2023 Tennessee Code › Title 45 - BANKS AND FINANCIAL INSTITUTIONS (§§ 45-1-101 — 45-20-111) › Chapter 2 - BANKING INSTITUTIONS (§§ 45-2-101 — 45-2-2204) › Part 11 - LOANS (§§ 45-2-1101 — 45-2-1108) › Section 45-2-1102 - Limit of loans to any one borrower - Classified loans

(a)
(1)
Except as provided in this section, no state bank shall be allowed to lend to any one (1) person, firm or corporation (including loans to a firm or loans to the several members thereof) more than fifteen percent (15%) of its capital, surplus and undivided profits. However, the loans may be in excess of that percent, but not above twenty-five percent (25%) except as provided in subsection (b), if each specific loan in excess of fifteen percent (15%) is first submitted to and approved in advance in writing by the board of directors or by the finance committee of the bank and a record is kept of the written approval.
(2)
No loan limit shall be applicable to any state bank in any situation or circumstance in which no loan limit is applicable to national banks.
(3)
No loan limit shall be applicable to the extent that the loan or extension of credit is secured by a segregated deposit account in the lending bank.
(b)
(1)
Obligations of any person in the form of notes or drafts secured by shipping documents, warehouse receipts or other documents transferring or securing title covering readily marketable nonperishable staples shall be subject to a limitation equal to the percent of the sum of the lending bank's capital, surplus, and undivided profits shown in column A below, when the market value of the staples securing the obligations is not at any time less than the percent of the face amount of the obligation shown in column B below:
Column A
Column B
25%
115%
30%
120%
35%
125%
40%
130%
45%
135%
50%
140%
(2)
The exceptions listed in subdivision (b)(1) do not apply to obligations of any one (1) person, copartnership, association or corporation arising from the same staples, for more than ten (10) months.
(c)
(1)
Notwithstanding any other provision of law, a state bank or bank holding company may not sell a classified loan or participation in a classified loan to, or purchase the loan or participation from, another financial institution without obtaining the prior approval of the commissioner.
(2)
For purposes of subdivision (c)(1):
(A)
"Classified loan" means a loan that is designated "substandard," "doubtful," or "loss" in the most recent state or federal report of examination; and
(B)
"Financial institution" means a bank, savings bank, savings and loan association or any subsidiary of those entities, industrial loan and thrift company, credit union, mortgage broker, mortgage banker, or leasing company accepting deposits, making or arranging loans and making or arranging leases.
(d)
(1)
The loan limit applicable to any one (1) person under this section shall take into consideration credit exposure arising from derivative transactions between the state bank and the person.
(2)
For purposes of subdivision (d)(1), "derivative transaction" includes any transaction that is a contract, agreement, swap, warrant, note, or option that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event relating to, one (1) or more commodities, securities, currencies, interest or other rates, indices, or other assets.
Acts 1969, ch. 36, § 1 (3.241); T.C.A., § 45-429; Acts 1983, ch. 69, § 1; 1984, ch. 573, § 1; 1985, ch. 226, § 1; 2001, ch. 54, §§ 17, 18; 2012, ch. 634, § 1.