The parent company of Tacoma-based Columbia Bank has been on an acquisition spree since 2010, picking up four failed banks in Washington and one in Oregon.

Wednesday it made its biggest acquisition yet, buying Oregon-based West Coast Bancorp for about $506 million in what executives called the largest Pacific Northwest bank deal done without government assistance since the 2008 financial crisis.

The combination of Columbia and West Coast would create a community bank with $7.2 billion in assets and $5.7 billion in deposits, operating more than 150 branches mostly along the Interstate 5 corridor, officials said.

More broadly, analysts say the acquisition by the third-largest Washington-based bank could encourage smaller community banks to look for merger partners.

“The seller, West Coast, was a high-quality franchise of significant size. That alone is an indication of where we’re headed,” said Jeff Rulis, senior research analyst at D.A. Davidson & Co.

Columbia Banking System is paying $264.5 million in cash and 12.8 million shares of stock. Based on Columbia’s closing share price of $18.85 on Tuesday, West Coast shareholders would receive a 14.5 percent premium, or about $23.10 per share, the companies said.

Both companies’ boards have approved the merger, while shareholders controlling about 22 percent of West Coast have already agreed to vote in favor of it, officials said.

The acquisition is expected to close in the first quarter of 2013 and is subject to approval by shareholders as well as federal and state regulators.

If the deal goes through, West Coast shareholders will own about 24 percent of the combined company, officials said.

News of the deal sparked heavy trading in both companies’ stocks. West Coast’s stock price soared 10 percent Wednesday to close at $22.22. Columbia’s stock fell 4 percent and closed at $18.05.

Columbia is offering a 45 percent premium over West Coast’s tangible book value.

“That kind of sets the scale for everybody that’s smaller and having more issues than West Coast,” said Rulis, who called the price “reasonable.”

Even before the financial crisis, West Coast was on the radar of Columbia CEO Melanie Dressel.

She had long let it be known to West Coast CEO Robert Sznewajs — who will retire after the two banks’ operations are woven together next year — that Columbia would be interested in buying the franchise.

“It was time for them to consider a sale,” Dressel said. And Columbia found it attractive because West Coast had “a very clean loan portfolio. They’re well capitalized.”

Columbia benefits financially and geographically, said Dressel, with an expected 33 percent increase in earnings per share in 2014 and a big expansion in Oregon — a dense urban cluster from Portland to Salem, several branches on the Oregon Coast and outposts as far as Eugene.

“When you look at the map, it makes a nice picture,” Dressel said.

Columbia expects to close eight to 10 overlapping branches and realize about $20.9 million in savings.

Dressel said she was confident Columbia could integrate its operations well with West Coast, after absorbing the five failed banks it bought with federal assistance in the past two years.

In 2010, Columbia bought Columbia River Bank in Oregon and American Marine Bank on Bainbridge Island. Last year, it bought three Washington banks: Summit Bank in Burlington, First Heritage Bank in Snohomish, and Bank of Whitman in Colfax.

Sara Hasan, an analyst at Seattle brokerage McAdams Wright Ragen, said the acquisition will make Columbia a tougher competitor for other Pacific Northwest banks like Portland-based Umpqua Bank, Spokane-based Sterling Bank and Walla Walla-based Banner Bank.

According to data from SNL Financial, in the second quarter Columbia Bank notched 12.7 percent growth in loans over the prior year, compared with 8.8 percent at Sterling Bank and 5.9 percent at Umpqua Bank.

While there have been other acquisitions recently in the Pacific Northwest, Wednesday’s deal differed in that the selling bank was relatively healthy.

“Seeing a healthy institution decide to sell itself and find a partner may encourage others to do the same,” Hasan said.

Sanjay Bhatt: 206-464-3103 or sbhatt@seattletimes.com

On Twitter @sbhatt