Community Bank & Co. is buying a second troubled Tampa Bay area institution, agreeing to invest $25 million through its parent company to recapitalize Old Harbor Bank in Clearwater.
The deal, confirmed Friday morning, comes just five weeks after Community Bank closed on its acquisition of First Community Bank of America.
Both First Community Bank and Old Harbor were among a handful of bay area banks that received the lowest-possible, zero-star ranking from Coral Gables ratings agency Bauer Financial. Zero stars would indicate a bank that is in severe financial distress and could be susceptible to failing.
Community Bank's parent company, CBM Florida Holding Co., was formed in 2008 to acquire and recapitalize Florida banks.
Community Bank, which is based in Lakewood Ranch in Manatee County, has been on a mission to specifically expand in Pinellas, Hillsborough and Pasco counties. By adding Old Harbor's seven branches, Community Bank grows to 24 branches and nearly $1 billion in assets.
"We continue to invest in recapitalizing Florida banks because we believe in the marketplace and in the recovery of the Tampa Bay economy," Marcelo Lima, chairman of CBM Florida Holding, said in a statement.
Many expanding Florida institutions have waited until a bank fails before cutting a deal with regulators to take that bank's assets with the government assuming some of the riskiest loans. Community Bank's strategy, in contrast, has been buying a bank for a nominal price before it fails — $1 in this case — and then furnishing capital to help the institution survive.
Trevor Burgess, CBM Florida's chief executive, said by acting ahead of regulators, his company is able to preserve the value of a franchise, preserve local jobs, help prevent future bank failures and get customers excited about who their bank is.
"Many of these banks don't need to close. What they need is more capital," he said.
A signal of Community Bank's intent to buy Old Harbor came through a notice filed earlier this week with the Federal Deposit Insurance Corp.
The boards of directors and shareholders of Community Bank and Old Harbor have both approved the deal.
Pending regulatory approval, the acquisition is expected to close in the third quarter of this year.