First Union Is Apparent Winner of Miami Bank

First Union Corp. of Charlotte, N.C., appears to have won the sweepstakes to acquire the tattered but valuable franchise of Miami-based Southeast Banking Corp.

After reviewing bids for the $11.3 billion-asset company, the Federal Deposit Insurance Corp.'s staff singled out one proposal, and the agency has entered final negotiations with that bidder, according to a regulator who attended a closed FDIC board meeting on Tuesday.

The official declined to identify the leading bidder, but all signs point to First Union, a $39.7 billion-asset company eager to expand its reach in Florida.

First Union's bid reportedly outdistanced those of its rivals, and the FDIC is now ironing out details with the company, sources said. An announcement of the federally assisted takeover, which will still have to be formally approved by the board, is expected soon.

Speculation that First Union would win the bidding drove the company's stock up sharply Wednesday. Its shares jumped $1.625, to $25.125, in late afternoon trading on the New York Stock Exchange.

Others Report No Follow-Up

At least two other companies - Barnett Banks Inc., Jacksonville, and SunTrust Banks Inc., Atlanta - submitted bids for Southeast, according to sources. In addition, NCNB Corp. of Charlotte, N.C., was said to be weighing a bid. There was little movement in the stocks of the three companies Wednesday.

Officials at Barnett and SunTrust acknowledged privately Wednesday that they thought First Union had clinched the deal because the FDIC had not contacted them with follow-up questions on their bids.

Spokesmen for the FDIC and First Union declined to comment.

A regulatory source told the American Banker that the FDIC's discussions with First Union have involved the use of a loss-sharing arrangement under which the FDIC would absorb the majority of Southeast's losses over five years, and First Union the rest. The source said an 85%-15% split was initially discussed, but unspecified changes had been made.

Southeast, which was once Florida's premier corporate bank, has lost nearly $500 million in the last seven quarters because of losses on real estate loans. It's capital ratios are below regulatory guidelines, and liquidity problems have driven it to the Federal Reserve Bank of Atlanta's discount window, where its daily borrowings have been as high as $275 million.

The FDIC has been peddling Southeast for months. Final bids were due on last Thursday.

Gordon Matthews contributed to this report.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.