Benjamin C. Bishop Jr., chairman of Allen c. Ewing & Co., Jacksonville, says Florida's acquisition market for community banks is red hot after a five-year lull.

This year 22 acquisitions have been closed or announced, versus 11 acquisitions in 1992 and three in 1991. Of the 22, two have more than $1 billion of assets.

Mr. Bishop doesn't foresee a slow down anytime soon. The reason: Big out-of-state banks want a piece of Florida's growing market. Also, big banks have plenty of cash, since earnings have been strong and relatively high stock prices mean acquisitions will be less dilutive to shareholder value.

To date, Alabama banks have been making most of the acquisitions in Florida. Amsouth Bancorp, is the leader, with eight acquisitions pending this year. But Mr. Bishop says other players are bound to come into the market, including Midwest banks that want to follow retirees, and New York banks.

The 62-year-old Mr. Bishop holds an engineering degree from Georgia Institute of Technology and a master's in business from Harvard University.

He has been following the Florida market since 1972. That is when he and a partner acquired Ewing, a licensed investment banking firm that typically represents community banks that are buying or being bought.

"We probably have done more deals involving community banks than anyone else" in Florida, Mr. Bishop said. In an interview, he discussed the state of the market.

Q.: Is the excitement back?

BISHOP: Yeah, 1993 has been one of the most active acquisition markets we have had. And it was spearheaded by the Alabama banks, which look upon Florida as a very, very desirable market. Amsouth has made a major policy decision to make Florida as big a market as Alabama is.

Q.: Who have been the targets?

BISHOP: Those that tend to bring the most money are the larger ones, over $200 million. If they are the large, they obviously have strong market share.

I don't see many acquisitions of problem banks. As a general rule, we are talking about acquiring clean banks that are making decent money and an ROA of at least 0.70%.

Most of them tend to be in the medium-size cities. We don't see many acquisitions in the metro areas.

Q.: Why not in the big cities?

BISHOP: Community banks that have the most valuable franchise are in the smaller markets, where they can represent a greater share of the market. Your franchise is worth more.

The $250 million bank in Miami, unless it has a niche and unless it has demonstrated profitability, is probably struggling. The hardest market to compete in is the metropolitan market. The little guy is at a disadvantage. He has got to have a niche.

Q.: What kinds of prices are being paid for community banks?

BISHOP: The average was way up, to 1.76% from 1.12% in '92. The range went as low as 1.25% up to 2.65. A hell of a range. That is up significantly since '92.

Q.: So, are prices heading up in 1994?

BISHOP: In '94 we will see the prices remain at these lofty levels, depending on what overall bank stocks do. It is possible they could be a little higher. I anticipate broader interest in Florida independent banks.

Q.: What transactions stand out this year as exceptional?

BISHOP: Citizens [National Bank, Naples] and Andrew Jackson [Savings Bank, Tallahassee].

In the case of Citizens, they got and outstanding price of 2.65 times book value - just an excellent price. I think it reflects that it's one heck of a bank, and one heck of a franchise. That Naples market is the fastest growing in the state.

In the case of Andrew Jackson, SunTrust is paying 1.95 times book value, which is certainly a high in Florida banking for thrifts.

Q.: Are these deals isolated instances?

BISHOP: They represent the high end of values. You don't see many banks and thrifts bringing those kinds of prices.

That shouldn't mean that there are other institutions in Florida . . . that won't bring similar numbers. The ones I am thinking of aren't for sale.

Q.: will the acquisition pace continue into next year?

BISHOP: No question. It will continue in '94 as long as the prices of the acquiring banks continue at good levels. If they just hold their own, they can afford to take the dilution necessary to make the premium offers necessary to attract stockholder groups to sell.

Q.: What's so attractive about Florida?

BISHOP: It goes back to the basic demographics of the state.

We have about 13 million people; next year we will have about $190 billion in deposits. The deposit rate and the population rate are growing at 50% to 100% more than the country as a whole. Not only is it a big state, it is getting bigger - and it is getting bigger faster.

California is kind of at a status quo. Texas . . . is still suffering from the real estate debacle. If you were a large bank with plenty of resources, where would you like to be represented? Certainly, Florida has got to be way way up on you list.

Q.: Who are the most aggressive acquirers?

BISHOP: I think we are going to see the two New York City banks in Florida become more active. They have been dormant until now.

Citicorp and Chase are both operating in Florida because they bought distressed banks. They paid huge premiums . . . yet they really haven't taken advantage of it, because of their own problems. I think that is going to change.

I think we are also probably going to see the other Midwest banks that are not down here make acquisitions by way of thrifts.

Q.: What are your favorite small-bank acquisition targets?

BISHOP: I am not going to comment on that. It is our business; it would be showing our hand.

Q.: Well, than what banks are the most aggressive acquirers?

BISHOP: I do think we are going to see SunTrust, Barnett, First Union, and NationsBank back in the game.

As a general rule they would only be looking for larger institutions at least over $200 to $300 million. It has got to be a bank that gives them share of market . . . or perhaps a product area.

Q.: What about smaller banks? Which ones will be the acquirers?

BISHOP: I can't give you and example of that without showing my hand. I think we may see the merger of similar community banks in metropolitan areas, with the objective of enhancing the value of combined institution and the creation of a public market for its shares. I am talking about in the bigger cities of the state. Banks in Fort Lauderdale. Tampa Bay and West Palm [Beach] . . . are probably going to find buyers.

Q.: With all of this merger activity, are investors flocking to small banks?

BISHOP: I'm not going to be Dan Dorfman.

There are only a handful of Florida banks trading on Nasdaq. Because there haven't been very many, those that do trade seem to be the beneficial recipients of a lot of buying interest.

We are presently working with about five banks, all of which are $100 million, that I think are either going to file to go on Nasdaq or have a public offering.

Q.: Where are small-bank stocks headed?

BISHOP: The general prognosis for banks stocks has been down. Most of the banks have been off their March highs.

The outlook for '94 for the big guys is earnings are going to be flat.

What will the little guys do? I would have to say, in view of the fact that Florida banks are already trading at pretty good premiums, I don't see anything sensational.

On a case-by-case basis, I think there are some attractive stocks. One should focus on the cheaper banks in the state, but I'm reluctant to discuss those.

Q.: After this wave of acquisitions, what's next?

BISHOP: We are having a revival of larger independent banks.

Community banking in the state was just kind of flat; it was kind of depressing. It thought we were going to end up with the big guys controlling 80% of the market.

We are going to have big fish eating little fish in '94, and we are also conceiving a lot of good banks that are going to grow. They will be the merger candidates in 1996 and 1997.

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