Bank of Commerce in Sarasota, Fla., will change hands following a bankruptcy auction.
Bank of Commerce Holdings recently filed a voluntary petition for bankruptcy protection, which will allow it to sell the $209 million-asset bank. The company has been saddled with $10 million in trust-preferred securities owed to institutional investors.
"The bank will receive $10 million in additional capitalization, which should be sufficient to meet the remaining item and the consent order that we've been under since March 2011," Charles Murphy, the bank's president and chief executive, said in an interview.
Byron DeFoor, a real estate developer in Tennessee, is interested in buying the bank, Murphy said. DeFoor already owns Millennium Bank in Chattanooga, Tenn., and AB&T Financial in Gastonia, N.C.
The bankruptcy, if approved by the court, would wipe out the investments of more than 200 shareholders who backed Bank of Commerce.
Murphy said the bankruptcy filing affects only the holding company and not the bank, which will retain all staff at its three branches. Murphy said he will remain in his executive roles, while DeFoor will appoint some associates to the bank's board, including Alan Smith as chairman. Murphy said he expects the sale to close by the end of this year.
Murphy said the bank completed all the requirements of its regulatory order, except for boosting capital levels.
"We've been trying to raise capital since 2009, and there really was no alternative … to capitalize this bank," he said. "We had tried and spoke with well over 100 people, and the biggest inhibiting factor happened to be the trust-preferred securities at the holding company."