Fortress, Lightyear, Crestview near Fla. bank deal

By Joseph A. Giannone

NEW YORK (Reuters) - Three private equity firms are near a deal to inject $800 million into a small Florida bank, giving them control of a healthy lender that could be used as a vehicle for acquiring more banks, people familiar with the situation told Reuters Thursday.

Under a preliminary deal expected to be announced Thursday, Fortress Investment Group LLC (FIG.N: Quote, Profile, Research), Crestview Partners LP and Lightyear Capital would each hold a significant, minority stake in First Southern Bancorp Inc (FSOF.PK: Quote, Profile, Research), a Boca Raton-based community bank with less than $400 million of assets.

With the investment, First Southern could start gobbling up troubled banks in Florida. People familiar with the deal expect the bank could grow to at least $5 billion in assets.

The three investment firms would collectively hold a majority stake of $450 million, through individually the firms would remain below the 25 percent threshold that would then trigger Federal Reserve oversight.

Investment bank KBW Inc (KBW.N: Quote, Profile, Research) would raise an additional $350 million from institutional investors, the sources said.

Fortress, Lightyear and Crestview each would have equal shares and board representation. The investment group plans to install Gene Taylor, a former senior Bank of America Corp (BAC.N: Quote, Profile, Research) executive, as First Southern's chief executive.

Taylor was a longtime lieutenant to former BofA chief Hugh McColl, asked to oversee the integration of dozens of banks acquired by NationsBank and later Bank of America, particularly in the U.S. Southeast.

First Southern's board is expected soon to approve a nonbinding term sheet and grant the investors an exclusive 60-day window to hammer out a definitive agreement, sources familiar with the deal said.