coveted by many of the nation's financial institutions. But this year, the state's mergers and acquisitions scene has become an incremental game of chess for some institutions and Russian roulette for others.

For market leader Barnett Banks Inc. in Jacksonville, the last major banking company based in Florida, its in-state M&A strategy is defensive - focused on maintaining its status as the No. 1 bank by deposit share, ahead of First Union Corp. That's why Barnett aggressively bid $160 million for - and won - the $1.1-billion Florida franchise left behind in June by the departing First of America Bank of Kalamazoo, Mich.

Losing its lead position in Florida would be one of the greatest blows to the high-flying value of the Barnett franchise.

"Because Barnett feels pressure from First Union, it's back making acquisitions again," said Richard Bove, an analyst with Raymond James & Associates.

Two acquisitions this year by Barnett have closed. But a third announced deal, estimated at $400-million, for Miami's Republic Banking Corp. fell through in May after it became clear Barnett could suffer a greater-than usual defection of the Hispanic bank's customers. And, in a swap, Barnett in May traded some of its branches in Georgia with SouthTrust Bank, picking up five offices in Florida.

Barnett will do more in-state deals, at top prices, if it is necessary.

"Barnett," Mr. Bove said, "is loath to give up its top ranking in the state."

The retreat by First of America, which first entered Florida in a 1994 government acquisition of the failed Goldome Savings Bank franchise, is the latest indicator that some Midwest banks are rethinking their "follow the retiree customer to Florida" concept.

One result of the Midwest retreat, like that of Ohio's FirstMerit Bank, is that the few dominant banks already entrenched in Florida have been better able to consolidate their holdings.

The top three banks in market share - Barnett, First Union and NationsBank - continue to make selective acquisitions in the state. But First Union's main focus is now in the Middle Atlantic region, while NationsBank is looking to strengthen its new presence in the Midwest.

Together with No. 4 SunTrust Banks, the top four banks now control more than 75% of the state's deposits.

If some out-of-state banks are rethinking their Florida moves, Alabama institutions are not.

While several Alabama banks launched major M&A assaults in Florida several years ago, this year saw a latecomer with an aggressive agenda. Midsize, Montgomery-based Colonial BancGroup this year has completed or announced nine acquisitions in Florida of banks ranging in size from $80 million to nearly $250 million.

Colonial CEO Robert Lowder, recognizing a strong Florida stake is a proven way to boost Wall Street's opinion of Alabama banks, has publicized a lofty goal. He wants $5 billion of assets under Colonial's belt within the next two to four years. So far, Colonial is up to $1.7-billion in Florida assets.

"We're just getting cranked," said Charlie Brinkley, Colonial's chief in Florida and the former head of Colonial's first acquisition in the state, Orlando's $240-million-asset Southern Bank.

But as other acquisition-minded banks are learning this year, expansion in Florida won't come cheap. When Mr. Lowder first approached Southern Bank, Mr. Brinkley said his bank was not for sale. Then Mr. Lowder pulled out his checkbook, analysts recall, and said, "What will it take?"

Colonial paid a hefty three times book value for Southern Bank. Its other acquisition prices this year have ranged generally from 2.25 to 2.5 times book.

Colonial's late start in Florida will make it more challenging and expensive for it to reach $5-billion than it did for, say, Alabama's Amsouth Bancorp. to reach the same market share, said analyst Ben Bishop of Allen C. Ewing & Co. in Jacksonville.

"It's much tougher. It means greater dilution for Colonial. It means buying more, smaller banks. And prices are going up," Mr. Bishop said. On the other hand, Colonial's stock price hit a 52-week high in July, giving it more clout to deal. "That's good for sellers, too" he said.

So far, Colonial has scooped up a geographically diverse mix of Florida banks. After Southern Bank, Colonial acquired First Family Bank in Eustis; Tomoka State Bank in Ormond Beach; Jefferson Bank, Miami Beach; Fort Brooke Bank outside of Tampa; First Commerce Bank, Winter Haven; GreatSouthern Bank, West Palm Beach; First Independence Bank, Fort Myers; and, most recently, Dadeland Bank in south Miami.

It remains to be seen how Colonial will knit together a cohesive banking unit in Florida that, so far, stretches from southern Miami to Tampa on Florida's Gulf coast to Daytona on the Atlantic.

Unlike its Alabama peers, Colonial decided to dip its toe in South Florida, a market heavily influenced by its growing Hispanic population and ties to Latin America. Amsouth and SouthTrust, the Alabama banks with the largest presence for now in Florida, acknowledge they are not comfortable competing in such an international market and have studiously avoided south Florida in their bank acquisitions.

But they remain active buyers in central Florida.In February, California's Home Savings of America agreed to sell its 12 west Florida branches to South Trust in a deal valued at $45 million.

While the flood of out-of-state buying binge in Florida has slowed, it is not over.

One unusual strategy involves FNB Corp., a banking company based in Hermitage, Pa., that has decided to string together a west-coast-of-Florida franchise composed of community banks. FNB, with $1.8 billion in assets, most recently acquired the Tampa Bay area's Indian Rocks State Bank. The stock deal for the $70.2 million community bank is valued at $16.5 million.

The dearth of midsize Florida banks represents a special challenge for expansion-minded institutions. Mr. Bishop suggests any out-of-state bank wishing to claim a solid piece of the state's banking market may be forced to buy one of the Alabama banks.

Still, some up-and-comer Florida banks have grown enough to break the $1 billion-asset mark. That target size automatically puts them on the radar screen of the larger buyers.

St. Petersburg's Republic Bancshares, whose past acquisitions include the failed Crossland Savings franchise, pushed past $1-billion in size in July. Now it is pushing into the Orlando market, with purchases of Firstate Financial and FFO Financial Group.

Fort Lauderdale's BankAtlantic Bancorp., with $2.7-billion of assets, on the surface would appear to be a likely takeover target. Not so, analysts say. BankAtlantic chief executive Alan Levan has shown no interest yet in being courted by larger institutions.

Ahead, the good news in Florida banking is that the state's growth is encouraging a rebirth in community banks. In time, the growth and consolidation of these small banks will set the stage for yet another round of rapid purchases.

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