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THE HERALD BUSINESS JOURNAL    EVERETT, WASHINGTON

SEPTEMBER 1, 2014 Search 
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John Wolcott / For HBJ 
(click to enlarge)
Coastal Community Bank’s ninth branch opened in Snohomish at 928 Ave. D in mid-February. Coastal’s 10th branch is expected to open in late March in Smokey Point in north Snohomish County.

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Jim Davis, Editor
jdavis@heraldnet.com
Published: Wednesday, February 27, 2013

Bankers foresee strong year ahead

Community banks in Snohomish and Island counties anticipate growth in 2013, including new branches, increased business lending and a stronger housing market.

The popularity of community banks remains strong.

For those community banks that survived the last couple years of bank closures and the absorption of many well-known names into larger bank networks, their positions have been strengthened by new customers who defected from the megabanks that bought failed community banks in the wake of the collapse of real estate and construction.

Union Bank of California bought Frontier Bank. Whidbey Island Bank absorbed the assets of City Bank and North County Bank. Cascade Bank was bought by Opus Bank of California. Columbia State Bank in Tacoma bought First Heritage Bank after it failed.

Coastal Community Bank

While all of the bankers interviewed offered an optimistic view of the coming months, Everett-based Coastal Community Bank is one of the most active, planning to expand from eight to 10 branches in the first quarter.

Its Snohomish branch opened in mid-February and its Smokey Point branch is expected to open in late March in the former North County Bank facility on Smokey Point Boulevard.

Net income of $1.4 million in 2012 came from steady loan yields, a decrease in the number of troubled loans and improved funding sources for the bank’s loans. At the end of 2012, Coastal reported assets of $370.9 million, a 25 percent increase of $73.7 million compared to 2011. Total loans increased in 2012 to $75.4 million or 34 percent, and total deposits increased 24 percent to $328.3 million.

“Last year the economy hit bottom and now seems to be coming back,” said Eric Sprink, Coastal’s president and CEO. “We’ve also added some employees, including many of the top people from those failed community banks. We now have 500 to 600 commercial customers and entrepreneurs and they see the time is right to do things. Our SBA loans are huge right now.”

To step up to the bank’s increased loan demands, Sprink said the bank raised $6.5 million in capital during three weeks in February, “all from local investors in Snohomish and Island counties.”

Mountain Pacific Bank

At Mountain Pacific Bank, also based in Everett, CEO Mark Duffy said, “Our growth story over the past year is something we’re very proud of, particularly after three years of downsizing to survive the great recession. … We’re assisting the recovery of the local economy. As of Sept. 30 last year we were ranked in the top five of 70 Washington banks, showing a portfolio growth rate of more than 30 percent.”

Duffy, who was chosen The Herald Business Journal’s Executive of the Year last year, said the bank also recently acquired the top-ranked commercial lending team from the former City Bank in Lynnwood to “accelerate our growth plans in south Snohomish County.”

Duffy said he’s seeing much of his bank’s growth coming “from new customers displaced by Union and Opus banks (after they bought smaller community banks). There’s a little more commercial market confidence. People are buying, building and expanding so we’re very liquid right now with increased deposits and we’d like to make even more loans.”

Duffy said the bank’s success also stems from its courier service for business accounts, a service provided with Mountain Pacific-painted vehicles. Only one other bank, in Olympia, provides similar courier service.

Whidbey Island Bank

Another major player in the Snohomish County lending market is Whidbey Island Bank, which expanded its presence in the county in the changing banking environment that saw it purchase the former North County Bank and City Bank assets.

Looking ahead to 2013, Whidbey Island Bank CEO Bryan McDonald said he’s seeing increasing interest in commercial lending and a slowly improving economy this year, spurred by encouraging 2012 growth.

“Our new commercial loans in 2012 reached $193 million, up 49 percent over 2011, and the steady improvement in the local economy is a trend we expect to see continue this year,” McDonald said. King and Snohomish counties have been at the forefront of the upturn in banking business, with Skagit, Whatcom and Island counties trailing with smaller improvements.

“Our bank earnings of $16.8 million were up 13 percent in 2012 over the prior year,” he said.

More businesses sought loans last year and “we see signs that trend will continue,” McDonald said. “We feel very fortunate to have our new Snohomish and King County branches.”

Picking up North County Bank and City Bank assets “provided us with some good growth last year.”

Whidbey Island Bank’s newest branch is in Woodinville. It and branches in Mill Creek and Bothell are expected to benefit from increasing economic growth in King and Snohomish counties, McDonald said. The bank has 31 branches in the Puget Sound area.

The Bank of Washington

At The Bank of Washington in Lynnwood, President and CEO Bruce Clawson said that after a “slow three years, business finally picked up in the fourth quarter of last year, spurred by an increase in commercial loans. Our bank is for small-business owners and employers, as well as offering a full range of consumer products.”

Clawson said “the basic lending approach of larger banks is much different than community-based banks. We’ve been able to attract former Frontier Bank staff and others over the past two years, which is a big part of our plan to build on their customers and referral network.”

The Bank of Washington recently closed its Issaquah branch because it didn’t fit well in the bank’s market strategy, but Clawson said he has seen good growth at its branches in Edmonds, Mukilteo, Everett and Redmond.

“We’re seeing a definite shift in customers’ confidence and willingness to invest, plus we see a recovering housing market that’s making stronger gains,” he said. “I think 2013 is poised for more growth.”

Pacific Crest Savings

“We continue to focus on helping businesses with commercial lending, construction loans and lines of credit,” said Sheryl Nilson, co-founder and president of Pacific Crest Savings Bank.

She sees “a stronger commercial market” and notes that many loans are going to businesses buying facilities for their businesses or those that need a line of credit to finance their operations.

Founded in 1984 as Phoenix Mortgage and Escrow, today Pacific Crest Savings Bank focuses on real estate financing in the Pacific Northwest for businesses and consumers. It offers a variety of portfolio loan options, including loans for customers who often need financing for unique situations that many lenders don’t accept.

“Also, even though we have only our Lynnwood office, we provide a full range of online banking services that businesses like to use so we reach a broad market,” she said.

1st Security Bank

Headquartered in Mountlake Terrace, 1st Security Bank of Washington, headed by CEO Joe Adams, serves customers in Snohomish, King, Pierce and Kitsap counties with six branches that specialize in working with small businesses and community partners, including local contractors, builders, mortgage companies, home buyers and boat dealerships.

Last July, 1st Security raised $32.4 million in an initial public stock offering at $10 per share, providing the bank, originally chartered as Washington’s Credit Union in 1936, with strong funding for diversifying its business.

Adams was not available to comment but according to earlier news articles about its IPO, the bank plans to make more home loans, expand lending to businesses and commercial real-estate investors, as well as opening a branch on Seattle’s Capitol Hill in the first quarter.

UniBank

UniBank in Lynnwood continues to focus on its multi-ethnic banking market, particularly Korean-American communities. Last year the bank raised more than $5 million in capital and opened branch offices in Bellevue and Federal Way, according to published news reports. Headed by CEO Daniel Changyol Lee, UniBank emphasizes lending to minority businesses and individuals in the Puget Sound area.