Chap. 193.—An ACT to amend and re-enact section 48 of an act entitled an act
to revise, collate and codify into one act the general statutes of the Com-
monwealth relating to banks and banking, which act shall constitute and be
designated and cited as the Virginia Banking Act, and to repeal all Code
sections and all acts and parts of acts inconsistent therewith, and to provide
penalties for the violations thereof, approved March 27, 1928, as heretofore
amended, relating to liability of borrowers and loans on stock, [H B 109]

Approved March 14, 1936

1. Be it enacted by the General Assembly of Virginia, That section
forty-eight of an act entitled an act to revise, collate and codify into
one act the general statutes of the Commonwealth relating to banks
and banking, which act shall constitute and be designated and cited as
the Virginia Banking Act, and to repeal all Code sections and all acts
and parts of acts inconsistent therewith, and to provide penalties for
the violations thereof, approved March twenty-seventh, nineteen hun-
dred and twenty-eight, as heretofore amended, be amended and re-
enacted so as to read as follows:

Section 48. Limit of liability of borrowers; loans on stock.—
(a) The total liabilities of any person, partnership or corporation to
any bank, including the liabilities of the co-partnership, and the liabil-
ities of the several members thereof, except special partners, shall at
no time exceed fifteen per centum of the capital and permanent surplus
of such bank. Provided, that such limitation of fifteen per centum
shall be subject to the following exceptions:

(1) Obligations in the form of drafts or bills of exchange drawn
in good faith against actually existing values shall not be subject under
this section to any limitation based upon such capital and surplus.

(2) Obligations arising out of the discount of commercial or busi-
ness paper actually owned by the person, co-partnership, association,
or corporation negotiating the same shall not be subject under this
section to any limitation based upon such capital and surplus.

(3) Obligations drawn in good faith against actually existing val-
ues and secured by goods or commodities in process of shipment shall
not be subject under this section to any limitation based upon such cap-
ital and surplus.

(4) Obligations as indorser or guarantor of notes, other than com-
mercial or business paper excepted under (two) hereof, having a
maturity of not more than six months, and owned by the person, cor-
poration, association, or co-partnership indorsing and negotiating the
same, shall be subject under this section to a limitation of fifteen per
centum of such capital and surplus in addition to such fifteen per
centum of such capital and surplus.

(5) Obligations in the form of banker’s acceptances of other
banks of the kind described in section thirteen of the Federal reserve
act shall not be subject under this section to any limitation based upon
such capital and surplus.

(6) Obligations of any person, co-partnership, association or cor-
poration, in the form of notes or drafts secured by shipping documents,
warehouse receipts or other such documents transferring or securing
title covering readily marketable non-perishable staples when such
property is fully covered by insurance, if it is customary to insure such
staples, shall be subject under this section to a limitation of fifteen per
centum of such capital and surplus in addition to such fifteen per centum
of such capital and surplus when the market value of such staples
securing such obligation is not at any time less than one hun-
dred and fifteen per centum of the face amount of such obligation, and
to an additional increase of limitation of five per centum of such cap-
ital surplus in addition to such thirty per centum of such capital and
surplus when the market value of such staples securing such additional
obligation is not at any time less than one hundred and twenty per
centum of the face amount of such additional obligation, and to a fur-
ther additional increase of limitation of five per centum of such capital
and surplus in addition to such thirty-five per centum of such capital and
surplus when the market value of such staples securing such additional
obligation is not at any time less than one one hundred and twenty-five per
centum of the face amount of such additional obligation, and to a
further additional increase of limitation of five per centum of such
capital and surplus in addition to such forty per centum of such cap-
ital and surplus when the market value of such staples securing such
additional obligation is not at any time less than one hundred and
thirty per centum of the face amount of such additional obligation, and
to a further additional increase of limitation of five per centum of
such capital and surplus in addition to such forty-five per centum of
such capital and surplus when the market value of such staples secur-
ing such additional obligation is not at any time less than one hundred
and thirty-five per centum of the face amount of such additional obliga-
tion, and to a further additional increase of limitation of five per
centum of such capital and surplus in addition to such fifty per
centum of such capital and surplus when the market value of such
staples securing such additional obligation is not at any time less than
one hundred and forty per centum of the face amount of such addi-
tional obligation, but this exception shall not apply to obligations of
any one person, co-partnership, association or corporation arising
from the same transactions and/or secured upon the identical staples
for more than ten months.

(7) Obligations of any person, co-partnership, association, or cor-
poration in the form of notes or drafts secured by shipping documents
or instruments transferring or securing title covering livestock or giving a
lien on livestock when the market value of the livestock securing the
obligation is not at any time less than one hundred and fifteen per centum
of the face amount of the notes covered by such documents shall be sub-
ject under this section to a limitation of fifteen per centum of such
capital surplus in addition to such fifteen per centum of such capital
and surplus.

(8) Obligations of the United States, obligations of the State of
Virginia and of its political subdivisions, including sanitary districts,
obligations issued under authority of the Federal Farm Loan Act, as
amended, or issued by the Federal Home Loan Banks or the Home
Owners’ Loan Corporation, first mortgage real estate loans, which are
insured by the Federal Housing Administrator, and obligations guaran-
teed as to principal and interest by the United States, shall not be sub-
ject to any limitation based upon such capital and surplus.

(9) Obligations of any person, co-partnership, association, or cor-
poration in the form of notes secured by not less than a like amount
of bonds or notes of the United States, or bonds of the State of Vir-
ginia, shall be subject under this section to a limitation of fifteen per
centum of such capital and surplus, in addition to such fifteen per
centum of such capital and surplus.

(b) No loan shall be made by any bank on the security of shares
of stock in such bank. All loans of every character, in excess of fifteen
per centum of the capital and permanent surplus of any bank shall be
approved by a majority of the board of directors, or by the executive
committee of said board, approved by a majority of such executive
committee, by resolution which shall be recorded in the minutes of said
board or committee, and signed by the directors present and consenting
thereto.

(c) The validity of loans previously made in accordance with the
provisions of this section prior to the amendment shall not be affected
by this amendment, and such loans may from time to time be renewed,
provided such loans shall be reduced or collected in full, as the case
may be, as soon as reasonably possible, so as to conform to the provi-
sions of this section.
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