U.S. Bank, West One To Merge Deal Creates One Of Nation’s Largest Bank Holding Companies
U.S. Bancorp and West One Bancorp have agreed to merge in a transaction that will create one of the 30 largest bank holding companies in the country.
It will also assure, at least for a while, the continued independence of Portland-based U.S. Bancorp, the largest bank based in the Northwest.
Company-owned subsidiaries, U.S. Bank of Washington and U.S. Bank of Idaho among them, operate in five states.
Boise-based West One has divisions in Idaho, Washington, Oregon and Utah.
Together, the two institutions have 670 branches and more than 14,000 employees. But U.S. Bancorp Chairman Gerry Cameron said about 1,100 employees will lose their jobs as duplicate branches and administrative functions are eliminated.
Cameron will remain chairman and chief executive officer of the combined institutions. West One Chairman Daniel Nelson will be president, and become CEO in three years.
The expanded U.S. Bancorp will have assets of $30 billion and deposits of $21 billion, resources analysts said Monday will position the institution for the increasingly intense competition that lies ahead.
“This is a marriage made in heaven,” said R. Jay Tejera, a banking specialist with the Dain Bosworth brokerage firm.
He said the banks have eyed each other as a potential partner for years, coming close to an agreement in 1990.
The decision to go forward now, Tejera said, was probably based on the realization that large market shares in their home states were no longer going to be enough to fend off aggressive, well-run competitors like Ohio-based KeyBank and Seafirst Bank, a division of BankAmerica.
In Washington, U.S. Bank and West One were an increasingly vulnerable fourth and fifth, respectively, in market share, he said.
Not only will they be a much more solid No. 3 statewide, Tejera said, U.S. Bank will be able to offer customers more service around Tacoma, an attractive extension of its Seattle branch system.
Spokane, with only one West One branch, will likely be among the least-affected communities in the six states served by the two companies.
U.S. Bank, by comparison, has 17 in the county. Spokane was the headquarters of Old National Bancorporation, which U.S. Bancorp purchased in 1987. The two branch systems overlap much more in North Idaho.
Tejera said the merger, combined with the pending liberalization of laws governing interstate banking, should greatly simplify cross-border banking in the Spokane-Coeur d’Alene area.
Although announced early Monday, rumors of the deal had apparently reached the financial markets Friday, when the stocks of both institutions traded at more than 12 times normal volume.
West One stock bounced 17 percent on the day to $32.12. It gained another $1.38 Monday.
U.S. stock slipped 88 cents Friday, another $2.12 Monday, closing at $24.62.
Based on Friday closing prices, the deal would be valued at $1.6 billion. West One stockholders will trade each of their shares for 1.47 shares of U.S. stock.
By increasing its size 30 percent, U.S. becomes a more unlikely takeover target, said Piper Jaffray analyst Steven Schroll.
The Portland institution had been considered an acquisition candidate because of its attractive niche and perceived underperformance, he said, but circumstances have improved in the last year.
“People have been pretty harsh on them,” he said. “They finally got focused.”
U.S. Bank of Washington President Phyllis Campbell said size will increase the institution’s ability to chart its own course.
“I prefer to think of this as a move to keep us on the offensive,” she said.
Campbell and Tejera said U.S. Bank’s strength in agricultural lending should be enhanced as a result of the merger.
Regulatory and shareholder approval of the deal is expected by the end of the year.