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HomeStreet branch closing, West Coast Bancorp struggles

The number of banks in Lake Oswego - 26 - plays a role

Feeling the pinch from the mortgage crisis and competition from other banks, the Lake Oswego branch of HomeStreet Bank will close March 28, after nine years of doing business at 101 A Ave.

The branch will move its personal consumer accounts to the Tigard branch at 16200 S.W. Pacific Highway. The Lake Oswego branch's business accounts will be serviced at the Northwest Portland branch, 22 N.W. 23rd Ave.

HomeStreet was finding it increasingly difficult to compete with the growing number of banks here, according to Dennis Floyd, vice president of sales and marketing for HomeStreet.

It is not the only bank struggling in Lake Oswego. Last week, West Coast Bancorp announced it took a $27.8 million loss in the fourth quarter of 2007.

West Coast Bancorp CEO Robert Sznewajs cited 'dramatic slowing of the residential real estate market,' which has led to defaults and damaged the Lake Oswego bank's loan portfolio.

'The company's balance sheet is strong, our bank remains well capitalized under regulatory guidelines, and we expect to achieve solid net income growth in 2008 over 2007,' Sznewajs added. The company's stock Wednesday hit a six-year low of $12.40.

In HomeStreet's case, it was a combination of factors that made executives decide to close shop here.

'The Lake Oswego community has a total of 26 different banking offices,' said Floyd. 'To a great extent, the community is over-banked.'

'We don't like closing branches, and it's always a tough decision,' he added.

Umpqua Bank opened a branch in late 2006 about two blocks from HomeStreet, on B Avenue, and in May MBank opened a branch on Southwest McEwan Road in Lake Grove.

With so much competition, Floyd said there was not as much opportunity for growth.

Mortgage lending is the primary engine of HomeStreet's operations. The company in the last three years has generated about $3 billion in loans to residential construction, single-family home buyers and those wishing to re-finance. The company also lends to small businesses.

Floyd said HomeStreet 'never became involved in the subprime lending' market, which has hurt other lending institutions such as Washington Mutual and CitiBank.

'We took a look at the subprime lending market and thought it might have been attractive in the short term,' he said. 'But we do our best to put people in the right kind of loan, that they can live with and pay off.'

Floyd said the Northwest housing markets are weathering the mortgage crisis better than other areas such as Miami or the Midwest. But he agreed that 2008 will be difficult for housing markets everywhere, including the Northwest, as inventories climb and homes stay on the market for longer periods.

Nationally, 86,000 mortgage industry jobs have been lost in 2007, according to recent figures by MortgageDaily.com.

'This business is cyclical,' Floyd said, referring to mortgage lending. 'We've been in business 87 years and have learned to deal with the cycles pretty effectively.'

HomeStreet has 600 employees and 21 branches in Oregon, Idaho, Washington and Hawaii. Most of the branches are in Seattle, where HomeStreet is based. The most recently opened branch is in Honolulu.

Four of HomeStreet's Lake Oswego employees, including manager Brad Holland, will move to the Northwest Portland branch. Five of the branch's mortgage lending officers will relocate to office space near Interstate 5 or Interstate 205, Floyd said. The company is still searching for that office space.

Floyd said HomeStreet has made a name in the marketplace by adding a 'personal touch and our commitment to serving customers.' The branches, including Lake Oswego, have a living room feel. 'Very seldom does a person walk in who we don't know,' he said.

'Lake Oswego has been extremely responsive to us,' he said.

HomeStreet's lease on A Avenue expires at the end of October. The mortgage staff will continue working in the office after the March 28 close, but they will move by the end of October.