Sun American Bancorp in Boca Raton, Fla., could end up getting back some of the price it paid in a bank acquisition a year ago.
The $560 million-asset company closed its deal last January for Beach Bank in Miami, paying $21 million in stock, but the two companies disagreed over a balance-sheet adjustment, which went into arbitration.
A recent arbitrators decision would shrink the purchase price by 18%, or $3.7 million, Robert Nichols, Sun American's chief financial officer, said in a press release late Monday.
If the ruling is upheld, Beach Bank's liquidating trust would have to return 240,000 Sun American shares.
The Boca Raton company also would not have to issue $700,000 worth of additional shares called for under Beach's accounting.
The 240,000 shares that Beach might have to return would have been worth $3 million at the time of the deal. However, Sun American's share price has declined in the last year, in part because of the flagging residential construction industry in South Florida.
On Tuesday, the stock was trading at $4 a share, virtually unchanged from Monday's closing price but down 68.9% from a year earlier. That would indicate a market value for the 240,000 shares of $960,000.
Sam Caldwell, a research analyst in Atlanta for KBW Inc.'s Keefe, Bruyette & Woods Inc., said the arbitration decision is a "positive" for Sun American because it would reduce the company's share count.
He said he did not know what required the balance-sheet adjustment that prompted the dispute.
Calls to Sun American executives were not returned before press time.
