A Johnston County bank has agreed to acquire Nuestro Banco, the struggling Garner bank that is focused on the Hispanic community.
Four Oaks Bank, which will pay about $2.7 million, will keep Nuestro Banco's sole branch in Garner open for at least a year, said Nancy Wise, Four Oaks' chief financial officer. During that time, Four Oaks will evaluate whether it makes financial sense to keep the Nuestro Banco branch open. Four Oaks already has a Garner branch.
"We have a commitment to serve all the citizens in the communities we serve," said Wise, who noted that many of the bank's 17 branches have bilingual tellers.
State and federal regulators recently issued a cease-and-desist order against Nuestro Banco that called for it to overhaul its operations and halt "unsafe and unsound banking practices and violations."
It's not unusual for a cease-and-desist order to trigger a sale.
Nuestro Banco lost $3.3 million last year and $2 million in 2007, according to the Federal Deposit Insurance Corp. The bank had $16.8 million in assets as of Dec. 31, up from $14.4 million in 2007.
Ayden R. Lee Jr., Four Oaks' chairman and CEO, said in a prepared statement that acquiring Nuestro Banco will strengthen the bank's capital position.
"We are well-capitalized, but, in these days, it is hard to get too much capitalized," Wise said. She said that the acquisition, which is expected to close in the third quarter, would add roughly $5 million in capital to Four Oaks' coffers.
The $2.7 million sale price adds up to a significant loss for Nuestro's initial investors. The bank opened in September 2007 after raising $13.75 million in capital.
Four Oaks will keep many, but not all, of Nuestro Banco's employees. "Obviously, we don't need two CEOs," Wise said.
Tom Caffrey, who took command of Nuestro Banco's operations after president and CEO David Flores resigned in October, couldn't be reached.
The definitive agreement was announced Thursday. The boards of directors of both banks have approved the sale, which is subject to the approval of Nuestro Banco's shareholders and regulatory agencies.
Four Oaks has 17 branches in eight counties. Its assets totaled $957.3 million as of March 31.
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