Cowlitz Bancorp. of Longview, Wash, which has been looking to establish a presence in Portland, Ore., said it signed a definitive agreement to buy troubled Northern Bank of Commerce for $7.2 million in cash and stock.
Cowlitz would pay Northern Bank of Commerce shareholders $5.20 a share. Cowlitz would also place $2 million in cash in a two-year escrow account, to hedge Cowlitz from any potential losses in Northern Bank of Commerce's loan portfolio. At the end of two years, the $2 million, minus any funds required to cover losses in the portfolio, would be distributed among Northen Bank's shareholders.
Northern Bank of Commerce, which has $71.7 million of assets operates eight branches in retirement communities around Portland, was recently slapped with a cease-and-desist order by the Federal Deposit Insurance Corp. for unsafe banking practices tied to its fast-growing loan portfolio.
Cowlitz has been on a buying spree this year. The $169 million-asset company also bought a mortgage company in Seattle and one in Bellevue, Wash.
"Cowlitz has been aggressively seeking new markets where we can leverage our capital into solid, long-term investments," said Charles W. Jarrett, president and chief operating officer. "We are confident these acquisitions can provide substantial future returns."
The Northern Bank deal is expected to close in the first quarter of 2000. -- Matt Andrejczak