Anyone who's ever switched banks understands the frustration, hassle, and potential for error in even a relatively small financial transaction.
So imagine what Spokane-based Sterling Bank has faced as it absorbs 27,503 consumer accounts and 4,924 business accounts from the former First Independent Bank into its own computer and ATM systems.
Sterling, which officially acquired First Independent on Feb. 29, turns on the switch Monday that fully integrates customers of the former Vancouver-based bank as Sterling account holders. It's the final step in a transition that began in November, when members of the Firstenburg family agreed to sell family-owned First Independent's operations to Sterling, while keeping a portfolio of troubled loans to be managed by a family company.
Taking over a popular, locally owned bank creates significant marketing and public relations challenges, and Sterling is casting itself as a worthy Washington-based competitor in the crowded and still-struggling financial industry market. It recently established an advisory board headed by Jeanne Firstenburg, First Independent's last president and daughter-in-law of bank founder E.W. Firstenburg.
Jeanne Firstenburg, now Sterling's market president, said she hopes the committee will give Sterling direction on local business and philanthropic needs. And, she says she's actively looking for event sponsorship opportunities for Sterling, since competitors quickly scooped up many community events that had long been sponsored by First Independent.
No stranger to bank acquisitions, Sterling has worked hard on the technical side to create a trouble-free transition. It has invested in 18,878 hours of employee software and sales training as part of the transition, said Cara Coon, Sterling's public affairs director. Sterling began training its new Vancouver employees on new systems in May, Coon said.
Coon offers another big number: Sterling has spent approximately 14,000 hours on planning, infrastructure, and system conversion related to integrating First Independent into Sterling's operations, she said. The transition is "intensely IT (information technology) heavy," she said.
Small problems were already developing late last week, with reports of three ATMs failing and two complaints to The Columbian about debit cards being rejected by major retailers. Sterling said it was working to fix those problems.
By comparison, the branding and marketing aspects of the changeover seem relatively easy. On Friday, the First Independent name disappeared from the former bank’s flagship Main Street branch in downtown Vancouver, replaced by Sterling’s new logo (the new logo is part of Sterling’s recent name change from Sterling Savings Bank.) Sterling’s name was to be unveiled over the weekend at all 14 of the former First Independent branches in Clark and Skamania counties.
Sterling pledges so far to keep those branches open, and it is going forward with a project launched by First Independent to open a branch in downtown Portland, Coon said. That branch, which will give Sterling its first presence in Portland's central business district, will open in late October, she said.
As expected, not all First Independent employees survived the transition. First Independent had 243 full-time employees when it was subsumed into Sterling. That number dwindled immediately to 209 employees through a layoff of approximately 18 workers, six retirements, and a move of nine employees to a company owned by the Firstenburg family. Sterling, which had one branch each in Clark and Skamania counties before its acquisition of First Independent, said last week that it currently has 204 Clark County employees and five in Skamania County.
Last month, Sterling gave legal notice to the state that it would lay off up to 63 workers in Vancouver beginning Aug. 3. Many on the layoff list perform "back office" functions at a downtown Vancouver service center that are being integrated into Sterling's central operations. Sterling officials say some employees are finding jobs in the company or elsewhere in advance of layoffs.
But for those who don't leave on their own, Sterling now expects to cut 61 jobs by the end of the year. Of that number, 48 of those positions will go away this month, and the rest by the end of November, Coon said.
First Independent's departure has left Riverview Community Bank as the only remaining bank based in Clark County, and that bank last week launched a new promotional campaign for its personal and business loans. But Sterling hopes to capitalize on the goodwill built up over decades by First Independent and its Firstenburg family owners by casting itself as a Washington-based regional bank in touch with the local community.
Patrick Kelley, a former First Independent board member who is now on Sterling's advisory board, said he senses a "wait and see" attitude by Clark County residents about the newcomer.
"People in Vancouver are cautious what is Sterling Bank going to do for Vancouver," said Kelley, who is retired. Kelley said he'll be interested to hear more about Sterling's strategic plan. "They're trying to convince the people they are a stable bank, that they're here and want to stay," he said.
Sterling, which will release its second-quarter earnings Thursday, enters the Southwest Washington market at a challenging time for the finance industry, locally and nationally. Tom Hayes, a Montana-based principal in investment banking firm D.A. Davidson & Co., said the industry still faces daunting competitive and market challenges in attracting new customers wary of taking on debt burdens.
"The general feeling is that things are getting a little bit better (for the industry,) but not at a rate people were hoping for," he said. Loan demand at some banks isn't even strong enough to offset the loss of loans that are being paid off by borrowers, he said.
Hayes expects Sterling's loss of customers to be negligible if it successfully pitches itself as a successor Northwest bank to another Northwest bank. Still, he said, it's important for Sterling to "do the integration right, and keep the right people."
"They need to operate the bank like before," he said. "It's a relationship business."
Firstenburg heads Sterling’s advisory board
Sterling Bank’s new advisory board for Southwest Washington is headed by Jeanne Firstenburg, former president and chief operating officer of First Independent Bank, now market president for Sterling.
The advisory board also includes:
• Steve Hansen, owner of Basel Cellars Estate Winery.
• Steve Horenstein, former First Independent board member and principal at Horenstein Law Group LLCP.
• Patrick M. Kelley, retired, a former First Independent board member.
• Al Kirkwood, Kirkwood & Kirkwood Inc. owner and president.
• Robert Knight, Clark College president.
• Tom Mears, chairman of The Holland Inc.
• David Nierenberg, founder and president of Nierenberg Investment Management Company.
• Matt Olson, co-owner and managing member of Olson & Robertson Construction.
• Don Rhoads, president and CEO of The Convenience Group.
• Lisa Schauer, CPSM, principal, MacKay & Sposito Inc.
• Rhona Sen Hoss, assistant director of development for Washington State University Vancouver.
• Elson Strahan, president and CEO of Fort Vancouver National Trust.
• Kaycee Wiita, marketing and public relations consultant.
The Firstenburg Family Foundation continues to operate under the family business, now called Northwest Equity Holdings, and it offers grants to nonprofits in the former First Independent Bank’s service area. Information is available by email at firstname.lastname@example.org.