A West Palm Beach, Fla., community bank is strengthening its hold on the lucrative South Florida banking market by purchasing a neighboring bank.
Republic Security Financial Corp. will pay about $46 million in a stock swap for Family Bank, a $248 million-asset bank headquartered in Hallandale.
The purchase of Family Bank is Republic's fifth acquisition in the last four years. Richard Haskins, Republic's chief financial officer, said the bank wants to continue the expansion.
Republic will issue 7.7 million shares of stock to exchange 13 shares, valued at $6 each, for each share of Family Bank's stock.
The transaction represents 228% of Family Bank's book value and 11-times earnings. Traditionally, a transaction price of more than 200% of book value is considered expensive.
"Family Bank is one of the most profitable banks in Florida, and basically what we are buying is their earning power," Mr. Haskins said.
The combined banking company would cut $1.5 million this year and $3 million in 1998 in human resources, electronic data processing, and corporate overhead expenses.
When the merger is completed in June, Republic will have $610 million of assets and 17 branches in Palm Beach and Broward counties, two of the largest banking markets in the state. No branches would be closed.
Hallandale is in Broward County, on Florida's Atlantic coast between Palm Beach County and Dade County, which encompasses Miami. Mr. Haskins said the bank plans to open new branches in northern Broward County to fill in gaps between its geographic territories.
"Broward County is a market we wanted to be in, and it's very nice to be able to go in with seven branches," he said.
Barnett Banks, First Union Corp., and Sun Trust Banks all have a strong presence in the two counties, which rank among the top 10 in per capita income in Florida.
"This offers a real alternative to the giant banking organizations, which have absorbed so many community banks," Republic chairman Rudy Schupp said.
Carol Owen, president and chief executive of Family Bank, will continue as one of Republic's senior executives and serve on the board of directors. Four other Family Bank directors will serve on Republic's board.