Banks and Financial Institutions - As introduced, requires a state-chartered bank to obtain an annual audit of its financial statements at intervals of no longer than 15 months, unless the bank's financial statements are included in the audit of its holding company's consolidated statements; requires the board to review, discuss, and record the audit in meeting minutes; requires each bank to provide the commissioner of financial institutions with a copy of the external audit within 45 days of receiving the audit; requires each bank to notify the commissioner whenever an independent public accountant is engaged to perform external auditing work, or when a change or termination of the bank's independent accountant occurs. - Amends TCA Title 45.

114th Regular Session (2025-2026) Introduced by William Lamberth

Tennessee requires state-chartered banks to conduct annual audits and submit results to financial commissioner within 45 days, with board oversight documentation.

Assigned to s/c Banking & Consumer Affairs Subcommittee

#banksandfinancialinstitutions

Legislative bill overview

HB 109 establishes mandatory annual financial statement audits for Tennessee state-chartered banks, requiring audits at least every 15 months (unless consolidated with holding company audits). Banks must submit audit copies to the state financial commissioner within 45 days and notify the commissioner of any changes to their external auditors. Board directors must formally review and record audit results in meeting minutes.

Why is this important

This legislation increases regulatory oversight and transparency of state-chartered banks' financial health, which protects depositors and the broader financial system. The requirements create a standardized audit schedule and improve the commissioner's ability to monitor banking sector stability through timely access to verified financial information.

Potential points of contention

Compliance burden on smaller banks: Rural and community banks may face disproportionate costs for annual audits, particularly if they previously operated on longer audit cycles, potentially affecting their competitiveness

Timeline feasibility: The 45-day submission deadline may be tight for banks receiving complex audits, raising questions about whether extensions should be permitted for legitimate delays

Redundancy concerns: Banks already subject to federal auditing requirements (FDIC-insured institutions) may view state-level audit mandates as duplicative and unnecessarily expensive