Columbia Banking System buys California bank for $266 million

Columbia Banking System in Tacoma, Wash., has agreed to buy Bank of Commerce Holdings in Sacramento in a deal that will mark Columbia’s entry into the Golden State.

Columbia’s $17.3 billion in assets said late Wednesday it would pay about $266 million in stock for Bank of Commerce, the parent company of Merchant Bank of Commerce’s $1.8 billion in assets. . The transaction 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 metropolitan and rural markets, making expansion into this region a natural extension of our existing footprint. We appreciate how the management team has developed this franchise profitably and are excited to have them join Columbia to help manage our expansion into California,” said Clint Stein, president and CEO of Columbia, in a press release.

Coumbia has been an active acquirer for the past two decades, but hadn’t bought a bank since late 2017, when it bought Pacific Continental Bank in Eugene, Oregon. Stein had alluded to his company’s interest in the northern california market in an interview with American Banker in late 2019.

The 11 California locations will continue to operate 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 this division and hold the title of chairman.

“We look forward to continuing to honor these values ​​while offering our customers a broad range of additional products and solutions as part of the Columbia family. Additionally, I am very pleased to continue leading the same teams of exceptional bankers. serving our customers in each of our markets after the merger closes, ensuring that customers continue to benefit from the same local expertise and relationships,” Eslick said in the press release.

Columbia said the deal would be accretive to 3% earnings per share in 2022, 4% in 2023 and 0.3% to tangible book value per share.

“Financially, the acquisition looks solid,” Stephens analyst Andrew Terrell said in a June 24 note to clients.

Piper Sandler analyst Matthew Clark agreed, saying Columbia was taking “a logical path” 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.