Capital Raising

The Challenges

A small community bank in Rocky Mount, North Carolina was 97% controlled by a large, multi-state bank holding company located in Michigan. The bank was under a Consent Order with a Tier 1 Leverage Ratio just above 2%, labeling the bank “significantly undercapitalized” by the FDIC. A group of local businessmen, many of them with bank management and board experience, decided to form a Holding Company in an attempt to purchase all of the common stock of the bank and then recapitalize it. They reached out to Derek Cunningham and Will Creekmore to work with the newly formed holding company to raise the capital needed to successfully execute the transaction.

The Solutions

  • Our principals worked with the Holding Company Board of directors to identify a quality list of accredited investors in the community. From past experience we realized very soon into the process that we would need more people on the “team”.
  • With a holding company of only 6 individuals we saw the need to form an Advisory Board to help strengthen the oversight of the bank but also to increase our ability to be connected to enough HNW individuals in the community to ensure a successful capital raise. We worked with the Holding Company Board to select a group of influential businessmen and women in the community to form the Advisory Board with 11 new members.
  • Much of the former executive management team was replaced in an effort to bring in new, top-performing talent who also knew the local market.
  • Utilizing a series of 19 luncheons and cocktail receptions in addition to over a dozen private 1 on 1 meeting’s; we produced a total of 156 accredited investors; average investment of $83,573.
  • In about 5 months, utilizing our proven “community raise” process of having FINRA-licensed sales representatives working and living in the community; we raised over $13 million. More than 96% of these new investors came from within 1 hour of the main branch.
Today, the bank is 100% owned by the local community in Rocky Mount. The new management team has cleaned up the bank significantly as non-performing assets (as a % of assets) were above 13% before the offering and are now below 6%. The Leverage Ratio has improved from 2.08% to over 12% with the Risk-based ratio improving from 3% to over 16%. After 5 straight years of net losses, the bank is now profitable and will continue to be as they have excellent management, 2 stellar Boards, and enough capital to produce a lot of shareholder value.