A Montana company is buying Inland Northwest Bank – the latest acquisition of a publicly traded company headquartered in Spokane.
First Interstate BancSystem will purchase INB’s parent company, Northwest Bancorp., in a $160.9 million stock deal expected to close later this year.
To keep up with mobile deposits and other rapidly evolving technology, “banks need a certain scale,” said Russ Lee, Northwest Bancorp.’s president and CEO. “To meet our customers needs, we need to be a bigger bank.”
INB has 20 offices in three states and 90 people at its downtown Spokane headquarters. First Interstate approached the bank as it was considering its next steps, Lee said.
“We focus on people and community. We weren’t interested in becoming part of a large bank,” Lee said. “First Interstate was like-minded. They view banking similar to how we do.”
First Interstate, which is headquartered in Billings, also had a larger array of banking products. Instead of reinventing those products, Northwest Bancorp.’s board of directors decided to pursue the sale, Lee said.
After the announcement, Northwest Bancorp.’s stock shot up 44 percent in trading Thursday, closing at $20.22 per share. On a stock basis, the deal is valued at $21.03 per share.
Northwest Bancorp.’s shareholders must still approve the sale, which also is subject to regulatory approvals.
The announcement follows news over the last year about publicly traded companies being purchased or moving their headquarters out of the Spokane area. Telect was acquired by a Connecticut company and Red Lion Hotels moved its headquarters to Denver.
With the pending sales of Avista Corp., and now Northwest Bancorp., the number of publicly traded companies headquartered in the area is half of what it was 10 years ago, said Craig Hart, president of Hart Capital Management.
From Spokane to Sandpoint, there used to be 15 publicly traded companies, but the number will drop to seven by the end of the year.
Not all of the change results in fewer local employees, or significant alterations in how the company interacts with the community. Telect and Red Lion said their local employee counts will remain about the same.
Avista has made the same assurance, along with agreements for continued charitable giving.
But the loss of a headquarters still affects the community, Hart said. “They often give back to the community in a really big way,” he said.
Headquarters employ high-paid executives, he said. They often have a corporate building. Other businesspeople come to Spokane to meet with the executives. And local companies are usually active in charitable donations.
“You could make the argument that a private company could do that,” Hart said. “We have fertile startup companies, but we’re not seeing a growth rate of multihundred-person companies here.”
Eventually, that will happen, Hart predicted. In the meantime, the loss of a headquarters “leaves somewhat of a void,” he said.
INB was founded in 1989. The Bank of Spokane had recently sold, prompting 32 local business leaders to start their own community bank. They held a stock offering, raising about $3 million. Spokane developer Harlan Douglass was a founding director and remains on the board, Lee said.
INB’s total assets have grown to more than $800 million. The bank does about $100 million in home loans each year, making it one of the Inland Northwest’s larger mortgage lenders. Agricultural lending also is a niche.
First Interstate will continue that work, Lee said. First Interstate services mortgages after it makes the loan, which INB wasn’t large enough to do, Lee said. And agricultural loans are a specialty for First Interstate, too, he said.
“They understand agricultural lending as part of their DNA,” Lee said.
First Interstate intends to continue operating all INB’s branches, but will make changes at the Spokane headquarters.
After the sale, INB’s chief banking officer, Chad Burchard, will oversee operations in Eastern Washington and North Idaho. Lee said he’ll stay on as long as needed.
Following the sale, INB’s branches will be rebranded to First Interstate. The INB Performing Arts Center also could get a new name. First Interstate executives have expressed interest in continuing INB’s longstanding sponsorship of the 2,700-seat auditorium, Lee said.
INB pays the Spokane Public Facilities District more than $150,000 annually for the sponsorship, Lee said.
First Interstate has been expanding from the Mountain West region into the Pacific Northwest. After the sale, First Interstate will have $13.1 billion in total assets and 146 banking locations.
Eastern Washington’s diverse economy was part of the deal’s attraction, First Interstate President and CEO Kevin Riley told analysts during a conference call. He cited a regional cluster of manufacturing firms that make parts for the aerospace industry and Spokane’s affordable housing, which is attracting young families to the area.
In addition to the Spokane and Coeur d’Alene markets, the sale gives First Interstate a presence in the Portland area.
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