Statehouse Report: Tennessee: Law Heats Up Market for Recent Tenn. Start-Ups
Thompson, Laura K., American Banker
A recent change in Tennessee law that reduces the waiting period for start-up banks to sell themselves could open up acquisition opportunities for out-of-state banks looking to bulk up in the Memphis and Nashville markets.
Under a law passed in March, a bank in Tennessee is fair game to potential acquirers as soon as it hits its third anniversary. The waiting period had been five years.
Because 1999 and 2000 were Tennessee's busiest start-up years in more than a generation, 16 three- and four-year-old banking companies could now be in play. The stock of one of them, Pinnacle Financial Partners Inc. in Nashville, has risen 15% since the law was changed, to $15.25 late Monday.
Timothy Amos, the general counsel for the Tennessee Bankers Association, said it began lobbying for the change after banking lawyers complained that the five-year barrier made it hard to do deals with out-of-state banks.
Shortening the wait continues the trend toward lower interstate banking barriers, Mr. Amos said, "and it might prompt some of our neighbors to give another look at Tennessee banks."
Tennessee is the second southern state to have recently reduced the waiting period from five years to three; Georgia passed a similar law last year. Four other states that border Tennessee have five-year waiting periods; three -- Virginia, Kentucky, and North Carolina -- impose no wait at all.
Perhaps because of its place on the map, Tennessee, which is bordered by eight states, has attracted a lot of interest from out-of-state banks. (Missouri is the only other state bordered by as many states.)
Just last week, at the Gulf South Bank Conference in New Orleans, executives from three banking companies in Georgia and Mississippi said they were eyeing acquisitions in the Nashville and Memphis markets, where most of the start-up activity occurred. …