City National Will Grow Under Chiles Bci
By Scott Blake
City National Bank President and CEO Jorge Gonzalez has calming words for those concerned that the local focus of one of Miami’s best homegrown banks is drifting away under the control of foreign ownership.
Not to worry, he says. It didn’t happen when Spanish bank Caja Madrid bought the 67-year-old City National in 2008, and he doesn’t think it will happen now under the new sale to Banco de Credito e Inversiones, or Bci, Chile’s third-largest bank with assets of $38 billion.
If anything, Mr. Gonzalez said Tuesday in an interview with Miami Today, City National stands to get bigger, stronger and more technologically sophisticated behind the deep pockets of its new owner, as it did after the acquisition five years ago by Caja Madrid.
"I’m sure City National will continue to grow and expand its bank network and grow its employee base," Mr., Gonzalez said. "This is being looked at as a growth investment for Bci and growth usually comes with more employment."
On Friday, City National announced that its Spanish parent company, the Bankia group, signed an agreement to sell the Miami-based community bank to Bci for $882.8 million. The deal, still subject to regulatory approval, is expected to close by the end of the year.
Banking conglomerate Bankia, which absorbed Caja Madrid and other banks in 2010, was required to sell its foreign assets, including City National, as part of an agreement with European financial regulators to recapitalize the Spanish bank.
The price of the sale — at 1.5 times City National’s book value — speaks to the local bank’s solid performance, as a number of US banks have had trouble getting even their book value for a sale due to the sluggish economy and still-weakened loan portfolios from the real estate crash, said Ken Thomas, a Miami-based independent banking consultant and economist.
Mr. Gonzalez, meanwhile, said he anticipates that City National will continue to diversify its loan portfolio, open more branches in the future, and offer more services, including adding more "incremental technology and products."
Furthermore, he said, he doesn’t anticipate cuts in staffing or changes in management. He also said he expects to stay on with his current duties under Bci, and said City National and Bci will maintain their separate corporate offices on Brickell Avenue as they are now.
Bci "has commented that they’re very happy with [our] management," he added. "I’m very happy. I have no plans to leave."
After a long stint in Southeast Florida for the now defunct Wachovia Corp., Mr. Gonzalez said he joined City National as president about two months after the purchase by Caja Madrid. The next year, he also was named CEO, replacing the retiring Leonard Abess Jr., son of City National’s co-founder.
The bank was founded by Leonard Abess Sr. and Baron de Hirsch Meyer in 1946 as North Shore Bank on 71st Street in Miami Beach — where City National continues to operate a bank and offices. The bank’s corporate office, however, has since moved to 1450 Brickell Ave. in the city’s financial district.
Today, City National has about 445 employees, 24 locations in Southeast Florida and two in the Orlando area, Mr. Gonzalez said.
Last year, City National posted a record financial performance, reporting a profit of $190 million. Overall, the bank has $4.7 billion in assets, $3.5 billion in deposits, $2.5 billion in loans, and is a five-star rated institution, the highest ranking by bank rating firm BauerFinancial.
After the Caja Madrid purchase, Mr. Gonzalez said, City National maintained its business culture emphasizing customer service, close business relationships, and its commitment to lending in low- and moderate-income neighborhoods.
Since then, he said, the bank has diversified its loan portfolio and made other advances without sacrificing its original approach to doing business.
"Our balance sheet is more diversified," he explained. "We’ve added a lot of talent. We’ve added new technology, expanded our branch network. In addition to real estate loans, we now do more corporate banking; serve more small businesses; started taking on private clients; and doing more residential lending."
Mr. Gonzalez said he expects those directions to continue under Bci — made easy because the two banks have similar cultures.
"They’re following their Chilean clients to South Florida," he added about Bci.
Friday’s announcement of the sale said City National will remain "a locally-based community bank" and will continue to operate under the City National brand.
For Bci, the acquisition will allow it to further diversify its sources of income and its loan portfolio, create "cross-sell" opportunities, and capture the benefits of "business flow" between Miami and Latin America, Bci said.
The acquisition by Bci will be the Chilean bank’s first major foray into the US banking market, although Bci has had a presence in Southeast Florida since 1999 and its Miami branch has assets of $3 billion.
"This acquisition will further diversify Bci by expanding its footprint in the US through ownership of a domestic bank strategically located in Miami, the gateway of the Americas," Bci said in a statement.
"We believe that the culture of [City National] and Bci are very compatible and complementary," said Bci CEO Lionel Olavarria.
"Bci has been successfully operating in Miami for 12 years through our subsidiary," Mr. Olavarria added. "We see great opportunities in the Miami market and we know it well… [City National] is a bank prepared to benefit from the ongoing recovery in the US economy."
Eugenio von Chrismar, another top Bci executive, said City National has "a distinguished history, a proven management team, an attractive customer base, a healthy portfolio and strong capital levels."To read the entire issue of Miami Today online, subscribe to e-MIAMI TODAY, an exact digital replica of the printed edition.