(a) Every association has the power to invest in securities as set forth in this section.
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Terms Used In Tennessee Code 45-3-601

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Association: means a capital stock or mutual savings and loan association. See Tennessee Code 45-3-104
  • Bank: means any person, as hereinafter defined, doing a banking business subject to the laws of this or any other jurisdiction and, for the purposes of supervision, examination and liquidation, includes industrial investment companies and industrial banks authorized by chapter 5 of this title. See Tennessee Code 45-1-103
  • Commissioner: means the commissioner of financial institutions. See Tennessee Code 45-3-104
  • Community: means a city, town, or incorporated village in this state, or where not within any of the foregoing, a trade area in this state. See Tennessee Code 45-1-103
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • Financial institution: means a thrift institution, commercial bank, or trust company. See Tennessee Code 45-3-104
  • Home: means a structure designed for residential use by not more than four (4) families or a single condominium unit, including common elements pertinent thereto, designed for residential use by one (1) family in a multiple dwelling unit structure or complex, and includes fixtures. See Tennessee Code 45-3-104
  • Interest: means that part of the net income, retained earnings, or surplus of an association that is payable to or credited to holders of deposit accounts. See Tennessee Code 45-3-104
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • United States: includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Year: means a calendar year, unless otherwise expressed. See Tennessee Code 1-3-105
(b)

(1) No Percent-of-Asset Limitation. The following investments shall not be subject to a percent-of-assets limitation:

(A) Obligations of, or obligations that are fully guaranteed as to principal and interest by, the United States or any state;
(B) Stock or obligations of any federal home loan bank;
(C) Stock or obligations of the federal savings and loan insurance corporation;
(D) Obligations of the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, or any successor or successors thereto;
(E) Obligations of any agencies or instrumentalities created pursuant to the Tennessee Valley Authority Act of 1933, as may be amended from time to time;
(F) Obligations of, or guaranteed as to principal and interest by, the Dominion of Canada or any province of the Dominion of Canada; provided, that the principal of and interest on the obligations are payable in United States currency or funds;
(G) Obligations of, or guaranteed as to principal and interest by, the International Bank of Reconstruction and Development, the Inter-American Development Bank or the African Development Bank;
(H) Demand, time, or savings deposits, shares or accounts, or other obligations of any financial institution, the accounts of which are insured by a federal agency;
(I) Bankers’ acceptances that are eligible for purchase by federal reserve banks; and
(J) Other investments approved in writing by the commissioner, subject to the conditions that the commissioner may impose.
(2) Twenty-Five Percent-of-Asset Limitation. The following investments, either separately or in the aggregate, shall be subject to a limitation of twenty-five percent (25%) of an association’s total assets:

(A) Bonds, notes, or other evidence of indebtedness that are general obligations of, or guaranteed as to principal and interest by, any agency or instrumentality of the United States not specified in subdivision (1);
(B) General obligations, not specified in subdivision (1), of any state or of any city, county, school district, or other municipal corporation or political subdivision of any state;
(C) Corporate obligations, exclusive of common stock, of any corporation that does not own or control, directly or indirectly, more than ten percent (10%) of the capital stock of any kind or class of the investing association, or of any corporation, no more than ten percent (10%) of whose capital stock of any kind or class, is owned or controlled, directly or indirectly by the investing association; provided, that the corporation is listed on an exchange registered under the Securities Exchange Act of 1934;
(D) Adjustable rate preferred stock of any publicly held corporation created or existing under the laws of the United States or any state, district, or territory of the United States that is rated in one (1) of the four (4) highest investment grades by one (1) or more recognized investment rating services approved by the commissioner for rating the investments;
(E) Shares or certificates in any open-end management investment company that is registered with the securities and exchange commission under the Investment Company Act of 1940, and the portfolio of which is restricted by the management company’s investment policy, changeable only if authorized by shareholder vote, solely to any investments in which an association by law or regulation may invest; and
(F) Other securities and obligations that the commissioner approves and places on a list to be published and distributed to every association at least once each year, and the commissioner is directed to publish and make distribution of the list. An association holding investments that are listed by the commissioner shall not be required to dispose of the investments if, at a later time, the commissioner removes any investments from the list.
(3) Investment Rating. Notwithstanding any of the above provisions of this section, none of the securities or obligations described hereinabove, except for investments set forth in subdivision (b)(1)(J), shall be eligible for investment in any amount, unless rated in one (1) of the four (4) highest investment grades by one (1) or more recognized investment rating services approved in writing by the commissioner, or unless otherwise approved for investment in writing by the commissioner as constituting a safe and prudent investment.
(4) Percent-of-Asset Limitation Set by Commissioner. The following investments, either separately or in the aggregate, shall be subject to a limitation of one percent (1%) of an association’s total assets or of a greater percent that may be set by the commissioner:

(A) Capital stock, obligations, or other securities of service organizations that assist in furthering or facilitating the association’s purposes, powers, or community responsibilities; and
(B) Other investments that may be approved in writing by the commissioner.
(5) Valuation. No security owned by an association shall be carried on its books at more than the actual cost thereof unless a different treatment is approved by the commissioner in writing.
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