A North Carolina community bank has rejected another's offer to buy it, prompting the suitor to appeal directly to shareholders.

Newton-based Peoples Bank, which has $286 million of assets, turned down a $52.8 million stock offer from $444 million-asset Carolina First Bancshares, Lincolnton, saying it wanted to stay independent.

But Carolina First didn't take no for an answer. It wrote shareholders of nearby Peoples asking them to consider the proposition.

A public rebuff is rare in community banking, and going over management's head is even more unusual, though not unprecedented in recent years.

"We don't consider this hostile," said James E. Burt 3d, president of Carolina First. "We are encouraging their shareholders to speak up, which we feel is in the best interest of their organization. We would very much like to work this out on a friendly basis."

Mr. Burt said he wants shareholders to convince management to enter into "meaningful discussions" with Carolina First.

Tony W. Wolfe, president and chief executive officer of Peoples Bank, said he was disappointed that Carolina First contacted shareholders. He said the larger bank has expressed interest in Peoples before.

"We're committed to remaining independent," Mr. Wolfe said of the 85- year-old bank. "We're very excited and very optimistic about our future."

Peoples Bank sent shareholders a letter of its own, requesting that they continue their support of the bank. Peoples Bank has been a mediocre performer, with return on assets of 0.84% and return on equity of 9.08% last year. But Mr. Wolfe said the bank is growing and expects to open three new branches this year.

Even so, "I think it's a generous offer and it would make sense," said Carl Cline, branch manager of J.C. Bradford & Co. in Hickory, N.C.

But Mr. Cline and another North Carolina bank analyst, Ronald Poe of Interstate Johnson Lane, Newton, said they were doubtful that Carolina First could persuade shareholders of the tightly held Peoples to sell. Under North Carolina banking law, two-thirds of shareholders must approve the sale if it comes to a shareholder vote.

"It's over," Mr. Poe said. "I just think they ruffled the feathers, but that's just about it."

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