BancorpSouth Inc. of Tupelo, Miss., is taking an inexpensive route into Florida.
Instead of buying a bank there, the $11.8 billion-asset company said late Friday that it is buying a Florida charter from Superior Bancorp in Birmingham, Ala. Out-of-state banks cannot expand into Florida without first acquiring a state banking charter, but Superior Bancorp is a thrift company and does not need a charter to branch into the state.
BancorpSouth plans to use its new charter to open branches throughout the state - starting with the Florida Panhandle.
"It's a logical extension of our existing geographical footprint, as well as being an attractive market," said Aubrey Patterson, BancorpSouth's chairman and chief executive officer.
Superior would gain the charter when its pending deal for the $325 million-asset Kensington Bankshares Inc. in Tampa closes next quarter.
BancorpSouth would not disclose the deal price for the charter, but one analyst said that the "going rate" for a charter is about $1 million.
"Given that there are very little assets involved, it's likely that the purchase price is not a significant amount," said Barry McCarver, an analyst at Stephens Inc.
Most out-of-state banks enter Florida by acquiring a bank, but James Schutz, an analyst at Sterne, Agee & Leach, said that the purchase of an individual bank charter as an entree into a state, "is not all that unique."
In March the $350 million-asset Heritage Bank of the South in Albany, Ga., said that it would pay $1 million to Ameris Bancorp, a $1.8 billion-asset company in Moultrie. Ga., for a Florida charter.
Mr. Patterson said Monday that the company would use the charter to set up a full-service branch and mortgage banking operation in Destin, a city in the Florida Panhandle with a population of about 12,000, according to 2004 statistics from the Census Bureau.
BancorpSouth has 243 branches, in Alabama, Tennessee, Louisiana, Arkansas, Mississippi, and Texas. Mr. Patterson said that many of its customers have commercial and personal ties to the Florida Panhandle.
He would not rule out an acquisition in the state. "We will look at the opportunity to enter other Florida markets by acquisition," Mr. Patterson said, but "frankly, they have to make economic sense to us."
Florida has historically been among the most expensive states to buy into. According to SNL Financial LC of Charlottesville, Va., Florida-based banks fetched an average of 2.8 times book value last year, well above the national average of 2.2 times book.
Peyton Green, an analyst with First Horizon National's FTN Midwest Research Equities Corp., said that it makes sense for BancorpSouth to get into Florida any way it can. These are "stronger, higher-growth markets, as opposed to their rural markets in Mississippi and Arkansas," Mr. Green said.
But Mr. Schutz had a slightly different take. "I think you could characterize this as plan B for BancorpSouth."
He said that before committing to an acquisition it would get its Destin operation up and running and keep an eye out for potential deals.
Mr. Schutz said that BancorpSouth used a similar strategy when it moved into the Nashville, Tenn. market. It opened a loan production office in the area in December of 2003, and after just about a year in the market it announced a $37 million deal for the $151 million-asset Premier Bancorp, in Brentwood, Tenn.
