Mountain National gone forever; First Tennessee new owner, with banks to open Monday

Feds took over at closing on Friday after bank was in trouble for months
Jun. 07, 2013 @ 08:27 PM

After struggling for years to reduce problem loans and increase its capital, Mountain National Bank shut its doors for the last time under that name Friday.

Federal and state personnel entered its main office on Main Street and 11 other branch offices to take over the bank. Agents with the Federal Deposit Insurance Corp. will be taking inventory at the banks over the weekend, and the banks will open for business Monday as part of First Tennessee Bank, National Association.

In the meantime, officials stressed that customers can still access their accounts, use ATMs, write checks, receive direct deposits and make loan payments as usual. Their funds aren’t going anywhere — only the name of the bank has changed.

“Their money is safe,” FDIC ombudsman Adela G. Coronado said Friday outside the main office on Dolly Parton Parkway. “They can continue banking as normal.”

Customers with questions can call the FDIC toll-free 800-356-1848. The number will be operated Saturday from 9 a.m. until 6 p.m., Sunday from noon to 6 p.m., Monday from 8 a.m. until 8 p.m. and thereafter from 9 a.m. until 5 p.m. They can also get information at fdic.gov/bank/individual/failed/mountain-tn.html.

Coronado stressed that no one from the FDIC or from First Tennessee Bank will call MNB customers to ask about their account information. Anyone making calls like that to customers is most likely trying to swindle them, she said, and people receiving calls like that should call the toll-free FDIC number to report the incident.

It will likely be several months before the bank issues new ATM cards, checkbooks and similar materials, she said.

The news doesn’t appear as good for investors. All shares were owned by Mountain National Bancshares, which was not included in the closing/transfer of the bank.

The Office of the Comptroller of the Currency ordered the bank closed and into FDIC receivership as of Friday, but had arranged the sale ahead of time. Mountain National officers, however, apparently did not get word until Friday when the officials arrived at the doors of the three-story building on Main Street as the bank was getting set to close for the week. The failure is expected to cost the FDIC’s deposit insurance fund about $33.5 million. That's not tax money; the FDIC is funded by insurance premiums paid by member banks.

Memphis-based First Tennessee Bank, according to an FDIC release, agreed to purchase “essentially all of the failed bank’s assets.”

Pam Fansler, president of the East Tennessee district for the bank, was at the MNB main office Friday to talk to employees. First Tennessee already had a strong presence in the area, she noted, but until now it didn’t have any locations in Sevier County.

“We’re really excited to welcome the employees of Mountain National and the customers to First Tennessee, and we’re looking forward to doing more business in Sevier County,” she said.

They will be talking to Mountain National employees and analyzing the needs of their customers before making any decisions about whether to cut staff or close branches. With First Tennessee already having some branches nearby, she said she couldn’t rule out closing some MNB sites.

"We obviously have some overlap in some areas and we’ll be evaluating that and taking a look at it,” she said.

MNB had been in trouble for some time. The Office of the Comptroller of the Currency gave the bank a notice in 2009 that it was “troubled.” In October 2011, bank officials accepted an OCC consent order calling for it to reduce its problem loans, come up with and follow a three-year strategic plan and reduce its commercial real estate loans.

The bank had been considered “critically undercapitalized,” meaning its capital was less than 2 percent of its liabilities. Federal officials gave it until June of last year to bring the number above that threshold; the bank released a statement that month saying it had miscalculated and the number of was 2.1 percent. They later said the number had reached 2.76 percent.

Also last year, longtime president and CEO Dwight Grizzell resigned from the bank and Michael Brown took over that position. Grizzell later sued the bank, claiming it had illegally coerced him into turning over an $800,000 retirement fund. That lawsuit remains active in federal court.

As of March 31, 2013, MNB had about $437.3 million in total assets and $373.4 million in total deposits, according to the FDIC.

n jfarrell@themountainpress.com