When chairman and chief executive officer Dennis Bottorff arrived at First American Corp. in 1991, its loan portfolio was hurting and its future was in doubt.

Today the $10.4 billion-asset company is a top performer-and turning up the heat on competitors.

"This is a company that came from fixing what was broken to really taking a look at a number of internal initiatives and remaining very competitive," said Hope Willard, an analyst at J.C. Bradford & Co. in Nashville.

Broken might be an understatement. When Mr. Bottorff arrived from C&S/Sovran Corp. with longtime colleague Dale W. Polley as vice chairman, First American's troubled loan portfolio was causing losses as high as $60 million a year. Regulators were hovering.

When he was approached for the turnaround job, Mr. Bottorff was president and Mr. Polley treasurer of C&S/Sovran, which was being acquired by NationsBank Corp.

Mr. Bottorff was more than eager to take the helm at First American, which would bring him back to Nashville, where he had started his banking career at the defunct Commerce Union Bank.

After cleaning up First American's balance sheet and instituting a series of risk management systems, Mr. Bottorff and his management team began to build a new company.

"They say you can't come back home, but we did, and it's great," Mr. Bottorff said in a recent interview at First American's headquarters.

One measure is the share price in the $45-to-$50 range, up from about $7 when Mr. Bottorff arrived.

First American has become a takeover candidate, according to analysts. Its strong fee-income-generating businesses and its market share-No. 1 in Nashville and second in Tennessee-are seen as especially attractive.

"Bottorff and Polley have sold every bank they've ever run at tremendous value to shareholders," said Christopher T. Kelley, an analyst at Morgan Keegan & Co. "That is why so many people are huge fans, because they made a ton of money investing with them. There is a lot of speculation they will sell this bank."

Mr. Bottorff is well aware of that market sentiment and said he would not be averse to a favorable sale. But he is busy raising the value of First American, not advertising for buyers.

"A company this size can't completely control its destiny," he said. "But there are things you can do to influence your destiny."

First on the list is maximizing the use of a data warehouse the company calls Vision. This resource enables First American not only to tailor product offerings and pricing to individual customers, but to deliver the information needed to streamline and reorganize its entire distribution network, Mr. Bottorff said.

The company is wrapping up an analysis that will guide a reshaping of its branch network, thanks largely to Vision-generated information.

"The institution that can figure out how to match demand and capacity ... to produce the lowest-cost distribution system is a company that is going to be very successful," Mr. Bottorff said. "We think we've got that information."

Vision is also behind an innovative retail offering that First American is hoping will generate more money from less-profitable customers. The program, Select Rewards, seeks to influence customer behavior by providing bonus points redeemable for trips, merchandise, and restaurant meals according to the type and amount of business customers do with the bank.

A consolidated monthly statement gives detailed information about each of a customer's accounts, and a new feature will soon add a personalized message page that recommends additional bank products.

The company also used Vision recently to eliminate losses in its senior citizen checking accounts. Using what it learned, the company changed its price structure; many unprofitable customers became profitable, and some reacted by closing their accounts.

"We eliminated the loss entirely," said M. Terry Turner, president of First American's General Bank.

The Vision system is important for long-term growth, said Mr. Polley. "It helps us focus. A lot of banks talk about their data warehouses, but this $10 billion bank has got it down."

Joseph Roberto, an analyst with Keefe, Bruyette & Woods Inc., agreed that First American is "at the leading edge in knowing who their customers are and their profitability base."

Also counted on to drive double-digit growth in the future is First American Enterprises Inc., a subsidiary formed to boost fee income.

Last year it acquired Invest Financial Corp., a big third-party marketer of investment products, and a 49% interest in SSI Group Inc., a health-care payment processing company. The acquisitions helped increase First American's fee-based revenues from 27% of the total at midyear 1996 to its current 40%.

Invest, which ranks third in its field, added $100 million of annual revenue immediately and is on target to grow more than 20% a year, said Robert A. McCabe Jr., president of First American Enterprises.

The company is looking to Invest, which has 1,200 representatives in 1,000 offices in 43 states, to provide almost a third of First American's earnings growth, said Mr. McCabe.

To get there, he is looking for more acquisitions, adding brokers, raising sales goals, and planning to open more Invest offices around the country.

SSI is also expected to contribute, if less significantly. Mr. McCabe wants the $20 million company to grow through acquisitions, but he said its primary goal is to take advantage of a high price-earnings ratio and help drive up the parent company's market capitalization.

First American's trust, brokerage, and insurance businesses are also expanding, with revenues rising at double-digit rates, said Mr. McCabe.

With all this in place, First American plans to start making some bank acquisitions, said Mr. Bottorff.

"All of this becomes a strength that allows us to grow geographically," he said. "This company will expand."

Strengthening its presence in Tennessee is first on the agenda. The company has a "less defined" plan for expansion outside the state, said Mr. Bottorff.

He and other officials stressed that their goals are not only driven by size and market share.

A goal in the three-year plan adopted in July is to become one of the 16 top-performing U.S. banking companies. The management team identified 21 other measures of soundness and profitability, with goals for 2000 including:

Return on equity of 19.5% (up from the current 16.18%).

Return on assets of 1.60% (1.40%).

Efficiency ratio below 50% (56.05%).

Earnings per share growth in double digits (maintaining the current 15%).

"This company has to be one of the Sweet 16 or it won't be able to remain independent," said Mr. Bottorff. "We have to be exceptional." u

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