§ 12604. Uninsured banks

(a) An uninsured bank is a financial institution that only accepts deposits for which insurance of deposits by the FDIC is not required. For purposes of this section, uninsured banks may accept deposits from a depositor that, when added to the deposits already held for the depositor, if any, exceed the maximum insured amount then permitted to be insured by the Federal Deposit Insurance Corporation for insured deposits. An uninsured bank may be organized pursuant to this section and subchapters 1 through 5 of this chapter. Unless otherwise indicated in this chapter, an uninsured bank has all the powers, rights, duties, and obligations as a financial institution under this title. An uninsured bank is not a nondepository trust company nor is it a merchant bank.

(b) No uninsured bank shall engage in business as an uninsured bank in this State without first obtaining a certificate of authority from the Commissioner pursuant to sections 11703 and 12103 of this title and this section.

(c) The organizational documents of an uninsured bank that are filed with the Secretary of State shall contain the following statement: “This organization is subject to the Vermont law on uninsured banks, 8 V.S.A. § 12604, and does not have the power to solicit, receive, or accept retail deposits.” This statement in the organizational documents of an uninsured bank may not be amended.

(d) An uninsured bank shall maintain capital in accordance with section 14104 of this title, except that the Commissioner may establish different capital requirements for uninsured banks from those required for insured financial institutions.

(e) An uninsured bank may convert to any other type of investor-owned financial institution pursuant to chapter 206 of this title.

(f) The Commissioner may establish by rule or order reserve requirements for uninsured banks.

(g) An uninsured bank’s lending limit is governed by subsection 14301(d) of this title, except that loans or extensions of credit to a person are limited to 15 percent of total capital.

(h) An uninsured bank shall display conspicuously at each window or place where deposits are usually accepted a sign stating that deposits are not insured by the FDIC.

(i) An uninsured bank shall either include in boldface conspicuous type on each signature card, or instrument evidencing a deposit the following statement: “This deposit is not insured by the FDIC” or require each depositor to execute a statement that acknowledges that the initial deposit and all future deposits at the bank are not insured by the FDIC. The bank shall retain this acknowledgment as long as the depositor maintains any deposit with the bank.

(j) An uninsured bank shall include on all its deposit-related advertising a prominent disclosure that deposits are not insured by the FDIC.

(k) An uninsured bank formed and authorized under this chapter shall:

(1) maintain its principal place of business in this State;

(2) appoint a registered agent to accept service of process and to otherwise act on its behalf in this State, provided that whenever such registered agent cannot with reasonable diligence be found at the Vermont registered office of the uninsured bank, the Secretary of State shall be an agent of such uninsured bank upon whom any process, notice, or demand may be served;

(3) hold at least one meeting of its governing body in this State each year; and

(4) have at least one Vermont resident as a member of its governing body. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2011, No. 78 (Adj. Sess.), § 13, eff. April 2, 2012.)