Wheatland Bank, of Spokane, last week began limited demolition work for an extensive remodeling of the building in Yakima, Wash., where it has operated its18-month-old bank branch there. It also planned to make an offer last week for a site for a new building for its Wenatchee, Wash., branch and continues to eye sites for new branches here.

Sue Horton, Wheatland's chairwoman, president, and CEO, says the bank bought a 10,000-square-foot building in Yakima's Park Square development recently for $1.9 million from an investor who already had put in new electrical service and heating, ventilation, and air-conditioning systems.

"It will be close to a $3 million project" after Wheatland installs banking equipment, including for a drive-through operation, buys bank furniture, and completes its remodeling of the building's shell to upgrade its current branch there, Horton says.

She says that Vandervert Construction Inc., of Spokane, is handling the remodeling, and Bernardo-Wills Architects PC, of Spokane, is the architect on the project. Vandervert Construction founder Dick Vandervert is a member of Wheatland's board of directors, Horton says.

In the project, Wheatland also will remodel an 1,800-square-foot tenant space, and it already has had inquiries from parties who are interested in leasing the space, Horton says.

She says Wheatland will use 2,000 square feet of the building for the drive-through banking operation.

Meanwhile, Wheatland was to make an offer last week on a site in Wenatchee where it plans to construct a freestanding building for its branch there, and it remains interested in finding sites on Spokane's South Hill, on north Division Street, and in Spokane Valley for new branches here, Horton says.

She says Wheatland is unlikely to open branches in any of those locations before 2010.

Wheatland hopes to open a branch on north Division midway between downtown Spokane and its branch at 10801 N. Newport Highway, in the Pine Water Plaza development, and it wants to open a Spokane Valley branch midway between downtown Spokane and its Valley Mall branch, Horton says.

"Tri-Cities is another market that has always been on our radar," she says. "It would be a natural in-fill for us. We have to be there eventually."

Still, Horton says, "It's a real credit union town," with HAPO (for Hanford Atomic Products Operations) Credit Union and Gesa Credit Union each having a big market share there. As Wheatland sizes up the Tri-Cities market, it will monitor how that area stands to fare on future U.S. government appropriations, which drive much of the activity at the nearby Hanford Nuclear Reservation and have undercut the economy when they have dried up in the past.

Through June 30 this year, Wheatland's deposits had grown by 17.6 percent, to $176 million, Horton says. Total assets had grown by 14.4 percent, to $216 million, and total loans were up 10.6 percent, to $187 million.

Wheatland made net income through June 30 $363,000, which exceeded the projected $254,000, although it still was down from $657,000 in the year-earlier period because of the bank's costs in opening branches in the Central Washington communities of Yakima, Wenatchee, Ellensburg, and Chelan in the last couple of years, Horton says.

The bank knew its profits would be down this year because of the costs of its expansion, Horton says. "We budgeted for this," she says.

Yet, she says, the bank now has $72 million in total loans and about $28 million in deposits in its branches in Central Washington, which also include offices in Moses Lake and Quincy, Horton says.

"We hired very seasoned ag lenders in Central Washington and a large number of them" in the expansion in 2007 and 2008, she says.

"Their customers followed them" to Wheatland, enabling the bank to land the largest cherry grower in one of the cities it serves in Central Washington and the biggest orchardist in another city there, Horton says. "We never would have gotten them without our experienced lenders."

Wheatland has been slowed in its search for a new location for its Wenatchee branch because few sites have been available, although the economy is strong there and also in nearby East Wenatchee, she says. Eventually, Horton says, "We'll probably have (a branch) in East Wenatchee, too."