Bank of Las Vegas is being sold to a Michigan bank holding company. Bank executives say the deal will recapitalize the struggling community lender and allow it to grow for the first time in three years.
Capitol Bancorp Ltd., the community bank’s bankrupt parent company, will sell its stock in the Las Vegas-based bank and three other banks for $4.5 million to Talmer Bancorp Inc. Under the deal, which is subject to court and regulatory approval, Talmer will invest more than $90 million in the four banks.
“The pending sale is a good thing,” Bank of Las Vegas President and CEO Pete Atkinson said Tuesday. “We have never been able to raise the capital needed. This gets us completely recapitalized. We can go back and do banking business again.”
Atkinson said that because of the recession, the Bank of Las Vegas has struggled to grow since 2010. He said the bank has issued some loans, mostly to help existing customers, while other customers have left to do business with other community banks.
Talmer CEO David Provost declined to comment until the deal closes. Talmer, the parent of Talmer Bank and Trust, also is acquiring Indiana Community Bank, Michigan Commerce Bank and Sunrise Bank of Albuquerque, N.M.
Capitol Bancorp, a holding company in Lansing, Mich., filed for Chapter 11 bankruptcy protection in August 2012. Capitol was once a fast-growing national banking group and had more than 60 community banks.
When it filed for bankruptcy, Capitol had 13 banks in 10 states and had sold 24 banks. Atkinson said the capital raised from those sales “was redeployed to the banks.”
Capitol shares gained 185.71 percent to close Tuesday at 1 cent in over-the-counter trading, down from their 52-week high of 16 cents. Atkinson said the goal is to have the sale closed by year’s end.
Bank of Las Vegas has long been rumored to be an acquisition target. The bank, which posted $100,000 in net income through June 30, has four branches in Southern Nevada and $120 million in assets.
“We hope the public will acknowledge all the bank has done,” Bank of Las Vegas Chief Operating Officer Jim Howard said. “Out of all the banks (locally) that didn’t take (Troubled Asset Relief Program) funding, we are the only one that has made it.”
Bank of Las Vegas posted its last annual profit, of $44,000, in 2008.
Capitol’s other local bank, 1st Commerce Bank in North Las Vegas, was seized by federal regulators in June; its deposits and most of its assets were sold to Plaza Bank.
In a statement, Capitol Chairman and CEO Joseph Reid said, “We are pleased to provide the banks with a strategic partner that has the resources and capital to support the banks’ long-term success.”
Reid said the pending transaction will affect neither the operations of the banks nor their employees and customers.
Customer deposits remain insured by the Federal Deposit Insurance Corp.
The sale of Capitol is expected to close under Section 363 of the U.S. Bankruptcy Code, which is the sale of assets in a bankruptcy case.
Talmer used Section 363 in January to buy Warren, Ohio-based First Place Bank.
That deal, which cost more than $200 million, grew Talmer from $2.2 billion in assets to $4.5 billion. Before its rapid expansion began in April 2010, Talmer was known as First Michigan Bank, with a single branch and $90 million in assets.
As of Sept. 30, Talmer had 85 branches and 20 loan production offices in Michigan, Ohio Illinois, Wisconsin, Indiana, and Maryland.
Talmer didn’t say whether Bank of Las Vegas will continue to operate under its current name and brand once the deal closes.
Contact reporter Chris Sieroty at email@example.com or 702-477-3893. Follow @sierotyfeatures on Twitter.