Community banking has some room to grow

Every time a vacancy develops in the Mountain West Plaza office center at the corner of Ironwood and Government Way in Coeur d’Alene, the property manager notifies Mountain West Bank President Jon Hippler. Hippler is almost always in need of a little more space.

His 12-year-old institution has become the largest state-chartered bank in Idaho, with assets of $700 million. From a single branch in a manufactured building, Mountain West has expanded to 17, with four more planned by the end of 2006. The growth has taken the bank into wealthy enclaves like Park City, Utah, business centers like Boise, and hamlets like Ione, Wash. Mountain West just completed the purchase of a former Zions First National Bank office in Bonners Ferry, where a struggling economy would not appear to offer much to a bank on the make.

Hippler sees things differently.

“I truly believe Bonners Ferry is going to be a dynamic market over the next 10 years,” he says.

Just as the hunt for reasonably priced housing has pushed buyers from Coeur d’Alene to Sandpoint, he says, so will the now pricey market in Bonner County send more farther north into Boundary County. Many of those buyers are immigrants to the area, and they are bringing lots of money with them.

Between June 30, 2000, and June 30, 2004, the most recent period for which the FDIC has figures, bank deposits increased by more than 20 percent in every North Idaho county except Benewah. The increase in both Kootenai and Bonner counties was 40 percent as, by the way, was Spokane County’s. Only Ada County, with a 32.2 percent share of all deposits in Idaho, exceeded the 9.2 percent held in Kootenai County institutions.

Local banks in particular have prospered. Although Wells Fargo, Bank of America and U.S. Bank still hold almost half of all deposits in Kootenai County, their market share dropped by more than 8 percent between June 2000 and June 2004.

Mountain West now holds about 10 percent of those deposits, as does Idaho Independent Bank, also founded in 1993 and also a local success story.

“Community banking still has a lot of appeal,” say Hippler, who started Mountain West after a wave of mergers claimed all Coeur d’Alene-based banks. Security Pacific Bank, also headed by Hippler, was purchased by Bank of America in 1992.

Mountain West itself was purchased by Glacier Bancorp in 2001, but has largely retained its independence. Hippler says the Kalispell, Mont.-based holding company provides capital and back-office services to Mountain West and nine other subsidiaries, but keeps them under the guidance of local management.

“I talk to my boss once a month,” he says.

With Glacier’s resources to draw on, Mountain West will originate roughly $500 million in mortgages this year, Hippler estimates. The bank has also become the largest Idaho lender using U.S. Small Business Administration guarantee programs.

Hippler says all the activity has attracted new players who are increasing the competition for clients, and skilled employees.

“There isn’t a lot of lending talent to go around,” he says, adding that the pushing and shoving to get the best people has sometimes gotten ugly.

Spokane-based AmericanWest is among the new market entrants. A Hayden branch opened in September 2002 has done so well that plans for a permanent structure are well along. Vice President Patricia Braddock, who until recently ran the branch, says officers keep adding services.

“We’re making changes even as we speak,” she says. Expansion into Coeur d’Alene, Post Falls and Sandpoint are in the future. Mountain West and Sandpoint-based Panhandle State Bank are AmericanWest’s toughest competitors, Braddock adds.

Although he says Kootenai County has become over-banked, Hippler does not foresee any fallout. If North Idaho’s economy appears overheated, says the Coeur d’Alene native, just look at Tucson, Ariz., where he also keeps a home. He likens the ferocious bidding for homes there to a lottery.

“The basic fundamental is a lot of people want to live here,” Hippler says. “The next 10 to 15 years, I think we’re going to do well.

“There’s just a lot of stars lined up.”

That plaza property manager may never need look for another tenant.