Shedding a last vestige of its thrift past, Interwest Bancorp in Washington State has changed its name to Pacific Northwest Bancorp.
The $2.8 billion-asset company officially assumes the new name today. In the coming months its four banking subsidiaries will be combined as Pacific Northwest Bank.
Interwest, which had operated as a thrift for more than 40 years, switched to a commercial bank charter in June. It has acquired several commercial banks since 1996 and today its commercial loan portfolio accounts for 65% of outstanding loans.
CEO Patrick M. Fahey, who is also president, said the change to a commercial banking orientation should improve profits.
"Most margins have been under pressure in the thrift industry with residential real estate lending," Mr. Fahey said. "There was a need to switch into the business arena, where margins can be stronger and earnings improvement can occur."
The company is also seeking to raise its profile with investors. That is one reason it will move its headquarters to Seattle, from the bedroom community of Oak Harbor, Wash.
Mr. Fahey, who succeeded longtime CEO Steve Walden in April, was chosen in part because of his experience as a commercial lender. He founded Pacific Northwest Bank in 1988 and built it to $200 million of assets before selling it to Interwest 10 years later.
The company has a bright future in business banking, Mr. Fahey said.
"I really believe that we have the tremendous opportunity to recreate something that hasn't existed in the Pacific Northwest in some time - a statewide, locally headquartered, medium-size commercial bank," he said.
James Bradshaw, a senior analyst with D.A. Davidson & Co. in Portland, said Pacific Northwest will have its hands full dealing with all the recent changes. But overall, he said, the conversion to a commercial bank was a wise move.
"Changing their name certainly gives them brand identity, and becoming a commercial bank as opposed to a thrift should improve their stock price and multiples as well," Mr. Bradshaw said.
He added that business lending opportunities in the Pacific Northwest are "outstanding," and that the change in focus should improve spreads and limit interest rate risk.
"In the next two to four years it ought to be a very good stock," Mr. Bradshaw said.
The stock is down nearly 40% since August 1999. It closed at $13.25 Thursday.
