The transaction, which is expected to complete in the second calendar quarter of 2023, will create a combined company that will have around $29bn in total assets, $23bn in total loans and $22bn in total deposits
Washington Federal to acquire Luther Burbank. (Credit: Mackenzie Marco on Unsplash)
Washington Federal has agreed to acquire Luther Burbank and its wholly-owned subsidiary Luther Burbank Savings, in an all-stock transaction worth around $654m.
Under the terms of the merger deal, Luther Burbank shareholders will receive 0.3353 shares of WaFd, in exchange for each share of Luther Burbank common stock held.
The transaction is unanimously approved by the boards of directors of Washington Federal and Luther Burbank.
It is expected to complete in the second calendar quarter of 2023, subject to shareholder and regulatory approval and other customary closing conditions.
Upon closing, transaction will create a combined company that will have around $29bn in total assets, $23bn in total loans and $22bn in total deposits.
In addition, it will have more than 210 locations in Washington, California, Oregon, Idaho, Utah, Nevada, Arizona, Texas, and New Mexico
Washington Federal will operate the combined company through its community bank subsidiary Washington Federal Bank (WaFd Bank).
Washington Federal president and chief executive officer Brent Beardall said: “Both organisations are committed to lending within their footprints and serving as a source of strength for our clients looking to appropriately utilise leverage to purchase their homes and control their long-term need for shelter.
“Unlike many financial institutions, both WaFd Bank and Luther Burbank Savings are portfolio lenders, meaning that we originate mortgage loans to hold on our balance sheets because we fully appreciate the true value of investing in our clients and communities we serve over the long run.
“As part of the transaction, WaFd Bank is committing $1 million to support communities in Luther Burbank’s California footprint. We look forward to engaging with our new community partners in this endeavour and showing that, together, Luther Burbank Savings and WaFd Bank are committed to our communities’ vitality and success.”
Based in Santa Rosa, California, Luther Burbank operates 10 full-service branches in California, one in Washington, six loan production offices in California and one in Oregon.
Luther Burbank had total assets of $7.9bn, total loans of $6.9bn and total deposits of $5.8bn, as of 30 September 2022.
It operates primarily through its wholly-owned subsidiary, Luther Burbank Savings, an FDIC insured, California- chartered bank.
Washington Federal had total assets of $20.8bn, total loans of $16.3bn and total deposits of $16bn, as of 30 September 2022.
The company said that the acquisition of Luther Burbank will expand its franchise into California.
Keefe, Bruyette & Woods, A Stifel Company served as financial advisor and Davis Wright Tremaine served as legal counsel to Washington Federal, while Piper Sandler & Co. as financial advisor and Holland & Knight as legal counsel to Luther Burbank.
Luther Burbank president and chief executive officer Simone Lagomarsino said: “We are very pleased to partner with Washington Federal, which we believe will lead to long-term value creation for our shareholders and the delivery of superior financial products and services to our clients and the communities we serve.”
Luther Burbank Board chairman Victor Trione said: “This truly is a great opportunity for our shareholders to reinvest in a larger pro forma institution with a shared legacy and long-term perspective on value, customers and community.”