CHAPTER 584

An Act to revise, rearrange, amend and recodify the general laws of
Virginia relating to banking and finance; to that end to repeal Title 6
of the Code of Virginia, which title includes Chapters 1 to 18 and
§§ 6-1 to 6-585, inclusive, of the Code of Virginia, as amended, which
title relates to banking and finance; to amend the Code of Virginia by
adding thereto, in lieu of the foregoing title, chapters and sections of
the Code repealed by this act, a new title numbered 6.1, which title
includes new chapters numbered 1 to 9, inclusive, and new sections
numbered 6.1-1 to 6.1-851, inclusive, relating to banking and fi-
nance; to prescribe when such revision and recodification shall become
effective, and to repeal all acts and parts of acts in conflict with the
provisions of this act.

{H 229)

Approved April 5, 1966
Be it enacted by the General Assembly of Virginia:

1. That Title 6 of the Code of Virginia, which title includes Chapters
is one and §§ 6-1 to 6-585, inclusive, of the Code of Virginia, as amended,
e
. That the Code of Virginia be amended by adding thereto, in heu of
the title, chapters and sections of the Code of Virginia herein repealed, a
new title number 6.1, new chapters numbered 1 to 9, inclusive, and new sec-
tions numbered 6.1-1 to 6.1-351, inclusive, which new title, chapters and
sections are as follows:

CHAP. 1

GENERAL PROVISIONS

§ 6.1-1. The term “the Commission,” as used in this title, shall be
construed to mean the State Corporation Commission.

8 6.1-2. In order to provide additional funds for the operation of the
Bureau of Banking, the Commission is hereby authorized to increase the
fees and assessments for the examination, supervision, registration and
licensing of industrial loan associations, and credit unions to the extent
of fifty per centum of the fees and assessments imposed by law as of
January first, nineteen hundred thirty-four.

CHAP. 2
BANKING ACT

§ 6.1-3. This chapter may be cited as the Virginia Banking Act.

§ 6.1-4. The provisions of this chapter shall apply to all state banks
and trust companies; and so far as constitutionally permissible, to all banks
organized under the laws of the United States doing business in Virginia.

As used in this chapter, unless a different meaning is required by the
context, (1) the words “bank” and “trust company” mean a corporation
authorized by statute to accept deposits and to hold itself out to the public
as engaged in the banking or trust business in this Commonwealth; (2)
the words “merged bank’”’ mean any bank which has acquired another bank
under the provision of § 6.1-39 which has its principal office in one political
subdivision and a branch in another political subdivision; (3) the words
“bank holding company” mean any company (a) which directly or in-
directly owns, controls or holds with power to vote, twenty-five per centum
or more of the voting shares of each of two or more banks or of a company
which is or becomes a bank holding company by virtue of this section, or
(b) which controls in any manner the election of a majority of the direc-
tors of each of two or more banks, or (c) for the benefit of whose share-
holders or members twenty-five per centum or more of the voting shares of
each of two or more banks or bank holding company is held by trustees;
and for the purpose of this section, any successor to any such company
shall be deemed to be a bank holding company from the date as of
which such successor cocompany becomes a bank holding company. Not-
withstanding the foregoing, (i) no bank shall 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,
(ii) no company shall be a bank holding company by virtue of its.owner-
ship or control of its shares acquired by it in connection with its under-
writing of securities and which are held only for such period of time as will
permit the sale thereof upon a reasonable basis, (iii) no company formed
for the sole purpose of participating in a proxy solicitation shall be a bank
holding company by virtue of its control of voting rights or shares acquired
in the course of such solicitation, and (iv) no company shall be a bank
holding company if at least eighty per centum of its total assets are com-
posed of holdings in the field of agriculture.

§ 6.1-5. No person, copartnership or corporation, except corpora-
tions duly chartered and already conducting the banking business or trust
business in this State under authority of the laws of this State or the United
States, or which shall hereafter be incorporated under the laws of this
State or authorized to do business in this State under the banking laws of
the United States, shall engage in the banking business or trust business in
this State, and no foreign corporation shall do a banking or trust business
in this State, except that nothing in this chapter shall:

(1) Prevent a natural person from qualifying and acting as trustee,
personal representative, guardian, committee or in any other fiduciary,
capacity,

(2) Prevent any person or copartnership or corporation from lend-
ing money on real estate and personal security or collateral, or from guar-
anteeing the payment of bonds, notes, bills and other obligations, or from
purchasing or selling stocks and bonds, or

(3) Prevent any bank or trust company organized under the laws of
this State from qualifying and acting in another state or in the District of
Columbia, as trustee, personal representative, guardian or committee or in
any other fiduciary capacity, when permitted so to do by the laws of such
other state or District.

Nothing in this section shall be construed to prevent banks or trust
companies organized in this State and chartered under the laws of the
United States from transacting business in Virginia.

§$ 6.1-6. A bank may be incorporated under the Virginia Stock Cor-
poration Act; but need not comply with the provisions of subdivision (a) of
§ 13.1-6. Except as otherwise provided in this chapter, it shall have all
the powers conferred on corporations and be subject to all restrictions
imposed on corporations by the Virginia Stock Corporation Act. Except
as otherwise provided in this chapter, a bank shall not issue its shares for
any consideration except money at least equal in amount to the par value
of its shares; and it shall not issue no-par stock.

6.1-7. The powers, privileges, duties and restrictions conferred
and imposed upon any bank existing and doing business under the laws of
this State are abridged, enlarged or modified, as each particular case may
require, to conform to the provisions of this chapter. Nothing in this
chapter, however, shall be construed to change or affect any privilege
granted by charter to any bank incorporated before June fifteenth, nine-
teen hundred ten, nor to affect the legality of any investment made or
transaction had prior to June eighteenth, nineteen hundred twenty-
eight, pursuant to any provisions of law in force when such investment was
made or transaction had, nor shall the provisions of this chapter other than
§ 6.1-5 apply to any bank chartered prior to such date under the laws of
this State but having no place of business within this State and conducting
its entire business outside of this State.

6.1-8. Any bank heretofore or hereafter incorporated under the
laws of this State may, if it so elect, beeome a member bank of the Federal
Reserve Bank System of the United States, subject to the provisions of the
Act of Congress of the United States, approved December twenty-third,
nineteen hundred thirteen, and of any amendment thereof permitting
it to do so, and shall be vested with all powers conferred upon State
member banks of such system by the terms of such act, which shall be
exercised subject to all restrictions and limitations imposed by the Federal
Reserve Act, or by regulations of the Federal Reserve Board made pursuant
thereto. The right, however, is expressly reserved to revoke or amend the
powers herein conferred. The State Corporation 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.

§ 6.1-9. Any bank heretofore or hereafter incorporated under the
laws of this State may, if it so elects, become an “insured bank” as that
term is used in section twelve-B of the Federal Reserve Act, as amended,
providing for the creation of a Federal Deposit Insurance Corporation, and
shall, upon becoming an insured bank, be vested with all powers conferred
by the section and any amendment thereof upon State banks which shall
become insured banks. Such powers shall be exercised subject to all restric-
tions and limitations imposed upon such banks by the section and any
amendment thereof. 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 Federal
Deposit Insurance Corporation so long as like records, reports and infor-
mation in the possession or under the control of Federal Deposit Insurance
Corporation are, by federal statute, made available and subject to the
inspection of the governmental authority of this Commonwealth having
supervisory authority over such banks.

6.1-10. A bank may contract with the principal of any elementary
or secondary school, if authorized so to do by the school board in any county,
city or town wherein such bank has a location, for the participation by the
bank in any school thrift or savings plan, and it may accept deposits at
such a school either by its own collector or by any representative of the
school who becomes the agent of the bank for such purpose.

§ 6.1-11. Every such bank shall have power to exercise, by its board
of directors, or duly authorized officers or agents, subject to law, all such
incidental powers as shall be necessary to carry on the business of banking,
by discounting and negotiating bills of exchange, promissory notes, drafts,
and other evidences of debt; by receiving deposits; by buying and selling
exchange, coin, and bullion; by loaning money on real and personal secur-
ity, or collateral; by guaranteeing the payment of bonds, bills, notes and
other obligations, having not more than six months to run; by rediscount-
ing paper; and in purchasing and selling bonds.

§ 6.1-12. Every bank and trust company doing business in this State
is authorized temporarily to suspend its usual business during a period of
actual or threatened enemy attack affecting the community in which such
institution is doing business or other emergency justifying temporary
closing such as fire, flood or hurricane.

6.1-13. Before any bank shall begin business it shall obtain from
the State Corporation Commission a certificate of authority authorizing it
to do so; and 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, surplus and a reserve for operation in amounts sufficient to
warrant successful operation, provided that the capital stock shall not be
less than fifty thousand dollars;

(3) That oaths of all the directors have been taken and filed in
accordance with the provisions of § 6.1-48;

(4) That, in its opinion, there is public need for banking facilities or
additional banking facilities, as the case may be, in the community where
the bank is proposed to be, except as provided in § 6.1-40; ;

(5) That the corporation is formed for no other reason than a legiti-
mate banking business;

(6) That the moral fitness, financial responsibility, and business
qualifications of those named as officers and directors of the proposed bank
are such as to command the confidence of the community in which the
bank is proposed to be located;

(7) Anything else deemed pertinent.

§ 6.1-14. 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 it.

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 and stock purchase plans, and the issuance of stock
pursuant to such plans. In no event shall any stock option be granted at a
price which is less than one hundred per cent of the book value per share
of the stock as shown by the bank’s last published statement prior to the
granting of the option.

§ 6.1-15. The State Corporation Commission shall not issue a cer-
tificate of authority to any bank to commence business if commissions,
fees, brokerage, or other compensation, by whatever name it may be called,
have been paid or contracted to be paid by the bank, or by anyone in its
behalf, either directly or indirectly, to any person, partnership, association
or corporation for the sale of stock in said bank.

§ 6.1-16. 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. It shall not commence to engage in the trust business with-
out first obtaining permission from the State Corporation Commission.
The Commission shall not grant such permission unless the bank’s capital,
surplus and undivided profits exceed two hundred thousand dollars and the
Commission is satisfied that the bank is capable of complying with the
provisions of this article. But any bank actively engaged in the trust busi-
ness on January 1, 1966, may continue in the trust business without such
permission.

§ 6.1-17. All banks that are authorized to do a trust business and all
trust companies, heretofore and hereafter chartered, shall have the pow-
ers, and be subject to the regulations and restrictions conferred or imposed
upon companies authorized to do a general banking business in this State,
and shall in addition thereto have the following rights, powers and priv-
ileges, 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,
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, and to act as agent of any corporation,
foreign or domestic, for any lawful purpose.

(3) To act as trustee under any mortgage or bond issued by an
individual, municipality, body politic or corporate, and accept and execute
any other municipal or corporate trust not inconsistent with the laws of
this State.

(4) To accept trusts from and execute trusts for married women, in
respect to their separate property, and to be their agent in the manage-
ment of such property, or to transact any business in relation thereto.

(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, corporation or party.

To take, accept and execute any and all such lawful trusts,
duties and powers in regard to the holding and management and disposi-
tion 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 court of
record, judge or clerk, or by any person, corporation, municipality or other
authority, and it shall be accountable to all parties in interest for the faith-
ful 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 en-
trusted or committed to it by any person or persons, 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 court of record, judge or clerk, and to
receive and hold any property or estate, real or personal, which may be the
subject of any such trust.

(8) To act as executor under the last will and testament or admin-
istrator of the estate of any deceased person; or as guardian of any infant;
or as committee of the estate of any insane person, idiot or habitual
drunkard or any 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, or
trustee or committee for any convict in the penitentiary, under appoint-
ment of any court of record, judge or clerk thereof, having jurisdiction of
the estate of such deceased person or other person.

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.

All national banks which 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 this chapter.

§ 6.1-18. No bank or trust company of this State, with a minimum
unimpaired capital stock of fifty thousand dollars or more, shall be required
by any Officer or court of this State to give security upon appointment to or
acceptance of any office of trust which it may, by law, be authorized to
execute or to give security upon any bond given pursuant to §§ 4-56, 46.1-
351.2, or similar statute; provided, however, that no bank or trust company
shall qualify on an estate having a value in excess of its combined unim-
paired capital and surplus without giving bond for such excess.

§ 6.1-19. In all cases where any bank or trust company in this State
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 the president, vice-president, cashier, treasurer, secretary, or
any other officer of such trust company to take and subscribe for such cor-
poration any and all oaths required to be taken or subscribed by such
executor, administrator, trustee, guardian, or other fiduciary.

§ 6.1-20. Every State bank which obtains permission from the State
Corporation Commission to do a trust business, and every trust company
permitted to do commercial banking, shall establish a separate trust depart-
ment. Such department shall be established before such bank or trust com-
pany 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 bank or trust company or by either an amend-
ment to the bylaws of the bank or trust company or by a resolution duly
entered in the minutes of the board of directors.

6.1-21. Funds received or held in the trust department of a bank or
trust company awaiting investment or distribution shall not be used by the
bank or trust company in the conduct of its business, through deposit in its
commercial or savings department to the credit of its trust department, or
otherwise, unless the bank or trust company first delivers to the
department, as collateral security therefor securities, of any of the follow-
ing classes: |

(1) Bonds, notes, or certificates of indebtedness of the United States;

(2) Other readily marketable securities of the classes in which fidu-
ciaries are authorized or permitted to invest trust funds, as set forth in
§ 26-40 of this Code; or

(3) Other readily marketable bonds, notes, or debentures, commonly
known as investment securities, meeting the following requirements:

(a) That the issue be of a sufficiently large total to make market-
ability possible;
(b) Such a public distribution of the securities must have been pro-
vided for or made in a manner to protect or insure the marketability of the
issue ;

(c) That the trust agreement under which the security is issued
provides for a trustee independent of the obligor, which trustee must be a
bank or trust company. ,

The securities so deposited as collateral shall be owned by the bank or
trust company 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 or
trust company, less such amount thereof as shall be insured by the Federal
Deposit Insurance Corporation under existing or future federal law.

In the event of the failure or liquidation of such bank or trust com-
pany 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.

§ 6.1-22. The securities and investments held in each trust shall be
kept separate and distinct from the securities owned by the bank and
separate and distinct one from another. Trust securities and investments
shall be placed in the joint custody of two or more officers or other em-
ployees designated by the board of directors of the bank or trust company,
and such joint custody shall be interpreted to mean that neither of such
officers shall have access alone at any time to such securities and invest-
ments, and all such officers and employees shall be bonded.

§ 6.1-23. Funds received or held in the trust department of a bank or
trust company awaiting investment or distribution shall be invested or dis-
tributed as soon as practicable and shall not be held uninvested by such
bank or trust company any longer than is reasonably necessary.

Where the instrument creating the trust does not specify the char-
acter or class of investments to be made, and does not expressly invest in
the bank, its officers or directors a 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.

§ 6.1-24. No trust company or bank doing a trust business shall buy
any property for a trust from itself, or a department or branch thereof, or
from an affiliate or subsidiary corporation, or from an officer or employee
of such trust company or bank. Any such purchase shall be voidable at the
election of any beneficiary or successor trustee.

A sale of any trust property by a trust company or bank doing a trust
business to itself, or a department or branch of such trust company or bank,
or to an affiliate or subsidiary corporation, or to an officer or employee of
such trust company or bank shall be a breach of trust and voidable at the
election of any beneficiary or successor trustee.

But a trust company or bank as trustee of one trust may sell to itself
as trustee of another trust, and as such trustee of such other trust may buy
from itself as trustee of the first trust, bonds and negotiable notes directly
secured by a first lien on improved real estate which at the time of sale
satisfy the requirements of § 26-40.

§ 6.1-25. Any bank may establish and maintain one or more common
trust funds for the collective investment of funds held by it in any fiduciary
capacity, including agency accounts under which the bank exercises invest-
ment discretion and assumes fiduciary responsibilities. The collective
investment of funds of such agency accounts shall be permitted only in a
separate common trust fund composed solely of assets of agency accounts.
Such bank may invest the funds held by it in any fiduciary capacity in one
or more such common trust funds, whether it be acting as sole fiduciary
or with others as cofiduciaries, provided:

(1) That such investment in interests in such common trust funds
is not prohibited by the instrument, judgment, decree or order creating
the fiduciary relationship ;

(2) That in the case of cofiduciaries, such bank procures the written
consent of its cofiduciary or cofiduciaries to such investment, which consent
such cofiduciary or cofiduciaries are hereby authorized to grant;

(3) That at the time of making an investment in any such common
trust fund not less than forty per cent of the value of the assets of the
common trust fund shall be composed of cash and readily marketable in-
vestments after effecting the admissions and withdrawals then to be made.

In determining whether to invest in one or more common trust funds
the bank and its cofiduciaries, if any, may consider the common trust fund
as a whole and shall not, for example, be prohibited from making such
investment because any particular asset is nonincome producing; provided
that in making such investment in the fund as a whole, the fiduciary or
fiduciaries shall conform to the standard of judgment and care prescribed
in § 26-45.1 and the common trust fund shall not contain any asset which
the fiduciary or fiduciaries are expressly prohibited from purchasing by
the terms of the will or other instrument of the particular fiduciary account
whose funds are to be so invested.

(4) That the bank has no interest in any of the assets of the common
trust fund other than in a fiduciary capacity.

§ 6.1-26. Each common trust fund shall be established and main-
tained in accordance with a written plan, approved by resolution of the
board of directors of the bank, approved in writing by competent legal
counsel, and a copy thereof filed with the Commissioner of Banking. A
copy of such plan shall be available at the principal office of the bank for
inspection during all regular business hours by any person having a bene-
ficial interest in a fiduciary account participating in the common trust
fund, and a copy of such plan shall be furnished to any such person upon
request. Such plan may be amended, altered or modified from time to time
by the bank, provided, that such amendment, alteration or modification is
approved in the manner provided herein for the approval of the original
plan.

Such plan shall contain full and detailed provisions, not inconsistent
with the provisions of this chapter, as to (1) the manner in which the
fund is to be operated; (2) the bank’s investment powers with respect to
the assets of the fund; (3) the allocation and apportionment of income,
profits and losses; (4) the terms governing the admission and withdrawal
of participations in the fund; (5) the auditing of accounts of the bank
with respect to the common trust fund; (6) the basis and methods of
valuing assets in the common trust fund; (6a) the minimum frequency for
valuation of assets of the fund; (7) the basis upon which the fund may
be terminated; and (9) such other matters as may be necessary to define
clearly the rights of participants in the common trust fund.

The provisions of the plan shall control all participation in the fund
and the rights and benefits of all persons interested in such participations
as beneficiaries, or otherwise.

§ 6.1-27. Not less frequently than once during each period of three
months, the bank administering a common trust fund shall determine the
value of the assets in such fund. No participations shall be admitted to
or withdrawn from the common trust fund except on the basis of such
valuation. No participation shall be admitted or withdrawn from the
common trust fund unless the taking of such action shall have been
approved in such manner as the board of directors shall prescribe and
entry thereof shall have been made on or before the valuation date in the
fiduciary records of the bank. When participations are withdrawn from a
common trust fund, distribution may be in cash or ratably in kind, or
partly in cash and partly ratably in kind, provided, however, that all such
distributions as of any one valuation date shall be made on the same basis.
Valuations made in good faith in accordance with the provisions of this
chapter shall be conclusive and binding upon all parties in any way in-
terested in the fund.

§ 6.1-28. The bank shall have the exclusive management and control
of each common trust fund administered by it, and the sole right at any
time to sell, exchange, transfer or otherwise change or dispose of assets
comprising the same; provided, however, that no asset shall be purchased
which is not a proper investment for each fiduciary account participating
in such fund, and that at no time shall the bank purchase any asset in
which it has any interest. The bank shall not invest any of its own
funds in a common trust fund administered by it, and if the bank, because
of a creditor relationship or for any other reason acquires an interest
in a participating fiduciary account, such participation shall be with-
drawn on the first date on which such withdrawal can be effected. The
legal title to all of the assets of the common trust fund shall be solely in
the bank as fiduciary, and shall be considered as assets held by it as
fiduciary. The bank may hold any of the assets of a common trust fund
in the name of a nominee, provided the records of such common trust fund
clearly show the ownership of the asset to be in the bank as trustee of the
common trust fund. The participating accounts owning or holding partici-
pations in the common trust fund shall be deemed to have only a propor-
tionate undivided interest in the common trust fund. No fees, commis-
sions or compensation whatsoever shall be paid out of any common trust
for the management of such fund except as hereafter provided. The bank
may charge a fee for the management of the common trust fund pro-
vided that the fractional part of such fee proportionate to the interest of
each participant shall not, when added to any other compensations charged
by the bank to the participant, exceed the total amount of compensations
which would have been charged to said participant if no assets of said par-
ticipant had been invested in participations in the fund. A bank shall not
be prohibited from reimbursing itself out of a common trust fund for
such reasonable expenses incurred by it in connection therewith as would
have been chargeable to the respective participating fiduciary accounts
if incurred in the separate administration of such participating fiduciary
accounts. Further, a bank shall not be prohibited from paying to servic-
ing agents, including the bank administering the common trust fund,
the reasonable expenses incurred in servicing mortgages held by the com-
mon trust fund and charging such expenses against the income account
of the common trust fund; provided that any charge made by the bank
for servicing mortgages shall not exceed the amount charged by the
bank to other accounts or customers for similar services.

Notwithstanding the foregoing and the provisions of § 6.1-24, the
bank may purchase for its own account from a common trust fund any
defaulted mortgage held by such fund. If the bank elects so to purchase
the mortgage, it must do so at its market value or at the sum of principal,
interest and penalty charges, whichever is greater.

§ 6.1-29. A bank administering a common trust fund shall, at least
once during each period of twelve months, cause a complete audit to be
made of the common trust fund either by auditors responsible only to the
board of directors of the bank or by independent public accountants. If
an independent public accountant is used the expense shall be charged
to the common trust fund, either against principal or income or appor-
tioned between both as may be provided by the plan. A condensed state-
ment of such audit shall be available, without charge, to any person who is
receiving income from any of the trusts participating in the common
trust fund and such complete audit shall be available at the principal
Office of the bank for examination and inspection, during all regular
business hours, by any person having an interest in a fiduciary account
participating in the common trust fund. A condensed statement of such
audit shall also be filed with the Commissioner of Banking.

§ 6.1-30. Whenever ordered by a court of competent jurisdiction, a
bank administering a common trust fund shall render to such court an
accounting of such fund; and upon application of a bank to a court of com-
petent jurisdiction, it may obtain a settlement of its common trust fund
accounts on such conditions as the court may specify.

§ 6.1-31. A bank holding stock as fiduciary may hold it in the name
of a nominee without mention of the trust in the stock certificate or stock
registry book. A fiduciary registering stock in the name of a nominee as
herein permitted, shall (1) clearly show upon its trust records the owner-
ship of the stock by the fiduciary and the facts regarding its holding, and
(2) shall provide that the nominee shall not have possession of the stock
certificate 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 so
held. Any individual serving as cofiduciary with a bank may consent to
the bank holding such stock in the name of a nominee as herein provided,
but provided further in such case said bank shall forthwith upon demand of
said individual cofiduciary cause said stock to be transferred into the name
of the fiduciaries in their fiduciary capacity.

6.1-32. Any trust company or any bank doing a trust business,
failing to comply with the provisions of §§ 6.1-20 to 6.1-22 and 6.1-24 or
any one or more of them, may be suspended or prohibited, or suspended
and prohibited from doing a trust business by the State Corporation Com-
mission.

§ 6.1-38. A national banking association, organized under the laws
of the United States and doing business in this State, may be converted
into and become an incorporated bank of this State by the following
procedure:

_ 1. The directors of the national banking association shall cause to be
incorporated under the laws of this State a corporation authorized by its
certificate of incorporation to conduct the business of banking as the suc-
cessor of the national banking association.

a. The certificate of incorporation of said corporation shall conform
as nearly as may be legally permissible to that of the national] banking
association.

b. The principal office of said corporation shall be in the county or
city wherein the national banking association has its principal office.

c. The maximum amount of the capital stock of said corporation, its
division into shares, the par value of shares, their classification and prefer-
ences, if any, shall conform in all respects to those of the national banking
association; and the minimum capital stock requirements shall comply
with § 6.1-13 of the Code.

2. The procedure to be followed in effecting the conversion of a
national banking association to a State bank shall be that prescribed by
the Act of Congress of August seventeen, nineteen hundred fifty, Chapter
729, as it now exists or as it may hereafter be amended.

3. Upon completion of the procedures required by federal law, 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,
and file said certificate with the State Corporation Commission.

§ 6.1-34. Upon the conversion of a national banking association to a
State bank, as provided in §§ 6.1-33 and 6.1-38 the State bank shall be
considered to be the same business and corporate entity as the former
national banking association but with rights, powers and duties as pre-
scribed by State law. Any reference to the former national banking asso-
ciation in any contract, will or document shall be considered and construed
as a reference to the State bank if not inconsistent with the provisions of
the contract, will or document or with applicable law.

6.1-35. Any bank incorporated under the laws of this State may,
upon compliance with the laws of the United States, be converted into a
national banking association.

Whenever any such bank shall have become a corporation for carrying
on the business of banking under the laws of the United States, it shall
notify the State Corporation Commission of such fact, and shall file with
it a copy of its authorization as a national banking association certified by
the Comptroller of the Currency. It shall thereupon cease to be a corpora-
tion under the laws of this State, except that for a period not exceeding three
years thereafter, its corporate existence shall be deemed to continue for
the purpose of prosecuting or defending suits by or against it, and of en-
abling 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 shall have been established.

Such change from a State to a national bank shall not release any such
bank from its obligations to pay and discharge all the liabilities created by
law or incurred by it before becoming a national banking association, or
any tax imposed by the laws of this State 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 any assessment,
penalty or forfeiture imposed or incurred under the laws of this State up
to the date of its becoming a national banking association.

§ 6.1-36. At the time when such a conversion of a State bank into a
national banking association under the authority granted by the preceding
section becomes effective, all the property of the former State bank, includ-
Ing all its right, title and interest in and to all property of whatsoever kind,
whether real, personal or mixed, and things in action, and every right,
privilege, interest and asset of any conceivable value or benefit then exist-
ing, belonging or pertaining to it, or which would inure to it, shall imme-
diately, 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, which 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 such State bank; and such national bank shall be deemed to be
a continuation of the entity and identity of such State banking corporation,
operated under and pursuant to the laws of the United States, and all the
rights, obligations and relations of such State banking corporation to or in
respect to any person, estate, creditor, depositor, trustee or beneficiary of
any trust, and in or in respect to any executorship or trusteeship or other
trust or fiduciary function, including appointments, designations and nomi-
nations, shall remain unimpaired. And such national bank, as of the

ginning of its corporate existence, shall, by operation of this section,
succeed to all such rights, obligations, relations and trusts, including ap-
pointments, designations and nominations, and the duties and liabilities
connected therewith, and 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. If such State banking corporation be acting as ad-
ministrator, coadministrator, executor, coexecutor, trustee, or cotrustee
of, or in respect to, any estate or trust being administered under the laws of
this State, 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 into and in such national bank from
and as of the beginning of its corporate existence, irrespective of the dat
when any such relation may have been created or established, and irrespe
tive of the date of any trust agreement relating thereto or the date of th
death of any testator or decedent whose estate is being so administered.

Nothing done in connection with the change from a State to a nations
bank shall, in respect to any such executorship, trusteeship or simila
fiduciary relation, be deemed to be or to effect, under the laws of this Stat
a renunciation or revocation of any letters of administration or letter
testamentary pertaining to such relation, nor a removal or resignatio
from any such executorship or trusteeship, nor shall such act or any othe
thing done be deemed to be of the same effect as if the executor or truste
had died or otherwise become incompetent to act; provided, however, th
nothing in this section shall in any way affect any provisions of law in cas
of a national bank becoming a State bank.

6.1-37. The rights of stockholders of the national banking associ
tion who dissent from the action of the stockholders, approving the conve)
sion of the national banking corporation into a State bank, shall be gov
erned by the provisions of § 2 (b) of the Act of Congress of August sever
teen, nipeleat hundred fifty, Chapter 729, as now existing or as hereafte
amended.

§ 6.1-38. The State Corporation Commission shall examine the cet
tificate filed pursuant to § 6.1-33 and if from such examination it appear
that the procedure required by federal law has been followed and that th
conversion has been approved by the stockholders of the national bankin
association in the manner and by the percentage vote required by feders
law, the Commission may issue to the newly incorporated State bank |
certificate of authority to do business as a bank, in accordance with th
provisions of § 6.1-13 and upon the issue of such certificate the conversio
of the national banking association into a State bank shall be and becom
effective and automatically completed.

6.1-39. (a) No bank or trust company heretofore or hereafter in
corporated under the laws of this State shall be authorized to engage i
business in more than one place, except that the State Corporation Com
mission, when satisfied that public convenience and necessity will thereb
be served, may authorize banks having paid-up and unimpaired capits
and surplus of fifty thousand dollars or over to establish branche
within the limits of the city, town or county in which the parent ban
is located or to establish branches elsewhere by merger with banks Ic
cated in any other county, city or town.

This section shall not be construed to prohibit the operation 0
existing branch banks heretofore established.

The term “parent bank’ shall be construed to mean the bank 0
banking office at which the principal functions of the bank are conductec
The location of a parent bank or of a branch bank may be moved if th
State Corporation Commission determines that public convenience an
necessity will be served by such move; but the location of a parent ban
or of a branch bank may not be moved beyond the limits of the city
town or county in which it is located except through a merger wit
another bank.

(b) This section shall be construed to allow the merger of bank
and the operation by the merged company of such banks, and to allo
the sale of any bank to, and the purchase thereof through merger by, an
other bank and the operation of such banks by the merged bank, provide
that the State Corporation Commission shall be of the opinion and sha
first determine that public convenience and necessity will be served b
that the public interest demands, on account of emergency conditions,
that a merger be effected, it may enter an order to such effect permitting
such merger notwithstanding that the banks involved, or one or more
of them, have not been in actual] operation for five or more years.

(c) Notwithstanding the limitations of the foregoing paragraphs,
the State Corporation Commission may, when satisfied that public con-
venience and necessity will thereby be served, authorize the establishment
of branch banks in cities contiguous to the county or city in which the
parent bank is located, and the establishment of branch banks in counties
contiguous to the city in which the parent bank is located. Establishment
of such branches may be by merger, consolidation, purchase of assets or
creation of a new branch; but if the parent bank is located in a city such
branches in the contiguous county may not be established more than five
miles outside the city limits.

§ 6.1-40. When an application is made to the State Corporation
Commission by a bank pursuant to § 6.1-13 for a certificate of authority to
commence business in a political subdivision it shall not be necessary to
prove the requirements of the paragraph numbered (4) of § 6.1-13 or,
under § 6.1-13 to prove the public necessity for banking or additional
banking facilities in the community where the bank is proposed to be
located when all of the banks located in such political subdivision are
owned or controlled (1) by “bank holding companies” or (2) when all of
the banks located in that political subdivision are owned or controlled by
“merged banks” or (3) when all of the banks located in such political
subdivision are owned or controlled by “bank holding companies” and
“merged banks.”

§ 6.1-41. No branch bank shall be operated or advertised under any
other name than that of the identical name of the parent bank, unless
permission be first had and obtained from the Commission, and unless such
different name shall contain or have added thereto language clearly indi-
cating that it is a branch bank and of which bank it is a branch.

§ 61-42. The Commission, when in its discretion the same is re-
quired for patients in, students at, and employees of hospitals operated by
the Veterans Administration or by the State or for members of the armed
forces at any military or naval federal area in Virginia, may permit any
bank which is authorized to do business in this State to establish and
operate such banking facilities as are required in any such hospital or
federal area.

__ The banking facilities so established shall be operated in accordance
with the laws of this State relative thereto and the Commission may permit
only certain specified services to be so established and operated.

6.1-43. Banks may merge or consolidate upon compliance with the
provisions of Article 5 of the Virginia Stock Corporation Act, except that
the provisions of § 13.1-75 shall not apply. § 13.1-71 (other than the last
paragraph thereof) shall apply to the merger or consolidation of a state
and a national bank if the national bank is engaged in business in Virginia.
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.

§ 6.1-44. In the event of any such merger or consolidation as is
authorized by the preceding section the merged or consolidated corporation
(whether it be one of merging or consolidating banks, or a new bank,
State or national, formed by means of such merger or consolidation) 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 consolidation or merger became effective, or then
belonging or pertaining to any one or more of the banks, parties to such
such banks. But no such merged or consolidated State bank resulting from
any merger or consolidation shall do business in Virginia until it shall
have obtained from the State Corporation Commission a certificate of
authority authorizing it to do so. The provisions of § 6.1-13 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 or consolidated
bank were a new bank.

6.1-45. The affairs of every bank or banking institution incorpo-
rated under the laws of this State shall be managed by a board of directors
which shall consist of not less than five persons.

A majority of the directors shall be citizens of this State, provided
this requirement shall not apply to any bank chartered under the laws of
this State prior to June eighteenth, nineteen hundred twenty-eight
but having no place of business within this State and conducting its entire
business outside of this State.

§ 6.1-46. The provisions of The Virginia Stock Corporation Act
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.

§ 6.1-47. Every director of a bank incorporated under the laws of
this State which has a capital stock not in excess of fifty thousand dollars
shall be the owner in his sole name and have in his personal possession or
control shares of stock in such bank having a par value of not less than one
hundred dollars for each ten thousand dollars, or fractional part thereof,
of the capital stock of such bank; every director of a bank which has a
capital stock in excess of fifty thousand dollars shall be the owner in his
sole name and have in his personal possession or contro! shares of stock in
such bank having a par value of not less than five hundred dollars if such
bank has a capital stock of more than fifty thousand dollars and not to
exceed one hundred thousand dollars, not less than seven hundred and
fifty dollars if such bank has a capital stock of more than one hundred
thousand dollars and not more than three hundred thousand dollars, and
not less than one thousand dollars if such bank has a capital stock of
more than three hundred thousand dollars. Such stock must be un-
pledged and unencumbered at the time such director becomes a director
and during the whole of his term as such.

When a bank is controlled by a bank holding company as defined in
§ 6.1-4, a director may comply with the provisions of this section 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 par
value equal to the par value of shares of bank stock that he would be
obligated to own under the preceding provisions of this section.

Any director violating the provisions of this section shall, immedi-
ately, vacate his office. The requirements of this section shall not apply to
any person duly elected a director of a bank prior to June eighteen, nine-
teen hundred twenty-eight, 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.

§ 6.1-48. Every director of a bank incorporated under the laws of
this State shall, within sixty days after his election, take and subscribe to
an oath that he will diligently and honestly perform his duties as director,
and that 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 com-
pany, unpledged and unencumbered in any way, shares of stock of the
bank of which he is a director or, when a bank is controlled by a bank
holding company as defined in § 6.1-4, shares of stock of the bank holding
company, having a par value of not less than the amounts respectively
prescribed by § 6.1-47, and, in case of reelection or reappointment, that
during the whole of his immediate previous term as a director, such stock
was not at any time pledged or in any other manner encumbered or
hypothecated to secure a loan. Such 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 sixty days after his election or appointment to take the oath as
required by this section, shall automatically forfeit his office.

§ 6.1-49. Whenever any director or officer of a bank doing business
in this State, shall have continued to violate any law relating to such bank
or shall have continued unsafe or unsound practices in conducting the
business of such bank, after the director or officer, and the governing board
of the bank of which he is a director or officer, have been warned in writing
by the State Corporation Commission to discontinue such violation of law
or such unsafe or unsound practices, the Commission shall certify the facts
to the Circuit Court of the City of Richmond. Such circuit court shall
thereupon enter an order requiring such director or officer to appear before
such court, within not less than ten 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 court by the Commission. 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.

If after granting the accused director or officer a reasonable
opportunity to be heard the court 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 govern-
ing board of the bank, of which he is a director or officer have been warned
in writing by the Commission to discontinue such violation of law or
unsafe or unsound practices, the court 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, whereupon such director or officer shall cease to be a director or
officer of such bank and thereafter cease to participate in any manner in
the management of such bank.

The Commission in any such hearing shall be represented by the
Attorney General.

§ 6.1-50. The Commission and any director or officer aggrieved by
any order of the court entered under the preceding section removing such
director or officer from office and restraining him from participating in
any manner in the management of the bank of which he is a director or
officer, or refusing to remove the director or officer from office and to
restrain him from participating in any manner in the management of the
bank, shall have, of right, an appeal to the Supreme Court of Appeals
within sixty days from the date of such order.

§ 6.1-51. Any director or officer removed and restrained under the
provisions of § 6.1-49 from participating in any manner in the manage-
ment of any bank of which he is a director or officer, who thereafter par-
ticipates in any manner in the management of such bank except as a stock-
holder therein shall be fined not more than five thousand dollars, or confined
a a penitentiary for not less than one year nor more than five years, or

§ 6.1-52. The board of directors of every bank shall hold meetings at
least once in each calendar month, at which meeting a majority of the
whole board shall be necessary for the lawful transaction of business, ex-
cept that the stockholders. by bylaw, may fix any riumber not less than
§ 6.1-58. No officer, director or employee of a bank or trust company
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.

§ 6.1-54. The board of directors of every bank shall require bonds
from all of the active officials and employees of such bank. 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 State Corporation Commission it is neces-
sary for the protection of the public interest.

§ 6.1-55. The directors of every bank shall, at least once in each
calendar year, cause an examination to be made of the operation of the
bank and of its general books of account. A statement of such examina-
tion shall be reported to the Board at the next regular meeting following
report of such examination and the minutes of the meeting shall show
that such report was made.

§ 6.1-56. The board of directors of any bank may declare a dividend
of so much as they shall judge expedient of the profits of the bank, after
providing for all expenses, losses, interest and taxes accrued, or due by
such bank. But before any such dividend is declared, the capital shall be
paid in full, and the directors shall cause to be laid aside, to a fund known
as a surplus the entire net profits, until such fund shall amount to at least
ten per centum of the capital stock of the bank; and thereafter the directors,
before declaring a dividend and, in the absence of a dividend declaration,
at least annually, shall set aside to the surplus fund, at least ten per centum
of the net profits as hereinafter defined, until the surplus fund shall amount
to twenty per centum of the capital stock of the bank. Any losses sustained
by such bank in excess of its net undivided profits may be charged to its
surplus; provided, that its surplus shall thereafter be reimbursed from its
earnings, and no dividend shall be declared or paid by such bank until its
surplus shall be fully restored to the amount accumulated in accordance with
this section and no dividend shall be declared or paid by any bank which
would reduce the surplus below the amount accumulated in accordance with
the mandatory requirements of this section.

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 twelve months, unless the same are well secured and
in process of collection by law, shall be deducted from the profits in addition
to all expenses, losses, interest and taxes accrued, and the balance shall be
deemed to be the net profits.

§ 6.1-57. No bank or trust company incorporated under the laws of
this State shall invest in its bank building and premises, including its
furniture and fixtures, and including such part of the stock in a building
company or other corporation of like nature as represents the ownership
of any such bank building or premises, an amount greater than fifty
per centum of its paid-in capital stock and its surplus undiminished by
losses. If, subsequent to any such investment, the surplus of any such bank
or trust company be diminished by losses so that such investment shall
amount to more than fifty per centum of its paid-in capital stock and its
remaining surplus, such bank or trust company shall not pay dividends
in excess of a rate of six per centum per annum until such surplus and
paid-in capital stock of such bank or trust company shall again be equal
to double the value of its bank building and premises, including its
furniture and fixtures, and including any stock in any such building com-
pany or corporation of like nature; provided, however, that nothing in this
section shall apply to investments existing on June twenty-first, nine-
teen hundred thirty-two and valid when made.
CH. 584] ACTS OF ASSEMBLY 803

§ 6.1-58. 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 ten per cent of the bank’s capital stock and permanent surplus;
provided that it may not invest in any such service corporation unless it
uses or intends to use the services of such service corporation. It may not
invest in more than one such corporation without the consent of the State
Corporation Commission. For purposes of this section, a bank service cor-
poration is defined as one 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. Stock in a Federal Reserve Bank shall not
be considered stock of a bank service corporation within the meaning of
this section.

§ 6.1-59. Every bank incorporated under the laws of this State may
a hold and convey real estate for the following purposes and for no
other:

(1) Such as shall be desirable and prudent for its present or future
accommodation in the transaction of its business ;

(2) Such as shall be mortgaged or otherwise encumbered to it in good
faith by way of security for debts contracted ;

3) Such as shall be conveyed to it in satisfaction of debts pre-
viously contracted in the course of its dealings;

Such as it shall purchase at sales under judgments, decrees,
mortgages, or deeds of trust held by it, in whole or in part, or shall purchase
to secure debts due to it; but no such bank shall hold the possession of any
rea] estate under mortgage or other encumbrance or the title and possession
of 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
ten years except with the written consent and approval of the State Cor-
poration Commission, provided, however, that if, within such ten 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 such
consent and approval of the Commission. :

Nothing in this section shall affect the validity of the title to any such
real estate conveyed or transferred by a bank.

§ 6.1-60. No bank shall acquire or own its own stock except to protect
itself against loss from debts previously contracted, in which case it shall
be disposed of within twelve months from the time acquired. No bank
shall make loans collaterally secured by the stock of such bank. No bank
shall invest any of its funds in shares of stock of any other corporation nor
in any notes or other obligations secured by real estate on which as security
it is prohibited by § 6.1-63 from making any loans; this provision shall
not, however, prevent any bank, (1) from acquiring any such stock, notes
or other obligations to protect itself or any fund in its custody or posses-
sion against loss from debts theretofore contracted, nor (2) from acquir-
ing, owning and holding stock of a building corporation of the character
and to the amount provided by § 6.1-57, nor (3) from acquiring, owning
and holding stock of an agricultural credit corporation organized under
the laws of this State, provided that the total amount of such stock shall
not exceed twenty per centum of the amount of the capital stock of such
bank actually paid in and unimpaired, plus the amount of its unimpaired
surplus fund, nor (4) from acquiring, owning and holding stock of Fed-
eral National Mortgage Association, nor (4) (a) from acquiring, holding
and owning stock, in any corporations 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 per centum
of the amount of the capital stock of such bank actually paid in and unim-
paired, plus the amount of its unimpaired surplus fund, nor (5) from
acquiring, owning and holding stock of a small business investment com-
pany as defined by the Federal Small Business Investment Act of 1958,
nor (6) from acquiring, owning and holding stock of an industrial develop-
ment company organized under the provisions of the Virginia Industrial
Development Corporation Act; nor (7) from acquiring, owning and
holding stock of a bank service corporation of the character and to the
amount provided in § 6.1-58; nor shall the provisions hereof be construed
to require a bank to dispose of any preferred stocks lawfully acquired as
an investment prior to the first day of January, nineteen hundred forty.
6.1-61. Subject.to the exceptions hereinafter stated, the total
liabilities of any person, partnership (including the members other than
limited partners) or corporation to any bank shall at no time exceed fifteen
per cent of the capital and surplus of such bank. For the purposes of this
section there may be counted as part of the surplus (a) the undivided
profits as of the date of the most recent call statement, and (b) capital
notes and debentures, the issuance of which has been approved by the Com-
mission, outstanding as of said date, and consisting of debt obligations
subordinate to all other contractural liabilities of the bank, and maturing
more than five years after said date.
The following kinds of obligations shall not be subject to any
limitation :

(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, or corpora-
tion negotiating the same;

(8) Obligations drawn in good faith against actually existing values
and secured by goods or commodities in process of shipment;

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, obligations of the State of
Virginia and of its political subdivisions, including sanitary or public facili-
ties districts, 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, obligations issued under authority of the Federal
Farm Loan Act, as amended, or issued by the Federal Home Loan Banks,
‘first mortgage real estate loans which are insured by the Federal Housing
Administrator, obligations guaranteed as to principal and interest by the
United States, loans in which the Small Business Administration or a
federal reserve bank has definitely agreed or committed itself to partici-
pate, to the extent of such participation, loans which the Federal Com-
modity Credit Corporation has definitely agreed to purchase, direct obliga-
tions of and obligations guaranteed by the Export-Import Bank and loans
guaranteed by a federal guaranteeing agency, pursuant to the Defense
Production Act of 1950, or bonds and notes of the Federal National Mort-
gage Association or obligations of Federal Land Banks, Federal Inter-
mediate Credit Banks, or Banks for Cooperatives issued pursuant to Acts
of Congress;

(6) Obligations of any person, partnership, association or corpora-
tion secured by not less than a like amount of bonds or notes or other
evidences of indebtedness of the United States or of the State of Virginia.

. The following kinds of obligations shall be subject to a limitation
of thirty per cent of such capital and surplus:

(1) Obligations as endorser or guarantor of notes, other than com-
mercial or business paper excepted under paragraph A(2) hereof having a
maturity of not more than six months, and owned by the person, partner-
ship, or corporation endorsing and negotiating the same. . |
: (2) Obligations of any person, partnership, or corporation in the
form of notes or drafts secured by shipping documents or instruments
transferring or securing title covering livestock or giving a lien on live-
stock when the market value of the livestock securing the obligations is not
at any time less than one hundred and fifteen per cent of the amount by
which the obligations exceed fifteen per cent of such capital and surplus.

(3) Obligations secured by bonds or notes of the United States, or
bonds of the State of Virginia or any of its political subdivisions, if the
face value thereof is at least equal to the excess of the obligations over
fifteen per cent of such capital and surplus.

C. Nonrenewable obligations having not more than ten months to
run consisting of notes or drafts secured by shipping documents, ware-
house 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 limita-
tion up to fifty per cent of such capital, surplus and undivided profits.
The sliding scale limitation shall be applied as follows: When the face
amount of the obligation exceeds fifteen per cent of such capital and sur-
plus by any number of percentage points up to thirty-five, the market value
of the security for the obligation must exceed the face amount of the obliga-
tion by at least the same number of percentage points.

All loans made by a bank in excess of fifteen per cent of its capital and
surplus shall be approved by the board of directors or the executive com-
mittee of the bank by resolution recorded in the minute book.

§ 6.1-62. No officer, director, or employee of any bank shall borrow
any amount whatever from such bank until after such loan has been
approved by a majority of the directors or a committee appointed by the
board of directors with authority to approve loans. The board of directors
may by proper resolution authorize certain officers to handle renewals of
such loans, or may fix for a definite period lines of credit that may be
granted to individual directors, officers or employees.

§ 6.1-68. No bank shall make any loan secured by real estate when
such loan together with all prior liens and encumbrances on such real
estate exceeds fifty per cent of the appraised value of the real estate
securing such loan, unless such loan is (a) amortized by level or sub-
stantially level] payments of principal and interest due at least as regularly
as annually in amounts which would pay the loan in full over a period
of twenty-five years or less, or (b) amortized by payments of principal due
at least as regularly as annually, which are not less than four per cent
per annum of the original principal of the loan and in either of such
events, the amount of the loan, together with all prior liens or encum-
brances on such real estate shall not exceed eighty per cent of the ap-
praised value of the real estate securing such loan.

No bank shall make such loans in an aggregate sum in excess of the
amount of its capital and its surplus, or in excess of seventy per cent
of its time and savings deposit, whichever is greater.

The appraisals herein required if and when the loan shall equal or
exceed five thousand dollars, shall be made by appraisers appointed by or
by the authority of the board of directors, shall be in writing, signed by
the appraisers, and shall be retained in the files of the bank, subject to
examination of bank examiners. When the loan shall exceed ten thousand
dollars, the appraisal shall be made by at least two such appraisers. The
appraisers so appointed shall be experienced persons competent to appraise
real estate in the locality where the real estate is.

6.1-64. Loans made to finance the construction of a building or
otherwise to improve real estate, and having maturities of not to exceed
eighteen months if accompanied by a valid and binding agreement to
advance an amount equal to or greater than the construction loan upon the

gS eee
partnership, association or corporation acceptable to the bank (and in-
cluding 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 § 6.1-63, but shall be classed as ordinary commercial loans.
No bank shall invest in, or be liable in, any such loans in an aggregate
amount in excess of one hundred per cent of its capital and surplus. The
period of time, not to exceed eighteen months, elapsing prior to the com-
pletion of the improvements shall not be counted in computing the period
of twenty-five years specified in § 6.1-63. The provisions of this section and
§ 6.1-65 shall be cumulative and not mutually exclusive.

§ 6.1-65. A loan secured by real estate within the meaning of
§ 6.1-63 shall be in the form of an obligation or obligations executed or
assumed by the borrower, secured by mortgage, trust deed or other such
instrument upon real estate owned by the borrower, and upon which the
bank relies as the principal security for the loan.

Where 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 enter in its records a written statement of the
factors it relies on, the loan does not constitute a loan secured by real es-
tate within the meaning of § 6.1-63.

The provisions of § 6.1-63 shall not be construed to prohibit any bank
from accepting as security for a loan made in good faith without security
or upon security since found to be inadequate an obligation or obligations
secured by mortgage, trust deed, or other such instrument upon real

§ 6.1-66. Loans made to home owners for maintenance, repair,
modernization, improvement and equipment to their homes, whether or not
secured, shall not be considered as loans secured by real estate within the
meaning of § 6.1-63, provided each such loan shall be payable in approxi-
mately equal monthly installments, shall not be for a term longer than six
years, and shall not exceed five thousand dollars in amount.

§ 6.1-67. Any bank or trust company borrowing money or redis-
counting 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. No
officer, director or employee of any bank or trust company shall issue the
note of such bank or trust company for borrowed money or rediscount any
note or pledge any of the assets of such bank or trust company, except when
authorized by resolution of the board of directors of such bank or trust
company previously made and entered upon the minutes of such bank or
trust company, under such rules and regulations and in such form as may
be prescribed by the Commission.

6.1-68. Any bank or trust company doing business in this State
may accept drafts or bills of exchange drawn upon it, having not more than
six months’ sight to run, which grow out of transactions involving the
importation or exportation of goods, or which grow out of transactions
involving the domestic shipment of goods, (1) if shipping documents
conveying or securing title are attached at the time of acceptance, or (2) if
such drafts or bills of exchange are secured at the time of acceptance by a
warehouse receipt or other such document conveying or securing title cov-
ering readily marketable staples. No bank shall accept, whether in a
foreign or domestic transaction, for any one person, company, firm or
corporation to an amount equal at any time in the aggregate to more than
ten per centum of its paid-up and unimpaired capital stock and surplus,
unless the bank is secured either by attached documents or by some other
actual security growing out of the same transaction as the acceptance; and
no bank shall accept such bills to an amount equal at any time in the aggre-
gate to more than one-half of its paid-up and unimpaired capital stock and
surplus except that:

(1) With the approval of the State Corporation Commission, any
bank may accept such bills to an amount not exceeding at any time in the
aggregate one hundred per centum of its paid-up and unimpaired capital
stock and surplus, provided, however, that the aggregate of acceptance
growing out of domestic transactions shall in no event exceed fifty per
centum of such capital stock and surplus; and

(2) All banks which are members of the Federal Reserve System
may accept drafts or bills of exchange drawn upon them by banks or
bankers in foreign countries or dependencies or insular possessions of the
United States for the purpose of furnishing dollar exchange as required by
the usages of trade in the respective countries, dependencies or insular pos-
sessions, according to the conditions, limitations and restrictions then in
force, as prescribed by the Federal Reserve Board of the United States.

Any bank or trust company doing business in this State may issue
letters of credit authorizing the holders thereof to draw drafts upon it or
upon its correspondent at sight or on time not exceeding one year, but the
total amount issued for one person, firm or corporation shall not at any
one time exceed ten per centum of the capital and surplus of the issuing
bank or trust company.

§ 6.1-69. Every bank shall at all times maintain a reserve of at
least ten per centum of its demand deposits and of at least three per
centum of its time deposits. Such reserve shall consist of actual cash on
hand and balances payable on demand, due from other solvent banks.
The term “demand deposits” shall mean all deposits the payment of which
can be legally required under thirty days. The term “time deposits” shall
mean all deposits the payment of which cannot be legally required in less
than thirty days and represented by a certificate of deposit which so states
or by a pass book issued to the customer in which the notice required for
withdrawal is printed, written or stamped in such pass book; provided,
however, that when any bank has become a member of the Federal Reserve
System it shall be required to comply with the reserve requirements of the
Federal Reserve Act.

§ 6.1-70. Any bank may pay any balance on deposit to the credit of
any deceased person (after ten days shall have elapsed from the date of his
death), or of any person under disabilities, to the personal representative,
guardian, curator or committee of such person upon a letter of qualification
as such personal representative, guardian, curator or committee, issued by
any court of competent jurisdiction of this State, and such letter shall be
sufficient authority for such transfer. Any such bank making such trans-
fer shall no longer be liable for such deposit to any person whomsoever.
The presentation of a duly certified letter of qualification as personal
representative, guardian, curator or committee shall be conclusive proof of
the jurisdiction of the court issuing the same.

§ 6.1-71. When the balance in any bank or trust company to the
credit of a deceased person, upon whose estate there shall have been no
qualification, shall not exceed one thousand dollars, it shall be lawful for
such bank or trust company, after one hundred and twenty days from the
death of such person, to pay such balance to his or her spouse, and if
none, to his or her next of kin, whose receipt therefor shall be a full
discharge and acquittance to such bank or trust company to all persons
whomsoever on account of such deposit; provided, such sum, not exceeding
two hundred dollars, after thirty days from the death of such person, at
the request of the consort, or if no consort, then the next of kin, may be
paid to the undertaker or mortuary handling the funeral of such decedent
and a receipt of the payee shall be a full and final release of the payor.

§ 6.1-72. When a deposit has been made, or shall hereafter be made,
in any bank or trust company transacting business in this State, under the
names of two or more persons, payable to either, or payable to the sur-
vivor or any survivor, such deposit, or any part thereof, or any interest or
dividend thereon, may be paid to any of such persons, whether the other or
others be living or not, and the receipt or acquittance of the person so paid
shall be a valid, sufficient and complete release and discharge of the bank
or trust company for any payment so made. The term “deposit” shall
include certificates of deposit heretofore and hereafter issued.

§ 6.1-73. When a deposit has been made, or shall hereafter be made,
in any bank or trust company transacting business in this State, under the
names of a husband and wife, payable to either, or payable to the survivor,
such deposit, or any interest or dividend thereon, upon the death of either
husband or wife shall vest in the survivor. Upon the entry of a decree of
divorce, either a mensa et thoro or a vinculo matrimonii, of the parties
subsequent to the making of such deposit, and delivery of a certified copy of
such decree to the bank or trust company wherein such deposit was made,
the interests of said parties in such deposit shall be as tenants in common,
unless otherwise ordered by the court.

This section shall not apply to any proceeding pending in any court in
this State on June 29, 1956.

§ 6.1-74. Whenever any deposit shall be made in any bank by or in
the name of any infant or minor, such deposit shall be held for the exclusive
right and benefit of such minor, free from the control of all persons whom-
soever, except creditors, and shall be paid with interest, if any be due
thereon, to the person in whose name the deposit shall have been made,
and the check, order or receipt of such infant or minor shall be a good and
sufficient release and discharge for such deposit to the bank.

§ 6.1-75. 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 such
deposit shall not be bound to inquire whether the fiduciary is committing
thereby a breach of his obligation as fiduciary; and the bank is authorized
to pay the amount of the deposit or any part thereof upon the personal
check of the fiduciary without being liable to the principal, unless the bank
receives the deposit or pays the check with actual knowledge that the
fiduciary, in making such deposit or in drawing such check, is committing
a breach of his obligation as fiduciary, or with knowledge of such facts that
its action in receiving the deposit or paying the check amounts to bad faith.

6.1-76. No bank or trust company shall issue any certificate of
deposit, or other negotiable instrument of its indebtedness, to the holder
thereof, except for lawful money of the United States, checks, drafts, or
bills of exchange which are the actual equivalent of such money. Any
officer or employee of any bank violating the provisions of this section shall
be guilty of a misdemeanor and upon conviction thereof shall be fined or
imprisoned, or both in the discretion of the court.

§ 6.1-77. (Reserved)

§ 6.1-78. No bank or trust company shall give preference to any
depositor or creditor by pledging the assets of such bank or trust company,
except as otherwise authorized in the two succeeding sections.

§ 6.1-79. Notwithstanding the provisions of § 6.1-78 any bank or
trust company may deposit securities for the purpose of securing deposits
of the United States government, and its agencies, and the Commonwealth
of Virginia, its agencies, and its political subdivisions, and for the purpose
of securing sureties on surety bonds furnished to secure such deposits, or
may, in lieu of depositing such securities to secure deposits of political
subdivisions of the Commonwealth, by its board of directors, adopt a reso-
lution before such public funds are deposited therein, to the effect that, in
the event of the insolvency or failure of such bank or trust company, such
public funds thereafter deposited therein shall, in the distribution of the
assets of such bank or trust company, be paid in full before any other
depositors shall be paid deposits thereafter made therein, and the adoption
of such resolution shall be deemed to constitute an obligation binding on
such bank or trust company.

§ 6.1-80. Notwithstanding the provisions of § 6.1-78, any bank or
trust company is authorized:

(1) For any temporary purpose to pledge its assets as security for
amounts of borrowed money which shall not, without the approval of the
State Corporation Commission given in advance in writing, exceed in the
aggregate the amount of the capital and surplus of such bank or trust com-
pany actually paid in or earned and remaining undiminished by losses or
otherwise; provided that the amount of assets pledged for the security of
such a loan shall not without such approval, so given, exceed one hundred
and fifty per centum of the amount borrowed; provided also, that no loan in
excess of the amount so permitted made to any such bank or trust company
shall be invalid or illegal as to the lender, even though made without the
consent of the Commission; and provided, also, that rediscounting with or
without guarantee or indorsement of notes, drafts, bills of exchange or
loans is hereby authorized and shall not be limited by the terms of thi
section, and shall not be considered as borrowed money within the meaning
of this section ; and

To borrow from a Federal Reserve Bank and to rediscount with
and sell to a Federal Reserve Bank any and all notes, drafts, bills of ex-
change, acceptances and other securities, and to give security for al] 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. ;

§ 6.1-81. (Reserved)

§ 6.1-82. (Reserved)

§ 6.1-83. In every case in which a bank is required by the laws of this
State to furnish or deposit a surety bond or securities as security for the
payment of any funds deposited in such banking institution, other than
funds received or held in the trust department of such banking institu-
tion 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 as is, to the satisfaction of the body, officer or
person charged with the responsibility of seeing that a surety bond or
securities are furnished as security for such deposit, insured under the
provisions of section twelve-b of the Federal Reserve Act, as amended, or
any amendments thereto.

§ 6.1-84. The Commission shall, at least once in each and every year,
and at such other times as it may deem necessary, cause to be examined
each and every bank incorporated under the laws of, and doing business in,
this State.

§ 6.1-85. The Commission may, also in connection with the exam-
ination of any bank, make or cause to be made such examination of the
affiliates of the bank as shall be necessary to ascertain the financial condi-
tion 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.

For the purpose of this section the term “affiliate” of any bank shall
mean any corporation, business trust, association, or other similar organ-
ization (1) of which such bank. directly or indirectly owns or controls
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, or (2) of which control is held, di-
rectly 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 fifty per centum 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 (3) of
which a majority of the directors, trustees, or other persons exercising
similar functions are directors of such bank.

6. . The Commission shall also, upon 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, this State, or whenever, 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, cause to be made a special
examination of such bank. All expenses incident to such special examina-
tion shall be borne by the bank so examined.

§ 6.1-87. Upon the making of any examination under the provisions
of any of the three preceding sections, the officers, directors and employees
of the bank being examined or whose affiliate is being examined shall, upon
the demand of the person or officer designated to make such examination,
give to such examiner full access to all the money, books, papers, notes,
bills and other evidences of debts due said bank and shall also discloge
fully and truly all indebtedness and liability thereof, and shall furnish all
information which such examiner may deem necessary to a full investiga-
tion into the affairs of such bank. And such 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 such
bank touching any matter or thing pertaining to such examination, and for
that purpose shall have authority to administer oaths to them.

§ 6.1-88. No previous notice of any examination shall be given any
bank or any of its directors, officers, or employees.

§ 6.1-89. Whenever it shall appear to the Commission, from an
examination of any bank, that any of the assets thereof are valued by the
bank at an amount in excess of their fair and reasonable value, the Com-
mission may, after such bank shall have been given an opportunity to be
heard by the Commission, require such bank to revalue such assets on the
basis of their fair and reasonable value.

§ 6.1-90. When any bank is examined under the provisions of this
article, a copy of the report of such examination shall for a period of sixty
days after completion thereof be open to the inspection of the officers and
directors of the bank.

Upon resolution of the board of directors of such bank, such report
may at any time during such period be inspected by the officers and direc-
tors of any other bank designated in such resolution.

§ 6.1-91. 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 conducted or made by the Commission,
or containing suggestions or recommendations as to the conduct of the
bank shall, if required by the authority submitting same, be submitted by
the officer or director receiving it, to the executive committee or board of
directors of such bank and duly noted in the minutes of such meeting.

§ 6.1-92. If upon the examination of any bank, the Commission shall
ascertain that the banking laws of this State are not being fully observed,
or that any irregularities are being practiced, or that its capital has been
or is in danger of being impaired, the Commission shall give immediate
notice thereof to the officers and directors of such bank and, if deemed
necessary in order to conserve the assets of such bank or to protect the
interests of depositors and creditors thereof, the Commission may:

(1) Temporarily suspend the right of such bank to receive any
further deposits ;

(2) Temporarily close such bank, for a period not exceeding sixty
days, and such period may be further extended for a like period or periods
as the Commission may deem necessary ;

(3) Require the officers and directors of such bank to liquidate its
outstanding loans insofar as shall be required ;

(4) Require that any such impairment of the capital stock be made

(5) Require that any such irregularities be promptly corrected;

(6) Require such 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/or

(7) Without examination, close, for such period or periods 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.

But the powers enumerated in subdivisions (1), (2), (8) and (7) of
this section shall be exercised only upon request of directors of such bank.

If any such bank shall fail or refuse to comply with any such order or
orders 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 such bank and to wind up its affairs as hereinafter provided.

§ 6.1-93. Every bank shall make to the State Corporation Commis-
sion statements of its financial condition at such times as the national
banks organized under the laws of the United States are required to make
statements to the Comptroller of the Currency and at such other times as
the Commission may deem necessary; and also within fifteen days there-
after publish such statements in condensed form in some newspaper
printed in the county, city or town where such banking business is carried
on, or where the principal office of such bank is located; and if there is no
such paper published in the county, city or town, then such statements
shall be published in the newspaper published in the county, city or town
nearest thereto. Such statements shall be made and published in accord-
ance with forms prescribed by the Commission certified under oath by the
president or cashier of the bank, or, if there is no cashier, by the treasurer,
and attested by at least three of its directors. The Commission shall call
upon all such banks doing business in Virginia for the statements herein-
before mentioned, and at the time prescribed, and shall have prepared
such forms as may be necessary to carry out the provisions of this section.
Whenever calls for statements are made by the Commission, it shall for-
ward to each such bank two blank forms, one of which, after being properly
filled out and certified, as hereinbefore required, shall be returned to the
Commission within fifteen days next succeeding the date of such call, and
the other of which, filled out in like manner, shall be filed with the records
of the bank.

§ 6.1-94. Every bank shall pay for its examination and supervision
annual and additional fees as follows:

A minimum fee of one hundred dollars, which shall cover the first
one hundred thousand dollars of assets or less, to which shall be added,
in the case of each bank, according to its total assets, as shown by the
statement of financial condition made to the Commission next preceding
June the first as follows: (1) For the amount by which its total assets
exceed one hundred thousand dollars and do not exceed five hundred thou-
sand dollars, six dollars per twenty thousand dollars or fraction thereof ;
(2) for the amount by which its total assets exceed five hundred thousand
dollars and do not exceed two million dollars, four dollars per twenty thou-
sand dollars or fraction thereof; (3) for the amount by which its total as-
sets exceed two million dollars and do not exceed fifty million dollars,
two dollars per twenty thousand dollars or fraction thereof; (4) and for
all assets over fifty million dollars, one dollar per twenty thousand dollars
or fraction thereof. Every bank shall be assessed in addition twenty-five
dollars for each of its branches.

For the examination of trust departments, the Commission shal]
charge an additional fee of seventy-five dollars per day per man.

For investigating an application for a certificate of authority pursuant
to § 6.1-13, the Commission shall charge a fee of one thousand dollars.

For investigating an application for authority to establish a branch
pursuant to § 6.1-39 or a facility pursuant to § 6.1-42, the Commission
shall charge a fee of one hundred dollars.

For investigating an application to exercise trust powers, the Com-
mission shall charge a fee of one hundred dollars.

For investigating an application of merger, the Commission shall
charge a fee of one thousand dollars and 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.

For investigating an application for authority to change the location
of an existing bank or branch bank, the Commission shall charge a fee
of one hundred dollars.

For investigating an application for authority to exercise trust pow-
ers, the Commission shall charge a fee of one hundred dollars.

§ 6.1-95. Except as hereinafter provided all such fees and charges
shall be assessed against each such bank by the Commission on or before
the first day of July of each year and shall be paid into the State treasury
on or before the thirty-first day of July following. 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 institu-
tion is located having original jurisdiction of civil cases on motion of and
in the name of the Commission. The Commission shall mail the assessment
to each bank on or before July first of each year and give advice thereof to
the Comptroller and it shall be the duty of the Comptroller to furnish the
Commission promptly with a list of the banks which fail to pay the assess-
ment on or before July thirty-first.

Fees for investigating applications for authority shall be paid before
the investigation is made.

Fees for the examination of trust departments shall be paid into the
State treasury within thirty days after the Commission notifies the bank
or trust company of the amount of the fee.

§ 6.1-96. If the Commission is of the opinion that the amounts of the
several charges and fees fixed by § 6.1-94 will produce a greater sum than
required to cover the costs and expenses to be paid thereby, the Commis-
sion may, in its discretion, reduce on a pro rata basis the amount of such
charges so fixed.

§ 6.1-97. Every bank authorized to begin business after the first day
of July and before the thirty-first day of December in any one year, shall
pay the full amount of fees prescribed by § 6.1-94 and every bank author-
ized to begin business after the first day of January and before the thir-
tieth day of June of any year, shall pay one-half of the fees so prescribed.
Such fees shall be based on the total resources of such bank at its first
examination after it has been authorized to begin business, and at that
time collected by the Commission and paid into the State treasury as other
funds arising under the provisions of this chapter.

§ 6.1-98. All fees paid into the State treasury as provided in § 6.1-95
shall be credited to a fund designated as “Banking Fund—State Corpora-
tion Commission” and out of such fund and the unexpended balance thereof,
shall be appropriated the sums required for the proper examination of
State banks and trust companies. The Governor is hereby authorized, in
his discretion, to increase the annual appropriation made to the Commis-
sion for examination of banks and trust companies to an amount not to
exceed existing balances in the Banking Fund aforesaid.

6.1-99. Every national bank which is now or may be designated as
a State depository, shall, so long as it acts as such, be subject to the exam-
ination provided for State banks, when, in the opinion of the State Treas-
urer, such examination is necessary for the protection of the State. But
no fees or charges shall be imposed upon national banks for such examina-
tions.

§ 6.1-100. If upon the examination of any bank it shall be found to
be insolvent, or it is deemed necessary by the Commission for the protec-
tion of the public interests, the Commission may at once close the doors of
such bank without any notice whatsoever, and the Commission by its duly
appointed agent shall take charge of the books, assets and affairs of such
bank until the appointment of a receiver as provided by law.

§ 6.1-101. If, upon the examination of any bank, it shall appear to
the Commission that any such bank, which is designated as a State depos-
itory, is insolvent or is unable to meet its obligations and the legal de-
mands 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 State therein.

§ 6.1-102. In any case the Commission shall, whenever, in its judg-
ment, it is necessary for the protection of the interests of the State or of
the depositors and creditors of any bank doing business in this State, or of
the creditors of any trust company doing business in this State, apply to
any court in this 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 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.

§ 6.1-108. And when any receiver shall be appointed under the provi-
sions of this article for any bank authorized to do a trust business or for
any trust company he may be empowered by the court by which he is
appointed 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 com-
pany by any instrument, and, 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 upon pay-
ment of the amount secured under any such instrument, to execute, ac-
knowledge and deliver for and on behalf of such bank or trust company a
proper release deed for the property conveyed therein. And 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. And all sales which have been made by any
such receivers within the State of Virginia and all such deeds and release
deeds which have been executed by any such receivers within this State
under the authority of the court by which they were appointed, since June
nineteenth, nineteen hundred thirty-six, 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.

6.1-104. 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 so 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 Virginia 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.

§ 6.1-105. When any court of competent jurisdiction shall, on a
proper application therefor, appoint a receiver for any State bank, bank-
ing institution, or trust company, such court may prescribe and direct,
by order or decree entered of record, that the rate of interest to be paid
by such receiver upon the claims of depositors of such bank, or banking in-
stitution, or trust company, shall not exceed the current or contracted rate of
interest paid by such State bank, banking institution or trust company on
deposits and may also fix the interest to be so paid at such lower rate
as such court may deem proper under all the circumstances of the case. In
any such event such court shall also direct that any surplus remaining
after the payment in full of such depositors, together with the interest
thereon as so prescribed and fixed, shall be distributed prorata among the
shareholders of such bank, banking institution, or trust company, as of
the date of the appointment of such receiver.

§ 6.1-106. Whenever in a pending suit, having for its object the
administration or liquidation of the assets of an insolvent bank or trust
company operating in this State, the court shall have ordered the payment
to creditors of dividends on, or other payments of, claims as therein ascer-
tained and established, and the receiver, special commissioner or other
person or officer charged with the duty of making the ordered payment to
creditors shall have been unable to effect such payment by reason of
inability to ascertain the address of any creditor or the failure of any
creditor to apply to such disbursing official for payment when so directed
by the order of the court or for any other similar reason; or whenever a
trustee engaged in the voluntary liquidation of the assets of an insolvent
bank or trust company operating in this State by petition to any court of
general jurisdiction in the county or city wherein the principal office of
such insolvent bank or trust company is located, shall allege and show to
the satisfaction of the court his inability to make payment to creditors for
any of the reasons specified herein, the court, in its discretion, may enter
an order directing its receiver, special commissioner or other person or
officer charged with the duty of making such payment, or the trustee to
publish in some newspaper, having a general circulation in the county or
city where such suit or petition is pending, at least twice, a list of creditors
to whom dividends or payments are due and unpaid and the amount thereof,
together with a notice that any creditor therein named who shall fail 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 which may thereafter
be ordered.

§ 6.1-107. If any bank or trust company under the circumstances
referred to in the preceding section shall have been in liquidation for a
period of more than ten years, and more than five years shall 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 ascer-
tained and established, then it shall be unnecessay to publish a list of cred-
itors to whom dividends or payments are due and unpaid and the amount
thereof, and it shall only be necessary to publish a notice stating the total
amount of dividends ordered paid and unclaimed and the fact that a list of
such creditors may be seen at the office of the receiver, liquidating agent or
other disbursing officer, and that any creditor who shall fail 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 will be barred
from his right thereafter to receive payment of amounts then due and
from participation in any future dividends or payments which may there-
after be ordered.

§ 6.1-108. Whenever there are two or more newspapers having gen-
eral circulation in the county or city where such suit or petition as is
referred to in § 6.1-106 is pending, the court, in its discretion, may, in lieu
of the publication provided for therein or in § 6.1-107 direct that the list
of creditors, together with the notice, shall be published once in at least
two of such newspapers having general circulation in such county or city.

§ 6.1-109. After the lapse of six months from the date of the last
publication of the notice prescribed by §§ 6.1-106, 6.1-107 or 6.1-108 the
court shall enter an order barring the claims of all creditors who have not
theretofore applied for payment of their claims, and thereafter no creditor
who shall have failed to apply for payment within such period shall bring
or maintain any action, suit or proceeding, nor shall any process issue for
the enforcement of any claim to dividends or payments previously ordered
paid to such creditor nor shall such creditor participate in future dividends
or payments thereafter ordered in the suit or petition to be paid; provided,
however, that the court in which any such suit or petition is pending may,
in its discretion, before final distribution and for good cause shown, re-
instate any claim barred as aforesaid.

§ 6.1-110. Any court in this State having jurisdiction to appoint
receivers may, in its discretion, authorize any receiver appointed by such
court t for any bank or trust company, in pursuance of the provisions of this

apter:

(1) To make application for and contract for a loan from any cor-
poration or agency 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,
if such corporation or agency is organized, or provided for by, or pursuant
to, legislation enacted by the Congress of the United States, and if such
loan shall be for the purpose of aiding in the reorganization or liquidation
of any such bank, including the payment of liquidating dividends from the
proceeds thereof, and

(2) Tosecure any such loan or advance by the pledge, hypothecation
or mortgage of any or all of the assets of such bank or trust company, or in
such other manner as such court, in its discretion, may authorize.

Any such court may also, in its discretion, authorize any such receiver
so appointed by it, to invest any funds in the hands of such receiver, in
bonds of the United States or of the State of Virginia.

§ 6.1-111. Every person, association or company who shall trade or
deal as a bank or trust company, or carry on banking or do a trust business,
without authority of law, and their officers and agents therein, shall be
confined in jail not exceeding six months, and fined not less than one
hundred nor more than five hundred dollars.

The Commission shall have authority to examine the accounts, books
and papers of any person, copartnership or corporation who it has reason
to suspect is doing a banking business, in order to ascertain whether such
person, copartnership, or corporation has violated, or is violating, any
provision of this title, and the refusal to submit such accounts, books and
papers shall be prima facie evidence of such violation.
§ 6.1-112. No person, copartnership or corporation not lawfully
engaged in the banking business or trust business in this State and sub-
ject to the supervision of the Commission, by the provisions of this chapter
or authorized to transact a banking business or trust business under the
laws of the United States, shall make use of any office sign having thereon
any artificial or corporate name or other words indicating that any such
place or office is the place or office of a bank, savings bank, trust company,
bank or place of banking. No person, copartnership or corporation shall
make use of or circulate any letterheads, billheads, blank notes, blank
receipts, certificates, circulars or any written or printed paper whatever
having thereon any artificial or corporate name or word indicating that
such business is the business of a bank, savings bank, trust company or
banker, or a place of banking. No person, copartnership or corporation
shall use the word “bank,” “savings bank,” “banking,” “banker,” or
“trust,” or the equivalent thereof in any foreign language, or the plural of
any such word or words in any business or in connection with any business
other than that of the business of banking.

Any person or persons violating the provisions of this § 6.1-5, either
individually or as an interested party, in any copartnership or corporation,
shall be guilty of a misdemeanor.

The use of the above-mentioned terms in the name of any corporation
or in connection with any other business shall not be prohibited where the
context or remaining words show clearly and definitely that the corpora-
tion or business is not a bank or trust company, and is not carrying on a
banking or trust business.

§ 6.1-1138. Any bank or trust company violating the provisions of
§§ 6.1-39 or 6.1-41 shall be liable to a fine of one thousand dollars, to be
imposed and judgment entered therefor by the Commission, and enforced
by its process.

§ 6.1-114. Any such bank or trust company failing to comply with
any of the provisions of § 6.1-93, for a period of longer than thirty days,
after being called upon by the Commission for a statement, or to do such
other act as is therein provided, shall be fined not less than one hundred nor
more than one thousand dollars, and the Commission shall give notice of
such default in a newspaper published as provided in § 6.1-93. Any officer
of any such bank or trust company, who shall refuse to give any examiner
the information or refuse to be sworn, as required by § 6.1-87, shall be
fined not less than twenty-five nor more than one hundred dollars for such
offense.

All records, reports and information concerning any bank, other than
those required by law to be public, shall be open only to such officers and
employees of the State as may have occasion and authority to inspect them
in the performance of their duties, and to any officer or duly authorized
agent of such bank or trust company, and the imparting of such informa-
tion by any employee or officer of the State may be sufficient cause for his
removal from the position he occupies under the State government.

§ 6.1-115. Any person who, with intent to defraud, shall make or
draw or utter or deliver any check, draft, or order for the payment of
money, upon any bank, banking institution, trust company, or other deposi-
tory, knowing, at the time of such making, drawing, uttering or delivering,
that the maker or drawer has not sufficient funds in, or credit with, such
bank, banking institution, trust company, or other depository, for the pay-
ment of such check, draft or order, although no express representation is
made in reference thereto, shall be guilty of larceny.

Any person who, under the provisions of this section, is guilty of
grand larceny shall, in the discretion of the jury or the court trying the
case without a jury, be confined in the penitentiary not less than one year
nor more than five years, or be confined in jail not exceeding twelve months
and fined not exceeding five hundred dollars.

The word credit, as used herein, shall be construed to mean any
arrangement or understanding with the bank, trust company, or other
depository for the payment of such check, draft or order.

6.1-116. Any person who shall make, draw, or utter, or deliver any
check, draft, or order for the payment of money, upon any bank, banking
institution, trust company or other depository on behalf of any business
firm or corporation, for the purpose of paying wages to any employee of
such firm or corporation, or for the purpose of paying for any labor per-
formed by any person for such firm or corporation, knowing, at the time of
such making, drawing, uttering or delivering, that the account upon which
such check, draft or order is drawn has not sufficient funds, or credit
with, such bank, banking institution, trust company or other depository,
for the payment of such check, draft or order, although no express repre-
sentation is made in reference thereto, shall be guilty of a misdemeanor.

The word credit, as used herein, shall be construed to mean any
arrangement or understanding with the bank, banking institution, trust
company, or other depository for the payment of such check, draft or order.

In addition to the criminal penalty set forth herein, such person shall
oe perscnally liable in any civil action brought upon such check, draft or
order.

§ 6.1-117. In any prosecution of action under the preceding sec-
tions, the making or drawing or uttering or delivery of a check, draft,
or order, payment of which is refused by the drawee because of lack of
funds or credit shall be prima facie evidence of intent to defraud or
of knowledge of insufficent funds in, or credit with, such bank, banking
institution, trust company or other depository unless such maker or drawer,
or some one for him, shall have paid the holder thereof the amount due
thereon, together with interest, and protest fees (if any), within five days
after receiving written notice that such check, draft, or order has not been
paid to the holder thereof. Notice mailed by certified or registered mail,
evidenced by return receipt, to the last known address of the maker
or drawer shall be deemed sufficient and equivalent to notice having been
received by the maker or drawer.

If such check, draft or order shows on its face a printed or written
address, home, office, or otherwise, of the maker or drawer, then the
foregoing notice, when sent by certified or registered mail to such address,
with or without return receipt requested, shall be deemed sufficient and
equivalent to notice having been received by the maker or drawer, whether
such notice shall be returned undelivered or not.

When a check is drawn on a bank in which the maker or drawer has
no account, it shall be presumed that such check was issued with intent to
el and and the five-day notice set forth above shall not be required in
such case.

§ 6.1-118. In any civil action growing out of an arrest under §§ 6.1-
115 or 6.1-116, no evidence of statements or representations as to the status
of the check, draft, order or deposit involved, or of any collateral agreement
with reference to the check, draft, or order, shall be admissible unless such
statements, or representations, or collateral agreement, be written upon
the instrument at the time it is given by the drawer.

If payment of any check, draft, or order for the payment of money be
refused by the bank, banking institution, trust company or other depository
upon which such instrument is drawn, and the person who drew or uttered
such instrument be arrested or prosecuted under the provisions of §§ 6.1-
115 or 6.1-116, for failure or refusal to pay such instrument, the one who ar-
rested or caused such person to be arrested and prosecuted, or either, shall
be conclusively deemed to have acted with reasonable or probable cause in
uttered such instrument, if the one who arrested or caused such person to
be arrested and prosecuted, or either, shall have, before doing so, presented
or caused such instrument to be presented to the depository on which it
was drawn where it was refused, and then waited five days after notice, as
provided in § 6.1-117, without the amount due under the provisions of such
instrument being paid.

§ 6.1-119. Any person who shall willfully and maliciously make, cir-
culate or transmit to another, any statement, rumor or suggestion, written,
printed or by word of mouth, which is directly or by reference derogatory
to the financial condition or affects the solvency or financial standing of
any bank or trust company doing business in this State, or who shall coun-
sel, aid, procure or induce another to start, transmit or circulate any such
statement or rumor, shall be guilty of a misdemeanor, and upon conviction
thereof, shall be sentenced to pay a fine of not more than one thousand
dollars, or to be confined in jail not more than one year, or both.

§ 6.1-120. Whoever, being an officer, employee, agent or director of a
bank, certifies a check drawn on such bank and willfully fails forthwith to
charge the amount thereof against the account of the drawer thereof, or
willfully certifies a check drawn on such bank when the drawer of such
check has not on deposit with the bank the amount of money subject to the
payment of such check and equivalent to the amount therein specified, shall
be guilty of a misdemeanor.

§ 6.1-121. Except as otherwise provided, any officer, director, em-
ployee, or attorney of any bank who stipulates for or receives or consents
or agrees to receive any fee, commission, gift or thing of value from any
person, firm or corporation, for procuring or endeavoring to procure for
such person, firm or corporation, or for any other person, firm or corpora-
tion, any loan from or the purchase or discount of any paper, note, draft,
check, bond, stock, security or bill of exchange by any such bank shall be
deemed guilty of a misdemeanor and shall be imprisoned not more than
one year in jail or fined not more than one thousand dollars, or both;
provided that the above prohibition shall not apply to any officer or direc-
tor, who is a member of a firm of licensed brokers, in buying for or from or
selling to, or for the account of, a banking institution, of which he may be
an officer or director, in the ordinary course of business, bonds, stocks or
other evidences of debt at the usual rate of commission for such service.

§ 6.1-122. 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 such bank, shall be guilty of
larceny and punished as provided by law. Any officer, director, agent or
employee of any bank who issues or puts forth any certificate of deposit,
draws any order or bill of exchange, makes any acceptance, assigns any
note, bond, draft, bill of exchange, mortgage, judgment, decree or other
instrument in writing, or who makes any false entry in any book, report or
statement of such bank, with intent in any case to injure or defraud such
bank, or any other company, body politic or corporate, or any individual
person, or to deceive any officer of such bank, or the State Corporation
Commission, or any agent or examiner authorized to examine the affairs
of such bank, and any person, who, with like intent, aids or abets any such
officer, director, agent or employee of such bank, in any such violation,
shall be guilty of a felony and upon conviction thereof shall be confined in
the penitentiary not less than one year or more than ten years, or be
confined in jail not exceeding twelve months and fined not exceeding five
thousand dollars.

_ Any such officer who knowingly makes a false statement of the condi-
tion of any such bank or institution, shall be deemed guilty of a felony and
upon conviction shall be fined not less than one hundred nor more than
five thousand dollars, and be imprisoned in the penitentiary not less than
one nor more than ten years.

§ 6.1-123. Any officer, director, agent or employee of any bank who
knowingly violates or who knowingly causes any bank to violate any provi-
sion of this chapter, or knowingly participates or knowingly acquiesces in
any such violation, shall, unless other punishment be provided for the
offense of such officer, agent or employee, be guilty of a misdemeanor and
be punished accordingly. The provisions of this section shall not affect the
civil liability of any such officer, director, agent or employee.

§ 6.1-124. Any officer or director of any bank and any private banker
or broker or any employee of any such bank, banker or broker, who shall
take and receive, or permit to be received, a deposit from any person with
the actual knowledge that the bank, banker or broker is at the time insol-
vent, shall be guilty of embezzlement, and shall be punished by a fine double
the amount so received, and be confined in the penitentiary not less than
one nor more than three years, in the discretion of the jury, for each offense.
On the trial of any indictment under this section it shall be the duty of any
such bank, banker or broker, its agent or officers, to produce in court on
demand of the attorney for the Commonwealth, all books and papers of
such bank, banker or broker, to be read as evidence on the trial of such
indictment; but in determining the question of the solvency of any bank,
the capital stock thereof shall not be considered as a liability due by it.

§ 6.1-125. (Reserved)

CHAP. 3
VIRGINIA SAVINGS AND LOAN ACT

_ § 61-126. The short title of the law embraced in this chapter is
Virginia Savings and Loan Act.

§ 6.1-127. The powers, privileges, duties and restrictions conferred
and imposed upon any savings and loan association existing under the laws
of this State on July first, nineteen hundred sixty are hereby abridged,
enlarged or modified, as each particular case requires, to conform to the
provisions of this chapter, but nothing in this chapter shall affect the
legality of any investment heretofore made or transaction heretofore had
under authority of any provision of law in force when such investment was
made or transaction had.

_ Notwithstanding any other provision of law with respect to the rates
of interest which may be charged, an association which on September
one, nineteen hundred fifty-nine, was operating on a share accumulation
loan plan whereby its earnings were equitably distributed to both its
borrowers and its shareholders may continue to operate upon the same plan.

_ § 6.1-128. The provisions of this chapter apply to federal associa-
Lp insofar as this State has the power to enact legislation with regard to
em.

§ 6.1-129. As used in this chapter, unless a different meaning is
required by the context, (1) “Commission” means the State Corporation
Commission; (2) the word “association” means a savings and loan associa-
tion incorporated in Virginia under this chapter or prior acts relating
thereto whether called savings and loan associations, or building and loan
associations or building associations, and a savings and loan association
incorporated under the laws of the United States and authorized to conduct
its business as a savings and loan association in Virginia; (3) the word
““‘members” means all persons having savings accounts in and all borrowers
from and obligors of the association; (4) the word “shares” means the
interest of a member having a savings account in the association and the
the word “shareholder’ means a member having such interest; (5) the
words “shares of stock’? mean the shares of capital stock issued by a stock
savings and loan association subject to the provisions of the Virginia Stock
Corporation Act and the word “stockholder” means a person holding
shares of stock; (6) the words “State association” means a savings and
loan association incorporated under the laws of the State of Virginia; (7)
the words “federal association” means a savings and loan association
incorporated under the laws of the United States and authorized to conduct
its business as a savings and loan association in the State of Virginia; (8)
the expression “improved real estate” means real estate on which is located
or will within twelve months be located, a home or a combination home and
business structure; (9) the expression “other improved real estate’ means
real estate other than “improved real estate” which produces or will within
twelve months produce sufficient income to maintain the property and
retire the loan in accordance with the terms thereof; (10) the term “short
term savings shares” means a savings account which by its terms will be
withdrawn in less than twenty-four months from the date on which the
account is opened. ;

§ 6.1-130. All savings and loan associations which are organized
and operated exclusively for the benefit of their members and which do not
issue shares of stock shall be deemed to be mutual savings and loan associa-
tions. All other associations shall be deemed to be stock savings and loan
associations.

§ 6.1-131. The provisions of the Virginia Stock Corporation Act shall
apply to all stock savings and loan associations in all cases not inconsistent
with the provisions of this chapter. The provisions of the Virginia Non-
stock Corporation Act shall apply to all mutual savings and loan associa-
tions in all cases not inconsistent with the provisions of this chapter.

6.1-1382. Mutual savings and loan associations heretofore incorpo-
rated under the Virginia Stock Corporation Act or prior laws relating to
stock corporations shall be subject to and governed by the provisions of the
Virginia Nonstock Corporation Act.

§ 6.1-133. Individuals may form a stock savings and loan association
upon being incorporated as provided in the Virginia Stock Corporation
Act. Individuals may form a mutual savings and loan association upon
being incorporated as provided in the Virginia Nonstock Corporation Act.

§ 6.1-134. Every association hereafter incorporated under the laws
of this State shall have as a part of its corporate name the words “building
and loan association,” or “savings and loan association.”’ But no associa-
tion need comply with the provisions of subdivision (a) of § 13.1-6.

§ 6.1-135. The articles of incorporation of a savings and loan asso-
ciation shall provide that it is organized primarily for the purpose of
enabling its members to borrow its funds upon giving security therefor by
first mortgages or first deeds of trust upon real estate, for purchasing,
making improvements, or removing encumbrances on real estate, and for
the accumulation of savings and earnings thereon. Any such association
may operate under such plan or plans as its articles of incorporation or
bylaws provide. Every association shall within 30 days from the adoption
thereof file with the Commission a copy of its bylaws and every amend-
ment thereof.

§ 6.1-136. In stock savings and loan associations the right to vote
shall be limited to stockholders and may not be conferred on members. In
mutual savings and loan associations the right of members to vote may not
be conferred or limited by the articles of incorporation, and each share-
holder shall be entitled to one vote for each one hundred dollars or fraction
thereof in his account on the books of the association and each borrowing
or obligor member shall be entitled to cast one vote. Any member who is a
shareholder and a borrower or obligor shall be entitled to cast his votes as
a shareholder and as a borrower or obligor. But, in no case shall any
member be entitled to cast more than 50 votes. Each member may cast his
vote in person or by proxy. Every proxy shall be in writing and shall,
unless otherwise specified in the proxy. remain in full force and effect until
revoked in writing.

§ 6.1-137. Shares of stock issued by an association shall have a par
value of not less than ten dollars each and shall be paid for in full in cash at
not less than par upon issuance. An association may not purchase, redeem
or otherwise reacquire shares of stock that it has issued and may not accept
its shares of stock as security.

§ 6.1-138. No association shall agree to pay a fixed amount of divi-
dends upon any shares issued by it.

Dividends upon all shares issued by it may be declared from time to
time and shall be at the same dividend rate regardless of the class or kind
of shares except that an association may omit dividend payments on share
accounts of fifty dollars or less and may omit or may make lower dividend
payments on short term savings shares; and except that an association
may pay a bonus on all other shares issued by it at least twelve months
prior to the date of such bonus, if the holder of such shares has made no
withdrawals from his share account during the twelve months prior to the
declaration of the bonus.

§ 6.1-139. An association may make a service charge of not more
than one dollar ($1.00) in any calendar year against any share account,
if at the time any such charge is made:

(1) The association is not required to pay a dividend on such
account;

(2) No dividend has been paid on such account for a period of at
least thirty-six (36) months next preceding the date on which such
charge is made; and

(3) Thirty (80) days prior to making the first service charge, the
association has mailed to the shareholder, at his last known address, a
notice that service charges will be made in ‘accordance with this section.

§ 6.1-140. A subscriber for shares shall not be obligated beyond the
amount actually paid in on such shares. Shareholders shall not be liable for
debts of the association and shares shall not be subject to assessment, but,
in case of the insolvency of an association, all creditors of the association
other than shareholders shall be paid in "full before any distribution is
made to shareholders.

§ 6.1-141. Shares may be repurchased and cancelled as the bylaws
direct. No shares in a mutual association may be repurchased at the request
of the association unless, at the time of the repurchase, the assets of the
association are greater than its liabilities due its members and other cred-
itors; and no shares in such association may be repurchased at the request
of the association in contemplation of dissolution. However, if shares in a
mutual association are repurchased at the request of the association in con-
templation of dissolution the holder of such shares at the time of the
repurchase may demand the right to receive the liquidating dividends in
excess of the repurchase price of his shares that he would have received if
his shares had not been repurchased.

§ 6.1-142. An association may hold, convey and encumber all prop-
erty, real or personal, acquired in the due course of its business, but may not
engage in any mercantile, manufacturing or industrial business, or in the
business of buying and selling land or constructing houses or other build-
ings. except as acquired in the due course of business on account of debts

‘s 6.1-143. To cover the costs of investigating and processing the
loan, an association may charge and collect in advance from the borrower
a fee not to exceed fifty dollars ($50.00) or two and one-half per cent
(2%) of the principal amount of the loan, whichever is the greater, on
construction loans, and, on all other loans secured by real estate a fee not to
exceed twenty dollars. ($20. 00) or one per cent (1%) of the principal
amount of the loan, whichever is greater, unless the laws of this State shall
otherwise provide for a higher amount, in which case the latter shall be
applicable. An association also may require the borrower to pay the reason-
able and necessary charges in connection with making the loan, including
the cost of title examination, title insurance, recording fees, taxes, insur-
ance including mortgage guaranty insurance, appraisals, credit reports,
surveys, drawing of papers and closing the loan. An association also may
charge a reasonable penalty to a borrower for making a late payment on his
loan provided the amount of the penalty is specified in the contract between
the association and the borrower.

Such charges shall not be considered in determining whether a con-
tract for a loan or forebearance of money or other things is illegal within
the meaning of Title 6.1 of the Code.

6.1-144. Any association in connection with making loans secured
by deed of trust is empowered to elect a trustee or trustees at such times
and for such terms as may be prescribed by its charter or bylaws; and
all the rights, titles, duties and obligations of such a trustee relating to
loans secured by deed of trust shall pass by operation of law to his successor
or successors in office and every right of the association required to be
exercised by or through such trustee or trustees, whether it be the sale of
property or some other act or acts, shall be done, enforced and carried out
by the trustee or trustees in office at the time when such rights are exer-
cised by or for the association. All sales or conveyances heretofore or
hereafter made by a trustee or trustees appointed in the manner designated
above shall be as valid and binding as though the sale or sales, conveyance
or conveyances had been made by the trustee or trustees named in the deed
or deeds of trust. A majority of the trustees in office are empowered to
conduct sales and make conveyances in pursuance thereof with the same
force and effect as though all the trustees had acted; and when there are
two trustees either one may act.

§ 6.1-145. Notwithstanding any restriction in its articles of incor-
poration limiting the number, kinds and classes of shares that it may
issue, every association may issue as many shares of any kind or class as its
board of directors, by resolution or bylaw, determines to issue.

§ 6.1-146. An association is empowered to become a member of the
Federal Home Loan Bank and the Federal Savings and Loan Insurance
corporation, and to conform to the provisions, rules and regulations

ereof.

§ 6.1-148. An association shall have the right to establish rules gov-
erning withdrawals of shares and may from time to time fix the period of
notice required to be given for withdrawal.

§ 6.1-149. Shares issued in the name of a trustee for a named bene-
ficiary, when the association has no knowledge or notice of the terms of the
trust, shall, in the event of the death of the trustee, be the sole property of
the beneficiary and may be withdrawn by him, if he is eighteen years of
age or over, without the intervention of a guardian.

§ 6.1-149.1. Whenever trust interests or accounts are created for the
same beneficiary, but each such interest or account and the shares repre-
senting the same are in the name of a separate and distinct trustee,
or combination of trustees, each such trust interest or account shall con-
stitute a separate, distinct and valid trust entity for all purposes.

6.1-150. Shares may be issued in the name of a minor, and a receipt
executed by him shall be a valid and sufficient release and discharge of the
association for the amounts paid to him.

§ 6.1-151. When shares are issued in the names of two or more
persons, withdrawable by either or by the survivor or survivors, such
shares shall be vested in such persons as joint tenants, and the share bal-
ances in such account may be paid by the association to any one of such
persons or to any one of the survivors, without liability to the others. But
if any such person notifies the asssociation in writing not to permit with-
drawals by any other such person, the association may refuse, without
liability, to honor any withdrawal order pending determination of the
rights of the parties. An association paying a survivor in accordance with
the provisions of this section shall not thereby become liable for any estate
or inheritance taxes. The hypothecation to an association of all or part of
such shares signed by any person who is authorized in writing to make
withdrawals from the account shall, unless the association has been advised
specifically to the contrary, be a valid pledge to the association of those
shares and shall not operate to sever the joint ownership of all or any part
of such shares.

§ 6.1-152. An association may pay any share balance due a deceased
person, or any person under disability, to the personal representative,
guardian, curator or committee of such person upon a letter of qualification
as such personal representative, guardian, curator or committee, issued by
any court of competent jurisdiction of this State, and such letter shall be
sufficient authority for such payment. Any association making such pay-
ment shall no longer be liable for the amount thereof to any person whom-
soever. The presentation of a duly certified letter of qualification as
personal representative, guardian, curator or committee shall be conclusive
proof of the jurisdiction of the court issuing the same.

§ 6.1-153. When the share balance of a deceased person upon whose
estate there has been no qualification does not exceed one thousand dollars,
it shall be lawful for the association, after one hundred twenty days from
the death of such person, to pay such balance to his or her spouse, and if
none, to his or her next of kin, whose receipt therefor shall be a full dis-
charge and acquittance of the association as to all persons on account of
such balance.

§ 6.1-154. Shares may be issued to a shareholder payable on his
death to a named survivor or survivors. The shareholder may with-
draw any or all of such shares during his lifetime, and sixty days after
his death the association may pay the share balance in such account to
the named survivor or survivors. An association paying a named survivor
or survivors in accordance with the provisions of this section shall not
thereby become liable for any estate or inheritance taxes nor shall such
association be liable for the amount thereof to any other person whom-
soever.

§ 6.1-155. Shares issued by savings and loan associations shall not be
treated as shares of capital stock for the purpose of computing the franchise
tax imposed by § 58-456.

6.1-156. Every association shall build a reserve (viz. net worth)
of at least 10% of its total resources; and for the purpose of building this
reserve it shall set aside amounts equal to at least 5%, of its annual net in-
come during every year that the reserve is less than 10% of its total re-
sources, provided, however, that whenever the reserve of any association at
the end of its fiscal year is less than 5% of its share accounts at the beginning
of such fiscal year such association shall set aside at such time and at
each closing date thereafter an amount at least equal to 25% of its net
income or such part of such 25% as may then be sufficient to cause the
amount of such reserve account to equal at least 5% of its share accounts at
the beginning of said fiscal year. In the case of stock savings and loan
associations, the capital stock account, to the extent that the capital has
not been impaired, shall be treated as part of the reserve. Provided fur-
ther that the Commission may temporarily reduce the reserve require-
ments for an association if it finds such reduction to be in the best interest
of the association and its members. An association may retain its un-
divided profits in such amounts as may from time to time be fixed by reso-
§ 6.1-157. The assets of an association may be invested in the follow-
ing ways and in such ways only:

(a) In real estate and in equipment necessary for the conduct of its
business. Such association may invest in an office building or buildings
and appurtenances for the transaction of such association’s business, or
for the transaction of such business and for rental, provided that no such
investment may be made without the prior approval of the Commission if
the total amount of the investment exceeds the aggregate amount of the
association’s general reserve and surplus. In the case of stock associa-
tions, the capital stock account, to the extent that the capital has not been
impaired, shall be treated as a part of general reserve.

(b) In obligations of or obligations guaranteed as to principal and
interest by the United States or any agency thereof or of the State of
Virginia or any of its political subdivisions.

(c) In stock or obligations of Federal Home Loan Banks; in stock
or obligations of the Federal Savings and Loan Insurance Corporation; in
obligations of the Federal National Mortgage Association through making
non-refundable contributions; in certificates of deposit, time deposits, sav-
ings accounts, or demand deposits of banks insured by the Federal Deposit
Insurance Corporation ; and, to the extent of not more than fifteen per cent
a its total assets, in shares of other State associations or federal associa-

ions.

(c-1) In the purchase of stock or membership in industrial develop-
ment corporations and in loans to such corporations to the extent provided
by law at any time that the general reserves, surplus and undivided profits
of the association aggregate a sum in excess of five per centum of its
withdrawable accounts.

(c-2) In the purchase of stock and other securities or obligations of a
service corporation in an amount not to exceed one per cent of its assets;
provided that it may not invest in any such service corporation unless it
uses or intends to use the services of such service corporation. It may not
invest in more than one such service corporation without the consent of the
State Corporation Commission. For purposes of this section, a service
corporation is defined as one engaged primarily in rendering services, other
than the renting of the association’s premises or the furnishing of furniture
or fixtures, to two or more associations. Stock in a Federal Home Loan
Bank shall not be considered stock of a service corporation within the
meaning of this section.

(d) In loans fully secured by shares of the association.

(e) In loans secured by first liens on improved real estate. No such
loans shall exceed forty thousand dollars on each home or combination of
home and business property securing the same. No such loan shall exceed
ninety per cent of the value of the real estate as appraised by a compe-
tent appraiser up to thirty-five thousand dollars and eighty per cent of
such value on the amount in excess of thirty-five thousand dollars. Pro-
vided that loans insured or guaranteed by a federal agency may be made
on such terms as are acceptable to the insuring or guaranteeing agency.
At least sixty per cent of the assets shall be invested in such loans un-
less, because of exceptional conditions in the real estate market, the Com-
mission permits an association to deviate from this requirement.

Every such loan shall provide that the borrower shall make regular
periodic payments of principal and interest, in equal or unequal amounts,
the first payment being due not later than twelve (12) months from the
date of the first advance in the case of a loan made for the purpose of
financing the construction of a home or a combination home and business
structure and sixty (60) days from the date of the loan in the case of other
loans, until the mortgage indebtedness and the disbursements, if any,
made by the association for the payment of taxes, insurance premiums,
and other items, together with interest thereon, have been fully paid;
provided, however, that no subsequent periodic payment of principal and
interest shall be greater than any previous periodic payment of principal
and interest, and that no such loan shall be for a longer term than thirty
(30) years. Loans insured or guaranteed by a federal agency may be
repayable upon such terms as are acceptable to such agency. The associa-
tion may compute, charge, and collect interest on monthly balances by
computing the same on the preceding monthly balance and adding such
interest to that balance plus advances for taxes, insurance and other lawful
charges accruing since the preceding balance, less credits for payments
made by the borrower.

(f) Up to twenty per cent (20%) of the assets may be invested in
secured or unsecured loans for maintenance, repair, modernization, im-
provement and equipment of improved real estate or other improved real
estate. Such loans shall be payable monthly and shall not be for a term
longer than eight (8) years and shall not exceed five thousand dollars
($5,000.00).

An association may charge and collect in advance the legal! rate of
interest upon the entire amount of such loan.

(g) Up to twenty per cent (20%) of the assets may be invested in
other loans secured by a first lien on improved real estate or other improved
real estate. No such loans shall be for a term longer than thirty (30)
years nor in excess of seventy-five per cent (75%) of the value of the real
estate as appraised by a competent appraiser.

) Up to five per cent (5%) of the assets may be invested in other
loans secured by a first lien on unimproved real estate.

(i) Up to five per cent (5%) of the assets may be invested in loans,
obligations, and advances of credit made for the payment of expenses of
college or university education. Such loans may be secured, partly secured,
or unsecured, and the association may require a comaker or comakers,
insurance, guarantee under a governmental student loan guarantee plan,
or other protection against contingencies. The borrower shall certify to
the association that the proceeds of the loan are to be used by a full time
student solely for the payment of expenses of college or university educa-
tion. For the purpose of this section, the term “College or University edu-
cation” means education at an institution which provides an educational
program for which it awards a Bachelor’s Degree, or provides not less than
a two year program which is acceptable for full credit toward such a degree.

§ 6.1-158. In addition to the investment powers specifically granted
to associations by the provisions of this chapter, the Commission may by
appropriate regulation amend the investment powers of State associations
So as to allow such associations competitive investment power with any
other association as defined in § 6.1-129 engaged in a similar business in
this State, with respect to investment permitted under subsections b, c,
c-1, c-2, e, f, g, and i of § 6.1-157, nor shall the twenty per cent limitation of
said subsection g be increased. Such authority to the Commission shall
not be construed in any manner to confer authority to restrict or limit or
diminish any right or powers specifically given associations by the Code of
Virginia. The Commission shall adopt such regulations only after public
hearing thereon, notice of which shall be sent to every savings and loan
association authorized to conduct its business in Virginia. Such regula-
tions shall be effective upon their adoption, and shall continue in effect
until ninety days following the adjournment sine die of the next regular
session of the General Assembly of Virginia following their adoption, after
which new regulations may be adopted pursuant to the provisions of this

on.
§ 6.1-159. (Reserved)
association may provide that the entire unpaid balance thereof, at the
option of the holder, shall become due and payable upon default in pay-
ment of any installment without impairing the negotiability of the note, if
otherwise negotiable.

§ 6.1-161. A borrower may anticipate the payment of any loan
secured by a first mortgage or deed of trust on real estate on any install-
ment due date; but in case of prepayment before maturity, the borrower
shall pay such an amount for the privilege as has been agreed upon, but in
no event in excess of a sum equal to two per centum of the amount of such
prepayment.

§ 6.1-162. (a) State Associations and Federal Associations, as de-
fined in § 6.1-129 (6) and (7), may purchase from each other or partici-
pate with each other or with banks insured by the Federal Deposit Insur-
ance Corporation in loans on real estate. An association may participate
in the making of or purchase a participation in a loan on real estate made
by a savings and loan association that is not authorized to do business in
Virginia, not to exceed fifty per cent of the amount of the loan, irrespective
of where the security for such loan is located, provided that the aggregate
amount of such interest in all such loans shall not exceed twenty per cent of
the association’s assets. An association may sell a participation in a loan
made or to be made by it on real estate to a savings and loan association
that is not authorized to do business in Virginia, provided that the loan is
collected and serviced by the Virginia association. An association that is
not authorized to do business in Virginia shall not be deemed to be doing
business in Virginia solely because of such participation.

An association may purchase any loan it may legally make.

(c) An association shall not engage in the mortgage brokerage busi-
ness; but an association may sell any loan made by it provided that it is
sold without recourse against the association.

§ 6.1-163. An association may not make a loan to a director, officer
or employee of the association or to any attorney regularly serving the
association in his capacity as such, or to any partnership in which any
such director, officer, employee or attorney has any interest, nor to a cor-
poration in which any such person is a stockholder except that a loan may
be made to a corporation in which no such person owns more than 15% of
the total outstanding stock and in which the stock owned by all such
persons does not exceed 25% of the total outstanding stock. Provided, that
nothiny herein contained shall prohibit an association from making a loan
on the security of the shares of such persons in the association or on the
security of a first lien on the home or combination of home and business
property owned and occupied by such director, officer, employee or attorney.

§ 6.1-164. The affairs of every association shall be managed by a
Board of Directors of not less than five (5) persons, a majority of whom
shall be residents of this State. Every director shall be the owner and have
in his personal possession or control, share or shares of stock in the associa-
tion of which he is a director and for which has been paid into the treasury
of the association not less than five hundred dollars ($500.00), and
such shares or share of stock must be unpledged (except as required to be
pledged to a Federal Home Loan Bank) and unencumbered at the time of
his becoming a director and during the whole of his term as such. The
office of any director violating the provisions of this section shall immedi-
ately become vacant. In the case of shares a director shall own such share
either in his sole name or jointly with his spouse. In the case of shares of
stock a director shall own such shares of stock in his sole name.

8 6.1-165. The board of directors of every association shall meet at
least once in each month. A majority of the whole board shall be necessary
for the lawful transaction of business, except that the members or stock-
holders, by bylaw, may fix any number not less than five as a quorum;
provided however, that associations with total assets of less than $500,000
may meet once in every three months unless the Commission for good
cause requires them to meet monthly.

§ 6.1-166. The directors of each association shall require a bond
with corporate surety from each of the active officers and employees of the
association as an indemnity for any loss the association may sustain as a
result of his fraud, dishonesty, theft or embezzlement; provided that in
lieu of individual bonds a blanket bond with corporate surety covering all
active officers and employees of the association may, with the approval of
the board of directors, be obtained. The Commission shall annually exam-
ine all such bonds and pass on their sufficiency and either the board of
directors or the Commission may require new or additional bonds at any
time. The corporate surety shall have a license issued by the Commission.

§ 6.1-167. The directors of every such association shall, at least once
in each calendar year, cause an examination to be made of the association,
and review the internal controls of the association. A statement of the
results of such examination and review shall be recorded with the proceed-
ings of the board.

§ 6.1-168. A mutual savings and loan association shall give notice of
its meetings of members as required by § 13.1-214, and, in addition, a copy
of the notice shall be posted in a conspicuous place in each office of the
association during the fourteen days preceding the date of the meeting.

§ 6.1-169. (a) Every member shall have the right to inspect such
books and records of an association as pertain to his loan or savings account.
Otherwise, the right of inspection and examination of the books and
records shall be limited to the Commission or its duly authorized represen-
tatives, to persons duly authorized to act for the association, and to any
federa] instrumentality duly authorized to make such inspection. The
accounts and loans of members shall be kept confidential by the association,
its directors, officers and employees and by the Commission and its agents
and representatives. No other person shall have access to the books and
records of the association or shall be given a partial or complete list of
members except upon express authority of the board of directors.

(b) If any member desires to communicate with the other members
of the association with reference to any vote or question to come before a
meeting of members, the association shall promptly furnish, upon request,
a statement of the approximate number of members of the association and
an estimate of the cost of preparing and mailing such communication.
The requesting member may then submit the communication to the Com-
mission which, if it finds that the communication should be considered by
the members, shall direct the association to forthwith prepare and mail the
same to the members, upon the requesting member’s or members’ payment
of the expenses of preparation and mailing.

§ 6.1-170. Before any association may begin business, it shall obtain
from the Commission a certificate of authority to do so; and prior to the
issuance of such certificate, the Commission shall ascertain that (1) all
applicable provisions of law have been complied with; (2) shares to the
value of at least $50,000 have been purchased by members who have prom-
ised in writing not to withdraw any shares for at least one year, or shares
of stock to the value of at least $50,000 have been purchased by stock-
holders, and the purchase price has been paid into the treasury of the
association in cash; (3) regulations governing directors of the association
have been complied with; (4) there is public need for savings and loan
facilities or additional such facilities in the community where the savings
and loan association is proposed to be located; (5) the officers and directors
of the proposed association are of (i) moral fitness, (ii) financial respon-
sibility, and (iii) business ability. ,
from any order of the Commission granting or denying such certificate of
authority. If a certificate is finally denied, the association shall return to
the purchasers the amounts they have paid for shares or shares of stock,
less such sums as have been necessarily and prudently expended in seeking
to obtain a certificate; and the directors individually, jointly and severally,
shall be liable for any failure of the association so to do. This liability
may be enforced by a suit in equity instituted by one or more of the pur-
chasers on behalf of all against the association and one or more of its
directors.

§ 6.1-171. The main office of a savings and loan association is the
office at which it first commences to do business. No savings and loan
association may establish a branch office nor may it engage in business in
more than one place, except that the Commission, when satisfied that the
public convenience and necessity will be served, may authorize an associa-
tion to establish a branch or branches.

The Commission may authorize the removal of a main or branch
office to another location when it is satisfied that the new location will
serve the public convenience and necessity better than the old location.

§ 6.1-172. Two or more mutual associations or two or more stock
associations may consolidate or merge, subject to the approval of the
Commission, when the Commission finds that the merger or consolidation
will promote the best interests of the members and the convenience of the
public. The order approving the consolidation or merger shall specify
which office is to be the main office and which office or offices may be oper-
ated as branch offices.

§ 6.1-173. A mutual State association may convert into a federal
association as follows:

(1) At any meeting of the members called and held in accordance
with the Virginia Nonstock Corporation Act to consider such action, the
members, 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 associa-
tion into a federal association ;

(2) <A copy of the minutes of the meeting duly certified by the presi-
dent or vice president and the secretary or assistant secretary of the State
association shall be transmitted to the Commission;

(3) Thereafter, the State association shall take such action as is
necessary under federal law to make it a federal association.

(4) It shall file with the Commission a certified copy of the charter
issued to it by the Federal Home Loan Bank Board, or a certificate of the
Board showing the organization of the State association as a federal asso-
ciation; and the association shall thereupon cease to be a State association.

(5) No State association shall convert into a federal association until
it has been in operation as a State association for a period of at least five
years.

§ 6.1-174. When such conversion becomes effective, the State asso-
ciation shall cease to be a Virginia corporation and all its property shall
by operation of law and without any further act or deed continue to be
vested in it under its new name as a federal association and under its fed-
eral charter; and the federal association 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 association. Such federal
association, at the time of the taking effect of the conversion, shall become
and continue responsible for all of the obligations of the State association
including taxes and other liabilities created by law or incurred by it before
becoming a federal association to the same extent as though the conversion
had not taken place.

§ 6.1-175. A federal association doing business in this State may
become a State association as follows:
(1) It shall take such action as will effect its dissolution as a federal
association on a specified date;

(2) Its directors, before its dissolution becomes effective, shall organ-
rene corporation under this chapter and the Virginia Nonstock Corporation

ct; an

(3) The new corporation shall apply for a certificate of authority
to do business under § 6.1-170.

§ 6.1-176. The association shall transact no business as a State asso-
ciation other than that relating to its organization until its certificate of
authority to do business has been granted and its dissolution as a federal
association has become effective.

§ 6.1-177. As soon as the certificate of authority to do business has
been granted and its dissolution as a federal association has become effec-
tive, all the property of the federal association shall by operation of law
and without any further act or deed, be vested in and become the property
of the State association, which shall have, hold and enjoy the same in its
own right as fully and to the same extent as the same was possessed, held
or enjoyed by the federal association; and the State association shall be-
come and continue responsible for all the obligations, duties and agree-
ments of the federal association including taxes and other liabilities cre-
ated by law or incurred by it before becoming a State association to the
same extent as though the conversion had not taken place.

§ 6.1-178. No person except corporations chartered and conducting
the savings and loan business under the authority of the laws of this State,
or corporations hereafter incorporated under the laws of this State for
such purposes, shall engage in the savings and loan association business in
this State; but nothing in this chapter shall prevent any person from
lending money on real estate or personal] security or collateral, or from
guaranteeing the payment of bonds, notes, bills and other obligations, or
from purchasing or selling stocks and bonds. No savings and loan associa-
tion shall be incorporated in this State with authority to conduct its busi-
ness outside of this State, nor shall any savings and loan association
incorporated under the laws of any other state be authorized to do business
in this State.

§ 6.1-179. (a) No person not engaged in the business of a savings
and loan association in this State under the provisions of this chapter shall
use any sign having thereon any assumed or corporate name containing the
words “savings and Joan,” “building and loan,” or other words indicating
that its office is the office of a savings and loan association; nor shall any
such person use or circulate any written or printed material having thereon
any assumed or corporate name or word or words indicating that the busi-
ness of such person is that of a savings and loan association.

The provisions of this section as to the use of a corporate name shall
not apply to any industrial loan association which was authorized to do
business in this State on January one, nineteen hundred sixty, and which
on that date had the words “savings and loan” or “building and loan” as a
part of its corporate name.

_ (b) The use of any of these terms in the name of any other corpora-
tion or in connection with any other business is not prohibited when addi-
tional words show clearly and definitely that the corporation is not, and
that the business is not that of, a savings and loan association.

__ (ce) Any person violating the provisions of this section, either indi-
vidually or as a partner or as a director or officer of a corporation, shall be
guilty of a misdemeanor.

§ 6.1-180. The Commission is authorized and directed to examine
the accounts, books and papers of any person who it has reason to believe is
doing the business of a savings and loan association without legal authority
a& misdemeanor.

§ 6.1-181. Every person who does the business of a savings and loan
association without authority of law, and every officer and agent who
knowingly participates therein, shall be guilty of a misdemeanor.

§ 6.1-182. Whoever, directly or indirectly, willfully and knowingly
makes or transmits to another, circulates, or counsels, aids, procures or
induces another to make, transmit or circulate any false or untrue state-
ment, rumor or suggestion derogatory to the financial condition, solvency
or financial standing of any savings and loan association doing business in
this State, or who knowingly counsels, aids, procures or induces another to
make, transmit or circulate any false or untrue statement, rumor or sug-
gestion derogatory to the financial condition, or of derogatory character
with respect to the earnings or management of the business, of any such
association, shall be guilty of a misdemeanor.

§ 6.1-183. No association shall, without the written approval of the
Commission, make any representation, oral or written, that any of its
shares are insured or guaranteed unless such shares are insured or guaran-
teed by an instrumentality of this State or of the United States. No asso-
ciation shall publish any misleading advertisement.

6.1-184. The Commission shall have supervision over all savings
and loan associations incorporated under the laws of this State and the
Commission shall, not less than once in each year and at such other times
as in its discretion it deems necessary, without previous notice, examine
each such association.

A copy of the report of all examinations shall be furnished to the asso-
ciation and such report shall be presented by the president to the directors
at their next meeting.

§ 6.1-185. For the purpose of defraying the expenses of such super-
vision and examination the Commission shall, on or before the first day
of July of each year, assess against every such association fees as follows:
A minimum fee of one hundred fifty dollars ($150.00) which shall
cover the first fifty thousand dollars of assets or less, to which shall be
added in the case of each association, according to its total assets, as
shown by its statement of financial condition made to the Commission as
of the next preceding December thirty-one, additional fees as follows:
For the amount by which its total assets exceed fifty thousand dollars and
do not exceed one million dollars, two dollars fifty cents on each ten
thousand dollars or fraction thereof; for the amount by which its total
assets exceed one million dollars and do not exceed three million dollars,
one dollar on each ten thousand dollars or fraction thereof; and for all
assets over three million dollars, one dollar on each twenty thousand
dollars or fraction thereof. Every association having a branch or branches
shall be assessed fifty dollars per year for each branch.

All fees so assessed shall be paid into the State treasury on or before
the thirty-first day of July following. The Commission shall mail the
assessment to each association on or before the tenth day of July of each
year, and give notice thereof to the Comptroller, and it shall be the
duty of the Comptroller to furnish the Commission with the names of the
associations which fail to pay the assessment on or before July thirty-first.

Before investigating an application for a certificate of authority the
Commission shall charge a fee of two hundred fifty dollars.

Before investigating an application for authority to establish a
branch, the Commission shall charge a fee of one hundred dollars. But no
fee shall be charged for investigating an application for authority to
change the location of an existing main office or branch office.

§ 6.1-186. The officers, directors and employees of every association
shall, upon the demand of the person designated to make any examination
under the provisions of this chapter, give to such examiner full access to
all money, books, papers, notes, bills and other evidences of debt of the
association and shall disclose fully and truly all of its indebtedness and
liability, and shall furnish the Commission with all information which it
deems necessary to a full investigation into the affairs of the association.

The Commission is empowered to examine under oath any and all of
the directors, officers, clerks, and employees of the association touching
any matter or thing connected with the operation of the association. Any
examiner is authorized to administer oaths to the persons examined.

§ 6.1-187. Every association shall furnish the Commission within
thirty days after the close of its fiscal year a statement of its financial con-
dition on forms supplied by the Commission; and, in addition, shall either
mail to each of its members or shall publish in some newspaper having
general circulation in the county or city where its business is carried on a
statement in condensed form of its financial condition. Such statements
shall be made and published in accordance with forms prescribed by the
Commission, certified under oath by the president or treasurer of the
association, and attested by at least three of its directors. Insofar as prac-
ticable, the reports requested by this section shall conform to those required
of associations insured by any instrumentality of the federal government.

Every association shall make such other reports as the Commission
may from time to time require.

6.1-188. The Commission may require an association to have an
audit made of its books, records and methods of operation, whenever it
appears to the Commission that the system of internal controls is not
adequate or that the association is engaging in dangerously unsound prac-
tices or that the financial condition of the association makes it necessary.

§ 6.1-189. The Commission shall prepare and make available to each
member of the board of directors of every association a statement describ-
ing generally their duties and responsibilities. The statement shall include
a brief outline of the examining procedure employed by the Commission,
an explanation of the distinction between an examination and an audit,
and any information which the Commission deems necessary to apprise
the directors of the necessity for an adequate system of internal controls.

§ 6.1-190. If the Commission finds: (1) That the laws of this State
are not being fully observed by an association, or (2) that the association
has failed to comply with the lawful orders of the Commission, or (3) that
the reserve of the association is insufficient for the protection of share-
holders, the Commission shall give immediate notice thereof to the officers
and directors of the association; and, if necessary to conserve the assets of
the association and protect the interests of its shareholders, the Commis-
sion may, after reasonable notice to the association and opportunity for it
to be heard: (1) Close the association for a period not exceeding sixty days,
which period may be further extended for a like period or periods as the
Commission deems necessary; (2) require the officers and directors of the
association to liquidate, insofar as is required, its outstanding loans; (3)
require that all lawful orders of the Commission be complied with; (4)
require the association to make reports daily or at such other times as it
may require as to the results achieved in carrying out its orders; or (5) if
the Commission determines that a receiver should be appointed, it may
close the doors of the association and apply to the proper court for the
appointment of a receiver to take charge of its business and assets and to
wind up its affairs. Proceedings for the appointment of a receiver of an
association shall not be entertained by any court except on the application
of the Commission.

§ 6.1-191. The Commission may impose, enter judgment for, and
enforce by its process, a fine of not more than one thousand dollars against
any association or against any of its directors, officers or employees for
violating any lawful order of the Commission; and may remove from office
any director or officer who a second time violates any such order but in all
cases the defendant shall have an opportunity to be heard and to introduce
evidence, and the right to appeal as in other cases.

§ 6.1-192. Any officer or agent of such an association who know-
ingly makes a false statement of the condition of the association to the
Commission shall, upon conviction thereof, be fined not less than one hun-
dred nor more than one thousand dollars, or be confined in the penitentiary
not less than one nor more than ten years, or both.

§ 6.1-198. An association may remain closed on any one or more or
all Saturdays as the association by resolution of its directors may from
time to time determine. Any Saturday on which an association shall re-
main closed shall, as to such association, constitute a legal holiday, and
any act authorized, required or permitted to be performed at, by or with
respect to any such association on a Saturday on which the office of the
association is so closed, may be performed on the next succeeding business
day and no liability or loss of rights of any kind shall result from such

elay.

§ 6.1-194. (Reserved).

§ 6.1-195. (Reserved).

CHAP. 4
CREDIT UNIONS

§ 6.1-196. Any eight persons, residents of this State, may by execut-
ing and filing the articles provided for in Article 3 (§§ 13.1-48 et seq.) of
Chapter 1 of Title 13.1 except as otherwise herein provided, establish a
corporation for the purpose of accumulating and investing the savings of
its members, making loans to members for provident purposes and gen-
erally conducting a credit union as hereinafter provided in this chapter.
Every corporation organized under this chapter shall include in the cor-
porate name the two words “credit union” as well as some other distin-
guishing word or words. But no such corporation need comply with the
provisions of subparagraph (a) of § 13.1-6.

§ 6.1-197. Immediately after the granting of the certificate of incor-
poration of a credit union by the State Corporation Commission, the incor-
porators or members shall adopt a set of bylaws in conformance with this
chapter, and shall file a copy of the same with the Commission. When the
bylaws are filed with and approved by the Commission, the minimum
amount of capital stock subscribed for, and all requirements of law as to
organization are complied with, the Commission shall thereupon issue a
certificate authorizing the credit union to commence business. Provided,
however, that the Commission shall not issue a certificate of authority to
do business to a credit union when it has reason to believe that the corpora-
tion is formed for any other than legitimate credit union business, or that
the moral fitness, financial responsibility, or business qualifications of the
persons named as officers and directors are not such as to command the
confidence of the community in which the credit union proposes to operate.

§ 6.1-198. The bylaws of every credit union shall specify:

(1) The date of the annual meeting, which shall be in January,
February or March, of each calendar year, and the requirements as to
notice and manner of conduct of such meeting;

(2) The number of directors, which shall be not less than five all of
whom must be shareholders and members of the corporation, the powers
and duties of the directors, the maximum compensation and the duties of
all officers ;

(3) The conditions and qualifications for membership, which shall
limit the membership to persons having a specified common bond of inter
est, members of their families, associations of such persons, and employees
of the credit union; |
(4) The number of members of the credit committee and of the
supervisory committee, with their respective powers and duties;

(5) The conditions upon which shares may be issued, transferred
and withdrawn;

(6) The charges, if any, to be made for failure to meet obligations
punctually ;

(7) The conditions upon which deposits may be received and with-
drawn, and whether the corporation shall have the power to borrow;
_ (8) The manner in which the funds of the corporation may be
invested ;

(9) The conditions upon which loans may be made and repaid;

(10) The method of receipting for money paid in on account of
shares, deposits or loans;

(11) The manner in which the reserve fund shall be accumulated;

d
' (12) The manner in which dividends shall be determined and paid
out.
Any bylaw may be amended by the Commission by order entered on
its order book and certified to the credit union. Before entering any such
order the Commission shall notify the credit union of the proposed amend-
ment and afford it an opportunity to be heard thereon.

6.1-199. The bylaws when so approved and filed shall be the by-
laws of the corporation and no amendments shall be operative unless the
same shall conform to the provisions of this chapter and be approved by
the Commission. ;

§ 6.1-200. The credit union may receive the savings of its members
in payment for shares or on deposit and may Joan to its members or may
undertake such other activities relating to the purposes of the corporation
as its charter or bylaws may authorize, not inconsistent with the provi-
sions of this chapter. )

§ 6.1-201. If the bylaws so provide, a credit union shall have the
power to rediscount, as hereinafter provided, or to borrow money from any
source in addition to receiving deposits as indicated in § 6.1-214, but the
aggregate amount of rediscounts and borrowings shall at no time exceed
the sum total of the capital, surplus and reserve funds of such borrowing
credit union.

§ 6.1-202. Notes, drafts and bills of exchange, executed for the pur-
pose of this chapter, having a maturity not to exceed six months, and
endorsed by a national bank or a State bank or trust company, may be
rediscounted in the open market by a credit union. The total of such paper
outstanding shall at no time exceed the paid-in capital and surplus; pro-
vided, however, that the Commission, in its discretion, may extend this
limit temporarily; and provided further, that the limitation here fixed
shall not be considered money borrowed under §6.1-201..

_§ 6.1-203. A credit union may change its place of business on written
notice to and approval of the Commission. -
_ § 6.1-204. The membership of the corporation shall consist of the
Incorporators and such eligible persons, societies, associations, partner-
ships and corporations, subject to approval by the board, who have sub-
scribed for one or more shares and have paid for the same in whole or in
part, together with the entrance fee as provided in the bylaws, and have
complied with such other requirements as the certificate of organization
and bylaws may contain. : a

§ 6.1-205. A member may be expelled by a two-thirds vote of the
membership present at a special meeting called to consider the matter, but
only after a hearing. A member may withdraw from a credit union as
hereinafter provided, by filing a written notice of his intention so to do.
with any dividends credited to his shares to the date of expulsion or with-
drawal, shall be paid to such member in the order of expulsion or with-
drawal and only as funds therefor become available, after deducting any
amounts due to the corporation by such member. All deposits of an
expelled or withdrawing member, with any interest accrued, shall be paid
to such member subject to sixty days’ notice and after deducting any
amounts due the corporation by such member. Such member when with-
drawing shares or deposits shal] have no other or further right in such
credit union or to any of its benefits, but such expulsion or withdrawal
shall not operate to relieve such member from any remaining liability to
the corporation.

§ 6.1-206. The capital of a credit union shall consist of the payments
that have been made to it by the several members thereof on shares. The
par value of the shares shall be five dollars per share and shall be paid for
in money only. Shares may be subscribed for and paid in such manner as
the bylaws shall prescribe, not inconsistent with the provisions of this
chapter. A credit union shal] have a lien on the shares of any member and
upon any dividends payable thereon for, and to the extent of, any loan
made to him and of any dues and fines payable by him. A credit union may,
upon the resignation or expulsion of a member, cancel the shares of such
member and apply the withdrawal value of such shares towards the liqui-
dation of such member’s indebtedness.

Shares may be issued or transferred only to members of the credit
union or to other credit unions. Shares that are not fully paid may not be
transferred. The fee for transferring one or more shares at one time from
one transferor to one transferee shall not exceed twenty-five cents.

6.1-207. Shares of a credit union may be issued and deposits re-
ceived in the name of a minor, and such shares and deposits may be
withdrawn by such minor, and in such case payments made on such with-
drawals shall be valid. If shares are held or deposits made in trust the
name and residence of the beneficiary shall be disclosed and the account
shall be kept in the name of such holder as trustee for such beneficiary.
Such shares and deposits may, upon the death of the trustee, be withdrawn
by the person for whom the shares were held or for whom such deposits
were made.

§ 6.1-208. For failure by any member of a credit union to meet his
payments on shares when due, such charges and other penalties may be
imposed upon the delinquent member as the bylaws provide. Such charges
shall not exceed one and one-half per centum per month or a fraction
thereof on amounts due, except that a minimum charge of five cents per
month or fraction thereof may be imposed.

§ 6.1-209. The fiscal year of every credit union shall end at the close
of business on the thirty-first day of December. The annua) meeting of the
corporation shall be held as provided in the bylaws of the corporation.
Special meetings may be held by order of the directors or of the supervisory
committee, and shall be held upon request in writing of ten per centum of
the members. Notice of all meetings of the corporation shall be given in
the manner prescribed in the bylaws. At all meetings of members a mem-
ber shall have but one vote, irrespective of the number of shares held.
Except as hereinafter provided, no shareholder may vote by proxy, but 4
society, association, copartnership or corporation, having membership 1n
the credit union may be represented by one person authorized by su
society, association, copartnership or corporation to so represent it; pro-
vided, however, that at any meeting called for the purpose of amending the
charter or certificate of incorporation any shareholder may vote by proxy
for or against such amendment, but for no other purpose; and the affirma-
tive votes of two-thirds of the members of the credit union shall be neces-
sary and sufficient to approve the amendment irrespective of the number
of shares held by each. At any meeting the members may decide upon any
question of interest to the corporation and overrule the board of directors,
and by a three-fourths vote of those present and represented, provided the
notice of the meeting shall have specified the question to be considered,
may vote to amend the bylaws.

§ 6.1-210. At the annual meeting of such credit union the members
shall elect a board of directors of not less than five members, a credit
committee and a supervisory committee of not less than three members
each. However, in the discretion of the members the board of directors as
such may also be the credit committee. Except as herein specified, no
member of the board of directors shall be a member of either of such
committees, nor shall one person be a member of more than one of such
committees, and all members of committees and all directors, as well as all
officers whom they may elect, shall be sworn, and shall hold their several
offices for such term as may be determined by the bylaws.

The oath required of each director, officer and member of committee,
shall be the oath of the individual taking the same that he will, as far as the
duty devolves upon him, diligently and honestly administer the affairs of
such corporation and will not knowingly violate or willingly permit to be
violated any of the provisions of law applicable to such corporation, and
that he is the owner in good faith and in his own right on the books of the
corporation of at least one share therein. Such oath shall be subscribed by
the individual making it and certified by the officer before whom it is taken
and shall immediately be transmitted to the Commission and filed and pre-
served in its office.

§ 6.1-211. At their first meeting following the annual meeting, the
board of directors of such credit union shall elect from their number a
president, vice president, secretary and treasurer. The offices of secretary
and treasurer may, if the bylaws so provide, be held by one person; and
other officers may be elected in the discretion of the directors.

The board of directors shall have the general management of the
affairs, funds and records of the corporation, and shall meet as often as
may be necessary. Unless the bylaws shall specifically reserve all or any
of these duties to the members it shall be the special duty of the directors:
(1) To act upon all applications for membership and the expulsion of
members; (2) to fix the amount of the blanket surety bond which shall be
required of each official, committee member or employee of the credit
union, the surety on the bond to be some solvent surety company licensed
to do business in Virginia and the amount thereof to be approved by the
Commission; (3) to determine from time to time the rate of interest which
shall be allowed on deposits and charged on loans; (4) to fix the maximum
number of shares which may be held by, and the maximum amount which
may be lent to, any one member; (5) to declare dividends; (6) to recom-
mend amendments to the bylaws; (7) to fill vacancies in the board of di-
rectors or in the credit committee until the election and qualification of
successors; (8) to have charge of the investment of the funds of the
corporation; and (9) to perform such other duties as the members may
from time to time authorize. ;

No member of the board of directors shall receive any compensation
for his services as a member of such board. The members of the credit or
supervisory committee of any corporation established hereunder having
assets in excess of fifty thousand dollars may receive for their services, as
such members, such compensation as the board of directors may determine.

§ 6.1-212. The credit committee of such credit union shall approve
every loan or advance made by the corporation to members, except that
the credit committee may appoint one or more loan officers, and delegate
to him or to them the power to approve loans up to the unsecured limit,
of shares. Each loan officer shall furnish to the credit committee a record
of each loan approved or not approved by him by the next meeting of the
committee or, in any case, within seven days of the date of the filing of
the application therefor. All loans not approved by a loan officer shall be
acted upon by the credit committee. No individual shall have the authority
to disburse funds of the credit union for any loan which has been ap-
proved by him in his capacity as a loan officer. No member of the credit
union committee may be appointed as a loan officer. Every application
for a loan shall be made in writing on a form prepared by the board
of directors and shall state the purpose for which the loan is desired and
the security offered. No loan shall be made unless it receives the unanimous
approval of those members of the credit committee who are present when
it is considered, which number shall constitute at least a majority of the
members of the committee, nor if any member of the committee shall dis-
approve thereof; but the applicant for a loan may appeal from the decision
of the credit committee to the board of directors. The credit committee
shall meet as often as may be required. Due notice of each such meeting
shall be given to each member of the committee.

§ 6.1-213. The supervisory committee of such credit union shall
inspect the securities, cash and accounts of the corporation. At any time
the supervisory committee, by unanimous vote, may, if it deems such
action necessary to the proper conduct of the credit union, suspend any
officer or director or any member of the credit committee and shall, if any
such officer, director or member of the committee be so suspended, call
the members together to act on such suspension as hereinafter provided.
The members at such meeting may sustain such suspension and remove
such officer permanently or may reinstate such officer. By a majority vote
they may call a meeting of the shareholders to consider any violation of
this chapter or of the bylaws, or any practice of the corporation which, in
the opinion of the committee, is unsafe and unauthorized. Within seven
days after the suspension of the credit committee, or any member thereof,
or of any director or officer, the supervisory committee shall cause notice
to be given of a special meeting of the members to take action relative to
such suspension. The supervisory committee shall fill vacancies in their
own number until the next meeting of the members.

At the close of each fiscal year, the supervisory committee shall make
or cause to be made a thorough audit of the receipts, disbursements, income,
assets and liabilities of the corporation for such fiscal year, and shall make
a full report thereon to the directors. Such report shall be read at the
annual meeting of the members and shall be filed and preserved with the
records of the corporation. .

§ 6.1-214. A credit union may receive the savings and deposits of its
members, members of their families, associations of such persons, and em-
ployees of the credit union, and other credit unions, in such amounts and
upon such terms as the board of directors may determine and the bylaws
shall provide. |

§ 6.1-215. A credit union may lend to its members at reasonable
rates of interest, or invest, as hereinafter provided, the funds accumulated
by it. The rates of interest shall not exceed one per centum per month
computed on unpaid balances.

§ 6.1-216. The capital, deposits, undivided profits and reserve fund
of the corporation may be invested in the following ways, and in such ways
only:

(1) Lent to members of the corporation in accordance with the pro-
visions of this chapter ;

Deposited to the credit of the corporation in other credit unions
or in State banks or trust companies incorporated under the laws of this
State, or in national banks operating in this State;
(8) Not more than ten per centum of the capital stock and reserve
fund of a credit union may be invested in the stock of other credit unions;

(4) Lent to other credit unions if provided—and under conditions
set forth in the bylaws;

(5) Invested in United States government bonds or in bonds of the
debe : Virginia, or any subdivisions thereof, including revenue bonds

ereof ;

(6) Invested in shares of any building and loan association of this
State, and in shares of any federal savings and loan association lawfully
engaged in business in this State under supervision of the Commissioner of
Banking or of a corresponding federal authority.

§ 6.1-217. As provided in § 6.1-216 a credit union may loan to its
members for such purposes and upon such security and terms as the
bylaws shall provide and the credit committee shall approve; but security
must be taken for any loan (except to another credit union) in excess of
six hundred dollars. Endorsement of a note or assignment of shares in any
credit union shall be deemed security within the meaning of this section.

The supervisory committee shall appoint a substitute to act on the
credit committee in the place of any member in case such member makes
application to borrow money from a credit union or become surety for any
other member whose application for a loan is under consideration.

All officers and members of any committee in any way knowingly
permitting or participating in making a loan of funds of a credit union to a
nonmember thereof shall be guilty of a misdemeanor. The credit union
shall have the right to recover the amount of such illegal loans from the
borrower or from any officer or member of a committee who knowingly
participated in the making thereof, or from all of them jointly.

A borrower may repay the whole or any part of his loan on any day
on which the office of the corporation is open for the transaction of busi-

ess.

§ 6.1-218. All entrance fees, transfer fees and fines shall, after pay-
ment of the organization expenses, be added to the reserve fund of the cor-
poration. At the close of the dividend period there shall be set apart to the
reserve fund ten per centum of the gross income of the corporation which
has accumulated during the period, until the reserve fund is equal to twenty
per centum of the total assets, exclusive of the reserve fund. Upon recom-
mendation of the board of directors the members, at an annual meeting,
may increase the proportion of earnings to be set apart to the reserve fund.
Losses incurred in any form may be charged to the reserve fund. Any sums
recovered on items previously charged to it shall be credited to the reserve
fund, except when the reserve equals twenty per centum of the total assets
exclusive of the reserve fund. The reserve fund, including any excess from
June twenty-ninth, nineteen hundred forty-eight, shall belong to the cor-
poration and shall be held to meet contingencies and shall not be dis-
tributed to the members except on dissolution of the corporation.

§ 6.1-219. Annually, semiannually or quarterly as the bylaws of
each credit union may provide and after provision for the required re-
serves, the board of directors may declare a dividend to be paid from the
remaining net earnings. Such dividends shall be paid on all paid-up
shares outstanding at the end of the period for which the dividend is
declared. Shares which become fully paid up during such dividend period
and are outstanding at the close of the period shall be entitled to a pro-
portional part of such dividend. Dividend credit for a month may be ac-
crued on shares which are or become fully paid up during the first ten
ma eae d under the provisions of thi

-1-220. Corporations organized under the provisions of this cha
ter shall be subject to such supervision and examination as the Commission
a report of condition to the Commission at the close of business on the
thirty-first day of December of each year. These reports shall be signed by
the president and the treasurer or secretary, or by a majority of the mem-
bers of the supervisory committee, and they shall make such other reports
as the Commission shall at any time demand. Any such corporation which
neglects or refuses to make any report called for shall be subject to a fine,
to be imposed by the Commission, of not more than ten dollars for each
day or such neglect, unless excused by the Commission for good cause

own.
§ 6.1-221. Each credit union shall be examined at least once a year,
but the Commission may, in its discretion, order other examinations. The
examiners shall be given free access to all books, papers, securities and
other sources of information in respect to such corporation. At the time of
each examination the Commission shall charge an examination fee of
twenty-five dollars, which shall cover the first three thousand dollars of
assets or less, to which shall be added in the case of each credit union,
according to its total assets, as follows: for the amount by which its total
assets exceed three thousand dollars and do not exceed thirty thousand
dollars, one dollar for each one thousand dollars or fraction thereof;
for the amount by which its total assets exceed thirty thousand dollars,
and do not exceed five million dollars, sixty cents for each one
thousand dollars or fraction thereof; and, for the amount by which its
total assets exceed five million dollars, thirty cents for each one thousand
dollars or fraction thereof. For the purpose of making such examination
the Commission may subpoena and examine, personally, witnesses on oath,
whether such witnesses are members of the corporation or not, and may
require the production of any documents, whether such documents are
documents of the corporation or not.

All expenses incident to any special examination which may be neces-
sary may be ordered to be paid by the credit union so examined.

§ 6.1-222. In the event that any credit union shall neglect or refuse
to make its reports as provided in this chapter for more than fifteen days,
or in the event that any such corporation shall fail to pay such charges as
are required under this chapter, including any charges for delay in filing
reports, the Commission shall give notice to such corporation of its inten-
tion to revoke the certificate of approval of such corporation for such
neglect or failure, and if such neglect or failure continues for fifteen days
after such notice, then the Commission may revoke or suspend the license
of the corporation. And, in such event, the Commission may, in its discre-
tion, close such corporation and take possession of its property and business
until such time as it may see fit to allow the corporation to resume business,
or may proceed to finally liquidate such business, as may seem proper.

6.1-222.1. Any credit union may dissolve in accordance with the
provisions of Title 13.1 pertinent thereto.

§ 6.1-223. In the event that it appears to the Commission that any
such corporation is violating any provisions of this chapter, it may, after
a hearing or an opportunity for a hearing has been given to such corpora-
tion, direct that it discontinue the illegal methods or practices mentioned
in the order. If any credit union is insolvent, or has failed or refused to
comply with the provisions of this chapter, the Commission may take pos-
session of the business and property of such corporation and retain such
possession until such time as it may permit such corporation to resume
business, or until its affairs are finally liquidated under order of the Com-
mission; or the Commission may apply to any court in this Commonwealth
having jurisdiction to appoint receivers for the appointment of a receiver
to take charge of the business and assets and to wind up the affairs and
business of any such corporation. Such receiver when appointed shall
become and be assignee of the assets of such corporation.
§ 6.1-224. The use by any person, copartnership, association or cor.
poration, except corporations formed under the provisions of this chapter
and associations or corporations whose membership or constituency con-
sists exclusively of credit unions or members of credit unions, of any name
or title which contains the words “credit union,” shall be a misdemeanor,
and punishable by a fine of not less than ten nor more than one hundred
dollars for each day of the illegal use of such name, and may be enjoined by
any court having equity jurisdiction over the party.

§ 6.1-225. All credit unions organized under the laws of this State
and doing business purely as credit unions shall be exempt from the pay-
ment of any franchise tax.

§ 6.1-226. <A credit union which makes loans only to its stockholders
or members shall pay an annual State license tax as follows:

Five dollars where the actual paid-in capital is not in excess of twenty
thousand dollars; ten dollars where the actual paid-in capital is over twenty
thousand dollars and not in excess of fifty thousand dollars; twenty dollars
where the actual paid-in capital is over fifty thousand dollars and not in
excess of one hundred thousand dollars; and an additional sum of thirty
cents per thousand for each one thousand dollars of actual paid-in capital
in excess of one hundred thousand dollars.

Such license tax shall be in lieu of all taxation for State purposes
which but for this section would be imposed upon the paid-in capital of

such credit union.
CHAP. 5
INDUSTRIAL LOAN ASSOCIATIONS

§ 6.1-227. Industrial loan associations may be incorporated under
the provisions of the Virginia Stock Corporation Act and shall have all the
general powers and be subject to all the restrictions contained in that act,
except as herein otherwise provided. But no such corporation need comply
with the provisions of subdivision (a) of § 13.1-6.

No such corporation incorporated prior to July one, nineteen hundred
sixty, shall use in its corporate name or title, nor shall it do business under
the name of “bank,” “savings bank,” “banker,” “trust company,” “trust”
or other words of similar import.

§ 6.1-228. Industrial loan associations incorporated after July one,
nineteen hundred sixty, shall have all the powers conferred on banks by
the Virginia Banking Act, shall be subject to all restrictions applicable to
banks, and shall for the purposes of State supervision and control, be banks.

§ 6.1-229. An association that had no certificates of investment
issued and outstanding on the first day of January, nineteen hundred
fifty-nine, may not sell certificates of investment.

§ 6.1-230. An association that had certificates of investment issued
and outstanding on the first day of January, nineteen hundred fifty-nine,
may become a bank on complying with all the provisions of the Virginia
Banking Act.

§ 6.1-231. An association that had certificates of investment issued
and outstanding on the first day of January, nineteen hundred fifty-nine,
may sell certificates of investment upon either the fully paid or partial
payment system.

§ 6.1-232. An association that has certificates of investment issued
and outstanding shall not:

1. Advertise that it is subject to regulation or supervision by the
State Corporation Commission or the Bureau of Banking, or publish any
advertisement suggesting that it is engaged in the business of banking or
hat it receives deposits ;

2. Advertise that it carries insurance unless its certificates of invest-
nent are insured or guaranteed by a State or federal agency or an insur-
unce company authorized to do business in Virginia ;
8. Own any shares of stock issued by any other corporation except
to the extent legal for banks;

4. Invest more than 80% of the amount of its outstanding certifi-
cates of investment in loans secured by liens on real estate;

5. Make any loan secured by liens on real estate in excess of that
per cent of the appraised value permitted to banks;

6. Issue certificates of investment for the purpose of borrowing
money from financial institutions;

7. Issue a certificate of investment paying a higher rate of interest
than four and one-half per cent per annum, except that notwithstanding
this limitation it may pay at any time an interest rate equal to the highest
rate paid by any State savings and loan association or bank located in the
same community in the State of Virginia.

§ 6.1-233. An industrial loan association shall not have more than
one office for the conduct of its business; and shall not move its office with-
out first satisfying the State Corporation Commission that moving its
office will promote the convenience of its customers.

§ 6.1-234. An industrial loan association may charge in advance the
legal rate of interest upon the entire amount of the loan, and such loans
may be repaid in weekly, monthly or other periodical installments, with
the privilege to the association to declare the entire unpaid balance due
and payable in the event of default in the payment of any installment for a
period of thirty days; and such associations may also charge an investiga-
tion fee not exceeding two per centum of the amount of the loan. In the
event the combined charges for interest and investigation fee would not
amount to one dollar, such industrial loan association shall be entitled to a
minimum charge of one dollar in lieu thereof. It may fix in its bylaws
such fines as it will charge for the nonpayment of any installments of any
loan ; but such fines shall not be more than ten per cent of the amount of the
payment i in which default is made, and shall not be cumulative.

No loans shall be made for a longer period than ten years, nor for a
greater amount in the aggregate to any person, firm or corporation than
twenty per cent of the paid in capital stock and capital surplus of the
association.

§ 6.1-235. Every such industrial loan association shall have at least
five directors, each of whom shall own in his own right and have in his
personal possession or control shares of stock in the association of which
he is a director aggregating at least one hundred dollars in par value, and
which must be unpledged and unencumbered at the time of his becoming
a director and during the whole of his term as such. Each director sha
take and subscribe an oath to that effect, and that he will diligently and
honestly administer the affairs of such industrial loan association as such
director. Such oath shall be transmitted within sixty days from his elec-
tion to the Commission. Any director violating the provisions of this
section shall thereby vacate his office and the remaining directors shall
proceed forthwith to fill such vacancy. Such directors shall require of all
active officers of such industrial loan association bonds in such sums as
may be prescribed by the Commission in some surety company authorized
to do business in this State.

§ 6.1-236. Every industrial loan association incorporated under this
chapter shall pay an annual State license tax of two dollars per thousand
for each one thousand dollars of actual paid-in capital; and the license
taxes prescribed by this section shall be in lieu of all taxes for State pur-
poses which, but for this section, would be imposed upon the capital of
such industrial loan association.

§ 6.1-237. The State Corporation Commission shall have supervision
of all industrial loan associations, and may require of them statements of
their financial condition at such times as to the Commission may seem
proper.

Each industrial loan association shall be examined at least once a year,
but the Commission may, in its discretion, order other examinations; and
the examiners shall be given free access to all books, papers, securities and
other sources of information in respect to such association.

Every such industrial loan association shall pay for its examination a
es equal to one and a half times the fee prescribed for the examination of

In the event that any industrial loan association shall fail or refuse to
make its reports to the Commission or shall fail to pay the charges for its
examination, or shall violate any of the provisions of this chapter, the
Commission may revoke or suspend the license of such association; and
may, in its discretion, close such association and take possession of its
property and business until such time as it may see fit to allow the associa-
tion to resume business, or may proceed to finally liquidate such business,
as to it may seem proper.

§ 6.1-238. It shall be the duty of each industrial loan association to
make the statements required by the preceding section to the Commission,
upon request, general or special, and for a failure so to do for a period of
thirty days after such request, any such association shall be fined not Jess
than one hundred dollars nor more than one thousand dollars by the Com-
mission, unless in answer to a rule for that purpose, good cause be shown
against it.

§ 6.1-289. Each official communication directed by the Commission
to any industrial] loan association, or to any officer thereof, relating to an
examination or investigation conducted or made by the Commission, or
containing suggestions or recommendations as to the conduct of the asso-
ciation, shall, if required by the authority submitting the same, be sub-
mitted by the officer or director receiving it to the executive committee or
board of directors of such association and duly noted in the minutes of the
meeting at which it is so submitted. The receipt and submission of such
notice to the executive committee or board of directors shall be certified to
the Commission, within such time as it may require, by at least three mem-
bers of such committee or board. Any such association failing to comply
with the provisions of this section within thirty days after being called
upon by the Commission for such certificate shall be fined not less than one
hundred nor more than one thousand dollars, such fine to be imposed and
judgment entered by the Commission and enforced by its process.

_ § 6.1-240. If, upon the examination of any industrial loan asso-

ciation as provided for in § 6.1-237 the Commission shall ascertain that the
laws of the State relating to industrial loan associations are not being fully
observed, or that any irregularities are being practiced, or that the capital
has been or is in danger of being impaired, the Commission shall give
Immediate notice thereof to the officers of such association and demand
that such irregularities shall be promptly corrected, or that the impairment
of the capital stock shall be made good, and upon failure of the association
80 to do within a reasonable time, not exceeding thirty days after such
notice, may provide for the appointment of a receiver to take charge of the
business affairs and assets of such association and to wind up its affairs as
hereinafter provided. .
_ _§ 6.1-241. If, however, upon the examination of any such association,
it shall be found to be insolvent, or it is deemed necessary by the Commis-
sion for the protection of the public interests, the Commission may at once
close the doors of such association without any notice whatever, and the
Commission shall take charge of the books, assets and affairs of such asso-
ciation until the appointment of a receiver as provided by law. |
necessary for the protection of the interests of the State or of the creditors
of any such association doing business in this State, apply to any court in
this Commonwealth having jurisdiction to appoint receivers, for the ap-
pointment of a receiver to take charge of the business affairs and assets
and to wind up the affairs and business of any such association failing to
comply with the requirements of the Commission, or found upon examina-
tion 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.

Such receiver, when appointed, shall be and become assignee of the
assets and property of such association, and shall be vested with all the
power and authority conferred upon or exercised by receivers for banks
of discounts and deposit and trust companies under the Virginia Banking
Act, or under general law.

6.1-243. (Reserved)
CHAP. 6
SMALL LOAN ACT

8 6.1-244. The short title of the law embraced in this chapter is the
Small Loan Act.

§ 6.1-245. As used in this chapter, unless a different meaning or con-
struction is clearly required by the context : ;

(1) “Person” includes individuals, copartnerships, associations,
trusts, corporations, and all other legal and commercial entities;

(2) “License” means a single license issued hereunder with respect
to a single place of business;

(8) “Licensee” means a person to whom one or more licenses have
been issued ; and

(4) “Commissioner” means the Commissioner of Banking as defined
by the law as of the particular time.

§ 6.1-246. Nothing in this chapter shall be so construed as to impair
or affect the obligation of any contract of loan between any licensee and
any borrower which was lawfully entered into prior to July first, nineteen
hundred forty-four.

8 6.1-247. All provisions of this chapter are cumulative to all consis-
tent provisions and requirements of existing laws relevant to the subject
matter of this chapter and the operation and effect of all such provisions
and requirements are hereby reserved except as repealed expressly or by
implication because of irreconcilable inconsistency.

§ 6.1-248. This chapter or any part of it may be modified, amended,
or repealed so as to effect a cancellation or alteration of any license or right
of a licensee thereunder provided that the cancellation or alteration shall
not impair or affect the obligation of any preexisting lawful contract
between any licensee and any borrower.

6.1-249. No person shall engage in the business of lending in
amounts of six hundred dollars or less, and charge, contract for, or
receive, directly or indirectly, on or in connection with any loan, any
interest, charges, compensation, consideration or expense which in the
aggregate are greater than the rate otherwise permitted by law except
as provided in and authorized by this chapter and without first having
obtained a license from the Commission.

6.1-250. No person doing business under the authority of any
law of this State or of the United States relating to banks, savings
banks, trust companies, building and loan associations, industrial loan
associations, or credit unions shall be eligible to become a licensee under
this chapter nor shall this chapter apply to any business transacted by
any person under the authority of and as permitted by any such law,
nor to any bona fide pawnbroking business transacted under pawnbroker’s
license, nor to anyone operating in accordance with the specific provisions
of any other law heretofore or hereafter enacted.

8 6.1-251. The provisions of § 6.1-249 shall apply to any person
who seeks to evade its application by any device, subterfuge, or pretense
whatsoever including, but not thereby limiting the generality of the fore-
going: The loan, forbearance, use, or sale of credit (as guarantor, surety,
endorser, comaker, or otherwise), money, goods, or things in action; the use
of collateral or related sales or purchases of goods or services, or agree-
ments to sell or purchase, whether real or pretended; receiving or charging
compensation for goods or services, whether or not sold, delivered, or
provided; and the real or pretended negotiation, arrangement, or pro-
curement of a loan through any use or activity of a third person, whether
real or fictitious.

§ 6.1-252. Any contract of loan in the making or collection of which
any act has been done which violates § 6.1-249 shall be void and the
lender shall not collect, receive, or retain any principal, interest, or charges
whatsoever, and any amount paid on account of principal or interest on
any such loan shall be recoverable by the person by or for whom pay-
ment was made.

§ 6.1-258. No licensee shall use a firm, corporate, or assumed
name which contains any of the following words: “savings,” “trust,”
“trustee,” “bank,” “banker,” “banking,” “investment,” “thrift,” “‘build-
ing,” or “industrial,”’ unless such name shall have been authorized and in
use by the licensee on or before January first, nineteen hundred forty-

ur.

§ 6.1-254. Application for a license to make loans under this chapter
shall be in writing, under oath, and in the form prescribed by the Com-
mission, and shall contain: (1) The name, residence and business ad-
dresses of the applicant, and if the applicant is a copartnership or asso-
ciation of every member, and if a corporation of each officer and director;
(2) the county or municipality, with street and number, if any, where
the business is to be conducted; (3) all other information as may be
required by the Commission.

And the application shall be accompanied by payment of the sum
of fifty dollars as a fee for investigating the application and by the
additional sum of one hundred fifty dollars as a license fee for the
period ending on the last day of the current calendar year, except that
when the license is issued after June thirtieth in any year, the license
fee shall be seventy-five dollars.

§ 6.1-255. Upon the filing of the application and the payment of
the fees, the Commission shall make an investigation of the facts concern-
ing the application and the requirements provided for in § 6.1-256. At
least twenty days before granting such application, the Commission shall
mail a notice of the receipt of the application to each licensee having
a place of business in the community where the applicant proposes to do
business. The Commission may make such investigations relative to the
application and the requirements as it deems fit, and it shall grant or
deny each application for a license within sixty days from the date it is
filed together with all required information and fees unless the period
be extended by order of the Commission reciting the reasons for the
extension.

_ _§ 6.1-256. If the Commission finds (1) that the financial respon-
sibility, experience, character, and general fitness of the applicant, or of
the members if the applicant be a copartnership or association, or of
the officers and directors if the applicant be a corporation, are such as
calculated to command the confidence of the public and to warrant belief
that the business will be operated lawfully, honestly, fairly and efficiently
within the purpose of this chapter, (2) that allowing the applicant to
engage in business will promote the convenience and advantage of the
community in which the licensed office is to be located, ($) that the
applicant has available, for the operation of the business at the specified
location, liquid assets of at least forty thousand dollars if the specified
location is in a city with a population of more than fifteen thousand, or of at
least twenty thousand dollars if the location is not in a city with a
population of more than fifteen thousand, and (4) that all of the pre-
requisites to obtaining the license prescribed by § 6.1-254 have been
complied with, (the foregoing facts being conditions precedent to the
issuance of a license under this chapter), it shall issue and deliver to the
applicant a license to make loans in accordance with the provisions of
this chapter at the location specified in the application, provided, how-
ever, if any licensee shall sell his outstanding loan contracts and surrender
his license, the Commission shall issue a license to the purchaser of said
contracts to make loans under this chapter in the same community with-
out reference to whether the convenience and advantage of said com-
munity will be promoted thereby, if said purchaser shall qualify in all
other respects for the issuance of said license.

§ 6.1-257. If the Commission does not so find it shall thereupon
deny the application and notify the applicant of the denial, returning
the license fee but retaining the investigation fee.

§ 6.1-258. The license shall contain the address at which the busi-
ness is to be conducted, the full name of the licensee, or if the licensee
is a copartnership or association the names of the members, and if a
corporation the date and place of incorporation. It shall be kept con-
spicuously posted in the place of business of the licensee, and it shall
not be transferable or assignable.

§ 6.1-259. Each license shall remain in full force and effect until
surrendered, revoked or suspended as provided by this chapter. Every
licensee shall, on or before the tenth day of each December, pay to the
Commission the sum of one hundred fifty dollars for each license
held by him, as an annual license fee for the succeeding calendar year.

§ 6.1-260. The Commission, upon ten days’ written notice to the
licensee stating the contemplated action and in general the grounds there-
for, and upon reasonable opportunity to be heard, may revoke any license
issued hereunder if it finds that: |

(1) The licensee has failed to pay the annual license fee or to com-
ply with any order of the Commission lawfully made pursuant to and
within the authority of this chapter; or

(2) The licensee, either knowingly or without the exercise of due
care to prevent the same, has violated any provision of this chapter or
any regulation lawfully made by the Commission under § 6.1-302 or

(8) Any fact or condition exists which clearly would have war-
ranted the Commission in refusing originally to issue the license, except
that no license shall be revoked solely upon a finding by the Commission
that the business of the licensee is not promoting the convenience and
advantage of the community in which the licensed office is located.

§ 6.1-261. If the Commission finds that probable cause for revoca-
tion of any license exists and that enforcement of the law requires im-
mediate suspension of the license pending investigation, it may, upon
three days’ written notice and a hearing, by the Commission or by the
Commissioner, enter an order suspending the license for a period not
exceeding thirty days.

§ 6.1-262. Whenever the Commission revokes or suspends a license
issued pursuant to this chapter it shall forthwith enter its findings and
an order to that effect and shall compile a record containing (1) a sum-
mary of the evidence, (2) the findings with respect thereto, (3) the
order, and (4) the reasons supporting the revocation or suspension.
And it shall serve a copy upon the licensee.
§ 6.1-268. Any licensee may surrender any license by delivering
it to the Commission with written notice of its surrender, but the sur-
render shall not affect his civil or criminal liability for acts previously

§ 6.1-264. No revocation, suspension, or surrender of any license
shall impair or affect the obligation of any preexisting lawful contract
between the licensee and any borrower.

§ 6.1-265. The Commission may reinstate any suspended license or
issue a new license to a person any license of whom has been revoked
if no fact or condition then exists which clearly would have warranted
the Commission in refusing originally to issue a license under this law.

§ 6.1-266. Not more than one place of business shall be maintained
under the same license, but the Commission may issue more than one
license to the same licensee upon compliance, as to each additional license,
= all applicable provisions of this law governing issuance of a single

cense

§ 6.1-267. No licensee shall conduct the business of making loans
under this chapter within any office, suite, room, or place of business
in which any other business is solicited or engaged in, or in association
or conjunction with any other business, unless authority to do so is first
given by the Commission or by the Commissioner. Upon receipt of writ-
ten application for such authority the Commission or the Commissioner
shall investigate the facts and, if it be found that the character of the
licensee and the nature of the other business warrant belief that the
conduct of the other business would not conceal or facilitate violation
or evasion of this chapter or of regulations lawfully made thereunder, it
or he shall in writing, grant the authority applied for. If it is not so
found it or he shall deny such authority in writing.

§ 6.1-268. No licensee shall conduct the business of making loans
provided for by this chapter under any other name or at any place of
business within this State other than those designated in the license.

§ 6.1-269. No change in the place of business of a licensee to a
location outside of the original county, city, or town shall be permitted
under the same license. When a licensee wishes to change his place of
business to a new location or street address within the same county, city,
or town, he shall give written notice to the Commission which shall in-
vestigate the facts, and, if it shall find that the proposed location is
reasonably accessible to borrowers under existing loan contracts, it shall
permit the change, and shall issue and deliver to the licensee an amended
icense covering the new location or address, which shall be authority
for operation at the new location. If the Commission does not so find
it shall deny the licensee permission to make the change.

§ 6.1-270. Nothing in this chapter shall be construed to limit the
loans of any licensee to residents of the community in which the licensed
place of business is situated.

§ 6.1-271. The Commission shall investigate from time to time the
economic conditions and other factors relating to and affecting the busi-
ness of making loans under this chapter, and shall ascertain all pertinent
facts necessary to determine what maximum rates of charge should be
permitted. Upon the basis of such ascertained facts, and subject to the
restrictions, provisions and limitations imposed by this chapter, the Com-
Mission shall determine and fix by regulation or order the maximum
rates of charge in connection with such loans which will induce efficiently
Managed commercial capital to be invested in such business in sufficient
amounts to make available adequate credit facilities to individuals seek-
ing such loans, and which will afford those engaged in such business a
fair and reasonable return upon the assets; provided, however, that the
one-half per centum a month on that part of the unpaid principal balance
of any loan not in excess of three hundred dollars, and one and one-
half per centum a month on any remainder of such unpaid principal
balance. Subject to such limitation as to maximum rates, the Commis-
sion may from time to time, upon the basis of changed conditions or
facts, redetermine and refix any such maximum rates of charge, but,
before determining or redetermining any such maximum rates, the Com-
mission shall give reasonable notice of its intention to consider doing so
to all licensees and a reasonable opportunity to be heard and introduce
evidence with respect thereto and such notice shall also be published once
each week for two consecutive weeks in some newspaper published in or
having a general circulation in the county, city, or town in which any
small loan licensee has an office. Any such changed maximum rates of
charge shall not affect preexisting loan contracts lawfully entered into
between any licensee and any borrower.

§ 6.1-272. Until such time as different rates are fixed by the Com-
mission in accordance with the preceding section, every licensee may
contract for and receive on any loan of money, not exceeding six hundred
dollars in amount, charges at rates not exceeding two and one-half per
centum a month on that part of the unpaid principal balance of any
loan not in excess of three hundred dollars, and one and one-half per
centum a month on any remainder of such unpaid principal.

§ 6.1-273. If judgment be obtained against any party on any loan
made under the provisions of this chapter neither the judgment nor the
loan shall carry, from the date of the judgment, any charges against
any party to the loan other than court costs and interest on the amount
of the judgment at six per centum per annum.

§ 6.1-274. Any loan made under the provisions of this chapter which
is properly scheduled in a bankruptcy proceeding shall bear interest against
any party to the loan from ninety days after the date of adjudication,
whether there is an ultimate discharge or an extension, if any interest
be allowable at all, at six per centum per annum only; but this limitation
shall not apply either when the bankrupt is not entitled to a discharge,
or the particular obligation is not dischargeable under the provisions of
the Bankruptcy Act as now or hereafter amended.

§ 6.1-275. After ninety days from the date of the death of the
borrower no other charges than interest at six per centum per annum
shall be computed or collected from any party to the loan upon the unpaid
principal balance of the loan.

6.1-276. For the period beginning twenty-three months after the
date of making any loan contract under the provisions of this chapter,
no further charges than interest at six per centum per annum shall be
computed or collected from any party to the loan upon the unpaid principal
balance of the loan.

§ 6.1-277. Charges on loans made under this chapter shall not be
paid, deducted, or received in advance, nor compounded. If part or all of
the consideration for a loan contract is the unpaid principal balance of a
prior loan, then the principal amount payable under the loan contract may
include any unpaid charges on the prior loan which have accrued within
sixty days before the making of the new loan contract. The inclusion
of these charges shall not be made oftener than once each six months, the
six months’ period to be computed from the date of entering into the
new loan contract; and the foregoing privilege is intended for the con-
venience of the borrower and is not to be construed or applied to validate
a general course of dealings by a licensee with the intent and for the
purpose of profit. Charges on loans shall (1) be computed and paid only
as a percentage per month of the unpaid principal balance or portion
thereof, (2) be so expressed in every obligation signed by the borrower,
and (3) be computed on the basis of the number of days actually elapsed.
For the purpose of computing charges, whether at the maximum rate
or less, a month shall be any period of thirty consecutive days and the
rate of charge for each day shall be one thirtieth of the monthly rate.

§ 6.1-278. In addition to the charges herein provided for no
further or other amount whatsoever for any examination service, broker-
age, commission, fine, notarial fee, recordation fee or other thing or
otherwise shall be directly or indirectly charged, contracted for or re-
ceived. If any amount other than or in excess of the charges permitted
by this chapter is charged, contracted for, or received, except as the
result of an accidental and bona fide error of computation which was not
made pursuant to a regular course of dealing, the contract of loan shall
be void, and the licensee shall have no right to collect or receive or retain
any principal, or charges whatsoever and any amounts paid on account
of principal or interest shall be recoverable by the person by or for
whom payment was made; and the licensee and the several members,
officers, directors, agents and employees thereof who participated in the
violation shall be guilty of a misdemeanor and upon conviction shall be
punishable by a fine of not more than five hundred dollars and not less
than fifty dollars, or by imprisonment of not more than six months, or
by both, in the discretion of the court or jury.

§ 6.1-279. Every licensee shall maintain at all times the minimum
assets prescribed by this chapter for each license, either in liquid form
available for the operation of or actually used (whether pledged or not) in
the conduct of the business at the location specified in each license.

§ 6.1-280. No licensee or other person subject to this chapter shall
advertise, display, distribute or broadcast, or cause or permit to be ad-
vertised, displayed, distributed or broadcast, in any manner, whatsoever,
any false, misleading or deceptive statement or representation with re-
gard to the rates, terms or conditions for loans in the amount or of the
value of six hundred dollars or less. The Commission may require that
charges or rates of charge, if stated by a licensee, be stated fully and
clearly in such manner as it deems necessary to prevent misunderstand-
ing by prospective borrowers, and it may permit or require licensees to
refer in their advertising to the fact that their business is under State
supervision, subject to conditions imposed by it to prevent false, mislead-
Ing or deceptive impression as to the scope or degree of protection provided
by this chapter.

§ 6.1-281. No licensee shall take a lien upon real estate as security
for any loan made under the provisions of this chapter, except a lien
arising upon rendition of a judgment; and any such lien taken in violation
of the provisions of this section shall be void.

6.1-282. Every licensee shall:

(1) At the time any loan is made, deliver to the borrower, or if
there are two or more borrowers to one of them, a passbook or state-
ment on which shall be printed in the English language a copy of §§ 6.1-
271 through 6.1-278 or so much as is designated by the Commission, in
type not smaller than eight point, which statement or passbook shall dis-
close in clear and distinct terms the amount and date of the loan, a clear
description of the payments required, the type of security, if any, for
the loan, the names and addresses of the licensee and of the principal
debtor on the loan contract and the agreed rate of charge;

(2) When each payment is made on account of any loan, enter
the payment on the statement or on the passbook, specifying the amount
applied to charges and the amount, if any, applied to principal, and stating
the unpaid principal balance, if any, and, if neither the statement nor the
passbook be produced, and only in such case, a receipt, containing the
shall be made on the statement or passbook at the first opportunity;

(3) Permit payment to be made in advance in any amount on any
contract of loan at any time, but the licensee may apply the payment
first to all charges in full at the agreed rate up to the date of the pay-
ment;

(4) Upon repayment of the loan in full, marked plainly every obli-
gation and security other than a security agreement executed by the bor-
rower with the word “Paid” or “Cancelled,” mark satisfied any judgment,
restore any pledge, cancel and return any note and any assignment given
by the borrower to the licensee and release any security agreement or other
form of security instrument which no longer secures an outstanding loan
between the borrower and the licensee. ,

(5) In the event of collection by foreclosure sale or otherwise, pay
and return to the borrower or to whomsoever is entitled thereto any
surplus arising after the payment of the expenses of collection, sale or
foreclosure and satisfaction of the debt.

§ 6.1-2838. No licensee shall take any confession of judgment or
any power of attorney running to himself or to any third person to con-
fess judgment or to appear for the borrower in a judicial proceeding,
and any such confession of judgment or power of attorney to confess
judgment shall be void.

§ 6.1-284. No licensee shall take any note, promise to pay, or in-
strument of security that does not give the amount of the loan, a clear
description of the installment payments required, and the agreed rate of
charge, nor any instrument in which blanks are left to be filled in after
execution.

§ 6.1-285. No licensee shall enter into any contract of loan under
this chapter providing for installment payments extending more than
twenty-one calendar months from the date of making the contract, and
every contract shall provide for repayment of the amount loaned in
substantially equal installments, either of principal or of principal and
charges in the aggregate, at approximately equal periodic intervals of
time. But nothing contained in this chapter shall prevent a loan being
considered a new loan because the proceeds of the loan are used to pay
an existing contract.

§ 6.1-286. No licensee shall permit any person, as borrower, or as
endorser, guarantor or surety for any borrower, or otherwise, or any
husband and wife, jointly or severally, to become obligated, directly or
contingently, or both, (a) to the licensee at any time in a sum of more
than six hundred dollars in principal, nor (b) under more than one con-
tract of loan at the same time for the purpose of obtaining a higher
rate of charge than would otherwise be permitted by this chapter; pro-
vided, however, if a licensee purchases all, or substantially all, the loan
contracts of another licensee and has at the time of the purchase loan
contracts with one or more of the borrowers whose loans are purchased,
the purchaser shall be entitled, to collect the principal and charges ac-
cording to the terms of each loan contract, but the purchaser shall not
refinance or make a new loan to any such borrower except in accordance
with the provisions of this chapter.

If two or more licensees are under the same ownership, or under
common control, then such of their offices as are located in the same
political subdivision of the State, or within five miles of each other, shall
be treated as one licensee for the purpose of this section.

§ 6.1-287. No licensee shall combine or conspire with another
licensee to cause the same person, or a husband and wife, to borrow less
than six hundred dollars from each of them for the purpose of requiring
the payment of a higher rate of charge than would be permitted if one
of said licensees had loaned all, or as much as six hundred dollars of, the
amounts borrowed from both licensees.

§ 6.1-288. The payment of six hundred dollars or less in money,
credit, goods or things in action, as consideration for any sale or assign-
ment of, or order for, the payment of wages, salary, commission, or
other compensation for services, whether earned or to be earned, shall
for the purposes of this chapter be deemed a loan of money secured by
the sale, assignment, or order, and the amount by which the compensa-
tion so sold, assigned or ordered paid exceeds the amount of consideration
actually paid shall for the purpose of this chapter be deemed interest
or charges upon the loan from the date of the payment to the date the
compensation is payable, which amount shall not, in any case, be more
than is sufficient to yield, to the licensee making the loan, interest on his
investment at the rate of ten per centum per annum. Such transactions
shall in all other respects be governed by and subject to the provisions
of this chapter.

§ 6.1-289. No assignment of or order for payment of any salary,
wages, commissions, or other compensation for services, earned or to be
earned, given to secure any loan made by any licensee, shall be valid
unless the amount of the loan is paid to the borrower simultaneously
with its execution; nor shall any such assignment or order, or any chattel
mortgage or other lien on household furniture then in the possession
and use of the borrower be valid unless it is in writing, signed in person
by the borrower, and not by an attorney, or if the borrower is married
unless it is signed in person by both husband and wife, and not by an
attorney, provided nothing in this chapter shall have the effect of impair-
Ing in any manner any rights on the part of any one as to exemptions
under the poor debtors law or under any other applicable exemption law
as now or hereafter enacted; but written assent of a spouse shall not be
required when husband and wife have been living separate and apart for
a period of at least five months prior to the making of the assignment,
order, mortgage, or lien; and the provisions of this section are in addition
to, and not in derogation of, the general statutes pertaining to the subject.

§ 6.1-290. A valid assignment or order for the payment of future
salary, wages, commissions, or other compensation for services, may be
given as security for a loan made by any licensee, notwithstanding the
provisions of any other law to the contrary, and under the assignment or
order, not to exceed ten per centum of the borrower’s salary, wages, com-
missions, or other compensation for services shall be collectible from
the employer of the borrower by the licensee at the time of each payment
to the borrower of the salary, wages, commission, or other compensation
for services, from the time that a copy of the assignment, verified by
the oath of the licensee or his agent, together with a similarly verified
statement of the amount unpaid upon the loan and a printed copy of
§ 6.1-289 and this section, is served upon the employer.

§ 6.1-291. No loan made outside this State in the amount of six
hundred dollars or less for which greater rates of interest, consideration
or charges, than is permitted by the law applicable to such loan in the
state in which the loan was made, has been charged, contracted for, or
received shall be collected in this State and every person in any wise
participating in an effort to enforce the collection of such loan in this
State shall be subject to the provisions of this chapter.

§ 6.1-292. All powers and duties of regulation and supervision con-
ferred and imposed by this chapter are, except as otherwise specifically
stated, vested in and imposed upon the Commission, but it may delegate
to the Commissioner the exercise of such of these powers and the per-
formance of such of these duties as it deems proper, subject to its super-
vision and control.
treasury all license and other fees and all amounts so collected and the un-
expended balances thereof may be used only for the payment of the
expenses of the administration of this chapter and of the performance
of other functions of the Bureau of Banking of the Commission. The
Commission may employ such examiners or clerks to assist it and the
Commissioner as it from time to time deems necessary and may fix their
compensation. All salaries and expenses necessarily incurred in the ad-
ministration of this chapter shall be paid out of the license and other fees
collected and turned into the State treasury under the provisions of this
chapter, upon the basis of duly verified itemized vouchers, approved by the
Commission. The Comptroller shall issue his warrant on the State Treas-
urer for, and the State Treasurer shall pay, the salaries and expenses
out of the proceeds in the State treasury from these fees, in accordance
with appropriations as from time to time made.

§ 6.1-294. For the purpose of discovering violations of this chapter
or securing information lawfully required under it, the Commission or
its duly authorized representative may at any time investigate the loans,
books and records of any person who is engaged, or appears to the Com-
mission to be engaged, in the business of making small loans as defined
and described in, and required to be licensed and supervised under, this
chapter, particularly in § 6.1-249, or who advertises for, solicits, or holds
himself out as willing to make, loans in amounts of six hundred dollars
or less, or who the Commission has reason to believe is violating any
provision of this chapter, whether such person shall act or claim to act
under or without the authority of this chapter, or as principal, agent,
broker or otherwise. In furtherance of the investigation the Commission
through its duly authorized representatives shall have and be given free
access to the offices, places of business, books, papers, accounts, records,
files, safes, and vaults of all such persons, and shall have authority to
require attendance of witnesses and to examine under oath any person
whose testimony may be required relative to any such loans or business
or to the subject matter of the investigation, examination or hearing.

§ 6.1-295. Before making an investigation as provided for in the
preceding section as to any person not licensed nor an applicant for a
license under this law a formal order shall be entered by the Commission
specifically directing the investigation to be made, commanding submis-
sion by the person whose business is to be investigated, and setting
forth all other details necessary to clearness and certainty, and no such
order may be entered except upon at least one affidavit, which may be
given by any member of the personnel of the Commission or by any
other person, or upon documentary data, or upon admissions of the per-
son to be investigated, or upon any combination of the foregoing, satis-
factorily establishing, prima facie, facts sufficient to warrant the investi-
gation provided for by the preceding section. But if the person involved
consents to the investigation being made the foregoing requirements may
be dispensed with and the investigation may be made upon formal or
informal direction of the Commission or by, or upon the direction of,
the Commissioner.

§ 6.1-296. In any case of compulsory investigation, as provided for
in § 6.1-294 of the business of a person not a licensee nor an applicant
for a license under this law, no prosecution of the person so investigated
for any crime, penalty, or forefeiture provided for by this chapter may
be maintained. But nothing in this section shall prevent prosecution for
the violation of any other criminal law or of any other law providing for
penalty or forfeiture, nor shall the immunity from prosecution provided
for hereby extend to any officer, agent or employee of the person whose
business is so investigated, except that insofar as the Commission
requires, as it may do, verbal testimony to be given by any one not
a licensee or an applicant under this chapter there shall be no prosecution
of, nor proceeding against, the person so compelled to testify for any
crime committed, or for imposition of any penalty or any forfeiture in-
curred in connection with, the subject matter as to which such testimony
is compelled to be given.

§ 6.1-297. Notwithstanding any such compulsory investigation or
verbal testimony, civil rights, not involving penalty or forfeiture, on the
part of any one and the right to injunctive relief as provided for in
§ 6.1-303 may be enforced and the facts discovered and disclosures made
in the course of any such investigation shall be available against the
person so investigated or so compelled to testify in any proceeding in-
volving any ordinary civil right or for obtaining an injunction under
this chapter.

§ 6.1-298. At least once each year, and at such other times as
deemed necessary, the Commission, through the Commissioner or his
duly authorized representative, shall make an examination of the affairs,
business, office and records of each licensee in so far as they pertain to
any business licensed under this chapter. It shall be the duty of the
licensee to furnish promptly by mail or otherwise such facts and state-
ments in connection with his business transacted in Virginia as the
Commission deems proper to require at any time.

§ 6.1-299. At the time of examination, the Commissioner of Bank-
ing shall charge an examination fee of twenty dollars; but if the loan
balance of such licensee exceeds fifty thousand dollars, the examination
fee shall be twenty dollars for the first fifty thousand dollars of loan
balance and forty cents for each thousand dollars, or fraction thereof,
of loan balance in excess of fifty thousand dollars.

§ 6.1-800. The licensee shall keep and use in his licensed place of
business such books, accounts and records as in the opinion of the Com-
mission will enable it to determine whether the licensee is complying
with the provisions of this chapter and with rules and regulations law-
fully made under the provisions of this chapter. Every licensee shall
preserve the books, accounts, and records, including cards used in the
card system, if any, for at least two years after making the final entry
on any loan recorded therein. No note or security taken under this
chapter shall be hypothecated or deposited outside this State, nor with-
in the State except under an agreement permitting the Commission or its
duly authorized representatives to examine the papers so hypothecated
or deposited.

§ 6.1-301. Each licensee shall annually, on or before the first day
of March, file a report with the Commission giving such relevant informa-
tion as may reasonably be required concerning his business and opera-
tions during the preceding calendar year as to each licensed place of
business conducted by him within the State. Reports shall be made under
oath and shall be in the form prescribed by the Commission which shall
make and publish annually an analysis and recapitulation of the reports.

§ 6.1-302. The Commission is empowered to promulgate rules and
regulations for the enforcement of this chapter, in addition thereto and
consistent therewith, in the manner required by law. Every regulation,
every administrative ruling, and every requirement of general application
shall be in writing and be entered and maintained as a public record
in an indexed permanent book with the date of each suitably indicated.
A copy of each regulation and order promulgating it shall be mailed
to all licensees at least ten days before the effective date thereof, and a
copy of each other order affecting persons other than licensees shall be

mailed to the person or persons immediately affected thereby but without a
reniired nariad anf natian avnant aa and whan ather nrnradinra ia ranininad
§ 6.1-808. In addition to all other powers granted under this
chapter, the Commission may, whenever it has reasonable cause to believe
that any person, not licensed under this chapter, is violating or is threaten-
ing to or intends to violate any provision of this chapter or any order or
regulation lawfully made pursuant to the authority of this chapter, certify
the facts to the Attorney General and request him to examine the same,
and if in his judgment the facts justify it the Attorney General shal]
institute and prosecute injunction proceedings in the Circuit Court of the
City of Richmond, in the name of the Commonwealth at the relation of
the Commission, and that court may enjoin and restrain any such person
from engaging in or continuing any such violation or from doing any
act or acts in furtherance thereof. In any such suit a decree or order
may be entered awarding such preliminary or final injunction as may be
deemed proper. In addition to all other means provided by law for the
enforcement of a temporary restraining order, temporary injunction, or
final injunction, the court shall have the power and jurisdiction to im-
pound, and to appoint a receiver for, the property and business of the
defendant, including books, papers, documents, and records pertaining
thereto, or so much thereof as the court deems reasonably necessary to
prevent further violation of this chapter through or by means of the
use of such property and business. The receiver, when appointed and
qualified, shall have such powers and duties as to custody, collection,
administration and liquidation of the property and business as from time
to time are conferred upon him by the court.

§ 6.1-304. No person shall be entitled to refuse to testify in a suit
brought under the preceding section because his testimony would tend to
incriminate himself or subject him to penalty or forfeiture but if called
to testify by the Commonwealth or by the court trying the case he may not
thereafter be prosecuted for any crime or subjected to any penalty or
forfeiture growing out of the transaction concerning which he testifies.

§ 6.1-305. On application of any person, and payment of the costs,
the Commission shal] furnish such person with a certified copy of any
order or regulation made or any license issued by it or by the Commis-
sioner under its authority. Such copy shall be prima facie evidence in
any court or proceeding of the fact of the making of the order or of the
issuance of the license or regulation.

§ 6.1-306. In addition to any other remedy he may have any I-
censee or any other person considering himself aggrieved by any action
of the Commissioner hereunder pursuant to authority conferred upon him
or delegated to him by the Commission may, within thirty days of the
action complained of, file a petition as a matter of right with the Com-
mission to review the action. The proceeding on review shal] be de novo
and the record and summary of the evidence before, and findings of,
the Commissioner shall be admissible as evidence before the Commis-

§ 6.1-307. From any action taken by the Commission hereunder,
whether upon petition from action taken by the Commissioner, or other-
wise, any licensee, or any other person in interest considering himself
aggrieved, may, as a matter of right, appeal to the Supreme Court of
Appeals in the manner provided by law.

§ 6.1-308. Any person and the several members, officers, directors,
agents, and employees thereof, who violate or participate in the violation
of any provision of § 6.1-249 shall be guilty of a misdemeanor and upon
conviction shall be punishable by fine of not more than five hundred
dollars and not less than fifty dollars, or by imprisonment of not more
than six months, or by both fine and imprisonment, in the discretion of
the jury or court.

§ 6.1-309.: Any lender violating any provision of this chapter, either
knowingly or without the exercise of due care to prevent the violation,
shall be subject to a fine, to be imposed by the Commission, of not less
than ten dollars nor more than five hundred dollars; and if any lender,
in the making or collection of any contract of loan violates, either know-
ingly or without the exercise of due care to prevent the violation, any
provision of §§ 6.1-282 through 6.1-285 he may recover or retain only
i principal amount of the loan and any interest paid shall be recover-
e.

§ 6.1-310 (Reserved)