South Sound Bank of Olympia and Timberland Bank of Hoquiam are set to merge, the two banks announced Wednesday.
The merger is expected to be finalized in the fourth quarter of the year.
Under the terms of the merger, South Sound Bank shareholders will receive 904,918 shares of Timberland common stock and $6.9 million in cash.
At first glance, one might question why Timberland Bank and its parent company, Timberland Bancorp, a publicly traded bank-holding company with $1 billion in assets, would be interested in a bank a fraction of its size. South Sound Bank has $186 million in assets and two branches, in Olympia and Lacey.
But Timberland President and Chief Executive Michael Sand said Wednesday that South Sound Bank has a good reputation, exceptional lenders and fits into its market area nicely.
"It's just a good fit," Sand said, adding that South Sound Bank is well known as a small business lender, including work it has done with the U.S. Small Business Administration.
Both South Sound Bank branches will eventually become Timberland branches, which will give Timberland seven in Thurston County. The two South Sound branches currently employ 34 people, while Timberland employs 260, Sand said.
"We will preserve as many jobs as absolutely possible," he said.
South Sound Bank President and Chief Executive Dan Yerrington said he expects there will be more opportunity for his employees within a larger organization.
Yerrington, meanwhile, will continue his duties for South Sound Bank through the transition and then he expects to retire and join the Timberland board of directors.
As for how the merger agreement was hatched, Yerrington said he and Sand began talking about it one day. South Sound Bank has been approached by several potential merger partners over the years, but this was different because he has known Sand for many years, he said.
The two banks also have similar business models and cultures when it comes to employees, customers and shareholders, he said.
"I feel pretty good about it," said Yerrington about Wednesday's announcement. "I feel like I'm leaving it (the bank) in good hands."
