Expanding its market share in South Florida, NationsBank Corp. said Monday that it had agreed to acquire Miami's Intercontinental Bank for $208 million in stock, or 2.1 times book value.
The robust premium reflects the fact that few independent banks or thrifts of any size remain in Florida. Intercontinental, with $1.17 billion of assets, was the largest independent bank left in the Sunshine State.
"It's very much in line with the expectations for Florida banks that are performing well," said analyst Benjamin C. Bishop Jr., with Allen C. Ewing & Co. in Jacksonville. "It's just a rule down here that the larger the bank, the higher the multiple of book and earnings."
Nationsbank called the deal "exciting news" for its South Florida franchise.
"Intercontinental Bank brings with it a strong customer base, a branch network that complements our banking center network, and provides new business opportunities," said Adelaide A. Sink, president of NationsBank Florida.
The acquisition gives NationsBank $900 million of additional deposits and 24 branches in Miami's Dade and Broward counties. Nearly all of the impact will be felt in Dade County, where NationsBank has $1.7 billion of deposits.
Following the acquisition of Intercontinental's $700 million of Dade deposits, NationsBank will vault in market share from fifth to fourth place, over Sun Banks Inc., which has $1.9 billion of deposits in the county, according to data compiled by the Florida Bankers Association.
First Union Corp. is the clear leader in Dade, with more than $4.5 billion of deposits, followed by Barnett Banks Inc. ($4.1 billion) and Great Western Financial Corp. ($2.5 billion).
Intercontinental's $200 million of deposits in Broward will help No. 2- ranked NationsBank, with $3.6 billion, inch closer to the leader, Barnett, which holds $4 billion.
The deal announced Monday is also notable because Intercontinental's owners and managers had previously sold a Florida bank to NationsBank. Michael Weintraub, Intercontinental's principal investor, with 24% of the shares held by him and family members, sold Miami's Pan American Banks Inc. to NCNB Corp., NationsBank's predecessor organization, in 1985.
Mr. Weintraub remains a NationsBank director, with 800,000 shares, or 0.1% of the total. NationsBank itself already holds a 7% stake in Intercontinental.
William H. Allen Jr. and William L. Morrison, respectively Intercontinental's chairman and president/CEO, both worked for Pan American. They left NCNB in 1986 to take command at Peninsula Federal Savings and Loan, a thrift that Mr. Weintraub purchased with some of the proceeds from the Pan American sale.
In the summer of 1987, Peninsula Federal's holding company acquired the nearly insolvent Intercontinental. Mr. Allen and Mr. Morrison then focused their attention on building a commercial bank franchise by lending to medium-size companies with annual sales in the $1 million-to-$50 million range.
Intercontinental was also an energetic acquirer of community banks in South Florida, which has helped it double its asset size since 1990.
After suffering some credit problems in the early 1990s, Intercontinental has rebounded strongly. It reported a 1.23% return on assets and 15.27% return on equity in the first quarter.
Intercontinental stock closed at $28.31 a share on Monday, up from Friday's close of $27.75 a share. NationsBank's shares were down 37.5 cents, to $55.88.
Trading of Intercontinental's stock was halted Friday morning when rumors that NationsBank planned to buy the company sent prices surging $2.625 a share.
