Despite barriers to entry, county’s demographics are hard to ignore
Clark County has become a highly competitive banking environment. Locally owned banks, such as Bank of Clark County, First Independent Bank and Riverview Community Bank, and national institutions, including Bank of America, U.S. Bank and Wells Fargo, have found success in the market. Oregon banks are also looking to Clark County as an important place to build a presence. But it’s not so easy for Oregon and Washington to make the trade.
An element of reciprocity
Federal legislation in the mid-1990s liberalized interstate banking regulations, opening the doors for state-chartered banks to branch across state lines. Known as reciprocity, Washington allows banks based in other states to establish and operate branches under the same circumstances a Washington bank can operate in the corresponding state. According to Gloria McVey, acting director of banks for the Washington Department of Financial Institutions, the ability for Oregon banks to branch into Washington became more limited last year. Banks from each state must obtain a charter from the neighboring state before branching across the border. Banks can either acquire an existing bank that is more than five years old to begin operating under its own banner immediately, or the bank holding company can apply for a state charter by establishing a new, or "de novo," bank in the other state and after five years merge it into the existing bank. Acquisition has proven to be the most effective method for Oregon banks to extend into Washington.
Significant population growth attracts banks
Lake Oswego-based West Coast Bank and Portland’s Umpqua Bank entered Clark County through acquisition in 1995 and 2002, respectively. And Eugene-based Pacific Continental purchased a Seattle bank late last year before announcing in March it would open its first Clark County branch this year.
Mike Worthy, president of the Bank of Clark County doesn’t view competition from Oregon banks differently than others. The difference, he said, is in where the banks’ headquarters are, giving local banks the advantage.
"There is always a higher level of attention paid to headquarter cities," he said.
Because of the regulatory barrier to entry, banks pay a significant premium for the right to branch across the border, said Worthy. And now that they are here, the Oregon-based banks plan continued growth in the market.
West Coast Bank has the largest presence and longest history in Clark County of the three Oregon banks.
"It’s growing in many respects," said President and CEO Bob Sznewajs. "The residential housing market and land development are very explosive."
In 1995, it acquired Bank of Vancouver’s single branch started just six years earlier. It continued to operate under the Bank of Vancouver name until 1999 when West Coast Bank brought several subsidiary banks under the West Coast banner. The bank moved its downtown Vancouver office to the West Coast Bank building owned by Killian Pacific in 2001. Since then it has opened three additional branches, most recently in March near the Columbia Tech Center.
"It is a market we are very much committed to," said Sznewajs. "There is a lot of opportunity to grow."
West Coast Bank will add locations in growth areas of the county, as exampled by its newest location in East Vancouver.
"We will keep reaching out in the direction of people," said Sznewajs, "and continue to follow the development or precede it if we can find an opportunistic property that we see makes sense."
Umpqua acquired Portland-based Centennial Bancorp, which operated two Vancouver locations, in 2002. Centennial had been in the Clark County market since acquiring a Hazel Dell Branch in 1998, which was divested as a condition of a merger between two other banks in the region.
"There is strong growth in the community," said Lani Hayward, Umpqua’s director of creative strategies. "It’s a good fit for us as a community bank to be there."
Umpqua maintains the two branches it acquired and considers Clark County a key growth area as it looks to add eight or nine locations throughout its market area that stretches from Seattle to Sacramento this year.
"Washington as a state continues to be our growth strategy," said Hayward.
Umpqua operates two other Washington locations in Bellevue and Kent.
Pacific Continental wasted no time taking advantage of its ability to branch into Washington after it acquired Northwest Business Bank in Seattle in November 2005. In March it announced plans to open a branch in downtown Vancouver.
"We committed the resources to establish ourselves as quickly as we could in that market because of the significant growth in Vancouver and Clark County," said Dan Hempy, director of Portland operations.
Pacific Continental continues to look for expansion opportunities in all of its markets, including Vancouver.
"We see Clark County and the growth occurring there complementary to our Portland metro service focus," said Hempy. "We view it as an extension of the Portland metro area."
Pacific Continental isn’t alone in its thinking.
"Vancouver is a very important market because of the connectivity to Portland," said Sznewajs. "There is a separate identity, but a connectivity that I think everybody recognizes."
North of the river looking south
Riverview Bancorp acquired Portland-based American Pacific Bank in 2005, giving it its first presence in Oregon, where it has said it will look to grow. Ron Wysaske, president and chief operating officer of Riverview, however, views the two as different kinds of markets, noting that Portland has not grown as rapidly as Clark County has in the past 20 years. Riverview’s approach is to operate in Portland the same way it has in Clark County, by clustering its banks to create convenience for customers. The bank is looking to expand on Portland’s east side and has purchased land near an existing Wood Village branch.
Additionally, First Independent Bank has expressed interest in building a presence across the river, where it operates a loan production office. The Firstenburg family is invested in the year-old Bank of Oswego, which could position the bank for a possible acquisition in the future.
Despite already strong competition in the market, the waters are sure to get murkier.
"It is a growth market," said Umpqua’s Hayward. "I expect new start-ups and branch locations from others."
Worthy expects more Washington banks to make a run at Clark County. He is waiting for Columbia Bank and Frontier Bank from the Puget Sound region and America West and Sterling Savings Bank in Spokane to enter or grow in the market. Columbia has a presence in Woodland and Sterling operates one Clark County location. The only Oregon bank that could viably look to enter Washington is MBank in Gresham, which has grown its locations and is reaching $300 million in assets, said Worthy. But they won’t enter through an acquisition of Bank of Clark County, he said. The bank, which reached $300 million in assets this month, has regular inquires, but the answer is always no.
Banks new to the market in the past year
Regents Bank
1701 S.E. Columbia River Drive in Vancouver
Expanded loan production office to full-service branch of La Jolla, Calif.-based bank owned in-part by former Vancouver-based Northwest National Bank owner Tom Young.
Banner Bank
3100 S.E. 164th Ave. in Vancouver
Walla Walla-based bank has more than 60 locations in Washington, Oregon and Idaho.
Bay Bank
First floor of Vancouvercenter development
A subsidiary of Longview-based Cowlitz Bancorp with locations in Oregon and Washington, Bay Bank expanded from a loan production office to a full-service branch.
Pacific Continental
911 Main St. in Vancouver
Oregon-based bank announced in March it would expand into Vancouver, following November 2005 acquisition of a Seattle bank.
