During Umpqua Holdings' earnings call, executives said they were hopeful that the Portland, Oregon, company's deal to merge with Columbia Banking System in Tacoma, Washington, will close before October.
Cort O'Haver, Umpqua's president and chief executive, said he expects to close the deal in the third quarter, with integration taking place in 2023. However, regulators have still not approved the transaction. During Thursday's earnings call, O’Haver said the two banks hadn’t received an approval date yet.
The merger, which was announced in October, would create a $50 billion-asset regional bank along the West Coast. The $20.6 billion-asset Columbia would be the acquirer, though shareholders of the $30.1 billion-asset Umpqua would own 62% of the stock of the combined company. The holding company would use the Columbia name while the banking unit expects to take the Umpqua brand.
When the deal was announced, the companies noted that it
Industry experts said they are not worried that regulators have yet to approve the Umpqua-Columbia merger.
"I'm not concerned about Umpqua because it seems they certainly have good relations with their regulators. It's highly likely that they have been talking to them all along," said Jared Shaw, an analyst at Wells Fargo Securities. Industrywide, deals are taking longer because of a "political climate where the regulators want to make sure that they're giving all proper due diligence," he added.
Clint Stein, president and CEO of Columbia, said during his bank’s earnings call on Thursday that employees were waiting to announce retirement since some positions would need to be eliminated after the merger. The lingering uncertainty "creates a point of frustration for them," added Stein, who would become CEO of the combined institution.
Columbia posted record profits in the second quarter, earning $58.8 million, up 7% from a year earlier. Earnings per share of 79 cents beat analyst expectations by 2 cents.
Total loans increased 21% to $11.3 billion year over year, according to its earnings
"A lot of the business that we've won over the last couple of years, are prospects that we've called on for in some cases 10-plus years, and they just didn't really like the experience or the lack of availability of their existing bank," when rivals withdrew from in-person services during the pandemic, said Stein, who added Columbia is continuing to
Meanwhile, Umpqua's net income for the quarter
Umpqua said this was largely a result of weakness in its mortgage portfolio because of rising interest rates. Residential mortgage banking revenue totaled $30.5 million, down 31% from a year earlier and less than half of what the bank recorded in the first quarter.
"As an industry, home lending is facing significant headwinds given the sharp increase in mortgage rates," O’Haver said.
Umpqua reported $2.7 million and Columbia recorded $3.9 million in merger-related expenses.
