Pacific Northwest Bancorp to buy Bank of the Northwest for 3.85 times revenue

Weekly Corporate Growth Report, Jul 29, 2002

The Deal: Pacific Northwest Bancorp and Bank of the Northwest have signed a definitive agreement to merge. Pacific Northwest Bancorp will issue 1.75 million shares of common stock and spend about $25.8 million in cash in a transaction where Bank of the Northwest shareholders will have the opportunity to choose between cash and stock payment. Based on recent prices of Pacific Northwest stock, each shareholder of Bank of the Northwest would receive either 0.82 shares of Pacific Northwest or $22.50 in cash per share. The transaction is valued at approximately $85 million and has been unanimously approved by the shareholders of both companies. The deal is expected to close in the fourth quarter of 2002.

Discussion: Bank of the Northwest is a locally owned and managed full-service commercial bank in Oregon. The bank offers a range of products and services, including business loans, cash management services, commercial real estate loans, and consumer services.

Pacific Northwest Bancorp (formerly InterWest Bancorp) is the holding company for Pacific Northwest Bank. The company operates 55 branches in western and central Washington and in the Seattle area. The bank provides residential mortgages, commercial mortgages, and commercial, construction, and consumer loans, as well as traditional deposit services.

The acquisition will give Pacific Northwest an entry into metropolitan Oregon. Bank of the Northwest will be able to provide existing customers with higher lending limits and expanded product lines.