Barnett Banks Inc.'s agreement to buy First Florida Banks Inc. is doing wonders for the shares of another Florida institution.
With the deal, Fortune Bancorp, a $2.6 billion-asset savings bank, becomes the largest independent financial institution on Florida's fast-growing West Coast. That has heightened interest in it as a takeover play.
Among the possible suitors: First Union Corp., Nations Bank Corp., and SunTrust Banks Inc.
Shares Rise 65% in Quarter
The shares of Fortune, which is based in Clearwater, were already up sharply following a strong first-quarter earnings report. Then they jumped another 25% after last month's announcement that Barnett would buy Tampa-based First Florida. That brought the gain this quarter to 65%.
For the past two years, the thrift has been run by John R. Torell 3d. Mr. Torell was formerly chairman and chief executive officer of CalFed Inc. in Los Angeles, one of the nation's largest thrifts, and before that was president of Manufacturers Hanover Corp. in New York.
On Monday, shares of Fortune were up another 50 cents to $15.50. But like many thrift equities, the stock remains depressed in relation to book value. Tangible book value at the end of the first quarter was $20.27 a share, or $124 million. The company's market value is about $85 million.
Fortune's management is in the midst of reversing a long series of mistakes made at the company during the 1980s. And Mr. Torell, who became chairman and chief executive in July 1990, is applying concepts that have served him well in the past.
"We are moving ahead with a full-service banking strategy," Roy J. McCraw Jr., Fortune's president and chief operating officer, said Monday. A veteran commercial banker himself, Mr. McCraw joined Mr. Torell last year from First Union, Charlotte, N.C.
In pursuit of its goal to be banklike, the thrift is adopting a retail and small-business orientation and is emphasizing the acquisition of non-interest-bearing demand deposits, said Samuel J. Beebe, a banking and thrift analyst at Robert W. Baird & Co., Tampa.
The strategy should pay off with Fortune positioned as one of the few major acquisition targets in its area. Florida's west coast is "arguably the best banking market in the state," said Mr. Beebe.
"At some point, it is logical to assume that one of the superregional banks will come a courting," the Florida analyst noted, particularly since others fell far behind Jacksonville-based Barnett in market share after the First Florida deal.
Barnett's 27% market share in Florida is 50% larger than runner-up First Union and equal to the combined market shares of NationsBank, Charlotte, N.C., and Atlanta-based Sun Trust.
Two Big Independents
Assuming a more banklike character will put Fortune in a rarefied group of takeover targets. Only two sizable independent banking companies remain in Florida, both on the east coast. They are Flagler Bank Corp., based in West Palm Beach, with $451 million in assets, and Seacoast Banking Corp., based in Stuart, with $608 million in assets.
Fortune, formerly called Fortune Financial Group Inc., has 48 banking locations that stretch along Florida's west coast as far south as Naples. Over half the locations are in its home county of Pinellas which includes both Clearwater and St. Petersburg.
In Pinellas County, Fortune ranks second in deposit share behind only Barnett.
During the 1980s, Fortune endured many of the problems that sank a large number of thrifts. John B. Sweger, a former developer, was elected its chairman in 1982, and the federal savings and loan association shifted to stock ownership the next year.
That set the stage for a number of exotic ventures, including the issuance of 30,000 shares, together with $1.9 million in cash, to purchase a 50% interest in Golf Cart Systems Inc., a golf car leasing firm.
"This was one of the worst investments any thrift this side of Texas ever got into," said Mr. Beebe. By yearend 1989, Fortune had $14 million in loans outstanding to Golf Cart Systems "and $13 million of it had gone bad," noted the analyst.
The election of a major shareholder, John Moran, as chairman in January 1990 signaled a back-to-basics philosophy.