13.1-989 - Membership in corporation; loans from members.
§ 13.1-989. Membership in corporation; loans from members.
A. Any financial institution is authorized to become a member of acorporation by making application to the board of directors on such form andin such manner as the board of directors may require and membership shallbecome effective upon acceptance of such application by the board. Membershipshall be for the duration of the corporation, provided, however, that uponwritten notice given to the corporation two years in advance, a member maywithdraw from membership at the expiration date of such notice and shall notthereafter be obligated to make any loans to the corporation.
B. Each member shall make loans to the corporation as and when called upon byit to do so. Such loans shall be made upon terms and conditions as shall beapproved from time to time by the board of directors, subject to thefollowing conditions:
1. All loans shall be evidenced by transferable instruments of thecorporation and shall bear interest at a rate of not less than one-half ofone percent in excess of the rate of interest determined by the board ofdirectors to be prevalent commercial banking prime or base rate on unsecuredcommercial loans as of the date of the loan.
2. If expressly provided in such call, the loan may provide for a rate ofinterest which fluctuates with the prime or base rate from time to time andwhich would be subject during the life of the loan to adjustment as of eachinterest period commencing after the next interest payment date.
3. All loan limits shall be established at the $1000 amount nearest to theamount computed in accordance with the provisions of this section.
4. No loan pursuant to call under this section to a development corporationshall be made if immediately thereafter the total amount of the obligationsof the corporation would exceed ten times the amount of its outstanding andunimpaired capital stock, its earned and unimpaired surplus establishedpursuant to § 13.1-994 and any indebtedness expressly subordinated to loansmade pursuant to call under this section.
5. The total amount outstanding at any one time on loans to a developmentcorporation made by any member shall not exceed the following limit, to bedetermined as of the time such member becomes a member, on the basis offigures contained in the most recent year-end statement furnished by suchmember to state or federal supervisory authorities, as the case may be: twopercent of the capital and permanent surplus of banks and trust companies;one-half of one percent of the total outstanding loans made by a savingsinstitution, or $250,000, whichever is less; one percent of the totaloutstanding loans made by an industrial loan company; one percent of thecapital and unassigned surplus of stock insurance companies, except fireinsurance companies; one percent of the unassigned surplus of mutualinsurance companies, except fire insurance companies; one-tenth of onepercent of the assets of fire insurance companies.
6. All loan limits shall be recomputed as of January 1 of each even-numberedyear, but no member's loan limit shall be increased as the result of suchrecomputation without the consent of such member.
7. Each call for loans made by the corporation shall be prorated among themembers of the corporation in substantially the same proportion that theadjusted loan limit of each member bears to the aggregate of the adjustedloan limits of all members. The "adjusted loan limit" of a member shall bethe amount of such member's loan limit, reduced by the balance of outstandingloans made by such member to the corporation and the investment of suchmember in capital stock of the corporation at the time of such call.
8. A member of a corporation created under this chapter shall not be a memberof more than one such corporation.
(Code 1950, § 13.1-147; 1960, c. 80; 1962, c. 159; 1972, c. 693; 1985, c.522; 1996, c. 77.)