A Virginia Beach investment group has pulled the plug on its plan to buy a struggling bank in the Washington, D.C., suburbs.
Formed in February, Cape Henry Bancshares was seeking to raise up to $30 million to buy and recapitalize the $171 million-asset Millennium Bank in Sterling, Va. Millennium's chairman, Joe Paulini, told the Washington Business Journal that Cape Henry has called off the deal, but declined to disclose why.
The story was reported in Friday's edition of the Washington Business Journal.
Millennium has been undercapitalized for more than a year and has been trying to sell itself or raise capital for two years. The bank has lost roughly $40 million over the last four years and has not reported an annual profit since 2005, according to Federal Deposit Insurance Corp. data.
Cape Henry is made up of former executives of Resource Bank in Virginia Beach, which was sold to Fulton Financial (FULT) of Lancaster, Pa., in 2008.
Under terms of their agreement, Millennium's holding company was to declare bankruptcy and then Cape Henry was to buy its main asset, the bank. Investors would have been wiped out under that scenario, but the bank would have survived.
Cape Henry said at an investor presentation in March that it expected to complete its fundraising by May 2, though it is unclear if it was able to meet that target.