First Interstate BancSystem, Inc., the parent of First Interstate Bank, Billings, Mont., announced April 26 it plans to acquire Northwest Bancorporation, Inc., the parent of Inland Northwest Bank (INB).
The all-stock transaction is valued at approximately $160.9 million in aggregate, or $21.03 per share. The transaction follows First Interstate’s May 2017 acquisition of Cascade Bancorp and provides First Interstate with a presence in several high-growth markets, including Spokane, Wash., Portland, Ore., and Coeur d’Alene, Idaho.
Based in Spokane, Wash., INB has $826.8 million of assets, $669.0 million in loans, $721.0 million in deposits and $81.7 million in shareholders’ equity with 20 banking offices across Washington, Idaho and Oregon, which First Interstate intends to continue operating.
After completing the acquisition, First Interstate will have approximately $13.1 billion in total assets, $8.3 billion in total loans, $10.7 billion in total deposits, $1.5 billion in shareholders’ equity and 146 banking offices.
“Our partnership with INB supplements and accelerates our expansion into the Pacific Northwest,” said Kevin Riley, First Interstate president and CEO. “We believe INB’s customer focus and community bank model align very well with our culture and approach to banking.”
“INB’s growth and momentum spurred First Interstate’s interest in us, and, consequently, a tremendous opportunity for our combined company to expand throughout the Pacific Northwest,” said Russ Lee, president and CEO of Northwest Bancorporation. “We are confident that, together, we will deliver a high standard of excellence, continue to value our relationships in each of our communities, and generate strong returns for our shareholders, many of whom have supported INB since it was founded almost 30 years ago.”
Under terms of the deal, Northwest shareholders will receive 0.516 shares of First Interstate Class A common stock in exchange for each share of Northwest common stock. The exchange ratio is fixed and the shares received by Northwest shareholders are expected to qualify as a tax-free exchange. Northwest shareholders will own approximately 6 percent of First Interstate once the transaction is complete.
First Interstate expects the transaction will result in annual earnings per share accretion of 3 percent in 2019. First Interstate is expected to recover the minimal tangible book value dilution experienced in this transaction in less than two years.
The deal is expected to close late in the third or early in the fourth quarter of 2018, pending regulatory approval. It is anticipated that Inland Northwest Bank will be merged into First Interstate Bank in connection with the scheduled data processing conversion.
Sandler O’Neill & Partners, L.P., served as financial advisor and Luse Gorman, PC served as legal counsel to First Interstate. D.A. Davidson & Co. served as financial advisor and Witherspoon Kelley served as legal counsel to Northwest.