Reports: Umpqua Holdings Is Talks To Buy Sterling Financial For About $1.8 Bln

(RTTNews) - Financial holding company Umpqua Holdings Corp. (UMPQ) is in advanced talks to acquire Sterling Financial Corp. (STSA) in a deal valued at about $1.8 billion, according to media reports on Monday. Sterling Financial operates the second-largest bank in Washington by deposit market share. There is currently no guarantee of reaching a deal, and talks may still fail.

A deal will reportedly enable Portland, Oregon-based Umpqua Holdings to expand its operations in California, with Umpqua bank doubling the size of its assets to about $20 billion and branches to nearly 400.

Spokane, Washington-based Sterling Financial, the bank holding company for Sterling Savings Bank, is partly owned by private-equity firms Warburg Pincus LLC and Thomas H. Lee Partners L.P. after they invested a combined $278 million in May 2010 for a 40 percent ownership interest in Sterling Financial. Sterling had then raised a total of at least $720 million of capital from different sources.

As of June 30, 2013, Sterling Financial had assets of $9.94 billion and operated about 170 depository branches in Washington, Oregon, Idaho and California.

The proposed deal is billed as the second-largest deal in the U.S. banking sector in 2013 after the $2.3 billion cash and stock deal agreed upon in July for bank holding company PacWest Bancorp (PACW) to acquire CapitalSource, Inc. (CSE) that will create a commercial bank with over $15 billion in assets. The deal is currently expected to close in the first quarter of 2014.

UMPQ closed Monday's regular trading session at $17.11, up $0.82 or 5.03% on a volume of 2.24 million shares, and STSA closed at $27.72, up $0.94 or 3.51% on a volume of 0.97 million shares.