Columbia Banking System in Tacoma, Washington, has agreed to buy Bank of Commerce Holdings in Sacramento in a deal that will mark Columbia's entry into the Golden State.
The $17.3 billion-asset Columbia said late Wednesday that it would pay about $266 million in stock for Bank of Commerce, the $1.8 billion-asset parent of Merchant Bank of Commerce. The deal is expected to close in the fourth quarter.
The combined company would have more than 150 branches in Washington, Oregon, Idaho and California.
"Northern California shares many similarities with the Northwest in both metropolitan and rural markets, making expansion into this region a natural extension of our existing footprint. We appreciate how the management team has grown this franchise in a profitable manner and are excited to have them join Columbia to help manage our California expansion,” Clint Stein, Columbia's president and CEO, said in a press release.
Coumbia has been active acquirer over the past two decades but had not bought a bank since late 2017, when it purchased Pacific Continental Bank in Eugene, Oregon. Stein had hinted about his company’s interest in the
The 11 California locations will continue operations under the Merchants Bank of Commerce brand as a division of Columbia Bank after the deal closes. Bank of Commerce CEO Randy Eslick will lead that division and hold the title of president.
"We look forward to continuing to honor those values while offering clients an expansive array of additional products and solutions as part of the Columbia family. Additionally, I am very pleased to continue to lead the same teams of exceptional bankers serving our clients in each of our markets following the close of the merger, ensuring clients continue to enjoy access to the same local expertise and relationships,” Eslick said in the press release.
Columbia said the deal will be 3% accretive to its earnings per share in 2022, 4% in 2023 and 0.3% accretive to tangible book value per share.
“Financially, the acquisition appears solid,” Stephens analyst Andrew Terrell said in a June 24 note to clients.
Piper Sandler analyst Matthew Clark agreed, saying that Columbia is taking "a logical route" to expansion "at a very reasonable price,” he wrote.
Keefe, Bruyette & Woods and Sullivan & Cromwell LLP advised Columbia on the deal. Bank of Commerce was advised by Raymond James & Associates and Miller Nash LLP.
