Spokane7
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October 27, 2010 in Business, City
Plan would leave AmericanWest Bank privately held
AmericanWest Bank will become a privately held company under a recapitalization plan announced today by its holding company, Spokane-based AmericanWest Bancorporation.
The move was prompted by orders from regulators to reinforce its capital base. AmericanWest Bancorporation President and CEO Pat Rusnak has said the bank, headquartered at 41 W. Riverside Ave., needs about $125 million.
AmericanWest has a sizable, 58-branch footprint that extends from Spokane and Eastern Washington through Idaho to southern Utah. Total deposits were $1.45 billion as of Sept. 30.
AmericanWest said it will sell to SKBHC Holdings LLC, a private investor led by banking professionals, and an affiliated entity that signed a purchase agreement to acquire all the bank’s common stock for $6.5 million in cash, subject to a competitive bidding process.
If SKBHC is the successful bidder, the agreement calls for it to recapitalize AmericanWest Bank with additional capital of up to $200 million to satisfy capital requirements imposed by federal and state regulators.
AmericanWest Bancorporation will file for Chapter 11 bankruptcy to facilitate the transaction, and the bankruptcy court will supervise a competitive bidding process for the bank’s common stock. The filing would affect only the holding company and would exclude AmericanWest Bank and its Far West Bank division, which operate separately. AmericanWest Bank operates under the name of Far West Bank in Utah.
“This transaction will give AmericanWest Bank and Far West Bank the capital to become ‘well-capitalized’ and to meet the capital requirements defined by the Bank’s regulators – without any financial assistance from the government or taxpayers,” Rusnak stated in a news release. “We are pleased to have found a partner with extensive banking experience and a strong interest in enabling AmericanWest Bank to grow as a viable competitor that serves thousands of individuals and businesses in our communities.”
In August Rusnak said AmericanWest used the past year to aggressively address its problem loans while maintaining deposits and liquidity. The FDIC, Washington Department of Financial Institutions, and other overseers have been kept constantly informed on the bank’s progress, he said.
Disability insurance let woman focus on recovery after serious injury 
hawken on October 27 at 2:11 p.m.
This is how it works!! Not big government bailouts!!
PhiltheBibliophil on October 27 at 3:50 p.m.
NO, Hawken this is how it works, America West raises the capital and then loans it out 9-10 times over with the Fed’s blessing and then gets in trouble all over again. Beware small banks!
de3 on October 27 at 4:02 p.m.
In their own press release,
http://www1.snl.com/irweblinkx/file.aspx?IID=100865&FID=10277537
they say the parent company’s chapter 11 bankruptcy is expected to wipe out the common shareholders who will lose all of their investment.
They also will not be able to pay off all creditors in full.
This is not a happy ending.
Lovinlife52 on October 27 at 4:55 p.m.
Hawken ~ Your right that is the way it should work. I think it’s great that even though AmericanWest has been in trouble for a while now they didn’t take the bailout money!
Phil ~ Why do you feel the need to be so negative? Why would you want the small banks to go away? They have the lowest fees, the best customer service, and they do a ton for the community. What big bank does that? Do a little research before you comment. The last paragraph of the article states that they have aggressively addressed it’s problem loans. What makes you think it was loans that got them in trouble in the first place? That may not be what or where it started. You should be happy that they didn’t take the bailout (which is more than I can say for the big banks) and figured out the financials for themselves with out the taxpayers or governments help!
De3 ~ The holding company is filing for bankruptcy, that doesn’t include the bank. Essentially the bank is being sold to another holding company. The shareholders won’t get additional funds from the liquidation, but (I believe) the shares would be taken over by the new company so technically they aren’t losing anything (if I’m understanding it correctly). The only unhappy ending is for the holding company because they aren’t sure they’ll be able to pull out of this as an operating company.
At any rate I say WHOOHOO to AmericanWest Bank for finding a solution to their problem without assistance from the taxpayers! I’m proud to have them as one of our community banks! JOB WELL DONE!
hawken on October 27 at 5:29 p.m.
Phil….
‘Beware small banks!” You say….
“Beware all banks”…. I say.
I do my banking at a local credit union.
The point again,,,, No more bank bailouts!
They don’t work!
They cost the taxpayer billions in bailouts…. as we have seen…
There are still massive problems with our banking system,,, because of their “troubled asset ratio….”
Which we as taxpayers spend billions to fix…!
Let banks fail that cannot remain solvent!
Small and large
If you have the courage to see the desperate situation our banks are in…… go here:
http://banktracker.investigativereportingworkshop.org/banks/
hawken on October 27 at 5:30 p.m.
Post Script:
The easiest, quickist way to get hurt with a bank,,,, is to own common stock in a bank…
de3 on October 27 at 6:23 p.m.
LovinLife52, this is what the bank’s own statement says and they confirm that shareholders are expected to be wiped out. Read the last sentence:
“The Company anticipates that, even after receiving proceeds from the sale of the Bank and paying the costs associated with the bankruptcy proceeding, it will not have sufficient assets to pay creditors in full. The Company further believes it is unlikely shareholders will receive any proceeds from the liquidation. ”
west on October 27 at 6:31 p.m.
They need $125 mil in new capital, How about some 1 year CD’s worth 5%…
zelda on October 27 at 6:33 p.m.
Some may be attributing loftier motives to this bank re: TARP than was actually the case:
(from Puget Sound Business Journal, April 30, 2009)
>>AmericanWest Bancorp. of Spokane is withdrawing its application for $57 million in federal bailout funds, the bank said Thursday in its first quarter earnings report.
The bank said it withdrew its application largely because it didn’t think it would be able to find matching private equity dollars in time — a requirement to receive the funds under the Troubled Asset Relief Program (TARP).<<
In other words, they ascertained that they couldn’t meet the terms of TARP so they withdrew the application.
And yes, shareholders of common stock are essentially wiped out. They’re always last on the list of creditors in a bankruptcy. That’s the risk of owning equities.
AWBC said this won’t affect its customers, doesn’t say how or if it might affect the employees.
Also, as is the case with Sterling, the top decision-makers for these two institutions are no longer local people.
hawken on October 27 at 6:45 p.m.
Here’s some more news today, concerning our banks…. If you own common stock in any,,,, I would sell it….
Unless, of course, your stock is in a bank that get’s Obama preference…
“The demise of the politically connected ShoreBank has sparked yet another investigation — one that could spell trouble for FDIC chief Sheila Bair.”
The FDIC Inspector General’s office has launched a wide-ranging probe into the failure of Chicago-based ShoreBank earlier this year, including the role played by Bair in prodding Wall Street’s biggest firms, from Goldman Sachs (GS: 160.24 ,+1.79 ,+1.13%) to JPMorgan (JPM: 37.55 ,+0.29 ,+0.78%) to Morgan Stanley (MS: 24.40 ,+0.19 ,+0.78%), in donating tens of millions of dollars to prevent the bank, with close ties to the Obama administration, from failing.
ShoreBank did fail in August, with the FDIC taking over $2.16 billion in faulty assets, including risky investments in urban real estate, from the bank.
Valerie Jarrett, the president’s senior economic adviser has close ties to the bank, and the president himself has singled out the bank for praise for its community lending and for financing environmentally friendly green jobs. Jarrett has adamantly denied any involvement in the matter.”
http://www.foxbusiness.com/markets/2010/10/26/read-shorebank-fdic-letter-response/?test=latestnews
de3 on October 27 at 10:27 p.m.
I suspect both Sterling (STSA) and AWBC had a number of local shareholders - that would be common in a local bank. Sterling’s shareholders were 98% clobbered. AWBCs’ are likely to be 100% clobbered. Those losses (most of which are already realized since both stocks have been penny stocks for a long time now) accrue to local shareholders which mean less money to spend in Spokane - not cool.
As Zelda says, AWBC and STSA will no longer be locally owned or managed. That has ramifications down the line…
This is an ending to the mess but not entirely a happy one.