PremierWest Bancorp, parent company of PremierWest Bank, Wednesday reiterated its position on why shareholders should approve a $1.65 per share buyout proposal by Starbuck Bancshares at a special meeting next Tuesday.
PremierWest has suffered through capital difficulties since the real estate market bubble burst six years ago. It received $41.4 million from the Treasury Department's Troubled Asset Relief Program (TARP) in February 2009 and later found itself in regulatory hot water with both the state and Federal Deposit Insurance Corp.
In October, Starbuck Bancshares, the parent company of AmericanWest Bank in Spokane, Wash., reached an accord with PremierWest to acquire the Medford-based bank.
The company's biggest shareholder, Georges St. Laurent, who holds more than 9 percent of the shares, declared shortly thereafter he would vote against the deal.
Restating the points it made at the time the deal was announced, PremierWest said in a statement that it needs to substantially increase its capital base to meet regulatory requirements, resolve remaining credit issues and remain competitive.
The statement said the bank's earlier efforts to raise capital from private equity and institutional investors were not acceptable to the Treasury Department, and raising capital would have further diluted the holdings of existing shareholders.
"Despite significant efforts, no other acquirer stepped forward with an offer to acquire PremierWest at a value that was higher than that being offered by Starbuck," PremierWest said in the statement.
If the merger is not completed, the five years allowed to repay Treasury would expire at the end of 2014. "If our consent order with state and federal regulators remains in effect and we are unable to obtain consent from our regulators to pay accrued interest at the end of the permissible deferral period, we would default on the (TARP) payments," the company said.
The shareholder meeting begins at 1 p.m. Tuesday at Rogue Valley Country Club.
Reach Greg Stiles at 541-776-4463 or firstname.lastname@example.org. Follow him on Twitter @GregMTBusiness.