Analysis: New Look For Banking Biz In Gulf Region

ALAN SAYRE

NEW ORLEANS (AP) â¿¿ The recent deal for Mississippi-based Hancock Holding Co. to acquire Gulf Coast rival Whitney Holding Corp. foretells how the post-meltdown future of the banking industry may play out.

Analysts are forecasting more combinations of regional banking players. One of the architects of the $1.5 billion Hancock-Whitney marriage sees community banks playing a bigger role â¿¿ and likely executing mergers between themselves to provide more lending clout.

And banking centers themselves are changing.

Whitney will be the last of the classic Louisiana headquartered banks that once included such names as First Commerce Corp., Hibernia Corp. and Premier Bancorp. First Commerce and Premier were swept up in the megabank acquisition craze of the 1990s. Capital One Financial Corp. bought Hibernia in 2005.

Hancock bought another pair of Louisiana headquartered banks â¿¿ American Security Bank and American Bank of Baton Rouge â¿¿ as it widened its reach in the '90s. Whitney pulled off more than two dozen other acquisitions from the 1980s to 2008 to spread across the Gulf Coast â¿¿ only to become bogged down in the Florida loan debacle.

After Whitney loses its separate identity, the big dog on the block in Louisiana appears to be Lafayette-based Iberiabank Corp., which has a smaller, but feisty rival in its back yard, MidSouth Bancorp Inc.

More combinations in the South are inevitable, banking analyst Michael Rose of Raymond James said recently, with Hancock-Whitney likely pointing the way to a new era of mergers and acquisitions following big loan problems in the region and new federal capital requirements.

"It's going to force more to the altar," Rose said.

Iberiabank has been expanding throughout the post-meltdown, taking over three failed banks in Florida and one in Alabama with the Federal Deposit Insurance Corp. agreeing to share in any resulting loan losses. Hancock took over another failed Florida banking company.

But Hancock chief executive Carl Chaney said recently that the FDIC â¿¿ after shuttering 304 banks since 2009 â¿¿ is tightening its purse strings, making failed bank takeovers less inviting â¿¿ and shifting the focus to live acquisitions.

Last week, MidSouth chief executive C.R. "Rusty" Cloutier said his company was "very optimistic about significant opportunities for unassisted, open-bank acquisitions in Louisiana and Texas" â¿¿ the company's home turf.

Chaney said there is a myriad of other reasons for banks to combine â¿¿ new regulations and the cost that goes with them, the high cost of technology improvements and the fact that banks that took bailout money from the federal government under the Troubled Asset Relief Program are restricted in acquisition activity.

"As the economy heats up a bit, it's natural for banks to want to take advantage of the opportunities that are in their markets," Chaney said. "Banks with TARP will not be able to do that, so that will drive some of the consolidations."

Hancock plans to redeem $200 million in preferred stock that Whitney issued to the U.S. Treasury to participate in a TARP-related program designed to provide more money for lending. MidSouth also took money from that program. Iberiabank, on the other hand, took the cash â¿¿ and then gave it back to the government, saying it came with too many strings attached.

Chaney said that banks that did not take any direct bailout money have won points with customers.

"There is something about regional banking when the country has gone through such a recession," Chaney said. "We find that customers are becoming very loyal to those banks that didn't take TARP funds. We didn't take them and we are proud we didn't."

Although Rose and other analysts suggested there are simply too many banks in the United States now, Chaney said smaller community banks are positioned to play a major role in small business lending. He said he expected some of these banks to combine â¿¿ but still remain close to their niche markets and small businesses.

Peyton Green, a banking analyst with Sterne Agee & Leach, said there might not be an immediate explosion of acquisitions in the South because the region is still working its way out of credit problems.

"By 2012, it should be an active year. We're still in sort of a transition year," Green said.

Rose is looking for a strong industry comeback in the future. "The South shall rise again and these deals are a way to capitalize on that recovery."

___

Alan Sayre is the New Orleans-based business writer for The Associated Press.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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