A group of 20 investors has purchased a majority stake in Bend-based High Desert Bank and also infused the financial institution with $1.4 million in additional capital, the bank announced Tuesday.
The sale puts High Desert Bank on more solid financial footing, and will allow it to grow and add services beyond its mostly commercial lending, said Cynthia Kane, chairwoman of High Desert Bank’s board of directors. “It’s given us the capital to be able to move forward,” she said.
Founded in 2007, High Desert Bank has one office, on Southwest Disk Drive, assets of about $30 million as of Sept. 30, and five employees, according to Federal Deposit Insurance Corp. documents.
Joining Kane, who owns her own health care consulting business, on the bank’s board are Gary Fish, founder of Deschutes Brewery; Dr. Bruce McLellan, president of Heart Center Cardiology, and executives and owners of other companies in the region.
Previously, Capitol Bancorp Limited, a bank holding company based in Lansing, Mich., owned a majority interest in High Desert Bank.
In 2008, Capitol Bancorp had 64 banks operating in 17 states, but the economic collapse pushed it into financial trouble. Federal banking regulators issued a cease and desist order for Capitol on Dec. 29, 2009; the company began selling off banks, and it filed for bankruptcy in August.
Capitol’s difficulties had the potential to overflow onto High Desert Bank. FDIC documents said High Desert may have been on the hook for costs related to failures of other Capitol Bancorp-controlled banks.
As of Sept. 30, High Desert was listed as adequately capitalized, a step below the top level, well capitalized, according to Capitol Bancorp’s third-quarter financial statements.
Along with purchasing Capitol’s majority interest, however, the group of 20 investors also bought additional shares totaling $1.4 million, which will move High Desert Bank up to the well-capitalized classification, Kane said.
It also means no one shareholder owns more than 9.9 percent of the bank, she said.
Bank officials are finalizing a business plan for 2013 and considering offering more home mortgages, she said.