The name may be familiar. Tennessee Bank & Trust, which has been part of a bigger company, is now striking out. That dollars a recent trend since Tennessee had lost nearly a bank a month over the last few years, mainly through acquisitions and mergers.
There hasn’t been a new bank to promote commercial lending in Tennessee since before the financial crisis. The TBA president Colin Barrett blames what he considers onerous regulations in the Dodd Frank Act intended to rein in Wall Street.
“The reason that banks are getting out… is the same reason that banks are not starting, because those challenges are the same,” he states.
Barrett says even small banks are having to hire compliance experts rather than more loan officers, making it harder to turn a profit. He say’s its even harder on consumers. The shrinking number of individual banks have made loans a bit tougher to come by; especially in rural areas.
As Tennessee Bank & Trust announced its approval for a new state charter to become a locally-focused commercial lending in Tennessee, a spokesman pointed out that regulators are “practically begging” for new applications. For years, banking officials discouraged the creation of new lenders, preferring possible investors to drive their capital into existing institutions.
Tennessee banks are continuing to choose state-based regulators rather than federal authorities having primary oversight, or better known as a charter conversion. A dozen banks in the last five years dropped their national credentials to become state-chartered in Tennessee. This will be fruitful for commercial lending in Tennessee.
It’s been a nationwide trend ever since the passage of financial reforms following the financial crises in 2008. Tennessee Commissioner of Financial Institutions Greg Gonzales says his bank examiners spend more time with institutions that have a spotty track record.
Gonzales says he’s more concerned with the economic health of the state than federal regulators might be.
“Our mission is, number one, safety and soundness,” he says. “But it’s also to do it in a way that puts institutions in a great position to contribute to economic progress.”
Gonzales denies that his office would be any more lenient. But a study out of the University of Chicago found that state regulators consistently went easier on banks than federal authorities like the Office of the Comptroller of the Currency.
The latest conversion in Tennessee was in October when Dickson’s First Federal traded in its national charter. The largest chartered bank is Pinnacle Financial, which made the switch in 2012.
“In this environment of fast-paced regulatory changes and all the uncertainty that surrounds it, I believe there is great value in close contact with regulatory decision makers who can meet face-to-face and who understand the nuances of our markets,” Pinnacle CEO Terry Turner said at the time.