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INSIGHTS INTO THE BANKING INDUSTRY

Columbia to divest branches tied to Umpqua merger

Columbia Banking System in Tacoma, Wash., will sell 10 branches in Washington, Oregon and northern California.

The $20 billion-asset Columbia said in a pair of press releases that the sales are tied to securing clearance from the Justice Department to buy Umpqua Holdings in Portland, Ore.

Columbia will sell seven branches in Oregon and Washington to the $2.4 billion-asset FS Bancorp in Mountlake Terrace, Wash. The sale includes about $510 million in deposits and roughly $76 million in loans.

Three branches in California will be sold to the $1.9 billion-asset First Northern Community Bancorp in Dixon, Calif. The sale includes $128 million of deposits and $4 million of loans.

The sales are expected to close in the first quarter. Columbia said all employees will be retained by the buyers.

“We are pleased to find a partner for these branches with a reputation for service and community support and will work to provide a seamless transition for our customers and employees,” Clint Stein, Columbia’s president and CEO, said in one of the releases. “This agreement satisfies a key DOJ requirement to proceed toward closing our transformational merger with Umpqua.”

FS Bancorp disclosed in a presentation that its purchase should be 19% accretive in 2023 and 28% accretive the following year. It should take two years to earn back a projected 9% dilution to FS Bancorp’s tangible book value.

First Northern disclosed that the consideration it will pay will total 3.15% of the average daily closing balance of certain deposit accounts over the 30 days prior to closing, plus the net book values of certain branch assets and accrued interest and fees tied to the loans.

The Federal Reserve recently approved Columbia’s $5.2 billion purchase of the $31.5 billion-asset Umpqua. While Columbia is the legal acquirer, Umpqua shareholders will own 62% of the combined company.

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