Home News Local News Pioneer sells to Idaho bank
Pioneer sells to Idaho bank
By MIKE FERGUSON
Of the Baker City Herald
An Idaho bank will purchase Baker City-based Pioneer Bank and its parent company, Oregon Trail Financial Corp.
Based in Lewiston, Idaho, FirstBank Northwest has eight branches and three loan centers in Eastern Washington and Northern Idaho. The acquisition will more than double FirstBank's size: using Dec. 31, 2002 data, FirstBank will have $687 million in total assets and $461 million in total deposits after the merger is accomplished.
Pending approval by federal regulators and each company's shareholders, the merger is expected to be completed by the fourth quarter of 2003.
Under the terms of the agreement, OTFC shareholders will be entitled to $22 cash for each share of OTFC stock they own or approximately 1.028 shares of FirstBank common stock at the time the merger is accomplished.
Both stocks were surging this morning on the news. OTFC stock was trading at $22.07 on the NASDAQ exchange, up $1.51 per share on volume of 153,000 shares, while FirstBank Northwest (symbol FBNW) was at $22.60, up $0.15 on volume of 12,088 shares.
The volume and price were at least three-month highs for OTFC stock.
OTFC President and Chief Executive Officer Berniel Maughan said Tuesday that he has known FirstBank Northwest President and Chief Executive Officer Clyde Conklin for years.
Conklin has known Pioneer Bank and its predecessor, Pioneer Federal Savings and Loan, for years, too.
Conklin is a 1969 Baker High School graduate and the first cousin of Darrell Conklin, who works for the Baker County Road Department. The two Conklins grew up on the same block outside town, Clyde Conklin said this morning.
"As a boy, I used to save my pennies at Pioneer Bank," he said. "I'd say this has really come full circle."
Another connection between the banks is that Don Durgan, the son of former Pioneer Bank President Al Durgan, is a senior vice president with FirstBank Northwest.
The two companies are similar in style and culture, Maughan said. Both banks went public in 1997. He believes the merger will combine the success that Pioneer has exhibited in garnering depositors with the growth the FirstBank Northwest is enjoying in some of its larger markets, including Spokane and Boise.
Maughan said the OTFC board came to the conclusion that in order to grow, the bank would either have to expand which can be costly and time-consuming or find another institution with which it could partner.
"You arrive at the point where you need to continue to grow, but still maintain the high degree of quality on your loan portfolio," he said.
Maughan expects the transition to be seamless for Pioneer Bank customers. Except for the senior management team, no jobs are expected to be lost, he said.
Conklin said there are no plans at present to reduce Pioneer Bank's workforce after the merger.
OTFC Chairman of the Board Stephen R. Whittemore said that "as we discussed it, the branch manager and employees will stay. Obviously, there will be some changes at the senior management level."
"After the transition, we will part company," Maughan said of the senior management team at OTFC. "We have to remember that we work for shareholders. It's our job to evaluate opportunities like this one. If it's good for shareholders, we have the responsibility to make it work."
The companies employed an investment banker to evaluate the value and fairness of the proposed deal, Maughan said.
Pioneer Bank's corporate headquarters on First Street in Baker City will "remain intact," Maughan said, and will probably be used after the merger to help FirstBank Northwest administer the region.
"Time will tell," he said of the Idaho bank's plans. "Whether they want to occupy the building remains to be seen. They've got an awful lot of other things to be concerned about right now."
Conklin said it was "way too soon" in the process to decide how or if the building will be used.
Maughan said Pioneer employees took the news well Monday afternoon, in part because they perceive the merger could enhance their career development.
"I know FirstBank Northwest will recognize their talents and abilities," he said.
The merger agreement includes a standstill agreement with activist shareholder Joseph Stilwell, a New York fund manager. Stilwell, who sued OTFC in 2001 and won a seat on its board for his designated choice, Kevin Padrick, still owns 9.2 percent of OTFC's stock.
Under the agreement, Stilwell must divest himself of FirstBank-converted stock within six months of the merger and must not solicit proxies in opposition to the bank's management.
Stilwell could not be reached for comment in time for this story.
Maughan said there was some sadness in selling a bank that will celebrate its 102nd birthday this month.
"It started out as a small investment. Over the years it became a mutual savings bank, and six years ago we went public," he said. "Anytime you go to a stock-traded company, you have shareholders who expect results and returns. We won't put our shareholders and customers at any risk, and we've been a well-capitalized, safe and sound institution.
"When the opportunity comes up, you have to seriously consider it."
FirstBank Northwest has branches in these Idaho communities: Lewiston, Lewiston Orchards, Moscow, Grangeville, Coeur d'Alene, and Post Falls. It also has retail offices in Clarkston and Liberty Lake, Wash., and residential and commercial loan centers in Lewiston, Moscow, Coeur d'Alene and Boise.
The company recently received its second consecutive "outstanding" Community Reinvestment Act rating for meeting the credit needs of the communities it serves.
It is northern Idaho's largest and oldest locally based financial institution, independently owned and locally managed.