TN Commerce Bank fails; Louisville company to buy assets
Fallout from the recession and bad, speculative loans finally crumpled Tennessee Commerce Bank in Franklin, a $1.2 billion bank closed Friday by regulators in Tennessee?s first bank failure in a decade.
Republic Bancorp Inc. of Louisville, Ky., will buy all of the deposits and some loans of Tennessee Commerce Bank at a steep discount to cushion against what could be additional problem loans lingering on the failed bank?s books.
The bank will reopen Monday with a 125-person transition team on site representing investigators, attorneys and a Republic Bank management crew expected to arrive over the weekend.
It represents the first bank branch in Tennessee for Republic, which has $3.4 billion in assets and operations in four other states. Deposits are protected up to legal limits by the Federal Deposit Insurance Corp., officials said. Stockholders shouldn?t expect to be made whole financially.
Other losers include taxpayers, who shouldn?t expect to get back the $30 million that Tennessee Commerce got under the US Treasury?s Troubled Asset Relief Program.
But Steve Trager, Republic?s CEO, called expanding into the Nashville market a natural for his bank, which probably will add other locations here.
?We?re here to grow,? Trager said.
?We have a good history of expansion and associating ourselves with quality people in local markets and serving customers in a responsive and accountable way.?
Closing a bank is a last resort for regulators.
Kathryn Edge, a banking attorney at law firm Miller Martin in Nashville, said, ?At least this one was acquired by a strong company, and that?s good for consumers.?
Peyton Green, a bank analyst with Sterne Agee in Nashville, added: ?You?re going to see an occasional failure in states where the economy is better than the national average. It could be related to an individual bank?s business model, which could cause problems.?