Magna Bank in Memphis, Tenn. has switched to a state charter, dumping the Office of the Comptroller of the Currency in favor of a state regulator that management believes is more familiar with its local market.
The Tennessee Department of Financial Institutions approved Magna Bank's application to convert to a commercial bank from a federal thrift, the $441 million-asset institution said Wednesday. Magna Bank had already received approval to join the Federal Reserve System.
Kirk Bailey, Magna Bank's president and chief executive, said that Tennessee regulators did not recruit management or the board to make the switch. Regulators in other states have admitted to trying to persuade thrifts to switch charters.
"Virtually every competitor in our marketplace is a state-regulated institution," Bailey said. "State regulators are very familiar with the names of the lenders and borrowers in this market."
The switch comes about four months after Magna Bank deregistered its common stock, taking advantage of the recently enacted Jumpstart Our Business Startups Act. Magna Bank estimated that deregistration would save it about $105,000 yearly in lower administrative expenses.
Magna Bank is one of many institutions that have stopped filing reports because of the JOBS Act, which was signed in April. The new law loosens the requirement on the number of shareholders a bank must have to avoid filing reports.