Local banks strive to lure variety of new clients
First Indy, Riverview have cash to lend, find selves competing for same customers
Sunday, March 20, 2011
Clark County’s community banks say they’re loaded with cash and are ready to hand out loans that will help revive the local economy.
But as the lenders position themselves for growth, they’re fighting to attract potential business and consumer borrowers still spooked by the Great Recession.
Clark County’s two locally based banks — First Independent and Riverview Community Bank — both have hired or reassigned staff to focus on commercial loans, health care providers, and nonprofit organizations, among other potential growth areas. They face competition from other regional banks, notably Oregon-based Umpqua Bank, and national banks who also are in pursuit of the same market niches.
First Independent and Riverview are exploring expansion opportunities across the Columbia River. And they’re busy upgrading their technology to simplify electronic transactions, which continue to grow rapidly as smart phones and other technologies become ubiquitous. Having made it through the biggest financial crisis in decades, the local banks are eager to compete.
“We’re a survivor, but we’re tired of just being a survivor,” said Pat Shaeffer, board chairman and chief executive officer of Riverview Community Bank, which has posted three consecutive quarterly profits. “We lived through it, and it’s time to get back in the business.”
With the construction and real estate sectors both shrunken shells of their pre-recession peaks, the lenders are looking for a new market that will help them rebuild profits as the county’s economy slowly mends.
“I think we’re all going to be competing with each other for a broader lending base,” said Steve Horenstein, a Vancouver attorney who serves on the board of Vancouver-based First Independent Bank. “We all got too caught up in the real estate market.”
The new question for these lenders as they look for business borrowers from other sectors is whether they are again all putting their lines in the same over-fished hole.
“Every bank is looking for what a balanced portfolio looks like,” said Jeanne Firstenburg, First Indy’s president. “What I worry about most when I look at what’s possible is that everybody is going after the same piece of the pie.”
Chicken meets egg
The excesses of the financial industry — its creative financing on Wall Street and its easy loans on Main Street — contributed to the economic collapse that still weighs heavily on Clark County and the nation. That collapse, in turn, led to a bailout of some of the nation’s largest banks and new federal regulations that are reshaping the industry.
Locally, lenders are feeling their way through the new regulatory maze and continuing economic uncertainty.
Whether their troves of cash will bolster the local economy remains an open question. Here, the chicken meets the egg: Businesses don’t want to expand if consumers, who generate about 70 percent of economic activity, aren’t ready to spend. High unemployment, declining household incomes and sinking property values are likely to hold back recovery even if banks make money readily available.
The money for loans “is necessary, but not sufficient, for recovery,” said Scott Bailey, regional economist for the Department of Employment Security.
One of the great unknowns is whether consumers will return to their old spending habits as the economy recovers. Dan Foster, a financial adviser at Vancouver-based Foster & Associates, thinks not.
While household belt-tightening has increased the number of credit-worthy borrowers, Foster said, many people have become averse to debt for nonessential purchases.
“There’s a movement toward living within your means,” he said.
Lenders are ready to loosen their belts, but no one wants to return to the lax standards that initially made for easy living but ultimately crippled the economy. Still, banks want to be ready when businesses finally decide to expand and consumers are ready to borrow for school, home improvements, or vacations.
First Indy says it will target small business, commercial, and consumer loans as potential growth areas. Bank officials say they also want to increase its lending to small and institutional nonprofit groups and to strengthen its position with health care professionals.
Given that those categories encompass much of the local economy, it’s not surprising that Riverview is competing for the same turf. One of the most eye-catching new job titles locally is director of medical banking, a position established earlier this year at Riverview. The company hired Steve Plambeck, a banker with extensive connections in the medical and nonprofit fields, to fill the post. His assignment: build relationships with clinics, private practices, physicians, and hospital administrators.
Umpqua Bank earlier this year launched a new business banking division focused on loans of $250,000 or more, said Eve Callahan, Umpqua’s senior vice president for corporate communications.
“We’ve got $1 billion to lend,” she said. “We’re letting people know we have dollars.”
While their priorities sound similar, the lenders aim to distinguish themselves from national banks and each other with their own variations on the themes of full-service banking, friendly service, volunteerism and philanthropy. Then there’s the overlay of marketing, as the lenders aim to fashion images that build comfort and confidence among customers and potential customers.
On that score, executives at Riverview and First Indy acknowledge that Umpqua is the uncontested master. It has crafted a casual, consumer and community-oriented image that permeates everything from location of branches (which it calls stores) to its relentless self-promotion as “the world’s greatest bank.”
Umpqua also sets a defined goal for its community service program, giving employees as much as 40 hours of paid time off per year for community service activities, and has developed a “learn to earn” classroom program that educates students on the basics of financial management.
First Indy and Riverview both emphasize their deep community ties as banks based here in Clark County. They say they’re proud of the contributions the banks and their employees make to the community, acknowledging that they might need to do a better job of selling their message.
“We don’t make any noise,” said Riverview’s Shaeffer. “We need to work on not being the quiet bank.”
If the current pond isn’t big enough, local banks don’t have to look far for deeper waters. Federal regulatory reform has made it easier for community banks to open branches across state lines. First Indy is preparing to open an office in downtown Portland this spring. Riverview is looking for opportunities in Portland’s east-side suburbs, Shaeffer said.
It doesn’t take a banker to run the numbers.
“There are 600,000 people in Southwest Washington,” Shaeffer explained “and there are 2 million across the river.”
Correction: Eve Callahan's name was spelled incorrectly in an earlier version of this web story.