Spokane Journal of Business

Bank with blue couch looks to grow

Columbia has 13 branches east of Cascades, foresees more in the Spokane area

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-—Staff photo by Treva Lind
Columbia Bank Eastern Washington Regional Manager Nicole Sherman says the Tacoma-based institution hopes to have a presence in North Idaho within 24 months.

Two years after gaining a foothold in the Inland Northwest, Tacoma, Wash.-based Columbia Bank is eyeing potential expansion in the next two years with additional branches in the Spokane area and North Idaho, a regional manager here says.

"We have two branches right here in Spokane, and we're committed to being a community bank in every region we serve," says Nicole Sherman, Columbia's Spokane-based Eastern Washington regional manager since August 2011. "We'd love to be in North Idaho as well. It's a matter of growing strategically, and what makes sense to our customer base and our communities."

She adds, "I'd say we're hopeful we can be in that market within the next 24 months. I'd like to also see us out in the Valley, South Hill, and in Liberty Lake as well," which she estimated also might occur within the next two years.

Today, the bank has 13 branches in what Columbia calls its Eastern Washington region, which spans from Yakima east of the Cascade Mountains to Pullman. Among those branches, nine are former branches of the now-defunct Bank of Whitman, previously based in Colfax, including the two in Spokane.

Columbia's Eastern Washington regional office and downtown Spokane branch are based in the historic Fernwell Building, at 505 W. Riverside. The bank also has a Wandermere-area branch, at 12812 N. Addison.

Columbia Banking System Inc. is the Tacoma, Wash.-based parent of Columbia Bank, which operates 156 branches in Washington and Oregon. The bank has grown from fewer than 100 branches two years ago after a series of acquisitions, including one completed earlier this year involving Lake Oswego, Ore.-based West Coast Bancorp.

It first entered the Spokane market through an August 2011 purchase-and-assumption agreement with the Federal Deposit Insurance Corp. to take over certain assets of the Bank of Whitman.

Sherman says the initial FDIC agreement included eight of Whitman's former branches, but that about a month later, Columbia agreed to purchase the assets of a ninth branch in Mattawa, Wash., about 160 miles southwest of Spokane. She says the Mattawa branch emerged as a key branch serving many farmers in Grant County and the surrounding area. The acquisition also included branches in Clarkston, Colfax, Othello, Pullman, Ritzville, and Walla Walla.

Prior to August 2011, Sherman says Columbia Bank already had expanded east of the Cascade Mountains with a 2010 acquisition involving certain assets of the now defunct Columbia River Bank. The assets included branches in Yakima, Sunnyside, Pasco, and Richland.

Sherman, formerly an executive vice president at AmericanWest Bank here, says Columbia completed internal work for full conversion of Bank of Whitman systems and assets in spring 2012. Since 2011, the bank's Eastern Washington region employees also have focused on training and community outreach, she adds.

The bank employs about 110 people east of the Cascades, including 31 people in the Spokane area.

Columbia Bank also spent $800,000 about a year ago to remodel 11,000 square feet of space it leases on the first and fourth floors of the Fernwell Building. The bank moved just over a year ago from the former downtown Bank of Whitman office, at 618 W. Riverside, after being unable to come to terms on a lease there with the landlord, BKW Spokane LLC.

Sherman says the move, just one block east on Riverside Avenue, went smoothly and gives the bank a prominent location inside an historic downtown building.

The bank's spaces at Fernwell include branch services for commercial, small business, and consumer banking, and residential lending, all located on the first floor. Its regional offices and a wealth management department are located on the fourth floor.

Sherman says launching the private banking-wealth management group was an expansion that also occurred a year ago, when four people were hired. The group that now has seven employees helps clients with wealth management, investments, trusts, and complicated financial matters.

Meanwhile, she says the bank's regional operation has had strong organic loan growth since August 2011. Separate from the loans acquired through the Bank of Whitman asset purchase here, the loan portfolio grew from $70 million as of Dec. 31, 2011, to $123 million a year later, up 75 percent Sherman says.

As of June 30 of this year, the regional operation's organic loan amount has risen to $170 million, up another 38 percent.

"At that pace, we're set to outperform what we did last year," Sherman says. "The input I hear from customers is Columbia Bank has money to loan. We're lending money, and I think that stems from Columbia being very focused on the business customers."

Similarly, she says the region's core deposits were at $295 million as of Dec. 31, 2011, compared with $324 million as of year-end 2012, up nearly 10 percent.

About two-thirds of its business here is in commercial or business banking services, while about a third is in consumer and private banking, she says.

"We have a lot of business customers who want to do testimonials for us," Sherman says, referring to Columbia's advertising campaign that features its clients talking about their banking experiences while sitting on a small blue couch. The same blue couches are found in its branches, she says.

The region's employees also focus on community involvement, Sherman adds, having volunteered 1,500 community hours last year. She says the regional office has budgeted $91,500 this year toward sponsorships and community contributions, which include funding for Hoopfest, Providence Health Care Foundation, United Way, and Junior Livestock, among other groups.

Melanie Dressel, president and CEO of Columbia Banking System and Columbia Bank, says she's pleased with the growth in this region in the past two years. Dressel grew up in Colville before moving to the West Side to attend the University of Washington. She started her banking career in 1974.

"The Spokane and Eastern Washington marketplace is a very important part of our strategic expansion plans," says Dressel, who in the past has said this region plays a pivotal role in the bank's goal to become a Pacific Northwest regional community bank. "Of course, being from Eastern Washington, it's nice to see the kind of growth. Obviously, Spokane is a thriving community."

"We've seen really strong growth in our core deposits and in organic loan growth, and we've added a private banking-wealth management group about a year ago," Dressel says. "Adding the private banking-wealth management group really sends a strong message that we're very interested in expanding in the Spokane and the Eastern Washington marketplace."

She adds, "At some point and time, we'll want to expand the number of branches we have in the Spokane marketplace."

Dressel says the bank's strategic plan for the remainder of this year doesn't include new branches opening in this region in 2013, while the institution's plans for next year still are being solidified.

"Clearly, it's one of the market areas that we're looking at," she says.

With all of Columbia Bank's current operations, including 86 branches in Washington and 70 in Oregon, the financial institution employs about 1,800 people.

Dressel says Columbia started as a financial institution 20 years ago in August 1993. To help mark that anniversary, Dressel says she was invited to represent Columbia along with Clint Stein, executive vice president, to ring the opening Nasdaq bell on July 29. Dressel also was in New York City to present at a community bank investor conference.

Overall, Dressel says that Columbia is performing well this year.

"We're seeing growth through acquisition as well as organic growth," she says.

For its second-quarter earnings, Columbia recently reported net income was $14.6 million, or 28 cents per diluted share, compared with $11.9 million, or 30 cents per diluted share, for the same year-earlier quarter. A total of $9.2 million in expenses from the West Coast acquisition, completed on April 1, impacted second-quarter earnings, Dressel says.

"Generally, we're seeing dramatic loan growth throughout our Washington and Oregon footprint," Dressel says. "I'm confident we'll continue to see growth in loan production."

Dressel says the loan activity is predominantly for commercial loans to businesses and in commercial real estate lending. She says Spokane businesses generally are being cautious, though.

"We continue to hear that businesses are reluctant yet to make capital investments unless they're in those things that help them be more efficient," she says, such as new technology or equipment that can boost growth. "That's where we're seeing most of the new lending opportunities."

Treva Lind
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