By Mark Wineka
mwineka@salisburypost.com
A new private equity fund, First American Financial Management Co. of Charlotte, will buy Community Bank of Rowan and use it as the platform for future acquisitions.
The pending purchase, announced Wednesday afternoon, will be good news for local shareholders in Community Bank of Rowan. They will receive a 50 percent return on the investment they made three years ago when the bank was formed.
Those 300 local investors bought stock in the new bank at $10.75 a share. As of the close of business Wednesday, they would receive $16.06 a share in a cash payout.
Community Bank of Rowan’s board of directors voted unanimously to recommend the agreement with First American subject to approval by the local shareholders and regulatory authorities.
“It’s a heckuva deal in today’s world,” said Bruce Jones, president and chief executive officer of Community Bank of Rowan. “We feel real fortunate to get this type of return for our shareholders.”
Jones said he hoped the deal could be completed by Sept. 1.
Jones will become chief operating officer of First American Financial Management, a privately held company newly formed by D. Ben Berry. Jones also continues as president of Community Bank of Rowan, which has offices in Salisbury and China Grove.
Berry serves as president and chief executive officer of First American. He was the founder and former chairman, CEO and president of Gateway Financial Holdings of Virginia Beach, Va., and Gateway Bank and Trust Co. of Elizabeth City.
“Acquiring (Community Bank of) Rowan will give us our initial platform on which we intend to launch additional acquisitions primarily in the Southeast and Mid Atlantic regions without regard to geographic limitations,” Berry said.
“Rowan brings us a solid initial franchise with excellent management, and we intend to make no changes.”
The original local investors will receive cash equal to 150 percent of the bank’s tangible stock value.
At present, Community Bank of Rowan is owned 51 percent by Capital Bancorp Ltd. of Lansing, Mich., and 49 percent by local investors, mostly from Rowan County.
Jones said Capital Bancorp is selling some of its banks to raise capital, and First American provided “a really good opportunity” for Community Bank of Rowan to gain additional capital to grow, besides continuing as a state-chartered community bank.
Jones said the First American partnership also puts to rest any underlying perception about Community Bank of Rowan’s not really being a N.C. bank. If approved, Community Bank of Rowan will become a wholly owned subsidiary of the Charlotte-based private equity fund.
“When we started our bank three years ago,” he said, “we had three primary objectives.”
He said he wanted to build a financially strong community bank driven by customer service and for the bank to have a powerful commitment to the community. The third goal was to give an excellent return to its shareholders.
Community Bank of Rowan has demonstrated exceptional growth in its three years, going from nothing to $141 million in assets. Jones said the bank has strong liquidity and capital ratios.
Its employees serve on a number of local boards and have been involved in all levels of community service, Jones said.
“By partnering with First American, we will honor our third objective by giving a 50 percent return to our shareholders,” he added.
Jones said the infusion of capital will allow the bank to add additional products, services and branches “throughout Rowan and surrounding counties.”
“The bank’s core belief will continue to be ‘Customers Always First,’ ” Jones said.
The entire board of directors now serving Community Bank of Rowan will stay in place but will add Berry as chairman.
Community Bank of Rowan has about 25 employees. It opened its first office in China Grove in February 2006. The Salisbury main office opened in May 2006 at the former home of the National Sportscasters and Sportswriters Hall of Fame, at North Long and East Innes streets.
Under its partnership with Capital Bancorp, the bank shares its holding company’s black-and-yellow logo. But Community Bank of Rowan is operated by Jones, his local management team and a 10-member board of directors made up of Rowan citizens.
Capital Bancorp provides back office and computer-related support services that help with operational costs of its affiliated banks.
Jones also serves as Southeast region president for Capital Bancorp and has overseen the startup of two other banks for the company in North Carolina. He will be severing all ties with Capital Bancorp.
Jones previously had led Rowan Bank’s transition from a savings and loan to a bank and stock institution. The China Grove-based bank had grown to $164 million in assets when it was sold to what is now Community One in 2004.