For Bank of Idaho President and CEO Jeff Newgard, buying five eastern Washington branches of Seattle-based HomeStreet Inc. wasn’t just an acquisition, but coming home.
At 32, Newgard was CEO of Yakima National Bank in central Washington — a $40 million, two-branch bank that he built up to $225 million between 2005 and 2013 before selling it to HomeStreet.
“I bought my old bank back,” Newgard proclaimed.
Building a network
In addition to “getting the band back together,” as Newgard puts it, the acquisition contributes to his plans of developing a multistate Intermountain West banking network, from eastern Washington to western Montana and perhaps including eastern Oregon, Wyoming or Utah, he said. “The first priority is eastern Washington and then probably western Montana,” he said.
The five HomeStreet branches are in Spokane, Kennewick, Dayton, Yakima and Sunnyside. Bank of Idaho, based in Idaho Falls with 11 branches throughout Idaho, announced the acquisition on May 11.
“Bank of Idaho’s growth over the last six years, and now its expansion into eastern Washington, gives the bank increased capital for loans and opportunities to offer a broader array of services to businesses across the Pacific Northwest,” said Trent Wright, president and CEO of the Idaho Bankers Association, in an email message.
To complete the transaction, Newgard said he had to raise $35 to $40 million. “We’re acquiring $300 million in deposits,” he explained. “We have to have enough capital to back those deposits.”
In 2019, the bank, which was previously privately held, began trading its stock over the counter. Bank of Idaho Holding Co., the sole owner of Bank of Idaho, qualified to trade on the OTCQX Best Market and trades under the symbol “BOID.”
Despite the upward rate environment and the uncertain capital market, Newgard called the response to the raise “unbelievably positive.” “They loved our story, love Idaho and love the markets we’re entering,” and responded by oversubscribing the raise to $53 million, which the bank will use for further expansion, he said.
In addition to the five Washington branches acquired from HomeStreet, Bank of Idaho has opened up a loan production office in Pasco, independent of this purchase. “It’s made up of three individuals who used to work with me at Yakima National Bank,” Newgard said. That office is pending approval to open as a full-service bank branch, he added.
Bank of Idaho also opened on May 16 a branch in West Boise at the corner of Fairview Avenue and Five Mile Road in a former U.S. Bank branch, giving it a total of four Treasure Valley locations, including one in Nampa and another one in West Boise, as well as one downtown.
As far as new Idaho branches, Newgard prefers to hire the team first and then pick a location, he said.
The Idaho Department of Finance (IDOF) has 60 days to approve the application, though in practice it tries to get it done within 30 days, said Robert Moore, supervisory bank examiner, in an email message.
“The regulatory approval process begins when the acquiring institution submits a standardized interagency application to the regulatory agencies, including the IDOF, host-state regulator, and federal agencies (FDIC/Federal Reserve),” Moore said. “The department would then review the application to ensure the transaction meets the requirements of the Idaho Bank Act and other applicable laws and regulations. During our review, we would evaluate the financial condition and capital position of the acquiring institution and ensure that the transaction would not negatively impact the safety and soundness of the institution. We would also evaluate the impact that the transaction will have on the public and verify that the depositors and shareholders are not negatively affected. Once the agencies have completed their review and each has granted final regulatory approval, the institutions can move forward with finalizing the transaction.”
The acquisition is expected to close on or before Aug. 1.