PremierWest Bancorp's leadership failed to gain shareholder approval Tuesday of its proposed acquisition by AmericanWest's parent company, Starbuck Bancshares of Spokane, Wash.
During a shareholder meeting at Rogue Valley Country Club, less than half of the company's shares were voted, forcing executives to adjourn until Wednesday, March 13, to allow more time for proxy votes to come in. Thus far, 46.9 percent of the outstanding shares were voted and 63.9 percent of those favored the merger.
For the deal to be approved, more than half of PremierWest's shares must be cast and of those, more than half must vote in favor.
"We're not going to have any comment beyond what we put out," Chief Executive Officer Jim Ford said after issuing a release.
PremierWest ended four years of quarterly losses in the third quarter of 2012, when it recorded a $114,000 gain. But the swing to profitability was short-lived when it recorded a $4.6 million loss in the fourth quarter.
PremierWest announced it had agreed to be bought by Starbuck Bancshares on Oct. 29 for $16.6 million in cash, about 43 percent of PremierWest's tangible book value. Starbuck offered $1.65 per share as well as paying off its $41.4 million TARP Capital Purchase Program debt to the U.S. Treasury.
However, Georges St. Laurent, PremierWest's largest shareholder and a board member, made public his disagreement with the deal shortly after the acquisition agreement was announced. Other shareholders have been vocal in their dissent as well.
The bank reported assets of $1.1 billion at the end of 2012 and is well-capitalized, with an 8.95 percent Tier 1 leverage ratio at year end, according to the Federal Deposit Insurance Corp. Tier I capital is a measurement of a bank's ability to sustain losses. It includes core capital such as common stock and retained earnings. However, PremierWest's problem loans represent 4.21 percent of its balance sheet. Regulators want that figure to be closer to 1 percent. Further, PremierWest still owes the U.S. Treasury Department $41.4 million for its Troubled Asset Relief Program funds; AmericanWest will pay that off if the deal is approved.
PremierWest said it would again accept proxies via Internet and telephone, beginning at 5 a.m. today, until 8:59 p.m. Tuesday, March 12.
In its Tuesday night release announcing adjournment of the shareholder meeting, PremierWest once more urged voters to approve the proposal.
If a majority of PremierWest shareholders approve the plan, the bank's Oregon and Northern California offices will become AmericanWest Bank branches later this year.