Miami Bank's Stock Drop Spurs CEO to Deny Rumors
A sharp drop in the stock price of Southeast Banking Corp. prompted the troubled Miami company Wednesday to deny that it is negotiating to be taken over with government assisance.
"I will categorically say we have not had any discussions with the Federal Deposit Insurance Corp. about open-bank assistance," Douglas Ebert, the company's chief executive, said in a telephone interview.
Mr. Ebert said he was concerned by the decline in Southeast's stock price, which he said he believes "was heavily driven by silence on our part and [by] some unfair and inaccurate reports" saying that NCNB Corp. wanted to acquire Southeast with government assistance.
If the FDIC were to inject capital into the $12.9 billion-asset company, the stake of existing shareholders would be severely reduced or wiped out.
Southeast's stock closed at $1.75 Wednesday, down 25 cents. The shares have fallen 42%, or $1.25, in the past six days.
The company's market value has dropped by $126 million since May 1. The value of its outstanding shares now stands at $58.6 million.
Southeast has been hit hard by the real estate downturn in Florida. Its troubled loans equal a staggering 93% of equity plus loan-loss reserves, forcing it to shop itself to prospective buyers. NCNB Corp., based in Charlotte, N.C., has been discussing a possible merger.
The possibility that those talks might lead to a government-assisted takeover have helped push down Southeast's stock, analysts said.
An NCNB spokesman declined to comment Wednesday.
Private Capital Sought
Banking sources in Florida said Wednesday that Southeast was also actively negotiating a capital infusion with several private investor groups.
Banking analysts attributed the precipitous decline in Southeast's stock partly to investor discouragement over Southeast's failure to make a deal with NCNB, despite nearly nine weeks of negotiation.
"The market is very pessimistic that there's going to be any kind of deal," said Benjamin C. Bishop Jr., chairman of Allen C. Ewing & Co., a Jacksonville-based investment banking firm.
"The more people look at this, the more they seem to focus on the fact that there's no real way to put a floor on the stock price," said J. Frederick Meinke, banking analyst with Raymond James & Associations Inc. in St. Petersburg.
"It seems like every trade puts a little extra pressure [on the price] and it's settling down to some minimal value where it will probably bounce around until you get a resolution of the [merger] discussions."
Mr. Ebert, who replaced Charles J. Zwick as chief executive in January, said: "We are continuing the same direction we announced two months ago of reviewing various alternatives from merger to equity investment to a substantial restructuring and shrinking of the organization," he said. "We are in active discussions on all fronts in that regard."
Mr. Ebert declined to elaborate about Southeast's discussions with potential acquirers and equity investors. But he did say the company is continuing with a dramatic shrinking program that has already cut 900 employees, or 13% of Southeast's work force, mostly in the past six weeks.
Mr. Ebert said he anticipates another 300 to 400 employees leaving Southeast's 6,750 work force by the end of the year, most of them through attrition.
In addition, Southeast will close 20 branches by summer, bringing the total down to 214, and downsize its indirect auto lending and dealer finance units.
Mr. Ebert said Southeast has put its commercial finance and leasing businesses on the block, with a total of 100 employees and a $250 million in assets between them. Sources close to the bank said Southeast is also negotiating to sell its 18 branches in the Florida panhandle.