Shareholders in BankFirst Corp. of Knoxville, Tenn., among the last banking companies to go public before the market tanked, have had an especially turbulent ride.

While other banks stocks were heading steadily downward, BankFirst's August initial public offering was fully subscribed at $12. The stock edged up in September, scraping $13 twice, then leveled off at $12 before dropping to $8 last week.

Shares were at $8.9375 late Friday

"It's been quite a run," said Christopher Kelley, a banking analyst at Morgan Keegan, which helped manage the company's stock sale.

Right now the stock is nearly "on a par with the rest of other banks," Mr. Kelley said. Share of banks both weak and strong have fallen to low price-to-earnings multiples, and BankFirst has been trading at 17.6 times projected 1999 earnings per share, he noted.

Board members and management hold 47% of the stock, and local people own most of the rest, thanks to aggressive marketing before the IPO.

Mr. Kelley and other analysts said BankFirst's prospects warrant a higher share price.

The Aug. 27 sale brought in $13.2 million for expanding existing operations and scouting for nontraditional bank businesses.

The company was already growing fast. Annual growth over the past three years has averaged 11.7% for assets, 16.3% for loans, and 9.9% for deposits.

BankFirst's territory is part of the Southeast's industrial backbone, full of noncyclical industries including textiles, automotive equipment, and general manufacturing. The Great Smoky mountains make the area a magnet for tourists, and the company has a loyal customer base. And at 3.3%, the area's unemployment rate is more favorable than the state's 3.9% and the national average of 4.5%.

The area has attracted banking giants such as First American Corp., First Tennessee, and National Commerce Bancorp. But they operate in many areas, whereas BankFirst can keep its focus on the local market.

There are risks for investors. BankFirst's market cap is just $130 million, so the stock is not in a lot of hands and could be hard to trade. And Tennessee could be hit hard by unemployment in a recession. But the pieces are in place for success, analysts said.

BankFirst is emerging as "the east Tennessee banking alternative" to enormous commercial banks and community institutions, said Hope Willard of J.C. Bradford & Co. "The demand for service and high personal attention will persist."

The "well-run local community bank should continue to thrive in what is a becoming a rapidly consolidating industry," Mr. Kelley said.

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