United Community Banks Inc. (NASDAQ:UCBI) have seen shares rise this morning over 25%. Shares have climbed more than $.40 to over $1.90 on more than 2.8 million shares traded. This is three times the normal daily volume of .9 million shares. This large increase in UCBI’s shares is due to announcement of UCBI’s intent to sell a stake of the company.
United Community Banks Inc is looking to sell a one quarter stake in the company(approx 22.5%) for $380 million while offloading $435 million in bad assets to help shore up the balance sheet. UCBI will sell a combination of both common and preferred shares to a group of institutional investors and a partner of Corsair Capital. Such a large stake in the company will give the buying group a seat on the board.
If Corsair Capital and its group of institutional investors are able to purchase this stake before UCBI fails they will be able to avoid rules governing private equity firms buying failed banks that U.S. Bank Regulators have on place. This marks another occasion where private equity firms like Corsair Capital step in to bail out financial institution when traditional funding sources dried up.
About United Community Banks, Inc.
United Community Banks operates as the bank holding company for United Community Bank that provides retail and corporate banking services. Its deposit product line includes interest-bearing and non interest bearing deposits, NOW accounts, money market accounts, checking accounts, savings deposits, time deposits, and brokered deposits.