Powers of Associations Generally

  1. Law
  2. Tennessee Code
  3. Banks and Financial Institutions
  4. Savings and Loan Associations
  5. General Provisions
  6. Powers of Associations Generally

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Every association has all the powers enumerated, authorized and permitted in this section and other rights, privileges, and powers as may be incidental to or reasonably necessary or appropriate for the accomplishment of the objects and purposes of the association, including those rights and powers not in conflict with this chapter conferred generally upon corporations by the Tennessee Business Corporation Act, compiled in title 48, chapters 11-27. Without limiting the foregoing, and except as otherwise provided by this chapter, every association has the power to:

  1. Deposits and Investments.  Acquire deposits and pay interest on deposits, and lend and invest its funds;
  2. Property Transfers.  Acquire, hold, sell, dispose of, convey, mortgage, pledge, or lease any real or personal property;
  3. Borrowing.  Subject to any rules or regulations promulgated by the commissioner, borrow from sources, individual and corporate, for the uses and purposes of the association, which borrowings may be evidenced by the notes, bonds, debentures, or other obligations or securities as the commissioner may prescribe; and pledge, mortgage, or otherwise encumber any of its assets in connection therewith; provided, that in no event shall any borrowing by an association exceed seventy percent (70%) of the deposit liability of the association unless the commissioner shall grant written approval of a greater percentage;
  4. Sale of Loans.  Sell any loan, without recourse, including any participating interests therein;
  5. Insurance of Accounts.  Obtain and maintain insurance of its deposit accounts by the federal savings and loan insurance corporation, any agency of this state or other federal agency established for the purpose of insuring deposit accounts in associations, or with any other insurer approved by the commissioner and having a net worth not less than one hundred million dollars ($100,000,000);
  6. Membership in Organizations.  Qualify as and become a member of a Federal Home Loan Bank, or any other agency of the United States or the state of Tennessee or of any organization to the extent that the agency or organization assists in furthering or facilitating the association's purposes or powers, and comply with any reasonable conditions of eligibility;
  7. Safe Deposit Boxes.  Maintain and let safes, boxes, or other receptacles for the safekeeping of personal property in the same manner as banks are authorized to do under the laws of this state; provided, that in the event of any conflict with the law relating to safe deposit boxes in banks, this law shall be controlling. Any association has the right to construct a vault on its real estate, or on premises leased by it, or to rent any vault that in the judgment of the directors will provide reasonable means of safety against loss by theft, fire, or other cause, in which vault may be placed safes, boxes, or receptacles, for the keeping of jewelry, diamonds, gold, bank notes, bonds, notes, and other valuables, and that may be rented by the association to other persons on terms that may be agreed by the parties, but it is understood that in no event shall the association be liable for any loss of the jewelry, diamonds, gold, bank notes, bonds, notes, or other valuables by theft, robbery, fire, or other cause, the association not being the insurer of the safety of the property, nor in any manner liable therefor. The association is not required to take any note of property thus deposited, as the person who rents a safe, box, or receptacle is, for the term of the lease, the owner thereof;
  8. Money Orders, etc.  Sell money orders, travel checks, and similar instruments drawn by it on its bank accounts or as agents for any organization empowered to sell the instruments within this state;
  9. Fiscal Agent.  Act as fiscal agent of the United States, of this state, or of any subdivision of this state when duly designated for that purpose, and as fiscal agent perform the reasonable functions that may be required by it;
  10. Servicing.  Service loans and investments for others;
  11. Limited Trusteeship.  Act as trustee or custodian within the contemplation of the Federal Self-Employed Individual Tax Retirement Act of 1962, the Federal Employee Retirement Income Security Act of 1974, or similar federal acts, all as may be amended from time to time; and act as trustee or custodian with regard to other activities that may be authorized to federal associations by federal law or regulation. An association exercising the powers authorized by this subdivision (11) shall segregate all funds held in those fiduciary capacities from the general assets of the association and shall keep a separate set of books and records, showing in detail all transactions made under authority of this subdivision (11). If the individual records are kept as aforementioned, all funds held in the fiduciary capacities by an association may be commingled for appropriate purposes of investment. The funds may be invested in deposit accounts of the association in the event that the trust, custodial, or other plan does not prohibit the investment;
  12. Employee Stock Option Plans.  Establish, as part of its compensation benefits to its full-time employees, a plan or plans whereby the employing association may issue shares of its capital stock to the employees as compensation to them at a value to be established periodically, but at least annually, by the board of directors of the employing association, which value may be less than the market value of the stock or less than the price at which the stock may be offered to nonemployees; provided, that the plan is approved by a majority of the stockholders of the employing association. The plan may include provisions for the creation of a retirement trust whereby the stock issued to the employees and accumulated earnings on the stock are held in trust for the employees' retirement; and
  13. Electronic Funds Transfer Systems.  Subject to rules and regulations of the commissioner, transfer funds between holders of deposit accounts, and third parties, or their designees, by means of electronic funds transfer systems. No such system or any part of the system, including terminals or processing centers, shall of itself be considered a branch or satellite office.


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