TENNESSEE'S STATE BANK CHARTER - THE CHARTER OF CHOICE
There are many advantages of becoming a Tennessee state chartered institution:
- Greater Access to the Regulator - Because state banks in Tennessee have closer geographical proximity to their primary regulator, communication is more direct and more effective. The Department of Financial Institutions has an "open door" policy with regard to all institutions. Representatives of any institution may call staff members or the commissioner with questions or concerns and get a personal audience quickly. We encourage officers, directors and employees of banks and other institutions to stay in close contact with us; no problem is deemed unimportant.
The Department's main office is located in Nashville, Tennessee. However, the Department maintains field offices located in East, Middle and West Tennessee. The Department's examiners work from the various field office locations and are familiar with the local community and the market area in which they work. This provides a better and more feasible working environment for the examiner and the banker. In addition, if needed, a one on one audience between the examiner and banker can easily be arranged.
The Department prides itself on maintaining experienced staff members. The Nashville office staff and the examining staff have multiple years of experience in handling examination and application related issues.
We invite every banker to visit our Department at any time, to ask questions and/or provide suggestions. We welcome and appreciate comments on how we can provide a better and more efficient regulatory environment.
- Lower Fees and Assessments - Generally, the fees charged by the Tennessee Department of Financial Institutions are lower (e.g. application fees, assessments) than those charged by the OCC. Specifically, pursuant to T.C.A. Section 45-1-118(c)(1)(B), no state-chartered bank is charged, in its annual banking assessment, more than it would be charged if it were nationally chartered in Tennessee. For our largest institutions, the fees may be the same as the OCC fee, but they will not be greater.
- Examinations - The department has cooperative examination agreements with both the Federal Deposit Insurance Corporation and the Federal Reserve, whereby examinations are conducted on an alternating basis. We make every effort to have minimal disruption on operations. The use of cooperative examination agreements between state banking supervisors and the FDIC essentially assures that a state bank will have only one regulatory examination on either a 12 or 18 month cycle since each agency relies on the alternating examination agreement.
- Commitment to Quality - The department is committed to the provision of quality constituent services, both by its central office and field office staffs. This commitment includes an out-reach to the banks we supervise, encouraging their input for improvements in our processes and procedures. We are actively involved in strategic planning at all levels of the organization and trust that our commitment to quality translates into better service to the institutions that we regulate.
Working Relationship with Tennessee Bankers Association - The department enjoys a close working relationship with the TBA. We share ideas and honest assessments, work together on legislation, continuing education and other areas that affect state chartered banks and together strive to make banking a more profitable enterprise in Tennessee.
- Working Relationship with Federal Regulators - The department enjoys a good working relationship with the Federal Deposit Insurance Corporation and the Federal Reserve Banks. We interact well with other regulatory agencies both state and federal on those occasions when our regulatory paths cross, providing mutual assistance when possible and necessary.
Generally, federal regulators typically will consult with the state banking supervisor as to an appropriate remedy for problem issues involving state chartered institutions, since the state banking supervisor is the chartering agent for the bank. This state/federal consultation process often results in greater overall flexibility on the part of the regulators.
The new bank application and/or conversion process is a joint effort between the State and Federal regulator which minimizes investigation and turnaround time. In many instances, the Department will accept a copy of the federal application filing so that regulatory burden on the applicant is reduced. See Link to Application Forms to obtain a copy of the Interagency Charter and Federal Deposit Insurance Application and the Interagency Biographical and Financial Report.
Our alternating examination program with the federal regulators minimizes the intrusion of examiners into institutions which are well-managed and well-capitalized, freeing up staff to concentrate on institutions in need of closer supervision.
- Training of examiners - The department endeavors to provide up-to-date training for its examination staff and other professional staff in order to better assist banks with the difficult issues which face financial institutions in this competitive environment.
- State law parity statutes - Admittedly, the OCC has been very progressive in its efforts to allow national banks to engage in a number of activities beyond traditional banking. However, Tennessee has a parity statute, commonly referred to as the wildcard provision, which allows state banks to engage in any activity that a national bank may engage in, subject to safety and soundness. For that reason, state banks can have the same advantages and the same competitive edge that a national bank would have.
- Relationship with the Conference of State Bank Supervisors (CSBS) - The department is active in the CSBS and has worked with our counterparts nationally to effect a seamless regulatory system for financial institutions doing business on an interstate basis. The Department is a party to the nationwide agreement providing a single regulatory point of contact at both state and federal levels for multi-state, state chartered banks. The home state regulator of a state chartered bank is the primary regulator and the single point of contact for the bank. Through the commissioner and senior staff, on-going efforts are being made to assure that banks can compete on an interstate basis.
- Director training - The Department recently formulated a training program for directors of new Tennessee state chartered banks. The training session, typically, is a one day session in the Department's Nashville office. Staff members and representatives from the FDIC and/or Federal Reserve are also on hand to be sure that all aspects of director responsibility are covered. The training session was formulated to give directors hands on experience and provide information as to expectations as to their role as a director of a new bank. In addition, the session provides opportunity for the Directors to meet with Department staff, to ask questions and to discuss, face to face, any concerns, issues or suggestions they may have.
We believe that the combination of access, low fees, expertise and experience of the department's staff, and favorable state laws make the state banking charter the charter of choice for Tennessee banks. We welcome your interest and would encourage you to contact us if you need additional information or if we may offer assistance to you.
In summary, state banking supervisors are not only regulators assuring that banks under our supervision operate in a safe and sound manner, we support the dual banking system and encourage the formation and prosperity of all banks under our supervision. We operate in a manner that encourages state banks to remain state banks, and to encourage the formation of new banks. The department tries to create a positive environment and by doing so we encourage the formation of new banks as well as the conversion of existing financial institutions into state chartered institutions.
We look forward to working with you during the new bank or conversion process and appreciate your confidence in the Department and its staff.
Thank you for helping us to make the Tennessee state charter the charter of choice.