UPDATE 1-Columbia Banking to buy West Coast Bancorp for $506 million

Wed Sep 26, 2012 8:53am EDT

Sept 26 (Reuters) - Columbia Banking System Inc said it would buy West Coast Bancorp for about $506 million to expand its footprint in Washington and Oregon, the latest in a slew of deals in the community bank sector.

There have been 5 deals by publicly listed community banks this month, with values ranging from $3 million to over $900 million. Industry experts have predicted an increase in small bank mergers in the next few years.

The combination of Columbia Banking and West Coast Bancorp would have about $7.2 billion in assets and over 150 branches. There are over 7200 banks in the United States, the vast majority of which have less than $10 billion in assets.

Columbia Banking said it would pay for the deal with $264.5 million in cash and 12.8 million shares.

West Coast shareholders can choose to receive payment in common stock, cash or a combination of the two.

Columbia said West Coast shareholders would receive about $23.10 per share, a 14 percent premium to the stock's Tuesday close.

West Coast shareholders would own about 24 percent of the combined bank.

Columbia said the deal would add to its earnings per share immediately and that it would be able to cut about a quarter of West Coast's operating expense base.

Columbia's shares closed at $18.85 on the Nasdaq on Tuesday. West Coast's stock closed at $20.18.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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