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Texas Finance Code - Section 34.201. Lending Limits

Legal Research Home > Texas Lawyer > Finance Code > Texas Finance Code - Section 34.201. Lending Limits

§ 34.201. LENDING LIMITS.  (a) Without the prior written 
approval of the banking commissioner, the total loans and 
extensions of credit by a state bank to a person outstanding at one 
time may not exceed an amount equal to 25 percent of the lesser of 
the bank's capital and certified surplus or the bank's total equity 
capital.  This limitation does not apply to:
		(1)  liability as endorser or guarantor of commercial 
or business paper discounted by or assigned to the bank by its owner 
who has acquired it in the ordinary course of business;
		(2)  indebtedness evidenced by bankers' acceptances as 
described by 12 U.S.C. Section 372 and issued by other banks;
		(3)  indebtedness secured by a bill of lading, 
warehouse receipt, or similar document transferring or securing 
title to readily marketable goods, except that:
			(A)  the goods must be insured if it is customary 
to insure those goods;  and
			(B)  the aggregate indebtedness of a person under 
this subdivision may not exceed an amount equal to 50 percent of the 
lesser of the bank's capital and certified surplus or the bank's 
total equity capital;
		(4)  indebtedness evidenced by notes or other paper 
secured by liens on agricultural products in secure and properly 
documented storage in bonded warehouses or elevators if the value 
of the collateral is not less than 125 percent of the amount of the 
indebtedness and the bank's interest in the collateral is 
adequately insured against loss, except that the aggregate 
indebtedness of a person under this subdivision may not exceed an 
amount equal to 50 percent of the lesser of the bank's capital and 
certified surplus or the bank's total equity capital;
		(5)  indebtedness of another depository institution 
arising out of loans with settlement periods of less than one week;
		(6)  indebtedness arising out of the daily transaction 
of the business of a clearinghouse association in this state;
		(7)  liability under an agreement by a third party to 
repurchase from the bank an investment security listed in Section 
34.101(d) to the extent that the agreed repurchase price does not 
exceed the original purchase price to the bank or the market value 
of the investment security;
		(8)  the portion of an indebtedness that this state, an 
agency or political subdivision of this state, the United States, 
or an instrumentality of the United States has unconditionally 
agreed to repay, purchase, insure, or guarantee;
		(9)  indebtedness secured by securities listed in 
Section 34.101(d) to the extent that the market value of the 
securities equals or exceeds the indebtedness;
		(10)  the portion of an indebtedness that is fully 
secured by a segregated deposit account in the lending bank;
		(11)  loans and extensions of credit arising from the 
purchase of negotiable or nonnegotiable installment consumer paper 
that carries a full recourse endorsement or unconditional guarantee 
by the person transferring the paper if:
			(A)  the bank's files or the knowledge of its 
officers of the financial condition of each maker of the consumer 
paper is reasonably adequate;  and
			(B)  an officer of the bank designated for that 
purpose by the board certifies in writing that the bank is relying 
primarily on the responsibility of each maker for payment of the 
loans or extensions of credit and not on a full or partial recourse 
endorsement or guarantee by the transferor;
		(12)  the portion of an indebtedness in excess of the 
limitation of this subsection that is fully secured by marketable 
securities or bullion with a market value at least equal to the 
amount of the overage, as determined by reliable and continuously 
available price quotations, except that the exempted indebtedness 
or overage of a person under this subdivision may not exceed an 
amount equal to 15 percent of the lesser of the bank's capital and 
certified surplus or the bank's total equity capital;
		(13)  indebtedness of an affiliate of the bank if the 
transaction with the affiliate is subject to the restrictions and 
limitations of 12 U.S.C. Section 371c;
		(14)  indebtedness of an operating subsidiary of the 
bank other than a subsidiary described by Section 34.103(c)(2);  
and
		(15)  the portion of the indebtedness of a person 
secured in good faith by a purchase money lien taken by the bank in 
exchange for the sale of real or personal property owned by the bank 
if the sale is in the best interest of the bank.
	(b)  The finance commission may adopt rules to administer 
this section, including rules to:
		(1)  define or further define terms used by this 
section;                   
		(2)  establish limits, requirements, or exemptions 
other than those specified by this section for particular classes 
or categories of loans or extensions of credit;  and
		(3)  establish collective lending and investment 
limits.                    
	(c)  The banking commissioner may determine whether a loan or 
extension of credit putatively made to a person will be attributed 
to another person for purposes of this section.

Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.  Amended 
by Acts 2001, 77th Leg., ch. 528, § 12, eff. Sept. 1, 2001.

Last modified: August 10, 2007