BancTrust Financial Group Inc. (BTFG) in Mobile, Ala., has put itself up for sale after its bid to raise capital from two private-equity groups fell through.

The $2 billion-asset company said late Wednesday that the price investors were offering to acquire a stake in BancTrust was not sufficient and that its board has determined to seek a merger partner instead. BancTrust has hired Keefe, Bruyette & Woods Inc. to help it identify a potential buyer.

"While we began the capital raise believing we could generate significant shareholder value as a recapitalized independent entity…it became increasingly clear as the process neared conclusion that the recapitalization could only be effected at a price level that was not in our shareholders' interest," BancTrust President and Chief Executive Bibb Lamar Jr. said in a news release.

The company also said that after thoroughly re-examining its loan portfolio it has decided to take an additional $13.25 million loan-loss provision for the fourth quarter - triple the amount it initially set aside -- and write down the carrying value of other real estate owned by $27 million. The company initially reported a loss of $971,000 in the fourth quarter, but after the adjustments its loss is expected to swell to more than $50 million.

BancTrust's shares plunged early Thursday in response to the dual announcements. In extremely heavy trading, its shares were down nearly 20%, to $1.20.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.