Ameris Bancorp sits squarely in ground zero for the bank financial crisis: Georgia. But unlike its peers getting gobbled up by the FDIC and competitors, Ameris Bancorp is growing after buying six of its weakened peers since the fall of 2009, taking branches and market share in Georgia and Florida.
The Moultrie-based bank has gone from having $2.4 billion in assets at the end of 2008 to $2.97 billion in the first quarter, essentially driven by acquisitions of failed banks in the region at a time when traditional banking had come to a standstill.
“We couldn’t find any good customers to grow the balance sheet,’’ said Dennis Zember, executive vice president and chief financial officer of Ameris, at a Bank Director conference May 2nd in Chicago.
Left: Jeff Schmid; Right: Dennis Zember
With the acquisitions, the bank took $1 billion in assets at fair value and $52.4 million of bargain purchase gains, essentially the value of the assets beyond what was paid for.
The FDIC took 80 percent of the losses for each failed bank, while Ameris is responsible for disposing of the bad assets over time.
It hasn’t been a cake walk.
In one instance, the FDIC allowed only five Ameris bankers two and a half days to walk into a failing bank’s branches and assess what they were buying before the sale. One Ameris banker wrote down the addresses for every piece of real estate on the loan books and emailed them to colleagues so they could drive around and look at them.
Other bankers have had unwelcome surprises.
One of the clients of attorney Jim McAlpin of Bryan Cave bought a failed bank, but found out after the closing that half of the drive-through teller infrastructure and half of the parking lot had been sold by the bank in a last ditch effort to raise capital.
The FDIC will tell you what it knows about the bad bank, but it doesn’t know everything, he said.
Jeff Schmid, the chairman and chief executive officer of Mutual of Omaha Bank, which has become a $5 billion bank in five years after buying failed banks, said a lot of banks aren’t worth buying, but his bank still looks at every institution that comes up for sale. Many banks have little value because they’re only a few years old and funded real estate loans almost exclusively through brokered deposits, so do not have a sustainable deposit gathering franchise.
He urged bankers to be strategic in their acquisitions, identifying what they wanted and where to grow, before jumping after every failed bank that comes up for sale.
“You’ve got to decide where you want to go rather than fall in love with something that falls out on a sheet,” he said.
Schmid suggested doing research before banks end up on the FDIC’s for-sale list, finding out which banks have high Texas ratios, a sign of stress, in the regions where you want to grow. Then, go visit the executives.
“They’re worn out and their boards are worn out,’’ he said. “If a (traditional) sale doesn’t go forward, you’ll have so much more intelligence when the FDIC does put it on their list.”