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.)