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Can you summarize 7 TXAC 12.1?
LENDING LIMITS > Purpose and Scope
Short Summary
This subchapter of the Texas Administrative Code governs loans and extensions of credit made by a state bank and its operating subsidiaries. Its purpose is to protect the safety and soundness of state-chartered banks by preventing excessive loans to one person or a relatively small group of financially interdependent persons, and to promote diversification of loans to reduce portfolio and credit risk. The subchapter applies to all loans and extensions of credit made by a state bank and its operating subsidiaries, except for loans made to the bank’s ‘affiliates’ as defined in 12 U.S.C. 371c(b)(1), loans made by a state bank to its operating subsidiaries, and other loans specifically exempted from the lending limit. Loans and extensions of credit to affiliates, executive officers, directors, and principal shareholders of state banks, and their related interests, are subject to additional limits prescribed by federal regulations. The lending limits in this subchapter are separate from the investment limits set forth in the Finance Code, 34.101. State banks may make loans or extensions of credit up to the full amount permitted by this subchapter and also purchase and hold eligible investment securities issued by the same obligor up to the full amount permitted under the Finance Code, 34.101.
Whom does it apply to?
State banks and their operating subsidiaries
What does it govern?
Loans and extensions of credit made by a state bank and its operating subsidiaries
What are exemptions?
Loans made by an insured state bank and its domestic operating subsidiaries to the bank's 'affiliates', loans made by a state bank to the bank's operating subsidiaries, and other loans specifically exempted from the lending limit
What are the Penalties?
No penalties mentioned.
Jurisdiction
Texas