Lanky and slightly stooped, Jerry Shearer ambles up to a microphone in a crowded hotel ballroom to tell some 200 shareholders of Bankers First in Augusta, Ga., why they ought to sell.

Though he is in the midst of a fierce proxy fight, his voice is soft - just barely audible at times. But management and the standing-room-only crowd of shareholders don't want to miss a word.

And neither does anyone else involved in the southeastern thrift market.

Called by many a "thrift raider," Mr. Shearer, managing partner of Mid- Atlantic Investors in Columbia, S.C., prefers the term "shareholder activist" - someone who makes a thrift realize its true value, which normally means selling.

"In every case profitability has improved, and in most cases dramatically, after we got involved," Mr. Shearer said recently in a rare interview. "We have proven that if management is not willing to jump over the hurdles that we set for them, then we are willing to wage a proxy contest to see that our objectives are met."

To date, executives at three thrifts in South Carolina and Georgia are out of a job because of Mr. Shearer. But while their companies were sold out from under them, they - along with Mr. Shearer - are much richer for it. Mid-Atlantic's estimated profit from the three acquisitions is around $15 million over three years.

Mr. Shearer is about to make some more money. After his speech at Bankers First in May, the shareholders voted convincingly to put the $1.1 billion-asset company up for sale. It is now in talks with several large banks.

That victory was the latest in a string of Mid-Atlantic successes since its inception three years ago that has portfolio managers, merger and acquisition lawyers, thrift executives, and shareholders buzzing.

How big has Mid-Atlantic's impact been?

"Huge," says Henry Coffey of J.C. Bradford Co. in Nashville. "They've been a great stimulus for the consolidation occurring, not to mention a great generator of fee income for corporate finance people. It's simple - they're telling management to get the job done or get out of the way."

Wachtell, Lipton, Rosen & Katz, the Wall Street law firm, in a May report described Mid-Atlantic as "even more aggressive than Mr. (Michael) Price" of Heine Securities who, among other coups, successfully campaigned to have Michigan National Corp. sold earlier this year.

Mid-Atlantic's success has created a huge following among investors who take positions wherever Mid-Atlantic goes, expecting a subsequent acquisition and a big return. Mr. Shearer's phone rings constantly with calls from brokers and investors suggesting new targets or asking if he's looking for additional partners.

Mr. Shearer has only one partner at the moment, Jerry Zucker, who heads the second-largest privately held company in South Carolina, Intertech Group Inc. of Charleston. The media-shy Mr. Zucker is the money behind Mid- Atlantic, Mr. Shearer the analysis and sweat.

Formed in 1992, Mid-Atlantic finds undervalued thrifts and takes up to a 9.9% stake in them. Any more would require additional filing fees and paperwork. Much less would not get the attention of management. Mr. Shearer, who has a thorough understanding of banking from his nearly 30 years of experience in the industry, then suggests ways to improve profitability.

If the thrift doesn't generate the numbers Mr. Shearer expects, he pushes for a sale, sometimes within a matter of months.

"It's safe to say that he's created a fair amount of anxiety and concern out there," says Luther C. Boliek, the former chief executive of First Savings Bank of Greenville, which Mid-Atlantic steered into a merger with Southern National Corp. two years ago. "Most are probably wondering if they're next, and are getting their defenses up."

Viewed by some as brazen and interested only in short-term profits, Mr. Shearer points out that Mid-Atlantic has sold only negligible amounts of the stock it has bought to date. Even more distressing to him, however, is the perception that he is a "raider."

"A raider is someone who takes over a company and bleeds off its assets for personal gain," he says. "That's not what we do."

Mr. Shearer doesn't push for a sale in every case. He was even invited to invest in a privately held bank, Community Bank Capital Corp. of Atlanta, several years ago.

"That's what I find most interesting about these guys," says Walt Moeling, a lawyer at Powell, Goldstein, Frazer & Murphy in Atlanta. "They have this Attila the Hun image, but the reputation is only part of the story. Where they have gotten management to pay attention to shareholder value, they are not a problem."

Mr. Shearer doesn't really fit any mold. His actions suggest a cutthroat dealmaker, but his demeanor is one of a clergyman.

Last fall he pounced on a pending merger-of-equals deal between two South Carolina thrifts, arguing that shareholders were getting short- changed. He bought $6 million of stock in one of the thrifts, United Financial Corp., just days after hearing about the proposed merger.

The deal was dead within three months. Five months after that, despite strong resistance from management, United Financial was acquired by First Union, netting Mid-Atlantic a cool $5.7 million, a 95% return in eight months.

But despite all the fanfare, Mr. Shearer still operates from a small office behind his garage in a modest neighborhood in Columbia. Before moving into a slightly larger house a couple of months ago, Mr. Shearer worked from a spare bedroom in his home. He still answers his own phone.

Those who have worked with him over the years as he toiled mostly in obscurity at three South Carolina banks are stunned by Mr. Shearer's new incarnation.

"Where he got this Barbarian-at-the-gates attitude, I'll never know," says William C. Crowley, who was Mr. Shearer's boss at First National Bank of Charleston in the late '70s and '80s. "His appearance is one of almost a somber person, but somewhere along the line a tiger was unleashed."

Mr. Shearer's humble manner reflects his beginnings. A native of Anderson, S.C., he went to work in a bank right after high school. He later became a teller in the Anderson office of First National Bank and spent most of the next 20 years plugging away in the back office.

But Mr. Shearer was no ordinary number cruncher, former colleagues say.

"He was thinking so far out into the future he was almost like a mad scientist," says W. Douglas King, a former executive vice president at First National. "A lot of times we had to bring him back a few years closer to where we were."

Mr. Shearer thought he would spend his entire career at First National. Ill at ease with the limelight, he didn't aspire to a highly visible bank president position.

But then his world turned upside down - First National was put into play in 1982. After about a year, the bank was sold to South Carolina National Corp. (later acquired by Wachovia Corp.).

"That was a wake-up call," Mr. Shearer says. "For the first time I realized that a bank was owned by its shareholders."

But he wasn't ready to give up First National without a fight. Unbeknownst to anyone, he says, Mr. Shearer dispatched a friend to a New York investment bank, Kelso & Co., to see what could be done to block the sale. The emissary returned with the idea to use an employee stock ownership plan, but it proved too late.

Mr. Shearer then went on to hold positions as chief financial officer at Liberty National Bank in Charleston, where he met Mr. Zucker, who was a director, and then to ComSouth Bankshares' Columbia bank.

This top-to-bottom understanding of a bank give Mr. Shearer a leg up on the average investor. Undervalued elements emerge quickly, whether it's inefficient technology or incompetent management, he says. His targets range in size from $500 million to $5 billion of assets, but this could change, as could Mid-Atlantic's territory.

"We expected these megamergers, but not quite so quickly," he says. "It just means that we have to change our time line and our views on what we have to do."

Mr. Shearer suggests that Mid-Atlantic may eventually convert from its general partnership structure to perhaps a limited partnership, to include more investors and go after bigger prey. Mid-Atlantic so far has invested only in Georgia, South Carolina, and, most recently, Virginia, because that is the region Mr. Shearer knows best.

He points out, however, that the name, Mid-Atlantic, has nothing to do with his geographic intentions - it's just the name of a street in Charleston.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.