SDN Bancorp Enters into Letter of Intent with Dartmouth Capital Group

SDN Bancorp and its subsidiary San Dieguito National Bank have announced a letter of intent with Dartmouth Capital Group L.P. led by Robert P. Keller. The proposed transaction aims to recapitalize San Dieguito National Bank by having Dartmouth Capital Group purchase shares of common stock and convert at least 75% of the bank's outstanding subordinated convertible debentures into common stock. Following the recapitalization, Dartmouth Capital Group is expected to own approximately 85% to 98% of the outstanding shares of SDN Bancorp common stock.

Key Takeaways:

• The proposed transaction involves Dartmouth Capital Group L.P. purchasing shares of common stock from SDN Bancorp and requiring at least 75% of the bank's outstanding subordinated convertible debentures to convert into common stock.
• The actual equity interest retained by existing SDN Bancorp shareholders will depend on the performance of San Dieguito National Bank's portfolio of classified assets, which aggregated $4.3 million as of March 31, 1995.
• Robert P. Keller, the lead of Dartmouth Capital Group, has previously led successful recapitalizations of financial institutions, including a New England area group of institutions.
• SDN Bancorp's chairman, J. Peter Fitzpatrick, stated that the board is delighted with the prospects of the transaction and looks forward to working with the new investors.
• The transaction is subject to several conditions, including the execution of a definitive agreement, completion of the current regulatory examination, and approval from shareholders, debenture holders, and regulators.
• San Dieguito National Bank has assets of approximately $57 million and was founded in 1980 by local business men and women.

Statistics:

• $4.3 million: the aggregate value of San Dieguito National Bank's classified assets of loans and real estate owned as of March 31, 1995.
• 75%: the minimum percentage of SDN Bancorp's outstanding subordinated convertible debentures required to convert into common stock as part of the recapitalization.
• 85-98%: the estimated equity interest that Dartmouth Capital Group is expected to own in SDN Bancorp's outstanding shares of common stock post-recapitalization.
• $57 million: the assets of San Dieguito National Bank.
• $1.8 billion: the headquarters institution of Robert P. Keller, Caliber Bank, which was acquired by Norwest Corp. in February 1995.
• 1980: the year San Dieguito National Bank was founded by local business men and women.

Sources:

• SDN Bancorp press release dated June 6, 1995.
• PR Newswire, June 6, 1995.