BankAtlantic Has $38M Deal to Buy Ryan Beck

BankAtlantic Bancorp said Tuesday that it had agreed to buy Ryan, Beck & Co., catapulting the Florida thrift company into the lucrative businesses of underwriting, market making, and merger advisory work.

BankAtlantic, which has $3.1 billion of assets, said it would pay $38.2 million in stock for Ryan, Beck, a New Jersey investment bank that specializes in financial services firms.

No thrift company has ever paid so much for a securities firm. BankAtlantic is based in Fort Lauderdale, Fla.

The two companies have agreed to refer business to one another, and BankAtlantic said it would provide "substantial new capital" to help Ryan, Beck expand. Despite this new coziness, BankAtlantic insisted the investment bank would operate as an "autonomous, independent" subsidiary.

The thrift-securities firm merger is only the third in the last 10 years. Regulatory firewalls have not discouraged deals, merger advisers say, so much as lack of interest. But that may be changing.

"I'd think there will be more interest in securities firms by thrifts that are less traditional mortgage companies and more like commercial banks," said Ronald H. Janis, partner at Pitney Hardin Kipp & Szuch, the attorney who represented Ryan, Beck on the deal.

Ryan, Beck, the 65th-largest debt and equity underwriter last year according to Securities Data Co., was barely a footnote on anyone's list of likely takeover candidates. The firm's stock has missed the bull market rally of recent years. "It's been one of the worst performers of the stocks I cover," said Michael A. Flanagan, a securities industry analyst in Philadelphia.

But BankAtlantic executives said buying the boutique, which has raised most of BankAtlantic's capital, fits their needs.

"This investment will not only enable the expansion of Ryan, Beck as an independent entity, but ... will lead to further growth in noninterest income" at BankAtlantic, said the thrift's chairman, Alan B. Levan.

Ryan, Beck simultaneously announced that it would acquire Cumberland Advisors, a Vineland, N.J., money management firm with approximately $400 million of assets under management, and Cumberland Consulting, a financial adviser to state and municipal governments. Terms of that transaction were not disclosed.

Analysts heartily applauded the proposed merger between the securities firm and BankAtlantic.

"This move will probably assure BankAtlantic's independence for some time and should enhance its long-term franchise value," said Deborah R. Beylus, an analyst at JW Charles Securities.

Although rare, mergers between thrifts and securities firms are not unprecedented.

On Dec. 9, Chester Valley Bancorp, a $325 million-asset thrift based in Downingtown, Pa., said it had agreed to acquire Philadelphia Corporation for Investment Services, a broker-dealer with offices in Philadelphia and Wayne, Pa. Terms were not disclosed.

A handful of other mergers occurred in the mid-1980s, and one in 1993, but there were no others until the Chester Valley announcement.

Ryan, Beck and BankAtlantic have had a long relationship.

In November, Ryan, Beck and Tucker Anthony Inc. co-led a public offering worth $40 million in stock plus $100 million in convertible subordinated debentures for BankAtlantic, according to a Securities and Exchange Commission filing.

Some investment bankers at rival firms speculated that Ryan, Beck's decision to join BankAtlantic could hurt its thrift conversion business. Despite assurances that Ryan, Beck will remain independent, they say executives at other thrifts might be unwilling to share their company's strategies with a firm owned by a competitor.

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