Premier American Bank has become the most aggressive failed-bank buyer in Florida, distinguishing itself from the state's other private investor-backed groups by sticking to deals close to home.
Premier gained a stronger footing in the past month by buying three failed banks, swelling its collection of such prizes to seven since a blind investor pool under Bond Street Holdings LLC took over the Miami bank in January 2010 with $440 million of capital.
Ken Thomas, a bank consultant at branchlocation.com, said the cell phone number for Dan Healy, the bank's CEO, "must be on the fab five list" for Sheila Bair, who chairs the Federal Deposit Insurance Corp. Thomas pointed out that the bank has landed "one out of every five failures" in Florida since the Bond Street infusion.
The $3 billion-asset Premier has surpassed other heavily capitalized groups such as North American Financial Holdings Inc. and First Southern Bank in Boca Raton in terms of the number of FDIC-assisted deals.
Some analysts said that is because Premier is willing to bid on the smallest deals in a "shotgun" expansion approach, as long as the target is in Florida.
"It's hard to make money with a shotgun strategy … because you don't have the critical mass to create economies of scale," Thomas said. "The branches may or may not be in good markets, but on the map of Florida, it will look good."
Most of Premier's deals have been smaller banks across Florida. On Friday, it won the two-branch Coastal Bank in Cocoa Beach. A week earlier, it bought the two-branch Cortez Community Bank in Brooksville and the six-branch First National Bank of Central Florida in Winter Park. Premier has 39 branches across the state.
Though the bank did not stay solely focused on its first footing in south Florida, some analysts argue that a wider strategy can be pulled off successfully.
"A thinly spread branch strategy can work because it is easier to pull it off now with the technology advances and capabilities," said Dave Martin, the chief training consultant at SunTrust Banks Inc. unit NCBS. "What it comes down to is, do you have the right folks in line, do you have a plan, and can you execute?"
Martin compared it to dieting. "Diets are pretty simple but when it doesn't work, it wasn't the plan that went wrong, it was in the execution."
Kent Ellert, Premier's president and chief operating officer, said the bank is not building a franchise to sell but is trying to grow an "enduring franchise" in all major Florida markets. He said in an interview Monday that Premier plans to go public later this year.
"The regulators have invited us to look at other financial institutions in the Southeast and other parts of the country," Ellert said. "Our best execution strategy is to remain ... Florida focused."
Despite its vast spread in the state, Premier has an advantage by targeting smaller deals. Larger banks show little interest in such bids and most other Florida community banks are not healthy enough to make a serious play, either, said Chip MacDonald, a partner at Jones Day in Atlanta.
"There are only so many bidders who are qualified," MacDonald said. "A lot of these [smaller] failures … only have one bidder or maybe one or two bids from the same bidder."
Similar private-investor-backed groups have since expanded beyond the state, and have progressed to more traditional deals. The biggest question among observers is whether the failed-bank branches can become profitable.
For groups like NAFH and Premier, the strategy "is one of building network density," said Steve Reider at Bancography. "There are significant benefits in banking that accrue to holding the largest network."
Premier reached its first quarterly profit in the first quarter since being taken over in January 2010, earning $5.8 million, compared with a loss of $1.2 million in the previous quarter.
Premier has typically incurred higher gains from failed-bank acquisitions than other Florida consolidators.
The latest data available shows that Premier had a 23.9% gain from its purchase of Sunshine State Community Bank in February, according to Jones Day. The biggest gain came from buying Florida Community Bank, at 42.2% in January 2010.
NAFH National Bank's two failed-bank deals in Florida in July generated gains of 13% and 15.3%, respectively. NAFH has since announced two open-bank deals outside of Florida, including a deal last week to buy a 90.1% stake in Green Bankshares Inc. in Greeneville, Tenn.