Summit Community Bank in Moorefield, W.Va., said Wednesday that it has shed an enforcement action and completed the first portion of its private placement with Castle Creek Capital Partners.
The West Virginia Division of Financial Institutions and the Federal Deposit Insurance Corp. have terminated a memorandum of understanding with the $1.4 billion-asset Summit Community. That MOU was imposed in September 2009 and updated in October 2012.
However, the bank's holding company-Summit Financial-is still subject to an informal memorandum of understanding from November 2009 with the Federal Reserve Bank of Richmond and state regulators.
Meanwhile, the holding company raised $8 million by selling 819,384 shares of common stock to Castle Creek, which agreed to a two-part transaction in August.
Summit is offering an additional 237,753 shares of common stock to Castle Creek for $2.3 million. This transaction is scheduled to close in the first quarter and is conditioned on conversion of the bank's preferred shares into common stock.
Once both private placements are completed, Castle Creek will own 9.9% of Summit's common stock.
Following the second closing, Summit plans to raise another $2.5 million through a rights offering to existing shareholders. The bank will offer 256,410 shares at a purchase price of $9.75 per share. This offering is expected to take place during the second quarter.
"Higher consolidated capital levels resulting from this investment, and the rights offering contemplated under the purchase agreement, should give us flexibility and strength to evaluate opportunities for future growth earlier than previously planned," H. Charles Maddy, III, president and chief executive of Summit Financial, said in a press release.