6.2-1130 - (Effective October 1, 2010) Reserves; surplus and undivided profits.
§ 6.2-1130. (Effective October 1, 2010) Reserves; surplus and undividedprofits.
A. Every savings institution doing business in the Commonwealth shallmaintain an adequate net worth appropriate for the conduct of its businessand the protection of its account holders. Every savings institution (i)shall set up and maintain the reserves required by this chapter and (ii) mayset 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 ofor provision for all expenses, every savings institution shall transfer to aseparate reserve account that shall be set up and maintained for the solepurpose of absorbing losses, referred to in this section as the "generalreserve," an amount equal to at least five percent of its net income. Asavings institution that at the close of such accounting period has assets inexcess of $20 million or that has done business as a savings institution inthe Commonwealth for more than 20 years shall transfer to such separatereserve account the greater of five percent of its net income or an amountobtained by subtracting an amount equal to its general reserve at thebeginning 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 reserveis equal to at least five percent of the total amount of its deposit accountsat the beginning of such accounting period. Upon advanced written applicationof a savings institution, the Commissioner may approve the transfer to thegeneral reserve of a lesser amount for such accounting period. If any creditto the general reserve is made after July 1, 1985, in excess of the minimumrequirement, the dollar amount of any such excess may be carried over as acredit toward the minimum requirement of any subsequent period.
C. When the general reserve of a savings institution does not equal at leastfive percent of the deposit account liability of the institution, credits, asprovided in subsection B, shall again be made to the general reserve until itagain equals at least five percent of the institution's deposit accountliability.
D. In the case of stock savings institutions, the capital stock account, tothe extent that the capital has not been impaired, shall be treated as partof the reserve and the board of directors may, by resolution, permanently orconditionally designate all or part of the capital stock, capital surplus,earned surplus, or undivided profit accounts as a part of its generalreserve. A savings institution may retain its undivided profits in suchamounts as may from time to time be fixed by resolution of its board ofdirectors.
E. The Commission may temporarily reduce the reserve requirements for asavings institution if it finds such reduction to be in the best interest ofthe institution and its stockholders or members.
F. Notwithstanding the requirements of this section, an insured savingsinstitution may maintain its reserves in accordance with the requirements ofthe Federal Deposit Insurance Corporation or other federal agency.
(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.)