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.

Lehman has substantial investments in other community banks, including First Capital Bancorp (FCVA) in Glen Allen, Va., and Liberty Bell Bank (LBBB) in Marlton, N.J.

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.