Virginia Code 6.2-1205: Merger, consolidation or transfer of assets of insolvent or financially unstable savings institution; notice and hearing; final order; priorities; examinations of resulting institutions.
A. As used in this section:
Terms Used In Virginia Code 6.2-1205
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Association: means a savings and loan association or building and loan association that is authorized by law to accept deposits and to hold itself out to the public as engaged in the savings and loan business. See Virginia Code 6.2-1100
- Commission: means the State Corporation Commission. See Virginia Code 6.2-100
- Commissioner: means the Commissioner of Financial Institutions. See Virginia Code 6.2-100
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Main office: means the office where a savings institution first commences to do business or, if the savings institution has more than one office, the office designated by the institution's board of directors as the institution's main office. See Virginia Code 6.2-1100
- Member: includes such persons with a joint and survivorship or other multiple owner or borrower relationship, which persons shall constitute a single membership for purposes of this chapter. See Virginia Code 6.2-1100
- Rescission: The cancellation of budget authority previously provided by Congress. The Impoundment Control Act of 1974 specifies that the President may propose to Congress that funds be rescinded. If both Houses have not approved a rescission proposal (by passing legislation) within 45 days of continuous session, any funds being withheld must be made available for obligation.
- Savings institution: means a savings and loan association, a building and loan association, or savings bank, whether organized as a capital stock corporation or a nonstock corporation, that is authorized by law to accept deposits and to hold itself out to the public as engaged in the savings institution business. See Virginia Code 6.2-1100
- State: when applied to a part of the United States, includes any of the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands, and the United States Virgin Islands. See Virginia Code 1-245
- State savings institution: means a savings institution incorporated under the laws of the Commonwealth. See Virginia Code 6.2-1100
- United States: includes the 50 states, the District of Columbia the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands and the United States Virgin Islands. See Virginia Code 1-255
“Bank” or “savings institution” means institutions incorporated or established under the laws of (i) the Commonwealth, (ii) the United States, or (iii) any other state, which institutions’ deposits are insured as required by this title for the issuance of a certificate of authority to do business.
“Insolvent” means that the current book value of liabilities is in excess of the current book value of assets.
B. If the Commission finds that (i) a state savings institution is insolvent, or, in its opinion, the financial stability of a state savings institution is threatened, (ii) the merger or consolidation of such state savings institution into another savings institution or into a bank is desirable for the protection of the stockholders, members or depositors of such association, and that such merger or consolidation is in the public interest, and (iii) an emergency exists, and if the board of directors of such state savings institution approves a plan of merger or consolidation of such savings institution into another savings institution or bank, compliance with the requirements of § 13.1-718 or 13.1-895 shall be dispensed with as to such state savings institution. In such event, the approval by the Commission of such plan of merger or consolidation shall be the equivalent of approval by the holders of more than two-thirds of the outstanding shares of such state savings institution for all purposes of Article 12 (§ 13.1-715.1 et seq.) of Chapter 9 of Title 13.1 or the approval of two-thirds of the members for all purposes of Article 11 (§ 13.1-893.1 et seq.) of Chapter 10 of Title 13.1.
C. If the Commission finds that (i) a state savings institution is insolvent, or in its opinion, the financial stability of a state savings institution is threatened, (ii) the acquisition of the assets and liabilities of such savings institution by another savings institution or by a bank is in the best interests of the stockholders, members or depositors of such state savings institution, and that such acquisition of the assets and liabilities is in the public interest, and (iii) an emergency exists, it may, with the consent of the board of directors of both institutions as to the terms and conditions of such transfer, including the assumption of all or certain liabilities, enter an order transferring some or all of the assets and liabilities of such state savings institution to such other savings institution or bank. In such event, compliance with the provisions of § 13.1-723, 13.1-724, 13.1-899, or 13.1-900 shall not be required, and § 13.1-730 shall not be applicable to such transfer.
D. In the case either of such a merger, consolidation or a transfer of assets and liabilities, the Commission shall provide that prompt notice of its findings, and plan of merger, consolidation or transfer of assets and liabilities, be sent to the stockholders or members of record of such insolvent savings institution or savings institution threatened with financial instability for the purpose of providing such shareholders or members an opportunity to challenge the findings of the Commission and the plan of merger, consolidation or transfer of assets and liabilities. The relevant books and records of such state savings institution shall remain intact and be made available to such shareholders or members for a period of 30 days after such notice is sent. The Commission’s findings and plan of merger, consolidation or transfer of assets and liabilities shall become final if a hearing before the Commission is not requested by any such shareholder or member in a written request delivered to the Commission within 15 days after the notice specified by this section is sent. Any such request for a hearing shall contain a statement of the specific grounds for such shareholder’s or member’s challenge to the Commissioner‘s findings and plan of merger, or consolidation or transfer of assets and liabilities.
E. If, after a hearing as provided in subsection D, the Commission finds that good cause has been shown for the reversal or modification of its initial findings, or for rescission or modification of its initial plan for merger, consolidation or transfer of assets and liabilities, the Commission shall enter its final order accordingly. If, after such hearing, the Commission affirms its original findings and plan for merger, or consolidation or transfer of assets and liabilities, its order shall be final.
F. Notwithstanding any other provision of law, any institution resulting from a merger, consolidation or a transfer of assets and liabilities under the provisions of this section shall have the right to retain and operate all offices of the institution so merged, consolidated or acquired that were in operation at the time of such merger, or consolidation or acquisition. This section shall not be construed to allow the establishment of additional branches by any institution resulting from such merger, consolidation or transfer than would otherwise be allowed by the laws of the Commonwealth.
G. The Commission shall authorize transactions under this section in the following order of priority:
1. Between financial institutions of the same type located within the Commonwealth;
2. Between financial institutions of different types located within the Commonwealth;
3. Between financial institutions of the same type including depository institutions located outside the Commonwealth; and
4. Between financial institutions of different types including depository institutions located outside the Commonwealth.
H. In considering transactions involving financial institutions located outside the Commonwealth, the Commission shall give priority to plans of merger, consolidation or asset acquisition involving financial institutions located in states adjoining the Commonwealth or located in the District of Columbia.
I. Any institution resulting from a transaction authorized by this section whose main office is located outside of the Commonwealth shall, as a condition of being able to do business in the Commonwealth, allow the Commission to examine such institution from time to time as the Commission deems necessary. In conducting such examinations, the Commission shall have all of the powers provided by this title relating to the examination of financial institutions.
J. The provisions of Article 5 (§ 6.2-1148 et seq.) of this chapter shall not apply to mergers, consolidations, and acquisitions authorized by the provisions of this section.
1983, c. 450, § 6.1-195.70:2; 1985, c. 425, § 6.1-194.88; 1991, c. 230, § 6.1-194.150; 1994, c. 353; 2005, c. 765; 2010, c. 794.