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The last big bank is gone

The last big bank is gone

Once upon a time, in the not-too-distant past, three Nashville banks lorded over Middle Tennessee: Third National Bank, First American Bank, and Commerce Union Bank. By the mid-’80s, however, as interstate banking invaded Tennessee, local banks began cashing out.

In December 1986, Third National sold out to Trust Company Bank. (It is SunTrust Bank today.) Then, in November 1987, Commerce Union Bank threw in the towel, selling to Sovran Bank. (It is now called NationsBank, which is part of Bank of America.)

Meanwhile, First American Bank became the only large, hometown bank. It ambitiously laid claim to that mantle by assembling a board of directors that represented the cream of the city and its leadership. David K. ”Pat“ Wilson, Nelson Andrews, Ken Roberts, and other notables served the bank in board or executive positions. Visiting the bank’s executive dining room was for years like being summoned to a city hall, only one with money. When the bank stumbled in the late ’80s under the burden of numerous bad real estate loans, it recruited Denny Bottorff to lead the bank out of its troubled times. Soon, everything came up roses again.

If the rule of banking in recent years is that one must ”eat or be eaten,“ First American Bank chose the former course of action for a long while. But its purchase last year of Deposit Guaranty Corp., a Jackson, Miss., bank for which many analysts said it paid too much, did not go well. Customers fled, profits dropped, and First American’s stock fell. So, when AmSouth came knocking with a reasonable purchase price, the First American board must have known it was time to bail.

AmSouth, based in Birmingham, and First American are about the same size, with roughly $20 billion in assets. The transaction is a stock merger, meaning shareholders in First American will receive shares in AmSouth. Based on Friday’s closing of the New York Stock Exchange, shareholders in First American will receive a 30 percent jump in their share prices, according to Monday’s Wall Street Journal. Analysts said the deal is an attractive one in business terms, as it will create a financial behemoth spanning nine states across the Southeast.

Andrews, a Nashville businessman who often lectures on leadership, said that unlike other cities in the Southeast, Nashville’s civic leadership has often come from the banking profession, rather than its retail and manufacturing sectors. ”When the other banks have become foreign-owned, so to speak, they haven’t disintegrated as happens in many cases,“ Andrews commented. ”A whole lot of leadership still comes from SunTrust, and from NationsBank, or Bank of America. The likelihood is that will happen again.“

As for what will happen to Bottorff, who is the chairman and CEO of First American and one of Nashville’s prime movers and shakers, he will be chairman of the board of the combined company through Jan. 1, 2001. The Wall Street Journal described Bottorff’s position as a ”non-executive“ one. In other words, dear reader, this is now a Birmingham bank.

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