First Tennessee Sells Affinity and Co-branded Programs to MBNA

Business Wire, Nov 30, 2000

Business Editors

MEMPHIS, Tenn.--(BUSINESS WIRE)--Nov. 30, 2000

First Tennessee Bank N.A., lead bank of First Tennessee National Corp. (NYSE:FTN), and MBNA Corporation (NYSE:KRB) announced today that they have entered into a definitive agreement for MBNA to acquire First Tennessee's affinity, co-branded, and certain single relationship credit card accounts and assets, subject to necessary approvals. First Tennessee will retain its $270 million FTN bank customer credit card portfolio and continue to offer credit card products and services to all First Tennessee and First Horizon retail, corporate and agent bank customers.

The portfolio to be acquired by MBNA totaled as of Sept. 30, 2000, approximately 222,000 accounts with receivables of $286 million. First Tennessee will continue to service the purchased accounts through an interim processing period.

The transaction is estimated to result in a total pre-tax gain, less occupancy, severance and other similar expenses, of approximately $50 million, of which approximately $42 million is expected to occur in the fourth quarter of 2000 with the remainder occurring in the first quarter of 2001.

As a result of the transaction, approximately 100 positions will be eliminated from First Tennessee's credit card group as of April 30, 2001. In this five-month period it is anticipated that many of these employees will be offered other positions within First Tennessee.

In an earlier release, First Tennessee said that, in an effort to enhance growth and business mix, some non-core businesses would be considered for divestiture. This agreement falls under that category. In explaining why First Tennessee decided to sell a piece of its credit card business, Ralph Rolen, executive vice president of the retail credit division, said, "Our strategy is about strengthening our relationships by becoming `all things financial' to our core customers. The affinity, co-branded and other single relationship programs do not fit in this strategic focus. Therefore we made the decision to sell these programs."

MBNA Corporation, a bank holding company and parent of MBNA America Bank, N.A., a national bank, has $84.7 billion in managed loans. MBNA, the largest independent credit card lender in the world, also provides retail deposit, consumer loan and insurance products. MBNA.com (www.MBNA.com) provides credit card, consumer loan, retail deposit, travel and shopping services.

First Tennessee National Corp., parent company of First Tennessee Bank, has assets of $19.2 billion and is a nationwide, diversified financial services institution and one of the 50 largest bank holding companies in the United States in asset size and market capitalization. Banking and other financial services are provided through the regional banking group and three national lines of business: First Horizon Home Loans, First Tennessee Capital Markets, and transaction processing which includes First Horizon Merchant Services (credit card merchant processing) and Express Processing (nationwide payment processing operation). More information is available at www.firsttennessee.com.