Accelerating its drive into Florida, Union Planters Corp. said Monday that it would pay California Federal Bank $110 million for 24 branches and $1.5 billion of deposits there.
The deal, along with one that closed at yearend and one still pending, would boost Union Planters' Florida deposits to $3 billion.
The purchase from CalFed is slated to close in the third quarter. The price includes a healthy deposit premium of 7.3%, but analysts said the branches are well worth it.
"People are paying attractive premiums for Florida franchises, and this was a good price for CalFed to exit," said Joseph K. Morford of BT Alex. Brown.
The purchase would also move Union Planters into several desirable markets on the west coast of Florida, such as Bradenton and Sarasota.
"This is really perfect for us," said Adolfo Henriques, president and chief executive officer of Union Planters Bank of Florida. "It will help us round out our franchise in a diverse, growing market."
Analysts said Union Planters' track record of smoothly integrating acquisitions and leaving local boards in place bodes well for the deal.
According to Alan F. Morel, an analyst with Hilliard, Lyons in Louisville, Ky., the transaction would bring Union Planters more access to wealthy retirees, who "demand quality and in return present a very attractive and stable customer base."
The $20 billion-asset Union Planters entered the Sunshine State last year with the acquisition of $1.9 billion-asset Capital Bancorp of Miami, which contributed 28 branches in eastern Florida. The bank would add 12 more branches by acquiring TransFlorida Bank in Boca Raton, with about $350 million of assets; that deal is expected to close in the third quarter.
The CalFed transaction would mean the closure of an as-yet unspecified number of branches, since 17 locations to be acquired are in markets Union Planters already serves.
But Mr. Henriques said the bank would not lay off any employees.
The deal also is attractive for San Francisco-based CalFed, which announced Feb. 5 that it would merge with Glendale Federal Bank.
Observers said CalFed chairman Gerald J. Ford and owner Ronald L. Perelman are grooming the merged CalFed-Glenfed for eventual sale.
"You get paid more for a bigger market share than you do for a small market share," said R. Jay Tejera, an analyst with Dain Rauscher in Minneapolis. "The Florida thing would have just made it all more difficult."
In the past four years CalFed has sold off 21 Michigan branches, 30 branches in New York and New Jersey, 28 in Ohio, and 26 in Illinois-all of them First Nationwide offices.
"This is the last domino to fall," said Carl B. Webb, CalFed's president and chief operating officer. "We had tried to keep our ear to the ground as long as we could for a good value, and this was as good as we were going to do."
The deal, which has been approved by Union Planters' and CalFed's boards, would increase CalFed's tangible book value by about 10%, or as much as 60 cents per share. Analysts said this will help counteract the dilution expected by the CalFed-Glenfed merger, which is also scheduled to close in the third quarter.
In addition, the Florida sale would let CalFed focus its management and systems in the West, where the thrift generates the majority of its business.
"It didn't make sense to have 90% of our presence in the West and 10% of it three times zones away," Mr. Webb said.
Glendale Federal sold off its 60-branch Florida franchise to Barnett Banks Inc. in 1994.
With only $1.5 billion of deposits in Florida, CalFed lacked "critical mass to be an effective competitor there,"Mr. Morford said, "and there is no additional mass being brought in the merger" with Glendale.