Yes, state banks are permitted to use their holding company stock as collateral for loans to any borrower, provided that the aggregate amount of all transactions involving any one affiliate, including a bank holding company, does not exceed 10% of the bank’s unimpaired capital and surplus, and the total aggregate of transactions involving all affiliates does not exceed 20% of the bank's unimpaired capital and surplus.

For resources related to our guidance, please see:

• Illinois Banking Act, 205 ILCS 5/35.2(a)(1)(A)-(B) (“A state bank and its subsidiaries may engage in a covered transaction with an affiliate, as expressly provided in this Section 35.2, only if . . . in the case of any one affiliate, the aggregate amount of covered transactions of the state bank and its subsidiaries will not exceed 10% of the unimpaired capital and unimpaired surplus of the state bank; and . . . in the case of all affiliates, the aggregate amount of covered transactions of the state bank and its subsidiaries will not exceed 20% of the unimpaired capital and unimpaired surplus of the state bank.”)

• Illinois Banking Act, 205 ILCS 5/35.2(b)(7)(D) (“‘Covered transaction’ means, with respect to an affiliate of a state bank . . . the acceptance of securities issued by the affiliate as collateral security for a loan or extension of credit to any person or company”)

• Illinois Banking Act, 205 ILCS 5/35.2(b)(1) (“‘Affiliate’ with respect to a state bank means . . . any company that controls the state bank and . . .  any other company that is controlled by the company that controls the state bank”)

• IDFPR Interpretive Letter 89-11 (August 31, 1989) (Determining that a state bank may extend a loan secured by stock of its bank holding company without violating prohibition against making a loan secured by bank's own stock.)