Sometimes two problems add up to one solution.
For some time executives at the $697 million-asset First Independent Bank in Vancouver, Wash., wondered how to crack the Seattle market. An affiliate, First Independent Mortgage Co., has fledging operations in the area, but the bank wanted branches there.
Then a golden opportunity landed at their feet. A group of bank organizers had hit a snag starting a bank ijon Bellevue, Wash., so First Independent’s executives persuaded them to open a First Independent branch there instead. That branch, in an office park, opened last week.
The two groups were not strangers. First Independent’s parent, First Independent Investment Group Inc., was an investor in what was to be called Sky Bank.
According to both First Independent and Sky Bank’s organizers, the deal was great for both sides. The Bellevue group has the financial wherewithal to make the kinds of loans it wants to make, and First Independent enters a market — and tries a new model — with a ready-made team of bankers with longstanding books of business there.
Sky Bank’s organizers were led by Scott Rerucha, who was the chief executive of the Bellevue-based Bay Mortgage for seven years and ran its operations after Cowlitz Bancorp of Longview, Wash., bought it in 2001.
Mr. Rerucha had planned to bring to Sky Bank a team of 15 bankers and 50-plus back-office employees from Bay Mortgage and other places he had worked. Now most of them are working at First Independent’s Bellevue branch on behalf of First Independent Mortgage.
In addition, the branch employs a small team of commercial bankers that Mr. Rerucha had recruited from other banks to join Sky Bank.
“In one fell swoop we got a team of people who are experienced, highly capable. and well connected to the market,” said Roger Jones, First Independent’s chief financial officer. “It’s a new marketplace for us, and we feel that we can grow faster by bringing in a complete team, rather than growing organically. Also, they are a known quantity, so this gives us a sense of comfort that there’ll be no surprises.”
For Sky Bank’s organizers, the offer from First Independent came at the perfect time, Mr. Rerucha said.
“We had wanted to open a regular community bank that would also fund about $70 million in mortgage loans a month, but regulators were concerned that this model would put a lot of pressure on a small start-up bank that did not have a lot of capital,” Mr. Rerucha said.
An agreement was reached in September.
“This deal gave us the capital right away to aggressively produce mortgage loans, which are very profitable,” Mr. Rerucha said.
Had First Independent not made its offer, Sky Bank’s organizers — which at the time had $1.5 million in seed money and $12 million in additional commitments — would have tweaked their model a bit to satisfy regulators.
Mr. Rerucha said the route they took was far better. “We would have had to cut our mortgage lending goals in half, but we didn’t want to do that, because that’s a lot of income that we would have had to give up.”
Moreover, First Independent offered the organizers an attractive compensation package, said Mr. Rerucha, now a senior vice president for First Independent Bank and president of First Independent Mortgage, whose headquarters were relocated to the Bellevue branch.
A team of mortgage bankers remain in the subsidiary’s Vancouver offices but are now under Mr. Rerucha’s supervision.
Robert J. Rogowski, a principal at Columbia Financial Advisors Inc. in Seattle, said he had never heard of a community bank persuading organizers of a would-be start-up to join it instead.
“I’ve seen other situations where banks have invested in start-ups in other markets, but this was definitely done for more than investment purposes,” Mr. Rogowski said. “First Independent also wants to stake out future opportunities in the Seattle area, and Scott [Rerucha] is a quality player who knows his stuff.”
Unlike First Independent’s 24 other branches in southern Washington, which work equally hard for retail and business deposits, the Bellevue branch is focusing on the latter, Mr. Rerucha said.
The commercial team he recruited has years of experience with local businesses, their high-net-worth owners, and other professionals. The deposits will be used to fund home loans.
First Independent plans to open more branches using this model in the Puget Sound area, Mr. Rerucha said.
