Washington Mutual Inc. said today it will expand its presence in Oregon by acquiring Western Bank of Coos Bay, the second-largest independent commercial bank in the Northwest, after U.S. Bancorp.
Western Bank, which operates 41 offices in 33 Oregon communities, had assets of $780.1 million at the end of September. (U.S. Bancorp had $21.34 billion in assets at the end of June.)
The estimated $156 million acquisition of Western Bank is expected to be completed in the first three months of 1996 after regulator and shareholder approval. It will give Seattle-based Washington Mutual access to about 20 new Oregon communities, said Craig Tall, executive vice president of corporate development and commercial banking.
Washington Mutual already is Oregon's largest residential mortgage lender.
Western will continue operating with its present management and with its own name as a division of Washington Mutual Bank, a subsidiary of the parent Washington Mutual Inc. and the region's largest thrift institution with $18.5 billion in assets.
The deal will help both banks, said Jay Tejera, stock analyst with Dain Bosworth in Seattle.
"Western is considered a first-class operation and is exceptionally well-run," Tejera said, adding that the acquisition is a plus for Washington Mutual.
But Tejera said the price to be paid - about 15 times earnings of $1.20 a share - is higher than the going rate being paid today of 12 to 12.5 times earnings.
Plans call for Western shareholders to receive 0.725 shares of Washington Mutual stock for each Western share. The per-share price is expected to be between $17 and $19.96, depending on the average closing price of Washington Mutual stock prior to closing.
Washington Mutual stock was down 50 cents at $25.50 in midday trading today. Western Bank shares were at $17.75, up $2.25.
The acquisition is another step toward meeting two key Washington Mutual objectives recently identified in a five-year plan, said Kerry Killinger, Washington Mutual chairman, president and chief executive officer. These are continued business diversification and investing in business lines offering opportunities for strong growth.
"With our solid capital resources, the underlying strength of Oregon's diversified economy, and Western Bank's established presence throughout Oregon, the prospects are excellent for expanding Western's position as a leading commercial bank for small to midsized businesses," Killinger said.
Seattle Times business reporter Greg Heberlein contributed to this report.