Washington's Sterling Financial Corp. buying Montana thrift

Northwestern Financial Review, Jun 6, 1998

Sterling Financial Corporation, Spokane, Wash., announced an agreement to acquire Big Sky Bancorp Inc., and its subsidiary, First Federal Savings and Loan Association of Montana.

First Federal conducts operations from two offices in Missoula, and from its headquarters in Hamilton. At year-end 1997, First Federal had $62.8 million in assets with $47.8 million in deposits.

Sterling's chairman and CEO, Harold B. Gilkey, has strong ties to Montana. He was born and raised in Livingston, attended the University of Montana in Missoula; and he is the immediate past chairman of the University of Montana Foundation.

"This merger fits well within our broad strategy of being a leading community bank in the Northwest," Gilkey said. "First Federal is positioned in the highest growth area of Montana, which we currently serve through our residential lending subsidiary Action Mortgage Co., and our commercial banking subsidiary Intervest-Mortgage Investment Co."

"As management and the board of First Federal looked forward, considering the size of our company, we recognized that we had limited resources with which to better serve our customers as well as expand our markets," said Michael E. McKee, president and CEO of Big Sky and First Federal. "This merger presents an opportunity to increase market share, particularly with the addition of Sterling's array of financial products and services, including small business services."

The agreement provides for each shareholder of Big Sky to receive 1.384 Sterling common shares for each of his or her Big Sky common shares held, and cash in lieu of the issuance of fractional shares.

The purchase price is approximately 1.6 times Big Sky's book value. As part of the agreement, Big Sky has agreed to pay a $500,000 cash break-up fee to Sterling if the agreement is terminated under certain circumstances. The transaction is expected to be complete late in 1998.