In today’s chaotic banking world, where crashing waves of economic change have swept away dozens of famous-name banks and restructured much of the nation’s financial community, First Heritage Bank is stabilizing and creating a positive new image as “The Greatest Small Business Bank.”
Its future isn’t filled with rosy sunrises and rainbows yet but there are encouraging signs the bank has turned the corner and is regaining its balance.
Like many Snohomish County banks that invested deeply in real estate lending when that was the starring market in 2008-2009, the bank is under a “cease and desist” order from its overseer, Washington state’s Department of Financial Institutions (DFI).
With $215 million in assets in September 2009, the bank noted that more than 90 percent of its $174.6 million loan portfolio was in real estate. The bank lost $5.9 million in the first nine months of 2009, compared to a profit of $992,000 in the same period in 2008.
But the bank has been working hard to comply with the corrective terms of the DFI order, taking one of its biggest steps recently with a recent private sale of $3 million of preferred stock to raise capital to meet state requirements for improved capital ratios.
“The shares were bought by existing shareholders, employees and selected friends and family,” she said. “Half of the bank’s employees and all of its directors bought shares in the offering. I’m proud of how shareholders showed their confidence in us and their support for community banking and First Heritage in particular.”
That kind of confidence and commitment is part of the working environment and team building efforts led by Reines as president and CEO.
“We’re continuing to develop the strategic plan that our board of directors (chairman Fred Sjoholm, vice chairman Ben Magnuson, secretary Robert McDaniel, Adrian Taylor and Reines) approved three years ago to position the bank to become the ‘greatest small business bank.’ That plan was derailed by the economy but it’s now being readopted,” she said.
More than just being a bank, she wants First Heritage to be known as “the bank that businesses turn to when they think about finding a trusted business advisor that can help their business be more successful,” she said.
Re-emphasizing the bank’s leadership role in Small Business Administration lending in Snohomish County — it’s traditionally been the number one SBA lender since 1990 when SBA designated it a “Preferred Lender” — is part of implementing that plan, she said, but “that’s merely the beginning.”
Retail stores, developers, plant nurseries and restaurants are only a few of the many small businesses that form the heart of First Heritage Bank’s customer base. Larger banks may avoid business loans of less than $250,000, but that’s where First Heritage excels, she said.
“We established our niche through years of meeting our small business customers’ needs, whether it means a $15,000 revolving line of credit or even a $2 million business opportunity. A tradition of resourcefulness and integrity has developed.
“Our loan officers pride themselves on personalized service: visiting the customer’s place of business, being available on weekends and getting to know our customers over coffee,” she said.
When the economy began falling apart and unemployment ranks swelled, it was no longer business as usual for the bank.
“There were some very long days at first as we began working our way through this period of economic collapse and its impact on the bank’s loan portfolio and future investments, dealing with regulatory agencies and working to keep things together,” Reines recalls.
“About six months ago we got our arms around the problems and then started moving forward again. We saw nobody was lending and saw the need so we began using the SBA program to make a difference and, yes, we are lending now,” she said.
One of the most important elements in her efforts to create a unified, energized approach to serving the business communities where the bank’s six offices operate focused on using James Collin’s best-selling book, “Good to Great” as the basis for achieving the bank’s new goals for its future.
“It inspired us and helped us to focus on our core business — small business lending — and the need for positive attitudes and teamwork. We used it for our guide and it really made a difference in our attitudes, teamwork, focus and success,” she said.
When she became president in Nov. 2005 and CEO in Jan. 2007 things were different in terms of teamwork, goals and community involvement.
“Over the past four years the bank has become much more engrained in our communities,” she said. “Making a difference through our employees is part of fulfilling our need to give back to the communities where we live and work. That’s just as important as lending money.”
Employees are involved with food banks, Boys and Girls Clubs, chambers of commerce, senior centers and hospitals, she said. As for her own role, she takes a modest view.
“I’m sure every leader credits their successes to being blessed with a positive, hard working team. So do I, for sure,” she said.
First Heritage Bank’s President and CEO, Cathy Reines, has loved banks — particularly community banks — for many years, and it shows.
“I began my career in public accounting, specializing in banking. For the past 20 years I’ve worked in both the private and public sectors but always in support of the community banking industry,” said Reines, who still keeps her Certified Public Accountant (CPA) license active because “it’s served me well in this economic environment.”
Soon after being born in southern California, where her father was stationed with the U.S. Army, her family moved to Hawaii, then to Hillsboro, Ore., two years later, where she grew up. She’s lived in the Puget Sound area since 1984.
She began her career in the late 1980s with Ernst &Whinney, a CPA firm, which later became Ernst &Young, where she specialized in data processing, auditing and information technology.
Reines later moved to Puget Sound Bank until it was acquired by Key Bank, then moved on to US Bank before accepting an offer from a regional accounting firm, KVG (Knight, Vale &Gregory), working in their community banking practice.
Only five years later, in 1999, she became a partner with the firm until it was sold in 2001 to a national CPA firm, McGladrey &Pullen. Prior to leaving in 2003, Reines headed the firm’s West Coast Risk Management Banking Practice, overseeing 60 community banks, primarily in Washington state.
Afterward, she was Chief Financial Officer for a Security &Exchange Commission reporting bank before she started her own community bank consulting business.
When one of her clients — First Heritage Bank — was looking for a new president in 2005, she accepted the bank’s offer, later moving up to CEO in 2007.
“I never planned to become a bank president,” she said. “It just happened because of my passion. When I took an accounting class in high school I found I was addicted to it. That’s when I discovered how important it is to have a passion about what you’re doing. That’s why our bank has focused on small business banking, because that’s what people here are so passionate about doing,” she said.
Bank employees also are passionate about giving back to their communities, involving themselves in a variety of community service groups and other volunteer organizations.
Reines credits her successes to her outlook on life.
“By nature, I’m a positive, optimistic, forward looking individual,” she said. “I try to make a positive difference in the lives of people around me every day. ”
She also has leadership roles in the community in such groups as the Everett Area Chamber of Commerce, where she is chairman of the board; the board of the Carnegie Foundation Education Center; the Snohomish Education Foundation; the finance committee of the Greater Everett Community Foundation, the Washington Bankers Association’s NWFA Employee Benefits board of Trustees and the boards of Western Independent Bankers and Snohomish County Junior Achievement.
Another passion is her family, including her husband, Marty, who works in the Pro Shop at the Lynnwood Golf Course, four children and two grandchildren.
Nolan, who’s married to Katie Jo, and Chelsea, the wife of Jason, are both college graduates working on advanced degrees. Chelsea and Jason have two children — Taylor, who is 17 months and the current star on Cathy’s office computer screen, and month-old Jayden.
Two boys still at home, Josh, an 8th grader, and Jake, in 6th grade, keep their parents busy attending sports events, she said.
“It’s fabulous to find a career I can be passionate about. That’s what I tell my children to look for, too,” she said.
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