Citing unintended consequences of the current regulatory environment, Radius Bank today announced a new recapitalization plan in which four private equity investors will acquire a 95 percent ownership stake in the bank to the tune of $63 million.

Those private equity investors include Patriot Financial Partners, GCP Capital Partners, Endicott Management Co. and BayBoston Capital. Of that $63 million, about $18 million will be an investment for new equity capital for Radius Bancorp.

“We’re deeply committed to the institutional pension fund market,” Radius Bank President and CEO Michael A. Butler told Banker & Tradesman. “Our owners have been part of that and will continue to be. We’ll continue to be good commercial lenders and we’ll continue to build out our virtual bank.”

The Volcker Rule, a provision of the Dodd-Frank Act, limits how much bank holding companies can invest into private equity funds. That meant the bank’s current owners, the New England Carpenters Pension and Annuity Funds and the Empire State Carpenters Pension Funds, would be considered bank holding companies, Butler said. In order to keep holding the types of investments that would constitute the ordinary business of maintaining the carpenters’ pension funds, Radius Bank’s first owners had to get out of that bank holding company status.

The pension funds have been in conversations with private equity firms for about two years, Butler said. Those firms liked what they saw at Radius – including its partnerships over the past few years with fintech startups like LevelUp, Smarter Bucks and Prosper. While the bank will bring on a new group of directors when the deal closes, Butler said, there are no plans to change the bank’s management team, its current board chairman or any other aspect of its business.

“There are no plans to change our business model,” he said. “This is a classic private equity investment. They’ll add financial capital and some form of intellectual capital and take what is a good business model today and turn it into an even better performing business model over the next few years.”

Radius Bank will, however, put some of that new capital to work adding new products, new technology and larger commercial loans. Additionally, the bank plans to expand its pension fund services into New Jersey and Philadelphia.

“It’s all about doing the same thing we’ve been doing, but being able to grow at the pace we feel the market will allow us to; this capital will allow us that opportunity,” Butler said.

The deal is slated to close in March.