Tacoma’s Columbia Banking System will grow some 50 percent in both branches and assets when it acquires Lake Oswego, Ore.’s West Coast Bancorp in a merger valued at $506 million, the banking company said today.
That merger, announced this morning, will create the largest community-based commercial bank in Washington and Oregon. The combined bank, which will bear Columbia’s name, will have 150 or so branches stretching from the Canadian border to Eugene, Ore. along the 1-5 corridor and from the Oregon coast to Eastern Washington and Oregon. The bank’s assets will total $7.2 billion.
Its nearest rival in the Oregon and Washington community commercial bank market is Oregon’s Umpqua Bank with 109 branches in the two states.
The bank’s headquarters will remain in Tacoma, said Columbia spokeswoman Jo Anne Coy. The merger won’t add significantly more employees to the company headquarters, said Dressel.
Most of West Coast’s 650 employees will remain on the payroll. The Oregon bank’s chief executive, Robert D. Sznewajs, announced his retirement Wednesday. Columbia expects he will stay on in his position during the transition.
“We are very pleased that West Coast has agreed to join and grow with Columbia,” said Melanie J. Dressel, president and chief executive officer at Columbia. “We see this as an exciting opportunity for both companies, our shareholders, customers and employees to create the premier community banking franchise in the Pacific Northwest. On a combined basis, we will have extensive coverage throughout Washington and Oregon.”
Sznewajs said the two banks have similar cultures.
“This merger is a rare fit of two high quality organizations with similar business models, cultures and values. We think the transaction will provide outstanding benefits to our customers, communities, shareholders, and other constituencies, along with enhancing our proven approach to community banking.”
The merged banks expect to close eight to 10 branches where they have overlapping coverage. In the first year, the combined banks expect to see savings equal to 25 percent of West Coast’s operating expenses and ultimate savings amounting to 100 percent of West Coast’s expenses two years after the merger is consummated.
For fast-growing Columbia, the West Coast acquisition is the sixth in the last five years. The Tacoma bank assumed control of five failed banks during the recession with assistance from the Federal Deposit Insurance Corporation.
Columbia now employs about 1,200 workers. Its workforce will grow about 50 percent when West Coast employees join the Columbia team.
Dressel said that in past acquisitions, employees at closed branches generally have been able to transfer to other branches to fill vacancies left by retirements and other staff changes.
Columbia is paying $506 million for West Coast. Of that sum, $264.5 million will be in cash. The remainder will be stock. Based on Columbia’s share price of $18.85 on Tuesday, West Coast shareholders would receive a 14.5 percent premium, or about $23.10 per share, the companies said. West Coast shareholders can choose to receive Columbia’s stock, cash or a combination of both, the banks said.
Dressel said the two banks have been in merger discussions for several months. That discussion began, she said, when she and Sznewajs were attending a banking conference in Phoenix.
“I’ve known Bob for several years. Our banks have very similar styles,” she said.
When the merger is complete, West Coast shareholders will own about 24 percent of Columbia.
Once federal regulators approve the combination, said Dressel, Columbia will work diligently to change the identity of West Coast branches to Columbia. The Bank of Astoria, already owned by Columbia, won’t change its name because of the merger, she said.
Columbia has grown rapidly since its 1993 founding by opening more branches on its own and acquiring other banks such as Oregon’s Bank of Astoria, which has six branches.