Lawrenceville-based Brand Bank said Monday it has landed up to $200 million from a coalition of investors, money that will bolster the 105-year-old bank's finances, and eventually help clear the way to buy other banks.
The infusion arms the Gwinnett County bank with cash to repair its balance sheet and to make it a player in the further consolidation of Georgia’s banking industry.
Brand is expected to close on the deal early next year, pending regulatory approval.
Bank leaders say they will focus mainly on gaining market share through increased lending to small to midsize businesses. Brand also plans to grow its current footprint of six retail branches.
“This [investment] solidifies our position in the Northern Arc as a community bank that will be here for the future,” Brand CEO Bartow Morgan Jr. told The Atlanta Journal-Constitution.
The first phase of the Brand deal includes a $125 million investment by affiliates of Washington, D.C.-based the Carlyle Group and the Stephens Group of Little Rock, as well as real estate titan Tom Cousins’ Nonami LLC and other individual metro Atlanta investors.
An additional $75 million could be called upon for potential bank acquisitions or for other corporate purposes, Morgan said.
Monday’s announcement is the first significant cash injection into a metro Atlanta community bank. Brand has $1.2 billion in assets, and it is the 11th largest bank in the metro area.
Morgan, the great-great-grandson of bank founder E.M. Brand, said he and his family will continue to be significant shareholders in the bank. Given the volume of investment, their ownership will be greatly diluted.
John E. McKinley III, the former principal operating officer of BankSouth, a turnaround expert, joins Brand as executive chairman. Patrick Flinn, former CEO of BankSouth, joins Brand’s board as an independent director.
McKinley and Flinn helped revive BankSouth, which was stunned during the recession and real estate crisis of the late 1980s and early 1990s. BankSouth was sold to Bank of America in 1996.
“There are going to be banks, not failing, but in a situation they won’t have the capital to grow,” McKinley said. “I think we’ll have the opportunity to buy some banks and add to them.”
Georgia banks that aren’t publicly traded, like Brand, have struggled to raise investor dollars during the banking crisis, which has claimed 46 banks in the state since 2008.
Private equity investors have first looked to support institutions aiming to buy dead banks through government-backed loss-share deals.
Brand reported a $35.6 million loss in the third quarter, according to SNL Financial, as it socked away reserves for loan losses. The bank -- which received regulatory scrutiny in August over its lending practices, budget and business plan -- made $6.4 million during the first half of the year.
Chris Marinac, bank analyst with FIG Partners, noted the quality of the investors involved.
“These are proven leaders with a lot to lose in their reputation if this is not a success,” Marinac said.
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