Umpqua plans moves after buy of Centennial.

Byline: ED RUSSO The Register-Guard

Umpqua Bank expects to close two of its Eugene branches as part of its upcoming acquisition of Centennial Bank.

Umpqua will consolidate its downtown and west Eugene branches with nearby Centennial operations. It's unclear whether jobs will be lost in the closures.

Though it's Umpqua that's moving, Centennial is the bank that soon will cease to exist as an independent institution.

Next week, shareholders of both bank holding companies are expected to approve the sale. The deal is set to close on Nov. 15.

The two firms disclosed the branch closure plans in a joint proxy statement and prospectus to shareholders.

Centennial, with branches in 10 Oregon communities, has about 320 employees. The bank, which began in Springfield in 1974, employs about 175 people in Lane County.

Centennial Bancorp moved its headquarters from Eugene to Portland three years ago. However, most of Centennial's back-office functions, check processing, computer services, loan service, mortgage, and other departments are in Centennial's four-story downtown building at Sixth Avenue and Oak Street.

In mergers, companies often lay off staff to cut costs and eliminate duplicative jobs.

However, Lani Hayward, Umpqua's Holding Corp.'s director of marketing, said executives hope to keep layoffs to a minimum through attrition and allowing employees to transfer to other positions in the combined company.

Executives are still working on plans to integrate the two banks, she said.

At this point, "I don't have a number (of possible job cuts), " she said. "We are working hard to have (cuts) be as minimal as possible, and we have successfully shown that in previous acquisitions."

Umpqua will move its downtown branch at 11th Avenue and Oak Street five blocks east to Centennial's four-story office building.

Umpqua will move its branch at West 18th Avenue and Bailey Hill Road one-half mile east to Centennial's branch at West 11th Avenue and Bailey Hill Road.

Hayward said the Centennial banks are larger than Umpqua's already crowded offices, a major reason why Umpqua decided to close its offices.

Hayward said Umpqua has yet to decide what it will do with the buildings, which it owns.

All Centennial's branches are to be converted to Umpqua banks by mid-December, Hayward said.

The deal involves closing one other branch - a Centennial branch in Portland that is near an Umpqua branch, Hayward said.

Centennial board member Sue Prichard, a Eugene real estate broker, said the acquisition is good for employees, shareholders and customers of both banks.

Unlike large out-of-state bank companies that acquire smaller banks, Umpqua will maintain Centennial's commitment to local communities, she said.

"Nobody is moving out of state," Prichard said. "Instead of taking jobs out of Oregon, these two institutions are building a bigger entity, which has the capacity to provide more opportunities for employ- ment."

The purchase of Centennial is a stock and cash deal valued at $215 million.

In exchange for their shares, Centennial stockholders can receive Umpqua stock, cash or a combination of both. Umpqua will pay Centennial shareholders $9.35 a share, a 34 percent premium over Centennial's closing stock price on July 23, the day before the sale was announced. If Centennial shareholders elect to take stock, they would receive 0.5343 of an Umpqua share for each Centennial share.

Centennial shareholders will meet at the Valley River Inn in Eugene on Wednesday at 6 p.m. to discuss the transaction and to learn results of their vote on the sale.

Umpqua shareholders will meet at 6 p.m. on Thursday at the Holiday Inn Express in Roseburg.

The prospectus also disclosed that Centennial's sale grew from Centennial Chief Executive Ted Winnowski's plan to retire at the end of the year. After learning of Winnowski's planned departure, investment bankers from Wells Fargo Securities met with Umpqua executives to discuss making an offer for Centennial, the prospectus said. Winnowski and Centennial's board of directors received a preliminary proposal in May. Two months later, both boards approved the deal.

In the prospectus, Centennial's board said shareholders "could realize significant value from the merger" and the combined company would create greater value than if Centennial continued independ- ently.

Acquiring Centennial would help Umpqua in several ways, the prospectus said. Adding Centennial's branches and assets would make Umpqua the state's largest Oregon-based bank, and boost its presence in the Portland area, as well as in Vancouver, Wash., where it has no outlets, Umpqua figured.

Merging Centennial's operations into Umpqua's also would result in pre-tax savings and revenue increases of $5.7 million for Umpqua, the prospectus said.

Umpqua and Winnowski have agreed that Winnowski will work for one year after completion of the merger, the prospectus said. For that, Winnowski is to receive $150,000, which will be paid to a retirement plan.

Seven other top Centennial executives have compensation agreements that kick in if they leave Umpqua Bank within a year of the acquisition, or soon after the first anniversary of the deal.