U.S. Century Bank is one step closer to its recapitalization, after shareholders overwhelmingly approved a proposed capital injection by a group of local investors Thursday evening during a meeting at Florida International University.
The recapitalization won approval from 91.3 percent of the shares represented at the meeting. Those shares, which included those conferred by proxy, represented more than 63 percent of the bank’s total shares. The deal required a majority approval from holders of shares represented at the meeting. Fewer than 30 shareholders attended the meeting.
“Our objective with this transaction was for the vast majority of the shareholders to embrace the deal, and that was proven today,” said an animated Carlos J. Dávila, U.S. Century’s president and chief executive, just after the meeting.
The new investors have offered to pour $50 million into the troubled Doral bank and bring in a third party to buy certain loans, including all $95 million of U.S. Century’s non-performing loans. The investors have also reached an agreement with the U.S. Treasury Department to pay an as yet undisclosed, negotiated amount that “significantly” exceeds $6.3 million, to repay $50.2 million in TARP funds that the bank owes, said Jimmy Tate, president and chief executive of Tate Capital, who is leading the investment group along with Sergio Rok, president of Rok Enterprises.
The deal must still be approved by regulators.
And another significant hurdle remains: a resolution to pending shareholder litigation — a class action lawsuit and a derivative lawsuit — related to alleged wrongdoings of the bank’s current and past directors and management.
“Now that we won support from the legacy shareholders to proceed to close, we are hopeful that the plaintiffs and defendant can find a mutually acceptable resolution to their differences,” Tate said via email after the meeting.
If the recapitalization is completed, the new investors will own 75 percent of U.S. Century’s shares, and the 10-year-old bank’s existing 441 shareholders will have a 25 percent share.
Existing investors, who paid as much as $26 a share, will now have their shares worth $1 each.
Yet, Dávila said the goal is for the shares to regain value over the next five years.
U.S. Century, which has $1 billion in assets and 24 branches, said the recapitalization could be completed by year-end.