Columbia, seeking deal approval, to sell branches to 1st Security, First Northern

Columbia Banking System plans to sell seven branches to 1st Security Bank of Washington and three to First Northern Bank as a condition of the Department of Justice's approval of its merger with Umpqua Holdings.

"This agreement satisfies a key DOJ requirement to proceed toward closing our transformational merger with Umpqua," Columbia CEO Clint Stein said Monday in a statement announcing the branch sales.

Columbia said in October that it had agreed to divest 10 branches identified by the Justice Department, which examines antitrust implications of bank mergers.

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The Federal Reserve last month approved Columbia's $5 billion purchase of Umpqua. Columbia is still waiting on approval from the Federal Deposit Insurance Corp. The deal would create a powerhouse bank in the Pacific Northwest, boasting about $52 billion of assets and a branch network stretching across Washington, Oregon, California, Idaho and Nevada.

1st Security will add seven branches in Oregon and Washington, which have about $510 million in deposits and close to $76 million in loans. 1st Security is headquartered in Mountlake Terrace, Washington, and has about $2.4 billion of assets and $2 billion of deposits.

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First Northern Bank will gain three Columbia branches, which have $128 million of deposits and about $4 million of loans. The Dixon, California-based bank has about $1.9 billion of assets and $1.8 billion of deposits.

The banks said they would provide additional information to affected customers, and that all employees will be retained.

The bank's systems conversion is on track for the first quarter of 2023, Columbia executives said during an earnings call last month.