A Franklin-based financial institution that’s been under tighter scrutiny from state and federal regulators is taking control of two smaller community banks that owe it money.
Tennessee Commerce Bank announced Thursday its intention to acquire a controlling interest in Peoples Bank, headquartered in Nolensville, and Farmers Bank of Lynchburg.
Tennessee Commerce CEO Mike Sapp described to analysts how the transaction would work. He also tried to put the best face on what has been a string of bad reports from his bank.
“It’s been a tough quarter. We continue to appreciate your support through this. We are obviously striving to end up with profitability and we will accomplish that.”
Tennessee Commerce would have two years to decide whether to convert the other banks into new branches or sell them off. For now, Tennessee Commerce plans to keep the existing 100 employees working in the respective banks.
It’s unusual for a bank to take over a debtor institution this way. It’s called a “Debt Previously Contracted” transaction, and Tennessee Commerce is among the first in the southeast to try it.
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