COEUR dALENEFive years ago last spring, a group of 250 mostly local investors picked a tough time to start up a community bank, says Max Faller, president and CEO of that institution, Coeur dAlenes bankcda.


The national economy was in a recession and interest rates were at low levels. A few months after the institution opened, terrorists attacked the World Trade Center and the Pentagon, causing the economy to plummet further.


The first few years were not easy, Faller says. But because national markets were declining, the investors felt local, long-term investment in a bank in Kootenai County was a positive. They knew we were local, and they had confidence in a vibrant local economy.


Compared with regional and national banks, bankcda is tiny. As of Sept. 30, its assets totaled just $73.5 million. Still, Faller says, Our shareholders believe in our business model. They dont necessarily believe bigger is better.


The banks assets have grown just over 300 percent since the close of 2002, when it reported $24.2 million in assets. Deposits totaled $61.4 million at the end of the third quarter this year, up from $50.3 million at the end of 2005 and $19.2 million at year-end 2002.


Bankcdas first branch opened in May 2001, at 1052 W. Mill, just off of Northwest Boulevard, in Coeur dAlene, with eight employees.


With just one branch, the bank reached profitability in 22 months, Faller says. Then, bankcda invested in expansion and infrastructure, which cost us, he says, adding, We decided to forgo profitability in 2005 in order to be well-positioned in the market and highly profitable in 2006.


During the expansion, bankcda built its second branch, at 200 W. Honeysuckle in Hayden, and moved and expanded its loan department to two floors of a second building in the complex on Mill.


We started with 3,000 square feet of total office space and brought it up to 9,000 square feet, Faller says. The banks staff has expanded at a similar rate, to 27 employees.


The expansion took its toll on bankcdas return on equity, a common ratio used in the industry to gauge a banks performance. The bank reported a 0.61 percent loss on equity in 2005, compared with a 1.56 percent positive ratio in 2004 and a 2.93 percent ratio in 2003.


This year, the bank is realizing post-expansion profits, he says, adding that he expects it to earn a 9 percent return on equity in 2006.


The bank reported net income of about $161,000, or 23 cents a share, for the third quarter, compared with a net loss of about $97,000, or 15 cents a share, for the year-earlier period. For the first nine months of the year, the bank posted net income of $415,000, compared with a net loss of $8,500 in the year-earlier period.


We took a strategy to have a good footprint to increase value and the ability to be convenient to customers, Faller says. Plans now focus on providing the best service to customers we can in Kootenai County.


The bank also does some business in surrounding counties, including Spokane County, though it has no current plans to expand to Spokane.


We think of ourselves as providing highly personal banking on a human scale, he says. Big banks are quite often anonymous. Here, our employees know our customers. They are interested in relationships, character, and the fabric of the community.


From its humble name with no capital letters to its homey branches, the bank wants to appear welcoming to customers, he says. Its main branch on Mill appears cozier than a traditional bank, with a living-room like setting, where customers have the option of sitting down to do transactions with tellers, Faller says.


Its a smaller building with lots of light. We designed it so customers can walk in and feel greeted, warm, and known, Faller says of the Coeur dAlene branch. Similarly, the banks Hayden branch has a cedar interior and a fireplace, he says.


Faller has been working in Idaho for 12 years, after beginning his banking career with First National Bank, in Boulder, Colo. In Idaho, he worked at First Security Bank, in the Silver Valley, then helped open a First Security branch in Post Falls, before joining the founders of bankcda.


He says bankcda is filling a niche in small-business lending and has a growing residential loan department.


The banks loan total was $56.4 million as of Sept. 30, up 31.3 percent from $43 million a year earlier.


Big banks can make similar loans, but cant always specialize in one-on-one, tailored, or highly personalized transactions, Faller says. Small community banks know personal or unique characteristics of small-business owners.


Like most small community banks, he says, bankcda can be nimbler than its larger counterparts. You can pick up the phone and talk to the bank and decisions are made right on the spot, he says.


But the bank isnt big enough to handle some services that larger banks can. Faller says bankcda works with partners, often larger out-of-area banks, for any loan larger than $1.5 million. We still take the lead on it, but use a participant bank, he says.


The company also provides a courier service for customers who dont have time to go to the bank.


We come by offices and pick up and drop off bank transactions, primarily for businesses, he says. Its a method of reaching customers that small banks can use when they dont have a large branch network. Its efficient, and customers are often so busy, its attractive to them.


Faller says bankcda is looking for continued growth, although it has no immediate plans for more branches.


Our next goal would be to grow beyond $100 million in assets as soon as possible, he says. We spent five years making investments in infrastructure. Were well capitalized in a growing market.


Contact Mike McLean at (509) 344-1266 or via e-mail at [email protected].