Regulations Governing Business of Banks and Trust Companies

Del. Code tit. 5, ch. 9
in effect

Del. Code tit. 5, § 901 Corporate charter to do business as bank or trust company.

No banking business or the business of a trust company shall be conducted within this State except under a corporate charter valid in this State authorizing the conduct of such business in this State.

Del. Code tit. 5, § 902 Certificate required to transact business or open place of business.

No bank or trust company not actively engaged in business in this State prior to January 1, 1933, shall transact any business in this State or open a place of business in this State without having first secured from the State Bank Commissioner a certificate authorizing it to begin the transaction of business and to open a place of business in this State.

Del. Code tit. 5, § 903 Issuance of certificate to transact business.

(a) The Commissioner shall not give any certificate required by § 902 of this title until satisfied by proper evidence that all the requirements of the charter of the corporation applying for the certificate and all the requirements of this Code and any other laws of this State applicable to such a case have been complied with and that the whole capital stock has been fully paid in cash, unless the charter shall expressly provide otherwise. (b) No certificate shall be issued until the corporation has filed with the Commissioner a duly certified copy of its charter and all amendments thereof, and a copy of its bylaws; and thereafter the corporation shall file with the Commissioner a duly certified copy of every subsequent amendment of its charter and of every subsequent amendment of its bylaws and a failure to file within 30 days after any amendment of its charter or bylaws has been effected, shall render the corporation liable to a penalty of $50 to be sued for by the Commissioner in the name of the State if the Commissioner considers such failure to have been wilful. (c) A fee of $5,750 for every certificate shall be required by the Commissioner before issuing the same. (d) In addition, the applicant shall pay an investigation fee of $1,150 which shall not be refundable and shall be submitted with the application.

Del. Code tit. 5, § 904 Reports to Commissioner.

(a) Every bank and trust company shall make and transmit to the State Bank Commissioner at least 4 reports during each year, according to the form which may be prescribed by the Commissioner, verified by the oaths or affirmations of the president or vice-president, and cashier, or treasurer or secretary of the corporation, and attested by the signatures of at least 2 directors. Each report shall exhibit under appropriate heads the resources and liabilities of the corporation at the close of business on any day past specified by the Commissioner, and shall be transmitted to the Commissioner within 30 days after the receipt of a request or requisition therefor. (b) The Commissioner shall have power to call for special reports whenever in the Commissioner’s judgment the same are necessary. The Commissioner may require a separate report as to each department or subsidiary of any bank or trust company. (c) The making of reports to the Commissioner under this section shall be in lieu of the making of reports to any other state official except for the purpose of assessment or taxation.

Del. Code tit. 5, § 905 Reports by national banks, federal savings associations and out-of-state banks.

National banks, out-of-state banks (as defined in § 795 of this title) having one or more branch offices in this State, and federal savings associations (as defined in the Home Owners’ Loan Act, as amended, 12 U.S.C. § 1461 et seq.) doing business in this State shall make and transmit to the State Bank Commissioner reports according to the form which may be prescribed by the Commissioner when the Commissioner calls upon such banks for the reports; the object and purpose of such reports being the public good and not the regulation of said banks. The Commissioner shall have power to call for special reports whenever in the Commissioner’s judgment the same are necessary.

Del. Code tit. 5, § 906 Failure to make reports; penalty.

Every bank or trust company failing to comply with §§ 904 and 905 of this title shall be subject to a penalty of $25 for each day that it continues in such failure; unless the Commissioner is satisfied that such failure was not wilful. Any penalty that may be imposed by the Commissioner hereunder shall be paid to the State Treasurer for deposit in the General Fund.

Del. Code tit. 5, § 907 Reserve requirements.

(a) “Demand deposits” as used in this section shall mean all deposits payable within 30 days; and time deposits shall comprise all deposits payable after 30 days, all savings accounts, certificates of deposit, and postal savings which are subject to not less than 30 days notice before payment. (b) Every bank, trust company or savings bank shall maintain reserves as follows: (1) Seven percent of the average aggregate of its demand deposits and 3 percent of the average aggregate of its time deposits, except that no reserves need be maintained against deposits of the United States or any agency or instrumentality thereof, or the State or any political subdivision or municipality thereof which are collateralized; and (2) Such reserves shall consist of cash in the possession of the bank or of net balances payable on demand with banking institutions within or without the State which have been approved in writing as reserve depositories by the State Bank Commissioner or 50% of such required reserves may be maintained in unencumbered obligations of or guaranteed by the United States or any agency or instrumentality thereof including, without limitation, obligations of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and public housing authorities, or obligations of the State or its municipalities, subdivisions, agencies or instrumentalities and having a like market value. (c) Whenever the State Bank Commissioner determines that the maintenance of sound banking practices or the prevention of injurious credit expansion or contraction makes such action advisable, the Commissioner may, by general regulation, change, from time to time, the requirements as to reserves against demand or time deposits, or both, in banking institutions doing business in this State which are not members of the Federal Reserve System. The reserves so specified shall be not less than the statutory requirement, nor greater than those requirements of the Federal Reserve Bank in this district applicable to member banks in this State. Reserves maintained under federal statute by state chartered nonmember banks shall satisfy the reserve requirements of this section. (d) No money held in a fiduciary capacity whether as executor, administrator, guardian, trustee or otherwise, which is on deposit with other banking institutions, shall be carried or counted as a part of the required reserves in any bank or trust company, exclusive of Federal Reserve Member Banks, unless it shall first set aside, earmarked for the trust department, obligations of or guaranteed by the United States or any agency or instrumentality thereof including, without limitation, obligations of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and public housing authorities or obligations of the State, its municipalities, subdivisions, agencies or instrumentalities having a maturity of not more than 5 years from the date of earmarking for the trust department and having a current market value of at least 110 percent of the amount on deposit. (e) If the reserve of any corporation comprehended by this section shall be less than prescribed by general regulations issued by the State Bank Commissioner, the corporation shall not make any new loans or discounts, other than discounting bills of exchange payable on sight, nor shall the corporation declare or pay any dividends until the full amount of its reserve shall have been restored. Upon failure of any corporation to make good its reserve within 30 days after notice from the State Bank Commissioner, the Commissioner may treat such corporation as in an unsound condition and may proceed against it accordingly. (f) For purposes of subsection (b) of this section, “deposits” as they relate to activities of international banking facilities shall not be included in the terms “demand deposits” or “time deposits” as such terms are defined in subsection (a) of this section.

Del. Code tit. 5, § 908 Value at which assets shall be carried on books.

No bank or trust company shall carry on its books any of its assets at a sum in excess of the cost value thereof except by and with the written consent of the State Bank Commissioner.

Del. Code tit. 5, § 908A Bank distinct from bank insurance department or division.

The assets of any bank or trust company shall be liable for and applicable to the payment and satisfaction of the liabilities, obligations and expenses of such bank or trust company only, and not to those liabilities, obligations and expenses of any insurance department or division of such bank or trust company established pursuant to § 767(a) or § 1662(b)(1) of this title. The liabilities, obligations and expenses of any such bank or trust company shall be applied against and paid and satisfied out of the assets of such bank or trust company only, and not out of the assets of any insurance department or division of such bank or trust company established pursuant to § 767(a) or § 1662(b)(1) of this title.

Del. Code tit. 5, § 909 Loan limitations.

(a) No bank, trust company or savings bank shall make any loans, directly or indirectly, to any person, firm, association or corporation, aggregating an amount which (including any extension of credit to such person, firm, association or corporation, by means of the issuance of letters of credit, or the discount or purchase of the notes, bills of exchange or other obligations of, such person, firm, association or corporation, or the acceptance, discount or purchase of drafts not eligible for discount by a Federal Reserve bank) shall exceed the following percentage of the lender’s total capital, which for this purpose means, in the case of a bank (including a bank and trust company and a savings bank), the bank’s Tier 1 and Tier 2 capital included in the bank’s risk-based capital under the capital guidelines of the appropriate federal banking agency, plus the balance of the bank’s allowance for loan and lease losses not included in the bank’s Tier 2 capital for purposes of the calculation of risk-based capital by the appropriate federal banking agency, based on the bank’s most recent consolidated report of condition filed under 12 U.S.C. § 1817(a)(3), or, in the case of a trust company (other than a bank and trust company), the sum of the capital, surplus, undivided profit and the valuation portion of the loan loss reserve accounts of the lender: (1) Fifteen percent, if the loan be without collateral security. Nothing herein contained shall prohibit the taking or receiving of any kind, character or amount of security whatsoever, either real or personal, for the protection of any loan made under this paragraph, but no such loan or any part thereof shall be considered or construed as a secured loan within the meaning of this paragraph unless the whole thereof has collateral security worth at least 15 percent more than the amount of such loan; or (2) Ten percent (in addition to the amount that may be loaned under paragraph (1) of this subsection) upon collateral security worth at least 15 percent more than the amount of such loan so secured; provided, the aggregate amount which can be loaned under paragraph (1) of this subsection and this paragraph to any 1 person, firm, association or corporation shall not exceed 25 percent of the lender’s total capital; and provided further that no loan which is without collateral security shall be combined or blended with a loan which has collateral security, but the 2 classes of loans shall be kept separate and independent and each shall be represented by a separate evidence of indebtedness; or (3) Twenty-five percent upon collateral security worth at least 15 percent more than the amount of the loans so secured. When loans so secured are made to this amount, then no loans not so secured shall be permitted in addition to such secured loans, except as set forth in subsection (b) below. (b) None of the limitations or restrictions contained in subsection (a) of this section shall apply to: (1) Loans, discounts or other extensions of credit secured by bonds or other obligations of the United States (defined to include any Federal Reserve bank or any department, bureau, board, agency, instrumentality, commission or establishment of the United States including any corporation wholly owned directly or indirectly by the United States) or of this State (defined to include any department, bureau, board, agency, instrumentality, commission or establishment of this State, including any corporation wholly owned directly or indirectly by this State); (2) Any loan, discount or extension of credit, to the extent that any of the loans, discounts or extensions of credit are to, or are secured or covered by, guaranties, or by commitments, or agreements to take over or to purchase any such loans, discounts or extensions of credit made by the United States or this State, provided that such guaranties, agreements or commitments are unconditional and must be performed by payment of cash or its equivalent within 60 days after demand; (3) Any loan, discount or extension of credit to an affiliate or subsidiary other than a subsidiary referred to in subsection (e) of this section. (4) The sale of federal funds to depository institutions as defined in § 19 of the Federal Reserve Act [12 U.S.C. § 461] and to Edge Act corporations [12 U.S.C. § 611 et seq.] or the purchase of securities under agreements to resell provided such sales and purchases shall be repayable on the banking day next following their date of execution; (5) The purchase or discount of bankers acceptances of the kind described in § 13 of the Federal Reserve Act [12 U.S.C. § 342 et seq.] and issued by other banks; (6) Loans or extensions of credit arising from the discount of commercial or business paper evidencing an obligation to the persons negotiating it with recourse; (7) Loans or extensions of credit secured by a segregated deposit account in the lending bank; (8) Loans and extensions of credit arising from the discount of negotiable or nonnegotiable installment consumer paper which carries a full recourse endorsement or unconditional guaranty by the person transferring the paper, which shall be subject to a maximum loan limitation equal to 25 percent of such total capital; (9) Loans and extensions of credit secured by bills of lading, warehouse receipts or similar documents transferring or securing title to readily marketable staples which shall be subject to a limitation of 35 percent of such total capital, if the market value of the staples securing each additional loan or extension of credit at all times equals or exceeds 15 percent more than the outstanding amount of such loan or extension of credit; (10) The acceptance of a draft eligible for discount by a Federal Reserve bank drawn on the bank or the issue or confirmation of time letters of credit calling for the creation of such acceptances, which shall be subject to a loan limitation of 10 percent of such total capital, unless, with respect to that part in excess of 10 percent of such total capital, the institution is secured either by attached documents or by some other actual security growing out of the same transaction as the acceptance; and (11) Any provisional debit, loan or extension of credit made by the lending bank or trust company to the demand deposit account of a customer of the lending bank or trust company in the course of settling overlimit checks drawn on such demand deposit account, provided that any such debit, loan or extension of credit is revocable at will by the lending bank or trust company as of the close of business the banking day next following the settlement of such checks, and provided further that any such debit, loan or extension of credit is funded by the customer within such time period. (c) In computing loans to each of the following types of borrower, the loans shall be computed for such type of borrower only on the basis set forth in the applicable subparagraph below designated for such type of borrower and not with reference to either of the other subparagraphs: (1) In computing loans to any individual person under this section, there shall be included all loans or extensions of credit by the lending corporation to: a. Any partnership or unincorporated association of which the borrower is a member, to the extent that the borrower is actually liable to the lending corporation for the liabilities of the partnership or unincorporated association; and b. All loans made for the borrower’s benefit, or for the benefit of any partnership or unincorporated association, of which the borrower is a member, except partnerships of which the borrower is a limited partner and not also a general partner, and is not otherwise liable for the liabilities of such partnership to the lending corporation. (2) In computing the loans to any partnership, or unincorporated association under this section there shall be included: a. All liabilities of its members to the lending corporation except liabilities of limited partners who are not also general partners, and who are not generally liable for the debts of the limited partnership, either by agreement or by operation of law; and b. All loans made for the benefit of the partnership, or unincorporated association or any member thereof, except limited partners who are not also general partners, and who are not generally liable for the debts of the limited partnership, either by agreement or by operation of law. (3) In computing the loans to any corporation under this section there shall be included all loans made for the benefit of the corporation. A loan shall not be deemed to be made for the benefit of a corporation if such loan is made to a person other than the corporation, including a subsidiary or affiliate of the corporation, unless the loan proceeds are to be loaned to the corporation or are to be transferred to the corporation without fair and adequate consideration, but the discharge of an equivalent amount of debt previously incurred in good faith and for value shall be considered fair and adequate consideration. (d) No bank, trust company or savings bank shall make any loans directly or indirectly to any of its executive officers or directors in an amount that, when aggregated with the amount of all other extensions of credit to that person, exceeds the lesser of $500,000 or 5% of the bank’s total capital, except on the following conditions: (1) That the loan be approved by the vote of a majority of the whole board of directors, or where the granting of loans is vested in a committee of the board of directors, then by a vote of a majority of the whole committee, and the proposed borrower shall not be present when the application for the loan is acted on; (2) That at the time the loan shall be voted upon, there shall be submitted to and examined by the directors voting upon the loan a written statement signed by the proposed borrower setting forth clearly the proposed borrower’s financial condition and disclosing the proposed borrower’s assets and liabilities, and in case the loan shall be granted, the statement shall be preserved and kept with the evidence of the loan while the same remains unpaid, but no such statement shall be necessary where the loan is secured by liquid collateral worth at least 20 percent more than the amount of the loan. (e) A department or division or subsidiary of a bank or trust company which engages in any activity authorized by § 761(a)(14) or § 1661(a)(14) of this title shall be deemed a corporation subject to the limitations of this section.

Del. Code tit. 5, § 910 Investment limitations.

No bank or trust company shall invest more than 25 percent of its total capital, surplus and undivided profits in the stock, bonds or other obligations of any 1 corporation or political entity or political division except bonds or other obligations of or guaranteed by the United States or any agency or instrumentality thereof including, without limitation, obligations of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and public housing authorities, or obligations of the State or its municipalities, subdivisions, agencies or instrumentalities; provided, that: (1) The limitation on investment in this section shall not apply to the investment by a bank or trust company in 1 or more subsidiaries; (2) The underwriting of or dealing in stocks, bonds, debentures, notes or other securities, or certificates of deposit or bankers’ acceptances, shall not constitute an investment within the meaning of this section; (3) No bank or trust company which engages in activities authorized by § 761(a)(14) or § 1661(a)(14) of this title through subsidiaries or divisions shall initially allocate more than 25 percent of its total capital, surplus and undivided profits in the aggregate to all such subsidiaries or divisions, or shall thereafter allocate to all such subsidiaries or divisions (i) in any 1 year, without the approval of the Commissioner, any amount in excess of 3 percent of its total capital, surplus and undivided profits or (ii) in any event, any amount in excess of 25 percent of its then current total capital, surplus and undivided profits in the aggregate; and (4) No bank or trust company which engages in activities authorized by § 761(a)(14) or § 1661(a)(14) of this title through subsidiaries or divisions shall allocate any of its total capital, surplus or undivided profits to any such subsidiaries or divisions unless such allocations are “unimpaired” within the meaning of Title 18 and free of all liens and encumbrances.

Del. Code tit. 5, § 911 Ownership of real estate used for transaction of business.

Section 762 of this title shall be applicable to all banks and trust companies of this State, except with respect to the investment or expenditure of money prior to July 1, 1933.

Del. Code tit. 5, § 912 Limitations upon loans on security of and purchase of own capital stock.

No bank or trust company shall purchase shares of its own capital stock, nor make any loan on the faith or pledge of shares of its own capital stock; but nothing in this section shall inhibit such purchase or loan when necessary to prevent loss on debts created prior to March 31, 1921, nor shall it affect the holding of stock acquired by any bank or trust company prior to March 31, 1921. Notwithstanding the foregoing, the Commissioner may approve the purchase by a bank or trust company of the shares of its own capital stock, subject to such terms and conditions, if any, as the Commissioner may require.

Del. Code tit. 5, § 913 Authority of national bank, out-of-state state bank and out-of-state state trust company to act as fiduciary.

(a) Any national bank located in this State, when authorized by the laws of the United States, may act by any and every method of appointment, and in any capacity whatever, as trustee, executor, administrator, or register of stocks and bonds. (b) A bank or trust company organized and doing business under the laws of any state of the United States other than Delaware, duly authorized by the laws of such state and its organizational documents, including its certificate of incorporation, bylaws, certificate of formation or limited liability company agreement or their equivalent based on the form of organization, so to act, may be appointed by any last will and testament or other testamentary writing, probated within this State, or by a deed of trust, mortgage or other agreement, as executor, guardian, trustee or other fiduciary, and may act as such within this State, when and to the extent that the laws of the state in which the bank or trust company is organized confer like powers upon banks or trust companies organized and doing business under the laws of this State.

Del. Code tit. 5, § 914 Appointment of trust company as trustee.

Any court, judge or officer, authorized by law to appoint any person or corporation to any office of trust, may appoint to such office any trust company incorporated under the laws of this State, and having its principal office or place of business in this State, if the court, judge or officer is satisfied that the capital stock of the trust company has been fully paid in cash, and that the trust company is authorized by its charter to perform the duties of the office.

Del. Code tit. 5, § 915 Fiduciary funds held as separate trust [Repealed].

Repealed by 59 Del. Laws, c. 271, § 1, eff. Mar. 23, 1974.

Del. Code tit. 5, § 916 Preference of funds held on deposit.

Whenever any bank or trust company holds on deposit funds as a part of its deposit liabilities for the account of an estate for which it is acting as executor, administrator, guardian, trustee or in any other fiduciary capacity, the liability of such institution to the estate entitled to the funds shall be at all times a preferred claim superior to all unsecured claims of other creditors, including depositors of the institution. This section shall not be construed to subordinate the security of any secured creditor of any such institution to the preference hereby accorded to the deposits of any estate.

Del. Code tit. 5, § 917 Surety not required on bond of trust company or national bank; liability and lien upon real estate.

(a) (1) Whenever a trust company is appointed to an office of trust or to act in a fiduciary capacity, no surety need be required, in the discretion of the appointing court, judge or officer, on any bond given by it for the faithful performance of its duties, by reason of such appointment, unless otherwise stipulated in the will or other instrument making the appointment, or unless required in or by an order or decree of court having jurisdiction in the premises; but all of the capital stock, surplus and property owned by the trust company shall be specially and primarily liable for the obligation of the trust company while acting in such trust or fiduciary capacity. (2) All liabilities and obligations, arising from or growing out of any such trusts, shall be liens upon its real estate prior and paramount to any other lien or encumbrance the trust company may create or suffer respecting the same. (b) In case any national bank located in this State shall be appointed trustee, executor or administrator, it need not be required, in the discretion of the appointing person, corporation, court, judge, officer, or authority, to give security on any bonds, which it may by law be compelled to give by reason of such appointment.

Del. Code tit. 5, § 918 Limitations on pledging or hypothecating assets [For application of this section, see 85 Del. Laws, c. 346, § 9].

(a) No bank or trust company shall pledge or hypothecate any of its assets except to undertake any of the following: (1) To secure any borrowing, guarantee, credit exposure, or other potential liability in an aggregate amount up to but not exceeding the amount of its capital and surplus actually paid in and undiminished by losses or otherwise. (2) To secure any borrowing, guarantee, credit exposure, or other potential liability in an amount in excess of the limitation of paragraph (a)(1) of this section upon written consent of the State Bank Commissioner. (3) To secure any borrowing, guarantee, credit exposure, or other potential liability, in addition to the amounts specified in paragraphs (a)(1) and (2) of this section, for the purpose of buying United States bonds, United States Treasury certificates, or notes or obligations of the United States or any United States government agency, and in such case the consent of the State Bank Commissioner shall not be required. (4) To qualify itself to receive deposits of money of the United States or any United States government agency. (5) To qualify itself to receive deposits of money of the State or any political subdivision or municipality thereof. (6) To qualify itself to exercise any of the powers of a trust company or to act in any fiduciary capacity; provided, however, that assets pledged in accordance with this subsection shall not be counted for purposes of satisfying the minimum capital stock and paid-in surplus required to be maintained by any bank, trust company or limited purpose trust company pursuant to § 745 of this title or by any family trust company pursuant to § 797F of this title. (b) No bank or trust company shall repledge or rehypothecate any property held by it or delivered to its account in pledge or hypothecation as collateral which belongs to any other corporation or person, unless such property is accompanied by the obligation of the original borrower from, or counterparty to, the institution. (c) No borrowing, guarantee, credit exposure, or other potential liability entered into in contravention of this section shall be rendered illegal for this cause as against the lender, creditor, or holder thereof, but the bank or trust company shall be subject to appropriate proceedings by the State Bank Commissioner for a violation of law. (d) Any savings bank or savings society doing business in this State may borrow money, and may secure the same by the assignment or pledge of any mortgage, mortgages, bonds, or other assets held by said savings bank or savings society, provided that the amount borrowed from all sources shall not at any time exceed in the aggregate 25% of the amount set aside for surplus and reserves. The amounts borrowed from all sources shall at all times, irrespective of whether or not the same are secured, constitute a preferred claim superior to all other claims on the assets of said savings bank or savings society. Provided, however, that any savings bank or savings society may borrow in excess of the 25% limitation set out above on written approval by the State Bank Commissioner. (e) The limitation on pledges and hypothecations in paragraph (a)(1) of this section and the limitation on repledges and rehypothecations in subsection (b) of this section shall not apply to any pledge, hypothecation, repledge, or rehypothecation by a bank or trust company supervised by a federal banking agency if the pledge, hypothecation, repledge, or rehypothecation is permitted under applicable federal law or regulations or orders promulgated thereunder by the federal banking agency.

Del. Code tit. 5, § 919 Filing of rules and regulations on time and savings deposits [Repealed].

Repealed by 70 Del. Laws, c. 112, § 48, eff. Sept. 29, 1995.

Del. Code tit. 5, § 920 Deposits by minors.

(a) Any bank, savings bank, savings institution or trust company may receive money on deposit from or in the name of any minor. When any deposit of money shall be made by or in the name of any minor with any bank, savings bank, savings institution or trust company in this State, the same shall be held for the benefit of the depositor, in the same way and to the same extent as if the depositor were an adult person. The minor depositor may make drafts or withdrawals of his deposits, and the deposits shall be paid, together with the dividends and interest thereon, to the person in whose name the deposit shall have been made, or upon his or her written order. The receipt or acquittance of a minor shall be a valid and sufficient release and discharge to the bank, savings bank, savings institution or trust company for the deposit, or any part thereof. (b) Any bank, savings bank, savings institution or trust company shall have the right to refuse any deposit offered by or in the name of a minor. (c) Any minor depositing money with a bank, savings bank, savings institution or trust company shall be subject, in all transactions connected therewith, as between himself or herself and the bank, savings bank, savings institution or trust company, to all the obligations, equities and defenses to which an adult person would be subject in similar transactions.

Del. Code tit. 5, § 921 Deposits of married women [Repealed].

Repealed by 71 Del. Laws, c. 19, § 42, eff. Apr. 23, 1997.

Del. Code tit. 5, § 922 Deposits of decedents.

Banks, trust companies, savings banks, and savings societies may pay out deposits of decedents, without requiring letters of administration to be issued upon the estates of such decedents, when and as provided by §§ 2306 and 2307 of Title 12.

Del. Code tit. 5, § 923 Deposits in names of two or more persons.

When a deposit in any bank, trust company, savings bank or other banking institution in this State, is made in the name of 2 or more persons, deliverable or payable to either, or to their survivor or survivors, the deposit, or any part thereof, or the increase thereof, may be delivered or paid to either of the persons, or to the survivor or survivors, in due course of business.

Del. Code tit. 5, § 924 Bank deposit accounts in trust form.

(a) The following terms shall have the following definitions for the purposes of this section. (1) A “beneficiary” is a natural person, or a nonprofit organization (as qualified under 26 U.S.C. § 501(c)(3)), that is described by a depositor as a person for whom a trust account is established and maintained. There shall be no more than 1 beneficiary per trust account, unless otherwise provided by the respective banking organization’s agreements, rules or regulations. (2) A “depositor” is a natural person in whose name a trust account subject to this part is established or maintained. There shall be no more than 2 depositors per trust account, unless otherwise provided by the respective banking organization’s agreements, rules or regulations. (3) A “trust account” includes all deposits in a savings account, interest- or noninterest-bearing transaction account, time deposit whether or not evidenced by a certificate or any similar deposit account in a banking organization which: a. Is established by a depositor as trustee for another, other than a depositor describing the depositor as acting under a will, trust instrument or other document, court order or decree (including so-called Totten Trust accounts); or b. Pursuant to an agreement with the banking organization, is payable on request to the depositor during the depositor’s lifetime and, on the depositor’s death, to a beneficiary (including so-called payable-on-death accounts). (b) All funds in a trust account, including any interest or additions thereto, shall be trust funds subject to the following terms: (1) Except as otherwise provided by the respective banking organization’s agreements, rules or regulations, the trust can be revoked, terminated or modified in whole or in part by any depositor during the depositor’s lifetime by means of, and to the extent of, partial or total withdrawals from or charges against the trust account made or authorized by the depositor or by a writing, other than a will or other similar testamentary disposition, received by the banking organization wherein the account is maintained during the lifetime of the depositor. (2) The trust account cannot be revoked, terminated or modified in whole or in part by any depositor by will or other similar testamentary disposition. (3) If the depositor survives the beneficiary, the trust shall terminate and title to the funds shall continue in the depositor free and clear of the trust. (4) If the beneficiary survives the depositor, the trust shall terminate and title to the funds shall vest in the beneficiary free and clear of the trust. (5) If the depositor and beneficiary die under circumstances where it is impossible to determine which survived the other, it shall be conclusively presumed that the depositor was the survivor and title to the funds shall vest in the depositor’s estate, free and clear of the trust. (c) If the beneficiary survives the depositor under the circumstances provided in paragraph (4) of subsection (b) of this section, the funds shall be paid to the beneficiary upon the beneficiary’s order, if, at the time of the beneficiary’s demand for payment of all or part of the funds, the beneficiary is 18 or more years of age. If the beneficiary survives the depositor under the circumstances provided in paragraph (4) of subsection (b) of this section and if the beneficiary is under 18 years of age at the time demand for payment of any part or all of the funds is made, the funds may be paid to the order of the parent or parents of the beneficiary to be held for the use and benefit of such minor beneficiary or to the order of the duly appointed guardian of the property of the beneficiary. (d) A banking organization which, upon the death of a depositor prior to service upon it of a restraining order, injunction or other appropriate process from a court of competent jurisdiction prohibiting payment, makes payment to a beneficiary or, if the beneficiary is under 18 years of age, to the guardian of the property or to the parent or parents of the minor beneficiary pursuant to subsection (c) of this section, shall, to the extent of such payment, be released from liability to any person claiming a right to the funds and the receipt or acquittance of the person to whom payment is made shall be a valid and sufficient release and discharge of the banking organization. (e) If a trust account is established in the names of more than 1 depositor, in form to be paid or delivered to any or the survivor of them, in trust for another, or payable on death of all of the depositors to a beneficiary, such account shall be subject to the terms of this section, except that the title to the funds on deposit and any additions and accruals thereon, as between the depositors, shall be the property of such depositors as joint tenants; and the property, together with all the additions and accruals thereon, may be paid or delivered to any of such depositors during the lifetime of such depositors subject to the terms of § 923 of this title, and, after the death of 1 of them, title to the property, together with all additions and accruals thereon, shall become property of the surviving depositor or surviving depositors, subject to the trust which may be revoked, terminated or modified by the surviving depositor or depositors, as the case may be, in accordance with the terms of this section.

Del. Code tit. 5, § 926 Subrogation of Federal Deposit Insurance Corporation to rights of owners of insured deposits in closed institutions.

Whenever a receiver has been appointed by the Court of Chancery for a bank or trust company in this State and the Federal Deposit Insurance Corporation pays or makes available for payment to the receiver the insured deposit liabilities of the closed institution, the Federal Deposit Insurance Corporation shall be subrogated to all the rights against the closed institution of the owners of the insured deposits in the same manner and to the same extent as if the owners had lawfully assigned to the Federal Deposit Insurance Corporation so much or such of their deposits as the Federal Deposit Insurance Corporation has paid or is ready to pay to the receiver.

Del. Code tit. 5, § 927 Penalty for false statements regarding financial condition.

Whoever wilfully and maliciously makes, circulates or transmits to another or others, any false statement, rumor or suggestion, written, printed or by word of mouth, which is directly or by inference derogatory to the financial condition or affects the solvency or financial standing of any bank, trust company, savings bank, or other banking institution in this State, shall be fined not more than $2,000 or imprisoned not more than 2 years, or both.

Del. Code tit. 5, § 928 Penalty for representing or holding oneself out as engaged in business of receiving deposits or of a trust company.

(a) Any person, firm, or association of individuals or any agent or official of any corporation or other person who in any manner represents or holds out one’s self, whether by public advertisement, placard, handbill or otherwise, as engaged in the receipt of deposits of money as a savings fund, bank or trust company or any business substantially similar thereto within the boundaries of the State, or as engaged in the business of a trust company within the boundaries of the State, not being authorized under this Code or any other laws of this State to engage in such business or any business substantially similar thereto, shall be fined $1,000 per day in accordance with § 143 of this title, except that § 143(c) of this title shall not apply. In addition, any such person or agent or official of any such corporation, firm or association of individuals may be imprisoned not more than 1 year. (b) When the name of any person or persons, firm, association or corporation appears in or on any handbill, placard, advertisement or other representation advertising or holding out such person, firm, association or corporation as engaged in the business of receiving deposits of money within the boundaries of the State, or as engaged in the business of a trust company within the boundaries of the State, it shall be prima facie evidence of its presence there by the authority and with the knowledge of such person, firm, association or corporation and of the officers and representatives in this State of the corporation or other person.

Del. Code tit. 5, § 929 Tying arrangements prohibited.

(a) No bank or trust company shall, either directly or indirectly through any subsidiary, division or 3rd person, in any manner extend credit, sell any product or furnish any service to any person, or fix or vary the consideration for any of the foregoing, on the condition or requirement that: (1) The person shall obtain some additional credit, product or service from such bank or trust company or its affiliate other than a loan, discount, deposit or trust service; or (2) The person provide some additional credit, product or service to such bank or trust company or its affiliate other than those related to and usually provided in connection with a loan, discount, deposit or trust services; or (3) The person shall not obtain some other credit, product or service from a competitor of such bank or trust company or its affiliate, other than a condition or requirement that such bank or trust company shall reasonably impose in a credit transaction to assure the soundness of the credit. (b) No bank or trust company which is first authorized to engage in any activity by § 761(a)(14) or § 1661(a)(14) of this title shall, while an application for a loan, credit or other services previously submitted to such bank or trust company by any person is pending, accept from such person, either directly or through any division or subsidiary, an application for a policy of insurance directly related to the applied-for loan, credit or other services, or thereafter accept such an insurance application until such person has received from such bank or trust company a commitment with respect to the applied-for loan, credit or other services. (c) The Commissioner shall by regulation promulgated after consultation with the Insurance Commissioner provide for the adequate disclosure of the prohibitions set forth in subsections (a) and (b) of this section. (d) For purposes of this section, the term “affiliates” shall mean a person that directly or indirectly through 1 or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. “Control” means beneficial ownership, directly or indirectly through 1 or more intermediaries, of 25% or more of the voting securities or partnership interests in any person other than an individual. (e) The prohibitions contained in this section shall be in addition to, and not in derogation of, those provided for under the laws of the United States, including 12 U.S.C. § 1971 et seq., the laws of this State, including § 2305 of Title 18, and all other applicable statutes, rules and regulations. (f) The prohibitions of subsection (a) of this section shall not apply to conduct authorized by the Commissioner by regulation, if such conduct is permissible under 12 U.S.C. § 1972 or regulations or orders promulgated thereunder by the Board of Governors of the Federal Reserve System.

Del. Code tit. 5, § 930 Right of cancellation of certain insurance.

(a) Except as otherwise provided in this section, in the case of any extension of credit by the bank or trust company engaged directly or indirectly in activities first authorized under § 761(a)(14) or § 1661(a)(14) of this title to an individual borrower in connection with which insurance is obtained from such bank or trust company, or any subsidiary thereof engaged in activities first authorized under § 761(a)(14) or § 1661(a)(14) of this title, the individual borrower shall have the right to cancel the purchase of such insurance until midnight of the 30th calendar day following the consummation of the transaction or the delivery of the information and forms required under this section, whichever is later. Within the first 10 days, the individual borrower shall be entitled to an unconditional refund of the premium upon serving notice of cancellation as provided herein. The individual borrower shall effect such cancellation by notifying the bank or trust company or its subsidiary, in accordance with the regulations of the Commissioner, of an intention to do so. In accordance with the regulations of the Commissioner, the bank or trust company or its subsidiary shall: (1) Clearly and conspicuously disclose to any individual borrower in a transaction subject to this section the rights of the individual borrower under this section; and (2) Provide appropriate forms for the exercise by the individual borrower of this right to cancel any insurance subject to this section. Such forms shall contain a clear and specific statement setting forth: a. The cost of the insurance; b. That the individual borrower may choose the person through which the insurance is to be obtained; c. The individual borrower’s right to use the cancellation period to obtain price quotations for insurance from other sources; d. The actions necessary for the individual borrower to cancel the insurance; and e. The individual borrower’s right to receive a credit or the unearned portion of the insurance premium after cancellation. (b) Within 20 days after the unconditional recision period if no liability for a loss under the insurance has been incurred, the bank or trust company or its subsidiary shall: (1) Credit the unearned portion of the premium, computed in accordance with applicable law or regulation promulgated by the Insurance Commissioner to enforce the provisions of this section, as of the date of cancellation and, where the premium has been financed, credit the unearned portion of the finance charge, if any, attributable to the insurance, computed as of the date of cancellation in accordance with the terms of the contract documents; or (2) At the option of the individual borrower, refund the unearned portion of the premium to the borrower. (c) When the insurance written in connection with an extension of credit is against loss of, or damage to, or against liability arising out of ownership or use of, property used as security for the extension of credit, the bank or trust company or its subsidiary may require evidence that the individual borrower has obtained other adequate insurance before exercising the right of cancellation set forth in this subsection. For reasonable cause, a bank or trust company on its subsidiary may refuse to accept an insurer offered by the individual borrower; provided, however, that a bank or trust company shall accept a policy of insurance issued by an authorized insurer offered by the individual borrower, so long as such insurer is not then impaired, insolvent, the subject of any rehabilitation or liquidation proceeding, or deemed by the Insurance Commissioner to be otherwise disqualified. (d) Any individual borrower who has the right to cancel insurance under this section in connection with an obligation which has been assigned may cancel the insurance only by delivering to the assignee of the obligation the notice of cancellation required by this section. Delivery shall be considered made when mailed, or if sent by other means, when received by the assignee. (e) Any individual borrower who exercises the right to cancel the purchase of insurance pursuant to this section shall not be subject to the imposition of any fee, cancellation charge, or other penalty payment. (f) For purposes of this section, “individual borrower” means a borrower who is a natural person borrowing for personal, household or family purposes, or business or commercial purposes where the natural person employs 500 employees or less, or a borrower who is a corporation, partnership, limited partnership or other business entity which is borrowing for business or commercial purposes and which employs 500 employees or less. (g) The rights provided under this section shall be in addition to, and not in derogation of, those provided by contract under the laws of the United States, the laws of this State, and all other applicable statutes, rules and regulations.

Del. Code tit. 5, § 930A Mandatory disclosure in bank insurance policies.

(a) Any bank or trust company issuing policies of insurance either directly or through a division or subsidiary, shall disclose or cause to be disclosed to all applicants for such policies and to all policyholders that such policies, if and when issued, are not direct liabilities of such bank or trust company, and that only the assets of the insurance division or subsidiary issuing such policy are applicable to the payment and satisfaction of such policies or claims made thereunder. (b) The Commissioner shall by regulation provide for the adequate disclosure of the information set forth in subsection (a) of this section.

Del. Code tit. 5, § 931 Employee retirement pensions for savings banks and savings societies.

(a) Savings banks and savings societies, subject to the laws of this State, may, in the discretion of a majority of all the managers or governing board, retire any officer, clerk or other employee, who has served the savings bank or savings society for a period of 30 years or more, or who has served the savings bank or savings society for a period of 10 years or more and shall have become incapacitated, or who has served the savings bank or savings society for a period of 20 years or more and has attained the age of 60 years. Any person retired from service pursuant to this section may be paid an annual pension, in equal monthly installments. The maximum pension paid shall in no case exceed 60% of the average annual salary for the 3 years preceding retirement. The discretion of the managers or governing board as to the time of payments, the amount of payments, and the duration of payments, within the maximum amounts allowed under this section, shall at all times be absolute and final. (b) For the purpose of establishing and maintaining a pension plan or a plan for carrying life insurance or providing other after death benefits for any of its officers, clerks or employees, or their estates or beneficiaries, or a plan combining these types of benefits, any such savings bank or savings society may, in the discretion of a majority of its board of managers or governing board, segregate or allocate funds from its income or other assets and pay the same into a trust fund. Any such institution establishing such trust fund may itself act as trustee or may have an independent trustee. Even though the ultimate benefits of the plan are paid out of such trust fund, or even though premiums for the coverage are paid out of such trust fund, rather than directly out of the savings institution’s operating funds, unless the terms of the said trust are approved by the State Bank Commissioner as provided in this section, the limitations of years and percentage specified in the preceding paragraph shall remain applicable, and the only benefits payable shall be such as are authorized by the said paragraph. If the State Bank Commissioner shall determine that the said plan is not injurious to the institution or the security of its deposits, then such benefits as may be provided by said plan may be paid to officers, clerks or employees, or their estates or beneficiaries, in accordance with the terms of the plan, even though these terms may not be within the limitations of the preceding paragraph. If the plan has once been approved but is thereafter amended, the amendment shall be approved before any benefits are paid out under the amended plan.

Del. Code tit. 5, § 932 Loans and securities insured by Federal Housing Administrator.

(a) Banks, savings banks, trust companies, building and loan associations and insurance companies, subject to this Code and any other laws of this State, may make such loans and advances of credit and purchases of obligations representing loans and advances of credit as are eligible for insurance by the Federal Housing Administrator, and may obtain such insurance; and may make such loans, secured by real property or leasehold, as the Federal Housing Administrator insures or makes a commitment to insure, and may obtain such insurance. (b) Banks, savings banks, trust companies, building and loan associations, insurance companies, trustees, guardians and other fiduciaries, may invest their funds and the moneys in their custody or possession, eligible for investment, in notes or bonds secured by mortgage or trust deed insured by the Federal Housing Administrator, provided such notes or bonds or the notes, bonds or debentures into which the same are convertible upon foreclosure of such mortgage or deed of trust shall be guaranteed as to principal and interest by the United States government. (c) The mortgages, debentures and other securities herein made eligible for investment may be used, wherever securities must be furnished by any depository in the State, as security for the deposit of any funds whatsoever, or wherever securities must be deposited with any official of the State pursuant to this Code and any other statute of this State. (d) No law of this State requiring security upon which loans or investments may be made, or prescribing the nature, amount or form of such security, or prescribing or limiting interest rates upon loans or investments or limiting investments of capital or deposits, or prescribing or limiting the period for which loans or investments may be made, shall be deemed to apply to loans or investments made pursuant to this section.

Del. Code tit. 5, § 933 Prize linked savings programs.

(a) For purposes of this section “savings promotion raffle” means a raffle conducted by a bank or credit union doing business in Delaware where the sole action required for a chance of winning designated prizes is the deposit of a minimum specified amount of money in a savings account or other savings program. (b) Any bank or credit union doing business in this State may conduct a savings promotion raffle provided that the bank or credit union: (1) Conducts the savings promotion raffle in a manner that ensures that each entry has an equal chance of winning the designated prize; (2) Fully discloses the terms and conditions of the savings promotion raffle to each of its account holders; (3) Offers an interest rate that is commensurate with the interest rate the bank or credit union offers on comparable savings accounts or savings programs that are not subject to a savings promotion raffle; and (4) Maintains records sufficient to facilitate an audit of such savings promotion raffle. (c) A savings promotion raffle is not a lottery for purposes of Chapter 48 of Title 29.

Del. Code tit. 5, § 936 International banking facilities.

The Commissioner may by rule except from the terms “deposit,” “borrowing,” and “extension of credit,” as they relate to the activities of international banking facilities and as defined in § 101 of this title, any class of transactions if the Commissioner finds that its inclusion would not be in the public interest. Any class of transactions otherwise included within the aforementioned terms “deposit,” “borrowing” and “extension of credit” shall be deemed by the Commissioner to be in the public interest if it promotes an environment conducive to the conduct of international banking business in this State, and does not constitute an unsafe, unsound or anticompetitive banking practice.

Del. Code tit. 5, § 937 Availability of funds.

(a) Financial institutions that delay availability shall review their policies and consider reducing the delay periods to the extent possible, consistent with prudent business practices. (b) Financial institutions shall disclose to depositors in an effective manner as to their delayed availability policies. (c) Financial institutions shall refrain from imposing unnecessary delays on all checks, particularly on social security and other government checks, deposited into established accounts beyond the time required to receive credit for the checks.

Del. Code tit. 5, § 938 Transfer of fiduciary accounts.

(a) For purposes of this section, “fiduciary” shall mean a banking organization or trust company of a type referred to in this section acting as a trustee, personal representative, guardian or custodian under a Uniform Gifts to Minors Act or any comparable act. (b) The term “interested person” means any living person who: (1) Is an income beneficiary or vested remainderman of a trust; (2) Has a vested interest in a decedent’s estate; (3) Receives benefits as a ward from a guardianship account; or (4) Is the minor with respect to an account established under a Uniform Gifts to Minors Act or a comparable act. (c) With the prior written approval of, and in accordance with the terms and conditions of transfer prescribed by, the office of the State Bank Commissioner, and upon completion of the notice procedure of subsection (d) of this section, a banking organization, trust company or a bank holding company having its principal place of business in this State may transfer 1 or more of the fiduciary accounts administrated by such banking organization, trust company, or 1 or more of the banking organizations or trust companies controlled by such bank holding company to another banking organization or trust company controlled by such banking organization or bank holding company. With the prior written approval of, and in accordance with the terms and conditions of transfer prescribed by, the office of the State Bank Commissioner, and upon completion of the notice procedures of subsection (d) of this section, a banking organization or trust company organized under the laws of any jurisdiction (including federal law) that has a place of business in this State but not its principal place of business in this State may transfer 1 or more of the fiduciary accounts administered in this State by such banking organization or trust company, to another banking organization or trust company in this State controlled by such banking organization or trust company or by a bank holding company or a savings and loan holding company that controls such transferring banking organization or trust company. (d) Prior to effecting a transfer of 1 or more fiduciary accounts under subsection (c) of this section, the fiduciary shall send written notice of such transfer to all interested persons or their legal or natural guardians. If the persons, or their legal or natural guardians in the case of minor children or incompetents, to whom such notice was sent do not make written objections to the fiduciary of the account within 30 days of the date such notice was mailed, then the fiduciary may complete the transfer of the account. (e) If a fiduciary completes a transfer as described in the preceding subsections, the banking organization or trust company to which such fiduciary accounts have been transferred shall automatically be substituted as a fiduciary of all the accounts so transferred without further action and without any order or decree of any court or public officer, and such transferee banking organization or trust company shall have all the rights, duties, responsibilities, obligations and liabilities, financial or otherwise, of such transferring fiduciary with respect to such accounts. Likewise, a fiduciary which completes a transfer of 1 or more accounts as described in the preceding subsections shall be removed as fiduciary of all such accounts without an accounting and without any order or decree of any court or public officer, and prospectively such fiduciary shall have no continuing duties, responsibilities, obligations or liabilities, financial or otherwise, with respect to the accounts so transferred. Such transfer shall not relieve a fiduciary of any liability it may have incurred for its action or inaction prior to the transfer.

Del. Code tit. 5, § 939 Negotiable instruments.

(a) For purposes of this section, “fiduciary” shall have the same meaning as in § 3301(d) of Title 12. (b) If a negotiable instrument is drawn upon the account of a principal in a bank by a fiduciary who is empowered to draw upon the principal’s account, the bank is authorized to pay such instrument without being liable to the principal for the application of the funds. (c) If any negotiable instrument payable or endorsed to a fiduciary as such is endorsed by a fiduciary, or if any negotiable instrument payable or endorsed to a principal is endorsed by a fiduciary empowered to endorse such instrument on behalf of the principal, the endorsee is not bound to inquire whether the fiduciary is committing a breach of its obligation as fiduciary by endorsing or delivering the instrument, and is not liable for the application of the funds.

Del. Code tit. 5, § 940 Self-analysis privilege for depository institutions and affiliates.

(a) Definitions. — For purposes of this section, the following words and phrases shall have the meanings ascribed to them herein: (1) “Depository institution” means a state-chartered or federally-chartered financial institution that is located in this State and is authorized to maintain deposit or share accounts. (2) “Depository institution affiliate” means any corporation whose stock is at least 80 percent owned by a depository institution or the holding company of a depository institution. (3) “Compliance review committee” means a person or persons assigned by a depository institution or a depository institution affiliate to test, review or evaluate its conduct, transactions or potential transactions for the purpose of monitoring and improving or enforcing compliance with: a. Safe, sound and fair lending practices; b. Financial reporting to federal or state regulatory agencies; c. The depository institution’s or depository institution affiliate’s own policies and procedures; or d. Federal or state statutory or regulatory requirements. (4) “Compliance review document” means any document prepared for or created by a compliance review committee for its exclusive use. (5) “Person” means an individual, a group of individuals, a board committee or a corporation, partnership, firm, association, trust, pool, syndicate, sole proprietorship, unincorporated association or any other form of entity not specifically listed herein. (b) Privilege. — Notwithstanding any provisions of Delaware common or statutory law to the contrary, except as provided in subsection (c) of this section: (1) Compliance review documents shall be confidential and shall not be discoverable or admissible into evidence in any civil action; (2) Compliance review documents delivered to a federal, state or foreign governmental or regulatory agency shall remain confidential and shall not be discoverable or admissible in any civil action; and (3) No person serving on a compliance review committee or acting at the request of a compliance review committee shall be required to testify in any civil action: a. As to the contents or conclusions of any compliance review document; or b. As to the actions taken by a compliance review committee. (c) Limitations. — (1) This section shall not apply to any person serving on or at the request of a compliance review committee in connection with such person’s duties pursuant to the depository institution’s or depository institution affiliates’ by laws or operations manual, management responsibility for the operations, records, employees or activities being examined or evaluated by the compliance review committee. (2) This section shall not be construed to limit the discovery or admissibility in any civil action of any documents that are not compliance review documents. (3) This section shall not apply if, after an in camera review by the court consistent with applicable rules of procedure, the court determines that the compliance review was initiated or used to enable persons serving on the compliance review committee or the depository institution or the depository institution affiliate which created such committee to commit or plan to commit what the committee knew or reasonably should have known to be a crime.

Del. Code tit. 5, § 941 Definitions.

As used in this subchapter: (1) “Bank” means any bank or bank and trust company organized under this title or any other law or laws of this State, any depository institution organized under the authority of the United States and having its principal place of business in this State and any foreign bank agency. (2) “Borrower” means any corporation, partnership, association, government or governmental subdivision or agency, trust, individual or other entity. (3) “Individual borrower” means a borrower who is a natural person borrowing for personal, household or family purposes. (4) “Revolving credit plan” or “plan” means a plan contemplating the extension of credit under an account governed by an agreement between a bank and a borrower pursuant to which: a. The bank permits the borrower and, if the agreement governing the plan so provides, persons acting on behalf of or with authorization from the borrower, from time to time to make purchases and/or to obtain loans by use of a credit device; b. The amounts of such purchases and loans are charged to the borrower’s account under the revolving credit plan; c. The borrower is required to pay the bank the amounts of all purchases and loans charged to such borrower’s account under the plan but has the privilege of paying such amounts outstanding from time to time in full or otherwise in accordance with the agreement governing the plan; and d. Interest may be charged and collected by the bank from time to time on the outstanding unpaid indebtedness under such plan. (5) “Purchases” mean payments for property of whatever nature, real or personal, tangible or intangible, and payments for services, licenses, taxes, official fees, fines, private or governmental obligations, or any other thing of value. (6) “Loans” mean cash advances or loans to be paid to or for the account of the borrower. (7) “Credit device” means any card, check, identification code or other means of identification contemplated by the agreement governing the plan. (8) “Outstanding unpaid indebtedness” means on any day an amount not in excess of the total amount of purchases and loans charged to the borrower’s account under the plan which is outstanding and unpaid at the end of the day, after adding the aggregate amount of any new purchases and loans charged to the account as of that day and deducting the aggregate amount of any payments and credits applied to that indebtedness as of that day and, if the agreement providing the plan so provides, may include the amount of any periodic interest, interest charges and other charges permitted by this subchapter, including late or delinquency charges, which have accrued in the account and which are unpaid at the end of the day. Purchases and loans may be included in outstanding unpaid indebtedness as of such time as may be specified in the agreement governing the plan.

Del. Code tit. 5, § 942 Extension of credit.

Any bank may, subject to any limitations on lending authorities contained in its charter or otherwise imposed by law and subject to the other provisions of this subchapter, offer and extend credit under a revolving credit plan to a borrower and in connection therewith may charge and collect periodic interest, interest charges and other charges permitted by this subchapter and may take such security as collateral in connection therewith as may be acceptable to the bank. Without limitation of the foregoing, credit may be extended under a revolving credit plan by a bank’s acquisition of obligations arising out of the honoring by a merchant, a bank or other financial institution (whether chartered or organized under the laws of this or any other state, the District of Columbia, the United States or any district, territory or possession of the United States, or any foreign country), or a government or governmental subdivision or agency of a credit device made available to a borrower under a plan, whether directly or indirectly by means of telephone, point of sale terminal, automated teller machine or other electronic or similar device or through the mails.

Del. Code tit. 5, § 943 Periodic interest.

A bank may charge and collect periodic interest under a revolving credit plan on outstanding unpaid indebtedness in the borrower’s account under the plan at such daily, weekly, monthly, annual or other periodic percentage rate or rates as the agreement governing the plan provides or as established in the manner provided in the agreement governing the plan. Periodic interest may be calculated using an average daily balance, 2-cycle average daily balance, adjusted balance or previous balance method or using any other balance computation method provided for in the agreement governing the plan. Periodic billing cycles may be established in such manner and shall have such duration as may be specified in the agreement governing the plan.

Del. Code tit. 5, § 944 Variable rates.

If the agreement governing the revolving credit plan so provides, the periodic percentage rate or rates of interest under such plan may vary in accordance with a schedule or formula. Such periodic percentage rate or rates may vary from time to time as the rate determined in accordance with such schedule or formula varies and such periodic percentage rate or rates, as so varied, may be made applicable to all or any part of outstanding unpaid indebtedness under the plan on or after the first day of the billing cycle that contains the effective date of such variation including any such indebtedness arising out of purchases made or loans obtained prior to such variation in the periodic percentage rate or rates. Without limitation, a permissible schedule or formula hereunder may include provision in the agreement governing the plan for a change in the periodic percentage rate or rates of interest applicable to all or any part of outstanding unpaid indebtedness, whether by variation of the then applicable periodic percentage rate or rates of interest, variation of an index or margin or otherwise, contingent upon the happening of any event or circumstance specified in the plan, which event or circumstance may include the failure of the borrower to perform in accordance with the terms of the plan. Nothing herein precludes a bank from charging or reserving a right to charge, by discretion or otherwise, a rate lower than any maximum rate provided for in any schedule or formula.

Del. Code tit. 5, § 945 Interest charges.

(a) In addition to or in lieu of interest at a periodic percentage rate or rates as provided in §§ 943 and 944 of this title, a bank may, if the agreement governing the revolving credit plan so provides, charge and collect, as interest, in such manner or form as the plan may provide, 1 or more of the following: (1) A daily, weekly, monthly, annual or other periodic charge in such amount or amounts as the agreement may provide for the privileges made available to the borrower under the plan; (2) A transaction charge or charges in such amount or amounts as the agreement may provide for each separate purchase or loan under the plan; (3) A minimum charge for each daily, weekly, monthly, annual or other scheduled billing period under the plan during any portion of which there is an outstanding unpaid indebtedness under the plan; (4) Reasonable fees for services rendered or for reimbursement of expenses incurred in good faith by the bank or its agents in connection with the plan, or other reasonable fees incident to the application for and the opening, administration and termination of a plan including, without limitation, commitment, application and processing fees, official fees and taxes, costs incurred by reason of examination of title, inspection, appraisal, recording, mortgage satisfaction or other formal acts necessary or appropriate to the security for the plan, and filing fees; (5) Returned payment charges or charges imposed for the return of a draft drawn on a revolving credit plan evidencing an extension of credit under such plan; (6) Documentary evidence charges; (7) Stop payment fees; (8) Overlimit charges; (9) Automated teller machine charges or similar electronic or interchange fees or charges; (10) Prepayment charges authorized under subsection (b) of this section; and (11) Subject to any limitations contained in this subchapter, such other fees and charges as are set forth in the agreement governing the plan. (b) An individual borrower may pay the outstanding unpaid indebtedness charged to the borrower’s account under a plan in full at any time. Except for a charge imposed to terminate a plan if the agreement governing the plan so provides, a bank may not impose any prepayment charge in connection with the payment of outstanding unpaid indebtedness in full by an individual borrower. A bank may charge and collect any prepayment penalty or charge specified in the agreement governing the plan in connection with the payoff and termination of a plan that is secured by a real estate mortgage. The terms of prepayment of the outstanding unpaid indebtedness relating to a revolving credit plan involving a borrower other than an individual borrower shall be as the bank and the borrower may agree. (c) No charges assessed by a bank in accordance with this section shall be deemed void as a penalty or otherwise unenforceable under any statute or the common law.

Del. Code tit. 5, § 946 Terms for indebtedness.

A bank may, if the agreement governing a revolving credit plan so provides, impose different terms (including, without limitation, the terms governing the periodic percentage rate or rates used to calculate interest, the method of computing the outstanding unpaid indebtedness to which such rate or rates are applied, the amounts of other charges and the applicable installment repayment schedule) in respect to indebtedness arising out of purchases and indebtedness arising out of loans made under the plan.

Del. Code tit. 5, § 947 Overdraft accounts.

If credit under a revolving credit plan is offered and extended in connection with a demand deposit account or other transaction account maintained by the borrower with the bank pursuant to an agreement or arrangement whereby the bank agrees to honor checks, drafts or other debits to such account, which if paid would create or increase a negative balance in such account, by making extensions of credit to such borrower under such revolving credit plan, any charges customarily imposed by the bank under the terms governing such demand deposit or other transaction account in the absence of any associated revolving credit plan (including, without limitation, check charges, monthly maintenance charges, checkbook charges, charges for checks drawn on funds in excess of an available line of credit and other similar charges) may continue to be imposed on such account without specific reference thereto or incorporation thereof by reference in the agreement governing the revolving credit plan and the amount of any such charge, to the extent the balance in such demand deposit or other transaction account is insufficient to pay such a charge, may be charged to the borrower’s account under the plan as a loan thereunder and may be included in outstanding unpaid indebtedness in accordance with the terms of the agreement governing such revolving credit plan.

Del. Code tit. 5, § 948 Omitted installments.

A bank may at any time and from time to time unilaterally extend to a borrower under a revolving credit plan the option of omitting monthly installments.

Del. Code tit. 5, § 949 Insurance.

(a) A bank may request but not require an individual borrower to be insured in respect of a revolving credit plan under a life, health, accident, health and accident or other credit or other permissible insurance policy, whether group or individual, and in the event that an individual borrower’s outstanding unpaid indebtedness under the plan is secured by an interest in real or personal property, a bank may require the borrower to obtain insurance, from an insurer acceptable to the bank, against loss of or damage to such property, or against the liability arising out of the ownership or use of the property and may finance the premiums for such insurance. (b) In the case of a borrower borrowing under a revolving credit plan for other than personal, household or family purposes, a bank may require the borrower to obtain insurance, from an insurer acceptable to the bank, under a life, health, accident, health and accident or other credit or other permissible insurance policy, whether group or individual, and in the event that the borrower’s outstanding unpaid indebtedness under the plan is secured by an interest in real or personal property, the bank may require the borrower to obtain insurance, from an insurer acceptable to the bank, against loss of or damage to such property, or against the liability arising out of the ownership or use of the property and may finance the premiums for such insurance. (c) The offer and placement of insurance under this section shall be subject in all respects to the applicable provisions of Title 18.

Del. Code tit. 5, § 950 Delinquent installments.

(a) If the agreement governing a revolving credit plan so provides, a bank may impose, as interest, a late or delinquency charge upon any outstanding unpaid installment payments or portions thereof under the plan which are in default; provided however, that no more than 1 such late or delinquency charge may be imposed in respect of any single such installment payment or portion thereof, regardless of the period during which it remains in default; and provided further, however, that for the purpose only of the preceding proviso all payments by the borrower shall be deemed to be applied to satisfaction of installment payments in the order in which they become due. Nothing contained in this section shall limit, restrict or otherwise affect the right of a bank under and pursuant to §§ 943 and 944 of this title to change the periodic percentage rate or rates of interest applicable to the revolving credit plan between the bank and a borrower upon the occurrence of a delinquency or default or other failure of the borrower to perform in accordance with the terms of the plan. (b) No charges assessed by a bank in accordance with this section shall be deemed void as a penalty or otherwise unenforceable under any statute or the common law.

Del. Code tit. 5, § 951 Attorney’s fees; costs.

In the event a borrower defaults under the terms of a plan, the bank may, if the borrower’s account is referred to an attorney (not a regularly salaried employee of the bank) or to a third party for collection and if the agreement governing the revolving credit plan so provides, charge and collect from the borrower a reasonable attorney’s fee. In addition, following a borrower’s default, the bank may, if the agreement governing the plan so provides, recover from the borrower all court, alternative dispute resolution or other collection costs (including, without limitation, fees and charges of collection agencies) actually incurred by the bank.

Del. Code tit. 5, § 952 Amendment of agreement.

(a) Unless the agreement governing a revolving credit plan otherwise provides, a bank may at any time and from time to time amend such agreement in any respect, whether or not the amendment or the subject of the amendment was originally contemplated or addressed by the parties or is integral to the relationship between the parties. Without limiting the foregoing, such amendment may change terms by the addition of new terms or by the deletion or modification of existing terms, whether relating to plan benefits or features, the rate or rates of periodic interest, the manner of calculating periodic interest or outstanding unpaid indebtedness, variable schedules or formulas, interest charges, fees, collateral requirements, methods for obtaining or repaying extensions of credit, attorney’s fees, plan termination, the manner for amending the terms of the agreement, arbitration or other alternative dispute resolution mechanisms, or other matters of any kind whatsoever. Unless the agreement governing a revolving credit plan otherwise expressly provides, any amendment may, on and after the date upon which it becomes effective as to a particular borrower, apply to all then outstanding unpaid indebtedness in the borrower’s account under the plan, including any such indebtedness that arose prior to the effective date of the amendment. An agreement governing a revolving credit plan may be amended pursuant to this section regardless of whether the plan is active or inactive or whether additional borrowings are available thereunder. Any amendment that does not increase the rate or rates of periodic interest charged by a bank to a borrower under § 943 or § 944 of this title may become effective as determined by the bank, subject to compliance by the bank with any applicable notice requirements under the Truth in Lending Act (15 U.S.C. §§ 1601 et seq.), and the regulations promulgated thereunder, as in effect from time to time. Any notice of an amendment sent by the bank may be included in the same envelope with a periodic statement or as part of the periodic statement or in other materials sent to the borrower. (b) (1) If an amendment increases the rate or rates of periodic interest charged by a bank to a borrower under § 943 or § 944 of this title, the bank shall mail or deliver to the borrower, at least 15 days before the effective date of the amendment, a clear and conspicuous written notice that shall describe the amendment and shall also set forth the effective date thereof and any applicable information required to be disclosed pursuant to the following provisions of this section. (2) Any amendment that increases the rate or rates of periodic interest charged by a bank to a borrower under § 943 or § 944 of this title may become effective as to a particular borrower if the borrower does not, within 15 days of the earlier of the mailing or delivery of the written notice of the amendment (or such longer period as may be established by the bank), furnish written notice to the bank that the borrower does not agree to accept such amendment. The notice from the bank shall set forth the address to which a borrower may send notice of the borrower’s election not to accept the amendment and shall include a statement that, absent the furnishing of notice to the bank of nonacceptance within the referenced 15 day (or longer) time period, the amendment will become effective and apply to such borrower. As a condition to the effectiveness of any notice that a borrower does not accept such amendment, the bank may require the borrower to return to it all credit devices. If, after 15 days from the mailing or delivery by the bank of a notice of an amendment (or such longer period as may have been established by the bank as referenced above), a borrower uses a plan by making a purchase or obtaining a loan, notwithstanding that the borrower has prior to such use furnished the bank notice that the borrower does not accept an amendment, the amendment may be deemed by the bank to have been accepted and may become effective as to the borrower as of the date that such amendment would have become effective but for the furnishing of notice by the borrower (or as of any later date selected by the bank). (3) Any amendment that increases the rate or rates of periodic interest charged by a bank to a borrower under § 943 or § 944 of this title may, in lieu of the procedure referenced in paragraph (2) of this subsection, become effective as to a particular borrower if the borrower uses the plan after a date specified in the written notice of the amendment that is at least 15 days after the mailing or delivery of the notice (but that need not be the date the amendment becomes effective) by making a purchase or obtaining a loan; provided, that the notice from the bank includes a statement that the described usage after the referenced date will constitute the borrower’s acceptance of the amendment. (4) Any borrower who furnishes timely notice electing not to accept an amendment in accordance with the procedures referenced in paragraph (2) of this subsection and who does not subsequently use the plan, or who fails to use such borrower’s plan as referenced in paragraph (3) of this subsection, shall be permitted to pay the outstanding unpaid indebtedness in such borrower’s account under the plan in accordance with the rate or rates of periodic interest charged by a bank to a borrower under § 943 or § 944 of this title without giving effect to the amendment; provided however, that the bank may convert the borrower’s account to a closed end credit account as governed by subchapter III of this chapter, on credit terms substantially similar to those set forth in the then-existing agreement governing the borrower’s plan. (5) Notwithstanding the other provisions of this subsection, no notice required by this subsection of an amendment of an agreement governing a revolving credit plan shall be required, and any amendment may become effective as of any date agreed upon between a bank and a borrower, with respect to any amendment that is agreed upon between the bank and the borrower, either orally or in writing. (c) For purposes of this section, the following are examples of amendments that shall not be deemed to increase the rate or rates of periodic interest charged by a bank to a borrower under § 943 or § 944 of this title: (1) A decrease or increase in the required number or amount of periodic installment payments; (2) Any change to a plan that increases the rate or rates in effect immediately prior to the change by less than ¼ of 1 percentage point per annum; provided that a bank may not make more than one such change in reliance on this paragraph with respect to a plan within any 12-month period; (3) a. A change in the schedule or formula used under a variable rate plan under § 944 of this title that varies the determination date of the applicable rate, the time period for which the applicable rate will apply or the effective date of any variation of the rate, or any other similar change, or b. Any other change in the schedule or formula used under a variable rate plan under § 944 of this title; provided, that the initial interest rate that would result from any such change under this paragraph (3), as determined on the effective date of the change or, if notice of the change is mailed or delivered to the borrower prior to the effective date, as of any date within 60 days before mailing or delivery of such notice, will not be an increase from the rate in effect on such date under the existing schedule or formula; (4) A change from a variable rate plan to a fixed rate, or from a fixed rate to a variable rate plan so long as the initial rate that would result from such a change, as determined on the effective date of the change, or if the notice of the change is mailed or delivered to the borrower prior to the effective date, as of any date within 60 days before mailing or delivery of such notice, will not be an increase from the rate in effect on such date under the existing plan; (5) A change from a daily periodic rate to a periodic rate other than daily or from a periodic rate other than daily to a daily periodic rate; and (6) A change in the method of determining the outstanding unpaid indebtedness upon which periodic interest is calculated (including, without limitation, a change with respect to the date by which or the time period within which a new balance or any portion thereof must be paid to avoid additional periodic interest). (d) The procedures for amendment by a bank of the terms of a plan to which a borrower other than an individual borrower is a party may, in lieu of the foregoing provisions of this section, be as the agreement governing the plan may otherwise provide.

Del. Code tit. 5, § 953 Application of other state laws.

Any other law of this State limiting the rate or amount of interest, discount, points, finance charges, service charges or other charges which may be charged, taken, collected, received or reserved shall not apply to extensions of credit under a revolving credit plan operated in accordance with this subchapter.

Del. Code tit. 5, § 954 Nonexclusivity; captions.

(a) The provisions of this subchapter are not exclusive and a bank may at its option elect to extend credit either pursuant to this subchapter or as otherwise permitted by applicable law. (b) Section headings and captions contained in this subchapter are inserted only as a matter of convenience and for reference and do not, and shall not be construed to, define, limit, extend or describe the scope of this subchapter or the meaning or intent of any section hereof.

Del. Code tit. 5, § 955 Materiality of terms.

All terms, conditions and other provisions of and relating to a plan as contained in this subchapter or in the agreement governing the plan (other than those which are interest under this subchapter), including, without limitation, provisions relating to the method of determining the outstanding unpaid indebtedness on which interest is applied, time periods within which interest charges may be avoided, reasons for default and the right to cure any default, rights to accelerate, account cancellation, choice of law, change in terms requirements, rights to charge and collect attorney’s fees, court and collection costs and the compounding of periodic interest or interest charges, shall be and hereby are deemed to be material to the determination of interest applicable to a plan under Delaware law, under the most favored lender doctrine, and under § 85 of the National Bank Act (12 U.S.C. § 85) or § 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (12 U.S.C. § 1831d).

Del. Code tit. 5, § 956 Governing law.

A revolving credit plan between a bank and an individual borrower shall be governed by the laws of this State.

Del. Code tit. 5, § 961 Definitions.

As used in this subchapter: (1) “Bank,” “borrower” and “individual borrower” have the meanings given in subchapter II of this chapter. (2) “Business day” means, with respect to recission under § 976 of this title, all calendar days except Sundays and legal public holidays. (3) “Closed end credit” means the extension of credit by a bank to a borrower pursuant to an arrangement or agreement which is not a revolving credit plan as defined in subchapter II of this chapter. (4) “Conspicuously displayed” means highlighted through the use of capitalization, bold print, underlining or some combination thereof. (5) “Loan” means any single extension of closed end credit. (6) “Right of recission” means, with respect to any short-term consumer loan, the right to return any amount borrowed, in full, on or before the close of business of the business day following the day on which such sum has been disbursed or advanced, without the incursion of any fee or other charges. (7) “Rollover” means, with respect to any short-term consumer loan, the extension of an outstanding and unpaid indebtedness beyond the stated repayment period solely on the basis of the payment of a fee without approval of a new loan application. (8) “Short-term consumer loan” means a loan of $500 or less made to an individual borrower that charges interest and/or fees for which the stated repayment period is less than 60 days and is not secured by title to a motor vehicle. (9) “Workout agreement” means an agreement between an individual borrower and a bank, trust company or savings bank for the repayment of an outstanding and unpaid indebtedness which requires a net reduction of not less than 10% of such indebtedness per payment period.

Del. Code tit. 5, § 962 Extension of credit.

Any bank may, subject to any limitations on lending authority contained in its charter or otherwise imposed by law and subject to the other provisions of this subchapter, offer and extend closed end credit to a borrower and in connection therewith, may charge and collect any periodic interest, interest charges and other charges permitted by this subchapter and may take such security as collateral in connection therewith as may be acceptable to the bank.

Del. Code tit. 5, § 963 Periodic interest.

A bank may charge and collect periodic interest in respect of a loan at such daily, weekly, monthly, annual or other periodic percentage rate or rates as the agreement governing, or the bond, note or other evidence of, the loan provides or as established in the manner provided in such agreement, bond, note or other evidence of the loan and may calculate such periodic interest by way of simple interest or such other method as the agreement governing, or the bond, note or other evidence of, the loan provides. If the interest is precomputed it may be calculated on the assumption that all scheduled payments will be made when due. For purposes hereof, a year may but need not be a calendar year and may be such period of from 360 to 366 days, including or disregarding leap year, as the bank may determine.

Del. Code tit. 5, § 964 Variable rates.

If the agreement governing, or the bond, note or other evidence of, the loan so provides, the periodic percentage rate or rates of interest charged and collected in respect of the loan may, if the interest is not precomputed and taken in advance, vary in accordance with a schedule or formula. Such periodic percentage rate or rates may vary from time to time as the rate determined in accordance with such schedule or formula varies and such periodic percentage rate or rates, as so varied, may be made applicable to all or any part of outstanding unpaid amounts of such loan on and after the effective date of such variation. This section shall not be construed to limit the authority of a bank to charge and collect interest in respect of a loan in the manner and at the rate or rates authorized in any other section of this subchapter. Without limitation, a permissible schedule or formula hereunder may include provision in the agreement governing the loan for a change in the periodic percentage rate or rates of interest applicable to all or any part of outstanding unpaid amounts, whether by variation of the then applicable periodic percentage rate or rates of interest, variation of an index or margin or otherwise, contingent upon the happening of any event or circumstance specified in the loan agreement, which event or circumstance may include the failure of the borrower to perform in accordance with the terms of the loan agreement.

Del. Code tit. 5, § 965 Interest charges.

In addition to or in lieu of periodic interest at a periodic percentage rate or rates permitted by §§ 963 and 964 of this title, a bank may charge and collect, as interest, in respect of a loan: (1) Loan fees, points, finders fees and other front-end and periodic charges; provided, however, that in the case of a loan to an individual borrower, no such front-end or periodic charge may be charged and collected unless the agreement governing, or the bond, note or other evidence of, the loan so provides; (2) Reasonable fees for services rendered or for reimbursement of expenses incurred in good faith by the bank or its agents in connection with such loan, including, without limitation, commitment fees, official fees and taxes, premiums or other charges for any guarantee or insurance protecting the bank against the borrower’s default or other credit loss, or costs incurred by reason by examination of title, inspection, recording and other formal acts necessary or appropriate to the security of the loan, filing fees, attorney’s fees and travel expenses; provided, however, that in the case of a loan to an individual borrower, no such fee may be charged and collected unless the agreement governing, or the bond, note or other evidence of, the loan so provides; (3) Returned payment charges; (4) Documentary evidence charges; and (5) Subject to any limitations contained in this subchapter, such other fees and charges as are set forth in the agreement governing, or the bond, note or other evidence of, the loan.

Del. Code tit. 5, § 966 Deferred installments.

A bank may at any time or from time to time permit a borrower to defer installment payments of a loan and may, in connection with such deferral, charge and collect, as interest, deferral charges and may also require payment by such borrower, as interest, of the additional cost to the bank of premiums for continuing in force, until the end of such period of deferral, any insurance coverage provided in connection with the loan pursuant to § 967 of this title.

Del. Code tit. 5, § 967 Insurance.

(a) A bank may request but not require an individual borrower to be insured in respect of a loan under a life, health, accident, health and accident or other permissible insurance policy, whether group or individual, and in the event that a loan to an individual borrower is secured by an interest in real or personal property, the bank may require the borrower to obtain insurance, from an insurer acceptable to the bank, against loss of or damage to such property, or against the liability arising out of the ownership or use of the property and may finance the premiums for such insurance. (b) In the case of a borrower borrowing for other than personal, household or family purposes, a bank may require the borrower to obtain insurance, from an insurer acceptable to the bank, under a life, health, accident, health and accident or other credit or other permissible insurance policy, whether group or individual, and in the event that the borrower’s loan is secured by an interest in real or personal property, the bank may require the borrower to obtain insurance, from an insurer acceptable to the bank, against loss of or damage to such property, or against the liability arising out of the ownership or use of the property and may finance the premiums for such insurance. (c) The offer and placement of insurance under this section shall be subject in all respects to the applicable provisions of Title 18.

Del. Code tit. 5, § 968 Delinquent installments.

If the agreement governing a loan so provides, a bank may impose, as interest, a late or delinquency charge upon any outstanding unpaid installment payments or portions thereof under the loan agreement which are in default; provided, however, that in the case of a loan to an individual borrower, no such late or delinquency charge may be charged or imposed unless the agreement governing, or the bond, note or other evidence of, the loan so provides and that no more than 1 such late or delinquency charge may be imposed in respect of any single such installment payment or portion thereof regardless of the period during which it remains in default; and provided further, however, that for the purpose only of the preceding proviso all payments by the borrower shall be deemed to be applied to satisfaction of installment payments in the order in which they become due. Nothing contained in this section shall limit, restrict or otherwise affect the right of a bank under and pursuant to §§ 963 and 964 of this title to change the periodic percentage rate or rates of interest applicable to the loan agreement between the bank and a borrower upon the occurrence of a delinquency or default or other failure of the borrower to perform in accordance with the terms of the loan agreement.

Del. Code tit. 5, § 969 Prepayment.

(a) An individual borrower may prepay a loan in full at any time. (b) If interest charged pursuant to § 963 of this title in respect to a loan to an individual borrower has been precomputed and taken in advance, then, in the event of prepayment of the entire indebtedness, the bank shall refund to such borrower the unearned portion of the precomputed interest charge. This refund shall be in an amount not less than the amount which would be refunded if the unearned precomputed interest charge were calculated in accordance with the actuarial method, except that the borrower shall not be entitled to a refund which is less than $5. The unearned portion of the precomputed interest charge is, at the option of the bank, either: (1) That portion of the precomputed interest charge which is allocable to all originally scheduled or, if deferred, all deferred payment periods, or portions thereof, ending subsequent to the date of prepayment. The unearned precomputed interest charge is the total of that which would have been earned for each such period, or portion thereof, had the loan not been precomputed, by applying to unpaid balances of principal, according to the actuarial method, an annual percentage rate based on the precomputed interest charges, assuming that all payments were made as scheduled, or as deferred, if deferred. The bank, at its option, may round this annual percentage rate to the nearest one-quarter of 1 percent; or (2) The total precomputed interest charge less the earned precomputed interest charge. The earned precomputed interest charge shall be determined by applying an annual percentage rate based on the total precomputed interest charge, under the actuarial method, to the unpaid balances for the actual time those balances were unpaid up to the date of prepayment. (c) As used in subsection (b) of this section: (1) “Actuarial method” means the method of allocating payments made on a loan between the outstanding balance of the loan and interest pursuant to which a payment is applied first to the accumulated interest and any remainder is subtracted from the outstanding balance of the loan. (2) “Precomputed interest charge” means interest as computed by the add-on, discount or other similar method. (3) “Payment period” means the time period within which periodic installment payments of a loan are due as provided in the agreement governing, or the bond, note or other evidence of, the loan. (d) If a charge was made to an individual borrower for premiums for insuring such borrower under an insurance policy pursuant to § 967 of this title, then, in the event of prepayment, the bank shall refund to such borrower the excess of the charge to such borrower therefor over the premiums paid or payable to the bank, if such premiums were paid or payable by the bank periodically, or the refund for such insurance premium received or receivable by the bank, if such premium was paid or payable in a lump sum by the bank, provided that no such refund shall be required if it amounts to less than $5. (e) In connection with any prepayment of any loan by an individual borrower, the bank may not impose any prepayment charge, except that in the case of a residential mortgage loan, the bank may charge and collect any prepayment penalty or charge specified in the agreement governing, or the bond, note or other evidence of, the loan. (f) The terms of prepayment of any loan made to a borrower other than an individual borrower shall be as the bank and the borrower may agree.

Del. Code tit. 5, § 970 Refinancing.

(a) An individual borrower may, with the consent of the bank, refinance the entire outstanding and unpaid amount of a loan, and the bank may charge and collect, as interest, a refinancing charge in connection with any such refinancing. (b) For the purposes of this section, the entire outstanding and unpaid amount of a loan shall be deemed to be: (1) If the interest and charges in respect of the loan were not taken in advance, the total of the unpaid balance and the accrued and unpaid interest and charges on the date of refinancing; or (2) If the interest and charges on the loan were precomputed and taken in advance, the amount which the borrower would have been required to pay upon prepayment on the date of refinancing pursuant to § 969 of this title governing refund upon prepayment.

Del. Code tit. 5, § 971 Attorney’s fees; costs.

In the event an individual borrower defaults under the terms of a loan, the bank may, if such borrower’s account is referred to an attorney (not a regularly salaried employee of the bank) or to a third party for collection and if the agreement governing, or the bond, note or other evidence of, the loan so provides, charge and collect from the borrower a reasonable attorney’s fee. In addition, following an individual borrower’s default, the bank may, if the agreement governing, or the bond, note or other evidence of, the loan so provides, recover from such borrower all court, alternative dispute resolution or other collection costs (including, without limitation, fees and charges of collection agencies) actually incurred by the bank.

Del. Code tit. 5, § 972 Loans to other than individual borrowers.

This subchapter shall not be deemed to prohibit a bank, in connection with a loan to other than an individual borrower, from: (1) Extending or deferring the scheduled payment of all or any portion of any installment or installments payable under such loan; (2) Permitting prepayment or refinancing of such loan in whole or in part; (3) Charging and collecting any charges in connection with the matters referred to in subdivisions (1) and (2) of this section; or (4) Charging and collecting late or delinquency charges, attorneys’ fees or collection charges.

Del. Code tit. 5, § 973 Application of other state laws.

Any other law of this State limiting the rate or amount of interest, discount, points, finance charges, service charges or other charges which may be charged, taken, collected, received or reserved shall not apply to extensions of credit made in accordance with this subchapter.

Del. Code tit. 5, § 974 Nonexclusivity; captions.

(a) The provisions of this subchapter are not exclusive and a bank may at its option elect to extend credit either pursuant to this subchapter or as otherwise permitted by applicable law. (b) Section headings and captions contained in this subchapter are inserted only as a matter of convenience and for reference and do not, and shall not be construed to, define, limit, extend or describe the scope of this subchapter or the meaning or intent of any section hereof.

Del. Code tit. 5, § 975 Materiality of terms.

All terms, conditions and other provisions of and relating to any extension of closed end credit as contained in this subchapter or in the agreement governing, or the bond, note or other evidence of the loan (other than those which are interest under this subchapter), including, without limitation, provisions relating to the method of calculating interest, reasons for default and the right to cure any default, rights to accelerate, choice of law, rights to charge and collect attorney’s fees, court and collection costs, repayment schedule, balloon payments, loan term and the refunding of unearned interest or insurance charges, shall be and hereby are deemed to be material to the determination of interest under Delaware law, under the most favored lender doctrine, and under § 85 (12 U.S.C. § 85) of the National Bank Act or § 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (12 U.S.C. § 1831d).

Del. Code tit. 5, § 976 Governing law.

The agreement governing, or the bond, note or other evidence of a loan between a bank and an individual borrower shall be governed by the laws of this State.

Del. Code tit. 5, § 977 Commissioner’s regulations.

The State Bank Commissioner may prescribe regulations to carry out the purpose of this chapter.

Del. Code tit. 5, § 978 Short-term consumer loans.

(a) In addition to such other limitations and requirements as are imposed pursuant to other provisions of this subchapter, short-term consumer loans shall be subject to the following: (1) No bank, trust company or savings bank shall make more than 4 rollovers of an existing short-term consumer loan. A bank, trust company or savings bank may, following not more than the maximum allowable number of rollovers, enter into a workout agreement with the borrower or take such other actions as are lawful to collect any outstanding and unpaid indebtedness. (2) No bank, trust company or savings bank shall make a short-term consumer loan unless such loan is subject to a right of recission on the part of the individual borrower. (3) No bank, trust company or savings bank shall pursue or threaten to pursue criminal action against an individual borrower in connection with the nonpayment of any amount due, including the unpaid return of any check or automated clearinghouse transaction. (b) In addition to such other disclosure requirements as are imposed pursuant to other provisions of this subchapter, short-term consumer loans shall be subject to the following: No bank, trust company or savings bank shall make a short-term consumer loan unless the application for such loan, which application shall be written in both English and Spanish, contains a written disclosure, conspicuously displayed, that: (1) The loan is designed as a short-term cash flow solution and not designed as a solution for longer term financial problems; (2) Additional fees may accrue if the loan is rolled over; and (3) Credit counseling services are available to consumers experiencing financial problems. (c) Nothing in this section prohibits a lender from refinancing the principal amount of a short-term consumer loan, subject to the limitations and requirements imposed herein. (d) The Commissioner is authorized to promulgate rules and regulations to exempt certain loans or classes of loans from the requirements of this section.
Source: DE Code (Official Site)URL: https://delcode.delaware.gov/title5/c009/sc01/index.htmlFetched: 10/4/2026