PremierWest Delays Shareholder Vote on Sale — Again

PremierWest Bancorp (PRWT) in Medford, Ore., has granted itself more time to persuade shareholders to approve a takeover by Starbuck Bancshares.

The $1.1 billion-asset PremierWest on Wednesday adjourned a meeting of its shareholders until March 28 so it can gather enough votes for the deal, which was announced in October.

Management has now extended the deadline twice. The tally was supposed to be completed Feb. 19, and PremierWest had put it on hold until March 19.

Starbuck, the parent company of AmericanWest Bank, agreed to buy PremierWest for $16.6 million in cash, or roughly 43% of the company's tangible book value.

PremierWest is recommending that shareholders approve the deal, which management says would provide its Premier West Bank unit with much-needed capital, according to a prospectus filed by Premier in January with the Securities and Exchange Commission.

"We continue to believe that the merger with Starbuck Bancshares is in the best interests of PremierWest shareholders and expect to use this further adjournment period to solicit proxies and to continue to gather additional votes," James Ford, PremierWest's chief executive, said in a press release.

According to Premier, an order issued by the Federal Deposit Insurance Corp. in April 2010 requires the bank to achieve a Tier 1 leverage ratio of 10%. PremierWest Bank had a Tier 1 leverage ratio of roughly 9% as of Dec. 31, according to the FDIC.

Most of PremierWest's regulatory capital currently comes from a combination of debt the company has raised from creditors and $41.4 million it received through the Troubled Asset Relief Program.

PremierWest says it heard from one other prospective suitor besides Starbuck despite having contacted roughly 21 potential buyers, and that the other suitor withdrew its offer, which was less attractive than the one from Starbuck, according to the prospectus.

So far, 49.2% of the outstanding shares and 60% of the total votes cast by shareholders have been in favor of the merger. At least half PremierWest's shareholders must vote to approve the deal.