Contacts & Phone Numbers

Rates of Interest

Rules of the Department of Financial Institutions

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 



		a) 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.