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UnionBanCal Corp.’s (UB) Northwest Expansion

San Francisco-based Union Bank of California (UB) is looking to Portland, Ore., and Seattle as key growth areas. These two Pacific Northwest cities are seeing population and deposit growth that far exceeds the bank’s Bay Area home base.

“The growth rate of Portland and Seattle is about twice as fast as San Francisco’s,” said Scott Hagel, market president overseeing the bank’s Central Valley and Pacific Northwest commercial banking operations. So far the bank has added a handful of staff in Seattle and Portland, primarily commercial bankers, real estate relationship managers and wealth advisers.

Brick-and-mortar expansion is also on the drawing board, since the bank operates just one branch in Portland and three in the Seattle area. The bank is likely to build branches as well as consider small acquisitions to boost its presence in the region. Union Bank’s acquisition plans are on hold for the time being. The bank is operating under a regulatory order resulting from compliance problems involving the Bank Secrecy Act. The bank says it’s working to meet the requirements set out by regulators under the order.

Meanwhile, the current financial turmoil may set the stage for better pricing, from Union Bank’s perspective, on potential acquisitions down the road. Hagel said the bank’s focus in the Pacific Northwest will be on the wealthy and small business owners, just as it is in California. The economics of trying to be a mass market bank like Bank of America and Wells Fargo don’t pencil out for Union Bank.

The bank is no stranger to the Pacific Northwest. It entered the region in 1905 when it acquired the London and San Francisco Bank and its offices in Portland, Seattle and Tacoma. Union Bank later added a branch in the Seattle suburb of Bellevue. Hagel downplayed the idea that the bank’s Pacific Northwest efforts are fueled by economic woes in its home state. Union Bank is also expanding in California, with five new branches added in the East Bay.

Hagel said the bank must boost its profile in Seattle and Portland, and plans to increase advertising and sponsorships in the two cities. But Union Bank’s solid California franchise is expected to give the bank a leg up on its Pacific Northwest growth spurt, since almost one-third of Portland and Seattle’s new residents hail from California.

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