Florida Community Bank, based in Weston, said Wednesday that it has agreed to buy troubled Great Florida Bank, giving it a stronger foothold in Miami-Dade and Broward counties, and boosting its stature to become Florida’s fourth largest independent bank.
Florida Community Bank, a subsidiary of Bond Street Holdings, was created in 2009 to buy up ailing Florida banks during the economic downturn. It has raised more than $700 million in capital and made eight acquisitions to date, all failed banks purchased from the Federal Deposit Insurance Corp, said Florida Community Bank President and Chief Executive Kent Ellert. Its first purchase, in 2010, was Premier American Bank of Miami.
While Great Florida, based in Miami Lakes, has been operating under a regulatory enforcement action, and mandated to raise capital, it had not been shut down, and will be Florida Community Bank’s first negotiated acquisition. In Miami-Dade, it will add 14 branches to Florida Community’s four, and 10 to its two in Broward, Ellert said.
“We think it’s just terrific relative to what it does to expand our presence,” he said. “We recognize Dade and Broward —for our business model, community banking — that it is critically important for us to be in those two markets.”
In all, Great Florida has more than $1 billion in assets and 25 locations in Miami-Dade, Broward and Palm Beach counties.
The deal, subject to regulatory and shareholder approval, would give Great Florida Bank’s more than 500 shareholders $3.24 per share in cash for each common share owned, which would be a substantial premium to Great Florida’s average stock price over the last several years, the bank said. Great Florida’s shares closed Wednesday at $2.92, up 812.5 percent from their closing price on Tuesday of 32 cents. The purchase is expected to be completed by the end of the fourth quarter.
“Now we are going to be part of a large institution with significant opportunities to grow, and create the largest community bank in Florida,” said Mehdi Ghomeshi, president and chief executive of Great Florida Bank.
Founded in 2004, Great Florida has suffered since the economic downturn, and is rated zero stars, on a scale of zero to five, by Coral Gables rating firm BauerFinancial.
“The biggest mistake I made is I started it at the wrong time and in the wrong place,” said Ghomeshi, referring to South Florida’s real estate and foreclosure crisis. “Everyone thought we would fail, and no one gave us credit, and we did not, and that is a tremendous tribute to the people in this company.”
Ellert said Florida Community will retain the “large majority” of the bank’s 174 employees, and much of its management, including Ghomeshi.
When the deal is completed, Florida Community Bank, owned by a group of individuals, private equity firms and institutional investors, will have $4.4 billion in assets and 67 locations along both Florida coasts and in southeast Florida.
Ken Thomas, a Miami independent bank consultant and economist, said the purchase is good news, since “it eliminates concerns over a large problem bank that has been a dark cloud over the local banking industry.
“Now that it is bought by a strong player,” he said, “that cloud is removed.”