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Umpqua Gets Final Nod to Acquire Sterling

Zacks Equity Research

The West Coast is soon going to witness the largest community bank as the proposed merger between Umpqua Holdings Corporation (UMPQ) and Sterling Financial Corporation (STSA) has received all regulatory approvals. The merged entity will operate as Umpqua Holdings Corporation, with banking operations conducted under the Umpqua Bank brand. It will operate in 394 locations, spreading across OR, WA, ID, CA and NV.

Before receiving its final regulatory approval, this merger plan got strong support from Umpqua Holdings’ shareholders in the last week of February. Now, the merger is scheduled to close by April 18, 2014, subject to fulfillment of customary closing conditions.

Earlier, on Sep 11, 2013, Umpqua Holdings and Sterling Financial had declared having entered into an agreement.

Umpqua Holdings has been on an acquisition spree in the recent past. In June 2013, the company acquired specialty finance company Financial Pacific Holding Corp. for $158 million. In Aug 2013, Umpqua Holdings successfully acquired the thrift institution Circle Bancorp in an all-cash deal of $21.07. However, Umpqua Holdings’ endeavors to acquire American Perspective Bank were thwarted.

The latest acquisition, in terms of value and spread, is a major one for Umpqua. At the time of announcing this deal, the merged entity was projected to have approximately $22 billion in assets, $16 billion in deposits, $15 billion in loans and 5,000 associates.

At present, both Umpqua Holdings Corporation and Sterling Financial Corporation carry a Zacks Rank #3 (Hold). However, some better-ranked regional banks include Central Pacific Financial Corp. (CPF) and Central Valley Community Bancorp (CVCY). Both these stocks have a Zacks Rank #1 (Strong Buy).

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