March 5, 2001

First Tennessee Sells Educational Loans to edsouth

MEMPHIS, Tenn.-- March 5, 2001--First Tennessee National Corp. (NYSE:FTN) announced today that its principal banking subsidiary, First Tennessee Bank N.A. (FTB), has entered into a definitive agreement with Educational Funding of the South, Inc. (edsouth), for edsouth to purchase First Tennessee's existing portfolio of educational loans. At Jan. 31, 2001, the portfolio to be acquired by edsouth consisted of approximately 105,000 accounts with receivables of approximately $343 million. FTB will maintain its service promise of being "All Things Financial" by continuing to make loans to students and their families under the First Tennessee brand.

The transaction is estimated to result in a pretax gain, net of expenses, of approximately $11 million and is expected to be completed in the first quarter of 2001, subject to routine closing conditions and completion of financing. Because of ongoing consolidation within the student lending industry, rapid changes in related technology and other factors, First Tennessee decided to sell its student loan portfolio and focus on businesses that are strategically aligned with its long-term objectives. In an earlier release, First Tennessee stated its plans to improve its long-term growth rate by enhancing the overall business mix. This agreement, as well as the previously announced sale of First Tennessee's wholly owned subsidiary, Peoples & Union Bank, is a continuation of that strategy. The closing of the Peoples & Union transaction is currently expected to occur in the second quarter of 2001, subject to regulatory approval. These transactions are not expected to affect First Tennessee's earnings expectations for 2001, as opportunities continue to be explored for reinvestment into earnings enhancement initiatives.

As a result of this agreement, approximately 35 First Tennessee student loan employees will transfer to Educational Services of America, Inc. (edamerica). FTB is very pleased that, as a result of this transaction, there will be no loss of employment for these employees in the student loan servicing center.

Lew Weems, business financial services president, East Tennessee metro, said, "We are pleased to have entered into this alliance with edsouth, a company whose reputation is well known for excellence in the student loan industry. First Tennessee looks forward to a strong ongoing relationship as we continue to work together to expand the access to higher education."

edsouth is a private, not-for-profit corporation headquartered in Knoxville, Tenn., with total assets of more than $1.2 billion. Since 1988 edsouth has funded more than $1.6 billion in educational loans for students and families throughout the South. edsouth is an edamerica serviced lender.

edamerica is a private, not-for-profit corporation headquartered in Knoxville, Tenn. Providing innovative solutions for lenders in various regions of the United States, edamerica services student loan volumes approaching $1 billion and provides early college and financial aid awareness and outreach services to students.

First Tennessee National Corp., parent company of First Tennessee Bank, has assets of $18.6 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

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