First Independent Bank, a longtime presence in Clark County’s business and philanthropy worlds, will disappear as a locally owned institution and become part of Spokane-based Sterling Savings Bank, leaders of the two banks announced Monday.
Sterling’s purchase of First Independent, to be completed early next year, spells an end to one of the nation’s few remaining family-owned banks. Members of the Firstenburg family are the sole board members and shareholders in First Independent. The family’s philanthropy has been highly visible in the form of many locally funded projects, among them PeaceHealth Southwest Medical Center’s Firstenburg Tower and Washington State University Vancouver’s Firstenburg Student Commons. The bank traces its origins to the former Ridgefield State Bank, founded 101 years ago.
“They were a true community bank. They did a lot of things for the community,” said Ron Wysaske, president of Riverview Community Bank. While the First Independent’s sale to Sterling is sad in many ways, Wysaske said, it creates opportunities for Riverview as the last Clark County-based bank. “We welcome it,” he said. “It’s a great thing for us.” By midday, Riverview’s website was promoting the bank as the last of the local independents.
First Independent had worked quietly over many months to find a purchaser for the bank, said Jeanne Firstenburg, the bank’s president. Her husband, Bill, and his brother Bruce, who serve on the bank board that includes only family representatives, are in their 70s and wanted to ease their schedules and responsibilities, she said. Family members chose to sell to Sterling because of its Washington state roots and its shared values, she said. Sterling will acquire $691 million of First Independent’s core deposits and 14 branches in Clark and Skamania counties, in addition to $455 million of assets under management from First Independent’s wealth and trust businesses.
“For this family and this bank, Sterling is the clear choice,” Jeanne Firstenburg said in an interview with The Columbian at company headquarters that also included Greg Seibly, Sterling Financial Corporation’s president and chief executive officer. “We are absolutely delighted, because community means everything to us.”
But the merger will eliminate an undetermined number of First Independent’s 240 jobs.
Firstenburg will become a regional vice president for Southwest Washington, and Seibly said Sterling would retain First Independent’s senior management. Sterling says it is evaluating the future of bank branches and will try to maintain as many branch-level employees as possible, but is uncertain about other administrative and support staff. Seibly said employees whose jobs are eliminated will be offered opportunities to transfer to other locations in Sterling’s five-state region.
“We are working through those issues,” he said, adding that he hopes to have more information in 30 to 60 days. As Sterling’s first acquisition in five years, the purchase of First Independent “is a signal that the recovery of Sterling is complete,” Seibly said.
Ezra Eckhardt, Sterling Savings Bank’s president and chief executive officer, said the ownership change should have little practical effect on customers. Operational changes are likely to take place by midyear of 2012, he said. Customers can continue to use checks and bank cards, and account numbers will generally remain the same. “The transition should be invisible to the customer,” he said.
Sterling agreed to pay an $8 million premium above the net value of acquired assets and assumed liabilities at time of closing. It will pay up to an additional $17 million over 18 months based on loan performance and retention of core deposits. The move strengthens Sterling’s presence in the Vancouver-Portland market, moving it from 12th place to seventh in the region, based on deposit share. Sterling has $9.18 billion in assets and 178 branches in Washington, Oregon, Idaho, Montana and California.
First Independent will retain $49 million in existing loans and $34 million in other assets, including its five-floor downtown headquarters. A Firstenburg family holding company will manage those assets and loans in addition to an existing loan portfolio they had purchased previously to shore up the bank’s bottom line.
The arrangement for retaining some assets provides tax advantages to the Firstenburgs and made the deal more attractive to Sterling, said Ken Roberts of the Portland office of the Lane Powell law firm, which represented First Independent. But the sale would have been appealing to prospective buyers even if the bank had been sold whole. “First Independent was an attractive franchise for a number of financial institutions in the Northwest,” he said.
Roberts said the decision to sell was based on a number of factors facing many smaller community banks. The weak economy has reduced loan demand and low interest rates have eroded profitability. New regulations and demands by the Federal Deposit Insurance Corp. for deeper loan reserves also are hurting small banks, Roberts said. In Clark County, the outlook is aggravated by the bust of what had been a boom economy.
“They said ‘We’ve got a healthy bank now and there’s an attractive enough market. There will be a lot of consolidation in the market. Let’s be at the forefront of that,’ ” Roberts said.
End of era
This all means the end of an era personified by E.W. Firstenburg, who purchased the Ridgefield State Bank in 1936 and built it into First Independent as Clark County shook its rural roots to become a thriving suburban community. Firstenburg’s work ethic and community focus were legendary, and he continued coming to the bank daily until his death in August 2010 at age 97.
That era ended with two votes Friday. In the morning, the bank’s board voted in support of the bank sale. In the afternoon, the bank’s shareholders — a large swath of descendants of E.W. and Mary Firstenburg — also endorsed the sale. Some children didn’t attend: they were too young to understand the intricacies or implications of the deal, Jeanne Firstenburg said. But they were represented at the meeting that closed a chapter in their family history and in the history of Clark County.