Banner Bank, looking to become a more recognized name and expand its market share here, could open as many as five to seven more branches in the Spokane-Coeur dAlene market in coming years, says D. Michael Jones, its top executive. Depending on market conditions, though, it could take many years to achieve that growth, he says.


We clearly would like to be in Coeur dAlene, wed like to be in Post Falls, and we need to fix a couple of things in Spokane, where the Walla Walla-based bank now has 16 branches, says Jones, president and CEO of the banks company, Banner Corp. One of those fixes, he says, might involve moving an in-store branch at Liberty Lake into its own building.


As the result of rapid expansion in recent years, Banner Bank now is well-known in the Walla Walla, Puget Sound, and Boise markets, Jones says. Yet, he adds, Were not as well known in Spokane, where Banner had a relatively small foothold until May 2007, when it acquired Spokane-based F&M Bank.


Just getting to be a household market name is going to be the main challenge for awhile, he says.


One of the projects he believes will help move Banner toward that goal is its planned opening early next year of a large branch office in downtown Spokane that will become its base of its operations here. The bank, as reported earlier, has agreed to lease about 14,000 square feet of space in the Grant Building, at 806 W. Riverside, where an extensive remodeling currently is under way.


Its kind of the linchpin for all of the branches in the area, so I think its important, Jones says.


That main branch will open in the first quarter of next yeara more precise opening date hasnt been determined yetand will employ around 35 people, he says.


Also, he says, the bank has just completed a lease agreement for a roughly 40,000-square-foot piece of land at the northeast corner of U.S. 2 and Hawthorne Road, next to the old Newport Cinemas, where it plans to construct a new branch. G.D. Longwell Architects PLLC, of Hayden Lake, Idaho, is designing the branch, which is expected to be a 3,500- to 4,000-square-foot structure. Banner hopes to open the branch next year.


Those new operations should boost the banks overall employment here to around 150, Jones estimates.


I think were in a position to really be able to capture market share and serve that community well, he says. We have good branch distribution there, and we have some wonderful people who joined us from the F&M operation.


Banner has a habit of growing market share wherever we go, doing so last year in 18 of the 21 markets in which it competes, and it expects the Spokane-Coeur dAlene area to be no different, says Jones. Hes familiar with the Spokane market, having once been the No. 2 executive at Old National Bancorporation here before it was acquired by then Portland-based U.S. Bancorp.


In a list of financial institutions that the Journal published earlier this year, Banner ranked seventh in local deposits, behind Washington Trust Bank, Sterling Savings Bank, Bank of America, Washington Mutual Bank, U.S. Bank, and Wells Fargo Bank. Its $489.7 million in local deposits put it at slightly less than one-third the market share of Washington Trust, which topped the list with $1.62 billion in local deposits.


Overall, though, Banner Corp. is a $4.5 billion bank-holding company with a total of about 1,150 employees, including those who work for Banner Bank and for Islanders Bank, based in Friday Harbor, on San Juan Island. It acquired that bank and its parent company, San Juan Financial Holding Co., at the same time it acquired F&M. Founded in Walla Walla in 1908, Banner now operates 86 full-service branches and 12 loan offices in 29 counties in Washington, Oregon, and Idaho, according to its Web site.


Banner Corp. wont report its second-quarter earnings until July 28. For the first quarter, though, it posted net income of $3.8 million, or 24 cents a diluted share, down from $7.8 million, or 62 cents a share, in the first quarter of 2007. It attributed the sharp drop in earnings partly to stressed housing markets and to interest rate changes by the Federal Reserve that together had led to higher credit costs and a shrinking net-interest margin, but said it was encouraged by increases in its commercial loan balances in recent quarters.


Were having good business-lending growth this year, good retail growth this year, Jones says. We serve a lot of agricultural communities, and this is the best of times for them.


Also, despite the economic downturn, the Boise market continues to be a hot one for Banner, he says, adding, Its hot for all banks, due partly to a continuing strong in-migration pattern there and thriving business climate.


Thanks to its acquisition of F&M, Banner now is a solid small-to-medium-sized-business lender in the Spokane market and has a strong relationship with its retail customers, Jones says. One area where it probably is not as strong as it could be is in single-family to four-plex residential lending, but given the degree to which the housing market has plummeted nationwide, now obviously isnt the best time to try to broaden that piece of its business, he says.


Banner said in its last quarterly earnings statement that it now is easing back from an aggressive expansion strategy that has included adding 18 branches through acquisitions, opening 21 new branches, and relocating eight others, over just the last three years.


We have reached our goal in terms of the number of branches required to generate deposit growth sufficient to fund our expected loan growth and produce significant fee-generating opportunities, it said. Thus, it said, it will be opening just two branches this year, one in Bellevue and the other in Portlands Pearl District, as part of a more moderate pace of expansion. It has a number of branches in Oregon already.


Jones says he expects the bank to average three to six branch openings annually in coming years as it seeks to fill in perceived gaps in its regional market area, rather than just building branches to grow deposits.


Contact Kim Crompton at (509) 344-1263 or via e-mail at kimc@spokanejournal.com.