                                 CODE OF VIRGINIA

RESERVES; SURPLUS AND UNDIVIDED PROFITS (§ 6.2-1130)

A. Every savings institution doing business in the Commonwealth shall maintain
an adequate net worth appropriate for the conduct of its business and the
protection of its account holders. Every savings institution (i) shall set up
and maintain the reserves required by this chapter and (ii) may set up and
maintain such additional reserves as are permitted by this chapter.

B. On or before the closing date of each accounting period, after payment of or
provision for all expenses, every savings institution shall transfer to a
separate reserve account that shall be set up and maintained for the sole
purpose of absorbing losses, referred to in this section as the &#8220;general
reserve,&#8221; an amount equal to at least five percent of its net income. A
savings institution that at the close of such accounting period has assets in
excess of $20 million or that has done business as a savings institution in the
Commonwealth for more than 20 years shall transfer to such separate reserve
account the greater of five percent of its net income or an amount obtained by
subtracting an amount equal to its general reserve at the beginning of the
period from an amount equal to four percent of its assets, excluding liquid
assets, at the end of the period, until the general reserve is equal to at least
five percent of the total amount of its deposit accounts at the beginning of
such accounting period. Upon advanced written application of a savings
institution, the Commissioner may approve the transfer to the general reserve of
a lesser amount for such accounting period. If any credit to the general reserve
is made after July 1, 1985, in excess of the minimum requirement, the dollar
amount of any such excess may be carried over as a credit toward the minimum
requirement of any subsequent period.

C. When the general reserve of a savings institution does not equal at least
five percent of the deposit account liability of the institution, credits, as
provided in subsection B, shall again be made to the general reserve until it
again equals at least five percent of the institution&#8217;s deposit account
liability.

D. In the case of stock savings institutions, the capital stock account, to the
extent that the capital has not been impaired, shall be treated as part of the
reserve and the board of directors may, by resolution, permanently or
conditionally designate all or part of the capital stock, capital surplus,
earned surplus, or undivided profit accounts as a part of its general reserve. A
savings institution may retain its undivided profits in such amounts as may from
time to time be fixed by resolution of its board of directors.

E. The Commission may temporarily reduce the reserve requirements for a savings
institution if it finds such reduction to be in the best interest of the
institution and its stockholders or members.

F. Notwithstanding the requirements of this section, an insured savings
institution may maintain its reserves in accordance with the requirements of the
Federal Deposit Insurance Corporation or other federal agency.

HISTORY: Code 1950, § 6-201.28; 1960, c. 402; 1966, c. 584, § 6.1-156; 1968,
c. 256; 1972, c. 796, § 6.1-195.33; 1973, c. 133; 1985, c. 425, § 6.1-194.23;
1986, c. 500; 1990, c. 3; 2010, c. 794.