Bond Street to Buy Atlantic Coast in Florida

Atlantic Coast Bank (ACFC) in Jacksonville, Fla., has found a buyer.

Bond Street Holdings has agreed to pay a premium of nearly 50% for the struggling bank, the companies announced Tuesday. Atlantic Coast announced it was exploring the possibility of a merger more than a year ago.

Bond Street would pay $5 per share for the $774 million-asset bank. Atlantic Coast would merge with Bond Street's Florida Community Bank subsidiary, a $3.4 billion-asset bank headquartered in Weston, Fla. The deal is expected to close late in the second quarter.

Of the sale price, $2 would be held in an escrow account for one year to cover potential losses from shareholder claims. The $5 stock price is a 49% premium over the 10-day average price of $3.36, the companies said. The stock rose to $4.57 in pre-opening trading Tuesday morning following the announcement.

Atlantic Coast has struggled to recover from the financial crisis and the housing bust in South Florida, and last posted a quarterly profit in 2008.

Jay Sidhu, its former chairman, sought last week to oust the several of the bank's directors, saying the board "has consistently failed to act to mitigate or significantly reduce the risks facing the issuer and follow prudent safety and sound banking practices." Sidhu resigned as chairman of Atlantic Coast's board in May.

Atlantic Coast is under a consent order with the Office of the Comptroller of the Currency that requires the bank to raise its capital ratios and establish better oversight. The bank's current Tier 1 leverage ratio of 5.13% and total risk-based capital ratio of 10.58% are below the levels mandated by the consent order.

Stifel Nicolaus advised Atlantic Coast on the sale. The bank first announced in November 2011 that it had hired the investment bank to explore strategic alternatives, including rights offerings and mergers.

"This transaction is a win for our stockholders, a win for our customers and a win for our banking franchise," Atlantic Coast's chief executive, G. Thomas Frankland, said in a news release. "This strategic business combination significantly enhances our combined abilities to be one of the financially strongest and most competitive community banking organizations in the northeast Florida and southeast Georgia markets."

Florida Community bank would have more than $4 billion in assets and 53 branches in Florida and Southeast Georgia upon completion of the deal.