Business
First Tennessee Bank to acquire TrustAtlantic Bank
First Tennessee Bank, a regional bank that opened its first Triangle branch last year, is significantly expanding its presence in Wake County by acquiring Raleigh-based TrustAtlantic Bank for $80 million.
The acquisition of privately held TrustAtlantic, announced Wednesday, will give First Tennessee an additional four branches locally – three in Raleigh and one in Cary – as well as a branch in Greenville. TrustAtlantic’s branches will operate under the First Tennessee brand when the deal is completed, which is expected to happen in the first half of 2015.
John Fox, president of First Tennessee’s mid-Atlantic region, said of TrustAtlantic: “We think, first and foremost, they have great leadership and great employees and have established an outstanding reputation of serving their customers. On top of that, their offices are very well-located. And they have great clients.”
First Tennessee is based in Memphis and has more than 180 branches, mostly in Tennessee.
First Tennessee, which is celebrating its 150th anniversary this year, opened a Raleigh office in 2005 that offered a number of services, such as commercial banking, commercial real estate loans and wealth management. But it didn’t have a full-service office locally – it lacked a teller for accepting customer deposits – until it opened a branch on Oberlin Road in May 2013.
Over the past few years First Tennessee, which also has branches in Winston-Salem and Charlotte, has been looking for a small or mid-sized acquisition that would expand its Wake County operations.
“It provides more convenience for our existing business clients ... and gives us an opportunity to grow in a very vibrant market,” said Ken Reece, president of the mid-Atlantic region at First Tennessee.
First Tennessee provided the financing to the developers of the new Citrix office building that recently opened in Raleigh’s downtown Warehouse District.
TrustAtlantic CEO Jim Beck said that being acquired by First Tennessee “is a really good move for our customers and our shareholders.” The bank’s shares are traded privately.
First Tenneesse’s “array of services is much broader than ours, more sophisticated than ours,” Beck said.
Beck will become Triangle market president for First Tennessee, overseeing commercial banking and the branches. Ken Reece, currently the market leader for First Tennessee’s local market, will manage private banking and wealth management in the region.
TrustAtlantic was formed in 2007 when it raised $40.3 million from investors. It then jump-started its operations by acquiring a bank in Greenville, Millenia Community Bank, for $35 million.
As of Sept. 30, TrustAtlantic had $453 million in assets and $395 million in deposits. According to data filed with the Federal Deposit Insurance Corp., the bank earned $2.1 million in net income in the first half of this year, up from $1.7 million a year ago.
TrustAtlantic decided about a year ago that it needed to take stock of its strategic options going forward.
“Everything was on the table,” Beck said.
Among other things, the bank concluded that, given the current regulatory environment, TrustAtlantic needed to join up with a larger bank to remain competitive over the long-term.
Both Beck and Reece said some layoffs are inevitable once the deal closes, but it hasn’t yet been determined how many people will lose their jobs. TrustAtlantic has about 60 employees.
But there’s no overlap in the two banks’ branch sites, “so there aren’t any branch closures, as there might have been with other partners,” Beck said. “And we know that (First Tennessee) is oriented towards working with our employees and trying to preserve as many roles, as many positions, as we can.”
TrustAtlantic shareholders can opt to receive cash or stock in First Horizon National, First Tennessee’s corporate parent. But, overall, the transaction will be structured so that 75 percent of the $80 million cost is paid out in stock and 25 percent in cash.
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