Banner Corporation (“Banner”) (NASDAQ: BANR), the holding company for Banner Bank and Islanders Bank, and Skagit Bancorp, Inc. (“Skagit”), the holding company for Skagit Bank, a Washington state-chartered commercial bank, today announced that they have entered into a definitive merger agreement pursuant to which Banner will acquire Skagit in an all-stock transaction, subject to the terms and conditions set forth therein. Under the merger agreement, Skagit will merge with and into Banner, and immediately thereafter Skagit Bank will merge with and into Banner Bank. The combined company will have approximately $11.4 billion in assets.
Upon completion of the merger, Cheryl R. Bishop, Skagit’s Chief Executive Officer, will join the Banner board of directors.
Skagit Bank is a 60 year old community bank based in the North Sound region of the Pacific Northwest focused on developing and serving long term consumer and business clients. At June 30, 2018, Skagit Bank had assets of $922 million, a diverse and high-quality loan portfolio of $599 million, and a low-cost deposit base of $811 million with 12 banking locations along the I-5 corridor from Seattle to the Canadian border.
“We are thrilled to have Skagit Bank and its employees join the Banner Bank team and are looking forward to having Cheryl join the board,” stated Mark Grescovich, Banner’s President and Chief Executive Officer. “This transaction expands Banner’s presence and density in the attractive Seattle and I-5 corridor markets and represents a complementary fit, both strategically and culturally, with Banner’s business model. The combination of our two organizations provides the opportunity to create efficiencies and enhance the value of the combined company while offering Skagit customers a broader product offering, increased lending limits and an expanded branch delivery system that stretches throughout the four states of Washington, Oregon, Idaho and California.”
Cheryl Bishop commented, “Banner is an excellent fit for us. This combination allows us to partner with a strong community bank that is focused on providing great customer service, a deep commitment to the communities where it operates and an excellent environment for employees to perform and advance. We are proud of our long history of developing genuine, lasting relationships with our clients and serving our market area. We look forward to working with the management team at Banner Bank to expand the scope of our products and services to even better serve Northwest Washington residents and businesses.”
The boards of directors of Banner and Skagit each unanimously approved the transaction. Pursuant to the merger agreement, Skagit shareholders will receive 5.6664 shares of Banner common stock in exchange for each share of Skagit common stock, subject to potential adjustment as provided in the merger agreement. Based on the closing price of $61.60 per share of Banner common stock on July 25, 2018, the merger consideration would have an aggregate value of approximately $191.1 million. Banner expects the transaction to be immediately accretive to earnings per share, excluding one-time transaction expenses.
The transaction is subject to approval by Skagit shareholders, regulatory approvals and other customary closing conditions and is expected to close late in the fourth quarter of 2018.
Banner was advised by D.A. Davidson & Co., as financial advisor, and Wachtell, Lipton, Rosen & Katz, as legal counsel. Skagit was advised by Sandler O’Neill & Partners, L.P., as financial advisor, and Miller Nash Graham & Dunn LLP, as legal counsel.
An investor presentation will be available on Banner’s website at http://investor.bannerbank.com/Presentations and will be filed with the Securities and Exchange Commission.