A small metro Atlanta bank has closed a private stock sale with New York investors and will use the cash to pay off government aid and buy up struggling institutions.
Hoschton-based Hamilton State Bank completed a stock offering late Monday for $231.6 million, with two investment firms providing most of the new cash.
It’s the fourth privately-owned bank in Georgia since 2009 to announce a cash raise of more than $200 million for the purpose of buying up failed or troubled rivals.
Hamilton State’ CEO Bob Oliver said executives will immediately begin scouring for Federal Deposit Insurance Corp.-assisted purchases of failed banks.
“We’re looking at all areas in Georgia and would consider looking beyond Georgia if we thought the opportunities were there,” said Oliver, a former chief executive of Atlanta-based Premier Bank, which merged into BB&T in 2000.
Georgia leads the nation in bank failures with 57 since mid-2008. Other Georgia private equity-backed institutions like State Bank & Trust and Community & Southern Bank have been active in the bidding wars for failed institutions.
Government-assisted deals, though complicated, are lucrative for buyers because of substantial government guarantees on loan losses.
New York investment firms Tailwind Capital and Angelo, Gordon & Co. each invested $60 million in Hamilton State, which added six new directors as part of the deal.
Among them are: former JPMorgan Chase & Co. executives Joseph Sclafani and Dennis O’Leary, and Ray Christman, former head of the Federal Home Loan Bank of Atlanta.
With the cash, tiny Hamilton State, with $245 million in assets, could support growth to $2 billion or more in assets through the acquisition of failed or distressed institutions. That would make it one of the largest banks based in the state.
Georgia’s banking industry needs new investment sources to rebound, and also needs to consolidate, said Chris Marinac, bank analyst with FIG Partners.
“We know we need consolidation. We just have to take it one step at a time,” he said.
Hamilton State’s deal, and the recently announced investment of up to $200 million in Gwinnett County’s Brand Banking Co., suggests such investors see profit opportunity in Georgia. Brand, which has said it is seeking organic growth and potential deals to buy living banks, is expected to close on its funding by the end of the first quarter.
Hamilton State has six metro Atlanta branches. It received $7 million in assistance under the Troubled Asset Relief Program. Oliver said the bank would file Tuesday with the Treasury Department for permission to repay TARP.
