§ 45-2-1403 — Prohibition against acquiring shares of bank in operation less than three

(a) Except as otherwise provided in subsection (b): (1) No bank holding company acting directly or indirectly shall acquire control of, merge, or consolidate with a Tennessee bank that has not been in operation for at least three (3) years; and (2) No out-of-state bank acting directly or indirectly shall acquire control of, merge, or consolidate with a Tennessee bank that has not been in operation for at least three (3) years. (b) Subsection (a) shall not prohibit the following transactions: (1) An interim bank merger for the purpose of acquiring control of a Tennessee bank that has been in operation for at least three (3) years, but the requirement of that period of operation shall not apply if the bank holding company owned more than fifty percent (50%) of the shares of the bank prior to the time of merger by reason of the purchase of the shares in a de novo acquisition; (2) Acquisition of control, merger or consolidation of any Tennessee bank in financial difficulty, as determined by the appropriate regulatory officials; provided, that the officials determine that the acquisition will protect the stockholders and depositors by maintaining financial soundness; (3) Acquisition of shares of stock given as collateral security upon a debt contracted in good faith; provided, that: (A) The acquisition is necessary to prevent loss upon the debt; (B) The making of the loan and the acquisition of the shares are in the ordinary course of business and not as a means of circumventing this part; and (C) The shares so acquired shall be sold or disposed of at public or private sale within a period of one (1) year from the acquisition of the shares or by a later time that the appropriate regulatory officials deem required to permit the disposition of the shares without undue risk or loss; (4) Acquisition of shares of stock by a bank acting solely in a fiduciary capacity in the ordinary course of its trust business and not for the purpose of circumventing this part; (5) Acquisition of control of a bank by a company that will become a Tennessee bank holding company solely by reason of the acquisition; and (6) The acquisition of shares of a bank holding company by another bank holding company where more than fifty percent (50%) of the total consolidated assets of the holding company being acquired are held by banks in operation for more than three (3) years.

Legislative History

Acts 1974, ch. 469, § 3; 1979, ch. 76, § 1; T.C.A., § 45-621; Acts 1980, ch. 616, § 1; 1981, ch. 228, § 1; 1983, ch. 74, § 3; 1987, ch. 45, § 1; 1995, ch. 165, § 2; 1996, ch. 768, § 24; 2003, ch. 32, § 4.