Banking $mart in 2008

Clark County bankers predict 2008 will be “complicated.” But most see opportunities amongst the obstacles.

“There’s definitely a headwind due to the weakening economy. But we’re projecting growth in our business plan,” said Brett Bryant, executive vice president and director of Wholesale Banking at First Independent Bank.

The secret, bankers say, lies in “banking smart” – capitalizing on consumer trends and strong economic sectors. In particular, commercial loans, business-related services and technology promise to be important focus areas.

“’08 will have challenges,” said Mike Worthy, CEO of Bank of Clark County, “but it won’t slow down our business growth.”

A look back at 2007

Many Clark County financial institutions experienced strong growth last year, putting them in a position to weather an economic slowdown in 2008. For example:

•iQ Credit Union’s dividend went up by 36 percent, membership grew by 4 percent (twice the national average) and business loans grew 13 percent.

•First Independent’s Wholesale Banking division saw a 28 percent increase in assets under management, a 37 percent increase in deposits and a 15 percent increase in loans.

•Columbia Credit Union’s home loans were up 10 percent.

•Bank of Clark County’s loan production grew 26 percent.

To protect these gains in 2008, said Greg Spear, chief financial officer and vice chairman of Columbia River Bank, “financial institutions will spend a lot more time watching over credit risks, and focusing on margins.”

Spear pointed out that borrowing rates aren’t moving in parallel with interest rates. Banks need cash, and many are offering over 4 percent on deposits. But as loan interest rates fall, profit margins are compressed.

“It’s getting tougher,” said Spear.

Commercial products on the rise

Ron Wysaske, president and CEO of Riverview Community Bank, said the residential housing and construction activity slowdown in 2007 was offset by robust commercial real estate and development activity and commercial and industrial loans.

Another local banker who sees a “firm market” for light industrial and office/retail activity is Wayne Kepfer, senior vice president and regional manager for Bay Bank. Commercial lending, said Kepfer, helps create jobs, and “jobs are king.”

Capitalizing on the strong commercial market, various banks are expanding their business client offerings:

•Riverview is expanding its corporate cash management services and offering bank card processing.

•Danette LaChapelle, senior vice president of marketing for iQ Credit Union, said it is ramping up its small business services.

•Columbia Credit Union has a renewed commitment to SBA lending.

Ron Bertolucci, First Independent’s senior vice president and director of retail banking, said the bank downsized its mortgage department in 2006, and have “no worries” about a mortgage meltdown. They are focused on corporate clients. In April of 2007, First Independent created a new “wholesale banking” division, which combines commercial banking, wealth management, asset management and cash management teams. Bryant stated that the new division was projecting strong, double-digit growth for 2008 in all areas – loans, assets under management and deposits.

Residential market not completely dead

Clark County banks still anticipate profits in the housing sector, albeit on a smaller scale than previously.

The bursting real estate bubble has created an opportunity, said LaChapelle, for iQ to “rescue members who got involved with exotic loans.” Also, while she doesn’t expect to see a lot of new home buying, dropping rates might offset a slightly slow economy.

Kepfer added that one could not ignore the ripple effect of the housing market correction, but certainly “the sky isn’t falling.”

Bank of Clark County is taking an aggressive approach. Worthy said they were “dramatically increasing” their mortgage staff. He said that the downfall of lenders who made unwise lending decisions is a “market opportunity.”

“All those (credit-worthy) people who were getting loans can now get them from us,” said Worthy, who hopes to roughly double the bank’s mortgage business in 2008.

Technology is a key factor

“Technology has really been important to the banking industry,” said Bertolucci.

Although banks continue to build branches, he said, fewer people are actually using branches, preferring to use ATMs, the Internet and the phone. To take advantage of this trend, First Independent has “invested heavily” in technology, such as “remote deposit capture,” whereby commercial clients can run a customer’s check through a machine, and the funds are almost instantaneously available.

“It’s safer,” said Bertolucci. “No one has to leave the office.”

Some of First Independent’s ATMs also offer a card-swipe-access vestibule, which provides safety and privacy.

iQ is planning to revamp their website to mirror branch offerings, so customers can apply for loans and accounts online, get instant answers and receive podcasts and e-alerts. Columbia Credit Union’s website offers podcasts from Brass Magazine, a money magazine geared to young adults.

 

NEW ON THE BLOCK

Frontier Bank and Columbia River Bank take advantage of hot Clark County market

New players in the market include Columbia River Bank, headquartered in The Dalles, and Frontier Bank, headquartered in Everett. Greg Spear, chief financial officer and vice chairman of Columbia River Bank said the bank moved its administration/operations office to Vancouver because as the bank grew, adopted more technology and went public, it was getting harder to find qualified bankers in The Dalles. In addition, said Spear, the bank was attracted by Clark County’s population growth and the fact that national banks have a smaller percentage of the market share than in other areas.

Columbia River Bank’s 6,500 square-foot temporary office on Mill Plain is “busting at the seams” according to Spear, with 20 employees – up from only four staff members six months ago. Spear said he hopes to open a new branch in East County by the end of 2008, and employ 50 to 60 people here. The long-term goal is to move Columbia River Bank’s parent company here.

Frontier Bank officially opened its loan production office off Mill Plain Boulevard in Vancouver on Jan. 7. Ken Imse, Frontier’s senior vice president and loan office manager, said they plan a full-service bank with branches. They hope to locate their first branch in downtown Vancouver, and add one in East County and north Vancouver within two years.

Imse said the bank’s current focus will be on commercial construction.

“Southwest Washington is a great opportunity,” said Imse.

 

BRANCHING OUT

In 2008, Clark County will see several new bank and credit union branches

 

Bank of Clark County. Long known for its “one branch” status, the bank will open a second location in February in East County.

Columbia Credit Union. CCU is working on three new branches – the Washougal branch, off Highway 14 at “C” Street, is already under construction; branches at Grand Central in Vancouver and Salmon Creek are in the permitting process. Also, CCU has purchased 1.8 acres in Battle Ground for a potential new branch there, replacing the branch inside the Fred Meyer store. All new branches will be LEED certified. 

iQ Credit Union. Along with the purchase of two downtown buildings for their City Branch, corporate headquarters, business lending and business services, the credit union opened a new Ridgefield branch in April and a branch at Union High School in the fall. Currently, they are remodeling the Fisher’s Landing branch, and in March or April will open a Camas branch. All new branches feature “low-impact” building techniques.

First Independent. The local bank has been steadily working on capital improvements, having redone five branches in the last three years. In 2007, the bank completed the total redesign of its Fourth Plain branch in November, and renamed it the International Branch. The bank plans several new branches in 2008, including a full-service branch in Salmon Creek, and will announce two new retirement community branches in early February, according to Ron Bertolucci, senior vice president and director of retail banking. 

Riverview Community Bank. The bank will open a new Hazel Dell office, replacing an older, leased facility in the area.

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