SEATTLE -- Although new banks are continuing to form in Washington, the boomlet that came with interstate mergers appears to be running out of steam. Only one bank, Fremont First National Bank, is currently in organization, on the north side of Seattle.

In the past four years, more than 18 banks were founded in the state, according to Robert Anderson, executive vice president of the Washington Bankers Association.

"Community banking in our state has been as vibrant as anyplace," Mr. Anderson said. "The regional banks have pretty much squared themselves away by now. But in the interim, we've had a lot of new banks popping up."

|Window of Opportunity'

And though the number of new banks may have tapered off, the reasons for their founding haven't changed.

Pat Fahey, chief executive of Pacific Northwest Bank in Seattle, which just celebrated its fifth anniversary, has the same motivation as Bill Parker, chief executive of Fremont First, which just embarked on a drive to raise $2.5 million as its initial capitalization.

"There's been this window of opportunity in the last four years," Mr. Fahey said. "Interstate banking passed here in 1987. and since then the majors have been distracted with the frenzy that ensued."

Mr. Fahey was president of Old National Bank in Seattle, which was bought by Portland's U.S. Bancorp in 1987.

The next year, Mr. Fahey quit to help found Pacific Northwest. Five years later, the bank has $1 10 million of assets and a 1.8% return on assets.

Big Layoffs

"It was a good time to start a bank," he said. "You had Security Pacific, Key, and First Interstate all making moves here. There was a lot of strife internally, and we capitalized on it. We raised $8 million not long after the stock market crashed [in October 1987]."

Pacific Northwest's success emboldened other bankers, many of whom quit Washington's bigger banks -- or were ejected -- when the institutions were bought by out-of-state holding companies.

Fremont First is just one such scenario. Mr. Parker was a regional manager of First Interstate Bank of Washington until last year, when his job was axed in a consolidation.

Indeed, according to Glenn MacDonnell, a Dri/Mcgraw-Hill analyst, banking jobs are imperiled in Washington. For example, the purchase of Puget Sound Bancorp by Keycorp alone will eliminate 600 jobs.

Nevertheless, Mr. Parker will be adding a few jobs by starting Fremont First, which will serve small businesses on Lake Washington.

He said he's not worried about the flat economy because he believes that, long term, it's still a good time to start a bank.

"The market we're in is very varied," Mr. Parker said. "There's been lot of attention paid to the layoffs at Boeing, but our economy is more diverse than in California. We think that the overall trend is right."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.