Republic Bancorp Inc. has never been much of a dealmaker, but with its stock price surging and its coffers full from record profits, the Louisville company is spreading the word that it is interested in buying banks.

Its Florida market president, Doug Winton, has been meeting with potential targets there over the last few months, and last week the $3.1 billion-asset company announced that it has hired Ted Parker, a National City Corp. executive, to fill the newly created position of chief executive of acquisitions and corporate strategy.

Though the market for mergers and acquisitions market remains "dead in the water," as one analyst put it, Republic is well positioned to make deals, because it has largely avoided the extensive problems with asset quality that have forced so many would-be acquirers to the sidelines, analysts said. It also has the currency. First-half profits — fueled by tax refund anticipation loans — doubled from a year earlier, to $28.5 million, and Republic's stock price is up 99% so far this year.

Steve Trager, Republic's president and CEO, said it is looking at potential deals in its markets of Kentucky, Indiana, Ohio and, especially, Florida, a state it entered two years ago by acquiring GulfStream Bank in Port Richey — its only acquisition this decade. It is eager to bulk up in and around the Tampa area, Mr. Trager said.

Florida banking companies have been particularly hard hit by the real estate market slump, and many industry observers predict that several there are in danger of failing.

Some analysts said buying in Florida now could be dicey, but Mr. Trager said Republic would have no problem buying a troubled bank or, given the proper guarantees, even a failed one.

Republic acquired a couple of failed thrifts in the 1980s, he said. "We are not afraid to buy something that's flawed. Obviously, the price is impacted by that."

Mr. Trager also said some of the potential targets that have met with Mr. Winton, the Florida market president, initiated the contact themselves. "People have seen that our stock price has performed well, that we've had a very good six months, and they've come to the conclusion that we're a candidate to acquire."

Before joining Republic, Mr. Parker, 47, ran various lines of business for Nat City. He said that even though the focus of his acquisition strategy would be on core banking, that does not preclude looking at businesses "that would fit under a financial services company umbrella."

Republic has not been shy about venturing into unconventional lines. It had been active in the payday lending business until regulators pressured it to quit, and it has been making refund anticipation loans for a dozen years. That business has been boosted significantly by a three-year agreement it signed last year with Jackson Hewitt Tax Services Inc.

Mr. Parker also said any bank purchase would require careful due diligence and a clear understanding of the seller's book value. M&A activity is down because measuring book value has been difficult over the past year as loans losses have mounted, he said.

As of Aug. 27 there have been 107 bank and thrift deals announced this year, according to SNL Financial LC, compared with 207 announcements in the same period last year.

James Schutz, an analyst with Sterne, Agee, & Leach Inc., said the M&A pace is likely to remain slow while banks shore up their capital and work their way through problem loans.

"The universe of acceptable candidates for acquisition is severely restricted at this time, primarily because of the asset quality problems," Mr. Schutz said.

Michael Lipman, an analyst with First Horizon National Corp.'s FTN Midwest Securities Corp., said that even for willing buyers like Republic, deals are not easy to come by, because sellers would rather ride out the downturn and wait for their values to rebound, instead of accepting what buyers are offering.

The current sellers are mainly those that are "in dire straits" and need a partner to survive, Mr. Lipman said.

Observers also say several banking companies in the Midwest have been burned by recent acquisitions in Florida. Park National Corp. in Newark, Ohio, has reported that most of its problem assets are confined to the Florida bank it bought last year.

Republic, too, has had problem loans in Florida spike in the two years since it bought GulfStream, which has since been rebranded under the Republic name. In the first quarter it reported that $7.2 million of its loans in Florida were nonperforming, and that 85% of its total nonperformers were in that state.

Mr. Trager said a single loan on a 250-acre raw land development in Hillsborough Country accounts for substantially all of the $7.2 million.

The Florida operation has only had one profitable quarter since Republic acquired it, but Mr. Trager said that is because the company has been adding branches, including three in the last six months.

"We would have made money if we still had one location," he said. "We're investing in our Florida franchise. The lack of income is to be expected."

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