The embattled Web banking pioneer USABancShares.com Inc. has hired a financial adviser to help reshape its strategy after a private investment company backed away last week from a deal to purchase a controlling interest.
The Philadelphia bank holding company issued a statement Tuesday that it had hired Livingston, N.J., investment banking firm Ryan, Beck & Co. to provide advice on its strategic alternatives - which could include seeking another major investor or selling the bank.
Neither Craig J. Sher, president and chief executive officer of USABancShares.com, nor executives of Ryan Beck returned calls seeking comment on the announcement by press time.
The buyer that pulled out was Harron Finance Group, which is owned by Harron Management Co. of Frazer, Pa. James McEntee, an executive at Harron, said that other investors are interested in USABancShares.com, and that he is "pretty confident the bank will get the additional equity it needs.
"We think that the bank will stabilize once it gets the additional capital. Over a period of time, I think that will be a good investment," he said.
Harron had this year purchased a 9% stake in USABancShares.com with a stated plan to invest between $8 million and $9 million more, enough to give it a controlling interest in the company.
Mr. McEntee said Harron had known for some time about the difficulties at the bank, but that the decision to drop the takeover plan was not precipitated by the recent problems.
"We've got so many different things on our plate at the moment that we decided not to pursue other things right now," he said.
Harron has invested in another online bank, but primarily targets communications and media technology businesses.
Problems at USABancshares.com came to light last month, when the company disclosed it had agreed to cease-and-desist orders from the Federal Deposit Insurance Corp. and the Pennsylvania Department of Banking, and suffered a $3 million loss, reportedly stemming from one customer's bad checks.
The federal and state regulators cited a series of deficiencies in the bank's operation, including poor management, inadequate capital, improper internal controls, and excessive reliance on volatile funding sources. Harron's 9% investment came before the $3 million loss.
In the wake of those disclosures, the company said it would return to its roots as a community bank serving the Philadelphia market.
USABancShares.com was started in 1996 after a group of investors purchased Peoples Savings Bank, which was founded more than a century earlier.
Mr. McEntee said Harron will retain its 9% stake in USABancShares.com, and possibly invest in another financial services company within the next six months. The company has no plans for further investment in the bank, he said.
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