Umpqua Holdings Corp., parent company of Umpqua Bank and Umpqua Investments, said on Tuesday that it has signed an agreement to acquire Financial Pacific Holding Corp. for $158 million in cash. FinPac is currently a portfolio company of Flexpoint Ford LLC, a Chicago-based private equity firm. Based in Federal Way, Washington, FinPac is the parent company of Financial Pacific Leasing, LLP, a provider of commercial equipment leases and loans.
PORTLAND, Ore.–(BUSINESS WIRE)–Umpqua Holdings Corporation (NASDAQ: UMPQ), parent company of Umpqua Bank and Umpqua Investments, Inc., announced today that Umpqua Holdings and Umpqua Bank have signed a definitive agreement to acquire Financial Pacific Holding Corp. (FinPac) for $158 million in cash. FinPac is currently majority-owned by an affiliate of Flexpoint Ford, LLC, a Chicago-based private equity firm. FinPac is parent company of Financial Pacific Leasing, LLC, which provides business-essential commercial equipment leases and loans to various industries throughout the United States, and is based in Federal Way, Washington.
FinPac had total assets of $279 million as of April 30, 2013, with tangible equity of $57 million expected at close. Upon completion of the acquisition, Financial Pacific Leasing will become a subsidiary of Umpqua Bank, reporting directly to Cort O’Haver, EVP Commercial Banking of Umpqua Bank.
“Combining FinPac’s talented staff and national reach with Umpqua Bank’s funding will provide valuable diversification and enhance Umpqua’s profitability,” said Cort O’Haver, EVP Commercial Banking of Umpqua Bank. “The platform is scalable, and is consistent with other key expansion initiatives we’ve completed over the last three years, including our business banking, agriculture lending and home builder lending groups.”
“We are excited to become a part of Umpqua Bank, which is one of the most respected community banks in the country,” said Paul Menzel, President and Chief Executive Officer of Financial Pacific Holdings. “We’re confident this transaction will create value for both organizations, and look forward to leveraging our combined strengths for continued growth in the future.”
“This transaction, along with the dividend increase we announced last month, represents another effective use of our capital,” said Ray Davis, president and CEO of Umpqua Bank. “At eight times 2012 earnings, this represents a disciplined acquisition which leverages excess capital, deploys excess liquidity into significantly higher yielding assets, provides growth and further diversification, and increases profitability. Further, this transaction does not rule out the possibility of additional strategic acquisitions in the future, as we continue to deploy remaining excess capital for the benefit of our shareholders.”
The boards of both companies and Flexpoint Ford, LLC have approved the transaction. Completion of the acquisition is expected within 30 days.
Umpqua Holdings Corporation expects the following financial impact from this acquisition:
Operating earnings per share accretion of 14% in the first full year,
Internal rate of return in excess of 30%,
Tangible book value dilution earn back of 4 years,
Immediate accretion of approximately 35 basis points to the net interest margin, and
The operational integration of the combined institutions is expected to be minimal and completed immediately following closing.
Wachtell, Lipton, Rosen and Katz served as legal advisor, and J.P. Morgan Securities LLC served as financial advisor, to the board of directors of Umpqua Holdings Corporation. Kirkland & Ellis LLP served as legal advisor to Flexpoint Ford, LLC.
About Umpqua Holdings Corporation
Umpqua Holdings Corporation (NASDAQ: UMPQ) is the parent company of Umpqua Bank, an Oregon-based community bank recognized for its entrepreneurial approach, innovative use of technology, and distinctive banking solutions. Umpqua Bank has locations between San Francisco, California, and Seattle, Washington, along the Oregon and Northern California Coast, Central Oregon and Northern Nevada. Umpqua Holdings also owns a retail brokerage subsidiary, Umpqua Investments, Inc., which has locations in Umpqua Bank stores and in dedicated offices in Oregon. Umpqua Private Bank serves high net worth individuals and non-profits, providing trust and investment services. Umpqua Holdings Corporation is headquartered in Portland, Oregon. For more information, visit www.umpquaholdingscorp.com.
About Financial Pacific Leasing
Financial Pacific Leasing is a commercial finance company that leases equipment to small businesses. The Company originates leases through a nationwide network of third-party brokers. Financial Pacific’s average lease is approximately $25,000, and its portfolio is comprised of a diverse set of equipment types, including vehicles/trailers, medical equipment, computer systems, restaurant equipment and construction equipment.