J. Gregory Seibly President and CEO, Sterling Financial Corporation


YOUTH: When I was a kid, my father worked as general counsel for a horseshoe manufacturing company in Lodi, California, near Sacramento. He had been a horse racing fan all his life. I went to plenty of horse races and my dad still owns interest in a couple of horses, but I’m just a watcher. I’m not a good handicapper. I can’t pick a good horse from a bad horse. They all look nice to me. My father later became a superior court judge.

WORK: My first serious job was in eighth grade at my grandfather’s masonry company. I was a hod carrier, which is the guy who does all the grunt work—mixes the cement, carries the blocks. I became an apprentice bricklayer in college. I’ve had union jobs. I’ve worked more hours a day than I’d like to. It’s one reason I went into banking—because I knew I wasn’t tough enough to be a bricklayer.

EDUCATION: I started at Pacific Union College [in the Napa Valley], then taught English in Korea for a year. It was a chance to see another culture. On my return, I wanted a bigger school with more diverse programs and more job opportunities, so I went to Indiana University and got a bachelor's in business at the Kelly School of Business. It was a new part of the country and a fabulous experience. 

EARLY CAREER: After my graduation in 1987, I went through the training program at PNC Bank and worked for them in Pittsburgh and Dallas. Once I had children, I moved back to the West Coast with Bank of America to be closer to their grandparents. I later ran commercial banking for Wells Fargo in Southern California, then was California market president for U.S. Bank. I wanted to get back into community banking, so I joined Sterling in 2007. It was just before the subprime crisis. Sterling didn’t make subprime loans, but it lent to builders who sold to people who depended on subprime lenders and were later unable to cover their loans.

RECOVERY: In 2009 [when Seibly became CEO], we were one of the weakest banks around. In 2010, we made some lists as among the very worst banks in the country. Because of the regulatory [situation], we had to raise $700 million in capital. There was a real sense of urgency. But we had already begun to change. We decided to simplify our organizational structure, our market strategies and our focus. We wanted to create a value proposition that would last, and we wanted a message that was easily understood by our key constituents: employees, customers, communities and shareholders.

NEW FOCUS: The plan was beautiful in its simplicity. We had four operating principles: raising deposits, reducing risk, growing loans and managing expenses. We focused on four businesses: retail, commercial banking, multifamily lending and home loans. [Construction used to represent 25 to 30 percent of the balance sheet. Today, it’s 3 percent.] The way that we took the brand to the market was through the 2,500 people who work at the company. It was about every employee taking really good care of customers one at a time. In the middle of 2010, we were on death’s doorstep, yet the bank scored highest in the Northwest in J.D. Power’s study of customer satisfaction among retail banking customers. The hardest part was having to let 6 percent of our people go. But in a short time, we made a huge transition that, under normal market conditions, probably would have taken seven to 10 years.

COMMUNITY: We redoubled our efforts around creating strong relationships that allowed us to bank with businesses and individuals in each community. When there is a relationship based on trust, it’s easier to manage the risk. In 2007 and 2008, many of our competitors retrenched while we focused on growing the organization through relationships.

INVESTORS: Investors liked us because we have a meaningful franchise and brand presence in the Northwest as the largest commercial bank chartered in the state of Washington, with 187 branches [in Washington, Idaho, Oregon and California]. We have many more resources than most of the other institutions that are headquartered locally in the Northwest.

EXPANSION: If you look at the last six quarters, there have been good, steady improvements with more deposits and better loan volumes. In the second quarter of 2012, core earnings totaled $32 million. Our profits now are about the same level we were running at in 2007, before the crisis, but with 25 percent less in assets. We will be opening three new branches in the Northwest: downtown Portland, downtown Bellevue and Pullman. 

COMPETITIVE ADVANTAGE: The regulations are daunting for smaller institutions, but we’re big enough to handle it. We have a broad product suite and we have the ability to handle the infrastructure costs associated with new regulations. We can out-hustle the smaller institutions to be the community bank of choice. In Washington, California and Oregon, 60 to 70 percent of the market is dominated by five large banks: Bank of America, KeyBank, Wells Fargo, Chase and U.S. Bank. We have 3.5 percent of those markets. If we can take a couple basis points every year from them, that’s meaningful.

ECONOMY: Geographically, Seattle has recovered well. Eastern and Central Washington never went down much, and it’s coming back. We see strength in manufacturing and agriculture. Some customers are still shell shocked; they’re not as aggressive as they once were. We’ve put a specific focus on multifamily lending. We are well down the path on small-business lending. The next most successful market is residential mortgages. With current valuations and interest rates down, people are coming back into the market. We have 225 loan officers across the Pacific Northwest and are originating mortgages at a rate of more than $2.7 billion a year.

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