Lending mixed at Oregon's TARP banks

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Archives - March 2009
Sunday, March 01, 2009

STATEWIDE Oregon's slice of the Troubled Assets Relief Program has been meager. But that's not necessarily a bad thing, because the banks that got TARP money haven't been moving it through the economy any more ambitiously than the banks who passed on it.


Most of the major financial institutions that received the first $200 billion in TARP funds actually cut back on lending in the fourth quarter. The prominent exception was U.S. Bank, headquartered in Minnesota but with a significant presence in Oregon, which received $6.6 billion in TARP money and boosted loans by 3.9%, easily outperforming larger banks such as Bank of America and Citigroup.  

The other local bank to buck the trend vigorously was Eugene-based Pacific Continental Bank. The bank's executives earned approval from the Treasury for $30 million under TARP, but after considering the offer carefully, they said thanks, but no thanks.

"We wanted to remain independent," says Pacific Continental  VP Maecey Castle.

It was an unusual response, but for Pacific Continental it has been an unusual year. How many banks saw dividends increase in 2008? While others were dodging brickbats for accepting TARP money and hoarding it, Pacific Continental raised $10 million on its own and boosted lending in the fourth quarter by $32 million.

Results have been underwhelming so far for the local banks that took the money. The Oregon bank that received by far the most TARP money, Umpqua Bancorp, saw its loan balance decline by $30 million over the quarter in which it received $214 million from the Treasury. "It takes time to get these programs up and running," says Umpqua spokeswoman Lani Hayward.

Three months after receiving the TARP money, Umpqua issued a press release detailing how it intends to invest it, through four focused loan initiatives. Three of these loan programs target sectors with a real upside: helping municipalities finance public works, facilitating renewable energy projects and backing the local wine industry.  As for the fourth loan initiative, a mortgage-lending program specifically for condos that were financed by Umpqua and have been slow to sell, that one might take a while to get rolling.

BEN JACKLET


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Editor's Letter: Power Play

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There’s a fascinating article in the December issue of the Harvard Business Review about a profound power shift taking place in business and society. It’s a long read, but the gist revolves around the tension between “old power” and “new power” as a driver of transformation. Here’s an excerpt:

Old power works like a currency. It is held by few. Once gained, it is jealously guarded, and the powerful have a substantial store of it to spend. It is closed, inaccessible, and leader-driven. It downloads, and it captures.

New power operates differently, like a current. It is made by many. It is open, participatory, and peer-driven. It uploads, and it distributes. Like water or electricity, it’s most forceful when it surges. The goal with new power is not to hoard it but to channel it.

The authors, Henry Timms and Jeremy Heimans, don’t necessarily favor one form of power over another but merely outline how power is transitioning, and how companies can take advantage of these changes to strengthen their positions in the marketplace. 

Our Powerbook issue might be viewed as a case study in the new-power transition. This annual book of lists provides information on leading businesses, nonprofits and universities in the state. Most of the featured companies are entrenched power players now pursuing more flexible and less hierarchical approaches to doing business. Law firms, for example, are adopting new technologies and fee structures to make legal services more accessible and affordable.

This month we also take a look at a controversial new U.S. Securities and Exchange Commission rule requiring public companies to disclose the median pay of workers, as well as the ratio between CEO and median-worker pay. 

Part of the 2010 Dodd-Frank financial reform law, the rule will compel public companies to be more open about employee compensation, with the assumption that greater transparency will improve corporate performance and, perhaps, help address one of the major challenges of our time: income inequality.

New power is not only about strategy and tactics, the Harvard Business Review authors say. “The ultimate questions are ethical. The big question is whether new power can genuinely serve the common good and confront society’s most intractable problems.”

That sounds like a call to arms. Or a New Year’s resolution. Old power or new, the goals are the same: to be a force for positive change in the world. Happy 2015!

— Linda


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