Fidelity Bancshares Inc. of West Palm Beach, Fla., had no plans to expand into Fort Lauderdale this year - but when it learned that Wachovia Corp. would close a branch there, it saw an opportunity it could not pass up.
Fidelity, the $4.1 billion-asset parent of Fidelity Federal Bank and Trust, announced Friday that it had leased the space Wachovia will vacate on Feb 22 - more than 13,000 square feet in a 21-story building in downtown Fort Lauderdale. It plans to open a branch and loan production office there March 13.
Vince Elhilow, Fidelity's chairman and chief executive, said it is now scouting Fort Lauderdale and other Broward County communities for additional branch sites.
"Existing loan customers with strong Broward ties have encouraged this move," Mr. Elhilow said in a press release. "Our studies have shown that the opportunities for commercial deposits and business loans are even greater in Broward County than in Palm Beach County." Fidelity opened its first two branches in Broward, north of Fort Lauderdale, in January.
Analysts, meanwhile, said that the move to Fort Lauderdale would make Fidelity even more attractive to potential buyers. With more than 50 branches in some of Florida's most affluent markets, Fidelity regularly appears on analysts' short list of takeover targets.
In the short term, analysts said that the downtown Fort Lauderdale branch would add $2.4 million to Fidelity's operating expenses and shave about 4 cents off its 2006 earnings per share. But Mr. Elhilow said in an interview Friday that the expansion makes sense because Broward borders Palm Beach County and Fidelity already has a large number of lending clients in Fort Lauderdale.
"It's like a megalopolis," he said of the two counties. "You don't know where one stops and the other starts."
Fidelity's Fort Lauderdale branch, which sits across from the Broward County Courthouse in the heart of Fort Lauderdale's financial district, is bigger than most branches and analysts speculated that it would need about $80 million of deposits to break even. As of Sept. 30, each of its branches had average deposits of about $70 million, according to Federal Deposit Insurance Corp. statistics.
Mr. Elhilow, though, said he is confident that Fidelity would reach the break-even point within the first year. Fidelity's two new Broward branches together have already attracted $41 million of deposits, according to the company.
Fidelity Federal Bank and Trust was founded in 1952. It is the No. 3 banking company in the Palm Beach County market, with 43 branches and about 9% of the $34 billion-deposit market, according to June 30, 2005 statistics compiled by the FDIC.
Founded as a depositor-owned mutual savings bank, Fidelity converted to a mutual holding company in 1994 and a fully stock traded one in 2001.
A Wachovia spokesman said Friday that the company is closing the branch because it has another one on the same street.
In a research report, Laurie Hunsicker of Friedman, Billings, Ramsey & Co. in Arlington, Va., said Fidelity is "an excellent investment" because of its organic growth in vibrant markets and its attractiveness to out-of-state suitors.
Her report, issued Friday, named Fifth Third Bancorp of Cincinnati, BB&T Corp. of Winston-Salem, N.C., and the Royal Bank of Scotland's Citizens Financial Group Inc. in Providence, R.I., as potential buyers.
Theodore P. Kovaleff, an analyst at Sky Capital LLC in New York, said that Fidelity is perhaps more attractive to another Florida bank that is looking to bulk up. He named the $3 billion-asset Harbor Florida Bancshares Inc. of Fort Pierce as a possible suitor.
"I look at Fidelity as prey," he said Friday. "Somebody is going to take them."
A spokesman for Fidelity said it would not discuss merger and acquisition speculation.
