The last time Pat Frawley ran a Georgia bank, his role was would-be savior of Integrity Bank, a deeply troubled lender that ultimately failed in the summer of 2008.
Now Frawley is back on the scene, leading a group that picked up the remnants of the latest failed Georgia bank, First National Bank of Carrollton, which was shut down by regulators Friday.
The new bank’s plan, filed with state and federal regulators, includes about $200 million in new capital, much of it raised from private equity investors. The bank reopened last weekend under its new name, Community & Southern Bank.
Bank industry watchers hailed the transaction – and the flow of private equity to the deal – as a strong show of faith in Georgia’s banking industry, which has been badly battered over the past two years amid a collapsed real estate market and deep recession.
Frawley’s deal comes six months after a similar deal in which an investment team led by longtime Georgia banker Joe Evans raised $300 million to acquire failed Security Bank of Macon.
“Smart money is out there, and it wants to get in there and take advantage of the troubled situation,” said Lee Bradley, an Atlanta financial consultant who often works with banks. “It’s finding its way into the battlefield.”
The troubles offer plenty of opportunities, Bradley said, particularly for groups like Frawley’s that are able to acquire the loans and other assets of failed banks at deep discounts, with protection to boot on any potential losses from the Federal Deposit Insurance Corp.
Community & Southern, unlike many competitors, is flush with cash and will have a much greater ability to make loans and even buy additional failed banks.
Frawley, who couldn’t be reached for comment, is a veteran banker with experience in both large and small institutions. He once worked as a banking regulator.
In recent years, he gained a reputation as a bank turnaround artist for helping save a severely distressed, small Alabama bank. In 2007, he was brought in to try and rescue Integrity Bank, a suburban Atlanta lender drowning in bad real estate loans.
The bank failed in August 2008, the first of 32 Georgia banks to be shut down amid the financial crisis. Though Frawley was unable to save the bank, experts said it wasn’t his fault: the bank was simply too wounded to survive.
Frawley was able to draw interest in his new banking venture from several deep-pocketed investors, according to documents filed with federal and state regulators.
Lightyear Capital, a private equity investment company based in New York, put up $52.2 million. Westport Capital, a Connecticut investment management company specializing in distressed real estate, added $20.8 million.
In launching Community & Southern, Frawley has brought over executives he’s worked with before, including his stint at Integrity. The list includes Stacey Mann, who will be chief operating officer, and David Edwards, executive vice president and chief credit officer.
Support real journalism. Support local journalism. Subscribe to The Atlanta Journal-Constitution today. See offers.
Your subscription to the Atlanta Journal-Constitution funds in-depth reporting and investigations that keep you informed. Thank you for supporting real journalism.