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PE Seeking Bank Deals, Meet A Bank Deal

After he sold his company, Fidelity & Trust Bank, to Eagle Bankcorp in 2008, Robert Fiallo has sought to build new bank by cobbling together a handful of the many failed institutions.

In fact, he’s received regulatory approval to buy a federally chartered bank and is gathering commitments from private equity firms and high net worth individuals to implement his roll-up strategy. He’s got everything lined up, he’s just waiting on the commitments.

Fiallo said he hopes to raise and invest between $50 million and $100 million in the next 120 days. The situation is urgent, because this window of time is when he expects the most forced sales of FDIC-seized banks to take place. “The window will close eventually,” he said.

For now, he is working to close on his first deal. It’s for a federally chartered bank in Virginia, and the approval process for buying the bank is complete. Federally chartered banks are attractive because they are subject to national laws, rather than state-by-state. Fiallo said he chose to start with a small, failed bank because the cost of entry, including its charter, is next to nothing, and the smaller the assets under management, the less of “someone else’s junk,” he would have to worth through.

Fiallo has raised $15 million to close on the bank, which has $9.5 million in assets under management. He plans to build up the bank in the same style as his prior to companies. With Fidelity & Trust Bank, he created the bank de novo and built to it $500 million in assets before selling to Eagle Bankcorp for $48.8 million last year. Prior to that, Fiallo worked on the roll-up of F&M Bank, a regional bank. The strategy was that F&M, with $4 billion in assets under management, would purchase small regional banks and build efficiencies by consolidating backroom operations, while keeping senior management and the bank’s branding in place.

Fiallo plans to implement that strategy with his latest venture and he already has three targeted institutions in mind. Those targets will fail in the next quarter, he said, “unless a miracle happens.” The banks’ boards of directors have already expressed interest in partnering with Fiallo’s venture.