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Park Sterling in Charlotte, N.C., has agreed to buy First Capital Bancorp in Glen Allen, Va.
October 1 -
Investors have varied expectations of how banks should build and deploy capital. Ultimately, management teams need to stick to their growth plans rather than serve the whims of specific shareholders.
May 8 -
Ken Lehman is buying outsized stakes in community banks, using his personal funds and often introducing himself to CEOs with a direct phone call.
February 22
The management team at Park Sterling in Charlotte, N.C., flirted with buying into First Capital Bancorp several years before agreeing to acquire the Glen Allen, Va., company earlier this month.
The $2.4 billion-asset Park Sterling
But Jim Cherry, Park Sterling’s chief executive, first considered recapitalizing First Capital in early 2010, a period when the ex-Wachovia executive was still looking to invest in a bank to expand in Virginia and the Carolinas, according to a
By April 2010, Cherry’s group had committed to
First Capital, meanwhile, periodically fielded inquiries from potential acquirers though nothing materialized. In mid-2012, Ken Lehman, a former banking lawyer who buys big stakes in community banks, began amassing what would become a
Park Sterling floated out an offer in October 2013 that valued First Capital at $5.25 to $5.50 a share, but talks broke off shortly thereafter when Park Sterling indicated that any deal would “likely fall at the lower end” of the range.
Park Sterling finally entered Richmond, Va.,
Around that time, First Capital hired Banks Street Partners, an Atlanta investment bank, to help it identify possible buyers, the filing said. Nine of the 15 companies contacted by Banks Street, including Park Sterling, expressed an interest, and four of those suitors had in-person meetings with Presley. Offers valued First Capital’s common stock at $5 to $5.50 a share, with Park Sterling having one of the highest amounts.
During these talks, an unnamed bank showed a willingness to pay up to $5.80 a share, but it backed away “after expressing a concern over employee retention and cultural fit,” the filing said. First Capital and Banks Street later determined that retaining First Capital’s commercial lending team was critical to making a deal work. By the end of last year, First Capital’s board decided it best to stay independent, authorizing a dividend and a stock repurchase program.
New interest in First Capital surfaced in May, prompting the board to rehire Banks Street. By July, the company had reached back out to Park Sterling. First Capital and Park Sterling continued to have discussions as other banks indicated that they were also interested in a deal, the filing said.
In late August, four First Capital executives traveled to Charlotte, where they held a group meeting and rotating one-on-one meetings with Park Sterling executive to gauge cultural fit.
Park Sterling soon offered to pay $5.54 a share in cash and stock for First Capital. Park Sterling also agreed to a fixed exchange ratio – structured to take into account market volatility at that time – that would be set when it provided a preliminary nonbinding indication of interest. Park Sterling also offered Presley a consulting agreement.
Discussions and minor revisions took place throughout September before the parties agreed to the merger, the filing said.