New Bank Formation Procedures
The statutes governing formation of a state-chartered bank are found in T.C.A. Sections 45-2-201 through 45-2-217. In addition, the Department of Financial Institutions has promulgated certain rules governing new bank formation.
Applicants are encouraged to initiate pre-filing discussions and meetings with the Applications Staff of the Department and ultimately with the Commissioner, along with the appropriate federal regulatory agency(s). The Department will coordinate these meetings upon request.
A notice of intention as required under Tennessee Code Annotated Section 45-2-202(a), must be filed with the Department. The notice of intention must include the following:
(1) The name, residence and occupation of each incorporator and the amount of stock subscribed and paid for by each.
(2) The name and address of an individual within the state to whom notice to all incorporators may be sent.
(3) The total capital, the number of shares of each class, and the par value of the shares of each class of the proposed state bank and a copy of the shareholder offering circular and subscription agreement for review, before it is finalized and printed. In addition, please supply a copy of the escrow agreement.
The Federal Deposit Insurance Corporation has issued a statement of policy which recommends use of an offering circular in connection with the sale of new bank securities which details the information that should be included in an offering circular.
(4) Whether it is intended that the proposed state bank shall have trust powers.
(5) The community in which the proposed state bank is to be located.
Please also identify the method of financing and amount of the organizational expense fund. Your attention is directed to T.C.A. Section 45-2-203 whereby "prior to applying for a Charter, the incorporators shall establish an organizational expense fund in an amount the Commissioner deems adequate . . ." Section 0180-7-.10 Rules of Department of Financial Institutions sets forth the procedure and purpose for establishing this fund. Please confirm that this fund has been established prior to applying for a Charter.
The Commissioner shall within ten (10) business days after receipt of the notice of intention notify the incorporators that the notice of intention is approved as to form or call attention to any defects.
After the incorporators have received notification from the Commissioner that the notice of intention and accompanying documents are approved as to form, the incorporators may apply to the Commissioner for the issuance of an early charter. However, the issuance of the early charter does not give the organizing bank permission to begin a banking business. The granting of an early charter to a bank “in organization” permits the bank to enter into legal arrangements, among other things, to facilitate the new bank formation process.
The Department will file the charter for the applicant upon approval of the Commissioner. The Tenn. Secretary of State filing fee for the charter is $100 and can be paid by ACH to the Department. ACH instructions can be obtained from the contacts in this correspondence
Please submit a copy of the Interagency Charter and Federal Deposit Insurance Application and the Interagency Biographical and Financial Reports for each incorporator, director, executive officer and persons owning ten percent (10%) or more of the stock of the proposed new bank.
All information is to be submitted electronically to the Department. Specific information regarding electronic submission will be provided by the contacts in this correspondence. In addition, the incorporators shall submit with the application a proposed charter which complies with Tennessee law, if the proposed bank has not already requested the filing of an early charter as permitted in the Notice of Intention stage.
The application fee to the Department is $20,000 and is to be submitted via ACH. ACH instructions can be obtained from the contacts in this correspondence.
The applicant will receive notification within twenty (20) business days from the receipt of the application and accompanying documents as to its sufficiency. If the application is deemed sufficient by the Commissioner, it shall be accepted for filing.
If clarification is needed as to any information necessary to complete this application, please contact:
Debra Grissom
Chief Administrator for Applications
615/741-5018
Debra.Grissom@tn.gov
or
William Cook
Program Administrator for Applications
615/934-1891
William.Cook@tn.gov
The Department looks forward to working with you and the organizers of your proposed new bank. All of the items referenced in this document can be found using the links below.
T.C.A. Section 45-2-204(d) empowers the Commissioner to require the incorporators to "mail such notice of the application as may be prescribed to each bank in the county in which the proposed new bank is to be located, and to such persons and organizations as he may designate." Publication of the notice is required by Chapter 0180-5, of the Rules of Department of Financial Institutions.
Within 3 days, before or after, the date you mail or deliver your application, you must publish notice one time in a newspaper of general circulation in the community where you propose to establish your bank. The notice should contain Items A and B below. However, if the notice is run concurrently with the FDIC notice, and if such notice complies with the requirements of the applicable FDIC Rules and Regulations, then only Item B below should be included.
Immediately after publication, you should furnish this Office with a clipping of the notice as published in the newspaper with the date of the publication on the clipping.
It is suggested that the proposed bank submit the draft public notice to the contacts in this letter prior to publishing for pre-approval.
ITEM A
(names of all organizers) has applied to the Tennessee Department of Financial Institutions to establish a DeNovo Bank at (street address, including city, state, zip code). The proposed name of the institution is (proposed name of bank). The application was submitted on (date mailed or delivered to the Department).
ITEM B
The following statement:
"Any person wishing to comment on or protest this application or any person having information which may have a bearing on the fitness of any of the organizers or proponents of this application, may file comments with the Commissioner of Financial Institutions, Tennessee Tower, 312 Rosa L. Parks Avenue, Nashville, Tennessee 37243, email the Department at TDFI.Contact@tn.gov or telephone the Department of Financial Institutions at 615/741-5018. Written or telephonic notice must be made to the Commissioner within fifteen (15) days of this publication."
The New Bank Formation Procedure's may be downloaded for a printable version.