Published March 2003

Philosophy of service
serves Frontier well

The Herald/STEPHANIE S. CORDLE “A bank reflects its community,” Frontier Bank President and CEO Bob Dickson said. “And if the community fabric is strong, we feel that the bank is going to get its investment back by community growth, prosperity and the standard of living within that community.”

By Kimberly Hilden
SCBJ Assistant Editor

Twenty-five years ago, Frontier Bank started with seven employees — five full time and two part time — in a trailer on Everett’s Evergreen Way with $2 million in start-up capital.

And it didn’t take long for business to start booming.

“New accounts kept coming in, and at the end of our first year of operation, at that time, we had shown the best growth of any start-up bank in the history of the state of Washington,” said Bob Dickson, president and chief executive of the bank he helped found.

“We got off to a good start and continued that momentum,” he said, crediting much of the initial success to the enthusiasm and word-of-mouth spread by the bank’s 325 original investors.

Today, the bank has some 600 on staff, 38 branches in eight counties and almost $2 billion in assets. It has posted record-high annual earnings 23 times and has gained national recognition for its efforts, being named the No. 1 midsize bank in the United States in 1999 by U.S. Banker magazine.

Frontier also has gained a reputation as a good corporate citizen, donating time and money to a number of community organizations, including United Way of Snohomish County.

How did Frontier grow from a one-trailer institution to one of the largest independent commercial banks in the region? A simple philosophy of service, Dickson said.

“Our philosophy is that there are five constituencies that we’re serving, and that we have to serve each constituency equally well,” he said. “Those constituencies are our customers, our employees, our shareowners, our communities and our regulators.”

Keeping that sense of community
When it comes to serving its customers, Frontier understands that no two communities are alike, that a branch in Marysville might need to operate a bit differently than a branch in Port Townsend to better serve its market, Dickson said.

But that can be a challenge when the bank in question has more than three dozen offices in a growing geographic footprint. The key, Dickson said, lies in middle management “having the desire and commitment to continue that culture.”

“We are a decentralized organization, where our branch managers do have some authority within their communities to come up with their own plan that’s specific to the area that they operate in,” he said.

“If we continue to have 38 individual units that look at themselves as free-standing units, yet part of the total, we’ll continue to be successful,” he added.

Along with customizing bank branches to meet local needs, Frontier operates on the belief that community involvement is “part of the job,” Dickson said, which is why the bank, its executives and employees have donated their time and money to various community service groups.

Dickson himself is a past president of the United Way of Snohomish County and has served on the boards of United Way, the General Hospital Foundation, Hospice of Snohomish County, the Everett Area Chamber of Commerce and Junior Achievement, winning JA’s National Bronze Leadership award in 1983.

Others on Frontier’s executive staff also have given of their time and expertise to community groups. Dickson’s son, John, the senior vice president and cashier of Frontier, serves on the United Way’s finance committee and is on the board of Bethany of Northwest. Lyle Ryan, the bank’s executive vice president and branch administrator, serves on the board of the Mount Baker Council of Boy Scouts of America and is chairman of the board of Cocoon House and past chairman of United Way of Snohomish County.

“A bank reflects its community,” Bob Dickson said of Frontier’s desire to give back, “and if the community fabric is strong, we feel that the bank is going to get its investment back by community growth, prosperity and the standard of living within that community.”

Handling adversity
For 2002, Frontier announced record earnings of $36 million. It was a welcome report for a bank used to posting record-high earnings, particularly because it had suffered its largest loan loss ever just a year before.

During that time, the fourth quarter of 2001, bank executives became aware of some irregularities concerning a commercial loan account. According to Dickson, those irregularities prompted bank officers to research the matter further.

“The more we dug, the more we found things we really didn’t want to find had happened,” he said at the time, hinting at the possibility of fraud.

The bank acted quickly to save what it could, repossessing and selling off the collateral, applying the balance to the loan and increasing its loan-loss reserve by $13 million. It took a $93,000 loss for the fourth quarter but still was able to post annual earnings of $24.5 million.

Then, Frontier, which had just suffered a $9.3 million charge-off, “wiped the slate clean” and got back to business, Dickson said.

“Over this past year, 2002, in spite of a slowing economy and challenging interest rates, we were back on track,” he said.

Frontier’s future
With the bank celebrating a quarter-century of service and Dickson celebrating his 70th birthday this year, the longtime head of Frontier is looking to spend a little less time at the bank.

“I’ve been trying to cut back for two or three years and just doing a lousy job of it. If I tried to work just four days a week, I’d put in longer hours those four days,” he said.

So in January he announced that he would step down as president and CEO of the bank effective May 19, the day after his birthday. But he will retain his role as president and CEO of Frontier Financial Corp., the bank’s holding company, as well as remain on the boards of both Frontier Bank and Frontier Financial.

Taking over for Dickson will be a management team comprising John Dickson as CEO, Lyle Ryan as president, Connie Pachek as executive vice president of bank operations and human resources and Jim Ries, president of the bank’s real estate division. Together, the team has more than 120 years of banking experience — 88 of them with Frontier.

“I think it’s reassuring to our employees that if there is going to be a change, it’s really the same faces,” Bob Dickson said.

For the younger Dickson, the first order of business will be “business as usual.”

“The first thing I’d like to do is continue the success we’ve experienced over the past 25 years,” he said. “There are some pretty big shoes to fill, and, fortunately, I’ve got some pretty good people around me.”

Like his father, John Dickson said there is opportunity to add more branches within Frontier’s existing market area, noting an increase in activity in Pierce County. And the bank is always looking at alternative delivery systems, such as Internet banking, as well as enhancing its product offering in cash management to help support business customers.

For now, he and the other members of the leadership team are working on dividing up responsibilities for the official transition in May.

“Lyle, Connie and I have been somewhat running the bank the last couple of years, unofficially, so I think we will just continue that progression,” John Dickson said, adding that “Dad will always be there with his advice and wisdom.”

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