When the owners of Trails End Recovery, Inc., in Warrenton wanted to purchase expensive machinery to expand their wood waste recycling business, ShoreBank Enterprise Cascadia (SBEC) provided the help that allowed the company to enlarge its operations and eventually to more than double its workforce.
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ShoreBank Enterprise Cascadia has worked with restaurateurs Ann and Tony Kischner since the 1990s when the couple operated two eateries in Long Beach, Wash., and later assisted them with financing to open Bridgewater Bistro in Astoria. Photo: Peter Gearin
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When Doumit Marine Services LLC of Cathlamet needed immediate financing but was unable to obtain a conventional loan, SBEC stepped up to help the company.
And when the John Jacob Astor Elementary School in Astoria needed to replace its fire sprinkler system, SBEC financed the project through a U.S. Department of Agriculture loan program.
At a time when some traditional financial institutions have been forced to tighten lending practices, SBEC is finding ways to financially assist private businesses, non-profit organizations and the rural and urban communities it serves throughout the western half of both Oregon and Washington.
So what makes Ilwaco-based ShoreBank Enterprise Cascadia different?
SBEC is not a bank
Despite the word "bank" in its name, SBEC is not a bank, it’s a certified non-profit Community Development Financial Institution (CDFI). Unlike most other financial institutions, SBEC is not regulated by any federal agency.
SBEC was originally formed under the name ShoreBank Enterprise Pacific in 1995 as a non-profit affiliate of ShoreBank Corporation of Chicago, the nation’s first and leading development and environmental bank corporation, and EcoTrust of Portland.
The fledgling institution’s original mission was to promote economic opportunity, social equity and a healthy environment with the focus on rural communities in Oregon and Washington. SBEC is an affiliate of ShoreBank Pacific, an FDIC insured community bank, also based in Ilwaco.
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Peter Roscoe, owner of Fulio’s Restaurant, says he has had a long business relationship with ShoreBank Enterprise Cascadia, which provided a loan when Roscoe wanted to add a delicatessen at his restaurant. Photo: Peter Gearin
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Because of its special status, SBEC, through its revolving loan fund, can make loans to people who cannot access traditional sources of capital.
"We can absorb a lot higher risk and structure deals that banks can’t," explained Mike Dickerson, SBEC’s executive vice president.
It also works with other financial institutions to design loan packages for its clients.
"Our goal is to get our clients (traditional loans) from banks, to make them ‘bankable’," Dickerson emphasized.
In its first five years, the organization experienced robust growth, but the loan program wasn’t making the kind of impact officials had hoped.
"We were doing a lot of cool individual (loans), but it didn’t add up to a lot of impact," Dickerson said.
In 2001, ShoreBank Enterprise Pacific began narrowing its operating focus and concentrated its resources on fewer, more critical initiatives. A matrix, called the "Triple Bottom Line" was created to show how each loan enhanced the economy, environment and/or social equity.
Growth through merger
The most significant change in its evolution came in 2007, when ShoreBank Enterprise
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Owners of Trails End Recovery, Inc., received a loan from ShoreBank Enterprise Cascadia to pur-chase two wood waste grinders that helped the company expand its operations. Photo courtesy of Trails End Recovery, Inc.
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Pacific merged with Cascadia Revolving Fund of Seattle to create ShoreBank Enterprise Cascadia. The merger not only doubled the size of SBEC’s capital fund to $28 million, but also expanded the once rural organization’s footprint to include the urban centers of Portland and Seattle, making SBEC a regional institution.
Dickerson said the decision to merge with Cascadia Revolving Fund was based on the recognition that to be "relevant" in providing the kinds of opportunities to the communities it serves, it either had to "grow, change or die."
"We made the decision to grow as a large fund," he said.
Today, the organization manages $80 million in funds with its loan portfolio standing at $71 million. Its delinquency rate is less than 2.5 percent, a figure nearly unheard of in today’s poor economic climate.
Since its inception in 1995, the organization has invested more than $95 million throughout the Pacific Northwest.
No foreclosures during recession
Even in the current recession, SBEC has not foreclosed on one property in its loan portfolio, Dickerson noted, even while the organization’s employees took a 10 percent pay reduction.
Over the past three years, SBEC has been refining its message in an effort to create a closer connection between rural and urban communities.
Dickerson describes it as a "handshake" approach that is meant to benefit the entire region.
If one area has economic hardships, it will have an impact throughout the region, he said. "You can’t unwind the regional economy we all live in."
Connecting rural, urban
As an example of its efforts to build public awareness of the economic connections between urban and rural communities, SBEC is an active participant in the Consumer Seafood Initiative, a community relations effort to educate consumers in urban areas about the importance of maintaining a healthy fishing industry in Oregon’s coastal communities.
"It’s a matter of learning from each other" as to how one community’s industry can impact the region, said Jay Flint, SBEC’s Columbia Pacific strategy coordinator.
The Consumer Seafood Initiative also highlights the importance SBEC officials give to the traditional industries, such as fishing, logging and farming that once made rural communities prosperous.
Those industries, said Dickerson, "have to be the fabric of the future economies in rural communities. It is the key to the preservation of their heritage."
With its growth as a regional organization, SBEC has diversified its investments to help build "resilience" in the communities it serves, explained John Berdes, SBEC president. In rural communities, it has developed "regional centers" and focused investments on specific community needs. As an example, SBEC has identified health care and education as priorities for support in the Astoria area.
In Grayland, Wash., SBEC has invested $8 million in the state’s first coastal wind farm that not only will provide new jobs, but also is expected to reduce the reliance on fossil fuels.
In the past two years, SBEC has launched a $5 million project to replace failing septic systems around Washington’s Hood Canal. The runoff from those failed septic systems had severely impacted the canal’s substantial shellfish industry.
With the septic system replacement program, "we are beginning to see the oyster beds reopen," said Berdes.
Because of its unique position, Berdes said SBEC is willing to take risks on projects that more traditional financial organizations could not.
"We’re willing to be out front on a project, whether something works or not," Berdes said.
Consulting services benefit clients
Even as its role has expanded to a regional organization, ShoreBank Enterprise Cascadia hasn’t lost sight of the importance of its role as an advisor to its clients.
SBEC offers clients expertise in strategic planning, as well as organizational and real estate development services.
"Our success relies completely on the success of our clients," Dickerson said.