U.S. Bank buys MUFG Union Bank, a competitor in Seattle, for $8 billion

US Bancorp joins the banking industry’s consolidation frenzy with a nearly $ 8 billion deal to purchase MUFG Union Bank, which operates primarily in the West Coast states.

With the purchase, the US bank, which has 148 offices in Washington, including 68 in Counties King, Pierce and Snohomish, will increase its retail market share in the state to about 11%, just behind Wells Fargo.

Union Bank has, according to the Federal Deposit Insurance Corp. 14 offices in King, Pierce and Snohomish.

Overall, the purchase will add roughly 20% to the U.S. bank’s loans and deposits and greatly increase its market presence in California, where it will climb from tenth market share in the retail banking market to fifth place.

“The acquisition of Union Bank increases our reach at a time when size is more important to the industry than ever before, and it increases market share in the demographically attractive markets of California and other West Coast markets,” said Andy Cecere, CEO of US Bancorp said investors and analysts this morning.

It’s the Minneapolis-based banking company’s largest deal since its $ 21 billion merger with Firstar Corp. in 2001 which made it one of the ten largest banks in the country. It is also the US Bank’s first purchase of another banking business since 2014.

The transaction comes about as merger activities in the banking sector are accelerating again, partly driven by rising technology costs and the efficiency of serving more customers. Last year’s pandemic and recession cut the number of deals in both volume and value by more than half.

However, last year’s deals included one of Minnesota’s largest and best-known banking brands, TCF, which was acquired by Huntington Bancshares Inc. of Ohio the size of US Bancorp, by BBVA USA Bancshares.

With the MUFG Union Bank deal, the US Bank will serve approximately 1 million retail customers and 190,000 small business customers, primarily in California, Oregon and Washington. It will add $ 58 billion in loans to a base of $ 294 billion. It also receives $ 90 billion in deposits, adding to its $ 429 billion base.

Mitsubishi UFG Financial Group, the Tokyo-based parent company of MUFG Union, will retain its global corporate and investment bank.

In a statement, Kevin Cronin, CEO of MUFG’s US operations, said the company was “very pleased” to reach an agreement with the US bank. MUFG will add people and resources to its wholesale banking business in North America, focusing primarily on corporate banking services.

The U.S. bank will pay MUFG $ 5.5 billion in cash and 44 million of its shares, which were valued at $ 2.45 billion at Monday’s closing price of $ 55.68. When the transaction is complete, MUFG will own nearly 3% of US Bancorp.

U.S. bank executives said they identified about $ 900 million in cost savings that could be achieved after the merger. They said they are committed to keeping all MUFG Union Bank employees on the front lines.

“We will not leave markets or reduce the availability of branches or banking services in low- or middle-income areas,” said Terry Dolan, chief financial officer of the US Bank.

Cecere called the US bank’s approach to acquisitions “disciplined”.

“Union Bank is the right business at the right time at the right price,” he said. “It increases the size, offers considerable opportunities to optimize the combined sales network and increases our market share and the demographically attractive markets considerably.”

The deal has been approved by the boards of both companies and executives plan to close it in the first half of next year.

Seattle Times staff contributed to this report.