Portland-based bank buys Sterling in $2 billion deal

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Spokane-based Sterling Financial Corp. will merge with Portland’s Umpqua Holdings Corp. in a $2 billion cash and stock transaction that will create the West Coast’s largest community bank.

The two companies announced Wednesday they have entered into a definitive agreement that will merge Sterling with and into Umpqua.

The combined organization will have about $22 billion in assets, $15 billion in loans and $16 billion in deposits, with 5,000 associates and 394 locations spread throughout Oregon, Washington, Idaho, California and Nevada. Sterling operates Sterling Bank branches at 2 E. Main St. and Ninth Avenue and Rose Street in Walla Walla; at 401 S. College Ave. in College Place; and on Dayton’s Main Street.

After the merger is complete — likely sometime in the first half of 2014 — the company will operate under the Umpqua Bank name and brand. The joint companies have also agreed to establish and fund a $10 million community foundation.

Umpqua Holdings will continue to be led by Ray Davis as president and chief executive officer. Sterling President and CEO Greg Seibly will join as co-president with Umpqua Bank Co-President Cort O’Haver.

“Together, Umpqua and Sterling will create something unique in the financial services industry, an organization that offers the products and expertise of a large bank but delivers them with the personal service and commitment of a community bank,” Davis said in the release. “With our size, shared cultures and financial strength, our combined organization will be uniquely positioned to deliver value for our associates, customers, communities and shareholders. We look forward to starting the process of bringing our companies together.”

Sterling has emerged from its 2010 recapitalization as a stronger bank, Seibly said. A more profitable company is what Umqpua will be merging with. “We admire Umpqua’s shared commitment to community banking and look forward to working with them to create one of the strongest, most innovative community banks in the country,” he said.

Sterling shareholders will receive 1,671 shares of Umpqua common stock and $2.18 cash for each share of Sterling common stock, under the terms. The total value of the Sterling merger based on the closing price of Umpqua shares of $16.96 Wednesday is $30.52.

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