EVERETT – KeyCorp will pay $194.7 million to acquire one of Everett’s landmark financial institutions, EverTrust Financial Group.
The deal, which will make KeyCorp subsidiary KeyBank the fourth-largest bank in Snohomish County, was signed Thursday and announced Friday morning. EverTrust’s 160 employees were notified Thursday afternoon.
It must still be approved by regulators and by EverTrust shareholders.
KeyBank’s district president, James Peoples, said EverTrust was attractive to the nationwide banking company because of its strong presence in Snohomish County. He called the acquisition “a very, very important piece … a great fill-in project for us.”
KeyBank has been trying to grow in the county, Peoples said. It has opened two new branches during the past two years, in Mukilteo and Marysville, for a total of eight branches.
Peoples said KeyBank foresees more growth coming in the county as people and businesses migrate north out of the crowded Seattle core.
According to the most recent figures from the Federal Deposit Insurance Corp., EverTrust was Snohomish County’s fourth-largest bank in 2003, with $493 million deposited in its branches around the county and an 8.1 percent market share. KeyBank had $143 million in Snohomish County deposits, a 2.4 percent market share.
EverTrust chief executive Michael Hansen said his bank turned down previous offers before KeyCorp approached with its “bold” offer about a month ago.
EverTrust agreed because the two banks have similar philosophies and business lines. “The fit is absolutely perfect,” he said. “As the days went by, we became more and more impressed with the synergies that would exist between the organizations.”
KeyBank is a strong lender to small- to medium-sized businesses, Hansen said. That’s the business line EverTrust has been trying to enter in recent years. Both banks have expertise in commercial real estate lending, and both have strong private banking and asset management divisions, he said.
“The niches fit, the geography fit,” Hansen said. “And they were very sensitive about our employees.”
Peoples said KeyBank has not decided whether to close any branches or lay off people because of the merger.
If the are any layoffs, employees would have the option of transferring to other jobs within KeyCorp or receiving severance, Peoples said.
The deal already has support from three of the biggest individual stock owners. Hansen himself owns about 5.7 percent of EverTrust stock, more than 390,000 shares, according to documents filed with the Securities and Exchange Commission earlier this year.
Two other major shareholders – directors Tom Collins and Tom Gaffney, who each own roughly 90,000 shares – said they support the sale.
KeyBank will offer EverTrust customers “the same community banking, but with a lot more resources,” Gaffney said.
The sale announcement created a buzz at the Washington Banking Association’s annual meeting Friday, said John Dickson, chief executive of Frontier Bank and the association’s chairman.
There had been rumors that EverTrust management was in talks to sell the bank, Dickson said. The big surprise was the sale price – $25.60 a share. A month ago, EverTrust stock was selling at close to $18.50 a share, meaning KeyCorp is paying nearly a 40 percent premium to acquire EverTrust.
Given that, EverTrust’s management “did really well for their shareholders,” Dickson said.
The deal boosted EverTrust’s stock, which rose to $25.35 during Friday’s trading , up $5.39.
EverTrust was formed in 1916 in Everett as the Scandinavian-American Savings Association. It was known as Everett Mutual Bank until it changed its named to EverTrust Financial Group in January 2001.
As part of the merger agreement, the EverTrust Foundation will continue to exist. The foundation has a $10 million endowment that includes shares of the bank company’s stock, so it will benefit from the sale to KeyCorp, Collins said.
The foundation has given away more than $2.5 million in the past six years, making it one of Western Washington’s top corporate philanthropists, EverTrust marketing director Brad Ogura said.
Reporter Bryan Corliss: 425-339-3454 or corliss@heraldnet.com.
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