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REVIEW SUMMARY
Bank. Sabadell United Bank
Trend. European banks are seeking opportunities in Florida.
Key. Florida's banking consolidation continues apace.
The headlines about European banks lately aren't exactly rosy, so you may wonder what a Spanish bank is doing expanding in Florida.
But just as the U.S. financial crisis didn't bring down every bank here, the European financial crisis hasn't tainted every bank in Spain.
In the current restructuring of the Spanish banking industry, Banco Sabadell has been tapped as one of the winners in a wrenching consolidation of that country's financial services sector. Even after taking a 1 billion euro ($1.3 billion) provision for loan losses, the Spanish bank still reported net income of 232 million euros ($309 million) in 2011.
To diversify its operations, Banco Sabadell's U.S. subsidiary, Sabadell United Bank, is boosting its presence in Florida. The Miami-based bank expanded to the West Coast of Florida by acquiring the assets and deposits of Lydian Private Bank in August after it was seized by regulators, establishing beachheads in Naples, Sarasota and Tampa.
Sabadell United's mission is to pursue business in Florida with commercial lending and wealth management, says Mario Trueba, president and CEO of Sabadell United. Indeed, the Spanish parent provided $200 million in capital for the expansion last year, he notes.
“I'm the only guy who speaks Spanish on the management team,” laughs the Cuban-born Trueba.
The bank plans to grow the business internally and by acquisitions in Florida. “You're going to see a consolidation of the banking industry in Florida, and we need to be a part of that,” says Trueba.
Sabadell United doesn't break out financial data for its West Coast operations, but it reported assets totaling nearly $3.51 billion as of Dec. 31 from 24 offices across Florida. The bank posted net income of $18.1 million in 2011, more than double the $7.4 million it earned in the previous year, and it has a comfortable capital cushion that's more than double the regulatory requirement.
Entrepreneurial roots
Banco Sabadell, Spain's sixth-largest banking group, traces its roots to Barcelona in 1881 when traders and businessmen formed it to gain more favorable terms for buying coal and wool. It didn't begin expanding throughout Spain until the mid-1970s and only made the transatlantic leap to Florida in recent years.
Banco Sabadell first established commercial banking operations in Florida when it acquired Transatlantic Bank in Miami in 2007. Sabadell acquired Mellon's United National Bank in 2010 and West Palm Beach-based Lydian Private Bank in August 2011.
Trueba, who helped engineer the sale of United National to Sabadell, knew the Spanish bank was eager to grow its operations despite a rocky start with struggling Transatlantic Bank. “I knew it had an excellent reputation,” says Trueba.
Born in Cuba and raised in Philadelphia and Miami, Trueba, 53, acknowledges a cultural affinity with Spanish colleagues at Sabadell. Three of his four grandparents had moved to Cuba from Spain. “We still have family in Spain,” says Trueba, whose parents fled Fidel Castro's revolution.
But Trueba's focus is uniquely Florida; Sabadell has other businesses that focus on lending in Latin America. “You have to see us as a Florida strategy,” says Trueba.
Florida expansion
Sabadell is picky. “We've passed on 40 FDIC-assisted transactions,” says Trueba, referring to failed banks seized by regulators and sold with the help of the Federal Deposit Insurance Corp. Despite the $200 million infusion of capital from its parent company, “they'd like to see us prudently grow the business in Florida,” he notes.
And while net loans have nearly doubled in a year to almost $2 billion, Sabadell still has a sizable securities portfolio of nearly $773 million as of Dec. 31. “I want to take that money in securities and lend it,” Trueba says.
Like many lenders in Florida, most of Sabadell United's loan portfolio consists of real estate loans totaling about $1.6 billion. Of those, roughly half are commercial real estate loans and the other half residential.
Trueba says residential lending was the first sector of real estate to recover, particularly in second-home markets such as Collier County. But commercial real estate lending has increased, too. “We've seen a pickup around the state,” Trueba says.
Areas of commercial real estate that are appealing now include apartments, shopping centers in better locations, warehouse buildings and hotels. “The hidden surprise of the recession was the resiliency of the hospitality industry,” Trueba notes.
Still, Sabadell United has been growing business loans. Such “commercial and industrial” loans grew to $328 million as of Dec. 31, a 72% increase over the prior year. Trueba says Sabadell seeks to lend to doctors, lawyers, accountants and architects. “It's a little more active in Tampa,” he notes.
And Sabadell United has $1 billion in assets under management in its wealth-management division, Sabadell Bank & Trust. Trueba hinted that the bank might grow that part of the business by acquiring investment advisory firms, trust companies or the wealth-management divisions of banks that seek to exit that business. “What you prize is the caliber of the people,” Trueba says.
For example, it would have been difficult to start the wealth-management business from scratch, and Lydian provided an entree into markets such as Naples where Trueba says “everybody has a corner staked out.”
Trueba doesn't want to tip his competition, but says he's open to bank acquisitions, particularly FDIC-assisted ones. “We want to gain in profitable size to be relevant to Florida and our parent company,” he says.
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