                                 CODE OF VIRGINIA

LIMITATIONS ON OBLIGATIONS OF BORROWERS (§ 6.2-875)

A. As used in this section:
			&#8220;Derivative transaction&#8221; shall include any transaction that is a
contract, agreement, swap, warrant, note, or option that is based, in whole or
in part, on the value of, any interest in, or any quantitative measure or the
occurrence of any event relating to, one or more commodities, securities,
currencies, interest or other rates, indices, or other assets.
			&#8220;Installment consumer paper&#8221; shall include installment notes of
up to 10 years&#8217; duration for the purchase of unimproved real property.
			&#8220;Obligation&#8221; means the direct liability of the maker or acceptor
of the paper discounted with or sold to a bank and the liability of the
endorser, drawer, or guarantor who obtains a loan from or discounts paper with
or sells paper under his guaranty to such bank. &#8220;Obligation&#8221; shall
include:

   1. 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;

   2. 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; and

   3. Any credit exposure to a person arising from a derivative transaction
   between the bank and the person.

B. Subject 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.

C. For the purposes of this section:

   1. The obligation of partners in the partnership and the partnership shall not
   be combined with each other except if (i) the purpose for which the obligation
   of any partner was incurred or utilized relates to the partnership or the
   purposes of the partnership, including acquisition of an interest in the
   partnership, such obligation shall be combined with the obligation of the
   partnership or (ii) the primary source of repayment of a partner&#8217;s
   individual obligation is the partnership or funds therefrom, the obligation of
   the partnership shall be combined with the obligation of such partner, other
   than a limited partner or partner with less than five percent interest, and
   the limitation specified herein shall apply to the combined obligations of
   each such partner and the partnership. Except in the two instances specified
   in clauses (i) and (ii), the individual liability of the partner shall not be
   treated as an obligation of the individual, and the obligations of partner as
   individual guarantor on partnership obligations shall not be treated as an
   obligation of the individual for purposes of computation hereunder when, in
   either case, the bank has a certificate of a responsible officer, designated
   by the board of directors for this purpose, stating that the responsibility of
   the partnership for each obligation has been evaluated and the bank is relying
   primarily upon such partnership for the payment of such indebtedness; and

   2. 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.

D. The following kinds of obligations shall not be subject to any limitation,
except as expressly stated in subdivision 20:

   1. Obligations in the form of drafts or bills of exchange drawn in good faith
   against actually existing values;

   2. 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;

   3. Obligations drawn in good faith against actually existing values and
   secured by goods or commodities in process of shipment;

   4. Obligations in the form of banker&#8217;s acceptances of other banks of the
   kind described in section thirteen of the Federal Reserve Act;

   5. Obligations of the United States, the Commonwealth, or any political
   subdivision of the Commonwealth, including sanitary or public facilities
   districts;

   6. 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;

   7. First mortgage real estate loans that are insured by the Federal Housing
   Administrator;

   8. Obligations guaranteed as to principal and interest by the United States;

   9. 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;

   10. Obligations guaranteed by the Small Business Administration or Farmers
   Home Administration, to the extent of such guaranty;

   11. Loans that the Federal Commodity Credit Corporation has definitely agreed
   to purchase;

   12. Direct obligations of, and obligations guaranteed by, the Export-Import
   Bank;

   13. Loans guaranteed by a federal guaranteeing agency pursuant to the Defense
   Production Act of 1950;

   14. Bonds and notes of the Federal National Mortgage Association;

   15. Bonds, debentures, and other similar obligations of Federal Land Banks,
   Federal Intermediate Credit Banks, or Banks for Cooperatives issues pursuant
   to acts of Congress;

   16. 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;

   17. Time deposits in, or obligations issued by, a Federal Home Loan Bank;

   18. Repurchase agreements of obligations authorized by this subsection;

   19. 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;

   20. 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; and

   21. 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.

E. The following kinds of obligations shall be subject to a limitation of 30
percent of such capital and surplus:

   1. 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;

   2. 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; and

   3. 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.

F. Nonrenewable 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.

G. The 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:

   1. 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;

   2. 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;

   3. 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; and

   4. Any person having an interest in income or capital of a partnership may be
   treated as a related party.

H. All loans made by a bank in excess of 15 percent of its capital and surplus
shall be approved by the board of directors or the executive committee of the
bank by resolution recorded in the bank&#8217;s minute book.

I. Notwithstanding 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.

J. The Commission may adopt such regulations as it deems appropriate to (i)
further define the term &#8220;derivative transaction&#8221; and (ii) set forth
the rules for calculating credit exposures arising from derivative transactions.
Before adopting any such regulation, the Commission shall give reasonable notice
of its content and shall afford interested parties an opportunity to be heard,
in accordance with the Commission&#8217;s Rules.

HISTORY: Code 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.