published Thursday, December 6th, 2012

Tennessee's FirstBank repays TARP loan

One of Tennessee's biggest independent banks has repaid its $50 million loan provided by Uncle Sam during the worst of the recent recession.

FirstBank, the Lexington, Tenn.,-based bank that operates 47 offices across Tennessee, announced Wednesday it has fully repaid money the bank received through the 2008 Troubled Asset Relief Program (TARP). FirstBank had one of the biggest outstanding balances of any of the 24 Tennessee banks that received TARP loans three years ago.

The repayment, including a 25 percent installment already paid by FirstBank, came solely through bank earnings and not through any additional stock issue or asset sale. Chris Holmes, FirstBank's president, said he was "especially proud" that the bank was able to do so through its own profits.

"The fact that we were able to repay these funds out of our earnings reflects FirstBank's core financial strength," Holmes said in his announcement of the repayment. "We had a great year in 2011, and 2012 will be our best year in the 106-year history of the bank. And we are excited about our momentum entering 2013."

FirstBank, which is owned by James W. Ayers of Lexington, Tenn., lost $24 million in 2009 and 2010 before bouncing back from the recession, according to bank filings with the Federal Deposit Insurance Corp. Last year, FirstBank earned $19.9 million. In the first nine months of this year, FirstBank profits rose nearly 24 percent over last year to total more than $19.3 million.

FirstBank received $50 million through TARP's Capital Purchase Program for bank in July 2009, through its holding company, FirstSouth Bancorp Inc. Although FirstBank officials say they were hurt by the recession, the bank continued to meet federal regulatory standards for being a well-capitalized bank.

With nearly $1.8 billion of deposits in Tennessee, FirstBank is the state's 8th biggest bank and the third biggest bank based in Tennessee, behind only First Tennessee Bank based in Memphis and Pinnacle National Bank in Nashville.

FirstBank expanded into Chattanooga in 20007 and has more than $44 million in deposits at its two local offices, according to FDIC filings.

Among the two dozen banks in Tennessee that received TARP loans, only 10 have not fully repaid their federal loans, according to a recent analysis by ProPublica, a public interest journalism group.

The biggest banks in Tennessee with outstanding federal loans are trying to raise additional capital to repay their debt. Those include:

• First Security Group in Chattanooga with an outstanding balance of $31.6 million

• Tennessee Commerce Bancorp in Franklin, Tenn., with an outstanding balance of $26.8 million

• Community First Inc., in Columbia, Tenn., with an outstanding balance of $15.9 million.

about Dave Flessner...

Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...

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