Slideshow Hits and Misses for PE-Backed Bank Rollups

Published
  • April 08 2014, 4:02pm EDT

Hits and Misses for PE-Backed Bank Rollups

Distressed-bank rollups were all the rage among private-equity and hedge fund investors in the early days of the financial crisis. The results have been decidedly mixed, as the following examples illustrate.-- American Banker Staff



Images: Thinkstock

<b>'Dream Team' Disappoints</b>

Some of the country's top hedge fund managers were sold on the notion that CertusBank's "dream team" of executives would profit from government support in failed-bank deals. But Certus has spent heavily on questionable items, like a giant video wall (pictured). It has also posted more than $100 million in losses over the past two years.

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<b>Building an Empire</b>

PacWest Bancorp (PACW) in Los Angeles raised capital from private-equity fund CapGen Financial Group to build a regional banking franchise on the West Coast. Its Pacific Western Bank has bought three failed banks since November 2008, and CEO Matt Wagner has struck deals for several open banks recently, including one for CapitalSource (CSE) that is scheduled to close April 7.

<b>Cashing in on Kanas</b>

WL Ross & Co., Blackstone Group and Carlyle Group successfully cashed out of BankUnited (BKU) in March in what was considered a postcrisis milestone. The firms teamed up with veteran banker John Kanas to acquire BankUnited in May 2009, when it failed. Their investment in BankUnited "was a dream private-equity deal," Kanas said recently.



Image: Bloomberg News

<b>Failed Takeover Bid</b>

Bond Street Holdings, the holding company for Florida Community Bank, has acquired eight failed banks since the onset of the financial crisis. But Bond Street itself stumbled when investor Jay Sidhu shot down its attempt to acquire Atlantic Coast Financial (ACFC) in Jacksonville, Fla.; Sidhu said the price was too low.

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<b>Calming Nerves</b>

Capital Bank Financial (CBF), in Coral Gables, Fla., had early success buying failed banks, gobbling up several in the Southeast. But it hit a dealmaking lull in 2012, and CEO Gene Taylor had to calm agitated private-equity investors by putting its capital to use through buybacks.

<b>Going West</b>

A private-equity group including John Paulson and George Soros bought the failed IndyMac Bank in July 2008, and rebranded it OneWest Bank. Since the deal, OneWest has become a potential buyout candidate and has also considered an initial public offering.

Image: Bloomberg

<b>Branching Out</b>

State Bank Financial (STBZ) in Atlanta has bought a dozen failed banks in Georgia with the backing of several private investment funds. As the pace of banking failures cooled down, State Bank's earnings growth slowed. It has responded by expanding into new areas, one via the acquisition of a payroll services company.