Washington Federal, Inc. and Luther Burbank Corporation jointly announced the signing of a definitive merger agreement pursuant to which Washington Federal will acquire Luther Burbank and its wholly owned subsidiary, Luther Burbank Savings, in an all-stock transaction valued at approximately $654 million based upon the closing price of Washington Federal’s common stock on Nov. 11.
Upon closing of the transaction, which was unanimously approved by the boards of directors of each of Washington Federal and Luther Burbank and is subject to shareholder and regulatory approval and other customary closing conditions, Luther Burbank shareholders will be entitled to receive 0.3353 shares of Washington Federal common stock for each share of Luther Burbank common stock they own. The transaction, which is anticipated to close as early as the second calendar quarter of 2023, will expand Washington Federal’s franchise into California.
“One thing I have learned is that you do not find the right deal - the right deal finds you. That is the case here,” said Brent Beardall, President and Chief Executive Officer of Washington Federal. “It checks all the boxes. It creates scale. It creates a contiguous footprint from Seattle to Austin. Unlike so many comparable transactions, this transaction does not negatively affect our tangible book value and is accretive to forward-estimated earnings and capital. Frankly, the near-term positive impact to our financial position and physical footprints are bonuses, not our objective. Our objective is long-term value creation, which only happens if there is a harmony of people, values and culture, which we believe to be the case in this strategic transaction. We want everyone at our respective banks to know how excited we are to grow our team and serve our customers and communities together.”
Beardall continued, “Both organizations are committed to lending within their footprints and serving as a source of strength for our clients looking to appropriately utilize 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 endeavor and showing that, together, Luther Burbank Savings and WaFd Bank are committed to our communities’ vitality and success.”
Simone Lagomarsino, President and Chief Executive Officer of Luther Burbank, 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.”
Victor Trione, Chairman of the Luther Burbank Board, said, “This truly is a great opportunity for our shareholders to reinvest in a larger proforma institution with a shared legacy and long-term perspective on value, customers and community.”
Upon completion of the merger, the combined institution will have approximately $29 billion in total assets, $23 billion in total loans and $22 billion in total deposits with over 210 locations in Washington, California, Oregon, Idaho, Utah, Nevada, Arizona, Texas and New Mexico operated through its community bank subsidiary and approximately 2,400 full time employees.
Washington Federal was advised in the transaction by Keefe, Bruyette & Woods, A Stifel Company as financial advisor and Davis Wright Tremaine LLP as legal counsel. Luther Burbank was advised by Piper Sandler & Co. as financial advisor and Holland & Knight LLP as legal counsel.
Washington Federal is headquartered in Seattle, WA, and has 201 branches in eight western states. As of September 30, 2022, Washington Federal had total assets of $20.8 billion, total loans of $16.3 billion and total deposits of $16.0 billion. Washington Federal conducts its business primarily through its wholly owned subsidiary, Washington Federal Bank.
Luther Burbank is headquartered in Santa Rosa, CA, and operates 10 full-service branches in California, one full-service branch in Washington, six loan production offices in California and one loan production office in Oregon. As of September 30, 2022, Luther Burbank had total assets of $7.9 billion, total loans of $6.9 billion and total deposits of $5.8 billion. It operates primarily through its wholly owned subsidiary, Luther Burbank Savings.