Four Oaks Fincorp (FOFN) in Four Oaks, N.C., could purge up to $50 million in assets with help from its newest investor.

Kenneth Lehman disclosed in a regulatory filing Monday that he will work with the $820 billion-asset company to create an asset-resolution plan for the assets. The filing, noting that Lehman has purchased a 9.9% stake in Four Oaks, adds that he has 30 days to identify the assets.

The asset-resolution plan would give Four Oaks 18 months to dispose, work out or upgrade the status of the assets, the filing said. Four Oaks could write down or charge off the value of the assets, which could lead to an increase in its loan-loss reserves.

Lehman also disclosed in his filing that he has held informal conversation with Four Oaks' directors about joining the board, though such representation was not a condition of his investment. Lehman also said he "intends to recommend additions to the company's management team in the future," which could include the replacement of existing officers.

Lehman agreed last month to buy 875,000 shares of the company's common stock at $1 each. Four Oaks is also planning to hold a rights offering for existing shareholders, including Lehman, during the second quarter, where it will sell up to 26.5 million shares of stock at $1 each. Shareholders will have the right to buy three shares of stock for each share they already own.

Lehman will have the opportunity to buy roughly 2.6 million shares in the rights offering, boosting his potential ownership to 3.5 million shares. If any stock remains after the rights offering, Lehman has agreed to buy 10 million shares, including those he already owns. He could raise his total ownership in Four Oaks to 16 million shares, unless his stake would put the company's deferred tax asset at risk via a change in ownership.

The stock sale will provide Four Oaks with a shot of much-needed capital. It is operating under a May 2011 agreement with the Federal Reserve Board that requires it to meet certain capital requirements. The company has struggled to find investors and it was a target the Justice Department's "Operation Choke Point" probe, which investigates banks' ties to payday lenders. Four Oaks reached a $1.2 million settlement with the Justice Department in January, helping to dispel its troubled aura.

Lehman, a former banking lawyer, has emerged as a key community bank investor in recent years, buying large chunks of lenders including Liberty Bell Bank (LBBB) Marlton, N.J.; Delmar Bancorp in Salisbury, Md.; Marine Bank & Trust in Vero Beach, Fla.; and First Capital (FCVA) in Glen Allen, Va.

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