National Commerce Financial Corp. of Memphis said Friday that it plans to expand into Florida this year under a new agreement with a longtime partner, Wal-Mart Stores Inc., for new in-store branches.
The deal calls for opening at least 70 new in-store branches in Georgia and Florida from the third quarter through 2005.
At first the branches would use the National Bank of Commerce brand name, and not the Wal-Mart banking brand the two companies are testing in the Atlanta area.
The $23 billion-asset banking company has had branches in Wal-Mart stores in Georgia and Tennessee since 1997. Last fall it converted 16 existing in-store locations into Wal-Mart Money Centers under a pilot program designed to gauge the effectiveness of using the Bentonville, Ark., retailer's well-known brand.
A spokeswoman said Friday that the two companies have not decided whether to expand the Wal-Mart Money Center concept. The pilot is scheduled to continue through late 2005, and includes an option for another 16 stores.
Three-quarters of the new Wal-Mart locations, or 53, would be in Florida, and the remainder in Georgia. The agreement calls for in-store locations in new and existing Wal-Mart stores.
As it enters Florida, National Commerce will focus on three large metro areas: Jacksonville, Orlando, and Tampa/St. Petersburg.
The banking company had foreshadowed a move into Florida with Wal-Mart during recent investor presentations, and on Friday executive vice president Christopher T. Holmes said that for now its strategy does not include building stand-alone branches in Florida, as it has elsewhere.
"We don't anticipate having stand-alone branches included as a part of [this strategy]" he said. The company may consider doing so in the future, he added.
Though the companies have not decided whether to expand the Wal-Mart Money Center pilot, the Florida branches could eventually be converted to the Wal-Mart brand. "That's certainly a possibility," Mr. Holmes said, but it is "not something that's imminent."
Florida was the logical next step after Nat Commerce's Atlanta expansion, initiated two years ago, he said. "Florida is a natural geographical expansion for us, and it's a great banking market, if you look at household income growth and population growth there."
The expansion into Florida also comes as the company tries to improve profitability in its branch network by focusing on faster-growing metro areas. In 2003 it sold eight branches and closed 22 while opening new branches in Atlanta and launching the Wal-Mart Money Center test.
It now has nearly 500 branches across the Southeast, about one-third of which are in stores.
Analysts called Friday's announcement a further sign that Wal-Mart sees partnerships with banks as the best alternative to its so far thwarted efforts to enter banking directly.
"Clearly Wal-Mart is admitting that they're not going to get into the bank business soon," said Christopher Marinac, an analyst with FIG Partners LLC in Atlanta.
