January 22, 2009, Interviewed by Glenn Croston 

ShoreBank Pacific is a community bank focused on supporting sustainable development of communities.  With its headquarters located in Ilwaco, Washington, ShoreBank Pacific is not jumping on the green bandwagon.   It has been banking on sustainable development for years.  As the CEO of ShoreBank Pacific, David Williams is at the helm in a time of unprecedented economic difficulty but still keeping the bank focused on providing a solid resource helping communities and green businesses.  Williams took time to speak with me recently about the bank, sustainable development, and how the bank works with green entrepreneurs to help them succeed.

Glenn Croston (GC): Can you tell me about ShoreBank Pacific?

Dave Williams (DW):  ShoreBank Pacific is focused on helping businesses become more sustainable. Sustainability drives you to think about communities differently. The question you are driven to ask is “How do I operate within the community in which I live?’ “How do I find and use local products?” We’re not just thinking about one business, but more importantly on building sustainable businesses within a community. Building sustainable businesses is closely tied to the health of communities.  Strong sustainable businesses help the community and a strong community helps build strong businesses.  Once you get the ball spinning then it keeps spinning on its own.  

GC: What type of services do you provide for business clients beyond what traditional banks do?

DW: What we do is not really new, but the way it used to be done by all banks. We build close relationships with our customers, getting to know them and working with them closely.  Because of our focus on sustainable businesses we expect to have long-lasting and stable relationships with our customers.  We need to know their business as well as they do.  This used to be the way banks did business, however, this is not the way large banks have been run for the last twenty years.

We have people working at our bank who specialize in each of the industries on which we focus, getting to know the underlying industries in the communities where we are working.  In a coastal community we have a “fish guy,” someone who knows the fishing industry.  In a rural or farming area, we have someone who can provide alternative energy support for wind farms in wheat fields, or methane digesters on dairy farms.  We expect these guys to be engaged in support of the community, and groups that support important industries in that area.  If there is an alliance to support organic farming in the area, we get to know them and have them as a customer.  We went after the US Green Building Council as a customer because they are involved in green building, which is important for our customers.    

Working with sustainable businesses in communities, nothing works in isolation.  All of the businesses connect in a network of interactions, like a spiderweb, reinforcing the whole thing making it stronger.

GC: How do you help green entrepreneurs, particularly startups and small businesses?

DW: If you get a business client when they are just starting, perhaps not as strong as a traditional bank thinks they should be, we have the mechanisms to help them be successful.  We have a network of business connections in our community. We get to know them, see what they need, and help them make the right connections to people who can help them with all of the steps they need to take.

When businesses are getting started we help them by taking their deposits, not lending.  If we know their industry well, we often know equity players who are interested in investments.  We can connect them with lenders that lend to startups, people who come in and provide funding for early stage companies.  If it is a strong business plan with the right kind of people who need extra support to get going we can help them get that extra boost.

GC: Are your business clients all in your local region?

DW: Our borrowers are located in areas where we have locations. We are headquartered in Ilwaco, Washington, with additional offices in Seattle and Portland, Oregon.   Our depositors, however, are located everywhere. They are attracted to us because their deposits go to a good cause, to support lending to sustainable businesses.     

GC: How do you get involved with customers beyond depositing and lending?

DW: We put together a program where we analyze what it means to be sustainable, looking at environmental, business, and community issues.  One big question is how are you treating your employees?  Are you helping them to generate wealth?  Are you improving their wealth, using your stock options to help your employees and enhance your business?  For environmental issues, we look at how you use water, how you recover water and clean it, how you use energy, if you produce clean energy, how you manage CO₂, whether you are you offsetting CO₂ that your product produces, if you are using sustainably produced materials.

All of this goes on a scorecard which we use to determine how they are doing.  We find some things upon which they can improve, and make those suggestions. In addition, we talk to them annually to see how they are becoming a more sustainable business.

Another way we help is by asking ‘What is your strategy about capital?’  If you bring in venture capital, most likely you will sell your business in 5 years, and that is not a sustainable business.  We would work with them to rethink their business strategy.  We like to work with businesses we think are going to be around for 100 years, like the community in which the business is located.  A mill town is there because there’s a lot of trees; if they cut all the trees down, then there is no town. 

I think people are more in tune with the environmental questions, and less in tune with the employee questions.  Depending on the business, they may understand nothing or everything about the community.  Often though they are not thinking about their employees in a long-term strategic fashion.

GC: How can green businesses invest in employees?

DW: Take manufacturing businesses that take on and lay off employees depending on production.  This makes employees feel like cogs in the wheel, not attractive to folks looking for long-term employment.  We need to be committed to long-term success of the business and the employees as members of the community.  The best businesses provide health benefits, pay fairly, support education, and provide training.  We need to educate young people who are the workers of tomorrow, reaching out to get involved with the school system and community.   How can businesses work with the local high school to better prepare kids?  

GC: How are you affected by the current banking and credit crisis?

DW: The non-performing loans on our “watch list’ are higher than before, but they’re still manageable and we are well-capitalized.  Are sustainable businesses doing better than the average business?  They appear to be in better shape, but it will take a year to know for sure. We didn’t get deeply in the residential developer and residential mortgage market, which caught a lot of the community banks. It does not follow our sustainable business mission, and we have been lucky so far in the current situation as a result.