By GINA KINSLOW
A Louisville-based bank holding company, Porter Bancorps Inc., has been rejected by the board members of Citizens First Corporation in an attempt to purchase a controlling interest of the company.
Porter Bancorps Inc. officials said they made the offer to purchase Citizens First’s common stock because as a large shareholder of Citizens First they are unhappy with the management of the bank and the fact that the bank has had losses for the past two years.
“We would like to see our investment be worth more than it is presently with an experienced proven (proprietor) like Porter Bancorps,” said Maria L. Bouvette, President and CEO of Porter Bancorps Inc. . “We love the market that Citizens operates in. We believer there is a lot of opportunity to increase the value of the shares for the shareholders by acquiring the bank.”
Porter Bancorps Inc. made the announcement in mid-October that it was interested in purchasing the common stock at $9 per share raising its ownership to 19.7 percent of the outstanding Citizens First common stock.
On Nov. 6, Citizens First Corporation announced in a press release the board of directors decision to unanimously recommend that holders of the company’s common stock reject PBI’s unsolicited tender offer to acquire all outstanding shares of the company’s common stock.
In the letter, Citizens First officials called Porter Bancorps' offer to be “financially inadequate” and said it “does not properly reflect Citizens First’s business, financial condition, current business strategy and future prospects.”
They also said the board of directors has concerns about the value of PBI common stock and pointed out that the offer is taxable, regardless of whether it elects to receive the shares in stock or cash.
Citizens First officials also called the offer opportunistic, disruptive to Citizens First’s business and that the terms and conditions were coercive and “create unacceptable risks for our stockholders who do not tender their shares.”
They further advised shareholders to withdraw any shares they may have tendered.
The attempted purchase was acknowledged in October with a Oct. 23 press release in which Bouvette stated the move made “compelling business sense” and it would be “financially and strategically beneficial” for the bank holding company.
She was also quoted as saying the price of $9 per share is “significantly greater than the recent trading price of their shares. Citizens First has not traded at the $9 level in over a year and was trading less than that amount prior to Porter Bancorps' announcement.”
When Citizens First officials were questioned by the Glasgow Daily Times about the announcement, Jim Lee, community president, referenced press releases issued by the company.
“Outside of that we have no further comment,” he said.
Citizens First officials said they were surprised by PBI announcement to purchase 15.8 percent of Citizens First Corporation’s common shares, according to the Oct. 16 press release.
“Citizens First wants to assure shareholders that it was not involved in this action and first learned of it in Porter Bancorps' press release,” the press release stated.
Jack Sheidler, chairman of Citizens First, referred to the announcement as “hostile action.”
Bouvette said Citizens First officials refer to the officer as “hostile,” because they have been approached five times by Porter Bancorps Inc. to discuss ways we can increase the values of shares ... and they have refused to meet with us, have a cup of coffee or talk to us,” she said, adding the only option Porter Bancorps Inc. had was to take the offer directly to shareholders. “We had to use whatever methods were available to us.”
Todd Kanipe, president and CEO of Citizens First, said in a press release that over the last 60 days management has undertaken a complete re-evaluation of bank operations and the board of directors has approved a series of steps designed to improve future performance and enhance shareholder value. In another press release dated Oct. 23, Citizens First Corporation recommended its stockholders take no action in response to Porter Bancorps Inc.’s announcement.
“Citizens First board will review and consider the offer, and within 10 business days, will advise Citizens First’s stockholders of the board’s position regarding the offer as well as its reasons for that position,” the press release read.
Despite Citizens First’s officials recommendation that shareholders reject the offer, Bouvette said shareholders have contacted Porter Bancorps about selling their shares.
“Hundreds of shareholders have called me asking me how soon I can tender my shares,” she said. “Share-holders are very disappointed and upset with the management.”
Bouvette added it was the shareholders who approached her asking her to make an offer.
“We have had an overwhelming response from shareholders,” she said. “I’m getting calls every day, basically, saying ‘how to do I get my money.’”
The offer is set to expire at the end of December.
“It’s pending bank regulatory approval and all of the filings have been made and regulatory agencies have accepted the applications and are working through the process and that should take place in December,” she said, adding that a press release will be issued the first week of December announcing the results. “A lot of people are trying to decide if they want cash or Porter Bancorps stock.”
PBI Bank has 19 banking offices in 12 counties in Kentucky, including Barren.
Citizens First Corporation, a bank holding company headquartered in Bowling Green, has branch offices in Barren, Hart, Simpson and Warren counties.
