Paragon National Bank today filed an application for admittance and business plan with the Tennessee Department of Financial Institutions (TDFI). In addition to this filing, Paragon has mailed proxy materials to its shareholders to vote on the issue during a special meeting on April 16. If approved by TDFI, the Federal Reserve and Paragon shareholders, the Bank will dissolve its national charter and convert to the state charter on April 30. The change to the state charter will have no effect on customers of the bank or day-to-day bank operations.
“While we have had an excellent relationship with the OCC (Office of the Comptroller of the Currency), the state charter provides us with two critical advantages – a regulator based in Tennessee who fully understands our market, and a level playing field with our peer institutions, virtually all of whom are state chartered,” said Robert Shaw, Chief Executive Officer at Paragon National Bank. “In the current regulatory environment, we look forward to maintaining close contact with our regulators in Nashville.” Due to the switch, the bank could also recognize modest cost savings.
Concurrent to the filing for a state charter, Paragon has announced its intent to form a holding company to own the bank. The official name of the holding company will be Paragon Financial Solutions, and will be regulated by the Federal Reserve. The holding company will only have one initial investment – Paragon Bank – and will have the same board members as that of Paragon National Bank.
“The holding company provides the flexibility to enable future growth, if that’s what we choose to do strategically,” stated Shaw. “We are taking steps today to position Paragon for the future – for our shareholders and for our customers, who remain our number one priority.”