Umpqua, Columbia merger to create $50B asset bank

Columbia Banking System in Tacoma, Wash., is merging with Umpqua Holdings in Portland, Ore.

While the $18 billion-asset Columbia is the legal acquirer, shareholders of the $29.2 billion-asset Umpqua will own 62% of the combined company. The deal, estimated to have a value of $5.2 billion, is expected to close in mid-2022.

Columbia will be the company’s name, while the bank will operate under the Umpqua brand. The combined company will be based in Tacoma, though the bank will be headquartered in Portland.

The merger "brings together two well-respected organizations and talented teams, accelerating our shared strategic objectives to create the leading regional bank headquartered in the West,” Cort O’Haver, Umpqua’s president and CEO, said in a Tuesday press release. 

“Together, with increased scale, we’ll have the ability to provide expanded opportunities for associates and serve customers through an even more comprehensive suite of solutions,” O’Haver added. “We’ll also be able to strengthen our ongoing investment in our communities and deliver tremendous value for shareholders.

“Umpqua shares our values and relationship-based business model,” Clint Stein, Columbia’s president and CEO, added. "This is a historic partnership that will enhance what both banks are able to do for clients, team members and communities, while driving significant value for our shareholders.”

Stein will remain president and CEO, while O’Haver will become executive chairman. Each company will appoint seven directors to the combined board. 

The companies plan to cut about 12.5% of their combined annual noninterest expenses, or $135 million. They expect to incur $236 million of merger-related expenses, including a $20 million charitable foundation donation.

The deal is expected to be accretive to the earnings per share of both companies. It should take nearly three years to earn back the expected 5.9% dilution to the combined company’s tangible book value. 

Columbia agreed in June to buy Bank of Commerce Holdings in Sacramento, Calif., for $266 million in stock. 

Keefe, Bruyette & Woods and Sullivan & Cromwell advised Columbia. J.P. Morgan Securities and Wachtell, Lipton, Rosen & Katz advised Umpqua.