No change for Las Vegas banks owned by Capital Bancorp
Capital Bancorp Ltd.'s decision to file for bankruptcy will have no effect on operations at the bank holding company's two community banks in Southern Nevada, a company executive said Friday.
The company owns Bank of Las Vegas and 1st Commerce Bank in North Las Vegas.
Jim Howard, chief operating officer at Bank of Las Vegas, said bankruptcy "moves some priority debt into stock, which is a good thing" that could lead to additional capital for the banks.
"It won't change how we operate," said Howard, who is also acting chairman and CEO at 1st Commerce Bank.
Capital Bancorp is seeking to raise between $70 million and $115 million in new equity financing, which would give potential investors 47 percent of the bank. Howard said the investment would be sufficient to restore both Las Vegas banks and the 11 other affiliate institutions to "well-capitalized" status.
Bank of Las Vegas and 1st Commerce Bank are both under Federal Deposit Insurance Corp. supervisory orders to increase their capital levels.
In its Chapter 11 petition filed Thursday in U.S. bankruptcy court in Detroit, Capital Bancorp said it is seeking a "quick-approval" from the court for its pre-packaged reorganization plan.
The Lansing, Mich.-based bank holding company listed assets of $112.2 million and debt of $195.6 million. Its largest unsecured creditors are M&T Trust Co. of Delaware, with $44.4 million in trust preferred securities, and U.S. Bank of Boston, with $22.4 million of similar securities.
Joseph Reid, chairman and CEO of Capital Bancorp, said the plan would provide "a more stable platform for future growth." He said the company continues to focus on raising capital to manage its balance sheet in the face of ongoing economic challenges.
"We are very optimistic about the plan, which will provide benefits to Capital and all of its stakeholders," Reid said.
Capital Bancorp in June announced its voluntary restructuring, which includes moving troubled banks into a new wholly owned subsidiary. The company moved Bank of Las Vegas, Indiana Community Bank, Sunrise Bank of Albuquerque, Sunrise Bank of Arizona and Michigan Commerce Bank into Michigan Commerce Bancorp.
Michigan Commerce Bancorp is included in the company's reorganization plan, according to court records.
Capital Bancorp in July completed the sale of Bank of Michigan and First Carolina State Bank in North Carolina to separate investor groups. Financial terms were not disclosed.
In the past few years, Capital Bancorp has sold 24 of its banks in an effort to raise needed operating capital. The company, founded in 1988, has $2.1 billion in assets and owns banks in 10 states.
Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893.
