Bloodied but unbowed, the Florida banking market is poised for a rebound, but only a handful of in-state banks have the capital to take advantage of one.

Out-of-state banks will likely claim the spoils, analysts say.

Jack Greeley, a banking lawyer at Smith Mackinnon in Orlando, Fla., said that for the past two years only 40% of Florida-based banks could even have a conversation about expansion. The rest have either been idle or have contracted, giving outsiders even more opportunities to grow.

"There are a number of banks reducing their size, and that business is going to go somewhere," said Greeley said. He said he doubts that a lot of Florida banks will turn aggressive next year. "Many times, this creates an opportunity for the regionals."

The outside heavyweights that analysts see as consolidators in the state include PNC Financial Services Group Inc., JPMorgan Chase & Co. and Toronto-Dominion Bank. Those banks entered or expanded in Florida by buying struggling or failed banks in recent years. TD Bank particularly awed Florida bankers when it squeezed into the state by offering record-low bids with the Federal Deposit Insurance Corp. for three failed banks earlier this year.

"We've never had a situation in Florida where there are so many big banks wanting to get into the state," said Ken Thomas, an economist and independent bank consultant in Miami. Longer-term, "Florida is one of the top three banking markets in the country," next to Texas and California.

Despite its current troubles, Florida is attractive because of population growth, which fuels a deposit base, said Paula Johannsen, a managing director in the Florida office of the investment bank Carson Medlin Co. She said FDIC-assisted deals and weaker banks' unloading branches have helped Florida hold its allure.

Bigger banks can use deposits from those branches to fund loans elsewhere, boosting margins and profits. "We're still seeing people selling branches for capital reasons rather than buying because of the earnings play," Johannsen said.

Analysts agreed that the few banks with an ability to expand in Florida are being careful about how they deploy their prized capital. This is especially true for the small number of banks that have pulled off a strong capital raise.

"Capital these days is becoming more of a precious commodity," Greeley said. As a result, he said, the handful of Florida banks that have capital and are expanding "are more sensitive in how to deploy it."

Greeley pointed to a branch deal he is helping close for CenterState Banks Inc. in Davenport, Fla. The company is buying four former South Financial Group Inc. branches from TD Bank. All of the branches are in rural markets, but Greeley said the deal makes sense for the $2.1 billion-asset buyer.

"CenterState has built a terrific franchise, and they've done it by being in non-major-market areas," Greeley said.

BankUnited Inc. in Miami Lakes and EverBank in Jacksonville are among the in-state banks that might expand. North American Financial Holdings Inc., backed by private equity and based in Miami, is another viable consolidator. In each instance the companies are raising capital.

Few other in-state banks are seen as legitimate buyers. The last major capital raise announced in the state came in October, when the $1.1 billion-asset BankUnited filed its initial public offering, according to data from Sandler O'Neill & Partners LP.

Analysts said there will be few others planning capital raises to expand in the near term as investors watch the next two quarters to decide about Florida's banks.

"We haven't seen very many capital raises in that region recently," said Mark Fitzgibbon, an analyst at Sandler O'Neill. Investors "are going to want to see how the year-end cleaned up first."

Other types of expansion can be expensive. TD Bank is spending more than $8 million to buy two pieces of land in Broward County in South Florida, according to

Thomas said that, to really become a top competitor in Florida, a buyer must pursue one of the few banks that are large enough to compete in major markets. Most of the banks with any scale are actually large out-of-state rivals that beefed up in Florida with acquisitions of their own, making such deals impossible for the banks based in the state.

"There's just not many franchises where you can pick up at least 100 offices," Thomas said.

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