Virginia Law

Article 5. Foreign Savings Institutions; Acquisitions by Out-of-State Savings Institutions or Out-of-State Savings Institution Holding Companies.

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

"Acquire" means:

1. The merger or consolidation of one stock savings institution with another stock savings institution or of a savings institution holding company with another savings institution holding company;

2. The acquisition by a savings institution holding company or savings institution of direct or indirect ownership or control of voting shares of another savings institution holding company or a savings institution, if, after such acquisition, the savings institution holding company or savings institution making the acquisition will directly or indirectly own or control more than 25 percent of any class of voting shares of the other savings institution holding company or savings institution;

3. The direct or indirect acquisition by a savings institution holding company or by a savings institution of all or substantially all of the assets of another savings institution holding company or of another savings institution; or

4. Any other action that would result in direct or indirect control by a savings institution holding company or by a savings institution of another savings institution holding company or another savings institution.

"Out-of-state savings institution" means a savings institution that:

1. Is organized under the laws of the United States or of one of the states other than Virginia; and

2. Has its principal place of business in a state other than Virginia.

"Out-of-state savings institution holding company" means a savings institution holding company that has its principal place of business in a state other than Virginia.

"Principal place of business of a savings institution" shall be the state in which the largest portion of the deposits of the savings institution is located at the end of the last calendar year.

"Principal place of business of a savings institution holding company" shall be the state in which the largest portion of the deposits of the holding company's subsidiaries is located as of the end of the last calendar year.

"Subsidiary" with respect to a savings institution holding company means:

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

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

3. Any company with respect to the management or policies of which such savings institution holding company has the power, directly or indirectly, to exercise a controlling influence, as determined by the Commission, after notice and opportunity for hearing.

"Virginia savings institution" means a savings institution, including a state savings bank, that:

1. Is organized under the laws of the Commonwealth or of the United States; and

2. Has deposit-taking offices located only in the Commonwealth.

"Virginia savings institution holding company" means a savings institution holding company, including the holding company of a state savings bank, that:

1. Has its principal place of business in the Commonwealth;

2. The financial institution subsidiaries of which are located outside the Commonwealth hold not greater than 20 percent of the total deposits held by all of its financial institution subsidiaries; and

3. Is not controlled by a savings institution holding company other than a Virginia savings institution holding company.

1985, c. 425, § 6.1-194.96; 1988, c. 535; 1994, cc. 315, 353; 2010, c. 794.

A. A foreign savings institution shall not transact a savings institution business in the Commonwealth unless it first receives from the Commission a certificate of authority to do so.

B. A foreign savings institution may apply to the Commission for a certificate of authority by paying the filing fee prescribed by the Commission and filing an application that shall include:

1. A copy of its articles of incorporation and bylaws, certified as a true copy by the public officer having custody of the original articles and bylaws;

2. Evidence satisfactory to the Commission that its accounts are insured by the Federal Deposit Insurance Corporation or other federal insurance agency satisfactory to the Commissioner; and

3. Such other information as the Commission may require.

C. The Commission shall issue a certificate of authority to the foreign savings institution when:

1. The Commissioner has examined the application of the institution and investigated and determined that the institution meets the requirements of § 6.2-1118;

2. The Commissioner has verified the financial status of the institution by conducting such examination of its assets and its records as the Commission shall deem appropriate for the purpose of ascertaining whether they meet the requirements of this chapter with regard to state associations;

3. The Commissioner is satisfied that the institution is in sound financial condition, and that it is conducting its business, and will conduct its business in the Commonwealth, in a manner consistent with the laws of the Commonwealth; and

4. The Commissioner is satisfied that the laws, regulations or administrative actions of the state or territory where the principal office of the applicant is located do not prohibit or unfairly impede a state association or state savings bank from transacting business in such state or territory.

D. In meeting the requirements set out in subdivisions C 1, C 2, and C 3, the Commissioner may rely on examinations, audits and other information provided by the federal and state supervisory authorities charged with the responsibility of regulating and supervising savings institutions in the state where the applicant's principal place of business is located. Prior to issuing a certificate of authority to the foreign savings institution, the Commission shall enter into cooperative agreements with the appropriate regulatory authorities for the periodic examination of the foreign savings institution. The Commission may accept reports of examination and other records from such authorities in lieu of conducting its own examinations.

1985, c. 425, § 6.1-194.41; 1986, cc. 500, 509; 1987, c. 289; 1990, c. 3; 1994, c. 353; 2010, c. 794.

When the laws, regulations or administrative actions of another state prohibit or unfairly impede a state savings institution from transacting business in that state, then the savings institutions of that state are prohibited from transacting business in the Commonwealth.

1985, c. 425, § 6.1-194.42; 1994, c. 353; 2010, c. 794.

Except as otherwise provided in this chapter, a foreign savings institution conducting a savings institution business in the Commonwealth shall comply with the provisions of the Virginia Stock Corporation Act (§ 13.1-601 et seq.) and the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.) governing the admission and transaction of business by foreign corporations in the Commonwealth.

1985, c. 425, § 6.1-194.43; 2010, c. 794.

Any contract made by a foreign savings institution with a resident of the Commonwealth or a foreign corporation authorized to do business in the Commonwealth shall be construed according to the laws of the Commonwealth.

1985, c. 425, § 6.1-194.44; 2010, c. 794.

A. Each foreign savings institution authorized to transact business in the Commonwealth shall furnish to the Commissioner a copy of all periodic reports of examinations of the institution conducted by all supervisory agencies that examine the institution to determine its financial soundness. Such reports shall include the examination reports of the Federal Deposit Insurance Corporation or other federal examining agency. Such report copies shall be furnished to the Commissioner within 10 days after the institution receives the report and shall be in certified form or such other form as is acceptable to the Commissioner. In determining whether such institution is in sound financial condition, the Commissioner shall be entitled to rely solely on such examination reports.

B. The Commission shall enter into cooperative agreements with other supervisory authorities for purposes of determining the financial soundness of the foreign savings institutions doing business in the Commonwealth. The Commission may enter into joint actions with other supervisory authorities having concurrent jurisdiction over foreign savings institutions doing business in the Commonwealth or may take such actions independently to carry out its responsibilities under this chapter and assure compliance with the provisions of this chapter and other applicable financial institution laws of the Commonwealth.

1985, c. 425, § 6.1-194.45; 1990, c. 3; 2010, c. 794.

A. The Commission may revoke a certificate of authority of a foreign savings institution if:

1. The institution fails to conduct its business in the Commonwealth in a manner consistent with the laws of the Commonwealth;

2. The affairs of the institution are in an unsafe condition;

3. The institution refuses to comply with the orders of the Commission or refuses to comply with a request by the Commissioner to review the books and records of the institution; or

4. The institution fails to pay any fees or taxes imposed by the laws of the Commonwealth.

B. The Commission may also revoke the certificate of authority of a foreign savings institution at any time that the Commission determines that the state where the principal place of business of the foreign savings institution is located has enacted or amended its laws or regulations, or taken administrative action, so as to prohibit or unfairly impede a state association or state savings bank from transacting business in that state.

1985, c. 425, § 6.1-194.46; 1994, c. 353; 2010, c. 794.

The Commissioner is authorized to obtain an injunction or to take any other action necessary to prevent any foreign savings institution from doing any business of a savings institution in the Commonwealth without appropriate approval.

1985, c. 425, § 6.1-194.47; 2010, c. 794.

For the purposes of this chapter and any other law of the Commonwealth prohibiting, limiting, regulating, charging or taxing the doing of business in the Commonwealth by foreign savings institutions or foreign corporations of any type, any federal savings institution the principal place of business of which is located outside the Commonwealth, and any foreign savings institution that is subject to state or federal supervision, or both, that by law is subject to periodic examination by such supervisory authority and to a requirement of periodic audit, shall not be considered to be doing business or to have a tax situs or nexus in or with the Commonwealth by reason of engaging in any of the following activities:

1. The purchase, acquisition, inspection, appraisement, holding, sale, assignment, transfer, collecting, and enforcement of obligations or any interest therein secured by real estate mortgages, deeds of trust, or other similar instruments, covering real property located in the Commonwealth, or the foreclosure of such instruments, or the acquisition of title to such property by foreclosure, or otherwise, as a result of default under such instruments, or the holding, protection, rental, maintenance and operation of said property so acquired, or the disposition thereof; or

2. The advertising or solicitation of deposit accounts, or the making of any representations with respect thereto in the Commonwealth through the media of the mail, radio, television, magazines, newspapers, or any other media that are published or circulated within the Commonwealth, if (i) such advertising, solicitation or the making of such representations is accurately descriptive of fact and (ii) no such advertising, solicitation, or the making of such representations contains any reference to insurance or guarantee of accounts, unless the accounts of such institution are insured by the Federal Deposit Insurance Corporation or other insurer approved by the Commissioner.

1985, c. 425, § 6.1-194.48; 1990, c. 3; 2010, c. 794.

A. Any savings institution holding company that does not have a Virginia savings institution subsidiary, except as acquired in the regular course of securing or collecting a debt previously contracted in good faith, may acquire a Virginia savings institution holding company or a Virginia savings institution with the approval of the Commission. Such savings institution holding company shall submit to the Commission an application for approval of such acquisition, which application may be approved if the Commission:

1. Determines that the laws of the state in which the savings institution holding company making the acquisition has its principal place of business do not prohibit or unfairly impede a Virginia savings institution holding company meeting the criteria in this article from acquiring savings institutions or savings institution holding companies in that state;

2. Determines that the laws of the state in which the savings institution holding company making the acquisition has its principal place of business permit such savings institution holding company to be acquired by the Virginia savings institution holding company or Virginia savings institution sought to be acquired. For purposes of this subsection, a Virginia savings institution shall be treated as if it were a Virginia savings institution holding company;

3. Determines either that the Virginia savings institution sought to be acquired has been in existence and continuously operating for more than two years or that all of the savings institution subsidiaries of the Virginia savings institution holding company sought to be acquired have been in existence and continuously operating for more than two years. The Commission may approve the acquisition by such savings institution holding company of all or substantially all of the shares of a savings institution organized solely for the purpose of facilitating the acquisition of a savings institution that has been in existence and continuously operating as a savings institution for more than two years; and

4. Makes the acquisition subject to any conditions, restrictions, requirements or other limitations that would apply to the acquisition by a Virginia savings institution holding company of a savings institution or savings institution holding company in the state where such savings institution holding company making the acquisition has its principal place of business but that would not apply to the acquisition of a savings institution or savings institution holding company in such state by a savings institution holding company all the savings institution subsidiaries of which are located in that state.

B. An out-of-state savings institution holding company that has a Virginia savings institution subsidiary, except as acquired in the regular course of securing or collecting a debt previously contracted in good faith, may acquire any Virginia savings institution or Virginia savings institution holding company with the approval of the Commission. Such savings institution holding company shall submit to the Commission an application for approval of such acquisition, which application may be approved if the Commission:

1. Determines either that the Virginia savings institution sought to be acquired has been in existence and continuously operating for more than two years or that all of the savings institution subsidiaries of the Virginia savings institution holding company sought to be acquired have been in existence and continuously operating for more than two years. The Commission may approve the acquisition by such savings institution holding company of all or substantially all of the shares of the savings institution organized solely for the purpose of facilitating the acquisition of a savings institution that has been in existence and continuously operating as a savings institution for more than two years; and

2. Makes the acquisition subject to any conditions, restrictions, requirements or other limitations that would apply to the acquisition by a Virginia savings institution holding company of a savings institution or a savings institution holding company in the state where such savings institution holding company making the acquisition has its principal place of business but that would not apply to the acquisition of a savings institution or a savings institution holding company in such state by a savings institution holding company all the savings institution subsidiaries of which are located in that state.

1985, c. 425, § 6.1-194.97; 1994, c. 353; 2010, c. 794.

A. Any out-of-state savings institution that is insured by the Federal Deposit Insurance Corporation or other federal insurance agency, may acquire a Virginia savings institution holding company or a Virginia savings institution with the approval of the Commission. Such savings institution shall submit to the Commission an application for approval of such acquisition, which application may be approved if the Commission:

1. Determines that the laws of the state in which the savings institution making the acquisition has its principal place of business do not prohibit or unfairly impede a Virginia savings institution meeting the criteria in this article from acquiring savings institutions or savings institution holding companies in that state;

2. Determines that the laws of the state in which the savings institution making the acquisition has its principal place of business permit such savings institution to be acquired by the Virginia savings institution holding company or Virginia savings institution sought to be acquired;

3. Determines that the Virginia savings institution sought to be acquired has been in existence and continuously operating for more than two years or that all of the Virginia savings institution subsidiaries of the Virginia savings institution holding company sought to be acquired have been in existence and continuously operating for more than two years. The Commission may approve the acquisition by a savings institution of all or substantially all of the shares of a savings institution organized solely for the purpose of facilitating the acquisition of a savings institution that has been in existence and continuously operating as a savings institution for more than two years; and

4. Makes the acquisition subject to any conditions, restrictions, requirements or other limitations that would apply to the acquisition by a Virginia savings institution of a savings institution or savings institution holding company in the state where the savings institution making the acquisition has its principal place of business but that would not apply to the acquisition of a savings institution or savings institution holding company in such state by a savings institution located in that state.

B. An out-of-state savings institution that is insured by the Federal Deposit Insurance Corporation or other federal insurance agency and that has previously acquired a Virginia savings institution or Virginia savings institution holding company may acquire any additional Virginia savings institution or Virginia savings institution holding company with the approval of the Commission. Such savings institution shall submit to the Commission an application for approval of such acquisition, which application may be approved if the Commission:

1. Determines that the Virginia savings institution sought to be acquired has been in existence and continuously operating for more than two years. The Commission may approve the acquisition by a savings institution of all or substantially all of the shares of a savings institution organized solely for the purpose of facilitating the acquisition of a savings institution that has been in existence and continuously operating as a savings institution for more than two years; and

2. Makes the acquisition subject to any conditions, restrictions, requirements or other limitations that would apply to the acquisition by a Virginia savings institution of a savings institution or a savings institution holding company in the state where the savings institution making the acquisition has its principal place of business but that would not apply to the acquisition of a savings institution or a savings institution holding company in such state by a savings institution located in that state.

1985, c. 425, § 6.1-194.98; 1986, c. 500; 1990, c. 3; 1994, c. 353; 2010, c. 794.

A. For 90 days following receipt of a complete application under § 6.2-1157 or 6.2-1158, the Commission may conduct an investigation for the purpose of determining whether:

1. The proposed acquisition would be detrimental to the safety and soundness of the applicant or the Virginia savings institution or Virginia savings institution holding company that the applicant seeks to acquire or control;

2. The applicant, its directors and officers, if applicable, and any proposed new directors and officers, of the Virginia savings institution or Virginia savings institution holding company that the applicant seeks to acquire, are qualified by character, experience and financial responsibility to control and operate a Virginia savings institution or Virginia savings institution holding company;

3. The proposed acquisition would be prejudicial to the interests of the depositors, creditors, beneficiaries of fiduciary accounts or shareholders of the Virginia savings institution holding company or any Virginia savings institution that the applicant seeks to acquire or control; and

4. The acquisition is in the public interest.

B. The 90-day investigation period may be shortened or waived by the Commission, as it deems appropriate, if the Commission finds that it must act immediately in order to prevent the probable failure of a Virginia savings institution involved. The 90-day investigation period may be extended if the Commission determines that the applicant has not furnished all the information necessary to make the determination under § 6.2-1157 or 6.2-1158 or that the information submitted is substantially inaccurate or misleading.

C. Within the prescribed investigation period, or any extension thereof, and upon request of the applicant or the Virginia savings institution or Virginia savings institution holding company that the applicant seeks to acquire or control, or upon its own motion, the Commission may order a hearing concerning the proposed acquisition.

D. Within the prescribed investigation period, or any extension thereof, the Commission, by giving written notice of its decision and the reasons therefor to the applicant and to the Virginia savings institution or Virginia savings institution holding company that the applicant seeks to acquire or control, may: (i) approve the application, (ii) disapprove the application, or (iii) impose such conditions on the acquisition as the Commission may deem advisable to effect the purpose of this article.

1985, c. 425, § 6.1-194.99; 2010, c. 794.

A Virginia savings institution, a Virginia savings institution holding company, or an out-of-state savings institution holding company owning subsidiaries that conduct a savings institution business in the Commonwealth shall file with the Commission notice of its intention to acquire a financial institution outside Virginia, together with such information as the Commission may request. The Commission shall within 30 days or an extended period not exceeding 15 days, disapprove such acquisition if it determines that the acquisition could affect detrimentally the safety or soundness of a Virginia savings institution. The Commission may approve such acquisition prior to the expiration of the 30-day period if it determines that the acquisition will not affect detrimentally the safety or soundness of such Virginia savings institution.

1985, c. 425, § 6.1-194.105; 1994, c. 353; 2010, c. 794.

A. Any Virginia savings institution that is controlled by a savings institution holding company that is not a Virginia savings institution holding company shall be subject to all laws of the Commonwealth and all regulations under such laws that are applicable to Virginia savings institutions controlled by Virginia savings institution holding companies.

B. The Commission shall adopt such regulations, including the imposition of reasonable application and administration fees, as it finds necessary to implement the provisions of this article.

C. The Commission shall have the same powers to enforce the provisions of this article as those granted under Article 9 (§ 6.2-1191 et seq.) of this chapter.

1985, c. 425, §§ 6.1-194.102, 6.1-194.104; 2010, c. 794.

A. The Commission may examine any out-of-state savings institution holding company owning a Virginia savings institution and each of its Virginia or non-Virginia savings institution or nonsavings institution subsidiaries and shall require reports of each savings institution holding company subject to this chapter. Such reports shall be filed under oath with such frequency and in such scope and detail as may be appropriate for the purpose of assuring continuing compliance with the provisions of this chapter.

B. Prior to approving an acquisition under the provisions of this article, the Commission shall enter into cooperative agreements with the appropriate regulatory authorities for the periodic examination of any savings institution holding company that has a Virginia savings institution subsidiary or any subsidiary of such holding company and may accept reports of examination and other records from such authorities in lieu of conducting its own examinations. The Commission may enter into joint actions with other regulatory authorities having concurrent jurisdiction over any savings institution holding company that has a Virginia savings institution subsidiary or may take such actions independently to carry out its responsibilities under this chapter, assure the safety and soundness of any Virginia savings institution, and assure compliance with the provisions of this chapter and the applicable savings institution laws of the Commonwealth.

1985, c. 425, § 6.1-194.103; 1994, c. 353; 2010, c. 794.

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

1987, c. 634, § 6.1-194.107; 2010, c. 794.

A state savings bank, or holding company thereof, may not be acquired by a financial institution, or financial institution holding company, whose principal place of business is outside the Commonwealth, except in accordance with the provisions of this article.

1991, c. 230, § 6.1-194.132; 2010, c. 794.

Notwithstanding the provisions of § 1-243, if any portion of this article pertaining to the terms and conditions for and limitations upon acquisition of Virginia savings institution holding companies and Virginia savings institutions by savings institutions and savings institution holding companies that do not have their principal place of business in the Commonwealth is determined to be invalid for any reason by a final nonappealable order of any appropriate Virginia or federal court, then §§ 6.2-1157 through 6.2-1164 shall be void and of no further effect from the effective date of such order. Any transaction that has been lawfully consummated pursuant to this article prior to a determination of invalidity shall be unaffected by such determination.

1985, c. 425, § 6.1-194.106; 1994, c. 353; 2010, c. 794.