MEMPHIS -- Hardly more than a year ago, the Tennessee banking industry was on the ropes, reeling from 23 commercial bank failures in two years.
But after absorbing blows that includes the collapse of the banking network once run by politician-businessman Jake Butcher and his brother, C.H. Butcher Jr., and large losses at a major bank, Tennessee has bounced back for another round, say regulators, bankers, and other industry experts.
Sixty Tennessee banks disappeared through failure or merger from 1982 to 1984, according to the Federal Deposit Insurance Corp. But only five banks folded in 1985, all with $25 million or less in assets. Robert Gilliam, executive vice president of the Tennessee Bankers Association, says 296 commercial banks remain in the state.
W.C. Adams, state commissioner of financial institutions, says commercial banks are in better shape now than any time in the last three years. And Boardman Stewart, a bank analyst for Equitable Securities, a Nashville investment firm, says the industry is in "excellent health."
"The lessons of the mid-70s have been learned," he says, noting that credit is being extended more carefully and that banks are diversifying their portfolios to reduce risk. problem experienced in 1983 and 1984 are mostly in the past. They were "largely limited to that one [Butcher] group of banks that failed," Mr. Gilliam says.
FDIC researchers, in a report issued last October, say bank customers in the Knoxville area became more aware of banking institutions in general, and the institutions became more conservative in lending as a result of the failures.
Sixteen of the 26 failures from 1982 to 1984 were at banks owned by, controlled by, or connected with the Butchers, the report says, FDIC officials declined to comment beyond the contents of the report. Officials of the Comptroller of the Currency and the Federal Reserve Banks of St. Louis and Atlanta also declined to comment.
The other failures during the period were related to economic conditions or mistakes by management, Mr. Gilliam says. Three to four banks a year failed in the state before the Butcher-related problems hit, Mr. Adams adds.
That matches up with the 1985 record. One failed bank in Dickson, Tenn., had connections to the former Butcher empire, but the others did not, officials says.
The 1985 failures were:
* Citizens Fidelity Banks, Bristol, which closed Feb. 1 with $16 million in assets. It was bought by Energy Bank of Oak Ridge, Tenn.
* Peoples Bank and Trust Co. of Wartburg, closed Feb. 8 with assets of $23 million. Taken over by Citizens Banks and Trust Co. of Wartburg.
* First Bank and Trust Co., Tracy City, closed June 28 with assets totaling $21 million. The new owner is First National Bank of Shelbyville, Tenn.
* Bank of Loretto, closed Sept. 4 with assets of $25 million assumed by First Farmers and Merchants National Bank of Columbia, tenn.
* First Security Bank, Dickson, closed Sept. 12 with assets of $15 million, taken over by …