West Florida Banking Corp. will launch a capital raise as it works on its plan to buy Flagship Community Bank in Clearwater.
The company is targeting at least $30 million, with a minimum of $27 million and a maximum of $40 million, Bob McGivney, CEO and vice chairman, told the St. Pete Catalyst.
West Florida Banking is a newly formed company led by McGivney and other Pinellas County banking veterans.
McGivney was president of Jefferson Bank of Florida in Oldsmar when it was acquired in 2017 by HCBF Holding Co. in Fort Pierce. HCBF in turn was bought by Winter Haven-based CenterState Bank the following year, and CenterState named McGivney as Pinellas County market president.
CenterState (Nasdaq: CSFL) has grown through acquisitions to be one of the largest banks headquartered in Florida, with $12.6 billion in assets.
McGivney left CenterState on Feb. 1. He has a lot of respect for CenterState, but said he prefers community banking.
“I like to be closer to the customer than you can be in the larger [banking] world. Also, the customer is not as far away from policy makers, which makes for better customer convenience,” McGivney said.
Both community banks and larger institutions perform the same functions, but at community banks “the answers can come more quickly than at bigger banks and often do.” In addition, community banks are able to handle the credit needs of the vast majority of the businesses in the Tampa Bay area.
The number of community banks has decreased dramatically since the end of 2008, when there were 307 banks headquartered in Florida. Now there are 108 banks based in the state with less than $10 billion in assets, and just three of them, including Flagship, are headquartered in Pinellas County. There have been just three new banks formed in Florida in the past decade.
Starting a new bank can take a year or more and it’s expensive, McGivney said.
“There’s a lot of overhead that’s burned in that process. When we started Jefferson, we burned about $1 million before we could open the door,” he said. “That does not include leasehold improvements. It’s everything from attorney fees to data processing contracts to payroll. You have to be fully staffed 30 days before you can open doors, so you have to have a full staff on board at least 60 days ahead of time.”
Buying Flagship could be a much shorter process, since the staff is in place.
A group of Tampa investors led by Carl Chaney, the former CEO of Hancock Whitney Bank, took the same path last year when they bought Beach Community Bank in Florida’s Panhandle, recapitalized it with $100 million and opened a Tampa office, with plans to move the bank’s headquarters to Tampa.
The Flagship deal is expected to close by the end of the year, pending completion of the capital raise and regulatory approval.
Most of the Flagship employees are expected to stay on the job. West Florida Banking will hire additional lenders and treasury management talent. The company is in discussions with Frank Burke, Flagship’s chairman, president and CEO, and it’s not yet been decided if he will stay on.
Flagship currently has two offices. Under new ownership, it’s likely to add some modest-sized offices and beef up its electronic banking offerings.
The agreement calls for West Florida Banking to pay $14.57 a share in cash and stock for all the shares of Flagship. The total deal is valued at about $25 million, McGivney said.
“We have managed to assemble a fantastic group of bankers from some of the most successful community banks around. We are looking forward to putting that into play and taking care of old customers and new customers,” he said.