Boston, MA 03/12/2014 (wallstreetpr) – In a move signaling the consolidation of business interests in the financial sector, Ameris Bancorp (NASDAQ:ABCB) announced the acquisition of the Coastal Bank. The acquisition has several positives for both the entities as the merged entity will become the largest community bank in Georgia.
The Acquisition Deal:
Ameris Bancorp (NASDAQ:ABCB) will be acquiring the shares of Coastal Bank for a total consideration of $36.7 million and it is expected to close in the third quarter. The combined entity will be present in 74 locations and will have $4.1 billion in assets besides $3.4 billion in deposits and $2.8 billion in loans. The bank will be able to add six locations through the acquisitions. Such acquisitions and consolidations are expected to pick up pace as bigger banks look at smaller companies with higher profits and few problem assets. Regulations are being tightened across the U.S. and smaller banks do not have the required capital to grow.
Other opportunities also available:
Ameris Bancorp (NASDAQ:ABCB) can also explore other acquisition deals. Banks require 8% of assets in capital to grow. However, in Georgia, almost 49 of the 218 banks covered under Federal Deposit Insurance Corp. have capital below 8%. More worrying, almost 20 banks have capital below 5%. These banks do not have the capital to grow. Banking regulations have tightened since 2009. The regulations were needed as banks had engaged in questionable practices which lead to the collapse of the housing industry. This, in turn, lead to a slew of bank failures. The tight regulations have meant that the financial conditions in the banking sector has improved. Though stressed banks are still present, a domino effect can be avoided. Secondly, such a situation also provides for ample scope for large and financially strong banks to grow.
Ameris Bancorp (NASDAQ:ABCB) has already seen the scope for expansion. It received permission from the Federal Reserve in December to acquire The Prosperity Banking Company.
