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The new majority owner of Sarasota-based Bank of Commerce, if a $10 million deal for fresh capital is approved, brings a passion for fast cars and rock and roll to town.
Chattanooga, Tenn.- based entrepreneur Byron DeFoor has also been building up a portfolio of banks in the Southeast that struggled with capital and nonperforming loan issues in the recession. In addition to the pending deal for Bank of Commerce, announced Sept. 22, DeFoor holds a majority interest in Ooltewah, Tenn.-based Millennium Bank and Gastonia, N.C.-based Alliance Bank & Trust.
The banks are small: Alliance had $147.5 million in assets through June 30; Millennium, which serves the Greater Chattanooga region, had $156 million; and Bank of Commerce had $209 million. All were under regulatory consent orders to raise capital.
And DeFoor brings more to Bank of Commerce. One company he owns operates more than 40 skilled nursing home facilities, while another provides financing for health care companies. He's also a real estate developer, with projects that include a Westin and Embassy Suites in Chattanooga. “I've never seen a guy with as much energy,” says Alan Smith, a longtime Tennessee banker who works with DeFoor. “He's always on the go.”
That carries through to another DeFoor passion: racing cars. He's raced the Rolex 24 in Daytona several times, says Smith, and he won the Rolex Endurance Series in 2009. He also has a connection to Sarasota beyond the bank, in a friendship with AC/DC rocker and local resident Brian Johnson.
DeFoor and Smith, named Bank of Commerce chairman under DeFoor's ownership, have looked at banks to buy for five years. They seek a good long-term investment based on the area market and leadership team, despite an underwhelming balance sheet. “We are not intimidated by regulatory issues,” Smith tells Coffee Talk. “And we don't come in and rip and replace” managers and local leaders.
DeFoor's $10 million investment in the bank hinges on court approval of a voluntary bankruptcy filing by its parent company, Bank of Commerce Holdings Inc. That bankruptcy, through a section of the code for a distressed holding company, according to a statement, “permits the sale of assets 'free and clear' of existing liens and interests.”
One of those interests is more than $10 million in trust preferred stock debt the bank holds, and the bankruptcy clears a path for DeFoor's capital. The bankruptcy is for the holding company, and doesn't impact the Bank of Commerce itself.
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