Banks Backed by Private Equity Funds Do Deals as Six U.S. Lenders Collapse

Community banks backed by private- equity funds purchased at least two lenders, or a third of this week’s failures, as regulators shutter institutions weakened by the plunge in real-estate values.

Hamilton State Bancshares Inc. and Community Bancorp LLC, which together raised more than $1.2 billion for acquisitions, bought failed lenders in Alabama and Georgia, the Federal Deposit Insurance Corp. said in statements on its website. The six failures yesterday drained $588.1 million from the FDIC’s deposit-insurance fund. Community Bancorp purchased Superior Bank of Birmingham, Alabama.

“This transaction represents a sound strategic move for Community Bancorp and an exciting growth opportunity,” Chief Executive Officer Paul B. Murphy Jr. said in a statement. “We continue to build our competitive banking franchise in the Southeast.”

Banks are closing under stress from commercial real estate loans, tied to property values that fell as much as 45 percent from the October 2007 peak through last August, according to Moody’s Investors Service. More than 350 lenders have been shut down since the start of 2008.

Superior Bank, with $3 billion in assets, is the biggest lender to be shut this year. Community Bancorp will keep the Superior Bank name, adding 73 branches and 24 consumer-finance offices in Alabama and Florida, according to the company’s statement. It picks up $2.7 billion in deposits, the FDIC said.

$1 Billion

Community Bancorp completed a $1 billion capital raise in November. Murphy, a former Zions Bancorporation executive, runs the company with former JPMorgan Chase & Co. Chairman William B. Harrison, the architect of one of the biggest bank mergers in U.S. history, the $58 billion purchase of Bank One in 2004.

Former JPMorgan executives also sit on the board at Hamilton State, which paid a 1 percent premium to acquire $304.1 million in total deposits of Cartersville, Georgia-based Bartow County Bank.

Hamilton added four branches to its 7 existing locations, according to the FDIC. With deposits of $199.7 million before the transaction, Hamilton State offers commercial banking for small- to medium-sized businesses in north Georgia.

Hamilton State is backed by Angelo Gordon & Co. and Tailwind Capital LLC, the New York-based firms that invested $60 million each in the Hoschton, Georgia-based lender earlier this year, according to a statement. Hamilton completed the $231.6 million private placement in February.

AloStar Bank

Regulators closed a second Alabama lender when they shuttered Birmingham-based Nexity Bank and sold its operations to AloStar Bank of Commerce, according to the FDIC. AloStar added almost $800 million in assets and more than $630 million in deposits held at one branch.

AloStar, a newly chartered bank, was started by Michael J. Gillfillan, a former Wells Fargo & Co. chief credit officer, and former SunTrust Banks Inc. executive Andrew McGhee, founder of Atlanta-based private-equity firm Archway Equity Partners.

New Horizons Bank, of East Ellijay, Georgia, and Rosemount National Bank, Rosemount, Minnesota, were also closed by regulators. Citizens South Banking Corp. (CSBC) paid the FDIC a premium of 1 percent for New Horizons’ more than $100 million in deposits, the FDIC said. Stillwater, Minnesota’s Central Bank bought Rosemount’s sole branch.

Trustmark National Bank, of Jackson, Mississippi, paid the FDIC a premium of 0.15 percent to acquire almost $200 million in deposits from Heritage Banking Group, of Carthage, Mississippi. Trustmark adds eight branches with the acquisition.

To contact the reporter on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.

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