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Ameris plans to restructure Fidelity Southern's auto lending with deal

Moultrie, Ga.-based Ameris Bancorp plans to restructure Fidelity Southern Corp.'s balance sheet upon its acquisition of the Atlanta-based bank.

Fidelity Southern reported nearly $1.60 billion in total auto lending at Sept. 30, representing approximately 39.2% of the bank's total loans and leases.

"In the short term, we will restructure the Fidelity balance sheet ... away from the indirect auto business," Ameris President and CEO Dennis Zember Jr. said on a conference call to discuss the deal. According to an investor presentation, Ameris expects approximately $100 million per quarter of cash flow from shrinking the bank's indirect auto portfolio. Ameris CFO Nicole Stokes said the restructure "gives [Ameris] more on the revenue side versus the cost saves."

Ameris executives said the bank's increased presence in Atlanta will allow it to successfully drop the auto portfolio while increasing more profitable lines of lending. "We'll focus more on the commercial opportunity that our image in Atlanta will drive," Zember said.

The bank plans to replace auto lending with an increased focus on commercial real estate and commercial and industrial lending. Zember said the combined bank would be "better" C&I lenders than either bank was before combining. "We didn't have the presence or the image to be able to pick up the best customers on the C&I side."

"We've got a lot of room on the CRE side," said Zember. Zember said the bank would not be aggressive in its pursuit of CRE lending opportunities, but that it would be "more active" after the acquisition.

The bank is modeling 40% cost savings on the deal. This will be achieved through the balance sheet restructuring, administrative efficiencies, combining the two banks' mortgage groups and reducing overlapping branches. The bank expects the restructuring and cost-saving initiatives to be completed in 2020.