Region's Banks Are Branching Out
Dozens of new offices are in works this year

By Richard Burnett, Sentinel Staff Writer
April 17, 2006


In the movie Field of Dreams, a mystical voice reassures Kevin Costner's character that, "If you build it, he will come." Sure enough, a few cornfield subplots and a new baseball field later, he does come -- and is soon followed by hordes of paying customers.

Central Florida banks may be hearing such voices these days. And they're hoping for similar results.

Spurred by the region's strong growth, many banks have launched ambitious expansion plans this year, scouting sites, negotiating land deals, and investing millions in new branches.

The region's 10 largest banks combined plan to open more than four dozen new branches in Central Florida between now and the end of the year, dwarfing the number opened in 2005, a year dominated by mergers and consolidations.

With much of the dust settling on that merger and post-merger activity, many banks are now focused on expanding their branch networks in hot markets such as Metro Orlando, bankers say.

The combined price tag -- including land acquisition, construction, equipment and personnel -- could easily reach $250 million, according to industry estimates.

"By all statistics, Central Florida is a growing marketplace, and the competition is pretty fierce," said Marshall Vermillion, Wachovia Corp.'s regional market president. "But a highly competitive environment also offers high growth potential, and that's what everyone is after."

A survey of the region's banks found these general trends:

The largest banks will be building the fewest branches. Bank of America and Wachovia, for example, will each open only two or three new offices this year. "They're already everywhere, anyway," one expert noted. "Why not be choosy?"

Midsize regional banks will try harder. AmSouth Bank leads the pack, with plans for 15 new offices. Fifth Third Bank is second, with plans for 11.

Big players like SunTrust Banks and Washington Mutual are keeping their plans confidential. But you can count on seeing their signs in at least a few new places. SunTrust already has a branch under construction in Oviedo and plans to continue opening branches inside Wal-Mart Supercenters.

Community banks are also busy branching out. Among those planning new offices: Florida Choice Bank and CNLBank; new banks such as Florida Bank of Commerce, Old Southern Bank and Florida Capital Bank; and other regional players such as Trustco Bank and Banco Popular.

Some local experts are heartened by the banks' expansion talk because it shows that the Orlando area compares favorably with other "A" markets in Florida such as Miami-Fort Lauderdale, West Palm-Boca Raton and Tampa Bay.

"Florida remains one of the three most desirable banking states in the country, with California and Texas," said Jack Greeley, a banking lawyer and partner at Smith Mackinnon P.A. in Orlando. "But there are A and B markets in Florida. You would expect the expansion plans in the B markets would be less pronounced."

AmSouth announced last month that it intends to open 15 new offices in Central Florida and 39 more across the state. It's the Birmingham, Ala.-based bank's first big expansion since late 2004, when it ran into problems with federal regulators. AmSouth agreed at the time to expansion restrictions and other disciplinary measures to settle allegations that it had failed to detect a multimillion-dollar money-laundering scheme involving AmSouth accounts.

Fifth Third has had its problems during the past year after completing its acquisition of Orlando-based Southern Community Bank and Naples-based First National Bank of Florida. In the first six months after the merger, Central Florida deposits fell 16 percent, or $128 million, as customers and banking personnel moved elsewhere.

But the Cincinnati-based bank now says it has regained much of that lost business. It is pinning its hopes for a resurgence in Central Florida on an aggressive branch program.

Such ambitious plans can cut both ways, however, some experts warn.

They're good for public relations, but the devil's in the details, said Kenneth Thomas, a Miami-based banking consultant and publisher of

"Everyone wants it to be heard that they are growing -- they have these growth plans and they are expanding in Florida, a market that is growing so well," he said. "It's good for employees and good for competitors to see this kind of thing.

"But it takes a lot of time, work and money to get the really good, 100 percent locations," Thomas said. "The bottom line is that you can talk all you want to about what you're planning. But often there is a big disconnect between plans and reality. It's kind of like saying you were going to lose 10 pounds last year. But what then really happened?"

Others say that, even if banks like AmSouth do follow through with their plans, they are going to be hard-pressed to make those new branches as profitable as they would like.

"Everybody in the world is in Florida now and, even with the population growth there, it's going to be much more competitive for AmSouth," said Richard Bove, a banking analyst in the Tampa office of Punk, Ziegel & Co., a New York brokerage that currently has a "buy" rating on AmSouth stock.

"I don't think they're going to be able to get the profit margins with these new branches that they've been used to in the past."

But AmSouth says it's confident Florida's growth will justify its expansion in the market.

"When we look at the branches we've added over the past four years, Florida has been very profitable for us," spokesman David Webster said. "Florida remains a leading market for us in a variety of areas, from wealth management and small-business lending to commercial and commercial real estate. We have a high confidence level that will continue."

Smaller banks probably face even more pressure than larger ones in deciding where and how much to expand, experts say, because they don't have the same financial resources.

"That puts a huge premium on small banks making the right choice in terms of where they open," said Rod Jones, a banking lawyer with Shutts & Bowen LLP in Orlando. "They have to get it right if they want to make a significant financial impact."

The region's biggest banks don't plan to add many branches this year, but they do have some brick-and-mortar work on their schedules.

Bank of America, for example, will be doing a lot of branch makeovers, said Ed Timberlake, the company's Orlando market president. The bank has a new branch design that includes personal greeters, banking kiosks and flat-screen TVs to replace the "people at desks" motif.

"We'll be more aggressive in renovating and upgrading our existing facilities," he said. "Where possible, we'll be converting some branches to our new prototype, which we feel puts our associates more in touch with the customers."


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