RBC Centura Gains OK For $1.6 Billion Buyout of Alabama National
By Richard Burnett, Sentinel Staff Writer
February 06, 2008
RBC Centura Bank received a thumbs-up from federal regulators Tuesday in its pending $1.6 billion buyout of Alabama National BanCorporation -- a deal that would make RBC the 10th largest bank in Central Florida and 47th largest nationwide.
The Federal Reserve Board approved the proposed deal, citing the financial stability, management practices and solid track record of RBC -- the U.S. unit of Royal Bank of Canada -- and Alabama National, which owns the Florida Choice Bank franchise in Central Florida, the region's 13th largest financial institution.
Regulators also dismissed the protest of a New York-based consumer watchdog group -- Fair Finance Watch -- which had accused Raleigh, N.C.-based RBC of violating fair-lending laws and fueling racial disparity in its mortgage loans. There was no convincing evidence of such violations, the Fed said.
The approval clears the way for RBC and Alabama National to go forward with the deal. Alabama National shareholders approved it Jan. 25.
But the banks have delayed the closing twice in the past week, setting off speculation among industry experts that a glitch may have developed in the merger. Bank officials said the deadline changes were made to allow more time for Alabama National shareholders to decide whether they want cash or stock or a combination in the buyout.
Such last-minute moves are unusual and may signal some underlying issues with the structure of the deal, said Ken Thomas, a Miami-based banking consultant, author and publisher of BranchLocation.com.
Falling share prices and interest rates coupled with the still-unfolding mortgage/housing and credit crisis have undermined or altered the terms in many proposed mergers and acquisitions in the financial sector, he said.
"This is not the only deal that has come into question in recent months," Thomas said. "There are a lot of deals that may have made sense six months ago, but not now. It's a different environment out there these days."
RBC could not be reached for comment Tuesday. Scott Custer, the bank's chief executive officer, reassured analysts last month that RBC had thoroughly vetted Alabama National's credit exposure and felt confident with carrying the acquisition forward.
Though questions persist about the merger's future, the Fed made it clear that complaints by consumer advocates would not be the cause of any delay.
Regulators said Fair Finance's case against RBC was unconvincing, though it did highlight some racial disparities in the federal home-loan data, according to the 20-page order. RBC and Alabama National have routinely rated "satisfactory" or "outstanding" in Community Reinvestment Act compliance audits, the order said.
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