Sterling Financial Corp. (STSA), the biggest commercial bank based in the state of Washington by deposits, agreed to buy North Valley Bancorp (NOVB) for $196.2 million to expand its branch network in northern California.
North Valley shareholders will receive 0.7364 shares of Sterling stock for each share held and $2.80 in cash, for a total of $25.14 a share, Spokane, Washington-based Sterling said in a statement today. Shares of Redding, California-based North Valley closed yesterday at $24.86. The stock has gained about 33 percent this year.
Sterling will add 25 branches in nine counties in northern California, bringing its total in the region to 38. The combined company will have about $12.5 billion in assets and $8.5 billion in deposits. Sterling, which operates under the names Sterling Savings Bank and Golf Savings Bank, added 11 California branches when it bought Northern Empire Bancshares in March.
Sterling expects the North Valley purchase to close in the third quarter and add ``modestly'' to its operating earnings next year. North Valley shareholders will hold about 10 percent of Sterling's outstanding shares once the deal is completed. Sterling's total branches will number almost 200, located in Washington, California, Oregon, Idaho and Montana.
Sterling shares, which have dropped about 11 percent so far this year, fell 28 cents to $30.05 in Nasdaq composite trading. North Valley's stock declined 26 cents to $24.60.