First Tennessee National Corp., looking to diversify the business it generates through its strong home lending operation, has opened the first of what may become a chain of retail sites through which it plans to pitch investments and other banking services.
In the past decade First Tennessee has built a nationwide presence in home financing by buying small mortgage companies, which it united last year under the name First Horizon Home Loan Corp. The retail gambit is part of a strategy to expand its business from First Horizon customers.
"We see this as a bridge to build a relationship with our customers," said Marty Mosby, senior vice president for investor relations and strategic planning.
The new approach makes First Tennessee the latest in a series of banking companies pushing sales through specialized locations that bear little resemblance to traditional branches. The retail centers, looking more like stores than banks, will be equipped with video terminals, a stock ticker, and merchandising displays - but no tellers. At each site, customers will be able to meet with certified financial planners, who will host free seminars on financial planning and investing.
The current plan calls for five sites, and last week the Memphis banking company opened the first of them - in Addison, Tex., near First Horizon's Dallas headquarters. Mr. Mosby said the other four will open within 12 months in areas where First Horizon has a strong presence.
The financial centers are intended to supplement, not replace, established First Horizon stores, Mr. Mosby said. Further expansion will depends on how well the centers are received, he added.
The offerings include investment products, financial planning, and credit cards, all under the First Horizon mortgage banner.
Insurance, which Mr. Mosby calls a "natural fit" for mortgage customers, will be an early focus.
If successful, the plan would address some important issues that First Tennessee faces in attempting to expand its retail presence, analysts said.
On one level, the company is a victim of its own success, said Richard X. Bove, an analyst at St. Petersburg, Fla.-based Raymond James. "This is a new attempt at a new product line, and they need a new product line at this point, because they're running into saturation with most of their products," he said.
By leveraging an established strength, First Tennessee can kick-start its investment and insurance sales program, Mr. Bove said.
Chairman and chief executive Ralph Horn said last year that First Tennessee would consider adopting the First Horizon name companywide.
Christopher W. Marinac, an equities analyst at Robinson-Humphrey in Atlanta, said that with the branding overhaul and the new centers First Tennessee could take its expanded product line national without the drawback of a regional moniker. At the same time, he said, it is a great way to take advantage of First Tennessee's strength in home lending.
"It's really fertile territory to cross-sell," he said. "They have all these mortgage customers. If they're only banking a tenth of that relationship, they're leaving a lot on the table."
