Bank of Sacramento, a longtime presence in the region’s community banking landscape, is being acquired in a $60 million transaction by Spokane, Wash.-based AmericanWest Bank, the two banks confirmed Wednesday.
The deal – which officials expect will close in the first half of 2015 – will likely result in the Bank of Sacramento name disappearing from the local landscape. The bank’s headquarters, which opened in July 1998 at 1750 Howe Ave., plus three other Bank of Sacramento branches in Rancho Cordova, Roseville and downtown Sacramento, will be absorbed when the local bank formally becomes an affiliate of AmericanWest.
“Nothing will happen (until) the approval process is completed, but our plan is for those (branches) to become AmericanWest banks,” said Kelly McPhee, a spokeswoman for the Spokane bank.
William Martin, president and CEO of Bank of Sacramento, also disclosed in a phone interview that he plans to retire next year once the approval process is completed. He said Kathleen Thomas, Bank of Sacramento’s executive vice president, chief operating officer and chief risk officer, ultimately will oversee the local banks.
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Martin said the merger did not prompt his retirement decision. He said he has been contemplating retirement but wanted to stay on to help finalize the AmericanWest acquisition.
“We’re excited about this merger for a lot of reasons. It’s a great fit for our customers, who will benefit from expanded resources … We’re a $480 million bank, but it’s difficult for a bank of our size to absorb all the expenses of running a community bank. There will be a much larger revenue base.”
Bank mergers nationwide have been ongoing throughout the post-recession period, as banking companies look to bolster their presence and consolidate resources.
According to the Federal Deposit Insurance Corp., the number of commercial banking institutions in California has been in decline since 1990, when there were 482 statewide. As of 2013, the number of FDIC-insured commercial banking institutions had dropped by more than half, totaling 206.
However, the long-term trend of big banks swallowing smaller ones has resulted in more branches that are owned by fewer banking institutions. Last year, the 206 institutions in California had 7,011 branches and 7,217 offices, compared with 4,580 branches and 4,861 offices in 2003 when there were 281 banking institutions, according to FDIC.
One of the recent examples of banking mergers in the Sacramento area is the holding companies of Tri Counties Bank and North Valley Bank, which recently approved a deal where North Valley Banks will convert to the Tri Counties name. TriCo Bancshares is based in Chico, and North Valley Bancorp is based in Redding.
Scott Kisting, chairman and CEO of AmericanWest Bank, said the deal gives AmericanWest “a much stronger position in the Sacramento marketplace. We’ve always wanted to be a much more important bank in Sacramento.”
AmericanWest, a privately held banking company that operates in five states and reports it has $4 billion in assets, oversees a handful of banks in the Sacramento region, but has not had a presence in the city’s downtown core. Last year, AmericanWest completed a merger with Medford, Ore.-based PremierWest Bancorp, whose 32 branches in the Sacramento region have been rebranded as AmericanWest branches.
Under terms of the Bank of Sacramento agreement, shareholders of Greater Sacramento Bancorp, the holding company of Bank of Sacramento, will get $22.05 per share in cash – or an aggregate of $60 million. The combined bank would have about $4.5 billion in assets and nearly 100 banking locations in California, Washington, Idaho, Oregon and Utah.
Within hours of the acquisition announcement, the Los Angeles-based law firm of Glancy Binkow & Goldberg LLP said it is investigating “potential claims” against Greater Sacramento Bancorp’s board in connection with the merger. A release said the firm is looking into concerns that the board failed to “adequately shop” the company to other potential buyers and failed to adequately disclose information to shareholders.
Martin vehemently denied the allegations, saying the Sacramento bank “discussed with several banks over a year and a half period the possibility of a merger arrangement. I can tell you that this was thoroughly done and well-documented, and that will come out when we issue our proxy.”
Shares of Greater Sacramento Bancorp closed Wednesday at $21.20, up $3.70 or 21.1 percent in over-the-counter trading.
Call The Bee’s Mark Glover, (916) 321-1184. Bee writer Bill Lindelof contributed to this report.