Cascade Bancorp bought by Montana bank for $589 million

Nearly 40 years after its founding in 1977, Bend-based Bank of the Cascades’ parent company announced Thursday it is being acquired — for a whopping $589 million — by a Montana-based bank with a familiar name to long-time Northwest residents: First Interstate Bancorp.

The First Interstate Bank name is one very familiar to long-time Northwest residents, as it was a major regional bank that was acquired by Wells Fargo in 1996. Its headquarters building, the First Interstate Bank tower, dominated the Portland skyline before the even-taller U.S. Bank tower was built.

When that bank was acquired, Montana-based First Interstate was not, but as part of the acquisition, it retained the rights to use the First Interstate name in several states, from Montana and Wyoming to Idaho, Utah, South Dakota and Nebraska, said First Interstate Director of Marketing Lyle

However, those rights did not extend to Oregon and Washington, so the branches in those states likely will retain the Bank of the Cascades name, at least for now, Lyle said.

Terry Zink, president and CEO of Cascade Bancorp, told NewsChannel 21 Thursday that customers won’t see too many changes.

“We didn’t end up with a lot of job loss for employees,” he said. “What you’ll see here is because there is no overlap, we’re not going to end up with a lot of job loss, our branches will all remain the same. So you’ll see the same people as you’ve always seen.”

Here’s the two banks’ joint news release:

First Interstate BancSystem, Inc. and Cascade Bancorp announced Thursday that they have entered into a definitive agreement under which First Interstate, parent company of First Interstate Bank, will acquire Cascade, parent company of Bank of the Cascades, in a cash and stock transaction for total consideration valued at approximately $589 million in aggregate, or $7.60 per share based on the First Interstate closing price of $38.30 per share on November 16 , 2016. The transaction creates a unique regional banking franchise that extends from the Mountain West to the Pacific Northwest and provides First Interstate with a presence in several high-growth markets, including Bend, Oregon and Boise, Idaho.

Cascade is a relationship-oriented community bank based in Bend, Oregon with total assets of $3.2 billion, deposits of $2.7 billion, loans of $2.1 billion and 50 banking offices across Oregon, Idaho and Washington. After completion of the acquisition, First Interstate will have approximately $12.1 billion in total assets, $10.1 billion in total deposits, $7.6 billion in total loans and 131 banking offices.

“We are very excited to announce this transformational acquisition that leverages our significant investment in people, processes and technology. This opportunity is a good fit for us geographically, strategically, financially and culturally. Cascade’s operating philosophy, commitment to community banking and corporate responsibility are similar to ours, allowing for a seamless integration of our two companies,” said First Interstate President and Chief Executive Officer, Kevin Riley.

“We are pleased to welcome Cascade’s employees, customers and shareholders and look forward to continuing the good work that Cascade has been doing. Both of our banks have very strong, relationship-centered cultures and this is an ideal extension of First Interstate into markets we have been evaluating for several years,” continued Mr. Riley.

“We believe First Interstate is an exceptional banking partner for Cascade,” commented Terry Zink, President and Chief Executive Officer of Cascade Bancorp. “Strategically they intend to grow Cascade’s branch network, as well as our metropolitan commercial banking centers across the Northwest. It follows that they highly value the many Cascade bankers who are on the front line with our customer relationships and are committed to ensuring our loyal customers will benefit from this combination.”

Zink continued, “For nearly 50 years, First Interstate has demonstrated strong and stable banking leadership. Today , they are a recognized leader in community banking and consistently deliver quality and competitive financial services to their customers while making a clear and positive difference in the communities they serve. In light of our shared culture and commitment to community, I am excited for the prospects of our combined companies.

Together, we will continue to deliver a highly personalized experience to our customers with the expanded set of products and services that First Interstate will provide our customers. Employees and shareholders will be well-served as part of the First Interstate family.”

Pursuant to the terms of the definitive merger agreement, Cascade shareholders will receive 0.14864 shares of First Interstate Class A common stock and $1.91 in cash in exchange for each share of Cascade common stock they hold. The exchange ratio is fixed and the portion of shares received by Cascade shareholders is expected to qualify as a tax-free exchange. Cascade shareholders will own approximately 20% of the outstanding capital stock of First Interstate once the transaction is complete.

First Interstate expects the transaction will result in long-term annual earnings per share “EPS” accretion of 10% and 2018 EPS accretion of over 8% after accelerating the debit interchange limitations from the Durbin amendment brought on by crossing $10 billion in consolidated total assets. First Interstate is expected to recover the tangible book value dilution experienced in this transaction in five years.

The boards of directors of each company have unanimously approved the transaction, and the directors and certain large shareholders of Cascade have entered into agreements with First Interstate pursuant to which they have agreed to vote their shares of Cascade common stock in favor of the transaction. Additionally, the directors of First Interstate have entered into agreements with Cascade pursuant to which they have agreed to vote their shares of First Interstate common stock in favor of the transaction.

First Interstate and Cascade expect to close the transaction in mid-2017 after satisfaction of customary closing conditions, including regulatory approvals and the approvals of the First Interstate and Cascade shareholders. Immediately following the completion of the acquisition, it is anticipated that Bank of the Cascades will be merged with and into First Interstate Bank. Two members of Cascade’s Board of Directors will be added to the First Interstate Board of Directors in order to maintain the community commitment that Cascade has established in important markets in the Pacific Northwest.

Barclays Capital Inc. served as exclusive financial advisor and Luse Gorman, PC served as legal counsel to First Interstate. Piper Jaffray & Co. served as exclusive financial advisor and Hunton & Williams LLP served as legal counsel to Cascade.