7687886.2-875Virginia Decodedhttps://vacode.org2016Financial Institutions And ServicesDepository Institutions And Trust OrganizationsBanksInvestments And Loans.Limitations on obligations of borrowersCode 1950, § 6-76; 1952, c. 23; 1958, c. 74; 1960, c. 27; 1966, c. 584, § 6.1-61; 1970, c. 42; 1974, c. 557; 1977, cc. 110, 466; 1978, c. 683; 1984, c. 134; 1987, c. 494; 1994, c. 290; 2002, c. 186; 2006, c. 912; 2010, c. 794; 2013, cc. 98, 126.http://law.lis.virginia.gov/vacode/6.2-875//6.2-875/6.2/II/8/9/6.2-8756.2-885 In the case of obligations of a corporation or a limited liability company, all obligations of all subsidiaries thereof in which the corporation or limited liability company owns or controls a majority interest;sectionA1A12 Any liability of the bank under a letter of credit, other than a letter of credit arising out of transactions involving the importation or exportation of goods or the domestic shipment of goods, except to the extent (i) the bank has a binding participation of another bank, organized under the laws of the Commonwealth or another state or the United States, or a written commitment by another such bank to assume primary liability therefor or (ii) such bank issuing the letter of credit has in its possession money on deposit to the credit of such customer or securities or assets readily convertible into cash with which to honor such letter of credit; andsectionA2A22 Any credit exposure to a person arising from a derivative transaction between the bank and the person.sectionA3A32Subject to the exceptions set forth in subsections D, E, F, and I, the total obligations of any person, including, with respect to a partnership, as provided in subsection C, the partners having a five percent or greater interest in either the income or capital of a partnership other than limited partners, to any bank shall at no time exceed 15 percent of the sum of the capital, surplus, and loan loss reserve of such bank.sectionBB1For the purposes of this section:sectionCC1 The obligation of partners in the partnership and the partnership shall not be combined with each other except if (i) thesectionC1C12 There may be counted as part of the surplus (i) the undivided profits as of the date of the most recent call statement and (ii) capital notes and debentures, the issuance of which has been approved by the Commission, outstanding as of said date, and consisting of debt obligations subordinate to all other contractual liabilities of the bank.sectionC2C22The following kinds of obligations shall not be subject to any limitation, except as expressly stated in subdivision 20:sectionDD1 Obligations in the form of drafts or bills of exchange drawn in good faith against actually existing values;sectionD1D12 Obligations arising out of the discount of commercial or business paper actually owned by the person, partnership, association, limited liability company, or corporation negotiating the same;sectionD2D22 Obligations drawn in good faith against actually existing values and secured by goods or commodities in process of shipment;sectionD3D32 Obligations of the United States, the Commonwealth, or any political subdivision of the Commonwealth, including sanitary or public facilities districts;sectionD5D52 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;sectionD6D62 First mortgage real estate loans that are insured by the Federal Housing Administrator;sectionD7D72 Obligations guaranteed as to principal and interest by the United States;sectionD8D82 Loans in which the Small Business Administration or a federal reserve bank has definitely agreed or committed itself to participate, to the extent of such participation;sectionD9D92 Obligations guaranteed by the Small Business Administration or Farmers Home Administration, to the extent of such guaranty;sectionD10D102 Loans that the Federal Commodity Credit Corporation has definitely agreed to purchase;sectionD11D112 Direct obligations of, and obligations guaranteed by, the Export-Import Bank;sectionD12D122 Loans guaranteed by a federal guaranteeing agency pursuant to the Defense Production Act of 1950;sectionD13D132 Bonds and notes of the Federal National Mortgage Association;sectionD14D142 Bonds, debentures, and other similar obligations of Federal Land Banks, Federal Intermediate Credit Banks, or Banks for Cooperatives issues pursuant to acts of Congress;sectionD15D152 Obligations of the Federal Financing Bank, the Student Loan Marketing Association, the Federal Home Loan Mortgage Corporation, the National Credit Union Administration, Farm Credit Banks, the Government National Mortgage Association, or the Commodity Credit Corporation;sectionD16D162 Time deposits in, or obligations issued by, a Federal Home Loan Bank;sectionD17D172 Repurchase agreements of obligations authorized by this subsection;sectionD18D182 Obligations of any person, secured by not less than a like amount of bonds or notes or other evidences of indebtedness of the United States or of the Commonwealth;sectionD19D192 Obligations as endorser or guarantor of installment consumer paper that carry a full or limited endorsement or guarantee of the person transferring the same when the bank has a certificate of a responsible officer, designated by its board of directors for that purpose, stating that the responsibility of the maker of such obligation has been evaluated and the bank is relying primarily upon such maker for the payment of such obligation. In such case the limitations of this section as to the obligations of the maker shall be the sole applicable loan limitation; andsectionD20D202 Obligations secured by the pledge or assignment of certificates of deposit or saving certificates of the lending bank, to the extent of the principal amount of such certificates so pledged or assigned.sectionD21D212The following kinds of obligations shall be subject to a limitation of 30 percent of such capital and surplus:sectionEE1 Obligations as endorser or guarantor of notes, other than commercial or business paper excepted under subdivision D 2 having a maturity of not more than six months, and owned by the person endorsing and negotiating the same;sectionE1E12 Obligations of any person in the form of notes or drafts secured by shipping documents or instruments (i) transferring or securing title covering livestock or (ii) giving a lien on livestock when the market value of the livestock securing the obligations is not at any time less than 115 percent of the amount by which the obligations exceed 15 percent of such capital and surplus; andsectionE2E22 Obligations secured by bonds or notes of the United States, or bonds of the Commonwealth or any of its political subdivisions, if the face value thereof is at least equal to the excess of the obligations over 15 percent of such capital and surplus.sectionE3E32Nonrenewable obligations having not more than 10 months to run consisting of notes or drafts secured by shipping documents, warehouse 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 limitation up to 50 percent of such capital, surplus, and undivided profits. The sliding scale limitation shall require that when the face amount of the obligation exceeds 15 percent of such capital and surplus by any number of percentage points up to 35, the market value of the security for the obligation shall exceed the face amount of the obligation by at least the same number of percentage points.sectionFF1The Commission shall adopt necessary regulations to require entities that would otherwise be treated as separate entities to be treated as related for the purposes of compelling reporting not more frequently than quarterly, to the Commission of the aggregate obligations of such parties to the bank. For the purposes of this subsection:sectionGG1 The Commission may treat as related parties individuals that are in the same household or that are the parents, grandparents, children, or grandchildren of each other whether or not in the same household;sectionG1G12 Any person owning as much as 34 percent of stock of a corporation or being an officer or director of such corporation may be treated as related to such corporation;sectionG2G22 Any person entitled to a share of the profits and losses of or distributions from a limited liability company, or who is a manager of a manager-managed limited liability company or a member of a member-managed limited liability company, may be treated as related to the limited liability company; andsectionG3G32 Any person having an interest in income or capital of a partnership may be treated as a related party.sectionG4G42Notwithstanding the limitations in this section, the Commission may by regulation authorize state banks to make loans to one borrower in such amounts as may be authorized under any lending limit laws applicable to national banks.sectionII1