Northrim and PBCO shareholders approve Oregon bank merger, which still needs regulators' OK

Shareholders of Northrim BanCorp and PBCO Financial Corporation approved the Anchorage bank's purchase of the Medford, Oregon, lender at separate special meetings Oct. 20. Four banking regulators still must approve the deal, which would give Northrim its first branches outside Alaska. Customary closing conditions must also be met or waived.

The companies applied Sept. 3 to the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Alaska Division of Banking and Securities and the Oregon Division of Financial Regulation. The records do not show whether any of those approvals has arrived. The companies expect to close on or about Jan. 1, 2027.

Northrim shareholders voted 15,748,028 shares in favor of issuing the stock that pays for the deal, with 213,530 against and 42,746 abstaining, according to a report Northrim filed Thursday with the Securities and Exchange Commission. About 72% of the 22,244,766 outstanding shares were present. The proposal needed a majority of all outstanding shares, and yes votes came to about 71%. PBCO shareholders approved the merger agreement at their own meeting the same day. PBCO is not an SEC filer and released no vote count.

The vote came five days after Northrim recorded an $8.8 million impairment on a single specialty finance customer with a $20 million balance, as Alaska News reported Oct. 16. Northrim said the charge is expected to cut third-quarter after-tax earnings by about $6.7 million, or $0.29 per diluted share, according to a company filing.

Northrim Bank has 21 branches in Alaska. The companies signed the deal in July, joining it with People's Bank of Commerce, which would bring 11 new branches.

PBCO shareholders will get 1.160 Northrim shares for each PBCO share. Northrim expects to issue about 5,955,402 common shares to PBCO shareholders, according to the joint proxy statement. That exchange was worth about $167.3 million at signing and about $153.3 million at Northrim's Sept. 16 price. Former PBCO shareholders would own about 21% of Northrim, and one PBCO director would join Northrim's board.

The ratio can be cut if PBCO's adjusted tangible common equity falls below about $102.5 million at closing. That measure of capital leaves out intangible assets, up to $7.5 million of merger costs and accumulated other comprehensive loss or gain. PBCO estimated it at about $103.7 million as of June 30.

The merger agreement can be terminated if the deal has not closed by April 30, 2027, a date that can be extended to June 30, 2027, in some circumstances.