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Hunger games: Out-of-state banks eager to feast on Florida economy join buying spree

Published Nov. 14, 2015

Think of small Florida banks as if they were precious gems.

There are not a lot of them around. No new ones are being created, at least for now. And a lot of folks want to buy one, two or even a lot more.

Get 'em while they're hot. But not too hot. The last bank to be started from scratch around here was born before the last recession. By Florida standards, that's a long time without a new startup bank. The state's weakest banks have largely been culled from the state herd via failures and forced mergers during the recession.

"It increases the scarcity value of the remaining players," banking analyst Michael Rose at Raymond James Financial told the American Banker newspaper.

Community banks based in a rebounding Florida economy are back at the top of the shopping lists of midsize banks in other states. In a dragging national economic recovery, potential buyers eye the improving Florida market as not only growing faster than most states for the foreseeable future — they see the state as a final landing spot for a good portion of retiring baby boomers looking for better weather, perhaps a cheaper place to live, no personal state income taxes and, of course, some banking services to handle all that retirement and Social Security money.

That's why we are starting to see a fresh round of midsize banks from afar buying into the "rich deposit markets" of Florida and the Tampa Bay area.

Not only do they hope to make more money here. But ambitious multistate banks with a presence in the Southeast feel they have to stake a claim in Florida, the third-largest state by population. Being in the Florida market makes any bank more attractive.

In this latest round, the banks buying into the Tampa Bay market are regionally clustered in Arkansas, Louisiana and Kentucky.

The latest deal: Little Rock-based Bank of the Ozarks this past week said it will spend a hefty $402.5 million for C1 Financial, the parent company of St. Petersburg's C1 Bank.

I'm not sure a bank that chose to put "Ozarks" in its name initially anticipated putting out its shingle in the Sunshine State. It will be interesting to see how the bank markets the Ozarks brand in this state.

Yet Bank of the Ozarks is a well-oiled banking machine, emboldened with a formidable stock price and high market value that lets it spend money easily and often to pick off promising banks in Florida and other states.

Once the C1 Bank deal is done, the Florida bank will become branches of Bank of the Ozarks.

That deal is just the latest among many that in recent months and the past year. Community banks based in Tampa, St. Petersburg and Dade City have all gotten scooped up by expansion-minded banks from mostly slower-growing metro markets.

A midyear report from bank advisory firm FIG Partners confirms that the Sunshine State is a shopping hot spot, noting there have been 22 deals (make that more since the report was released) in Florida since January 2014.

More deals are all but guaranteed. At Raymond James, analyst Rose suggests Clearwater's USAmeribank, by its ample size and coveted market, is ripe for the plucking. At the right price.

Are these Florida banks worth such high prices?

Last month, Arkansas banker John Allison vented a bit of his scorn at overpriced Florida banks during a quarterly teleconference with analysts. The founder and chairman of Home Bancshares, the parent of Centennial Bank, which recently bought Tampa's Bay Cities Bank, suggested that once one bank gets a high purchase price, every bank thinks it's worth just as much or more.

"Everyone thinks their baby is prettier than the next one," Allison said. "And they expect that same crazy prize on the next deal, and they want more for the baby.

"I don't mean to be getting on the bankers. The bankers are brainwashed," he said. "A lot of these sellers with these stupid prices put them in their head. When we present a realistic price, they think we're trying to steal their baby."

Allison clearly is a banker on a mission to grow by buying banks in Florida. But not by paying too much.

"There's lots of deals," Allison said. "Lots and lots and lots of deals out there. You just have to move on. The expectations are sometimes not realistic. So, we have to move on. It's just next, next, next. You don't fall in love with one."

"Florida is the place to be for us," added Home Bancshares CEO Randy Sims.

We wish all these optimistic and wallet-laden banks well. Welcome to Florida! Enjoy the sun, the beaches and the competition.

But here's a word of caution.

Out-of-state banks have sipped the Florida Kool-Aid. Some suffered greatly.

"Florida is a wonderful market," the bullish CEO of Ohio's Huntington Bancshares said when it pushed into the state in 1997.

Flash forward four years.

"Florida is simply not well-positioned strategically for Huntington," said an apologetic (and different) CEO of Huntington in explaining the bank's exit from the state in 2001.

Big Florida savings and loans? Come and long gone. Michigan banks? Disappeared. Even Chase Manhattan Bank of New York tried branch banking in the 1990s here and eventually fled. Now the bigger JPMorgan Chase is back, furiously building branches and trying it all over again.

Littered beneath the many banks that prosper in Florida are the banking bones of plenty that could not find their niche in the sunshine.

Contact Robert Trigaux at rtrigaux@tampabay.com. Follow @venturetampabay.

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