Banner Corp. in Walla Walla, Wash., has agreed to buy Pacific Financial in Aberdeen, Wash.
The $16.3 billion-asset Banner said in a press release that it will pay $177 million in stock for the parent of the $1.3 billion-asset Bank of the Pacific. The deal, which is expected to close in the third quarter, priced Pacific Financial at 154% of its tangible book value.
Bank of the Pacific has 18 branches, $762 million in loans and $1.1 billion in deposits.
Denise Portmann, Pacific Financial’s President and CEO, is expected to join the Banner Bank executive team.
“Bank of the Pacific is a highly respected, financially strong community bank with exceptional core deposits, and we’re pleased they selected Banner as their merger partner,” Mark Grescovich, Banner’s president and CEO, said in the release. “This transaction expands our presence and density in attractive Western Washington and Western Oregon markets while offering Bank of the Pacific customers broader product offerings and technology tools, increased commercial lending limits and an expanded branch delivery system.”
Banner said the deal should be 3.2% accretive to earnings per share, including cost savings. It should take less than three years to earn back any dilution to Banner’s tangible book value.
Banner plans to cut 40% of Pacific Financial’s annual noninterest expenses, or about $16.4 million. It expects to incur $25.5 million in merger-related expenses and lose about $1.4 million of pretax interchange fee income tied to the Durbin Amendment.
Pacific Financial was advised by Piper Sandler and Miller Nash. Banner was advised by BofA Securities and Ballard Spahr LLP as legal counsel.