Businessman to put $25 million into Service1st Bank

By Steve Green

Monday, June 21, 2010 | 8:39 a.m.

Businessman Jason Ader says his company still plans to buy Service1st Bank of Nevada and today Ader announced plans to pump $25 million of capital into the bank to beef up its finances.

Ader, a Las Vegas Sands Corp. board member, in September announced plans for his company Global Consumer Acquisition Corp. to buy the privately held and Las Vegas-based Service1st, with the price to be negotiated based on Service1st's book value.

Today, Western Liberty Bancorp, the new name of Global Consumer Acquisition Corp., said the price will now be equal to the bank's book value at the end of the month prior to the closing of the transaction, subject to certain adjustments.

The revised agreement eliminates a book value premium payment. Service1st shareholders will continue to receive Western Liberty common stock, with a floor of $8.001 per share and a ceiling of $9.779 per share.

Service1st lost $1.8 million in the first quarter as it set aside $1.5 million to cover bad loans. Many Nevada banks have taken similar loan-loss charges during the recession as some borrowers are unable to meet debt obligations.

The quarterly loss reduced the bank's equity capital position from $24.5 million at the end of the year to $22.9 million at the end of the first quarter. The bank last reported it had $210 million in loans and other assets.

"The transaction with Western Liberty Bancorp brings valuable additional capital to us, not only strengthening our competitive posture in our local market but also providing the potential for additional growth opportunities beyond our local market," William Martin, chief executive of Service1st who is to become CEO of Western Liberty, said in a statement.

"We believe the modifications to our agreement with Service1st allow both parties to move forward to pursue attractive opportunities for our combined base of shareholders and we look forward to completing the transaction upon receipt of required regulatory approvals," said Ader, chairman of Western Liberty.

Western Liberty, a New York-based holding company pursuing acquisitions, said that as of March 31 it had $86.5 million of cash assets. During the first quarter it lost $1.75 million as it spent about that amount on stock payments to officers, professional fees and pursuing the Service1st deal.