Premier Holding Co.'s chapter 11 filing is the latest example of an unusual strategy, as most bank owners turn to bankruptcy only after their bank is in such poor financial shape that federal regulators take over their subsidiary bank's operations, the Wall Street Journal reported today. The approach is risky because the holding-company's bank could still be taken over by regulators at any time. Premier Bank Holding Co. filed for bankruptcy protection earlier this week after losses piled up for four years as recession-stung customers struggled to repay their loans. The chapter 11-facilitated sale of its only asset—its seven-branch Premier Bank unit—could bring in money for the bank holding company's estate that would otherwise be lost of the Federal Deposit Insurance Corp. took over the bank and sold it itself. Home BancShares Inc. of Arkansas, which operates the 28-location Centennial Bank, has agreed to buy Premier in a deal that will cost between $16.4 million and $21.4 million. The Premier move comes just one week after Capitol Bancorp Ltd. filed for bankruptcy protection with a similar strategy for its string of community banks that it said were "dangerously close" to failing, according to court papers.
