City National Bank of Florida is looking to grow and sees little need to venture beyond Miami to make it happen.
On Dec. 1, the Miami-based bank announced that it has an agreement to buy TotalBank, also based in Miami, for $528 million. City National Bank is a unit of Chile-based Banco de Credito e Inversiones SA, or BCI, and TotalBank's parent company is Spain-based Banco Santander SA. Prior to the deal, BCI's banking unit already ranked No. 9 in the Miami market with nearly $6.49 billion in deposits. TotalBank's more than $2 billion of deposits will almost certainly push City National Bank of Florida up two spots to No. 7, leapfrogging Toronto-Dominion Bank and BB&T Corp. That would mean the only banks ahead of City National in Miami deposit share would be the four money-center national banks — Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. — plus BankUnited Inc. and SunTrust Banks Inc.
"This is a good deal for City National," said Ken Thomas, an economist, bank analyst, and president of Community Development Fund Advisors, a Miami-based investment adviser. "It certainly solidifies their position in South Florida as a premier bank and one of the biggest in the state."
Bankers have reason to target increased exposure to the Miami market. Since 2010, the market's population has increased by 11.25%, and it is projected to book above-average household income growth of 10.55% over the next five years, according to data from Claritas. Those figures are well above the national averages of 5.76% population growth since 2010 and 8.86% expected household income growth. In addition to robust demographic growth domestically, Miami offers favorable private wealth management opportunities as the market has attracted foreign investment from Central and South America as well as Europe.
"It echoes how attractive the Miami market is for not only domestic banks and also for international banks because of the way Miami operates. It's a combination of European money and South American money," said Thomas Rudkin, a principal at DD&F Consulting Group, which advises community banks on strategy and mergers and acquisitions.
Chilean bank BCI has only recently made an aggressive move to grow its U.S. presence via deals in Miami. The bank is the third-largest in Chile with about $51 billion of assets, per a bank press release. It has had a branch in Miami since 1999 but only recently acquired significant scale via its purchase of City National Bank, which closed in 2015. In a May publication, S&P Global Ratings was positive on the Chilean bank's move to grow in Miami, noting that it improves the bank's geographic diversification and provides exposure to a different economic cycle.
BCI's acquisition of City National was lengthy, taking more than two years to close. Rudkin said he does not expect a repeat for BCI's purchase of TotalBank. He said BCI's purchase was delayed largely because the bank did not have a significant U.S. presence, no longer an issue since it has successfully owned City National over the last two years. Barring any unforeseen issues, Rudkin said the deal should close in the typical five- to six-month time frame for deals.
Rudkin said success in the Miami market is highly dependent on relationship banking, even beyond the traditional role of relationship lending due to foreign investment coming from wealthy families. And Thomas, who has raised funds from Florida-based banks, enthused about the deal and what it could mean for City National Bank's investment in local opportunities.
"When you're based here, you want the deposits to stay here — to go into affordable housing, to go into small-business lending and things we need," Thomas said. "City National has an outstanding [Community Reinvestment Act] rating and they excel at those things, and they've done it for decades."

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.
