Washington’s Columbia Banking System will merge with Oregon’s Umpqua Holdings Corp., in an all-stock transaction, creating a West Coast franchise with more than $50 billion in assets.
Columbia Banking System is the parent company of Columbia State Bank, and Umpqua Holdings is the parent company of Umpqua Bank. “This is an exciting combination that brings together two well-respected organizations and talented teams, accelerating our shared strategic objectives to create the leading regional bank headquartered in the West,” said Umpqua President and CEO Cort O’Haver.
Once the transaction is finalized in mid-2022, the bank name will change to Umpqua Bank. The combined company will operate under the Columbia Banking System, Inc., name, and have $43 billion in deposits, including $16 billion in Oregon, $15 billion in Washington, $10 billion in California and $2 billion collectively in Idaho and Nevada. The combined bank’s focus on the middle market is expected to be strengthened by Columbia’s specialization in small businesses and Umpqua’s corporate banking franchise.
The companies will contribute $20 million to the charitable foundation of the combined company following the closing of the transaction.
The combined company will be led by an executive team of leaders from both Columbia and Umpqua. O’Haver is expected to serve as executive chair, and Stein as CEO. Chris Merrywell will be president of consumer banking, Troy Nixon president of commercial banking, and Ron Farnsworth CFO. The combined board will consist of seven directors from both Columbia and Umpqua. Craig Eerkes, current chair of Columbia, will serve as the lead independent director.
Under the terms of the agreement, Umpqua shareholders will receive 0.5958 of a share of Columbia stock for each Umpqua share they own. After the transaction is completed, Umpqua shareholders will own approximately 62 percent and Columbia shareholders will own approximately 38 percent of the combined company.
The transaction is expected to deliver approximately 25 percent cash earnings per share accretion and 23 percent generally accepted accounting principles earnings per share accretion for Columbia, and approximately 11 percent cash earnings per share accretion and 8 percent generally accepted accounting earnings per share accretion to Umpqua in 2023, assuming fully phased-in cost savings. The transaction is expected to allow for $1.1 billion in value creation.
For Columbia, Keefe, Bruyette & Woods is serving as financial advisor and Sullivan & Cromwell LLP legal counsel. For Umpqua, J.P. Morgan Securities LLC is a financial advisor and Wachtell, Lipton, Rosen & Katz as legal counsel.