Magazine article American Banker

Florida Bank and Thrift Stocks Beckon as Interest Rates Fall

Magazine article American Banker

Florida Bank and Thrift Stocks Beckon as Interest Rates Fall

Article excerpt

TAMPA, Fla. -- Investors seeking good stock values in the financial industry should look to Florida-based companies, local bank analysts say.

Despite a six-month increase in the stock value of many Florida bank holding companies, there still is time for investors to reap the rewards of low interest rates, the analysts contend.

The stock in Florida banks and thrifts has been touted for several months because of a lower cost for their funds as a result of declining interest rates. The combination has produced greater earnings for most state-based financial institutions, the experts say.

However, they advise investors to choose their stocks carefully and generally lean more heavily toward the thrifts. Not only do they see a number of undervalued stocks there, but they contend that since last July there has been rapid appreciation in the price of many Florida bank stocks. Thus, those stocks now trade at above their book value and are not of favor.

In most recent acquisitions of Florida bank holding companies, the purchase price was approximately twice the book value.

Among those holding company stocks that have climbed rapidly, Barnett Banks of Florida Inc. in Jacksonville has risen from $34 per share to the $54 range recently. Company officials have declared a 3-for-2 stock split to make the price more affordable and attractive to potential investors.

Common stock of NCNB Corp., a Charlotte, N.C., company with a Florida banking division, NCNB National Bank of Florida, has risen from $24 per share to $40 per share. Florida National Banks Inc., Jacksonville, and Sun Banks Inc., Orlando, have posted substantial gains as well.

Two Tampa Bay area thrifts head the favorites chosen by Erwin Katz., president and chief executive officer of Williams Securities Group Inc. in Tampa.

Mr. Katz said he was impressed with Freedom Savings & Loan Association chairman Robert Klingler's presentation at the company's recent annual meeting. The analyst said Mr. Klingler has turned the Tampa company around and improved its future earnings potential.

Saying he would buy the thrift's stock on its weakness alone, Mr. Katz said Freedom investors may have to hold the stock long term to realize a solid gain. Still, he said, it is undervalued at the $9-to-$10 per share it has traded at recently.

The securities executive also likes Florida Federal Savings & Loan Association, despite the $10.1 million loss the St. Petersburg thrift announced for the first quarter of 1985.

Mr. Katz said the company's major problems are behind it, and he lauded Florida Federal officials for their decision to "bite the bullet" and write down the value of real estate holdings that had been carried at inflated values on the company books.

"I have been optimistic about the stock for some time," Mr. Katz said. "I would accumulate the stock because it is trading where it was prior to the original announcement of the loss. It did dip one day, but it came right back."

A Contrarian's Strategy

Calling it an opportunity for investors to have a position in the largest thrift in Florida, Mr. …

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