Umpqua Holdings said Tuesday it will purchase Financial Pacific Holding Corp. of Federal Way, Wash., for $158 million.

Umpqua Holdings said Tuesday it will purchase Financial Pacific Holding Corp. of Federal Way, Wash., for $158 million.

Acquisition of the firm, which provides commercial equipment leases and loans nationwide, is a major move for the parent company of Umpqua Bank, whose roots go back to Valley of the Rogue Bank.

Financial Pacific reported total assets of $279 million as of April 30, with tangible equity of $57 million expected at closing. Financial Pacific Leasing will become a unit of Umpqua Bank under the leadership of Cort O'Haver, executive vice president for commercial banking.

Umpqua said it expects to recover the purchase cost in four years, with a return rate of more than 30 percent.

Umpqua has expanded its operations into Northern California and Washington and is positioned for more growth.

President and Chief Executive Officer Ray Davis said even though Umpqua has expanded well beyond its original boundaries, such moves continue to benefit its communities and shareholders.

"The addition of Financial Pacific gives our business and commercial clients — including those in Southern Oregon and throughout our footprint — access to a new level of leasing expertise from a trusted community bank," Davis said in an email. "This is important as the economy picks up and businesses are looking for capital in a variety of ways."

Davis said Umpqua's vision is to build a community bank with a growing geographic reach and convenience, while offering products and expertise associated with a large bank.

"As we grow, we remain absolutely committed to our roots — where we came from — and Southern Oregon and Roseburg are essential to our story, he said. "Any expansion we consider has to support that objective, and we look forward to adding new products and services that allow our customers and communities to grow."

Davis said the Financial Pacific purchase made effective use of Umpqua's capital.

"At eight times 2012 earnings, this represents a disciplined acquisition which leverages excess capital, deploys excess liquidity into significantly higher yielding assets, provides growth and further diversification, and increases profitability."

Umpqua shares gained 10 cents Tuesday, closing at $13.64.

Reach reporter Greg Stiles at 541-776-4463 or Follow him on Twitter @GregMTBusiness, and read his blog at Edge.