By GREG STILES
PremierWest Bank is going away and its branches will fold into AmericanWest Bank.
The Medford-based bank that was founded in May 2000 will fade into banking history in April — just short of its 13th anniversary.
PremierWest Bancorp shareholders on Thursday gave their grudging endorsement to a $20 million agreement with Starbuck Bancshares, the private equity parent company of Spokane-based AmericanWest Bank.
The new owner will pay $2 apiece for just more than 10 million shares and take possession of PremierWest’s 32 branches — ranging from Redmond to Galt, Calif., once the deal closes. PremierWest’s $41.4 million TARP Capital Purchase Program debt to the U.S. Treasury also will be paid off as part of the deal.
“It’s a difficult time, because PremierWest has been part of these communities for so long,” said Jim Ford, president and chief executive officer. “It’s difficult to go through the transition, but I couldn’t be prouder of the people who have worked their tail off to get us into the position for what was accomplished today. Without the will and commitment of our people we wouldn’t have survived until now.”
It took the corporate world’s version of a March Madness double-overtime to settle the matter.
After failing to gain sufficient votes during a Feb. 19 shareholder meeting, the gathering adjourned until March 13 when it pulled to the cusp of approval before again falling short. Then, Starbuck upped its offer by 35 cents from the $1.65 per share announced last October, giving holdouts enough incentive to seal the deal.
The final tally reported by PremierWest was 5,099,107 shares in favor and 3,237,826 opposed, with 38,848 abstentions. PremierWest needed 78,106 additional favorable votes above the March 13 tally to win approval, but wound up with 159,841 more.
More than 12,000 of those favorable shares had previously abstained, while 1,016,490 shares were changed from opposition to favoring the takeover.
The deal, which already has the blessings of federal and Washington state regulators, is expected to close within a couple of weeks.
AmericanWest got its start as United Security Bank in Chewelah, Wash., in 1974. A few small banks merged in that region, creating AmericanWest in 1999.
AmericanWest also languished before SKBHC Holdings, led by Scott Kisting, purchased it out of U.S. Bankruptcy Court for the Eastern District of Washington for $6.5 million two years ago. Since then, the private equity group — which raised $750 million — has gone on a spending spree, buying up troubled banks.
With the addition of PremierWest’s offices, AmericanWest will operate 112 branches in five states. The combined assets of $2.7 billion leaves AmericanWest in the community bank category — well below the industry’s $10 billion regional bank threshold, said AmericanWest spokeswoman Kelly McPhee.
“There is still going to be local decision-making,” McPhee said. “That’s not going to change, all that sort of thing will still happen in Medford.”
Among the issues that irked shareholders — most of whom lost the majority of their investment — is the “Golden Parachute Compensation” for top executives written into the agreement. If the executives remain with the company the severance doesn’t kick in.
If terminated, Ford is due total compensation of $898,598, including $400,000 cash. Chief Administrative Officer Tom Anderson would receive $542,850, including $182,000 cash and Chief Financial Officer Doug Biddle would receive $207,248, including $180,000 cash.
McPhee said no decisions have been made, concerning the future of PremierWest executives, McPhee said.
“I know it has been a bumpy road with the decline of shareholder value,” she said. “They have some really talented people.”
Ford said there has no indication of AmericanWest’s intentions during recent discussions.
“At this point no decision has been made for any position, from the top down,” Ford said.
When PremierWest obtained Stockmans Financial Group in 2008, Ford said three of the top four executives were retained and the CEO retired.
“I hope people remember PremierWest for what it stood for, supporting our community, customers and caring for our employees,” Ford said. “The fact that there are such similarities between our banks and how similar the logos are, I hope the legacy we leave is that people were proud of what PremierWest was able to accomplish.”
PremierWest was founded in May 2000 when Bank of Southern Oregon acquired Roseburg-based Douglas National Bank for $48 million and changed its name with an eye toward the future.
“Between Eugene and Redding there are about $11 billion in deposits,” John Anhorn, the bank’s first CEO and present chairman, told the Mail Tribune in 2000. “We think that’s very attractive.”
Beginning in 2001, PremierWest moved aggressively into California, eventually giving the bank a total of 48 offices by 2009.
By then, the worm had turned.
PremierWest found itself extended too far when the credit crunch hit in 2008 and subsequently wound up taking a $41.4 million Troubled Asset Relief Program loan from the Treasury Department.
“I think we built something that was wonderful and moving forward,” Anhorn said Thursday. “But the economy caught a lot of banks.”
A string of quarterly losses led to regulatory sanctions and stock prices plummeted, leading executives to search for a buyer. PremierWest closed nine unprofitable branches last year and sold two more to Pacific Crest Federal Credit Union.
Anhorn declined to address issues that led to the bank’s demise, but said the network he helped build will be an asset to AmericanWest.
“The employees, officers and shareholders built a wonderful community bank,” said Anhorn, who retired from day-to-day duties in December 2008. “There’s a new group now and they’ll keep it going forward. Hopefully, what they’re doing will add to the equation of what we were trying to get done.”
Reach reporter Greg Stiles at 541-776-4463 or firstname.lastname@example.org. Follow him on Twitter @GregMTBusiness, and read his blog at www.mailtribune.com/Economic Edge.
This story originally appeared in Medford Mail Tribune.