Popular demand: Puerto Rico's largest bank sees an opportunity to grow in South Florida by tapping the burgeoning Hispanic community in the area

South Florida CEO, March, 2005 by Mike Seemuth

Banco Popular North America is expanding its footprint in South Florida as part of a national strategy targeting metropolitan areas with large, fast growing Hispanic populations.

Popular Inc., Banco Popular's parent company, completed its acquisition of Miami Lakes-based Kislak National Bank on Jan. 4--a move that boosted the unit's South Florida deposit base tenfold. Kislak had $679 million in deposits and $1 billion in total assets, including $569 million in loans, as of Sept. 30, 2004.

Richard Carrion, chairman and CEO of San Juan, Puerto Rico-based Popular Inc., says the bank holding company's mainland operation began more than 40 years ago to serve the Puerto Rican community in New York. Banco Popular has since expanded to a six-state operation with 130-plus branches and $10 billion of assets. The Kislak acquisition is the start of an aggressive push into South Florida.

"We like their locations and we particularly like their loan portfolio," Carrion says.

Through Kislak, the bank expects to draw business from a large cross-section of Hispanics, including burgeoning communities of expatriate Venezuelans, Colombians and Dominicans as well as the bank's mainstay, Puerto Ricans. The eight Popular-owned branch offices still operating under the Kislak name are in Miami Lakes, Miami Gardens, Miami Beach, North Miami, Doral, Sunrise and Sea Ranch Lakes in Broward County and Boynton Beach in Palm Beach County.

The Popular brand name will replace Kislak this June, when Popular expects to convert Kislak's back-office computer system to its own, according to Roberto Herencia, the Chicago-based president of Banco Popular North America.

"It's one of those mergers where you have no concern about changing the name," Herencia says. "We have strong name recognition in the Miami area. We felt the name was going to be very well received."

That may seem like a bold statement, since the only local office bearing the Banco Popular brand is a remotely located branch on SW Eighth Street in western Miami-Dade County. But since that humble Calle Ocho branch opened in January 2000, its deposit base has increased from zero to $70 million. "That branch has done pretty well even though it doesn't have a great location," Herencia says.

The US bank's Puerto Rican parent started operating in the Miami area in 1998, through a non-banking business that cashes checks and sells money orders. Popular Inc. operates 130 Popular Cash Express check-cashing stores in the US--14 of them in the Miami area. "Miami was our first location for Popular Cash Express," Herencia says.

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Banco Popular North America operates primarily as a community bank serving individual customers and small- to medium-size business owners, and expects to attract more of each because of the Kislak acquisition, Herencia says. Popular offers services Kislak did not--commercial cash management services, for example--and its subsidiaries also offer insurance, automobile financing, leasing and securities brokerage.

Kislak's Miami Lakes-based loan officers were retained after the merger, and they will focus on construction lending in South Florida and in the Orlando area.

Moreover, Herencia says the bank intends to build on a niche lending business that Kislak established: granting credit to not-for-profit condominium associations for structural repair and renovation. It was a major source of its loan business. The plan is to increase loan volume to the associations and tap their members for additional business.

Jonathan Kislak, former chairman of Kislak National Bank's holding company prior to the acquisition, says Popular has the resources to follow through on his bank's lead. "We were just starting to experiment on how to do that. Banco Popular has got a larger set of tools," he says.

Overall, the takeover could benefit some former Kislak employees. In a recent investment presentation, Jorge Junquera, Popular Inc.'s chief financial officer, cited management talent as one of the attractions of the Kislak acquisition. "Kislak is a very clean institution. It gives us some niche businesses we didn't have and some management help," he said at a Feb. 1 institutional investor conference in New York.

"We want to continue growing in the Miami market," Junquera said. From the nine local branches Banco Popular now owns, to "something two times that, three times that, probably would be the long-term view of our Miami presence."