Unable to dig up much gold among the coal mines, a small West Virginia savings and loan is venturing into one of the nation's most affluent areas.
Ameribank Inc. of Welch, W.Va., won approval from the Office of Thrift Supervision this week to open a branch in Palm Beach Gardens, Fla., where the median income is nearly triple that of McDowell County, one of the poorest counties in the nation's poorest state.
Ameribank has been healthy for a long time, says Jim Sutton, its vice chairman, "but try as we might, our loan portfolio will not grow in this county - so we have to go somewhere else, where there is significant loan demand."
The $80 million-asset thrift, which has operated only in West Virginia's coal-mining country for nearly a century, is likely to open the Florida branch in mid-July, he said. In the long term it plans to open more branches in Florida and eventually move its headquarters there, Mr. Sutton said.
"I imagine at some point we will be a Florida bank with some West Virginia branches," he said.
As one of the fastest-growing states, Florida holds undeniable allure for institutions in slow-growth or, in Ameribank's case, no-growth markets. Since the mid-1990s dozens of banks and thrifts have expanded into the Sunshine State by making acquisitions or building branches.
Though there is evidence that Florida is becoming saturated, Mr. Sutton said that Ameribank is almost out of lending options in its home county. McDowell's per capita income was $16,347 in 2001, compared with the national average of $30,413, according to the Bureau of Economic Affairs; its unemployment rate in April was 11.8%.
With its economy at a virtual standstill, the thrift's loan-to-deposit ratio was a paltry 38.15% as of March 31, versus nearly 78% for other thrifts with less than $100 million of assets and 103% for all thrifts.
Its total loans have been declining steadily over the last four years, despite the fallout from First National Bank of Keystone's failure. When the $1.1 billion-asset bank, which was also based in McDowell County, was shut down in 1999, Ameribank acquired $135 million of its local deposits.
Though McDowell's neighboring counties are better off economically, they are overbanked, so adding branches in those markets is not an option, Mr. Sutton said.
In stark contrast with McDowell, Palm Beach is the richest county in Florida and one of the wealthiest in the country, with a per capita income of $43,626 in 2001. It is home to dozens of upscale restaurants, boutiques, and marinas and is a popular destination for affluent retirees.
Still, Ameribank can expect to face stiff competition there. In McDowell, it competes with only two other financial institutions, whereas 56 institutions of all sorts are fighting for deposits and loans in Palm Beach, according to the Federal Deposit Insurance Corp.
Nevertheless, Mr. Sutton says he is confident that Ameribank will succeed in gathering loans and deposits there. Its attention will be focused on growing in Florida, and it has hired several experienced local bankers, he said. The president of the new branch, Lou Dunham, was an executive vice president at the $2 billion-asset Republic Security Financial Corp. of West Palm Beach until Wachovia Corp. acquired it in February 2001.
"I have spent a lot of time as a Florida banker, and so have others" at Ameribank, said Mr. Sutton, who comes from the Palm Beach area and has family there. "We will go after customers we are familiar with to spread the Ameribank name in Palm Beach."
Before joining Ameribank, Mr. Dunham tried to start Infinity Bank in the Palm Beach market. However, it withdrew its application four months ago after failing to raise the required $25 million of capital. As a thrift, Ameribank does not have to acquire or apply for a new charter to expand into another state.
Mr. Dunham insisted in an interview Wednesday that Ameribank is not abandoning its home state.
One Community Reinvestment Act advocate warned, however, that if it does, Ameribank's "outstanding" CRA rating would be in jeopardy.
"If all banks say forget about their market and they go over to the big cities, then that's not good for the rural areas," said Kenneth Thomas, a CRA consultant with clients in southern West Virginia. "They have an opportunity to develop the county, rather than just leaving it behind."
