by Brian Bandell (Senior Reporter, South Florida Business Journal)
Apr 30, 2013, 11:56am EDT
U.S. Century Bank has signed a formal agreement to become recapitalized with a group led by real estate investors Jimmy Tate and Sergio Rok.
The group signed a letter of intent with the Doral-based bank in February. They now have a formal agreement, according to sources familiar with the situation. The details of the agreement weren’t immediately available, but they were said to be similar to the original terms: $50 million in capital from new shareholders and $90 million to buy all of the bank’s problem loans and move them to another entity.
“This group of successful business leaders has a proven track record of dedication to our community,” U.S. Century Bank President and CEO Carlos J. Dávila stated in a news release. “They want to invest in U.S. Century Bank so that it can continue to operate and expand as a first class community-based bank, and they are eager to build upon its family-oriented, service-first environment."
The deal would still require the approval of U.S. Century Bank shareholders and regulators, including officials at the U.S. Department of the Treasury. The bank accepted $50.2 million in taxpayer funds from the Troubled Asset Relief Program and as of March 31 it missed 13 consecutive dividend payments for a combined $8.9 million.
Without TARP, U.S. Century Bank likely would have failed.
Repaying part of TARP is likely in the investors' plans, but the exact amount, including whether the missed dividends must be repaid, is subject to negotiations with the Treasury. The investors hope to close the deal in the fourth quarter.
U.S. Century Bank was “undercapitalized” on Dec. 31 after years of losses related mostly to construction loans made during the real estate boom. However, the $1.01 billion-asset bank with 24 branches is seen by Tate, Rok and their fellow investors as an attractive platform for a community bank with local owners.
Condo developer Jorge Pérez, Miami Dolphins owner Stephen Ross, auto dealership owner Alan Potamkin, Southern Wine & Spirits President Wayne Chaplin, Perry Ellis top executives George Feldenkreis and Oscar Feldenkreis, real estate developers Scott Robins and Gerald Robins, Philip Levine, of Royal Media Partners, FMS Bonds owners Paul Feinsilver and Jimmy Klotz, and Jackson Health System CEO Carlos Migoya are among the investors in the Tate/Rok group.
Tate, Rok and Migoya would join the bank's board of directors.
The existing shareholders of U.S. Century Bank would maintain a minority interest. It has yet to be disclosed how much.
Some minority shareholders of the bank have several pending lawsuits against the bank’s current and former officers and directors over allegations of mismanaging the bank and profiting off of an excessive number of insider transactions.
Another issue for the investor group is the pending fine that regulators are preparing against U.S. Century Bank over violations of the Bank Secrecy Act, as disclosed in the bank’s shareholder communications.
In a joint statement, Tate and Rok said, “We recognize that U.S. Century Bank has a prominent presence in South Florida and an important reputation for being a good corporate citizen.All of the business leaders involved in this transaction are passionate about turning around this community bank and we are ultimately investing in the future of our community, our businesses and our families."
This is the third serious offer to acquire control of U.S. Century Bank in the last two years. Former Terremark Worldwide CEO Manuel D. Medina had a letter of intent to invest $200 million in the bank in late 2011 and St. Petersburg-based C1 Bank had an agreement to acquire it and recapitalized it with $100 million in 2012 but both deals fell through.
Treasury was ready to allow C1 Bank to pay off only $6.27 million of U.S. Century Bank’s $50.2 million in TARP, but that deal was a whole bank acquisition, where a TARP repayment is required. TARP doesn't have to be repaid when a bank raises capital. In the new deal, it’s not clear if the investors would see to repay TARP or have it converted to a different type of stock at a discount.
Officials with U.S. Century Bank couldn’t be reached for comment on the new deal.