State banking regulator urges tailored oversight as Tennessee loses community banks

Commissioner Gonzales of the Tennessee Department of Financial Institutions told the Senate Commerce and Labor Committee that the department’s goal is to preserve a safe, sound banking system while avoiding “one‑size‑fits‑all” regulation that can harm community banks.

Gonzales said state regulators oversee state banks, credit unions, trust companies and many non‑deposit entities and that Tennessee has seen a long decline in the number of state‑chartered community banks. “Since ’92, we have gone from 207 Tennessee state banks to 104 today,” he said, adding that the number would be lower if federally chartered banks that later converted to state charters were excluded. He said the department has not seen a new state bank since 2008 in many cases, and that reversing that trend is an objective.

The commissioner told the committee the department is funded by…