U.S. Century Bank has reached an agreement that will bring $65 million in fresh capital to the ailing institution and leave legacy shareholders with voting control, according to bank chairman Alex Acosta and president Carlos J. Davila.
State and federal banking regulators already have approved the deal, Acosta said. The institution’s 441 investors will vote on it early next month.
Bank management hopes that the new agreement is a case of third time’s the charm. Two previous recapitalization efforts failed.
“The capital allows us to continue operating as an independent community bank, one of the few remaining in South Florida,” Acosta said.
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Leading the investment are two private equity firms, Philadelphia-based Patriot Financial Partners and New York-based Priam Capital, with a number of smaller investors contributing less than 5 percent, Acosta said. Unlike a previous proposal, existing investors will be able to participate in the investment with the same economic terms as the lead investors, including access to common and preferred shares. Each will have the opportunity to invest at the $60,000 level, unless the board grants an exemption.
In total, legacy investors will retain 38 percent of the economic interest in U.S. Century.
“This is superior for our shareholders,” Acosta said.
If the deal is approved, the bank is expected to have $90.5 million in capital, with a 10.35 percent Tier 1 ratio, said Acosta.
Currently the bank has $725 million in loans across the commercial, industrial, real estate and residential mortgage sectors. In the past three years, the bank has reduced its portfolio of declassified assets — or bad loans — from $355 million to $77 million, said Acosta. He credited Davila with the progress.
The capital infusion is required by a 2011 consent order issued by federal banking regulators.
The latest offer of a capital infusion comes a year after a local group of wealthy investors pulled the plug on their deal to recapitalize U.S. Century.
Jimmy Tate, Sergio Rok and Jorge Perez, all local real estate developers, had put together a group of deep-pocketed local investors. The deal was awaiting 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, when it expired at the end of 2013. The investors had already reached an agreement with the U.S. Treasury Department to pay about $9 million of a $50.2 million TARP loan owed by the bank.
The failed deal would have injected $50 million into the bank and given the new investors 75 percent of the bank’s shares, with U.S. Century’s existing 441 shareholders retaining a 25 percent share.
A previous purchase deal with C1 Bank of St. Petersburg was terminated by C1 in late 2012.
U.S. Century Bank, established in 2002, has 22 branches — 21 in Miami-Dade and one in Broward. The troubled bank is rated the lowest rank of zero stars by Coral Gables-based BauerFinancial, which ranks banks from zero to five stars based on capital ratios, profitability, delinquent loans, charge-offs, repossessed assetsand other factors.
This report was supplemented by previous reporting published in The Miami Herald.
This report was edited to correct the name of the lead investors.