Umpqua to Buy Circle in California for $25M

Umpqua Holdings (UMPQ) is not giving up on expanding in California.

Four months after the Portland, Ore., company lost a deal in the state to a higher bidder, it has agreed to buy Circle Bancorp in Novato, Calif., for about $25 million. The $322 million-asset Circle has six branches in the Bay Area, an attractive market for Umpqua.

"As we've announced previously, the Bay Area is a strategic growth market for Umpqua Bank, and this partnership is an important first step in our planned expansion in the region," Ray Davis, president and chief executive of Umpqua Bank, said in a news release.

The $11.5 billion-asset Umpqua, which has 193 branches in four states, had announced in April an agreement to buy American Perspective Bank in San Luis Obispo, Calif., for $44.7 million in cash. However, it was outbid when PacWest Bancorp (PACW) offered $58 million in cash.

Umpqua would pay Circle's shareholders $20.4 million, or $17.75 per share, in cash and redeem outstanding options and warrants as well as $3.5 million of preferred stock. Shoreline Capital Partners, which holds 99% of Circle's common stock, has agreed to vote in favor of the deal.

Umpqua expects the deal to close in the fourth quarter and be immediately accretive to earnings. The combined company would have roughly $11.8 billion of assets, $9.4 billion of deposits and about $1.7 billion of shareholder equity.

Lane Powell served as legal advisor to the board of Umpqua, and Horgan, Rosen, Beckham & Coren served in the same capacity for Circle. Keefe, Bruyette & Woods served as financial advisor to Circle.