Loans and Transactions Involving Banks Own Stock as Collateral or Otherwise

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    1. A state bank may make a loan secured by not more than fifty percent (50%) of the book value of its own stock upon the approval of a majority of the bank's board of directors; provided, that this subsection (a) shall not permit a purchase money loan for the initial acquisition of the bank's own stock. Loans secured by the bank's own stock shall be limited to and shall not exceed:
      1. In the aggregate, twenty percent (20%) of the bank's capital, surplus and undivided profits; or
      2. To any one (1) borrower, ten percent (10%) of the bank's capital, surplus and undivided profits.(2)  A loan that is otherwise adequately secured to the extent required of loans of the type provided and in which the bank's stock is taken as additional or secondary collateral shall not be included in the limits provided in this subsection (a).
    1. Except as expressly limited or restricted in this title, a state bank may engage in transactions involving its own stock, including, but not limited to, the transfer, repurchase, holding, sale or division, to the same extent permitted to corporations under the Tennessee Business Corporation Act, compiled in title 48, chapters 11-27.
    2. The bank shall give the commissioner thirty (30) days' advance notice of any proposed transaction and may consummate the transaction at the end of the thirty-day period unless the commissioner advises the bank in writing of the commissioner's objection to the proposed transaction.


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