Two Florida thrift institutions are turning the tables in the state's frenetic merger scene by acquiring banks to fortify their operations.
The $205 million-asset Republic Savings Bank of Palm Beach Gardens expects to close an agreement to acquire Governors Bank, a three-branch commercial bank in West Palm Beach, in November.
The deal will come just months after the $601 millionasset First Federal Bancorp of New Smyrna, a holding company based 20 miles south of Daytona Beach, purchased Key Bank of Florida, a Tampa-based commercial bank.
'This is like the man biting the dog," said Samuel Beebe, vice president of the Robert W. Baird & Co. brokerage firm. "This is definitely the exception rather than the rule."
Republic is in the midst of applying for approval by the Office of Thrift Supervision and will go to Governors' shareholders on Oct. 7, said Republic's chief executive Rudy Schupp.
"They are a pure commercial bank, which is why we're interested," said Mr. Schupp. "Their commercial loan portfolio will get us where we want to be quickly. I guess we're a little bit of a rebel in doing this."
Governors, an $80 million asset bank, brings three branches in the West Palm Beach area to Republic's five. Mr. Schupp described Republic as a "hybrid" institution, with its combination of commercial and consumer lending, and mortgage banking services.
If the deal is approved, Republic would acquire both the bank and its holding company, Governors Bank Corp. The latter would be dissolved, and Governors would become a subsidiary of Republic. It would also adopt Republic's name.
Mr. Schupp would not disclose the proposed purchase price but said the transaction would be an all-cash deal.
First Federal Bancorp, which was created in July 1992 when First Federal Saving Bank of New Smyrna, a $324 million asset thrift, acquired the First Federal Savings and Loan Association of Citrus County in Inverness. In April, the holding company acquired Key Bank in a stock and cash deal.
"I think all thrifts will have to diversify in order to survive," said Tilden Smith, a vice president at First Federal in charge of its mergers and acquisitions. "You don't have to change radically, but you do have to diversify your product mix."
Unlike Republic's plans, First Federal has allowed Key, a $70 million-asset bank, to keeps its name. Key Bank's management and board of directors have remained essentially the same as well, Mr. Smith said.
Despite the dominance in the state by the larger banks, such as Barnett Banks Inc. and NationsBank Corp., and the plethora of smaller community banks, Mr. Smith said there was room for more midsize community banks in the $200 million to $300 million range that can make individual loans of $1 million to $3 million with little difficulty.
"It's like the difference between Macy's and a small specialty men's shop," Mr. Smith said. "In between them there is a need for the specialty shops that can handle the bigger orders."