BOISE, Idaho — In this state capital, where potato empire billionaire J.R. Simplot once drove a Lincoln Continental adorned with “MR SPUD” vanity plates, a Washington Federal executive expressed an affinity for what he counts as the Gem State’s rock-ribbed fiscal conservatism.
Remember it’s Idaho, where residents are proud of the balanced state budget.
“It’s sound. It’s healthy. That’s just kind of how they think, and operate,” said Tom Van Hemelryck, Washington Federal’s regional president for Idaho. “We’re the same way. We’re long-term strategic thinkers and fiscally conservative. So, we match up very well.”
During the sluggish post-recession economic recovery, the Seattle-based bank has grown via acquisition of 65 bank offices in Idaho, Oregon and Eastern Washington.
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In Idaho, it bought 15 branches from Bank of America in 2013, bringing its total in the state to 29; deposits rose by more than $250 million.
Washington Federal was attracted to a solid agricultural economy in eastern Idaho and “the beating heart of the Idaho economy” in Boise, said Chief Executive Roy M. Whitehead.
“With the 2008 housing crisis and banking crisis fading into the distance, we began to see Idaho coming back,” Whitehead said. “And, of course, agriculture has been very strong in the past few years.”
At $24 billion, agribusiness was the largest part of the Idaho economy in 2012, according to the Idaho Department of Agriculture.
Washington Federal executives now expect to expand by increasing its small-business lending. It will have to compete against Salt Lake City, Utah-based Zions Bank, which has been the top Small Business Administration’s 7(a) lender in Idaho for 12 consecutive years.
“While we are No. 3 in deposit market share … we’re No. 1 in small-business lending,” said Rob Brough, spokesman for Zions. In January, Zions opened an 18-story, 323-foot-high office tower — now the tallest building in Idaho — in downtown Boise. It has 326 employees in the state.
Washington Federal was No. 10 statewide in deposit market share before the Bank of America deal and expects to leapfrog from No. 5 to No. 3 in the Boise market. In pre-acquisition numbers, Bank of America held 5.34 percent of the Idaho deposit market share; 7 percent in the Boise area.
Zions entered the Idaho market in July 1997 after acquiring 10 Wells Fargo branches and two Tri-State Bank branches. Washington Federal entered the Idaho banking territory with initial acquisitions in 1987, and now employs 206 people in the state.
“The presence of Zions doesn’t necessarily strike me as overly onerous in terms of a competitor,” said Jeff Rulis, a banking analyst at D.A. Davidson & Co. brokerage firm in Lake Oswego, Ore.
Washington Federal’s Idaho expansion, he said, fits in with its multipronged strategy that includes leveraging excess capital to increase profits. Just last month Washington Federal acquired 23 Bank of America branches in Nevada and Arizona, expanding its retail operations, Rulis said.
“By itself, the acquisition of retail branches doesn’t necessarily get them to the end game of being a commercial bank,” Rulis said. “It’s a step in the process.”
Numbers provided by Washington Federal indicate that Idaho deposits for the bank had reached $811 million during the quarter ended March 31; up from the $545.8 million reported on Sept. 30, 2013 — before the Bank of America branch acquisitions closed.
“We’re here to do business,” said Whitehead. “So, between the combination of … just the natural growth in the market, and the disruption we see from other mergers, in conjunction with our increased mass, we think this is a really good opportunity for us.”