Two years after entering the United States, R&G Financial Corp. of San Juan said Tuesday that it would more than double its mainland operations by buying 18 branches from SouthTrust Corp.
The $8.9 billion-asset company’s R-G Crown Bank, headquartered in Orlando, is to get 15 more Florida branches — including nine in the Jacksonville market, where it has none — for a total of 30 in the state. The deal also includes three branches in Augusta, Ga.
“We have been trying to expand our footprint in central Florida, and this opportunity was ideal for our branch expansion,” said Victor J. Galan, R&G’s chairman and chief executive. “This is a very important step for us.”
R&G did not say how much it was paying in the deal, which is expected to close in the first quarter.
The Puerto Rican company entered Florida in 2002, when it bought the $664 million-asset Crown Group Inc. of Orlando for $100 million. Since then it has focused on integrating its large mortgage operations into the $1.5 billion-asset R-G Crown and on expanding the bank’s commercial lending rather than making acquisitions.
The deal for the SouthTrust branches includes about $300 million of assets, primarily in commercial real estate, and $600 million of liabilities, mostly deposits. R&G has agreed to retain all the branch employees.
Regulators required that SouthTrust, of Birmingham, Ala., sell these branches as a condition of its pending sale to Wachovia Corp., which was announced in June.
David Oliver, a spokesman for SouthTrust, said it chose to sell to R&G because it made the best offer and promised little service disruption. Though these branches were the only ones that had to be divested, SouthTrust plans to consolidate up to 200 overlapping branches throughout the Southeast, he said.
Over all, analysts were pleased with R&G’s announcement and said that buying branches is a more efficient way to grow than branch-building or even whole-bank purchases.
Adding the branches will also help establish R&G as a major player in a highly competitive state, said Joseph Gladue, an analyst with Cohen Bros. & Co. in Philadelphia. “It gives them more credibility in Florida,” he said. “It also increases their visibility as both a buyer and seller.”
Mr. Gladue questioned the addition of the Augusta branches, which he said are “far removed” from the rest of R&G’s market. Augusta is about 400 miles from R-G Crown’s headquarters.
Mr. Galan said that R&G was not looking to enter Georgia but that it welcomes the Augusta branches. The company will consider expanding in the state and may also look at Charleston, S.C.
As for Florida, Mr. Galan said R&G hopes to fill in the markets between Orlando and Jacksonville, which include Gainesville and Daytona Beach. He said he would like to see R-G Crown become as big as R&G’s $6.6 billion-asset bank subsidiary in Puerto Rico.
