Magazine article American Banker

Spokane's Sterling Aims to Reopen Branch 'Shells'

Magazine article American Banker

Spokane's Sterling Aims to Reopen Branch 'Shells'

Article excerpt

The megamergers in the Pacific Northwest have left a fair number of branches boarded up. But a Spokane, Wash., thrift has devised a way to capitalize on the situation.

Sterling Savings Association calls its current branching strategy "neutron de novos."

"The neutron bomb leaves the buildings intact but the people are all gone," said William Zuppe, the thrift's chief executive. "Neutron de novos are just the shell of the branch, and all the people and money have vanished."

On July 30, Sterling bought six branches that have no core deposits and no staff. It's a kind of hybrid branch acquisition strategy: Not exactly de novo, and not exactly buying an existing branch - because the selling bank has already abandoned the location.

Yet the strategy will allow Sterling to cheaply enter the Seattle retail market by buying art established banking location. It will take more time, however, to rebuild the business in conformance with Sterling's retail strategy.

The six branches, which will bring Sterling's network to 19, are all at sites closed down by Keycorp since the Albany, N.Y.-based company acquired Puget Sound National Bank in January.

"We feel it is a good strategy for us because there's a lot of unsettledness out there in the consumer community about the changes going on because of these mergers," Mr. Zuppe said.

"We rely on intense consumer service, what we call |hometown helpful.' [The branches] will be a drag on earnings for a while, but it allowed us into the greater-Seattle marketplace and we felt it was a good time to invest in the future. …

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