Square Mile Capital LLC bought a 40 percent stake in a unit of Atlanta’s failed Silverton Bank from the Federal Deposit Insurance Corp. as the U.S. government unloads hundreds of bankrupt lenders.
The New York-based private-equity firm is buying an interest in a company holding assets mainly of performing hospitality loans and loan participations with an unpaid principal balance of about $421 million, the FDIC said yesterday in a statement.
“We’re pleased to have been selected to acquire an investment interest and to manage this loan portfolio,” Square Mile said yesterday in an e-mailed statement. “Once the transaction is completed, we’ll work hard in collaboration with the FDIC to manage these loans successfully on behalf of both our investors and the U.S. taxpayers.”
Private-equity investors have hesitated to bid on failed lenders, which are piling up at the fastest rate in two decades, after the FDIC required their firms to maintain higher capital ratios and prohibited them from selling for at least three years. Instead, they have sought live banks such as Sterling Financial Corp. (STSA), a Spokane, Washington-based lender, which sold a stake last week to private-equity firm Thomas H. Lee Partners, and Pacific Capital Bancorp, a Santa Barbara, California-based bank that has said it may collapse. The lender agreed last week to a $500 million injection from bank investor Gerald J. Ford.
The sale of assets from Silverton Bank, which failed in May 2009, is expected to close later this month, the FDIC said. The agency will initially hold the remaining equity. Terms of the deal weren’t disclosed.
Square Mile was founded in 2006 by Jeffrey Citrin, a former banker with Oppenheimer & Co. and president of Blackacre Capital Management LLC, and Craig Solomon, who was a founding principal of Solomon and Weinberg LLP and SWH Realty Corp.
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