Castle Creek Raises $65M For $250M Fund V: UPDATED

Principals for Castle Creek Capital Partners V include John Eggemeyer, Mark Merlo, John Pietrzak and Mikesell Thomas. Pietrzak is listed as managing principal of the general partner of the new fund.

“We’re seeing this [as] an interesting time to invest in community banking,” said Sundeep Rana, principal at Castle Creek Capital. “If you look at the market now, composite valuations for smaller banks haven’t much changed [from 2009], but risk in the system has decreased…and credit problems and non-performing assets have started to decline and tangible common equity levels are at a 20-year high.”

He declined to comment on the firm’s fundraising plans.

Fundraising for Castle Creek Capital Partners V has kicked off separately from an effort to set up specialized funds to invest in the preferred stock of banks that took part in the Troubled Asset Relief Program in the wake of the 2008 financial crisis.

The latest effort comes after its last flagship fund, Castle Creek Capital Partners IV, closed in February 2011 with $331 million in commitments.

In a 2011 interview with Buyouts, Eggemeyer, managing principal of Castle Creek, said the money-raising effort for Fund IV took place “during a very tough fundraising environment.” That fund’s original target was $500 million, but the firm pared it back.

Eggemeyer turned to buying up banks after Drexel Burnham Lambert went out of business in 1989. “I went and saw people who had money and said if we could get these troubled banks back on the straight and narrow, you could earn a nice return,” he said.

Based in Rancho Sante Fe, California, Castle Creek positions itself as an expert in recapitalization, growth equity and buyout investments of U.S. community banks, those with less than $10 billion in assets. Since 1992, it has invested more than $1.9 billion of capital, mostly for bank transactions, with 60 investments and acquisitions to date, according to its website.

Current portfolio companies include Carlile Bancshares LLC, Continental Bank, First Merchants Corp, First NBC Holding Co., Heritage Commerce Corp, Square 1 Financial and West Coast Bancorp.