Good banking, as George Gleason explains it, is simple: Adhere to fundamental lending principles, lean on your team's experience, and seize strategic opportunities.
That philosophy helped Gleason and Little Rock-based Bank of the Ozarks, where he is chairman and chief executive, avoid the lending landmines that felled so many banks nationwide in the financial crisis and subsequent recession.
Bank of the Ozarks sees opportunity in the failures and a chance for growth by acquisition.
The bank, which has more than $3 billion in assets, planted roots in North Georgia last month with its acquisition of the failed Unity National Bank of Cartersville.
"We have been for many years a rapidly growing organization. Our company has grown organically without acquisitions," Gleason told The Atlanta Journal-Constitution. "But the opportunity posed by the current banking environment to acquire banks is compelling."
At first glance, it seems like an odd match for Bank of the Ozarks, which reported last week that its first quarter profit rose more than 70 percent to $15.9 million, or 94 cents per share.
After all, Little Rock is a long way from Cartersville. Bank of the Ozarks' branch footprint is mostly Arkansas and Texas, along with a loan production office in Charlotte.
What's more, the Peach State leads the nation in bank failures -- 37 institutions have shuttered their doors since 2008, with most of those stemming from the crises in the residential mortgage and commercial real estate sectors.
And real estate lending, the engine behind rapid growth for many of those now-failed Georgia banks, remains murky, making it even more of a risk for a new entrant to the market.
But the risk is mitigated by the Federal Deposit Insurance Corp.'s loss-share agreement. That makes the FDIC responsible for 80 percent of Unity-related loan losses, capped at $65 million, and then after that, 90 percent.
And analysts say the Arkansas bank, which didn't get caught up in the race to get big just because competitors were, has the flexibility and capital to grow, particularly in Georgia.
"The reason Ozarks has outperformed is because they do a good job of underwriting residential and commercial real estate loans and [have] a lack of exposure to areas that had any significant real estate speculation," said Doug Rainwater, an analyst with Rodman & Renshaw. "All of us expected they were in a position to acquire and looking to bid on failed banks. The question was which market would it be."
Analysts also say Unity's markets, which included Rome, Adairsville and Calhoun, mirror those of Bank of the Ozarks' home base in Arkansas.
That was key in Bank of the Ozarks' choice of Unity, Gleason said, explaining the bank had explored other acquisitions in Georgia.
"We looked at the Unity acquisition as the [one] we felt most positive about," he said. "One of the pluses is that it affords us the opportunity in the future to grow, including in the metro Atlanta area."
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