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Bank deal set to go despite loan woes
(Chattanooga Times (Free Press, TN) (KRT) Via Thomson Dialog NewsEdge) Dec. 29--First Volunteer Corp., the parent company of First Volunteer Bank, is moving ahead with plans to buy Benton Banking Co in Benton, Tenn., in a deal expected to close Monday, according to a release issued Friday by First Volunteer officials.
Shareholders of Benton Bancshares approved the previously announced sale of Benton Banking Co. to First Volunteer Corp. at a meeting Thursday.
Troubled loans were at the heart of Benton Bancshares' decision to sell Benton Banking Co. to First Volunteer Corp., said Patti Steele, First Volunteer Bank president and CEO. She said the bank has a solid future as part of First Volunteer.
"The bank that we bought is solid -- it has $95 million in deposits in Polk County," Ms. Steele said. "It is a very solid bank and it is a good investment for First Volunteer Corp."
At the shareholders' meeting Thursday, some who attended were reported to be upset by the loss of the value of their stock in the wake of what shareholder Steve Morgan said was $18.7 million in troubled loans.
Mr. Morgan said his losses totaled about $50,000 in the value of his stock.
"The very first adult present I got when I was 10 years old was $10,000 in stock at Benton Bank," Mr. Morgan said. "That's how important it was for the people to pass that down to their children."
He said he was raised in a community where the people at the bank were "the people that when you get to be a teenager, they loan you money for a car. When you got married, they loaned you money for a house, and when you died, they loaned you the money to put your kinfolk in the ground."
Ms. Steele said the deal by her company acquiring the Benton bank could open up "an opportunity for recovery of some of these troubled loans."
Founded in 1906, Benton Banking Co. is the largest bank in Polk County and operates six offices, including branches in Charleston, Delano and Ocoee.
In 1983, Benton Bancshares was created as a holding company for the bank and in 1991 the bank purchased the T.B. Isbell Insurance Agency which had been established in Riceville, Tenn., in 1929. In 2005, T.B. Isbell acquired Partain Insurance Agency. Also, in 2006, Benton Banking Mortgage Co. was founded.
Among the 116 shareholders, 93 percent reside in Polk County, according to the bank.
Almost 96 percent of Benton Banking Co.'s shareholders voted to approve the sale during Thursday's meeting, said Joe Waters, vice president of Benton Banking Co. He said the last few weeks have been tough for him and the bank's employees.
To the shareholders who were unhappy with the sale, Mr. Waters said he told them, "We looked at several options, and this deal with First Volunteer going forward gives us the best opportunity that we have to maximize their shareholder value."
The sale will only affect shareholders, and will have no impact on the bank's depositors.
Since Benton Bancshares will no longer own the bank, it will be a corporation that will be charged with collecting the troubled loans, the bond claims and tax refunds, Mr. Waters.
As of Sept. 30, Benton Banking reported equity of just over $11 million and assets of nearly $108 million, according to the bank's financial statement filed with the Federal Deposit Insurance Corp.
Through the first nine months of 2007, the bank reported earning $741,000, down 12.2 percent from the same period a year ago.
Staff Writer Dave Flessner contributed to this report.
E-mail Amy O. Williams at awilliams@timesfreepress.com
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Copyright (c) 2007, Chattanooga Times/Free Press, Tenn.
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