Columbia Banking System of Tacoma strikes deal for $45.8 millionThe Bank of Astoria, Clatsop County's only independent bank, will soon have new owners.
The bank's board has agreed to a $45.8 million acquisition offer from Columbia Banking System of Tacoma, Wash.
Deal in brief Columbia Banking System of Tacoma, Wash., will acquire Bank of Astoria in a $45.8 million acquisition, approved by both banks' boards.
The cash-and-stock deal is subject to the approval of Bank of Astoria stockholders and federal regulators.
The action is expected to be completed by the third quarter of 2004 (July-September).
The new bank's total assets will approach $2 billion and it will have 39 branches, including locations in Clatsop and Tillamook Counties and Cowlitz county in Wash.
Bank of Astoria will operate under its own name as a separately operated subsidiary.
The deal, which is subject to a vote at an upcoming meeting of Bank of Astoria shareholders and scrutiny by an alphabet soup of federal regulators, is expected to be completed by the end of September. It was approved by the boards of directors of both banks meeting separately
The signing of a "definitive agreement" was announced Monday night and some of Bank of Astoria's 56 staff were briefed on the agreement right away. The new owners said they expect no significant staff reductions.
"We are excited about it - it's a great opportunity for our shareholders" said Cheri J. Folk, who has been president and chief executive officer of Bank of Astoria since 1982 and just celebrated 31 years with the bank. "I see this as a new era for the bank," she added. "This is the best of both worlds."
Columbia Banking System trades on the Nasdaq and lists $1.8 billion in assets; Bank of Astoria, whose shares are traded on over-the-counter markets, has $151.4 million in assets. Under the agreement, Bank of Astoria will join Columbia as a separately operated banking subsidiary and continue to operate under its own name.
It is the first move into Oregon for the Tacoma-based bank, which has 34 branches in Pierce, King, Cowlitz, Kitsap and Thurston counties.
Melanie J. Dressel, president and chief executive officer of Columbia Banking System, said the move was part of a "patient strategy" to expand from Washington into broader Pacific Northwest markets. She said two people told her about the profitability and solid management of Bank of Astoria in April and she and Folk began talks.
"It came about very quickly," she said.
Dressel said the "fit" with Bank of Astoria was reflected in common cultures and both banks' efforts to maintain a community flavor while growing. "We see this as an excellent opportunity," she said, adding that Bank of Astoria customers will benefit from additional services including home equity lines of credit, international banking, investment services and merchant card programs.
Folk said she was impressed visiting Columbia's Tacoma headquarters to see the many wall plaques marking the regional bank's support of community projects. She was able to brief Dressel on Bank of Astoria's support for local projects, including the Liberty Theater restoration project and the Columbia River Maritime Museum.
Bank of Astoria operates branches in Astoria, Warrenton, Cannon Beach, Seaside and Manzanita and has approximately one-third of the bank deposits in Clatsop County. It was formed by a group of North Coast business leaders in 1967 to bring lending decisions closer to home, with the first branch in Astoria opening in late 1968. The Manzanita branch building, which opened in 2001, won a national architectural award for "excellence in sustainable design."
William D. Shaw of Knutsen Insurance chairs the Bank of Astoria board. He said directors were at first curious at Columbia's approach. "As we looked at them and their products and culture we found it was similar to ours," he said, noting that the liquidity of Columbia's stock will be a key attraction for shareholders after the deal is sealed.
Two members of Columbia's board will join the Bank of Astoria board, which will continue functioning.
Columbia was formed in 1993 when Key Bank took over the Bank of Puget Sound where Dressel, formerly of California Bank, and others worked. Beginning with assets of $150 million, in 11 years it has grown through opening new branches and acquiring two other banks, the Bank of Fife and Cascade Community Bank in Auburn, Wash., to an operation with about 600 employees. On completion of the acquisition of Bank of Astoria, Columbia's total assets will approach $2 billion, and the combined entity will have 39 branches. Dressel said she expects no significant staff reductions at Bank of Astoria.
Terms of the acquisition call for Columbia to pay $18.2 million in cash and issue 1,277,750 shares of common stock.
Based on Columbia's June 4 closing price of $21.59, the value of the stock consideration is approximately $27.6 million. Bank of Astoria stock is at $16.50.