Legacy Bank of Florida in Boca Raton delayed plans to sell itself for nearly a year as it responded to borrowers’ needs created by the coronavirus pandemic.
The $533 million-asset bank agreed to be sold to Seacoast Banking Corp. of Florida in Stuart in March for $102 million. The deal is expected to close in the third quarter.
Legacy’s investment bank first approached the $8.3 billion-asset Seacoast to discuss a potential deal in January 2020, according to a regulatory filing tied to the pending merger. Seacoast signed a non-disclosure agreement with Legacy the following month and began looking at nonpublic data.
The investment bank contacted 25 potential acquirers in late February and early March. Eight expressed interest and five, including Seacoast, were given access to a virtual data room.
“Management meetings were set up with several prospective buyers” in March 2020, the filing said.
Then the pandemic hit.
Legacy decided to focus its attention on the Paycheck Protection Program, an effort that allowed the bank to “cautiously” expand its balance sheet, the filing said. The bank’s management team waited until December to ask the investment bank to revisit conversations with Seacoast.
Charles Shaffer, Seacoast’s CEO, and Dennis Bedley, Legacy’s chairman and CEO, met in West Palm Beach, Fla., in January. A confidentiality agreement was reached on Jan. 5, allowing Seacoast to resume its due diligence.
Seacoast and Legacy agreed to a proposed exchange ratio of 0.1703 shares of Seacoast common stock for each Legacy share, which valued the seller at $5.50 a share. During the third week of March, the parties negotiated the merger agreement, voting agreements for directors and noncompetition agreements for directors and officers, among other things.
Legacy’s board unanimously approved the merger on March 22. Seacoast’s directors approved the deal the next day and an announcement was released. The deal priced Legacy at 167% of its tangible book value.
Legacy “is a customer-focused franchise with an outstanding reputation for service excellence and deep customer relationships in this important market,” Shaffer said in the release announcing the deal. “We see great opportunity in complementing its strengths with Seacoast’s innovation and breadth of offerings to grow our presence and expand our position in South Florida.”
The deal is expected to be 2% accretive to Seacoast’s 2021 earnings, excluding merger-related expenses. It should take the company three months to earn back any dilution to its tangible book value.
Seacoast plans to cut about 45% of Legacy annual noninterest expenses.