Recently, Washington Federal Inc. ( WAFD ) announced the completion of the acquisition of Oregon-based South Valley Bancorp Inc. Per the deal, with the amalgamation of both the parent companies, South Valley's wholly-owned subsidiary - South Valley Bank & Trust - will also merge with Washington Federal's wholly-owned subsidiary - Washington Federal.
Washington Federal further stated that the combined company will have 190 offices in 8 western states. Furthermore, the combined company will have access to a bigger branch network, higher liquidity and increased lending capacity, which will propel its profitability going forward.
The acquisition will add roughly $514 million loans and $743 million deposits to Washington Federal's financials. It will also strengthen the company's foothold in southern and central Oregon, which in turn will drive its banking and commercial real estate businesses.
Washington Federal has always been inclined towards mergers and acquisitions due to its capital strength. In 2011, the company acquired Albuquerque, New Mexico-based Charter Bank and Phoenix, Arizona-based failed Western National Bank.
In 2010, Washington Federal acquired all of the deposits of Horizon Bank of Bellingham, Washington. Also, the company acquired First Mutual Bancshares Inc. and First Federal Banc of the Southwest Inc. in 2008 and 2007, respectively.
These mergers and acquisitions have helped Washington Federal increase its assets, workforce and branch network, which in turn has strengthened its market share substantially. We expect the company to maintain this growth strategy.
Currently, Washington Federal retains a Zacks #3 Rank, which translates into a short-term Hold rating. Among its peers, Sterling Financial Corporation ( STSA ) also retains a Zacks #3 Rank.