Florida Bank Creates Holding Company to Support M&A Push

First National Bank of the Gulf Coast believed it had all the cards in place to become a serial bank acquirer.

Management had the wherewithal, raised more than $140 million in private equity, technology upgrades, and had even snagged a small-bank failure. But the $504 million-asset bank hit a snag: it lacked a holding company to fully put its strengths to use.

On Wednesday, the bank announced that its shareholders had approved the creation of TGR Financial, a bank holding company that should allow it to become a more aggressive consolidator.

The holding company "gives us more flexibility with structuring mergers and acquisitions as well as being able to look at other financial intermediate and service providers" including wealth management and insurance agencies, says Bob Reichert, the bank's senior executive vice president and chief administrative officer. He says management opted against a holding company because it wanted to keep the structure "simple" at a time when other banking companies were actually consolidating charters.

Shortly after receiving the capital infusion in April 2011, management realized that they could not house multiple charters at once or even hold separate financial units at the bank level. Any deal that they secure, including July's purchase of the failed Royal Palm Bank of Florida, must be immediately consolidated into the bank.

A holding company will allow management to consolidate charters "later on to gain those efficiencies," Reichert says. "Sometimes, in order to get a deal done, you have to have that structure for both the buyer and seller."

First National's holding company proposal was backed by more than two-thirds of shareholders, who voted during a special meeting held on Monday. Shareholders will exchange each of their shares in the bank for an equal amount of shares in the parent. The exchange and launch of the holding company will occur within 30 days, Reichert said.

TGR will deploy about $100 million in excess capital to the bank to use for acquisitions and organic growth. "We're now looking at potentially expanding our footprint along the west coast and" into Orlando, Reichert says.

Management wants to grow the bank to nearly $2.5 billion in assets over the next three years. That 340% growth trajectory may be difficult considering the weakened state of M&A activity in Florida. But Reichert notes that the bank had just $58 million in assets three years ago to support his belief that it can grow quickly.

"The strategy is to continue the way we've talked in the past. We've always talked about whole bank acquisition and FDIC-assisted transactions and organic growth," Reichert says. "Now this [holding company] gives us the ability to pursue that quicker."