Angelo Gordon & Co., the New York- based firm that raised $1.1 billion to invest in distressed assets, and Tailwind Capital are seeking to buy almost half of a Georgia bank as private investors intensify efforts to acquire control of faltering lenders.
Angelo Gordon and Tailwind are each seeking regulatory approval to acquire stakes of about 24.9 percent in Hamilton State Bancshares Inc., which has $277 million in assets, according to the bank and the Federal Reserve’s website. Angelo Gordon and Tailwind together plan to invest at least $90 million, and Hamilton will then seek more distressed banks to buy, according to a statement from the Hoschton-based lender.
“Regulators have made it very difficult for private equity to come into the banking system,” said William Isaac, chairman of Fifth Third Bancorp and former head of the Federal Deposit Insurance Corp. in a June 4 interview. By contrast, “there are definite advantages” given to strategic buyers, or existing institutions that purchase failed banks, he said. The FDIC typically will offer seized banks to healthy, operating banks.
The deals are the latest evidence that private-equity investors are shifting tactics as they bid for struggling banks. The FDIC has been reluctant to sell failed lenders to private investors, in part on concern that they may take too much risk with insured deposits. Instead, firms including Carlyle Group and Thomas H. Lee Partners are offering capital to prop up banks that are still open.
Hamilton offers commercial banking for small to medium- sized businesses at six branches in north Georgia, the statement said. Proceeds from Angelo Gordon and New York-based Tailwind will be used to pay back Hamilton’s $7 million of U.S. bailout funds and shore up capital, said Hamilton’s statement.
After that, the bank may seek “failed or distressed depository institutions in FDIC-assisted transactions,” said the statement.