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Martin Diaz-Led Investors Abandon Deal for Legacy Bank

Recently the rumored investors for an application to recapitalize Legacy Bank of Florida, the bank is reportedly looking for new investors as they leave the deal as “undercapitalized”, reports said.

Since 2011, the Boca Raton-based bank have been working towards getting the control by 5 Latin American nationals who then filed an application to have $16.3 Million in capital to be injected and as an exchange 70.8% of the bank will be taken over by the investors. Offering a $2.7 million capital that year, the deal fell as state and federal won’t approve the deal which they couldn’t contribute more without it.

However in October, the remaining 3 investors (which 2 investors already dropping out) Martin Diaz Alvarez (Mexico City, Mexico), Miguel A. Capriles Lopez (Caracas, Venezuela) and Alejandro Rodriguez Blanco (Key Biscayne), they refiled the withdrawn application in hopes of saving the deal.

Florida Office of Financial Regulation was told by the bank that the investors decided to not proceed anymore and that was on February 13. In early December, Federal Deposit Insurance Corporation reps, met with potential investors with Legacy Bank. Based on the feedback from the FDIC, there were significant challenges with the proposal, to discuss the process of them gaining regulatory non-objection letter to their ownership of the bank. Attorney Jonathan S. Hightower of Bryan Cave, there were significant challenges with the proposal. He added that as a result the bank and the investors have agreed to abandon the proposed investment.

The three investors are in talks to buy more shares of the bank, Legacy Bank Chairman and CEO Dennis Bedley adding that up to the limit of 9.9% that doesn’t require regulator approval. Bedley said that "We will be able to have a successful capital raise," and then added that "The bank is in significantly better shape than it was in a year ago. We plan to make a profit this year."

Often “undercapitalized” banks bring lending to a near halt to keep their asset levels as low as possible. Legacy Bank has continued lending and having recently made a construction loan in Fort Lauderdale, in anticipation of the new capital. The bank was “undercapitalized” & under regulatory pressure to raise capital or find a merger, still with $12.6 million in tier 1 capital & $260 million in assets, the bank reportedly lost $2.85 million in 2012. Most banks maintain a reserve coverage ratio above 50 percent to protect them from bad loan charges. The bank’s $4.9 million reserve for future loan losses covered 34 percent of its noncurrent loans at year-end.

03.02.2015. 21:01