In Treasure Valley, it's goodbye, Bank of America; hello, Washington Federal.

zkyle@idahostatesman.comJuly 30, 2013 

Goodbye, Bank of America. Hello, Washington Federal.

Money deposited at 51 Bank of America branches throughout the Northwest — including all B of A branches in the Treasure Valley — will change hands to Washington Federal in the coming months. A sale is pending that will make Seattle-based Washington Federal a bigger player in the region and especially in the Treasure Valley, where it will bump its branch count from eight to 13 and become the third-largest bank with a 14 percent market share, trailing only national banks Wells Fargo (27 percent) and U.S. Bank (19 percent).

Washington Federal branches in the Treasure Valley

Red Ws are existing Washington Federal branches. Blue Bs are Bank of America branches that will become Washington Federal locations if regulators approve the deal.

Bank President and CEO Roy Whitehead talked to Business Insider in Washington Federal’s Boise headquarters five days after announcing the sale. Whitehead, 60, talked about what the branch acquisitions mean for Treasure Valley customers and for his growing bank.

Q: What brings you to Boise?

A: I’m here to meet with both our legacy Washington Federal employees and the [320] Bank of America employees we’ll be picking up to talk about what [the acquisition] means for them individually and collectively. All will be assured of jobs. The less disruption to customers’ normal banking patterns, the more likely they will stay with us.

Q: How will the Bank of America branch acquisitions affect Washington Federal’s presence in Boise?

A: Washington Federal does well in what I’d characterize as micropolitan markets. Boise is at the high end of that range, but historically we’ve done well in places like Idaho Falls, Twin Falls and markets like Coeur d’Alene. But we haven’t had as much presence in Idaho as we’d have liked.

Q: What is the base of your business?

A: We have three businesses. We are in consumer-banking business, which entails small business as well as individual consumers. We’re in the commercial real estate business, and we have another segment — banking with middle-market companies.

Q: Acquiring Bank of America’s four Boise branches will make you the third-largest bank in the city. Is that significant?

A: Any bank in Boise wants to be in a leadership position. It just makes it easier to operate. Advertising dollars can be spent more efficiently. Being in the top three is a goal we have for every market, but Boise is the first one we’ve got to that level. We’re not even there in Seattle, which is where we’re based. More importantly, it will make banking more convenient for our clients, who will have nine branches to go to in Boise.

Q: What do Bank of America customers need to know about their accounts transferring to Washington Federal?

A: It will be important for customers to double-check to make sure that the online bill pays map over correctly. Other than that, there won’t be a lot for them to do. We will issue new checks for free. Customers should experience lower fees with Washington Federal than Bank of America.

Q: What’s different about Washington Federal’s business model compared with Bank of America’s?

A: The most important difference is that Washington Federal is a portfolio lender. We don’t sell anything to a secondary market, so the folks who originate our loans are the same people you deal with through the life of the loan. Everything stays on our books, which makes it much easier for clients if they need to modify their mortgage or if they have issues related to record-keeping, it’s all self-contained. We haven’t sold the servicing to somebody in New York or Europe.

Q: When can Boiseans expect to see the Bank of America signs be replaced by green Washington Federal signs?

A: We expect to receive regulatory approval in the next 90 days. The transaction will close in two phases, first with all of the New Mexico branches, and then about a month later, we’ll convert all of the Pacific Northwest branches, including those in Boise. Hopefully everything will be converted over by the end of the year.

Q: How did this deal happen? What bank called the other?

A: Bank of America has made a strategic decision to divest some branches. This is part of a national effort. This was a group of branches that they put together as a package in New Mexico and the Pacific Northwest. They contacted us in May and invited us to take a look at the branches and to make a bid. There were other bidders. I don’t know how many.

Q: What’s the purchase price?

A:. On the day we close, we will tally up all the deposits from the 51 branches and write them a check for 2.6 percent of the balance, which we estimate will be $1.8 billion. [That makes the estimated cost $46.8 million.]

Q: How long do you anticipate it will take for this purchase to pay for itself?

A: We anticipate two years.

Q: Were there efforts to either add or subtract branches from the package?

A: We did ask for a couple of branches in eastern Washington to be added, because we wanted to establish a presence there, but otherwise, we bid on the package as presented.

Q: Other than seeking profits, were there other reasons to make the deal?

A: Talent. We’re a company, like so many in our industry, that is long on baby boomers like myself who are closer to the end of their careers than the beginning. We need a pipeline of talent, and we like the Bank of America employees because they are well-trained, and they tend to be younger.

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Zach Kyle: 377-6464, @IDS_ZachKyle

 

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