Washington Federal Inc.’s acquisition of 23 Bank of America branches in Nevada and Arizona is the Seattle-based bank’s second deal with the nation’s second largest-bank in the last six months.
Bank of America has sold more branches than any other U.S. bank as it continues to cut locations and shed costs. In July, Washington Federal acquired 51 Bank of America branches in New Mexico, Washington, Idaho and Oregon.
Washington Federal bank expects to receive approximately $610 million of deposits and $4 million of loans from the deal announced late Thursday. Terms of the deal were not disclosed.
“This transaction will improve the company’s deposit mix and reduce overall funding costs,” Roy Whitehead, president and CEO of Washington Federal, said in a statement.
The deal is expected to close May 2, pending regulatory approval from the Office of the Comptroller of the Currency as well as satisfying customary closing conditions. Once the deal closes, Bank of America will have 70 branches in Nevada.
“When completed, the transaction will represent a significant enhancement of our branch network in Arizona and Nevada,” Whitehead said in the statement.
Prior to Thursday’s announcement, Washington Federal operated four branches in Las Vegas, Henderson and North Las Vegas. The 10 new branches in Nevada are in Beatty, Elko, Ely, Fallon, Fernley, Mesquite, Mineral County, Moapa, Pioche and Winnemucca.
In a 10-page transaction summary, Washington Federal expected the deal to add 7 cents in “tangible book value” in a year after the proceeds are fully invested. The bank didn’t expect any cost savings from the deal as it plans to add staff and “expense to service the higher transaction volumes associated with the low-cost deposits.”
Washington Federal manages a branch network of 235 offices in eight Western states, and after the acquisition that number will increase to 258.
Bank of America last year sold 118 branches in six deals, giving up $4.05 billion in deposits, according to data from SNL Financial. The Charlotte, N.C. -based bank has been selling or shuttering U.S. branches as part of its massive companywide cost cutting program.
“The decision to sell these locations to a community bank, rather than closing them, was made to preserve as many jobs as possible and to ensure these communities will continue to be served with convenient local branches,” Colleen Haggerty, a Bank of America spokeswoman, said Friday in an email.
Haggerty said the bank views this as a way to “save jobs and a brick and mortar banking presence” in these Nevada towns.
The bank’s program known as Project New BAC was launched in 2011 has led to Bank America shedding some 300 branches nationwide. Bank of America today has less than 5,300 branches in the U.S.
Bank of America recently reported fourth quarter net income of $3.4 billion, or 29 cents a share, compared with $732 million, or 3 cents a share, in the period a year earlier. The bank exceeded the 26 cents that Wall Street analysts had expected the bank to make.
Western Federal on Jan. 15 reported fiscal first-quarter 2014 earnings of 39 cents per share, surpassing analyst estimates of 37 cents. The report also beat the 33 cents earned in the year-ago quarter. Net income was $40.2 million, compared with $35.2 million in the first quarter of fiscal first-quarter 2013.
Contact reporter Chris Sieroty at email@example.com or 702-477-3893. Follow @sierotyfeatures on Twitter.