Tennessee Commerce Falls, State’s First Bank Failure Since 2002

Federal banking officials took over operations of two troubled institutions in Tennessee this afternoon, one of them in Franklin. The failure of Tennessee Commerce Bank is the state’s first in nearly a decade.

Tennessee Commerce had been under increasing scrutiny from federal regulators for months. The bank had become too “unsound” to continue “normal operations,” according to the state’s Department of Financial Institutions.

Commissioner Greg Gonzales has worked directly with troubled banks to avoid FDIC takeover. His record was perfect until today.

“I just simply think it’s been remarkable that we haven’t had a failure up until this point – one of the last states in the country despite one of the toughest banking environments since the Great Depression.”

Just across the state line, Georgia was home to nearly a quarter of all bank failures last year.

Deposits at Tennessee Commerce will now be held by Republic Bank & Trust of Louisville. Despite the failure, Commissioner Gonzales says he feels good about the banking system as a whole. But late this afternoon the FDIC announced another failure in Tennessee – BankEast of Knoxville.