- Key Insight: If approved by regulators, the merger combining Banner Bank with Bank of the Pacific would bolster Banner's presence in Washington and Oregon.
- Supporting Data: Bank of the Pacific has 15 branches in Washington and three in Oregon.
- Expert Quote: "We view this as a sensible, low-risk in-market transaction that adds a high-quality, low-cost deposit franchise in markets [Banner] knows well," Piper Sandler analyst Matthew Clark wrote in a research note.
Banner Corp. has reached a deal to acquire an Aberdeen, Washington-based community bank, deepening its footprint in the Pacific Northwest.
The $16.3 billion-asset holding company of Banner Bank, based in Walla Walla, Washington, plans to purchase the $1.3 billion-asset Pacific Financial, the parent company of Bank of the Pacific. The two lenders announced the $177 million, all-stock transaction on Thursday.
"Bank of the Pacific is a highly-respected, financially strong community bank with exceptional core deposits, and we're pleased they selected Banner as their merger partner," Banner CEO Mark Grescovich said in a statement.
The deal stands to bolster Banner's presence in both Washington, where Bank of the Pacific has 15 branches, and Oregon, where Bank of the Pacific has three. Banner currently has 150 branches spread across Washington, Oregon, Idaho and California.
"This transaction expands our presence and density in attractive Western Washington and Western Oregon markets while offering Bank of the Pacific customers broader product offerings and technology tools," Grescovich said.
The two Washington-based commercial banks have much in common. Aside from their overlapping geography, both issue loans to businesses in agriculture, real estate and construction, as well as to consumers.
"Our organizations share many important values," Denise Portmann, CEO of Pacific Financial, said in a statement. "We are both financially strong, take a relationship-based approach to banking, are deeply committed to the communities we serve, trust and empower our employees, and take great care in delivering outstanding customer service."
The merger, which has yet to receive approval from regulators and Pacific Financial's shareholders, is expected to close by the end of this year's third quarter.
Matthew Clark, an analyst at Piper Sandler, viewed the deal as "a highly attractive acquisition" for Banner, pointing out that it would raise the bank's market deposit share in both Washington and Oregon.
"We view this as a sensible, low-risk in-market transaction that adds a high-quality, low-cost deposit franchise in markets [Banner] knows well," Clark wrote in a research note.
Banner has not acquired another bank since 2019, when it
Since then, Banner has proven highly choosy about its acquisitions. But the purchase of Pacific Financial leaves room for other mergers in the future, Clark wrote.
"Given the small deal size, we expect a relatively seamless transition and do not expect this deal would keep Banner on the sidelines if another opportunity were to come available," Clark wrote. "We believe Banner would consider additional M&A opportunities to add density within its current footprint that possess a high-quality deposit franchise and are culturally similar."
After the merger is completed, Portmann will join Banner's executive team, the bank said. Banner did not say what position she would hold.
"I am extremely proud of our team and all that we have achieved together," Portmann said in the release. "Combining with Banner represents an exciting next chapter, creating tremendous opportunities for our employees, customers and shareholders."
