The Vermont Statutes Online

Title 8: Banking and Insurance

Chapter 201: Supervision; Definitions

• Subchapter 001: Definitions

• § 11101. Definitions

  Except as otherwise specifically provided elsewhere in this title, and subject to such definitions as the Commissioner adopts by rule, the following terms have the following meanings for purposes of Parts 1, 2, and 5 of this title, unless the context clearly indicates otherwise:

  (1) “Affiliate” means any company or person that, directly or indirectly, controls, is controlled by, or is under common control with another company.

  (2) “Automated teller machine” or “ATM” means an electronic device at which a natural person may make deposits to an account by cash or check and perform other account transactions. Point-of-sale terminals, machines that only dispense cash, night depositories, and lobby deposit boxes are not automated teller machines.

  (3) “Bank” or “bank and trust company” means any financial institution organized under the prior laws of this State that is authorized to exercise the powers and subject to the conditions and limitations on the exercise of those powers as set forth in chapter 204 of this title.

  (4) “Bank credit card” means a card, plate, or other credit device issued by a bank or financial institution to a cardholder for the purpose of obtaining money, property, labor, or services on credit. The term “bank credit card” shall not be deemed to include a debit card; provided, however, that a credit card may include features of a debit card.

  (5) “Bank holding company” shall have the same meaning as in 12 U.S.C. § 1841(a) and shall include a financial holding company as defined in 12 U.S.C. § 1841(p).

  (6) “Banking day” shall mean each day that a financial institution is open to the public for the transaction of substantially all of its banking functions and shall be deemed a banking day for the purposes of all transactions with the financial institution under this title, Title 9A as it applies to financial institutions, and all other provisions of law applicable to financial institutions and the business of banking in this State.

  (7) “Billing date” means the cycle date on the financial institution books and statements, which statements shall be mailed four days after the closing of the cycle.

  (8) “Billing period” means the time interval between periodic statement dates. A billing period shall be considered a month or monthly if the last day of each billing period is on the same day of each month or does not vary by more than four days each month.

  (9) “Borrower” means any person who is named as a borrower or debtor in a loan or extension of credit, including a drawer, endorser, or guarantor who is deemed a borrower under subsection 14301(d) of this title.

  (10) “Branch” means any office of a financial institution at which deposits are received, checks paid, or money lent. A branch may include a messenger service, mobile branch, temporary facility, night depository (drop box), drive-in facility, or a seasonal agency. A branch does not include:

  (A) a remote service unit;

  (B) an office that does not permit members of the public to have physical access for purposes of making deposits, paying checks, or borrowing money;

  (C) an office that is located at the site of, or is an extension of, an approved main or branch office;

  (D) a loan production office; or

  (E) deposit production office.

  (11) “Business of banking,” “business of financial institutions,” or “banking business” means soliciting, receiving, or accepting money or its equivalent on deposit and the loaning of money as a regular business by any person.

  (12)(A) “Capital,” for purposes of determining statutory limits that are based on the amount of a bank’s or financial institution’s capital or surplus:

  (i) means the sum of the amount of common stock outstanding and unimpaired, the amount of perpetual preferred stock outstanding and unimpaired, and the amount of capital surplus, and undivided profits, for financial institutions organized as corporations;

  (ii) means the sum of members’ or partners’ contributions and undistributed earnings of the company or partnership, for financial institutions organized as limited liability companies, limited partnerships, or limited liability partnerships; or

  (iii) means the sum of capital deposits, surplus, and undivided earnings for all other financial institutions.

  (B) For purposes of evaluating a Vermont depository institution’s financial condition and safety and soundness, “capital” shall be determined in accordance with applicable federal regulations and interagency guidelines issued jointly by the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Office of Thrift Supervision.

  (13) “Charter” means the grant of authority to a financial institution under state or federal law to operate as a financial institution.

  (14) “Closely related activities” mean those activities that are part of the business of banking, are closely related to the business of banking, are convenient and useful to the business of banking, are reasonably related to the operation of a financial institution, or are financial in nature or incidental to such financial activity. “Closely related activities” include business and professional services, data processing, courier and messenger services, credit-related activities, consumer services, real estate-related services, insurance and related services, securities brokerage, investment advice, securities underwriting, mutual fund activities, financial consulting, tax planning and preparation, community development and charitable activities, and any activities reasonably related or incidental to these activities. A “closely related activity” shall include:

  (A) any activity that may be authorized from time to time for financial institutions or their service corporations or subsidiaries, including financial subsidiaries as defined in Subdivision 5136A(g)(3) of Chapter One of Title XLII of the Revised Statutes of the United States, to engage in pursuant to statutes administered by the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, or the Office of Thrift Supervision; and

  (B) any additional activities that the Commissioner by rule or order determines to be a “closely related activity.”

  (15) “Commercial bank” means a bank or bank and trust company organized under prior law of this State or the laws of the United States, another country, or state, but does not include a special purpose financial institution or similar entity.

  (16) “Commissioner” means the Commissioner of Financial Regulation.

  (17) “Control” means that a person, directly or indirectly or acting through one or more other persons or through one or more subsidiaries, owns, controls, or has power to vote 25 percent or more of any class of equity interest of a financial institution; the person controls in any manner the election of a majority of the directors of the financial institution; or that the person directly or indirectly exercises a controlling influence over the management or policies of the financial institution. For depository institutions, control determinations may be made under the federal Bank Holding Company Act of 1956, 12 U.S.C. § 1841 et seq., or the federal Change in Bank Control Act, 12 U.S.C. 1817(j), or the Home Owners Loan Act, 12 U.S.C. § 1467a, as applicable in the circumstances. For institutions that are not depository institutions, control may be determined by the Commissioner.

  (18) “Cooperative financial institution” means any financial institution organized pursuant to chapter 203 in which the earnings and net worth of the institution inure to the ultimate benefit of the members.

  (19) “Day” means a calendar day unless otherwise expressly provided.

  (20) “Debit card” means a card, plate, or other device issued by a bank or financial institution to a depositor for the purpose of drawing funds from a deposit account and that does not include any credit features other than (i) provisions to maintain a minimum deposit account balance, or (ii) protection against deposit account overdrafts.

  (21) “Department” means the Vermont Department of Financial Regulation.

  (22) “Deposit production office” means any place of business of a financial institution at which information is distributed or assistance provided in connection with the opening of new deposit accounts, provided that any initial deposit of funds is made at the main office or an authorized branch of the financial institution and not at such office.

  (23) “Depositors” of a financial institution, solely for the purposes of chapter 210 of this title, include the holders of its regular savings accounts, other savings accounts, NOW accounts, certificates of deposit and other deposits having a fixed maturity, and all other accounts except noninterest bearing demand deposits.

  (24) “Depository institution” shall mean an insured depository institution within the meaning of 12 U.S.C. § 1813(c)(2).

  (25) “Director” means a member of the governing body of a financial institution.

  (26) “Electronic banking” means conducting the business of banking and any closely related activity electronically.

  (27) “Equity interest” means common stock, preferred stock, members’ or partners’ interests, or any other type of capital instrument that entitles the holder to vote pursuant to the financial institution’s organizational documents; provided, however, that this definition shall not be deemed to prohibit or impair the creation of nonvoting classes of stock or other ownership interests in a financial institution.

  (28) “Executive officer” shall have the same meaning as in Regulation O of the Federal Reserve Board, 12 C.F.R. Part 215.

  (29) “Federal association” means a savings and loan association, savings bank, or other financial institution organized pursuant to the Act of Congress entitled “Home Owners’ Loan Act of 1933”, as amended.

  (30) “Federal Deposit Insurance Corporation” or “FDIC” shall have the same meaning as in 12 U.S.C. § 1811.

  (31) “Fiduciary capacity” means every capacity specified in section 14401 of this title and every other capacity in which a financial institution acts or may act through its trust department pursuant to chapter 204, subchapter 4 of this title, including trusteeship with respect to collective investment funds.

  (32) “Financial institution” means any Vermont financial institution, state financial institution, and national financial institution.

  (33) “Financial institution holding company” means any company that has control over any financial institution or has control over any company that controls any financial institution and shall include bank holding companies as defined in subdivision (5) of this section and savings and loan holding companies as defined in 12 U.S.C. § 1467a.

  (34) “Foreign bank” means any company organized under the laws of a foreign country, a territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands that engages directly in the banking business. “Foreign bank” includes foreign commercial banks, foreign merchant banks, and other foreign institutions that engage in usual banking activities in connection with the banking business in the countries where the foreign institutions are organized or operating.

  (35) “Governing body” means the body that oversees the affairs of a financial institution. The governing body may also be referred to as the “board of directors,” “board of trustees,” “board of managers,” “partners’ committee,” or “managing partners’ committee,” depending upon the ownership structure of the financial institution.

  (36) “Home state” means, for a national financial institution, the state in which the main office of the national financial institution is deemed to be located; for a state financial institution, the state by which the financial institution is chartered; and for a foreign bank, the state of the United States that the foreign bank has designated as its home state as determined in accordance with 12 U.S.C. § 3103(c).

  (37) “Host state” means a state, other than the home state of a bank or financial institution, in which the bank or financial institution maintains or seeks to establish and maintain a branch.

  (38) “Investor” means any person who has an equity interest in a financial institution and is entitled to vote under the institution’s organizational documents; provided, however, that this definition shall not be deemed to prohibit or impair the ownership rights of the holders of nonvoting classes of stock or other ownership interests in a financial institution.

  (39) “Investor-owned institution” means a financial institution organized under chapter 202 of this title.

  (40) “Loan production” means the business of a financial institution in which loans or loan contracts are originated, but not approved, in this State.

  (41) “Mutual financial institution” or “mutual institution” means any financial institution organized pursuant to chapter 203 of this title, in which the earnings and net worth of the institution inure to the ultimate benefit of the depositors.

  (42) “Mutual holding company” means, solely for the purposes of chapter 210 of this title, the corporation that continues in the mutual form as the corporate parent of a stock financial institution resulting from the reorganization of a mutual financial institution pursuant to chapter 210 of this title.

  (43) “Mutual holding company subsidiary financial institution” means, for purposes of chapter 210 of this title, an investor-owned financial institution organized under chapter 202 of this title to receive the assets and liabilities of a reorganizing mutual financial institution in accordance with the provisions of chapter 210 of this title and that will be a subsidiary of the mutual holding company upon consummation of a reorganization under chapter 210 of this title.

  (44) “Mutual voter” means a corporator of a mutual financial institution or member of a cooperative financial institution.

  (45) “National bank” means a commercial banking association or limited purpose banking association organized pursuant to the Act of Congress entitled “The National Bank Act,” as amended, or any subsequent Act of Congress relating to the same subject.

  (46) “National financial institution” means a national bank as defined in subdivision (45) of this section or a federal association as defined in subdivision (29).

  (47) “National trust company” means a national bank with powers generally limited to trust or fiduciary matters.

  (48) “Nondepository trust company” means any Vermont financial institution with powers generally limited to trust or fiduciary matters or any national trust company, organized for the purpose of consolidation or reorganization of trust operations pursuant to section 12602 of this title or organized as a trust company under prior law.

  (49) “Officer” means a person who has been given managerial or other high-level duties by the governing body or organizational documents of the financial institution. Depending upon the ownership structure of the institution, an officer may include a person with the title of chair, president, secretary, vice president, treasurer, manager, managing partner, or partner. For organizations that are not corporate in nature, the term “secretary” shall refer to the person to whom the governing body has delegated responsibility for the custody of the minutes of the meetings of the governing body and the equity interest holders, and for authenticating records of the organization.

  (50) “Operating subsidiary” means an entity that is owned in whole or in part by a Vermont financial institution and whose activities are limited to the business of banking and closely related activities and in which a financial institution or financial institution holding company directly or indirectly holds more than 50 percent of the equity interests, but not including any equity interest:

  (A) taken in satisfaction of a debt previously contracted; or

  (B) held in a fiduciary capacity.

  (51) “Organizational document” means the charter, certificate of organization, articles of incorporation, articles of association, articles of organization, certificate of limited liability partnership, bylaws, or other internal governance documents, operating agreement, partnership agreement, or any other similar document required to be filed with and approved by the Commissioner pursuant to section 12101 or 13101 of this title.

  (52) “Principal” means, with respect to a trust account, the individual or entity to whom the financial institution ordinarily furnishes statements of account and other customer communications regarding such trust account.

  (53) “Proprietary interests” of the depositors of a mutual or cooperative financial institution refer to the proportionate inchoate interests that such depositors have in the net worth of such financial institution, such interests maturing and being realized upon the financial institution’s liquidation and after the claims of all creditors, including those of depositors as creditors, have been satisfied. “Proprietary interests” of the depositors of a subsidiary financial institution refer to the proportionate inchoate interests that such depositors have in the net worth of the mutual holding company of which such financial institution is a subsidiary, such interests maturing and being realized upon the mutual holding company’s liquidation and after the claims of all creditors have been satisfied.

  (54) “Real estate-related services” means real estate investment and development, including maintenance and management of improved real estate; real estate appraising; real estate settlement services; real estate brokerage activities with respect to properties owned by a financial institution authorized to do business in this State, a bank holding company, or subsidiaries thereof, regardless of how the property is acquired or for what purpose; or any real estate-related service authorized by this title or by rule or order of the Commissioner or any real estate-related service authorized for any financial institution chartered by or otherwise subject to the jurisdiction of the federal government.

  (55) “Remote Service Unit” or “RSU” means an automated, unstaffed banking facility, such as an automated teller machine, cash dispensing machine, point-of-sale terminal, or other remote electronic facility, at which deposits are received, cash disbursed, or money lent.

  (56) “Savings and loan association,” “association,” “cooperative savings and loan association,” or “foreign building and loan association” means a financial institution organized under the prior laws of this State that is authorized to exercise the powers and subject to the conditions and limitations on those powers set forth in chapter 204 of this title.

  (57) “Savings bank” means a financial institution organized under the prior laws of this State that is authorized to exercise the powers and subject to the conditions and limitations on those powers set forth in chapter 204 of this title.

  (58) “Service corporation” means a corporation substantially all the activities of which consist of originating, purchasing, selling, and servicing loans and participation interests in loan activities; or clerical, bookkeeping, accounting, and statistical or similar functions related to a financial institution or real estate activities; or management, personnel, marketing, or investment counseling related to a financial institution or real estate activities; or any activity authorized by the Commissioner by rule or order that has not been prohibited by federal law for service corporations.

  (59) “Special purpose financial institution” means an institution authorized and operating pursuant to chapter 202, subchapter 6 of this title or other entity with the same or similar functions by whatever name that was established prior to January 1, 2001.

  (60) “State financial institution” means a bank, bank and trust company, commercial bank, industrial loan corporation that is a depository institution with insurance by the Federal Deposit Insurance Corporation, limited or special purpose bank, special purpose financial institution, savings and loan association, savings bank, trust company, nondepository trust company, and universal financial institution, or other entity with the same or similar functions by whatever name that is organized under the laws of a state other than Vermont or by special act of the legislature of a state other than Vermont and is regulated by its home state in an equivalent manner to a Vermont financial institution; however, trust company as used in this subdivision shall not include an entity that is regulated by its home state in an equivalent manner to an independent trust company as defined in chapter 77 of this title. Nothing in this definition shall be deemed to be a grant of authority to any person to operate as a financial institution unless otherwise authorized under law.

  (61) “State trust company” means a special purpose financial institution that is organized under the laws of a state other than Vermont and whose business is limited to trust or fiduciary powers as those powers are set forth in chapter 204, subchapter 4 of this title.

  (62) “Subsidiary” means an organization owned or controlled by a financial institution or financial institution holding company.

  (63) “Supervisory agency” means:

  (A) the banking department or equivalent agency of a state;

  (B) the Federal Deposit Insurance Corporation;

  (C) the National Credit Union Administration;

  (D) the Federal Reserve Board;

  (E) the Office of Thrift Supervision;

  (F) the Office of the Comptroller of the Currency;

  (G) any successor agency to any of the agencies enumerated in this section.

  (64) “Universal financial institution” means an investor-owned institution or a mutual or cooperative financial institution authorized by its organizational documents to exercise all the powers granted in chapter 204 of this title and includes any bank, bank and trust company, commercial bank, savings bank, and savings and loan association established prior to January 1, 2001, pursuant to this title, or by special act of the General Assembly.

  (65) “Vermont financial institution” means a special purpose institution or universal financial institution organized under the laws of the State of Vermont.

  (66) “Derivative transaction” means 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. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2001, No. 73 (Adj. Sess.), § 2, eff. Feb. 2, 2002; 2011, No. 78 (Adj. Sess.), §§ 2, 25, eff. April 2, 2012; 2021, No. 105 (Adj. Sess.), § 285, eff. July 1, 2022.)

• Subchapter 002: Business Days and Emergencies

• § 11201. Business days

  (a)(1) For purposes of this title, unless otherwise provided under other state or federal law applicable to a Vermont or state financial institution that is a depository institution, a business day is a calendar day other than the following:

  (A) Saturday and Sunday;

  (B) New Year’s Day, January 1;

  (C) Martin Luther King Jr.’s Birthday, the third Monday in January;

  (D) Presidents’ Day, the third Monday in February;

  (E) Town Meeting Day, the first Tuesday in March;

  (F) Memorial Day, the last Monday in May;

  (G) Independence Day, July 4;

  (H) Bennington Battle Day, August 16;

  (I) Labor Day, the first Monday in September;

  (J) Indigenous Peoples’ Day, the second Monday in October;

  (K) Veterans’ Day, November 11;

  (L) Thanksgiving Day, the fourth Thursday in November;

  (M) Christmas Day, December 25.

  (2) A legal holiday that falls on a Saturday may be observed on the preceding Friday, and a legal holiday that falls on a Sunday may be observed on the following Monday.

  (b) A Vermont financial institution may choose to remain open or to close any of its banking offices on any of the days enumerated in subsection (a) of this section. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2019, No. 14, § 11, eff. April 30, 2019; 2019, No. 18, § 3.)

• § 11202. Banking day

  (a) Each Vermont and state depository institution shall be open not less than five banking days each week, except for the days enumerated in subsection 11201(a) of this title or except as otherwise provided in this chapter.

  (b) In addition to the hours of each banking day established by an institution under subsection (a) of this section, a Vermont or state depository institution may, at its discretion, establish days and hours for its offices, including opening offices for business on days that are not defined as business days in section 11201 of this title. The financial institution’s governing body is responsible for determining the scope of operations of each branch, including the services to be provided and the days and hours of operation.

  (c) A Vermont or state depository institution shall post the days and hours of operation at or near the public entrances to its banking offices and shall provide customers with reasonable advance notice of reduction in services or hours of operation.

  (d) Any act authorized, required, or permitted to be performed at, by, or with respect to any Vermont or state depository institution on a day not defined as a business day or on a day the institution is closed pursuant to section 11204 or 11205 of this title, may be performed on the next succeeding business day and liability or loss of rights of any kind to such financial institution shall not result from this delay. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 11203. Special hours

  In addition to the hours of each banking day under subsection 11202(a) of this title, a Vermont or state depository institution may have special hours on banking or other than banking days when it is open in a limited capacity for certain definite and stated transactions or purposes only, constituting substantially less than all of its banking functions. A copy of such schedule of special hours shall be filed with the Commissioner. The payment, certification, or acceptance of a check or other negotiable instrument or any other transaction by such financial institution shall be valid, notwithstanding it was done or performed during such special hours on other than a banking day. A Vermont or state depository institution with special hours on other than a banking day shall not constitute such day a “banking day,” for the purpose of notice, presentment, protest, notice of protest, or the time requirements for any act or action or notice to perfect or preserve rights accorded under 9A V.S.A. article 4. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 11204. Closing for cause

  A Vermont or state depository institution may temporarily close any of its offices for reasons that include good cause, extreme weather conditions, and community events. If a Vermont or state depository institution temporarily closes any of its offices for all or any part of a banking day, the institution shall post a conspicuous notice of the closing at all points of public access to the closed offices. A closing may not become effective until such notice is posted at the office to be closed. Posting this notice relieves the institution from liability for failure to perform any of the business of the financial institution at the closed offices. The Commissioner may, by adopting rules, establish standards governing the form and content of the notice required under this section and may require dissemination of the notice of closing by any other reasonable means. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 11205. Emergency closing by financial institution

  (a) If an emergency arises or is so imminent and immediate as to interfere with or threaten the conduct of normal banking transactions or the safety and welfare of a Vermont or state depository institution’s plant, assets, or personnel, the financial institution officer or official in charge of any office open to the public may determine not to open the office so threatened or close the same, if open. The financial institution shall notify the Commissioner of the emergency closing, as soon as reasonably possible. In no case, however, shall the office or offices closed under this section remain closed for more than two consecutive business days commencing the day following closure, except as otherwise provided by law, unless the Governor or Commissioner shall expressly authorize and sanction the same.

  (b) An emergency closing pursuant to this section, including the hours of any extension sanctioned by the Governor or Commissioner, shall be lawful and the time of such closing, including any partial day before a closing, shall be considered a holiday and not a banking day. Nevertheless, the transaction of any banking business shall be valid and have the same effect as if performed during special hours on other than a banking day in accordance with section 11203 of this title. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• Subchapter 003: Records

• § 11301. Preservation of records

  (a) A Vermont financial institution, and a state financial institution with a branch in this State, shall keep those books, accounts, and records relating to all of its transactions that will enable the Commissioner to ensure full compliance with the laws of this State. Each such financial institution shall retain its business records for such periods as prescribed by the Commissioner by regulation.

  (b) Any such financial institution may dispose of any record that has been retained for the period prescribed by or in accordance with the regulation for retention of records of its class and thereafter shall be under no duty to produce the record in any action or proceeding.

  (c) Records required to be preserved and retained by law or regulation may be maintained in paper, photograph, microprocess, magnetic, digital, mechanical, or electronic media, or in or by any other information storage device or process that forms a durable medium providing reasonable assurances against tampering and degradation of any reproduction of the original record and that can be accurately transferred to paper in a legible written form within a reasonable time. Records maintained in a computer-based format shall be archival in nature only, so as to preclude the possibility of alteration of the content of the record by computer once the record has been transferred to that format. Any record reproduced from a record maintained in compliance with this subsection shall have the same force and effect as the original thereof and may be admitted in evidence equally with the original. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• Subchapter 004: Reports

• § 11401. Financial reports

  (a) The Commissioner shall require each Vermont financial institution to submit at least quarterly in each calendar year a report of its condition in such manner and as of such dates as the Commissioner may fix. Only summary reports and examinations shall be required with respect to fiduciary activities that are subject to court accountings. The Commissioner may accept reports filed with other regulators for purposes of the requirements of this section.

  (b) The Commissioner may require special reports to include special information as the Commissioner may direct. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 11402. Internal audits

  (a) The governing body shall cause internal audits of the Vermont financial institution to be performed. The internal audit shall be reported in writing to the governing body at least once in six months if made by a committee of the governing body and at least once a year if made by a certified or registered public accountant. Any committee of the governing body shall consist of at least three persons. At the request of the Commissioner, a copy of the report shall be made available to the Commissioner.

  (b) Prior to declaration of any dividend or other distribution, the governing body of a Vermont financial institution shall determine that the institution will continue to meet the capital requirements under section 14104 of this title as established by the Commissioner after payment of the proposed dividend or other distribution. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 11403. Periodic reports from state financial institutions with a branch, office, or activity in this State

  (a) The Commissioner may require periodic reports from any state financial institution that has established and maintains a branch in this State pursuant to section 15202 of this title.

  (b) The Commissioner may require periodic reports from any state financial institution that has established and maintains an office or conducts an activity pursuant to section 15204 of this title.

  (c) Any reporting requirements prescribed by the Commissioner under this section shall be:

  (1) consistent with the reporting requirements applicable to financial institutions incorporated under the laws of this State; and

  (2) appropriate for the purpose of enabling the Commissioner to carry out his or her responsibilities under the laws relating to branching, offices, or activities. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 11404. Reports required under consumer protection chapter

  A financial institution shall file with the Commissioner reports as required by chapter 200 of this title on the following:

  (1) community reinvestment activities; and

  (2) basic banking. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2007, No. 178 (Adj. Sess.), § 3.)

• § 11405. Exemption from annual report to Secretary of State

  Vermont financial institutions shall not be required to make any annual report to the Secretary of State. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• Subchapter 005: Examinations

• § 11501. Examinations

  (a) The Commissioner shall conduct a regular examination of the condition of each Vermont financial institution at least once every three years or more frequently as the Commissioner determines it to be prudent.

  (b) The Commissioner may at any time conduct a special examination or may expand the scope of any regular examination. An entity examined pursuant to this subsection shall be responsible for examination fees and expenses provided in section 18 of this title and collected as provided in subsections 19(c) and (e) of this title.

  (c) The Commissioner shall be given access to all the files, books, accounts, securities, and assets of the financial institution and any person under contract with it to perform services for the financial institution that the Commissioner deems material to the financial condition of the financial institution and shall be afforded every reasonable facility for making an examination of the affairs of the financial institution and such person under contract.

  (d) Whenever the Commissioner deems it necessary, the Commissioner may examine any company, the majority of the stock of which is owned by a Vermont financial institution, or that is found by the Commissioner to be controlled by a Vermont financial institution. In addition, whenever the Commissioner deems it necessary in the conduct of the exercise of the Commissioner’s supervisory authority over a financial institution, the Commissioner may review the records of any person that controls a Vermont financial institution. In furtherance of the conduct of the exercise of the Commissioner’s supervisory authority over a Vermont financial institution, to the extent not prohibited by federal law, and upon the request of the Commissioner, a person that controls a financial institution shall furnish to the Commissioner copies of reports filed with the Federal Reserve Board or the Office of Thrift Supervision. Such person shall also consent to the request by the Commissioner to the Federal Reserve Board or the Office of Thrift Supervision for any other information pertaining to such person. The Commissioner shall not disclose any information obtained pursuant to this section that is treated as confidential by the Federal Reserve Board or the Office of Thrift Supervision. Nothing in this section shall be construed to grant any additional examination, supervisory, or regulatory authority over any person that controls a Vermont financial institution. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 11502. Confidentiality of investigation and examination reports

  (a) Regardless of source, all records of investigations, including information pertaining to a complaint by or for a consumer, and all records and reports of examinations by the Commissioner, whether in the possession of a supervisory agency or another person, shall be confidential and privileged, shall not be made public, and shall not be subject to discovery or introduction into evidence in any private civil action. No person who participated on behalf of the Commissioner in an investigation or examination shall be permitted or required to testify in any such civil action as to any findings, recommendations, opinions, results, or other actions relating to the investigation or examination. The Commissioner may, in his or her discretion, disclose or publish or authorize the disclosure or publication of any such record or report or any part thereof to civil or criminal law enforcement authorities for use in the exercise of such authority’s duties, in such manner as the Commissioner may deem proper.

  (b) For the purposes of this section, records of investigations and records and reports of examinations shall include joint examinations by the Commissioner and any other supervisory agency. Records of investigations and reports of examinations shall also include, when such records are considered confidential by an agency or foreign government and the records are in the possession of the Commissioner, records of examinations and investigations conducted by:

  (1) any supervisory agency; and

  (2) the supervisory agency of any foreign government with jurisdiction over any financial institution. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 11503. Examinations by federal regulatory agencies; departmental participation

  Where an examination is normally conducted by the Department jointly with a federal regulatory authority, the Commissioner, at such times as the Commissioner deems necessary or appropriate because of departmental fiscal restraints, may reduce or eliminate the Department’s participation in such examination. Where the Commissioner determines such reductions are necessary or appropriate, the Commissioner is authorized to rely on the examination report of the federal regulatory authority as the basis for exercising his or her powers and discharging his or her responsibilities under this title. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 11504. Examinations; cooperative agreements

  (a) To the extent consistent with subsection 11505(a) of this title, the Commissioner may make such examinations of any branch established and maintained in this State pursuant to chapter 205 of this title by a state financial institution as the Commissioner may deem necessary to determine whether the branch is being operated in compliance with the laws of this State and in accordance with safe and sound banking practices. The provisions of sections 18, 19, 11501, 11502, and 11503 of this title shall apply to such examinations.

  (b) The Commissioner may enter into contracts with any financial institution supervisory agency that has concurrent jurisdiction over a Vermont financial institution or a state financial institution maintaining a branch, agency, office, or location in this State to engage the services of such supervisory agency’s examiners, or to provide the services of the Commissioner’s examiners to such supervisory agency.

  (c) The Commissioner may enter into joint examinations or joint enforcement actions with other supervisory agencies having concurrent jurisdiction over any branch, agency, office, or location established and maintained in this State by a state financial institution or any branch, agency, office, or location located in any host state that is established and maintained by a Vermont financial institution, provided that the Commissioner may at any time take such actions independently if the Commissioner deems such actions to be necessary or appropriate to carry out his or her responsibilities under this title or to ensure compliance with the laws of this State, but provided further that, in the case of a financial institution that has its principal place of business in a state other than this State, the Commissioner shall recognize the exclusive authority of the home state regulator over organizational governance matters and the primary responsibility of the home state regulator with respect to safety and soundness matters. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 11505. Cooperative and other agreements

  (a) The Commissioner may enter into cooperative, coordinating, and information-sharing agreements with any other governmental agency, the Federal Home Loan Bank, or any organization affiliated with or representing one or more governmental agencies with respect to the periodic examination or other supervision of any activity, branch, agency, office, or location in this State of a state financial institution, or any activity or branch of a Vermont financial institution located in any host state. Such agreements may be used to resolve conflicts arising from inconsistent regulatory requirements and to specify the manner in which any application process under section 15201 or 15202 of this title shall be coordinated.

  (b) Agreements under this section may also be entered with nonbank regulatory agencies on matters affecting financial institutions organized or doing business in this State. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2017, No. 1, § 2, eff. Feb. 23, 2017.)

• Subchapter 006: Enforcement

• § 11601. Enforcement powers of Commissioner

  (a) The Commissioner may:

  (1) Restrict the withdrawal of deposits from a Vermont financial institution, a state financial institution, or a branch of a foreign bank licensed under this title when the Commissioner finds that extraordinary circumstances make the restriction necessary for the proper protection of depositors in the affected institution.

  (2) Order the holders of equity interests in a Vermont financial institution or financial institution regulated under this title to refrain from voting on any matter if the Commissioner finds that the order is necessary to protect the institution against reckless, incompetent, or careless management, safeguard the funds of depositors, or prevent the willful violation of this chapter or of any lawful order issued under it, and in such a case the equity interests of such a holder shall not be counted in determining the existence of a quorum or a percentage of the outstanding interests necessary to take any action by the financial institution.

  (3) Order any person to cease violating this title, a lawful regulation or order of the Commissioner issued under it or to cease engaging in any unsafe or unsound practice.

  (4) Except as provided in subdivision (5) of this subsection, impose an administrative penalty of not more than $15,000.00 for each violation of this title, a lawful regulation or order of the Commissioner issued under it, upon any person:

  (A) who knowingly violates this title or a lawful regulation or order issued under it;

  (B) who has knowingly engaged or participated in any materially unsafe or unsound practice in connection with a financial institution; or

  (C) who has knowingly committed or engaged in any act, omission, or practice that constitutes a breach of fiduciary duty to the financial institution, including violations of section 14110 of this title.

  (5) Impose an administrative penalty of not more than $1,000.00 per day on any person who fails without good cause to file any report or other filing under chapters 73, 77, and 200 through 210 of this title when due.

  (6) Remove from a Vermont financial institution or state financial institution regulated under this title any person:

  (A) who knowingly violates this title or a lawful regulation or order issued under it;

  (B) who is convicted of a crime involving dishonesty;

  (C) who has knowingly engaged or participated in any materially unsafe or unsound practice in connection with the financial institution; or

  (D) who has knowingly committed or engaged in any act, omission, or practice that constitutes a breach of fiduciary duty to the financial institution.

  (7) Revoke the charter of a Vermont financial institution that ceases to exist or ceases to be eligible for a charter.

  (b) In determining the amount of any administrative penalty assessed pursuant to this section, the Commissioner shall consider the following factors:

  (1) the appropriateness of the administrative penalty with respect to the financial resources and good faith of the person or financial institution charged;

  (2) the gravity of the violation or practice;

  (3) the history of previous violations or practices of a similar nature;

  (4) the economic benefit, if any, derived by any person from the violation or practice;

  (5) whether the financial institution has suffered or probably will suffer financial loss or other damage;

  (6) whether the interest of depositors could be seriously prejudiced by such violation, practice, or breach of fiduciary duty; or

  (7) other factors as justice may require.

  (c)(1) Except as provided in subdivision (2) of this subsection, the Commissioner shall provide notice of any enforcement order proposed pursuant to this section and the grounds for the order by mail to the financial institution and to any affected person. The financial institution or any person so served may, within 30 days after service on the financial institution, request that a hearing be held by the Commissioner. If no hearing is requested, the proposed order shall become final 30 days after service on the financial institution. The provisions of 3 V.S.A. chapter 25 shall govern any hearing held by the Commissioner under this section. An appeal under this section shall be filed within 30 days after the date of the Commissioner’s decision and shall be to the Washington Superior Court.

  (2) Notwithstanding subdivision (1) of this subsection, the Commissioner may, ex parte without notice, issue any enforcement order under this section in any case in which the Commissioner determines such action is necessary to:

  (A) conserve the assets of any financial institution; or

  (B) protect the interests of the depositors.

  (d) The hearing on a removal order shall be private unless the Commissioner determines that a public hearing is necessary to protect the public interest. If it is deemed necessary to ensure the continued safety and soundness of the financial institution, the Commissioner may order an immediate suspension of any person pending completion of further administrative proceedings on his or her removal.

  (e) An executive officer, director, or holder of principal equity interests who fails to comply with a standard established by subsection 14110(a) of this title shall be subject to the civil penalties established by 12 U.S.C. sections 504, 505, and 506, as amended, as if he or she had violated Regulation O directly. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2013, No. 29, § 17, eff. May 13, 2013; 2021, No. 105 (Adj. Sess.), § 286, eff. July 1, 2022; 2021, No. 139 (Adj. Sess.), § 4, eff. May 27, 2022.)

• § 11602. Power of Commissioner to impose corrective action

  (a) The Commissioner may, in addition to any other power exercisable by the Commissioner under the provisions in this title, require a Vermont financial institution or state financial institution with a branch in this State to:

  (1) maintain its accounts in accordance with such rules as he or she may prescribe having regard to the size of the organization;

  (2) observe methods and standards that he or she may prescribe for determining the value of various types of assets;

  (3) charge off or sell the whole or part of an asset that was acquired in violation of the financial institutions’ investment policy or an order of the Commissioner;

  (4) write down an asset to its market value;

  (5) record liens and other interests in property;

  (6) obtain a financial statement from a borrower to the extent that the financial institution can do so;

  (7) obtain insurance against damage to real estate taken as security;

  (8) search, or obtain insurance of, the title to real estate taken as security; and

  (9) maintain adequate insurance against such other risks as the Commissioner may deem necessary and appropriate for the protection of depositors and the public.

  (b) Any order of the Commissioner issued under this section shall be subject to subsection 11601(c) of this title. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2021, No. 105 (Adj. Sess.), § 287, eff. July 1, 2022.)

• § 11603. Criminal penalties

  (a) It shall be a criminal offense, punishable by a fine of not more than $1,000.00 or imprisonment of not more than one year, or both, for any person to violate any existing order of the Commissioner or, after receipt of a removal order, or an order assessing a penalty, to perform any duty or exercise any power of or on behalf of any financial institution until the penalty has been satisfied, or otherwise satisfactorily resolved between the parties, or the removal or penalty order is vacated by the Commissioner or by a court of competent jurisdiction.

  (b) It shall be a criminal offense, punishable by a fine of not more than $10,000.00 or imprisonment of not more than one year, or both, for any person to willfully violate any existing order of the Commissioner or, after receipt of a removal order, or an order assessing a penalty, to willfully perform any duty or exercise any power of or on behalf of any financial institution until the penalty has been satisfied, or otherwise satisfactorily resolved between the parties, or the removal or penalty order is vacated by the Commissioner or by a court of competent jurisdiction.

  (c) An executive officer, director, or holder of a principal equity interest of a financial institution subject to the laws of this State under this title who, in violation of a standard established by section 14110 of this title, willfully misapplies any of the monies, funds, or credits of such financial institution, or any of the monies, funds, assets, or securities entrusted to the care or custody of such financial institution, or to the care or custody of such executive officer, director, or holder of a principal equity interest, shall be fined not more than $100,000.00 or imprisoned not more than five years, or both. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 11604. Indemnification

  A financial institution shall not indemnify any person for any penalty or fine imposed under this title. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 11605. Commissioner’s coordination of enforcement and corrective action with home state

  The Commissioner shall promptly give notice to the home state supervisory agency of each enforcement or corrective action proposed to be undertaken against a state financial institution and, to the extent practicable, shall consult and cooperate with the home state regulator in pursuing and resolving such enforcement action. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• Subchapter 007: Application Process

• § 11701. Application of subchapter

  (a) An application required to be filed under chapter 202, 203, 206, 207, or 210 of this title for the approval of the Commissioner, including an application for a charter, merger, acquisition, conversion, or other similar request, shall be submitted to and considered by the Commissioner in accordance with the provisions of this subchapter.

  (b) An application required to be filed under chapter 204 or 205 of this title for the approval of the Commissioner shall be filed on a form prescribed by the Commissioner and considered in accordance with the standards in section 11703 of this title. If the Commissioner finds that the application promotes the general good, a certificate of general good may be issued in summary fashion. No further approval shall be required.

  (c) Nothing in this subchapter shall prevent the Commissioner from issuing a certificate of approval for any application that the Commissioner finds may be approved as filed without further process.

  (d) Notwithstanding the provisions of subsections (a), (b), and (c) of this section, a financial institution shall notify the Commissioner of its intention to amend its organizational documents and may proceed as provided in the notice unless the Commissioner objects in writing within 30 days; provided, however, no advance notice for a bylaw amendment is required. If the Commissioner objects, the financial institution shall file an application in accordance with this subchapter. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 11702. Applications

  (a) Upon receipt of an application subject to this section in the form prescribed by the Commissioner, the Commissioner shall determine whether the application is complete. The Commissioner shall have the power to request modifications in, and additional information relating to, any application prior to certifying its completeness.

  (b) As soon as the application is deemed substantially complete, the Commissioner may order the applicant to provide notice of the application in the manner and form as he or she may prescribe.

  (c) Any person may submit written comments on the proposed application to the Commissioner. If the Commissioner orders publication or other notice to be given, he or she shall establish a deadline for receipt of written comments on the application that shall be no less than five business days following the completion of publication or other notice. The Commissioner may, but shall not be compelled to, consider written comments filed after the close of the written comment period. All comments shall be maintained in the public files of the Department.

  (d) Applications accepted by the Commissioner shall be placed on public file at the office of the Department and shall be made available for public inspection or copying, at cost, provided that any information that is exempt from public inspection under 1 V.S.A. chapter 5 shall be removed before public inspection of the file is permitted. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 11703. Hearings on applications; decisions; general good standard

  (a) The Commissioner may conduct public hearings on any application subject to this subchapter in his or her discretion.

  (b) After consideration of all relevant matters presented in the application, in any written comments, in a Department investigation and at any hearing, the Commissioner shall issue a decision approving or disapproving the application.

  (c) If the Commissioner’s decision is favorable, a certificate of general good, if required and one has not already been issued, and a certificate of approval shall issue with the decision. If the Commissioner’s decision is not favorable, the Commissioner shall provide the reasons for the disapproval.

  (d) No financial institution shall commence operations; open a branch; or effectuate a merger, share exchange, acquisition, conversion, reorganization, dissolution, or other similar request without first securing a certificate of approval.

  (e) The Commissioner shall approve an application if he or she determines that the proposed transaction promotes the general good of the State of Vermont.

  (f) Bases for meeting general good standards. In determining whether the proposed transaction promotes the general good of the State of Vermont, the Commissioner may consider the following factors:

  (1) the character, ability, and overall sufficiency of the management, including directors or organizers, corporators, and incorporators of a new financial institution;

  (2) the adequacy of capital and financial resources of the institution or institutions concerned;

  (3) the competitive abilities and future prospects of the institution or institutions concerned;

  (4) the convenience and needs of the market area or areas to be served;

  (5) the competitive effect of the proposed transaction on the price, availability, and quality of services in the market area or areas to be served;

  (6) the effect on the applicant’s customers;

  (7) if an existing financial institution, whether the proposed transaction contributes to the financial strength and success of the financial institution or institutions concerned;

  (8) the fairness and equities involved in any conversion, merger, consolidation, or acquisition; and

  (9) such other aspects of the proposed transaction as the Commissioner deems advisable. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)