Troubled U.S. Century Bank, whose sale was called off in December, has a new deal in the works that would bring in fresh capital, wipe out its bad loans and allow the bank to continue to operate independently.

A letter of intent is in final negotiations and is expected to be signed next week with a local investor group led by Jimmy Tate of Tate Capital and Sergio Rok of Rok Enterprises, U.S. Century President and Chief Executive Carlos J. Dávila said Thursday.

As part of the deal, the investor group would inject $50 million in capital into the Doral bank, becoming majority owners. In addition, the group would pay about $90 million to buy certain loans, including all $98 million of U.S. Century’s non-performing loans. The deal would also provide for a negotiated amount to be paid to the federal government for U.S. Century’s $50.2 million in TARP funds, Dávila said.

“We’re recapitalizing, with a new group taking majority ownership,” he said, “and reigniting the institution to start lending again and be profitable.”

Under the deal, U.S. Century’s 441 existing shareholders would remain as stockholders. It is too early to know the value of their shares if they choose to cash out, Dávila said.

“It’s a much better transaction for shareholders, and they will remain owners of the bank,” he said, comparing the terms to those of the failed deal with C1 Bank of St. Petersburg .

So far, the bank’s directors have given their approval, and a definitive agreement is expected by early March. Pending shareholder and regulatory approval, the deal could be completed by mid-year, Dávila said.

The bank has made significant financial strides by reducing its non-performing loans from $230 million at year-end 2011 to $98 million at the end of 2012, through loan work-outs and packaged sales to individuals and institutional buyers. As a result, the bank increased its capital ratio from about 4 percent at year-end 2011 to 4.6 percent at the end of 2012.

U.S. Century, a Hispanic-oriented community bank, has been operating under a regulatory enforcement action since June 2011 that required it to boost capital, among other issues.

After hiring investment bankers and searching for new capital, U.S. Century agreed Aug. 31 to be sold to C1 Bank. The deal would have infused $100 million into the bank but would have given U.S. Century’s shareholders just $2.5 million, or 1.7 cents on the dollar for their $150.1 million investment.

C1 called off the deal in December, paving the way for the investor group led by Tate and Rok.

“Things happen for a reason,” said Dávila, who joined the bank in late August.

The Tate-led investor group had made an unsolicited offer while the C1 deal was still underway, but did not want to get involved in litigation, and decided to take a wait-and-see approach, Dávila said.

“Once it [the C1 deal] fell through, they decided to move forward,” he said.

Shareholders had buzzed about a better offer from Tate during a meeting in November to approve the C1 deal.

“For the right transaction, for the shareholders and us, if it makes sense, we would be interested in talking,” Tate had said in December. He did not return recent calls seeking comment.

If the recapitalization is completed, it would put U.S. Century “close” to regulators’ requirement of an 8 percent capital ratio, with zero non-performing loans, Dávila said.