Patriarch's Chief Executive to Form Bank Holding Company

October 5, 2009

NEW YORK -Lynn Tilton, the chief executive of Patriarch Partners LLC, started her career dealing with bad banks.

Last year, she bought full-page ads in the New York Times and The Washington Post espousing the initiation of a provisional Federal Bank, worried about the state of the financial markets and its impact on middle-market businesses.

Now she is taking the first steps in launching her own bank holding company to buy up struggling middle-market banks. The plan is to purchase and turn around regional community banks. News of the venture was previously reported by Reuters.

"My whole goal is to bring back the traditional lending relationships," she said. "The old CIT. Factoring. Working capital loans. Asset based loans. The small middle market is 80% of our workforce, and we're starving them. We're creating a hole we can't fill."

Tilton is using her own capital for the venture, which will be completely separate from the operations of Patriarch, she said.

The venture is in its earliest stages of getting regulatory approval. Tilton added she is in the midst of recruiting a "very senior management team" of individuals with "substantial banking experience."

"I can't at Patriarch make enough difference to stem the tide, which, until we go from job loss to job creation, will keep rising," Tilton said.

Once the venture gets off the ground and is able to net a charter or a bank acquisition, Tilton plans to recruit an equity fund -- but for now, she is "sanguine" with the use of her own capital, she said.

As far as the structure goes, Tilton was vague. "I always believe that there are winning structures -- the losing ones have already sunk," she said. "It might be similar to the off-balance sheet type I did when I worked with other troubled banks in the past, but I don't know yet. "

This year, Tilton proposed the Rescue Loans Program, a plan for a public-private partnership that would operate under the Treasury Department's Public Private Investment Program and provide rescue loans to small and midsize companies. She said that she has heard back from the Senate, which expressed interest in the program.

Reach Patriarch at 212-825-6533.