Magazine article American Banker

Umpqua, Other Bank Buyers like Flying below the M&A Radar

Magazine article American Banker

Umpqua, Other Bank Buyers like Flying below the M&A Radar

Article excerpt

Byline: Matthew Monks

Umpqua Holdings' (UMPQ) latest deal is low profile by design.

Its $45 million agreement to buy a three-branch community bank north of Los Angeles is a safe bargain that probably will keep thrifty shareholders and "too big to fail" watchdogs at ease.

And though American Perspective Bank a which has $260 million of assets a would be by far the smallest of the nine acquisitions Umpqua has done in 10 years, it still promises to be a moneymaker, says Ron Farnsworth, the chief financial officer of the $11.6 billion-asset Umpqua.

American Perspective is "a very, very clean bank in a good market," he says. "It is not about the size for us. It is about what we think we can do in the market over time. We think this is step one."

The next steps would include opening more branches in American Perspective's home market of San Luis Obispo and neighboring Santa Maria. Umpqua would also begin collecting deposits at American Perspective's loan office in Paso Robles.

Bite-size deals have become popular with banks hungry for acquisitions. The $13.8 billion Washington Federal (WAFD) of Seattle last week agreed to pay up to $73 million for the $868 million-asset South Valley Bancorp of Klamath Falls, Ore. Other banks with several billion dollars of assets that bought much smaller ones in March included S&T Bancorp (STBA) of Indiana, Pa., and Iberiabank Corp. (IBKC) of Lafayette, La.

The well-established trend should continue, experts say.

"These small deals, while they are a lot of work for the amount of integration involved, they make sense because the pricing is pretty reasonable," says Brett Rabatin, an analyst with Sterne Agee & Leach.

Small banks are facing mounting competitive and regulatory costs, he says. Umpqua and other regional franchises with several dozen branches are eager to grow profits but afraid to overpay. …

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