Mark Freerks
- Nina Lincoff
- Reporter-South Florida Business Journal
- Email | Twitter
Doral-based U.S. Century Bank said regulators approved its $65 million capital raise plan on Friday and also revealed its two largest investors.
The bank will hold a shareholder meeting on March 9 at the InterContinental Hotel in Miami.
"We hope that the shareholders attend, approve, and that they invest," said Alex Acosta, chairman of the bank's board of directors. The bank's state and federal regulatory partners gave a non-objection to the plan earlier in the week, he said.
The $65 million capital raise is composed of two parts. It would raise $41 million from two lead investors – Philadelphia-based Patriot Financial Partners, a private equity group that specializes in investing in community banks, and New York-based Priam Capital, a private investment partnership. They would each own 9.99 percent of the voting stock, but they would receive the bulk of the proceeds should the bank be sold because of their preferred stock ownership.
Investors can provide up to $1.2 million, or 5 percent, of the remaining $24 million.
According to a U.S. Century Bank proxy statement obtained by the Business Journal, the net proceeds U.S. Century Bank expects to receive from the offering would be $47.2 million.
U.S. Century Bank took a $50.2 million investment from the Trouble Asset Relief Program (TARP) in 2009, which was the largest taxpayer bailout for a Florida bank. Of the $65 million offering proceeds, $12.33 million will be used to buyout the TARP securities, according to the proxy statement sent out to investors. That's a 24.5 percent recovery of principal for taxpayers, although the government wouldn't receive any of the $14.2 million in dividend payments the bank missed. The investors will receive substitute preferred TARP shares in return for partially repaying TARP.
The net cash proceeds from the large investor transactions and the offering will be used by U.S. Century Bank for general purposes including funding organic growth and working on capital needs, according to the proxy statement sent to investors.
This is the third recapitalization plan from U.S. Century Bank. It follows the previously failed Tate Rok deal to inject $50 million into the undercapitalized bank led by real estate developers Jimmy Tate and Sergio Rok.
If approved by shareholders, this plan would give legacy shareholders just over 50 percent of voting control and allow them to retain approximately 38 percent of the economic value of the bank. That's an improvement over the 25 percent voting control and 25 percent economic value proposed in the Tate Rok deal, Acosta said.
If the bank is sold under the new deal, the first $112.8 million of the proceeds goes to Patriot, Priam, and whoever invests in the offering, after which the rest is portioned out to holders of common stock. The legacy shareholders would get a portion of the remaining proceeds over that amount.
In the Tate Rok deal, if the bank had been sold in the first 18 months for more than $70 million, the legacy shareholders would have received at least $9 million.
"In Tate Rok, our shareholders did not have access to the TARP," Acosta said. "In this transaction, we negotiated that all the shareholders will have the ability to invest on the same economic terms as the lead shareholders. They'll be able to invest on the equity and in TARP," he said.
Both new investors and legacy shareholders can purchase "units" of U.S. Century Bank for $1,233.48 each. Each unit will be a combination of common stock, preferred stock and TARP substitute preferred stock. The two categories of preferred stock would receive the bulk of any sale of the bank. The minimum individual investment is $61,674.
The offering deadline to close is April 30. However, the deal with Patriot and Priam requires that the shareholder litigation against U.S. Century Bank and its former directors be resolved before the closing. The settlement in that case is on appeal.
If the capital raise succeeds, U.S. Century Bank will raise its total capital to more than $90 million. The bank's Tier 1 leverage ratio is currently 4.94 percent and following a successful capital raise it is expected to rise to 10.35 percent, Acosta said.
"Given the good economic environment in Miami, we've put the bank in position now to really be the leading locally owned community bank in South Florida," said Carlos Davila, president and CEO of the bank.
According to the proxy statement, Acosta, Davila and Aida Levitan would remain on the bank's board. Patriot and Priam would appoint W. Kirk Wycoff and Howard Feinglass, respectively, to its board.
U.S. Century Bank had $839.02 million in assets as of Dec. 31.
No comments:
Post a Comment