The 12 branches of Mountain National Bank of Sevierville reopened for business at the start of this week under the banner of First Tennessee Bank.
The transition was a result of the Office of the Comptroller of the Currency closing Mountain National Bank Friday, June 7, and naming the Federal Deposit Insurance Corp. as receiver. To protect Mountain National’s depositors, the FDIC entered into what’s called a purchase and assumption agreement with First Tennessee that includes assuming all deposits of Mountain National.
In addition to assuming all of the deposits of the failed bank, First Tennessee Bank also agreed to purchase essentially all of the failed bank’s assets. The Sevierville bank’s systems will be integrated into First Tennessee’s in the coming months, and customers will be mailed letters this week informing them about the purchase.
In a statement about the transaction, Bryan Jordan – the chairman, president and CEO of First Tennessee parent company First Horizon National Corp. – said, “With the acquisition of Mountain National, we’re proud to expand in Tennessee, where we’ve earned one of the highest customer retention rates of any bank in the country. We’ll maintain our commitment to our communities and long-term profitability through outstanding employees supported by market-leading technology. We look forward to welcoming our new customers and new employees to First Tennessee.”
As of March 31, Mountain National Bank had about $437.3 million in assets and $373.4 million in deposits. The FDIC estimates the cost to its deposit insurance fund from the bank closure will be $33.5 million.
The Office of the Comptroller of the Currency said it closed the bank “after finding that the bank had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices.” Additionally, the OCC found that the bank had incurred losses that depleted its capital, that the bank was “critically undercapitalized,” and that the agency saw no “reasonable prospect” for the bank to become adequately capitalized.
Mountain National Bank is the 16th FDIC-insured institution to fail in the U.S. this year, and the first in Tennessee.