What happens when FDIC regulations become too onerous for the Main Street Bank in Texas? It shrugs.

Main Street Bank lends most of its money to small businesses and is earning decent profits. But the Kingwood, Texas, bank is about to get out of the banking business.

In an extreme example of the frustration felt by many bankers as regulators toughen their oversight of the nation’s financial institutions, Main Street’s chairman, Thomas Depping, is expected to announce Wednesday that the 27-year-old bank will surrender its banking charter and sell its four branches to a nearby bank. . . .

Mr. Depping plans to set up a new lender that will operate beyond the reach of banking regulators—and the deposit-insurance safety net. Backed by the private investment firm of Microsoft Corp. co-founder Paul Allen, the company won’t be able to call itself a bank, but it will be able to do business the way Mr. Depping wants.

“The regulatory environment makes it very difficult to do what we do,” says Mr. Depping, who last summer saw his bank hit with an enforcement order from the Federal Deposit Insurance Corp. . . .

Bankers have long complained about their overseers, but it is rare for a bank to basically close its doors aside from an acquisition or failure. Mr. Depping blames the move on a tightening regulatory noose.

I wonder if this will start a trend?

H/T Soulless lawyer. Literally.