Delmar Bancorp in Salisbury, Md., has worked out an arrangement to redeem preferred stock from an outside investor.
The $432 million-asset company agreed last week to sell nearly 3.3 million shares of common stock to Kenneth Lehman for a consideration worth about $3.57 a share. Lehman will pay Delmar $6 million in cash, cancel his 5,000 shares of preferred stock in the company and waive $600,000 in unpaid dividends on the preferred stock.
Delmar said that the transaction will result in an $11 million increase in common stockholders' equity and reduce its preferred stock account by $5 million.
"I am very pleased Ken Lehman has agreed to deepen his relationship with the company," Edward Thomas, Delmar's president and chief executive, said in a press release. "The additional $6 million of Tier 1 capital will enable us to accelerate our efforts to resolve or dispose of problem assets."
The transaction is expected to close in the fourth quarter.