U.S. Century Bank’s recapitalization deal, nearly a year in the works, is now off — leaving the troubled bank to continue its search for fresh funds.
Jimmy Tate, Sergio Rok and Jorge Perez, all local real estate developers who had put together a group of deep-pocketed local investors to revitalize the bank, have pulled the plug on the agreement, U.S, Century Bank’s Chairman R. Alexander Acosta said Tuesday. The deal was still pending approval from the Federal Deposit Insurance Corp., as well as a settlement on pending litigation alleging wrongdoing by certain current and former directors and managers.
“A definitive time to resolve this remained elusive, and as a result, the uncertainty arising from the situation caused the Tate-Rok Group to instead decide to terminate,” said Acosta, who joined the bank’s board late last year. “We had proposed an additional extension through Jan. 31, and rather than take on another extension, they just determined to terminate.”
It’s the second deal to revive ailing U.S Century that has been called off since the end of 2012, when C1 Bank of St. Petersburg pulled out of its agreement to purchase the bank.
The latest group of investors had offered to inject $50 million into the 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 had also reached an agreement with the U.S. Treasury Department to pay an undisclosed, negotiated amount that “significantly” exceeded $6.3 million, to repay $50.2 million in TARP funds that the bank owes.
“We all worked very hard on this proposed transaction, and for reasons beyond both parties’ control, the agreement was not closed by Dec. 31, 2013, and therefore the agreement was terminated,” Tate said Tuesday. “Sergio [Rok] and I wish only the best for our friends at U.S. Century Bank, with whom we have worked so closely over the past year.”
Tate, president and chief executive of Tate Capital; Rok, president of Rok Enterprises and Perez, chairman and CEO of the Related Group, had assembled a group of high profile local investors, all friends and family, for the U.S. Century recapitalization.
Among them: Tate’s brother Kenny, co-owner of Tate Capital; Wayne Chaplin, president of Southern Wine & Spirits; real estate developer Scott Robins and his father Gerald; Perry Ellis International Chairman and Chief Executive George Feldenkreis and his son Oscar, president of Perry Ellis International; Alan Potamkin, cochairman of the Potamkin Companies; Philip Levine, founder of Royal Media Partners and mayor of Miami Beach; Paul Feinsilver and business partner Jimmy Klotz, owners of FMS Bonds; Carlos Migoya, chief executive of Jackson Health System; brothers-in-law Louis Wolfson III and David Deutch, partners in Pinnacle Housing Group; Jose Mas, chief executive of MasTec, and his brothers, Jorge, chairman of MasTec and Juan Carlos, investors in a private equity vehicle, Mas Equity Partners; and brothers Gabriel and Marcel Navarro, whose family founded Navarro Discount Pharmacies, and their brother-in-law Martin Pico, who share a real estate investment firm, MMG Equity Partners.
The U.S. Century Bank recapitalization would have given the new investors 75 percent of the bank’s shares, with the bank's existing 441 shareholders retaining a 25 percent share. Those existing investors, who paid as much as $26 a share, would have seen their shares valued at $1 each.
Yet, the deal would also have allowed the bank, with $1 billion in assets and 24 branches, to remain independent. In the works for much of 2013, a definitive agreement was signed in April and approved by U.S. Century’s shareholders in October.
“We have spent full time on this for 10 months, and it has cost us, in opportunity lost, millions and millions of dollars,” Tate said.
Asked whether the group he assembled now has its eyes on other investments, said Tate: “Our eyes are always open and looking.”
Meanwhile, several of those investors are also owners in Apollo Bank and have said they will now increase their investment in Miami-based Apollo. It is raising capital to purchase Coral Gables-based First Bank of Miami, said Eddy Arriola, Apollo chairman. He declined to disclose those investors at this time.
The U.S. Century deal failure was “unfortunate,’’ said Arriola. “But quite frankly for us, it’s an opportunity.”
U.S. Century must now seek out new capital, which is a significant requirement of a consent order issued by regulators. The troubled bank is rated the lowest rank of zero stars by Coral Gables-based BauerFinancial, which ranks based zero to five stars based on capital ratios, profitability, delinquent loans, charge-offs and repossessed assets, among other factors.
Carlos J. Dávila, U.S. Century’s president and chief executive, called the bank “a more viable asset” and “a more valuable franchise” today than it was when the deal with Tate, Rok and Perez was first reached.
“We have made progress in critical areas,” Dávila said, citing loan quality, liquidity and deposits. “All those position us well in terms of finding another capital partner and continuing with the viability of our franchise as a community bank in Miami.”
Acosta said other investor groups had expressed interest in U.S. Century, and the bank has already begun to initiate discussions. It is also not discounting the possibility of existing shareholders injecting more capital, he said.
Miami independent bank consultant and economist Ken Thomas said U.S. Century’s branch network in Miami-Dade and Broward counties makes it a strong candidate for buyers. During the past year, other local banks have agreed to be purchased, such as City National Bank of Florida, which is under an agreement to be bought by Chile’s Banco de Crédito e Inversiones.
“Because [U.S. Century] is one of the most attractive franchises in South Florida — and South Florida is one of the five best banking markets, I expect to see considerable interest,” Thomas said, “not just from existing banks, but from banks outside this market and outside the country.”