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IberiaBank's planned acquisition of Florida Gulf Bank in Fort Myers sends mixed messages about the future of community banking in the region.
On the one hand, it's welcome news that IberiaBank agreed to pay 1.4 times book value for Florida Gulf Bancorp, the parent of Florida Gulf Bank. That's more than many Florida banks have been trading for in recent years. “No one's losing money on this deal,” says James Moore, Florida Gulf's chairman.
The nearly $44 million price tag sets a price-to-book benchmark for smaller community banks on the Gulf Coast that have survived the downturn, but it's not exactly the windfall that many investors might have expected.
Recall that Fifth Third Bank paid 5.75 times book value for First National Bank of Florida in 2005 at the peak of the market. Granted, that's not really a fair comparison because these stratospheric prices likely won't return to those levels in our lifetime, but two or three times book value for would have been a nice return.
Investors in smaller community banks like Florida Gulf Bank, which recently reported $350 million in assets, now have a tough choice. Either accept the new, lower prices for their shares or try to raise capital to comply with stricter regulatory requirements and eke out small profits for years to come.
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