ATLANTA -- First Tennessee National Corp. said it would acquire Highland Capital Management Corp., marking the second purchase within a month of a nonbank money management firm by a major Southeastern bank.
First Tennessee, which is based in Memphis, said it would merge Highland Capital, also Memphis based, into its own money management subsidiary, First Tennessee Investment Management Inc.
The combined company, with $2.6 billion of managed assets, including the trust assets of First Tennessee's lead bank, will operate under the Highland Capital name.
"We want to grow that business and have a bigger presence than we do now," said Ralph Horn. First Tennessee's president and chief operating officer.
Just last month, Charlotte, N.C.-based First Union Corp. announced the acquisition of Lieber & Co., which operates the Evergreen family of mutual funds.
The acquisition of Highland Capital, which has $800 million of managed assets, also follows close on the hells of First Tennessee's recent purchase of two mortgage servicing companies: Maryland National Mortgage Corp., Baltimore, and Dallas-based Sunbelt Mortgage Corp.
"It's an affirmation of their belief that having high levels of noninterest income is important for boosting the value of the company," said Peter Tuz, an analyst with Morgan Keegan Inc. in Memphis.
Strong Revenue Stream
First Tennessee, wit its large bond division, already has one of the strongest noninterest revenue streams of any bank in the country, contributing just over 40% of total revenue in 1992. The industry norm is closer to 30%.
"We're still looking for ways to grow those specialty business lines," Mr. Horn said.
Under First Tennessee's ownership, Highland Capital will be managed by its current five principals: Paul H. Berz, Edward J. Goldstein, James M. Weir, C. Thomas Whitman, and Steven Wishnia.
|Fits In Well'
William V. Pruett, as planned, will retire next year as president of First Tennessee Investment Management.
"This [acquisition] fits in well because it takes care of that succession problem," Mr. Horn said. "This is bringing in new management."
The company will continue to provide investment advisory services to individuals, family groups, charitable foundations, endowments, employee benefit plans, and corporations.
First Tennessee has $9.5 billion of total assets. At mid-afternoon on Wednesday, its stock was trading at $36.50, down 25 cents.
