IMCB inks $47.3M capital agreement
SANDPOINT — Panhandle State Bank is back on track to raise capital for the community after renegotiating the terms of a failed April deal.
According to CEO Curt Hecker, parent company Intermountain Community Bancorp officials brokered an agreement that will raise $47.3 million in capital for the bank. With all details finalized, Panhandle State Bank officials announced the deal on Sunday and closed it Monday.
The money will be used to provide the foundation for the bank’s future business dealings as well as increase the number of loans available for local residents and businesses.
“I think that primarily this will help us create a super-capitalized bank, which tend to be very strong and very safe,” Hecker said.
The business arrangement with investors Castle Creek Capital Partners and Stadium Capital Management is based on common stock at $1 per share and a newly-created convertible series of preferred stock. This new series will automatically convert into shares of non-voting common stock at a conversion price of $1 upon shareholder approval. The investors have also received warrants to purchase 850,000 shares of non-voting common stock at $1 per share.
Altogether, the investors have purchased 5.1 million shares of common stock and 617,000 shares of preferred stock, convertible into around 30.9 million shares of non-voting common stock. Given the enormity of the purchase, bank representatives expect Castle Creek will hold 9.9 percent of the voting equity, while Stadium will wield 14.9 percent.
In addition, each will hold up to 33.3 percent of the company’s total equity. Castle Creek and Stadium, along with another unnamed investor, will also have the right to select a member of both the bank and company’s boards, joining 10 current members on each body.
Armed with more financial flexibility, Hecker said he hopes the deal will not only benefit shareholders but also the surrounding community. With Bonner County slowly churning back into economic growth, the capital infusion will provide increased opportunity for loans and investments.
“We’re a community bank, and we’ve always been a community bank,” Hecker said. “It’s been a tough time for people here just like everywhere else, and we want to see this community prosper.”
Additionally, bank officials plan to conduct a $5 to $8 million rights offering, allowing existing shareholders to purchase shares at the same price as new investors.
The current deal is the child of previous $70 million capital proposal that fell through in September when the investors backed out of the financial agreement.
According to Hecker, the bank wasn’t able to receive regulatory approvals before the deal’s expiration date, prompting investors to back out. Upon renegotiation, bank officials lowered the total amount of capital to $47.3 million based on measures taken in the meantime.
“Between April and now, the bank has undergone a lot of stabilization,” Hecker said.