Colonial BancGroup Inc. of Montgomery, Ala., announced another deal in Florida on Tuesday, its second in four months and its 20th in the state since 1996.
The $18.9 billion-asset regional said it would pay $232 million in cash and stock for FFLC Bancorp Inc. of Leesburg, the holding company for the $1 billion-asset First Federal Savings Bank of Lake County.
FFLC's 16 central Florida branches would bring Colonial's total in the state to 161, against 118 in Alabama (and 47 in Georgia, Nevada, and Texas).
It was Colonial's last deal, for UB Financial Corp. of Sunrise, in the southern part of Florida, that tipped the balance from Alabama. (The deal for UB, the holding company for Union Bank of Florida, is expected to close within a month.) Tuesday's agreement looks very similar - $233 million of cash and stock for a $1 billion-asset institution.
W. Flake Oakley 4th, Colonial's president, said the two acquisitions would give it "a strong franchise throughout the state." Further acquisitions, he said in an interview Tuesday, are not "essential," but they have not been ruled out either.
"We'll always look at additional opportunities as they occur," Mr. Oakley said.
That may be an understatement. The day after Colonial struck its deal for UB Financial, Mr. Oakley said: "If an opportunity comes along, we'll look at it."
Kevin P. Fitzsimmons, an analyst with Sandler O'Neill & Partners LP in New York, said Colonial could pounce again as early as July, particularly in the Florida panhandle.
"I don't think this is their last deal," he said. "Over time, they want to continue to enhance their franchise, which in their eyes means more growth in Florida."
The deal for FFLC, set to close in midsummer, would give Colonial a 7.5% share of the deposits in the Orlando metropolitan statistical area, making it the fourth-largest banking company there, after SunTrust Banks Inc., Bank of America Corp., and Wachovia Corp.
According to the Federal Deposit Insurance Corp., Colonial is currently the fifth-largest Orlando-area bank, with a 5% share, behind Washington Mutual Inc., at which holds at 5.3%.
The deal "puts us in a very strong position in Orlando," Mr. Oakley said.
Statewide, Colonial would be No. 6, up from No. 7.
Stephen T. Kurtz, FFLC's president and CEO, did not return a call, but Mr. Oakley said the two companies "had been talking for some time."
Christopher Marinac, an analyst at FIG Partners LLC in Atlanta, said FFLC had not been considered a likely seller. "It speaks volumes about the changing attitudes toward selling at small banks," he said.
FFLC's board also may have been attracted by the prospect of Colonial selling itself within a few years. "If one looks out three or four years, that is a probability that cannot be ignored," he said.
To arrive at its $232 million deal price estimate for FFLC, Colonial assumed that the value of its own stock would reach $21 a share by the time the transaction is completed. It is offering to swap two of its shares or pay $42 in cash each FFLC share.
Colonial said those terms compare favorably with its other Florida deals. It said it is paying 2.75 times FFLC's book value, compared with an average of 2.96 times book for its 18 completed deals in the state. Colonial said the FFLC should be accretive to earnings within a year of its closing.
Mr. Oakley said Colonial expects to cut 20% to 25% of FFLC's noninterest expenses, primarily by eliminating redundant back-office functions.
Joseph A. Stieven, an analyst with Stifel, Nicolaus & Co. Inc. in St. Louis, said Florida's demographics, particularly its rapidly expanding population, is what makes it so attractive.
In Lake County, for instance, the population grew 38% between 1990 and 2000, according to the Census Bureau. In Broward County, where 12 of the Union Bank of Florida's 18 branches are located, the population grew nearly 30%. By contrast, Alabama's population grew just 1.3% between 1990 and 2000.
In midday trading Tuesday, Colonial shares were unchanged at $20 a share. FFLC was up $5.33, or 15.22%, to $40.36.
Colonial also released its 2004 results on Tuesday. The company said its earnings rose 17%, to $175.3 million. FFLC reported its earnings Friday: $10 million in 2004, up 9%.