Chicago's tepid market for acquisitions is set to get a jolt of energy.
Standard Bancshares in Hickory Hills, Ill., announced on Wednesday that it had entered into a set of definitive agreements with a consortium of private-equity investors for more than $130 million.
The $2.2 billion-asset company said in a press release that the new capital would improve its balance sheet and allow it to redeem the $60 million in preferred shares owned by the Treasury Department. However, it also said it would use the proceeds to be a bank buyer.
"We will better be able to meet the needs of our retail and commercial banking customers, and take advantage of anticipated growth opportunities in the consolidating Midwestern banking market," Lawrence P. Kelley, president and chief executive, said in the release. Kelley is expected to remain at the helm.
Chicago has long been considered a market ripe for consolidation, as Illinois was one of the last states to adopt branch banking. Despite the fierce competition, few deals have been announced in the city. Instead, market leaders have looked outside of the Second City for growth through side businesses such as asset-based lending and mortgage businesses.
The new investors include investment entities managed by private-equity firms Stone Point Capital, Pantheon Ventures, Cohesive Capital Partners, W Capital Partners, Constellation Wealth Advisors, Athena Capital Advisors and others, Standard said in its release. The capital raise is expected to close in the first quarter.
Alongside the investment, Robert A. Rosholt and Allen Koranda are expected to join Standard's board. Rosholt, who would become the lead independent director, is a former chief financial officer of First Chicago Bank, which was sold to Banc One in the late 1990s and is now part of JPMorgan Chase.
Koranda is a former chairman and CEO of MAF Bancorp, which was the holding company for MidAmerica Bank.
Standard was well capitalized at Sept. 30 with a leverage ratio of 8.56%. The company, however, has missed five dividend payments to the Treasury as part of the Troubled Asset Relief Program. The company has accumulated roughly $4.1 million of unpaid dividend payments, according to an October report from the special inspector general for Tarp.