Beach Bank to be acquired in $116.7M all-stock valued deal

Beach Bank, which operates branches in Tampa Bay, will be acquired by the holding company of The First Bank, allowing it to have an expanded lending capacity and access to new divisions. 

The First Bank’s parent company, The First Bancshares Inc. (NASDAQ: FBMS), is expected to acquire Beach Bank in a deal valued at $116.7 million, based on stock, the company announced this week. 

The acquistion will deepen The First Bank’s presence in the Florida panhandle, while also providing an entry into the Tampa market. Beach Bank operates seven branches across the Florida panhandle and Tampa markets with deposits of approximately $492 million and loans of $456 million, according to the most current data. 

Beach Bank CEO Chip Reeves told the St. Pete Catalyst the Covid-19 pandemic accelerated the digitalization of the banking industry and needed additional scale to become more competitive. 

Beach Bank CEO Chip Reeves. Photo provided.

“Our team in Tampa Bay and clients were having so much success that our team’s talent level was beginning to outstrip the size of our balance sheet,” Reeves said. “There’s nothing worse in life as a CEO to have to tell an important client that we aren’t going to be able to assist you on your next stage of growth or next acquisition because we don’t have enough scale or capacity to assist you. That was beginning to happen and we saw it occurring more in the future based on talent level. We knew we needed additional scale and started looking at a few partners to provide that.” 

Reeves said he and Ray “Hoppy” Cole Jr., President and CEO of The First Bancshares Inc., got acquainted with one another over the past couple of years through a mutual business relationship with Beach Bank Chairman Carl Chaney, former CEO of Hancock Whitney. The conversations on a potential acquisition emerged in January and the two entered into a letter of intent at the end of February, kicking off the due diligence period. 

“We are thrilled about joining forces with Beach Bank and continuing to grow our presence in Florida. Together, our company will have $5.9 billion in deposits, with $1.6 billion in Florida ranking us No. 1 in deposit market share among community banks within our northwest Florida markets,” Cole said in a news release. 

Reeves explained from First Bank, a multi-regional state bank, wanted to grow more deeply in Florida beyond its northern presence, and economic momentum in Tampa Bay attracted them. 

The deal is expected to close in the late third or fourth quarter. Under the terms of the merger agreement, Beach Bank’s shareholders are expected to receive 0.1711 shares of First Bancshares common stock for each share of Beach Bank’s common stock.

Although the deal has not officially closed yet, Reeves said Beach Bank is already experiencing some changes. 

“Yesterday, we approved an extremely sizable loan request from one of our clients that we wouldn’t have been able to do ourselves. We can take advantage of that lending capacity, and we previously did not offer a private banking and wealth management division. We are very business-centric so that wealth management component is very critical to us,” Reeves said. 

Vice-versa, Beach Bank will bring its valued lines to The First Bank. Beach Bank started to develop specialty lending lines of business that The First Bank will adopt, specifically the government lending platform, Reeves said.  

The acquisition will cause some shifts in leadership and roles. Beach Bank’s entire Tampa team has already signed agreements. 

Reeves, currently Beach Bank’s CEO, will be responsible for mortgage banking, specialty lending platforms and the Central Florida region. Henry Gonzalez, currently Beach’s Tampa market president, will become the regional president of Tampa. Chip Falk, senior lender principal for Beach Bank will join the specialty lines team, overseeing government lending and the derivatives business.

In addition, Tampa-based Corey McLaughlin will lead the health care practice lending division. Peter Dyson, SVP of  Northwest Florida and Pam Woodall, SVPof mortgage, will join the team in the panhandle.

Reeves said he doesn’t expect Beach Bank’s physical locations to change. The firm’s executive and commercial lending office in Westshore and downtown Tampa branch will remain. 

Over the next 12-24 months, Reeves said, the firm will likely open offices in St. Pete and Bradenton/Sarasota.