The purchase of Sterling Financial Corp. will almost double the size of Portland-based Umpqua Holdings Corp., Oregons biggest bank, to $22 billion in assets and almost 400 branches, all under the Umpqua name.
The companies announced the $2 billion deal late Wednesday. They said it will create the West Coasts largest community bank.
The deal will be the second-largest U.S. bank takeover announced this year, behind PacWest Bancorps $2.2 billion offer in July for CapitalSource Inc. There have been more than $8 billion in announced U.S. bank deals announced this year, the data show.
Sterling shareholders will receive 1.7 shares of Umpqua common stock and $2.18 cash for each share of Sterling common stock. Sterling shares closed at $16.96 on Wednesday.
Sterlings local branches are at 420 W. Main St. in Boise and 1595 S. Eagle Road in Meridian.
Sterling took $303 million from the U.S. Treasury Departments Troubled Asset Relief Program, repaid a year ago through a public stock offering.
Sterling has emerged from its 2010 recapitalization a stronger, more profitable bank, said Greg Seibly, president and CEO.
The bank 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 merger, which is subject to regulatory approval, is expected to close in 2014.
The move makes strategic and financial sense because it will help Umpqua expand in California, said Joseph Morford, an analyst with RBC Capital Markets in San Francisco, before Wednesdays announcement. 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 CEO Raymond P. Davis has sought to bulk up over the past two years through mergers and acquisitions. The lender completed the purchase of Financial Pacific Holding Corp. in July.