First Tennessee Bank, the major subsidiary of
First Horizon National Corporation
), is set to further enhance its footprint in Tennessee by
acquiring 13 branches and four remote ATMs in the state from
Bank of America Corporation
). The acquisition of the branches is expected to close later this
According to the terms of the deal, First Tennessee will assume
deposits worth $660 million, for a 3.32% premium. The deal also
includes some loan balances, though not significant.
This transaction will allow First Tennessee to further spread its
wings in several parts of Middle and East Tennessee including
Waverly, Columbia, Lawrenceburg and Johnson City. Upon closure of
the deal, the company will recruit all the existing employees of
What Incited the Deal?
Being a leading bank in the state, the latest deal comes as part of
First Tennessee's strategy to capture greater deposit market share
in the Tennessee market. Notably, First Tennessee is already
operating more than 170 financial centers in Tennessee and the
For a major regional bank like Bank of America, the deal seems to
be an effort to reduce a number of branches to save costs. Notably
in recent months, BofA inked deals with
Washington Federal Inc
Huntington Bancshares Incorporated
) to shed a number of branches.
Branch shedding has become a trend in the banking industry in
recent years. Given the regulatory restrictions and higher capital
requirement, cost control measures have become a priority in the
banking space - particularly for the mega banks. Shedding or
consolidation of branches significantly contributes to such an
On the other hand, as customers are gradually shifting towards
banking transactions through the online banking mode and mobile
applications, several large banks in the U.S. are opting for
reducing their branches and focus more on technology upgrade.
Smaller or medium banking institutions are grabbing this
opportunity as branch acquisitions pave the way for their business
expansion. These banks tend to explore strategic locations that
provide easy accessibility to customers and thus increase their
First Horizon currently carries a Zacks Rank #3 (Hold).
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