ShoreBank Pacific wants to make Seattle, the Emerald City, even greener.
The Ilwaco, Wash., bank, the nation's first bank dedicated to environmentally sustainable community development, has focused for the past decade on making loans in and around Portland, Ore., to organic farmers and developers that clean up and rebuild on once-contaminated industrial sites, among other borrowers.
In July the $175 million-asset bank plans to move its small loan office in Federal Way, Wash., to larger digs near downtown Seattle and convert it to a full-service branch by yearend or shortly thereafter. More important, it is beefing up its staff there from just one lender to a team of eight bankers.
David Williams, ShoreBank Pacific's chief executive, said Seattle's economy historically has revolved around large companies such as Boeing, Microsoft, Costco, and Starbucks. But the region has grown more diverse in recent years; its emerging industries include those that promote alternative energy such as biofuel and wind.
"Seattle is becoming more of a green city and focusing more on sustainability, and it's now compelling for us to get up there and participate in that," Mr. Williams said.
He said another reason the small bank is ramping up in Seattle is that it finally has the earnings stream and capital base to justify doing so.
ShoreBank Pacific was formed in 1997 as a joint venture of the $2.3 billion-asset ShoreBank Corp. in Chicago and EcoTrust, a Portland, nonprofit business development group that focuses on pro-environment ventures. ShoreBank's flagship subsidiary in Chicago, also named ShoreBank, became the country's first community development bank in 1978.
Business at ShoreBank Pacific hardly boomed at first. Initially capitalized with $7.5 million, the bank had just $18 million of assets after three years, and it was more than five years before it started making money. (Mr. Williams was hired in 2000.)
Mary Houghton, ShoreBank Corp.'s co-founder and president, said the first few years were slow because the bank "didn't have the right management team."
Since 2004 the parent company has infused ShoreBank Pacific with $8 million in capital, and Mr. Williams said it is finally at a point where it can hire more people. It also plans to roughly double its head count in the Portland area, to 35.
ShoreBank Pacific had its most profitable year ever in 2007, earning $787,000. In the first quarter its net income rose 46%, to $272,000, from a year earlier and its return on assets was 0.70%.
Mr. Williams said the bank aims to increase assets by 35% each year while raising its ROA to 1%, and it is counting on the Seattle expansion to help it reach those targets.
Kevin Wilhelm, the CEO of Sustainable Business Consulting in Seattle, said that now it was the right time for ShoreBank Pacific to expand in that market because businesses there are getting more receptive to sustainable practices, spurred by the heightened awareness of global warming.
Businesses promoting sustainability are also "becoming more interested in moving their money to a bank that shares their values," Mr. Wilhelm said.
"But," he said, "they are also like any other kind of business — that bank would have to give the same level of service and offer the same affordable loans as everyone else."
ShoreBank Pacific may be able to get a leg up on its competitors by offering specialty products such as its EcoCash Checking account, which allows five free checks a month but then charges $3 for every subsequent check — a portion of which is sent to Climate Trust, a Portland nonprofit that buys carbon offsets.
Ms. Houghton said the main bank subsidiary has borrowed some of the practices of its West Coast sister bank and is now making loans to businesses that promote sustainability, as well as loans to individuals to buy and rehabilitate homes to be more energy efficient. So far both banks have made more than $1 billion of these loans, she said.
