Seattle-based Washington Federal Inc. announced Wednesday it plans to acquire Klamath Falls-based South Valley Bancorp Inc., which has eight Central Oregon branches.
The merger agreement would make Washington Federal Oregon's seventh-largest bank by deposits, The Oregonian reported.
The proposed deal would give Seattle-based Washington Federal, a thrift specializing in home mortgages and certificates of deposits, a substantially greater presence in southern Oregon and Bend. After the deal closes, it will have about $2.1 billion of deposits in Oregon, or 3.61 percent of the market, based on June 2011 figures.
After the merger, it would have 190 locations in eight states, about $14.4 billion in assets and $9.6 billion in deposits, based on year-end 2011 financial results.
South Valley Bank & Trust has 24 branches, mostly around Medford, Klamath Falls and Bend. It has $868 million in assets and $771 million in deposits, making it the state's 13th largest Federal Deposit Insurance Corp.-insured institution.
South Valley Bank has two Bend branches and others in Gilchrist, La Pine, Madras, Redmond, Prineville and Sisters.
Under the deal, Washington Federal will give South Valley shareholders $33.7 million worth of its stock. That's well below South Valley's book value of $66.4 million as of Dec. 31.
But South Valley could earn up to $20 million in additional cash payments if balances on a $39 million pool of South Valley loans are collected in full over the next five years.
Regulators and South Valley shareholders must approve the deal, but Washington Federal expects it to close during the third quarter.