OREGON'S WESTERN BANK has withdrawn -- at least for now -- its takeover bid
for an institution whose shareholders, it maintains, largely support the proposed deal.
The target bank, $132 million-asset Bank of Newport on Oregon's central coast, says the offer -- $18 per share or a stock swap -- was deemed inadequate by a team of attorneys and accountants.
But Western CEO Georges St. Laurent Jr. says nearly 50% of Newport's shareholders have mailed in proxies saying they want their bank to negotiate a merger.
Because Newport's holding company, West Coast Bancorp, has refused to negotiate, Western on June 21 withdrew its bid. But Western, a $600 million bank based in Coos Bay, still wants Newport. And it is now trying to set up a meeting of Newport shareholders to oust the unresponsive board members, Mr. St. Laurent says.
He adds that West Coast's refusal to honor the request of its shareholders violates the mandate of a board. "We could take them to court on that," says Mr. St. Laurent.
The shareholders interested in Western's offer evidently agree that Newport should merge with a larger bank to compete with the big banks that are branching into Oregon, says Mr. Laurent.
Newport chief executive J.F. Ouderkirk says his bank has been enjoying strong profitability -- its returns on assets were 1.59% last year and 1.33% in 1991 -- thanks to the loyalty of customers who are not likely to jump ship if a big bank sets up shop in his service area on Oregon's central coast.
Moreover, Mr. Ouderkirk says, Mr. St. Laurent is planning to grow the bank and sell it to a national or a regional institution that is less likely to have Newport's commitment to community service.
In response, Mr. St. Laurent says, "Ouderkirk has no knowledge of my interests and it's presumptuous of him to say I'm planning to sell the bank. Its my responsibility as chairman to review any offers. I represent my shareholders, but I don't think [Mr. Ouderkirk] is a responsible representative for his."
The $18 offer was $6.41 over book value, and a stock swap would have been a $22 value. Mr. Ouderkirk would not specify the size of an offer in which he, and the directors, would be interested. West Coast shares are currently trading over the counter at $14 bid, $18 ask.
The bid was made April 8, and rejected by Newport's board on April 26. On June 16, a group of shareholders representing 19.3% of outstanding West Coast Bancorp shares said they had signed an "irrevocable agreement" that bars them from selling their own shares to Western.
But that group represents far less equity than the shareholders who want the deal to be negotiated, says Mr. St. Laurent, who wants Western to be a statewide bank -- but a community bank as well.
"I'm out every day to call on customers, and I fly a helicopter to reach them, if I have to. Western is just as much a community bank as the Bank of Newport."