LEGACY INVESTMENTS
Hovde has been actively investing in financial services companies since 1994 and has realized exits on 12 of 16 investments through identifying and negotiating sales to strategic buyers, with an average 2.3x invested capital and an IRR of 46.6%.
Financial Services Partners Fund I
2011 - Concord Wealth Management
In September, 2006, Fund I made a $5,000,000 investment in Concord Wealth Management, which operates out of the Northeast as part of the outsourced asset management industry. The company provides comprehensive wealth management platforms to investment advisors (primarily bank wealth management and trust departments) that are moving away from proprietary account management to external professional management. Concord was purchased by LPL Holdings on June 22, 2011 in a highly structured transaction. Subject to an earn-out period, it is anticipated that this will result in a potential IRR of 21%.
Merchant Banking
2011 - US Capital Associates
Hovde invested $3 million in US Capital in December 2003 to own 55% of the company. US Capital is a retail insurance premium finance business headquartered in Greenbelt, Maryland. In May 2011, Hovde's membership interest was redeemed by US Capital for $8.3 million generating a 27.3% IRR and 2.7x multiple on capital invested.
2003 - Bank of Coronado
In 1998, Hancock Park Acquisition, L.L.C. (“Hancock”) acquired a controlling interest in Coronado. In connection with the recapitalization, Hancock received approvals from the Board of Governors of the Federal Reserve System and the California Department of Financial Institutions to be a bank holding company and placed one of its senior officers on its board of directors. After a period of strategic improvements promoted by our representative, Coronado was sold to First Community in 2003 in a cash transaction, resulting in a gross IRR of 22.3% on an investment of approximately $1 million. Coronado was assisted by a Hovde Financial in this sale transaction.
2002 - Hancock Savings Bank, FSB
Hancock Park Acquisition, L.P. (“Hancock”) was formed in 1996 concurrently with Western Acquisition Partners, L.P. and capitalized with approximately $6.3 million for the primary purpose of purchasing a controlling interest in Hancock Savings. Hancock acquired an approximate 46% ownership interest in Hancock Savings following receipt of approval from the Office of Thrift Supervision to become a savings and loan holding company for the bank. After a period of strategic improvements promoted by Hovde board representatives and active involvement in the management of the bank, Hancock Savings was sold to Bank Plus Corp. in a stock exchange transaction; our position in Bank Plus Corp. was subsequently acquired in 2000 by Fidelity Federal Bank. Upon liquidation of our investment in 2002, a gross IRR of 7.1% on an investment of $7.1 million was realized.
2001 - B&I Lending, LLC
In February 1999, Hovde Acquisition, L.L.C. (“HACQ”) acquired a 60% interest in B&I, a finance company specializing in rural development loans guaranteed by the U.S. Department of Agriculture. In the fourth quarter of 2000, HACQ became actively involved in the management of B&I and, in April 2001, removed the chairman & CEO and replaced him with a HACQ senior officer. Assisted by a Hovde Financial, B&I was sold in a stock exchange transaction in July 2001; HACQ liquidated this position in December 2001, allowing HACQ to recognize a gross IRR of 14.7% on its $10.4 million investment, $5.4 million of which was not funded until late 2000 and early 2001.
2000 - Bank of Hollywood
Beginning in 1996, Hovde Affiliates acquired shares of Bank of Hollywood and, in 1998, received change in control approval from the Federal Deposit Insurance Corporation and the California Department of Financial Institutions and entered into passivity commitments with the Board of Governors of the Federal Reserve System to acquire in excess of 9.9% of Hollywood’s outstanding shares. Hollywood was sold in February 2000 to PBOC Holding Inc., resulting in a gross IRR of 33.4% on an investment of approximately $1.1 million. Hollywood was assisted by a Hovde Financial in this sale transaction.
2000 - American International Bank
In mid-1997, a Hovde affiliate recapitalized AIB, a troubled Asian-American bank, after obtaining necessary federal and state regulatory approvals. Hovde placed two members on the AIB board of directors, became actively involved in managing the bank and then spearheaded the sale of the bank. In January 2000, AIB was sold to East West Bancorp in a cash transaction valued at approximately $34 million, resulting in a gross IRR of 17.6% on an investment of approximately $1.7 million. AIB was assisted by a Hovde Financial in this sale transaction.
2000 - North County Bancorp
In 1995, a Hovde Affiliate acquired a controlling interest in North County in a recapitalization transaction intended to strengthen capital and fund growth and expansion. In connection with the recapitalization, change in control approvals were received from, and our passivity commitments were accepted by, the Board of Governors of the Federal Reserve System and the California Department of Financial Institutions. In January 2000, a Hovde Affiliate assisted in the sale of North County to Wells Fargo & Company, resulting in a gross IRR of 54.2% on an investment of approximately $2 million.
1999 - Bank of Stockdale / VIB Corp.
Financial Institution Partners, Ltd. (“FIP Ltd”) was formed in December 1997, for the purpose of acquiring an approximately 31% ownership interest in Bank of Stockdale, FSB. After receiving approval of the Office of Thrift Supervision to be a savings and loan holding company and recapitalizing the bank, at which time FIP Ltd appointed two of our senior officers to its board of directors, and after assisting in the cleaning up of the operation, the bank was marketed for sale. The bank sold to VIB Corp. in January 1999 in a stock transaction; the subsequent sale of the VIB Corp. stock (a “double dip”) yielded a gross IRR of 35.3% on an investment of $2.6 million. A Hovde Financial assisted in these sales transactions.
1999 - Belmont Associates, Inc. / Monarch Savings Bank, FSB
HACQ was formed in 1994 to acquire a 49% interest in Belmont Associates, Inc. and its wholly owned subsidiary, Monarch Savings Bank, FSB, in New Jersey. In connection with this acquisition, HACQ was approved by the Office of Thrift Supervision to be a savings and loan company. After a period of strategic improvements promoted by Eric Hovde, including a restructuring of the board of directors and the replacement of senior management, Belmont was sold for $33.9 million in January 1999, allowing HACQ to recognize a gross IRR of 123.5% on its $2.2 million investment, $1.7 million of which was not funded until June 1997.
1999 - Del Amo Savings Bank
Given our knowledge of and relationship with with management of the Del Amo Savings Bank, Hovde was able to assess the financial condition and future prospects of the bank. This enabled us to acquire a meaningful investment (21.03%) in a privately negotiated transaction at an attractive price per share. With Hovde's assistance, the management team negotiated a sale to City Holding in March 1999 at a recognized gain of approximately $1.4 million, a gross IRR of 23.2% and a multiple of capital invested of 1.6x.
1997 - Business and Professional Bank
In June 1996, principals of Hovde acquired approximately 11.5% of B&P. The bank was acquired for cash in May 1997 by U. S. Bancorp, yielding a gross IRR of 123.4% on an investment of $1.9 million.