Wheatland Bank, coming off double-digit growth in assets, deposits, and loans in 2006, has found tentative locations to add three branches here.


The bank has signed letters of intent for the three sites, but doesnt want to disclose yet where the sites are because it hasnt signed final agreements to tie up the properties, says Wheatland Chairwoman, President, and CEO Susan Horton.


I anticipate having another three locations in the Spokane area in the next couple of years, Horton says. Our strategy is to in-fill, or to locate new branches in areas of the market between Wheatlands established branches downtown, just north of the city of Spokane, and in Spokane Valley, she says.


Wheatland has nine branches now, located in Davenport, Ritzville, Moses Lake, Quincy, Wilbur, and Odessa, Wash., in addition to the three here.


Were also looking beyond the Spokane market and elsewhere in the state of Washington for other areas in which to expand, Horton says. She declines to say where else Wheatland is looking to grow, but says it will complete its expansion here before it goes into new areas.


Spokane is first, she says.


Wheatland, which has made a push into the Spokane market in recent years and has moved its administrative offices here from their historic location in Davenport, grew to $185 million in assets as of Dec. 31, up 13.47 percent from a year earlier, Horton says.


The banks deposits grew by 17 percent in 2006, rising to $154 million from $131 million a year earlier, while its loans grew to $126 million, up 12 percent from $112 million at the end of 2005, she says.


The bank saw in its 2006 results a payoff from its facilities expansion in that we just had our first full year of operation in our North Spokane financial center, which is in the Pine Water Plaza, she says.


More than two-thirds of Wheatlands loans now are in the Spokane and Columbia Basin markets, both of which it entered after Horton joined the bank in 1999 as its CEO, she says.


Still, the banks results also have been strong in the agricultural area that it served historically, she says.


The apple growers are doing phenomenally well, Horton says. The price of wheat has been strong.


For 2007, the bank is projecting loan growth of 18 percent and deposit growth of 11 percent, but asset growth in the range of 4 percent, Horton says. She says asset growth wont be as robust as it might have been because Wheatland this year will pay off long-term borrowings from the Federal Home Loan Bank that it took out when it expanded into Spokane. It borrowed that money to manage its net interest margin and to provide funding and liquidity if its loan growth came faster during its expansion than its deposit growth, which typically occurs when an institution enters a new market, Horton says.


In 2006, Wheatlands core deposits, or non-interest bearing checking accounts, grew by a particularly strong 20 percent, Horton says.


She says those deposits can help reduce a banks cost of funds when they grow rapidly because banks dont pay interest on them.


Wheatlands net interest margin, or the margin by which interest income from assets such as loans exceeds the interest a bank pays for money, rose to 5.24 percent, up from 5.01 percent in 2005, and exceeded that of its national and local peer groups, Horton asserts.


Wheatlands net interest margin did well comparatively because some other banks have ignored a directive from the accounting profession on how they should account for fee income derived from multi-year loans, Horton asserts. She says those banks have included as income in the year in which theyve written multi-year loans all of the fee income from those loans, rather than spreading it over the life of the loans, as the accounting profession says they should.


That approach can boost interest income when loan demand is strong, such as during the refinancing boom of a couple of years ago, but holds down interest income when loan demand lags, she says.


Contact Richard Ripley at (509) 344-1261 or via e-mail at [email protected].