Friday, May 28, 2010

Tennessee Commerce Bancorp wants to raise $50M in stock sale

Tennessee Commerce Bancorp said Thursday it plans to raise up to $50 million in a stock sale, hopeful that an improving market for bank stocks will help it raise the money.
The Franklin-based bank, which has nearly $1.4 billion in assets and focuses on business loans, said it could use the money to repay the $30 million it owes the federal government from the bank bailout to raise capital, pay down debt or for general corporate purposes.

"The market for banks to raise capital has been pretty good lately,'' said Martin Zorn, chief administrative officer.

The bank stock has improved from a low of about $3.25 a share in December to $8.95 per share on the Nasdaq Thursday. But it is still down nearly half from its price two years ago, as it has continued to struggle with bad loans.

Separately, it also has been battling a lawsuit by the U.S. Department of Labor over its firing two years ago of Chief Financial Officer George Fort.

Pressure builds

Revealing yet more pressure that the bank is under, Tennessee Commerce said in a regulatory filing on Thursday that it expects federal regulators to require higher capital levels for the bank, even though it remains "well capitalized" by current standards.

Zorn said regulators weren't forcing the bank to raise $50 million, but the bank could use the funds for such a purpose. The bank also said federal and state regulators are considering an informal enforcement action called a memorandum of understanding, which lays out a plan for how Tennessee Commerce Bank would be expected to operate going forward.

According to American Banker magazine, more than one-quarter of all the banks in the country are likely operating under such agreements, a byproduct of last year's toxic financial fallout.

MidSouth Bank in Murfreesboro is among those locally with such a regulatory document. Pinnacle Financial Partners also said it has an agreement with regulators to maintain higher than normally required levels of capital.

Contact banking reporter Naomi Snyder at 615-259-8284 or

Short Sale NegotiatorsTennessee Commerce Bancorp makes a profit, despite bad loans