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Bulletin B-99-3

TO: Chief Executive Officers
SUBJECT: TCA 45-2-1104
DATE: 06/08/99

A recent article published in the First Quarter 1999 TDFI Forum stated that loans secured by holding company stock would be subject to the same restrictions placed on loans secured by bank stock per TCA Section 45-2-1104. There have been some legal arguments made that since the referenced statute does not specifically address holding company stock the restrictions do not apply. After further review of the statute, we have made the determination that Section 45-2-1104 will apply only to bank stock. Thus, departmental Bulletin B-93-1 remains applicable.

TCA Section 45-2-1104 is interpreted as follows:

  1. Loans secured by bank stock - TCA 45-2-1104 will apply
    • This statute further provides in part "that this subsection shall not permit a purchase money loan for the initial acquisition of the bank's own stock". Initial acquisition has been interpreted to mean initial stock offerings as well as any transaction to purchase existing stock.
  2. Loans secured by holding company stock (single or multi bank) - Department Bulletin B-93-1 will apply.

We apologize for any inconvenience this may have caused.

Bill C. Houston