For immediate release

The Federal Reserve Board today announced its approval of the application of First American Corporation, Nashville, Tennessee, to acquire The Middle Tennessee Bank, Columbia, Tennessee. Attached is the Board's Order relating to this action.

First American Corporation Nashville, Tennessee Order Approving the Acquisition of a Bank

First American Corporation ("First American"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act to acquire The Middle Tennessee Bank, Columbia, Tennessee ("Bank").1 Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (63 Federal Register 33,932 (1998)). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act. First American is the second largest commercial banking organization in Tennessee, controlling approximately $8.2 billion in deposits, representing 14.2 percent of total deposits in commercial banking organizations in Tennessee ("state deposits").2 Bank is the 38th largest commercial banking organization in Tennessee, controlling approximately $196.8 million in deposits, representing less than 1 percent of state deposits. On consummation of the proposal, First American would remain the second largest commercial banking organization in Tennessee, controlling deposits of $8.4 billion, representing 14.5 percent of state deposits. Competitive Considerations Section 3 of the BHC Act prohibits the Board from approving a proposal that would result in a monopoly, or that may substantially lessen competition in any relevant banking market, if the anticompetitive effects of the proposal are not clearly outweighed in the public interest by the probable effect of the proposal in meeting the convenience and needs of the community to be served.3 First American and Bank compete in the Maury County, Tennessee, banking market, which is an area approximated by Maury County, Tennessee.4 Consummation of the proposal would exceed the Department of Justice Merger Guidelines ("DOJ Guidelines") in the Maury County banking market.5 First American is the fifth largest commercial banking organization in the market, controlling $43.5 million in deposits, representing 5.3 percent of total deposits in commercial banking organizations in the market ("market deposits").6 Bank is the second largest commercial banking organization in the market, controlling $196.8 million in deposits, representing 23.9 percent of market deposits. On consummation of the proposal, First American would become the second largest commercial banking organization in the market, controlling $240.3 million in deposits, representing 29.2 percent of market deposits. The HHI would increase by 252 points to 2727. Several characteristics of the Maury County banking market mitigate the proposal's potential anticompetitive effects. Six competitors, including First American, would remain in the market after consummation of the proposal. Several of the competitors are large regional institutions, and three of them would each control more than 20 percent of market deposits after consummation of the proposal. The Maury County banking market also is attractive for entry. Data for 1997 show that deposits per banking office and population per banking office in the market are greater than the averages for other non-MSA counties in Tennessee. In addition, population growth, household income, and per capita income in Maury County all substantially exceed the average for rural markets in Tennessee.7 Since 1992, one bank has entered the Maury County banking market de novo and four bank holding companies have entered the market by acquisition, including two bank holding companies that entered the market by acquiring banks with a significant portion of their deposits in the market. Tennessee, moreover, permits unrestricted intrastate branching.8 The Department of Justice reviewed the proposal and advised the Board that consummation of the proposal would not likely have any significantly adverse competitive effects in the Maury County banking market or any other relevant banking market. In addition, neither the Federal Deposit Insurance Corporation, which is the primary federal supervisor for Bank, nor the Office of the Comptroller of the Currency, which is the primary federal supervisor for First American National Bank, has objected to the related bank merger. Based on all the facts of record, and for the reasons discussed above, the Board concludes that consummation of the proposal is not likely to result in any significantly adverse effects on competition or on the concentration of banking resources in the Maury County banking market or any other relevant banking market. Other Considerations The BHC Act requires the Board, in acting on an application, to consider the financial and managerial resources and future prospects of the companies and banks involved, the convenience and needs of the communities to be served, and certain supervisory factors. The Board has reviewed these factors in light of all the facts of record, including supervisory reports of examination assessing the financial and managerial resources of the organizations. Based on all the facts of record, the Board concludes that the financial and managerial resources and the future prospects of First American, its subsidiary banks, and Bank are consistent with approval, as are the other supervisory factors the Board must consider under section 3 of the BHC Act. In addition, considerations related to the convenience and needs of the communities to be served, including the records of performance of the institutions under the Community Reinvestment Act, are consistent with approval of the proposal. Conclusion Based on the foregoing, and in light of all the facts of record, the Board has determined that the application should be, and hereby is, approved. The Board's approval is specifically conditioned on compliance by First American with all the commitments made in connection with the application. For the purposes of this action, the commitments and conditions relied on by the Board in reaching its decision are deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law. The transaction shall not be consummated before the fifteenth calendar day following the effective date of this order, or later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Reserve Bank of Atlanta, acting pursuant to delegated authority.

By order of the Board of Governors,9 effective August 17, 1998. (signed) Robert deV. Frierson Robert deV. Frierson Associate Secretary of the Board

Footnotes 1 First American proposes to acquire Bank and merge it with and into First American's subsidiary bank, First American National Bank, Nashville, Tennessee. 2 State deposit data are as of June 30, 1997, and reflect acquisitions through July 6, 1998. First American also controls a bank in Mississippi and a savings association in Virginia. 3 12 U.S.C. &3167; 1842(c)(1). 4 First American contends that the relevant banking market in this case should be the broader market defined to include Maury County and the greater Nashville, Tennessee, area. Based on an analysis of employment opportunities, commuting data, shopping patterns, loan and deposit data, interviews with local bankers, and other facts of record, the Board concludes that the appropriate market for analyzing the competitive effects of the proposal is the Maury County banking market. See St. Joseph Valley Bank, 68 Federal Reserve Bulletin 673, 674 (1982); see also United States v. Philadelphia Nat'l Bank, 374 U.S. 321, 374 (1963); United States v. Phillipsburg Nat'l Bank, 399 U.S. 350 (1969). 5 Under the revised DOJ Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger Herfindahl-Hirschman Index ("HHI") exceeds 1800 is considered highly concentrated. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Department of Justice has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial entities. 6 Market share data are as of June 30, 1997, and reflect acquisitions through July 6, 1998. No savings associations operate in the Maury County banking market. 7 Rand McNally Commercial Atlas (1997). 8 See Tenn. Code Ann. &3167; 45-2-614 (1997). 9 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, Ferguson, and Gramlich.

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1998 Orders on banking applications