Write-downs on mortgage-related assets aren't just for big banks, and apparently neither is taking private equity money. Regional thrift Freedom Bank announced a $5 million
conditional sale of 5 million shares of its common stock to Community Bank Investors of America LP, a private equity fund that specializes in community bank investments.
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Determined not to get caught out there alone, however, Community Bank
Investors conditioned the investment on Freedom Bank raising at least
$15 million more in new capital at an offering price of $1.00 a share.
The capital is needed to maintain the Bank's tier-one leverage capital ratio at a level acceptable to banking regulators, it said in a
statement. The Florida bank may have a tough time making it over that
$1.00 hurdle (the price that Community Bank paid per share as well) as
its OTC-traded shares closed at 90 cents on Wednesday and have seen a
52-week high of 70 cents. However there is the notion that the move
into smaller banks by a private equity firm that specializes in the
sector could
kick-start more dealmaking and spur the entry of other buyout firms into community banks.
- George White
See press release
See story in the Sarasota Herald-Tribune
