(a) Purpose. The purpose of this subchapter is to administer and carry out the objectives of the Finance Code, Title 3, Subtitle A, particularly the Finance Code, §34.201, to protect the safety and soundness of state-chartered banks by preventing excessive loans to one person or a relatively small group of persons who are financially interdependent, and to promote diversification of loans to reduce portfolio and credit risk. Notwithstanding the provisions of the Finance Code, §34.201, and this subchapter, loans and extensions of credit by state banks and their operating subsidiaries remain subject to the exercise of prudent lending standards and safe and sound banking practices.
(b) Scope.
  (1) This subchapter applies to all loans and extensions of credit made by a state bank and its operating subsidiaries. This subchapter does not apply to loans made by an insured state bank and its domestic operating subsidiaries to the bank's "affiliates," as that term is defined in 12 U.S.C. §371c(b)(1), pursuant to the Finance Code, §34.201(a)(13), or to loans made by a state bank to the bank's operating subsidiaries, pursuant to the Finance Code, §34.201(a)(14). Except as otherwise provided, this subchapter does not apply to other loans specifically exempted from the lending limit pursuant to the Finance Code, §34.201.
  (2) Loans and extensions of credit to affiliates, executive officers, directors, and principal shareholders of state banks, and their related interests, are subject to the limits prescribed by 12 U.S.C. §§371c, 371c-1, 375a, and 375b, Regulation O (12 C.F.R. §215.1 et seq.), and 12 C.F.R. §337.3, in addition to the lending limits established by the Finance Code, §34.201, and this subchapter, where applicable.
  (3) The lending limits in this subchapter are separate and apart from the investment limits set forth in the Finance Code, §34.101, and regulations adopted to govern investment limits. A state bank may make loans or extensions of credit to one borrower 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.

Source Note: The provisions of this §12.1 adopted to be effective March 1, 1996, 21 TexReg 1383; amended to be effective September 6, 2007, 32 TexReg 5655