Virginia Law

Article 4. Conversions, Reorganizations, Mergers, and Acquisitions.

A. With the approval of the Commission, and in accordance with provisions of this section and regulations adopted hereunder, a state mutual savings institution may convert to a stock institution. The conversion shall be conducted in a manner equitable to all parties thereto as follows:

1. The board of directors of the mutual savings institution shall first adopt by two-thirds vote a conversion plan. The provisions of the plan shall comply with regulations adopted by the Commission;

2. The plan shall provide that holders of savings accounts in the mutual savings institution will be afforded the opportunity to preserve their interest in the institution's net worth by subscribing to stock; and

3. The Commission shall approve any such plan of conversion if the Commission ascertains that such conversion will not have an adverse effect on the stability of the institution and that all other regulations of the Commission relating to the conversion of a mutual savings institution to a stock institution have been complied with.

B. The Commission shall adopt regulations governing the procedures to be followed in completing the conversion after a satisfactory plan has been adopted. The regulations shall ensure that any institution in converting shall continue to have its accounts insured by the Federal Deposit Insurance Corporation or other federal insurance agency.

1972, c. 796, § 6.1-195.57; 1975, c. 130; 1978, c. 683; 1985, c. 425, § 6.1-194.32; 1990, c. 3; 1994, c. 331, § 6.1-194.123:1; 2010, c. 794.

A. Notwithstanding any other provision of law, with the approval of the Commission, and in accordance with the provisions of this section and any regulations adopted pursuant to this section, any mutual association may reorganize to become a mutual holding company by:

1. Causing a stock association to be formed by incorporating a stock corporation and obtaining a certificate of authority to begin business as a savings institution pursuant to the provisions of Chapter 9 (§ 13.1-601 et seq.) of Title 13.1 and Article 2 (§ 6.2-1114 et seq.) of this chapter;

2. Transferring the substantial part of its assets and liabilities, including all of its deposit liabilities, to the stock association created, in exchange for receipt of no less than 51 percent of the capital stock of the stock association; and

3. Adopting an amended charter changing its name and conforming its organization, governance, and powers to those prescribed hereunder for a mutual holding company.

B. In connection with the transfer of assets and liabilities, the resulting mutual holding company may retain assets to the extent such assets are not required to be transferred to the stock association created in order to satisfy any capital or reserve requirements imposed by applicable state or federal law.

C. Upon such transfer, all persons who prior thereto held depository rights with respect to or other rights as creditors of the reorganized mutual association shall have such rights solely with respect to the stock association created, and the corresponding liability or obligation of the reorganized mutual association to such persons shall be assumed by the stock association. Persons who prior thereto had any ownership, liquidation, or voting rights with respect to the reorganized mutual association, in their capacities as savings depositors, and pursuant to provision of law, or pursuant to the articles of incorporation and bylaws of that association, shall continue to have such rights but solely with respect to the mutual association in its reorganized form as a mutual holding company. The ownership or liquidation interest of any savings depositor of the subsidiary stock association in the net earnings and net worth of the resulting mutual holding company, and the voting rights of any such depositor in the mutual holding company, shall terminate, or otherwise be limited, in the same manner and on the happening of the same events as was the case prior thereto with the interest held by that depositor in the mutual association.

D. The reorganization of a mutual association into a mutual holding company shall be conducted in a manner that is equitable to all parties. The board of directors of the mutual association shall first adopt by a two-thirds vote a plan of reorganization, the provisions of which shall comply with requirements set forth in regulations adopted by the Commission. Such plan shall provide that holders of savings deposits in the reorganized mutual association shall be afforded an opportunity to preserve their interests by subscribing to the minority stock of the subsidiary stock association. The Commission shall approve any such plan of reorganization if the Commission ascertains that the reorganization shall not have an adverse effect on the stability of the association and that the reorganized mutual association has complied with all laws and regulations of the Commission relating to the reorganization of a mutual association into a mutual holding company. The Commission shall adopt regulations governing the procedures to be followed in completing the reorganization after the Commission has approved a plan of reorganization. Such regulations shall ensure that the subsidiary association resulting from such reorganization shall continue to have its accounts insured by the Federal Deposit Insurance Corporation or other federal insurance agency.

E. Upon reorganization, the resulting mutual holding company (i) shall continue to possess and may exercise all the rights, powers, and privileges, except deposit-taking powers, of a mutual association under the laws of the Commonwealth and (ii) shall be subject to the limitations and restrictions imposed on savings institution holding companies by §§ 6.2-1147 and 6.2-1192, as well as all limitations and restrictions applicable to mutual savings institutions.

F. Upon reorganization, the association chartered as a stock corporation shall have the power to issue to persons other than the mutual holding company of which it is a subsidiary, an amount of common stock which in the aggregate does not exceed 49 percent of the issued and outstanding common stock of the association. For purposes of this percentage limitation, any issued and outstanding securities that are convertible into common stock shall be considered as issued and outstanding common stock. If at any time, the mutual holding company resulting from reorganization sells or otherwise disposes of outstanding shares in its stock association subsidiary, and as a result such mutual holding company no longer owns more than 51 percent of the outstanding shares of such association, or if the subsidiary stock association sells substantially all of its assets in a transaction in which substantially all deposit liabilities of such association are assumed and become liabilities of the purchaser of those assets, the Commission, on application of the Commissioner, may, after reasonable notice to the mutual holding company and its subsidiary stock association, appoint a receiver to wind up the affairs of the mutual holding company.

G. Any mutual holding company having its principal place of business in the Commonwealth may convert into a stock savings institution holding company, with the approval of the Commissioner, and in accordance with any regulations adopted by the Commission.

1989, c. 205, § 6.1-194.32:1; 1990, c. 3; 2010, c. 794.

A. A state savings institution may convert into a federal financial institution as follows:

1. At any meeting of the members or stockholders called and held in accordance with the Virginia Stock Corporation Act (§ 13.1-601 et seq.) or the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.) to consider such action, the members or stockholders, by an affirmative vote of those holding and voting two-thirds of the votes present in person or by proxy, may resolve to convert the state savings institution into a federal financial institution;

2. A copy of the minutes of the meeting duly certified by the president or vice-president and the secretary or assistant secretary of the state savings institution shall be transmitted to the Commission;

3. Thereafter, the state savings institution shall take such action as is necessary under federal law to make it a federal financial institution; and

4. The savings institution shall file with the Commission a certified copy of the charter issued to it by the federal chartering authority or a certificate of that authority showing the organization of the state savings institution as a federal financial institution.

B. Upon the filing of the certified copy of a charter or certificate of authority as provided in subdivision A 4, the savings institution shall cease to be a state savings institution.

C. No state savings institution shall convert into a federal financial institution until it has been in operation as a state savings institution for a period of at least five years.

D. When a conversion of a state savings institution into federal financial institution becomes effective, the state savings institution shall cease to be a Virginia corporation and all its property, by operation of law and without any further act or deed, shall continue to be vested in it under its new name as a federal financial institution and under its federal charter. The federal financial institution shall have, hold and enjoy the same in its own right as fully and to the same extent as the same was possessed, held and enjoyed by it as a state savings institution. The federal financial institution, at the time of the taking effect of the conversion, shall become, and continue to be, responsible for all of the obligations of the state savings institution, including taxes and other liabilities created by law or incurred by it before becoming a federal financial institution, to the same extent as though the conversion had not taken place.

Code 1950, §§ 6-201.43, 6-201.44; 1960, c. 402; 1966, c. 584, §§ 6.1-173, 6.1-174; 1972, c. 796, §§ 6.1-195.52, 6.1-195.53; 1982, c. 156; 1985, c. 425, §§ 6.1-194.33, 6.1-194.34; 1990, c. 3; 1991, c. 230, §§ 6.1-194.124, 6.1-194.125; 1995, c. 133; 2010, c. 794.

A. A federal financial institution doing business in the Commonwealth may become a state savings institution, and such a federal financial institution that is a stock institution may become a state bank, as follows:

1. In either case, the federal financial institution shall take such action as will under federal law and regulations terminate its existence as a federal financial institution on a specified date;

2. In the case of a conversion to a state savings institution, the directors of the federal financial institution shall organize a corporation under this chapter and, if a stock institution, the Virginia Stock Corporation Act (§ 13.1-601 et seq.), or if a mutual savings institution, the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.), and the new corporation shall apply for a certificate of authority to do business under § 6.2-1118; and

3. In the case of a conversion to a state bank, the directors of the federal financial institution shall organize a corporation under Chapter 8 (§ 6.2-800 et seq.) and the Virginia Stock Corporation Act (§ 13.1-601 et seq.), and the new corporation shall apply for a certificate of authority to do business under § 6.2-816. If the applicant meets the standards established by § 6.2-816, the Commission may issue it a certificate of authority to begin a banking business. The order shall designate the main office of the federal financial institution as the main office of the resulting bank, and the resulting bank shall be permitted to operate all branch offices of the former federal financial institution. Within one year of the date of such a conversion, the resulting bank shall conform its assets and operations to the provisions of law regulating the operation of banks. The Commission may grant such resulting bank additional one-year periods, not to exceed a total of four additional years, in which to conform its assets and operations to the provisions of law regulating the operation of banks.

B. The former federal financial institution converting to a state savings institution or a state bank shall transact no business as a state savings institution or as a state bank other than that relating to its organization until its certificate of authority to do business has been granted and its dissolution as a federal financial institution has become effective.

C. As soon as the certificate of authority to do business has been granted and its dissolution as a federal financial institution has become effective, all the property of the federal financial institution shall by operation of law and without any further act or deed be vested in and become the property of the state savings institution or state bank. The state savings institution or state bank shall (i) 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 financial institution and (ii) become, and continue to be, responsible for all the obligations, duties and agreements of the federal financial institution, including taxes and other liabilities created by law or incurred by it before becoming a state savings institution or state bank to the same extent as though the conversion had not taken place.

D. Upon conversion of a federal financial institution to a state savings bank, the state savings bank shall have the right to continue to operate all branch offices then in existence without having to obtain the approval of the Commission pursuant to § 6.2-1133.

Code 1950, §§ 6-201.45, 6-201.46, 6-201.47; 1960, c. 402; 1966, c. 584, §§ 6.1-175, 6.1-176, 6.1-177; 1972, c. 796, §§ 6.1-195.54, 6.1-195.55, 6.1-195.56; 1975, c. 129; 1985, c. 425, §§ 6.1-194.35, 6.1-194.36, 6.1-194.37; 1991, c. 230, §§ 6.1-194.126, 6.1-194.127, 6.1-194.128; 1995, c. 133; 2010, c. 794.

A. A state savings bank may be converted into a state association by the amendment of its articles of incorporation in compliance with the procedure established by Title 13.1, provided that such conversion is approved in advance by the Commission. Prior to approving or disapproving a conversion, the Commission shall investigate the application to convert as if it were an application for a certificate of authority to begin a savings and loan association business, and approval shall not be granted unless the applicant meets the standards established by § 6.2-1118. The order granting a certificate of authority to do a savings and loan business shall designate the main office of the state savings bank as the main office of the resulting financial institution. The resulting financial institution shall be permitted to operate all branch offices of the state savings bank that could have been established de novo by such financial institution having its main office at such location or which were in operation for at least five years prior to the date of the order permitting conversion. Within one year of the date of a conversion, the resulting financial institution shall conform its assets and operations to the provisions of law regulating the operation of state associations. The Commission may grant such resulting financial institution additional one-year periods, not to exceed a total of four additional years, in which to conform its assets and operations as required by this section.

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

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

A. A state stock association or state savings bank may be converted into a bank by the amendment of its articles of incorporation in compliance with the procedure established by Title 13.1, provided that such conversion is approved in advance by the Commission. Prior to approving or disapproving a conversion, the Commission shall investigate the application to convert as if it were an application for a certificate of authority to begin a banking business, and approval shall not be granted unless the applicant meets the standards established by § 6.2-816. The order granting a certificate of authority to do a banking business shall designate the main office of the savings institution as the main office of the resulting bank, and the resulting bank shall be permitted to operate all branch offices of the savings institution that could have been established de novo by a bank having its main office at such location or which were in operation for at least five years prior to the date of the order permitting conversion. Within one year of the date of a conversion, the resulting bank shall conform its assets and operations to the provisions of law regulating the operation of banks. The Commission may grant such resulting bank additional one-year periods, not to exceed a total of four additional years, in which to conform its assets and operations to the provisions of laws regulating the operation of banks.

B. A bank may be converted into a savings bank upon compliance with the procedure set forth in § 6.2-829, or into a stock association upon compliance with the procedure set forth in § 6.2-830.

1982, c. 224, § 6.1-195.57:2; 1985, c. 425, § 6.1-194.38; 1991, c. 230, § 6.1-194.129; 2010, c. 794.

A. Two or more mutual savings institutions or two or more stock institutions may merge, subject to the approval of the Commission, when the Commission finds that the merger will be in the public interest and in accordance with applicable laws and regulations.

B. Two or more state savings banks may consolidate or merge, subject to the approval of the Commission, when the Commission finds that the capital of the resulting institution will be sufficient to warrant successful operation, and that the merger or consolidation will be in the public interest and in accordance with applicable laws and regulations.

C. The order approving the merger shall specify which office is to be the main office and which office or offices may be operated as branch offices.

Code 1950, § 6-201.42; 1960, c. 402; 1966, c. 584, § 6.1-172; 1972, c. 796, § 6.1-195.51; 1982, c. 211; 1985, c. 425, § 6.1-194.39; 1988, c. 3; 1991, c. 230, § 6.1-194.130; 2010, c. 794.

A. Notwithstanding the provisions of § 6.2-874, 6.2-885, or 6.2-886, and subject to the prior approval of the Commission:

1. A state association or a federal savings institution may become a subsidiary of (i) a state bank or a national bank whose main office is located within the Commonwealth or (ii) a bank holding company whose banking subsidiaries principally conduct their operations within the Commonwealth;

2. A state bank may become a subsidiary of (i) a state association or a federal savings institution whose main office is located within the Commonwealth or (ii) a savings and loan holding company whose principal place of business is located within the Commonwealth;

3. A state association or a federal savings institution may merge into or consolidate with a state bank or a national bank whose main office is located within the Commonwealth or a state bank or a national bank may merge into or consolidate with a state association or a federal savings institution whose main office is located within the Commonwealth;

4. A state savings bank may become a subsidiary of (i) a state association, state bank, federal savings institution or national bank the main office of which is located within the Commonwealth or (ii) a financial institution holding company whose subsidiaries principally conduct their operations within the Commonwealth;

5. A state bank or state association may become a subsidiary of a state savings bank;

6. A state savings bank may merge into or consolidate with a state association, state bank, federal savings institution or national bank whose main office is located within the Commonwealth; and

7. A state association, state bank or federal financial institution may merge into or consolidate with a state savings bank.

B. If the resulting entity is to do business as a bank, the Commission shall not approve the merger or consolidation unless the applicant meets the standards established by § 6.2-816. If the resulting entity is to do business as a savings institution, the Commission shall not approve the merger or consolidation unless the applicant meets the standards established by § 6.2-1118. In either case, the order granting a certificate of authority to do business shall designate the main office of the resulting entity.

C. The resulting entity shall be permitted to operate all branch offices of the merging or consolidating entities that could have been established de novo by the resulting entity or that were in operation at least five years prior to the date of the order permitting merger or consolidation. Within one year of such merger or consolidation, the resulting entity shall conform its assets and operations to the provisions of law regulating the operation of savings institutions if the resulting entity is operated as a savings institution or to the provisions of law regulating the operation of banks if the resulting entity is operated as a bank. The Commission may grant the resulting entity additional one-year periods, not to exceed a total of four additional years, in which to conform its assets and operations as provided herein.

1982, c. 224, § 6.1-195.57:1; 1985, c. 425, § 6.1-194.40; 1991, cc. 228, 230, § 6.1-194.131; 1996, c. 26; 2010, c. 794.

No person, whether acting alone or in concert with others, shall acquire ownership or control of 25 percent or more of the voting shares of a state stock savings institution, or otherwise control the election of a majority of the directors of such institution, without the approval of the Commission. The Commission shall not approve the proposed acquisition unless the Commission determines that the proposed acquisition is in the public interest.

1985, c. 425, § 6.1-194.87; 1990, c. 3; 1991, c. 230, § 6.1-194.152; 1996, c. 16; 2010, c. 794.