Fort Walton Beach, Fla.-based Beach Community Bank entered into an agreement with Florida First City Banks Inc. and unit First City Bank of Florida for the merger of First City Bank of Florida with and into Beach Community Bank.

The deal will result in a combined entity with about $675 million in assets, according to a news release.

Florida First City Banks also filed a Chapter 11 petition in the U.S. Bankruptcy Court for the Northern District of Florida. In a news release, Florida First City Banks said it will undertake the voluntary action to facilitate the transaction. Only the holding company, and not the bank's day-to-day operations, clients and depositors' insurance coverage, will be affected by the filing, Florida First City Banks said.

Beach Community Bank intends to conduct the transaction together with a capital-raising activity for the combined entity.

The transaction is expected to close early in the second quarter. The completion of the deal will see Beach Community Bank expand in Okaloosa County, Fla., by two branches to be ranked fifth with an 8.36% share of about $4.17 billion in total market deposits, according to S&P Global Market Intelligence data.

S&P Global Market Intelligence valuations for bank and thrift targets in the Southeast region between Jan. 15, 2019, and Jan. 15, 2020, averaged 158.87% of book and 166.17% of tangible book and had a median of 16.82x last-12-months earnings, on an aggregate basis.

Hovde Group LLC was financial adviser to Beach Community Bank, with Smith Mackinnon as legal counsel and Nelson Mullins as special counsel. Gerrish Smith Tuck served as financial adviser and legal counsel to Florida First City Banks and First City Bank of Florida, with Wilson Harrell serving as special counsel.

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