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Regional index did well in 2009

Tue., Jan. 12, 2010

But bank stocks reflected ‘negative sentiment’

An index of 15 Inland Northwest stocks outperformed the broader market in 2009 despite dismal results by four local bank holding companies.

The Hart Capital Inland Northwest Index climbed 31.8 percent, compared with 23.5 percent for the Standard and Poor’s 500 index and 25.2 percent for the Russell 2000. But the Hart index advanced only 2.2 percent in the fourth quarter, less than one-half the 5.5 percent increase for the S&P.

Clearwater Paper Corp. was by far the best gainer, climbing 555.2 percent to $54.97. The company operates the sawmill and pulp and paper mill at Lewiston that were spun off by Potlatch Corp. at the end of 2008 as it converted to a timber real estate investment trust, or REIT.

Hart Capital President Craig Hart said Potlatch shareholders “indiscriminately” sold off Clearwater shares they received when the companies split. But Clearwater has been successful as a maker of store-branded paper products, and got a boost from a federal tax credit for use of “black liquor,” a byproduct of the paper-making process, he said. Clearwater burns the substance to produce energy.

Potlatch, also a REIT, managed a 22.6 percent increase, to $31.88 at year end. REITs produce dividends that have been attractive to investors.

Other stocks that more than doubled in 2009 are Key Tronic Corp., up 296.9 percent to $3.85; Hecla Mining Co., up 120.7 percent to $6.18; Red Lion Hotels Corp., up 107.6 percent to $4.94; and Coeur d’Alene Mines Corp., up 105.2 percent to $18.06.

Hart said Key Tronic has expanded its manufacturing customer base despite brutal competition among electronics makers.

“Those guys out there are going a good job,” he said.

The stocks of each of the four banks finished with double-digit losses. Intermountain Community Bancorp fell 45.5 percent, to $2.40; Northwest Bancorporation Inc. was down 51.7 percent, to $2.90; Idaho Independent Bank lost 52.7 percent, to $5.30; and Sterling Financial Corp. fell 93 percent, to 62 cents.

“There’s a lot of negative sentiment,” Hart said. “The financials clearly underperformed and dragged down the index.”

The other stocks included in the index are Coldwater Creek Inc., up 56.5 percent to $4.46; Ambassadors Group Inc., up 44.1 percent to $13.26; Avista Corp., up 11.4 percent to $21.59; Itron Inc., up 6 percent to $67.57; and Nighthawk Radiology Holdings Inc., down 6.8 percent to $4.53.

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