Medford-based PremierWest Bank, which has struggled following the real estate implosion, is being acquired by American West Bank of Spokane for $16.6 million, or $1.65 per share.
It boiled down to a need for cash after the bank saw many of its major clients default when their developments in Oregon and California failed during the Great Recession.
With double the assets AmericanWest Bank proved the answer. AmericanWest had total assets of $2.4 billion as of July 2 and PremierWest Bank had total assets of $1.2 billion as of September 30.
"Since early 2009, the employees of PremierWest have been working hard to resolve credit issues, organize the bank more efficiently and return the bank to profitability," Jim Ford, President and Chief Executive Officer of PremierWest Bank said in statement. "While significant progress has been made, it became evident to the board of directors and our bank management that without a sizable infusion of additional capital, the bank would not be able to exit all problem credit relationships, satisfy our commitment to the TARP program, and adhere to recently enacted regulatory requirements. After studying many options we decided to merge with AmericanWest Bank as the best course of action for our employees, shareholders and communities."
AmericanWest Bank and PremierWest Bank announced a definitive agreement this morning. The Spokane bank will acquire PremierWest Bancorp, the local bank's parent company.
The deal is subject to regulatory approval.
"This merger will bring together two like-minded community banks that complement one another in terms of geography, products, community engagement and the importance we place on outstanding customer service," said Scott A. Kisting, Chairman and Chief Executive Officer of AmericanWest Bank in a statement.
According to PremierWest, the Treasury Department has indicated it will accept less than full repayment of the outstanding TARP balance. The bank will repay $41.4 million it borrowed, but will pay no interest. (Correction: This statement has been clarified from the original publication.)
The parties are targeting a closing of the transaction in the first half of 2013.
"Our banks have remarkably similar corporate values and community-minded philosophies," Ford said. "Customers can expect the same level of one-to-one attention and dedicated service from AmericanWest Bank, with the added benefits of a larger, well-capitalized institution."
D.A. Davidson & Co. served as financial advisor to PremierWest Bancorp and issued a fairness opinion to its board.
— Greg Stiles