Harbor was one of several investments pursued by Stone Point to benefit from the substantial cost savings and earning accretion generated by consolidation in the commercial banking industry.
During the period of financial distress and depressed valuations surrounding the 2008-2009 Financial Crisis in the United States, Stone Point proactively identified several geographic regions in which bank consolidation was likely to become particularly active and profitable for acquirers. One of those regions was the state of Florida. After meeting with dozens of banks and management teams based in the State, Stone Point chose to partner with Harbor Chairman & CEO Mike Brown to form Harbor as an acquisition vehicle targeting distressed Florida banks. Prior to partnering with Stone Point, Mike and his management team had spent the previous thirty years building one of the most successful banking franchises in Florida, which had recently been sold for a large premium to an out of state acquirer.
After committing to an investment in Harbor, Stone Point worked closely with Mike to raise additional co-investor capital, formalize a business plan, and receive required regulatory approvals. Over the subsequent six years, Harbor deployed investors’ capital through eight bank and branch acquisitions, to ultimately develop a franchise with $2.3 billion of assets and 46 branch locations. After fully consolidating and optimizing the earnings of the acquired operations, Harbor decided to put itself up for sale in order to capitalize on the company’s increased net income. This ultimately led to an agreement for Harbor to be acquired by CenterStates Bank, a larger publicly traded bank consolidator in Florida. In order to continue to benefit from the earnings accretion that CenterStates would likely realize from the consolidation of Harbor, Mike Brown chose to join the CenterStates board and Harbor investors accepted the acquirer’s common stock as merger consideration.
Investments highlighted or discussed in this selection have been selected to illustrate SPC’s investment approach and/or market outlook and are not intended to be an indicator of past or future performance. Each investment discussed in this selection has been selected solely for this purpose and has not been selected on the basis of performance or any performance-related criteria. The investments discussed herein do not represent an entire portfolio and in the aggregate may only represent a small percentage of holdings. Nothing in this presentation shall constitute a recommendation or endorsement to buy or sell any security or other financial instrument referenced herein.