Anatomy of a deal: Northwest Bank to be sold to Time Bank 

It was nearly three years ago when the leadership of Northwest Bank & Trust came to the conclusion that if the longtime, family-owned bank was to remain in the community banking business, it needed a new strategy.  After months of researching its options and meeting with potential investors and partners, the Davenport-based bank chose to […]

It was nearly three years ago when the leadership of Northwest Bank & Trust came to the conclusion that if the longtime, family-owned bank was to remain in the community banking business, it needed a new strategy.  After months of researching its options and meeting with potential investors and partners, the Davenport-based bank chose to put its future in the hands of another Midwest, family-owned community bank.  On Wednesday, July 24, Northwest Investment Corp. — the holding company that owns Northwest Bank — revealed that Time Bank of Park Ridge, Illinois, will acquire Northwest Bank. Under the agreement, Time Bank — owned by the Carter family and led by President, CEO and Chairman Tom Carter Sr. — will purchase the approximately $225 million in total assets and liabilities of Northwest Bank. Details of the transaction were not disclosed.

“I made the decision back in October of 2021 that we need to do something different,” Northwest President and CEO Joe Slavens recalled. The third generation bank leader said the institution’s leadership recognized at the time its lack of access to capital would impact its future ability to compete and grow.  “We didn’t have the financial capacity to stay in the game,” Mr. Slavens said in an exclusive interview recently with the QCBJ. “We either had to obtain that financial capacity or step into a partnership with someone who has that capacity.”  He estimated that the bank met with 30 to 40 prospects over the past few years to discuss potential alternatives for securing the bank’s continued success and future growth. “We talked to a couple of candidates who were international financial institutions because it was an opportunity for them to come to the U.S. Ultimately, those deals didn’t come together,” he said. 

Back to the drawing board

Northwest even announced back in October of 2022 that it had signed a letter of intent to raise up to $100 million in growth capital from new investors, including two key investors in California. But as the transaction advanced, Mr. Slavens said the parties could not reach a final agreement.  So his leadership team went back out to explore other options such as other acquisitions, a merger of equals and other investment strategies. Adam Pelzer, Northwest Bank’s executive vice president, recalled the financial environment they were working in at the time. “Many, if not all institutions were looking at what to do with the capital. And we were pulling from similar sources — the investors were going to be from banking backgrounds. Although we had a tremendous amount of strength, the problems that were taking place (notably, the Silicon Valley Bank collapse) … still persist and so people were being wise with their capital decisions.”

Mr. Slavens added that it also was a time when “the markets were frozen.”  He said “If you look at statistics on capital raises, mergers and acquisitions of any type (in that period), we were probably at 10 to 20% of normal levels of activity … because of the increasing interest rates that impacted financial institutions’ balance sheets.”  According to Mr. Pelzer, ever since the original capital raising effort fell through they have “been looking for the best partner to take our capital and move it forward and do the best we can for this banking franchise.”  Both Mr. Slavens and Mr. Pelzer, who is his son-in-law, believe they have found that partner in Time Bank, which they described as a like-minded community bank with the same strong Midwest values. 

‘Foundation of trust’

In a Wednesday, July 24, news release announcing the acquisition, Mr. Slavens said “As a family-owned and family-led bank, our business has been built on a foundation of the trusted relationships with our customers and our team. We are confident that Time Bank, under the ownership of the Carter family, shares our values and will be good stewards of what my family has built.” 

Time Bank’s Tom Carter had this to say: “Northwest Bank’s outstanding performance, customer service, and financial strength are impressive, and their family-led culture and deep community ties really stood out to us. We look forward to welcoming the Northwest Bank team and working together on the opportunities ahead in the Quad Cities.”  The third-generation, family-owned Time Bank has operated for more than 29 years and has approximately $470 million in assets. It operates a single banking location in Park Ridge Illinois, about 175 miles east of Davenport.    Mr. Slavens, who followed his father Bob Slavens into the business, told the QCBJ “I go back to the value system. My job is to steward the resources that are here for (the) benefit of the family, the customers, the employees and the community.”  Mr. Pelzer will be the only family member staying on full-time with Time Bank, where after the deal is completed he will be its Quad Cities market president and executive vice president.  Mr. Slavens, who will serve as a strategic advisor to Time Bank, will continue to lead the family’s business interests including Northwest Investment Corp., which currently owns the bank and will continue to own its subsidiaries.  The deal, which is subject to standard regulatory and shareholders approval, is expected to be finalized in the fourth quarter of 2024. The transaction also does not include the purchase of the iconic Northwest Bank towers in Davenport and Bettendorf. But Time Bank has signed long-term leases for the properties and will receive naming rights for the towers, Mr. Slavens said.  Time Bank also has purchased Northwest Bank’s branch on West Locust Street in Davenport.  In addition, Northwest Investment Corp. will spin off its other subsidiaries from the bank including: River Cities Development, which will own the towers; Centennial Tax & Accounting; Stratman Solutions, a nationwide provider of financial services software solutions; and the bank’s trust and investment group, which will become its own company known as Tower Trust & Investment Company. 

‘Out of the shadows’

“We’ll be the only nonbank trust company in the Quad Cities,” Mr. Slavens said. “Now the other companies can come out of the shadows of the bank.”  In addition to Mr. Slavens, Northwest Investment Corp. also will employ and retain longtime employees Donna Connors, the bank’s controller, and Tracy Schwind, senior vice president and chief experience officer.   “We are excited about the opportunity to join Time Bank, a bank whose culture and ambitions will build upon our foundation of safety and soundness,” said Mr. Pelzer, who joined Northwest Bank in 2016.    Of the transaction’s process, he said “We attracted interest from folks throughout the world, investors throughout the world, partners throughout the world. Time Bank came to the table and offered us everything we would want for all the constituencies.”   He added: “We want to grow in this community. We believe in this community. We think it has wonderful prospects for the future for both our families and how we go from here onward, but also for our employees.” He expects the Time Bank name to be activated, likely in January 2025, after the deal is finalized in late 2024.  Northwest Bank traces its roots back to 1941 when a group of residents of German descent in northwest Davenport founded the bank. The Slavens made their first investment in the bank in 1964.  “This is too important (of a decision) from my standpoint. You don’t do this very often in this community,” Mr. Slavens said of the significance of the sale. “You’ve got to make sure if you do it … it’s not just about the shareholders, it’s about the employees, the customers. It’s about the community.”