A Spokane, Wash., credit union has agreed to buy the assets of a bank branch in the northern tip of Idaho, which would add $20 million in assets and 1,000 members if the deal closes as expected in August.
STCU ($3 billion in assets, 187,720 members) agreed to buy the Sandpoint, Idaho, branch from Banner Bank of Walla Walla, Wash. ($11.6 billion in assets) for an undisclosed price based on the value of the assets and liabilities, according to an Interagency Merger Act Bank Application filed April 22 with the FDIC.
The Sandpoint branch is about 70 miles northeast of Spokane and 60 miles south of the Canadian border.
Bonner Bank’s board approved the branch asset sale in October, stipulating a 5.5% core deposit premium. The board also approved the sale of the branch building, furniture, fixtures, equipment and land lease be sold at net book value plus a 10% premium to Potlatch No. 1 Federal Credit Union (P1FCU) of Lewiston, Idaho ($1.1 billion in assets, 87,540 members).
However, under the purchase agreement with STCU signed Feb. 28, the bank agreed not to reopen a branch there or sell it another financial institution for at least 90 days.
Federal and state regulators must review the Sandpoint branch acquisition. STCU plans to offer jobs to all five of the bank branch’s employees. They and the new members would join STCU two miles up the road in Ponderay. STCU is planning to move 300 feet in late May from its current branch in Ponderay to its new 4,100-square-foot branch, which is twice as large.
“Once approval is granted, we will make this conversion as seamless as possible for Banner Bank clients,” STCU President/CEO Ezra Eckhardt said. “The timing couldn’t be better, with the opening of our new Bonner branch location.”
Meanwhile, P1FCU converted to a federally insured state-chartered credit union effective Feb. 21, changing its formal name to Potlatch No. 1 Financial Credit Union, but still going by P1FCU. It has now expanded its field of membership in Idaho, Oregon, and Washington.
P1FCU already has a branch in Ponderay, and three others between Spokane and Idaho’s northern tip. In May, P1FCU plans to open its 18th branch in Rathdrum, Idaho, in May, just 30 miles east of Spokane.
STCU, which is named Spokane Teachers Credit Union in its charter, announced in January that it has bought land in Rathdrum for a new branch.
STCU’s field of membership includes residents of Washington or northern Idaho. It opened its first branch in Idaho in 2009 in the Bonner County town of Ponderay, and Rathdrum will be its sixth later this year. Idaho residents now account for 15% of members, up from 4% in 2009.
“This is part of our ongoing, and growing, commitment to Idaho,” said Dan Hansen, STCU’s media and communications manager.
Sandpoint is Banner Bank’s only branch in Bonner County, and its nearest branch in the state is about 50 miles south. The bank had $20.3 million in deposits and $3.7 million in loans at the Sandpoint branch at the end of 2018, while STCU’s Bonner Branch in Ponderay had $35.9 million in deposits and $8.4 million in loans.
At the end of June 2018, Bonner Bank’s share of deposits in Bonner County was barely above 3%, while STCU had close to 5% of the market, according the bank’s FDIC filing.
The filing said Banner Bank wants to exit the Bonner County market. “The bank has been unable to grow market share in the Sandpoint area and as a result the branch has been operating at a loss.”
The purchase agreement calls for the transfer of deposits and purchase of loans, including car loans, mortgages, home equity lines of credit, overdraft loans and business loans.
“STCU would like to acquire the loans and deposits at the Branch in order to deepen existing membership relationships in Bonner County and to improve its break-even position on the new branch,” the filing said.