AmericanWest Bancorps recently announced agreement to buy Pasco-based Columbia Trust Bancorp for $37.5 million is a noteworthy piece of business for the Spokane-based institution, but just a fraction of what it believes is yet to come.
That transaction, once its completed early next year, will boost AmericanWest to about $1.4 billion in assets, double its size of just four years ago, but the company expects to increase its asset base to more than $2 billion within the next two years.
It intends to achieve that rapid growthmore than a 40 percent jump from its current sizeby increasing volume at the branches of its main operating subsidiary, AmericanWest Bank, by opening new branches, and through more acquisitions.
We would like to become the acquirer of choice, says Robert M. Daugherty, who is president and CEO of both the parent company and the bank and was hired just 15 months ago.
Columbia Trust, with around $210 million in assets, is at the low end of the size of the financial fish AmericanWest is looking to reel in. As it aggressively pursues a goal of becoming a big regional the regions largest community bank, its interested in absorbing banks ranging in size up to around $750 million in assets, Daugherty says.
There are a number of Inland Northwest institutions that would fit in that zone, he says. He declines to say, though, whether AmericanWest currently is negotiating with any of them.
Potential acquisition targets must be strategic, meaning they must be inside or adjoining the banks current service area, and must be a good cultural fit, having similar internal values, Daugherty says. Also, they must be able to contribute to the parent companys earnings within a year after being acquired, he says.
AmericanWest Bank, which has its headquarters at 41 W. Riverside, employs about 460 people. It currently offers business and consumer banking services at 40 locations throughout Central and Eastern Washington and North Idaho, and it plans to open at least four more branches in 2006.
It started construction of a two-story, 8,000-square-foot branch in Hayden, Idaho, last month, and also recently announced plans to build branches in Coeur dAlene and Sandpoint. Another new branch, assuming the Columbia Trust acquisition is completed, is to be located in Yakima, and planning for it currently is being handled by Columbia Trust, Daugherty says.
AmericanWest has been back in full-throttle expansion mode for about two months, since regulatory restrictions placed on it by the Washington Department of Financial Institutions and the Federal Deposit Insurance Corp. were lifted. Those restrictions were based on problems the bank experienced under previous management and kept it from expanding for about a year, until it could show it had improved its asset quality, loan administration, and liquidity.
It precludes you from being able to grow. Youre basically in the penalty box when you are in those kinds of situations, Daugherty says. He says, though, that the light started coming over the mountains this fall when it became clear the regulatory restrictions would be lifted.
Daugherty, 52, who before coming to Spokane had developed a reputation as a bank turnaround specialist, was hired in September 2004 specifically to work that kind of magic at AmericanWest.
This situation was a turnaround situation, he says, noting that AmericanWest had $18 million in bad-debt expense when he arrived.
He moved quickly to right the listing ship, replacing all but two members of the banks executive team, establishing training and marketing programs, and adopting measures aimed at improving the credit quality of its loan portfolio.
For the first nine months of this year, the bank had net income of $9.9 million, or 94 cents a share, up from $8.8 million, or 84 cents a share, in the year-earlier period. It had total loans of $997.7 million and deposits of $963 million as of Sept. 30, up 7.5 percent and 7.6 percent, respectively, from the end of 2004. Perhaps most significantly, the amount of money tied up in nonperforming loans fell 29 percent during the first nine months of this year, to $17.2 million from $24.3 million, and Daugherty says hes continuing to chip away at that sum.
We are a very good competitor today. We werent a very good competitor a year ago, he says. His restructured management team is a driven bunch that works long hours, including often on weekends, he says, adding, The talent pool here has the ability to take this organization easily to $5 billion (in assets). I plan to lead the charge.
Diane L. Kelleher, AmericanWest Banks chief financial officer, says of Daugherty: He doesnt tire easily.
Born and raised in Canada, Daugherty spent the first 20 years of his career in Toronto, then moved to Salt Lake City in 1993 after deciding to make a midlife change. There, he says, he assembled a group of investors that bought a suburban institution called Draper Bank & Trust in 1997, doubled its profitability in three years, and sold it to Salt Lake City-based Zions Bancorp, parent company of Zions Bank.
He then worked briefly for Zions before being invited to interview in early 2002 for the top post at Humboldt Bancorp, which was based in Roseville, Calif., near Sacramento, and in one troubled year had lost all of its retained earnings. He became president and CEO of that company and its main operating entity, Humboldt Bank, in April 2002 and remained there for a little over two years, during which time, he says, Humboldt became the largest community bank in northern California north of Interstate 80, at $1.5 billion in assets.
Portland-based Umpqua Holding Corp., which owns Umpqua Bank, claimed by Daugherty to be the largest community bank on the West Coast, then bought Humboldt Bancorp early last year in a $340 million transaction. Daugherty was named to head up Umpquas California operation, but says, Having been a CEO, I grew accustomed to being a CEO, and decided to move on.
He joined AmericanWest in the fall of last year after being contacted by an executive headhunter, and says he was lured to the Spokane area by its quality of life.
I like challenges, he also says of his decision to join the bank. This is my hobby. This is my lifeblood.
What remains a bit of a question mark, though, given Daughertys history as a turnaround specialist, is how long hell stay at the bank. His former ties to Umpqua and a recent expansion by that bank into Washington state, though currently just in the Puget Sound area, also has raises questions among some observers about whether AmericanWest itself might becomeor seek to position itself asan acquisition candidate.
Daugherty downplays such speculation. As for himself, he says, This is a longer-term relationship. Id like this to be my last stop. He says he plans to work eight more years before retiring. As for the bank, he says, Were not calling them (Umpqua) or soliciting calls from them. Im just trying to grow this institution.
AmericanWest Bank was founded in 1974 in Chewelah, Wash., under the name United Security Bank. That bank moved to Spokane in 1990 and went public in 1995. AmericanWest Bancorp was formed in 2001 in a five-bank consolidation that included United Security, Home Security Bank, of Sunnyside, Wash.; AmericanWest Bank, of Walla Walla, Wash.; Bank of Pullman, of Moscow, Idaho; and Grant National Bank, of Ephrata, Wash. AmericanWest then acquired the Latah, Wash.-based Bank of Latah in 2002.
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