Powerlist: Community bankers’ perspective

BY BRANDON SAWYER

Conversations with the CEOs of Bend’s largest community bank and a ‘neighborhood bank’ in Portland.

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BY BRANDON SAWYER

Terry E. Zink

President and CEO, Bank of the Cascades

Oregon Business: Bend was hit hard by the Great Recession. How did your bank survive? 

Terry Zink: Probably as well as it could have. When Bend and surrounding areas went into a fairly deep recession, the bank was struggling to stay afloat. We ended up in 2011 getting recapitalized, and that helped enormously. We didn’t take any TARP money, so we didn’t get “bailed out” by the government. They felt that we were going to fail, and they weren’t going to take a chance. We were given up for dead, but thankfully we have a good management team in place now, and we were able to weather the storm.

OB: So the bank found investors to recapitalize? 

TZ: Yeah, we had an infusion of capital in 2011, and it allowed the bank to get by. The regulators require you to maintain capital levels, and we would have drifted below what was considered safe. So it worked out very well for the bank, for the employees and for the shareholders.

OB: How does Cascade’s imminent merger with Idaho-based Home Federal Bank fit into your business strategy? 

TZ: Prior to 2011, BOTC was a $2.5 billion bank, and with the crisis, the bank dropped down to about $900 million. But we still had the same credit facilities, the same processing capability — all that stuff was the same as when we were a much larger bank. What the merger does is allow us to right-size our infrastructure so we’ll go back to being a $2.5 billion bank. It’s like having a V-8 engine that’s only running on four cylinders. Now that you’ve got all the cylinders functioning together, it will perform at a much better level. 

OB: Are more mergers likely down the road?

TZ: It’s difficult to survive if you’re under a billion dollars and you’re trying to keep up with all the regulations. We believe consolidation is going to continue to be a way of putting banks together. What our mission really is, is to get around $5 billion in size, be a strong player in the Pacific Northwest and be a community bank that people can count on. We’ll continue to look for ways to help the consolidation effort along, because it’s going to happen and banks are actually looking for partners. It isn’t the old days where everybody felt like they could operate independently.

OB: Technology continues to change the way people and businesses bank. Bitcoin is all the rage currently. What’s next? 

TZ: The capability of doing P2P payments with mobile devices. I believe that checks will be a thing of the past in the next five years. About 80% of all the transactions that take place today are electronic, and that’s just going to continue to grow. The threats to banking today aren’t necessarily other banks; it’s really the Amazons of the world, the Walmarts of the world. Those are places where, depending on how things go, the pressure’s going to come from for the normal everyday transaction account.

Cheryl Cebula

President and CEO, Albina Community Bank

Oregon Business: Are small businesses better served by a community bank than a big bank or a credit union?

Cheryl Cebula: It depends on what the business needs and what they’re looking for. Do they want to be involved with a bank that takes the time to get to know them, that is willing to look for maybe more creative ways to help them with financing options or access to capital? Do they want to be with a bank that’s reinvesting back into the community? If you want to be treated like part of the local community and want to form a partnership with your bank, then yes, I do think that sometimes a community bank is a more viable option. That’s not to say that big banks and credit unions aren’t involved in the community. 

OB: Do a lot of business customers prefer remote banking or, as a “neighborhood bank,” do they like to walk in for face-to-face service? 

CC: For all of our locations a good majority of the business comes from the surrounding five-mile radius. Certainly businesses are more and more looking for alternative options, whether it’s mobile banking or remote capture, where they can make the deposits from their business. But there is a good number of people who like to come into the bank and know the people in the bank and the bank knows them. I do see that … as a small business owner, you spend a lot of your time, each and every day and on weekends, invested in your business, and it’s tough sometimes to get away to the bank. 

OB: How does your bank serve businesses? 

CC: We do a lot of small-business lending. We also work with a lot of nonprofit organizations and foundations. We have about 500 local nonprofits that are customers. So we work with a lot of smaller businesses, which I know some of the big banks aren’t necessarily interested in. We are interested in working with larger businesses that have more complex needs: professional-services firms, manufacturing, commercial- and industrial-type deals. 

OB: What small businesses are growing?

CC: Breweries seem to be the latest and biggest thing. There are so many breweries in Portland right now — that’s a very hot industry. We bank a lot of them; [also] family-owned businesses, small manufacturing companies, professional-services firms and the single-person law firm. 

OB: How has your bank been performing financially? 

CC: For the last couple of years, we have been struggling as a community bank with some of the downturn. But we had a profitable year last year and expect that trend to continue. We’re seeing loan demand picking up. Our losses are down as we work through our problem loans. We deal with a lot of distressed communities and low- to moderate-income communities, so many of our customers were more impacted by the economic downturn. It certainly impacted us, but we worked our way through it.

This month’s Powerlist ranks banks by 6/30/13 Oregon and Clark County, Washington deposits.

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