Let the bidding begin, maybe, for a Spokane bank.
AmericanWest Bancorp announced Wednesday that it would sell its subsidiary AmericanWest Bank, thereby raising capital and restoring compliance to regulatory orders.
The company operates branches throughout Eastern Washington and Northern Idaho, and in Utah with its subsidiary division, Far West Bank.
To facilitate the deal, the holding company intends to file Chapter 11 bankruptcy, and it is expected that the bankruptcy court will supervise a competitive bidding process.
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Privately held SKBHC Holdings of California has signed a purchase agreement to acquire all AmericanWest Bank stock for $6.5 million in cash, and to recapitalize the bank with an additional $200 million that would satisfy regulatory requirements, the holding company said in a news release.
Typically, bank takeovers either see regulators closing a bank and assisting a new buyer, or else another bank will simply pay shareholders to acquire the assets of the bank being sold.
This transaction is “very unusual. I think this is like the third or fourth in the country,” said Brad Williamson, director of banks for the state Department of Financial Institutions.
“In my opinion, the investment community feels that we’re at the bottom,” Williamson said. “They are now very interested in acquiring banks.”
By entering bankruptcy, the holding company might be relieved of responsibility to repay some investors who had purchased certain “trust preferred” investments.
Common shares have also likely lost value.
In May 2009, regulators issued a cease-and-desist order against AmericanWest, demanding that the bank raise capital and change its loan procedures. Should the bank be recapitalized, it is likely that regulators will lift the earlier requirements.
As the process continues, branches of AmericanWest and Far West Bank will remain open for business.
AmericanWest could be an attractive investment for regional banks seeking to expand into markets east of the Puget Sound area or northern Oregon, although bank spokeswoman Kelly McPhee said such bids were unlikely.