A North Carolina banking dispute has moved from behind closed doors into public view. Triad Business Bank has confirmed that it is the unnamed “Party A” referenced in M&F Bancorp’s proxy materials, and it has published the terms of its latest proposal to M&F’s shareholders and board.
Triad Business Bank (OTCID: TBBC), based in Greensboro, says it has made four written proposals to M&F Bancorp since August 6. Its most recent offer, delivered on October 8 and called Proposal Four, is a nonbinding indication of interest rather than a signed merger agreement.
The central feature is cash. Triad says it would pay $53.50 per M&F share at closing, with the payment fixed and not dependent on later events. That cash option would be available for up to 25% of M&F’s outstanding shares. If more shareholders choose cash than that limit allows, the available cash would be prorated among them.
M&F shareholders who do not take cash would instead receive 1.25 shares of M&F Bancorp for each share they currently own. In practical terms, they would remain owners of the holding company rather than selling out entirely. Triad says M&F Bancorp would survive and own both M&F Bank and Triad Business Bank, with each bank keeping its own charter.
Triad frames the offer as an alternative to M&F’s existing agreement with Optus Financial Corporation. Under that agreement, Triad says Optus would pay up to $46.57 per share at closing, with another $6.73 payable only if M&F’s Series E preferred stock is redeemed before or within twelve months after closing. That would bring the potential total to $53.30, but part of the payment would be conditional.
The difference at closing is therefore $1.93 per share in favor of Triad’s cash election, based on the companies’ public descriptions. Triad also stresses that its $53.50 payment would not depend on the Series E redemption or any post closing adjustment.
The timing matters. On October 7th, M&F shareholders, with a quorum present, did not approve the Optus merger agreement. M&F adjourned the meeting to October 20, giving shareholders more time to consider the proposal from Party A, whose identity had not then been disclosed.
Triad now wants M&F’s board to disclose Proposal Four and explain its position before shareholders vote again. It says M&F’s board rejected the proposal earlier this week, concluding that it was not a superior proposal and was not reasonably likely to lead to one. M&F also told Triad it would not review proposals received after 5:00 p.m. Eastern Time today.
Triad disputes the board’s reasoning and asks for a meeting before Tuesday’s reconvened vote. It argues that shareholders should see both the proposal and the board’s assessment before deciding whether to approve the Optus transaction.
The proposal also carries a broader message about M&F’s future. Triad says the combined company would preserve M&F Bank’s name, its 1907 charter and its Durham home office. It says M&F Bank would continue as a minority depository institution and community development financial institution within a holding company governed by a majority African American board, a requirement Triad says would be written into the charter and bylaws.
Triad director Jonathan Lee Kelly said the proposal is intended to preserve M&F’s legacy while giving shareholders a choice. He described the offer as one that lets shareholders take more cash at closing or remain owners of a larger banking company.
For Triad, the deal would create a bank holding company with two North Carolina charters. It estimates the combined company would have about $1.0 billion in assets at closing. Triad, which opened in March 2020, had approximately $536 million in total assets at June 30th and focuses on lending to small and midsize businesses.
There are important limits. Proposal Four is not a binding offer, and M&F remains bound by its agreement with Optus except where that agreement permits engagement. Any Triad transaction would still require a definitive agreement, shareholder approvals and regulatory clearances, including approvals from the FDIC, the North Carolina Commissioner of Banks and the Federal Reserve.
The next test comes on October 20th. If M&F shareholders again decline to approve the Optus agreement, Triad says its proposal will remain available and that it will be in Durham the following morning with a draft agreement ready. If the Optus deal is approved, Triad says it will accept the result, though its public campaign has already changed the terms of the debate.
