UPDATE: D.A. Davidson Upgrades Umpqua Holdings Corp. to Buy, Raises PT Following Announcement of Sterling Acquisition

In a report published Friday, D.A. Davidson analyst Jeff Rulis upgraded the rating on Umpqua Holdings Corp. (NASDAQ: UMPQ) from Neutral to Buy, and raised the price target from $17.00 to $20.00.In the report, D.A. Davidson noted, “Sterling shareholders will receive 1.671 shares of Umpqua common stock in addition to $2.18 cash, which equates to $30.52 per share or 1.67x Sterling's TBV (93% stock / 7% cash). The deal is expected to close in 1H'14. The combined entity, which will operate under the Umpqua brand, will hold $22 billion in assets, $15 billion in loans, and $16 billion in deposits with 394 branches across 5 states. The acquisition would position UMPQ as a premier community bank, holding a top 3 ranking among locally headquartered banks by deposit market share in 10 out of 11 primary markets. The pro forma loan book will be CRE based (43%) with a higher emphasis in multifamily (16% pro-forma vs. 5% UMPQ) and 1-4 family loans (14% pro-forma vs. 10% UMPQ). Management believes this to be a strategic acquisition that leverages the UMPQ brand and fortifies an expanded footprint.”Umpqua Holdings Corp. closed on Thursday at $16.20.