Oregons biggest bank is in advanced talks to buy Sterling Financial Corp., according to people with knowledge of the discussions.
Buying the Spokane-based banking company would almost double the size of Portland- based Umpqua Holdings Corp. to more than $20 billion in assets and almost 400 branches, according to data compiled by Bloomberg.
A deal for Sterling would be the second-largest U.S. bank takeover announced this year, behind PacWest Bancorps $2.2 billion offer in July for CapitalSource Inc., according to data compiled by Bloomberg. There have been more than $8 billion in announced U.S. bank deals announced this year, the data show.
Sterling took $303 million from the U.S. Treasury Departments Troubled Asset Relief Program, repaid a year ago through a public stock offering. The bank, run by CEO Greg Seibly, had $9.9 billion in assets as of midyear, with deposits of $6.6 billion from about 170 branches in Washington, Oregon, Idaho and California. Its Treasure Valley branches are at 420 W. Main St. in Boise and 1595 S. Eagle Road in Meridian.
The deal may be valued at about $1.8 billion, said one of the people, who asked not to be named because the process is private. The talks may still collapse and theres no guarantee a transaction will occur. Sterling had a market value of about $1.7 billion as of Sept. 6. It ranks 21st in the Treasure Valley measured by deposits, with about $38 million one-half percent of the local market, according to the Federal Deposit Insurance Corp.s most recent market-share report.
The move makes strategic and financial sense because it would help Umpqua expand in California, said Joseph Morford, an analyst with RBC Capital Markets in San Francisco. The bank could save money by closing some Sterling branches. Given some of the overlap, we suspect it should be very accretive to earnings, Morford said.
Umpqua Chief Executive Officer Raymond P. Davis has sought to bulk up over the past two years through mergers and acquisitions. The lender, which has about $11.4 billion in assets, completed the purchase of Financial Pacific Holding Corp. in July, and last year bought Circle Bancorp, a six-branch lender in Novato, Calif.
The Idaho Statesman contributed.