WASHINGTON -- Bank president F.C. Nixon's $35 million-asset institution has 14% capital and less than $10,000 in loan losses for its first three years of operation. So you'd expect its yearly exam by the Federal Deposit Insurance Corp. last July would be a breeze.

According to Mr. Nixon, here's what actually happened:

* Three regulatory compliance stayed a total of six weeks at his First Bank of Tallahassee.

* The week after they left, eight safety-and-soundness examiners showed up for a three-week stay, he said. Five of the examiners were trainees.

* The combined nine weeks of scrutiny raised overtime for the bank's 14 employees from $500 to $1,000 month and delayed the closings of some new loans.

Decided to Go Public

"What with summer vacations, they (the examiners) almost outnumbered us at times," said Mr. Nixon. "We literally spent no time running our business and all our time tending to the needs of examiners."

Other bankers tell similar tales of woe, but what is unusual in this case is that Mr. Nixon decided to go public.

"I realize I run a risk," he said when quizzed about the possibility of regulator retribution. But he said he isn't taking a shot at the examiners.

"They were just following instructions," he said.

Congress Blamed

Mr. Nixon, who has been a banker for 27 years, does fault Congress for passing laws that he believes led to this kind of overregulation.

"I'm trying to say, Hey Congress! Look at what happened to me," he said.

The FDIC refused to comment. Mr. Nixon said his bank was not "censured or criticized in any way," so his complaints are not about a poor rating.

"While they (the examiners) were polite, they were demanding beyond reason," he said.

"They'd show up at the door to my office and ask if I had a minute. And that minute would turn into 45 minutes," he said.

Every Loan Examined

The examiners also wanted lots of copies of documents, and both times, they looked at every single loan on the bank's books, he said.

The bank, which serves small businesses and young professionals has large, seasonal movements of money, said Mr. Nixon. The FDIC copied four month's worth of ledgers and also asked the bank about what came in, what went out, and what funds were sold during the period.

"It was about 10 hours' worth of work," he said.

The compliance examiners focused on the bank's money-laundering safeguards, claiming that its policies were not explicit enough and that its spot-checks of transactions were not enough. The debate got heated, according to Mr. Nixon, because the examiners found no evidence of a problem with money laundering. The banker said the fact that the examiners had uncovered no problems or violations was de facto proof that his policies were working.

Sees Examiners as Adversaries

Mr. Nixon believes exams should be mutually beneficial "and helpful in steering us to run a better operation."

What has happened, he said, is that the process is now totally adversarial.

"They are in your bank to find something wrong ... period. They will stay in your bank until they find or manufacture something of substance," he complained.

He said the regulators are "killing the independent banker."

"In relative terms, Nations-Bank could not have withstood what I did this summer. The process is ridiculous and unfair," he said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.