Vote Trips Up Sale of Bank in Northwest
Plans to sell an Oregon bank stumbled in a shareholder vote last week after the would-be buyer lowered its bid.Oregon law requires two-thirds approval for such sales, but $60 million-asset Northern Bank of Commerce in Portland said late Thursday that only 54% of its shares voted in favor of the proposed sale to $199 million-asset Cowlitz Bancorp. of Longview, Wash.
The swing votes, sources said, were those of a Portland stockbroker who wanted Cowlitz to pay more.
The original deal, announced last September, was valued at $7.3 million. But Cowlitz lowered its offer on Jan. 27 after Northern boosted its loan-loss reserves, thus reducing shareholder equity. The revised stock-swap offer would now work out to about $5.2 million.
Five-year-old Northern, which has eight branches in retirement communities in and around Portland, has been operating under a federal cease-and-desist order since July. The Federal Deposit Insurance Corp. said it was operating with insufficient capital and holding too many underperforming loans.
Northern's chairman, William Spicer, said it was disappointed with the vote but would "immediately begin to examine alternative means of addressing the concerns raised by federal and state banking regulators."
Benjamin Namatinia, chairman and chief executive officer of six-branch Cowlitz, also expressed disappointment. "We continue to believe this would have been a business combination with excellent potential," he said.
- Matt Andrejczak
Texas Bank Says It Mishandled Refunds
A Fort Worth bank said it would restate its earnings going back to 1996 to recognize a recently discovered loss of $2.6 million.Surety Capital Corp., the $102 million-asset holding company for Surety Bank, said it discovered the loss during a review of the books of its insurance premium finance division. It said managers responsible for the loss no longer are with the company.
Surety, which has yet to release 1999 earnings, said it discovered that insurance premium refunds due to some of its customers had been diverted into other accounts to cover up the loss. Surety said it has notified the Securities Exchange Commission and banking regulators of its discovery and of its plans to refund the money owed its customers.
The $2.6 million adjustment of earnings is equal to the amount that Surety is refunding, including $500,000 of interest.
Surety last posted a full-year profit in 1996. It said it expects to return to profitability by 2001.
- Craig Woker