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NewBridge Bancorp (NBBC) in Greensboro, N.C., is acquiring a cash-strapped mutual at the behest of state regulators.
June 13 -
NewBridge Bancorp (NBBC) in Greensboro, N.C., has agreed to buy CapStone Bank (CPSE) in Raleigh, N.C.
November 1 -
The more than $500 million that investors pumped into banks in the Tar Heel State has turned marginal players into consolidators, provided a way to absorb failures and instilled new discipline.
June 14 -
NewBridge Bancorp (NBBC) in Greensboro, N.C., is planning to raise $56 million after liquidating $45 million in bad loans and reporting a large quarterly loss.
November 1 -
The Treasury Department plans to auction its holdings in eight more banks as it continues to unwind Troubled Asset Relief Program holdings.
April 15
NewBridge Bancorp's (NBBC) goals are ambitious.
It wants to be the next big community bank in one of the preeminent banking states in the country, North Carolina. Yet NewBridge executives believe their ownership structure and growth plan will make it a study in how to stand out in a crowded field.
The Greensboro company has made aggressive moves across the state in recent months, poaching a commercial lending team in Charlotte,
It has assets of $1.8 billion and a long-term goal to reach $5 billion, using a blend of organic growth and acquisitions, says Pressley Ridgill, NewBridge's president and chief executive. It also would consider a merger with a bank of equal size, though he admits such deals "are hard to do."
Still, the environment in North Carolina seems ripe for a substantive merger. Several banks in the state - BNC Bancorp (BNCN), VantageSouth (VSB), Capital Bank Financial (CBF) and CommunityOne Bancorp - have like NewBridge
"Consolidation is coming to the Carolinas," says Brady Gailey, an analyst at Keefe, Bruyette & Woods. "It is just a matter of when. And I think a merger of equals will be the next big deal to take place in North Carolina."
Two years ago, NewBridge wasn't viewed as one of the state's consolidators. It was formed in 2007, the eve of the financial crisis, by the
NewBridge also received $52 million in late 2008 from the Troubled Asset Relief Program. At the same time, many competitors reeled in big investments from a long list of investors that included Carlyle Group, Oak Hill Partners, Crestview Partners, Aquiline Capital Partners, Stone Point Capital and Lightyear Capital.
"There was a lot of talk about them selling the company," Gailey says. "It took them years longer than they thought it would take [to tackle credit issues]. The stock price was low, they were losing money and the nonperforming assets were high. Even after they raised capital to get rid of the bad assets, some people thought they might sell."
Management finally turned to private equity late last year, raising $56 million to
Private-equity investment in North Carolina has come in two forms. Capital Bank, which is technically based in Florida but has a large presence in the state, and VantageSouth are largely controlled by their private-equity shareholders. Others, such as BNC, sold much smaller stakes to such investors.
NewBridge is in the latter class. Its biggest investor is Endicott Management. The New York firm owns 9.9%, and that stake is set to shrink by a fifth after NewBridge buys CapStone. For now, Wellington Capital owns 9.4% and EJF Capital has a 5.9% stake.
"Endicott is really hands-off," says Don Johnson, vice chairman of American Business Bank (AMBZ) in Los Angeles and Endicott's hand-picked representative on NewBridge's board. "They bet on management and, in this case, they bet on a team that pulled their bank through some really tough times and are focused on accelerated growth."
Endicott seems content so far, Johnson adds. NewBridge's stock has appreciated 64% since the private equity firm agreed to participate in the recapitalization effort in early November 2012. "I would think with those dynamics that people would be willing to make an additional investment," Johnson says.
The ownership structure also pleases NewBridge. "We had several [investors] that would have loved to have taken a 24.9% voting position," the maximum allowed under federal rules, Ridgill says. "That's a lot of control for one group to have. We felt like, because of the diverse base that we had with smaller investors before, that it would work best if we could keep a lot of them under 5%. We feel like it gives everybody more options going forward."
NewBridge still has to repay about $15 million of its Tarp funds, though it is
There is more to NewBridge's growth plan than acquisitions. The company also landed a Charlotte commercial lending team
"There are a number of markets that we can drive to today that might make sense," says David Barksdale, NewBridge's chief strategy officer. "While we're pursuing an organic or M&A strategy. … We feel we also have a good success formula for loan production offices."
"You have to get past the acquisitions to see the value," Johnson says. "You can't just look at this bank as an acquirer. Not only are they building a great franchise but they are adding good people and improving their core businesses."
The bulk of NewBridge's loan portfolio - roughly 75% of it - is in central North Carolina, which has suffered from slow growth for years. That area's contribution could shrink to 55% after NewBridge completes its pending acquisitions. (The portion of its portfolio in Raleigh could jump to 20% from 4% with the CapStone deal, based on regulatory filings.)
Ultimately, management wants to have $1 billion of assets each in Raleigh and Charlotte, with slightly fewer assets along the coast. "We're willing to see it grow," Ridgill says. "We're also looking to take advantage of disruptions."
Consolidation between other players could create opportunities to recruit displaced customers and lenders, particularly a
"We're all trying to figure out a way in North Carolina to create that super-community bank that South Carolina and Virginia now have," Ridgill says. "When you look around, there are five to seven of us that are in a range where you could put them together and have a $5 billion-asset bank pretty easily."
That's the kind of talk that gets investment bankers and private-equity investors excited. NewBridge, meanwhile, has the resources to raise more capital if the right opportunity develops. "You could see something where NewBridge needs a little more capital for a larger deal and Endicott goes in to raise its stake back to 9.9%," Gailey says.
"The management team has decided that there is more value to be created if they acquire and become a larger North Carolina bank," Gailey adds. "I think most people realize now that they are not a takeout play."