Former Bank of America Corp. Vice Chairman R. Eugene Taylor has spent the past six months searching for a bank to buy — only to return to whence he came.
On Tuesday, North American Financial Holdings Inc., a Charlotte bank holding company headed by Taylor, announced it was investing $175 million in the struggling TIB Financial Corp. in Naples, Fla. That will give North American a 99% ownership stake in TIB Financial, which is viewed as having considerable potential despite its immediate challenges.
It is just the type of company that Taylor, North American's chairman and chief executive, who began his long banking career in Florida, has been looking for. "You have no idea how many tires we kicked before arriving here," he said in an interview Tuesday evening. "We think we have the right group here, including the existing management."
North American was organized in December when it raised $900 million in capital to buy banks. Private-equity firm Crestview Partners led the investment.
With the $175 million investment, TIB Financial will soon go from searching for capital to having plenty to spare. Beyond the initial investment, the deal gives North American an option to invest another $175 million over the next 18 months. The first round allows the company to take its licks and move on, said Christopher G. Marshall, North American's chief financial officer.
"We are not just injecting them with capital. We are providing them with enough to fully mark the balance sheet to market," Marshall said in an interview. "It is going to put the credit problems behind them and leave the bank with a clean, strong balance sheet that has the ability to get lots and lots more capital."
Marshall, along with Taylor and two other North American executives are expected to join TIB Financial's board.
Following the writedowns, Marshall said the total risk-based capital ratio at North American's bank unit is expected to increase from a thin 8.1% at the end of the first quarter, to more than 13%. The second tranche of financing, he said, is not a backstop should more problems arise for TIB Financial. That is strictly targeted for growth. "That is there to ensure that should we want to invest in a bank, we can quickly," Marshall said. "As we see it, there are no limitations on its ability to grow."
With its first financing deployment in Florida on the table, North American's executives said it is open to options for its next move. "We've planted a flag in South Florida," Taylor said. "We would not rule out anything that is going to give our investors a good return."