Investor may infuse MBank with cash

Recapitalization plan to retain bank name, employees

A Portland financial group has agreed to invest up to $30 million in MBank common stock as part of a plan to fulfill the Gresham-based bank's regulatory requirements.

Led by Portland native Alexander 'Zan' Hamilton, MB Acquisition Bancorp intends to purchase at least $20 million of the bank's newly issued stock shares in a recapitalization plan designed to help the bank comply with federal capital guidelines, according to a news release issued to The Outlook.

Subject to approval by investors, state and federal regulating agencies, the transaction is expected to be in place by the third quarter, or early fall.

Hamilton is chief executive officer of LIME Financial, a former executive of Credit Suisse and adviser to Intuit during its acquisition of Quicken Loans.

Upon approval of the agreement, Hamilton will be named president and chief executive officer of Merchants Bancorp, MBank's parent company. President and CEO Rex Brittle will retain an active role in MBank operations as president emeritus.

Current employees, the bank's five Portland-area branches and the MBank name are expected to remain in place through the transition.

The Federal Deposit Insurance Corp. issued a mandate in 2009 requiring MBank - the only bank headquartered in Gresham - and six other Oregon banks to raise capital levels through issuing new shares and other strategies.

In the fourth quarter of 2010, Merchants Bancorp reported a net loss of $700 thousand, or $0.16 per share, compared to a net loss of $9.9 million, or $2.27 per share, for the year-ago quarter.

The year-to-date loss for 2010 was $3.2 million, or $0.74 per share, compared to a net loss of $14.8 million, or $3.37 per share, in 2009.

Brittle stressed the plan is positive news for MBank, its customers and the East County community.

'We are pleased to be working with (MB Acquisition Bancorp) on recapitalizing MBank, which has served our community well since its founding in 1995,' he said. 'Through the dedication of our employees, MBank has weathered the recession and will continue our commitment to help MBank customers by providing innovative products.

'I look forward to working with Zan Hamilton and his team.'