Northwest Bancorporation Inc., of Spokane, is offering its shareholders rights to buy additional shares of the company's common stock in an offering that it hopes will raise $4 million.

The bank-holding company, which owns Inland Northwest Bank, of Spokane, says it's conducting the offering to raise capital to support the bank, to position itself to take advantage of opportunities from the turmoil in the banking industry, and for general corporate purposes.

"We believe that the rights offering will strengthen our financial condition by providing us with additional capital," says a registration statement the company has filed with the U.S. Securities and Exchange Commission.

Randall L. Fewel, president and CEO of both the bank-holding company and the bank, says the opportunities the company could encounter "could be any number of things. They could be new branches, new customers, lending teams, or acquisitions, although we don't have anything like that in mind right now."

The registration statement says the bank is offering its current shareholders the right to buy 0.4192 of a share of stock for each share they owned as of 5 p.m. May 27. For example, a shareholder who owned 1,000 shares of stock would receive rights to buy an additional 419 shares, the registration statement says.

Shareholders will pay $4 a share for the additional stock, although the company's stock sold for $6 a share in the most recent trades of it before the registration statement was filed, Fewel says. Shareholders must buy the additional stock by July 1, when the rights offering expires.

"I personally plan to participate to the full extent permitted based on the number of shares that I own," Fewel says. "Our insiders have committed already to $1,085,000." Those insiders include the biggest shareholder, director Harlan D. Douglass, a Spokane real estate investor, who owns just under 243,000 shares, the registration statement says. Former CEO Fred Schunter owns almost 71,000 shares, and Fewel owns just under 50,000 shares, it says.

Fewel says the company proceeded with the rights offering to its shareholders rather than a public offering of stock partly because that option was much less expensive, "but primarily we did it because it doesn't dilute our existing shareholders' percentage of ownership" if they buy all of the shares they're entitled to purchase.

The company returned to profitability in the first quarter this year after five consecutive quarters of net losses, but announced May 12 that it was suspending payment of regular quarterly dividends on preferred stock it had issued to the U.S. Treasury when it acquired capital from the U.S. government under the Troubled Asset Relief Program.

"The regulators said, 'We don't want you paying your TARP dividend,'" Fewel says. "They probably won't relent on that until the end of the year when we've had a full year of profitability."

He adds, "Our liquidity is fine," but regulators are focused on making sure banks preserve their capital and what's called on-balance-sheet liquidity.

In the registration statement, the company disclosed that it had entered into a memorandum of understanding in April with the Federal Reserve Bank of San Francisco under which it agreed to obtain prior written approval before paying any dividends or taking a number of other actions. It said it also executed another memorandum that same month with the Federal Deposit Insurance Corp. and the Washington state Department of Financial Institutions under which it would obtain their approval before appointing any new director or senior executive officer, maintain capital above required amounts, refrain from paying dividends without prior approval, and take other steps.

The offering statement says that Inland Northwest Bank's nonperforming assets peaked at $18.8 million, or 4.7 percent of total assets, in the fourth quarter of 2008, but as of March 31 were at $12.4 million, or 3.1 percent of total assets.

D.A. Davidson & Co., the Great Falls, Mont., regional brokerage with an office here, was Northwest Bancorporation's financial and marketing adviser for the offering, Fewel says.