Little Seattle Bank Hopes to Raise $450M and be a Big Player
Little Seattle Bank Hopes to Raise $450M
And Be A Big Player
By Drew DeSilver
Seattle Times business reporter
Thursday, March 18, 2010 at 5:23 PM
The emerging race to consolidate the Pacific Northwest's weakened banking industry may be getting a new, deep-pocketed competitor.
Fortune Bank, a small Seattle-based bank, said Thursday it seeks to raise $450 million in new capital and plans to bring in the former top U.S. executive of global banking giant HSBC as its chief executive.
The apparent goal: To use Fortune Bank as a platform to roll up some of the Northwest banks weakened by the real-estate bust and the recession.
David Straus, Fortune's current CEO, would become chief operating officer under the plan, which is still in its early stages.
In a brief telephone interview, Straus said Fortune would deploy the new capital in government-assisted deals for shuttered banks, as well as unassisted acquisitions and to support organic growth.
Straus acknowledged that $450 million in new capital — enough to support an asset base of more than $4 billion — would dramatically change Fortune, which had assets of just $118.5 million at the end of 2009.
"We wouldn't be raising that much money if we weren't planning to utilize the capital," he said.
Privately held Fortune plans to ask its shareholders to raise the number of authorized shares from 10 million to 250 million, as well as to make other changes "that are typical for a publicly traded company."
The Federal Deposit Insurance Corp. also must approve Fortune's offering circular before it can formally solicit investors.
Fortune, which opened in December 2006, wouldn't seem to be a likely candidate for the role of bank consolidator.
It has one office in the former Washington Mutual Tower, less than $15 million in core capital, and a concentration on serving small businesses. Most of its borrowers have between $2 million and $20 million in annual sales, Straus said.
What it does have, besides a solid capital structure, is a partnership with Martin Glynn, a 24-year veteran of HSBC who ran its U.S. operations from 2003 to 2006, and its Canadian operations before that.
Since retiring from HSBC at the end of 2006, Glynn has lived in Vancouver, B.C., joined several corporate boards and, Straus said, looked for new opportunities in banking.
Should the capital raise proceed as planned, he said, Glynn would bring several other former HSBC executives with him to Fortune Bank.
They would have no shortage of buying opportunities. Washington's community-banking industry is one of the most distressed in the nation, with nearly a third of all state-based banks and thrifts operating under one form or another of enhanced regulatory oversight. Oregon and Idaho also have several distressed banks.
Since the beginning of 2008, seven Washington banks have been seized by regulators and their operations sold to other, stronger institutions. Umpqua Bank of Portland has snapped up three of them, aiming to fill in the Washington part of its planned Seattle-to-Sacramento footprint.
Struggling banks nationally have found it exceptionally hard to raise capital or find merger partners, which has only deepened their problems.
Many industry observers expected private-equity firms to step into the financing void, but despite a few toe dips such as last year's abortive deal between Frontier Financial and hedge fund Steel Partners, few have done so.
Diane Dewbrey, chief executive of Bellevue's Foundation Bank, said it would be a good sign if Fortune does raise significant sums from private investors.
"If that kind of private-equity money is available for Fortune, it's available for other banks," said Dewbrey, who said she has also spoken with private-equity groups.
Copyright © 2010 The Seattle Times Company
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