Palmetto Bancshares Inc. Wednesday announced it is raising $100 million in capital through a New York private-equity firm and institutional investors to allow its bank unit to reach well-capitalized ratio levels.
The company, based in Greenville, S.C., owns the $1.3 billion-asset The Palmetto Bank and has been trying to raise capital for some time. The bank has been adequately capitalized by regulatory standards for almost a year. As of March 31, it had an 8.17% total risk-based capital ratio.
Palmetto said it has entered into a stock purchase agreement with an affiliate of New York private equity firm CapGen Financial Partners to purchase $55 million of the company’s common stock at $2.60 a share as part of the private placement.
The company said in a press release that the effort, if approved by regulators, would cause the bank's capital adequacy ratios to exceed the minimum threshold required to be "well capitalized."
CapGen is the same firm, with another affiliate, that is leading a $30 million capital-raising effort between Jacksonville Bancorp Inc. and Atlantic BancGroup Inc. announced on May 10. The firm was founded by the former U.S. Comptroller of the Currency Eugene Ludwig.
In Palmetto's case, the remaining $45 million of the $100 million would come from other institutional investors. Palmetto said it already had received non-binding commitments from other institutional investors in excess of $45 million. The company is permitted to raise another $10 million from existing shareholders at the same price per share, after the private placement closes.
The capital-raising effort is part of the company's attempts to shore up losses from its loan portfolio.