Except for their names, BankAtlantic Bancorp of Fort Lauderdale, Fla., and Commerce Bancorp of Cherry Hill, N.J., are remarkably similar.
Both are deposit-gathering powerhouses that offer seven-day-a-week banking with extended hours, and both use advertising tag lines proclaiming supremacy in convenience. Even their mascots’ outfits — BankAtlantic’s giant, foam, red “7”, and Commerce’s giant, foam, red “C” — look alike.
But with the $33 billion-asset Commerce set to move into BankAtlantic’s territory, analysts and investors are not sure South Florida is big enough for both of them.
Commerce announced late Monday that it is buying the $350 million-asset Palm Beach County Bank and said it would use the acquisition as a springboard to open about 150 branches in Palm Beach, Broward, Miami-Dade and Martin counties — - where BankAtlantic has 93% of its deposits. (See related story, page 1.)
Predictably, executives at both companies said that sharing a market with each other would not cause them to alter their strategies. Investors, though, seem to be favoring Commerce. Late Tuesday BankAtlantic’s stock was down 5% in heavy trading to $17.90, the largest bank stock decline of the day. Meanwhile, Commerce’s stock is trading at a 52-week high.
Gary Tenner of SunTrust Robinson Humphrey said in a report issued Tuesday that he had downgraded BankAtlantic’s stock to “neutral” because he believes that with the “finite amount of deposits” in South Florida, Commerce will cut into BankAtlantic’s target market and its 3-year-old strategy of gathering low-cost deposits.
“The presence of a sizable institution such as … [Commerce], with a similar strategy and a deep advertising budget could impact … [BankAtlantic’s] ability to maintain its deposit growth at its current levels and impact earnings over time,” Mr. Tenner’s report said.
Commerce chairman and chief executive Vernon W. Hill said his company would definitely be gunning for BankAtlantic’s customers. “We look forward to putting up stores right across the street from theirs,” he said in a conference call Tuesday. (The deal for Palm Beach County Bank is expected to close in the fourth quarter.)
Though the two have never competed in banking, they did clash once in court. In 2002, soon after BankAtlantic adopted its “Florida’s Most Convenient Bank” slogan, Commerce, which has called itself “America’s Most Convenient Bank” for a dozen years, sued, claiming it had branding rights. Commerce withdrew the suit last year and Mr. Hill said Tuesday that it would take no further legal action against BankAtlantic.
Alan B. Levan, BankAtlantic’s chairman and CEO, has long acknowledged that his $6.1 billion-asset company admires Commerce and has mimicked its marketing approach.
In an interview Tuesday he said BankAtlantic would prove the skeptics wrong. He said that since January 2002 it has added 500,000 new checking and savings accounts, 49,000 in the second quarter alone, and that he expects this pace to continue as BankAtlantic opens more branches.
“We are anxiously waiting for them to come to our market, because now we can observe them up close,” Mr. Levan said. “And we believe that good quality competition raises the bar for everyone. The next couple years will be interesting.”
One analyst is betting on BankAtlantic. Beth A. Messmore of Merrill Lynch & Co. said in a report issued Monday that Commerce’s entry into Florida would work in BankAtlantic’s favor. For example, she said that BankAtlantic offers free checking for a lifetime for small businesses and consumers, while Commerce offers consumers free checking only for the first year.
“These differences should help defend” BankAtlantic’s “retail value proposition,” she wrote.
