With Bank of the Cascades’ proposed sale to a Montana-based bank, Central Oregon stands to lose its top small-business lender and a headquarters company employing about 200 people locally.

The impact can’t be understated, at least for Linda Navarro, president of the Oregon Bankers Association. Community banks account for a disproportionate share of small-business lending activity, relative to their assets, she said, and they tend to be more generous philanthropic players in their hometowns. “I’m not ever going to celebrate losing another headquartered bank in Oregon,” Navarro said Friday.

If regulators approve the $589 million sale of Bank of the Cascades to First Interstate Bank of Billings, Montana, next year as both parties expect, that will leave 23 community banks with a headquarters in Oregon, she said. Another Oregon-based bank, Gresham-based MBank, is being sold to Riverview Community Bank in Vancouver, Washington.

Bank of the Cascades is the second-largest Oregon bank, behind Umpqua Bank, because it executed a series of its own acquisitions after surviving the Great Recession. The bank is the top small-business lender in Deschutes County and was sixth-largest in Oregon during the 2016 federal fiscal year, according to the U.S. Small Business Administration.

One silver lining in the Cascades-First Interstate deal, Navarro said, is that First Interstate does not already have a presence in the Pacific Northwest. “They’re a new entrant into the Oregon market, so they’ll provide a new financial institution to compete for business and serve Central Oregonians,” she said. “They’re going to be committed to especially those areas outside of Portland. I think that’s really positive.”

Cascades CEO Terry Zink and First Interstate executives, including CEO Kevin Riley, will be in Bend and other parts of Oregon, Seattle and Idaho on Monday and Tuesday to answer questions from Bank of the Cascades’ more than 600 employees.

About 200 of those employees are in Central Oregon, said Debbie Amerongen, chief marketing officer. Most of those are in customer-facing roles at branch offices, but about 60 work in administrative and support roles at the Bend headquarters, she said.

Zink plans to retire, but President Chip Reeves, who was promoted from his job as chief banking officer in March, will stay in Bend. Zink said Thursday that future employment for the remaining bank executives will be “a wait-and-see type of approach” after the acquisition is final.

“My hope and prayer is that all those great people at Bank of the Cascades stay on because banking’s a people business,” Navarro said.

Most bank mergers present an opportunity to save money and increase profits through consolidation of jobs, especially back-office roles. It’s too early to tell how that will play out under First Interstate, Amerongen said. “They are going to determine that,” she said.

She added, though, that First Interstate, which has $9 billion in assets and 81 offices in Montana, Wyoming and South Dakota, will be even bigger after the acquisition. “There’s a lot of potential opportunity ahead,” Amerongen said.

The deal would create a bank with $12 billion in assets and 131 banking offices, according to Thursday’s announcement.

First Interstate probably sees room for “post-merger efficiency moves,” said Jon Moulton, instructor of finance at the University of Oregon. Bank of the Cascades pays more for salaries, building rents and leases and technology than most of its peers, he said, while First Interstate’s expenses are middle-of-the-pack.

Acquiring Bank of the Cascades will beef up First Interstate’s commercial real estate lending portfolio, Moulton said.

The main benefit for the Montana bank, however, is Bank of the Cascades’ presence along the Interstate 5 corridor, Moulton said. “Bank of the Cascades has been moving into what is a hyper-competitive marketplace,” he said. “From Eugene to Seattle, there are so many institutions and brokers trying to fight for every SBA or regular commercial business loan.”

Shares of Cascade Bancorp, the holding company for Bank of the Cascades, closed at $7.05 Friday, unchanged from the previous day’s trading, according to the Nasdaq Stock Market.

— Reporter: 541-617-7860, kmclaughlin@bendbulletin.com. Business Editor Joseph Ditzler contributed to this report