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FirstBank CEO Previews the $6 Billion Lender’s Next Acquisition

JULY 25, 2019

FirstBank CEO previews the $6 billion lender’s next acquisition 

By Meg Garner  – Reporter, Nashville Business Journal

Jul 24, 2019, 3:37pm EDT

FirstBank CEO Chris Holmes is pulling no punches: The veteran Nashville bank chief is ready to buy again.

On Tuesday, Holmes reupped the $6 billion bank’s commitment to buying additional banks, suggesting at least one deal could come by the end of the year.

“High-quality community banks — which we generally define as banks with high-quality deposit franchises, good credit quality and an absence of wholesale loans and deposits — have a good recognition of their value and they are able to realize it,” Holmes told analysts during the bank’s second-quarter earnings call. “Low-quality community banks, which are more plentiful, think that they should be valued like the high-quality peers and are finding that they can’t sell the bank for what they think they’re worth. We’re actively speaking to a few of the aforementioned high-quality banks and hope that we can reach an agreement with one or more of those in the second half of the year.”

Since becoming a public company, FirstBank (NYSE: FBK) has become an aggressive acquirer, particularly in the eastern part of the state. Holmes’ comments come less than a year after the bank paid $38 million for 14 branches, many of which were in Knoxville and Chattanooga, from Atlanta-based Atlantic Capital Bancshares (Nasdaq: ACBI). In 2017, FirstBank spent $284.2 million to snap up two banks: Knoxville’s Clayton Bank and Trust and Tullahoma’s American City Bank.

During the call, Holmes reiterated the characteristics of the type of bank FirstBank is interested in buying. Those characteristics include aligning with the bank’s existing footprint so FirstBank can bulk up its presence in key markets, and having a strong mix of client-based deposits and loans, which tend to have a greater long-term impact on a bank’s bottom line than deals not done in-house. To be sure, Holmes also mentioned a willingness to look at deals in Birmingham and Atlanta, two markets where the bank has no presence.

Gaining access to a broader deposit base would likely be valuable to FirstBank, with stable, low-cost deposits becoming increasingly rare amid Nashville’s boom. Originally headquartered in Lexington, Tennessee, FirstBank is known for using a strong base of rural deposits to fuel its continued growth in urban loans.

Outside of buying its way into new markets, FirstBank executives also said they hope to capitalize on the market disruption created by BB&T and SunTrust Corp.’s recent merger.

“We see opportunities there, and we see opportunities for frankly some fairly large accounts that don’t move very often, like maybe once in my career,” CFO James Gordon told analysts. “We’re trying to zero in on some of those, and we’re hopeful that we’ll be able to. We have gotten a shot at a few of them. We have won a few of those and we want to want to continue to focus on that.”

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