We Offer a Broad Array of Banking Products And
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Banking Table of FACILITY COUNT CONTENTS Arizona North Dakota 26 banking locations 10 banking locations 1 Financial Highlights California Oklahoma 287 banking locations 21 banking locations 2 Letter from the Chairman Colorado Oregon Banking on Relationships 105 banking locations 34 banking locations 4 Idaho South Dakota 6 Commercial Relationship Banking 4 banking locations 10 banking locations Iowa Utah 10 Small Business Relationship 51 banking locations 7 banking locations Banking Kansas Washington 29 banking locations 11 banking locations 12 Consumer Relationship Banking The Bank of the West Brand Minnesota Wisconsin 15 Specialized Banking Products 32 banking locations 4 banking locations The bear is the branding icon for Missouri Wyoming 16 Banking on Communities Bank of the West, signifying our 13 banking locations 27 banking locations Western heritage, the strength of Nebraska 18 Executive Management Committee a solid financial institution and 57 banking locations Includes Branches, Commercial and 19 Senior Management Committee the independent spirit of America. Nevada Corporate Banking 13 banking locations Offices, Agribusiness 20 Board of Directors New Mexico and Real Estate 31 banking locations Industries Offices Financial HIGHLIGHTS (dollar amounts in thousands) 2006 2005 2004 Net interest income $ 1,601,285 $ 1,413,239 $ 1,156,774 Total noninterest income 541,715 395,514 287,590 Total noninterest expense 1,170,941 941,015 721,379 Net income 572,032 525,661 419,027 Return on average assets 1.04% 1.23% 1.31% Total assets 55,642,936 55,157,645 40,170,606 Total loans and leases 39,495,309 37,744,452 27,234,728 Total deposits 37,436,420 33,901,911 26,006,520 Stockholder’s equity 8,810,493 8,331,286 6,733,971 Total risk based capital ratio 11.27% 10.79% 12.41% 1 Letter from the CHAIRMAN Relationship banking is the focus of our report this year, A NEW APPROACH and it has been at the core of our successful growth since Our challenge is to leverage the value of a much larger our founding as a community bank over 130 years ago. franchise and more comprehensive product line, while In 2006, we completed the migration of our relationship ensuring that size and scope don’t disrupt our personalized model into the 200-plus branches of the former style of customer service. To do this, we launched a new Commercial Federal Bank acquired in December, 2005. bank-wide operating model last June that enables us to That successful integration, and customer growth across offer a uniform set of products to our entire customer base. our network, served to increase earnings 9% over 2005, We call it, not too surprisingly, the B.E.A.R. Plan, an despite narrowing interest rate margins and intense acronym for Business Empowerment to Achieve Results. competition for deposits. Bank of the West had net income of $572.0 million for the year, up from the 2005 net of The B.E.A.R. model brings decision-making closer to our $525.7 million. Our deposits at December 31, 2006 were customers through decentralization, with geographic $37.4 billion, and loans and leases totaled $39.5 billion. division executives exercising a substantial degree of Year end assets for the bank were $55.6 billion. local operational and credit autonomy in eight regional centers: Albuquerque, Denver, Fargo, Los Angeles, Omaha, Now among the largest commercial banks in the U.S., Bank Portland, Sacramento, and San Francisco. We have also of the West faces complexities of scale that could present located representatives of our major product lines in an obstacle to our highly successful customer-focused each regional center, working closely with relationship strategy. We offer high-touch, community-bank service managers to provide SBA credit, cash management, with the full product set customers expect from a large equipment financing, foreign exchange, trade finance and financial institution. But we don’t want to risk becoming other services. yet another huge, impersonal organization. To keep our strategy viable, we began last year to make structural and Our larger scale allows us to be a more effective organizational changes, to make relationship banking commercial competitor. By deploying commercial banking truly scalable across a footprint of 19 states and more than employees regionally, segmented in accord with the size 700 branch and commercial locations. and scope of our 164,000 business clients, we can provide faster, better-tailored decisions and counsel. A newly- created National Banking Division is opening new offices to 2 better serve large customer relationships in major markets, MANAGEMENT TRANSITION and our Agribusiness and Real Estate Industries bankers are Two key, long-term vice chairmen of the bank retired also extending their presence with new office locations. in 2006. Doug Grigsby, Vice Chairman/Finance for Bank of the West and Chief Financial Officer of BancWest The past year was also devoted to making newly acquired Corporation, left after nearly three decades of commitment product lines readily accessible across our entire network, to the growth of the bank. Thibault Fulconis, a veteran and to rolling Bank of the West products out in new territory. of our shareholder BNP Paribas, joined us in December to Bank of the West’s strategy for the insurance business, assume these positions. for example, is to build market-by-market capacity by acquiring independent agencies to distribute products from Vice Chairman Steve Glenn, for many years our Chief our Fargo-based BW Insurance Agency. We now have 60 Administrative Officer, retired in the spring. Both Doug formerly independent agencies under the BWIA brand. We and Steve contributed immeasurably to the success of will continue to acquire insurance agencies and offer the bank. insurance products to both our consumer and commercial banking customers across our franchise. To ensure concentrated focus on implementation of the B.E.A.R. Plan, we created a new role, elevating J. Michael Building upon the Commercial Federal Bank acquisition, Shepherd, our former General Counsel and head of risk we expanded our mortgage business with a 75% increase management, to President and Chief Operating Officer. in mortgage consultants. We made mortgage application He manages all activities of our customer-facing business and loan processing more efficient with technology im- lines. provements. Despite a soft residential real estate market, the Omaha-based division experienced a 56% increase in To sustain Bank of the West as a high performance loan application volume in 2006, resulting in a year-end institution requires a tremendous amount of commitment mortgage portfolio that exceeds $10 billion. and effort from nearly 11,000 hard working employees, and they deserve my heartfelt thanks and appreciation. We also advanced our infill strategy in 2006, with the We also continue to owe our success to the strong support opening of new branches in Idaho, New Mexico, Oregon of our shareholder, BNP Paribas. and Minnesota. In Omaha, we completed construction of the Bank of the West Business Park by mid-year to A strong business model, sharpened focus and our accommodate our growing administrative and back office expanded geographical franchise all point to a promising support units. future. Our B.E.A.R. plan, when fully realized, will ensure that we continue to provide high-touch, personalized service on a much larger scale, fulfilling our brand promise COMMUNITY SUPPORT and differentiating Bank of the West as the bank that “gets The bank’s community affairs function helps stimulate bigger by acting smaller.” economic health in the communities we serve; our B.E.A.R. Plan improves our ability to accomplish this by extending more authority to the local community level. A $6 million charitable grant-making and community events program ensures that we support human service, educational and economic development nonprofits. Community affairs also works to ensure that our products, from mortgages to microcredit, from church loans to small farm and business loans, are made available to lower-income communities, organizations and individuals throughout our footprint. Don J. McGrath, Chairman and CEO March 1, 2007 3 Banking on RELATIONSHIPS We offer a broad array of banking products and services that help commercial customers manage their companies, enable small businesses to grow, assist consumers to meet their financial goals and support the economic health of our communities. Relationship banking has been the commercial customers manage their are available throughout our regional key to growth and success at Bank of companies, enable small businesses network. Our commercial bankers the West ever since our founding to grow, assist consumers to meet serve all industry segments, and as a California community bank in their financial goals and support the we have specialized expertise in 1874. With assets of $55.6 billion and economic health of our communities. agribusiness, commercial real estate, 3.75 million business and household construction, financial institutions, accounts, Bank of the West is among “Relationship banking starts with healthcare, municipalities and religious the 25 largest regional commercial understanding the company’s institutions. banks in the United States and the business and proactively second largest bank headquartered delivering products and services Our branch network provides in California. that meet all of the customer’s comprehensive banking services for commercial banking needs.” individuals and small business owners