FORT WALTON BEACH — Beach Community Bank, which operates in Okaloosa, Santa Rosa and Escambia counties, will be sold to a group of investors in a $100 million stock deal.
The money will eliminate problem assets that include foreclosed real estate and underperforming loans, according to bank president Tony Hughes.
Like other financial institutions, Beach Community Bank was hit hard by the Great Recession, the general worldwide economic decline of a decade ago, Hughes said in an interview Tuesday. And like other financial institutions along the Gulf Coast, the bank also felt the impact of the 2010 Deepwater Horizon oil spill, which hurt tourism and forced numerous businesses to close, Hughes added.
As a result, Beach Community Bank's board of directors "has worked for several years to develop a plan to recapitalize the bank," Hughes said in a news release Monday announcing the pending $100 million sale.
Working with the Illinois-based Hovde Group, an investment banking and advisory firm, Beach Community Bank attracted a mix of institutional and individual investors to provide the bank with the $100 million — roughly the amount of its problem assets, according to Hughes.
Part of the deal requires Beach Community Bancshares, the bank's parent company, to file for bankruptcy. The bankruptcy filing won't affect the bank's customers or their deposits, according to Hughes.
"It will be business as usual with no impact on bank deposits, creditors and vendors, and all accounts remain FDIC (Federal Deposit Insurance Corporation)-insured to the fullest extent allowed by law," Hughes said in the news release.
The only people who will be affected by the bankruptcy are the parent company's shareholders, who include Hughes and other bank officers, Hughes said Tuesday.
As part of the bankruptcy proceeding, the bank will be sold to the investor group, according to Hughes.
Given the bank's "weakened capital position" and other problems, "the bankruptcy filing was the only path the board could identify to attract new investors to contribute capital directly to the bank," Hughes said in the news release.
The bank will sell "substantially all" of its problem assets, Hughes said. The proceeds will become part of the recapitalization of Beach Community Bank, he added.
The $100 million deal will change the makeup of the bank's board of directors, Hughes said. The six current board members will stayg on, but will be augmented by "five to seven" new directors representing the investors, according to Hughes.
The capital infusion will come to Beach Community Bank at the conclusion of Beach Community Bancshares' bankruptcy, which is expected to take 60 to 90 days.