{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/6.2-874.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/6.2-874.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/6.2-874.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/6.2-874.html"}],"law_id":82541,"edition_id":1,"section_id":82541,"structure_id":14189,"section_number":"6.2-874","catch_line":"Prohibited uses of bank’s own stock; other investments or loans","history":"1982, c. 185, \u00a7 6.1-60.1; 1985, c. 339; 1986, c. 269; 1987, c. 297; 1988, c. 464; 1989, cc. 377, 650; 1992, c. 366; 1993, c. 186; 1994, c. 119; 1996, c. 27; 2010, c. 794; 2023, cc. 543, 544.","full_text":"A\n\nNo bank shall:1\n\nAcquire or own its own stock except to protect itself against loss from debts previously contracted, in which case the stock shall be disposed of within 12 months after it is acquired, and except as herein permitted;2\n\nMake loans collaterally secured by the stock of the bank, except that this section shall not affect the validity of any such security agreement between the bank and its borrower; or3\n\nInvest any of its funds in:\n\t\t\t\ta. Shares of stock of any other corporation;\n\t\t\t\tb. Any security of a limited liability company; or\n\t\t\t\tc. Any notes or other obligations that are secured by real estate on which the bank is prohibited by § 6.2-878 from making any loans secured thereby.B\n\nThe prohibitions in subsection A shall not prevent any bank from:1\n\nAcquiring any such stock, notes, or other obligations to protect itself or any fund in its custody or possession against loss from debts theretofore contracted;2\n\nAcquiring, owning, and holding stock of a building corporation or security of a limited liability company of the character and to the amount provided by § 6.2-870;3\n\nAcquiring, owning, and holding stock of an agricultural credit corporation organized under the laws of the Commonwealth, provided that the total amount of such stock shall not exceed 20 percent of the amount of the capital stock of the bank actually paid in and unimpaired, plus the amount of its unimpaired surplus fund;4\n\nAcquiring, owning, and holding stock of the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation;5\n\nAcquiring, holding, and owning stock in any corporations or securities of limited liability companies which have as their purpose the operation of parking lots or parking garages, provided that no bank shall own, at any one time, stock in such corporations exceeding two percent of the amount of the capital stock of such bank actually paid in and unimpaired, plus the amount of its unimpaired surplus fund;6\n\nAcquiring, owning, and holding stock of a small business investment company as defined by the Federal Small Business Investment Act of 1958;7\n\nAcquiring, owning, and holding stock of an industrial development company organized under the provisions of the Virginia Industrial Development Corporation Act (§ 13.1-981 et seq.);8\n\nAcquiring, owning, and holding stock of a bank service corporation or security of a controlled subsidiary corporation, subject to § 6.2-871 or 6.2-885, or from investing in a limited liability company, provided such investment conforms to § 6.2-871 or 6.2-885;9\n\nAcquiring, owning, and holding stock of the Student Loan Marketing Association, a corporation organized under the Higher Education Act of 1965, as amended;10\n\nAcquiring, owning, and holding stock of a “clearing corporation” as defined in § 8.8A-102;11\n\nAcquiring, owning, and holding stock of a trust subsidiary as defined in § 6.2-1000;12\n\nInvesting up to four percent of its capital and surplus, including undivided profits, in shares of any bankers’ bank organized under § 6.2-809 or in any bank holding company wherein the ownership of shares in such bank holding company is restricted to (i) financial institutions which have or are eligible for insurance of deposits by a federal agency or (ii) a financial institution holding company as defined in § 6.2-700 or a savings institution holding company as defined in § 6.2-1100;13\n\nAcquiring its own stock, with the book value of all such stock held not to exceed in the aggregate five percent of the book value of all shares issued and outstanding, including capital, surplus, and undivided profits as of the time of the purchase being made. In computing such capital surplus and undivided profits for purposes of this section, amounts received for resale of any repurchased stock shall be added back to capital, surplus, and undivided profits for purposes of computation of the five percent limitation. Such purchase may be without the written consent of the Commission, unless the Commission or Commissioner has previously notified the bank in writing that it may not utilize this subdivision until further notice. The Commission may further allow purchases of such stock in excess of such five percent criterion if the Commission finds that the purchase (i) will not impair the safety and solvency of the bank and (ii) is otherwise appropriate. The Commission may require the divestiture of any shares held if deemed necessary and appropriate;14\n\nAcquiring, owning, and holding, subject to such conditions as the Commissioner may prescribe, shares of investment companies;15\n\nAcquiring, investing in, owning, and holding, directly or indirectly, subject to such conditions as the Commissioner may prescribe, equity investments in a corporation, a limited partnership, a limited liability company, or another entity organized as (i) a community development corporation; (ii) an entity formed primarily to support community-based economic development; (iii) an entity qualifying for the new markets tax credit under 26 U.S.C. § 45D; (iv) an entity formed for a predominantly civic, community, or public purpose that (a) primarily benefits low-income and moderate-income individuals, (b) primarily benefits low-income and moderate-income areas, (c) primarily benefits areas targeted for redevelopment by a government entity, or (d) is a qualified investment under 12 C.F.R. § 25.23 for the purposes of the Community Reinvestment Act of 1977, 12 U.S.C. § 2901 et seq.; or (v) an entity making qualified rehabilitation expenditures with respect to a qualified rehabilitated building or certified historic structure, as such terms are defined in 26 U.S.C § 47, or a similar state historic tax credit program, as provided for in § 619(d)(1)(E) of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act, 12 U.S.C. § 1851(d)(1)(E);16\n\nAcquiring, owning, and holding shares of the Federal Agricultural Mortgage Corporation;17\n\nAcquiring, owning, and holding shares of a Federal Home Loan Bank;18\n\nEstablishing, acquiring, investing in, owning, and holding shares of a rural business investment company or any entity established to invest solely in a rural business investment company as permissible under 7 U.S.C. § 2009cc-9(a)(1)(A) and 7 U.S.C. § 2009cc-9(b);19\n\nEngaging, directly or indirectly, in any tax equity finance transaction permissible for a national bank or federal savings association under 12 C.F.R. § 7.1025. The authority to engage in tax equity finance transactions under this section is separate from and does not limit any investment authorities available to a bank. A tax equity finance transaction is subject to the substantive legal requirements of a loan; or20\n\nAcquiring, investing in, owning, and holding shares, directly or indirectly, subject to such conditions as the Commissioner may prescribe, in any community and economic development entity, community development project, or other public welfare investment, provided that the investment is in compliance with 12 C.F.R. Part 24.C\n\nThe provisions of this section shall not be construed to require a bank to dispose of any preferred stocks lawfully acquired as an investment prior to January 1, 1940.","order_by":null,"text":{"0":{"id":295734,"text":"No bank shall:","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"A1"},"1":{"id":295735,"text":"Acquire or own its own stock except to protect itself against loss from debts previously contracted, in which case the stock shall be disposed of within 12 months after it is acquired, and except as herein permitted;","type":"section","prefixes":["A","1"],"prefix":"1","entire_prefix":"A1","prefix_anchor":"A1","level":2,"prior_prefix":"A","next_prefix":"A2"},"2":{"id":295736,"text":"Make loans collaterally secured by the stock of the bank, except that this section shall not affect the validity of any such security agreement between the bank and its borrower; or","type":"section","prefixes":["A","2"],"prefix":"2","entire_prefix":"A2","prefix_anchor":"A2","level":2,"prior_prefix":"A1","next_prefix":"A3"},"3":{"id":295737,"text":"Invest any of its funds in:\n\t\t\t\ta. Shares of stock of any other corporation;\n\t\t\t\tb. Any security of a limited liability company; or\n\t\t\t\tc. Any notes or other obligations that are secured by real estate on which the bank is prohibited by § 6.2-878 from making any loans secured thereby.","type":"section","prefixes":["A","3"],"prefix":"3","entire_prefix":"A3","prefix_anchor":"A3","level":2,"prior_prefix":"A2","next_prefix":"B"},"4":{"id":295738,"text":"The prohibitions in subsection A shall not prevent any bank from:","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A3","next_prefix":"B1"},"5":{"id":295739,"text":"Acquiring any such stock, notes, or other obligations to protect itself or any fund in its custody or possession against loss from debts theretofore contracted;","type":"section","prefixes":["B","1"],"prefix":"1","entire_prefix":"B1","prefix_anchor":"B1","level":2,"prior_prefix":"B","next_prefix":"B2"},"6":{"id":295740,"text":"Acquiring, owning, and holding stock of a building corporation or security of a limited liability company of the character and to the amount provided by § 6.2-870;","type":"section","prefixes":["B","2"],"prefix":"2","entire_prefix":"B2","prefix_anchor":"B2","level":2,"prior_prefix":"B1","next_prefix":"B3"},"7":{"id":295741,"text":"Acquiring, owning, and holding stock of an agricultural credit corporation organized under the laws of the Commonwealth, provided that the total amount of such stock shall not exceed 20 percent of the amount of the capital stock of the bank actually paid in and unimpaired, plus the amount of its unimpaired surplus fund;","type":"section","prefixes":["B","3"],"prefix":"3","entire_prefix":"B3","prefix_anchor":"B3","level":2,"prior_prefix":"B2","next_prefix":"B4"},"8":{"id":295742,"text":"Acquiring, owning, and holding stock of the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation;","type":"section","prefixes":["B","4"],"prefix":"4","entire_prefix":"B4","prefix_anchor":"B4","level":2,"prior_prefix":"B3","next_prefix":"B5"},"9":{"id":295743,"text":"Acquiring, holding, and owning stock in any corporations or securities of limited liability companies which have as their purpose the operation of parking lots or parking garages, provided that no bank shall own, at any one time, stock in such corporations exceeding two percent of the amount of the capital stock of such bank actually paid in and unimpaired, plus the amount of its unimpaired surplus fund;","type":"section","prefixes":["B","5"],"prefix":"5","entire_prefix":"B5","prefix_anchor":"B5","level":2,"prior_prefix":"B4","next_prefix":"B6"},"10":{"id":295744,"text":"Acquiring, owning, and holding stock of a small business investment company as defined by the Federal Small Business Investment Act of 1958;","type":"section","prefixes":["B","6"],"prefix":"6","entire_prefix":"B6","prefix_anchor":"B6","level":2,"prior_prefix":"B5","next_prefix":"B7"},"11":{"id":295745,"text":"Acquiring, owning, and holding stock of an industrial development company organized under the provisions of the Virginia Industrial Development Corporation Act (§ 13.1-981 et seq.);","type":"section","prefixes":["B","7"],"prefix":"7","entire_prefix":"B7","prefix_anchor":"B7","level":2,"prior_prefix":"B6","next_prefix":"B8"},"12":{"id":295746,"text":"Acquiring, owning, and holding stock of a bank service corporation or security of a controlled subsidiary corporation, subject to § 6.2-871 or 6.2-885, or from investing in a limited liability company, provided such investment conforms to § 6.2-871 or 6.2-885;","type":"section","prefixes":["B","8"],"prefix":"8","entire_prefix":"B8","prefix_anchor":"B8","level":2,"prior_prefix":"B7","next_prefix":"B9"},"13":{"id":295747,"text":"Acquiring, owning, and holding stock of the Student Loan Marketing Association, a corporation organized under the Higher Education Act of 1965, as amended;","type":"section","prefixes":["B","9"],"prefix":"9","entire_prefix":"B9","prefix_anchor":"B9","level":2,"prior_prefix":"B8","next_prefix":"B10"},"14":{"id":295748,"text":"Acquiring, owning, and holding stock of a “clearing corporation” as defined in § 8.8A-102;","type":"section","prefixes":["B","10"],"prefix":"10","entire_prefix":"B10","prefix_anchor":"B10","level":2,"prior_prefix":"B9","next_prefix":"B11"},"15":{"id":295749,"text":"Acquiring, owning, and holding stock of a trust subsidiary as defined in § 6.2-1000;","type":"section","prefixes":["B","11"],"prefix":"11","entire_prefix":"B11","prefix_anchor":"B11","level":2,"prior_prefix":"B10","next_prefix":"B12"},"16":{"id":295750,"text":"Investing up to four percent of its capital and surplus, including undivided profits, in shares of any bankers’ bank organized under § 6.2-809 or in any bank holding company wherein the ownership of shares in such bank holding company is restricted to (i) financial institutions which have or are eligible for insurance of deposits by a federal agency or (ii) a financial institution holding company as defined in § 6.2-700 or a savings institution holding company as defined in § 6.2-1100;","type":"section","prefixes":["B","12"],"prefix":"12","entire_prefix":"B12","prefix_anchor":"B12","level":2,"prior_prefix":"B11","next_prefix":"B13"},"17":{"id":295751,"text":"Acquiring its own stock, with the book value of all such stock held not to exceed in the aggregate five percent of the book value of all shares issued and outstanding, including capital, surplus, and undivided profits as of the time of the purchase being made. In computing such capital surplus and undivided profits for purposes of this section, amounts received for resale of any repurchased stock shall be added back to capital, surplus, and undivided profits for purposes of computation of the five percent limitation. Such purchase may be without the written consent of the Commission, unless the Commission or Commissioner has previously notified the bank in writing that it may not utilize this subdivision until further notice. The Commission may further allow purchases of such stock in excess of such five percent criterion if the Commission finds that the purchase (i) will not impair the safety and solvency of the bank and (ii) is otherwise appropriate. The Commission may require the divestiture of any shares held if deemed necessary and appropriate;","type":"section","prefixes":["B","13"],"prefix":"13","entire_prefix":"B13","prefix_anchor":"B13","level":2,"prior_prefix":"B12","next_prefix":"B14"},"18":{"id":295752,"text":"Acquiring, owning, and holding, subject to such conditions as the Commissioner may prescribe, shares of investment companies;","type":"section","prefixes":["B","14"],"prefix":"14","entire_prefix":"B14","prefix_anchor":"B14","level":2,"prior_prefix":"B13","next_prefix":"B15"},"19":{"id":295753,"text":"Acquiring, investing in, owning, and holding, directly or indirectly, subject to such conditions as the Commissioner may prescribe, equity investments in a corporation, a limited partnership, a limited liability company, or another entity organized as (i) a community development corporation; (ii) an entity formed primarily to support community-based economic development; (iii) an entity qualifying for the new markets tax credit under 26 U.S.C. § 45D; (iv) an entity formed for a predominantly civic, community, or public purpose that (a) primarily benefits low-income and moderate-income individuals, (b) primarily benefits low-income and moderate-income areas, (c) primarily benefits areas targeted for redevelopment by a government entity, or (d) is a qualified investment under 12 C.F.R. § 25.23 for the purposes of the Community Reinvestment Act of 1977, 12 U.S.C. § 2901 et seq.; or (v) an entity making qualified rehabilitation expenditures with respect to a qualified rehabilitated building or certified historic structure, as such terms are defined in 26 U.S.C § 47, or a similar state historic tax credit program, as provided for in § 619(d)(1)(E) of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act, 12 U.S.C. § 1851(d)(1)(E);","type":"section","prefixes":["B","15"],"prefix":"15","entire_prefix":"B15","prefix_anchor":"B15","level":2,"prior_prefix":"B14","next_prefix":"B16"},"20":{"id":295754,"text":"Acquiring, owning, and holding shares of the Federal Agricultural Mortgage Corporation;","type":"section","prefixes":["B","16"],"prefix":"16","entire_prefix":"B16","prefix_anchor":"B16","level":2,"prior_prefix":"B15","next_prefix":"B17"},"21":{"id":295755,"text":"Acquiring, owning, and holding shares of a Federal Home Loan Bank;","type":"section","prefixes":["B","17"],"prefix":"17","entire_prefix":"B17","prefix_anchor":"B17","level":2,"prior_prefix":"B16","next_prefix":"B18"},"22":{"id":295756,"text":"Establishing, acquiring, investing in, owning, and holding shares of a rural business investment company or any entity established to invest solely in a rural business investment company as permissible under 7 U.S.C. § 2009cc-9(a)(1)(A) and 7 U.S.C. § 2009cc-9(b);","type":"section","prefixes":["B","18"],"prefix":"18","entire_prefix":"B18","prefix_anchor":"B18","level":2,"prior_prefix":"B17","next_prefix":"B19"},"23":{"id":295757,"text":"Engaging, directly or indirectly, in any tax equity finance transaction permissible for a national bank or federal savings association under 12 C.F.R. § 7.1025. The authority to engage in tax equity finance transactions under this section is separate from and does not limit any investment authorities available to a bank. A tax equity finance transaction is subject to the substantive legal requirements of a loan; or","type":"section","prefixes":["B","19"],"prefix":"19","entire_prefix":"B19","prefix_anchor":"B19","level":2,"prior_prefix":"B18","next_prefix":"B20"},"24":{"id":295758,"text":"Acquiring, investing in, owning, and holding shares, directly or indirectly, subject to such conditions as the Commissioner may prescribe, in any community and economic development entity, community development project, or other public welfare investment, provided that the investment is in compliance with 12 C.F.R. Part 24.","type":"section","prefixes":["B","20"],"prefix":"20","entire_prefix":"B20","prefix_anchor":"B20","level":2,"prior_prefix":"B19","next_prefix":"C"},"25":{"id":295759,"text":"The provisions of this section shall not be construed to require a bank to dispose of any preferred stocks lawfully acquired as an investment prior to January 1, 1940.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B20"}},"ancestry":[{"id":14189,"edition_id":1,"name":"Investments and Loans","identifier":"9","label":"article","depth":4,"order_by":1,"parent_id":13791,"metadata":{},"date_created":"2026-06-26 03:47:11","date_modified":"2026-06-26 03:47:11","permalink":{"id":265643,"object_type":"structure","relational_id":14189,"identifier":"9","token":"6.2\/II\/8\/9","url":"\/6.2\/II\/8\/9\/","edition_id":1,"permalink":0,"preferred":1}},{"id":13791,"edition_id":1,"name":"Banks","identifier":"8","label":"chapter","depth":3,"order_by":1,"parent_id":13000,"metadata":{},"date_created":"2026-06-26 03:45:53","date_modified":"2026-06-26 03:45:53","permalink":{"id":265065,"object_type":"structure","relational_id":13791,"identifier":"8","token":"6.2\/II\/8","url":"\/6.2\/II\/8\/","edition_id":1,"permalink":0,"preferred":1}},{"id":13000,"edition_id":1,"name":"Depository Institutions and Trust Organizations","identifier":"II","label":"subtitle","depth":2,"order_by":1,"parent_id":12852,"metadata":{},"date_created":"2026-06-26 03:44:07","date_modified":"2026-06-26 03:44:07","permalink":{"id":263685,"object_type":"structure","relational_id":13000,"identifier":"II","token":"6.2\/II","url":"\/6.2\/II\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12852,"edition_id":1,"name":"Financial Institutions and Services","identifier":"6.2","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:56","date_modified":"2026-06-26 03:43:56","permalink":{"id":263249,"object_type":"structure","relational_id":12852,"identifier":"6.2","token":"6.2","url":"\/6.2\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":63411,"structure_id":14189,"section_number":"6.2-870","catch_line":"Limitation of amount invested in bank premises","url":"\/6.2-870\/","token":"6.2\/II\/8\/9\/6.2-870","metadata":false},{"id":64130,"structure_id":14189,"section_number":"6.2-871","catch_line":"Investment in stock or securities of bank service corporations","url":"\/6.2-871\/","token":"6.2\/II\/8\/9\/6.2-871","metadata":false},{"id":61248,"structure_id":14189,"section_number":"6.2-872","catch_line":"For what purpose banks may purchase, hold, and convey real estate","url":"\/6.2-872\/","token":"6.2\/II\/8\/9\/6.2-872","metadata":false},{"id":74353,"structure_id":14189,"section_number":"6.2-873","catch_line":"Additional permissible investments in real estate","url":"\/6.2-873\/","token":"6.2\/II\/8\/9\/6.2-873","metadata":false},{"id":82541,"structure_id":14189,"section_number":"6.2-874","catch_line":"Prohibited uses of bank's own stock; other investments or loans","url":"\/6.2-874\/","token":"6.2\/II\/8\/9\/6.2-874","metadata":false},{"id":57173,"structure_id":14189,"section_number":"6.2-875","catch_line":"Limitations on obligations of borrowers","url":"\/6.2-875\/","token":"6.2\/II\/8\/9\/6.2-875","metadata":false},{"id":55367,"structure_id":14189,"section_number":"6.2-876","catch_line":"Loans to executive officers or directors","url":"\/6.2-876\/","token":"6.2\/II\/8\/9\/6.2-876","metadata":false},{"id":85468,"structure_id":14189,"section_number":"6.2-877","catch_line":"Overdrafts by bank officer or director","url":"\/6.2-877\/","token":"6.2\/II\/8\/9\/6.2-877","metadata":false},{"id":76996,"structure_id":14189,"section_number":"6.2-878","catch_line":"Loans secured by real estate generally","url":"\/6.2-878\/","token":"6.2\/II\/8\/9\/6.2-878","metadata":false},{"id":80117,"structure_id":14189,"section_number":"6.2-879","catch_line":"Certain loans not considered loans secured by real estate","url":"\/6.2-879\/","token":"6.2\/II\/8\/9\/6.2-879","metadata":false},{"id":59260,"structure_id":14189,"section_number":"6.2-880","catch_line":"Construction loans","url":"\/6.2-880\/","token":"6.2\/II\/8\/9\/6.2-880","metadata":false},{"id":78478,"structure_id":14189,"section_number":"6.2-881","catch_line":"Investment in reverse annuity mortgages","url":"\/6.2-881\/","token":"6.2\/II\/8\/9\/6.2-881","metadata":false},{"id":60973,"structure_id":14189,"section_number":"6.2-882","catch_line":"Bank borrowing money or rediscounting its notes","url":"\/6.2-882\/","token":"6.2\/II\/8\/9\/6.2-882","metadata":false},{"id":87132,"structure_id":14189,"section_number":"6.2-883","catch_line":"Acceptance of drafts or bills of exchange; issuance of letters of credit","url":"\/6.2-883\/","token":"6.2\/II\/8\/9\/6.2-883","metadata":false},{"id":76682,"structure_id":14189,"section_number":"6.2-884","catch_line":"Ownership and lease of personal property","url":"\/6.2-884\/","token":"6.2\/II\/8\/9\/6.2-884","metadata":false},{"id":64536,"structure_id":14189,"section_number":"6.2-885","catch_line":"Investment in stock or securities of controlled subsidiary corporations","url":"\/6.2-885\/","token":"6.2\/II\/8\/9\/6.2-885","metadata":false},{"id":74671,"structure_id":14189,"section_number":"6.2-886","catch_line":"Regulation of controlled subsidiary corporations by Commission","url":"\/6.2-886\/","token":"6.2\/II\/8\/9\/6.2-886","metadata":false},{"id":73096,"structure_id":14189,"section_number":"6.2-887","catch_line":"Insurance business of controlled subsidiary","url":"\/6.2-887\/","token":"6.2\/II\/8\/9\/6.2-887","metadata":false},{"id":69740,"structure_id":14189,"section_number":"6.2-888","catch_line":"Real estate brokerage business of controlled subsidiary","url":"\/6.2-888\/","token":"6.2\/II\/8\/9\/6.2-888","metadata":false}],"previous_section":{"id":74353,"structure_id":14189,"section_number":"6.2-873","catch_line":"Additional permissible investments in real estate","url":"\/6.2-873\/","token":"6.2\/II\/8\/9\/6.2-873","metadata":false},"next_section":{"id":57173,"structure_id":14189,"section_number":"6.2-875","catch_line":"Limitations on obligations of borrowers","url":"\/6.2-875\/","token":"6.2\/II\/8\/9\/6.2-875","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/6.2-874\/","history_text":"

This law was first created in 1982. The record of its establishment is cataloged in chapter 185 of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. Unfortunately, the 1982 \u201cActs\u201d aren\u2019t available online. It has been modified 11 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 1985, chapter 339; in 1986, chapter 269; in 1987, chapter 297; in 1988, chapter 464; in 1989, chapters 377 and 650; in 1992, chapter 366; in 1993, chapter 186; in 1994, chapter 119<\/a>; in 1996, chapter 27<\/a>; in 2010, chapter 794<\/a>; in 2023, chapters 543<\/a> and 544<\/a>.<\/p>","references":[{"id":65808,"section_number":"6.2-1146","catch_line":"State association or association holding company acquiring bank; association acquired by bank or bank holding company; merger or consolidation of association and bank","order_by":null,"url":"\/6.2-1146\/"},{"id":64536,"section_number":"6.2-885","catch_line":"Investment in stock or securities of controlled subsidiary corporations","order_by":null,"url":"\/6.2-885\/"}],"refers_to":[{"id":80825,"section_number":"13.1-981","catch_line":"How chapter cited","order_by":null,"url":"\/13.1-981\/"},{"id":61391,"section_number":"6.2-1000","catch_line":"Definitions","order_by":null,"url":"\/6.2-1000\/"},{"id":68689,"section_number":"6.2-1100","catch_line":"Definitions","order_by":null,"url":"\/6.2-1100\/"},{"id":75055,"section_number":"6.2-700","catch_line":"Definitions","order_by":null,"url":"\/6.2-700\/"},{"id":64462,"section_number":"6.2-809","catch_line":"Bankers' banks","order_by":null,"url":"\/6.2-809\/"},{"id":63411,"section_number":"6.2-870","catch_line":"Limitation of amount invested in bank premises","order_by":null,"url":"\/6.2-870\/"},{"id":64130,"section_number":"6.2-871","catch_line":"Investment in stock or securities of bank service corporations","order_by":null,"url":"\/6.2-871\/"},{"id":76996,"section_number":"6.2-878","catch_line":"Loans secured by real estate generally","order_by":null,"url":"\/6.2-878\/"},{"id":64536,"section_number":"6.2-885","catch_line":"Investment in stock or securities of controlled subsidiary corporations","order_by":null,"url":"\/6.2-885\/"},{"id":69812,"section_number":"8.8A-102","catch_line":"Definitions","order_by":null,"url":"\/8.8A-102\/"}],"permalink":{"id":265661,"object_type":"law","relational_id":82541,"identifier":"6.2-874","token":"6.2\/II\/8\/9\/6.2-874","url":"\/6.2-874\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/6.2-874\/","token":"6.2\/II\/8\/9\/6.2-874","dublin_core":{"Title":"Prohibited uses of bank’s own stock; other investments or loans","Type":"Text","Format":"text\/html","Identifier":"\u00a7 6.2-874","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> No bank<\/span> shall: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> Acquire or own its own stock except to protect itself against loss from debts previously contracted, in which case the stock shall be disposed of within 12 months after it is acquired, and except as herein permitted; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Make loans collaterally secured by the stock of the bank<\/span>, except that this section shall not affect the validity of any such security agreement between the bank<\/span> and its borrower; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> Invest any of its funds in:\n\t\t\t\ta. Shares of stock of any other corporation;\n\t\t\t\tb. Any security of a limited liability company; or\n\t\t\t\tc. Any notes or other obligations that are secured by real estate on which the bank<\/span> is prohibited by § 6.2-878<\/a> from making any loans secured thereby. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> The prohibitions in subsection A shall not prevent any bank<\/span> from: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> Acquiring any such stock, notes, or other obligations to protect itself or any fund in its custody<\/span> or possession<\/span> against loss from debts theretofore contracted; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Acquiring, owning, and holding stock of a building corporation or security of a limited liability company of the character and to the amount provided by § 6.2-870<\/a>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> Acquiring, owning, and holding stock of an agricultural credit corporation organized under the laws<\/span> of the Commonwealth, provided that the total amount of such stock shall not exceed 20 percent of the amount of the capital stock of the bank<\/span> actually paid in and unimpaired, plus the amount of its unimpaired surplus fund; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> Acquiring, owning, and holding stock of the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

5.<\/span> Acquiring, holding, and owning stock in any corporations or securities of limited liability companies which have as their purpose the operation of parking lots or parking garages, provided that no bank<\/span> shall own, at any one time, stock in such corporations exceeding two percent of the amount of the capital stock of such bank<\/span> actually paid in and unimpaired, plus the amount of its unimpaired surplus fund; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

6.<\/span> Acquiring, owning, and holding stock of a small business investment company as defined by the Federal Small Business Investment Act of 1958; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

7.<\/span> Acquiring, owning, and holding stock of an industrial development company organized under the provisions of the Virginia Industrial Development Corporation Act (§ 13.1-981<\/a> et seq.); <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

8.<\/span> Acquiring, owning, and holding stock of a bank<\/span> service corporation or security of a controlled subsidiary corporation, subject to § 6.2-871<\/a> or 6.2-885<\/a>, or from investing in a limited liability company, provided such investment conforms to § 6.2-871<\/a> or 6.2-885<\/a>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

9.<\/span> Acquiring, owning, and holding stock of the Student Loan Marketing Association, a corporation organized under the Higher Education Act of 1965, as amended; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

10.<\/span> Acquiring, owning, and holding stock of a “clearing corporation” as defined in § 8.8A-102<\/a>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

11.<\/span> Acquiring, owning, and holding stock of a trust subsidiary as defined in § 6.2-1000<\/a>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

12.<\/span> Investing up to four percent of its capital and surplus, including undivided profits, in shares of any bankers’ bank organized under § 6.2-809<\/a> or in any bank holding company<\/span> wherein the ownership of shares in such bank holding company<\/span> is restricted to (i) financial institutions<\/span> which have or are eligible for insurance of deposits by a federal agency or (ii) a financial institution<\/span> holding company as defined in § 6.2-700<\/a> or a savings institution holding company as defined in § 6.2-1100<\/a>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

13.<\/span> Acquiring its own stock, with the book value of all such stock held not to exceed in the aggregate five percent of the book value of all shares issued and outstanding, including capital, surplus, and undivided profits as of the time of the purchase being made. In computing such capital surplus and undivided profits for purposes of this section, amounts received for resale of any repurchased stock shall be added back to capital, surplus, and undivided profits for purposes of computation of the five percent limitation. Such purchase may be without the written consent of the Commission<\/span>, unless the Commission<\/span> or Commissioner<\/span> has previously notified the bank in writing that it may not utilize this subdivision until further notice. The Commission<\/span> may further allow purchases of such stock in excess of such five percent criterion if the Commission<\/span> finds that the purchase (i) will not impair the safety and solvency of the bank and (ii) is otherwise appropriate. The Commission<\/span> may require the divestiture of any shares held if deemed necessary and appropriate; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

14.<\/span> Acquiring, owning, and holding, subject to such conditions as the Commissioner<\/span> may prescribe, shares of investment companies; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

15.<\/span> Acquiring, investing in, owning, and holding, directly or indirectly, subject to such conditions as the Commissioner<\/span> may prescribe, equity<\/span> investments in a corporation, a limited partnership, a limited liability company, or another entity<\/span> organized as (i) a community development corporation<\/span>; (ii) an entity<\/span> formed primarily to support community-based economic development<\/span>; (iii) an entity<\/span> qualifying for the new markets tax credit under 26 U.S.C. § 45D; (iv) an entity<\/span> formed for a predominantly civic, community, or public purpose that (a) primarily benefits low-income and moderate-income individuals, (b) primarily benefits low-income and moderate-income areas, (c) primarily benefits areas targeted for redevelopment by a government entity<\/span>, or (d) is a qualified investment under 12 C.F.R. § 25.23 for the purposes of the Community Reinvestment Act of 1977, 12 U.S.C. § 2901 et seq.; or (v) an entity<\/span> making qualified rehabilitation expenditures with respect to a qualified rehabilitated building or certified historic structure, as such terms are defined in 26 U.S.C § 47, or a similar state historic tax credit program, as provided for in § 619(d)(1)(E) of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act, 12 U.S.C. § 1851(d)(1)(E); <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

16.<\/span> Acquiring, owning, and holding shares of the Federal Agricultural Mortgage Corporation; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

17.<\/span> Acquiring, owning, and holding shares of a Federal Home Loan Bank; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

18.<\/span> Establishing, acquiring, investing in, owning, and holding shares of a rural business investment company<\/span> or any entity<\/span> established to invest solely in a rural business investment company<\/span> as permissible under 7 U.S.C. § 2009cc-9(a)(1)(A) and 7 U.S.C. § 2009cc-9(b); <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

19.<\/span> Engaging, directly or indirectly, in any tax equity<\/span> finance transaction permissible for a national bank or federal savings association under 12 C.F.R. § 7.1025. The authority to engage in tax equity<\/span> finance transactions under this section is separate from and does not limit any investment authorities available to a bank. A tax equity<\/span> finance transaction is subject to the substantive legal requirements of a loan; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

20.<\/span> Acquiring, investing in, owning, and holding shares, directly or indirectly, subject to such conditions as the Commissioner<\/span> may prescribe, in any community and economic development entity<\/span>, community development project, or other public welfare investment<\/span>, provided that the investment is in compliance with 12 C.F.R. Part 24. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> The provisions of this section shall not be construed to require a bank to dispose of any preferred stocks lawfully acquired as an investment prior to January 1, 1940. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nPROHIBITED USES OF BANK’S OWN STOCK; OTHER INVESTMENTS OR LOANS (\u00a7\n6.2-874)\n\nA. No bank shall:\n\n 1. Acquire or own its own stock except to protect itself against loss from\n debts previously contracted, in which case the stock shall be disposed of\n within 12 months after it is acquired, and except as herein permitted;\n\n 2. Make loans collaterally secured by the stock of the bank, except that this\n section shall not affect the validity of any such security agreement between\n the bank and its borrower; or\n\n 3. Invest any of its funds in:\n \t\t\t\ta. Shares of stock of any other corporation;\n \t\t\t\tb. Any security of a limited liability company; or\n \t\t\t\tc. Any notes or other obligations that are secured by real estate on which\n the bank is prohibited by § 6.2-878 from making any loans secured\n thereby.\n\nB. The prohibitions in subsection A shall not prevent any bank from:\n\n 1. Acquiring any such stock, notes, or other obligations to protect itself or\n any fund in its custody or possession against loss from debts theretofore\n contracted;\n\n 2. Acquiring, owning, and holding stock of a building corporation or security\n of a limited liability company of the character and to the amount provided by\n § 6.2-870;\n\n 3. Acquiring, owning, and holding stock of an agricultural credit corporation\n organized under the laws of the Commonwealth, provided that the total amount\n of such stock shall not exceed 20 percent of the amount of the capital stock\n of the bank actually paid in and unimpaired, plus the amount of its unimpaired\n surplus fund;\n\n 4. Acquiring, owning, and holding stock of the Federal National Mortgage\n Association, the Government National Mortgage Association, or the Federal Home\n Loan Mortgage Corporation;\n\n 5. Acquiring, holding, and owning stock in any corporations or securities of\n limited liability companies which have as their purpose the operation of\n parking lots or parking garages, provided that no bank shall own, at any one\n time, stock in such corporations exceeding two percent of the amount of the\n capital stock of such bank actually paid in and unimpaired, plus the amount of\n its unimpaired surplus fund;\n\n 6. Acquiring, owning, and holding stock of a small business investment company\n as defined by the Federal Small Business Investment Act of 1958;\n\n 7. Acquiring, owning, and holding stock of an industrial development company\n organized under the provisions of the Virginia Industrial Development\n Corporation Act (§ 13.1-981 et seq.);\n\n 8. Acquiring, owning, and holding stock of a bank service corporation or\n security of a controlled subsidiary corporation, subject to § 6.2-871 or\n 6.2-885, or from investing in a limited liability company, provided such\n investment conforms to § 6.2-871 or 6.2-885;\n\n 9. Acquiring, owning, and holding stock of the Student Loan Marketing\n Association, a corporation organized under the Higher Education Act of 1965,\n as amended;\n\n 10. Acquiring, owning, and holding stock of a “clearing\n corporation” as defined in § 8.8A-102;\n\n 11. Acquiring, owning, and holding stock of a trust subsidiary as defined in\n § 6.2-1000;\n\n 12. Investing up to four percent of its capital and surplus, including\n undivided profits, in shares of any bankers’ bank organized under §\n 6.2-809 or in any bank holding company wherein the ownership of shares in such\n bank holding company is restricted to (i) financial institutions which have or\n are eligible for insurance of deposits by a federal agency or (ii) a financial\n institution holding company as defined in § 6.2-700 or a savings\n institution holding company as defined in § 6.2-1100;\n\n 13. Acquiring its own stock, with the book value of all such stock held not to\n exceed in the aggregate five percent of the book value of all shares issued\n and outstanding, including capital, surplus, and undivided profits as of the\n time of the purchase being made. In computing such capital surplus and\n undivided profits for purposes of this section, amounts received for resale of\n any repurchased stock shall be added back to capital, surplus, and undivided\n profits for purposes of computation of the five percent limitation. Such\n purchase may be without the written consent of the Commission, unless the\n Commission or Commissioner has previously notified the bank in writing that it\n may not utilize this subdivision until further notice. The Commission may\n further allow purchases of such stock in excess of such five percent criterion\n if the Commission finds that the purchase (i) will not impair the safety and\n solvency of the bank and (ii) is otherwise appropriate. The Commission may\n require the divestiture of any shares held if deemed necessary and\n appropriate;\n\n 14. Acquiring, owning, and holding, subject to such conditions as the\n Commissioner may prescribe, shares of investment companies;\n\n 15. Acquiring, investing in, owning, and holding, directly or indirectly,\n subject to such conditions as the Commissioner may prescribe, equity\n investments in a corporation, a limited partnership, a limited liability\n company, or another entity organized as (i) a community development\n corporation; (ii) an entity formed primarily to support community-based\n economic development; (iii) an entity qualifying for the new markets tax\n credit under 26 U.S.C. § 45D; (iv) an entity formed for a predominantly\n civic, community, or public purpose that (a) primarily benefits low-income and\n moderate-income individuals, (b) primarily benefits low-income and\n moderate-income areas, (c) primarily benefits areas targeted for redevelopment\n by a government entity, or (d) is a qualified investment under 12 C.F.R.\n § 25.23 for the purposes of the Community Reinvestment Act of 1977, 12\n U.S.C. § 2901 et seq.; or (v) an entity making qualified rehabilitation\n expenditures with respect to a qualified rehabilitated building or certified\n historic structure, as such terms are defined in 26 U.S.C § 47, or a\n similar state historic tax credit program, as provided for in §\n 619(d)(1)(E) of the federal Dodd-Frank Wall Street Reform and Consumer\n Protection Act, 12 U.S.C. § 1851(d)(1)(E);\n\n 16. Acquiring, owning, and holding shares of the Federal Agricultural Mortgage\n Corporation;\n\n 17. Acquiring, owning, and holding shares of a Federal Home Loan Bank;\n\n 18. Establishing, acquiring, investing in, owning, and holding shares of a\n rural business investment company or any entity established to invest solely\n in a rural business investment company as permissible under 7 U.S.C. §\n 2009cc-9(a)(1)(A) and 7 U.S.C. § 2009cc-9(b);\n\n 19. Engaging, directly or indirectly, in any tax equity finance transaction\n permissible for a national bank or federal savings association under 12 C.F.R.\n § 7.1025. The authority to engage in tax equity finance transactions\n under this section is separate from and does not limit any investment\n authorities available to a bank. A tax equity finance transaction is subject\n to the substantive legal requirements of a loan; or\n\n 20. Acquiring, investing in, owning, and holding shares, directly or\n indirectly, subject to such conditions as the Commissioner may prescribe, in\n any community and economic development entity, community development project,\n or other public welfare investment, provided that the investment is in\n compliance with 12 C.F.R. Part 24.\n\nC. The provisions of this section shall not be construed to require a bank to\ndispose of any preferred stocks lawfully acquired as an investment prior to\nJanuary 1, 1940.\n\nHISTORY: 1982, c. 185, \u00a7 6.1-60.1; 1985, c. 339; 1986, c. 269; 1987, c. 297;\n1988, c. 464; 1989, cc. 377, 650; 1992, c. 366; 1993, c. 186; 1994, c. 119;\n1996, c. 27; 2010, c. 794; 2023, cc. 543, 544.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}