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Merger makes titan among Oregon banks Valley of Rogue, South Umpqua join forces By David Preszler A new mountain is forming in Oregon�s banking landscape. Valley of the Rogue Bank is joining forces with South Umpqua Bank in what may be the largest merger of two Oregon banks in state history. The $54 million deal will create the third largest Oregon-based commercial bank, a nearly $750 million institution with 27 branches stretching from Ashland to Portland. Community bank merger Here�s what each bank brings to the deal unveiled Tuesday. Pending regulatory and shareholder approval, the combined bank would be called Umpqua Bank. VRB Assets: $326 million Branches: 13 Share of ownership in combined company: 47 percent Board seats, new bank: 5 Number of shareholders: about 2,000 South Umpqua Bank Assets: $411 million Branches: 14 Share of ownership in combined company: 53 percent Board seats, new bank: 6 Number of shareholders: About 2,000 "This, in our opinion, is the creation of the financial powerhouse in the Northwest," said Ray Davis, president and chief executive of South Umpqua Bank parent company Umpqua Holdings Corp. "This is not a stereotypical merger," said Bill Haden, president and chief executive of VRB Bancorp. "This is not a strong bank acquiring a weak bank." The combined bank would rank third in assets among Oregon banks, behind Lake Oswego-based West Coast Bancorp ($1.36 billion) and Portland-based Centennial Bancorp ($821 million). The new bank will be called Umpqua Bank and be a subsidiary of Umpqua Holdings Corp., the current parent of South Umpqua Bank and brokerage house Strand, Atkinson, Williams & York. The stock-for-stock deal is expected to close by year�s end. It is subject to shareholder and regulatory approval; no dates for shareholder meetings have been set. Following the announcement, VRB�s stock rose 81 cents a share to close at $6; Umpqua stock fell 63 cents to $7.63. Officials from both banks said there are no plans to close branches or to dramatically reduce the number of employees. "There will be no store closings," said Davis. "We have no overlapping markets." About 400 people work at the two banks. Davis said there may be some redundant positions cut as the two come together, but the long-term plan is to create more jobs as the bank expands. Valley of the Rogue has 13 branches along the Interstate 5 corridor in Jackson and Josephine counties. South Umpqua has 14 branches in Douglas, Multnomah, Lane and Marion counties. Between the two banks, they have a presence in every major market along Oregon�s portion of the I-5 corridor, including Portland, Salem, Eugene, Roseburg, Grants Pass, Medford and Ashland. VRB was founded in Rogue River in 1968 and has grown into Southern Oregon�s largest community bank, purchasing five other local banks along the way. Davis has made a name for himself and Umpqua Holdings on the Oregon banking scene in recent years. In March, the company became one of the first 117 companies nationwide to be granted "financial" holding company status, which allows it to offer a broader range of financial services, including insurance and securities. In addition to buying venerable Strand-Atkinson, Umpqua announced plans last month to acquire another brokerage house, Adams, Hess, Moore and Co. Umpqua also has been heralded for its unique approach, which is more retail in nature than financial. The company calls its branches "stores" and its customers "guests." Its "stores" are laid out as a series of boutique-style areas, including a cybercafe where the bank�s own blend of coffee, "South Umpqua Blend," is served and sold. Davis said those features will be added to VRB�s branches. Davis and Haden touted the deal as a boon to customers because it will allow the banks to offer more products and services. It also will dramatically increase the number and geographic range of ATMs for customers. The combined bank would have 54 ATMs scattered around Oregon, stretching from Ashland to Portland and from Coos Bay to Ontario. Officials called the deal a merger of equals, though the new bank would keep the Umpqua name, be based in Roseburg and be part of Umpqua Holdings. Davis will continue to serve as president and CEO of the parent company, while Haden will become president and CEO of the new bank. One competitor, John Anhorn of Medford�s PremierWest Bank, said the deal brings together two sets of "good bankers." PremierWest was created when Medford�s Bank of Southern Oregon and Roseburg�s Douglas National Bank merged earlier this year and stands as Umpqua and VRB�s chief community bank competitor in both Medford and Roseburg. Because VRB and Umpqua don�t overlap, Anhorn doesn�t expect the competitive balance to shift much. "There�s not any more competition," he said, adding that PremierWest will simply continue to do its own thing and try to serve customers better than its competitors. The deal gives Umpqua a border-to-border reach along Oregon�s I-5 corridor, but Davis and Haden said more expansion will occur, perhaps into California or Washington. "We will continue to get bigger, there�s no question about it," Davis said. "Our focus is Oregon and yet we will look south and we will look north." Despite the increased size, Davis said the style of banking will not change. "This organization will remain committed to the communities we serve," he said. "We are still a community bank." Obituaries | Sports | Business | Classifieds | Tempo | Prime Times | So Oregon Sites | Outdoor Journal | Subscribe | Contact | Movies | Advertise | Real Estate Showcase | Archive | Editorials | Letters to the editor | Religion | Wake-up Call | NIE | Cyber Chef | Job Network | So Oregon Weather | WSJ Northwest | Forums | AP Wire | AP Money | F.A.Q. | Awards Ottaway Newspapers, Inc. The Community Newspaper Subsidiary of Dow Jones & Co, Inc Copyright �The Mail Tribune 2000, Medford, Oregon USA