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VOL. 131 | NO. 53 | Tuesday, March 15, 2016

Tri-State Bank Prepares For Big Year

By Andy Meek

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The way longtime Memphis banking executive Christine Munson sees it, a small community bank has to carve out a clearly defined identity for itself - something that sets it apart from the myriad competitors of similar size, with comparable products and rates - if it wants to be successful.

This year is shaping up to be one of the most significant in the 70-year history of Tri-State Bank, which this month tapped a new CEO on the heels of a flurry of other major announcements.

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That’s what she and the rest of the leadership team at Tri-State Bank, one of only a few black-owned banks in the country, are in the process of identifying.

For one thing, the bank - which has seen a flurry of announcements in recent weeks, including a capital raise, the sale of its headquarters and a sale of preferred stock to First Tennessee - wants to reposition itself, to be seen as more than a minority-owned institution. And Munson herself, who retired from First Tennessee Bank in 2012, is one outgrowth of that shift.

She was tapped this month as Tri-State’s new CEO, the first time the bank has had a white chief executive.

“We remain one of the only minority-owned banks in the country, but you can’t be just that,” said Munson, formerly an executive vice president and head of corporate banking for First Tennessee and its parent First Horizon National Corp. “I don’t think any bank can afford to be one-dimensional. We want to reach out to other minority groups and to people who feel passionately about this bank. People who feel passionately about their institution naturally deliver a more interesting story to convince other people to want to bank with you.”

Her arrival comes at a time when the bank, which celebrates its 70th anniversary this year, is already set up to undergo what bank executives say looks to be one of, if not the most, significant 12-month period in its history.

Reversing some recent trends is one immediate task. The 45-employee bank has been shrinking, for example, as its assets dwindled from $124 million at the end of 2014 to about $120 million as of Sept. 30 and around $111 million at the end of 2015.

Board chairman Lucy Shaw said a focus on returning to sustained profitability - Tri-State’s quarterly results have frequently been in the red in recent years - is another mission-critical task. Meanwhile, that comes as the bank is looking to transform just about every core piece of its operation, including things like its technology and marketing.

“This bank spent a lot of time over the last two to three years, as many banks have, fixing a lot of things,” Munson said. “There were some technology shortfalls, certainly some problems in the loan portfolio. It’s focused on cleanup, on defensive actions, and where we are now is a bank ready to design the way they’re going to look and act in the future. That’s where I see my role, to design a plan for the bank going forward.

“That means determining where our main target markets are and evaluating our products to make sure we have the ones we need. And to make sure our customer focus is sharp enough. Those things then translate into a larger customer base, and eventually that all translates into profitability.”

The new direction got under way at year’s end, when Tri-State announced that as of Dec. 31 it had secured almost $5 million in new capital, an investment fueled in part by a deal between it and First Tennessee Bank.

First Tennessee bought 88,000 shares of Tri-State preferred stock, which was valued at $1.5 million at the end of the year. Among the results of that investment, which doesn’t affect Tri-State’s ownership, it let Tri-State receive an investment match of the same amount from the U.S. Treasury’s Community Development Financial Institution Fund.

Tri-State also announced it’s selling its Downtown headquarters building at 180 S. Main St. to Belz Investco GP in a $3 million deal. Tri-State will lease the building from Belz for up to 18 months as it relocates its headquarters and main branch operations.

The bank’s roots in the community are deep. Dr. J.E. Walker and his son A. Maceo Walker founded Tri-State after World War II. The elder Walker had also founded Universal Life Insurance Co. in 1923, which along with Tri-State was a pillar of black finance and capital in Memphis.

Tri-State’s leadership says the new moves best position it to preserve that legacy by setting the bank up for a strong future. Munson said she and Tri-State president Jesse Turner will be working together on marketing, while Turner will be focused on raising capital and “calling on customers.”

“I think that’s why this is such a good combination,” Munson said. “We’ve spent time talking about who’s going to do what, and while we both have a lot of contacts in the market, Jesse clearly has that institutional knowledge, that history, that cultural appreciation.”

He and the rest of the leadership team, she said, will be putting those and other skills to use as it becomes more aggressive in relationship-building and customer acquisition.

“We are redesigning our business model, and we want to be here for everybody,” Shaw says. “In the past, we were niche by color, and we really want to shed that as our identity - without leaving our past behind. We also want to be known as a bank of choice, because we provide services, products, that are competitive and well-thought out.”

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