Northwest Bank & Trust to raise growth capital with new investors

Northwest Bank & Trust Co., headquartered in Davenport, has announced plans to raise additional capital – by bringing in new investors – to position the longtime family-owned bank for future growth.  In an exclusive interview with the QCBJ, Northwest Bank President and CEO Joe Slavens said the company has signed a letter of intent to […]

Northwest Bank & Trust Co., headquartered in Davenport, has announced plans to raise additional capital – by bringing in new investors – to position the longtime family-owned bank for future growth. 

In an exclusive interview with the QCBJ, Northwest Bank President and CEO Joe Slavens said the company has signed a letter of intent to raise growth capital. The target is to raise up to $100 million from new investors, including two key investors in California.  The new investors include Dan Wheeler, a bank founder with deep experience in advising banks and fintech companies, and Irwin Golds, a retired attorney with extensive experience in bank formation and board service. The men, who are making private investments in the bank, will bring on other investors including other institutional investors, Mr. Slavens said.  Mr. Wheeler and Mr. Golds, who have worked together previously, will join the bank’s board of directors. Mr. Slavens will continue to serve on the board and continue as the bank’s president and CEO.  Company leaders announced the news to their 90 employees during meetings Tuesday, Oct. 25.  Mr. Slavens said the move means the family will give up its majority ownership and will own less than 50% of the company. The family likely will remain the bank’s single largest shareholder. Currently, the family owns 93% of the bank and has an Employee Stock Ownership Plan (ESOP). He said stock in the ESOP will eventually be bought out.   Despite rumors that the bank is being sold, he stressed “We are staying in the game.”  “To be technical, you are selling stock in the organization,” he added. “We’re doing a capital raise is what the market would call it.”  In a news release, Mr. Slavens said “We’ve made the decision to partner with this new group of investors because I see so many advantages for our customers, our employees, our family and the community as a whole. The bank’s mission is to ‘combine years of experience with an entrepreneurial spirit to create solutions that help clients achieve better results’ and this plan is the next logical step in fulfilling that mission.”   The transaction is subject to regulatory approval, which may take six to nine months, Mr. Slavens said. Cappello Global, LLC has been engaged as the bank’s exclusive financial advisor.  As part of the transaction, Northwest Bank’s real estate and other ancillary businesses will be spun out of the company and be 100% owned by the Slavens family. This will include the Bettendorf and NorthPark Towers as well as the bank’s trust and investment division, a software division known as Stratman Solutions, and its Centennial Tax & Accounting firm.  The only name change customers will see, Mr. Slavens said, will be a rebranding of the trust and investment company, which will take on the new name of Tower Trust & Investment Company. All the ancillary companies will continue to office in the NorthPark Tower near Davenport’s NorthPark Mall.  Mr. Slavens, who is the third generation of the Slavens family to be involved in Northwest, said the fact the new injection of capital comes from outside the Quad Cities region speaks volumes about the bank’s financial strength and its business model. By bringing in additional capital, the bank not only will be able to better serve its Quad Cities client base but also can look at future expansion. With the new investment, the bank’s legal lending limit – the amount of money it can loan to any one person or business – will increase.  “This is going to allow us to look at other markets,” he said. He added that this may not mean physical branches but other financial services now available in today’s digital banking world.

Adam Pelzer, the bank’s executive vice president and cashier, said the additional investment will allow the bank to deploy critical next generation technology. “In the bank particularly, the technology we had made our talent less ready to serve,” Mr. Pelzer said. “Most everyone has the same technology that they’re delivering to their customers. This strategy allows us to jump into a next-generation of technology over time… We were ready to invest in those things but this will allow us to do that.” He added that such a move would have been cost prohibitive without the new capital.     Mr. Pelzer, who is Mr. Slavens’ son-in-law, joined the bank in 2016. He will also continue to serve on the bank’s board of directors.

Mr. Pelzer and Bobbie Slavens, Mr. Slavens’ son, represent the fourth generation in the 81-year-old community bank. The younger Mr. Slavens, who joined the bank in 2018, is special projects manager and oversees the two bank towers.  The bank traces its roots back to 1941 when a group of residents in northwest Davenport of German descent founded the bank. The Slavens made their first investment in the bank in 1964.  According to Joe Slavens, who will continue to lead the bank, the bank’s plan is to triple its workforce over the next few years. “Some will be here. Some will be remote. We don’t know exactly (how it will look). We’re going to embrace that because what we need is the best people and some will be here. Some of the best people, as we develop niches and localities, will be where the business is.”     He said the company now employs about 45 people in its banking operations and another 45 outside the bank in the ancillary businesses. A potential new growth area will be commercial real estate development, which the younger Mr. Slavens has been advancing including with the development of a new retail center adjacent to the Bettendorf tower. “I think we’re seeing right now in the economy people want to go into work, they don’t want to work from home … Things have been great. We’re going to keep pushing that way and hopefully develop even more in the future.”    Asked by the QCBJ about the decision to bring in outside investors, Joe Slavens said “I’d be less than honest if I didn’t say it’s a change. I’ve spent my career, if you look at the history, collecting family ownership… Now to sit back and say ‘we’re going to do something different.’ You swallow hard, and say but at the end of the day you’re doing the right thing. I think it was the right thing to continue to consolidate family ownership over the last couple of decades. I think it is the right thing to partner now with investors to do something different because it’s necessary and it will be beneficial for everyone.”