§ 6.2-100. Definitions.

As used in this title, unless the context otherwise requires:

“Bureau” means the Bureau of Financial Institutions, a division of the Commission.

“Commission” means the State Corporation Commission.

“Commissioner” means the Commissioner of Financial Institutions.

“Commission’s Rules” means the rules of practice and procedure prescribed by the Commission pursuant to § 12.1-25 .

“Entity” means any corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or other legal or commercial entity.

“Finance charge” has the meaning assigned to it in Consumer Financial Protection Bureau Regulation Z, 12 C.F.R. § 1026.4, as amended.

“Financial institution” means any bank, trust company, savings institution, industrial loan association, consumer finance company, or credit union.

“Person” means any individual, corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or other legal or commercial entity.

History. Code 1950, § 6-1 ; 1966, c. 584, § 6.1-1 ; 1970, c. 270, § 6.1-2.1; 1976, c. 658; 1978, c. 683; 1983, c. 491; 1996, c. 16; 2010, c. 794; 2016, c. 501.

Cross references.

As to exemption for emergency relief payments related to federal Coronavirus Aid, Relief, and Economic Security Act, see § 34-28.3 .

Transition provisions.

Acts 2010, c. 794, cl. 2, provides: “That whenever any of the conditions, requirements, provisions, or contents of any section or chapter of Title 6.1 or any other title of the Code of Virginia as such titles existed prior to October 1, 2010, are transferred in the same or modified form to a new section or chapter of Title 6.2 or any other title of the Code and whenever any such former section or chapter is given a new number in Title 6.2 or any other title, all references to any such former section or chapter of Title 6.1 or other title appearing in this Code shall be construed to apply to the new or renumbered section or chapter containing such conditions, requirements, provisions, contents, or portions thereof.”

Acts 2010, c. 794, cl. 3, provides: “That the regulations of any department or agency affected by the revision of Title 6.1 or such other titles in effect on the effective date of this act shall continue in effect to the extent that they are not in conflict with this act and shall be deemed to be regulations adopted under this act.”

Acts 2010, c. 794, cl. 4, provides: “That the provisions of § 30-152 of the Code of Virginia shall apply to the revision of Title 6.2 so as to give effect to other laws enacted by the 2010 Session of the General Assembly, notwithstanding the delay in the effective date of this act.”

Acts 2010, c. 794, cl. 5, provides: “That the repeal of Title 6.1, effective as of October 1, 2010, shall not affect any act or offense done or committed, or any penalty incurred, or any right established, accrued, or accruing on or before such date, or any proceeding, prosecution, suit, or action pending on that day. Except as otherwise provided in this act, neither the repeal of Title 6.1 nor the enactment of Title 6.2 shall apply to offenses committed prior to October 1, 2010, and prosecution for such offenses shall be governed by the prior law, which is continued in effect for that purpose. For the purpose of this enactment, an offense was committed prior to October 1, 2010, if any of the essential elements of the offense occurred prior thereto.”

Acts 2010, c. 794, cl. 6, provides: “That any notice given, recognizance taken, or process or writ issued before October 1, 2010, shall be valid although given, taken, or to be returned to a day after such date, in like manner as if Title 6.2 had been effective before the same was given, taken, or issued.”

Acts 2010, c. 794, cl. 8, provides: “That the provisions of former §§ 6.1-330.47 and 6.1-330.48, which provide that (i) any contract, note, mortgage, or deed of trust made or received and providing for interest charges in excess of those permitted by former §§ 6.1-330.16 and 6.1-330.24, except as hereinafter provided, shall be null and void and unenforceable by the lender or by his assignees, who are agents or principals of the lender; (ii) the provisions of clause (i) shall apply only to loans made under former § 6.1-330.16; (iii) the provisions of clause (i) shall not apply to any (a) contract or note, or mortgage or deed of trust securing such obligation, that has been assigned to a person who is not the agent or principal of the lender, if such assignee has taken the note or obligation in good faith and in reasonable reliance upon the provisions of former § 6.1-330.44, (b) loan made by a lender licensed by, and under the supervision of, the State Corporation Commission or the federal government, or (c) loan made by a state or national bank, state or federal savings institution, or state or federal credit union, or to a seller in a real estate transaction who takes a subordinate mortgage on such real estate; and (iv) any agreement whereby the borrower waives the benefits of former Chapter 7.2 (§ 6.1-330.6 et seq.) of the Code of Virginia or releases any rights he may have acquired by the virtue thereof shall be deemed to be against public policy and void, shall continue to apply to, and apply only to, loans secured by subordinate deeds of trust or mortgages closed prior to July 1, 1986. For the purposes of this enactment, a loan shall be deemed closed upon the initial recordation of the deed of trust or mortgage securing the loan. The provisions of former § 6.1-330.47 shall not apply to any loan closed on or after July 1, 1986.”

Acts 2010, c. 794, cl. 9, provides: “That the provisions of §§ 6.2-304 , 6.2-305 , and 6.2-306 shall apply to all loans made under (i) § 6.2-327 , (ii) former § 6.1-330.71 that closed between July 1, 1987, and the effective date of this act, or (iii) former § 6.1-330.16 as amended in 1986, that closed between July 1, 1986, and July 1, 1987. For the purposes of this enactment, a loan shall be deemed closed upon the initial recordation of the deed of trust or mortgage securing the loan.”

Acts 2010, c. 794, cl. 10, provides: “That the repeal of Title 6.1 of the Code of Virginia, effective as of October 1, 2010, shall not affect the validity, enforceability, or legality of any loan agreement or other contract, or any right established or accrued under such loan agreement or contract, that existed prior to such repeal.”

Acts 2010, c. 794, cl. 12, provides: “That the provisions of this act shall become effective on October 1, 2010.”

Where appropriate, the historical citations to former sections have been added to corresponding new sections. The case notes appearing under new sections were decided under corresponding former sections or under prior law. For tables of corresponding former and new sections, see the tables in Volume 10.

For transition provisions related to recodification of former Title 6 as former Title 6.1, see Acts 1966, c. 584.

The 2016 amendments.

The 2016 amendment by c. 501, substituted “Consumer Financial Protection Bureau” for “Federal Reserve Board,” and “1026.4” for “226.4.”

Law Review.

For an article, “Technology and Bank Competition Policy,” see 8 Geo. Mason L. Rev. 721 (2000).

Research References.

Asset Based Financing: A transactional Guide (Matthew Bender). Ruda.

Bank Holding Co. Compliance Manual — Second Edition (Matthew Bender). Gluck, Gluck, LeGrande.

Banking Law (Matthew Bender). Lapine, Lassila, McCullough, Pilecki, Resseguie and Weisblatt.

Banks and Thrifts: Government Enforcement and Receivership (Matthew Bender). Resseguie and Zisman.

Checks, Drafts and Notes (Matthew Bender). Weisblatt.

Commercial Finance Guide (Matthew Bender). Leichtling and Karpen.

Commercial Loan Documentation Guide (Matthew Bender). Leichtling and Karpen.

Law of Electronic Funds Transfers (Matthew Bender). Geva.

Lender Liability Law and Litigation (Matthew Bender).

Letters of Credit (Matthew Bender). McCullough.

§ 6.2-101. Confidentiality of information.

1. Except as otherwise provided in this title or § 12.1-19 , the following shall not be disclosed by the Commission or any of its employees: (i) a report of examination of any person subject to this title, including any contents thereof; (ii) any information furnished to or obtained by the Bureau, the disclosure of which, in the opinion of the Commissioner, could endanger the safety and soundness of a bank, savings institution, or credit union; or (iii) any personal financial information furnished to, or obtained by the Bureau.
2. Any reports and information described in subsection A may be provided to:
   1. Members and employees of the Commission in the performance of their duties;
   2. In the case of an entity, directors and officers thereof and such other persons as may be authorized by resolution of the entity’s board of directors;
   3. Such governmental officers, instrumentalities, or agencies as the Commissioner may determine, in his discretion, to be proper recipients of such reports or information;
   4. Any persons pursuant to lawful process and, if necessary to protect the confidentiality of the reports and information, an appropriate protective order issued by or under the authority of any appropriate court;
   5. Other persons pursuant to grand jury subpoenas; or
   6. Any other persons with the consent of the person to whom the report or information pertains.

History. 1988, c. 555, § 6.1-1.1; 1991, c. 127; 2004, c. 165; 2010, c. 794.

§ 6.2-101.1. Certified mail; subsequent mail or notices may be sent by regular mail.

Whenever in this title the Commission is required to send any mail or notice by certified mail and such mail or notice is sent certified mail, return receipt requested, then any subsequent, identical mail or notice that is sent by the Commission may be sent by regular mail.

History. 2011, c. 566.

§ 6.2-102. Use of funds collected under this title.

1. All fees assessed under any provision of this title and paid into the state treasury shall be deposited to a special fund designated “Financial Institutions Special Fund — State Corporation Commission,” and out of such special fund and the unexpended balance thereof shall be appropriated the sums necessary for the regulation, supervision, and examination of all entities subject to regulation under this title. The Commission shall have the authority to maintain a reasonable margin in the nature of a reserve in the Financial Institutions Special Fund for the expenses of operating the Bureau.
2. In order to provide additional funds for the operation of the Bureau, the Commission is authorized to increase the fees and assessments for the examination and supervision of banks, trust companies, savings institutions, industrial loan associations, credit unions, consumer finance licensees, mortgage lenders, and mortgage brokers by an amount not to exceed 50 percent of the fees and assessments provided for in §§ 6.2-908 , 6.2-1033 , 6.2-1202 , 6.2-1310 , 6.2-1414 , 6.2-1532 , and 6.2-1612 .

History. Code 1950, § 6-4; 1966, c. 584, § 6.1-2; 1974, c. 183; 1987, cc. 556, 558; 1988, c. 303; 1993, cc. 419, 432; 1994, c. 312; 2010, c. 794.

§ 6.2-103. Financial institutions to furnish certain information to fiduciaries.

The provisions of this title and any other provisions of law notwithstanding, any financial institution subject to the provisions of this title shall make available to any fiduciary, upon request, all information concerning assets or liabilities in which his decedent or ward had or has any interest.

History. 1970, c. 270, § 6.1-2.1; 1976, c. 658; 1978, c. 683; 1983, c. 491; 1996, c. 16; 2010, c. 794.

§ 6.2-103.1. Financial institutions to furnish certain information as part of adult protective services investigation.

Notwithstanding any other provision of law, any financial institution subject to the provisions of this title shall cooperate in any investigation of alleged adult abuse, neglect, or exploitation conducted by a local department of social services pursuant to Chapter 16 (§ 63.2-1600 et seq.) of Title 63.2 and shall make any financial records or information relevant to such investigation available to the local department upon request to the extent allowed under the Gramm-Leach-Bliley Act (15 U.S.C. § 6801 et seq.) and 12 U.S.C. § 3403.

History. 2022, c. 743.

§ 6.2-104. Directors to serve only one institution.

1. No officer or director of any financial institution, other than a consumer finance company or credit union domiciled in the Commonwealth, shall at the same time serve as an officer or director of any other financial institution unless both such institutions are within a single financial institution holding company.
2. Notwithstanding the provisions of subsection A, the Commission, upon petition brought on behalf of an individual, may permit him to serve on the boards of more than one such institution if the Commission finds that the financial institutions are not in competition with each other or that one or both of the institutions might otherwise be denied capable management or direction from an individual residing in or employed in the locality served by an institution.

History. 1978, c. 683, § 6.1-2.7; 1979, c. 376; 1987, c. 556; 1989, c. 162; 2010, c. 794.

§ 6.2-105. Reclassification or conversion of banking institution shares.

1. As used in this section, unless the context requires otherwise:“Banking institution” means a corporation that is organized under the Virginia Stock Corporation Act (§ 13.1-601 et seq.) and that is a (i) bank, (ii) savings institution, (iii) bank holding company as defined in 12 U.S.C. § 1841 or § 6.2-800 , (iv) savings and loan holding company, or (v) multiple or diversified savings and loan holding company as defined in 12 U.S.C. § 1467a.“Issuer” means a banking institution required to file periodic reports under § 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m or 78o(d)).
2. A banking institution may adopt an amendment to its articles of incorporation to reclassify or convert a portion of its issued and outstanding shares of common stock into a class or series of preferred stock for the purpose of ceasing to be, or avoiding the status of, an issuer, provided (i) such reclassification or conversion is authorized by the banking institution’s original or amended articles of incorporation and (ii) the reclassified or converted shares continue to be a part of the equity capital of the corporation.
3. A reclassification or conversion of shares pursuant to this section shall not be subject to the provisions of Article 15 (§ 13.1-729 et seq.) of the Virginia Stock Corporation Act, notwithstanding that such shares are being reclassified or converted and other shares of the same class or series are not being reclassified or converted, if:
   1. The board of directors of the banking institution has recommended to the shareholders approval of the amendment to reclassify or convert such shares;
   2. The shareholders of the corporation approve the amendment;
   3. All affected shares are reclassified or converted on the same terms; and
   4. Articles of amendment are filed in accordance with § 13.1-710 .

History. 2009, cc. 253, 356, § 6.1-2.7:1; 2010, c. 794.

§ 6.2-106. Payment of civil penalties.

Civil penalties paid pursuant to this title, when collected, shall be paid by the Commission into the treasury of Virginia, in the manner provided for judgments collected as set forth in § 12.1-35 .

History. 2010, c. 794.

§ 6.2-107. Effect of contract provision requiring amendment or waiver to be in writing.

If any written contract to which a financial institution is a party contains a provision to the effect that no amendment or waiver of any terms or provisions thereof shall be valid unless such amendment or waiver is in writing, then any amendment or waiver of any terms or provisions of that contract by conduct, course of practice or dealing, or otherwise shall not apply to future rights and obligations under that contract unless it is in writing.

History. 2013, cc. 67, 142.

Research References.

Virginia Forms (Matthew Bender). No. 16-601 Deed of Trust Note — Simple Form, et seq.

§ 6.2-200. Money of account.

1. The money of account of the Commonwealth shall be the dollar, cent, and mill. All accounts by public officers shall be kept in accordance with such monetary units.
2. No writing shall be invalid, nor shall the force of any account or entry be impaired, because a sum of money is expressed in other monetary units.

History. 1987, c. 622, § 6.1-330.50; 2010, c. 794.

§ 6.2-201. Ascertaining value in money of account for money expressed in foreign currency.

1. In any suit for a sum of money expressed in any foreign currency or otherwise than in the money of account of the Commonwealth, the jury or the court shall ascertain the value in the money of account of the sum so expressed, including an appropriate allowance for the difference of exchange. The judgment or order may be for either the amount so ascertained, or for the amount of money so expressed, and the judgment or order shall be discharged by an amount so ascertained.
2. In any such suit involving an instrument to which § 8.3A-107 is applicable, the provisions of that section shall apply.

History. 1987, c. 622, § 6.1-330.51; 2010, c. 794.

Michie’s Jurisprudence.

For related discussion, see 3C M.J. Commercial Law, § 42.

§ 6.2-202. Issuance of currency and related prohibited acts.

1. No individual or entity, unless authorized by law, shall:
   1. Issue any note, bill, scrip, or other paper or thing with intent that the same be circulated as currency; or
   2. Otherwise deal, trade, or carry on business as a bank of circulation.
2. All contracts made for forming any entity to engage in any activity prohibited by subsection A shall be void.

History. 1987, c. 622, § 6.1-330.52; 2010, c. 794.

Law Review.

For comment, “Obtaining and Enforcing a Security Interest in Local Currency Under Article 9 of the UCC,” see 53 U. Rich. L. Rev. 769 (2019).

§ 6.2-203. Contracts and securities from illegal currency dealing void; recovery of payments.

1. All contracts and securities that originate from, or are made or obtained in whole or in part by means of any illegal currency dealing, trade, or business, shall be void.
2. If any person pays any money or other valuable consideration on account of any contract or security originating from, or made or obtained in whole or in part by means of, any illegal currency dealing, trade, or business, such person or his representative or assignee may recover the amount or value of such payment from the person to whom, or to whose use, the payment was made, by bringing suit within one year after such payment.

History. 1987, c. 622, § 6.1-330.52; 2010, c. 794.

§ 6.2-204. Capital stock of certain entities vested in Commonwealth; proceedings to recover stock; liability.

1. The capital stock of every entity formed to engage in any activity prohibited by subsection A of § 6.2-202 , whether paid up or merely subscribed, shall belong to the Commonwealth. The Attorney General, whenever informed of the existence of any such entity, shall institute a suit in the Circuit Court of the City of Richmond, for the purpose of recovering such capital stock. In such suit, all or any of the members of such entity, and any of its officers, agents, or managers, may be made defendants, and compelled to exhibit all their books and papers, and an account of everything necessary to enable the court to enter a proper order.
2. No disclosure made by a defendant in such suit, and no book or paper exhibited by him in answer to the bill, or under the order of the court, shall be used as evidence against him in any case at law.
3. Every member of any entity formed to engage in any activity prohibited by subsection A of § 6.2-202 who is made defendant in any such suit, shall be held liable to the Commonwealth for his proportion of the capital stock in such entity held by him, or for his use or benefit, at the institution of such suit, or at the time of the order. Such order against any defendant shall be a bar to a proceeding against him for any act done in violation of subsection A of § 6.2-202 .

History. 1987, c. 622, § 6.1-330.52; 2010, c. 794.

§ 6.2-300. Definitions.

As used in this chapter, unless the context otherwise requires:

“Bank” means any national bank, any bank organized under Chapter 8 (§ 6.2-800 et seq.), or any bank incorporated and organized under the laws of another state.

“Credit union” means any credit union organized under Chapter 13 (§ 6.2-1300 et seq.) or any credit union incorporated and organized under the laws of another state. “Credit union” shall not include any federal credit union.

“First deed of trust” or “first mortgage” includes all deeds of trust and mortgages, and amendments thereto, that are made by the same grantor or mortgagor, secure notes held by the same holder, convey substantially the same real estate, and are superior to all other deeds of trust or mortgages on the real estate.

“Grantor” or “mortgagor” includes an owner of real estate, and spouse, who has assumed responsibility for the obligation secured by a mortgage or deed of trust encumbering the real estate.

“Loan” means a loan or forbearance of money.

“Open-end credit” or “open-end credit plan” means consumer credit extended by a creditor under a plan in which: (i) the creditor reasonably contemplates repeated transactions; (ii) the creditor may impose a finance charge from time to time on an outstanding unpaid balance; and (iii) the amount of credit that may be extended to the consumer during the term of the plan, up to any limit set by the creditor, is generally made available to the extent that any outstanding balance is repaid.

“Savings institution” means any savings institution, as defined in § 6.2-1100 , incorporated and organized under the laws of the United States, the Commonwealth, or another state.

“Subordinate mortgage or deed of trust” means a mortgage or deed of trust that is subject to a prior mortgage or deed of trust in existence at the time of the making of the loan secured by such subordinate mortgage or deed of trust.

History. 1987, c. 622, §§ 6.1-330.49, 6.1-330.69, 6.1-330.71; 1991, c. 157; 1996, c. 243; 2010, c. 794.

§ 6.2-301. Legal rate of interest; when legal rate implied.

1. The legal rate of interest shall be an annual rate of six percent.
2. Except as provided in subsection (b) of § 8.3A-112 and § 6.2-302 , the legal rate of interest shall be implied when there is an obligation to pay interest and no express contract to pay interest at a specified rate.
3. The seller or provider of goods sold or services provided on an open account shall be entitled to, and may collect, interest at the legal rate upon the unpaid balance if (i) there exists no written agreement for closed-end credit under § 6.2-311 or open-end credit plan under § 6.2-312 and (ii) the purchaser or recipient of the goods or services fails to make payment in full within 60 days after mailing or presentation of a billing statement or invoice. Such interest shall begin to accrue on the day following such 60-day period.

History. 1987, c. 622, § 6.1-330.53; 1991, c. 375, § 6.1-330.77:1; 2004, c. 646; 2010, c. 794.

Cross references.

As to determination of interest by jury or court, see § 8.01-382 and Revisor’s note thereto.

As to accrual of interest on support payments collected by the Department of Social Services, see § 63.2-1951 .

Editor’s note.

The legal rate of interest was 6% from the adoption of the 1950 Code until § 6.1-330.53 was enacted on July 1, 1987, at which time the rate was increased to 8%. The section was amended by Acts 2004, c. 646, which made the legal rate of interest 6% again.

Research References.

Virginia Forms (Matthew Bender). No. 2-1204. Checklist for Default Judgment; No. 16-601 Deed of Trust Note — Simple Form, et seq.; No. 16-861 Usury Savings Clause.

§ 6.2-302. Judgment rate of interest.

1. The judgment rate of interest shall be an annual rate of six percent, except that a money judgment entered in an action arising from a contract shall carry interest at the rate lawfully charged on such contract, or at six percent annually, whichever is higher.
2. If the contract or other instrument does not fix an interest rate, the court shall apply the judgment rate of six percent to calculate prejudgment interest pursuant to § 8.01-382 and to calculate post-judgment interest.
3. The rate of interest for a judgment shall be the judgment rate of interest in effect at the time of entry of the judgment on any amounts for which judgment is entered and shall not be affected by any subsequent changes to the rate of interest stated in this section.

History. 1987, cc. 622, 623, 630, § 6.1-330.54; 1991, c. 508; 2004, c. 646; 2005, c. 455; 2010, cc. 550, 794.

Cross references.

As to interest on support debts pursuant to an order enforced by the Department of Social Services, see § 63.2-1952 .

Editor’s note.

Prior to enactment of former § 6.1-330.10 in 1975, it appears that there was no separate statute pertaining to the judgment rate of interest. The legal rate of interest was 6% from the time of adoption of the original Code in 1950 until § 6.1-330.53 was enacted on July 1, 1987, at which time the rate was increased to 8%.

Former § 6.1-330.10, as enacted in 1975, provided for a judgment rate of interest of 8%. This rate was increased to 10% in 1981 and to 12% in 1983. In 1987, the rate was reduced to 8%, and in 1991, the rate was increased to 9%. Acts 2004, c. 646, decreased the judgment rate of interest to 6%.

Acts 2010, c. 550 amended former § 6.1-330.54, from which this section is derived. Pursuant to § 30-152 and Acts 2010, c. 794, cl. 4, the 2010 amendment by c. 550 has been given effect in this section as set out above, by inserting “on any amounts for which judgment is entered” in subsection C.

§ 6.2-303. Contracts for more than legal rate of interest.

1. Except as otherwise permitted by law, no contract shall be made for the payment of interest on a loan at a rate that exceeds 12 percent per year.
2. Laws that permit payment of interest at a rate that exceeds 12 percent per year are set out, without limitation, in:
   1. Article 4 (§ 6.2-309 et seq.) of this chapter;
   2. Chapter 15 (§ 6.2-1500 et seq.), relating to powers of consumer finance companies;
   3. Chapter 18 (§ 6.2-1800 et seq.), relating to short-term loans;
   4. Chapter 22 (§ 6.2-2200 et seq.), relating to interest chargeable by motor vehicle title lenders;
   5. § 36-55.31 , relating to loans by the Virginia Housing Development Authority;
   6. § 38.2-1806 , relating to interest chargeable by insurance agents;
   7. Chapter 47 (§ 38.2-4700 et seq.) of Title 38.2, relating to interest chargeable by premium finance companies;
   8. § 54.1-4008 , relating to interest chargeable by pawnbrokers; and
   9. § 58.1-3018 , relating to interest and origination fees payable under third-party tax payment agreements.
3. In the case of any loan upon which a person is not permitted to plead usury, interest and other charges may be imposed and collected as agreed by the parties.
4. Any provision of this chapter that provides that a loan or extension of credit may be enforced as agreed in the contract of indebtedness, shall not be construed to preclude the charging or collecting of other loan fees and charges permitted by law, in addition to the stated interest rate. Such other loan fees and charges need not be included in the rate of interest stated in the contract of indebtedness.
5. The provisions of subsection A shall apply to any person who seeks to evade its application by any device, subterfuge, or pretense whatsoever, including:
   1. The loan, forbearance, use, or sale of (i) credit, as guarantor, surety, endorser, comaker, or otherwise; (ii) money; (iii) goods; or (iv) things in action;
   2. The use of collateral or related sales or purchases of goods or services, or agreements to sell or purchase, whether real or pretended; receiving or charging compensation for goods or services, whether or not sold, delivered, or provided; and
   3. The real or pretended negotiation, arrangement, or procurement of a loan through any use or activity of a third person, whether real or fictitious.
6. Any contract made in violation of this section is void and no person shall have the right to collect, receive, or retain any principal, interest, fees, or other charges in connection with the contract.

History. 1987, c. 622, § 6.1-330.55; 1997, c. 180; 2002, c. 897; 2010, cc. 477, 794; 2020, cc. 1215, 1258.

Cross references.

As to historical rates on legal rates of interest and judgment rates of interest, see Editor’s notes under §§ 6.2-301 and 6.2-302 .

Editor’s note.

From the adoption of the 1950 Code until March 1, 1968, the charging of a greater rate of interest on a contract “than allowed by law” was proscribed (the legal rate of interest being 6% at that time). The contract rate of interest was changed to 8% effective March 1, 1968, and to 12% effective July 1, 1987.

Acts 2010, c. 477, effective October 1, 2010, amended former § 6.1-330.55, from which this section is derived. Pursuant to § 30-152 and Acts 2010, c. 794, cl. 4, the 2010 amendment by c. 477 has been given effect in this section as set out above, by adding subdivision B 4, and redesignating former subdivisions B 4 through B 8 as subdivisions B 5 through B 9, respectively.

Acts 2020, cc. 1215 and 1258, cl. 5 provides: “That the provisions of the first and second enactments of this act shall become effective on January 1, 2021, except that the database required by § 6.2-1810 of the Code of Virginia, as amended by this act, shall be modified to accommodate the provisions of this first enactment of this act by January 1, 2022.”

The 2020 amendments.

The 2020 amendments by cc. 1215 and 1258 are identical, effective January 1, 2021, and in subdivision B 3, substituted “short-term loans” for “payday lenders” and added subsections E and F.

§ 6.2-304. Plea of usury; judgment.

Any borrower may plead in general terms that the contract on which the action is brought was for the payment of interest greater than is allowed by statute. If the court determines that the contract is usurious, judgment shall be rendered only for the principal sum.

History. 1987, c. 622, § 6.1-330.56; 2010, c. 794.

Editor’s note.

Acts 2010, c. 794, cl. 9 provides: “That the provisions of §§ 6.2-304 , 6.2-305 , and 6.2-306 shall apply to all loans made under (i) § 6.2-327 , (ii) former § 6.1-330.71 that closed between July 1, 1987, and the effective date of this act, or (iii) former § 6.1-330.16 as amended in 1986, that closed between July 1, 1986, and July 1, 1987. For the purposes of this enactment, a loan shall be deemed closed upon the initial recordation of the deed of trust or mortgage securing the loan.”

§ 6.2-305. Recovery of twice total usurious interest paid; limitation of action; injunction to prevent sale of property pending action; effect of errors in computation.

1. If interest in excess of that permitted by an applicable statute is paid upon any loan, the person paying may bring an action within two years from the first to occur of: (i) the date of the last scheduled loan payment or (ii) the date of payment of the loan in full, to recover from the person taking or receiving such payments:
   1. The total amount of the interest paid to such person in excess of that permitted by the applicable statute;
   2. Twice the total amount of interest paid to such person during the two years immediately preceding the date of the filing of the action; and
   3. Court costs and reasonable attorney fees.
2. If the sale of property in which an interest has been conveyed to secure the payment of the debt is scheduled or anticipated, an injunction may be granted to prevent such sale pending the completion of an action brought pursuant to subsection A.
3. Any creditor who proves that interest or other charges in excess of those permitted by law were imposed or collected as a result of a bona fide error in computation or similar mistake shall not be liable for the penalties prescribed in this section. In such event, the creditor shall only be liable to return to the borrower the amount of interest or other charges collected in excess of the amount permitted by applicable statute.

History. 1987, c. 622, § 6.1-330.57; 2010, c. 794.

Editor’s note.

Acts 2010, c. 794, cl. 9 provides: “That the provisions of §§ 6.2-304 , 6.2-305 , and 6.2-306 shall apply to all loans made under (i) § 6.2-327 , (ii) former § 6.1-330.71 that closed between July 1, 1987, and the effective date of this act, or (iii) former § 6.1-330.16 as amended in 1986, that closed between July 1, 1986, and July 1, 1987. For the purposes of this enactment, a loan shall be deemed closed upon the initial recordation of the deed of trust or mortgage securing the loan.”

§ 6.2-306. Waiver of rights violative of public policy.

1. Any agreement or contract in which the borrower waives the benefits of this chapter or releases any rights he may have acquired under this chapter shall be deemed to be against public policy and void.
2. The provisions of subsection A shall not apply to a waiver of benefits or release of rights made subsequent to a loan as part of a settlement of potential or pending claims by a borrower involving such loan.

History. 1987, c. 622, § 6.1-330.58; 2010, c. 794.

Editor’s note.

Acts 2010, c. 794, cl. 9 provides: “That the provisions of §§ 6.2-304 , 6.2-305 , and 6.2-306 shall apply to all loans made under (i) § 6.2-327 , (ii) former § 6.1-330.71 that closed between July 1, 1987, and the effective date of this act, or (iii) former § 6.1-330.16 as amended in 1986, that closed between July 1, 1986, and July 1, 1987. For the purposes of this enactment, a loan shall be deemed closed upon the initial recordation of the deed of trust or mortgage securing the loan.”

Research References.

Virginia Forms (Matthew Bender). No. 16-1020 Supplemental Deed of Trust for Additional Security — Another Form.

§ 6.2-307. Assertion of defenses or claims by borrowers; effect of assignment.

As to any loan to which the provisions of §§ 6.2-327 and 6.2-328 are applicable, the borrower may assert any defense or claim he may have under §§ 6.2-304 and 6.2-305 against any assignee or transferee of the contract of indebtedness.

History. 1987, c. 622, § 6.1-330.59; 2010, c. 794.

§ 6.2-308. Entities not permitted to plead usury.

1. No (i) corporation, (ii) partnership that is required to file a certificate pursuant to Chapter 2.1 (§ 50-73.1 et seq.) of Title 50 or was required to file a certificate pursuant to former Chapter 2 (§ 50-44 et seq.) or Chapter 3 (§ 50-74 et seq.) of Title 50 or that is formed under laws other than those of the Commonwealth, (iii) limited liability company, (iv) business trust, or (v) joint venture organized for the purpose of holding, developing, and managing real estate for profit, shall, by way of defense or otherwise, avail itself of any of the provisions of this chapter or any other statutory or case law relating to usury or compounding of interest to avoid or defeat the payment of any interest or any other sum that it has contracted to pay.
2. Nothing contained in this chapter or any other statutory or case law relating to usury or compounding of interest shall be construed to prevent the recovery of interest or any other sum that an entity described in subsection A has contracted to pay, regardless of whether it is more than the contract rate of interest and the fact appears on the face of the contract.

History. 1987, c. 622, § 6.1-330.76; 1988, c. 765; 1993, c. 113; 2010, c. 794.

§ 6.2-309. Charges by banks and savings institutions on installment loans.

Notwithstanding any statutory or case law, a bank or savings institution making a loan payable in installments may impose finance charges and other charges and fees at such rates and in such amounts and manner as the borrower has agreed.

History. 1987, c. 622, § 6.1-330.60; 1996, c. 242; 1997, c. 128; 1999, c. 610; 2001, c. 743; 2010, c. 794.

§ 6.2-310. Rate of interest chargeable by state banks and savings institutions.

In addition to the permissible interest rates and charges specifically granted to banks and savings institutions by this title, state banks and savings institutions may take, receive, reserve, and charge on any loan, any rate of interest, finance charge, or other loan charge permitted to any other lender under the laws of the Commonwealth, other than those rates or charges permitted to consumer finance companies under § 6.2-1520 .

History. 1980, c. 336, § 6.1-5.3; 1981, c. 93, § 6.1-195.3:1; 1985, c. 425, § 6.1-194.6; 1987, c. 556; 1988, c. 2; 2010, c. 794.

§ 6.2-311. Closed-end installment loans by sellers of goods or services.

1. Any seller of goods or services who extends credit under a closed-end installment credit plan or arrangement may impose finance charges at such rate or rates as the seller and the purchaser have agreed. Deferrals and extensions of the time for payment, if allowed by a seller of goods or services who extends credit under a closed-end installment credit plan or his assignee, may be subject to a finance charge if agreed to in the original contract or at the time of the renewal or extension. No additional finance charge shall be made for the extension of credit under such a plan or arrangement. If the total finance charge on the transaction is precomputed according to the actuarial method, the finance charge shall be calculated on the assumption that all scheduled payments will be made when due. The balance on which such finance charge may be imposed may include the deferred portion of the sales price, costs and charges incidental to the transaction, including (i) any insurance premium financed in connection therewith and (ii) the amount actually paid or to be paid by the seller to discharge a security interest or lien on the property traded in. The payment by a lessor to discharge a security interest or lien on the property traded in may be included in the gross capitalized cost of the goods leased and, for purposes of this chapter and Chapter 6 (§ 55.1-600 et seq.) of Title 55.1, shall not constitute a loan.
2. The debtor shall have the right to prepay in full on precomputed transactions and receive a rebate of unearned finance charge determined in accordance with the Rule of 78, as illustrated in § 6.2-403 , or other method elected by the seller under which the finance charge imposed does not exceed the amount that results from application of the Rule of 78 on extensions of credit with an initial maturity of 61 months or less. On extensions of credit with an initial maturity of more than 61 months, the debtor shall receive a rebate computed under a method at least as favorable to the debtor as the actuarial method. The seller may also condition such rebate upon receiving a minimum of $25 in finance charges. This amount, to the extent not earned, may be withheld from the rebate required hereunder.
3. In connection with such a credit plan, the seller may also:
   1. Impose a late charge pursuant to § 6.2-400 ; and
   2. Charge and collect a document fee as may be agreed upon by the seller and purchaser in connection with such credit plan. The document fee shall (i) be for the preparation, handling, and processing of documents relating to the goods or services and to the closing of the transaction and (ii) not be considered a finance charge for the purposes of this chapter.
4. Premiums for credit life insurance and credit accident and health insurance purchased by the debtor shall not be construed as an additional charge for the extension of credit if such insurance coverage is purchased voluntarily by the debtor. Premiums for property insurance on the goods purchased or leased, including vendor’s single interest insurance on such goods, shall not be construed as additional charges for the extension of credit if a clear and conspicuous statement in writing is furnished by the seller or lessor to the buyer or lessee setting forth the cost of the insurance if obtained from or through the seller or lessor and stating that the buyer or lessee may choose the person through which the insurance is to be obtained.

History. 1987, c. 622, § 6.1-330.77; 1988, c. 145; 1990, c. 338; 1999, cc. 62, 373; 2010, c. 794.

Cross references.

As to inapplicability of this section to lease-purchase agreements, see § 59.1-207.19.

Editor’s note.

To conform to the recodification of Title 55 by Acts 2019, c. 712, effective October 1, 2019, substituted “Chapter 6 (§ 55.1-600 et seq.) of Title 55.1” for “Chapter 6 (§ 55-106 et seq.) of Title 55.”

Michie’s Jurisprudence.

For related discussion, see 3C M.J. Commercial Law, § 95.

CIRCUIT COURT OPINIONS

Exemption inapplicable. —

Transaction between a homeowner and a foreclosure rescue service did not fall within the usury law’s statutory exception for consumer transactions, former § 6.1-330.77, because there was no evidence that the homeowner agreed to pay any particular rate of interest. Estate of Curry v. Anderson, 80 Va. Cir. 39, 2010 Va. Cir. LEXIS 173 (Rockingham County Jan. 14, 2010).

§ 6.2-312. Open-end credit plans.

1. The provisions of this section shall apply to any person that makes, arranges, or negotiates a loan or otherwise extends credit under an open-end credit plan, whether or not the person maintains a physical presence in the Commonwealth. However, the provisions of this section shall not apply to any bank, savings institution, or credit union as such terms are defined in § 6.2-300 .
2. Notwithstanding any provision of this chapter other than § 6.2-327 , and except as provided in subsections D, E, and F, a seller or lender engaged in extending credit under an open-end credit plan may impose, on credit extended under the plan, finance charges and other charges and fees at such rates and in such amounts and manner as may be agreed upon by the creditor and the obligor, if under the plan a finance charge is imposed upon the obligor if payment in full of the unpaid balance is not received at the place designated by the creditor prior to the next billing date, which shall be at least 25 days later than the prior billing date.
3. Notwithstanding the provisions of § 6.2-327 and subject to the provisions of § 8.9A-204.1 , any loan made under this section may be secured in whole or in part by a subordinate mortgage or deed of trust on residential real estate improved by the construction thereon of housing consisting of one- to four-family dwelling units.
4. The following persons are prohibited from engaging in the extension of credit under an open-end credit plan described in this section: (i) any person licensed under Chapter 18 (§ 6.2-1800 et seq.), any person affiliated through common ownership with such licensed person, and any person that is a subsidiary of such licensed person; (ii) any person licensed under Chapter 22 (§ 6.2-2200 et seq.), any person affiliated through common ownership with such licensed person, and any person that is a subsidiary of such licensed person; and (iii) any person conducting business at any office, suite, room, or place of business where a person described in clause (i) or (ii) is conducting business.
5. No person shall make a loan or otherwise extend credit under an open-end credit plan or any other lending arrangement that is secured by a non-purchase money security interest in a motor vehicle, as such term is defined in § 6.2-2200 , unless such loan or extension of credit is made in accordance with, or is exempt from, the provisions of Chapter 22 (§ 6.2-2200 et seq.).
6. A seller or lender engaged in extending credit under an open-end credit plan to a resident of the Commonwealth or to any individual in the Commonwealth shall not charge, collect, or receive, directly or indirectly, credit insurance premiums, charges for any ancillary product sold, charges for negotiating forms of loan proceeds or refunds other than cash, charges for brokering or obtaining an extension of credit, or any fees, interest, or charges in connection with credit extended under the plan, other than (i) interest at a simple annual rate not to exceed 36 percent and (ii) a participation fee not to exceed $50 per year. Any extension of credit made in violation of this subsection is void and no person shall have the right to collect, receive, or retain any principal, interest, fees, or other charges in connection with the extension of credit.
7. Any violation of the provisions of this section shall constitute a prohibited practice in accordance with § 59.1-200 and shall be subject to any and all of the enforcement provisions of the Virginia Consumer Protection Act (§ 59.1-196 et seq.).
8. A third party shall not engage in the extension of credit under an open-end credit plan described in this section.

History. 1987, cc. 622, 639, 714, § 6.1-330.78; 1992, Sp. Sess., c. 4; 1997, c. 112; 2009, cc. 784, 860; 2010, cc. 477, 794; 2020, cc. 1215, 1258.

Editor’s note.

Acts 2010, c. 477, effective October 1, 2010, amended former § 6.1-330.78, from which this section is derived. Pursuant to § 30-152 and Acts 2010, c. 794, cl. 4, the 2010 amendment by c. 477 has been given effect in this section as set out above, by deleting “Except as provided in subsection D” at the beginning of subsection C, and rewriting subsection D, which formerly read: “No prohibition in subsection C shall apply to an extension of credit under an open-end credit plan that is secured by a security interest in a motor vehicle, as such term is defined in § 46.2-100 .”

Acts 2010, c. 477, cl. 3 provides: “That nothing in this act shall prohibit the collection of any outstanding loan or extension of credit made under § 6.1-330.78 of the Code of Virginia that is secured by a lien on a motor vehicle, in accordance with the terms of a loan agreement made prior to the effective date of this act; however, no additional extensions of credit or advances shall be made under such motor vehicle secured loan agreement, and such a motor vehicle secured loan agreement shall not be extended or renewed, on or after the effective date of this act.”

Acts 2010, c. 477, cl. 4 provides: “That an applicant for a license pursuant to Chapter 21 (§ 6.1-480 et seq.) of Title 6.1 of the Code of Virginia shall not be required to provide to the State Corporation Commission, in connection with the State Corporation Commission’s determination of whether the applicant satisfies the qualifications for licensure set forth in § 6.1-486, any business records or documents that relate to loans made by the applicant prior to October 1, 2007, pursuant to § 6.1-330.78 of the Code of Virginia. In addition, matters involving extensions of credit secured by a motor vehicle that have been reviewed and resolved between a person and the Commonwealth prior to the enactment of this act shall not be a bar to licensure under Chapter 21 (§ 6.1-480 et seq.) of Title 6.1 of the Code of Virginia.”

Acts 2010, c. 477, cl. 5 provides: “That the provisions of the first enactment of this act shall become effective on October 1, 2010.”

Acts 2020, cc. 1215 and 1258, cl. 5 provides: “That the provisions of the first and second enactments of this act shall become effective on January 1, 2021, except that the database required by § 6.2-1810 of the Code of Virginia, as amended by this act, shall be modified to accommodate the provisions of this first enactment of this act by January 1, 2022.”

The 2020 amendments.

The 2020 amendments by cc. 1215 and 1258 are identical, effective January 1, 2021, and added subsection A and redesignated former subsections A and B as subsections B and C; in subsection B, substituted “subsections D, E, and F” for “subsection C”; rewrote former subsection C and redesignated it as subsection D; redesignated former subsection D as subsection E; deleted former subsection E, pertaining to a licensee extending credit while its license is revoked or surrendered; and added subsections F through H.

§ 6.2-313. Open-end credit extended by banks or savings institutions.

1. Notwithstanding any statutory or case law, any bank or savings institution may impose finance charges and other charges and fees at such rates and in such amounts and manner as may be agreed by the borrower under an open-end credit plan.
2. In the event of the extension of credit by a bank or savings institution hereunder to be effected by the use of a credit card for the purchase of merchandise or services, no finance charge shall be imposed upon the cardholder or borrower on such extension of credit if payment in full of the unpaid balance owing for all extensions of credit under the open-end credit plan is received at the place designated by the creditor prior to the payment due date, which shall be at least 25 days later than the billing date.

History. 1987, cc. 622, 639, 714, § 6.1-330.63; 1992, Sp. Sess., c. 4; 1997, c. 112; 2005, c. 670; 2010, c. 794; 2015, cc. 453, 454.

The 2015 amendments.

The 2015 amendments by cc. 453 and 454 are identical, and in subsection B, substituted “payment due date” for “next billing date” and deleted “prior” preceding “billing” at the end of the subsection.

§ 6.2-314. Motor vehicle purchase loans by subsidiaries and affiliates of banks and savings institutions.

Notwithstanding any statutory or case law, a subsidiary or affiliate of a bank or savings institution that is not a licensee under the provisions of Chapter 15 (§ 6.2-1500 et seq.) may impose finance charges and other charges and fees at such rates and in such amounts and manner as the borrower has agreed on loans payable in installments for the purpose of financing the purchase of a motor vehicle.

History. 1987, c. 622, § 6.1-330.60; 1996, c. 242; 1997, c. 128; 1999, c. 610; 2001, c. 743; 2010, c. 794.

§ 6.2-315. Loans by certain financial institutions or brokers payable on demand or having a term up to one year.

Any bank, savings institution, broker duly licensed to transact business as a stockbroker, or broker-dealer registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission, may loan money or discount bonds, bills, notes or other paper, whether payable on demand or for periods up to one year. Such a loan or discounting may be lawfully enforced as agreed in the contract of indebtedness. An interest rate charged in advance upon the entire amount of the loan or discount shall be lawful.

History. 1987, c. 622, § 6.1-330.62; 2010, c. 794.

§ 6.2-316. Loans of $5,000 or more made by certain financial institutions.

No person shall, by way of defense or otherwise, avail himself of the provisions of this chapter or any other section relating to usury to avoid or defeat the payment of interest, or any other sum, upon a loan made to a person by a bank, savings institution, industrial loan association, or credit union, if the initial principal amount of the loan is $5,000 or more.

History. 1987, c. 622, § 6.1-330.61; 2010, c. 794.

§ 6.2-317. Loans of $5,000 or more for business or investment purposes.

1. For purposes of this section:
   1. A loan shall be deemed to be for business or investment purposes if it is not for personal, family, or household purposes; and
   2. Personal, family, or household purposes do not include a passive or active investment.
2. No person shall, by way of defense or otherwise, avail himself of the provisions of this chapter, or any other statutory or case law relating to usury or compounding of interest, to avoid or defeat the payment of interest, or any other sum, in connection with a loan made to a person for business or investment purposes, if the initial amount of the loan is $5,000 or more.

History. 1987, c. 622, § 6.1-330.75; 2010, c. 794.

CIRCUIT COURT OPINIONS

Usury defense not available to borrower. —

Under § 6.1-330.75, the borrower was estopped from using the defense of usury to the lender’s motion for summary judgment where the loan proceeds were for more than $5,000. Berry v. Martens, 58 Va. Cir. 315, 2002 Va. Cir. LEXIS 54 (Fairfax County Mar. 7, 2002) (decided under former § 6.1-330.75).

§ 6.2-318. Loans by credit unions.

1. As used in this section, “average daily balance” means, for any billing period, that amount which is the sum of the actual amounts outstanding each day during the billing period divided by the number of days in the billing period.
2. Notwithstanding any other statute or provision relating to interest or usury, any credit union may charge interest as agreed by the borrower provided such interest is not charged in advance.
3. Any open-end credit plan offered by a credit union shall provide:
   1. For computation of any finance charges by application of a rate, at the option of the credit union, to:
      1. The average daily balance for the period ending on the billing date;
      2. The balance existing on the billing date of the month; or
      3. Any other balance which does not result in the credit union charging or receiving any sum in excess of what would be charged or received under subdivision a or b;
   2. That no finance charge shall be imposed unless the bill is mailed not later than eight days, excluding Saturdays, Sundays and holidays, after the billing date, except that such time limitation shall not apply in any case where the credit union has been prevented, delayed, or hindered in mailing or delivering the bill within such time period because of an act of God, war, civil disorder, natural disaster, strike, or other excusable or justifiable cause; and
   3. That in the event of the extension of open-end credit by a credit union to be effected by the use of a credit card for the purchase of merchandise or services, no finance charge shall be imposed upon the member or cardholder on such extension of credit if payment in full of the unpaid balance owing for extensions of credit for merchandise or services is received at the place designated by the credit union prior to the payment due date, which shall be at least 25 days later than the billing date.
4. Notwithstanding any provision of this chapter other than § 6.2-327 and subsection C, a credit union engaged in extending credit under an open-end credit plan may impose, on credit extended under the plan, finance charges and other charges and fees at such rates and in such amounts and manner as may be agreed upon by the credit union and the obligor, if under the plan a finance charge is imposed upon the obligor.

History. 1987, c. 622, § 6.1-330.64; 2006, c. 753; 2010, c. 794; 2015, cc. 453, 454.

The 2015 amendments.

The 2015 amendments by cc. 453 and 454 are identical, and in subdivision C 3, substituted “payment due date” for “next billing date” and deleted “prior” preceding “billing” at the end of the subdivision; and in subsection D, inserted “and subsection C” and deleted “if payment in full of the unpaid balance is not received at the place designated by the creditor prior to the next billing date, which shall be at least 25 days later than the prior billing date” at the end of the subsection.

§ 6.2-319. Loans by pension plans to participants.

1. As used in this section, “pension plan” includes an “employee pension benefit plan” or “pension plan” as defined in § 3(2) of the federal Employee Retirement Income Security Act of 1974 (P.L. 93-406, 88 Stat. 829).
2. Loans by a pension plan to an individual participating in the pension plan shall be lawfully enforced as agreed in the contract of indebtedness. No such participating individual, by way of defense or otherwise, shall avail himself of the provisions of this chapter, or any other law relating to interest or usury, to avoid or defeat the payment of interest or any other sum on any loan made by the pension plan. Nothing contained in any law relating to interest or usury shall be construed to prevent the recovery of such interest or other sum though it is more than otherwise lawful interest and though that fact appears on the face of the contract.

History. 1987, c. 622, § 6.1-330.67; 2010, c. 794.

§ 6.2-320. Loans by industrial loan associations.

1. Notwithstanding any statutory or case law relating to interest or usury, loans made by an industrial loan association payable in weekly, monthly, or other periodic installments may be enforced as agreed in the contract of indebtedness. In addition, such association may charge or collect in advance from the borrower on such loans a loan fee not exceeding two percent of the principal amount of the loan. An interest rate charged in advance upon the entire amount of the loan or pursuant to a written modification agreement shall be lawful.
2. An industrial loan association may charge interest at an annual rate not exceeding 18 percent on loans payable on demand or in a single payment. In addition, such association may charge or collect in advance from the borrower on such loans a loan fee not exceeding two percent of the principal amount of the loan.

History. 1987, c. 622, § 6.1-330.68; 2010, c. 794.

§ 6.2-321. Loans pursuant to stock option financing programs.

1. As used in this section, “stock option financing program loan” means a loan pursuant to which a lender finances the option holder’s exercise of the option to purchase stock, which exercise is financed through such means as purchasing the stock on margin, selling sufficient shares of the stock to cover the total exercise cost, or selling the full quantity of stock to cover the total exercise cost.
2. No person shall, by way of defense or otherwise, avail himself of the provisions of this chapter, or any other statutory or case law relating to usury or compounding of interest, to avoid or defeat the payment of interest, or any other sum, in connection with a loan made to a person pursuant to a stock option financing program loan.

History. 2003, c. 439, § 6.1-330.78:1; 2010, c. 794.

§ 6.2-322. Extensions of credit on pledged securities.

A broker-dealer licensed by the Commission and registered with the Securities Exchange Commission who extends credit to a customer on pledged securities as permitted under the provisions of the Securities Exchange Act of 1934, may charge the customer, on his debit balances that are payable on demand, interest at a annual rate that does not exceed one and three-quarters percent above the higher of:

1. The interest rate charged such broker-dealer by a bank doing business in the Commonwealth on loans collateralized by securities; or
2. The interest rate charged such broker-dealer by a bank doing business in the Commonwealth on loans for business purposes.

History. 1987, c. 622, § 6.1-330.65; 2010, c. 794.

§ 6.2-323. Educational loans by banks or savings institutions.

Notwithstanding any statutory or case law relating to interest or usury, including the deferral and capitalization of interest, any loan made by a bank or savings institution to defray educational expenses, including tuition, fees, books, supplies, room, board, and personal expenses, shall be lawfully enforced as agreed in the contract of indebtedness.

History. 1987, c. 622, § 6.1-330.60; 1996, c. 242; 1997, c. 128; 1999, c. 610; 2001, c. 743; 2010, c. 794.

§ 6.2-324. Educational loans by private institution of higher education.

1. As used in this section, “private institution of higher education” means an accredited nonprofit private institution of higher education in the Commonwealth whose primary purpose is to provide collegiate or graduate education.
2. Loans made by a private institution of higher education to defray educational expenses of its students, including tuition, fees, books, supplies, room, board, and personal expenses, may be enforced as agreed in the contract of indebtedness.

History. 1987, c. 622, § 6.1-330.66; 2010, c. 794.

Editor’s note.

At the direction of the Virginia Code Commission, the following changes were made to conform to Acts 2016, c. 588: substituted “institution of higher education” for “college or university” in subsection A and catchline; substituted “an accredited nonprofit private institution of higher” for “a private, accredited and nonprofit institution of collegiate” in subsection A; and substituted “institution of higher education” for “college or university in the Commonwealth” in subsection B.

§ 6.2-325. Certain loans secured by first deed of trust or mortgage.

1. As used in this section, “real estate” includes a leasehold estate of not less than 25 years.
2. Notwithstanding the provisions of any law relating to interest or usury, contracts made for the loan of money, secured or to be secured by a first deed of trust or first mortgage on real estate, or by a first priority security interest in the stock of a residential cooperative housing corporation, may be enforced as agreed in the contract of indebtedness or other agreement signed by the borrower.
3. For the purpose of this section, an interest rate which varies in accordance with any exterior standard, or which cannot be ascertained from the contract without reference to any exterior circumstances or documents, shall be enforceable as agreed in the contract of indebtedness or other signed agreement.
4. Disclosure of charges in a disclosure given to the borrower pursuant to federal disclosure laws or regulations and acceptance of the loan proceeds by the borrower shall be deemed an agreement signed by the borrower within the meaning of this section.

History. 1987, c. 622, § 6.1-330.69; 2010, c. 794.

§ 6.2-326. Fees and charges in connection with loans by real estate lenders.

1. A lender engaged in making real estate mortgage or deed of trust loans, other than loans subject to the provisions of §§ 6.2-327 and 6.2-328 , may:
   1. Charge or collect in advance from the borrower a loan fee as agreed between the parties; and
   2. Require the borrower to pay the reasonable and necessary charges in connection with making the loan, including the cost of title examination, title insurance, recording and filing fees, taxes, insurance, including mortgage guaranty insurance, appraisals, credit reports, surveys, drawing of papers, and closing the loan.
2. The fees and charges permitted by this section and other sections of this chapter are in addition to those permitted by § 6.2-325 and may be added to the principal of the loan, and shall not be considered in determining whether a loan contract is usurious.

History. 1987, c. 622, § 6.1-330.70; 1990, c. 3; 2010, c. 794.

Michie’s Jurisprudence.

For related discussion, see 18 M.J. Surveys and Surveyors, § 1.

§ 6.2-327. Certain loans secured by a subordinate deed of trust or mortgage.

1. As used in this section:“Exempt subordinate mortgage lender” means (i) a bank, savings institution, industrial loan association, or credit union or (ii) a seller in a real estate sales transaction who takes a subordinate mortgage or deed of trust on such real estate.“New money” means money advanced in excess of the outstanding principal balance at the time a new advance is made.“Real estate” includes a leasehold estate of not less than 25 years.“Residential real estate” means real estate improved by the construction thereon of housing consisting of one- to four-family dwelling units.
2. An add-on interest loan shall be subject to the following provisions:
   1. Any person may charge add-on interest that results in an annual yield of not more than 18 percent upon loans secured in whole or in part by a subordinate mortgage or deed of trust on residential real estate;
   2. An add-on interest loan may be made only under this subsection and shall not exceed a period of five years and one month; and
   3. The lender may also impose a loan fee not exceeding two percent of the principal amount of the loan provided that such loan fee shall not be imposed more often than once each 18 months except to the extent that new money is advanced within such 18-month period by a renewal or additional loan. New money shall be money advanced in excess of the outstanding principal balance at the time such new advance is made. These provisions shall apply whether such loan fee is payable directly to the lender or to a third party in connection with such loan.
3. No charge, other than actual costs documented to the applicant and expended for a credit report and an appraisal of the real estate conducted in connection with the loan application, may be made if a loan secured by a subordinate mortgage or deed of trust is not made. Such charge:
   1. Shall not exceed one percent of the amount of the loan applied for; but in no event shall such charge exceed $50 or one-half of such costs, whichever is less; and
   2. May be made only if the lender commits to make the loan. Such commitment shall be in writing and signed by the lender or a person who the lender has authorized to execute such documents.
4. Any loan secured by a subordinate mortgage or deed of trust on residential real estate upon which the interest is charged at an annual interest rate on the unpaid balance thereof shall be subject to the following provisions:
   1. Such a loan may be lawfully enforced at the annual interest rate stated in the contract of indebtedness on the principal amount of the loan. Such annual interest rate may vary in accordance with an exterior standard;
   2. In addition to the annual interest rate permitted by subdivision 1, the lender may charge the borrower a loan fee not exceeding five percent of the principal amount of the loan, provided that such loan fee shall not be imposed more often than once each 18 months except to the extent that new money is advanced within such 18-month period by a renewal or additional loan. Such loan fee may only be reimposed by the lender upon a borrower in connection with the refinancing of a loan made pursuant to this subsection; and
   3. The lender may charge the borrower with the actual costs of the loan as permitted by § 6.2-328 .
5. The rates, charges and other provisions permitted or required by this section or by § 6.2-328 shall apply to all loans secured by a subordinate mortgage or deed of trust, including, without limitation, (i) single maturity loans, (ii) amortizing loans, and (iii) loans secured by a credit line deed of trust as permitted by § 55.1-318 .
6. Except for the loan fee permitted in this section, no discount, initial interest, points or charges by any other name may be collected, charged or added to a loan secured by a subordinate mortgage or deed of trust upon residential real estate.
7. The provisions of this section shall not apply to any loan by an exempt subordinate mortgage lender.
8. For the purpose of this section, an interest rate that varies in accordance with any exterior standard, or that cannot be ascertained from the contract without reference to any exterior circumstances or documents, shall be enforceable as agreed in the contract of indebtedness or other signed agreement.
9. The borrower under any loan to which the provisions of this section apply may assert any defense or claim he may have under §§ 6.2-304 and 6.2-305 against any assignee or transferee of the contract of indebtedness.

History. 1987, c. 622, §§ 6.1-330.59, 6.1-330.69, 6.1-330.71; 1991, c. 157; 1996, c. 243; 2010, c. 794.

Editor’s note.

Acts 2010, c. 794, cl. 9 provides: “That the provisions of §§ 6.2-304 , 6.2-305 , and 6.2-306 shall apply to all loans made under (i) § 6.2-327 , (ii) former § 6.1-330.71 that closed between July 1, 1987, and the effective date of this act, or (iii) former § 6.1-330.16 as amended in 1986, that closed between July 1, 1986, and July 1, 1987. For the purposes of this enactment, a loan shall be deemed closed upon the initial recordation of the deed of trust or mortgage securing the loan.”

To conform to the recodification of Title 55 by Acts 2019, c. 712, effective October 1, 2019, the following substitution was made at the direction of the Virginia Code Commission: substituted “55.1-318” for “55-58.2.”

§ 6.2-328. Charges allowed on loan secured by subordinate mortgage.

1. Any lender making a loan secured by a subordinate mortgage or deed of trust may require the borrower to pay, in addition to the loan fee and interest permitted by § 6.2-327 , the actual cost of a credit report, title examination, title insurance, mortgage guaranty insurance, recording fees, surveys, attorney fees, appraisal fees, and a fee to determine if the property securing the loan is located in a special flood hazard area. No other charges of any kind shall be imposed on or be payable by the borrower either to the lender or any other party in connection with such loan other than:
   1. A fee charged by the settlement agent as defined in § 55.1-1000 ;
   2. Late charges in the amount specified in § 6.2-400 and a prepayment penalty permitted under § 6.2-423 that are contracted for; and
   3. Upon default, court costs, attorney fees, trustee’s commission, and other expenses of collection to which the borrower may be subject as otherwise permitted by law.
2. Broker’s or finder’s fees may be paid by the lender from the loan fee or interest permitted under § 6.2-327 . A broker’s fee, finder’s fee, or commission not to exceed five percent of the principal amount of the loan may be paid by the borrower if the total of the loan fee permitted under § 6.2-327 and the broker’s fee, finder’s fee, or commission does not exceed five percent of the principal amount of the loan.
3. The premium for any insurance required or provided pursuant to § 6.2-411 shall not be considered a charge imposed on or payable by the borrower in connection with the loan.
4. No charge may be imposed or collected, except as permitted by § 6.2-327 , if the loan is not made.
5. This section shall not apply to any loan made by (i) a bank, savings institution, industrial loan association, or credit union or (ii) a seller in a real estate sales transaction who takes a subordinate mortgage or deed of trust on such real estate.
6. The borrower under any loan to which the provisions of this section apply may assert any defense or claim he may have under §§ 6.2-304 and 6.2-305 against any assignee or transferee of the contract of indebtedness.

History. 1987, c. 622, § 6.1-330.72; 1993, c. 774; 1995, c. 75; 1996, c. 243; 1998, cc. 69, 89; 2010, c. 794.

Editor’s note.

To conform to the recodification of Title 55 by Acts 2019, c. 712, effective October 1, 2019, the following substitution was made at the direction of the Virginia Code Commission: substituted “55.1-1000” for “55-525.16.”

§ 6.2-329. Loans insured or guaranteed by certain governmental agencies.

1. No person shall, by way of defense or otherwise, avail himself of any of the provisions of this chapter or any other law relating to usury or any statutory or case law relating to compounding of interest to avoid or defeat the payment of any interest or any other sum which he has contracted to pay on any loan:
   1. Insured by the Federal Housing Administration, pursuant to the provisions of the National Housing Act (12 U.S.C. § 1701 et seq.);
   2. Guaranteed by the U.S. Department of Veterans Affairs, pursuant to Title 38 of the United States Code; or
   3. Insured or guaranteed by any similar federal governmental agency or organization, or made directly or indirectly by the Virginia Housing Development Authority pursuant to the provisions of Chapter 1.2 (§ 36-55.24 et seq.) of Title 36.
2. Nothing contained in this chapter shall be construed to prevent the recovery of such interest or any other sum from any person who has contracted to pay the same in connection with any loan described in this section.

History. 1987, c. 622, § 6.1-330.74; 2010, c. 794.

Editor’s note.

At the direction of the Virginia Code Commission, “U.S. Department of Veterans Affairs” was substituted for “Veterans Administration.”

§ 6.2-400. Amount of late charge; when charge can be made.

1. As used in this section:“Late charges” does not include charges imposed upon acceleration of the entire debt or costs of collection and attorney fees as otherwise permitted by law by reason of a default by the debtor.“Timely payment” means a payment made by the date fixed for payment or within a period of seven calendar days after such due date.
2. Any lender or seller may impose a late charge for failure to make timely payment of any installment due on a debt, whether installment or single maturity, provided that such late charge does not exceed five percent of the amount of such installment payment and that the charge is specified in the contract between the lender or seller and the debtor.
3. If any federal governmental agency or organization shall adopt any rules or regulations dealing with the application of late penalties as to loans insured or guaranteed by such federal agency or organization, then such rules and regulations shall control as to such loans insured or guaranteed by them.
4. Any provision for late charges in excess of the amount permitted by this section shall be void as to such excess but shall not otherwise affect the validity of the obligation.

History. 1987, c. 622, § 6.1-330.80; 2010, c. 794.

§ 6.2-401. Acceleration clause in note evidencing installment loan; effect of acceleration.

1. Any note or other contract evidencing an installment loan or other installment sales obligation with add-on interest may provide that the entire unpaid loan balance, at the option of the holder, shall become due and payable upon default in payment of any installment without impairing the negotiability of the note, if otherwise negotiable.
2. Upon such acceleration, the holder of the contract of indebtedness shall not be entitled to judgment for unearned interest, but the balance owing shall be computed as follows:
   1. On loans payable in equal periodic installments with an initial maturity and corresponding amortization period not exceeding 61 months, the accelerated balance shall be calculated as if the borrower had made a voluntary prepayment and obtained as of the date of acceleration an interest credit based upon the Rule of 78 rebate method as defined in § 6.2-403 ; and
   2. On other loans, the accelerated balance shall be calculated under a method at least as favorable to the borrower as the actuarial method.
3. The accelerated balance shall bear interest at the rate shown, or that should have been shown as the annual percentage rate under a truth in lending disclosure pursuant to federal law if the transaction was a consumer credit transaction.

History. 1987, c. 622, § 6.1-330.89; 1990, c. 338; 1991, cc. 171, 365; 2010, c. 794.

Cross references.

As to when acceleration of payment or repossession of consumer goods is not allowed, see § 11-4.3 .

Michie’s Jurisprudence.

For related discussion, see 3C M.J. Commercial Law, § 95.

§ 6.2-402. Notice of use of Rule of 78 rebate method.

Where any loan or sale on credit contains a provision that a rebate of unearned interest shall be calculated in accordance with the Rule of 78 rebate method as defined in § 6.2-403 , the note or other instrument evidencing the loan or sale on credit shall contain a notice advising the borrower of the effect of the interest calculation. The notice shall be in all capital letters and in 10-point type, and shall be substantially as follows:

NOTICE: IF YOU PAY THIS LOAN OR SALE ON CREDIT PARTIALLY OR IN FULL BEFORE ITS DUE DATE, THE AMOUNT OF INTEREST YOU PAY WILL BE GREATER THAN THE AMOUNT OF INTEREST YOU WOULD PAY FOR A SIMPLE INTEREST LOAN OF THE SAME PRINCIPAL AMOUNT.

History. 1990, c. 941, § 6.1-330.85:1; 2010, c. 794.

§ 6.2-403. The Rule of 78.

1. The Rule of 78 is so named because the integers one through 12 added together total 78.
2. The amount of the rebate of unearned interest to be credited upon the acceleration or anticipation of a loan on which such rebate is required to be calculated under the Rule of 78 shall be calculated as follows:
   1. Determine the denominator of the fraction, to be used as provided in subdivision 3, by adding the integers corresponding to the number of months over which the loan is to be repaid according to its terms, which in the example of a four-year loan would be the sum obtained by adding all of the integers in the series one through 48.
   2. Determine the numerator of the fraction, to be used as provided in subdivision 3, by adding in inverse sequence the integers corresponding to the number of months remaining on the loan after payment is anticipated, which in the example of a four-year loan anticipated after the third month, would be the sum obtained by adding all of the integers in the series 45 through one.
   3. Multiply the original amount of interest that would have been paid over the life of the loan by a fraction that has as its denominator the number determined as in subdivision 1 and as its numerator the number determined as in subdivision 2. The product is the amount of unearned interest to be rebated under the Rule of 78.
3. Payment anticipated between scheduled payment dates shall not be considered but instead the succeeding scheduled payment date shall be used in determining the amount of unearned interest to be rebated under the Rule of 78 pursuant to this section.

History. 1987, c. 622, § 6.1-330.86; 2010, c. 794.

§ 6.2-404. When use of Rule of 78 prohibited or permitted.

1. The Rule of 78 shall not be used to determine the amount of unearned interest to be rebated if payment of the debt is anticipated on any (i) loan of money made after January 1, 1991, with an initial maturity of more than 61 months; or (ii) sales contract made after January 1, 1991, that necessitates a loan as described in clause (i).
2. On any loan of money made with an initial maturity and corresponding amortization period of 61 months or less and that is payable in equal periodic installments, the Rule of 78 may be used to determine the amount of unearned interest to be rebated if payment of the debt is anticipated on the loan or contract.

History. 1990, c. 338, § 6.1-330.86:1; 1991, c. 171; 2010, c. 794.

§ 6.2-405. References to sections regulating rebates of unearned interest and prepayment penalties.

1. This article does not affect the application of §§ 6.2-420 through 6.2-423 regarding the imposition of prepayment penalties or rebates of unearned interest on certain loans secured by a lien on real estate.
2. This article does not affect the application of § 6.2-1409 regarding the imposition of prepayment penalties or rebates of unearned interest on loans made by an industrial loan association.

History. 2010, c. 794.

§ 6.2-406. Disclosure of terms of mortgage application.

1. Any lender making, or broker arranging, loans secured by a first mortgage or first deed of trust on owner occupied residential real estate consisting of one- to four-family dwelling units shall provide, at the time an application for such a loan is submitted by a loan applicant, to the loan applicant a written statement that:
   1. Describes when the interest, points, and fees quoted will be locked in; and
   2. Provides a good faith estimate of the processing time required for the loan. The estimate shall take into account the time needed for the performance of any local government inspections or other functions necessary to close the loan.
2. The requirements of subsection A shall not apply to any lender making 10 or fewer loans secured by a first mortgage or first deed of trust on such owner occupied residential real estate in any 12-month period.

History. 1988, c. 311, § 6.1-2.9:5; 2010, c. 794; 2016, c. 328.

The 2016 amendments.

The 2016 amendment by c. 328, in subdivision A 1, deleted “if ever” following “Describes when”; deleted former subdivision A 2, which read “States that all the loan terms not legally locked in are subject to change until settlement, which shall be initialed by the loan applicant and lender or broker; and” and redesignated former subdivision A 3 as subdivision A 2.

§ 6.2-407. Lenders to furnish borrower with copy of appraisal.

Any lender that requires a borrower or prospective borrower to pay for an appraisal of residential real estate made in connection with a loan or application for a loan secured by the real estate shall, upon request by the borrower or prospective borrower, furnish free of charge the borrower or prospective borrower with a copy of the written appraisal or, if no written appraisal exists, with a statement of the appraised value within 10 business days of the receipt of such request.

History. 1979, c. 101, § 6.1-2.9; 1988, c. 155; 1990, c. 7; 2010, c. 794.

§ 6.2-408. Priority of interest on debts secured by mortgage or deed of trust.

Interest that is charged pursuant to a written agreement, whether or not recorded, shall be of equal priority with the principal debt secured by the mortgage or deed of trust and shall have priority as to third parties as provided in Title 55.1.

History. 1987, c. 622, § 6.1-330.69; 2010, c. 794.

Editor’s note.

To conform to the recodification of Title 55 by Acts 2019, c. 712, effective October 1, 2019, the following substitution was made at the direction of the Virginia Code Commission: substituted “Title 55.1” for “Title 55.”

§ 6.2-409. Addition of unpaid interest to principal balance.

1. For the purpose of this section:“First deed of trust” or “first mortgage” includes all deeds of trust and mortgages, and amendments thereto, that are made by the same grantor or mortgagor, secure notes held by the same holder, convey substantially the same real estate, and are superior to all other deeds of trust or mortgages on the real estate.“Grantor” or “mortgagor” includes an owner of real estate, and spouse, who has assumed responsibility for the obligation secured by such deed of trust or mortgage encumbering the real estate.“Real estate” includes a leasehold estate of not less than 25 years.
2. Notwithstanding any other statutory or case law relating to compounding of interest, if regularly scheduled periodic payments on an obligation secured by a first mortgage or first deed of trust on real estate are insufficient to pay currently accruing interest on the then principal balance, an agreement in the contract of indebtedness, or other agreement signed by the borrower, providing for the addition of such unpaid interest to the principal balance and the future accrual of interest on such balances, shall be enforceable as written.
3. Disclosure of charges in a disclosure given to the borrower pursuant to federal disclosure laws or regulations and acceptance of the loan proceeds by the borrower shall be deemed an agreement signed by the borrower within the meaning of this section.

History. 1987, c. 622, § 6.1-330.69; 2010, c. 794.

§ 6.2-410. Borrowers not to be required to employ particular professionals.

In the case of loans secured by deeds of trust or mortgages on one- to four-family dwelling units, the lender may not require the borrower to use the services of a particular attorney, surveyor, or insurer. The lender shall have the right to approve any attorney, surveyor, or insurer selected by the borrower, provided such approval is not unreasonably withheld.

History. 1987, c. 622, § 6.1-330.70; 1990, c. 3; 2010, c. 794.

Michie’s Jurisprudence.

For related discussion, see 18 M.J. Surveys and Surveyors, § 1.

§ 6.2-411. Requirements relating to insurance.

1. Any lender making a loan secured by a subordinate mortgage or deed of trust, as defined in § 6.2-300 , may require the borrower to provide:
   1. Evidence of flood insurance if the security property is located in a special flood hazard area;
   2. Evidence of fire and extended coverage insurance; and
   3. Decreasing term life insurance, in an amount not exceeding the amount of the loan and for a period not exceeding the term of the loan.
2. At the option of the borrower, accident and health insurance and involuntary unemployment insurance may be provided by the lender.
3. Proof of all insurance issued in connection with loans subject to this chapter shall be furnished to the borrower within 10 days from the date the loan is closed.

History. 1987, c. 622, § 6.1-330.72; 1993, c. 774; 1995, c. 75; 1996, c. 243; 1998, cc. 69, 89; 2010, c. 794.

§ 6.2-412. Insurance coverage under certain loans not to exceed replacement value of improvements.

1. As used in this section:“Flood insurance coverage” means insurance against loss or damage to any property caused by flooding or the rising of the waters of the ocean or its tributaries.“Property insurance coverage” means insurance against losses or damages caused by perils that commonly are covered in insurance policies described with terms similar to “standard fire” or “standard fire with extended coverage.”
2. No lender shall require a borrower, as a condition to receiving or maintaining a loan secured by any mortgage or deed of trust, to provide or purchase property insurance coverage or flood insurance coverage against risks to any improvements on any real property in an amount exceeding the replacement value of the improvements on the real property.
3. In determining the replacement value of the improvements on any real property, the lender may:
   1. Accept the value placed on the improvements by the insurer; or
   2. Use the value placed on the improvements that is determined by the lender’s appraisal of the real property.
4. A violation of this section shall not affect the validity of the mortgage or deed of trust securing the loan.

History. 1989, c. 230, § 6.1-2.6:1; 2010, c. 794; 2014, c. 247.

The 2014 amendments.

The 2014 amendment by c. 247, in subsection A, inserted the definition of “Flood insurance coverage”; and in subsection B, inserted “or flood insurance coverage” following “insurance coverage.”

Research References.

Virginia Forms (Matthew Bender). No. 16-7007 Agreement to Provide Insurance. No. 16-7008 Flood Insurance Authorization.

§ 6.2-413. Obligation of lender to reimburse unused mortgage guaranty insurance premiums.

Any lender that requires, as a prerequisite to its lending money for the purchase of real property, that private mortgage insurance be secured to insure a certain amount of the lender’s interest in the property shall return to the person who paid the premium, or other person entitled thereto, any portion of the premium for such insurance that is not used to secure insurance for the lender’s interest in the property.

History. 1980, c. 748, § 6.1-2.9:1; 1990, c. 7; 2010, c. 794.

§ 6.2-414. Obligation of person maintaining escrow account to pay taxes and insurance; penalties.

Any lender or other person maintaining escrow accounts for the payment of taxes or insurance, who on receipt of notice thereof, fails to make timely payment therefor, and incurs a penalty or late charge thereon or a cancellation for nonpayment if there are sufficient funds in such escrow account at least five days before such due date to make such payment, shall be liable for the penalty or late charge assessed for late payment and for any loss as a result of the property being uninsured for nonpayment. The lender or other person shall give written notice to any obligor of the payment of such penalty or late charge within five days after such payment is made.

History. 1978, c. 685, § 6.1-2.8; 2010, c. 794.

§ 6.2-415. Lender not to cancel insurance policy at time of refinancing under certain circumstances.

1. No lender shall require a borrower or debtor, for the protection of property securing the credit or lien, to cancel an existing insurance policy on such property at the time of a refinancing solely to change the effective dates of coverage under the policy, unless the expiration date of such policy is within four months of the date of the closing.
2. The provision of subsection A shall not prevent a lender from requesting a new policy when the coverage under the existing policy is inadequate or there is reasonable concern over the soundness or services of the insurer.

History. 1995, c. 175, § 6.1-2.9:6; 2010, c. 794.

§ 6.2-416. Certain mortgages not to prohibit further encumbrance of real property.

Where any loan is secured by a mortgage or deed of trust on real property comprised of one- to four-family residential dwelling units, the note, or mortgage or deed of trust evidencing such loan shall in no way prohibit the further encumbrance of the real property.

History. 1975, c. 398, § 6.1-2.5; 2010, c. 794.

§ 6.2-417. Mortgage or deed of trust to contain notice that debt is subject to call or modification on conveyance of property.

Where any loan is secured by a mortgage or deed of trust on real property comprised of one- to four-family residential dwelling units, and the note or mortgage or deed of trust evidencing or securing the loan contains a provision that the holder of the note secured by such mortgage or deed of trust may accelerate payment of or renegotiate the terms of such loan upon sale or conveyance of the security property or part thereof, then the mortgage or deed of trust shall contain in the body a statement, either in capital letters or underlined, that advises the borrower as follows: “Notice — The debt secured hereby is subject to call in full or the terms thereof being modified in the event of sale or conveyance of the property conveyed.”

History. 1987, c. 622, § 6.1-330.88; 2010, c. 794; 2014, c. 330.

The 2014 amendments.

The 2014 amendment by c. 330 deleted “or on the margin thereof” following “in the body.”

Research References.

Virginia Forms (Matthew Bender). No. 16-601 Deed of Trust Note — Simple Form, et seq.; No. 16-701 Deed of Trust — Simplified Form, et seq.; No. 16-861 Usury Savings Clause.

§ 6.2-418. Property owner entitled to written statement of payoff amount.

1. If an obligation is secured by the lien of a deed of trust or mortgage on real estate, and the owner of the real estate is entitled to prepay the obligation secured by the deed of trust or mortgage, the owner shall be entitled to receive from the holder of the obligation a written statement setting forth the total amount to be paid as of a particular date in order to obtain a release of the deed of trust or mortgage.
2. The holder of the obligation secured by the deed of trust or mortgage shall mail or deliver such written statement of the payoff amount to the property owner or his designee within 10 business days of the receipt of a written request for such payoff information from the property owner or his designee if the request contains the loan number and the address or other description of the location of the subject premises.
3. Upon payment in full of the obligation, the holder shall promptly cause the cancelled loan documents to be forwarded to the owner or his designee.
4. An inadvertent error made in the calculation of the payoff amount shall neither release the obligor from the requirement to pay the full amount due under the contract of indebtedness, nor release the holder of the contract of indebtedness from the requirement to return any overpayment to the obligor or his designee.
5. A request for payoff information under this section may be made one time within a 12-month period without charge, and a fee not exceeding $15 may be charged for each additional request made within such period.

History. 1987, c. 622, § 6.1-330.82; 2010, c. 794.

§ 6.2-419. Disclosure of terms of assumption.

1. An owner of residential real estate that is improved by the construction thereon of housing consisting of four or fewer dwelling units and encumbered by a mortgage or deed of trust shall have the right, upon written request to any holder of the obligation secured by the mortgage or deed of trust, to receive a written disclosure of whether the holder will permit a qualified purchaser to assume the mortgage or deed of trust. If the answer is in the affirmative, the holder shall disclose the following information regarding the terms of such assumption:
   1. The rate of interest to be assumed, which may vary with an exterior standard;
   2. The balance of the escrow account, if any;
   3. Any fees and charges to be assessed by the holder against the seller and buyer in connection with the assumption;
   4. Usual limitations or requirements placed on the assumption; and
   5. Other terms and conditions of the assumption deemed pertinent by the holder.
2. The holder shall state the time period during which the terms disclosed pursuant to subsection A shall be valid, together with any limitations thereon.
3. Any holder receiving such a written request from an owner shall respond in writing within 10 business days of the receipt of the request.
4. Any holder receiving a second or subsequent written request with respect to the same mortgage or deed of trust within any 12-month period may charge a fee, not to exceed $15, for each additional request. The fee shall be paid in advance.

History. 1982, c. 233, § 6.1-2.9:3; 1990, c. 7; 2010, c. 794.

§ 6.2-420. Prepayment penalty not to be collected in certain circumstances.

No lender shall collect or receive any prepayment penalty on loans secured by real property comprised of one- to four-family residential dwelling units if the prepayment results from the enforcement of the right to call the loan upon the sale of the real property that secures the loan. If the loan is prepaid because of sale to a person who the lender has refused to approve for purposes of assuming the loan or failed to approve within 15 days after receipt by it of written request for approval, the prepayment shall be presumed to result from enforcement of the right to call the loan.

History. 1987, c. 622, § 6.1-330.87; 2010, c. 794.

Michie’s Jurisprudence.

For related discussion, see 14B M.J. Payment, § 10.

§ 6.2-421. Certain contracts to permit prepayment; amount of prepayment penalty.

1. For the purpose of this section:
   1. “First deed of trust” or “first mortgage” includes all deeds of trust and mortgages, and amendments thereto, that are made by the same grantor or mortgagor, secure notes held by the same holder, convey substantially the same real estate, and are superior to all other deeds of trust or mortgages on the real estate; and
   2. “Real estate” includes a leasehold estate of not less than 25 years.
2. Every loan contract, except as provided in subsection D, that is secured by a first deed of trust or first mortgage on real estate if the principal amount of the loan is less than $75,000, shall:
   1. Permit the prepayment of the unpaid principal at any time; and
   2. Not provide for a prepayment penalty in excess of one percent of the unpaid principal balance.
3. Any prepayment penalty provision in violation of subdivision B 2 shall be unenforceable as to the amount in excess of one percent of such balance.
4. The provisions of:
   1. Subsections B and C shall not apply to secured or unsecured notes evidencing installment sales contracts; and
   2. Subdivision B 2 and subsection C shall not apply to any loan contract that is (i) subject to § 6.2-422 or 6.2-1409 or (ii) governmentally regulated as to prepayment privilege.

History. 1987, c. 622, §§ 6.1-330.69, 6.1-330.81; 2010, c. 794.

Michie’s Jurisprudence.

For related discussion, see 14B M.J. Payment, § 10.

OPINIONS OF THE ATTORNEY GENERAL

When a borrower pays down the balance of a loan with an initial principal amount exceeding $75,000

that is secured by property owned in whole or in part by the borrower, both a federally regulated financial institution, which holds the note and mortgage that were purchased for value, and a state-regulated financial institution, which was the maker of the note, are permitted to charge a two percent prepayment penalty. See opinion of Attorney General to The Honorable L. Scott Lingamfelter, Member, House of Delegates, 07-014, 2007 Va. AG LEXIS 16 (6/1/07) (interpreting prior law).

§ 6.2-422. Prepayment penalty for loan secured by home occupied by borrower.

The prepayment penalty in the case of a loan secured by a mortgage or deed of trust on a home that is occupied or to be occupied in whole or in part by a borrower shall not exceed two percent of the amount of such prepayment.

History. 1987, c. 622, § 6.1-330.83; 2010, c. 794.

Michie’s Jurisprudence.

For related discussion, see 14B M.J. Payment, § 10.

§ 6.2-423. Prepayment of loans secured by certain subordinate mortgages or deeds of trust; rebates for unearned interest.

1. Any borrower under any loan secured by a subordinate mortgage or deed of trust on residential real estate, which loan is subject to the provisions of § 6.2-327 , shall have the right to anticipate payment of his debt in whole or in part at any time. If agreed to by the borrower, a lender may contract for a penalty for prepayment of the full amount of the loan if the prepayment penalty shall not exceed two percent of the principal amount prepaid, but no prepayment penalty shall be imposed if:
   1. The loan is refinanced or consolidated with the same lender or a subsequent noteholder;
   2. The loan is accelerated due to default;
   3. A partial prepayment is made; or
   4. In the case of an open-end credit plan, as defined in § 6.2-300 , where there is a payment of the outstanding balance without a demand to release the subordinate deed of trust or mortgage.
2. If interest has been added to the face amount of a note payable in installments, the borrower shall have the right to a rebate of any unearned interest. On loans with an initial maturity and corresponding amortization period of 61 or fewer months that are payable in equal periodic installments, the rebate shall be computed in accordance with the Rule of 78 as illustrated in § 6.2-403 . On loans with an initial maturity of more than 61 months, the rebate shall be computed under a method at least as favorable to the borrower as the actuarial method.
3. The provisions of this section shall not apply to any loan made by (i) a bank, savings institution, industrial loan association, or credit union or (ii) a seller in a real estate sales transaction who takes a subordinate mortgage or deed of trust on such real estate.

History. 1987, c. 622, § 6.1-330.85; 1990, c. 338; 1991, c. 171; 1998, c. 89; 2010, c. 794.

Michie’s Jurisprudence.

For related discussion, see 14B M.J. Payment, § 10.

§ 6.2-424. Definitions.

As used in this article, unless the context otherwise requires:

“Cardholder” means the person or organization named on the face of a credit card to whom or for whose benefit the credit card was issued by an issuer.

“Credit card” means any instrument or device, whether known as a credit card, credit plate, or by any other name, issued with or without fee by an issuer for the use of the cardholder in obtaining money, goods, services, or any other thing of value.

“Issuer” means the business organization or financial institution or its duly authorized agent that issues a credit card.

“Payment device” means any credit card, any “accepted card or other means of access” as defined in 15 U.S.C. § 1693a(1), or any card that enables a person to pay for transactions through the use of value stored on the card itself.

History. 1970, c. 324, § 11-30 ; 2010, c. 794.

§ 6.2-425. Cardholder not liable in absence of request for, consent to issuance of, or use of card.

1. A cardholder who receives a credit card from an issuer, which card the cardholder has not requested nor consented to the issuance of in writing, nor used, shall not be liable for any amount owing because of a use of the credit card.
2. The failure to destroy or return an unsolicited credit card shall neither:
   1. Be evidence of a cardholder’s request for or consent to the issuance of the credit card, nor
   2. Constitute negligence on the part of the cardholder.
3. Use by an authorized agent of the cardholder shall be the equivalent of use by the cardholder. The burden of proving the authority of an agent shall be upon the issuer.

History. 1970, c. 324, § 11-31; 2010, c. 794.

Michie’s Jurisprudence.

For related discussion, see 3C M.J. Commercial Law, § 95.

§ 6.2-426. When request, consent, or use not condition precedent to liability.

The request, consent, or use required in § 6.2-425 as a condition precedent to liability shall not be necessary in any instance:

1. Of a credit card that is a renewal of a credit card previously held and used by the cardholder or his authorized agent within 12 months of the renewal date; or
2. Where the card is issued to a customer who has previously established credit with the issuer and has used such credit within 12 months prior to the issuance of the card.

History. 1970, c. 324, § 11-32; 2010, c. 794.

§ 6.2-427. Costs and attorney fee in suit on card; evidence of request or consent.

1. In any suit arising out of the use of a credit card, where the request, consent, or use as required by § 6.2-425 is denied and is not proved, and judgment shall be for the defendant, the court shall assess against the issuer all court costs and shall award the defendant a reasonable attorney fee.
2. For purposes of subsection A, a certified copy of the request or consent shall be admissible as evidence that such request or consent was obtained.

History. 1970, c. 324, § 11-33; 2010, c. 794.

§ 6.2-428. Production of credit card number as condition of check cashing or acceptance prohibited.

1. Except as otherwise provided in subsection D, no person shall, as a means of identification or for any other purpose:
   1. Require that a person produce a credit card number for recordation; or
   2. Record a credit card number in connection with (i) a sale of goods or services in which a purchaser pays by check or (ii) the acceptance of a check.
2. A person aggrieved by a violation of this section shall be entitled to institute an action to recover his actual damages or $100, whichever is greater, and to injunctive relief against any person who has engaged, is engaged, or is about to engage in any act in violation of this section. Such action shall be brought in the general district or circuit court, whichever is appropriate, of any county or city wherein the defendant resides or has a place of business. In the event the aggrieved party prevails, he may be awarded reasonable attorney fees and court costs in addition to any damages awarded.
3. This section shall not be construed to (i) impose liability on any employee or agent of a person, where that employee or agent has acted in accordance with the directions of his employer, (ii) prohibit a person from requesting a purchaser to display a credit card as an indication of creditworthiness or financial responsibility or as identification, and in these instances the type, the issuer, and the expiration date of the credit card may be recorded, or (iii) require acceptance of a check, whether or not a credit card is presented.
4. A person may require production of and may record a credit card number as a condition for cashing a check only where (i) the person requesting the card number has agreed with the issuer to cash checks as a service to the issuer’s cardholders, (ii) the issuer has agreed to guarantee cardholder checks cashed by that person, and (iii) the cardholder has given actual, apparent, or implied authority for use of his card number in this manner and for this purpose.

History. 1990, c. 587, § 11-33.1; 2010, c. 794.

Michie’s Jurisprudence.

For related discussion, see 3C M.J. Commercial Law, § 94.

§ 6.2-429. Improper use of payment device numbers.

1. No person that accepts payment devices for any purpose shall print on any receipt provided to the holder of the payment device (i) more than the last four digits of the payment device number or (ii) the expiration date.
2. For transactions in which the sole means of recording the person’s payment device number is by handwriting or by an imprint or copy of the payment device, no receipt, other than the one original, shall display the information prohibited in subsection A. Returning all copies, including carbons, that do not comply with this section, to the payment device holder or authorized user or destroying such copies and carbons in front of the payment device holder or authorized user shall constitute compliance with this section.
3. The provisions of this section shall apply to all cash registers or other machines or devices that electronically print receipts for payment device transactions that are placed in service on or after July 1, 2003.
4. For all cash registers or other machines or devices that electronically print receipts for payment device transactions in service prior to July 1, 2003, the provisions of this subsection shall not apply until July 1, 2005.
5. Any person violating this section (i) shall be liable to the payment device holder and the issuer for any damages or expenses, or both, including attorney fees, that the payment device holder incurs due to the use of the payment device without the permission of the payment device holder and (ii) may be compelled, in a proceeding instituted in any appropriate court by the attorney for the Commonwealth, to comply with this section by injunction, mandamus, or other appropriate remedy. Without limiting the remedies authorized by this section in a proceeding instituted by the attorney for the Commonwealth, any person failing, neglecting, or refusing to obey any injunction, mandamus, or other remedy obtained pursuant to this section, shall be subject, in the discretion of the court, to a civil penalty not to exceed $1,000 for each violation.

History. 2002, c. 744, § 11-33.2; 2004, c. 793; 2009, c. 373; 2010, c. 794.

Michie’s Jurisprudence.

For related discussion, see 3C M.J. Commercial Law, § 94.

§ 6.2-430. Place where transaction occurred; federal Fair Credit Billing Act.

Solely for the purpose of a buyer asserting claims and defenses pursuant to 15 U.S.C. § 1666i, a transaction shall be presumed to have occurred at the mailing address most recently provided by the cardholder to the card issuer, without regard to the location where the last act necessary for the formation of the contract between the cardholder and the party honoring the card took place.

History. 2004, c. 373, § 11-33.3; 2010, c. 794.

§ 6.2-431. Certain cards excepted.

Except as set forth in § 6.2-428 , the provisions of §§ 6.2-424 through 6.2-430 shall not apply to any credit card issued by any telephone company that is subject to supervision or regulation by the Commission.

History. 1970, c. 324, § 11-34; 1990, c. 587; 2010, c. 794.

§ 6.2-432. Credit card account disclosures.

Any application form or preapproved written solicitation for an open-end credit card account to be used for personal, family, or household purposes that is mailed to a consumer residing in the Commonwealth by or on behalf of a creditor, whether or not the creditor is located in the Commonwealth, other than an application form or solicitation included in a magazine, newspaper, or other publication distributed by someone other than the creditor, shall contain or be accompanied by a disclosure that satisfies the initial disclosure requirements of Consumer Financial Protection Bureau Regulation Z (12 C.F.R. Part 1026).

History. 1987, cc. 622, 639, 714, §§ 6.1-330.63, 6.1-330.78; 1992, Sp. Sess., c. 4; 1997, c. 112; 2005, c. 670; 2009, cc. 784, 860; 2010, c. 794; 2016, c. 501.

The 2016 amendments.

The 2016 amendment by c. 501, substituted “Consumer Financial Protection Bureau” for “Federal Reserve Board,” and “1026” for “226.”

§ 6.2-433. Amendment to open-end credit contract or plan by bank or savings institution.

1. Any open-end credit plan, as defined in § 6.2-300 , by a bank or savings institution may be amended in any respect by the bank or savings institution at any time and from time to time to modify or delete terms, or to add new terms, which new or modified terms and amendment need not be of a kind previously included in or contemplated by such contract or plan, or of a kind integral to the relationship of the parties, by following the procedures, if any, set forth in the contract or plan for effecting changes in the terms thereof, subject to the bank’s or savings institution’s complying with any applicable notice requirements under the Truth in Lending Act (15 U.S.C. § 1601 et seq.) and regulations promulgated thereunder, as in effect from time to time.
2. Unless the contract or plan referred to in subsection A otherwise expressly provides, a bank or savings institution may amend such contract or plan in any respect at any time and from time to time, whether or not the amendment or the subject of the amendment was originally contemplated or addressed by the parties or is integral to the relationship between the parties. Without limiting the foregoing, such amendment may change terms by the addition of new terms or by the deletion or modification of existing terms, whether relating to plan benefits or features, the periodic rate or rates used to calculate finance charges, the manner of calculating periodic rate finance charges or outstanding unpaid indebtedness, variable schedules or formulas, finance charges other than periodic rate finance charges, other charges or fees, collateral requirements, methods for obtaining or repaying extensions of credit, attorney fees, plan termination, the manner for amending the terms of the contract or plan, arbitration or other alternative dispute resolution mechanisms, or other matters of any kind whatsoever. Unless the contract or plan otherwise expressly provides, any amendment may, on and after the date upon which it becomes effective as to a particular borrower, apply to all then outstanding unpaid indebtedness in the borrower’s account under the contract or plan, including any such indebtedness that arose prior to the effective date of the amendment. A contract or plan may be amended pursuant to this subsection regardless of whether the contract or plan is active or inactive or whether additional borrowings are available thereunder. Any such amendment may become effective as determined by the bank or savings institution, subject to compliance by the bank or savings institution with any applicable provisions under the Truth in Lending Act (15 U.S.C. § 1601 et seq.) and the regulations promulgated thereunder, as in effect from time to time. Any notice of an amendment sent by the bank or savings institution may be included in the same envelope with a periodic statement or as part of the periodic statement or in other materials sent to the borrower.

History. 1987, cc. 622, 639, 714, § 6.1-330.63; 1992, Sp. Sess., c. 4; 1997, c. 112; 2005, c. 670; 2010, c. 794.

§ 6.2-434. Law governing open-end credit contract or plan by bank or savings institution.

An open-end credit plan, as defined in § 6.2-300 , between a bank or savings institution and an obligor, or any plan which permits an obligor to avail himself of the credit so established, shall be governed solely by federal law, and by the laws of the Commonwealth, unless otherwise expressly agreed in writing by the parties.

History. 1987, cc. 622, 639, 714, § 6.1-330.63; 1992, Sp. Sess., c. 4; 1997, c. 112; 2005, c. 670; 2010, c. 794.

§ 6.2-435. Law governing open-end credit contract or plan by seller or lender.

An open-end credit plan as defined in § 6.2-300 , between a seller or lender and an obligor shall be governed solely by federal law and by the laws of the Commonwealth.

History. 1987, cc. 622, 639, 714, § 6.1-330.78; 1992, Sp. Sess., c. 4; 1997, c. 112; 2009, cc. 784, 860; 2010, c. 794; 2020, cc. 1215, 1258.

Editor’s note.

Acts 2020, cc. 1215 and 1258, cl. 5 provides: “That the provisions of the first and second enactments of this act shall become effective on January 1, 2021, except that the database required by § 6.2-1810 of the Code of Virginia, as amended by this act, shall be modified to accommodate the provisions of this first enactment of this act by January 1, 2022.”

The 2020 amendments.

The 2020 amendments by cc. 1215 and 1258 are identical, effective January 1, 2021, and deleted “unless otherwise expressly agreed in writing by the parties” at the end of the section and made a stylistic change.

§ 6.2-436. Compliance with federal law.

Every person subject to the provisions of 15 U.S.C. § 1601 et seq. and Consumer Financial Protection Bureau Regulation Z (12 C.F.R. Part 1026) shall comply with such statutes and regulations when offering or extending consumer credit as defined therein. A lender who fails to comply with this section shall not be subject to any liability or penalty beyond those imposed by such federal statutes and regulations.

History. 1987, c. 622, § 6.1-330.79; 2010, c. 794; 2016, c. 501.

The 2016 amendments.

The 2016 amendment by c. 501, substituted “Consumer Financial Protection Bureau” for “Federal Reserve Board,” and “1026” for “226.”

OPINIONS OF THE ATTORNEY GENERAL

State law claims are precluded where conduct underlying claim is regulated by federal law. —

A claim under former Chapter 7.3 of Title 6.1 [now see § 6.2-436 ] is limited substantively and procedurally to the remedies and recovery allowed by federal law; thus, a borrower who disputes a lender’s ability to establish a cut-off hour or the reasonableness of the hour for posting payments to his account is limited by the statute to seeking redress under federal law and cannot recast his claim under other state law theories. See opinion of Attorney General to The Honorable William C. Mims, Member, Senate of Virginia, 01-079, 2001 Va. AG LEXIS 28 (9/12/01).

§ 6.2-437. Right of buyer of consumer goods to refinance certain payments; agreements as to fluctuation in schedule of payments.

1. In any sales transaction, except one pursuant to an open-end account, involving exclusively consumer goods as defined in subdivision (a)(23) of § 8.9A-102 in which credit is extended and a security interest in consumer goods is taken, any installment payment, other than a down payment made prior to or contemporaneously with the execution of an agreement evidencing the transaction, that is more than 10 percent greater than the regular or recurring installment payments, shall be subject to the buyer’s right to refinance such a payment on the basis of an extended period of time. Such additional payments shall be in amounts that shall allow the unpaid balance to be paid in as few periodic payments, not more than 10 percent greater than the regularly scheduled installment payments, as are required to pay such balance. Such additional payments shall be considered and treated as part of the original transaction.
2. The parties may agree in a separate writing that one or more payments or the intervals between one or more payments shall be reduced or expanded in accordance with the desires or needs of the buyer, if such fluctuations in the schedule of payments are expressly arranged to coincide with the anticipated fluctuations in the buyer’s capability to make such payments.
3. No seller who has refused to refinance in compliance with the provisions of this section shall be entitled (i) to the return or repossession of the goods involved in the transaction or (ii) to a judgment for the unpaid balance involved in the transaction at the time of his failure to do so.

History. 1987, c. 622, § 6.1-330.90; 2010, c. 794.

§ 6.2-500. Definitions.

As used in this chapter, unless the context requires a different meaning:

“Adverse action” means a denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit in substantially the amount or on substantially the terms requested. The term does not include a refusal to extend additional credit under an existing credit arrangement where the applicant is delinquent or otherwise in default, or where such additional credit would exceed a previously established credit limit.

“Applicant” means any person who applies to a creditor directly for an extension, renewal, or continuation of credit, or applies to a creditor indirectly by use of an existing credit plan for an amount exceeding the previously established credit limit.

“Credit” means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment or to purchase property or services and defer payment therefor.

“Creditor” means any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who participates in the decision to extend, renew, or continue credit.

History. 1975, c. 627, § 59.1-21.20; 1977, c. 589; 2010, c. 794.

§ 6.2-501. Prohibited discrimination.

1. As used in this section, “age” means being an individual who is at least 18 years of age.
2. It shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction:
   1. On the basis of race, color, religion, national origin, sex, marital status, sexual orientation, gender identity, pregnancy, childbirth or related medical conditions, age, disability, or status as a veteran provided that the applicant has the capacity to contract; or
   2. Because all or part of the applicant’s income derives from any public assistance or social services program.
3. It shall not constitute discrimination for purposes of this chapter for a creditor:
   1. To make an inquiry of marital status if such inquiry is for the purpose of ascertaining the creditor’s rights and remedies applicable to the particular extension of credit and not to discriminate in a determination of creditworthiness;
   2. To make an inquiry of the applicant’s age or of whether the applicant’s income derives from any public assistance or social services program if such inquiry is for the purpose of determining the amount and probable continuance of income levels, credit history, or other pertinent element of creditworthiness as provided in regulations of the Commission;
   3. To use any empirically derived credit system which considers age if such system is demonstrably and statistically sound in accordance with regulations of the Commission, except that in the operation of such system the age of an elderly applicant may not be assigned a negative factor or value; or
   4. To make an inquiry or to consider the age of an elderly applicant when the age of such applicant is to be used by the creditor in the extension of credit in favor of such applicant.
4. It is not a violation of this section for a creditor to refuse to extend credit offered pursuant to:
   1. Any credit assistance program expressly authorized by law for an economically disadvantaged class of persons;
   2. Any credit assistance program administered by a nonprofit organization for its members or an economically disadvantaged class of persons; or
   3. Any special purpose credit program offered by a profit-making organization to meet special social needs which meets standards prescribed in regulations by the Commission, if such refusal is required by or made pursuant to such program.

History. 1977, c. 589, § 59.1-21.21:1; 2002, c. 747; 2010, c. 794; 2020, cc. 1137, 1140.

The 2020 amendments.

The 2020 amendment by c. 1137, in subdivision B 1, inserted “sexual orientation, gender identity” and made stylistic changes.

The 2020 amendment by c. 1140 added subsection A and redesignated former subsection A as subsection B; in subdivision B 1, substituted “marital status, sexual orientation, gender identity, pregnancy, childbirth or related medical conditions, age, disability, or status as a veteran provided that” for “or marital status, or age, provided”; and redesignated former subsections B and C as subsections C and D.

§ 6.2-502. Notification of action on credit application.

Within 30 days, or such longer reasonable time as specified in regulations of the Commission for any class of credit transaction, after receipt of a completed application for credit, a creditor shall notify the applicant of its action on the application.

History. 1977, c. 589, § 59.1-21.21:1; 2002, c. 747; 2010, c. 794.

§ 6.2-503. Statement of reasons for adverse action.

1. Each applicant against whom adverse action is taken shall be entitled to a statement of reasons for the action on the application from the creditor. A creditor shall satisfy this obligation by:
   1. Providing statement of reasons in writing as a matter of course to applicants against whom adverse action is taken; or
   2. Giving written notification of adverse action that discloses (i) the applicant’s right to a statement of reasons within 30 days after receipt by the creditor of a request made within 60 days after such notification and (ii) the identity of the person or office from which such statement may be obtained. The statement may be given orally if the written notification advises the applicant of his right to have the statement of reasons confirmed in writing on written request.
2. A statement of reasons meets the requirements of this section only if it contains the specific reasons for the adverse action taken.
3. Where a creditor has been requested by a third party to make a specific extension of credit directly or indirectly to an applicant, the notification and statement of reasons required by this section may be made directly by such creditor, or indirectly through the third party, provided in either case that the identity of the creditor is disclosed.
4. The requirements of subsections A, B, and C may be satisfied by oral statements or notifications in the case of any creditor who did not act on more than 150 applications during the calendar year preceding the calendar year in which the adverse action is taken, as determined under regulations of the Commission.

History. 1977, c. 589, § 59.1-21.21:1; 2002, c. 747; 2010, c. 794.

§ 6.2-504. Requirement of signatures of both parties to a marriage not discriminatory in a secured transaction.

For the purposes of a secured transaction, a request for the signature of both parties to a marriage for the purpose of creating a valid lien, passing clear title, waiving inchoate rights to property, or assigning earnings, shall not constitute discrimination under this chapter. This provision shall not be construed to permit a creditor to take sex or marital status into account in connection with the evaluation of creditworthiness of any applicant.

History. 1975, c. 627, § 59.1-21.22; 1977, c. 589; 2010, c. 794.

§ 6.2-505. Remedies for violation.

1. Any creditor who fails to comply with any requirement imposed under this chapter shall be liable to the aggrieved applicant in an amount equal to the sum of any actual damages sustained by such applicant.
2. Any creditor, other than the federal or state government or any political subdivision or agency of such government, who fails to comply with any requirement imposed under this chapter shall be liable to the aggrieved applicant for punitive damages in an amount not greater than $10,000, as determined by the court, in addition to any actual damages provided in subsection A.
3. Upon application by an aggrieved applicant, an appropriate court may grant such equitable and declaratory relief as is necessary to enforce the requirements imposed under this chapter.
4. In the case of any successful action to enforce the foregoing liability, the costs of the action, together with the reasonable attorney fee as determined by the court, shall be added to any damages awarded by the court under the provisions of subsections A, B, and C.
5. Any action under this chapter may be brought in an appropriate court within two years from the date of the occurrence of the violation.

History. 1975, c. 627, § 59.1-21.23; 1977, c. 589; 2010, c. 794.

§ 6.2-506. Commission regulations.

The Commission shall adopt regulations to effectuate the purposes of this chapter provided that such regulations conform to and are no broader in scope than regulations, and amendments thereto, adopted by the Consumer Financial Protection Bureau under the federal Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.). Such conforming regulations shall exempt from the coverage of this chapter any class of transactions which may be exempted from time to time from the federal Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), by regulations of the Consumer Financial Protection Bureau.

History. 1975, c. 627, § 59.1-21.24; 1977, c. 589; 2010, c. 794; 2016, c. 501.

The 2016 amendments.

The 2016 amendment by c. 501 substituted “Consumer Financial Protection Bureau” for “Board of Governors of the Federal Reserve System” and for “Federal Reserve System.”

§ 6.2-507. Limitation on liability.

No provision of this chapter imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or interpretation thereof by the Commission or by the Consumer Financial Protection Bureau or officer or employee duly authorized by the Bureau to issue such interpretation or approvals under the comparable provisions of the federal Equal Credit Opportunity Act, (15 U.S.C. § 1691 et seq.), and regulations thereunder, notwithstanding that after such act or omission has occurred, such rule, regulation, or interpretation is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.

History. 1975, c. 627, § 59.1-21.24; 1977, c. 589; 2010, c. 794; 2016, c. 501.

The 2016 amendments.

The 2016 amendment by c. 501 substituted “Consumer Financial Protection Bureau” for “Federal Reserve Board” and “Bureau” for “Board.”

§ 6.2-508. Compliance with Equal Credit Opportunity Act constitutes compliance with chapter.

Compliance with the federal Equal Credit Opportunity Act, (15 U.S.C. § 1691 et seq.), as amended, and regulations issued by the Consumer Financial Protection Bureau thereunder, constitutes compliance with this chapter.

History. 1975, c. 627, § 59.1-21.24; 1977, c. 589; 2010, c. 794; 2016, c. 501.

The 2016 amendments.

The 2016 amendment by c. 501 substituted “Consumer Financial Protection Bureau” for “Federal Reserve Board.”

§ 6.2-509. Public to be informed of rights under chapter.

The Commission shall use any methods available to it to inform the public of the rights created by this chapter. Notice given pursuant to the federal Equal Credit Opportunity Act, (15 U.S.C. § 1691 et seq.), and regulations promulgated thereto, shall satisfy the requirements of this section.

History. 1977, c. 589, § 59.1-21.25; 2010, c. 794.

§ 6.2-510. Commission to investigate complaints; records to be open to public.

The Commission shall receive, investigate, and mediate complaints of violations of this chapter and shall keep all records pertaining to such complaints, investigations, and mediations open to the public. Nothing in this section shall toll the operation of subsection E of § 6.2-505 .

History. 1977, c. 589, § 59.1-21.26; 2010, c. 794.

§ 6.2-511. Credit standards discoverable.

Nothing in this chapter shall be construed to prohibit the discovery of a creditor’s standards for granting credit, which discovery shall be under appropriate discovery procedures in the court in which an action is brought.

History. 1977, c. 589, § 59.1-21.27; 2010, c. 794.

§ 6.2-512. Election of remedies.

Where the same act or omission constitutes a violation of this chapter and of applicable federal law, a person aggrieved by such conduct may bring a legal action to recover monetary damages either under this chapter or under federal law, but not both. This election of remedies shall not apply to court actions in which the relief sought does not include monetary damages or to administrative actions.

History. 1977, c. 589, § 59.1-21.28; 2010, c. 794.

§ 6.2-513. Authority of Attorney General.

Notwithstanding any other provisions of the law to the contrary, the Attorney General may investigate and bring an action in the name of the Commonwealth to enjoin any violation of this chapter.

History. 1970, c. 780, § 59.1-68.2; 1973, c. 537; 1975, c. 43; 1984, c. 582; 2010, c. 794.

§ 6.2-600. Repealed by Acts 2013, cc. 30 and 102.

Editor’s note.

Former § 6.2-600 , requiring that checks on consumer deposit accounts show date account was opened, derived from Acts 1981, c. 214, § 6.1-2.9:2; 2010, c. 794.

§ 6.2-601. Federal insurance of deposits required for all banks or savings institutions.

Notwithstanding any other provisions contained in this title, no bank or savings institution doing business in the Commonwealth shall accept deposits unless its deposit accounts are insured by the Federal Deposit Insurance Corporation or other federal insurance agency, up to the limits of the insurance provided thereby. No bank or savings institution shall solicit deposits in the Commonwealth, nor shall any other person solicit or accept deposits in the Commonwealth on behalf of a bank or savings institution, unless the deposit accounts of such bank or savings institution are insured by the Federal Deposit Insurance Corporation or other federal insurance agency, up to the limits of the insurance provided thereby.

History. 1986, c. 500, § 6.1-2.9:4; 1990, c. 3; 1996, c. 16; 2010, c. 794.

§ 6.2-602. Adverse claims to accounts.

1. Notice to any financial institution doing business in the Commonwealth of an adverse claim to funds in an account with such institution shall not require the institution to recognize the adverse claim unless the adverse claimant shall either:
   1. Procure a restraining order, injunction, or other appropriate order against the financial institution from an appropriate court; or
   2. Execute to such financial institution, in form and with sureties acceptable to it, a bond indemnifying the institution from any and all liability, loss, damage, costs, and expenses, for and on account of the payment or recognition of such adverse claim, or the dishonor of, or failure to pay, any check, or failure to comply with any other order, of the person to whose credit the account is held.
2. This section shall not affect the provisions of Article 2 (§ 6.2-604 et seq.) of this chapter governing multiple-party accounts, and any claim by a party to such account shall be determined in accordance with the provisions therein.
3. This section shall not affect any notice of lien pursuant to § 8.01-502 , any order of an appropriate court, or the issuance of a notice or other action issued by a state or federal governmental agency.

History. 1996, c. 963, § 6.1-2.9:7; 2010, c. 794.

§ 6.2-603. Medical savings accounts and health savings accounts.

To the extent allowed by federal law, a bank, insured savings institution, or credit union may act as a trustee or custodian of health savings accounts established with financial institutions under § 223 of the United States Internal Revenue Code of 1986, as amended from time to time, and medical savings accounts established with financial institutions under § 220 of the United States Internal Revenue Code of 1986, as amended from time to time. Contributions may be accepted and interest thereon retained by such institution pursuant to forms provided by it and may be invested in accounts of the institution in accordance with the terms upon which such contributions were accepted. The financial institution shall administer such accounts in accordance with the requirements of federal law.

History. 1999, c. 331, § 6.1-2.9:8; 2005, cc. 503, 572; 2010, c. 794.

§ 6.2-603.1. Savings promotions.

“Depository institution” means a bank, savings institution, or credit union that is subject to any provision of this title and that offers savings accounts, share accounts, certificates of deposit, or other savings products or programs.

“Nonqualifying account” means a savings account, share account, certificate of deposit, or other savings product or program offered by a depository institution that is not a qualifying account.

“Qualifying account” means a savings account, share account, share certificate, or other savings product or program offered by a depository institution through which depositors may obtain chances to win prizes in a savings promotion.

“Savings promotion” means a contest or promotion sponsored by a depository institution in which a chance of winning designated prizes is obtained by its depositors for the purposes of encouraging depositors to build and maintain savings deposits.

B. Any depository institution may sponsor a savings promotion in accordance with the provisions of this section, to the extent (i) the savings promotion is not prohibited by federal law or regulation and (ii) the savings promotion complies with the following requirements:

1. Participants in the savings promotion shall not be required to provide any consideration in order to obtain entries to win. For purposes of this subdivision, participants shall not be deemed to have provided consideration due to the requirement that they deposit a specified amount of money for a specified time period in a qualifying account in order to obtain entries to win, provided that:
   1. The interest rate associated with any such qualifying account is not reduced when compared with other comparable nonqualifying accounts offered by any depository institution, to account for the possibility of depositors winning specified prizes; and
   2. The depository institution does not charge a fee for participating in the savings promotion;
2. All fees charged in connection with a qualifying account shall be comparable with all fees charged in connection with other comparable nonqualifying accounts, if any, offered by the depository institution;
3. The savings promotion shall be conducted such that each entry in the savings promotion has an equal chance of being drawn;
4. Participants in the savings promotion shall not be required to be present at a prize drawing in order to win; and
5. The savings promotion is conducted in a manner that complies with the applicable requirements of Chapter 31 (§ 59.1-415 et seq.) of Title 59.1. C. For purposes of Article 1 (§ 18.2-325 et seq.) of Chapter 8 of Title 18.2, a savings promotion offered in accordance with this section shall not constitute illegal gambling or otherwise be deemed to entail the promotion of gambling or a lottery.

History. 2015, cc. 12, 154.

§ 6.2-604. Definitions.

As used in this article, unless the context requires a different meaning:

“Account” means a contract of deposit of funds between a depositor and a financial institution, and includes a checking account, savings account, certificate of deposit, share account, and other similar arrangements.

“Beneficiary” means a person named in a trust account as one for whom a party to the account is named as trustee.

“Fiduciary” shall include any one or more of the following: (i) a fiduciary as defined in § 8.01-2 , (ii) an agent under a power of attorney, or (iii) an attorney acting under an attorney-client relationship.

“Fiduciary account” means (i) an estate account for a decedent, (ii) an account established by one or more agents under a power of attorney or an existing account of a principal to which one or more agents under a power of attorney are added, (iii) an account established by one or more conservators, (iv) an account established by one or more committees, (v) a regular trust account under a testamentary trust or a trust agreement that has significance apart from the account, or (vi) an account arising from a fiduciary relationship such as an attorney-client relationship. “Fiduciary account” does not include a trust account.

“Financial institution” means any entity authorized to do business under state or federal laws relating to financial institutions that is authorized to establish accounts, including, without limitation, banks, trust companies, savings institutions, and credit unions.

“Joint account” means an account payable on request to one or more of two or more parties whether or not mention is made of any right of survivorship.

“Multiple-fiduciary account” means a fiduciary account where more than one fiduciary is authorized to act.

“Multiple-party account” means any of the following types of account: (i) a joint account, (ii) a P.O.D. account, or (iii) a trust account. The term does not include accounts established for deposit of funds of a partnership, joint venture, or other association for business purposes, or accounts controlled by one or more persons as the duly authorized agent or trustee for a corporation, unincorporated association, or charitable or civic organization.

“Net contribution” of a party to a joint account as of any given time is the sum of all deposits thereto made by or for him, less all withdrawals made by or for him which have not been paid to or applied to the use of any other party, plus a pro rata share of any interest or any dividends included in the current balance. The term includes, in addition, any proceeds of deposit life insurance added to the account by reason of the death of the party whose net contribution is in question.

“Party” means a person who, by the terms of the account, has a present right, subject to request, to payment from a multiple-party account, including a fiduciary account. The term includes a P.O.D. payee or beneficiary of a trust account only after the account becomes payable to him by reason of his surviving the original payee or trustee. The term includes a guardian, conservator, personal representative, or assignee, including an attaching creditor, of a party. The term also includes a person identified as a trustee of an account for another whether or not a beneficiary is named, but it does not include any named beneficiary unless he has a present right of withdrawal.

“Payment,” with respect to sums on deposit, includes withdrawal, payment on check or other directive of a party, and any pledge of sums on deposit by a party and any setoff, or reduction or other disposition of all or part of an account pursuant to a pledge.

“P.O.D. account” means an account payable on request to one person during his lifetime and on his death to one or more P.O.D. payees, or to one or more persons during their lifetimes and on the death of all of them to one or more P.O.D. payees.

“P.O.D. payee” means a person designated on a P.O.D. account as one to whom the account is payable on request after the death of one or more persons.

“Proof of death” includes a death certificate; a certificate of qualification upon a decedent’s estate; or an authenticated copy of any record or report of a governmental agency, domestic or foreign, that a person is dead.

“Request” means a proper request for withdrawal, or a check or order for payment, that complies with all conditions of the account, including special requirements concerning necessary signatures and regulations of the financial institution. If the financial institution conditions withdrawal or payment on advance notice, for purposes of this article the request for withdrawal or payment is treated as immediately effective and a notice of intent to withdraw is treated as a request for withdrawal.

“Sums on deposit” means the balance payable on a multiple-party account, including a fiduciary account, including interest, dividends, and in addition any deposit life insurance proceeds added to the account by reason of the death of a party.

“Trust account” means an account in the name of one or more parties as trustee for one or more beneficiaries where the relationship is established by the form of the account and the deposit agreement with the financial institution and there is no subject of the trust other than the sums on deposit in the account, without regard to whether payment to the beneficiary is mentioned in the deposit agreement. The term does not include a fiduciary account.

“Withdrawal” includes payment to a third person pursuant to check or other directive of a party.

History. 1979, c. 407, § 6.1-125.1; 2010, c. 794; 2020, c. 259.

Cross references.

As to subpoena duces tecum of records concerning banking cards and credit cards, see § 19.2-10.1 .

As to augmented estates, see § 64.2-305 .

The 2020 amendments.

The 2020 amendment by c. 259 added the definitions for “Fiduciary,” “Fiduciary account,” and “Multiple-fiduciary account”; in the definition for “Multiple-party account,” deleted “or a regular fiduciary or trust account where the relationship is established other than by deposit agreement” at the end of the final sentence; in the definition for “Party,” added “including a fiduciary account” at the end of the first sentence; in the definition for “Sums on deposit,” inserted “including a fiduciary account”; and in the second sentence of the definition for “Trust account,” substituted “a fiduciary account” for “(i) a regular trust account under a testamentary trust or a trust agreement that has significance apart from the account or (ii) a fiduciary account arising from a fiduciary relationship such as an attorney-client relationship”; and made a stylistic change.

Law Review.

For comment, “Multiple-Party Accounts: Does Virginia Law Correspond With the Expectations of the Average Depositor?,” see 14 U. Rich. L. Rev. 851 (1980).

For survey of Virginia law on wills, trusts, and estates for the year 1979-1980, see 67 Va. L. Rev. 369 (1981).

For 2002 survey of Virginia law on wills, trusts, and estates, see 37 U. Rich. L. Rev. 357 (2002).

For article, “Property Law,” see 35 U. Rich. L. Rev. 777 (2001).

Research References.

Accounting for Banks (Matthew Bender). Resseguie.

Virginia Forms (Matthew Bender). No. 15-242 Jointly Owned Property; No. 15-401 Checklist for Probate and Administration.

§ 6.2-605. Applicability.

1. The provisions of §§ 6.2-606 , 6.2-607 , and 6.2-608 concerning beneficial ownership as between parties, or as between parties and P.O.D. payees or beneficiaries of multiple-party accounts, are relevant only to controversies between these persons and their creditors and other successors, and have no bearing on the power of withdrawal of these persons as determined by the terms of account contracts.
2. The provisions of §§ 6.2-612 through 6.2-617 govern the liability of financial institutions that make payments pursuant thereto, and their set-off rights, but shall have no effect on the beneficial ownership of or the power of withdrawal from the accounts between the parties or P.O.D. payees or beneficiaries of multiple-party accounts and shall have no effect on the fiduciary duties or obligations of fiduciaries under the governing instrument of multiple-fiduciary accounts.

History. 1979, c. 407, § 6.1-125.2; 2010, c. 794; 2020, c. 259.

The 2020 amendments.

The 2020 amendment by c. 259 added “but shall have no effect on the beneficial ownership of or the power of withdrawal from the accounts between the parties or P.O.D. payees or beneficiaries of multiple-party accounts and shall have no effect on the fiduciary duties or obligations of fiduciaries under the governing instrument of multiple-fiduciary accounts” in subsection B.

§ 6.2-606. Ownership during lifetime; garnishment, attachment, or levy.

1. A joint account belongs, during the lifetimes of all parties, to the parties in proportion to the net contributions by each to the sums on deposit, except that a joint account between persons married to each other shall belong to them equally, and unless, in either case, there is clear and convincing evidence of a different intent.
2. A P.O.D. account belongs to the original payee during his lifetime and not to any P.O.D. payee. If two or more parties are named as original payees, during their lifetimes rights as between them are governed by subsection A.
3. Unless (i) a contrary intent is manifested by the terms of the account or the deposit agreement or (ii) there is other clear and convincing evidence of an irrevocable trust, a trust account belongs beneficially and absolutely to the trustee during his lifetime. If two or more parties are named as trustee on the account, during their lifetimes beneficial rights as between them are governed by subsection A. If there is an irrevocable trust, the account belongs beneficially to the beneficiary.
4. Upon an order of garnishment, attachment, or other levy addressed to a party to a joint account as mentioned in subsection A, or a trust account as mentioned in subsection C, the financial institution shall:
   1. File an answer setting forth the form of account, whether it has funds responsive to the process, and such information as it has as to the names and addresses of the parties to the account;
   2. Send a copy of such answer by first class mail to the petitioning creditor or counsel of record;
   3. From the time of service of such garnishment, attachment or levy, hold the amount subject to such garnishment, attachment or levy, or such lesser amount or sum as it may have, which amount shall be set forth in its answer; and
   4. Not permit any person to draw against such amount whether by check against such account or otherwise.
5. If the petitioning creditor shall desire to pursue the question of ownership of such funds held subject to the claim of two or more parties to the deposit account, it shall (i) provide the clerk of the court that issued the order of garnishment, attachment, or other levy with a copy of the documents originally served on the original defendants or judgment defendants and (ii) request the clerk to issue a summons accompanied by such copy with a copy of a notice to co-depositors containing substantially the following information: “Attached is a copy of the documents served on a financial institution to cause it to withhold money from an account in which you may have an interest. If you wish to protect your interests, you or your attorney should take appropriate legal action promptly.”
6. Upon payment of the appropriate fees, the clerk shall issue such summons to be served on any other party having an interest or apparent interest in such account. Service on a party to the account made at the address on record at the financial institution shall be presumed to be proper service for the purposes of this section. In addition, a copy of such summons and notice shall be issued and served on or mailed to both the financial institution and the original defendant or judgment debtor. If such summons is received either by certified or registered mail or acknowledged in writing within 21 days on or by such financial institution, it shall continue to hold such funds pending further order of the court. If such financial institution is not served with, or does not acknowledge, such an order within 21 days from the filing of such answer, it may treat the garnishment, attachment or levy, insofar as it relates to such joint or trust accounts, as terminated on the twenty-second day and being of no further force or effect.
7. The court shall allow the financial institution its reasonable expenses in responding to discovery of its records and may condition any such discovery upon prepayment of such expenses.
8. Orders to withhold and deliver issued by the Department of Social Services shall be complied with as provided in §§ 63.2-1929 and 63.2-1931 .

History. 1979, c. 407, § 6.1-125.3; 1982, c. 302; 1983, c. 531; 1987, c. 296; 1988, cc. 368, 547; 1990, c. 950; 2010, c. 794.

Law Review.

For comment, “Multiple-Party Accounts: Does Virginia Law Correspond With the Expectations of the Average Depositor?,” see 14 U. Rich. L. Rev. 851 (1980).

§ 6.2-607. Effect of divorce.

Upon the entry of a decree of divorce, either a mensa et thoro or a vinculo matrimonii, all rights of either consort in any multiple-party account then existing between them, including the right of survivorship, shall be extinguished; and any joint account then existing between the consorts shall thereupon be converted into a tenancy in common, in the proportions provided in subsection A of § 6.2-606 , unless otherwise ordered by the court.

History. 1979, c. 407, § 6.1-125.4; 2010, c. 794.

§ 6.2-608. Right of survivorship.

1. Sums remaining on deposit at the death of a party to a joint account belong to the surviving party as against the estate of the decedent unless there is clear and convincing evidence of a different intention at the time the account is created. If there are two or more surviving parties, their respective ownerships during their lifetime shall be in proportion to their previous ownership interests under § 6.2-606 augmented by an equal share for each survivor of any interest the decedent may have owned in the account immediately before his death; and the right of survivorship continues between the surviving parties.
2. If the account is a P.O.D. account:
   1. On the death of one of two or more original payees, the rights to any sums remaining on deposit are governed by subsection A;
   2. On the death of the sole original payee or of the survivor of two or more original payees, any sums remaining on deposit belong to the P.O.D. payee or payees if surviving, or to the survivor of them if one or more die before the original payee. If two or more P.O.D. payees survive, there is no right of survivorship in the event of death of a P.O.D. payee thereafter unless the terms of the account or deposit agreement expressly provide for survivorship between them.
3. If the account is a trust account:
   1. On the death of one of two or more trustees, the rights to any sums remaining on deposit are governed by subsection A;
   2. On the death of the sole trustee or the survivor of two or more trustees, any sums remaining on deposit belong to the persons named as beneficiaries, if surviving, or to the survivor of them if one or more die before the trustee, unless there is clear evidence of a contrary intent. If two or more beneficiaries survive the death of the sole trustee or the last survivor of two or more trustees, there is no right of survivorship in the event of death of any beneficiary thereafter unless the terms of the account or deposit agreement expressly provide for survivorship between them.
4. In other cases, the death of any party to a multiple-party account has no effect on beneficial ownership of the account other than to transfer the rights of the decedent as part of his estate. If the terms of the account clearly indicate that there is no right of survivorship, the estate of a decedent party shall succeed to the rights of decedent in such account.
5. A right of survivorship arising from the express terms of the account or under this section, a beneficiary designation in a trust account, or a P.O.D. payee designation, cannot be changed by will.

History. 1979, c. 407, § 6.1-125.5; 1981, c. 53; 2010, c. 794.

Law Review.

For comment, “Multiple-Party Accounts: Does Virginia Law Correspond With the Expectations of the Average Depositor?,” see 14 U. Rich. L. Rev. 851 (1980).

For 1987 survey of Virginia wills, trusts, and estates law, see 21 U. Rich. L. Rev. 855 (1987).

Michie’s Jurisprudence.

For related discussion, see 20 M.J. Wills, §§ 19, 32.

§ 6.2-609. Change of form of account upon written order to financial institution.

The provisions of § 6.2-608 as to rights of survivorship are determined by the form of the account at the death of a party. This form may be altered by written order given by a party to the financial institution to change the form of the account or to stop or vary payment under the terms of the account. The order or request shall be signed by a party, received by the financial institution during the party’s lifetime, and not countermanded by other written order of the same party during his lifetime.

History. 1979, c. 407, § 6.1-125.6; 2010, c. 794.

§ 6.2-610. Transfers arising from right of survivorship nontestamentary.

Any transfers resulting from the application of § 6.2-608 are effective by reason of the account contracts involved and this article and are not to be considered as testamentary or subject to Chapter 4 (§ 64.2-400 et seq.) of Title 64.2.

History. 1979, c. 407, § 6.1-125.7; 2010, c. 794.

Editor’s note.

At the direction of the Virginia Code Commission, the reference to “Chapter 3 (§ 64.1-45 et seq.) of Title 64.1” was changed to “Chapter 4 (§ 64.2-400 et seq.) of Title 64.2” to conform to the recodification of Title 64.1 by Acts 2012, c. 614, effective October 1, 2012.

CIRCUIT COURT OPINIONS

Pay on death account. —

Testimonial evidence from bank employees clearly indicated that, when the decedent opened a money market savings account, she did so with the intent of creating a pay on death account in favor of the payee, rather than a trust account. Estate of Johnson, 56 Va. Cir. 467, 2001 Va. Cir. LEXIS 486 (Richmond Sept. 26, 2001) (decided under former § 6.1-125.7).

§ 6.2-611. Liability of surviving party for debts and other liabilities of decedent’s estate.

1. If the assets of a deceased party’s estate, other than the assets in a multiple-party account, are not sufficient to pay the debts, taxes, and expenses of estate administration, including statutory allowances to the surviving spouse, minor children, and dependent children, no transfer of account funds, to which the deceased party was beneficially entitled immediately before his death, shall be effective, by virtue of a party’s survivorship of the decedent, against the estate of such deceased party to the extent such funds are needed to pay such liabilities of the estate.
2. A surviving party, P.O.D. payee, or beneficiary who receives payment from a multiple-party account after the death of a deceased party shall be liable to account to his personal representative for amounts the decedent owned beneficially immediately before his death to the extent necessary to discharge the claims and charges described in subsection A that remain unpaid after application of the decedent’s estate. No proceeding to assert this liability shall be commenced (i) unless the personal representative has received a written demand by a surviving spouse, a creditor, or one acting for a minor or dependent child of the decedent and (ii) later than two years following the death of the decedent. Sums recovered by the personal representative shall be administered as part of the decedent’s estate.
3. This section shall not affect the right of a financial institution to make payment on multiple-party accounts according to the terms thereof, or make it liable to the estate of a deceased party unless, before payment, the institution has been served with process in a proceeding by the personal representative.

History. 1979, c. 407, § 6.1-125.8; 2010, c. 794.

CIRCUIT COURT OPINIONS

Statutory allowances. —

Despite the lack of personal representative, § 6.1-125.8 [now § 6.2-611 ] provided that the funds in a joint bank account could be used to satisfy a widow’s allowance under § 64.1-151.2 when the assets of the estate were otherwise insufficient. Bray v. Ireland, 69 Va. Cir. 270, 2005 Va. Cir. LEXIS 333 (Norfolk Nov. 7, 2005) (decided under former § 6.1-125.8).

§ 6.2-612. Financial institution duties; multiple-party accounts; multiple-fiduciary accounts.

1. Financial institutions may enter into multiple-party accounts to the same extent that they may enter into single-party accounts. Any multiple-party account may be paid, on request, to any one or more of the parties. A financial institution shall not be required to inquire as to the source of funds received for deposit to a multiple-party account, or to inquire as to the proposed application of any sum withdrawn from an account, for purposes of establishing net contributions.
2. Financial institutions may enter into multiple-fiduciary accounts with more than one fiduciary to the same extent that they may enter into fiduciary accounts with one fiduciary. Any multiple-fiduciary account may be paid, on request, to any one or more of the fiduciaries.

History. 1979, c. 407, § 6.1-125.9; 2010, c. 794; 2020, c. 259.

The 2020 amendments.

The 2020 amendment by c. 259 added subsection B.

Law Review.

For comment, “Multiple-Party Accounts: Does Virginia Law Correspond With the Expectations of the Average Depositor?,” see 14 U. Rich. L. Rev. 851 (1980).

CIRCUIT COURT OPINIONS

Breach of contract. —

Bank’s demurrer to a son’s breach of contract claim was sustained because the son did not allege that the contract between him and the bank precluded the bank from paying funds to the decedent’s stepson at his request; the amended complaint failed to state any term of a contract that the bank breached by depriving the son of access to the funds on deposit. Lance v. Wells Fargo Bank, N.A., 99 Va. Cir. 115, 2018 Va. Cir. LEXIS 20 (Chesapeake Feb. 21, 2018).

Conspiracy. —

Bank’s motion for summary judgment was denied because the allegation that a bank’s representative opened new accounts in a decedent’s name without his authorization provided the necessary element of unlawful means on the bank’s part to support a claim for common-law conspiracy in the underlying tort of conversion. Lance v. Wells Fargo Bank, N.A., 99 Va. Cir. 115, 2018 Va. Cir. LEXIS 132 (Chesapeake June 29, 2018).

Collusion with joint owner to open unauthorized accounts. —

While the Uniform Commercial Code may shield a bank from liability for honoring a withdrawal by any joint owner of an account, it does not shield a bank from colluding with a joint owner to open unauthorized accounts into which to transfer those funds. Lance v. Wells Fargo Bank, N.A., 99 Va. Cir. 115, 2018 Va. Cir. LEXIS 132 (Chesapeake June 29, 2018).

§ 6.2-613. Payment of sums in joint account.

Any sums in a joint account may be paid, on request, to any party without regard to whether any other party is incapacitated or deceased at the time the payment is demanded. Payment may not be made to the personal representative or heirs of a deceased party under the Virginia Small Estate Act (§ 64.2-600 et seq.) unless (i) proof of death is presented to the financial institution showing that the decedent was the last surviving party or (ii) there is no right of survivorship under § 6.2-608 .

History. 1979, c. 407, § 6.1-125.10; 2010, cc. 269, 794.

Editor’s note.

Acts 2010, c. 269 amended former § 6.1-125.10, from which this section is derived. Pursuant to § 30-152 and Acts 2010, c. 794, cl. 4, the 2010 amendment by c. 269 has been given effect in this section as set out above, by inserting “under the Virginia Small Estate Act (§ 64.1-132.1 et seq.).”

At the direction of the Virginia Code Commission, the reference to “Virginia Small Estate Act (§ 64.1-132.1 et seq.)” was changed to “Virginia Small Estate Act (§ 64.2-600 et seq.)” to conform to the recodification of Title 64.1 by Acts 2012, c. 614, effective October 1, 2012.

Michie’s Jurisprudence.

For related discussion, see 9B M.J. Husband and Wife, § 29.

CIRCUIT COURT OPINIONS

Civil conspiracy. —

Bank’s demurrer to a son’s civil conspiracy claim was overruled because the allegation that the decedent’s stepson and a bank representative had the right to misrepresent to the decedent the purpose of his signature or to open new accounts without his authorization sufficiently provided the unlawful means by which they committed an otherwise lawful act, transferring money from the old bank accounts into newly opened accounts. Lance v. Wells Fargo Bank, N.A., 99 Va. Cir. 115, 2018 Va. Cir. LEXIS 20 (Chesapeake Feb. 21, 2018).

§ 6.2-614. Payment of P.O.D. account.

Any P.O.D. account may be paid, on request, to any original party to the account. Payment may be made, on request, to the P.O.D. payee or to the personal representative or heirs of a deceased P.O.D. payee under the Virginia Small Estate Act (§ 64.2-600 et seq.) upon presentation to the financial institution of proof of death showing that the P.O.D. payee survived all persons named as original payees. Payment may be made to the personal representative or heirs of a deceased original payee under the Virginia Small Estate Act (§ 64.2-600 et seq.) if proof of death is presented to the financial institution showing that his decedent was the survivor of all other persons named on the account either as an original payee or as P.O.D. payee.

History. 1979, c. 407, § 6.1-125.11; 2010, cc. 269, 794.

Editor’s note.

Acts 2010, c. 269 amended former § 6.1-125.11, from which this section is derived. Pursuant to § 30-152 and Acts 2010, c. 794, cl. 4, the 2010 amendment by c. 269 has been given effect in this section as set out above, by inserting “under the Virginia Small Estate Act (§ 64.1-132.1 et seq.)” in the second and third sentences.

At the direction of the Virginia Code Commission, the two references to “Virginia Small Estate Act (§ 64.1-132.1 et seq.)” was changed to “Virginia Small Estate Act (§ 64.2-600 et seq.)” to conform to the recodification of Title 64.1 by Acts 2012, c. 614, effective October 1, 2012.

§ 6.2-615. Payment of trust account.

Any trust account may be paid, on request, to any trustee. Unless the financial institution has received written notice that the beneficiary has a vested interest not dependent upon his surviving the trustee, payment may be made to the personal representative or heirs of a deceased trustee if proof of death is presented to the financial institution showing that his decedent was the survivor of all other persons named on the account either as trustee or beneficiary. Payment may be made, on request, to the beneficiary upon presentation to the financial institution of proof of death showing that the beneficiary or beneficiaries survived all persons named as trustees.

History. 1979, c. 407, § 6.1-125.12; 2010, c. 794.

§ 6.2-615.1. Payment of multiple-fiduciary account.

Any multiple-fiduciary account may be paid, on request, (i) to any one or more fiduciaries, including any successor fiduciary upon proof showing that the successor fiduciary is duly authorized to act, or (ii) at the direction of any one or more of the fiduciaries. In determining the trustees duly authorized to act, the financial institution may rely on a certification of trust provided pursuant to § 64.2-804 .

History. 2020, c. 259.

§ 6.2-616. Discharge of financial institution upon payment.

1. Payment made pursuant to §§ 6.2-612 through 6.2-615 discharges the financial institution from all claims for amounts so paid whether or not the payment is consistent with the beneficial ownership of the account as between parties, P.O.D. payees, beneficiaries, or fiduciaries, or their successors.
2. The discharge provided by subsection A does not extend to payments made after a financial institution has received written notice from any party able to request present payment to the effect that withdrawals in accordance with the terms of the account should not be permitted. Unless the notice is withdrawn by the person giving it, or the successor of any deceased party has concurred in any demand for withdrawal, a discharge provided by subsection A shall not apply to withdrawals permitted by the financial institution.
3. No other notice or any other information shown to have been available to a financial institution shall affect its right to the discharge provided by subsection A. The discharge provided by subsection A shall have no bearing on the rights of parties in disputes between themselves or their successors concerning the beneficial ownership of funds in, or withdrawn from, multiple-party accounts or multiple-fiduciary accounts.
4. If any party, or the personal representative of any party, notifies the financial institution in writing not to permit withdrawals by any party, the financial institution may refuse, without liability, to allow any withdrawal pending the determination of the rights of the parties.

History. 1979, c. 407, § 6.1-125.13; 2010, c. 794; 2020, c. 259.

The 2020 amendments.

The 2020 amendment by c. 259, in subsection A, inserted “or fiduciaries”; in subsection C, added “or multiple-fiduciary accounts” at the end of the second sentence; and made stylistic changes.

Law Review.

For comment, “Multiple-Party Accounts: Does Virginia Law Correspond With the Expectations of the Average Depositor?,” see 14 U. Rich. L. Rev. 851 (1980).

CIRCUIT COURT OPINIONS

Disavowal of bank’s liability. —

Commissioner erred in placing a great deal of weight on the action of bank employees in allowing joint account holder to withdraw all remaining funds from a P.O.D. (payment on death) account when the other joint account holder died. Section 6.1-125.13 [now § 6.2-616 ] explicitly disavows a bank from any liability in regards to the withdrawal of funds from a P.O.D. joint account, so if, as the Commissioner suggested, the bank employees were aware of all relevant Virginia banking law, then one must assume that the employees were aware of the liability disavowal in § 6.1-125.13.In re Estate of Nash, 65 Va. Cir. 341, 2004 Va. Cir. LEXIS 213 (Fairfax County Aug. 10, 2004) (decided under former § 6.1-125.13).

Question of fact remained as to whether the money recipient was properly named as a P.O.D. payee or whether decedent intended the ownership of the account to vest with the money recipient; thus, the bank’s immunity plea had to be denied. Fitzgerald v. Deane, 60 Va. Cir. 345, 2002 Va. Cir. LEXIS 402 (Charlottesville Nov. 13, 2002) (decided under former § 6.1-125.13).

§ 6.2-617. Setoff by financial institution against account.

Without qualifying any other statutory right to setoff or lien, and subject to any contractual provision, if a party to a multiple-party account is indebted to a financial institution, the financial institution has a right to setoff against the account in which the party has or had immediately before his death a present right of withdrawal. The amount of the account subject to setoff is that proportion to which the debtor is, or was immediately before his death, beneficially entitled, and in the absence of proof of net contributions, to an equal share with all parties having present rights of withdrawal.

History. 1979, c. 407, § 6.1-125.14; 2010, c. 794.

§ 6.2-618. Identification of joint accounts.

1. Every financial institution in the Commonwealth offering joint accounts to its depositors shall either:
   1. Use two separate forms for the creation of joint accounts, one of which shall be clearly labeled “JOINT ACCOUNT WITH SURVIVORSHIP” and the other of which shall be clearly labeled “JOINT ACCOUNT — NO SURVIVORSHIP,” provided that a financial institution electing to use separate forms is not required to maintain both forms or make both forms available to persons opening joint accounts and may, in its discretion, elect to make one or both forms available to persons opening joint accounts; or
   2. Use one form for the creation of such accounts that shall contain the two labels “JOINT ACCOUNT WITH SURVIVORSHIP” and “JOINT ACCOUNT — NO SURVIVORSHIP,” with appropriate blank space or lines beside such labels for the parties to sign in order to indicate the type of account desired, which signature requirement shall be in addition to any signature verification form.
2. The forms provided for in subdivision A 1 may be identical in all respects except for the labels therein specified. This section shall not be construed to prevent any financial institution from changing from one method of identification to the other method of identification at any time, nor to require a financial institution making such a change to make any changes to the forms of its existing accounts.
3. The forms described in subsection A shall include disclosures to inform persons opening joint accounts of the disposition of such accounts upon a party’s death. Disclosures in a form substantially similar to the following shall satisfy the requirements of this section:Joint Account With Survivorship — On the death of a party to the account, the deceased party’s ownership in the account passes to the surviving party or parties to the account.Joint Account — No Survivorship — On the death of a party to the account, the deceased party’s ownership in the account passes as a part of the party’s estate under the party’s will, trust, or by intestacy.
4. This section is not applicable to joint accounts created before July 1, 1980.

History. 1979, c. 407, § 6.1-125.15; 1999, c. 125; 2010, c. 794; 2013, c. 70.

The 2013 amendments.

The 2013 amendment by c. 70 substituted “Use” for “Maintain” at the beginning of subdivisions A 1 and A 2; and in subdivision A 1, substituted “provided that a financial institution electing to use separate forms is not required to maintain both forms or make both forms available to persons opening joint accounts and may, in its discretion, elect to make one or both forms available to” for “both of which shall be made available to all.”

Law Review.

For comment, “Multiple-Party Accounts: Does Virginia Law Correspond With the Expectations of the Average Depositor?,” see 14 U. Rich. L. Rev. 851 (1980).

§ 6.2-619. Certain duties of parties to joint accounts in financial institutions.

1. Parties to a joint account in a financial institution occupy the relation of principal and agent as to each other, with each standing as a principal in regard to his ownership interest in the joint account and as agent in regard to the ownership interest of the other party. The provisions of the Uniform Power of Attorney Act (§ 64.2-1600 et seq.) shall apply to such principal/agent relationships.
2. For the purposes of this section, the ownership interest of the parties to the joint account shall be determined in accordance with the provisions of this article.

History. 1996, c. 260, § 6.1-125.15:1; 2010, cc. 455, 632, 794.

Editor’s note.

At the direction of the Virginia Code Commission, the reference to “Uniform Power of Attorney Act (§ 26-72 et seq.)” was changed to “Uniform Power of Attorney Act (§ 64.2-1600 et seq.)” to conform to the recodification of Title 26 by Acts 2012, c. 614, effective October 1, 2012.

Law Review.

For survey article, “Wills, Trusts, and Estates,” see 44 U. Rich. L. Rev. 631 (2009).

§ 6.2-620. Application of article to accounts existing on July 1, 1980.

1. Unless otherwise provided in this article, the provisions of this article shall be applicable to all multiple-party accounts in every financial institution in the Commonwealth on July 1, 1980, regardless of when such multiple-party accounts might have been opened or created.
2. Nothing in this article shall affect the common-law presumption of convenience now existing between persons not married to each other in joint accounts that were created prior to July 1, 1980, insofar as the ownership of the funds, whenever deposited, during their joint lifetime or their right of survivorship therein are concerned. Issues regarding ownership of such funds shall continue to be decided pursuant to the precedents of the Virginia Supreme Court.

History. 1979, c. 407, § 6.1-125.16; 2010, c. 794.

§ 6.2-700. Definitions.

As used in this chapter, unless the context requires a different meaning:

“Acquire” means:

1. The merger or consolidation of one bank holding company with another bank holding company;
2. The acquisition by a bank holding company of direct or indirect ownership or control of voting shares of another bank holding company or a bank, if, after such acquisition, the bank holding company making the acquisition will directly or indirectly own or control more than five percent of any class of voting shares of the other bank holding company or the bank;
3. The direct or indirect acquisition by a bank holding company of all or substantially all of the assets of another bank holding company or of a bank; or
4. Any other action that would result in direct or indirect control by a bank holding company of another bank holding company or a bank.“Bank”  has the same meaning assigned to it in 12 U.S.C. § 1841(c).“Bank holding company”  has the meaning assigned to it in 12 U.S.C. § 1841(a)(1).“Financial institution”  shall not include any consumer finance company or savings institution.“Financial institution holding company” means any person that has control over any financial institution or that has control over any person that controls any financial institution.“Home state”  means:

   1. With respect to a national bank, the state in which the main office is located;

   2. With respect to a state bank, the state by which the bank is chartered; and

   3. With respect to a bank holding company, the state in which the total deposits of all banking subsidiaries of such company are the largest on the later of (i) July 1, 1966, or (ii) the date on which the company becomes a bank holding company under the federal Bank Holding Company Act (12 U.S.C. § 1841 et seq.). “Out-of-state bank holding company” means a bank holding company that has as its home state a state other than the Commonwealth. “Subsidiary” means an entity over which another person has control. With respect to a bank, “subsidiary” means:

   1. Any entity 25 percent or more of whose voting shares, excluding shares owned by the United States or by any company wholly owned by the United States, are directly or indirectly owned or controlled by such bank holding company, or held by it with power to vote;

   2. Any company the election of a majority of whose directors is controlled in any manner by such bank holding company; or

   3. Any company with respect to the management or policies of which such bank holding company has the power, directly or indirectly, to exercise a controlling influence, as determined by the Commission, after notice and opportunity for hearing. “Virginia bank” means a bank that is organized under the laws of the Commonwealth or of the United States and that has the Commonwealth as its home state. “Virginia bank holding company” means a bank holding company that has the Commonwealth as its home state and is not controlled by a bank holding company other than a Virginia bank holding company. “Virginia financial institution” means a financial institution authorized to do business in the Commonwealth. “Virginia financial institution holding company” means any person that has control over any financial institution authorized to do business in the Commonwealth or has control over a person that controls any such financial institution.

History. 1978, c. 683, § 6.1-381; 1983, c. 194; 1985, c. 544, § 6.1-398; 1985, c. 604; 1986, c. 257; 1993, c. 58; 1994, cc. 315, 351; 1996, c. 16; 1998, c. 231; 2010, c. 794.

§ 6.2-701. Presumptions regarding control of entities, ownership of shares, and activities of subsidiaries or other entities.

1. A person shall be deemed to control another entity if:
   1. It owns 25 percent or more of the voting shares of the entity;
   2. The person is presumed to control the entity under the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.), as amended, or under Section 10 of the Home Owners’ Loan Act (12 U.S.C. § 1467a), as amended; or
   3. A determination has been made by the Commission that the person exercises a controlling influence over the management and policies of the entity.
2. A financial institution holding company shall be deemed to own shares owned by a subsidiary.
3. A financial institution holding company shall be deemed to engage in activities engaged in by its subsidiary or by any other entity of which it owns five percent or more of the voting shares.

History. 1978, c. 683, § 6.1-381; 1983, c. 194; 1985, c. 604; 1993, c. 58; 1996, c. 16; 2010, c. 794.

§ 6.2-702. Registration; authority to transact business.

Every person that controls one or more Virginia financial institutions (i) shall register with the Commission in accordance with procedures established by the Commission within 180 days after the date the person acquires control of a Virginia financial institution, unless the Commission allows additional time, and (ii) unless such person is a corporation chartered under the laws of Virginia, shall obtain a certificate of authority to transact business in the Commonwealth in accordance with § 13.1-757 .

History. 1978, c. 683, § 6.1-382; 1985, c. 544; 2010, c. 794.

§ 6.2-703. Acquisition of interest in entity other than financial institution by financial institutions.

No financial institution shall acquire more than five percent of the voting shares or otherwise gain control of any entity other than a financial institution without prior notice to the Commission.

History. 1978, c. 683, § 6.1-383; 1983, cc. 193, 194; 2010, c. 794.

§ 6.2-704. Acquisition of interests in financial institutions and financial institution holding companies; application; notice; Commission approval required.

1. Except as provided in this chapter, no person shall acquire or make any public offer to acquire, directly or indirectly, control of a Virginia financial institution or a Virginia financial institution holding company, and no Virginia financial institution holding company shall acquire more than five percent of the voting shares of any Virginia financial institution or of any other Virginia financial institution holding company, unless it first shall:
   1. File with the Commission an application in such form as the Commission may prescribe from time to time;
   2. Deliver to the Commission such other information as the Commission may require with such certification of financial information and such verification by oath or affirmation of other data as the Commission may deem appropriate;
   3. Pay such application fee as the Commission may prescribe from time to time; and
   4. Except in the case of an entity that is a domestic corporation or a foreign corporation qualified to do business in the Commonwealth, deliver to the Commission a written consent to service of process in any action or suit arising out of or in connection with said proposed acquisition through service of process on the Secretary of the Commonwealth.
2. Upon receipt of an application, the Commission shall notify the affected Virginia financial institution or Virginia financial institution holding company, and shall solicit the views of the affected Virginia financial institution or Virginia financial institution holding company. The application and all other information required by the Commission under this section, except such additional information as the Commission determines should be kept confidential, shall be held as part of the public records and made available to the public.
3. An out-of-state bank holding company may acquire a Virginia bank holding company or a Virginia bank if: (i) the out-of-state bank holding company complies with the application requirements of subsection A and (ii) the Commission does not disapprove the application, after the investigation prescribed by § 6.2-705 .

History. 1983, c. 194, § 6.1-383.1; 1985, c. 544, § 6.1-399; 1985, c. 604; 1991, c. 282; 1994, c. 351; 1998, c. 231; 2010, c. 794.

§ 6.2-705. Investigation of application.

1. For 60 days following receipt of a complete application with the required information, fee, and consent as provided in subsection A of § 6.2-704 , the Commission may conduct an investigation for the purpose of determining whether:
   1. The proposed acquisition would be detrimental to the safety and soundness of the applicant or of the Virginia financial institution or Virginia financial institution holding company that the applicant seeks to control or the stock of which is to be acquired;
   2. The applicant, its directors and officers, if applicable, and any proposed new directors and officers of the Virginia financial institution or Virginia financial institution holding company that the applicant seeks to control or the stock of which is to be acquired, are qualified by character, experience, and financial responsibility to control and operate a Virginia financial institution;
   3. The proposed acquisition would be prejudicial to the interests of the depositors, creditors, beneficiaries of fiduciary accounts, or shareholders of the applicant or of the Virginia financial institution holding company or any Virginia financial institution that the applicant seeks to control or the stock of which is to be acquired; and
   4. The acquisition is in the public interest.
2. The 60-day investigation period may be:
   1. Shortened or waived by the Commission, as it deems appropriate, if the Commission finds that it must act immediately in order to prevent the probable failure of a Virginia financial institution involved; or
   2. Extended only if the Commission determines that the applicant has not furnished all the information required by subsection A of § 6.2-704 or that the information submitted is substantially inaccurate or misleading.
3. Within the prescribed investigation period, and upon request of the applicant or the Virginia financial institution or Virginia financial institution holding company that the applicant seeks to control or the stock of which is to be acquired, the Commission may order a hearing concerning the proposed acquisition.
4. Within the prescribed investigation period, the Commission, by giving written notice of its decision and the reasons therefor to the applicant and to the Virginia financial institution or Virginia financial institution holding company that the applicant seeks to control or the stock of which is to be acquired, may (i) disapprove the application or (ii) impose such conditions on the acquisition as the Commission may deem advisable to effectuate the purposes of this chapter.
5. If the Commission (i) takes no action within the prescribed investigation period or (ii) issues notice within the prescribed investigation period of its intent not to disapprove the application, the acquisition may be completed by the applicant.
6. Any party in interest aggrieved by any decision of the Commission, as a matter of right, may appeal to the Supreme Court of Virginia in the manner provided by law.
7. The provisions of this section shall not apply:
   1. To mergers or acquisitions of assets authorized by the Commission pursuant to the provisions of § 6.2-914 ;
   2. If the acquisition or merger is arranged by the Commission or other supervisory authority in order to prevent the insolvency or closing of the institution; or
   3. If a financial institution itself forms a corporation for the purpose of acquiring and holding the stock of such financial institution and it is proposed that the shareholders of the financial institution will become the shareholders of the financial institution holding company being organized. This exclusion shall apply regardless of the fact that some shareholders of the financial institution may dissent from the proposal.

History. 1978, c. 683, § 6.1-387; 1983, c. 194, § 6.1-383.2; 1984, c. 335; 2010, c. 794.

§ 6.2-706. Cooperative agreements with other regulatory authorities.

Prior to approving the acquisition of any Virginia bank or Virginia bank holding company by any out-of-state bank holding company, or the acquisition of any out-of-state bank or out-of-state bank holding company by any Virginia bank holding company, the Commission shall enter into cooperative agreements with the appropriate regulatory authorities for the periodic examination of any out-of-state bank holding company that has a Virginia bank subsidiary, or any subsidiary of such holding company. The Commission may accept reports of examination and other records from such authorities in lieu of conducting its own examinations.

History. 1985, c. 544, § 6.1-404; 1994, c. 351; 2010, c. 794.

§ 6.2-707. Reports and examinations.

The Commission may require any financial institution holding company that controls a Virginia financial institution to furnish such reports as it deems appropriate to the proper supervision of such holding companies. Unless the Commission determines otherwise, reports prepared for federal authorities may be submitted by such holding company in satisfaction of the requirements of this section. If, in the judgment of the Commission, such information and reports are inadequate for the Commission’s intended purposes, the Commission may examine any such financial institution holding company and any subsidiary doing business in the Commonwealth.

History. 1978, c. 683, § 6.1-384; 1983, c. 194; 2010, c. 794.

§ 6.2-708. Unsafe or unsound practices; cease and desist orders.

Upon finding that any activity of a financial institution holding company, including the control of an entity other than a Virginia financial institution, is or may be detrimental to the safety or soundness of a financial institution that is subject to regulation under the laws of the Commonwealth, the Commission, after reasonable notice to the financial institution holding company and an opportunity for it to be heard, shall have authority to order it to cease and desist from such activity.

History. 1978, c. 683, § 6.1-385; 2010, c. 794.

§ 6.2-709. Conformity with federal forms.

To the maximum extent consistent with the effective discharge of the Commission’s responsibilities, the forms prescribed by the Commission under this chapter for registration, reports, or any other forms shall conform with those established by regulation adopted pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.) or Section 10 of the Home Owners’ Loan Act (12 U.S.C. § 1467a et seq.).

History. 1978, c. 683, § 6.1-386; 2010, c. 794.

§ 6.2-710. Regulations excluding financial institution holding companies from this chapter.

The Commission may adopt regulations excluding financial institution holding companies from the provisions of this chapter, under conditions comparable to those provided in either the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.) or Section 10 of the Home Owners’ Loan Act (12 U.S.C. § 1467a et seq.), when control of a Virginia financial institution arises (i) out of the acquisition of shares in a fiduciary capacity, (ii) in connection with an underwriting of securities or proxy solicitation, or (iii) in connection with securing or collecting a debt.

History. 1978, c. 683, § 6.1-387; 1984, c. 335; 2010, c. 794.

§ 6.2-711. Civil penalties; injunction.

1. To the extent provided for therein, the Commission may impose a civil penalty of not less than $100 but not exceeding $1,000 per day for each day of noncompliance upon financial institution holding companies subject to the laws of the Commonwealth that fail to comply with any of the provisions of § 6.2-707 for a period of longer than 30 days, after being called upon by the Commission for a statement, or to do such other act as is therein provided. The Commission may impose a civil penalty of not less than $25 but not exceeding $100 per day for each day of noncompliance upon any officer of any such financial institution holding company, who shall refuse to give any examiner the information or refuse to be sworn, as required by this title.
2. The Commission (i) may impose a civil penalty not exceeding $10,000 against any financial institution holding company subject to the laws of the Commonwealth or against any of its directors, officers, or employees for violating any lawful order of the Commission and (ii) may remove from office any director or officer who a second time violates any such order. In all cases the defendant shall have an opportunity to be heard and to introduce evidence, and the right to appeal as provided by law.
3. Any person violating any provision of this chapter or any regulation adopted thereunder shall be subject to injunction by the Commission or by an appropriate court on motion of any party in interest. In addition, the Commission may impose a civil penalty of not more than $1,000 per day for each day the violation continues upon any person violating any provision of this chapter or any regulation adopted thereunder.

History. 1978, c. 683, § 6.1-388; 1983, c. 194; 2010, c. 794.

§ 6.2-712. A savings institution holding company seeking to acquire a bank or bank holding company deemed a bank holding company.

For purposes of this chapter, any savings institution holding company seeking to acquire a bank or bank holding company, shall be deemed to be a bank holding company, for purposes of determining whether such savings institution holding company is permitted to acquire the bank or bank holding company in question.

History. 1987, c. 634, § 6.1-399.1; 2010, c. 794.

§ 6.2-713. Applicable laws and regulations.

1. Any Virginia bank that is controlled by a bank holding company that is not a Virginia bank holding company shall be subject to all laws of the Commonwealth and all regulations under such laws that are applicable to Virginia banks controlled by Virginia bank holding companies.
2. The Commission shall adopt such regulations, including the imposition of reasonable application and administration fees, as it finds necessary to implement and effect the provisions of this chapter.

History. 1985, c. 544, § 6.1-403; 2010, c. 794.

§ 6.2-714. Examinations of out-of-state bank holding companies and subsidiaries; reports; joint actions.

1. The Commission shall have the authority to examine any out-of-state bank holding company owning a Virginia bank and each of its Virginia or non-Virginia bank or nonbank subsidiaries.
2. The Commission shall require reports of each out-of-state bank holding company subject to this chapter. Such reports shall be filed under oath with such frequency and in such scope and detail as may be appropriate for the purpose of assuring continuing compliance with the provisions of this chapter.
3. The Commission may enter into joint actions with other regulatory authorities having concurrent jurisdiction over any out-of-state bank holding company that has a Virginia bank subsidiary or may take such actions independently to carry out its responsibilities under this chapter, assure the safety and soundness of any Virginia banks, and assure compliance with the provisions of this chapter and the applicable banking laws of the Commonwealth.

History. 1985, c. 544, § 6.1-404; 1994, c. 351; 2010, c. 794.

§ 6.2-715. Notice of intent to acquire out-of-state bank.

A Virginia bank holding company or an out-of-state bank holding company that controls a Virginia bank shall file with the Commission (i) notice of its intention to acquire a bank outside Virginia and (ii) such information as the Commission shall request. The Commission shall within 30 days, or an extended period not exceeding 15 days, disapprove such acquisition if it determines that the acquisition could affect detrimentally the safety or soundness of a Virginia bank. It shall approve such acquisition within 45 days if it determines that the acquisition will not affect detrimentally the safety or soundness of such Virginia bank.

History. 1985, c. 544, § 6.1-406; 1994, c. 351, 1996, c. 17; 2010, c. 794.

§ 6.2-800. Definitions.

As used in this chapter, unless the context requires a different meaning:

“Bank” means a corporation authorized by statute to accept deposits and to hold itself out to the public as engaged in the banking business in the Commonwealth.

“Bankers’ bank” means a bank whose shares are owned exclusively by either (i) financial institutions that have or are eligible for insurance of deposits by a federal agency or (ii) financial institution holding companies as defined in § 6.2-700 or savings institution holding companies as defined in § 6.2-1100 owning any financial institution described in clause (i), provided that no such financial institution or holding company owns, directly or indirectly, more than five percent of the issued and outstanding voting shares of any bankers’ bank.

“Bank holding company” means any corporation (i) that directly or indirectly owns, controls, or holds with power to vote, 25 percent or more of the voting shares of one or more banks or of a corporation that is or becomes a bank holding company by virtue of this definition, (ii) that controls in any manner the election of a majority of the directors of one or more banks, or (iii) for the benefit of whose shareholders or members 25 percent or more of the voting shares of one or more banks or bank holding companies is held by trustees. For the purpose of this definition, any successor to any such corporation shall be deemed to be a bank holding company from the date as of which such successor corporation becomes a bank holding company. Notwithstanding the foregoing, (a) a bank shall not be a bank holding company by virtue of its ownership or control of shares in a fiduciary capacity except where such shares are held for the benefit of the shareholders of such banks, (b) a corporation shall not be a bank holding company by virtue of its ownership or control of its shares acquired by it in connection with its underwriting of securities and which are held only for such period of time as will permit the sale thereof upon a reasonable basis, (c) a corporation formed for the sole purpose of participating in a proxy solicitation shall not be a bank holding company by virtue of its control of voting rights or shares acquired in the course of such solicitation, and (d) a corporation shall not be a bank holding company if at least 80 percent of its total assets are composed of holdings in the field of agriculture.

“FDIC” means the Federal Deposit Insurance Corporation.

“International banking facility” means a set of assets and liability accounts segregated on the books and records of the bank, or an adjacent or other subsidiary that includes only international banking facility time deposits and international banking facility extensions of credit. The facility may either be located within Virginia or outside the territorial United States. “International banking facility” has the meaning assigned to it by the laws of the United States or the regulations of the Board of Governors for the Federal Reserve System.

“State bank” means a bank incorporated under the laws of the Commonwealth and that has its principal place of business in the Commonwealth.

“Trust business” has the meaning assigned to it in § 6.2-1000 .

“Trust company” has the meaning assigned to it in § 6.2-1000 .

History. Code 1950, §§ 6-6, 6-27.1, 6-66; 1962, c. 404; 1966, c. 584, §§ 6.1-4, 6.1-80; 1974, c. 665; 1982, c. 411; 1983, c. 453, § 6.1-11.2; 1987, c. 556; 1989, cc. 376, 650, § 6.1-6.1; 1993, cc. 182, 432; 1994, c. 7; 1996, cc. 218, 306; 2006, c. 633; 2010, c. 794.

Law Review.

For article, “The Banking Structure of Virginia,” see 25 Wash. & Lee L. Rev. 20 (1968).

For survey of Virginia commercial law for the year 1969-1970, see 56 Va. L. Rev. 1387 (1970).

For article, “The Virginia Land Trust — An Overlooked Title Holding Device for Investment, Business and Estate Planning Purposes,” see 30 Wash. & Lee L. Rev. 73 (1973).

For survey of Virginia law on business associations for the year 1973-1974, see 60 Va. L. Rev. 1464 (1974).

For article, “Evolution of the Virginia Banking Structure 1962-1974: The Effects of the Buck-Holland Bill,” see 16 Wm. & Mary L. Rev. 567 (1975).

For a special section on the Virginia potential for banking structure and statewide branching, see 18 Wm. & Mary L. Rev. 93 (1976).

For survey of Virginia commercial law for the year 1975-1976, see 62 Va. L. Rev. 1375 (1976).

Research References.

Accounting for Banks (Matthew Bender). Resseguie.

Asset Based Financing: A transactional Guide (Matthew Bender). Ruda.

Bank Holding Co. Compliance Manual — Second Edition (Matthew Bender). Gluck, Gluck, LeGrande.

Banking Law (Matthew Bender). Lapine, Lassila, McCullough, Pilecki, Resseguie, Taylor, Weisblatt.

Banks and Thrifts: Government Enforcement and Receivership (Matthew Bender). Resseguie and Zisman.

Checks, Drafts and Notes (Matthew Bender). Weisblatt.

Commercial Finance Guide (Matthew Bender). Leichtling and Karpen.

Commercial Loan Documentation Guide (Matthew Bender). Leichtling and Karpen.

Law of Electronic Funds Transfers (Matthew Bender). Geva.

Lender Liability Law and Litigation (Matthew Bender).

Letters of Credit (Matthew Bender). McCullough.

§ 6.2-801. Application of chapter.

The provisions of this chapter shall apply to all state banks, and so far as constitutionally permissible, to all banks organized under the laws of the United States doing business in Virginia.

History. Code 1950, §§ 6-6, 6-27.1; 1962, c. 404; 1966, c. 584, § 6.1-4; 1974, c. 665; 1987, c. 556; 1993, c. 432; 2010, c. 794.

§ 6.2-802. Effect of chapter on certain banks.

1. Nothing in this chapter shall be construed to change or affect any privilege granted by charter to any bank incorporated before June 15, 1910, nor to affect the legality of any investment made or transaction had prior to June 18, 1928, pursuant to any provisions of law in force when such investment was made or transaction occurred.
2. No provision of this chapter other than § 6.2-803 shall apply to any bank chartered prior to June 15, 1910, under the laws of the Commonwealth but having no place of business within the Commonwealth and conducting its entire business outside of the Commonwealth.

History. Code 1950, § 6-8; 1966, c. 584, § 6.1-7; 2010, c. 794.

§ 6.2-803. Entities authorized to engage in banking business.

1. No person, except (i) corporations duly chartered and already conducting banking business in the Commonwealth under authority of the laws of the Commonwealth or the United States, (ii) corporations that shall hereafter be incorporated under, and authorized to conduct banking business in the Commonwealth under authority of, the laws of the Commonwealth, (iii) corporations that shall hereafter be authorized to do business in the Commonwealth under the banking laws of the United States, and (iv) banks authorized, after July 1, 1995, to establish and operate one or more branches in the Commonwealth under Article 6 (§ 6.2-836 et seq.) or Article 7 (§ 6.2-849 et seq.) of this chapter, shall engage in the banking business in the Commonwealth. No foreign corporation, except as permitted in Chapter 7 (§ 6.2-700 et seq.), shall engage in a banking business in the Commonwealth.
2. Nothing in this chapter shall prevent:
   1. An individual from qualifying and acting as trustee, personal representative, guardian, conservator, committee or in any other fiduciary capacity;
   2. Any person from (i) lending money on real estate and personal security or collateral, (ii) guaranteeing the payment of bonds, notes, bills and other obligations, or (iii) purchasing or selling stocks and bonds;
   3. Any bank organized under the laws of the Commonwealth from qualifying and acting in another state as trustee, personal representative, guardian of a minor, conservator, or committee or in any other fiduciary capacity, when permitted so to do by the laws of such other state; or
   4. An incorporated association that is authorized to sell burial association group life insurance certificates in the Commonwealth, as described in the definition of limited burial insurance authority in § 38.2-1800 , the principal purpose of which is to assist its members in (i) financial planning for their funerals and burials and (ii) obtaining insurance for the payment, in whole or in part, for funeral, burial, and related expenses, from serving as trustee of a trust established pursuant to § 54.1-2822 .
3. Nothing in this section shall be construed:
   1. To prevent banks organized in the Commonwealth and chartered under the laws of the United States from transacting business in the Commonwealth; or
   2. To prevent a real estate broker as defined in § 54.1-2100 from owning or operating a bank provided that the requirements of this chapter are met.

History. Code 1950, § 6-9; 1966, c. 584, § 6.1-5; 1985, c. 544; 1995, c. 301; 1997, c. 801; 1999, c. 835; 2003, cc. 536, 558, 910; 2007, c. 621; 2010, c. 794.

Cross references.

As to bank acting as testamentary trustee, see § 64.2-1306 . As to qualification of bank as trustee, see § 64.2-1400 .

Law Review.

For comment on state regulation, the Bank Holding Company Act, and the Commerce Clause, see 38 Wash. & Lee L. Rev. 231 (1981).

§ 6.2-804. Amendment of powers of state banks by regulation of the Commission.

1. In addition to the powers specifically granted to banks by the provisions of this chapter, the Commission may by regulation amend the powers of state banks so as to allow such state banks to engage in any activity in which a bank subject to the jurisdiction of the federal government may be authorized by federal legislation or regulation to engage.
2. The Commission, by regulation, may specify the activities that are permitted to be conducted at a location that is not authorized as a branch under § 6.2-831 , in order to allow a state bank to engage in any activity in which a bank subject to the jurisdiction of the federal government may engage at a location other than a branch.
3. Regulations authorized by this section shall be adopted as provided in the Commission’s Rules.

History. 1968, c. 325, § 6.1-5.1; 1975, c. 81; 1987, c. 556; 1997, c. 111; 2010, c. 794.

§ 6.2-805. Commission authorized to confer on state banks power to make charges comparable to those permitted to national banking associations.

In addition to the permissible interest rates and charges that banks specifically, and lenders generally, are granted the power to charge by this title, the Commission may, by order, from time to time confer upon state banks the power to take, receive, reserve, and charge on any loan or discount made, at a rate of one per centum in excess of the discount rate on 90-day commercial paper in effect at the Federal Reserve Bank for the fifth Federal Reserve District. The Commission may thereby confer upon state banks the power to make charges that are comparable to those permitted under any federal statute or regulation to any national banking association.

History. 1975, c. 80, § 6.1-5.2; 2010, c. 794.

§ 6.2-806. Saturday closing of banks.

Any bank, including national banking associations and federal reserve banks, may permit any one or more or all of its offices to remain closed on any one or more or all Saturdays, as the bank, by resolution of its board of directors, may from time to time determine. Any Saturday on which an office of a bank remains closed, as herein permitted, shall constitute a legal holiday as to such office. Any act authorized, required or permitted to be performed at, by or with respect to any such office on a Saturday on which the office is so closed may be performed on the next succeeding business day. No liability or loss of rights of any kind shall result from such delay.

History. Code 1950, § 2-20.1; 1952, c. 56; 1954, c. 273; 1956, cc. 38, 108, 366; 1958, c. 103; 1959, Ex. Sess., cc. 11, 65, 66; 1960, cc. 24, 588; 1962, c. 2; 1966, c. 677, § 2.1-23; 2001, c. 844, § 6.1-5.1; 2010, c. 794.

§ 6.2-807. Discoverability or admissibility of compliance review committee documents.

1. As used in this section, “compliance review committee” means a committee appointed by the board of directors of a bank for the purpose of evaluating and improving the bank’s compliance with federal and state laws and adherence to its own established ethical and financial standards, and includes any other person when that person acts in an investigatory capacity at the direction of a compliance review committee.
2. Any records, reports, or other documents created by a compliance review committee are confidential and shall not be discoverable or admissible in evidence in any civil action unless, upon motion, the trial court determines in its discretion that there has been an abuse of the provisions of this section.
3. Any records, reports, or other documents produced by a compliance review committee and delivered to a federal or state governmental agency remain confidential and shall not be discoverable or admissible in evidence in any civil action, except to the extent that applicable law provides that such records, reports or other documents are not protected from disclosure.
4. In no event shall the existence of or any action by a compliance review committee serve as a basis or justification for delay of, or limit upon, the discovery process set forth in state or federal rules.
5. The work product created by any person acting in an investigatory capacity at the direction of a compliance review committee prior to his participation in the work of the compliance review committee or at the direction of the compliance review committee shall be subject to the rules governing discovery in accordance with the Rules of the Virginia Supreme Court.
6. This section shall not be construed to limit the discovery or admissibility:
   1. In any civil action of any records, reports or other documents that are not created by a compliance review committee; or
   2. Of any factual information which may be reviewed by a compliance review committee.

History. 1994, c. 201, §§ 6.1-2.16, 6.1-2.17, 6.1-2.18; 2010, c. 794.

§ 6.2-808. Incorporation; corporate powers.

1. A bank may be incorporated under the Virginia Stock Corporation Act (§ 13.1-601 et seq.), but need not comply with the provisions of subsection A of § 13.1-630 .
2. Except as otherwise provided in this chapter, a bank shall:
   1. Have all the powers conferred on corporations, and be subject to all restrictions imposed on corporations, by the Virginia Stock Corporation Act;
   2. Not issue its shares for any consideration except money at least equal in amount to the par value of its shares; and
   3. Not issue no-par stock.

History. Code 1950, § 6-10; 1956, c. 433; 1966, c. 584, § 6.1-6; 1987, c. 556; 2010, c. 794.

§ 6.2-809. Bankers’ banks.

1. A bank may be incorporated as provided in § 6.2-808 for the purpose of becoming a bankers’ bank.
2. Except as specifically provided in this section or by regulation or order of the Commission, a bankers’ bank shall be vested with all of the powers and subject to all of the restrictions imposed upon a bank.
3. Notwithstanding any other provision in this title to the contrary, a bankers’ bank shall only accept deposits from or make loans to (i) a financial institution which has or is eligible for insurance of deposits by a federal agency, (ii) a bank in organization that has applied for insurance of deposits by a federal agency, (iii) a financial institution holding company as defined in § 6.2-700 or a savings institution holding company as defined in § 6.2-1100 owning an entity described in clause (i) or (ii), (iv) the officers, directors and employees of any such financial institution, bank in organization or holding company, (v) any person referred to a bankers’ bank by a financial institution or by a bank in organization that has applied for insurance of deposits by a federal agency, or (vi), with the prior approval of the Commissioner and subject to such conditions as the Commissioner may impose, other persons.
4. A bankers’ bank may form a bank holding company upon compliance with the provisions of Chapter 7 (§ 6.2-700 et seq.) and any applicable federal law.
5. A bankers’ bank may purchase investments or securities of governments or private corporations which are traded on the open market such as are authorized to any other bank organized under the provisions of this chapter.

History. 1989, c. 650, § 6.1-6.1; 1996, c. 218; 2006, c. 633; 2010, c. 794.

§ 6.2-810. Effect of chapter on charter powers.

The powers, privileges, duties and restrictions conferred and imposed upon any bank existing and doing business under the laws of the Commonwealth are abridged, enlarged or modified, as each particular case may require, to conform to the provisions of this chapter.

History. Code 1950, § 6-8; 1966, c. 584, § 6.1-7; 2010, c. 794.

§ 6.2-811. Membership in Federal Reserve Bank System or Federal Home Loan Bank System.

Any bank that has been or is hereafter incorporated under the laws of the Commonwealth, at its election, may become a member bank of the Federal Reserve Bank System, subject to the provisions of the Federal Reserve Act (P.L. 63-43, 38 Stat. 251) as it may be amended to permit a bank to become a member, or the Federal Home Loan Bank System, subject to the provisions of the Federal Home Loan Bank Act (P.L. 72-304, 47 Stat. 785) as it may be amended to permit a bank to become a member, or both. Upon becoming a member of either system, the bank shall be vested with all powers conferred upon state member banks of such systems by the terms of such acts. The powers shall be exercised subject to all restrictions and limitations imposed by the Federal Reserve Act or the Federal Home Loan Bank Act, or by regulations of the Federal Reserve Board or the Federal Housing Finance Board, respectively, adopted pursuant to such acts. The right is expressly reserved to revoke or amend the powers conferred pursuant to this section. The Commission may disclose to the Federal Reserve Board, or to examiners duly appointed by it, all information in reference to the affairs of any bank which has become, or desires to become a member of the system.

History. Code 1950, § 6-24; 1966, c. 584, § 6.1-8; 1993, c. 182; 2010, c. 794.

§ 6.2-812. Inspection of records, reports, and information of insured banks.

1. As used in this section, “insured bank” has the meaning assigned to it in § 12-B of the Federal Reserve Act (12 U.S.C. § 1813(h)), as amended.
2. All records, reports, reports of examinations, and information relating to insured banks shall be open to the inspection of, and made available to, the officers and duly accredited agents of the Federal Deposit Insurance Corporation so long as like records, reports, and information in the possession or under the control of the Federal Deposit Insurance Corporation are, by federal statute, made available and subject to inspection by the Commission.

History. Code 1950, § 6-25; 1966, c. 584, § 6.1-9; 2010, c. 794.

§ 6.2-813. Participation by banks in school thrift or savings plans.

A bank may contract with the principal of any elementary or secondary school, if authorized to do so by the school board in any locality where the bank has a location, for the bank to participate in a school thrift or savings plan. A participating bank may accept deposits at the school either by its own collector or by any representative of the school who becomes the agent of the bank for such purpose.

History. Code 1950, § 6-23.1; 1954, c. 160; 1966, c. 584, § 6.1-10; 2010, c. 794.

§ 6.2-814. Powers of banks.

1. Every bank shall have power to exercise, by its board of directors or duly authorized officers or agents, subject to law, all incidental powers that are necessary to carry on the business of banking, by:
   1. Discounting and negotiating bills of exchange, promissory notes, drafts, and other evidences of debt;
   2. Receiving deposits;
   3. Buying and selling exchange, coin, and bullion;
   4. Loaning money on real property, personal property, security, or collateral;
   5. Guaranteeing the payment of bonds, bills, notes and other obligations that have six months or fewer until maturity;
   6. Rediscounting paper;
   7. Purchasing and selling bonds;
   8. Acting as agent in the sale of insurance and annuities;
   9. Dealing in or making a market in securities;
   10. Providing financial, investment, or economic advisory services;
   11. Providing other products and services deemed by the Commission to be financial in nature;
   12. Engaging directly in those activities in which a controlled subsidiary corporation of a bank is authorized to engage pursuant to §§ 6.2-885 and 6.2-888 in accordance with the requirements of such sections, provided that a bank, or a controlled subsidiary corporation of a bank, that transacts business as a real estate brokerage firm shall be subject to the provisions of § 6.2-888 ;
   13. Establishing an international banking facility, either as a division of the bank or as a separate corporate entity under § 6.2-885 ; and
   14. Utilizing armored vehicles or other vehicles to provide adequate protection for the funds transported for receipt of deposits of its customers or to deliver currency and coin.
2. In addition to the permissible business authorized by subsection A, the Commission may, upon the Commission’s finding that an emergency exists, confer by order upon banks such temporary powers as the Commission may determine to be in the public interest. Such powers as are conferred may be (i) authorized for a limited period of time, (ii) granted selectively to fewer than all banks, and (iii) revoked by further order of the Commission.

History. Code 1950, § 6-23; 1966, c. 584, § 6.1-11; 1968, c. 727, § 6.1-41.1; 1978, c. 683, § 6.1-11.1; c. 453, § 6.1-11.2; 1987, c. 352; 2005, c. 320; 2010, c. 794.

§ 6.2-815. Suspension of business during emergency.

Every bank doing business in the Commonwealth is authorized temporarily to suspend its usual business during a period of actual or threatened enemy attack, civil insurrection or riot, affecting the community in which such institution is doing business or other emergency justifying temporary closing such as fire, flood, or hurricane.

History. Code 1950, § 6-30; 1966, c. 584, § 6.1-12; 1970, c. 15; 2010, c. 794.

§ 6.2-816. Banks to obtain certificate of authority.

1. Before any bank shall begin business it shall obtain from the Commission a certificate of authority authorizing it to do so. Prior to the issuance of such certificate, the Commission shall ascertain:
   1. That all of the provisions of law have been complied with;
   2. That financially responsible individuals have subscribed for capital stock and surplus in an amount deemed by the Commission to be sufficient to warrant successful operation. The amount of capital stock shall not be less than $2 million, except that the capital stock shall not be less than $500,000 for any trust company incorporated for the sole purpose of exercising fiduciary powers authorized by the provisions of Article 3 (§ 6.2-819 et seq.) of this chapter. The minimum capital stock requirement under this subdivision shall apply when a bank is being organized to begin business;
   3. That oaths of all the directors have been taken and filed in accordance with the provisions of § 6.2-863 ;
   4. That, in its opinion, the public interest will be served by banking facilities or additional banking facilities, as the case may be, in the community where the bank is proposed. The addition of such facilities shall be deemed in the public interest if, based on all relevant evidence and information, advantages such as, but not limited to, increased competition, additional convenience, or gains in efficiency outweigh possible adverse effects such as, but not limited to, diminished or unfair competition, undue concentration of resources, conflicts of interests, or unsafe or unsound practices;
   5. That the corporation is formed for no other reason than a legitimate banking business;
   6. That the moral fitness, financial responsibility, and business qualifications of individuals named as officers and directors of the proposed bank are sufficient to command the confidence of the community where the bank is proposed;
   7. That the bank’s deposits are to be insured by a federal agency up to the limits of the insurance provided thereby; and
   8. Anything else deemed pertinent.
2. The minimum capital stock requirement specified in subdivision A 2 shall not apply when this section is referred to or used in connection with:
   1. The conversion of an operating savings institution or national bank to a state bank;
   2. The reorganization of an operating bank under a holding company;
   3. The issuance of a certificate of authority to a holding company to facilitate its merger with and into its subsidiary bank;
   4. The issuance of a certificate of authority to a holding company to facilitate the merger of its subsidiary bank with and into the holding company;
   5. The issuance of a certificate of authority to a holding company to facilitate the merger of both the holding company and its subsidiary bank with and into a newly formed entity; or
   6. The issuance of a certificate of authority to a resulting bank following a merger described in subdivision B 3, B 4, or B 5, provided that such merger does not result in or involve a change of control as defined in § 6.2-701 .

History. Code 1950, § 6-31; 1966, c. 584, § 6.1-13; 1973, c. 454; 1976, c. 658; 1979, c. 57; 1983, c. 193; 1989, c. 751; 1989, Sp. Sess., cc. 4, 7; 1992, c. 460; 1996, c. 26; 1998, c. 18; 2010, c. 794; 2014, cc. 221, 372.

The 2014 amendments.

The 2014 amendments by cc. 221 and 372 are identical, and added the subsection A designation and in subdivision A 2 deleted the clause (i) designation and deleted “and (ii) shall not apply when this section is referred to or used in connection with the conversion of an operating savings institution or national bank to a state bank or the reorganization of an operating bank under a holding company” at the end; and added subsection B.

§ 6.2-817. Capital stock subscriptions.

1. Subscriptions to the capital stock of a bank shall be paid in money at not less than par. No bank shall begin business until the amounts specified in its certificate of authority to commence business have been received by the bank.
2. All money received for subscriptions to or for purchases of stock of a bank before it opens for business shall be deposited in an escrow account in an insured financial institution or invested in United States government obligations, under the joint control of two organizing directors of the bank. Such funds, together with any income thereon, shall be remitted to the bank on the day it opens for business. If the bank is denied a certificate of authority or is refused insurance of accounts, or it otherwise is determined that the bank will not open for business, such funds, after payment of any amount owing for expenses in connection with such attempted organization, including reasonable consulting fees, attorney fees, salaries, filing fees, and other expenses, shall be refunded to subscribers or shareholders.
3. The requirement that capital stock be paid in money shall not be construed to prohibit the establishment, as otherwise authorized by law, of stock option plans, stock purchase plans, and restricted stock award plans, and the issuance of stock pursuant to such plans. Such plans shall be established only after the bank has opened for business, and shall be approved by a majority vote of the bank’s shareholders. In no event shall any stock option be granted at a price which is less than 100 percent of the fair market value per share of the stock.

History. Code 1950, § 6-34; 1964, c. 58; 1966, c. 584, § 6.1-14; 1980, c. 659; 2010, c. 794; 2011, c. 240; 2019, cc. 253, 254.

The 2011 amendments.

The 2011 amendment by c. 240, in subsection C, in the first sentence, inserted “and restricted stock award plans” and made a related change, and in the last sentence, substituted “fair market value” for “book value” and deleted “as shown by the bank’s last published statement prior to the granting of the option” from the end.

The 2019 amendments.

The 2019 amendments by cc. 253 and 254 are identical, and deleted “both of whom shall be bonded for an amount equal to the total amount of the money to be collected” at the end of the first sentence in subsection B.

§ 6.2-818. Repealed by Acts 2019, cc. 253 and 254, cl. 2, effective July 1, 2019.

Editor’s note.

Former § 6.2-818 , prohibiting commissions or other compensation for sale of stock in the bank, derived from Code 1950, § 6-35; 1960, c. 276; 1966, c. 584, § 6.1-15; 2010, c. 794.

§ 6.2-818.1. Virtual currency custody services by banks.

1. As used in this section, unless the context requires a different meaning: “Bank” has the same meaning as provided in § 6.2-800 . “Custody services” means the role of a bank in the safekeeping and custody of various customer assets. “Self-assessment” has the same meaning as provided in § 6.2-947 . “Virtual currency” means an electronic representation of value intended to be used as a medium of exchange, unit of account, or store of value. “Virtual currency” does not exist in a physical form; it is intangible and exists only on the blockchain or distributed ledger associated with a particular virtual currency. The owner of virtual currency holds cryptographic keys associated with the specific unit of virtual currency in a digital wallet, which allows the rightful owner of the virtual currency to access and utilize it.
2. A bank may provide its customers with virtual currency custody services so long as the bank has adequate protocols in place to effectively manage risks and comply with applicable laws. Prior to a bank offering virtual currency custody services, the bank shall carefully examine the risks involved in offering such services through a methodical self-assessment process. If the bank decides to move forward with offering such services, the bank shall:
   1. Implement effective risk management systems and controls to measure, monitor, and control relevant risks associated with custody of digital assets such as virtual currency;
   2. Confirm that it has adequate insurance coverage for such services; and
   3. Maintain a service provider oversight program, to the extent that the bank engages with a service provider to provide virtual currency custody services, to address risks to service provider relationships as a result of engaging in virtual currency custody services.
3. A bank may provide virtual currency custody services in either a nonfiduciary or fiduciary capacity. In providing such services in a nonfiduciary capacity, the bank shall act as a bailee, taking possession of the customer’s asset for safekeeping while legal title remains with the customer, meaning that the customer retains direct control over the keys associated with their virtual currency. In providing such services in a fiduciary capacity, a bank is required to possess trust powers as described in § 6.2-819 and have a trust department pursuant to § 6.2-821 . Acting in a fiduciary capacity, the bank shall require customers to transfer their virtual currencies to the control of the bank by creating new private keys to be held by the bank. In its fiduciary capacity, a bank shall have authority to manage virtual currency assets as it would any other type of asset held in such capacity.

History. 2022, c. 623.

§ 6.2-819. Authority to engage in trust business; permission of Commission required.

1. A bank shall not engage in the trust business unless its articles of incorporation state that one of its purposes is to engage in the trust business.
2. A bank shall not commence to engage in the trust business without first obtaining permission from the Commission. The Commission shall not grant such permission unless it finds that:
   1. The bank’s capital structure is sufficiently strong to support such additional undertaking;
   2. The personnel who will direct the proposed trust department have adequate experience and training, and will devote sufficient time to its affairs to insure compliance with the law and to protect the bank against surcharge; and
   3. The granting of trust powers to the bank will be in the public interest.
3. Notwithstanding the provisions of subsection B, any bank actively engaged in the trust business on January 1, 1966, may continue in the trust business without the Commission’s permission.
4. A bank authorized to do a trust business shall conduct such business in accordance with the applicable provisions of Chapter 10 (§ 6.2-1000 et seq.).

History. Code 1950, § 6-91; 1958, c. 139; 1966, c. 584, § 6.1-16; 1976, c. 658; 2010, c. 794.

§ 6.2-820. Powers of national banks as fiduciaries.

All national banks that have been, or hereafter may be, permitted by law to act as trustee and in other fiduciary capacities, shall have the rights, powers, privileges, and immunities conferred upon trust companies by Chapter 10 (§ 6.2-1000 et seq.).

History. Code 1950, §§ 6-94, 6-104; 1966, c. 584, § 6.1-17; 1984, c. 172; 1993, c. 432; 1997, c. 801; 2010, c. 794.

§ 6.2-821. Separation of banking and trust functions; establishment of trust department.

Every state bank that obtains permission from the Commission to engage in trust business shall establish a separate trust department. Such department shall be established before such institution undertakes to act in any fiduciary capacity and shall be placed under the management of an officer or officers whose duties shall be prescribed by the board of directors of the institution or by either an amendment to the bylaws of the institution or by a resolution duly entered in the minutes of the board of directors.

History. Code 1950, § 6-97; 1966, c. 584, § 6.1-20; 1993, c. 432; 2010, c. 794.

§ 6.2-822. Merger and share exchange by state banks.

1. Virginia banks as defined in § 6.2-849 may merge upon compliance with the provisions of Article 12 (§ 13.1-715.1 et seq.) of the Virginia Stock Corporation Act. The provisions of:
   1. Section 13.1-716 that relate to a merger with a foreign corporation as foreign eligible entity shall not apply, except that the provisions of § 13.1-716 relating to merger shall apply to the merger of a state and a national bank if the national bank is engaged in business in Virginia, and if the state bank is to be the surviving bank; and
   2. Section 13.1-730 shall not apply to a merger under this section.
2. A national bank shall be treated as if it were a foreign corporation and as if the United States were the state where it is organized. A bank may enter into a share exchange, as permitted by § 13.1-717 , provided there is also compliance with Chapter 7 (§ 6.2-700 et seq.). The exclusion in subdivision G 3 of § 6.2-705 shall not apply in the case of such an exchange of shares.
3. In the event of a merger authorized by subsection A or B, the merged corporation, whether it be one of merging banks, or a new bank formed by means of such merger, shall without further act or deed succeed to, and be vested with all offices, rights, obligations and relations of trust or of a fiduciary nature, including appointments, designations and nominations, existing immediately prior to the time at which such merger became effective, or then belonging or pertaining to any one or more of the banks, parties to such merger, or which would then inure to any one or more of such banks.
4. No state bank resulting from any merger shall do business in the Commonwealth until it shall have obtained from the Commission a certificate of authority authorizing it to do so. The provisions of § 6.2-816 shall apply to the issuance, or refusal of the Commission to issue, the certificate herein provided for, to the same extent as if the merged bank were a new bank.
5. In the case of a merger heretofore or hereafter effected, the surviving or new bank shall be deemed to have been in actual operation for the period during which the oldest of the banks involved in the merger has been in actual operation.

History. Code 1950, §§ 6-20, 6-21; 1952, c. 571; 1956, c. 433; 1966, c. 584, §§ 6.1-43, 6.1-44; 1970, c. 536; 1987, c. 423; 1995, c. 301; 2005, c. 765; 2010, c. 794.

§ 6.2-823. Conversion of national banking association to state bank; certificate of authority.

1. A national banking association, organized under the laws of the United States and doing business in the Commonwealth, may be converted into and become a state bank by the following procedure:
   1. The directors of the national banking association shall cause to be incorporated under the laws of the Commonwealth a corporation authorized by its certificate of incorporation to conduct the business of banking as the successor of the national banking association. With regard to such incorporation:
      1. The certificate of incorporation of the corporation shall conform as nearly as may be legally permissible to that of the national banking association;
      2. The principal office of the corporation shall be in the county or city wherein the national banking association has its principal office; and
      3. The amount of the capital stock of the corporation, its division into shares, the par value of shares, their classification and preferences, if any, shall conform to those of the national banking association, and the minimum capital of the state bank shall comply with that required for a bank under § 6.2-816 .
   2. The national banking association shall effect its conversion to a state bank in accordance with the procedure prescribed by Subchapter XV of Chapter 2 of Title 12 of the United States Code (12 U.S.C. § 214 et seq.), as it now exists or as it may hereafter be amended.
   3. Upon completion of the procedures required by subdivision 2, the president of the national banking association and the official having custody of its records shall execute, under the seal of the association, a certificate showing in detail the procedures followed, the number of shares of each class of stock of the national banking association issued and outstanding, and the vote of each class of stockholders in favor of the plan of conversion. The national banking association shall then file the certificate with the Commission.
2. The Commission shall examine the certificate filed pursuant to subdivision A 3. If from such examination it appears that the procedure required by subdivision A 2 has been followed and that the conversion has been approved by the stockholders of the national banking association in the manner and by the percentage vote required by federal law, the Commission may issue to the newly incorporated state bank a certificate of authority to do business as a bank, in accordance with the provisions of § 6.2-816 . Upon the issue of such certificate, the conversion of the national banking association into a state bank shall become effective and be automatically completed.

History. Code 1950, §§ 6-14, 6-15.1; 1952, c. 571; 1966, c. 584, §§ 6.1-33, 6.1-38; 1993, c. 244; 1996, c. 26; 2010, c. 794.

§ 6.2-824. Status of converted bank.

Upon the conversion of a national banking association to a state bank as provided in § 6.2-823 , the state bank shall be considered to be the same business and corporate entity as the former national banking association, except that the state bank shall have the rights, powers, and duties as prescribed by state law. Any reference to the former national banking association in any contract, will, or document shall be deemed to be a reference to the state bank if not inconsistent with the provisions of the contract, will, or document or with applicable law.

History. Code 1950, § 6-15.2; 1952, c. 571; 1966, c. 584, § 6.1-34; 2010, c. 794.

§ 6.2-825. State bank becoming national bank; notice required; effect on liabilities.

1. Any bank incorporated under the laws of the Commonwealth may, upon compliance with federal law, be converted into a national banking association.
2. When any state bank becomes a corporation for carrying on the business of banking under federal law, it shall notify the Commission of such fact and file with the Commission a copy of its authorization as a national banking association certified by the Comptroller of the Currency. Such bank shall thereupon cease to be a corporation under the laws of the Commonwealth, except that, for a period not exceeding three years thereafter, its corporate existence shall be deemed to continue for the purposes of (i) prosecuting or defending suits by or against it and (ii) enabling it to settle and close its affairs, to dispose of and convey its property, and to divide its capital, but not for the purpose of continuing the business for which such bank was established.
3. A conversion from a state to a national bank shall not release the state bank from its obligations to pay and discharge (i) all the liabilities created by law or incurred by it before becoming a national banking association, (ii) any tax imposed by the laws of the Commonwealth up to the date of its becoming such national banking association in proportion to the time which has elapsed since the next preceding payment therefor, or (iii) any assessment, penalty, or forfeiture imposed or incurred under the laws of the Commonwealth up to the date it became a national banking association.

History. Code 1950, § 6-18; 1966, c. 584, § 6.1-35; 2010, c. 794.

§ 6.2-826. Effect of conversion of state bank to national bank.

1. When a conversion of a state bank into a national banking association under the authority granted by § 6.2-825 becomes effective, all the property of the former state bank, including all its right, title, and interest in and to all property of every kind, whether real, personal, or mixed, and things in action, and every right, privilege, interest, and asset of any conceivable value or benefit then existing, belonging, or pertaining to it, or which would inure to it, shall immediately, by act of law and without any conveyance or transfer, and without any further act or deed, be vested in and become the property of such national bank. The national bank shall have, hold, and enjoy the same in its own right as fully and to the same extent as if the same were possessed, held, or enjoyed by the state bank. The national bank shall be deemed to be a continuation of the entity and identity of the state banking corporation that is operated under and pursuant to federal law.
2. All the rights, obligations, and relations of the converted state bank to or in respect to (i) any person, estate, creditor, depositor, trustee, or beneficiary of any trust and (ii) any executorship or trusteeship or other trust or fiduciary function, including appointments, designations, and nominations, shall remain unimpaired. The national bank, as of the beginning of its corporate existence, shall, by operation of this section, succeed to all such rights, obligations, relations, and trusts, including appointments, designations, and nominations, and the duties and liabilities connected therewith. The national bank shall execute and perform each and every such trust and relation in the same manner as if such national bank had itself assumed the trust or relation, including the obligations and liabilities connected therewith.
3. If the state banking corporation is acting as administrator, coadministrator, executor, coexecutor, trustee, or cotrustee of, or in respect to, any estate or trust being administered under the laws of the Commonwealth, such relation, as well as any other or similar fiduciary relation, and all rights, privileges, duties, and obligations connected therewith, shall remain unimpaired and shall continue in such national bank from and as of the beginning of its corporate existence, irrespective of (i) the date when any such relation may have been created or established, (ii) the date of any trust agreement relating thereto, or (iii) the date of the death of any testator or decedent whose estate is being so administered.
4. Nothing done in connection with a conversion from a state to a national bank, in respect to any such executorship, trusteeship, or similar fiduciary relation, shall (i) be deemed to be or to effect, under the laws of the Commonwealth, a renunciation or revocation of any letters of administration or letters testamentary pertaining to such relation or a removal or resignation from any such executorship or trusteeship or (ii) be deemed to be of the same effect as if the executor or trustee had died or otherwise become incompetent to act. Nothing in this section shall in any way affect any provisions of law if a national bank becomes a state bank.

History. Code 1950, § 6-19; 1966, c. 584, § 6.1-36; 2010, c. 794.

§ 6.2-827. Rights of national bank stockholders dissenting from conversion.

The rights of stockholders of a national banking association who dissent from the approval by the stockholders of the conversion of the national banking corporation into a state bank shall be governed by the provisions of 12 U.S.C. § 214a(b), as now existing or as hereafter amended.

History. Code 1950, § 6-15.3; 1952, c. 571; 1966, c. 584, § 6.1-37; 2010, c. 794.

§ 6.2-828. Conversion of state bank to federal savings institution.

1. A state bank may convert into a federal savings institution as follows:
   1. At any meeting of the stockholders called and held in accordance with the Virginia Stock Corporation Act (§ 13.1-601 et seq.) or the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.) to consider such action, the stockholders, by an affirmative vote of those holding and voting two-thirds of the votes present in person or by proxy, may resolve to convert the bank into a federal savings institution;
   2. A copy of the minutes of the meeting duly certified by the president or vice-president and the secretary or assistant secretary of the state bank shall be transmitted to the Commission;
   3. Thereafter, the state bank shall take such action as is necessary under federal law to make it a federal savings institution; and
   4. The bank shall file with the Commission a certified copy of the charter issued to it by the federal chartering authority, or a certificate of that authority showing the organization of the bank as a federal savings institution.
2. Upon the filing of the certified copy of a charter or certificate of authority as provided in subdivision A 4, the bank shall cease to be a state bank.
3. No state bank shall convert into a federal savings institution until it has been in operation as a state bank for a period of at least five years.
4. When a conversion of a state bank into federal savings institution becomes effective, the state bank shall cease to be a Virginia corporation and all its property, by operation of law and without any further act or deed, shall continue to be vested in it under its new name as a federal savings institution and under its federal charter. The federal savings institution shall have, hold and enjoy the same in its own right as fully and to the same extent as the same was possessed, held and enjoyed by it as a state bank. The federal savings institution, at the time of the taking effect of the conversion, shall become and continue to be responsible for all of the obligations of the state bank including taxes and other liabilities created by law or incurred by it before becoming a federal savings institution to the same extent as though the conversion had not taken place.

History. Code 1950, §§ 6-201.43; 6-201.44; 1960, c. 402; 1966, c. 584, §§ 6.1-173, 6.1-174; 1972, c. 796, §§ 6.1-195.52, 6.1-195.53; 1982, c. 156; 1985, c. 425; 1990, c. 3; 1995, c. 133; 2010, c. 794.

§ 6.2-829. Conversion from state savings bank to state bank; conversion from state bank to state savings bank.

1. A state savings bank may be converted into a state bank upon compliance with the procedure set forth in subsection A of § 6.2-1144 .
2. A state bank may be converted into a state savings bank by the amendment of its articles of incorporation in compliance with the procedure established by Title 13.1, provided that such conversion is approved in advance by the Commission. Prior to approving or disapproving a conversion, the Commission shall investigate the application to convert as if it were an application for a certificate of authority to begin a savings bank, and approval shall not be granted unless the applicant meets the standards established by § 6.2-1118 . Within one year of the date of the conversion, the resulting state savings bank shall conform its assets and operations to the provisions of law regulating the operation of state savings banks. The Commission may grant such resulting state savings bank additional one-year periods, not to exceed a total of four additional years, in which to conform its assets and operations to the provisions of law regulating the operation of state savings banks.

History. 1991, c. 230, § 6.1-194.129; 2010, c. 794.

§ 6.2-830. Conversion from stock association to bank; conversion from bank to stock association.

1. A state stock association may be converted into a bank upon compliance with the procedure set forth in § 6.2-1144 .
2. A bank may be converted into a stock association by the amendment of its articles of incorporation in compliance with the procedure established by Title 13.1, provided that such conversion is approved in advance by the Commission. Prior to approving or disapproving a conversion, the Commission shall investigate the application to convert as if it was an application for a certificate of authority to begin a savings and loan business, and approval shall not be granted unless the applicant meets the standards established by § 6.2-1118 . Within one year of the date of the conversion, the resulting stock association shall conform its assets and operations to the provisions of law regulating the operation of savings and loan associations. The Commission may grant such resulting stock association additional one-year periods, not to exceed a total of four additional years, in which to conform its assets and operations to the provisions of law regulating the operation of savings and loan associations.

History. 1982, c. 224, § 6.1-195.57:2; 1985, c. 425, § 6.1-194.38; 2010, c. 794.

§ 6.2-831. Establishment of branch banks; redesignation of main office.

1. A bank may establish and operate one or more branch offices, and a bank may relocate a main or branch office, provided the bank applies to the Commission for authority to establish or relocate any such office. Applications shall be made in writing on a form prescribed by the Commission and shall be accompanied by the fee established pursuant to § 6.2-908 . As used in this section, “branch office” does not include any automated teller machine, cash-dispensing machine, or similar electronic or computer terminal, regardless of whether it (i) is located on bank premises or premises properly considered part of an authorized office of the bank or (ii) receives or records deposits, disburses loan proceeds, or provides for electronic fund transfers.
2. The Commission shall have 30 days from the date it receives a complete application in which to review a branch proposal or a proposed relocation. The review period may be extended for an additional 30 days. The Commission may deny such an application if the Commission finds that a proposal would have a detrimental effect on the applicant bank’s safety and soundness or that it is otherwise not in the public interest. A branch office that has been denied shall not be established and a relocation that has been denied shall not be carried out. If the Commission does not issue a denial of a branch proposal or a proposed relocation within 30 days, or 60 days if the review period is extended, the proposed branch office or offices, or the proposed relocation, shall be authorized, and the branch or branches may be established and operated, or the relocation may be completed.
3. The office at which a bank begins business shall be designated initially as its main office. Thereafter, the board of directors may redesignate as the main office any authorized office of the bank in the Commonwealth. The bank shall notify the Commission of any such redesignation not later than 30 days before its effective date and confirm the redesignation to the Commission within 10 days of its occurrence.
4. A bank shall be subject to the prohibition in § 6.2-842 against establishing or maintaining a branch in the Commonwealth on the premises or property of an affiliate if the affiliate engages in commercial activities.
5. The Commission may impose a civil penalty not exceeding $2,000 upon any bank that it determines, in proceedings commenced in accordance with the Commission’s Rules, has violated the provisions of this section.

History. Code 1950, § 6-29; 1966, c. 584, § 6.1-113; 1986, c. 505, § 6.1-39.3; 1987, cc. 352, 556; 1991, c. 322; 1992, c. 136; 1994, c. 7; 1996, c. 26; 1999, c. 545; 2007, c. 1; 2010, c. 794; 2015, cc. 19, 445.

Cross references.

As to authority of the Commission to adopt regulations defining what is or is not a branch within this section and further defining what activities are or are not permitted to be conducted at a location which is not authorized as a branch under this section, see § 6.2-804 . For Corporation Commission’s Rules, see 5 VAC 5-20-10 et seq.

The 2015 amendments.

The 2015 amendments by cc. 19 and 445 are identical, and in subsection A, added the last sentence.

Law Review.

For survey of Virginia commercial law for the year 1969-1970, see 56 Va. L. Rev. 1387 (1970).

For survey of Virginia administrative law for the year 1971-1972, see 58 Va. L. Rev. 1159 (1972).

For survey of Virginia commercial law for the year 1974-1975, see 61 Va. L. Rev. 1668 (1975).

for the year 1975-1976, see 62 Va. L. Rev. 1375 (1976).

For article, “Evolution of the Virginia Banking Structure 1962-1974: The Effects of the Buck-Holland Bill,” see 16 Wm. & Mary L. Rev. 567 (1975).

For a special section on the Virginia potential for banking structure and statewide branching, see 18 Wm. & Mary L. Rev. 93 (1976).

For article, “The ‘Public Interest’ and Bond and Savings and Loan Expansion in Virginia,” see 11 U. Rich. L. Rev. 561 (1977).

For survey of Virginia law on business associations for the year 1977-1978, see 64 Va. L. Rev. 1375 (1978).

For article discussing the question of when it is in the public interest to authorize a new bank, see 13 U. Rich. L. Rev. 533 (1979).

§ 6.2-832. Establishment of automated teller machines and electronic terminals.

1. No application to, or approval from, the Commission shall be required for a bank to establish or operate an automated teller machine, cash-dispensing machine, or similar electronic or computer terminal, regardless of whether it (i) is located on bank premises or premises properly considered part of an authorized office of the bank or (ii) receives or records deposits, disburses loan proceeds, or provides for electronic fund transfers.
2. A Virginia state bank, as defined in § 6.2-836 , may establish and operate such automated teller machines, cash-dispensing machines, or similar electronic or computer terminals in the Commonwealth, provided the bank complies with all Commonwealth and federal laws and regulations applicable to such machines and terminals. An out-of-state bank, as defined in § 6.2-836 , may establish and operate such automated teller machines, cash-dispensing machines, or similar electronic or computer terminals in the Commonwealth, provided the bank complies with all Commonwealth, home state and federal laws applicable to such machines and terminals.
3. The Commission may adopt regulations affecting electronic fund transfers by banks if it finds such regulations necessary for the protection of the public interest.

History. 1997, c. 141, § 6.1-39.4:1; 2010, c. 794; 2015, cc. 19, 445.

The 2015 amendments.

The 2015 amendments by cc. 19 and 445 are identical, and rewrote the section.

§ 6.2-833. Bank agent for depository institution.

A bank may act as the agent of any other depository institution in receiving deposits and providing other services without being deemed a branch of such other depository institution.

History. 1995, c. 301, § 6.1-39.5; 1997, c. 24; 2010, c. 794.

§ 6.2-834. Operation of branch office under different name; civil penalty.

1. No branch office shall be operated or advertised under any other name than that of the identical name of the bank, unless (i) permission is first obtained from the Commission and (ii) the different name shall contain or have added thereto language clearly indicating that it is a branch office of the bank or a division of the bank.
2. The Commission may impose a civil penalty not exceeding $2,000 upon any bank that it determines, in proceedings commenced in accordance with the Commission’s Rules, has violated the provisions of this section.

History. Code 1950, §§ 6-28, 6-29; 1966, c. 584, §§ 6.1-41, 6.1-113; 1979, c. 59; 1987, c. 556; 1992, c. 136; 1994, c. 7; 2010, c. 794; 2018, cc. 130, 266.

The 2018 amendments.

The 2018 amendments by cc. 130 and 266 are identical, and substituted “office of the bank or a division of the bank” for “office and of which bank it is an office” at the end of subsection A.

§ 6.2-835. Banking facilities in certain hospitals or federal areas.

1. The Commission, when in its discretion banking facilities are required (i) for patients in, students at, or employees of hospitals operated by the U.S. Department of Veterans Affairs or by the Commonwealth or (ii) for members of the armed forces at any military or naval federal area in the Commonwealth, may permit any bank that is authorized to do business in the Commonwealth to establish and operate such banking facilities as are required in any such hospital or federal area.
2. The banking facilities so established shall be operated in accordance with the laws of the Commonwealth relating thereto. The Commission may permit only certain specified services to be established and operated.

History. Code 1950, § 6-29.1; 1952, c. 75; 1956, c. 45; 1966, c. 584, § 6.1-42; 2010, c. 794.

Editor’s note.

At the direction of the Virginia Code Commission, “U.S. Department of Veterans Affairs” was substituted for “Veterans Administration.”

§ 6.2-836. Definitions.

As used in this article, unless a different meaning is required:

“Acquisition of a branch” means the acquisition of a branch located in a host state, without acquiring the bank of such branch.

“Affiliate” has the meaning assigned to it in 12 U.S.C. § 1841(k) of the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.), as amended.

“Bank” has the meaning assigned to it in 12 U.S.C. § 1813(a)(1) of the Federal Deposit Insurance Company Act of 1956 (12 U.S.C. § 1811 et seq.), as amended.

“Bank holding company” has the meaning assigned to it in 12 U.S.C. § 1841(a) of the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.), as amended.

“Commercial activities” means activities in which a bank holding company, a financial holding company, a national bank, or a national bank financial subsidiary may not engage under federal law.

“De novo branch” means a branch of a bank located in a host state which (i) is originally established by the bank as a branch and (ii) does not become a branch of the bank as a result of the acquisition of another bank or a branch of another bank, or the merger, consolidation, or conversion of any such bank or branch.

“Financial holding company” has the meaning assigned to it in 12 U.S.C. § 1841(p) of the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.), as amended.

“Home state” means:

1. With respect to a national bank, the state in which the main office of the bank is located;
2. With respect to a state bank, the state by which the bank is chartered;
3. With respect to a foreign bank, the state determined to be the home state of such foreign bank under 12 U.S.C. § 3103(c).“Host state”  means a state, other than the home state of a bank, in which the bank maintains, or seeks to establish and maintain, a branch.“Out-of-state bank”  means a bank whose home state is a state other than the Commonwealth.“Out-of-state state bank”  means a bank chartered under the laws of any state other than the Commonwealth.“Virginia state bank”  means a bank chartered under the laws of Virginia.

History. 1995, c. 301, § 6.1-44.2; 2007, c. 1; 2010, c. 794.

§ 6.2-837. Interstate branching by Virginia state banks.

1. With the prior approval of the Commission, any Virginia state bank may establish and maintain a de novo branch or acquire a branch in a state other than the Commonwealth.
2. A Virginia state bank desiring to establish and maintain a branch in another state under this section shall file an application on a form prescribed by the Commission and pay the branch application fee set forth in § 6.2-908 . If the Commission finds that the applicant has the financial resources sufficient to undertake the proposed expansion without adversely affecting its soundness and that the laws of the host state permit the establishment of the branch, it may approve the application. The bank may establish the branch when it has received the written approval of the Commission.

History. 1995, c. 301, § 6.1-44.3; 2010, c. 794; 2014, c. 200.

The 2014 amendments.

The 2014 amendment by c. 200, in subsection B, deleted the third sentence reading “In acting on the application, the Commission shall consider the views of the state bank supervisor of the host state where the branch is proposed to be located.”

§ 6.2-838. Interstate branching.

An out-of-state bank that does not already maintain a branch in the Commonwealth and that meets the requirements of this article may establish and maintain a de novo branch in the Commonwealth.

History. 1995, c. 301, § 6.1-44.4; 2010, c. 794.

§ 6.2-839. Interstate branching through the acquisition of a branch.

An out-of-state bank that does not already maintain a branch in the Commonwealth and that meets the requirements of this article may establish and maintain a branch in the Commonwealth through the acquisition of a branch.

History. 1995, c. 301, § 6.1-44.45; 2010, c. 794.

§ 6.2-840. Filing requirements.

An out-of-state bank desiring to establish and maintain a de novo branch or to acquire a branch in the Commonwealth shall submit to the Commission a copy of the application it files with its home state supervisor or the responsible federal banking agency to establish or acquire such branch. Such submission shall be made at the same time the application is filed by the out-of-state bank with such home state supervisor or responsible federal banking agency. The out-of-state bank shall also comply with the requirements of Article 17 (§ 13.1-757 et seq.) of the Virginia Stock Corporation Act and pay any filing fee required by the Commission.

History. 1995, c. 301, § 6.1-44.6; 2010, c. 794.

§ 6.2-841. Repealed by Acts 2014, c. 200, cl. 2.

Editor’s note.

Former § 6.2-841 , pertaining to conditions for approval of a branch of an out-of-state branch, derived from 1995, c. 301, § 6.1-44.7; 2010, c. 794.

§ 6.2-842. Powers.

1. An out-of-state state bank that establishes and maintains one or more branches in the Commonwealth under this article may conduct the same activities at such branch or branches that are authorized under Virginia law for Virginia state banks, except to the extent such activities may be prohibited by other laws, regulations, or orders applicable to the out-of-state state bank.
2. A Virginia state bank may conduct the same activities at a branch outside the Commonwealth that are permissible for a bank chartered by the host state where the branch is located, except to the extent such activities are expressly prohibited by other laws, regulations, or orders applicable to the Virginia state bank.
3. A bank shall not establish or maintain a branch in the Commonwealth on the premises or property of an affiliate if the affiliate engages in commercial activities.

History. 1995, c. 301, § 6.1-44.8; 2007, c. 1; 2010, c. 794.

§ 6.2-843. Examination; periodic reports; cooperative agreements; assessment of fees.

1. The Commission may make such examinations of any branch established under this article by an out-of-state state bank as the Commission may deem necessary to determine whether the branch is operating in compliance with the laws of the Commonwealth and to ensure that the branch is being operated in a safe and sound manner. The provisions of § 6.2-901 shall apply to such examinations.
2. The Commission may require periodic reports from any out-of-state bank that maintains a branch in the Commonwealth to the extent such reporting requirements (i) apply equally to similarly situated banks having the Commonwealth as their home state and (ii) are not preempted by federal law. Such reports shall be filed under oath with such frequency and in such scope and detail as may be appropriate for the purpose of assuring continuing compliance with the provisions of this article.
3. The Commission may enter into cooperative agreements with the appropriate state bank supervisors and federal banking agencies for the periodic examination of any branch in the Commonwealth of an out-of-state state bank, or any branch of a Virginia state bank in any host state, and may accept such agencies’ reports of examination and reports of investigation in lieu of conducting its own examinations or investigations. The Commission may enter into joint enforcement actions with other state bank supervisors and federal banking agencies having concurrent jurisdiction over any branch of an out-of-state state bank or any branch of a Virginia state bank, or may take such actions independently to carry out its responsibilities under this article and to assure compliance with the laws of the Commonwealth.
4. Out-of-state state banks may be assessed and, if assessed, shall pay supervisory and examination fees in accordance with the laws of the Commonwealth and regulations of the Commission. Such fees may be shared with other state and federal regulators in accordance with agreements between them and the Commission.

History. 1995, c. 301, § 6.1-44.9; 2010, c. 794.

§ 6.2-844. Enforcement.

If the Commission determines that there is any violation of any law of the Commonwealth in the operation of a branch of an out-of-state state bank, or that such branch is being operated in an unsafe and unsound manner, the Commission shall have the authority to undertake such enforcement actions as it would be permitted to take if the branch were a Virginia state bank.

History. 1995, c. 301, § 6.1-44.10; 2010, c. 794.

§ 6.2-845. Additional branches.

An out-of-state bank that has established or acquired a branch in the Commonwealth under this article may establish or acquire additional branches in the Commonwealth to the same extent that any bank, whose home state is the Commonwealth, may establish or acquire a branch in the Commonwealth under applicable federal and state law.

History. 1995, c. 301, § 6.1-44.11; 2010, c. 794.

§ 6.2-846. Regulations; fees.

The Commission may adopt such regulations and may provide for the payment of such reasonable application and administration fees as it finds necessary and appropriate in order to implement the provisions of this article.

History. 1995, c. 301, § 6.1-44.12; 2010, c. 794.

§ 6.2-847. Notice of subsequent merger or other transaction.

An out-of-state state bank that maintains a branch in the Commonwealth under this article shall give 30 days’ prior written notice of any merger, consolidation, or other transaction involving the bank which would cause the Virginia branch to be maintained by another bank.

History. 1995, c. 301, § 6.1-44.13; 2010, c. 794.

§ 6.2-848. Repealed by Acts 2014, c. 200, cl. 2.

Editor’s note.

Former § 6.2-848 , pertaining to nonseverability, derived from 1995, c. 301, § 6.1-44.14; 2010, c. 794.

§ 6.2-849. Definitions.

As used in this article, unless a different meaning is required:

“Bank” has the meaning assigned to it in 12 U.S.C. § 1813(a) (1) of the Federal Deposit Insurance Company Act of 1956 (12 U.S.C. § 1811 et seq.), as amended.

“Home state” has the meaning assigned to it in § 6.2-836 .

“Host state” has the meaning assigned to it in § 6.2-836 .

“Interstate merger transaction” means:

1. The merger or consolidation of banks with different home states, and the conversion of branches of any bank involved in the merger or consolidation to branches of the resulting bank; or
2. The purchase of all, or substantially all, of the assets of a bank whose home state is different than the home state of the acquiring bank.“Out-of-state bank”  has the meaning assigned to it in § 6.2-836 .“Out-of-state state bank”  has the meaning assigned to it in § 6.2-836 .“Resulting bank”  means a bank that has resulted from an interstate merger transaction under this article.“Virginia bank”  means a bank whose home state is Virginia.“Virginia state bank” has the meaning assigned to it in § 6.2-836.

History. 1995, c. 301, § 6.1-44.16; 2010, c. 794.

§ 6.2-850. Authority to branch outside the Commonwealth by merger.

1. With the prior approval of the Commission, any Virginia state bank may maintain and operate one or more branches in a state other than the Commonwealth pursuant to an interstate merger transaction in which the Virginia state bank is the resulting bank.
2. The Virginia state bank shall file an application on a form prescribed by the Commission, pay the merger fee prescribed by § 6.2-908 , and comply with the applicable provisions of Article 12 (§ 13.1-715.1 et seq.) of the Virginia Stock Corporation Act. If the Commission finds that (i) the proposed transaction will not be detrimental to the safety and soundness of the applicant, (ii) any new officers and directors of the resulting bank are qualified by character, experience, and financial responsibility to direct and manage the resulting bank, and (iii) the proposed merger is in the public interest, it may approve the interstate merger transaction and the operation of branches outside Virginia by the Virginia state bank.
3. Such an interstate merger transaction may be consummated only after the applicant has received the Commission’s written approval.

History. 1995, c. 301, § 6.1-44.17; 2005, c. 765; 2010, c. 794.

§ 6.2-851. Interstate merger transactions and branching permitted.

Virginia banks may merge with out-of-state banks under this article, and an out-of-state bank resulting from such an interstate merger transaction may maintain and operate the branches in the Commonwealth of a merged Virginia bank, provided the requirements of this article are met.

History. 1995, c. 301, § 6.1-44.18; 2010, c. 794.

§ 6.2-852. Filing requirements.

Any out-of-state bank that will be the resulting bank pursuant to an interstate merger transaction involving a Virginia bank shall submit to the Commission a copy of the application it files with the responsible federal banking agency to engage in the interstate merger transaction. Such submission shall be made at the same time the application is filed by the out-of-state bank with the responsible federal banking agency. All banks which are parties to any interstate merger transaction involving a Virginia bank shall comply with Article 12 (§ 13.1-715.1 et seq.) of the Virginia Stock Corporation Act, as applicable, and with other applicable state and federal laws. Any out-of-state bank resulting from an interstate merger transaction shall comply with Article 17 (§ 13.1-757 et seq.) of the Virginia Stock Corporation Act. The out-of-state bank shall pay any filing fee required by the Commission.

History. 1995, c. 301, § 6.1-44.19; 2005, c. 765; 2010, c. 794.

§ 6.2-853. Conditions for interstate merger.

An interstate merger transaction involving a Virginia bank shall not be consummated, and any out-of-state bank resulting from such a merger shall not operate any branch in the Commonwealth, if the Commission finds that the laws of the home state of any out-of-state bank involved in the interstate merger transaction do not permit interstate merger transactions or finds that the resulting out-of-state bank has not complied with all applicable requirements of any law of the Commonwealth.

History. 1995, c. 301, § 6.1-44.20; 2010, c. 794.

§ 6.2-854. Powers.

1. An out-of-state state bank that establishes and maintains one or more branches in Virginia under this article may conduct the same activities at such branch or branches that are authorized under Virginia law for Virginia state banks, except to the extent such activities may be prohibited by other laws, regulations, or orders applicable to the out-of-state state bank.
2. A Virginia state bank may conduct any activities at any branch outside the Commonwealth that are permissible for a bank chartered by the host state where the branch is located, except to the extent such activities are expressly prohibited by other laws, regulations, or orders applicable to the Virginia state bank.

History. 1995, c. 301, § 6.1-44.21; 2010, c. 794.

§ 6.2-855. Examinations and periodic reports.

1. The Commission may make such examinations of any branch of an out-of-state state bank located in the Commonwealth as the Commission may deem necessary to determine whether the branch is operating in compliance with the laws of the Commonwealth and to ensure that the branch is being operated in a safe and sound manner. The provisions of § 6.2-901 shall apply to such examinations.
2. The Commission may require periodic reports from any out-of-state bank that maintains a branch in the Commonwealth to the extent such reporting requirements (i) apply equally to similarly situated banks having the Commonwealth as their home state and (ii) are not preempted by federal law. Such reports shall be filed under oath with such frequency and in such scope and detail as may be appropriate for the purpose of assuring continuing compliance with the provisions of this article.

History. 1995, c. 301, § 6.1-44.22; 2010, c. 794.

§ 6.2-856. Cooperative agreements; assessment of fees.

1. The Commission may enter into cooperative agreements with the appropriate state bank supervisors and federal banking agencies for the examination of any branch in the Commonwealth of an out-of-state state bank, or any branch of a Virginia state bank in any host state, and may accept such agencies’ reports of examination and reports of investigation in lieu of conducting its own examinations or investigations. The Commission may enter into joint actions with other state bank supervisors and federal banking agencies having concurrent jurisdiction over any branch of an out-of-state state bank or any branch of a Virginia state bank, or may take such actions independently to carry out its responsibilities under this article and to assure compliance with the laws of the Commonwealth.
2. Out-of-state state banks may be assessed and, if assessed, shall pay supervisory and examination fees in accordance with the laws of the Commonwealth and regulations of the Commission. Such fees may be shared with other state and federal regulators in accordance with agreements between them and the Commission.

History. 1995, c. 301, § 6.1-44.22; 2010, c. 794.

§ 6.2-857. Enforcement.

If the Commission determines that there is any violation of any law of the Commonwealth in the operation of a branch of an out-of-state state bank, or that such branch is being operated in an unsafe and unsound manner, the Commission shall have the authority to undertake such enforcement actions as it would be permitted to take if the branch were a Virginia state bank.

History. 1995, c. 301, § 6.1-44.23; 2010, c. 794.

§ 6.2-858. Regulations; fees.

The Commission may adopt such regulations, and may provide for the payment of such reasonable application and administration fees, as it finds necessary and appropriate in order to implement the provisions of this article.

History. 1995, c. 301, § 6.1-44.24; 2010, c. 794.

§ 6.2-859. Notice of subsequent merger.

An out-of-state state bank that maintains a branch in the Commonwealth under this article shall give 30 days’ prior written notice of any merger, consolidation, or other transaction involving the bank that would cause the branch in the Commonwealth to be maintained by another bank.

History. 1995, c. 301, § 6.1-44.25; 2010, c. 794.

§ 6.2-860. Bank to be managed by board of directors; number of directors.

The affairs of every bank incorporated under the laws of the Commonwealth shall be managed by a board of directors. The board shall consist of not less than five individuals.

History. Code 1950, § 6-36; 1966, c. 584, § 6.1-45; 1996, c. 268; 2010, c. 794.

§ 6.2-861. Application of Virginia Stock Corporation Act.

The provisions of the Virginia Stock Corporation Act (§ 13.1-601 et seq.) relating to officers of a corporation shall apply to banks except that, if a bank shall not appoint a secretary, the cashier of a bank shall be deemed to be the secretary of the corporation.

History. 1966, c. 584, § 6.1-46; 2010, c. 794.

§ 6.2-862. Directors to own stock in bank.

1. As used in this section, “bank holding company” means (i) a bank holding company as defined in § 6.2-800 or (ii) any corporation organized under the laws of the Commonwealth and doing business in the Commonwealth that owns all of the capital stock of one bank, except those shares issued as directors’ qualifying shares, and at least 66 and two-thirds percent of the assets of the holding company, computed on a consolidated basis, consists of assets held by such bank and controlled subsidiaries of such bank.
2. Every director of a bank incorporated under the laws of the Commonwealth shall be the sole owner of, and have in his personal possession or control, shares of stock in such bank having a book value of not less than $5,000, calculated as of the last business day of the calendar year immediately preceding the election of the director. So long as a director shall successively be reelected, there shall be no requirement to increase the shares of stock owned according to this section. Such stock shall be unpledged and unencumbered at the time such director becomes a director and during the whole of his term as such. A director shall be deemed to be the sole owner of, and have in his personal possession or control:
   1. Shares held through a brokerage account or similar arrangement, provided that the director retains sole beneficial ownership and sole legal control over the shares;
   2. Shares held jointly or as a tenant in common, but only to the extent of the book value of the shares divided by the number of joint or tenant in common holders;
   3. Shares deposited by the director in a living trust, or inter vivos trust, as to which the director is a trustee and retains an absolute power of revocation; or
   4. Shares held through a profit-sharing plan, individual retirement account, retirement plan, or similar arrangement, provided that the director retains sole beneficial ownership and sole legal control over the shares.
3. When a bank is controlled by a bank holding company, a director may comply with the requirements of subsection B for each bank of which he is a director by ownership, in similar manner, of shares of capital stock of the bank holding company having an aggregate book value equal to the book value of shares of bank stock that he would be obligated to own under subsection B.
4. A director of a bankers’ bank shall not be required to own or control any shares of stock of such bankers’ bank or any shares of stock of a bank holding company that controls such bankers’ bank.
5. Any director violating the provisions of this section shall, immediately, vacate his office.
6. The requirements of this section shall not apply to any person duly elected a director of a bank prior to July 1, 1995, or so long as such person shall successively be reelected a director, and as to such person the requirements of the law prior to such date shall apply.

History. Code 1950, § 6-37; 1966, c. 584, § 6.1-47; 1970, c. 95; 1995, c. 63; 1996, cc. 25, 218; 2010, c. 794; 2014, cc. 156, 219; 2018, cc. 76, 262.

The 2014 amendments.

The 2014 amendments by cc. 156 and 219 are identical, and amended subsection B by adding a sentence to the end and subdivisions 1 through 4.

The 2018 amendments.

The 2018 amendments by cc. 76 and 262 are identical, and substituted “a trustee” for “the sole trustee” in subdivision B 3.

§ 6.2-863. Oaths of directors.

1. Every director of a bank incorporated under the laws of the Commonwealth shall, within 30 days after his election or reelection, take and subscribe to an oath that:
   1. He will diligently and honestly perform his duties as director; and
   2. He is the owner and has in his personal possession or control, standing in his sole name on the books of the bank or bank holding company as defined in subsection A of § 6.2-862 , unpledged and unencumbered in any way, shares of stock of the bank of which he is a director or, if a bank is controlled by a bank holding company as defined in § 6.2-800 , shares of stock of the bank holding company, having a book value of not less than the amounts respectively prescribed by § 6.2-862 , and, in case of reelection or reappointment, that during the whole of his immediate previous term as a director, the stock was not at any time pledged or in any other manner encumbered or hypothecated to secure a loan.
2. The oath subscribed to by such director, certified by the officer before whom it is taken, shall be transmitted by the cashier of such bank to the Commission. Any director who fails for a period of 30 days after his election or appointment to take the oath as required by this section shall automatically forfeit his office.

History. Code 1950, § 6-39; 1966, c. 584, § 6.1-48; 1992, c. 552; 1994, c. 105; 2010, c. 794; 2014, cc. 156, 219.

The 2014 amendments.

The 2014 amendments by cc. 156 and 219 are identical, and in subdivision A 2, substituted “book” for “par.”

§ 6.2-864. Report to Commission of election of director.

Within 60 days following the election or reelection of any person as a director of a bank, the bank shall furnish to the Commission such information as the Commission shall from time to time prescribe regarding the director’s personal character, integrity, financial condition, and personal and business background. The report shall be signed under oath by the director and a designated officer of the bank. Any person knowingly making a false statement in such a report is guilty of perjury and punishable as provided in § 18.2-434 .

History. 1968, c. 606, § 6.1-48.1; 1992, c. 552; 1994, c. 105; 2010, c. 794.

§ 6.2-865. Removal of director or officer; appeals; penalty.

1. Whenever any director or officer of a bank doing business in the Commonwealth shall continue (i) to violate any law relating to such bank or (ii) unsafe or unsound practices in conducting the business of such bank, after the director or officer, and the board of directors of the bank of which he is a director or officer, have been warned in writing by the Commissioner to discontinue such violation of law or such unsafe or unsound practices, the Commissioner shall certify the facts to the Commission. The Commission shall thereupon enter an order requiring such director or officer to appear before the Commission, within not less than 10 days, to show cause why he should not be removed from office and thereafter restrained from participating in any manner in the management of such bank. Such order shall contain a brief statement of the facts certified to the Commission by the Commissioner. A copy of such order shall be served upon such director or officer, and a copy thereof shall be sent by registered mail to each director of the bank affected.
2. If, after granting the accused director or officer a reasonable opportunity to be heard, the Commission shall find that he has continued to violate any law relating to such bank or has continued unsafe or unsound practices in conducting the business of such bank after he and the board of directors of the bank of which he is a director or officer have been warned as provided in subsection A, the Commission shall enter an order removing such director or officer from office and restraining such director or officer from thereafter participating in any manner in the management of such bank. A copy of such order shall be served upon such director or officer. A copy of such order shall also be served upon the bank of which he is a director or officer. Upon such removal, the director or officer shall cease to be a director or officer of such bank and thereafter shall cease to participate in any manner in the management of such bank.
3. Any director or officer aggrieved by (i) an order of the Commission entered under subsection B or (ii) an order refusing to remove another director or officer from office and to restrain him from participating in the management of the bank, shall have, of right, an appeal to the Supreme Court of Virginia within 60 days from the date of the order.
4. Any director or officer removed and restrained under the provisions of subsection B from participating in any manner in the management of any bank of which he is a director or officer, and who thereafter participates in any manner in the management of such bank except as a stockholder therein, is guilty of a Class 6 felony.

History. Code 1950, §§ 6-40, 6-41, 6-42; 1966, c. 584, §§ 6.1-49, 6.1-50, 6.1-51; 1979, c. 58; 1992, c. 136; 2010, c. 794.

Cross references.

As to punishment for Class 6 felonies, see § 18.2-10 .

§ 6.2-866. Meetings of board of directors.

The board of directors of every bank shall hold meetings at least once in each calendar month. At each meeting of the board, a majority of the whole board shall be necessary for the lawful transaction of business. Notwithstanding the foregoing, (i) the shareholders, by bylaw, may fix any number not less than a majority as a quorum and (ii) the Commission may allow less frequent meetings, but not less often than quarterly.

History. Code 1950, § 6-43; 1966, c. 584, § 6.1-52; 1981, c. 203; 2010, c. 794; 2019, cc. 242, 244.

The 2019 amendments.

The 2019 amendments by cc. 242 and 244 are identical, and substituted “a majority as a quorum” for “five as a quorum.”

§ 6.2-867. Discount by officer, director, or employee of paper refused by bank.

No officer, director, or employee of a bank may purchase or discount any note or paper at a rate of interest in excess of what such bank might charge knowing that such bank has refused to purchase or discount such paper.

History. Code 1950, § 6-44; 1966, c. 584, § 6.1-53; 2010, c. 794.

§ 6.2-868. Bonds required of officers and employees; blanket bond.

1. The board of directors of every bank shall require bonds from all of the active officials and employees of such corporation. In lieu of such bonds, the board may obtain one or more blanket bonds. A bank holding company may obtain a blanket bond covering all affiliate banks within the holding company. The surety on every bond shall be a bonding or surety company authorized to transact business in the Commonwealth. The penalty of any such bond shall be increased whenever in the opinion of the Commission it is necessary for the protection of the public interest.
2. If a bank is unable to obtain the bond required by this section, it shall immediately notify the Commission, which may then direct the bank to have an audit performed at its expense by an independent certified public accounting firm. The bank shall obtain blanket bond coverage as soon as such coverage is available. Failure to obtain blanket bond coverage may be cause for action by the Commission as provided by § 6.2-906 .

History. Code 1950, § 6-46; 1966, c. 584, § 6.1-54; 1974, c. 665; 1979, c. 52; 1992, c. 365; 2010, c. 794.

§ 6.2-869. Dividends; surplus; undivided profits.

1. The board of directors of any bank may declare a dividend of so much as the board shall judge expedient of the net undivided profits of the bank, after providing for all expenses, losses, interest and taxes accrued, or due by such bank. Before any such dividend is declared, any deficit in capital funds originally paid in shall have been restored by earnings to their initial level, and no dividend shall be declared or paid by any bank which would impair the paid-in capital of the bank.
2. To ascertain the net undivided profits before any dividend shall be declared, all debts due to such bank on which interest is past due and unpaid for a period of 12 months, unless the same are well secured and in process of collection by law, shall be deducted from the undivided profits in addition to all expenses, losses, interest and taxes accrued, and the balance shall be deemed to be the net undivided profits.
3. Notwithstanding the foregoing provisions of this section, the Commission may limit or approve the payment of dividends by the board of directors of any bank when the Commission determines that such limitation or approval is warranted by the financial condition of the bank.

History. Code 1950, § 6-48; 1966, c. 584, § 6.1-56; 1976, c. 658; 1979, c. 53; 1992, c. 48; 1995, c. 84; 2010, c. 794.

§ 6.2-870. Limitation of amount invested in bank premises.

1. No bank, without the approval of the Commission, shall invest in its bank building and premises, property held for future accommodation, or in stock or other obligations of any corporation holding title to premises of the bank, if the aggregate of such investments and loans, together with the amount of any indebtedness of such corporation, 50 percent or more of the stock of which is owned by the bank, will exceed the greater of (i) 50 percent of the capital stock, surplus, and undivided profits of the bank or (ii) 100 percent of the capital stock of the bank. If, subsequent to any investment or loan, the surplus or undivided profits of any such bank are diminished by losses so that the investments or loans amount to more than the greater of (a) 50 percent of its paid-in capital stock and its remaining surplus and undivided profits or (b) 100 percent of the capital stock, the bank shall not pay dividends without the permission of the Commission until such investments or loans are equal to or less than the greater of 50 percent of the capital stock, surplus, and undivided profits, or 100 percent of the capital stock of the bank.
2. In computing the bank’s investment in depreciable property, the initial price or cost may be reduced by reasonable depreciation.
3. The Commission shall not in any event approve investments and loans in excess of the foregoing if the aggregate amount thereof would exceed 60 percent of the bank’s capital stock, surplus, and undivided profits. The Commission in approving such excess investments may impose, as a condition of such approval, restrictions upon dividends or other restrictions upon the bank. The restrictions shall expire automatically when the investment of the bank in building premises shall no longer exceed the greater of (i) 50 percent of the capital stock, surplus, and undivided profits of the bank or (ii) 100 percent of the capital stock.

History. Code 1950, § 6-49; 1966, c. 584, § 6.1-57; 1968, c. 61; 2010, c. 794.

§ 6.2-871. Investment in stock or securities of bank service corporations.

1. As used in this section, “bank service corporation” means a corporation engaged primarily in rendering services, other than the renting of the bank premises or the furnishing of furniture or fixtures, to two or more banks.
2. A bank may acquire, own, and hold the stock and other securities or obligations of a bank service corporation in an amount not to exceed 10 percent of the bank’s capital stock and permanent surplus. A bank may not invest in any bank service corporation unless it uses or intends to use the services of the bank service corporation. A bank may not invest in more than one bank service corporation without the consent of the Commission.
3. Stock in a Federal Reserve Bank shall not be considered stock of a bank service corporation within the meaning of this section.

History. Code 1950, § 6-49.1; 1962, c. 38; 1966, c. 584, § 6.1-58; 2010, c. 794.

§ 6.2-872. For what purpose banks may purchase, hold, and convey real estate.

1. In addition to the authority provided in § 6.2-873 , every bank incorporated under the laws of the Commonwealth may purchase, hold, and convey the following real estate for the purposes stated and for no other:
   1. Real estate that is desirable and prudent for its present or future accommodation in the transaction of its business;
   2. Real estate that is mortgaged or otherwise encumbered to it in good faith by way of security for debts contracted;
   3. Real estate that is conveyed to it in satisfaction of debts previously contracted in the course of its dealings; and
   4. Real estate it purchased at sales under judgments, decrees, mortgages, or deeds of trust held by it, in whole or in part, or purchased to secure debts due to it.
2. Nothing in this section shall affect the validity of the title to any such real estate conveyed or transferred by a bank.

History. Code 1950, § 6-50; 1966, c. 584, § 6.1-59; 1988, c. 296; 2010, c. 794; 2012, cc. 59, 157.

The 2012 amendments.

The 2012 amendments by cc. 59 and 157 are identical, and deleted the former second and third sentences of subdivision A 4, which read “No bank shall possess any real estate that is encumbered by a mortgage or other encumbrance, or hold the title to and possess any real estate conveyed to it in satisfaction of debt or purchased by it for the protection of obligations secured thereby, for a longer period than 10 years without the written approval of the Commission. If within such 10-year period, a bank shall have reduced upon its books the asset value of such mortgage, deed of trust, or real estate to the nominal sum of one dollar, it may thereafter continue to hold and own the same indefinitely without the approval of the Commission.”

§ 6.2-873. Additional permissible investments in real estate.

1. In addition to the ownership of real estate permitted in § 6.2-872 , a bank may invest:
   1. In real estate (i) for the purpose of producing income or for inventory and sale or (ii) for improvement, including the erection of buildings thereon, for sale or rental purposes. The bank may hold, sell, lease, operate, or otherwise exercise the rights of an owner of any such property; and
   2. In the stock or other securities or obligations of a controlled subsidiary corporation under § 6.2-885 or 6.2-886 formed or utilized for the purposes in subdivision 1.
2. Unless specifically authorized by the Commissioner:
   1. A bank shall not invest more than five percent in the aggregate of its assets in the investments authorized in subdivisions A 1 and A 2.
   2. A bank shall not invest and lend in any one project an amount in excess of the loan limit to one borrower as provided in § 6.2-875 .

History. 1988, c. 296, § 6.1-59.1; 2010, c. 794.

§ 6.2-874. Prohibited uses of bank’s own stock; other investments or loans.

1. No bank shall:
   1. Acquire or own its own stock except to protect itself against loss from debts previously contracted, in which case the stock shall be disposed of within 12 months after it is acquired, and except as herein permitted;
   2. Make loans collaterally secured by the stock of the bank, except that this section shall not affect the validity of any such security agreement between the bank and its borrower; or
   3. Invest any of its funds in:
      1. Shares of stock of any other corporation;
      2. Any security of a limited liability company; or
      3. Any notes or other obligations that are secured by real estate on which the bank is prohibited by § 6.2-878 from making any loans secured thereby.
2. The prohibitions in subsection A shall not prevent any bank from:
   1. Acquiring any such stock, notes, or other obligations to protect itself or any fund in its custody or possession against loss from debts theretofore contracted;
   2. Acquiring, owning, and holding stock of a building corporation or security of a limited liability company of the character and to the amount provided by § 6.2-870 ;
   3. Acquiring, owning, and holding stock of an agricultural credit corporation organized under the laws of the Commonwealth, provided that the total amount of such stock shall not exceed 20 percent of the amount of the capital stock of the bank actually paid in and unimpaired, plus the amount of its unimpaired surplus fund;
   4. Acquiring, owning, and holding stock of the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation;
   5. Acquiring, holding, and owning stock in any corporations or securities of limited liability companies which have as their purpose the operation of parking lots or parking garages, provided that no bank shall own, at any one time, stock in such corporations exceeding two percent of the amount of the capital stock of such bank actually paid in and unimpaired, plus the amount of its unimpaired surplus fund;
   6. Acquiring, owning, and holding stock of a small business investment company as defined by the Federal Small Business Investment Act of 1958;
   7. Acquiring, owning, and holding stock of an industrial development company organized under the provisions of the Virginia Industrial Development Corporation Act (§ 13.1-981 et seq.);
   8. Acquiring, owning, and holding stock of a bank service corporation or security of a controlled subsidiary corporation, subject to § 6.2-871 or 6.2-885 , or from investing in a limited liability company, provided such investment conforms to § 6.2-871 or 6.2-885 ;
   9. Acquiring, owning, and holding stock of the Student Loan Marketing Association, a corporation organized under the Higher Education Act of 1965, as amended;
   10. Acquiring, owning, and holding stock of a “clearing corporation” as defined in § 8.8A-102 ;
   11. Acquiring, owning, and holding stock of a trust subsidiary as defined in § 6.2-1000 ;
   12. Investing up to four percent of its capital and surplus, including undivided profits, in shares of any bankers’ bank organized under § 6.2-809 or in any bank holding company wherein the ownership of shares in such bank holding company is restricted to (i) financial institutions which have or are eligible for insurance of deposits by a federal agency or (ii) a financial institution holding company as defined in § 6.2-700 or a savings institution holding company as defined in § 6.2-1100 ;
   13. Acquiring its own stock, with the book value of all such stock held not to exceed in the aggregate five percent of the book value of all shares issued and outstanding, including capital, surplus, and undivided profits as of the time of the purchase being made. In computing such capital surplus and undivided profits for purposes of this section, amounts received for resale of any repurchased stock shall be added back to capital, surplus, and undivided profits for purposes of computation of the five percent limitation. Such purchase may be without the written consent of the Commission, unless the Commission or Commissioner has previously notified the bank in writing that it may not utilize this subdivision until further notice. The Commission may further allow purchases of such stock in excess of such five percent criterion if the Commission finds that the purchase (i) will not impair the safety and solvency of the bank and (ii) is otherwise appropriate. The Commission may require the divestiture of any shares held if deemed necessary and appropriate;
   14. Acquiring, owning, and holding, subject to such conditions as the Commissioner may prescribe, shares of investment companies;
   15. Acquiring, owning, and holding, subject to such conditions as the Commissioner may prescribe, shares of stock in a community development corporation;
   16. Acquiring, owning, and holding shares of the Federal Agricultural Mortgage Corporation; or
   17. Acquiring, owning, and holding shares of a Federal Home Loan Bank.
3. The provisions of this section shall not be construed to require a bank to dispose of any preferred stocks lawfully acquired as an investment prior to January 1, 1940.

History. 1982, c. 185, § 6.1-60.1; 1985, c. 339; 1986, c. 269; 1987, c. 297; 1988, c. 464; 1989, cc. 377, 650; 1992, c. 366; 1993, c. 186; 1994, c. 119; 1996, c. 27; 2010, c. 794.

§ 6.2-875. Limitations on obligations of borrowers.

1. As used in this section:“Derivative transaction” shall include any transaction that is a contract, agreement, swap, warrant, note, or option that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event relating to, one or more commodities, securities, currencies, interest or other rates, indices, or other assets.“Installment consumer paper” shall include installment notes of up to 10 years’ duration for the purchase of unimproved real property.“Obligation” means the direct liability of the maker or acceptor of the paper discounted with or sold to a bank and the liability of the endorser, drawer, or guarantor who obtains a loan from or discounts paper with or sells paper under his guaranty to such bank. “Obligation” shall include:
   1. In the case of obligations of a corporation or a limited liability company, all obligations of all subsidiaries thereof in which the corporation or limited liability company owns or controls a majority interest;
   2. Any liability of the bank under a letter of credit, other than a letter of credit arising out of transactions involving the importation or exportation of goods or the domestic shipment of goods, except to the extent (i) the bank has a binding participation of another bank, organized under the laws of the Commonwealth or another state or the United States, or a written commitment by another such bank to assume primary liability therefor or (ii) such bank issuing the letter of credit has in its possession money on deposit to the credit of such customer or securities or assets readily convertible into cash with which to honor such letter of credit; and
   3. Any credit exposure to a person arising from a derivative transaction between the bank and the person.
2. Subject to the exceptions set forth in subsections D, E, F, and I, the total obligations of any person, including, with respect to a partnership, as provided in subsection C, the partners having a five percent or greater interest in either the income or capital of a partnership other than limited partners, to any bank shall at no time exceed 15 percent of the sum of the capital, surplus, and loan loss reserve of such bank.
3. For the purposes of this section:
   1. The obligation of partners in the partnership and the partnership shall not be combined with each other except if (i) the purpose for which the obligation of any partner was incurred or utilized relates to the partnership or the purposes of the partnership, including acquisition of an interest in the partnership, such obligation shall be combined with the obligation of the partnership or (ii) the primary source of repayment of a partner’s individual obligation is the partnership or funds therefrom, the obligation of the partnership shall be combined with the obligation of such partner, other than a limited partner or partner with less than five percent interest, and the limitation specified herein shall apply to the combined obligations of each such partner and the partnership. Except in the two instances specified in clauses (i) and (ii), the individual liability of the partner shall not be treated as an obligation of the individual, and the obligations of partner as individual guarantor on partnership obligations shall not be treated as an obligation of the individual for purposes of computation hereunder when, in either case, the bank has a certificate of a responsible officer, designated by the board of directors for this purpose, stating that the responsibility of the partnership for each obligation has been evaluated and the bank is relying primarily upon such partnership for the payment of such indebtedness; and
   2. There may be counted as part of the surplus (i) the undivided profits as of the date of the most recent call statement and (ii) capital notes and debentures, the issuance of which has been approved by the Commission, outstanding as of said date, and consisting of debt obligations subordinate to all other contractual liabilities of the bank.
4. The following kinds of obligations shall not be subject to any limitation, except as expressly stated in subdivision 20:
   1. Obligations in the form of drafts or bills of exchange drawn in good faith against actually existing values;
   2. Obligations arising out of the discount of commercial or business paper actually owned by the person, partnership, association, limited liability company, or corporation negotiating the same;
   3. Obligations drawn in good faith against actually existing values and secured by goods or commodities in process of shipment;
   4. Obligations in the form of banker’s acceptances of other banks of the kind described in section thirteen of the Federal Reserve Act;
   5. Obligations of the United States, the Commonwealth, or any political subdivision of the Commonwealth, including sanitary or public facilities districts;
   6. Obligations fully guaranteed or insured by a state or by a state authority for the payment of the obligation of which the faith and credit of the state is pledged;
   7. First mortgage real estate loans that are insured by the Federal Housing Administrator;
   8. Obligations guaranteed as to principal and interest by the United States;
   9. Loans in which the Small Business Administration or a federal reserve bank has definitely agreed or committed itself to participate, to the extent of such participation;
   10. Obligations guaranteed by the Small Business Administration or Farmers Home Administration, to the extent of such guaranty;
   11. Loans that the Federal Commodity Credit Corporation has definitely agreed to purchase;
   12. Direct obligations of, and obligations guaranteed by, the Export-Import Bank;
   13. Loans guaranteed by a federal guaranteeing agency pursuant to the Defense Production Act of 1950;
   14. Bonds and notes of the Federal National Mortgage Association;
   15. Bonds, debentures, and other similar obligations of Federal Land Banks, Federal Intermediate Credit Banks, or Banks for Cooperatives issues pursuant to acts of Congress;
   16. Obligations of the Federal Financing Bank, the Student Loan Marketing Association, the Federal Home Loan Mortgage Corporation, the National Credit Union Administration, Farm Credit Banks, the Government National Mortgage Association, or the Commodity Credit Corporation;
   17. Time deposits in, or obligations issued by, a Federal Home Loan Bank;
   18. Repurchase agreements of obligations authorized by this subsection;
   19. Obligations of any person, secured by not less than a like amount of bonds or notes or other evidences of indebtedness of the United States or of the Commonwealth;
   20. Obligations as endorser or guarantor of installment consumer paper that carry a full or limited endorsement or guarantee of the person transferring the same when the bank has a certificate of a responsible officer, designated by its board of directors for that purpose, stating that the responsibility of the maker of such obligation has been evaluated and the bank is relying primarily upon such maker for the payment of such obligation. In such case the limitations of this section as to the obligations of the maker shall be the sole applicable loan limitation; and
   21. Obligations secured by the pledge or assignment of certificates of deposit or saving certificates of the lending bank, to the extent of the principal amount of such certificates so pledged or assigned.
5. The following kinds of obligations shall be subject to a limitation of 30 percent of such capital and surplus:
   1. Obligations as endorser or guarantor of notes, other than commercial or business paper excepted under subdivision D 2 having a maturity of not more than six months, and owned by the person endorsing and negotiating the same;
   2. Obligations of any person in the form of notes or drafts secured by shipping documents or instruments (i) transferring or securing title covering livestock or (ii) giving a lien on livestock when the market value of the livestock securing the obligations is not at any time less than 115 percent of the amount by which the obligations exceed 15 percent of such capital and surplus; and
   3. Obligations secured by bonds or notes of the United States, or bonds of the Commonwealth or any of its political subdivisions, if the face value thereof is at least equal to the excess of the obligations over 15 percent of such capital and surplus.
6. Nonrenewable obligations having not more than 10 months to run consisting of notes or drafts secured by shipping documents, warehouse receipts, or similar documents creating a security interest in readily marketable, nonperishable, staple commodities, insured to the extent that insurance is customarily required, shall be subject to a sliding scale limitation up to 50 percent of such capital, surplus, and undivided profits. The sliding scale limitation shall require that when the face amount of the obligation exceeds 15 percent of such capital and surplus by any number of percentage points up to 35, the market value of the security for the obligation shall exceed the face amount of the obligation by at least the same number of percentage points.
7. The Commission shall adopt necessary regulations to require entities that would otherwise be treated as separate entities to be treated as related for the purposes of compelling reporting not more frequently than quarterly, to the Commission of the aggregate obligations of such parties to the bank. For the purposes of this subsection:
   1. The Commission may treat as related parties individuals that are in the same household or that are the parents, grandparents, children, or grandchildren of each other whether or not in the same household;
   2. Any person owning as much as 34 percent of stock of a corporation or being an officer or director of such corporation may be treated as related to such corporation;
   3. Any person entitled to a share of the profits and losses of or distributions from a limited liability company, or who is a manager of a manager-managed limited liability company or a member of a member-managed limited liability company, may be treated as related to the limited liability company; and
   4. Any person having an interest in income or capital of a partnership may be treated as a related party.
8. All loans made by a bank in excess of 15 percent of its capital and surplus shall be approved by the board of directors or the executive committee of the bank by resolution recorded in the bank’s minute book.
9. Notwithstanding the limitations in this section, the Commission may by regulation authorize state banks to make loans to one borrower in such amounts as may be authorized under any lending limit laws applicable to national banks.
10. The Commission may adopt such regulations as it deems appropriate to (i) further define the term “derivative transaction” and (ii) set forth the rules for calculating credit exposures arising from derivative transactions. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard, in accordance with the Commission’s Rules.

History. Code 1950, § 6-76; 1952, c. 23; 1958, c. 74; 1960, c. 27; 1966, c. 584, § 6.1-61; 1970, c. 42; 1974, c. 557; 1977, cc. 110, 466; 1978, c. 683; 1984, c. 134; 1987, c. 494; 1994, c. 290; 2002, c. 186; 2006, c. 912; 2010, c. 794; 2013, cc. 98, 126.

The 2013 amendments.

The 2013 amendments by cc. 98 and 126 are identical, and in subsection A, added the paragraph defining “Derivative transaction” and subdivision 3 of the paragraph defining “Obligation,” and subsection J; and made related changes.

§ 6.2-876. Loans to executive officers or directors.

1. The maximum amount of loans and other extensions of credit a bank may make to any of its executive officers or directors, and the conditions and procedures for approval of such extensions of credit, shall be governed by Federal Reserve Board Regulation O, 12 C.F.R. Part 215, whether or not the bank is a member of the Federal Reserve System.
2. The aggregate amount of a bank’s extensions of credit to its executive officers or directors, and their interests, shall not be excessive. The Commission shall adopt such regulations as may be required to prevent excessive aggregate amounts of extensions of credit by a bank to such persons and their interests.

History. Code 1950, § 6-77; 1966, c. 584, § 6.1-62; 1976, c. 658; 1978, c. 683; 1987, c. 351; 1995, c. 82; 1996, c. 13; 2004, c. 320; 2010, c. 794.

§ 6.2-877. Overdrafts by bank officer or director.

No bank shall pay an overdraft of an executive officer or director of the bank on an account at the bank unless the payment of funds is made in accordance with (i) a written, preauthorized, interest-bearing extension of credit plan that specifies a method of repayment or (ii) a written, preauthorized transfer of funds from another account of the account holder at the bank. This prohibition does not apply to the payment of inadvertent overdrafts on an account in an aggregate amount of $1,000 or less if (a) the account is not overdrawn for more than five business days and (b) the member bank charges the executive officer or director the same fee charged any other customer of the bank in similar circumstances.

History. 1981, c. 343, § 6.1-62.1; 2010, c. 794.

§ 6.2-878. Loans secured by real estate generally.

1. As used in this section, “loan secured by real estate” means an obligation executed or assumed by the borrower that is secured by mortgage, deed of trust, or similar instrument, encumbering real estate that is owned by the borrower and upon which the bank relies as the principal security for the loan.
2. No bank shall make any loan secured by real estate when such loan, together with all prior liens or encumbrances on such real estate, exceeds 90 percent of the appraised value of the real estate securing such loan.
3. The appraisals necessitated by this section shall be required if the loan shall equal or exceed an amount established from time to time by the Commissioner. In establishing such amount, the Commissioner shall take into consideration the requirements imposed on banks under applicable federal regulations. Such appraisals shall be in writing, signed by the appraisers, and shall be retained in the files of the bank, subject to examination of bank examiners. The appraisers so appointed shall be experienced persons competent to appraise real estate in the locality where the real estate is located.
4. Any bank may make loans secured by real estate that do not comply with the limitations and restrictions in this section if the total unpaid amount of such loans, exclusive of the loans that subsequently comply with such limitations and restrictions, does not exceed 10 percent of the total amount of loans secured by real estate.
5. The provisions of this section relating to ratio of loan to appraised value and appraisal shall not apply if:
   1. The real estate security is taken solely as an abundance of caution on terms which are not more favorable than they would be in absence of such a lien on real estate;
   2. A real estate security conveyance is taken by or ancillary to the assignment of lease obligations upon which the bank is relying primarily and prudently;
   3. A subsequent transaction results from an existing extension of credit providing (i) that the borrower has performed satisfactorily, (ii) there is no advance of new money, except as formerly agreed, (iii) the credit standing of the borrower is not deteriorating, and (iv) there is no obvious and noticeable deterioration of marketing conditions or the physical assets which provide collateral security to the bank; or
   4. A lien upon real estate is taken to secure a prior advance which was not secured by such real estate.
6. In cases where an appraisal by a state-certified or state-licensed appraiser is not required, under this section or other sections of this chapter in a real estate-related financial transaction, the bank as a matter of prudence may take and preserve a reasonable appraisal, valuation, or analysis of real estate or real property in connection with such transaction.
7. The Commission may by order or regulation eliminate loans or specific categories of loans from the requirements of this section.
8. The provisions of this section shall not be construed to prohibit any bank from accepting, as security for a loan that it had made in good faith without security or upon security since found to be inadequate, an obligation or obligations secured by mortgage, deed of trust, or other such instrument upon real estate.

History. Code 1950, § 6-78; 1952, c. 25; 1956, c. 622; 1960, c. 23; 1964, c. 150; 1966, c. 584, §§ 6.1-63, 6.1-65; 1968, c. 549; 1972, c. 189; 1976, c. 487; 1978, c. 624; 1979, c. 375; 1981, c. 271; 1982, c. 263; 1984, c. 133; 1988, c. 170; 1991, c. 160; 1992, c. 68; 1994, c. 501; 2005, c. 263; 2010, c. 794.

§ 6.2-879. Certain loans not considered loans secured by real estate.

1. If the bank reasonably and prudently relies upon factors other than or in addition to the real estate security, such as general credit standing, guarantees, commitments, or tangible or intangible personal property security, and enters in its records a written statement of the factors it relies on, the loan does not constitute a loan secured by real estate within the meaning of § 6.2-878 , except that if the terms of the transaction shall be more favorable than in the absence of a lien, an appraisal shall be required as provided under § 6.2-878 .
2. Loans made to homeowners for maintenance, repair, landscaping, modernization, alteration, improvement to, and furnishings and equipment for, their homes, whether or not secured, shall not be considered as loans secured by real estate within the meaning of § 6.2-878 , provided each such loan shall (i) be payable in approximately equal monthly installments, (ii) not be for a term longer than 12 years, and (iii) not exceed an amount specified in accordance with subsection C of § 6.2-878 . Such home loans may otherwise be made under the provisions of § 6.2-878 or 6.2-880 . If such loan is in excess of the amount specified under subsection C of § 6.2-878, unless the taking of real estate security is solely in the abundance of caution and the terms are not more favorable than in the absence of such a real estate lien, an appraisal as required by § 6.2-878 or 6.2-880 shall be required by the bank.

History. Code 1950, §§ 6-78, 6-79.2; 1952, c. 25; 1956, c. 622; 1960, c. 23; 1962, c. 267; 1964, c. 150; 1966, c. 584, §§ 6.1-65, 6.1-66; 1970, c. 13; 1976, c. 94; 1980, c. 714; 1991, c. 160; 1994, c. 501; 2005, c. 263; 2010, c. 794.

§ 6.2-880. Construction loans.

1. As used in this section, “construction loan” means a loan (i) made to finance the construction of a building or otherwise to improve real estate and (ii) with a maturity not exceeding 60 months.
2. A construction loan that is accompanied by a valid and binding agreement to advance an amount equal to or greater than the construction loan upon the completion of the building or improvement, which agreement is entered into by an individual or entity acceptable to the bank or the bank itself, whether or not secured by a mortgage or similar lien on the real estate upon which the building or improvement is being constructed, shall not be considered as a loan secured by real estate within the meaning of § 6.2-878 , but shall be classed as an ordinary commercial loan, unless the terms of the transaction shall be more favorable than in the absence of a lien, in which case an appraisal shall be required as provided under § 6.2-878 .
3. No bank shall invest in, or be liable in, construction loans in an aggregate amount in excess of 100 percent of its capital and surplus, except that any such loans supported by an executed agreement for permanent financing shall not be included in such aggregate amount.
4. Loans to finance construction of buildings or otherwise to improve real estate may be made under this section or under the provisions of § 6.2-878 .
5. Loans made under subsection H of § 6.2-878 or subsection A of § 6.2-879 shall not be treated as construction loans for purposes of the limitations of this section.

History. Code 1950, § 6-78; 1952, c. 25; 1956, c. 622; 1960, c. 23; 1964, c. 150; 1966, c. 584, § 6.1-64; 1970, c. 14; 1972, c. 189; 1981, c. 271; 1991, c. 160; 1995, c. 87; 2006, c. 273; 2010, c. 794.

§ 6.2-881. Investment in reverse annuity mortgages.

A bank may invest in reverse annuity mortgages to the extent and in the manner that may be provided in regulations adopted by the Commission.

History. 1979, c. 386, § 6.1-65.1; 1994, c. 501; 2010, c. 794.

§ 6.2-882. Bank borrowing money or rediscounting its notes.

1. Any bank borrowing money or rediscounting any of its notes shall at all times show on its books and accounts and in its reports the amount of such borrowed money or rediscounts.
2. No officer, director, or employee of any bank shall issue the note of such bank for borrowed money or rediscount any note or pledge any of the assets of such bank, except when authorized by resolution of the board of directors of such bank previously made and entered upon the minutes of such bank, under such regulations and in such form as may be adopted by the Commission.

History. Code 1950, § 6-80; 1966, c. 584, § 6.1-67; 1994, c. 7; 2010, c. 794.

§ 6.2-883. Acceptance of drafts or bills of exchange; issuance of letters of credit.

1. Any bank doing business in the Commonwealth, subject to conditions, limitations, and restrictions imposed by the Commission, may (i) accept for payment at a future date drafts or bills of exchange drawn upon it by its customers on time not exceeding six months and (ii) issue letters of credit, upon such terms and conditions and of such duration as may be deemed appropriate by such bank, that authorize the holders thereof to draw drafts upon it or its correspondent, which drafts may be payable at sight or may be accepted for payment from the date of presentment on time not exceeding six months.
2. The Commission, in adopting conditions, limitations, and restrictions with respect to such acceptances or letters of credit, shall use as a standard or guide the respective conditions, limitations, and restrictions, if any, imposed from time to time by federal statute or by the Federal Reserve Board on its member banks.

History. Code 1950, § 6-82; 1966, c. 584, § 6.1-68; 1974, c. 81; 1976, c. 152; 1994, c. 7; 2010, c. 794.

§ 6.2-884. Ownership and lease of personal property.

1. As used in this section, “personal property” includes fixtures.
2. A bank may become the owner and lessor of personal property, subject to the following limitations:
   1. Except in the case of short-term leases where a subsequent sale or reletting is anticipated, the rentals receivable by the bank under the initial lease of any item of personal property shall equal at least the cost to the bank of such item of personal property;
   2. Any leasing or rental obligations to any bank of any person shall be treated as obligations subject to the limitations imposed by § 6.2-875 ; and
   3. Upon the expiration of any lease whether by virtue of the lease agreement or by virtue of the retaking of possession by the bank, the personal property shall be sold or otherwise disposed of, or charged off within one year from the time of expiration of such lease unless it is held for the purpose of reletting.
3. No personal property acquired pursuant to this section shall be included in computable investment in fixed assets under § 6.2-870 .

History. 1968, c. 56, § 6.1-68.1; 1989, c. 482; 2010, c. 794.

§ 6.2-885. Investment in stock or securities of controlled subsidiary corporations.

1. As used in this section and §§ 6.2-886 , 6.2-887 , and 6.2-888 :“Control” has the meaning assigned to it in § 2 of the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.).“Controlled subsidiary corporation” means a corporation that is controlled by a bank organized under the laws of the Commonwealth, or by more than one bank, at least one of which is organized under the laws of the Commonwealth.
2. A bank may acquire, own, and hold the stock, securities, or obligations of one or more controlled subsidiary corporations. Such investment in stock, securities, or obligations, together with any investment of the bank in stock, securities, or obligations of a bank service corporation, shall not exceed in the aggregate 50 percent of the bank’s capital stock and permanent surplus, without the permission of the Commission, which limit on investment shall not include, but shall be in addition to, investment in (i) a real estate subsidiary as provided in § 6.2-873 , (ii) the stock, securities, or obligations of a building corporation under § 6.2-870 , and (iii) controlled subsidiary corporations that are wholly owned by the bank.
3. A controlled subsidiary corporation shall not be authorized to (i) receive deposits except as hereafter provided; (ii) engage in the trust business; or (iii) conduct any business that is required under § 13.1-620 to be specifically stated in the articles of incorporation, except a controlled subsidiary corporation may engage in the business of credit card operations, leasing, safe deposit, factoring, credit bureaus, mortgage brokerage or servicing, data processing, international banking and finance, and any other function or business activity in which a bank might engage, except the receipt of deposits, or the trust business. Subject to the foregoing limitations on the businesses that a controlled subsidiary corporation is authorized to conduct, and with the prior approval of the Commission and subject to such conditions as the Commission may impose, a controlled subsidiary corporation may also engage in any business that is authorized by statute, regulation, or official interpretation for a subsidiary of a national bank or an out-of-state state bank as defined in § 6.2-836 to the extent such activity is financial in nature, or incidental or complimentary to a financial activity, and is not otherwise prohibited by state law. A controlled subsidiary corporation transacting business as a real estate brokerage firm shall be governed by § 6.2-888 and be subject to the provisions of this section. A controlled subsidiary corporation may charge and collect such finance charges and fees or interest rates as are authorized to banks by the laws of the Commonwealth or as otherwise authorized by Chapter 3 (§ 6.2-300 et seq.).
4. A controlled subsidiary corporation engaged solely in the business of international banking and finance, and subject to the regulation and supervision by the Board of Governors of the Federal Reserve System, shall not be prohibited from receiving deposits or from taking any other action that any such regulated international banking and finance institution is permitted to take.
5. The provisions of § 6.2-874 relating to investment of funds in shares of stock of another corporation shall be applicable to controlled subsidiary corporations, except that a controlled subsidiary corporation may acquire, own, and hold stock in a subsidiary corporation if a bank would be permitted to directly acquire, own, or hold the stock hereunder. The provisions of § 6.2-876 relating to loans to officers, directors, or employees of the bank shall be applicable both to loans by the subsidiary to officers, directors, or employees of the bank and to loans by the bank to officers, directors, or employees of the subsidiary, with the approval of the board of directors of the bank only being required for purposes of § 6.2-876 . The limitations of §§ 6.2-878 through 6.2-881 as they relate to appraisal value, maximum term, and amortization on loans secured by real estate shall be applicable to controlled subsidiary corporations. Notwithstanding any provisions of this subsection to the contrary, the restrictions set out in §§ 6.2-874 through 6.2-881 shall not be imposed upon any controlled subsidiary that has no state banks as shareholders.
6. The provisions of § 6.2-875 relating to limitations upon obligations of any one borrower shall apply to the total obligations of any borrower in the aggregate to the subsidiary corporation and to any bank or bank holding company owning stock securities or obligations of such subsidiary corporation. The loan limit of the subsidiary shall be computed by attributing to the subsidiary a pro rata share of the lending limit of each bank stockholder prorated in accordance with the percentage of stock owned by such bank. However, in the case of a subsidiary, any of the stock, securities, or other obligations of which are owned by a bank holding company, the loan limits of the subsidiary shall be computed by attributing to the subsidiary a pro rata share of the lending limits of all bank subsidiaries of such holding company, which share shall be prorated based on the percentage of stock owned by the holding company and all subsidiary banks thereof. In computing whether a bank or a subsidiary that is not wholly owned is complying with its lending limit, the loans of the bank and the subsidiary to any common borrower shall be aggregated on a basis pro rata to the percentage of stock of the subsidiary owned by the bank. Such controlled subsidiary corporation shall not otherwise be subject to the provisions of this chapter except where it is expressly so provided. Notwithstanding any provisions of this subsection to the contrary, the restrictions set out in §§ 6.2-874 through 6.2-881 shall not be imposed upon any controlled subsidiary that has no state banks as shareholders.

History. 1968, c. 270, § 6.1-58.1; 1978, c. 797; 1988, c. 296; 1993, c. 64; 1997, c. 277; 1999, c. 60; 2001, c. 508; 2003, cc. 536, 558; 2010, c. 794.

Law Review.

For survey article on judicial decisions in real estate law from June 1, 2002 through June 1, 2003, see 38 U. Rich. L. Rev. 223 (2003).

§ 6.2-886. Regulation of controlled subsidiary corporations by Commission.

1. A controlled subsidiary corporation shall be subject to audit and examination by the Commission whether or not it is an affiliate as defined in § 6.2-899 . The controlled subsidiary corporation shall pay such examination fees as shall be imposed under § 6.2-908 for the examination of trust departments. If upon examination the Commission shall ascertain that the corporation is created or operated in violation of this section or that the manner of operation is detrimental to the business of the parent bank and its depositors, it may order the bank to dispose of all or part of its investment in such corporation upon such terms as the Commission may deem proper.
2. A controlled subsidiary may not merge or consolidate unless the surviving corporation is itself a controlled subsidiary corporation, or unless as a result of such merger or consolidation the bank divests itself of all stock or other securities that are held pursuant to the authority granted by this section.
3. The Commission shall have the same powers over controlled subsidiary corporations as it has over banks under §§ 6.2-913 , 6.2-915 , 6.2-917 , 6.2-918 , and 6.2-919 , excepting those controlled subsidiary corporations that have no state banks as stockholders.

History. 1968, c. 270, § 6.1-58.1; 1978, c. 797; 1988, c. 296; 1993, c. 64; 1997, c. 277; 1999, c. 60; 2001, c. 508; 2003, cc. 536, 558; 2010, c. 794.

§ 6.2-887. Insurance business of controlled subsidiary.

1. In addition to the types of business authorized in § 6.2-885 , a controlled subsidiary corporation that is a domestic or foreign corporation, the majority of the voting stock of which is owned, directly or indirectly, by (i) a bank or banks organized under the laws of the United States, (ii) a bank or banks organized under the laws of the Commonwealth, (iii) a bank or banks organized under the laws of another state, or (iv) a bank holding company owning a bank or banks in the Commonwealth or in another state, may be formed to:
   1. Transact the type of insurance business specified in § 38.2-120 and other insurance normally written under the coverage known as financial institution blanket bonds;
   2. Underwrite insurance indemnifying the bank, its holding companies or its affiliates, and their directors and officers against liability; and
   3. Underwrite reinsurance of mortgage guaranty insurance, subject to such conditions as the Commission may impose, on loans secured by real estate made or purchased by such controlled reinsurance subsidiary’s affiliates or by a bank owning such controlled subsidiary.
2. Any such controlled subsidiary corporation shall (i) transact only the insurance business specifically permitted by this section and (ii) be subject to the further provisions of Title 38.2 otherwise applicable to insurance companies transacting a comparable business.
3. The investment of any bank in the stock, services, or other obligations of such a controlled subsidiary shall not exceed two percent of such bank’s capital, surplus, and undivided profits.

History. 1976, c. 340, § 6.1-58.2; 1977, c. 190; 1986, c. 638; 1998, c. 48; 2010, c. 794.

§ 6.2-888. Real estate brokerage business of controlled subsidiary.

1. In addition to the types of business authorized in §§ 6.2-885 and 6.2-887 , a controlled subsidiary corporation may be formed and licensed to transact business as a real estate brokerage firm in accordance with § 54.1-2106.1 , provided such controlled subsidiary corporation transacts the real estate brokerage business and such services only in accordance with the specific provisions of this section. Such controlled subsidiary corporation shall be subject to the provisions of Chapter 21 (§ 54.1-2100 et seq.) of Title 54.1 that are otherwise applicable to real estate brokerage companies transacting a comparable business.
2. A controlled subsidiary corporation of a state bank may own and transact business as a real estate brokerage firm and provide the services of a real estate brokerage firm, only upon the Commission’s determination that the state bank making application to do so is in full compliance with applicable law. The investment of any bank in the stock, securities, or other obligations of a controlled subsidiary corporation shall be approved by the Commission only upon a determination by the Commission that (i) the depositors of the bank are adequately protected from the risk of such ownership and (ii) the ownership is a safe and sound investment for the bank in accordance with applicable law. Such determination shall include but not be limited to providing written notice to the Virginia Real Estate Board and receiving written confirmation from the Virginia Real Estate Board that the real estate brokerage firm, to be owned, and its brokers, are in good standing in accordance with the requirements of Chapter 21 (§ 54.1-2100 et seq.) of Title 54.1.
3. A controlled subsidiary corporation of a state bank may own and transact business as a real estate brokerage firm only in compliance with the following:
   1. The controlled subsidiary corporation, or a state bank that owns a controlled subsidiary corporation, that engages in real estate brokerage, shall not:
      1. Impose a requirement, orally or in writing, that a borrower shall contract for or enter into any other arrangement for real estate services with its affiliated real estate brokerage firm;
      2. Impose a requirement, orally or in writing, that as a condition of approving a loan a borrower shall contract or enter into any other arrangement with its affiliated real estate brokerage firm;
      3. Impose a requirement, orally or in writing, that a real estate brokerage customer shall make application for a loan or any other service or services of a particular bank or any of its subsidiaries, affiliates, or service entities, except as otherwise permitted under the federal Real Estate Settlement Procedures Act of 1974 (12 U.S.C. § 2601 et seq.) and regulations adopted thereunder;
      4. Impose a requirement, orally or in writing, that a condition of providing real estate brokerage services is that the customer shall make application for a loan or any other arrangement for other services of the bank or any of its subsidiaries, affiliates, or service entities, except as otherwise permitted under the federal Real Estate Settlement Procedures Act of 1974 (12 U.S.C. § 2601 et seq.) and regulations adopted thereunder;
      5. Offer or provide more favorable consideration, terms, or conditions for any financial products or services to induce or attempt to induce a person to enter into any arrangement for real estate brokerage services with any particular real estate brokerage firm;
      6. Offer or provide more favorable terms or conditions for any real estate brokerage services to induce or attempt to induce a person to apply for a loan or obtain any other services of a particular bank or any of its subsidiaries, affiliates, or service entities;
      7. Conduct real estate brokerage activities in the same areas of a building where the bank routinely accepts retail deposits from the general public;
      8. Conduct real estate brokerage activities in areas of a building that are identified as areas where banking activities occur;
      9. Conduct banking activities in areas of the building that are identified as areas where real estate brokerage activities occur;
      10. Make payment to its employees for any referrals of real estate brokerage business;
      11. Use confidential credit and other financial information available from the bank for solicitation purposes by a real estate brokerage affiliate, without first having obtained the written consent of the customer;
      12. Use or transfer from a bank to any affiliated real estate brokerage firm any financial information of or relating to any unaffiliated competing real estate brokerage firm that is an actual or prospective customer; or
      13. Use, directly or indirectly, nonpublic customer information that is held or obtained by the bank for the purpose of soliciting real estate business, without first having obtained the written consent of the customer;
   2. A state bank that makes a referral to its affiliated real estate brokerage firm shall clearly and conspicuously disclose in writing, in a separate document, to any person who applies for credit related to a real estate transaction or applies for prequalification or preapproval for credit related to a real estate transaction, that the person is not required to consult with, contract for, or enter into an arrangement for real estate brokerage services with its affiliated real estate brokerage firm; and
   3. A real estate brokerage firm that is affiliated with a bank shall clearly and conspicuously disclose in writing, in a separate document, before the time an agency agreement for real estate brokerage services is executed, that the person is not required to apply, contract for, or enter into any other arrangement for services of a particular bank or any of its subsidiaries, affiliates, or service entities.
4. The requirements of this section are in addition to the requirements of the federal Real Estate Settlement Procedures Act of 1974 (12 U.S.C. § 2601 et seq.) and regulations adopted thereunder.
5. State banks owning and transacting business as real estate brokerage firms under this section are subject to the provisions of Chapter 9 (§ 55.1-900 et seq.) of Title 55.1.
6. A state bank that acts as a mortgage broker, as defined in § 6.2-1600 , and that transacts business as a real estate brokerage through a controlled subsidiary corporation, is subject to subsection C of § 6.2-1616 ; however, a state bank that, pursuant to an executed originating agreement with the Virginia Housing Development Authority, acts or offers to act as an originating agent of the Virginia Housing Development Authority in connection with a mortgage loan shall not be deemed to be acting as a mortgage broker with respect to such mortgage loan but shall be deemed to be acting as a mortgage lender with respect to such mortgage loan, notwithstanding that the Virginia Housing Development Authority is or would be the payee on the note evidencing such mortgage loan and that the Virginia Housing Development Authority provides or would provide the funding of such mortgage loan prior to or at the settlement thereof.
7. In the event of a violation of this section, the Commission may take such action as is authorized in accordance with § 6.2-946 , including issuance of an order requiring the state bank to cease and desist the activity that violates this section and imposing penalties.

History. 2003, cc. 536, 558, § 6.1-58.3; 2006, c. 422; 2010, c. 794; 2022, cc. 400, 401.

Editor’s note.

To conform to the recodification of Title 55 by Acts 2019, c. 712, effective October 1, 2019, the following substitution was made at the direction of the Virginia Code Commission: substituted “Chapter 9 (§ 55.1-900 et seq.) of Title 55.1” for “Chapter 27.2 (§ 55-525.8 et seq.) of Title 55.”

The 2022 amendments.

The 2022 amendments by cc. 400 and 401 are identical, and inserted “federal” throughout; deleted “subdivision B 5 and” in subsection F preceding “subsection C of § 6.2-1616 ”; and made stylistic changes.

§ 6.2-889. Required reserves.

1. As used in this section, unless the context requires otherwise:“Demand deposits” means all deposits the payment of which can be legally required in less than 30 days.“Time deposits” means all deposits the payment of which cannot be legally required in less than 30 days.
2. Every bank shall maintain a reserve related to its demand deposits and to its time deposits. The reserve on:
   1. Demand deposits shall consist of actual cash on hand and balances payable on demand, due from other solvent banks; and
   2. Time deposits shall consist of actual cash on hand and balances payable on demand due from other solvent banks; provided that up to 100 percent of such reserve on time deposits may be in the form of short maturity general obligations of the United States, such maximum percentage to be fixed by the Commission.
3. The Commission shall by regulation establish from time to time the reserve requirements within the following limits:
   1. On demand deposits: zero to 15 percent; and
   2. On time deposits: zero to five percent.
4. The reserves required herein for each day shall be computed on the basis of average daily deposits covering a biweekly period, provided that shorter averaging periods may be fixed by regulation of the Commission.
5. Nothing herein shall be construed to relieve any bank which is a member of the Federal Reserve System from maintaining a reserve fund in accordance with the requirements applicable to such member banks.

History. Code 1950, § 6-52; 1966, c. 584, § 6.1-69; 1976, c. 658; 1981, c. 65; 2010, c. 794.

§ 6.2-890. Preferences by pledging assets.

1. No bank shall give preference to any depositor or creditor by pledging the assets of such bank, except as otherwise authorized by subsection B, or except to secure deposits of trust funds made pursuant to the provisions of § 6.2-1005 or 6.2-1057 .
2. Notwithstanding the provisions of subsection A, any bank:
   1. May deposit securities for the purpose of securing deposits of:
      1. The United States government and its agencies;
      2. The Commonwealth, any other state where the bank has a branch office, or any agency or political subdivision thereof;
      3. Insolvent national bank funds as permitted under 12 U.S.C. § 192;
      4. Proceeds of sale of United States obligations as permitted under 31 U.S.C. § 771; and
      5. Bankruptcy funds deposited under the provisions of 11 U.S.C. § 345;
   2. May deposit securities for the purpose of securing sureties on surety bonds furnished to secure deposits listed in subdivision 1, or may, in lieu of depositing such securities to secure deposits pursuant to subdivision 1 b, by its board of directors, adopt a resolution before such public funds are deposited therein, to the effect that, in the event of the insolvency or failure of such bank, such public funds thereafter deposited therein shall, in the distribution of the assets of such bank, be paid in full before any other depositors shall be paid deposits thereafter made therein. The adoption of such resolution shall be deemed to constitute an obligation binding on such bank;
   3. Is authorized to pledge its assets as security for amounts of borrowed money which shall not, without the approval of the Commission given in advance in writing, exceed in the aggregate the amount of the capital, surplus, and undivided profits of such bank actually paid in or earned and remaining undiminished by losses or otherwise. The amount of assets pledged for the security of such a loan shall not, without such approval, exceed 150 percent of the amount borrowed. No loan in excess of the amount so permitted made to any such bank shall be invalid or illegal as to the lender, even though made without the consent of the Commission. Rediscounting with or without guarantee or endorsement of notes, drafts, bills of exchange, or loans is hereby authorized and shall not be limited by the terms of this section, and shall not be considered as borrowed money within the meaning of this section;
   4. Is authorized to borrow from a Federal Reserve Bank or a Federal Home Loan Bank and to rediscount with and sell to a Federal Reserve Bank or a Federal Home Loan Bank any and all notes, drafts, bills of exchange, acceptances, and other securities, and to give security for all money so borrowed and for all liabilities incurred by the discount of such notes, drafts, bills of exchange and other securities without restriction in like manner and to the same extent as national banks may lawfully do under the acts of Congress and regulations of the Board of Governors of the Federal Reserve System and the Federal Housing Finance Board; and
   5. Is authorized to pledge its assets in connection with qualified financial contracts, which transactions shall be governed by this subdivision and not subdivision 3. The amount of assets pledged for obligations under such contracts shall not exceed 150 percent of the amount of the obligations, without the consent of the Commission, and the qualified financial contract shall be in writing and approved by the board of directors of such bank or an appropriate committee, which approval shall be reflected in the minutes of such board or committee. At the time any qualified financial contracts consisting of retail repurchase agreements are sold by a state bank, the market value of the underlying security must be at least equal to the amount of the aggregate purchase price paid by the purchasers of the retail repurchase agreements. As used in this subdivision, “qualified financial contract” means a qualified financial contract as defined in 12 U.S.C. § 1821(e)(8)(D)(i), as the same may be amended, and any contract or transaction that the Commissioner determines to be a qualified financial contract for purposes of this section.

History. Code 1950, §§ 6-64, 6-65, 6-66; 1966, c. 584, §§ 6.1-78, 6.1-79, 6.1-80; 1974, c. 665; 1982, cc. 112, 411; 1989, c. 376; 1993, c. 182; 1994, c. 7; 1996, c. 306; 2010, c. 794; 2013, c. 205.

The 2013 amendments.

The 2013 amendment by c. 205, in subdivision B 1 b, substituted “any other state where the bank has a branch office, or any agency or political subdivision thereof” for “its agencies, and its political subdivisions”; in subdivision B 1 e, substituted “§ 345” for “§ 15345”; and in subdivision B 2, substituted “pursuant to subdivision 1 b” for “of political subdivisions of the Commonwealth.”

§ 6.2-891. Perfection of certain security interests.

When securities are sold by a bank subject to an obligation of repurchase, any security interest or interest of ownership therein may be perfected:

1. As specified by Title 8.8A or Title 8.9A;
2. By designation to the person holding physical custody thereof, which shall include a person keeping the master records, in case of securities identified by book entry only, that certain securities identified by serial number or dollar amount are held for the benefit of third parties other than the bank, who may, but need not, be identified by name; or
3. By physical separation on the premises of the bank in a separate drawer, compartment, or other facility. The bank may, from time to time, instruct any third party holding such securities that the previously identified securities or an amount of such securities previously identified as pledged or belonging to third parties have been released from such pledge by payment of all or part of the amount due, or have been repurchased. The records of the bank shall identify the persons who are pledgees or owners of such securities. Book-entry securities held in a bank’s customer-safekeeping account, used for the same purpose, at the Federal Reserve Bank, notwithstanding that other customer securities are held in the same account, shall be deemed in compliance with subdivision 2, provided such securities are identified in the bank’s records as required by this section.

History. 1982, c. 429, § 6.1-81; 1983, c. 250; 1986, c. 320; 2010, c. 794.

§ 6.2-892. Federal deposit insurance a credit towards certain required bonds.

If a bank is required by the laws of the Commonwealth to furnish or deposit a surety bond or securities as security for the payment of any funds deposited in the bank, other than funds received or held in the trust department of the bank awaiting investment or distribution, the amount of the penalty of such bond or the amount of such securities shall be as required by law, less the amount of such deposit that, to the satisfaction of the body, officer, or other person responsible for seeing that a surety bond or amount of securities is furnished as security for such deposit, is insured under the provisions of § 12-b of the Federal Reserve Act, as amended, or any amendments thereto.

History. Code 1950, § 6-70; 1966, c. 584, § 6.1-83; 2010, c. 794.

§ 6.2-893. Payment of balance of deceased person or person under disability.

Any bank may pay any balance on deposit to the credit of any deceased person or of any person under disability, to the personal representative, curator, conservator, or committee of such person upon a letter of qualification as such personal representative, curator, conservator or committee, issued by an appropriate court. The letter shall be sufficient authority for such transfer. Any such bank making such transfer shall no longer be liable for such deposit to any person. The presentation of a duly certified letter of qualification as personal representative, curator, conservator, or committee shall be conclusive proof of the jurisdiction of the court issuing the same. Payment to a fiduciary qualified under the law of a state other than the Commonwealth shall be in accordance with Article 2 (§ 64.2-1426 et seq.) of Chapter 14 of Title 64.2 and § 64.2-609 .

History. Code 1950, § 6-53; 1966, c. 584, § 6.1-70; 1983, c. 487; 1997, c. 801; 2010, c. 794.

Editor’s note.

At the direction of the Virginia Code Commission, the reference to “Chapter 5 (§ 26-59 et seq.) of Title 26 and § 64.1-130” was changed to “Article 2 (§ 64.2-1426 et seq.) of Chapter 14 of Title 64.2 and § 64.2-609 ” to conform to the recodification of Title 26 by Acts 2012, c. 614, effective October 1, 2012.

Research References.

Virginia Forms (Matthew Bender). No. 15-401 Checklist for Probate and Administration; No. 15-441 Certificate/Letter of Qualification; No. 15-451 Affidavit Under Virginia Small Estate Act.

§ 6.2-894. Deposits in and withdrawals from accounts of convicts.

1. Notwithstanding the provisions of Chapter 11 (§ 53.1-221 et seq.) of Title 53.1, a person convicted of a felony and sentenced to confinement in a state correctional institution for one year or longer, with the written consent of the Director of the Department of Corrections, may have a bank account, free from control of all persons except the Director of the Department of Corrections and a committee appointed pursuant to the provisions of § 53.1-221 . A deposit made in a bank account by a convict shall be held for the exclusive right and benefit of the convict. The check, order, or receipt of the convict shall be a complete and sufficient release and discharge for any payments made from the deposit in the bank, until the bank is notified in writing by a duly qualified committee or the Director of the Department of Corrections not to permit further withdrawals from that account.
2. Upon receipt of such written notice or commencing on the banking day following the date of receipt of such written notice, the bank shall not permit further withdrawal, except with the consent of the committee or the Director of the Department of Corrections. A bank may further accept, pay or collect items on account for proceeds of collection of a bank account of a convict, despite his conviction or confinement or the bank’s knowledge thereof, until it receives written directions to the contrary from the committee of such convict or the Director of the Department of Corrections.

History. 1982, c. 593, § 6.1-70.1; 2010, c. 794.

§ 6.2-895. Repealed by Acts 2010, c. 269, cl. 2.

Editor’s note.

Acts 2010, c. 269 repealed former § 6.1-71, from which § 6.2-895 as enacted by Acts 2010, c. 794, was derived. Pursuant to § 30-152 and Acts 2010, c. 794, cl. 4, the 2010 repeal by c. 269 has been given effect in this section.

Former § 6.1-71, relating to payment of small balance to distributees or other persons, was derived from Code 1950, § 6-54; 1956, c. 423; 1962, c. 173; 1966, c. 584; 1968, c. 379; 1972, c. 191; 1976, c. 228; 1980, c. 462; 1986, c. 334; 1994, c. 7; 1997, c. 278; 2002, cc. 187, 220, 227.

§ 6.2-896. Deposits of minors.

A bank may establish a deposit account for a minor as the sole and absolute owner of such account. The bank may receive deposits by or for such minor, honor any withdrawal request of the minor, and act in any other manner with respect to such account on the minor’s order. Any payment or delivery of funds from such account to the minor, or the payment of a check or other written order for withdrawal of funds signed by such minor owner, shall be a valid and sufficient release and discharge of such bank for any payment or delivery so made. The parent or guardian of such minor shall not in his capacity as parent or guardian have the power to withdraw or transfer funds in any such account unless the minor has given written notice to the bank to accept the signature of such parent or guardian.

History. Code 1950, § 6-56; 1966, c. 584, § 6.1-74; 2009, c. 197; 2010, c. 794.

§ 6.2-897. Bank need not inquire as to fiduciary funds deposited in fiduciary’s personal account.

If any fiduciary or agent makes a deposit in a bank to his personal credit of checks drawn by him upon an account in his own name as fiduciary, or of checks drawn by him upon an account in the name of his principal, if he is empowered to draw checks thereon, or of checks payable to his principal and endorsed by him as fiduciary, the bank receiving the deposit:

1. Shall not be required to inquire whether the fiduciary is committing thereby a breach of his obligation as fiduciary; and
2. Is authorized to pay the amount of the deposit or any part thereof upon the withdrawal by the fiduciary without being liable to the principal, unless the bank receives the deposit or pays the withdrawal with (i) actual knowledge that the fiduciary, in making such deposit or in making such withdrawal, is committing a breach of his obligation as fiduciary or (ii) knowledge of such facts that its action in receiving the deposit or paying the check amounts to bad faith.

History. Code 1950, § 6-57; 1966, c. 584, § 6.1-75; 2010, c. 794.

§ 6.2-898. Examinations.

The Commission, as often as it deems necessary in the public interest, shall examine or cause to be examined each bank incorporated under the laws of, and doing business in, the Commonwealth. Such examination shall be conducted at least once in every three-year period.

History. Code 1950, § 6-106; 1966, c. 584, § 6.1-84; 1976, c. 658; 1996, c. 80; 2010, c. 794.

§ 6.2-899. Examination of affiliates.

1. As used in this section, “affiliate” of any bank means any entity (i) of which such bank, directly or indirectly, owns or controls either a majority of the voting shares or more than 50 percent of the number of shares voted for the election of its directors, trustees, or other persons exercising similar functions at the preceding election, or controls in any manner the election of a majority of its directors, trustees, or other persons exercising similar functions, (ii) of which control is held, directly or indirectly, through stock ownership or in any other manner, by the shareholders of such bank who own or control either a majority of the shares of such bank or more than 50 percent of the number of shares voted for the election of directors of such bank at the preceding election, or by trustees for the benefit of the shareholders of any such bank, or (iii) of which a majority of the directors, trustees, or other persons exercising similar functions are directors of such bank.
2. The Commission, in connection with the examination of any bank, may make or cause to be made such examination of the affiliates of the bank as shall be necessary to ascertain the financial condition of the bank and to disclose fully the relations between the bank and its affiliates and the effect of such relations upon the affairs of the bank.

History. Code 1950, § 6-107; 1966, c. 584, § 6.1-85; 2010, c. 794.

§ 6.2-900. Special examinations.

The Commission, when (i) written application made to it by the board of directors or by the stockholders representing two-fifths of the total outstanding capital stock of any bank incorporated under the laws of, and doing business in, the Commonwealth or (ii) in the judgment of the Commission it may be necessary for the protection of the public or of persons depositing or dealing with such bank, shall make or cause to be made a special examination of the bank. All expenses incident to such special examination may be charged to the bank so examined and shall be paid by the bank so charged.

History. Code 1950, § 6-108; 1966, c. 584, § 6.1-86; 1976, c. 658; 2010, c. 794.

§ 6.2-901. Assistance in making examinations.

1. Upon the making of any examination under the provisions of § 6.2-898 , 6.2-899 , or 6.2-900 , the officers, directors and employees of the bank being examined or the affiliate of which is being examined, upon the demand of the person or officer designated to make such examination shall:
   1. Give to such examiner full access to all the money, books, papers, notes, bills, and other evidences of debts due to the bank;
   2. Disclose fully and accurately all indebtedness and liability thereof; and
   3. Furnish all information that the examiner may deem necessary to a full investigation into the affairs of such bank.
2. The examiner shall have the right to examine, under oath, any and all of the directors, officers, clerks, and employees in any manner connected with the operation of any bank touching any matter or thing pertaining to the examination, and for that purpose shall have authority to administer oaths to them.
3. When any bank shall utilize an independent data processing service, the operations of such independent data processing firm and its records pertaining to any bank being examined shall be open to inspection by examiners. Access to such operations and information shall be a prerequisite to the use of such independent data processing services by any bank regulated hereunder.
4. The Commission may impose a civil penalty of not less than $25 but not exceeding $100 per day for each day of noncompliance upon any officer of any bank who it determines, in proceedings commenced in accordance with the Commission’s Rules, has refused to give any examiner the information, or refuse to be sworn, as required by this section.

History. Code 1950, §§ 6-109, 6-128; 1966, c. 584, §§ 6.1-87, 6.1-114; 1974, c. 665; 1976, c. 658; 1988, c. 555; 1997, c. 142; 2010, c. 794.

§ 6.2-902. Notice of examination.

No prior or advance notice of any examination shall be given any bank or any of its directors, officers, or employees unless the Bureau determines that notice will facilitate and not diminish the effectiveness of an examination.

History. Code 1950, § 6-110; 1966, c. 584, § 6.1-88; 1976, c. 658; 1978, c. 14; 2010, c. 794.

§ 6.2-903. Revaluation of assets after examination.

If it appears to the Commission, from an examination of any bank, that any of the bank’s assets are valued by the bank at an amount in excess of their fair and reasonable value, the Commission, after the bank has been given an opportunity for a hearing before the Commission, may require the bank to revalue the assets on the basis of their fair and reasonable value.

History. Code 1950, § 6-111; 1966, c. 584, § 6.1-89; 2010, c. 794.

§ 6.2-904. Report of examination; inspection and dissemination to directors.

1. When any bank is examined under the provisions of this article, a copy of the report of the examination, at any time after its completion, shall be open for inspection by the officers and directors of the bank. No other copies of the report of examination shall be made except as necessary for the inspection. The copies of the report made for officers and directors of the bank shall not be removed from the premises of the bank. The other such copies shall be destroyed after the inspection has been completed. The original examination report shall be retained in the records of the Bureau.
2. Upon resolution of the board of directors of the bank, the report, at any time during the established period, may be inspected in the bank by the officers and directors of any other bank or by any other person designated in the resolution.

History. Code 1950, § 6-112; 1966, c. 584, § 6.1-90; 1976, c. 658; 1992, c. 224; 2010, c. 794.

§ 6.2-905. Communications to board or executive committee.

Each official communication directed by the Commission or any state bank examiner to any bank, or to any officer thereof, relating to an examination or investigation made or caused to be made by the Commission, or containing suggestions or recommendations as to the conduct of the bank, shall, if required by the Commission or examiner submitting the communication, be submitted by the officer or director of the bank receiving it, to the executive committee or board of directors of the bank. The communication shall be duly noted in the minutes of the meeting of the board or executive committee.

History. Code 1950, § 6-119; 1966, c. 584, § 6.1-91; 2010, c. 794.

§ 6.2-906. Disclosure of irregularities; Commission’s powers.

1. If upon the examination of any bank, the Commission ascertains that the banking laws of the Commonwealth are not being fully observed, that any irregularities are being practiced, or that the bank’s capital has been or is in danger of being impaired, the Commission shall give immediate notice thereof to the officers and directors of the bank. In addition, if it is deemed necessary in order to conserve the assets of such bank or to protect the interests of depositors and creditors thereof, the Commission may do any one or more of the following:
   1. Temporarily suspend the right of such bank to receive any further deposits;
   2. Temporarily close such bank, for a period not exceeding 60 days, which period may be further extended for one or more 60-day periods as the Commission may deem necessary;
   3. Require the officers and directors of the bank to liquidate its outstanding loans insofar as shall be required;
   4. Require that any impairment of the capital stock be made good;
   5. Require that any irregularities be promptly corrected;
   6. Require the bank to make reports, daily or at such other times as may be required to the Commission, as to the results achieved in carrying out the orders of the Commission; and
   7. Without examination, close, for such period as the Commission may deem necessary, any bank facing an emergency due to withdrawal of deposits or otherwise, or, without closing such bank, grant to it the right to suspend or limit the withdrawal of deposits, for such period as the Commission may determine.
2. If any bank fails or refuses to comply with any such order of the Commission, or if the Commission shall determine that a receiver for any such bank should be appointed, the Commission may apply for the appointment of a receiver to take charge of the business affairs and assets of the bank and to wind up its affairs as provided in this chapter.

History. Code 1950, § 6-113; 1966, c. 584, § 6.1-92; 1976, c. 658; 2010, c. 794.

§ 6.2-907. Reports of condition and other statements.

1. Every bank shall make to the Commission statements of its financial condition at such times as the Commission may require. Such statements shall be (i) made in accordance with forms prescribed by the Commission, (ii) certified under oath by the president or cashier of the bank, or, if there is no cashier, by the treasurer, and (iii) attested by at least three of its directors.
2. The Commission shall require all banks doing business in the Commonwealth to make the statements described in subsection A, and at the time prescribed. The Commission shall prepare such forms as may be necessary to carry out the provisions of this section.
3. Whenever the Commission calls for statements, it shall forward to each such bank two forms, one of which, after being properly filled out and certified as required by subsection A, shall be returned to the Commission within a time prescribed by the Commission. The other form, filled out in like manner, shall be filed with the records of the bank. The Commission shall allow banks to submit such statements electronically. Any bank that submits such statements electronically shall maintain a copy of the statement with the required certified signatures affixed.
4. The Commission may require any bank to prepare and submit such other reports and material as it deems necessary to protect and promote the public interest.
5. The Commission may impose a civil penalty of not less than $100 but not exceeding $1,000 per day for each day of noncompliance upon any bank that it determines, in proceedings commenced in accordance with the Commission’s Rules, has failed to comply with any of the provisions of this section, for a period of longer than 30 days, after being called upon by the Commission for a statement, or to do such other act as is herein provided.

History. Code 1950, §§ 6-105, 6-128; 1966, c. 584, §§ 6.1-93, 6.1-114; 1974, c. 665; 1976, c. 658; 1977, c. 257; 1988, c. 555; 1995, c. 561; 1997, cc. 142, 407; 2010, c. 794.

§ 6.2-908. Fees for supervision and regulation and for certain examinations and investigations.

1. For the purpose of defraying the expenses of supervision and regulation of banks, the Commission shall assess against each bank an annual fee. A bank’s annual fee shall be calculated according to a schedule set by the Commission. The schedule shall bear a reasonable relationship to the assets of various individual banks and to other factors relating to their respective costs for supervision, regulation, and examination.
2. The Commission shall also charge additional fees:
   1. Of $330 per day per examiner during examinations for the supervision and regulation of trust departments;
   2. Of $10,000 for investigating an application for a certificate of authority pursuant to § 6.2-816 ;
   3. Of $1,800 for investigating an application for authority to establish a branch pursuant to § 6.2-831 or a facility pursuant to § 6.2-835 ;
   4. Of $7,500 for investigating an application of merger. The Commission shall not be entitled to any further fees for investigating any application to retain existing branches of the applying banks as branches of the merged bank;
   5. Of $1,000 for investigating an application for authority to change the location of an existing bank or branch bank; and
   6. Of $2,000 for investigating an application for authority to exercise trust powers.
3. Notwithstanding the designation of the fees set forth in subdivisions B 1 through B 6, the Commission may reduce by regulation or order any fee, if the Commission concludes that there is a reasonable basis for doing so and that the reduction of the fee will not be detrimental to the effectiveness of the Bureau.

History. Code 1950, § 6-122; 1956, c. 176; 1966, c. 584, § 6.1-94; 1972, c. 195; 1973, c. 401; 1974, c. 184; 1976, cc. 554, 658; 1981, c. 520; 1982, c. 455; 1987, c. 172; 1992, c. 283; 1997, c. 141; 1998, c. 19; 2010, c. 794.

§ 6.2-909. Assessment and payment of fees; lien.

1. Except as provided in subsections B and C, all fees and charges assessed pursuant to § 6.2-908 shall be assessed against each bank by the Commission on or before July 1 of each year and shall be paid into the state treasury on or before the following July 31. The Commission shall mail the assessment to each bank on or before July 1 of each year.
2. Fees for investigating applications for a certificate of authority shall be paid before the investigation is made.
3. Fees for the examination of trust departments shall be paid into the state treasury within 30 days after the Commission notifies the bank of the amount of the fee.
4. All fees so assessed shall be a lien on the assets of the bank, and if not paid when due may be recovered in any court of the county or city in which such bank or institution is located having original jurisdiction of civil cases on motion of and in the name of the Commission.

History. Code 1950, § 6-123; 1956, c. 176; 1966, c. 584, § 6.1-95; 1984, c. 343; 2010, c. 794.

§ 6.2-910. Reduction of fees.

If the Commission is of the opinion that the amounts of the several charges and fees set forth in § 6.2-908 will produce more revenue than is required to cover the costs and expenses to be paid from such charges and fees, the Commission, in its discretion, may reduce on a pro rata basis the amount of such charges and fees.

History. Code 1950, § 6-124; 1966, c. 584, § 6.1-96; 2010, c. 794.

§ 6.2-911. Examination of national banks.

Every national bank that is now or may be designated as a state depository, so long as it acts as such, shall be subject to the examination provided for state banks, when, in the opinion of the State Treasurer, such examination is necessary for the protection of the Commonwealth. However, no fees or charges shall be imposed upon national banks for such examinations.

History. Code 1950, § 6-127; 1966, c. 584, § 6.1-99; 2010, c. 794.

§ 6.2-912. Definition.

As used in this article, “insolvent” or “insolvency” means incapable of meeting the current demands of creditors or having liabilities which, in total, exceed the book value of assets.

History. Code 1950, § 6-114; 1966, c. 584, § 6.1-100; 1983, c. 507; 2010, c. 794; 2018, c. 257.

Cross references.

As to FDIC receiverships, see Article 14 (§ 6.2-912 et seq.) of this chapter.

The 2018 amendments.

The 2018 amendment by c. 257 inserted “or ‘insolvency’.”

§ 6.2-913. Closing bank; appointment of receiver.

1. If (i) any bank is approaching insolvency and no reasonable prospect for rehabilitation of the bank exists, (ii) the Commission deems it necessary with respect to any bank for the protection of the public interest, or (iii) any bank has a ratio of tangible equity to total assets that is equal to or less than two percent, the Commission (a) may close immediately the doors of the bank without any notice and (b) by its duly appointed agent shall take charge of the books, assets, and affairs of the bank until the appointment of a receiver as provided by law.
2. If a bank has been closed by the Commission, the Commission may proceed (i) to have a receiver for the closed bank appointed in accordance with § 6.2-916 or (ii) as provided in Article 14 (§ 6.2-925 et seq.) of this chapter.

History. Code 1950, § 6-114; 1966, c. 584, § 6.1-100; 1983, c. 507; 2010, c. 794; 2018, c. 257.

Cross references.

As to bank franchise tax for banks in liquidation, see § 58.1-1215 .

The 2018 amendments.

The 2018 amendment by c. 257 in subsection A, rewrote clauses (i) and (ii), which formerly read “(i) any bank, upon its examination by the Commission, is found to be insolvent or (ii) the Commission deems it necessary with respect to any bank for the protection of the public interests,” and added clause (iii).

§ 6.2-914. Merger or transfer of assets of insolvent bank.

1. If the Commission finds that a bank is insolvent, that its merger into another bank is desirable for the protection of its depositors, and that an emergency exists, and, if the board of directors of such insolvent bank approves a plan of merger of such bank into another bank, (i) compliance with the requirements of § 13.1-718 shall be dispensed with as to such insolvent bank and (ii) the approval by the Commission of such plan of merger shall be the equivalent of approval by the holders of more than two-thirds of the outstanding shares of such insolvent bank for all purposes of Article 12 (§ 13.1-715.1 et seq.) of Chapter 9 of Title 13.1.
2. If the Commission finds that a bank is insolvent, that the acquisition of its assets by another bank is in the best interests of its depositors, and that an emergency exists, the Commission, with the consent of the boards of directors of both banks as to the terms and conditions of such transfer, including the assumption of all or certain liabilities, may enter an order transferring some or all of the assets of such insolvent bank to such other bank, in which event (i) compliance with the provisions of §§ 13.1-723 and 13.1-724 shall not be required and (ii) §§ 13.1-730 through 13.1-741 shall not be applicable to such transfer.
3. In the case either of a merger as provided in subsection A or of a sale of assets as provided in subsection B, the Commission shall provide that prompt notice of its finding of insolvency and of the merger or sale of assets be sent to the stockholders of record of the insolvent bank for the purpose of providing such shareholders an opportunity to challenge the finding that the bank is insolvent. The relevant books and records of such insolvent bank shall remain intact and be made available to such shareholders for a period of 30 days after such notice is sent. The Commission’s finding of insolvency shall become final if a hearing before the Commission is not requested by any such shareholder within such 30-day period.
4. If, after such hearing provided in subsection C, the Commission finds that such bank was solvent, it shall rescind its order entered pursuant to subsection A or B and the merger or transfer of assets shall be rescinded. However, if after such hearing the Commission finds that such bank was insolvent, its order shall be final.

History. 1975, c. 44, § 6.1-100.1; 1983, c. 507; 2005, c. 765; 2010, c. 794.

§ 6.2-915. Protection of state deposits upon insolvency.

If, upon the examination of any bank that is designated as a state depository, it appears to the Commission that the bank is insolvent or is unable to meet its obligations and the legal demands upon it in the ordinary course of its business, the Commission shall forthwith notify the State Treasurer, who shall discontinue further deposits therein of state funds and take such action as may be necessary to protect the deposits of the Commonwealth therein.

History. Code 1950, § 6-115; 1966, c. 584, § 6.1-101; 2010, c. 794.

§ 6.2-916. Appointment of receiver.

When, in the judgment of the Commission, it is necessary for the protection of the interests of the Commonwealth or of the depositors and creditors of any bank doing business in the Commonwealth, or of the creditors of any trust company doing business in the Commonwealth, the Commission shall apply to any court in the Commonwealth having jurisdiction to appoint receivers for the appointment of a receiver to take charge of the business affairs and assets, and to wind up the affairs and business, of any such bank or trust company (i) failing to comply with the requirements of the Commission or (ii) found upon examination to be insolvent or unable to meet its obligations and the legal demands made upon it in the ordinary course and conduct of its business.

History. Code 1950, § 6-116; 1966, c. 584, § 6.1-102; 2010, c. 794.

Cross references.

As to bank franchise tax for banks in liquidation, see § 58.1-1215 .

§ 6.2-917. Execution of powers of sale by receivers.

1. When any receiver is appointed under the provisions of this article for any bank authorized to do a trust business or for any trust company, the receiver may be empowered by the court by which he is appointed:
   1. To act for and on behalf of such bank or trust company in the execution of any power of sale conferred upon such bank or trust company by any instrument;
   2. When such sale is made, to execute, acknowledge and deliver for and on behalf of such bank or trust company such deed as may be proper under the provisions of such instrument for the conveyance of title to the property conveyed therein; and
   3. Upon payment of the amount secured under any such instrument, to execute, acknowledge, and deliver for and on behalf of such bank or trust company a proper release deed for the property conveyed therein.
2. Any such sale made by such receiver and any such deed or release executed by him, when so authorized and empowered, shall be as effective and as binding as if the same had been made or executed by such bank or trust company before the appointment of such receiver.
3. All sales that have been made by any such receivers within the Commonwealth, and all such deeds and release deeds that have been executed by any such receivers within the Commonwealth under the authority of the court by which they were appointed, since June 19, 1936, shall be as effective and as binding as if the same had been made by such bank or trust company before the appointment of such receiver.

History. Code 1950, § 6-117; 1966, c. 584, § 6.1-103; 2010, c. 794.

§ 6.2-918. Rights and powers of receivers generally.

Any receiver appointed under the provisions of this article shall be and become assignee of the assets and property of the bank or trust company of which he has been appointed receiver, with power to prosecute and defend, in the name of the bank or trust company or in his name as such receiver or otherwise, in the Commonwealth or elsewhere, all such suits as may be necessary to wind up the affairs and business of such bank or trust company, and to appoint such agents or attorneys for any such purpose as the court may approve.

History. Code 1950, § 6-118; 1966, c. 584, § 6.1-104; 2010, c. 794.

§ 6.2-919. Interest on deposits; distribution of surplus remaining after payment of depositors.

When an appropriate court, on a proper application therefor, shall appoint a receiver for any bank or trust company, the court may prescribe and direct, by order or decree entered of record, that the rate of interest to be paid by the receiver upon the claims of depositors of the bank or trust company shall not exceed the current or contracted rate of interest paid by the state bank or trust company on deposits. In addition, the court may fix the interest to be so paid at such lower rate as the court may deem proper under all the circumstances of the case. In such event, the court shall also direct that any surplus remaining after the payment in full of the depositors, together with the interest thereon as so prescribed and fixed, shall be distributed pro rata among the shareholders of the bank or trust company as of the date of the appointment of the receiver.

History. Code 1950, § 6-69; 1966, c. 584, § 6.1-105; 2010, c. 794.

§ 6.2-920. Proceedings to bar certain claims against banks in liquidation.

If, in a suit having as its object the administration or liquidation of the assets of an insolvent bank or trust company operating in the Commonwealth, the court orders the payment to creditors of dividends on, or other payments of, claims as therein ascertained and established, and (i) the receiver or other person charged with making the ordered payment to creditors is unable to make the payment by reason of his inability to ascertain the address of any creditor, the failure of any creditor to apply to such disbursing official for payment when so directed by the order of the court, or any other similar reason; or (ii) a trustee engaged in the voluntary liquidation of the assets of an insolvent bank or trust company operating in the Commonwealth, by petition to an appropriate court in the locality wherein the principal office of the insolvent bank or trust company is located, alleges and shows to the satisfaction of the court his inability to make payment to creditors for any of the reasons specified in clause (i), the court, in its discretion, may enter an order directing its receiver or other person charged with the duty of making such payment, or the trustee, to publish at least twice in a newspaper having a general circulation in the locality where the suit or petition is pending a list of creditors to whom dividends or payments are due and unpaid and the amount thereof. The publication shall include a notice that any creditor therein named who fails to apply to the disbursing official for payment of the amount due him within six months from the date of the last publication of such notice will be barred from his right thereafter to receive payment of amounts then due and from participation in any future dividends or payments that may thereafter be ordered.

History. Code 1950, § 6-58; 1966, c. 584, § 6.1-106; 2010, c. 794.

§ 6.2-921. When publication of list of creditors unnecessary.

If any bank or trust company under the circumstances set forth in clause (i) or (ii) of § 6.2-920 is in liquidation for a period of more than 10 years, and more than five years have elapsed since the date of the entry of the last court order directing the payment to creditors of dividends on or other payments of claims as therein ascertained and established, then it shall be unnecessary to publish a list of creditors to whom dividends or payments are due and unpaid and the amount thereof. In such event, it shall only be necessary to publish a notice stating (i) the total amount of dividends ordered paid and unclaimed; (ii) that a list of such creditors may be seen at the office of the receiver, liquidating agent, or other disbursing officer; and (iii) that any creditor who fails to apply to such disbursing official for payment of the amount due him within six months from the date of the last publication of such notice shall be barred from his right thereafter to receive payment of amounts then due and from participation in any future dividends or payments that may thereafter be ordered.

History. Code 1950, § 6-59; 1966, c. 584, § 6.1-107; 2010, c. 794.

§ 6.2-922. When publication once in two newspapers sufficient.

If there are two or more newspapers having general circulation in the locality where a suit or petition described in § 6.2-920 is pending, the court, in its discretion, in lieu of the publication provided for therein or in § 6.2-921 , may direct that the list of creditors and the notice, be published once in at least two of the newspapers having general circulation in the locality.

History. Code 1950, § 6-60; 1966, c. 584, § 6.1-108; 2010, c. 794.

§ 6.2-923. When claims barred.

After the lapse of six months from the date of the last publication of the notice prescribed by § 6.2-920 , 6.2-921 , or 6.2-922 , the court shall enter an order barring the claims of all creditors who have not theretofore applied for payment of their claims. Thereafter, (i) no creditor who failed to apply for payment within such period shall bring or maintain any action, suit, or proceeding and (ii) no process shall issue, for the enforcement of any claim to dividends or payments previously ordered paid to such creditor. In addition, no such creditor shall participate in future dividends or payments thereafter ordered in the suit or petition to be paid. The court in which any such suit or petition is pending may, in its discretion, before final distribution and for good cause shown, reinstate any claim barred pursuant to the foregoing provisions of this section.

History. Code 1950, § 6-61; 1966, c. 584, § 6.1-109; 2010, c. 794.

§ 6.2-924. Power of receivers to contract for loans and make investments.

1. Any court in the Commonwealth that has jurisdiction to appoint receivers, in its discretion, may authorize any receiver appointed by such court for any bank or trust company, pursuant to the provisions of this article:
   1. To apply and contract for a loan from any corporation or agency that is (i) organized or provided for by, or pursuant to, federal law and (ii) authorized, among other purposes, to make loans upon the application of the receiver or liquidating agent of any bank that is closed, or in process of liquidation, secured by the assets of any such bank, and if such loan is for the purpose of aiding in the reorganization or liquidation of any such bank, secured by the payment of liquidating dividends from the proceeds thereof; and
   2. To secure any loan described in subdivision 1 by the pledge, hypothecation or mortgage of any or all of the assets of the bank or trust company, or in such other manner as such court, in its discretion, may authorize.
2. Any such court, in its discretion, also may authorize any receiver so appointed by it to invest any funds in the hands of such receiver in bonds of the United States or of the Commonwealth.

History. Code 1950, § 6-81; 1966, c. 584, § 6.1-110; 2010, c. 794.

§ 6.2-925. Definitions.

As used in this article, unless the context requires otherwise:

“Bank” means any bank or trust company organized under the laws of the Commonwealth.

“FDIC” or “Corporation” means the Federal Deposit Insurance Corporation. The term includes any successor to the Corporation or any other agency or instrumentality of the United States that undertakes to discharge the purposes of the Corporation.

“Receivership court” means the circuit court that appoints a receiver for a bank pursuant to this article.

History. 1983, c. 507, § 6.1-110.1; 2010, c. 794.

§ 6.2-926. Appointment of FDIC as receiver.

In any case where the Commission has closed and taken possession of a bank, the deposits in which are insured by the FDIC, the Commission may apply to the Circuit Court of the City of Richmond for the appointment of the FDIC as receiver. The court, if it finds that the FDIC is willing to accept the appointment, shall appoint the FDIC as receiver. Upon acceptance of the court’s appointment of the FDIC as receiver, the FDIC shall not be required to post bond.

History. 1983, c. 507, § 6.1-110.2; 2010, c. 794; 2018, c. 257.

The 2018 amendments.

The 2018 amendment by c. 257 substituted “the Circuit Court of the City of Richmond” for “any court in the Commonwealth having jurisdiction to appoint receivers” in the first sentence and “the FDIC is willing to accept the appointment, shall appoint the FDIC as receiver” for “to do so will be in the public interest, may appoint the FDIC receiver” in the second sentence.

§ 6.2-927. Transfer of title to bank assets.

Upon the appointment of the FDIC as receiver, title to all assets of the bank shall vest in the FDIC without the execution of any instruments of conveyance, assignment, transfer, or endorsement.

History. 1983, c. 507, § 6.1-110.3; 2010, c. 794.

§ 6.2-928. Posting of notice; effect of posting notice.

Immediately upon closing any bank with the intention of proceeding under the provisions of this article, the Commissioner shall post an appropriate notice of closing at the main entrance of the bank. Upon the posting of said notice, (i) no judgment lien, attachment lien, or voluntary lien shall thereafter attach to any asset of the bank and (ii) no director, officer, or agent of the bank thereafter shall have authority to act on behalf of the bank or to convey, transfer, assign, pledge, mortgage, or encumber any asset thereof.

History. 1983, c. 507, § 6.1-110.4; 2010, c. 794.

§ 6.2-929. Powers of receiver.

The FDIC as receiver shall have the following powers:

1. To take possession of all books, records, and assets of the bank;
2. To collect all debts, claims, and judgments belonging to the bank, and to do such other acts as are necessary to preserve or liquidate its assets;
3. To execute in the name of the bank any instrument necessary or proper to effectuate its powers as receiver or perform its duties as such;
4. To initiate, pursue, and defend litigation involving any right, claim, interest, or liability of the bank;
5. To exercise any and all fiduciary functions of the bank as of the date of its appointment as receiver;
6. To borrow money as necessary in the liquidation of the bank, and to secure such borrowings by the pledge or mortgage of bank assets. The repayment of money borrowed under this subdivision and interest thereon shall be considered an expense of administration for purposes of § 6.2-933 ;
7. To abandon or convey title to any holder of a mortgage, security deed, security interest, or lien against property in which the bank has an interest, whenever the FDIC as receiver determines that to continue to claim such interest is burdensome and of no advantage to the bank, its depositors, creditors, or shareholders;
8. Subject to the approval of the receivership court, to (i) sell, lease, or exchange any and all real and personal property, (ii) compromise any debt, claim, or judgment due the bank, and (iii) discontinue any action or other proceeding pending therefor; and
9. Subject to the approval of the receivership court, to (i) pay off all mortgages, security deeds, security agreements, and liens upon any real or personal property belonging to the bank and (ii) purchase at judicial sale or sale authorized by court order any real or personal property in order to protect the bank’s equity therein.

History. 1983, c. 507, § 6.1-110.5; 2010, c. 794.

§ 6.2-930. Emergency sale of assets.

The FDIC as receiver, with ex parte approval of the receivership court, may sell all or any part of the closed bank’s assets. All or any part of such assets may be sold to the Federal Deposit Insurance Corporation in its capacity as a corporation. The FDIC as receiver may also borrow from the FDIC, in its corporate capacity, any amount necessary to facilitate the assumption of deposit liabilities by an existing bank or a newly chartered bank, and may assign any part or all of the assets of the closed bank as security for such loan.

History. 1983, c. 507, § 6.1-110.6; 2010, c. 794.

§ 6.2-931. Notice and proof of claim; notice of rejection of claim; petition for hearing.

All parties having claims against the closed bank shall present their claims, substantiated by legal proof, to the FDIC as receiver within 180 days after the closing of the bank. The FDIC as receiver shall cause notice of the claims procedure prescribed by this section to be published once a week for 12 consecutive weeks in a newspaper of general circulation in one or more localities as the receivership court may direct, and shall mail such notice to the last address of record of each person whose name appears as a creditor upon books of the bank. The receiver shall notify in writing any claimant whose claim has been rejected within 180 days following receipt of the claim. Any claimant whose claim has been rejected by the receiver may petition the receivership court for a hearing on his claim within 60 days of the date of notice his claim is rejected. Notice shall be deemed given when mailed.

History. 1983, c. 507, § 6.1-110.7; 2010, c. 794.

§ 6.2-932. Payment of claims filed after prescribed period.

Any claim filed after the 180-day claim period prescribed by § 6.2-931 , and subsequently accepted by the FDIC as receiver or allowed by the receivership court, shall be entitled to share in the distribution of assets only to the extent of the undistributed assets in the hands of the FDIC as receiver on the date such claim is accepted or allowed.

History. 1983, c. 507, § 6.1-110.8; 2010, c. 794.

§ 6.2-933. Distribution of assets.

1. All claims against the bank’s estate, proved to the satisfaction of the FDIC as receiver or approved by the receivership court, shall be paid in the following order:
   1. Administration expenses of the liquidation;
   2. Claims given priority under other provisions of state or federal law;
   3. Deposit obligations;
   4. Other general liabilities;
   5. Debt subordinated to the claims of depositors and general creditors; and
   6. Equity capital securities.
2. No interest on any claim shall be paid until all claims within the same class have received the full principal amount of claim.

History. 1983, c. 507, § 6.1-110.9; 2010, c. 794.

§ 6.2-934. Receivership procedures involving assets held by closed bank as fiduciary.

The FDIC as receiver, with the approval of the receivership court, has the authority to appoint a successor to all rights, obligations, assets, deposits, agreements, and trusts held by the closed bank as trustee, administrator, executor, guardian, agent, or in any other fiduciary or representative capacity. The successor’s duties and obligations commence upon appointment and are to the same extent binding upon the former bank as though the successor had originally assumed such duties and obligations. Specifically, the successor shall succeed to and be entitled to administer all trusteeships, administrations, executorships, guardianships, agencies, and all other fiduciary or representative proceedings to which the closed bank is named or appointed in wills, whenever probated, or to which it is appointed by any other instrument, court order, or by operation of law. Nothing in this section shall be construed to impair any right of the grantor or beneficiary of trust assets to secure the appointment of a substitute trustee or manager. Within 30 days after appointment, the successor shall (i) give written notice, insofar as practicable, to all interested parties named in the books and records of the bank or in trust documents held by it that such successor has been appointed in accordance with state law and (ii) cause the fact of its appointment to be recorded in appropriate courts of record.

History. 1983, c. 507, § 6.1-110.10; 2010, c. 794.

§ 6.2-935. Termination of executory contracts and leases; liability; extension of statute of limitations.

Within 180 days of the date of the closing of the bank, the FDIC as receiver at its election may reject (i) any executory contract to which the closed bank is party without further liability to the closed bank or the receiver or (ii) any obligation of the bank as a lessee of real or personal property. The receiver’s election to reject a lease creates no claim (a) for rent other than rent accrued to the date of termination or (b) for actual damages, if any, for such termination, not to exceed the equivalent of six months’ payment. Notwithstanding any other law of the Commonwealth, the statute of limitations shall be extended for a period of six months on all causes of action which may accrue to the FDIC as receiver.

History. 1983, c. 507, § 6.1-110.11; 2010, c. 794.

§ 6.2-936. Subrogation to rights of bank depositors.

Whenever the FDIC pays, or makes available for payment, the insured deposit liabilities of a closed bank, the FDIC, whether or not it acts as receiver, shall be subrogated to all rights of depositors against the closed bank to the same extent as subrogation is provided for by the Federal Deposit Insurance Act (12 U.S.C. § 1811 et seq.) in the case of a national bank.

History. 1983, c. 507, § 6.1-110.12; 2010, c. 794.

§ 6.2-937. Destruction of records.

Subject to the approval of the receivership court, the closed bank’s records may be destroyed after the FDIC, as receiver, determines that there is no further need for them.

History. 1983, c. 507, § 6.1-110.13; 2010, c. 794.

§ 6.2-938. Engaging in banking business without authority; Commission may examine accounts of suspected person; penalty.

1. Every person who trades or deals as a bank, or carries on banking, without authority of law, and their officers and agents, is guilty of a Class 6 felony.
2. The Commission shall have authority to examine the accounts, books, and papers of any person who it has reason to suspect is doing a banking business, in order to ascertain whether such person has violated, or is violating, any provision of this title. The refusal to submit such accounts, books, and papers shall be prima facie evidence of such violation.

History. Code 1950, § 6-133; 1966, c. 584, § 6.1-111; 1992, c. 136; 1994, c. 7; 2010, c. 794.

Cross references.

As to punishment for Class 6 felonies, see § 18.2-10 .

§ 6.2-939. Unlawful use of terms indicating that business is bank; penalty.

1. A person not authorized to engage in the banking business in the Commonwealth by the provisions of this title or under the laws of the United States, shall not (i) use any office sign having thereon any name or other words indicating that any such office is the office of a bank; (ii) use or circulate any letterheads, billheads, blank notes, blank receipts, certificates, circulars, or any written or printed paper, having thereon any name or word indicating that such person is a bank; or (iii) use the word “bank,” “banking,” “banker,” or “trust,” or the equivalent thereof in any foreign language, or the plural thereof in connection with any business other than a banking business.
2. The foregoing prohibitions shall not apply to use by a bank holding company, as defined in § 6.2-800 , of the word “bank,” “banks,” “banking,” “banker,” “trust,” or the equivalent thereof in its name, or of a name similar to that of a subsidiary bank of such bank holding company.
3. The use of the above-mentioned words in the name of, or in connection with, any other business shall not be prohibited if the context or remaining words show clearly and definitely that the business is not a bank, and is not carrying on a banking business.
4. Any person violating the provisions of this section, either individually or as an interested party, is guilty of a Class 6 felony.

History. Code 1950, § 6-134; 1966, c. 584, § 6.1-112; 1972, c. 187; 1992, cc. 24, 136; 2000, c. 56; 2003, c. 592; 2010, c. 794.

Cross references.

As to requirements of business trust names, see § 13.1-1214 .

As to punishment for Class 6 felonies, see § 18.2-10 .

§ 6.2-940. Making derogatory statements affecting banks; penalty.

Any person who willfully and maliciously makes, circulates, or transmits to another any statement, rumor, or suggestion that is directly or by reference derogatory to the financial condition, or affects the solvency or financial standing of, any bank doing business in the Commonwealth, or who counsels, aids, procures, or induces another to start, transmit, or circulate any such statement or rumor, is guilty of a Class 1 misdemeanor.

History. Code 1950, § 6-132; 1966, c. 584, § 6.1-119; 1991, c. 710; 2010, c. 794.

Cross references.

As to punishment for Class 1 misdemeanors, see § 18.2-11 .

Michie’s Jurisprudence.

For related discussion, see 12A M.J. Libel and Slander, § 49.

§ 6.2-941. Use of bank name, logo, or symbol for marketing purposes; penalty.

1. As used in this section, “name, logo, or symbol, or any combination thereof, of a bank” includes any name, logo, or symbol, or any combination thereof, that is deceptively similar to the name, logo, or symbol, or any combination thereof of a bank.
2. Except as provided in subsection C, no person shall use the name, logo, or symbol, or any combination thereof, of a bank in marketing material provided to or solicitation of another person in a manner such that a reasonable person may believe that the marketing material or solicitation originated from or is endorsed by the bank or that the bank is responsible for the marketing material or solicitation.
3. This section shall not apply to (i) an affiliate or agent of the bank or (ii) a person who uses the name, logo, or symbol of a bank with the consent of the bank.
4. Any person violating the provisions of this section, either individually or as an interested party, is guilty of a Class 1 misdemeanor. This section shall not affect the availability of any remedies otherwise available to a bank.

History. 2005, c. 240, § 6.1-119.1; 2010, c. 794.

Cross references.

As to punishment for Class 1 misdemeanors, see § 18.2-11 .

As to remedies for use of name, logo or symbol of bank or trust company, etc., see § 59.1-92.22.

§ 6.2-942. False certification of checks; penalty.

Any officer, employee, agent, or director of a bank who (i) certifies a check drawn on such bank and willfully fails forthwith to charge the amount thereof against the account of the drawer thereof or (ii) willfully certifies a check drawn on such bank when the drawer of such check does not have on deposit with the bank the amount of money subject to the payment of such check, is guilty of a Class 1 misdemeanor.

History. Code 1950, § 6-136; 1966, c. 584, § 6.1-120; 2010, c. 794.

Cross references.

As to punishment for Class 1 misdemeanors, see § 18.2-11 .

§ 6.2-943. Offenses by officer, director, agent, or employee of bank; penalties.

1. Any officer, director, agent, or employee of any bank who embezzles, abstracts, or willfully misapplies any of the moneys, funds, or credits of, or in the possession or control of, the bank is guilty of larceny and subject to the penalties provided in § 18.2-95 or 18.2-96 .
2. Any officer, director, agent, or employee of any bank who (i) issues or puts forth any certificate of deposit, (ii) draws any order or bill of exchange, (iii) makes any acceptance, (iv) assigns any note, bond, draft, bill of exchange, mortgage, judgment, decree, or other instrument in writing, or (v) makes any false entry in any book, report, or statement of such bank, with intent in any case to injure or defraud the bank or any other individual or entity, or to deceive any officer of the bank or the Commission, or any agent or examiner authorized to examine the affairs of the bank, and any person, who, with the same intent, aids or abets any such officer, director, agent, or employee of such bank in any act described in clauses (i) through (v), is guilty of a Class 5 felony.
3. Any officer of a bank who knowingly makes a false statement of the condition of any bank is guilty of a Class 5 felony.

History. Code 1950, §§ 6-128, 6-138; 1966, c. 584, § 6.1-122; 1974, c. 665; 2010, c. 794.

Cross references.

As to punishment for Class 5 felonies, see § 18.2-10 .

§ 6.2-944. Officers, directors, agents, and employees violating or causing bank to violate laws; civil liability not affected.

Any officer, director, agent, or employee of any bank who knowingly violates or who knowingly causes any bank to violate any provision of this chapter, or knowingly participates or knowingly acquiesces in any such violation, unless other punishment is provided for the offense of such officer, agent, or employee, is guilty of a Class 1 misdemeanor. The provisions of this section shall not affect the civil liability of any such officer, director, agent, or employee.

History. Code 1950, § 6-139; 1966, c. 584, § 6.1-123; 1974, c. 665; 2010, c. 794.

Cross references.

As to punishment for Class 1 misdemeanors, see § 18.2-11 .

§ 6.2-945. Receiving deposit knowing bank to be insolvent; penalty.

1. Any officer, director. or employee of any bank, or broker, who takes and receives, or permits to be received, a deposit from any person with the actual knowledge that the bank or broker is at the time insolvent, is guilty of embezzlement. Notwithstanding the provisions of § 18.2-111 , an individual convicted of embezzlement pursuant to this section shall be fined double the amount so received and be subject to a term of imprisonment of not less than one nor more than three years, in the discretion of the jury, for each offense.
2. On the trial of any indictment under this section, it shall be the duty of the bank or broker, and its agent or officers, to produce in court, on demand of the attorney for the Commonwealth, all books and papers of the bank or broker, to be read as evidence on the trial of such indictment. In determining the question of the solvency of any bank, the capital stock thereof shall not be considered as a liability due by it.

History. Code 1950, § 6-3; 1966, c. 584, § 6.1-124; 2010, c. 794.

§ 6.2-946. Civil penalties for violation of Commission’s orders.

1. The Commission may impose, enter judgment for, and enforce by its process, a civil penalty not exceeding $10,000 upon any bank, or against any of its directors, officers, or employees, who it determines, in proceedings commenced in accordance with the Commission’s Rules, has violated any lawful order of the Commission.
2. The Commission may remove from office any director or officer of a bank for a second or subsequent violation by him of any such order.
3. In all cases the defendant shall have an opportunity to be heard and to introduce evidence, and the right to appeal as provided by law.

History. 1968, c. 791, § 6.1-125; 1974, c. 665; 1976, c. 658; 2010, c. 794.

§ 6.2-947. Definitions.

As used in this article, unless the context requires a different meaning:

“Bank” has the same meaning ascribed to the term in § 6.2-800 and includes any bank holding company, affiliates, and subsidiaries of a bank.

“Bank regulator” means any state, federal, or municipal governmental agency, bureau, commission, office, or other governmental entity charged with the regulation or supervision of a bank or the regulation or supervision of any activity in which a bank may be engaged. “Bank regulator” includes the Office of the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Consumer Financial Protection Bureau, the Federal Trade Commission, and the Bureau.

“Self-assessment” means (i) a bank’s voluntary, self-initiated internal assessment, audit, or review of the bank and its practices, policies, and procedures or (ii) a bank’s voluntary, self-initiated assessment, audit, or review of the practices, policies, and procedures of a person acting under contract, directly or indirectly, as the bank’s service provider, including mortgage servicers and sub-servicers, credit and debit card processors, and providers of loan document systems.

“Self-assessment report” means any document, including any audit, report, finding, communication, or opinion or any draft of an audit, report, finding, communication, or opinion, prepared by internal personnel or by outside attorneys, accountants, or consultants as a part of or in connection with a self-assessment that is made in good faith.

History. 2013, cc. 32, 148.

§ 6.2-948. Privilege for self-assessment reports.

Except as otherwise provided in this article:

1. A self-assessment report and any portion or contents thereof are privileged and are not admissible or subject to discovery in any civil or administrative litigation, action, proceeding, or investigation;
2. The self-assessment privilege shall be applicable regardless of whether a bank regulator or any other governmental authority in possession of a self-assessment report or any portion or contents thereof subsequently discloses it or any portion or contents thereof to a third party (i) in accordance with subsection B of § 6.2-101 or (ii) as required or permitted by any other state or federal law; and
3. Notwithstanding any state or federal law, a bank regulator or any other governmental authority in possession of a self-assessment report or any portion or contents thereof shall not disclose the report or any portion or contents thereof to a person in response to a request made pursuant to the Virginia Freedom of Information Act (§ 2.2-3700 et seq.) or any similar federal or state public records law.

History. 2013, cc. 32, 148.

§ 6.2-949. Exceptions from self-evaluation privilege.

The self-assessment privilege established by § 6.2-948 shall not apply:

1. If a bank expressly waives the protections of the self-assessment privilege established by § 6.2-948 ;
2. If a bank discloses a self-assessment report to any third party, provided that disclosure of a self-assessment report to a third party shall not void or waive the self-assessment privilege with respect to such self-assessment report if such third party (i) is a bank regulator, (ii) is subject to an agreement or obligation to preserve the confidentiality of the self-assessment report, which agreement or obligation to preserve confidentiality need not be in writing and may be evidenced by an indication of confidentiality on the face of any such self-assessment report, a verbal agreement regarding its confidentiality, an employment relationship, a principal-agent relationship, a fiduciary relationship, or an attorney-client relationship, or (iii) receives the self-assessment report from a person described in clause (i) or (ii);
3. If a court or hearing officer, after an in camera review, determines that (i) the privilege is being asserted for a fraudulent purpose, (ii) the self-assessment report was prepared to avoid disclosure of information in an investigative, administrative, or judicial proceeding that was underway at the time of its preparation or for which the bank had been provided written notification that an investigation into a specific violation had been initiated, or (iii) the self-assessment report addresses a matter reasonably expected to have an imminent and substantial harm to bank customers or consumers and the bank has not previously taken reasonable actions to correct the matter; or
4. To any self-assessment report requested by a bank regulator, provided that disclosure of a self-assessment report to a bank regulator shall not void or waive the self-assessment privilege with respect to such self-assessment report, and provided further that disclosure of a self-assessment report by a bank regulator to any third party shall not void or waive the self-assessment privilege with respect to such self-assessment report.

History. 2013, cc. 32, 148.

§ 6.2-950. Effect on other privileges.

Nothing in this article limits, waives, or abrogates the scope or nature of any statutory or common law privilege.

History. 2013, c. 32, 148.

§ 6.2-951. Definitions.

As used in this article:

“Benefits consortium” means a trust that complies with the conditions set forth in § 6.2-952 .

“ERISA” means the federal Employee Retirement Income Security Act of 1974 (P.L. 93-406, 88 Stat. 829), as amended.

“Sponsoring association” means an association (i) the members of which are banks and employers that provide products and services to banks, (ii) that is incorporated under the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.), (iii) that operates as a nonprofit entity under § 501(c)(6) of the Internal Revenue Code of 1986, (iv) that has been in existence for at least 20 years, and (v) that exists for purposes other than arranging for or providing health and welfare benefits to members. “Sponsoring association” includes any wholly owned subsidiary of a sponsoring association.

History. 2014, cc. 220, 296.

Editor’s note.

Acts 2014, cc. 220 and 296, cl. 2 provides: “That the provisions of this act shall become effective on January 1, 2015.”

§ 6.2-952. Conditions for a benefits consortium.

A trust shall constitute a benefits consortium when all of the following conditions exist:

1. The trust is subject to (i) ERISA and U.S. Department of Labor regulations applicable to multiple employer welfare arrangements and (ii) the authority of the U.S. Department of Labor to enforce such law and regulations;
2. A Form M-1, Report for Multiple Employer Welfare Arrangements (MEWAs), for the applicable plan year shall be filed with the U.S. Department of Labor identifying the arrangement among the trust, sponsoring association, and benefit plans offered through the trust as a multiple employer welfare arrangement;
3. The trust operates as a nonprofit voluntary employee beneficiary association within the meaning of § 501(c)(9) of the Internal Revenue Code of 1986;
4. The trust’s organizational documents:
   1. Provide that the trust is sponsored by the sponsoring association;
   2. State that its purpose is to provide medical, prescription drug, dental, and vision benefits to employees of the sponsoring association and its members and the dependents of those employees through benefits plans;
   3. Provide that the funds of the trust are to be used for the benefit of the participating employees, and their dependents, through insurance, self-insurance, or a combination thereof as determined by the trustee and for defraying reasonable expenses of administering and operating the trust and the benefits plans offered through the trust;
   4. Limit participation in the benefits plans offered through the trust to employers that are the sponsoring association, members of the sponsoring association, and their affiliates;
   5. Limit the benefits plans offered through the trust to benefits plans sponsored by the sponsoring association;
   6. Grant the sponsoring association the power to appoint the trustee of the trust;
   7. Provide the trustee with powers for the control and management of the trust; and
   8. Require the trustee to discharge its duties with respect to the trust in accordance with the fiduciary duties defined in ERISA;
5. Five or more employers participate in the benefits plans offered through the trust;
6. The trust establishes and maintains reserves determined in accordance with sound actuarial principles;
7. The trust has purchased and maintains policies of specific, aggregate, and terminal excess insurance with retention levels determined in accordance with sound actuarial principles from insurers licensed to transact the business of insurance in the Commonwealth;
8. The trust has secured one or more guarantees or standby letters of credit guaranteeing the payment of claims under the benefits plans offered through the trust in an aggregate amount not less than (i) the trust’s annual aggregate excess insurance retention level, minus (ii) the annual premium assessments for the benefits plans offered through the trust, minus (iii) the trust’s net assets, which net assets amount shall be net of the trust’s reasonable estimate of incurred but not reported claims; and such guarantees or letters of credit have been issued by (a) banks participating in the benefits plans offered through the trust or (b) qualified United States financial institutions as such term is used in subdivision 2 c of § 38.2-1316.4 ;
9. The trust has purchased and maintains commercially reasonable fiduciary liability insurance;
10. The trust has purchased and maintains a bond that satisfies the requirements of ERISA;
11. The trust is audited annually by an independent certified public accountant;
12. The trust does not include in its name the words “insurance,” “insurer,” “underwriter,” “mutual,” or any other word or term or combination of words or terms that is uniquely descriptive of an insurance company or insurance business unless the context of the remaining words or terms clearly indicates that the entity is not an insurance company and is not carrying on the business of insurance; and
13. The trust does not pay commissions or other remuneration to any person that is conditioned upon the enrollment of persons in any benefits plan offered by the trust.

History. 2014, cc. 220, 296.

Editor’s note.

Acts 2014, cc. 220 and 296, cl. 2 provides: “That the provisions of this act shall become effective on January 1, 2015.”

§ 6.2-953. Benefits consortium and sponsoring association not subject to regulation or taxation as an insurance company.

1. A benefits consortium shall not be subject to:
   1. The provisions of Title 38.2 and regulations adopted thereunder, including those provisions and regulations otherwise applicable to multiple employer welfare arrangements; or
   2. The tax levied on insurance companies pursuant to § 58.1-2501 .
2. The sponsoring association of a benefits consortium or any of its subsidiaries shall not, by virtue of its sponsorship of the benefits consortium or the benefits plans offered through the benefits consortium, be subject to any provisions or regulations described in subdivision A 1 or any tax described in subdivision A 2.

History. 2014, cc. 220, 296.

Editor’s note.

Acts 2014, cc. 220 and 296, cl. 2 provides: “That the provisions of this act shall become effective on January 1, 2015.”

Chapter 10. Entities Conducting Trust Business.

§ 6.2-1000. Definitions.

As used in this chapter, unless the context requires otherwise:

“Affiliated trust company” means a trust company that is controlled by a trust company holding company.

“Trust business” means the holding out by a person or legal entity to the public at large by advertising, solicitation or other means that the person or legal entity is available to act as a fiduciary in the Commonwealth or is accepting and undertaking to perform the duties of a fiduciary in the regular course of its business. A person does not engage in trust business by:

1. Rendering services as an attorney at law, either individually or through an entity wholly owned by attorneys at law, in the performance of duties as a fiduciary;
2. Rendering services as a certified or registered public accountant in the performance of duties as such;
3. Acting as trustee under a deed of trust made only as security for the payment of money or for the performance of another act;
4. Acting as a trustee in bankruptcy or as a receiver;
5. Holding trusts of real estate for the primary purpose of subdivision, development or sale, or to facilitate any business transaction with respect to such real estate;
6. Engaging in the business of an escrow agent;
7. Holding assets as trustee of a trust created for charitable purposes if:
   1. The trustee is an entity exempt from federal income tax under § 501(c) (3) of the Internal Revenue Code; and
   2. The trust is (i) exempt from federal income taxes under § 501(c) (3) of the Internal Revenue Code; (ii) a charitable remainder trust described in § 664 of the Internal Revenue Code; (iii) a pooled income fund described in § 642(c) (5) of the Internal Revenue Code; or (iv) a trust the charitable interest in which is either a guaranteed annuity or a fixed percentage distributed yearly of the fair market value of the trust property, described in § 2055(e) (2) (B) or § 2522(c) (2) (B) of the Internal Revenue Code;
8. Receiving rents and proceeds of sale as a licensed real estate broker on behalf of the principal; or
9. Engaging in securities transactions as a broker-dealer or salesman. “Trust company” means a corporation, including an affiliated trust company, that is authorized to engage in the trust business under Article 2 (§ 6.2-1013 et seq.) of this chapter, the powers of which are expressly restricted to the conduct of trust business. “Trust company holding company” means a corporation that controls a trust company. A trust company holding company shall not be deemed a financial institution holding company for any purpose under this title unless it controls a financial institution other than an affiliated trust company or another financial institution holding company. “Trust institution” means any (i) bank authorized to engage in the trust business, (ii) trust company, or (iii) trust subsidiary. “Trust subsidiary” or “subsidiary trust company” means a corporation organized under Chapter 9 (§ 13.1-601 et seq.) of Title 13.1, or an association organized under the National Banking Act with its main office located in the Commonwealth, that is authorized to transact trust business and business incidental thereto, but not to accept deposits except as incidental to such trust business.

History. 1974, c. 286, § 6.1-32.2; 1991, c. 282; 1993, c. 432, §§ 6.1-32.11, 6.1-32.12; 1994, c. 524; 1995, c. 140; 1997, c. 801; 2001, c. 717; 2004, c. 781; 2010, c. 794; 2022, c. 323.

The 2022 amendments.

The 2022 amendment by c. 323 inserted “either individually or through an entity wholly owned by attorneys at law” in the definition of “Trust business” in subdivision 1; and made stylistic changes.

Law Review.

For article, “Wills, Trusts, and Estates,” see 35 U. Rich. L. Rev. 845 (2001).

§ 6.2-1001. Entities authorized to engage in trust business.

1. No entities, except (i) corporations duly chartered and already conducting trust business in the Commonwealth under authority of the laws of the Commonwealth or the United States, (ii) banks hereafter incorporated under the laws of the Commonwealth that are authorized to engage in the trust business through a separate trust department pursuant to Article 3 (§ 6.2-819 et seq.) of Chapter 8, (iii) corporations authorized to engage in the trust business in the Commonwealth under the banking laws of the United States, including any national bank or federal savings bank described in clause (ii) of subsection B of § 6.2-1067 , (iv) trust companies authorized to establish and operate one or more trust offices or engage in trust business in the Commonwealth under Article 2 (§ 6.2-1013 et seq.), (v) trust subsidiaries authorized to engage in trust business under Article 3 (§ 6.2-1047 et seq.), (vi) multistate trust institutions authorized to engage in trust business under Article 4 (§ 6.2-1065 et seq.), (vii) private trust companies authorized to engage in trust business under Article 5 (§ 6.2-1074 et seq.), or (viii) savings institutions authorized to engage in the trust business pursuant to Article 6 (§ 6.2-1081 et seq.), shall engage in the trust business in the Commonwealth. No foreign corporation, except as permitted in Chapter 7 (§ 6.2-700 et seq.), shall engage in trust business in the Commonwealth.
2. Nothing in this chapter shall prevent:
   1. A natural person from qualifying and acting as trustee, personal representative, guardian, conservator, committee, or in any other fiduciary capacity;
   2. Any person from (i) lending money on real estate and personal security or collateral, (ii) guaranteeing the payment of bonds, notes, bills and other obligations, or (iii) purchasing or selling stocks and bonds;
   3. Any bank or trust company organized under the laws of the Commonwealth from qualifying and acting in another state as trustee, personal representative, guardian of a minor, conservator, or committee or in any other fiduciary capacity, when permitted so to do by the laws of such other state; or
   4. An incorporated association that is authorized to sell burial association group life insurance certificates in the Commonwealth, as described in the definition of limited burial insurance authority in § 38.2-1800 , the principal purpose of which is to assist its members in (i) financial planning for their funerals and burials and (ii) obtaining insurance for the payment, in whole or in part, for funeral, burial, and related expenses, from serving as trustee of a trust established pursuant to § 54.1-2822 .
3. Nothing in this section shall be construed:
   1. To prevent any bank or trust company organized in the Commonwealth and chartered under the laws of the United States from transacting business in the Commonwealth; or
   2. To prevent a real estate broker as defined in § 54.1-2100 from owning or operating a bank provided that the requirements of this chapter are met.
4. Except as permitted by this chapter or by Article 3 (§ 6.2-819 et seq.) of Chapter 8, or by federal law in the case of a national  bank or federal savings bank described in clause (ii) of subsection B of § 6.2-1067 , no entity shall qualify or act (i) as a personal representative of a deceased person; (ii) as a guardian for an infant or an incapacitated person; (iii) as a committee; (iv) as a conservator for an incapacitated person; (v) as a testamentary trustee, or trustee for any other trust if required by law to account to the commissioner of accounts of a circuit court in the Commonwealth; or (vi) in any other fiduciary capacity required to account to the commissioner of accounts of a circuit court in the Commonwealth.

History. Code 1950, § 6-9; 1966, c. 584, § 6.1-5; 1974, c. 286, § 6.1-32.5; 1985, c. 544; 1995, c. 301; 1997, c. 801; 1999, c. 835; 2003, cc. 536, 558, 910; 2007, c. 621; 2010, c. 794; 2011, c. 67; 2012, c. 608.

The 2011 amendments.

The 2011 amendment by c. 67, in subsection A, added clause (iv) and redesignated the remaining clauses accordingly; and in subsection D, substituted “national banking association described in clause (iv) of subsection A” for “national banking association having its main office in the Commonwealth.”

The 2012 amendments.

The 2012 amendment by c. 608, in subsection A, inserted “including any national bank or federal savings bank described in clause (ii) of subsection B of § 6.2-1067 ” in clause (iii), deleted former clause (iv) and redesignated the following clauses accordingly; in subsection D, substituted “a national bank or federal savings bank described in clause (ii) of subsection B of § 6.2-1067 , no” for “a national banking association described in clause (iv) of subsection A, no”; and made minor stylistic changes.

Law Review.

For annual survey article, “Wills, Trusts, and Estates,” see 46 U. Rich. L. Rev. 243 (2011).

For annual survey of Virginia law article, “Wills, Trusts, and Estates,” see 47 U. Rich. L. Rev. 343 (2012).

§ 6.2-1002. Powers of trust institutions.

1. All banks that are authorized to do a trust business and all trust companies shall have the following rights, powers, and privileges, and shall be subject to the following regulations and restrictions:
   1. To act as agent for any person, corporation, municipality, or state, for the collection or disbursement of interest, or income or principal of securities;
   2. To act as the fiscal or transfer agent of any state, municipality, or body politic or corporate, and in such capacity to receive and disburse money; to transfer, register, and countersign certificates of stock, bonds, or other evidences of indebtedness;
   3. To act as agent of any corporation, foreign or domestic, for any lawful purpose;
   4. To act as trustee under any mortgage or bond issued by an individual, municipality, or body politic or corporate, and to accept and execute any other municipal or corporate trust not inconsistent with the laws of the Commonwealth;
   5. To act as guardian, receiver, or trustee of the estate of any minor and as depository of any money paid into court, whether for the benefit of any minor or other person;
   6. To take, accept, and execute any and all such lawful trusts, duties, and powers in regard to the holding and management and disposition of any estate, real and personal, and the rents and profits thereof, or the sale or lease thereof, as may be granted or confided to it by any circuit court, judge, or clerk, or by any person, corporation, municipality, or other authority, and it shall be accountable to all parties in interest for the faithful discharge of every such trust, duty, or power which it may so accept;
   7. To take, accept, and execute any and all such trusts and powers, of whatever nature and description, as may be conferred upon or entrusted or committed to it by any person, including any body politic or corporate or other authority, by grant, assignment, transfer, devise, bequest, or otherwise or as may be entrusted or committed or transferred to it or vested in it by order of any circuit court, judge, or clerk, and to receive and hold any property or estate, real or personal, which may be the subject of any such trust; and
   8. To act as:
      1. Executor under the last will and testament or administrator of the estate of any deceased person, under appointment of any circuit court, judge, or clerk thereof, having jurisdiction of the estate of such deceased person;
      2. Guardian of the person or of the estate of any infant, guardian or conservator of any incapacitated person, habitual drunkard, or person who by reason of advanced age or impaired health or physical disability has become mentally or physically incapable of taking proper care of his person or properly handling and managing his estate, under appointment of any circuit court, judge, or clerk thereof, having jurisdiction of the estate of such person; or
      3. Trustee or committee for any convict in the penitentiary, under appointment of any circuit court, judge, or clerk thereof, having jurisdiction of the estate of such person.
2. Nothing in this section shall ever be construed as authorizing the creation of a trust not lawful as between individuals nor to prohibit the deposit of funds by court and fiduciaries in banks of deposit and discount and savings banks.
3. Every trust company doing business in the Commonwealth is authorized temporarily to suspend its usual business during a period of actual or threatened enemy attack, civil insurrection, or riot, affecting the community in which such institution is doing business or other emergency justifying temporary closing, such as fire, flood, or hurricane.

History. Code 1950, §§ 6-30, 6-94, 6-104; 1966, c. 584, §§ 6.1-12, 6.1-17; 1970, c. 15; 1974, c. 286, § 6.1-32.10; 1984, c. 172; 1993, c. 432; 1997, c. 801; 2010, c. 794.

Michie’s Jurisprudence.

For related discussion, see 15 M.J. Receivers, § 3.

§ 6.2-1003. When security not required; payment of probate taxes and fees.

1. No bank or trust company with a minimum unimpaired capital stock of $50,000 or more shall be required by any officer or court of the Commonwealth to (i) give security upon appointment to or acceptance of any office of trust which it may, by law, be authorized to execute or (ii) give security upon any bond given pursuant to § 19.2-386.6 or similar statute; however, no bank or trust company shall qualify on an estate having a value in excess of its combined unimpaired capital and surplus without giving bond for such excess.
2. When such bank or trust company shall qualify on any office of trust, the clerk in lieu of collecting the fees under Title 17.1 and probate taxes may render a bill or statement to the bank or trust company to be paid within five business days.

History. Code 1950, § 6-95; 1966, c. 584, § 6.1-18; 1988, c. 348; 1993, c. 866; 2010, c. 794; 2012, cc. 283, 756.

Cross references.

As to qualification and bond of trustee, see § 64.2-1400 et seq.

The 2012 amendments.

The 2012 amendments by cc. 283 and 756 are identical, and substituted “§ 19.2-386.6 ” for “§ 4.1-341” in clause (ii) of subsection A.

Research References.

Virginia Forms (Matthew Bender). No. 15-401 Checklist for Probate and Administration.

Michie’s Jurisprudence.

For related discussion, see 15 M.J. Receivers, § 22.

§ 6.2-1004. Who may take oath for corporate fiduciary.

In all cases where any trust institution shall be appointed to act as trustee, executor, or administrator of any estate or guardian for any infant, or in any other fiduciary capacity, it shall be lawful for any officer of the trust institution to take and subscribe for the institution any and all oaths required to be taken or subscribed by such executor, administrator, trustee, guardian, or other fiduciary.

History. Code 1950, § 6-96; 1966, c. 584, § 6.1-19; 1974, c. 665; 2010, c. 794.

§ 6.2-1005. Deposit or other use of trust funds.

1. Funds received or held in the trust department of a bank or by a trust company awaiting investment or distribution shall not be used by the bank or trust company in the conduct of its business.
2. Notwithstanding subsection A, such funds may be deposited by a bank in its commercial or savings department to the credit of its trust department, if the bank first delivers to the trust department, as collateral security therefor, securities of any of the following classes:
   1. Bonds, notes, or certificates of indebtedness of the United States;
   2. Other readily marketable securities of the classes in which fiduciaries are authorized or permitted to invest trust funds, as set forth in § 64.2-1502 ; or
   3. Other readily marketable bonds, notes, or debentures, commonly known as investment securities, meeting the following requirements:
      1. That the issue be of a sufficiently large total to make marketability possible;
      2. Such a public distribution of the securities must have been provided for or made in a manner to protect or insure the marketability of the issue; and
      3. That the trust agreement under which the security is issued provides for a trustee independent of the obligor, which trustee must be a trust institution.
3. The securities deposited as collateral pursuant to subsection B shall be owned by the bank and shall at all times be at least equal in market value to the amount of trust funds so used in the conduct of the business of the bank less such amount thereof as shall be insured by the Federal Deposit Insurance Corporation under existing or future federal law.
4. In the event of the failure or liquidation of such bank, the owners of the funds held in trust for investment shall have a lien on the bonds or other securities so set apart in addition to their claim against the estate of the bank.

History. Code 1950, § 6-99; 1966, c. 584, § 6.1-21; 1992, c. 810; 1993, c. 432; 1994, c. 7; 2010, c. 794.

Cross references.

As to deposits under this section being exempt from Virginia Security for Public Deposits Act, see § 2.2-4402 .

As to investment of funds by the Virginia Housing Development Authority and the Virginia Resources Authority, see § 2.2-4519 .

Editor’s note.

At the direction of the Virginia Code Commission, the reference to “§ 26-40.01” was changed to “§ 64.2-1502 ” to conform to the recodification of Title 26 by Acts 2012, c. 614, effective October 1, 2012.

§ 6.2-1006. Custody of trust securities to be kept separate; federal securities and obligations.

1. The securities and investments held in each trust shall be kept separate and distinct from the securities owned by the trust institution. The trust institution shall at all times show upon its trust records the interests of each separate fiduciary account and trust in each particular security or investment held by it in a fiduciary capacity. Trust securities and investments shall be placed in the joint custody or control of two or more officers or other employees designated by the board of directors of the trust institution. Such joint custody shall be interpreted to mean that neither of such officers or employees shall have access alone at any time to such securities and investments. All such officers and employees shall be bonded.
2. Securities and obligations of the United States and of agencies of the United States government may be held for the account of the trust institution by a Federal Reserve Bank in a book-entry custody account, without the requirement of the trust institution having physical possession of such securities, provided at all times that the records of the Federal Reserve Bank and the trust institution shall at all times identify separately those securities held for the account of the trust institution and those held by the trust institution in a fiduciary capacity.

History. Code 1950, § 6-100; 1966, c. 584, § 6.1-22; 1968, c. 59; 1974, cc. 75, 665; 2010, c. 794.

§ 6.2-1007. Investment of trust funds.

1. Funds received or held by a trust institution awaiting investment or distribution shall be invested or distributed as soon as practicable and shall not be held uninvested by the trust institution any longer than is reasonably necessary.
2. If the instrument creating the trust does not specify the character or class of investments to be made, and does not expressly grant to the trust institution, its officers or directors discretion in the matter of investments, funds held in trust shall be invested in any securities in which corporate or individual fiduciaries may lawfully invest.
3. If the instrument under which a trust institution is serving as fiduciary or cofiduciary does authorize it to retain:
   1. Its own stock or securities, it shall be authorized to retain in like manner the stock or securities of a bank holding company of which it is a subsidiary; or
   2. The stock or securities of a bank or trust company to the business of which the fiduciary has succeeded, or the stock or securities of a bank or trust company which has become a subsidiary of a bank holding company, such fiduciary shall be authorized in like manner to retain the stock of the successor bank or trust company or bank holding company.

History. Code 1950, §§ 6-98, 6-101; 1966, c. 584, § 6.1-23; 1972, c. 740; 1974, c. 665; 1993, c. 432; 2010, c. 794.

Cross references.

As to investment of funds by the Virginia Housing Development Authority and the Virginia Resources Authority, see § 2.2-4519 .

§ 6.2-1008. Dealings with self or affiliates.

1. No trust institution shall buy any property for a trust or estate from itself, or a department or branch thereof, or from an affiliate or subsidiary corporation, or from a director, officer, or employee of such trust institution. Any such purchase shall be voidable at the election of any beneficiary or successor trustee, unless (i) approved by an appropriate court, (ii) consented to by all beneficiaries after full and fair disclosure, (iii) authorized by the instrument creating the fiduciary relationship, or (iv) permitted by ruling of the Commissioner.
2. A sale of any trust or fiduciary property by a trust institution to itself, or a department or branch of such trust institution, or to an affiliate or subsidiary corporation, or to a director, officer, or employee of such trust institution, except as (i) approved by an appropriate court, (ii) consented to by all beneficiaries after full and fair disclosure, (iii) authorized by the instrument creating the fiduciary relationship, or (iv) permitted by ruling of the Commissioner, shall be a breach of trust and voidable at the election of any beneficiary or successor trustee.
3. Notwithstanding the provisions of subsections A and B, a trust institution, as fiduciary of one estate or trust, may buy or sell from or to itself, as fiduciary of another estate or trust, assets which at the time of sale are permissible fiduciary investments under Part A (§ 64.2-1200 et seq.) of Subtitle IV of Title 64.2, if the transaction is fair to both estates or trusts and is not prohibited by the terms of any instrument under which the fiduciary is acting.

History. Code 1950, § 6-102; 1966, c. 584, § 6.1-24; 1974, c. 665; 1991, c. 252; 2010, c. 794.

Editor’s note.

At the direction of the Virginia Code Commission, the reference to “Title 26” was changed to “Part A (§ 64.2-1200 et seq.) of Subtitle IV of Title 64.2” to conform to the recodification of Title 26 by Acts 2012, c. 614, effective October 1, 2012.

§ 6.2-1009. Common trust and collective investment funds.

1. As used in this section:“Common trust fund” means a common trust fund described under § 584 of the Internal Revenue Code of 1986, as amended, as well as any other type of collective investment fund that is exempt from federal income taxation under any other provision of the Internal Revenue Code or regulations issued pursuant thereto.“Maintaining bank” means a trust institution that establishes and maintains a common trust fund for the collective investment of qualified employee benefit trusts or funds held in a fiduciary capacity by it, including agency accounts under which the institution exercises investment discretion and assumes fiduciary responsibilities.“Participating bank” means a trust institution duly authorized to act as a fiduciary, wherever located, that is owned, controlled by, or affiliated with (i) a maintaining bank or (ii) a bank holding company that also owns, controls, or is affiliated with a maintaining bank.
2. Any trust institution may establish and maintain one or more common trust funds for the collective investment of qualified employee benefit trusts or funds held in a fiduciary capacity by it, including agency accounts under which the institution exercises investment discretion and assumes fiduciary responsibilities.
3. The maintaining bank may include, for the purposes of collective investment in a common trust fund or funds established and maintained by it, funds held in a fiduciary capacity by any participating bank.
4. A maintaining bank may invest the funds held by it in any fiduciary capacity in one or more common trust funds, provided (i) such investment is not prohibited by the instrument, judgment, decree, or order creating such fiduciary relationship or amendment thereof; (ii) in the case of co-fiduciaries the written consent of the co-fiduciary is obtained by the maintaining bank; and (iii) the maintaining bank has no interest in the assets of the common trust fund other than as a fiduciary.
5. Unless ordered by an appropriate court, the maintaining bank operating a common trust fund shall not be required to render a court accounting with regard to such fund; but, by application to an appropriate court, it may secure approval of such an accounting on such conditions as the court may establish. This section shall not affect the duties of the trustees of the participating trusts under the common trust fund to render accounts of their several trusts.
6. All common trust funds shall be operated in conformity with the regulations issued from time to time by the Commission, which regulations shall conform substantially to the regulations of the Comptroller of the Currency governing the operations of common trust funds.

History. 1983, c. 454, §§ 6.1-30.1, 6.1-30.2, 6.1-30.3; 1984, c. 299; 2010, c. 794.

§ 6.2-1010. Holding stock or other securities as fiduciary.

1. A trust institution holding stock or other securities as fiduciary may hold it in the name of a nominee without mention of the trust in the stock certificate or stock registry book or other book in which such securities are registered. A fiduciary registering stock or other securities in the name of a nominee as herein permitted, shall (i) clearly show upon its trust records the ownership of the stock or other securities by the fiduciary and the facts regarding its holding and (ii) provide that the nominee shall not have possession of the stock certificate or other securities nor access thereto except under the immediate supervision of the fiduciary. The fiduciary shall be personally liable for any loss to the trust resulting from any act of such nominee in connection with stock or other securities so held. Any individual serving as cofiduciary with a trust institution may consent to the trust institution holding such stock or other securities in the name of a nominee as herein provided; however, in such case the trust institution shall forthwith upon demand of the individual cofiduciary cause the stock or other securities to be transferred into the name of the fiduciaries in their fiduciary capacity.
2. Notwithstanding the provision relating to possession of the nominee, the trust institution may permit such certificates or other securities to remain in the possession of the nominee or a clearing corporation as defined in § 8.8A-102 , within or without the Commonwealth, if the trust institution obtains adequate protection, through insurance or otherwise, against loss of such certificates or securities due to lack of possession by the fiduciary or possession thereof by the nominee or a clearing corporation.
3. The Commissioner or other appropriate regulatory official may review in advance and approve the protection through insurance or otherwise against loss due to lack of possession of these certificates or securities by the fiduciary.

History. Code 1950, § 6-103.1; 1958, c. 283; 1966, c. 584, § 6.1-31; 1972, c. 739; 1974, c. 665; 1978, c. 14; 2010, c. 794.

Cross references.

As to voting entitlement of shares held by trustee, see § 13.1-662 .

Research References.

Virginia Forms (Matthew Bender). No. 15-490 Affidavit by Fiduciary Accounting for Stocks and Bonds.

§ 6.2-1011. Voting of bank shares held by trust institution as fiduciary; when disqualified.

1. As used in this section, “banking corporation” includes a bank or a corporation or company that is a bank holding company under 12 U.S.C. § 1841, as amended from time to time.
2. When shares of a national banking association or of a banking corporation organized under the laws of the Commonwealth or another state are held by a trust institution that is serving as a personal representative of a decedent, trustee, guardian of any infant, agent or in any other fiduciary capacity, the trust institution may not (i) vote or participate in the voting of any voting securities of such bank if the securities held in such fiduciary capacity, together with all the other voting securities of such bank held in a fiduciary capacity, exceed 25 percent of the outstanding voting securities of such bank or (ii) vote such voting securities, if the voting securities of such bank held as a personal representative of the decedent, together with all other voting securities of such bank held in a fiduciary capacity, exceed five percent, unless there has been a determination by the Board of Governors of the Federal Reserve System that the right to vote five percent or more of the voting securities but less than 25 percent thereof does not constitute control of that bank.
3. If there is any personal representative, trustee, guardian of any infant, or other fiduciary in addition to the trust institution in such fiduciary capacity, the other fiduciary, if not a director, officer, or employee of the trust institution, may vote such shares. If the trust institution is the sole fiduciary, or if the trust institution is serving along with a director, officer, or employee of the trust institution, it may petition the court, as provided in subsection D, for the appointment of a cofiduciary for the sole purpose of voting such bank shares.
4. When a trust institution has qualified or is serving under the laws of the Commonwealth as personal representative of a decedent, trustee, guardian of any infant, or in any other fiduciary capacity, and in such estate or trust, there are shares of stock of a national banking association or a banking corporation organized under the laws of the Commonwealth or another state, and the trust institution is disqualified under subsection B from voting such shares, the trust institution or any interested party may petition the court in which the institution qualified or is capable to qualify to appoint a cofiduciary for the sole purpose of voting the shares of the banking association or banking corporation held by the estate or trust, which the trust institution is disqualified from voting. The appointment and qualification may be ex parte, and no prior notice to the beneficiary shall be required. The court at the time of such qualification may relieve the cofiduciary of any obligation for the giving of surety on his bond, and if the appointment of the cofiduciary is limited to voting of the bank stock, such order may provide that the cofiduciary shall not be liable or accountable as a fiduciary in the administration of such estate or trust except for the breach of any fiduciary duty in voting or failing to vote such bank stock. No director, officer, or employee of a trust institution shall be eligible to be named cofiduciary under the provisions of this subsection.

History. 1972, c. 203, §§ 6.1-31.1, 6.1-31.2; 1974, c. 665; 2010, c. 794.

Cross references.

As to voting entitlement of shares owned by a second corporation, see § 13.1-662 .

§ 6.2-1012. Suspension or prohibition of trust institutions.

The Commission may prohibit or suspend from engaging in trust business any (i) trust company that fails to comply with any of the provisions of § 6.2-1005 , 6.2-1006 , or 6.2-1008 ; (ii) bank doing a trust business that fails to comply with any of the provisions of § 6.2-821 , 6.2-1005 , 6.2-1006 , or 6.2-1008 ; or (iii) trust subsidiary that fails to comply with the provisions of § 6.2-1006 or 6.2-1008.

History. Code 1950, § 6-103; 1966, c. 584, § 6.1-32; 1974, c. 665; 2010, c. 794.

§ 6.2-1013. Definitions.

As used in this article, unless the context requires a different meaning:

“Agent” has the meaning assigned to it in § 13.1-501 of the Virginia Securities Act (§ 13.1-501 et seq.).

“Broker-dealer” has the meaning assigned to it in § 13.1-501 of the Virginia Securities Act.

“Control” means (i) ownership by a person of 25 percent or more of the voting stock of a trust company; (ii) control as defined in the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.); or (iii) as determined by the Commission, the exercise of a controlling influence over the management and policies of a trust company.

“Fiduciary” means executor, administrator, conservator, guardian of a minor, committee, or trustee.

“Investment advisor” has the meaning assigned to it in § 13.1-501 of the Virginia Securities Act.

“Investment advisor representative” has the meaning assigned to it in § 13.1-501 of the Virginia Securities Act.

“Investment company” has the meaning assigned to it in the Investment Company Act of 1940 (15 U.S.C. § 80a-1 et seq.).

“Operating plan” means a plan submitted by an applicant for a certificate of authority, which plan establishes the policies and procedures a trust company will have in effect when the institution opens for business and thereafter (i) to avoid or resolve conflicts of interests, (ii) to prevent improper influences from affecting the actions of the trustee, (iii) to ensure that trust accounts are handled in accordance with recognized standards of fiduciary conduct, and (iv) to assure compliance with applicable laws and regulations.

“Principal” means any person who, directly or indirectly, owns or controls (i) 10 percent or more of the outstanding stock of a stock corporation or (ii) a 10 percent or greater interest in a nonstock corporation or a limited liability company.

History. 1993, c. 432, § 6.1-32.11; 1994, c. 524; 1995, c. 140; 1997, c. 801; 2004, c. 781; 2010, c. 794.

§ 6.2-1014. Certificate required.

No person shall engage in the trust business without first obtaining a certificate of authority from the Commission; however, a bank or savings institution authorized under state or federal laws to engage in the trust business or a trust subsidiary, including a national bank or federal savings bank described in clause (ii) of subsection B of § 6.2-1067 , may engage in such business to the extent permitted by law without obtaining a certificate under this article.

History. 1993, c. 432, § 6.1-32.13; 2010, c. 794; 2011, c. 67; 2012, c. 608.

The 2011 amendments.

The 2011 amendment by c. 67 inserted “including a national banking association described in clause (iv) of subsection A of § 6.2-1001 .”

The 2012 amendments.

The 2012 amendment by c. 608 substituted “a national bank or federal savings bank described in clause (ii) of subsection B of § 6.2-1067 ” for “a national banking association described in clause (iv) of subsection A of § 6.2-1001 .”

Law Review.

For annual survey article, “Wills, Trusts, and Estates,” see 46 U. Rich. L. Rev. 243 (2011).

§ 6.2-1015. Application for certificate; fee.

1. An application for a certificate shall (i) be in writing, in such form as the Commission prescribes, (ii) be verified under oath, (iii) be supported by such information, data, and records as the Commission may require, and (iv) include an operating plan.
2. Each application for a certificate of authority shall be accompanied by an investigation fee of $10,000.

History. 1993, c. 432, § 6.1-32.14; 1995, c. 140; 2010, c. 794.

§ 6.2-1016. Bond required.

1. No applicant shall obtain a certificate without filing with the Commission, and maintaining continuously thereafter, a surety bond in such amount as the Commission may from time to time require.
2. In no event shall the amount of the surety bond be less than $1 million.
3. The surety bond required by this section shall be for the benefit of:
   1. Any person damaged as a result of a violation of the provisions of, or any regulation adopted pursuant to, this chapter;
   2. Any person damaged by the negligence, fraud, or embezzlement of a trust company organized under this article or its directors, officers, or employees; and
   3. Any person damaged by any other breach of trust of any trust company organized under this article or its directors, officers, or employees.
4. The Commission may revoke the certificate of any trust company that the Commission finds has failed to maintain a bond as required by this section.

History. 1993, c. 432, § 6.1-32.17; 2010, c. 794.

§ 6.2-1017. Procedure for granting or denying certificate.

Before any trust company shall begin business, it shall obtain from the Commission a certificate of authority authorizing it to do so. Prior to the issuance of such a certificate to a trust company or affiliated trust company, the Commission shall ascertain that:

1. All of the provisions of law have been complied with;
2. The applicant is formed as a trust company for no other reason than to engage in legitimate trust business;
3. Financially responsible persons have subscribed for capital stock, surplus, and a reserve for operation in an amount deemed by the Commission to be sufficient to warrant successful operation, but the capital stock shall not be less than $500,000;
4. Each principal of an applicant has the financial responsibility, character, reputation, and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law;
5. Oaths of all the directors have been taken and filed in accordance with § 6.2-1029 ;
6. The moral fitness, financial responsibility, and business qualifications of those named as officers and directors of the applicant are such as to command the confidence of the community in which the trust company is proposed to be located;
7. If the applicant is an affiliated trust company, the trust company holding company of the applicant is qualified by virtue of its business record, experience, and financial responsibility to control a trust company;
8. In its opinion, the public interest will be served by the formation of a trust company in the community where it is proposed. Authorizing the applicant to engage in the trust business as a trust company shall be deemed in the public interest if, based on all relevant evidence and information, advantages such as, but not limited to, increased competition, additional convenience, or gains in efficiency outweigh possible adverse effects such as, but not limited to, diminished or unfair competition, undue concentration of resources, conflicts of interests, or unsafe or unsound practices;
9. The operating plan and any other relevant evidence and information warrant belief that the applicant will conduct its business in accordance with generally accepted fiduciary standards;
10. The applicant has provided a bond as required by § 6.2-1016 ;
11. The applicant is not in violation of § 6.2-1021 ; and
12. Anything else deemed pertinent.

History. 1993, c. 432, § 6.1-32.18; 1994, c. 524; 1995, c. 140; 2010, c. 794.

§ 6.2-1018. Minimum capital; state of incorporation; form of entity.

A certificate shall not be issued under § 6.2-1017 to an applicant:

1. Unless it meets the minimum capital requirement for a trust company prescribed by § 6.2-1017 ; and
2. That is not a corporation organized under the laws of the Commonwealth.

History. 1993, c. 432, §§ 6.1-32.15, 6.1-32.16; 1994, c. 7; 2010, c. 794.

§ 6.2-1019. Issuance of shares; subscriptions to stock; stock option plans.

1. A trust company shall not issue no-par stock. The stock of a trust company shall be paid for in money at not less than par value, and a trust company shall not begin business until it has received payment in full of the amounts of initial capital specified in its certificate of authority.
2. Money received for subscriptions to or purchases of stock of a trust company before it opens for business shall be deposited in escrow in one or more insured financial institutions or invested in United States government obligations. Such funds shall be under the joint control of at least two organizing directors of the trust company, each of whom shall be bonded for an amount not less than the total amount of money under their control. Such funds, together with any income thereon, less such organizational expenses as have been approved by the trust company’s board of directors, shall be remitted to the trust company on the day it opens for business.
3. If the trust company is denied a certificate of authority, or it is otherwise determined that the trust company will not open for business, such funds, after payment of any amount owing for expenses in connection with such attempted organization, including reasonable consulting fees, attorney fees, salaries, filing fees, and other expenses, shall be refunded to subscribers or shareholders. The directors of the trust company, individually, jointly, and severally, shall be liable for any failure of the trust company to refund such funds to the subscribers or shareholders. This liability may be enforced by a suit in equity instituted by one or more of the subscribers or stockholders on behalf of all subscribers or stockholders against the trust company and one or more of its directors.
4. The requirement that capital stock be paid for in money shall not be construed to prohibit the establishment, as otherwise authorized by law, of stock option plans and stock purchase plans, or the issuance of stock pursuant to such plans. Such plans shall be established only after the trust company has opened for business and shall be approved by the shareholders of the company in accordance with applicable provisions of the Virginia Stock Corporation Act (§ 13.1-601 et seq.).

History. 1994, c. 5, § 6.1-32.18:1; 2010, c. 794.

§ 6.2-1020. Certain transactions by affiliated trust companies prohibited.

An affiliated trust company shall not:

1. During the underwriting period, purchase from an affiliated broker-dealer, for any trust account or for its own account, any security that is being underwritten by that broker-dealer; or
2. Purchase for any trust account or for its own account any security that is issued by a company that owns five percent or more of the capital stock of, or is affiliated with, the affiliated trust company.

History. 1994, c. 524, § 6.1-32.14:2; 1995, c. 140; 2010, c. 794.

§ 6.2-1021. Commissions or fees for sale of stock not permitted.

The Commission shall not issue a certificate of authority to a trust company if any commissions, fees, brokerage, or other compensation by whatever name have been paid or contracted to be paid by the trust company, or by anyone in its behalf, directly or indirectly, to any person for the sale of stock in such trust company. Nothing herein shall be construed to prohibit a trust company that has been issued a certificate of authority and is conducting operations from paying or contracting to pay such commissions or fees in connection with the issue or reissue of shares of stock of the trust company.

History. 1994, c. 5, § 6.1-32.18:2; 2010, c. 794.

§ 6.2-1022. Reacquisition of shares; dividends.

1. A trust company may not purchase, redeem or otherwise reacquire shares of stock it has issued, except that the Commission, upon the petition of a trust company, may permit the company to reacquire its own stock if the Commission finds that the proposed reacquisition will not jeopardize the safety and soundness of the trust company and will not be contrary to the public interest.
2. The board of directors of any trust company may declare a dividend of so much as it finds expedient of the net undivided profits of the trust company, after providing for all expenses, losses, interest, and taxes owed by the trust company. However, before any dividend is declared, capital funds originally paid in shall have been restored by earnings to their initial level, and no dividend shall be declared or paid by the trust company that would impair the paid-in capital of the trust company. Notwithstanding the foregoing provisions of this section, the Commission may limit the payment of dividends by a trust company when it is determined that the limitation is in the public interest and is necessary to ensure the financial soundness of the trust company.

History. 1994, c. 5, § 6.1-32.18:3; 2010, c. 794.

§ 6.2-1023. Acquisition of stock; application.

1. Except as provided in this section, no person shall acquire, directly or indirectly, 10 percent or more of the voting shares of a trust company unless such person first:
   1. Files an application with the Commission in such form as the Commission may prescribe;
   2. Delivers such other information to the Commission as the Commission may require concerning the financial responsibility, background, experience, and activities of the applicant, its directors, senior officers, and principals and of any proposed new directors, senior officers, and principals of the trust company; and
   3. Pays such application fee as the Commission may prescribe.
2. Upon the filing and investigation of an application, the Commission shall permit the acquisition, subject to § 6.2-1024 , if it finds that the applicant and (i) its members if applicable, (ii) its directors, senior officers, and principals, and (iii) any proposed new directors, senior officers, and principals, have the financial responsibility, character, reputation, experience, and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law. The Commission shall grant or deny the application within 60 days from the date a completed application, accompanied by the required fee, is filed, unless the period is extended by order of the Commission reciting the reasons for the extension. If the application is denied, the Commission shall notify the applicant of the denial and the reasons for the denial.
3. The foregoing provisions of this section shall not apply to a person owning 51 percent or more of the capital stock of the trust company at the time of the proposed acquisition; however, such person shall give the Commission 30 days advance written notice of the proposed acquisition and provide such additional information as the Commission may require.

History. 1993, c. 432, § 6.1-32.19; 1995, c. 140; 2004, c. 781; 2010, c. 794.

§ 6.2-1024. Restrictions on control, officers and directors.

1. None of the following individuals or entities shall acquire control of any trust company under § 6.2-1023 :
   1. An agent;
   2. A broker-dealer;
   3. An investment advisor;
   4. An investment advisor representative;
   5. An investment company; or
   6. Any corporation, limited liability company, partnership, business trust, association, or similar organization.
2. Nothing in this section shall prohibit (i) the formation of a trust company holding company by a trust company, (ii) any officer, director, or employee of a trust company holding company or a subsidiary of a trust company holding company from owning, indirectly, five percent or more of any class of capital stock of an affiliated trust company, or (iii) the acquisition of a trust company pursuant to § 6.2-1023 by a bank holding company as defined in 12 U.S.C. § 1841 or by a corporation that controls a subsidiary authorized to engage in the trust business under federal law or the laws of any state.

History. 1993, c. 432, § 6.1-32.20; 1994, c. 524; 1995, c. 140; 2004, c. 781; 2010, c. 794.

§ 6.2-1025. Report to Commission of election of director.

Within 60 days following the election or reelection of any person as a director of a trust company, the trust company shall furnish such information to the Commission relative to his personal character, integrity, financial condition, and personal and business background as the Commission shall from time to time prescribe. Such report, under oath, shall be signed by the director as well as a designated officer of the trust company. Any person knowingly making a false statement in such a report is guilty of perjury.

History. 1968, c. 606, § 6.1-48.1; 1974, c. 665, § 6.1-51.1; 1992, c. 552; 1994, c. 105; 2010, c. 794.

§ 6.2-1026. Removal of director or officer; appeals; penalty.

1. Whenever any director or officer of a trust company doing business in the Commonwealth, shall have continued to violate any law relating to such trust company or shall have continued unsafe or unsound practices in conducting the business of such trust company, after the director or officer, and the board of directors of the trust company of which he is a director or officer, have been warned in writing by the Commissioner to discontinue such violation of law or such unsafe or unsound practices, the Commissioner shall certify the facts to the Commission. The Commission shall thereupon enter an order requiring such director or officer to appear before the Commission, within not less than 10 days, to show cause why he should not be removed from office and thereafter restrained from participating in any manner in the management of such trust company. Such order shall contain a brief statement of the facts certified to the Commission by the Commissioner. A copy of such order shall be served upon such director or officer, and a copy thereof shall be sent by registered mail to each director of the trust company affected.
2. If, after granting the accused director or officer a reasonable opportunity to be heard, the Commission shall find that he has continued to violate any law relating to such trust company, or has continued unsafe or unsound practices in conducting the business of such trust company, after he and the board of directors of the trust company of which he is a director or officer have been warned in writing by the Commissioner to discontinue such violation of law or unsafe or unsound practices, the Commission shall enter an order removing such director or officer from office and restraining such director or officer from thereafter participating in any manner in the management of such trust company. A copy of such order shall be served upon such director or officer. A copy of such order shall also be served upon the trust company of which he is a director or officer. Upon such removal the director or officer shall cease to be a director or officer of such trust company and thereafter cease to participate in any manner in the management of such trust company.
3. Any director or officer aggrieved (i) by any order of the Commission entered under subsection B or (ii) by an order refusing to remove another director or officer from office or to restrain him from participating in the management of the trust company, shall have, of right, an appeal to the Supreme Court of Virginia within 60 days from the date of the order.
4. Any director or officer removed or restrained under the provisions of subsection B from participating in any manner in the management of any trust company of which he is a director or officer, and who thereafter participates in any manner in the management of such trust company except as a stockholder therein, is guilty of a Class 6 felony.

History. Code 1950, §§ 6-40, 6-41, 6-42; 1966, c. 584, §§ 6.1-49, 6.1-50, 6.1-51; 1974, c. 665, § 6.1-51.1; 1979, c. 58; 1992, c. 136; 2010, c. 794.

Cross references.

As to punishment for Class 6 felonies, see § 18.2-10 .

§ 6.2-1027. Bonds required of officers and employees; blanket bond.

1. The board of directors of every trust company shall require bonds from all of the active officials and employees of such corporation. In lieu of such bonds, the board may obtain one or more blanket bonds. The surety on every bond shall be a bonding or surety company authorized to transact business in Virginia, and the penalty of any such bond shall be increased whenever in the opinion of the Commission it is necessary for the protection of the public interest.
2. If a trust company is unable to obtain the bond required by this section, it shall immediately notify the Commission. The Commission may then direct the trust company to have an audit performed at its expense by an independent certified public accounting firm. The trust company shall obtain blanket bond coverage as soon as such coverage is available. Failure to obtain blanket bond coverage may be cause for action by the Commission as provided by § 6.2-1036 .

History. Code 1950, § 6-46; 1966, c. 584, § 6.1-54; 1974, c. 665; 1979, c. 52; 1992, c. 365; 2010, c. 794.

§ 6.2-1028. Offices.

1. When satisfied that the public interest, as defined in subdivision 8 of § 6.2-1017 , will be served, the Commission may authorize:
   1. A trust company having paid-up and unimpaired capital and surplus in an amount deemed sufficient to warrant expansion to establish additional offices; and
   2. The relocation of any office.
2. The office at which a trust company begins business shall be designated initially as its principal office. The board of directors of a trust company may thereafter redesignate as the principal office another authorized office of the trust company in the Commonwealth. The trust company shall notify the Commission of any such redesignation not later than 30 days before its effective date and shall confirm to the Commission any redesignation within 10 days of its occurrence.

History. 1993, c. 432, § 6.1-32.21; 1997, c. 51; 2010, c. 794.

§ 6.2-1029. Directors.

1. The affairs of every trust company shall be directed by a board of directors. The board shall consist of not less than five nor more than 25 individuals. A majority of the directors shall be citizens of the Commonwealth.
2. Every director of a trust company shall be the sole owner, and have in his personal possession or control shares, of stock of such trust company having a book value of not less than $2,000 and, within 30 days of election, shall take an oath that he will diligently and honestly perform his duties as a director and that he is the sole owner and has in his possession or control the required amount of stock, unencumbered in any way. When a director is reelected or reappointed, he shall take an oath certifying his ownership and control of the required amount of unencumbered stock throughout his previous term.
3. Any director who (i) fails, for a period of 30 days, to take the oath or (ii) does not comply with the requirement for ownership of stock, both as required by subsection B, shall automatically forfeit his office.
4. Within 60 days following the election or reelection of any individual as a director of a trust company, the trust company shall furnish such information to the Commission relative to his personal character, integrity, financial condition, and personal and business background, as the Commission shall from time to time prescribe. Such report, under oath, shall be signed by the director as well as a designated officer of the trust company. Any person knowingly making a false statement in such a report is guilty of perjury.

History. 1993, c. 432, § 6.1-32.22; 1994, c. 105; 2010, c. 794.

§ 6.2-1030. Discount by officer, director, or employee of refused paper.

No officer, director, or employee of a trust company may purchase or discount any note or paper at a rate of interest in excess of what the trust company might charge knowing that the trust company has refused to purchase or discount such paper.

History. Code 1950, § 6-44; 1966, c. 584, § 6.1-53; 2010, c. 794.

§ 6.2-1031. Reports.

Each trust company and trust company holding company shall file statements of condition and other reports with the Commission in accordance with requirements established by regulation.

History. 1993, c. 432, § 6.1-32.23; 1995, c. 140; 2010, c. 794.

§ 6.2-1032. Investigations; examinations.

1. The Commission may, by its designated officers and employees, as often as it deems necessary, investigate and examine the affairs, business, premises, and records of any trust company and of any trust company holding company. Examinations of such trust companies shall be conducted at least twice in each three-year period.
2. In the course of such investigations and examination, the principals, officers, directors, and employees of such trust company or trust company holding company being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all premises, books, records, and information that the person making such investigation or examination deems necessary. For the foregoing purposes, the person making the investigation or examination shall have authority to administer oaths, examine under oath all the aforementioned persons, and compel the production of papers and objects of all kinds.

History. 1993, c. 432, § 6.1-32.24; 1995, c. 140; 2010, c. 794.

§ 6.2-1033. Fees.

1. In order to defray the costs of their examination, supervision, and regulation, every trust company shall pay a fee of $330 per day per examiner during examinations.
2. Each trust company and each trust company holding company shall also pay to the Commission:
   1. Such additional or special costs as the Commission may incur in connection with its examination;
   2. For investigating an application for authority to establish a branch office pursuant to § 6.2-1028 , a fee of $1,800;
   3. For investigating an application to change the location of a principal office or branch office, a fee of $1,000; and
   4. For investigating an application made pursuant to § 6.2-1023 , a fee of $7,000.

History. 1993, c. 432, § 6.1-32.25; 1994, c. 6; 1995, c. 140; 2010, c. 794.

§ 6.2-1034. Regulations.

The Commission may adopt such regulations as it deems appropriate to effect the purposes of this article. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard in accordance with the Commission’s Rules. In adopting regulations applicable to affiliated trust companies, the Commission shall be guided, where appropriate, by those standards and requirements concerning self-dealing and conflicts of interests that apply to banks, bank holding companies, and their subsidiaries when engaged in both trust and securities activities.

History. 1993, c. 432, § 6.1-32.26; 1995, c. 140; 2010, c. 794.

§ 6.2-1035. Audits.

The Commission may require trust companies or trust company holding companies to have audits made of their books, records, and methods of operation annually. The Commission may require such audits to be conducted at any other time that it appears to the Commission that (i) the internal controls of a trust company or trust company holding company are not adequate, (ii) it is engaging in unsound practices, or (iii) its financial condition makes such audit necessary.

History. 1993, c. 432, § 6.1-32.27; 1995, c. 140; 2010, c. 794.

§ 6.2-1036. Commission’s remedial powers.

1. If the Commission finds that a trust company (i) has failed to fully observe the laws of the Commonwealth, (ii) is being operated in an unsafe or unsound manner, (iii) has failed to comply with any Commission order or regulation, (iv) is engaging in any irregular practices, or (v) is, or is about to become, insolvent or its capital has been, or is in danger of being, impaired, the Commission shall give notice thereof to the officers and directors of the company. If necessary to conserve the assets of the company or protect the public interest, the Commission may:
   1. Close the company for a period not exceeding 60 days, which period may be further extended for a like period or periods as the Commission deems necessary;
   2. Require that all orders and regulations of the Commission be complied with;
   3. Require that the company make reports daily or at such other times as may be required as to the results achieved in carrying out the Commission’s orders;
   4. Require that any irregularities be promptly corrected;
   5. Require that any impairment of capital be made good; or
   6. Temporarily suspend the right of the company to receive any further property in a fiduciary capacity.
2. If the Commission determines that a receiver should be appointed for a trust company, the Commission may close the company; take charge of the books, assets and affairs of the company; and apply to any circuit court in the Commonwealth for the appointment of a receiver to take charge of the company’s business, assets and affairs. Proceedings for appointment of a receiver for a trust company shall not be entertained by any court except on application of the Commission.
3. The Commissioner may issue and serve upon a trust company a cease and desist order if, in the opinion of the Commissioner, the company is engaging, has engaged, or, there is reasonable cause to believe, is about to engage in an unsafe or unsound practice, irregularity, or any violation of law, rule, or regulation applicable to the conduct of its business, or any Commission order. The cease and desist order shall contain a statement of the facts upon which it is based and may require, in terms that may be mandatory or otherwise, the company and its directors, officers, employees, and agents to cease and desist from the practice or violation. The order shall specify its effective date and shall notify the company of its right to request a hearing in accordance with the Commission’s Rules.
4. When the practice or violation specified in an order issued pursuant to subsection C, or any continuation thereof, is likely to prejudice the company’s stockholders, or persons having an interest in property held by the company in a fiduciary capacity, the Commissioner may make the order effective immediately. An order shall remain in effect until withdrawn by the Commissioner or terminated by the Commission after a hearing. A request for a hearing shall be given expeditious treatment on the Commission’s docket, and the Commission need not allow 10 days’ notice to the company.

History. 1993, c. 432, § 6.1-32.28; 1994, c. 524; 1995, c. 140; 2010, c. 794.

§ 6.2-1037. Effect of surrender or revocation of certificate.

If a trust company surrenders its certificate or its certificate is revoked, the trust company, its assets, and the assets it holds in trust shall nevertheless continue to be subject to the provisions of this article, including the provisions of § 6.2-1036 .

History. 1993, c. 432, § 6.1-32.29; 2010, c. 794.

§ 6.2-1038. Appointment of receiver.

1. When in the judgment of the Commission it is necessary for the protection of the interests of the Commonwealth or of the creditors of any trust company doing business in the Commonwealth, the Commission shall apply to any court in the Commonwealth having jurisdiction to appoint receivers for the appointment of a receiver to take charge of the business affairs and assets and to wind up the affairs and business of any such trust company failing to comply with the requirements of the Commission, or found upon examination to be insolvent or unable to meet its obligations and the legal demands made upon it in the ordinary course and conduct of its business.
2. Reference is hereby made to §§ 6.2-916 through 6.2-924 and Article 14 (§ 6.2-925 et seq.) of Chapter 8 for provisions applicable to receiverships of trust companies.

History. Code 1950, § 6-116; 1966, c. 584, § 6.1-102; 2010, c. 794.

Cross references.

As to bank franchise tax for banks in liquidation, see § 58.1-1215 .

Michie’s Jurisprudence.

For related discussion, see 15 M.J. Receivers, § 5.

§ 6.2-1039. Engaging in trust business without authority; Commission may examine accounts of suspected person; penalty.

1. Every person who trades or deals as a trust company, or conducts a trust business, without authority of law, and their officers and agents, is guilty of a Class 6 felony.
2. The Commission shall have authority to examine the accounts, books, and papers of any person who it has reason to suspect is doing a trust business, in order to ascertain whether such person has violated, or is violating, any provision of this title. The refusal to submit such accounts, books, and papers shall be prima facie evidence of such violation.

History. Code 1950, § 6-133; 1966, c. 584, § 6.1-111; 1992, c. 136; 1994, c. 7; 2010, c. 794.

Cross references.

As to punishment for Class 6 felonies, see § 18.2-10 .

§ 6.2-1040. Unlawful use of terms indicating that business is trust company; penalty.

1. A person not authorized to engage in the trust business in the Commonwealth by the provisions of this title or under the laws of the United States, shall not (i) use any office sign having thereon any name or other words indicating that any such office is the office of a trust company; (ii) use or circulate any letterheads, billheads, blank notes, blank receipts, certificates, circulars or any written or printed paper, having thereon any name or word indicating that such person is a trust company; or (iii) use the word “trust” or the equivalent thereof in any foreign language, or the plural thereof in connection with any business other than a trust business.
2. The foregoing prohibitions shall not apply to use by a trust company holding company of the word “trust” or the equivalent thereof in its name, or of a name similar to that of a subsidiary trust company of such trust company holding company.
3. The use of the above-mentioned words in the name of, or in connection with, any other business shall not be prohibited if the context or remaining words show clearly and definitely that the business is not a trust company, and is not carrying on a trust business.
4. Any person violating the provisions of this section, either individually or as an interested party, is guilty of a Class 6 felony.

History. Code 1950, § 6-134; 1966, c. 584, § 6.1-112; 1972, c. 187; 1992, cc. 24, 136; 2000, c. 56; 2003, c. 592; 2010, c. 794.

Cross references.

As to requirements of business trust names, see § 13.1-1214 .

As to punishment for Class 6 felonies, see § 18.2-10 .

§ 6.2-1041. Civil penalties for failure to comply with § 6.2-1031 or 6.2-1032.

1. Any trust company failing to comply with any of the provisions of § 6.2-1031 , for a period of longer than 30 days, after being called upon by the Commission for a statement, or to do such other act as is therein provided, shall be subject to assessment by the Commission of a civil penalty of not less than $100 nor more than $1,000 per day for each day of noncompliance.
2. Any officer of any trust company who shall refuse to give any examiner the information or refuse to be sworn, as required by § 6.2-1032 , shall be subject to assessment by the Commission of a civil penalty of not less than $25 nor more than $100 per day for each day of noncompliance.

History. Code 1950, § 6-128; 1966, c. 584, § 6.1-114; 1974, c. 665; 1976, c. 658; 1988, c. 555; 1997, c. 142; 2010, c. 794.

§ 6.2-1042. Making derogatory statements affecting trust companies; penalty.

Any person who willfully and maliciously makes, circulates or transmits to another, any statement, rumor or suggestion that is directly or by reference derogatory to the financial condition, or affects the solvency or financial standing of, any trust company doing business in the Commonwealth, or who counsels, aids, procures or induces another to start, transmit, or circulate any such statement or rumor, is guilty of a Class 1 misdemeanor.

History. Code 1950, § 6-132; 1966, c. 584, § 6.1-119; 1991, c. 710; 2010, c. 794.

Cross references.

As to punishment for Class 1 misdemeanors, see § 18.2-11 .

§ 6.2-1043. Use of trust company name, logo, or symbol for marketing purposes; penalty.

1. As used in this section, “name, logo, or symbol, or any combination thereof, of a trust company” includes any name, logo, or symbol, or any combination thereof, that is deceptively similar to the name, logo, or symbol of a trust company.
2. Except as provided in subsection C, no person shall use the name, logo, or symbol, or any combination thereof, of a trust company in marketing material provided to or solicitation of another person in a manner such that a reasonable person may believe that the marketing material or solicitation originated from or is endorsed by the trust company or that the trust company is responsible for the marketing material or solicitation.
3. This section shall not apply to (i) an affiliate or agent of the trust company or (ii) a person who uses the name, logo, or symbol of a trust company with the consent of the trust company.
4. Any person violating the provisions of this section, either individually or as an interested party, is guilty of a Class 1 misdemeanor. This section shall not affect the availability of any remedies otherwise available to a trust company.

History. 2005, c. 240, § 6.1-119.1; 2010, c. 794.

Cross references.

As to punishment for Class 1 misdemeanors, see § 18.2-11 .

As to remedies for use of name, logo or symbol of bank or trust company, see § 59.1-92.22.

§ 6.2-1044. Offenses by officer, director, agent or employee of trust company; penalties.

1. Any officer, director, agent, or employee of any trust company who embezzles, abstracts, or willfully misapplies any of the moneys, funds or credits of, or in the possession or control of the trust company is guilty of larceny and subject to the penalties provided in § 18.2-95 or 18.2-96 .
2. Any officer, director, agent or employee of any trust company who (i) issues or puts forth any certificate of deposit, (ii) draws any order or bill of exchange, (iii) makes any acceptance, (iv) assigns any note, bond, draft, bill of exchange, mortgage, judgment, decree or other instrument in writing, or (v) makes any false entry in any book, report or statement of such trust company with intent in any case to injure or defraud the trust company, or any other individual or entity, or to deceive any officer of the trust company or the Commission, or any agent or examiner authorized to examine the affairs of the trust company, and any person, who, with like intent, aids or abets any such officer, director, agent or employee of such trust company in any act described in clauses (i) through (v), is guilty of a Class 5 felony.
3. Any officer of a trust company who knowingly makes a false statement of the condition of any trust company is guilty of a Class 5 felony.

History. Code 1950, §§ 6-128, 6-138; 1966, c. 584, § 6.1-122; 1974, c. 665; 2010, c. 794.

Cross references.

As to punishment for Class 5 felonies, see § 18.2-10 .

§ 6.2-1045. Officers, directors, agents and employees violating or causing trust company to violate laws; civil liability not affected.

Any officer, director, agent, or employee of any trust company who knowingly violates or who knowingly causes any trust company to violate any provision of this chapter, or knowingly participates or knowingly acquiesces in any such violation, unless other punishment is provided for the offense of such officer, agent, or employee, is guilty of a Class 1 misdemeanor. The provisions of this section shall not affect the civil liability of any such officer, director, agent or employee.

History. Code 1950, § 6-139; 1966, c. 584, § 6.1-123; 1974, c. 665; 2010, c. 794.

§ 6.2-1046. Civil penalties for violation of Commission’s orders.

1. The Commission may impose, enter judgment for, and enforce by its process, a civil penalty not exceeding $10,000 upon any trust company or against any of its directors, officers, or employees, who it determines, in proceedings commenced in accordance with the Commission’s Rules, has violated any lawful order of the Commission.
2. The Commission may remove from office any director or officer of a trust company for a second or subsequent violation by him of any such order.
3. In all cases the defendant shall have an opportunity to be heard and to introduce evidence, and the right to appeal as provided by law.

History. 1968, c. 791, § 6.1-125; 1974, c. 665; 1976, c. 658; 2010, c. 794.

§ 6.2-1047. Definitions.

As used in this article, unless the context requires a different meaning:

“Affiliate bank” with respect to a trust subsidiary means (i) a bank of which more than 50 percent of the shares are owned directly or indirectly through a subsidiary by the same Virginia bank holding company that owns directly or indirectly through a subsidiary all the shares, except directors’ qualifying shares, of a trust subsidiary or a subsidiary bank or (ii) a bank that owns some or all of the shares of a trust subsidiary or a subsidiary bank.

“Bank” has the meaning assigned to it in § 6.2-800 .

“Bank holding company” has the meaning assigned to it in § 6.2-800 .

“Bank under common ownership” means a bank of which 80 percent or more of its common stock is owned, directly or indirectly through a subsidiary, by the same Virginia bank holding company as owns, directly or indirectly through a subsidiary, at least 80 percent of the stock of the subsidiary bank substituted as fiduciary.

“Fiduciary capacity” means every capacity in which a trust institution is granted the right to act pursuant to § 6.2-1002 and every other capacity in which a bank acts, or may act, through its trust department, including, without limitation, trusteeship with respect to common trust funds.

“Main office” is the place designated in the articles of incorporation or articles of association as the main office of the bank or trust subsidiary at which the principal functions of the bank or trust subsidiary are to be conducted.

“Owning bank” means a bank owning 10 percent or more of the shares of a trust subsidiary.

“Subsidiary bank” means a bank authorized to exercise trust powers, at least 80 percent of the outstanding shares of which are owned directly or indirectly through a subsidiary by a Virginia bank holding company.

“Trust office” means, with regard to a trust subsidiary or a bank having trust powers, an office for trust purposes only, at which the trust subsidiary or bank holds itself out as dealing with the public in the solicitation and conduct of its trust business.

“Trust subsidiary under common ownership” means a trust subsidiary at least 80 percent or more of which is owned, directly or indirectly through a subsidiary, by the same Virginia bank holding company as owns, directly or indirectly through a subsidiary, at least 80 percent of the stock of the subsidiary bank substituted as fiduciary.

“Virginia bank holding company” means a bank holding company that, directly or indirectly through a subsidiary, owns or controls a bank the main office of which is located in the Commonwealth.

History. 1974, c. 286, § 6.1-32.2; 1991, c. 282; 2010, c. 794; 2020, c. 239.

The 2020 amendments.

The 2020 amendment by c. 239 added the definition for “Trust subsidiary under common ownership.”

§ 6.2-1048. Organization of subsidiary trust companies.

1. A subsidiary trust company may be incorporated and organized under Article 3 (§ 13.1-618 et seq.) of Chapter 9 of Title 13.1 or under federal laws relating to national banking associations for the purpose of conducting a trust business and other activities and business incidental thereto in which a trust subsidiary is permitted to engage as provided in § 6.2-1049 .
2. All the outstanding voting shares of a subsidiary trust company, other than directors’ qualifying shares, shall be owned directly or indirectly through a subsidiary by (i) one or more Virginia bank holding companies, (ii) one or more banks authorized to have a main or parent office in Virginia, or (iii) both.
3. A trust subsidiary shall be subject to regular examination and supervision by the Commission or by the Comptroller of the Currency of the United States.
4. If incorporated under Title 13.1, a trust subsidiary shall pay such examination fees as may be from time to time imposed upon trust departments of banks that are subject to examination by the Commission.

History. 1974, c. 286, § 6.1-32.3; 1991, c. 282; 2004, c. 781; 2010, c. 794.

§ 6.2-1049. Permissible business.

A trust subsidiary shall be permitted to engage in trust business and activities that may be engaged in by a bank pursuant to § 6.2-1002 , and business incidental thereto. A trust subsidiary shall not accept deposits or conduct any other business except as may be incidental to the trust business being conducted by it.

History. 1974, c. 286, § 6.1-32.5; 1997, c. 801; 2010, c. 794.

§ 6.2-1050. Directors.

The affairs of every trust subsidiary incorporated under the laws of the Commonwealth shall be managed by a board of directors. The board shall consist of not fewer than five individuals. A majority of the directors shall be citizens of the Commonwealth. Directors need not be stockholders of the trust subsidiary unless the articles of incorporation so require.

History. 1974, c. 286, § 6.1-32.4; 2010, c. 794.

§ 6.2-1051. Report to Commission of election of director.

Within 60 days following the election or reelection of any person as a director of a trust subsidiary, the trust subsidiary shall furnish such information to the Commission relative to his personal character, integrity, financial condition, and personal and business background as the Commission shall from time to time prescribe. Such report, under oath, shall be signed by the director as well as a designated officer of the trust subsidiary. Any person knowingly making a false statement in such a report is guilty of perjury.

History. 1968, c. 606, § 6.1-48.1; 1974, c. 665, § 6.1-51.1; 1992, c. 552; 1994, c. 105; 2010, c. 794.

§ 6.2-1052. Removal of director or officer; appeals; penalty.

1. Whenever any director or officer of a trust subsidiary doing business in the Commonwealth, shall have continued to violate any law relating to such trust subsidiary or shall have continued unsafe or unsound practices in conducting the business of such trust subsidiary, after the director or officer, and the board of directors of the trust subsidiary of which he is a director or officer, have been warned in writing by the Commissioner to discontinue such violation of law or such unsafe or unsound practices, the Commissioner shall certify the facts to the Commission. The Commission shall thereupon enter an order requiring such director or officer to appear before the Commission, within not less than 10 days, to show cause why he should not be removed from office and thereafter restrained from participating in any manner in the management of such trust subsidiary. Such order shall contain a brief statement of the facts certified to the Commission by the Commissioner. A copy of such order shall be served upon such director or officer, and a copy thereof shall be sent by registered mail to each director of the trust subsidiary affected.
2. If, after granting the accused director or officer a reasonable opportunity to be heard, the Commission shall find that he has continued to violate any law relating to such trust subsidiary, or has continued unsafe or unsound practices in conducting the business of such trust subsidiary, after he and the board of directors of the trust subsidiary of which he is a director or officer have been warned in writing by the Commissioner to discontinue such violation of law or unsafe or unsound practices, the Commission shall enter an order removing such director or officer from office and restraining such director or officer from thereafter participating in any manner in the management of such trust subsidiary. A copy of such order shall be served upon such director or officer. A copy of such order shall also be served upon the trust subsidiary of which he is a director or officer. Upon such removal the director or officer shall cease to be a director or officer of such trust subsidiary and thereafter cease to participate in any manner in the management of such trust subsidiary.
3. Any director or officer aggrieved by (i) any order of the Commission entered under subsection B or (ii) an order refusing to remove another director or officer from office or to restrain him from participating in the management of the trust subsidiary, shall have, of right, an appeal to the Supreme Court of Virginia within 60 days from the date of the order.
4. Any director or officer removed or restrained under the provisions of subsection B from participating in any manner in the management of any trust subsidiary of which he is a director or officer, and who thereafter participates in any manner in the management of such trust subsidiary except as a stockholder therein, is guilty of a Class 6 felony.

History. Code 1950, §§ 6-40, 6-41, 6-42; 1966, c. 584, §§ 6.1-49, 6.1-50, 6.1-51; 1974, c. 665, § 6.1-51.1; 1979, c. 58; 1992, c. 136; 2010, c. 794.

Cross references.

As to punishment for Class 6 felonies, see § 18.2-10 .

§ 6.2-1053. Bonds required of officers and employees; blanket bond.

1. The board of directors of every trust subsidiary shall require bonds from all of the active officials and employees of such corporation. In lieu of such bonds, the board may obtain one or more blanket bonds. The surety on every bond shall be a bonding or surety company authorized to transact business in Virginia, and the penalty of any such bond shall be increased whenever in the opinion of the Commission it is necessary for the protection of the public interest.
2. If a trust subsidiary is unable to obtain the bond required by this section, it shall immediately notify the Commission, which may then direct the trust subsidiary to have an audit performed at its expense by an independent certified public accounting firm. The trust subsidiary shall obtain blanket bond coverage as soon as such coverage is available. Failure to obtain blanket bond coverage may be cause for action by the Commission as provided by § 6.2-906 .

History. Code 1950, § 6-46; 1966, c. 584, § 6.1-54; 1974, c. 665; 1979, c. 52; 1992, c. 365; 2010, c. 794.

§ 6.2-1054. Certificate required.

No trust subsidiary, other than a wholly owned subsidiary of a national banking association, shall engage in trust business without first obtaining a certificate of authority from the Commission, or the Comptroller of the Currency if it is organized as a national banking association. The Commission shall not grant such certificate unless:

1. The capital and surplus of the trust subsidiary equal or exceed $200,000; and
2. The Commission is satisfied that (i) the trust subsidiary is capable of complying with the provisions of this chapter and (ii) the officers and directors have the moral fitness and business qualifications necessary to manage the trust subsidiary.

History. 1974, c. 286, § 6.1-32.5; 1997, c. 801; 2010, c. 794.

§ 6.2-1055. Trust offices.

A trust subsidiary may have trust offices at locations where branches are permitted under § 6.2-831 , upon approval of the Commission.

History. 1974, c. 286, § 6.1-32.6; 1987, c. 352; 2010, c. 794.

§ 6.2-1056. When security not required of trust subsidiaries.

No trust subsidiary with combined unimpaired capital stock and surplus of $200,000 or more shall be required by any officer or court of the Commonwealth to give security upon appointment to or acceptance of any office or trust that it may, by law, be authorized to execute. No trust subsidiary shall qualify in a fiduciary capacity on an estate that has a value in excess of its combined unimpaired capital and surplus, without giving security for such excess, unless:

1. The requirement that the trust subsidiary give security for such excess is waived by the person creating such fiduciary relationship;
2. A Virginia bank holding company or a bank owning, directly or indirectly through a subsidiary bank, 100 percent of the stock, exclusive of directors’ qualifying shares, of the trust subsidiary files with the Commission and with the circuit court for the jurisdiction in which the main office of the bank holding company or bank is located an undertaking to be fully responsible for the existing and future fiduciary acts and omissions of its trust subsidiary. If such undertaking is filed, a trust subsidiary may qualify in a fiduciary capacity without giving security if the assets it is to receive in such capacity have a value not greater than the combined and unimpaired capital and surplus of the parent Virginia bank holding company or parent bank that has undertaken to be responsible for the acts of such trust subsidiary. If no such undertaking shall have been filed, and corporate surety is provided, the premium thereof shall be borne by the trust subsidiary and not the fiduciary estate; or
3. If an affiliate bank shall already have qualified in any fiduciary capacity and given bond, without security, and the trust subsidiary or subsidiary bank shall qualify as successor fiduciary, then, if the order of substitution so provides, and the fiduciary for which there is to be substitution consents, the predecessor fiduciary shall remain liable on its bond for the acts of its named successor and no security shall be required of the successor fiduciary, if the bond of the fiduciary for which there is to be substitution is otherwise sufficient.

History. 1974, c. 286, § 6.1-32.7; 2010, c. 794.

§ 6.2-1057. Deposits held or received by trust subsidiaries or subsidiary bank with affiliate banks.

1. Funds received or held by a trust subsidiary or subsidiary bank while awaiting investment or distribution shall not be used by an affiliate bank or owning bank in the conduct of its business or deposited in such bank, unless the bank first delivers to its trust department or to the trust subsidiary or subsidiary bank, as collateral security therefor, securities of any of the classes described in subdivision B 1, B 2, or B 3 of § 6.2-1005 , in an amount described in subsection B.
2. The securities deposited as collateral as required by subsection A shall be owned by the bank and shall at all times be at least equal in market value to the amount of trust funds held on deposit by such trust subsidiary or subsidiary bank, less such amount thereof as are insured by the Federal Deposit Insurance Corporation.
3. In the event of the failure or liquidation of such bank, the trust subsidiary or subsidiary bank and the owners of the beneficial interest in such trust funds shall have a lien on the bonds or other securities so set apart, in addition to their claims against the estate of the bank.

History. 1974, c. 286, § 6.1-32.8; 1991, c. 282; 2010, c. 794.

§ 6.2-1058. Substitution of trust subsidiary as fiduciary.

1. Upon obtaining a certificate to engage in the trust business, a trust subsidiary may file an application in the circuit court of the jurisdiction in which its main office is located requesting that it be substituted, except as may be excluded in such application, in every fiduciary capacity for each of its owning banks, or, in the case of a Virginia bank holding company, for any one or more of its affiliate banks specified in the application.
2. Upon finding that (i) the trust subsidiary has obtained a certificate to engage in the trust business by the Commission, or by the Comptroller of the Currency if the trust subsidiary is a national banking association, the main office of which is in the Commonwealth and (ii) the requirements of § 6.2-1056 have been met, the court shall enter an order substituting the trust subsidiary in every fiduciary capacity for each of its specified affiliate banks, or specified owning banks, except as may be otherwise specified in the application.
3. Upon entry of such order, the trust subsidiary shall, without further act, be substituted in every fiduciary capacity. The substitution shall be evidenced by filing a copy of the order with the clerk of any circuit court in the Commonwealth. The order shall be indexed in each index in the records of such court in which substitutions of fiduciaries are otherwise indexed. The application may be made ex parte and need not list the fiduciary capacities in which substitution is made. If the requirements of § 6.2-1056 have been met, the order of substitution shall specify that the trust subsidiary shall be deemed without further act to have given bond with open penalty with respect to each fiduciary capacity in which there is substitution.
4. Any bond, with corporate surety, posted under this section or § 6.2-1056 may be a blanket bond conditioned as otherwise contemplated by law.
5. Each designation in a will or other instrument heretofore or hereafter executed of a bank as fiduciary shall be deemed a designation of the trust subsidiary substituted for such bank pursuant to this section except when the instrument is executed after such substitution and expressly negates the application of this section. No waiver of surety with respect to any fiduciary bond shall be effective except in such case when the bond would be otherwise sufficient as contemplated by § 6.2-1056 or 6.2-1059 . Any grant in such an instrument of any discretionary power shall be deemed conferred upon the fiduciary deemed to have been nominated hereunder.
6. A bank shall account jointly with the trust subsidiary that has been substituted as fiduciary for such bank pursuant to this section for the accounting period during which the trust subsidiary is initially so substituted. Upon substitution pursuant to this section, the bank shall deliver to the trust subsidiary all assets held by the bank as fiduciary, except assets held for accounts to which there has been no substitution. Upon such substitution, all such assets shall become the property of the trust subsidiary as fiduciary without the necessity of any instrument of transfer or conveyance.

History. 1974, c. 286, § 6.1-32.9; 1987, c. 352; 1991, c. 282; 2010, c. 794.

§ 6.2-1059. Substitution of subsidiary bank as fiduciary.

1. Upon obtaining permission to engage in the trust business, a subsidiary bank may file an application in the circuit court of the jurisdiction in which its main office is located requesting that it be substituted, except as may be specified in such application, in every fiduciary capacity for a bank under common ownership or a trust subsidiary under common ownership.
2. Upon a finding that (i) the subsidiary bank has been granted such permission to engage in the trust business by the Commission or the Comptroller of the Currency and (ii) the unimpaired capital and surplus of such subsidiary bank is sufficient as prescribed in § 6.2-1003 , or bond with corporate surety has been posted for any excess, or has been validly waived, the court shall enter an order substituting the subsidiary bank in every fiduciary capacity for each of the specified banks or trust subsidiaries under common ownership, except as may be otherwise specified in the application.
3. Upon entry of such order, such subsidiary bank shall, without further act, be substituted in every such fiduciary capacity. The substitution shall be evidenced by filing a copy of the order with the clerk of any circuit court in the Commonwealth. The order shall be indexed in each index in the records of such court in which substitutions of fiduciaries are otherwise indexed. The application may be made ex parte and need not list the fiduciary capacities in which substitution is made. If a bank or trust subsidiary under common ownership with the subsidiary bank shall already have qualified in any fiduciary capacity and given bond, without surety, then if the order of substitution shall so provide, which it may provide only if the fiduciary for which there is to be substitution consents, the predecessor fiduciary shall remain liable on its bond for the acts of its named successor, and no security or corporate surety shall be required of the successor fiduciary on its bond.
4. Any bond, with corporate surety, posted under this section or under § 6.2-1056 may be a blanket bond conditioned as otherwise contemplated by law.
5. Each designation in a will or other instrument heretofore or hereafter executed of a bank or trust subsidiary as fiduciary shall be deemed a designation of the subsidiary bank substituted for such bank or trust subsidiary pursuant to this section except when the instrument is executed after such substitution and expressly negates the application of this section. No waiver of surety with respect to any fiduciary bond shall be effective except in such case when the bond would be otherwise sufficient as contemplated by § 6.2-1056 or this section. Any grant in such an instrument of any discretionary power shall be deemed conferred upon the fiduciary deemed to have been nominated hereunder.
6. A bank or trust subsidiary shall account jointly with the subsidiary bank that has been substituted as fiduciary for such bank or trust subsidiary pursuant to this section for the accounting period during which the subsidiary bank is initially so substituted. Upon substitution pursuant to this section, the bank or trust subsidiary shall deliver to the substituted subsidiary bank all assets held by the bank or trust subsidiary as fiduciary, except assets held for accounts to which there has been no substitution. Upon such substitution, all such assets shall become the property of the subsidiary bank as fiduciary without the necessity of any instrument of transfer or conveyance.

History. 1974, c. 286, § 6.1-32.9; 1987, c. 352; 1991, c. 282; 2010, c. 794; 2020, c. 239.

The 2020 amendments.

The 2020 amendment by c. 239, in subsection A, added “or a trust subsidiary under common ownership”; in subsection B, inserted “or trust subsidiaries”; inserted “or trust subsidiary” in subsection C, twice in subsection D, and throughout subsection E; in the first sentence of subsection E, deleted “under common ownership” preceding “substituted for such bank”; and deleted “under common ownership” preceding “all assets held” in the second sentence of subsection F.

§ 6.2-1060. Trust subsidiaries to have same powers and restrictions as bank trust departments.

Wherever there is granted to or imposed upon a bank having and exercising trust powers any further powers in the nature of trust powers or any restriction upon any such powers, whether under this title or otherwise, it is intended that such grant to or restriction upon a bank in its trust powers shall be equally applicable to a trust subsidiary, unless context shall otherwise require or unless this chapter or Chapter 8 (§ 6.2-800 et seq.) specifically covers such situation or provides otherwise.

History. 1974, c. 286, § 6.1-32.10; 2010, c. 794.

§ 6.2-1061. Reports; investigations and examinations; civil penalties.

1. Each trust subsidiary shall file statements of condition and other reports with the Commission in accordance with the requirements established by regulation.
2. The Commission may, by its designated officers and employees, as often as it deems necessary, investigate and examine the affairs, business, premises, and records of any trust subsidiary. Examinations of such trust subsidiaries shall be conducted at least twice in each three-year period.
3. In the course of such investigations and examination, the principals, officers, directors, and employees of such trust subsidiary being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all premises, books, records, and information that the person making such investigation or examination deems necessary. For the foregoing purposes, the person making the investigation or examination shall have authority to administer oaths, examine under oath all the aforementioned persons, and compel the production of papers and objects of all kinds.
4. Any trust subsidiary that fails to comply with the provisions of subsection A, for a period of longer than 30 days, after being called upon by the Commission for a statement, or to do such other act as is therein provided, shall be subject to assessment by the Commission of a civil penalty of not less than $100 nor more than $1,000 per day for each day of noncompliance.
5. Any officer of any trust subsidiary being investigated or examined by the Commission who shall refuse to give any examiner the information or refuse to be sworn, as required by subsections B and C, shall be subject to assessment by the Commission of a civil penalty of not less than $25 nor more than $100 per day for each day of noncompliance.

History. Code 1950, § 6-128; 1966, c. 584, § 6.1-114; 1974, c. 665; 1976, c. 658; 1988, c. 555; 1997, c. 142; 2010, c. 794.

§ 6.2-1062. Offenses by officer, director, agent or employee of trust subsidiary; penalties.

1. Any officer, director, agent, or employee of any trust subsidiary who embezzles, abstracts, or willfully misapplies any of the moneys, funds or credits of, or in the possession or control of the trust subsidiary is guilty of larceny and subject to the penalties provided in § 18.2-95 or 18.2-96 .
2. Any officer, director, agent or employee of any trust subsidiary who (i) issues or puts forth any certificate of deposit, (ii) draws any order or bill of exchange, (iii) makes any acceptance, (iv) assigns any note, bond, draft, bill of exchange, mortgage, judgment, decree or other instrument in writing, or (v) makes any false entry in any book, report or statement of such trust subsidiary with intent in any case to injure or defraud the trust subsidiary, or any other individual or entity, or to deceive any officer of the trust subsidiary or the Commission, or any agent or examiner authorized to examine the affairs of the trust subsidiary, and any person, who, with like intent, aids or abets any such officer, director, agent or employee of such trust subsidiary in any act described in clauses (i) through (v), is guilty of a Class 5 felony.
3. Any officer of a trust subsidiary who knowingly makes a false statement of the condition of any trust subsidiary is guilty of a Class 5 felony.

History. Code 1950, §§ 6-128, 6-138; 1966, c. 584, § 6.1-122; 1974, c. 665; 2010, c. 794.

Cross references.

As to punishment for Class 5 felonies, see § 18.2-10 .

§ 6.2-1063. Officers, directors, agents and employees violating or causing trust subsidiary to violate laws; civil liability not affected.

Any officer, director, agent, or employee of any trust subsidiary who knowingly violates or who knowingly causes any trust subsidiary to violate any provision of this chapter, or knowingly participates or knowingly acquiesces in any such violation, unless other punishment is provided for the offense of such officer, agent, or employee, is guilty of a Class 1 misdemeanor. The provisions of this section shall not affect the civil liability of any such officer, director, agent or employee.

History. Code 1950, § 6-139; 1966, c. 584, § 6.1-123; 1974, c. 665; 2010, c. 794.

Cross references.

As to punishment for Class 1 misdemeanors, see § 18.2-11 .

§ 6.2-1064. Civil penalties for violation of Commission’s orders.

1. The Commission may impose, enter judgment for, and enforce by its process, a civil penalty not exceeding $10,000 upon any trust subsidiary or against any of its directors, officers, or employees, who it determines, in proceedings commenced in accordance with the Commission’s Rules, has violated any lawful order of the Commission.
2. The Commission may remove from office any director or officer of a trust subsidiary for a second or subsequent violation by him of any such order.
3. In all cases the defendant shall have an opportunity to be heard and to introduce evidence, and the right to appeal as provided by law.

History. 1968, c. 791, § 6.1-125; 1974, c. 665; 1976, c. 658; 2010, c. 794.

§ 6.2-1065. Definitions.

As used in this article, unless the context requires a different meaning:

“Acquisition of a trust office” means the acquisition of a trust office located in a host state, without acquiring the trust institution of such office.

“Bank” has the meaning assigned to it in 12 U.S.C. § 1813(a)(1) of the Federal Deposit Insurance Company Act of 1956 (12 U.S.C. § 1811 et seq.), as amended.

“Bank supervisory agency” means: (i) any agency of another state with primary responsibility for chartering and supervising a trust institution and (ii) the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, or the Board of Governors of the Federal Reserve System and any successor to these agencies.

“Home state” means (i) with respect to a federally chartered trust institution, the state where such institution maintains its principal office and (ii) with respect to any other trust institution, the state that chartered such institution.

“Home state regulator” means the bank supervisory agency with primary responsibility for chartering and supervising an out-of-state trust institution.

“Host state” means a state, other than the home state of a trust institution, in which the trust institution maintains or seeks to acquire or establish an office.

“New trust office” means a trust office located in a host state that (i) is originally established by the trust institution as a trust office and (ii) does not become a trust office of the trust institution as a result of (a) the acquisition of another trust institution or trust office of another trust institution or (b) a merger, consolidation, or conversion involving any such trust institution or trust office.

“Office” with respect to a trust institution means the principal office or a trust office, but not a branch.

“Out-of-state bank” means a bank chartered to act as a fiduciary whose home state is a state other than the Commonwealth.

“Out-of-state trust company” means a trust company or trust subsidiary whose home state is a state other than the Commonwealth.

“Out-of-state trust institution” means a trust institution whose home state is a state other than the Commonwealth.

“Principal office” with respect to (i) a state trust company, means a location designated by such trust company as its main office pursuant to § 6.2-1028 or 6.2-1047 or (ii) a trust institution other than a state trust company, means its principal place of business in the United States.

“State bank” or “Virginia state bank” means a bank chartered under the laws of the Commonwealth and permitted to engage in the trust business pursuant to § 6.2-819 .

“State trust company” means a corporation organized or reorganized as a trust company under Article 2 (§ 6.2-1013 et seq.) or Article 3 (§ 6.2-1047 et seq.) of this chapter.

“State trust institution” means a trust institution having its principal office in the Commonwealth.

“Trust company” means a state trust company or any other entity chartered to act as a fiduciary that is not a bank.

“Trust institution” means a bank or trust company chartered by a state bank supervisory agency or by the Office of the Comptroller of Currency.

“Trust office” means an office at which a trust institution engages in a trust business and not in the banking business.

History. 1999, c. 835, § 6.1-32.32; 2010, c. 794.

Cross references.

As to the powers and duties of the State Corporation Commission, see §§ 12.1-12 through 12.1-17 .

§ 6.2-1066. Interstate trust offices by Virginia state banks.

1. With the prior approval of the Commission, any Virginia state bank or state trust company may establish a new trust office or acquire a trust office in a state other than the Commonwealth.
2. A Virginia state bank or state trust company desiring to establish and maintain a trust office in another state under this section shall file an application or notice on a form prescribed by the Commission and pay the branch application fee set forth in subdivision B 3 of § 6.2-908 . If the Commission finds that the applicant has the financial resources sufficient to undertake the proposed expansion without adversely affecting its soundness and that the laws of the host state permit the establishment of the trust office, it may approve the application. In acting on the application, the Commission shall consider the views of the state bank supervisor of the host state where the trust office is proposed to be located.

History. 1999, c. 835, § 6.1-32.33; 2010, c. 794.

§ 6.2-1067. Trust business of out-of-state trust institution.

1. An out-of-state trust institution that establishes or maintains one or more offices in the Commonwealth under this article may conduct any activity at each such office that would be authorized under the laws of the Commonwealth for a state trust institution to conduct at such an office.
2. An out-of-state trust institution may engage in a trust business in the Commonwealth if it (i) maintains (a) a trust office in the Commonwealth as permitted by this article or (b) a branch in the Commonwealth, or (ii) is a national bank or federal savings bank, with or without an office or a branch in the Commonwealth, that is supervised and regulated by the federal Comptroller of the Currency and is authorized to serve as trustee, as executor, as administrator, or in another fiduciary capacity pursuant to § 92a of the National Bank Act (12 U.S.C. § 21 et seq.) or § 5(n) of the Home Owners’ Loan Act (12 U.S.C. § 1461 et seq.).

History. 1999, c. 835, §§ 6.1-32.34, 6.1-32.35; 2010, c. 794; 2012, c. 608.

The 2012 amendments.

The 2012 amendment by c. 608 rewrote subsection B, which formerly read “An out-of-state trust institution may engage in a trust business at an office in the Commonwealth only if it maintains (i) a trust office in the Commonwealth as permitted by this article or (ii) a branch in the Commonwealth.”

§ 6.2-1068. Establishing or acquiring an interstate trust office; additional trust offices; notice of closure.

1. An out-of-state trust institution that does not already maintain a trust office in the Commonwealth and that meets the requirements of this article may:
   1. Establish and maintain a new trust office in the Commonwealth; or
   2. Acquire and maintain a trust office in the Commonwealth.
2. An out-of-state trust institution that maintains a trust office in the Commonwealth under this article may establish or acquire additional trust offices in the Commonwealth to the same extent that a state trust institution may establish or acquire additional offices in the Commonwealth, provided it follows the procedures for establishing or acquiring such offices set forth in this article.
3. An out-of-state trust institution that maintains an office in the Commonwealth under this article shall give at least 30 days’ prior written notice, or in the case of an emergency transaction, such shorter notice as is consistent with applicable state or federal law, to the Commission of any merger, consolidation, or other transaction involving the trust institution that would cause any trust office operated by the institution in this state to be maintained by another trust institution or cause the operation of such an office to cease.

History. 1999, c. 835, §§ 6.1-32.36, 6.1-32.37, 6.1-32.42, 6.1-32.44; 2010, c. 794.

§ 6.2-1069. Filing requirements.

An out-of-state trust institution desiring to establish and maintain a new trust office or acquire and maintain a trust office in the Commonwealth pursuant to this article shall submit to the Commission a copy of the application or notice it files with its home state regulator or the responsible federal bank supervisory agency to establish or acquire such office. Such submission shall be made at the same time the application or notice is filed by the out-of-state trust institution with such home state regulator or responsible federal bank supervisory agency. The out-of-state trust institution shall also comply with the requirements of Article 17 (§ 13.1-757 et seq.) of the Virginia Stock Corporation Act and pay any filing fee required by the Commission.

History. 1999, c. 835, § 6.1-32.38; 2010, c. 794.

§ 6.2-1070. Conditions for approval.

A trust office of an out-of-state trust institution shall not be acquired or established under this article unless:

1. In the case of a new trust office, the laws of the home state of the out-of-state trust institution permit state trust institutions to establish and maintain new trust offices in that state under substantially the same terms as set forth in this article.
2. In the case of a trust office to be established through the acquisition of a trust office, the laws of the home state of the out-of-state trust institution permit state trust institutions to establish and maintain trust offices in that state through the acquisition of trust offices under substantially the same terms as set forth in this article.

History. 1999, c. 835, § 6.1-32.39; 2010, c. 794.

§ 6.2-1071. Examinations; periodic reports; cooperative agreements; assessment of fees.

1. The Commission may make such examinations of any office established and maintained in the Commonwealth pursuant to this article by an out-of-state trust institution as the Commission may deem necessary to determine whether the office is operating in compliance with the laws of the Commonwealth and to ensure the office is being operated in a safe and sound manner. The provisions of § 6.2-901 that apply to examinations of banks shall apply to examinations of an office conducted under this section. The Commission shall also have authority to examine the principal office of an out-of-state trust institution, as necessary. When any such examination is conducted outside the Commonwealth, the out-of-state trust institution shall be liable for and shall pay to the Commission within 30 days of the presentation of an itemized statement, the actual travel and reasonable living expenses incurred on account of such examination, or shall pay for such examination at a reasonable per diem rate approved by the Commission.
2. The Commission may require periodic reports from any out-of-state trust institution that maintains an office in the Commonwealth to the extent such reporting requirements (i) apply equally to similarly situated trust institutions having Virginia as their home state and (ii) are not preempted by federal laws. Such reports shall be filed under oath with such frequency and in such scope and detail as may be appropriate for the purpose of assuring continuing compliance with the provisions of this article.
3. The Commission may enter into cooperative agreements with the appropriate state bank supervisors and federal bank regulatory agencies for the examination of any trust office in the Commonwealth of an out-of-state trust institution or any office of a state trust institution in any host state, and may accept such agency’s report of examination and report of investigation in lieu of conducting its own examinations or investigations. The Commission may enter into joint actions with other state bank supervisors and federal banking agencies having concurrent jurisdiction over any office maintained in this state by an out-of-state trust institution or any office established and maintained by a state trust institution in any host state; however, the Commission may take such actions independently to carry out its responsibilities under this article and to assure compliance with the laws of the Commonwealth.
4. Out-of-state trust institutions may be assessed and, if assessed, shall pay supervisory and examination fees in accordance with the laws of the Commonwealth and regulations of the Commission. Such fees may be shared with other state and federal bank supervisory agencies in accordance with agreements between them and the Commission.

History. 1999, c. 835, § 6.1-32.40; 2010, c. 794.

§ 6.2-1072. Enforcement.

If the Commission determines that there is any violation of any applicable law or regulation in the operation of an out-of-state trust institution engaged in business in this state or that a trust office of such an institution in this state is being operated in an unsafe and unsound manner, the Commission shall have authority to undertake such enforcement actions as it would be permitted to take if the office were a Virginia state bank or state trust company.

History. 1999, c. 835, § 6.1-32.41; 2010, c. 794.

§ 6.2-1073. Regulations; fees.

The Commission may adopt such regulations, and may provide for the payment of such reasonable application and administration fees, as it finds necessary and appropriate in order to implement the provisions of this article.

History. 1999, c. 835, § 6.1-32.43; 2010, c. 794.

§ 6.2-1074. Definitions.

As used in this article, unless the context requires a different meaning:

“Degrees of kinship” means, with respect to two persons, (i) degrees of lineal kinship computed by counting one degree for each person in the line of ascent or descent, exclusive of the person from whom the computing begins and (ii) degrees of collateral kinship computed by commencing with one of the persons and ascending from that person to a common ancestor, descending from that ancestor to the other person, and counting one degree for each person in the line of ascent and in the line of descent, exclusive of the person from whom the computation begins, the total to represent the degree of such kinship.

“Designated relative” means the individual to or through whom the family members are related.

“Family” means a designated relative and family members of that designated relative.

“Family member” means the designated relative and:

1. Any individual within (i) the fifth degree of lineal kinship to the designated relative or (ii) the ninth degree of collateral kinship to the designated relative, for which purposes only a legally adopted individual shall be treated as a natural child of the adoptive parents;
2. The present or past spouse of the designated relative and of any individual qualifying as a family member under subdivision 1;
3. A trust established (i) by a family member or (ii) exclusively for the benefit of one or more family members;
4. A stock corporation, limited partnership or limited liability company, all of the capital stock, partnership interests, membership interests, or other equity interests of which are owned by one or more family members, their spouses qualifying under subdivision 2, their trusts qualifying under subdivision 3, or their estates qualifying under subdivision 5;
5. The estate of a family member; or
6. A charitable foundation or other charitable entity created by a family member.“Fiduciary”  means executor, administrator, conservator, guardian, committee, or trustee.“Operating plan”  means a plan that establishes the policies and procedures a private trust company will have in effect when the institution opens for business and thereafter (i) to ensure that trust accounts are handled in accordance with recognized standards of fiduciary conduct and (ii) to assure compliance with applicable laws and regulations.“Private trust business”  means acting as or performing the duties of a fiduciary in the regular course of its business for family members.“Private trust company”  means a corporation or limited liability company that is organized to engage in private trust business under this article with one or more family members and that does not transact business with the general public.“Tax” includes, but is not limited to, federal, state or local income, gift, estate, generation-skipping transfer, or inheritance tax.

History. 2003, c. 910, §§ 6.1-32.30:1; 6.1-32.30:7; 2010, c. 794.

§ 6.2-1075. Organization; minimum capital; notice to Bureau; control.

1. No person other than a corporation or limited liability company organized under the laws of the Commonwealth to engage exclusively in the private trust business shall act as a private trust company.
2. No person may act as a private trust company unless and until family members have subscribed for capital stock or interests, surplus, and a reserve for operation in an amount equal to or in excess of $500,000.
3. No person shall engage in business as a private trust company without first giving written notice to the Bureau. The notice shall identify (i) the designated relative whose relationship to other individuals determines whether the individuals are family members and (ii) the location of the principal office and additional office, if any, within the Commonwealth. The notice shall be accompanied by an operating plan and such other books, records, documents, or information as the Commissioner may require. The notice shall also certify that (a) all provisions of law have been complied with; (b) the private trust company is formed for no other reason than to engage in the private trust business; and (c) family members have subscribed for capital stock, surplus, and a reserve for operation in an amount equal to or in excess of $500,000.
4. All of the capital stock, membership interests, or other equity interests of a private trust company shall be and shall remain owned by, and under the voting control of, family members, including any spouses, trusts, stock corporations, limited partnerships, limited liability companies, or estates qualifying under subdivision 2, 3, 4, or 5 of the definition of “family member” set forth in § 6.2-1074 , of one or more families.

History. 2003, c. 910, § 6.1-32.30:2; 2010, c. 794.

§ 6.2-1076. Operation and powers.

Every private trust company shall have and shall conduct its business in accordance with an operating plan and in accordance with generally accepted fiduciary standards. A private trust company when engaging in a private trust business shall have the same rights, powers, and privileges as a trust institution pursuant to § 6.2-1002 , including the power to act as executor under the last will and testament or administrator of the estate of any deceased family member.

History. 2003, c. 910, § 6.1-32.30:3; 2010, c. 794.

§ 6.2-1077. Reacquisition of shares or interests; dividends.

A private trust company shall not purchase, redeem, or otherwise reacquire shares of stock or membership interests that the private trust company has issued, or declare a dividend or other distribution to its stockholders, members, or holders of equity interests, to the extent that such purchase, redemption, reacquisition, dividend, or distribution shall cause the private trust company’s paid-in capital, retained surplus and reserves to be reduced below $500,000.

History. 2003, c. 910, § 6.1-32.30:4; 2010, c. 794.

§ 6.2-1078. Offices.

1. The office at which a private trust company begins business shall be designated initially as its principal office. The board of directors or managers of a private trust company may thereafter redesignate as the principal office another authorized office of the private trust company in the Commonwealth.
2. The board of directors or managers of a private trust company may designate, and from time to time redesignate, one additional office at which the private trust company may conduct business in the Commonwealth.
3. The private trust company shall notify the Bureau of any such redesignation of its principal office or designation or redesignation of an additional office not later than 30 days before its effective date and shall confirm to the Bureau any such designation or redesignation within 10 days of its occurrence.

History. 2003, c. 910, § 6.1-32.30:5; 2010, c. 794.

§ 6.2-1079. Directors or managers.

The affairs of every private trust company shall be directed by a board of directors if a corporation, or managers if a limited liability company, consisting of not less than five nor more than 25 persons. At least one director or manager shall be a citizen of the Commonwealth.

History. 2003, c. 910, § 6.1-32.30:6; 2010, c. 794.

§ 6.2-1080. Limitation on powers.

1. In the exercise of any power held by a private trust company in its capacity as a fiduciary, the private trust company shall have a duty not to exercise any power in such a way as to deprive the estate, trust, or other entity for which it acts as a fiduciary of an otherwise available tax exemption, deduction, or credit for tax purposes or deprive a donor of trust assets of a tax exemption, deduction, or credit or operate to impose a tax upon a donor or other person as owner of any portion of the estate, trust, or otherwise.
2. Without limitation to subsection A, no family member who is a stockholder or member or who otherwise holds an equity interest in, or is serving as a director, officer, manager, or employee of, a private trust company shall participate in or otherwise have a voice in any discretionary decision by the private trust company to distribute income or principal of any trust in order to discharge a legal obligation of the family member or for the family member’s pecuniary benefit, unless:
   1. The exercise of the discretion is limited by an ascertainable standard relating to the health, education, support, or maintenance of that family member;
   2. The distribution is necessary for that family member’s support, health, or education; or
   3. The instrument governing the administration of that trust clearly so provides.

History. 2003, c. 910, § 6.1-32.30:7; 2010, c. 794.

§ 6.2-1081. Definitions.

As used in this article, unless the context requires a different meaning:

“Affiliate” means, with respect to an association, a bank holding company, as defined in 12 U.S.C. § 1841, or savings and loan holding company of which the association is a subsidiary, a corporation that is also a subsidiary of a bank holding company or savings and loan holding company of which the association is a subsidiary, a corporation with respect to which the association owns 25 percent or more of the outstanding voting shares of such corporation, or any other corporation that the Commissioner determines is, in fact, controlled by the association.

“Association” has the meaning assigned to it in § 6.2-1100 .

“Common trust funds” means common trust funds that are described under § 584 of the Internal Revenue Code of 1954, as well as any other type of collective investment fund that is exempt from federal income taxation under any other provision of the Internal Revenue Code or regulations issued pursuant thereto.

“Fiduciary” means the status resulting from an association’s undertaking to act alone, through an affiliate, or jointly with others, primarily for the benefit of another, and includes an association’s acting as trustee, executor, administrator, committee, guardian, conservator, receiver, managing agent, registrar of stocks and bonds, escrow, transfer, or paying agent, trustee of employee pension, welfare and profit sharing trusts, and in any other similar capacity.

“Fiduciary records” means all matters which are written, transcribed, recorded, received, or otherwise come into the possession of an association and are necessary to preserve information concerning the actions and events relevant to the fiduciary activities of an association.

“Governing instrument” means the written document or documents pursuant to which an association undertakes to act in a fiduciary capacity, and includes a will, codicil, deed of trust, trust deed, and other similar instruments.

“Investment authority” means the responsibility conferred by action of law or a provision of a governing instrument to make, select, or change investments, review investment decisions made by others, or to provide investment advice or counsel to others.

“Managing agent” means the fiduciary relationship assumed by an association upon the creation of an account that names the association as agent and confers investment authority upon the association.

“Savings institution holding company” has the meaning assigned to it in § 6.2-1100 .

“Trust account” means the account established pursuant to a trust, estate, or other fiduciary relationship that has been established with an association.

“Trust department” means that group or groups of officers and employees of an association, or of an affiliate of an association, to whom are assigned the performance of fiduciary services by the association.

“Uniform Transfers to Minors Act” means Chapter 19 (§ 64.2-1900 et seq.) of Title 64.2 or any comparable act in effect in any other state.

History. 1984, c. 303, § 6.1-195.78; 1997, c. 801; 2010, c. 794.

Editor’s note.

At the direction of the Virginia Code Commission, the reference to “Chapter 6 (§ 31-37 et seq.) of Title 31” was changed to “Chapter 19 (§ 64.2-1900 et seq.) of Title 64.2” to conform to the recodification of Title 31 by Acts 2012, c. 614, effective October 1, 2012.

§ 6.2-1082. Applications for permission to offer trust services.

1. An association desiring to exercise fiduciary powers, either through a trust department or through an affiliate, shall file with the Commission an application indicating which trust services it wishes to offer and providing the information necessary to make the determinations required under subsection B.
2. In addition to assessing any other facts or circumstances deemed proper, the Commission, in passing upon an application to exercise trust powers, shall not grant such application unless the Commission finds that:
   1. The association’s capital structure is sufficiently strong to support such additional undertaking;
   2. The personnel who will direct the proposed trust department have adequate experience and training, and will devote sufficient time to its affairs to ensure compliance with the law and to protect the association against surcharge;
   3. The granting of trust powers to the association will be in the public interest; and
   4. The association has available legal counsel to advise and pass upon fiduciary matters wherever necessary.

History. 1984, c. 303, § 6.1-195.79; 2010, c. 794.

§ 6.2-1083. Commission to issue certificate; powers of associations authorized to offer trust services.

1. Upon granting the application of an association to exercise trust powers, the Commission shall issue a certificate authorizing the association or affiliate to exercise trust powers and offer fiduciary services. Unless such certificate otherwise provides, such association shall have the following rights, powers, and privileges, and shall be subject to the following regulations and restrictions:
   1. To act as agent for any person, including any locality or state, for the collection or disbursement of interest, or income or principal of securities;
   2. To act as the fiscal or transfer agent of any state, locality, or other body public or corporate, and in such capacity to receive and disburse money, to transfer, register and countersign certificates of stock, bonds, or other evidences of indebtedness;
   3. To act as agent of any corporation, foreign or domestic, for any lawful purpose;
   4. To act as trustee under any deed of trust, mortgage, or bond issued by an individual, municipality, or body politic or corporate, and to accept and execute any other municipal or corporate trust not inconsistent with the laws of the Commonwealth;
   5. To act as a guardian, conservator, as a custodian under the Uniform Transfers to Minors Act (§ 64.2-1900 et seq.), and as depository of any money paid into court, whether for the benefit of a person under a disability or other person;
   6. To take, accept, and execute any and all trusts and powers, of whatever nature and description, as may be conferred upon or entrusted or committed to it by any person, or any body politic or corporate, or by other authority, by grant, assignment, transfer, devise, bequest, or otherwise or as may be entrusted or committed or transferred to it or vested in it by order of any circuit court, judge, or clerk; to receive and hold any property or estate, real or personal, which may be the subject of any such trust; and to be accountable to all parties in interest for the faithful discharge of every such trust, duty, or power which it may so accept; and
   7. To act as executor under the last will and testament, or administrator of the estate, of any deceased person, under appointment of any circuit court, judge, or clerk thereof, having jurisdiction of the estate of such deceased person.
2. Nothing in this chapter shall be construed as authorizing the creation of a trust not lawful as between individuals, nor to prohibit the deposit of funds by courts and fiduciaries in savings and loan associations and savings banks.
3. All rights, powers, and privileges, and all regulations, restrictions, and limitations, granted to or made applicable to associations by the provisions of this chapter shall likewise apply to any affiliate of an association which is authorized by the Commission to exercise trust powers. Any such affiliate shall be organized and operated solely for the purpose of offering trust services pursuant to the provisions of this chapter.
4. All federal savings and loan associations and federal savings banks, that have been, or hereafter may be, permitted by law to act in any fiduciary capacity, shall have the rights, powers, privileges, and immunities conferred by this chapter to the extent permitted by federal law.

History. 1984, c. 303, § 6.1-195.80; 1997, c. 801; 2010, c. 794.

Editor’s note.

At the direction of the Virginia Code Commission, the reference to “the Uniform Transfers to Minors Act (§ 31-37 et seq.)” was changed to “the Uniform Transfers to Minors Act (§ 64.2-1900 et seq.)” to conform to the recodification of Title 64.1 by Acts 2012, c. 614, effective October 1, 2012.

§ 6.2-1084. Continuation of trust powers in the event of consolidation or merger of two or more associations.

If an association consolidates or merges with another association or a bank and the association has, prior to such consolidation or merger, exercised trust powers under a certificate issued by the Commission, which certificate is in effect at the time of the consolidation or merger, the rights existing under such certificate shall pass to the resulting corporation. The resulting corporation may exercise such trust powers in the same manner and to the same extent as the association to which such certificate was originally issued. No new application to continue to exercise such powers is necessary. If the name of the resulting corporation differs from that of the association to which the right to exercise trust powers was originally granted, the Commission shall issue a certificate showing the right of such resulting corporation to exercise the trust powers theretofore granted to any of the associations participating in the consolidation or merger.

History. 1984, c. 303, § 6.1-195.81; 2010, c. 794.

§ 6.2-1085. When security not required.

No association with a minimum combined unimpaired capital and surplus of $50,000 or more shall be required by any officer or court of the Commonwealth to give security upon appointment to or acceptance of any fiduciary office which it may, by law, be authorized to execute, or to give security upon any bond given pursuant to § 19.2-386.6 or similar statute. No association shall qualify on an estate having a value in excess of its combined unimpaired capital and surplus without giving security for such excess on its bond, unless the giving of such security is waived under the terms of the governing instrument or by court order.

History. 1984, c. 303, § 6.1-195.82; 1993, c. 866; 2010, c. 794; 2012, cc. 283, 756.

The 2012 amendments.

The 2012 amendments by cc. 283 and 756 are identical, and substituted “§ 19.2-386.6 ” for “§ 4.1-341.”

§ 6.2-1086. Association’s operation and supervision of trust department.

1. The board of directors of an association is responsible for the proper exercise of fiduciary powers by the association. All matters pertinent thereto, including the determination of policies, the investment and disposition of property held in a fiduciary capacity, and the direction and review of the actions of all officers, employees, and committees utilized by the association in the exercise of its fiduciary powers, are the responsibility of the board. In discharging this responsibility, the board of directors may assign, by action duly entered in the minutes, the administration of such of the association’s trust powers as it may consider proper to assign to such directors, officers, employees, or committees as it may designate.
2. No fiduciary account shall be accepted without the approval of the directors, officers, or committees to whom the board may have assigned the performance of that responsibility. A written record shall be made of such acceptances and of the relinquishment or closing out of all fiduciary accounts.
3. Upon the establishment of a trust account for which the association has investment authority, a prompt review of the assets of such account shall be made. The board of directors shall also ensure that at least once during every calendar year thereafter, and within 15 months of the last review, all the assets held in or held for each trust account for which the association has investment authority are reviewed to determine the advisability of retaining or disposing of such assets. The board of directors shall act to ensure that all investments have been made in accordance with the terms and purposes of the governing instrument and in accordance with applicable law.
4. The trust department may utilize personnel and facilities of other departments of the association, and other departments of the association may utilize personnel and facilities of the trust department to the extent not otherwise prohibited by the law.
5. Every association exercising trust powers shall adopt written policies and procedures to ensure that the securities laws of the United States and the Commonwealth are complied with in connection with any decision or recommendation to purchase or sell any security. Such policies and procedures, in particular, shall ensure that the association’s trust department shall not use material inside information in connection with any decision or recommendation to purchase or sell any security.
6. Every association exercising fiduciary powers shall designate, employ, or retain legal counsel who shall be readily available to pass upon fiduciary matters and to advise the association and its trust department.

History. 1984, c. 303, § 6.1-195.83; 2010, c. 794.

§ 6.2-1087. Books and accounts.

Every association exercising trust powers shall keep its fiduciary records separate and distinct from other records of the association. All fiduciary records shall be so kept and retained for such time as to enable the association to furnish such information or reports with respect thereto as may be required by the Commissioner. The fiduciary records shall contain full information relative to each account. Every association shall also keep an adequate record of all pending litigation to which the association is a party in connection with its exercise of trust powers.

History. 1984, c. 30, § 6.1-195.84; 2010, c. 794.

§ 6.2-1088. Investment of funds and assets held as fiduciary.

Funds and assets held by an association in a fiduciary capacity shall be invested in accordance with the provisions of the governing instrument. When such instrument does not specify the character or class of investments to be made and does not vest in the association, its directors, or its officers absolute and uncontrolled investment discretion in the matter, funds and assets held pursuant to such instrument shall be invested in any investment in which fiduciaries may invest under the provisions of Chapter 15 (§ 64.2-1500 et seq.) of Title 64.2. An association acting as fiduciary under appointment by a court may likewise invest in any investments in which fiduciaries may invest under the provisions of Chapter 15 (§ 64.2-1500 et seq.) of Title 64.2 unless otherwise provided by order of the appointing court. Unless the governing instrument or order establishing the fiduciary relationship provides otherwise, funds and assets held by an association in a fiduciary capacity may also be invested in common trust funds and collective investment funds pursuant to the provisions of § 6.2-1095 .

History. 1984, c. 303, § 6.1-195.85; 2010, c. 794.

Editor’s note.

At the direction of the Virginia Code Commission, the two references to “Chapter 3 (§ 26-38 et seq.) of Title 26” were changed to “Chapter 15 (§ 64.2-1500 et seq.) of Title 64.2” to conform to the recodification of Title 26 by Acts 2012, c. 614, effective October 1, 2012.

§ 6.2-1089. Funds awaiting investment or distribution.

1. Funds and assets held in a fiduciary capacity by an association awaiting investment or distribution shall not be held uninvested or undistributed any longer than is reasonable for the proper management of the trust account.
2. Funds and assets held in trust by an association, including managing agency accounts, awaiting investment or distribution, unless prohibited by the governing instrument, may be deposited in other departments of the association, provided that the association shall first set aside under the sole control of the trust department, as collateral security:
   1. Direct obligations of the United States, or other obligations fully guaranteed by the United States as to principal and interest;
   2. Readily marketable securities of the classes in which fiduciaries are authorized or permitted to invest trust funds, as set forth in § 64.2-1502 ; or
   3. Other readily marketable securities as may be authorized by the Commissioner.Such collateral securities, or securities substituted therefor as collateral, shall at all times be at least equal in face value to the amount of trust funds so deposited, but such security shall not be required to the extent that the funds so deposited are insured by the Federal Deposit Insurance Corporation or other federal insurance agency. The req