Republic Security Financial Corp. said Thursday it would buy First Palm Beach Bancorp, West Palm Beach, Fla., for $279 million of stock or about 2.4 times book value.
The deal would make fast-growing Republic Security, also based in West Palm Beach, the largest commercial banking company headquartered in the Sunshine State.
Republic Security, with $1 billion of assets, said it would issue 21.3 million shares of stock to pay for the deal. The acquisition is expected to be completed in the fourth quarter.
This is the eighth deal the company has announced since 1992. In April, it said it would buy $140 million-asset Unifirst Federal Savings Bank, Hollywood, Fla., for $13.6 million, a deal expected to close in the third quarter.
Republic Security operates 32 branches in three counties. First Palm Beach has $1.3 billion of assets and 51 branches in five South Florida counties.
When the two deals close, Republic Security would have $2.8 billion of assets, pushing it past $1.8 billion-asset Republic Bancshares, St. Petersburg, as the state's largest commercial banking company. As recently as 1994, Republic Security had only $277 million of assets.
The deal would also move the company to fourth from 12th in Palm Beach County deposit share, with $1.4 billion.
"We think this is a thrilling, exciting situation," said Rudy E. Schupp, chairman, president, and chief executive officer of Republic Security in a conference call with investors. "It creates a dominant southeastern franchise ... and a wonderful combination of product lines."
First Palm Beach brings to the deal branches in Albertson's and Winn- Dixie supermarkets, Mr. Schupp said. And Republic Security offers PC banking, which First Palm does not.
The companies said they can cut $9.1 million-or 24%-of First Palm's noninterest expense through the in-market deal. Savings would be achieved by closing four branches, outsourcing First Palm's data processing, and cutting overhead.
Samuel J. Beebe, a St. Petersburg bank analyst and manager of the Beebe Fund, said that if the cost-cutting goal is met "there is a clear opportunity here for this to succeed, and become a good earner."
Mr. Beebe speculated that the deal was a defensive move. The post-merger company, he said, could be big enough to fend for itself.
"Either one by themselves is vulnerable," he said. "Together, they may be able to post good enough numbers to remain independent."
Indeed, Deborah R. Beylus, an analyst at JW Charles Securities in Boca Raton, Fla., said the deal "assures Republic Security's independence for some time to come."
Florida banks are hot takeover targets, Ms. Beylus said, but thanks to Republic Security's growth, "if there was ever an acquisition of this bank, it will be on their terms."
Richard J. Haskins, chief financial officer of Republic Security, said that "as long as we can provide to the shareholder superior returns by remaining independent, we will remain independent."
Still, "the combined company would be the most attractive franchise in Florida," Mr. Beebe said. "Sometime down the road, I think you could see an out-of-state bank making an offer."
After the deal's announcement, Ms. Beylus upgraded Republic Security's stock from "hold" to "buy."
In midday trading, Republic Security stock was down 93.75 cents a share, at $12.1875. First Palm Beach was trading at $44.625, up $8.125 a share.