the four branches.
“Mill Creek and Edmonds, those were our first two offices and we are very pleased with those,” Jacobson said. “That really gave our board of directors the confidence that we should continue up there.”
The bank has been around for decades, opening in 1923. It grew to a financial institution with more than $1 billion in assets with just the single headquarters in Renton.
“Depending on your familiarity with banking structures, we were at that time what is lovingly referred to as an old-time thrift model,” Harrison said.
The bank was looking to grow when it went public in 2007. Then the recession hit. The $225 million raised by going public allowed the bank to weather the downturn. Now the bank is pursuing its intention to grow.
“We are publicly traded, and with that comes responsibilities to grow earnings every year to meet the shareholder expectations,” Jacobson said. “We needed to expand outside of Renton.”
Harrison is leading the effort to build the branch system. Both she and Jacobson are familiar with Snohomish County. She worked for Peoples Bank in Bellingham before joining First Financial in 2014. Jacobson worked for Horizon Bank, which also was based in Bellingham, before joining First Financial in 2013.
First Financial is looking to continue to add branches and wants to be in communities in Snohomish, King and Pierce counties. Snohomish County is attractive because it’s a growing county, but it also has lots of what Harrison says are great small communities.
“When I was a kid, the community banker knew where to get the best piece of pie in the neighborhood, knew where to go to get your car fixed, knew all of those pieces and they would spend time with businesses and consumers and sit down and talk about what’s going on,” Harrison said. “We like to bring that model into communities that have a community feel to them.”
First Financial is different from other banks in another way, Harrison said. Most banks look for locations and then build branches. First Financial turns the globe upside down, Harrison said.
“We build our branches around people,” she said. “The first thing that I do is find the team and then I say if you’re the team, then, ‘Where is the community where you can best provide service?’ So then we find the location.”
That’s what happened with the Mill Creek and Edmonds locations. And when the bank purchased the Opus branches it had bankers in mind for those communities, she said.
The bank now has 23 employees with more than 354 years of banking experience in the county. She expects First Financial to continue to add branches in the county. She’s not saying how many.
“It’s not a magical number,” Harrison said. “It’s a magical result. We should go in if we can add value there and it makes sense business wise.”
Much of what First Financial aims to bring is the community banking know-how to communities, Harrison said.
“Banks have been struggling with what value they provide,” Harrison said. “We might, as an industry, be too focused on the transaction flow. If we go backwards to think about banks, a lot of times the real value of what we have provided is the education and the ability to help people get to where they want to go.
“The transaction is just the how, it’s not really the what. We think we do that differently.”