NCAL Bancorp (NCAL) in Los Angeles has agreed to a recapitalization that would give it new ownership.
The $342 million-asset company said Monday that it will receive a $25 million infusion. A California investor will buy $23.5 million of newly issued common stock for just under 55 cents a share, and NCAL's existing directors will provide roughly $1.5 million in capital. The company's stock was trading at $1.05 a share Tuesday morning.
The California investor, whom the news release did not identify, would become NCAL's majority owner after the recapitalization.
The recapitalization requires NCAL to buy back its $10 million of outstanding Troubled Asset Relief Program preferred stock from the Treasury Department, and that the company resolve the Department of Justice's inquiry into transactions with firms that process transactions for payday lenders. The Justice Department has inquired about transactions NCAL cleared for payments processors that may have worked for payday lenders, as part of an ongoing regulatory crackdown on banks that do business with payday lenders.
NCAL said the recapitalization will allow it to meet the capital requirements of its regulatory orders. NCAL is operating under a written agreement with the Federal Reserve Board that requires it to support its National Bank of California. At June 30, the bank had a Tier 1 leverage ratio of 6.23% and total risk-based capital of 11.13%, according to the Federal Deposit Insurance Corp.
"This recapitalization will strengthen the balance sheet and provide a solid foundation for customer growth and community support," Joe Kornwasser, NCAL's chairman, said in a press release.
In January, NCAL's agreement to sell itself to Grandpoint Capital for $3.4 million fell through, due to what NCAL's president, Henry Homsher, described as "minor" problems.
FIG Partners and King, Holmes, Paterno & Berliner advised NCAL on the recapitalization, which the company expects to take place in the first quarter.