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The Miami area's economy is on the rebound and expanding beyond sun and fun. A new influx of money, investors and customers with international ties could feed local banks' balance sheets and top-line growth.
May 15 -
The Sunshine State is once again outgrowing the rest of the country and some of its community banks are eager to become the states next flagship. Florida has changed a lot since the old Barnett Bank held that title, and so has banking. But now its thriving homegrown contenders aim to reshape the fragmented banking landscape, which is dominated by out-of-state rivals.
May 27 -
Pricing in Florida might be ticking higher as the state's economy booms, but some banks are still feeling the effects of the last downturn. Those banks are perhaps perfect candidates for acquirers looking to tap into the recovery.
March 30
Valley National Bancorp in Wayne, N.J., is ready for seconds just a year after making its first acquisition in Florida.
The $19 billion-asset company agreed Wednesday to buy the
While Valley has had some initial success in Florida, some industry observers are still waiting to see if its long-distance dealmaking will pay off. Such a strategy has been trying for other banks in the past, but Valley may be aided by the timing of its deals.
"History hasn't shown that jumping geographies is the biggest franchise enhancer," said Collyn Gilbert, an analyst at Keefe, Bruyette & Woods. "I'm still in observation mode to see if they can make this work."
For Valley, Florida represents a way to diversify its operations, which have largely been in New York and New Jersey. Double-digit growth in Florida is also a distinct possibility, executives said during a conference call to discuss the latest deal.
"I'm still bullish on New York and New Jersey," Gerald Lipkin, Valley's chairman and chief executive, said during an interview after the conference call.
"When you're running a company, you're always looking to take advantage of growth," Lipkin said. Florida is "one of the fastest-growing states in the country. It has a relatively young population in most of the counties we operate in. It's a place to grow."
Florida has been known as a boom or bust market in the past decade. After years of explosive growth, the state was hard hit by the financial crisis. Nearly
A number of out-of-state banks were burned in Florida during the financial crisis, including National City in Cleveland; Park National in Newark, Ohio; and Colonial BancGroup in Montgomery, Ala. National City struggled before selling itself to PNC Financial, and Park sold its Florida bank to Home Bancshares in Conway, Ark. BB&T expanded in Florida after buying Colonial's failed bank.
"It's difficult to move into markets outside of your core," said Dan Werner, an analyst at Morningstar. "Other banks have tried it and have either not been successful or had to divest. I'm not saying that will happen with Valley, but the strategic emphasis seems to be on Florida right now."
Florida is on the mend. An attractive tax structure has drawn non-depository financial firms, like hedge and private-equity firms, to the state,
Valley wants to reach $25 billion in total assets over the next three to five years, with a goal of having about a third of its banking franchise in Florida, Lipkin said during Wednesday's conference call.
"I think this is an attractive opportunity for them," David Darst, an analyst at Guggenheim Securities, said. "As they build out that franchise, it is important for them to get scale, and this gives them a chance to do that."
The acquisition, expected to close in the fourth quarter, would give Valley an additional $833 million in loans and $1.1 billion in deposits in Florida. CNLBancshares will provide Valley with points of entry into Naples, Fort Myers and Jacksonville.
Valley has benefited from being in Florida at the right time in the credit cycle, industry experts said. The company has had some early success in areas such as indirect auto lending, Darst said. Valley has added more than 50 new car dealership clients since closing the 1st United deal, Lipkin said during the conference call.
Valley could make more deals in Florida, where it is looking at banks with $1 billion to $2 billion in assets, Lipkin said in the interview.
"We don't try to bring New York City banking to the Florida market," Lipkin added. "We don't act like we're a bunch of big city slickers that will teach them how to do banking. They have very good, very strong local lenders down there already who know how to make loans."
