Savannah's newest banks take different paths to success

Savannah's two newest banks boast robust capital ratios and a desire to become bigger players in the local market.

The similarities between Bank of the Ozarks and Ameris Bank end there.

The two institutions that recently acquired failed banks in the Savannah area have contrasting profiles and approaches to the banking business. One is homegrown and cautious; the other is opportunistic and aggressive.

Both are sound.

Bank of the Ozarks

Bank of the Ozarks debuted locally in July after acquiring Woodlands Bank. The Arkansas-based bank is the exception to the banking rule. In 31 years and through three recessions, Bank of the Ozarks has never posted negative earnings.

The bank is run by George Gleason, who purchased the institution in 1979 at age 25 with $10,000 in cash and a $3.5 million loan. Bank of the Ozarks had three branches and $28 million in assets at the time. As of Sept. 30 of this year, 90 branches carried Bank of the Ozarks' signage, and the institution held more than $3 billion in assets.

The bank grew organically, expanding market by market over the years prior to making its first acquisitions of failed institutions earlier this year.

Bank of the Ozarks grew without sacrificing profit.

Bank of the Ozarks has posted record earnings in each of the last nine years and is on track for setting a new mark again this year. The bank turned a $44 million profit in 2009. By comparison, the bank closest to Bank of the Ozarks' size in the Savannah market lost $222 million last year.

Gleason credited lending standards for the bank's health. To underscore just how conservative Bank of the Ozarks is, the two largest pieces of the bank's portfolio are construction and development loans and commercial real estate - exactly the types of loans that have damaged other banks.

"We require very strong credit and cash equity in transactions, which has helped us to weather the storm and continue to be profitable through the downturn," Gleason said. "There were a lot of years where we saw literally hundreds of business opportunities going somewhere else because of it. But we didn't want to liberalize what's made us successful for all these years."

Bank of the Ozarks did receive funds from the federal government's Troubled Asset Relief Program. The bank repaid the $75 million in November 2009.

Bank of the Ozarks' local branch is located at the corner of Habersham Street and Stephenson Avenue. The bank plans to add additional branches, Gleason said, through acquisitions or organic expansion.

"We acquired a bank in Northwest Georgia earlier this year, and we'd like to do some things to gradually connect the dots between that area and Savannah," Gleason said. "We would be very comfortable expanding our reach in Georgia."

The other bank new to the local market, Ameris, already had a major presence in the Peach State prior to acquiring Darby Bank last month. Ameris is based in Moultrie, and most of its 42 Georgia branches are located in South Georgia.

Ameris

Ameris has grown through acquisitions and has been among the more active players during the banking crisis, taking over six failed banks since November 2009.

The aggressive growth is reflected on the bank's balance sheet: Ameris has reported losses in each of the last nine quarters. The bank lost $40 million last year and $4.9 million through the first three quarters of this year.

However, the poor performance has had little impact on the bank's capital position. Ameris' ratios are twice what the FDIC requires for a bank to be considered well-capitalized.

Credit $135 million worth of capital infusions during the last two years for Ameris' stability. The first $52 million came via TARP in November 2008. The bank has repaid approximately $5 million. The larger capital raise was done through a stock sale in April. The bank netted $84.9 million from that move.

Ameris boasts a well-diversified loan portfolio and minimizes its risk by limiting the size of the loans it underwrites. The bank owned just two loans in excess of $5 million as of the end of the third quarter. The average loan size was $86,000.

Ameris reduced its exposure in construction and development loans by 31 percent between Sept. 30, 2009, and Sept. 30, 2010.

Expect Ameris to become an increasingly larger player in the local market.

In a report presented at November's East Coast Financial Services Conference, the bank identified 92 troubled banks headquartered within 75 miles of an Ameris branch as "potential consolidation opportunities."

Two of those institutions are in the Savannah area.

The report listed remaining "well-positioned to capitalize on opportunities" as one of Ameris' current focuses.