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VOL. 131 | NO. 217 | Monday, October 31, 2016

First Tennessee Capital Markets Unit Acquires Houston Firm

By Andy Meek

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First Tennessee Bank’s Memphis-based capital markets business, FTN Financial, is acquiring a Houston company that specializes in Small Business Administration loans.

The company is acquiring Houston-based Coastal Securities Inc., a national leader in the trading, securitization and analysis of SBA loans.

FTN Financial president Mike Kisber said the acquisition will, among other things, help establish an additional major product sector for FTN Financial thanks to Coastal’s government-guaranteed loan products. Combined with FTN’s existing SBA trading activities, the acquisition will help increase revenue and product diversification.

He added that Coastal provides “important market liquidity” to facilitate government-guaranteed lending activities. The acquisition is an all cash transaction with a purchase price of about $160 million, to be determined based on the value of acquired net assets at the time the deal closes.

FTN Financial chief operating officer and CFO Mike Waddell told The Daily News acquisitions like this aren’t necessarily a rarity at the firm. There have been several over the years, he said, that were pursued to “capitalize on attractive opportunities” to grow the company’s business and expand its product offerings.

“When looking at potential transactions, the principal focus is on strategic and cultural fit,” Waddell said. “Coastal’s deep market penetration and expertise in government-guaranteed loan products fits nicely into FTN Financial, enabling us to substantially increase our presence in this sector.”

The combination with Coastal has already been approved by Coastal’s board as well as the board of First Tennessee’s parent company First Horizon National Corp. It’s still subject to regulatory approval, a yes vote from Coastal shareholders and other customary closing conditions, according to FTN.

From Coastal’s point of view, meanwhile, the deal proved too “compelling” to pass up, Coastal chairman Chris LaPorte said in a statement.

“The combination of our deep expertise in government-guaranteed loan products with FTN Financial’s extensive distribution platform, liquidity and capital presents a compelling opportunity for our customers, employees and shareholders,” LaPorte said.

FTN Financial is a leader in fixed-income sales, trading and strategies for institutional customers in the U.S. and abroad. It does business with about half of all U.S. banks with portfolios of more than $100 million.

The company provides investment services and balance sheet management solutions, has an average daily trading volume of more than $5 billion and does business with more than 5,000 institutional customers.

It also provides investment management for financial institutions and cash management for public funds. And its in-house economists are highly respected in the industry as well as frequent speakers at seminars and conferences.

FTN Financial chief economist Chris Low regularly commentates for outlets like Bloomberg and CNBC. Others, like FTN executive vice president and manager Jim Vogel – who manages fixed-income strategy and commentary – are likewise quoted frequently in the business press.

The company has offices around the country, from coast to coast including in Memphis.

PROPERTY SALES 56 56 9,658
MORTGAGES 49 49 10,665
BUILDING PERMITS 212 212 21,170
BANKRUPTCIES 49 49 6,157