Whitney Holding Corp. of New Orleans is clearly willing to pay top dollar to establish itself on Florida's Gulf Coast.
On Thursday, three months after it paid a whopping 5.7 times book value for the $528 million-asset Destin Bancshares, Whitney announced that it would pay 4.6 times book in cash and stock for the $334 million-asset First National Bancshares Inc. of Bradenton.
"The overall strategy is to expose ourselves to markets that have greater potential than the markets we may already be in," said Whitney's chief financial officer, Thomas L. Callicutt Jr. "We are willing to pay what the market cost of that is."
The tab in the new deal works out to $115 million at Whitney's closing price Wednesday - $34.64 per First National share. No more than 35% would be cash. The deal is expected to close in the first quarter.
First National has five branches, two asset-management offices, and a Sarasota loan production office.
The $8 billion-asset Whitney already has 25 branches in Florida. It has bought four banking companies there, including two since last August. In the last eight years it has also bought banks in Alabama, Mississippi, Texas, and Louisiana.
Mr. Callicutt said Whitney must look outside of its home state for growth. It already has a strong presence in southern Louisiana, and the northern part of the state is not growing quickly.
Florida and Texas are the two markets with the most opportunity, Mr. Callicutt said. "Commerce flows east and west along the Gulf Coast," he said.
Whitney would keep most of First National's employees, including F.I. "Rip" duPont 3d, the chairman and chief executive officer, Mr. Callicutt said. "We try to make sure we keep those people," he said. "Otherwise we wouldn't pay the price that we pay - it wouldn't be worth it."
Mr. duPont said Whitney's executives had been getting to know First National for three years. The two companies have common philosophies, he said, and First National's customers would benefit from Whitney's higher lending limits and more experienced trust department.
Analysts and investors applauded the deal. Whitney's stock was up 0.5% late Thursday, to $33.48. First National's rose 18.5%, to $33.75.
Brent Christ, an analyst with Swiss Reinsurance Co.'s Fox-Pitt, Kelton Inc. in New York, said the pricing was consistent with Whitney's other Florida acquisitions.
But though Destin was expensive, he pointed out that it added to Whitney's earnings in the second quarter.
"They've been trying to get into the right geographies when the right opportunity comes up, and obviously they are willing to pay up a little bit," Mr. Christ said.
