K.H. Thomas Associates - BranchLocation.com

Popular Inc. scoops up Miami-based Kislak bank
The San Juan-based Popular Inc., parent company of Banco Popular North America, announced its acquisition of Miami's Kislak Financial Corp.
By Gillian Wee
Posted on Thu, Aug. 19, 2004

The family-owned, Miami-based Kislak Financial Corporation and its subsidiary, Kislak National Bank, has sold out to Popular Inc., the Puerto Rican-based parent company of Banco Popular North America, for $158 million, as part of Popular's expansion plans in the mainland.

The transaction, which is expected to close in the first quarter of 2005, means Banco Popular will own 18 branches or $1.5 billion in assets in Florida, which includes Kislak's eight. Popular also operates 14 check-cashing stores in Miami, under the name of Popular Cash Express. Previously, Banco Popular, which saw $6.1 billion in assets and $5.1 billion in deposits last December, owned just one branch in Miami-Dade and nine branches in central Florida.

''We have a lot of commerce between Miami and Puerto Rico, a lot of traffic and relationships, both personal and business, so this is an important market,'' said Roberto Herencia, president of Banco Popular North America. "We have finally found an organization that fits well with our vision and plans.''

Banco Popular, the U.S. subsidiary of Popular Inc., a $40 billion holding company based in San Juan, had been searching for a Florida partner for the past three years.

In May, the company approached Kislak, and though its traditional strengths lay in mortgage lending, Banco Popular found the bank fit its vision of being a community bank geared toward small business owners and Hispanics.

''This deal is going to help them to expand their U.S. presence and continue to extend their percentage of net income from the U.S.,'' said Bain Slack, analyst at the New York-based Keefe, Bruyette & Woods. "This particular deal is a good one -- the sooner they can integrate it, the sooner they can focus on what market they want to make an acquisition in next.''

Banco Popular will pay Kislak shareholders cash for their shares. Customers won't be able to tell the difference until June 2005 when Banco Popular plans to convert Kislak stores and customer accounts to its own.

While Herencia said layoffs in areas such as the back offices will be inevitable, the company hasn't decided exactly where and how much to cut. The transaction is not expected to affect company earnings within the first year of its close, but will contribute to revenue growth after that, he said.

Claus Hirsch, director of research at the New York-based brokerage firm Corinthian Partners, applauded Banco Popular for waiting to find the right strategic fit.

''This is a fairly priced deal,'' said Claus Hirsch. "It's a good move on the part of Banco Popular and it will pay off for both parties.''

Kislak, established in 1963 by Jay Kislak, with 160 employees, $998 million in assets, $708 million in deposits and $557 milion in loans, warmed to the deal because of Banco Popular's brandname, said Jonathan Kislak, president of Kislak Financial Corporation.

''We thought we got a fair price and we thought we have very reputable buyers who will treat our customers and employees well,'' said Kislak. "Banco Popular is a very strong bank.''

Banco Popular, which has 100 branches in California, Texas, Chicago, New York and New Jersey, in addition to Florida, hopes to grow its presence in this state to 15 to 25 branches in the next three to five years.

But that might not be enough for Banco Popular to conquer the Florida market, industry watchers say.

''For them to become a player in Florida, they need to at least double or triple their South Florida offices,'' said Ken Thomas, a Miami-based banking expert of branchlocation.com, who thinks Banco Popular needs at least 50 branches in South Florida itself. "It's a toe in the door, but it's a small toe. We expect them to look for more acquisition in South Florida.''

The Miami Lakes-based Bank United, which has $8 billion in assets and 48 branches, wasn't concerned.

''They're acquiring a smaller player and it'll take some time to build critical mass,'' said Carlos Fernandez-Guzman, Bank United spokesman. "We have a larger footprint and more community involvement.''

Shares of Popular Inc. rose 375 cents or 1.61 percent to $23.615 at Wednesday's close.