A proposed merger between Coastal Community Bank in Everett and Prime Pacific Bank in Lynnwood failed on Wednesday night when Prime Pacific’s shareholders voted it down.
Coastal is the largest bank headquartered in Snohomish County and wanted to expand to south Snohomish County by merging with Prime Pacific.
“We knew it was going to be a close vote, but we were surprised and disappointed it didn’t go in our favor,” said Eric Sprink, Coastal’s president and CEO.
Prime Pacific can’t yet disclose the vote tally as part of the merger agreement, said Glenn Deutsch, Prime Pacific’s president and CEO.
Deutsch said he was surprised to some extent with the vote, adding that “you never know how shareholders will ultimately vote.”
Under the merger agreement, Prime Pacific shareholders would have received 0.8047 shares of Coastal Community Bank’s stock for each of theirs.
The merged bank would have been retained the Coastal Community brand.
The two banks held initial talks about merging in 2009 but opted not to. Last year, Deutsch and Sprink resumed the discussion and announced the intent for the merger in April.
Shortly after the public announcement, Prime Pacific was approached by another bank, which submitted an unsolicited proposal to merge, according to a filing with the Securities and Exchange Commission.
Prime Pacific’s board of directors determined that the new offer was a “superior proposal,” and started to negotiate with the third bank, which wasn’t named in the filing.
Before the final deal was reached, the other company withdrew its proposal “based on considerations unrelated to Prime Pacific,” according to the filing.
Coastal has 11 branches with about 140 employees, mainly in central and northern Snohomish County. Prime Pacific has about 30 employees with three branches, two in south Snohomish County and one in Kenmore in King County.
When the merger was announced, Prime Pacific was operating under a consent order from the Office of the Comptroller of the Currency, the result of what the government called unsafe and unsound banking during the recent recession. In June, the business was released from that order.
Prime Pacific Financial Services, the holding company for Prime Pacific Bank, is on track to have three consecutive profitable years. The company booked $783,000 in profit through three quarters this year.
“We put out our financial statements every quarter,” Deutsch said. “Certainly the bank has gotten stronger and stronger as time passes. With the consent order going away, our expenses have gone down.”
Prime Pacific will continue to conduct business and aim to enhance shareholder value, Deutsch said.
“Coastal is a good bank,” Deutsch said. “They’re a good team. We respect them. They’re the biggest community bank in our market.”
Sprink also praised Prime Pacific, which opened in 1995 and is the oldest community bank in Snohomish County.
“Prime’s a great bank with great leadership and we’re excited about them,” Sprink said.
Coastal is performing well. The bank surpassed $600 million in assets this year, an increase of 25 percent over last year, Sprink said.
He said the bank’s board will meet for a strategy session soon.
“Customers are still choosing Coastal and we’re excited about that,” Sprink said. “We’ll keep all of our options open and take the next steps as they present themselves.”
If the banks ever talked again about a merger, both would need to start from ground zero, Sprink said.
“This doesn’t foretell anything for either bank,” Sprink said. “It just means at this point in time their shareholders feel they should be an independent bank.”
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