                                 CODE OF VIRGINIA

PREFERENCES BY PLEDGING ASSETS (§ 6.2-890)

A. No bank shall give preference to any depositor or creditor by pledging the
assets of such bank, except as otherwise authorized by subsection B, or except
to secure deposits of trust funds made pursuant to the provisions of &#xA7;
6.2-1005 or 6.2-1057.

B. Notwithstanding the provisions of subsection A, any bank:

   1. May deposit securities for the purpose of securing deposits of:
   				a. The United States government and its agencies;
   				b. The Commonwealth, any other state where the bank has a branch office,
   or any agency or political subdivision thereof;
   				c. Insolvent national bank funds as permitted under 12 U.S.C. &#xA7; 192;
   				d. Proceeds of sale of United States obligations as permitted under 31
   U.S.C. &#xA7; 771; and
   				e. Bankruptcy funds deposited under the provisions of 11 U.S.C. &#xA7;
   345;

   2. May deposit securities for the purpose of securing sureties on surety bonds
   furnished to secure deposits listed in subdivision 1, or may, in lieu of
   depositing such securities to secure deposits pursuant to subdivision 1 b, by
   its board of directors, adopt a resolution before such public funds are
   deposited therein, to the effect that, in the event of the insolvency or
   failure of such bank, such public funds thereafter deposited therein shall, in
   the distribution of the assets of such bank, be paid in full before any other
   depositors shall be paid deposits thereafter made therein. The adoption of
   such resolution shall be deemed to constitute an obligation binding on such
   bank;

   3. Is authorized to pledge its assets as security for amounts of borrowed
   money which shall not, without the approval of the Commission given in advance
   in writing, exceed in the aggregate the amount of the capital, surplus, and
   undivided profits of such bank actually paid in or earned and remaining
   undiminished by losses or otherwise. The amount of assets pledged for the
   security of such a loan shall not, without such approval, exceed 150 percent
   of the amount borrowed. No loan in excess of the amount so permitted made to
   any such bank shall be invalid or illegal as to the lender, even though made
   without the consent of the Commission. Rediscounting with or without guarantee
   or endorsement of notes, drafts, bills of exchange, or loans is hereby
   authorized and shall not be limited by the terms of this section, and shall
   not be considered as borrowed money within the meaning of this section;

   4. Is authorized to borrow from a Federal Reserve Bank or a Federal Home Loan
   Bank and to rediscount with and sell to a Federal Reserve Bank or a Federal
   Home Loan Bank any and all notes, drafts, bills of exchange, acceptances, and
   other securities, and to give security for all money so borrowed and for all
   liabilities incurred by the discount of such notes, drafts, bills of exchange
   and other securities without restriction in like manner and to the same extent
   as national banks may lawfully do under the acts of Congress and regulations
   of the Board of Governors of the Federal Reserve System and the Federal
   Housing Finance Board; and

   5. Is authorized to pledge its assets in connection with qualified financial
   contracts, which transactions shall be governed by this subdivision and not
   subdivision 3. The amount of assets pledged for obligations under such
   contracts shall not exceed 150 percent of the amount of the obligations,
   without the consent of the Commission, and the qualified financial contract
   shall be in writing and approved by the board of directors of such bank or an
   appropriate committee, which approval shall be reflected in the minutes of
   such board or committee. At the time any qualified financial contracts
   consisting of retail repurchase agreements are sold by a state bank, the
   market value of the underlying security must be at least equal to the amount
   of the aggregate purchase price paid by the purchasers of the retail
   repurchase agreements. As used in this subdivision, &#8220;qualified financial
   contract&#8221; means a qualified financial contract as defined in 12 U.S.C.
   &#xA7; 1821 (e)(8)(D)(i), as the same may be amended, and any contract or
   transaction that the Commissioner determines to be a qualified financial
   contract for purposes of this section.

HISTORY: Code 1950, §§ 6-64, 6-65, 6-66; 1966, c. 584, §§ 6.1-78, 6.1-79,
6.1-80; 1974, c. 665; 1982, cc. 112, 411; 1989, c. 376; 1993, c. 182; 1994, c.
7; 1996, c. 306; 2010, c. 794; 2013, c. 205.