Northrim Bank said late Wednesday that it will tap the public markets to raise the $22 million it needs to buy eight Alaska branches from BankAmerica Corp.
The Anchorage-based bank, which announced plans in December to buy $115 million in loans and $145 million of deposits from Charlotte, N.C.-based BankAmerica, said it also needs the additional funds to maintain capital levels.
"There will be no purchase if we don't raise the equity," said Marc Langland, the chairman and chief executive officer of $345 million-asset Northrim. "We don't have enough excess capital."
Northrim plans to offer investors 1.795 million shares of common stock, boosting the company's shares outstanding to more than 5.3 million. Shares will be sold at around Northrim's current market price. In light trading Thursday the stock closed at $12.
Mr. Langland declined to release how much Northrim was paying for the branches. Specifics will be released in a prospectus next month, he said.
The branch acquisition would strongly enhance Northrim's operations in greater Anchorage, where it has two branches. With 10 sites-five in grocery stores-Northrim would hold a 20% deposit market share, Mr. Langland said.
It also would diversify the bank's portfolio beyond commercial and real estate loans into consumer lending.
"This deal substantially increases our market visibility," said Mr. Langland. "That's been one of our shortcomings."
Louis Feldman, an analyst at Red Chip Review in Portland, Ore., agreed. "This is almost an instant footprint for Northrim," said Mr. Feldman. "It gives them an opportunity to woo a larger segment of the community."
Northrim executives plan to hit the road in mid-April to meet with potential investors on both coasts. The offering is expected to begin late next month.
Wedbush Morgan Securities in Los Angeles, Friedman Billings Ramsey & Co. of Arlington, Va., and Hoefer & Arnett of San Francisco are the managing underwriters.