Are These Banks Looking for Some Florida Sunshine?
Dec 20th 2012 1:00PM
Updated Dec 20th 2012 1:06PM
Southern Florida has more than just sunny weather and retirement condos. The area also has a robust banking sector, which has attracted the interest of some big names in the financial industry. Now that soon-to-be-bailed-out Spanish bank Bankia SA appears to be moving forward with its plan to sell off its Florida business as a consequence of that lifeline, I can think of several players who might be interested in picking up its City National Bank of Florida -- even for a cool $500 million.
Many big banks are looking to expand in the sunshine state
Not that long ago, I noted that suitors were hanging around BankUnited , despite the fact that the bank wasn't even for sale. A true Cinderella story, the bank was nearly done-in by the financial crisis, but it was rescued and made a princess by a group of private equity firms. Now, the bank might be considering a proposal of its own -- to City National.
BankUnited's former beaus likely will have an interest in City National's sale, too. The bank is based in Miami, has over $4.3 billion in assets, and is currently the fourth-largest in southern Florida. City National has increased lending this year, and, with 26 locations, would be a nifty addition to any bank with a strong Florida presence.
The likely contenders -- in addition to BankUnited -- would likely be Wells Fargo , a lending powerhouse with the lion's share of Florida bank branches; JPMorgan Chase , which has been steadily adding branch locations to the Florida market since last year; and PNC Financial , an institution that has been straightforward about wanting to expand its presence in the area, as well. Canada's Toronto-Dominion Bank and BB&T were also said to be interested in BankUnited less than a year ago and likely will be sniffing around this offering, too.
One Fool's take
Branch banking is still a hot commodity, and I would venture to say that it is especially lucrative in the sunshine state, with its large population of older people who may eschew newfangled inventions such as online and mobile banking.
City National is a real gem, and the bank that wins its hand will have to pay dearly. The sale is expected to garner at least $500 million, and maybe more. A Florida banking analyst noted last month that the lucrative banking franchise might bring in over twice its book value.
Is City National that valuable? Time will tell, but there seems to be great interest in the Florida market, which I would think will only grow as the economy improves and more baby boomers head south after retirement. Sounds like a bank investor's paradise to me.
Wells Fargo's dedication to solid, conservative banking helped it vastly outperform its peers during the financial meltdown, characteristics that probably make it so attractive to banking customers in the Florida market. Today, Wells is the same great bank as ever, but with its stock trading at a premium to the rest of the industry, is there still room to buy, or is it time to cash in your gains? To help figure out whether Wells Fargo is a buy today, I invite you to download our premium research report from one of The Motley Fool's top banking analysts. Click here now for instant access to this in-depth take on Wells Fargo.
The article Are These Banks Looking for Some Florida Sunshine? originally appeared on Fool.com.Fool contributor Amanda Alix has no positions in the stocks mentioned above. The Motley Fool owns shares of JPMorgan Chase, PNC Financial Services, and Wells Fargo. Motley Fool newsletter services recommend Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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