Published March 2003

2002 a good year for local commercial banks

SCBJ Staff

Commercial banks, those holding either state or federal commercial charters, headquartered in Snohomish County ended 2002 on a strong note, with a number of them reporting record earnings for the year despite a slow economy. Here’s a summary of their performance:

Cascade Bank
Cascade Financial Corp., the Everett-based parent company of Cascade Bank, reported record profits for 2002, with net income increasing 44 percent to $8.1 million compared to $5.6 million in 2001.

“In each of the past two years, we’ve increased earnings more than 40 percent by focusing on customer service and improving operations at every level,” said President and CEO Carol Nelson, alluding to Cascade’s 47 percent increase in earnings for 2001.

Total assets also increased in 2002, by 6 percent, to $804 million compared to $762 million in 2001, and the bank’s focus on increasing its commercial lending activity was reflected in a growth in business loans to 26 percent of its total loan portfolio, up from 21 percent in 2001.

The bank did increase its provision for loan losses by 38 percent in 2002, to $1.9 million, compared to $1.4 million the prior year, but Lars Johnson, chief financial officer for Cascade, said the bank’s loan portfolio continues to perform well with few delinquencies.

“We continue to build reserves to reflect the changing nature of our portfolio and the current economic environment in our market area,” he said in a prepared statement.

Highlights for the fourth quarter alone included a 30 percent increase in profits compared to fourth quarter 2001, to $2.2 million, and the opening of the bank’s 15th branch, in Issaquah’s Pine Lake QFC.

CityBank
CityBank, the Lynnwood-based parent company of CityBank and a majority owner of due-diligence and document-retrieval service provider Diligenz Inc., reported a 1.3 percent increase in consolidated profits in 2002, to $19.7 million, compared to $19.4 million in 2001. Profits for the fourth quarter alone were $4.9 million, a 12.9 percent increase from the fourth quarter of 2001, which saw a net income of $4.4 million.

For 2002, total assets increased 7.1 percent from the prior year, to $632.7 million; loans increased 7.5 percent, to $543.1 million; and deposits were up slightly from the year before, to $412.9 million, according to the company.

Coastal Community Bank
Everett-based Coastal Community Bank, which also has offices in Sultan and Monroe, reported net income of $282,000 for 2002, with total assets of $79.6 million, up 32.8 percent from the prior year. Total loans ($73.8 million) and deposits ($69.5 million) also were up considerably from 2001, increasing by 44.9 percent and 38.4 percent, respectively.

Highlights for the year included opening a residential real estate department, adding a cash management product and starting an online branch at www.coastalbank.com.

Coastal kicked off 2002 with the creation of its Employee Giving Fund, a charitable fund into which all of the bank’s employees volunteered to donate via payroll deductions. So far, the fund has made grants to seven area nonprofits, including Big Brothers Big Sisters, YMCA of Snohomish County and Christmas House, among others.

First Heritage Bank
Snohomish-based First Heritage Bank reported $1.32 million in earnings for 2002, down from 2001, when the bank reported record earnings of $1.68 million. The bank, which operates five branches in Snohomish County, ended the year with total assets of $102.4 million, deposits of $81.8 million and total loan volume of $67 million.

This past year, First Heritage focused its efforts on expanding its Small Business Administration loan services, adding another lender to its SBA lending staff as well as another loan processor to the support staff. The department also moved from its space at the bank’s main office in Snohomish to larger quarters at First Heritage’s Monroe branch.

The bank already is one of the top 10 providers of SBA loans within the agency’s Seattle District office.

Frontier Bank
For 2002, Frontier Financial Corp., the Everett-based parent company of Frontier Bank, reported record earnings of $36 million, a 47 percent increase from 2001 earnings of $24.5 million.

Part of that increase in profits can be attributed to a $13 million contribution to Frontier’s loan loss reserve at the end of 2001, compared to $3.2 million in 2002, the bank said. The impact of the charge, made in part to cover the default of a $9.3 million loan, led to a $93,000 loss in the fourth quarter of 2001.

For 2002, assets increased 7.6 percent to $1.94 billion; net loans increased 5.3 percent to $1.63 billion; and deposits increased 4.2 percent to $1.56 billion.

“This past year was a management challenge due to falling interest rates and a slowing economy,” said Bob Dickson, president and CEO. “It is indeed a pleasure to again be able to report record annual earnings. This brings our overall record up to 23 years in which earnings were at record levels out of 24 years of operation.”

Also in 2002, Frontier Bank joined its parent company as a member of the Federal Reserve, a move to streamline the regulatory process.

North County Bank
Arlington-based North County Bank reported 2002 as a record year for profits, which were up 159 percent from a year ago to $310,724. Total assets were up 51 percent to $49.6 million; deposits were up 56 percent to $44.3 million; and net loans were up 47 percent to $40.9 million.

Also in 2002, the bank, which celebrates its fourth anniversary in April, opened its second office, a branch in Marysville.

“The bank has been well accepted in both Arlington and Marysville,” CEO Jack Myles said. “Customers are appreciative of the personal service they receive at our community bank, and they continue to support our growth.”

Prime Pacific Bank
Glenn Deutsch, executive vice president of Prime Pacific Financial Services Inc., the Lynnwood-based parent company of Prime Pacific Bank, reported record profits for 2002, with net income increasing 276 percent to $213,000 compared to a loss of $121,000 in 2001.

Total assets also increased in 2002 by almost 28 percent to $45 million compared to $35 million in 2001.

The loan portfolio was $36 million, which represents a 21 percent increase over the $30 million in 2001.

Deposit growth was 32 percent, or almost $10 million over the preceding year, while capital formation increased 13 percent, the bank reported.

The bank also appointed Eric Carlsen as senior vice president and chief loan officer.

The Bank of Washington
For 2002, Lynnwood-based The Bank of Washington reported a record year for profits, with net income of $757,000, a 20 percent increase from the year before, assets up 21 percent to $81.3 million, deposits up 25 percent to $71.6 million and total loans up 20 percent to $63.1 million.

Also during the past year, The Bank opened its fourth branch, in Kirkland, with four new staff members, hired two more loan officers, created a separate mortgage division with two additional staff members and added a credit administrator.

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