Merger facts
FirstBank Headquarters: Lexington, Tenn. Established: 1906 Owner: Jim Ayers since 1984 Assets: $2.5 billion Staff*: 765 employees Offices: 48 bank offices, including two in Hamilton County, and 15 mortgage only offices Northwest Georgia Bank Headquarters: Ringgold, Ga. Established: 1904 Owners: Fewer than 100 shareholders Assets: $292 million Staff: 103 employees Offices: Nine offices Source: Federal Deposit Insurance Corp., company reports
One of Tennessee's fastest- growing banks plans this summer to acquire the biggest bank in Northwest Georgia -- the fourth Chattanooga-area bank to announce plans to merge with a larger regional bank this year.
FirstBank, the wholly owned subsidiary of First South Bancorp Inc., and the third-largest Tennessee-based bank, signed an agreement Friday to acquire Northwest Georgia Bank.
"We're looking forward to increasing our presence in the Chattanooga and North Georgia areas, which have shown tremendous gains in recent years," said Chris Holmes, the CEO for FirstBank. "This will give us more than $350 million in assets in the Chattanooga area and, with the additional capital we will bring to Northwest Georgia Bank, we'll be able to be more aggressive in growing the bank in Chattanooga."
Terms of the pending acquisition, which is expected to close in the third quarter, were not disclosed since both of the banks are privately held.
Northwest Georgia Bank, which began in Ringgold, Ga., in 1904, operates nine offices in Chattanooga and Northwest Georgia. Despite losses during the Great Recession that have forced the bank to operate under an FDIC consent order, Northwest Georgia has remained 7th biggest bank in metro Chattanooga with assets of $298 million.
File photo / FirstBank's downtown Chattanooga office at 4th and Chestnut streets is one of two local branches.Steve Rownd, the president of Northwest Georgia Bank who was hired two years ago to help upgrade or sell the bank, called the merger with FirstBank "a perfect fit for our customers."
"They understand that our customers expect to have a true relationship with their bank and expect great service," he said. "This is exactly what they will get with FirstBank."
Rownd joined Northwest Georgia Bank following the retirement of former longtime bank president Wesley Smith. He previously headed GreenBank in Greenville, Tenn., and helped merge that bank with Florida-based Capital Bank in 2011.
FirstBank, based in Lexington, Tenn., was bought in 1984 by nursing home developer and millionaire Jim Ayers, who has grown over the past three decades from $14 million to $2.5 billion is assets through a series of eight acquisitions.
FirstBank opened a mortgage office in Chattanooga a decade ago and later added two bank branches in Chattanooga to gain more than $60 million in local assets. Holmes said he began talking with officials at Northwest Georgia Bank last year about a possible purchase and inked a final deal this week.
"In meeting with the management and staff today, we feel even better that the deal will be good for both of us," Holmes said Friday.
The merger of the two state-chartered banks is expected to be approved and completed in about three months. Until then, each bank will operate separately. Once combined, the banks will operate under the FirstBank flag with expanded lending limits and cash management services due to the stronger capital position of FirstBank. Holmes said the back-office software and support systems of Northwest Georgia Bank will likely combine next year with those of FirstBank.
Northwest Georgia Bank is the fourth independent bank based in metropolitan Chattanooga to announce plans to merge this year with a larger regional bank.
Cornerstone Bank announced plans in December to combine this year with the parent company of SmartBank in Knoxville. In March, FSG announced a deal to combine with Atlantic Capital Bancshares in Atlanta. And last month, CapitalMark Bank and Trust in Chattanooga agreed to sell to Pinnacle Financial Partners in Nashville.
Holmes said increased regulatory requirements under the rules of the Dodd-Frank banking reform law adopted in 2010 have encouraged many smaller banks to combine with bigger banks to lessen the share of expenses allocated for regulatory compliance.
"But I think in Chattanooga what you also have seen with all of this merger activity is the strong desire by many regional banks to enter or expand their presence in Chattanooga, which is seen as a strong market," Holmes said. "We're eager to not only consolidate with Northwest Georgia but to expand our lending and banking activity in this growing market."
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.