Florida Likely to Experience More M&A in 2014

By Stewart, Jackie | American Banker, January 6, 2014 | Go to article overview

Florida Likely to Experience More M&A in 2014


Stewart, Jackie, American Banker


Byline: Jackie Stewart

Much like Florida's weather, the forecast for bank consolidation in the state is bright.

Mergers in the state picked up last year and some industry observers believe the pace of acquisitions could accelerate in 2014. Interest from foreign investors, along with regulatory pressures, could prompt more banks to sell.

"I fully expect there to be a flurry of activity in the coming year," says Bowman Brown, a partner at Miami law firm Shutts & Bowen. Small banks in Florida are "under tremendous pressure so a very large number ... are thinking in terms of acquisition or disposition."

Through Dec. 12, Florida had 13 deals last year, or nearly twice the activity that took place a year earlier, according to KBW. Nationwide, M&A is on pace to be relatively flat compared to a year earlier, in terms of the number of deals.

The bulk of Florida's deals involved banks in the southern part of the state. South Florida has roared back since the financial crisis, as evidenced by several new construction projects, says James Cassel, chairman and co-founder of Miami investment banking firm Cassel Salpeter.

"For a while when I looked out [my office window] there were maybe 20 cranes and then there was a time there was just one," Cassel says. "Now we are on our way back up to 20. South Florida is a growing, thriving market."

The Miami area's recovery involves an influx of investment from foreign groups based in Spain and South America. Citizens from countries like Brazil frequently visit south Florida, and Miami continues to serve as an important place for international trade, says Fernando Alonso, a partner at Miami law firm Hunton & Williams. So it makes sense for foreign banks to seek out acquisitions to expand in the region.

In early 2013, Chilean bank Banco de Credito e Inversiones agreed to buy the $4.7 billion-asset City National Bank of Florida from Spain's Bankia. Banco Sabadell in Spain agreed to buy JGB Bank in Doral, Fla., and Lloyds Banking Group's international private banking business in Miami.

Similar acquisitions could take place next year, industry observers say.

"Miami has shown it is a resilient market, not just domestically but also with strong foreign investor influence and strong infrastructure from international trade," says Carl Fornaris, co-chair of the financial regulatory and compliance practice at the firm at Greenberg Traurig. "You will see continued interest in south Florida."

Pricing has firmed up, with at least five banks selling for more than tangible book value. Valuations should continue to rise next year, especially around Miami, as banks have fewer problems, industry experts say. As the number of community banks declines, buyers might be willing to pay more for the institutions that remain, Fornaris says. …

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