Equity firm wants tighter grip on Va. bank

A New York private equity firm wants to get a stronger grip on the struggling Norfolk-based parent of Gateway Bank.

CapGen Capital Group has asked regulators for permission to acquire a controlling interest of Hampton Roads Bankshares.

CapGen last month filed applications with the State Corporation Commission and the Federal Reserve to increase its ownership stake in Hampton Roads Bankshares to 49.9 percent from 18 percent.

CapGen already acquired a big stake in Hampton Roads Bankshares when it and several other investment firms put up more than $200 million to get the $2 billion bank on more stable ground.

CapGen also received approval from the Fed to become a bank holding company that could control Hampton Roads Bankshares and its subsidiary banks.

Hampton Roads Bankshares is the parent of Bank of Hampton Roads, which operates as Gateway Bank in Richmond with four local locations. It sold one of its Midlothian branches in October to McLean-based Sonabank.

Neither Hampton Roads Bankshares CEO Doug Glenn nor CFO Steve Theobald returned calls by press time.

Calls to CapGen Principal Robert Goldstein, who is also on the Hampton Roads Bankshares board, were not returned.

If approved, CapGen’s move would bring needed additional capital to Hampton Roads Bankshares. It lost $98 million in 2011, $99 million in 2010 and $210 million in 2009, all fueled by hundreds of millions of dollars in bad loans and foreclosed real estate across the Mid-Atlantic.

The company shrunk by about $1 billion in assets since it peaked at $3 billion in 2008.

The move might also give CapGen more leverage to shape the bank to its liking for future deals, according to Tom Tullidge, an investment banker at Cary Street Partners who works community bank deals.

One possibility could be to position Hampton Roads Bankshares to be acquired.

“My guess is the bank needs more capital,” Tullidge said. “I wouldn’t be surprised if they’re a target.”

CapGen might also be looking to go on the offensive.

Tullidge said CapGen could be angling to pad Hampton Roads Bankshares’ coffers to position it as an acquirer that could bulk up by buying smaller banks.

“I see them having a strategy of saying, ‘this bank needs more capital. We’ll put the money in to save this bank and use it as a vehicle to acquire other banks,’” Tullidge said.

Some of the country’s biggest banks, such as PNC or M&T, are targeting larger community banks, but they have little interest in a bank of Hampton Roads Bankshares’ size.

“They’d rather have a $10 billion bank,” Tullidge said.

Whatever its motivation may be, CapGen surely has a plan, Tullidge said.

“They’re not going to throw good money after bad.”

A New York private equity firm wants to get a stronger grip on the struggling Norfolk-based parent of Gateway Bank.

CapGen Capital Group has asked regulators for permission to acquire a controlling interest of Hampton Roads Bankshares.

CapGen last month filed applications with the State Corporation Commission and the Federal Reserve to increase its ownership stake in Hampton Roads Bankshares to 49.9 percent from 18 percent.

CapGen already acquired a big stake in Hampton Roads Bankshares when it and several other investment firms put up more than $200 million to get the $2 billion bank on more stable ground.

CapGen also received approval from the Fed to become a bank holding company that could control Hampton Roads Bankshares and its subsidiary banks.

Hampton Roads Bankshares is the parent of Bank of Hampton Roads, which operates as Gateway Bank in Richmond with four local locations. It sold one of its Midlothian branches in October to McLean-based Sonabank.

Neither Hampton Roads Bankshares CEO Doug Glenn nor CFO Steve Theobald returned calls by press time.

Calls to CapGen Principal Robert Goldstein, who is also on the Hampton Roads Bankshares board, were not returned.

If approved, CapGen’s move would bring needed additional capital to Hampton Roads Bankshares. It lost $98 million in 2011, $99 million in 2010 and $210 million in 2009, all fueled by hundreds of millions of dollars in bad loans and foreclosed real estate across the Mid-Atlantic.

The company shrunk by about $1 billion in assets since it peaked at $3 billion in 2008.

The move might also give CapGen more leverage to shape the bank to its liking for future deals, according to Tom Tullidge, an investment banker at Cary Street Partners who works community bank deals.

One possibility could be to position Hampton Roads Bankshares to be acquired.

“My guess is the bank needs more capital,” Tullidge said. “I wouldn’t be surprised if they’re a target.”

CapGen might also be looking to go on the offensive.

Tullidge said CapGen could be angling to pad Hampton Roads Bankshares’ coffers to position it as an acquirer that could bulk up by buying smaller banks.

“I see them having a strategy of saying, ‘this bank needs more capital. We’ll put the money in to save this bank and use it as a vehicle to acquire other banks,’” Tullidge said.

Some of the country’s biggest banks, such as PNC or M&T, are targeting larger community banks, but they have little interest in a bank of Hampton Roads Bankshares’ size.

“They’d rather have a $10 billion bank,” Tullidge said.

Whatever its motivation may be, CapGen surely has a plan, Tullidge said.

“They’re not going to throw good money after bad.”

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