The Spokane-Coeur d’Alene area has lost publicly-traded company headquarters at a greater rate than similar sized metropolitan areas, according to an analysis completed earlier this month by Spokane-based Hart Capital Management Inc.
Nine publicly traded companies are based in Spokane, Spokane Valley, and the Coeur d’Alene area, down from 17 such corporations that called the region home five years ago. In 2012, a similar Hart Capital report showed that the Spokane-Coeur d’Alene area had the most public companies among metropolitan areas of comparable size.
Hart Capital President Craig Hart cites several factors that have contributed to the loss of public company headquarters here.
“It’s really a combination of things,” he says. “Nationally, the credit crisis caused a reduction in independent banks, which we weren’t immune to. We lost a large retailer to bankruptcy, which is something we’ve also been seeing on a national scale. Other companies have been acquired or have chosen to move their headquarters.”
For the recent analysis, Hart says the study tracked publicly-traded companies with market capitalization values of $25 million or more located within 31 metro areas with regional population sizes of between 600,000 and just under 900,000. That would make them similar in size to the Spokane-Coeur d’Alene area’s combined population of about 710,000, he says.
Of the 31 metro areas included in the study, data show only four have had a net loss of publicly traded company headquarters during the last five years. The Spokane-Coeur d’Alene area showed the largest decline with a total of eight companies lost.
Among metropolitan areas included in the analysis, Greenville-Anderson-Maudlin, S.C., had the second largest decline in publicly traded company headquarters, with a total of four companies lost during the last five years.
Overall, the study showed 15 metro areas added one or more publicly-traded companies, while 13 others maintained the same amount.
The Spokane-Coeur d’Alene market now shares a third-place ranking for the most public-company headquarters among similar-sized markets, according to the analysis. Greensboro-High Point, N.C., and Little Rock-North Little Rock-Conway, Ark., also are home to nine public companies each.
The closest regions geographically—Boise-Nampa, Idaho, and Colorado Springs, Colo.—have seven and five public companies, respectively, the study found.
The Oxnard-Thousand Oaks-Ventura, Calif., metropolitan statistical area topped the list with 15 publicly-traded companies, followed by the Allentown-Bethlehem-Easton, P.A.-N.J. area, which has 13.
Last month, Red Lion Hotels Corp. moved its corporate headquarters to Denver after a decades-long presence in Spokane. Two public companies fell off the 2015 list, Ambassadors Group Inc., which discontinued operations, and Mines Management, which was acquired by Hecla Mining Co.
Other companies no longer based in the metropolitan area include Coeur Mining Inc., which moved its headquarters to Chicago in 2013; Sandpoint-based Coldwater Creek Inc., which shut down its operations after filing for Chapter 11 bankruptcy protection in 2014; Intermountain Community Bancorp, which was acquired by Columbia Banking System that same year; and Sterling Financial Corp. and Revett Minerals Inc., which both were subjects of acquisitions—Sterling by Umpqua Holdings Corp in 2013, and Revett by Hecla in 2015.
The list will dwindle again next year with the removal of Avista Corp., the longtime Spokane-based utility once known as Washington Water Power Co. In July, the company announced that Toronto-based Hydro One will acquire it in a transaction valued at $5.3 billion U.S., or $6.7 billion Canadian. The transaction has been approved by the boards of the companies and is scheduled to be completed in the second half of 2018.
For now, the remaining nine publically traded companies based here include Avista, Itron Inc., Hecla Mining Co., Potlatch Corp., Washington Trust Bank Financial Corp., Clearwater Paper Corp., Idaho Independent Bank, Key Tronic Corp., and Northwest Bancorporation Inc.
Grant Forsyth, chief economist for Avista, says one reason the region lost so many publicly traded companies in recent years is due to changes in regulations.
“Coming out of the Great Recession, many publicly traded companies were banks that have since been forced to merge in order to survive,” he says. “The regulatory environment is tougher now, and it’s become more costly for companies to go public and stay public. That’s also slowed the replacement of those publicly traded companies we’ve lost.”
While Hart maintains there isn’t necessarily one larger reason behind the reduction in publicly traded companies here, he says it is important to recognize the loss and try to remedy it.
“Part of the solution is to work toward growing new companies to replace those that are merging, being acquired, or moving away,” he says. “And we do see some developments like that beginning to take shape, but so far none have grown enough to move toward becoming public.”
Although the study showed the Spokane-Coeur d’Alene area had lost the most publicly traded companies, Hart points out that the combined market capitalization value of companies based here remained high.
Market capitalization value, which is a company’s share price multiplied by the number of outstanding shares, came to a total of $12.5 billion for the Spokane-Coeur d’Alene region’s nine remaining public companies.
“Those numbers show our remaining public companies have grown nicely over the last five years,” he says. “And overall, we still have a meaningful amount of publicly traded companies, worth a combined $12 billion, compared to metro areas of similar size.”
The study shows the Spokane-Coeur d’Alene area had a market capitalization value of $12.5 billion, ranking it 15th overall, just behind the Wichita, Kan., metropolitan area, which had a market capitalization value of $13.3 billion.
Hart says, however, the upcoming removal of Avista from the list will have a significant effect on the total combined market capitalization value in the Spokane-Coeur d’Alene market, reducing it by 20 percent to $9 billion.
“Any metropolitan area needs to see business growth in order to fulfill and meet the needs of the region’s economy, whether that’s public or private growth,” he says. “However, we don’t necessarily need public companies to have a robust local economy.”
In the past 10 years, larger companies have been choosing to remain private rather than go public, Hart says.
“Even though they’re private, many of those companies still have a positive effect on the local economies in which they’re based,” he says.
Looking ahead, Forsyth says the region should be focusing both on growing the companies we have, as well as talking with federal representatives about reviewing regulatory legislation.
“We’re not the only community struggling with this issue, so we have to stay aware of what others are offering, to make sure we’re still competitive,” he says. “We need to make sure the companies here that are growing and have potential to go public still have incentive to stay. At the same time, we also need to be speaking with federal legislators about perhaps loosening some of the regulatory legislation that’s keeping new companies from going public.”
Hart Capital, which is located at 601 W. Main downtown, is a privately-owned wealth and asset management investment firm with clients based around the Inland Northwest.
Hart says the company decided to conduct the updated study in part because of questions from Spokane-area business leaders.
“There’s been a large reduction in the amount of publicly traded companies in the last five years, and we’ve heard concerns from many business leaders throughout the community as to how that may affect our local economy,” he says.
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