Community banks in Tennessee are banding together in an effort to save money on everything from envelopes to external audits.

Two mid-state banks have formed the Tennessee Bankers’ Co-op Inc., a venture that they hope will eventually grow big enough to get volume discounts on supplies and back-office services.

Billy Atkins, president of one of the founding banks, Legends Bank in Clarksville, said he decided to form the co-op, which is believed to be the first of its kind in the country, after realizing that his and other start-up banks were paying much more for supplies than larger banks do.

“Banking has always been a competitive thing, but I figured since we are all in the same situation, it makes sense to form some sort of co-op to bid things like employee benefit packages, with the advantage of 250 employees instead of 35,” Mr. Atkins said.

The two founding banks — $75 million-asset Legends and the $38 million-asset Community Bank and Trust Company of Cheatham County — are recruiting other banks, specifically those from Middle Tennessee that are less than three years old.

Premier Bank of Brentwood has joined the co-op, and the founders hope to add at least five more by the time the co-op opens for business this fall.

Mr. Atkins said that bidding together and getting cheaper prices for things like advertising, armored car service, health care, audits, and office supplies could easily save each bank in the group $2,000 to $3,000 a year in back-office costs.

And the co-op plans to save banks time as well as money.

Robert Perry, the group’s adviser and an attorney at Balthorp Perry & Noe in Ashland City, said that once the co-op starts operations it wants to hire someone to work full-time on getting member banks the best deals.

“This gives the bank more time to focus on their assets and their market,” he said.

Member banks would be able to decide which products and services to acquire through the co-op, Mr. Perry said, but he was quick to say that they would not share customer information and that all of them would remain independent.

It is not uncommon for banks to team up — typically through trade groups — to offer customers things like insurance, credit cards, or surcharge-free automated teller machine networks.

But according to the Independent Community Bankers of America, the Tennessee co-op would be the first bank group to offer participants bulk discounts on supplies. The Washington-based trade group offers its members bankcard, investment, and retail financing services but not office supplies or back-office services.

“They are taking a concept that has often been used in community banking and applied it to an area that it has never been applied to before,” said Tim Cook, a spokesman for the trade group.

Mr. Perry compared the co-op to the ones in the Midwest through which farmers benefit from bulk purchases of equipment and supplies.

“We’re not exactly dealing with seed and threshers, but it’s analogous,” he said.

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