ATBancorp of Dubuque, Iowa, and United American Bank (UAB) today announced the completion of ATBancorp’s initial $10.0 million investment in UAB’s capital stock. The transaction received regulatory approval from the Federal Reserve Board and California Department of Financial Institutions. In addition, the United States Department of the Treasury, as a shareholder of UAB, voted to approve the transaction. With completion of the initial investment, UAB’s capital ratios would qualify as “well capitalized” as calculated under customary bank regulatory standards. UAB’s capital had been diminished in recent years by the increase in non-performing loans resulting from poor economic conditions in the hard-hit San Francisco-area commercial real estate market.
ATBancorp’s purchase of $10.0 million of common and common-stock-equivalent preferred stock at the price of $0.30 per common share resulted in ATBancorp owning approximately 88 percent of the outstanding voting stock of UAB. ATBancorp also received warrants to acquire 2.5 million common shares exercisable at $0.30 per share for 5 years following the initial closing. The investment agreement further provides that, on a quarterly basis over the next two years, ATBancorp will make additional investments in UAB to maintain UAB as adequately capitalized under bank regulatory standards. Any subsequent investments will be purchased at a price based on 68 percent of the then per-share book value of UAB. Under the terms of the investment agreement, also on October 31, 2011, UAB’s board of directors purchased $1.2 million in common stock at $0.30 per common share.
“ATBancorp has 100 years of community banking experience,” said ATBancorp Chairman and President Nick Schrup. “With this stock purchase we are leveraging our significant resources and community banking leadership as a first step in the process to restore United American Bank to its former status as a strong and growing bank, capable of meeting and exceeding the needs and expectations of the Bay-area businesses and residents it serves. We look forward to working as a team with the professionals at United American Bank to provide exceptional value to our clients and our shareholders.” As part of ATBancorp’s additional investment in UAB, ATBancorp will provide UAB with management oversight and assistance with resolving UAB’s troubled assets.