Hho's Buying Up Florida's S&L's Stock, and What Do They Intend to Do with It? Acquisitions of Blocks of Shares May Herald Wave of Consolidations

American Banker, July 26, 1984 | Go to article overview

Hho's Buying Up Florida's S&L's Stock, and What Do They Intend to Do with It? Acquisitions of Blocks of Shares May Herald Wave of Consolidations


As with any great detective novel, the issue is motive.

Around Florida, a group of investors has begun stealthily accumulating blocks of stock in the dozen or so state savings and loan associations that went public in the last year. But even as they are gathering this stock, questions about their ultimate motive echo from the chambers of the hunted.

"We're seeing a development of position," said Erwin Katz, executive vice president of the brokerage firm of Williams Securities Group Inc. of Tampa. "It is similar to what happened with the Florida banks in the last few years. Blocks of stock were acquired, a great many were sold, and the outcome was the emergence of a handful of large statewide organizations."

Now, as then, an array of fascinating characters stalks Florida's financial institutions. The current players range from a Miami real estate syndication company to a Venezuelan financier to a former ambassador to Switzerland.

No one is quite sure what the investors are after--the fast buck or control of the institution in wich they are investing. "The line between speculation and investment is a thin one," said Tim Rayl, a bank analyst with Raymond, James & Associates Inc. of St. Petersburg. "The investors' motives are unclear, but I lean to the theory they are in it for the short-term profit."

Analyst agree on one thing: The outcome of this free-for-all will be a massive consolidation of S&Ls that may result in only a handful of large Florida-owned institutions. Most state S&Ls, the analysts say, are likely to be owned by out-of-state institutions.

How this will affect Floridians, who have long enjoyed a special relationship with state savings and loans, is difficult to say. After all, Florida is one of the few states in the nation where S&L deposits exceed bank deposits--$54 billion to $53 billion as of February 1984.

The erosion of the local ties to the S&Ls may result in an infusion of deposits into the banks. But that depends on the whims of the investors.

Take Atlantic Federal Savings & Loan Association as an example. The fort Lauderdale-based thrift has $u.6 billion in assets, sound management, and the appeal to investors that raw meat has to sharks. Three investors--Dade Savings & Loan Association of Miami, I.R.E. Financial Corp. of Miami, and Freedom Savings & Loan Association of Tampa--have filed 13-D applications notifying the Securities and Exchange Commission of their intent to each acquire up to 9.9% of the company's stock.

The result has been chaos. Although Atlantic Federal converted to stock ownership less than eight months ago, it has already been sued by I.R.E. for attempting to pass antitakeover provisions. (The suit was dropped after Atlantic Federal's management realized it could not win shareholder support for the provisions.)

Atlantic Federal fate, as they say, does not exactly rest in management's hands.

And this is hardly an isolated case. The $611 million-asset Heritage Federal Savings & Loan Association of Daytona attracted six 13-Ds. Among them are applications from I.R.E., Freedom, Miami stockbroker Peter Bermont, and his partner, Al Kahn. In all, nearly 60% of Heritage's stock is in the hands of investors it cannot control.

First savings bank of Florida in Tarpon Springs has nearly 30% of its stock in the hands of large investors, and Peninsula Federal Savings & Loan Association of Miami has about the same, although management controls 12% of Peninsula's stock. Pan American Bank of Miami, which already owns 9.9% of Peninsula's stock, is widely rumored to be interested in buying the $541 million-asset S&L.

Just what is the appeal of Heritage, Peninsula, and the others?

First, the S&Ls in Florida have always been cash cows. They attract millions in low-cost deposits every year, much of it put down by retirees who rarely take money out of the institution. …

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