Oakes’ banking industry tidbits
Interest rates and regulations continue to be a sticking point.
“The regulatory environment is burdensome,” said Greg Oakes, Cashmere Valley Bank president and chief executive officer. “So far, with the change in administration, there is hope that it will be relaxed a bit. We’re seeing some movement in that direction, but we haven’t seen much that’s material yet.”
Some movement is happening with interest rates, but it hasn’t been enough to help.
“The Fed keeps raising rates, but they’re on the short end,” he said, on the short-term maturity yields rather than on rates for 10 years and beyond.
“Raising just one end hurts our margins. We’re not excited right now about what they’re doing, but we all manage balance sheets that could stand a rise in rates. Moving away from zero is good. That does offer some room to maneuver, but it’s not much in our favor. We’ll see what happens.”
The economy is hopping
“I’ve been at the bank for 35 years and was the chief lending officer for 22 years,” he said. “I’ve never seen such good credit quality. People have jobs, they’re paying their bills, business is going well. That reduces our credit costs. We don’t have to keep so much in our loan loss reserve to anticipate losses. But it never stays like this forever. We anticipate a slowdown at some point.”
Cashmere Valley Bank has been doing more business in construction, both residential and commercial, in the past year. “With the lack of inventory of homes and commercial property, most people are building something. That’s where the opportunities are,” he said.
CASHMERE — Cashmere Valley Bank is different and proud of it.
“Most banks are leaning heavily on the new,” said Greg Oakes, bank president and chief operating officer, referring to technology-related features like remote capture (depositing a check with your cell phone), online banking, bill pay, enhanced ATMs and more.
“It’s safe to say we’re all in that space,” he said. “But some of us are focusing on both channels, the new and the old. The major difference with Cashmere Valley Bank is we still have traditional branches with people in them, people with authority to help customers with problems.”
The bank is in the process of opening a new branch in downtown Yakima, bucking the trend of other financial institutions that have reduced the number and size of the branches, relying more on automation and technology.
“What we find in this market is people like the personal service,” he said. “It helps differentiate us. When we get compliments, it’s about how great the people are, how they solved their problem, how we answer the phone and how they like that they can get hold of us.”
Oakes said it does come with a cost.
“The buildings are larger and people are expensive,” he said.
Of the 12 banks operating in Chelan and Douglas counties, Cashmere Valley Bank has 47-percent market share of bank deposits. That percentage share has grown in the past three years, Oakes said.
“It must be working,” he said. “In a more urban area, you might find more tech-savvy customers who value other things more,” though he is not entirely convinced.
“It’s my personal opinion that as Generation X and the Millennials get older, they will start to appreciate human interaction,” he said.
It’s not that Cashmere Valley Bank has eschewed technology.
“As technology was released and as we could afford it, we’ve added things to stay competitive,” he said. “It’s just that we haven’t given up on the old way. Personal service has been an integral part of the bank’s operation from the beginning and will remain that way.”
The bank’s most recent investments in technology are behind the scenes, including cybersecurity, an ongoing concern of all banks, Oakes said.
“A lot of money and resources are going into making sure data is secure, to avoid a breach of any kind. No matter what you do to avoid it, it’s always a risk,” he said. “We have an in-house staff of people to monitor everything. The skimmers are a constant focus. It just depends on which brand of machine they think they have figured out.”
At the moment, the machines that are being hit are not the brand that Cashmere Valley Bank uses.
“But our machines could be on the list next,” he said.
The bank also is wrapping up a multi-year project of revising its teller rows, which included adding debit card issuers and installing more than 15 cash dispensers throughout its network to help speed up merchant deposits.
“It’s all automated in the way it’s counted and it takes about five minutes,” he said, rather than the half-hour or longer it took before.
“The customers might not notice them, but it helps the line run faster,” he said. “They’re expensive, but it’s in keeping with our strategic focus.”
‘The little bank with the big circle of friends’
The bank, established in 1932 in Cashmere, opened branches in Leavenworth, Wenatchee and East Wenatchee from the 1970s to the 1990s. Expansion outside Chelan and Douglas counties started about 14 years ago, with a branch in Cle Elum, then Ellensburg and on to its first branch in Yakima about five years ago. The new branch in Yakima will be the bank’s 11th, plus the financial center on East Penny Road in Olds Station.
“A lot of banks grow by buying other banks,” he said, but that hasn’t been CVB’s strategy. “We’re are still relatively unusual in the fact that we do de novo branching,” he said, which means establishing new branches from scratch rather than from a merger or acquisition. “It’s a slower, steadier form of growth with less disruptions for customers.”
That doesn’t mean all of the buildings are new, though. The bank has remodeled its share, including the new Yakima branch at 127 W. Yakima Ave., which will include personal and business banking plus mortgage and insurance services all in the same building.
The bank purchased the building in August and is just finishing up the remodel.
Oakes said he isn’t sure where or when a next branch will open.
“Yakima is a new market for us. I think we can grow quite a bit,” he said. “Yakima County has 247,000 people, a greater population than the other three counties (Chelan, Douglas and Kittitas) combined. We could hit our asset growth targets for many years to come just in Yakima.”