It likely will be another eight months or so before Umpqua Bank logos start showing up at Sterling Bank locations here, assuming Umpqua's proposed $2 billion acquisition of Sterling meets regulatory approval.

Umpqua, though, expects to capitalize and expand on Sterling's emphasis as a community bank, by bringing Umpqua's retail-store concept here, says Eve Callahan, an Umpqua spokeswoman.

The banks are still working out how Sterling's corporate presence here will shape up following the changeover to the Umpqua brand, which is headquartered in Portland, Ore., although sources at both banks tell the Journal they don't expect any of Sterling's 12 Spokane/Coeur d'Alene-area branches will close.

Umpqua Holding Corp. and Sterling Financial Corp., the parent companies of the banks, expected to file formal applications for regulatory approval of the merger this week, says Ezra Eckhardt, president and COO of Sterling.

Eckhardt has been named the integration executive for the Sterling side of the proposed consolidation.

He says the bank hopes to achieve required regulatory approvals from the Federal Deposit Insurance Corp. and the U.S. Department of Justice by early April.

"Our expectation is that somewhere before mid-2014, we will complete the initial brand rollout in this market," he says.

Sterling CEO Greg Seibly will be co-president of the merged bank, along with Umpqua's current vice president of commercial banking Cort O'Haver, the banks say. Umpqua CEO Ray Davis will remain in that position following the merger.

Callahan says, "We're in the process of sorting through where other (Sterling) executives will come on board. Many will join Umpqua to add their expertise."

While Callahan says, "There will continue to be a very strong leadership presence from the new organization in Spokane," she adds, "We know Greg Seibly will be spending a lot of time in Portland."

Sterling's corporate headquarters here occupy a five-story 105,000-square-foot building at 111 N. Wall. Sterling also has leased 81,800 square feet of office space in the Crescent building, at 707 W. Main, for back-office operations, including auditing, compliance, and loan-support services. The bank employs a total of 625 people downtown and at its processing center near the Spokane International Airport.

Eckhardt says he expects commercial, consumer, and operations groups will be based in Spokane to ensure a strong market presence in the Inland Northwest.

Meantime, Eckhardt says he plans to stay here awhile yet. "I think it will take longer than two years to perfect the integration, and (I) look forward to continue playing a leadership role," he says.

Beyond the new name and logo, Umpqua locations likely will vary in appearance from their Sterling predecessors, Eckhardt says, referring to plans to spend $41 million to convert Sterling branches into Umpqua stores.

Even though the merger will greatly expand Umpqua's geographic market and roughly double the bank's current assets, Callahan says Umpqua will seek to maintain its identity as a community bank through a strategy implemented by its CEO.

The combined bank is expected to have $22 billion in assets, which might stretch the definition of a community bank, says Jeffrey Rulis, senior research analyst with the Lake Oswego, Ore., office of Great Falls, Mont.-based D.A. Davidson & Co.

"However," Rulis adds, "To date, Umpqua through acquisitions has been able to retain and hold that community bank feel. Its culture is very much based in the communities it's in."

As Sterling approaches $10 billion in assets, it makes sense to merge with a similar-sized bank, Rulis says.

"Banks that have more than $10 billion in assets face different regulatory hurdles," he says. "The way to offset that is increased scale."

He also says the Sterling's strength in multifamily and commercial real estate loans will complement Umpqua's commercial and industrial loan platform.

Since the merger announcement, Rulis has upgraded D.A. Davidson's rating for Umpqua stock to "buy" from "neutral," and several stock research companies have placed Umpqua on their watch lists.

While a few big law firms have announced they're investigating the merger agreement to determine if it provides stockholders adequate value, Rulis says such outside-attorney scrutiny isn't unusual.

"I don't think it's at high risk of not going through," he says of the merger. "Two or three years ago, it would have had more regulatory scrutiny. At this point, Sterling has done a nice job of cleaning up its credit, and its capital is restored to a comfortable level."

Sterling's Seibly said in the merger announcement last month that Sterling has shown increases in profits over the past 10 quarters, since it emerged from recapitalization.

Umpqua brought on Davis as CEO in 1994, when the bank had $194 million in assets and five branches in the Roseburg, Ore., area, about 175 miles south of Portland.

Under his direction, Umpqua managers travelled the country and then created a business model inspired by the best retail and hospitality experiences they could find, Callahan says.

"We're a retailer of bank products. That's where the concept of stores—not branches—comes from," she says. "You go to a store to browse, shop, and do something enjoyable."

Today, Umpqua stores serve the bank's own blend of coffee, provide computer cafs with free Wi-Fi, sell products for featured merchants, and host community events, in addition to providing full banking services, she says.

During a conference call with investment analysts last week, Davis said, "Our strategy remains constant: to build a community bank at any size ... with a commanding regional presence and products and expertise of a large institution with values and customer experiences of a community bank."

Corporatewide, Sterling has 175 branches and 2,650 employees in Washington, Idaho, Oregon, and California, Eckhardt says.

Umpqua has more than 200 locations in Oregon, Washington, California, and Nevada, and more than 2,300 employees.

"There will be some consolidation and job elimination," Eckhardt says of the merger, but he adds, "We want to do it in a way that's respectful of people."

He says he's optimistic that the job elimination will be balanced by normal attrition, which is about 20 percent annually for financial institutions, and job openings companywide.

"There are 120-odd positions posted across Umpqua and 80 across Sterling," Eckhardt says. "Between the two companies, we will have somewhere around 5,000 employees" when the merger is completed.

Umpqua's Callahan says there's no overlap in the Inland Northwest that would call for branch closures here. Umpqua's closest branch is in Pendleton Ore., nearly 200 miles southwest of Spokane.

In the merger agreement approved last month by the boards of directors of both banks, Sterling shareholders will get 1.67 shares of Umpqua stock plus $2.18 cash per share of Sterling stock.

Existing Umpqua shareholders will own 51 percent of the merged bank and Sterling shareholders will own 49 percent.