Department of Financial Institutions
Greg Gonzales, Commissioner

TO: ALL TENNESSEE STATE CHARTERED BANKS AND SAVINGS BANKS

SUBJECT: Initial Investment Required by T.C.A. Section 45-2-201 Supercedes Bulletin No. B-95-1

DATE: March 18, 2004

T.C.A. Section 45-2-201(c) provides that "Each incorporator shall subscribe and pay in full in cash for common stock in an amount not less than one percent (1%) of the minimum capital structure of the bank or such amount as shall be determined by the commissioner".

Incorporators shall subscribe and pay in full for at least one percent (1%) of the minimum capital structure as proposed by the incorporators and substantiated by financial projections, unless the Commissioner determines otherwise. For example, if the incorporators issue an offering circular proposing a minimum offering of $7 million and a maximum offering of $9 million, the incorporators would subscribe and pay for 1% of the $7 million or $70,000. However, in the event a DeNovo Bank is formed as a branch incorporation pursuant to T.C.A. Section 45-2-614(c), and a bank holding company will own 100% of the stock of the bank immediately upon incorporation, the Commissioner may determine that the incorporators are not required to subscribe to, or pay for, any stock. Any other exceptions to the requirement to subscribe to 1% of the bank's minimum capital will be determined on a case-by-case basis, upon a showing of good cause.

If you have questions regarding this Bulletin, please contact Program Administrator for Applications Curtis F. Faulkner at 615/741-4791

Kevin P. Lavender
Commissioner