Banner Bank buying AmericanWest Bank in $702 million deal

Banner Bank is taking over Spokane-based AmericanWest Bank in a $702 million deal that will expand its regional banking brand into 190 branches across five states.

While the Banner name survives the transaction, the equity group owners of AmericanWest will become the dominant shareholder of Banner.

Both banks cater to small to midsize businesses ranging from farms to manufacturing companies. That won’t change, said Banner president and CEO Mark Grescovich. And neither will banking services and commitment to Spokane, he said. But with Banner’s headquarters in Walla Walla, Spokane will soon lose its second bank company headquarters following Sterling Savings’ sale earlier this year to Portland-based Umpqua bank.

“First and foremost, Banner has been dedicated to Spokane for a significant period of time,” he said. “That won’t change.”

Banner Bank made its major entry into Spokane eight years ago when it bought Farmers and Merchants Bank.

The acquisition of AmericanWest will turn Banner into a bank with $9.7 billion in assets, along with $6.8 billion in loans and $7.9 billion in deposits.

AmericanWest had been the more aggressive bank in recent years.

Scott Kisting, AmericanWest’s chairman and chief executive officer, purchased the bank with a group of investors in 2010. AmericanWest was on the brink of bankruptcy in 2010 amid the economic ruin of America’s financial sector.

Kisting’s equity group, SKBHC Holdings Inc., paid $6.5 million cash for AmericanWest and injected another $185 million in fresh capital to begin the job of resurrecting the lender.

During the next four years, Kisting would engineer the takeover of nine other troubled banks and triple the size of AmericanWest from $1.6 billion in assets to about $4.5 billion.

The company shed its label as “troubled” and today has a strong balance sheet.

Kisting said AmericanWest regained the trust of regulators, who allowed it to take over and clean up other struggling banks. That work helped make AmericanWest an attractive partner for Banner.

“That’s the thing I’m most proud of,” Kisting said. “There’s talent in this company.”

This week Kisting leveraged that 2010 investment and four years of turnaround into a $702 million sale. That figure includes Banner paying $130 million in cash and issuing 13.23 million shares of common stock to Kisting’s equity group, which translates into a 38.8 percent stake.

No other shareholder owns more than 9.9 percent of Banner’s common stock traded on the NASDAQ exchange.

Kisting will appoint five AmericanWest representatives to the 17-member Banner board of directors.

State and federal banking regulators will review the agreement and Grescovich anticipates the deal closing next spring after a shareholders’ vote.

The two bank leaders have worked for months on the deal after determining that their banks share a similar work culture and expansion interests.

The combined bank would have ample financial might, desire and experience to add more banks and services in the future.

“The combination makes sense,” Grescovich said.