Tacoma Apartments | Living in the Great Northwest

Encouraged by Tacoma's ongoing renaissance and undaunted by the presence of one of the largest state-based banks, two startup banks are hatching plans to open in the City of Destiny later this year.

The new financial institutions, the Bank of Tacoma and Commencement Bank, aim to open branches in Tacoma's downtown core, taking on Tacoma-based Columbia Bank and other established players. The banks' leaders say a booming Tacoma economy, along with a lack of new players, will deliver substantial business opportunities.

"There's plenty of room in this market for another bank," said Hal Russell, who is slated to serve as Commencement's president and chief executive officer. Russell is a veteran of Columbia Bank, where he spent 11 years and was an executive vice president before stepping down two years ago.

The Bank of Tacoma's leader, Michael Hansch, also has close ties to the area. Hansch spent more than 20 years as senior vice president and manager for the southwest Washington arm of Bank of America's private bank division. He retired from Bank of America earlier this year.

A majority stake in the Bank of Tacoma will be held by Capitol Bancorp Ltd., which is headquartered in Lansing, Mich., and Phoenix. Capitol specializes in developing community banks and has been working hard to expand its presence in the Puget Sound area. Capitol launched the Bank of Bellevue last year and is currently forming the Bank of Everett. Capitol owns 42 banks in 13 states.

The new banks will try to capitalize on Tacoma's ongoing development, and to follow in the footsteps of Columbia, which was founded in 1993 and now holds roughly $2.4 billion in assets.

First, the banks must raise millions of dollars at a time when competition for capital could be stiff. The Puget Sound region has seen approximately eight startup banks over the past two years and, while fundraising for those banks has been relatively easy, rising stock prices and the surging economy now present investors with a variety of appealing investment alternatives.

At Commencement, Russell said he should have no trouble raising its target of $20 million, thanks to his contacts in Tacoma and to pent-up demand among local bank investors. New banks are typically lucrative investments, and "there hasn't been a bank stock available in Tacoma in a number of years," Russell said.

The Bank of Tacoma plans to raise between $8 million and $10 million and, because Capitol provides 51 percent of its banks' initial funding, the bank will likely face a smaller fundraising burden than Commencement. Once the bank opens, Capitol will likely follow its standard business plan of offering the bank's board members and shareholders a one-time stock exchange after three years. Under the terms of the exchange, Capitol typically trades its own publicly held shares for the remaining 49 percent of stock, at 150 percent of book value.

Commencement will be privately held and, like most startups, will target small and medium-sized businesses. According to Russell, the bank will immediately focus on a broad geographic area including Pierce County, north Thurston County, and south King County.

So there you have it. Good reasons to consider living in Tacoma as an opportunity for a fresh start.