Shoring up a leadership position in southern Florida, NationsBank Corp. has reached an agreement to purchase Miami-based Chase Federal Bank, the largest independent thrift left in the state.
NationsBank said Monday it would buy $2.8 billion-asset Chase Federal and its parent company TAC Bancshares for $280 million in cash. The price is 1.7 times the thrift's book value and 13.5 times its fiscal June 1996 earnings.
The price, considered to be in line with other recent deals in Florida, represents a 6% premium over core deposits.
The deal underscores NationsBank's efforts to gain additional deposit marketshare in the Miami area. The purchase of Chase Federal would vault NationsBank to second place in Miami's Dade County with a 13% deposit marketshare and solidify the bank's leading market position in nearby Broward County. Eighteen of Chase Federal's 34 branches and most of its deposits are located in Dade County.
"It's a deal consistent with what they've been doing both in Florida and in other parts of their franchise," said Sanford C. Bernstein analyst Moshe Orenbuch.
Shares of Chase surged Friday, which may lead to scrutiny from regulators concerned about insider trading. (See story on back page.)
NationsBank's major purchases of 1995 were done all within its own market and included a large Miami thrift, a Miami-based community bank, and, in Georgia, Atlanta-based Bank South Corp.
"This is really a good move for us in Dade," said Adelaide A. "Alex" Sink, president of NationsBank Florida.
NationsBank declined to say how many of Chase Federal's branches would be closed after the deal is consummated in the third quarter.
But considering other recent transactions, where NationsBank has typically eliminated about 70% of the acquired bank's expense base, analysts expect few Chase Federal branches to survive.
"There's no point in duplicating the expense with your own branch a mile away," said Dean Witter's Anthony R. Davis. "The byword now in this industry is branch consolidation, not branch expansion."
The buyout of Chase Federal caps a successful turnaround effort by CEO Thomas A. Cooper, who assumed command of the floundering thrift in August 1993. Fresh from his unsuccessful effort to save New York's Goldome Federal Savings Bank from regulatory takeover, Mr. Cooper joined with six investors to purchase Chase Federal, which was then run by former Federal Home Loan Bank Board chairman Edwin J. Gray.
Mr. Cooper and his investors pumped $125 million into TAC Bancshares, a new holding company that owned Chase Federal and a smaller Florida thrift.
Mr. Cooper said the sale to NationsBank arose from a recent strategic review conducted by the board and its investment banker, Donaldson, Lufkin & Jenrette Inc. He said the board weighed the need for investing more capital into Chase Federal against the uncertainties of the economy and the resolution of the thrift insurance fund issue.
"The bottom line is consolidation is part of the industry today," Mr. Cooper said.
Mr. Cooper, who held top positions at Mellon Bank Corp. and BankAmerica Corp. earlier in his career, said he will see Chase Federal through the merger and then leave the company to pursue other opportunities.