First American Corp., rebounding from loan losses, would consider acquiring community banks and failed thrifts in Tennessee. But its president and chief executive, Dennis C. Bottorff, says it has no plans to expand beyond its home region.
Mr. Bottorff said the Nashville-based bank's goal is to become a "super community bank," emphasizing personal service to consumers and to business with less than $100 million in sales.
Raised $41 Million
First American took heavy loan-loss provisions in the previous three years because of heavy commercial real estate and out-of-state lending. In a stock offering completed Wednesday, it raised $41 million
Mr. Bottorff said one purpose of the offering was "to put First American comfortably in the well-capitalized zone," which allows it to receive favorable treatment under the Federal Deposit Insurance Corp.'s new risk-based premium assessments.
First American's capital ratios now exceed regulatory guidelines. For instance, Tier 1 risk-based capital ratio of 10.04% compares with a regulatory minimum of 4%.
Turning the Corner
Still, Mr. Bottorff said the $6.6 billion-asset First American, the second-largest bank holding company in Tennessee, remained "a turnaround situation." Return on assets in the second quarter was a modest 0.61%. Nonperforming assets have been declining for six quarters, but still totaled $116.1 million in the second quarter, or 3.14% of total loans and foreclosed real estate.
However, First American's $182.8 million reserve now covers 255% of nonperforming loans.
Profits Rising Again
"The asset quality problems have largely been dealt with, especially given that the Nashville economy seems to be rebounding a bit" said Peter Tuz, a banking analyst with Morgan Keegan in Memphis.
Another sign of progress: First American reinstated its dividend of 10 cents a share in August, more than two years after it was suspended because of rising loan losses.
First American earned $18.3 million in the first half, compared with $3.8 million in the period a year earlier. The company earned $17 million in 1991.
Mr. Bottorff, 48, joined First American a year ago. He was in line to become chief executive officer of Atlanta-based C&S/Sovran Corp. before it agreed to be acquired by NCNB Corp., now NationsBank.