A year and a half after a big merger that doubled its assets but took a bite out of earnings, Amsouth Bancorp is looking to Florida for its next wave of growth.
The Birmingham, Ala.-based regional is in the midst of a major branch-building project in the Sunshine State, tagged internally as "30 branches in 30 months." It is targeting four markets - Naples, Tampa, Orlando, and Jacksonville - and is already ahead of schedule; in the first quarter it built six new branches in the four cities.
The effort to wring more revenue and profit from its Florida network is among a half-dozen initiatives that Amsouth executives said will help boost earnings 12% to 15% a year. The $39 billion-asset company's profits slipped last year after the October 1999 merger with First American Corp. of Nashville and a major restructuring last fall.
The company said it also aims to double the profit contributions of business banking and wealth management, speed the growth of home-equity lending and other consumer banking products, and tap the Internet to support all of its business lines.
Florida, which is adding population faster than most other states, offered the best chance to meet some of these goals, said E.W. "Rusty" Stephenson Jr., a member of Amsouth's management committee and the executive vice president who oversees the Florida market. Executives are looking "at the high-potential, low-market-share areas in our company and how we can really grow those at a fast pace," he said.
Now No. 6 in Florida deposits, with about 2.3% statewide, Amsouth said it sees room for improvement in many metropolitan markets. In Orlando, for example, it ranks 11th, with just 1.9%, and in Jacksonville it ranks ninth, with 1.7%.
Bank of America Corp. is No. 1, followed by First Union Corp., SunTrust Banks Inc., SouthTrust Corp., and Washington Mutual Inc.
Analysts say the M&A crush in Florida, including the planned combination of First Union and Wachovia Corp., leaves customers and employees ripe for picking.
"There's been huge amounts of consolidation there, and that really continues. Some of the more traditional companies have had some stumbles, and I think Amsouth is hoping to gain some market share," said Gary Townsend, a senior analyst at Friedman, Billings, Ramsey in Arlington, Va.
Population growth in Naples, Tampa, Orlando, and Jacksonville makes them the best places for new branches, Mr. Stephenson said. "They're really high-growth, high-potential markets, higher than anything in the Southeast and anything in our system," he said.
Amsouth assembled its branch network mostly through acquisitions in the late 1980s and early 1990s. It entered Florida 1987 by buying First Mutual Savings Association of Florida in Pensacola. In 1993 and 1994 it jumped from about $1 billion to $4 billion in deposits by acquiring banks in Clearwater, St. Petersburg, Orlando, Jacksonville, Fort Myers, Naples, and other places.
Amsouth had been mostly content until last winter, when it began plotting the latest expansion strategy. Florida now accounts for about 20% of its $26 billion in deposits, and Mr. Stephenson said that number can go higher, though he did not say by how much.
This time around, with its name already established in the markets, Amsouth decided against acquisitions. "Usually if we really do our marketing and research, we'd rather build something brand new," Mr. Stephenson said.
As it builds branches Amsouth is adding trust specialists, private bankers, business bankers, and commercial real estate specialists. It has also been beefing up its services for wealthy customers. In mid-April it hired Geoff von Kuhn, the former head of Citigroup Inc.'s U.S. private bank, to run its wealth management business. First Union will be a major competitor in that business, as will Chicago's Northern Trust.
Mr. Townsend, the Friedman Billings analyst, said wealth management expertise could help Amsouth as it tries to take advantage of its smaller size against competitors that keep getting bigger by acquisition.
"Obviously Florida plays large in their view of the future," Mr. Townsend said, "and wealth management, just given the demographics there, has got to be a big part" of the strategy.
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