An ambitious expansion drive by United Security Bancorporation shifted into third gear this week as the Spokane holding company announced an agreement to acquire The Wheatland Bank, a five-branch system based in Davenport.
Under terms of the transaction, expected to close in the third quarter, Wheatland shareholders will receive 2.5 shares of USB stock for each share of Wheatland stock in a tax-free exchange.
With 343,414 shares of Wheatland stock outstanding, total consideration paid will be about $12.5 million.
Closely-held Wheatland has assets of $69 million. USB, the parent of Spokane-based United Security Bank and Sunnyside-based Home Security Bank, has assets of $235.4 million.
For Wheatland, the merger ends uncertainty that began three years ago when three other area institutions expressed an interest in an acquisition.
Sterling Financial Corp. and Inland Northwest Bancorporation offered stock for the bank. W.T.B. Financial Corp., the parent of Washington Trust Bank, anted up $127.50 a share, about twice what the lightly-traded stock was selling for at the time.
Wheatland’s board voted against the W.T.B. proposal, and the bid was withdrawn when shareholders did not tender stock necessary to consummate the deal.
Both Inland and Sterling backed off.
Wheatland subsequently executed a 5-for-1 stock split to increase the liquidity of the stock, but Chairman Roger Underwood said trading remained limited.
The USB deal will not only provide liquidity for shareholders, he said, but Wheatland customers and communities will have the comfort of dealing with the same people in the same branches.
Besides Davenport, those are located in Odessa, Wilbur, Ritzville and Cheney. Total staff is 36.
Dick Ludeman will remain president of the bank.
Also, Wheatland will retain its name and board of directors. The USB and Wheatland boards will likely exchange two or three members, he said.
“This is our kind of bank,” Underwood said of USB.
Wheatland shareholders must approve the deal, which Underwood said had the unanimous backing of the board. USB shareholders will not vote, but regulatory approval will be required.
Announcement of the Wheatland purchase follows by two months disclosure that USB will buy five Wells Fargo branches in a transaction expected to close in mid-July.
Offices in Naches, Mabton and Walla Walla will be added to Home Security. Moses Lake and Davenport locations will go to United Security.
USB President William “Bud” Dashiell said officials have made no decision about how to handle the overlap in Davenport.
“Our plan is to keep the whole (Wheatland) staff,” he said.
Dashiell said the transaction would not be dilutive for USB, which has thrived since moving into Spokane from Chewelah in 1989.
United Security has since grown to seven branches in Spokane, Chewelah, Colville, Kettle Falls, and Ione. Two more are under construction in the Liberty Lake and Qualchan areas.
Home Security has offices in Sunnyside, Prosser and Yakima.
The construction, coupled with the two acquisitions, will more than double USB’s branch system in less than a year. Although Dashiell said officers want to manage those actions carefully, he added that the bank will remain alert for other opportunities.
“We’re just going to see what happens,” he said.