Magazine article American Banker

How to Spend $1B: A Nice Problem Facing 10 Community Banks

Magazine article American Banker

How to Spend $1B: A Nice Problem Facing 10 Community Banks

Article excerpt

Byline: Paul Davis

Expect a number of community banks to pursue aggressive growth strategies next year after raising capital during the current stock market surge.

Since the presidential election, 10 publicly traded banks tracked by American Banker have announced plans to sell common stock with an aggregate value of nearly $950 million. Industry observers expect more institutions to follow suit as stock prices, particularly those of financial institutions, continue to appreciate.

Most of the banks have said they will use the capital for organic growth and acquisitions, virtually assuring an escalation in competition for high-quality sellers, loans and personnel.

"Those banks can see opportunities to put that money to work," said Chris Marinac, an analyst at FIG Partners in Atlanta. "You raise money when it's available, not when you need it. There's a lot of success in banking when companies do that."

Iberiabank in Lafayette, La., went to investors last week to raise nearly $300 million in a public offering. The $21 billion-asset company, which took advantage of a 44% spike in its stock price since June 30, recently said that it had hired a veteran banker to kick off an expansion into South Carolina.

Texas Capital Bancshares in Dallas raised nearly $240 million after its stock appreciated 60% from the middle of the year. The $22 billion-asset company in recent weeks has snagged a banker from BBVA Compass and small-business lenders from GE Capital and Bank of America.

The new capital gives the hires at Iberiabank and Texas Capital extra backing to go out and make more loans and compete harder with big banks, Marinac said. It could also translate to higher earnings in the long run if the banks are able to make more variable-rate loans. "That could be the wisest decision right now," Marinac said.

Organic-growth strategies have newfound promise, said Jeff Rulis, an analyst at D. …

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