These are not easy days for community banks in Georgia and Florida, but signs of hope are springing.
This week in Georgia Ameris Bancorp in Moultrie announced plans to raise nearly $74 million in fresh capital via a public offering, and Gwinnett Community Bank said it raised $5 million from members of its community.
And in Florida, the $1.7 billion-asset TIB Financial Corp. in Naples announced late Wednesday that it had cut a deal with Patriot Financial Partners, a private-equity firm based in Philadelphia, to invest up to $25 million.
Gwinnett's story, in particular, may hold lessons for other community banks in tough markets. The $500 million-asset bank raised the funds by hosting lunches twice a week, inviting people in the community to hear its story.
"Five years ago we could have gotten $5 million by sending out a letter to a few hundred people," said Tom Martin, Gwinnett Community's chairman and chief executive officer. "But not in the market we have been in the past year. … It is a small amount of money in the big picture … but it is a great step because it is so hard to get any amount of money."
Gwinnett, a subsidiary of Community Financial Holding Co., wasn't the first bank in the state to try this tactic. Northwest Georgia Bank in Ringgold collected $2.5 million from its community earlier this year.
Scott Smith, the $580 million-asset bank's president and chief operating officer, said in an interview that he plans to use the money to reduce assets and continue raising capital until Northwest Georgia Bank is in compliance with a regulatory order to get its leverage ratio to 8%. At the end of March the ratio was just over 7%, Smith said.
"We're letting the dust settle and see what rolls off, and then we will simultaneously see what we need to raise," Smith said.
Though Ameris executives did not return calls for comment, the $2.42 billion-asset company said Wednesday that it would sell 8.2 million shares for $9.50 a share, or $73.9 million. It plans to close the offering next week and use the capital for general corporate purposes, including acquisitions.
And TIB's investors attached a big string. Before getting the money, TIB must raise another $150 million from other sources. Its CEO and president, Thomas J. Longe, said in a press release that it is "continuing to pursue similar investments by other interested private equity investors."
Michael Iannaccone, president of MDI Investments Inc., a Chicago capital advisory firm, said that while having private equity on deck is no guarantee that TIB will succeed in raising the additional money, it certainly helps.
"In general, having a lead investor gives other investors a great deal of comfort," Iannaccone said. "If someone is willing to take a large stake, other investors think they can rely on their due diligence."
To be sure, banks in both states are still struggling, but the ability to raise capital indicates that residential and commercial real estate woes — mainly in metropolitan areas — are abating.
Georgia banks, many of which have heavy concentrations of construction and development loans, were hard hit when the real estate market crumbled and prices on collateral dropped.
Those problems led Georgia to rack up more bank failures than any other state in this down cycle. According to data from DD&F Consulting Group in Little Rock, there were five banks failures in Georgia in 2008, 25 in 2009 and there have been seven this year. Twenty-two Florida banks failed in that period.
It doesn't appear the wave has crested in either state. According to watch list compiled by Foresight Analytics, a unit of Trepp LLC, Georgia could see 48 more failures this year; the estimate for Florida is 44.
The trick for community banks in troubled markets is convincing investors that the bank has a vision.
"You need to have somebody come in and do a loan review, a strategic plan and a capital plan," said Lee Bradley, the managing director of the bank capital consulting firm Compass Point LLC in Duluth, Ga., who worked with Gwinnett Community. "You have to find out what the bottom is and how much capital you need."