2010 California Code
Financial Code
Article 1. General Powers

6500.  (a) Each association incorporated pursuant to or operating
under the provisions of this division shall have all the powers
enumerated, authorized, and permitted by this division and other
rights, privileges, and powers, and may engage in any activities
singly or with others, that are incidental to or reasonably necessary
or appropriate for the accomplishment of the objects and purposes of
the association, as provided by this division. Among others, and
except as otherwise limited by the provisions of this division, each
association shall have the powers set out in this chapter.
Associations shall be subject to the provisions of the General
Corporation Law (Division 1 (commencing with Section 100) Title 1 of
the Corporations Code) and shall also have all the powers and
privileges provided in the General Corporation Law of this state to
other corporations except those powers and privileges that are
expressly denied to associations in this division. If any provision
of the General Corporation Law is inconsistent with any provision of
this division, the provisions of this division shall prevail.
   (b) All references in this division to the General Corporation Law
mean the General Corporation Law effective January 1, 1977, and any
subsequent amendments thereto.
   (c) In the application of Chapter 23 (commencing with Section
2300) of the Corporations Code to associations, the definition of
effective date in Section 2300 is January 1, 1978.



6501.  An association may have perpetual existence, adopt and use a
corporate seal which may be affixed by imprint, facsimile, or
otherwise, and adopt and amend bylaws as provided in this division.



6502.  An association may sue, be sued, complain, and defend in any
court.


6502.5.  An association may, acquire, hold, sell, develop,
subdivide, dispose of, and convey real and personal property
consistent with its objects and powers. It may mortgage, pledge, or
lease any real or personal property and may take the property by
gift, devise, or bequest.



6503.  (a) No association or subsidiary thereof, without the prior
written consent of the commissioner, shall enter into either of the
following:
   (1) Any transaction or modification of any transaction with an
affiliated person to buy, lease, or sell real or personal property,
or take that property by gift.
   (2) Any consulting contracts or contracts for services with an
affiliated person.
   (b) As a condition to approving a transaction specified in
subdivision (a), the commissioner shall make both of the following
findings:
   (1) The terms of the transaction are fair to, and in the best
interests of, the savings association or subsidiary. In the case of
real or personal property transactions, this finding shall be
supported by an appraisal not prepared by an affiliated person or
employee of the association or subsidiary.
   (2) The transaction was approved in advance by a resolution duly
adopted with full disclosure by at least a majority, with no director
having an interest in the transaction voting, of the entire board of
directors of the association or subsidiary, or alternatively, by a
majority of the total votes eligible to be cast by the voting members
or stockholders of the association at a meeting called for that
purpose, with no votes cast by proxies not solicited for that
purpose. For purposes of this subdivision, "full disclosure" shall
include, but not be limited to, (A) the affiliated person's source of
financing for any real property involved in the transaction and (B)
whether the association or any subsidiary thereof has a deposit
relationship with any financial institution or holding company or
affiliate thereof providing the financing.



6504.  (a) Except by the prior written consent of the commissioner,
an association in organization that is not a member of a federal home
loan bank may borrow money from any source not more than an
aggregate amount equal to 25 percent of its assets on the date of
borrowing, and may pledge and otherwise encumber any of its assets to
secure its debts.
   (b) An association that is a member of a federal home loan bank
may borrow money from any source without limitation and may pledge
and otherwise encumber any of its assets to secure its debts or
savings accounts.



6505.  (a) An association may issue and sell, directly or through
underwriters, capital certificates that represent nonwithdrawable
capital contributions, and constitute part of the reserves and
statutory net worth of the association. The certificates shall have
no voting rights and shall be subordinate to all savings accounts,
debt obligations, and claims of creditors of the association. The
certificates shall constitute a claim in liquidation against any
reserves, surplus, and other statutory net worth accounts remaining
after the payment in full of all savings accounts, debt obligations,
and claims of creditors. The capital certificates shall be entitled
to the payment of interest prior to the allocation of any income to
surplus or other statutory net worth accounts of the association and
may be issued with a fixed rate of interest or with a prior claim to
distribution of a specified percentage of any net income remaining
after required allocations to reserves, or a combination of those
features. Losses may be charged against capital certificates only
after reserves, surplus, and other statutory net worth accounts have
been exhausted.
   (b) To the extent permitted by its articles of incorporation, an
association authorized to issue capital stock may provide for the
conversion of capital certificates into common stock.



6507.  An association may qualify as and become a member of a
federal home loan bank and a home loan bank established as an agency
or instrumentality of this state.



6508.  An association may become a member of, deal with, maintain
reserves or deposits with, or make reasonable payments or
contributions to any organization or instrumentality whether
government or private, to the extent that the organization or
instrumentality assists in furthering or facilitating the association'
s purposes, powers, services, or community responsibilities, and it
may comply with any reasonable requirements or conditions of
eligibility.


6509.  An association may act as depository for receipt of payments
of federal or state taxes and loan funds, and may satisfy any related
federal or state statutory or regulatory requirements, including
pledging of assets as collateral, payment of interest at prescribed
rates, and, notwithstanding any other provision of this division, may
issue the accounts subject to the right of immediate withdrawal.




6510.  An association may sell any loan, including a participating
interest in a loan, at any time.



6511.  Loans secured by real property may be sold to, and are legal
investments for, among others, any public or private pension fund,
credit union, labor union fund, or public employee association and
may be purchased by those institutions directly from an association.
Nothing in this subdivision shall be construed as altering any limits
imposed by law on the extent of participation in an investment that
is made by any entity covered by this subdivision.



6513.  An association may service loans and investments for others.



6514.  (a) An association may act, and receive compensation for so
acting, as trustee of any trust created or organized in the United
States and forming a part of a stock bonus, pension, or
profit-sharing plan that qualifies for specific tax treatment under
Section 401 of the Internal Revenue Code of 1986 (26 U.S.C., Sec.
401), as amended.
   (b) It may also act, and receive compensation for so acting, as
trustee or custodian of an individual retirement account within the
meaning of Section 408 of the Internal Revenue Code of 1986, as
amended.
   (c) Assets of the trust or account must be invested only in
savings accounts of the association, in obligations or securities
issued by the association, or in other investments that are approved
by the commissioner.
   (d) All assets held in fiduciary capacity by any association under
the authority of this section may be commingled and consolidated for
appropriate purposes of investment if records reflecting each
separate beneficial interest are maintained by the fiduciary or by
another appropriate party who assumes that duty.
   (e) The trustee or custodian may accept noncash assets under this
section if the assets are converted into cash as soon as practicable.




6515.  (a) Notwithstanding any provisions of Division 1 (commencing
with Section 99), Section 202 of the Corporations Code, or any other
provisions of law relating to trusts and trust authority, subject to
regulations of the commissioner, an association may act as trustee,
executor, administrator, guardian, or in any other fiduciary capacity
in which banks, trust companies, or other corporations are permitted
to act under the laws of this state, directly or through a state or
nationally chartered subsidiary.
   (b) All acts provided in this code to be performed by the
commissioner, the State Treasurer, or other public officials for or
in respect to the deposit of securities by trust companies for the
protection of court and private trusts shall be performed as well for
or in respect to the deposit of securities by any association or the
trust companies of any association organized or doing business under
the laws of this state, or by any federal association authorized to
transact a trust business. An association may advertise its authority
to engage in and conduct a trust business and to advertise for and
solicit a trust business in this state, notwithstanding any other
provision of law.
   (c) Pursuant to the authority contained in Section 1 of Article XV
of the California Constitution, the restrictions upon rates of
interest contained in Section 1 of Article XV of the California
Constitution shall not apply to any obligations of, loans made by, or
forbearances of, an association or federal association, or a service
corporation which is authorized to exercise trust powers, when the
association, federal association, or service corporation is acting in
its fiduciary capacity as trustee.
   (d) Subdivision (c) creates and authorizes an exempt class of
persons pursuant to Section 1 of Article XV of the Constitution.
Notwithstanding any other provision of law, subdivision (c) does not
exempt an association, federal association, or a service corporation
of such associations, from complying with all other laws and
regulations governing the business in which the association, federal
association, or service corporation is engaged.




6516.  (a) Subject to regulations issued by the commissioner, an
association may own and use or participate in the use or ownership
and use of remote service units.
   (b) A remote service unit is not a branch or agency.



6517.  Subject to Regulation E (12 CFR Part 205) and to rules and
regulations of the commissioner, an association may transfer funds
between holders of savings accounts, and third parties, or their
designees, by means of an electronic funds transfer system. No system
or any part of it, including terminals or processing centers, shall
of itself be considered a branch office or agency.



6518.  (a) An association may maintain and rent safes, boxes, or
other receptacles or premises for the safekeeping of personal
property upon terms and conditions that may be agreed upon.
   (b) An association that rents or otherwise makes safe-deposit
boxes available to the public is entitled to all of the remedies set
forth in Article 2 (commencing with Section 1660) of Chapter 13 of
Division 1, and may dispose of the unclaimed contents of safe-deposit
boxes in the manner set forth in that article.



6519.  An association may sell money orders, travel checks, and
similar instruments drawn by it on its bank accounts or as agent for
any organization empowered to sell the instruments through agents
within this state.


6520.  An association, service corporation, or a person authorized
in writing by an association may act as an agent for others except
that an association may not act as an insurer or transact insurance
as agent for an insurer. Any savings and loan association holding
company or any service corporation that acts as an agent of an
insurer shall conform to the requirements of Section 7455 and Section
770.1 of the Insurance Code.



6521.  (a) Notwithstanding the provisions of Division 6 (commencing
with Section 17000) or any other provision of law, an association or
service corporation may act as an escrow agent in connection with the
sale, transfer, encumbering or leasing of real or personal property.
   (b) The name for any subdivision of an association operating as an
escrow agent pursuant to this section, if different from the name of
the association, shall be approved by the commissioner.



6522.  (a) An association that declares and pays dividends may
distribute its own shares or may make payments in cash or property.
Payment of cash or property shall be made only if there is a
sufficient balance of unappropriated retained earnings which is that
portion of income retained in the business since its organization or
reorganization and which has not been appropriated or reserved for
some specific purpose. Dividends shall not be distributed unless the
association meets its required statutory net worth before and after
that distribution. No dividends shall be paid if that payment would
cause the association to be in an impaired condition.
   (b) A stock split, as defined in Section 188 of the Corporations
Code, and a reverse stock split, as defined in Section 182 of the
Corporations Code, are authorized and shall not be construed to be
dividends within the meaning of this section.
   (c) Any distribution of permanent capital or paid in surplus shall
require prior approval of the commissioner.
   (d) Any shareholder who receives any distribution prohibited by
this section with knowledge of facts indicating the impropriety
thereof is liable to the association for the amount received. The
commissioner may bring an action for the benefit of the association
to recover the distribution from the shareholder.



6523.  (a) An association may use advertising, whether printed,
broadcasted by radio, televised, displayed, or communicated in any
other manner or make any representation that is accurate and does not
misrepresent its services, contracts, investments, or financial
condition.
   (b) The commissioner may require an association to file a true
copy of the text of any advertising in the office of the commissioner
at least five days prior to its issuance, circulation, or
publication. Advertising filed under this subdivision may be used
upon the commissioner's express approval or failure to disapprove it
within five days of its filing.
   (c) Associations shall not issue, circulate, or publish any
advertising after notice in writing from the commissioner that in the
commissioner's opinion the advertising is inaccurate or
misrepresents the association's services, contracts, investments, or
financial condition.



6524.  An association may organize, sponsor, operate, control, or
render investment advice to, an investment company, or underwrite,
distribute, or sell securities of any investment company which has
qualified to sell its securities in this state pursuant to Part 2
(commencing with Section 25100) of Division 1 of Title 4 of the
Corporations Code, if the officers and employees of the association
who sell these securities meet such standards with respect to
training experience, and sales practices as established by the
Savings and Loan Commissioner. For the purpose of this section,
"investment company" means an investment company as defined in the
Investment Company Act of 1940 (15 U.S.C., Sec. 80a-1 et seq.).



6525.  (a) Notwithstanding the provisions of Sections 1051, 1052,
and 1054 of the Labor Code and Section 2947 of the Penal Code, an
association, a subsidiary or affiliate of an association, or any
officer or employee thereof may deliver fingerprints taken of a
director, an officer, an employee, or an applicant for employment to
local, state, or federal law enforcement agencies for the purpose of
obtaining information as to the existence and nature of a criminal
record, if any, of the person fingerprinted relating to convictions,
and to any arrest for which that person is released on bail or on his
or her own recognizance pending trial, for the commission or
attempted commission of a crime involving robbery, burglary, theft,
embezzlement, fraud, forgery, bookmaking, receiving stolen property,
counterfeiting, or involving checks or credit cards or using
computers.
   (b) The Department of Justice shall, pursuant to Section 11105 of
the Penal Code, and a local agency may pursuant to Section 13300 of
the Penal Code, furnish to the officer of the association or
subsidiary or affiliate thereof responsible for the final decision
regarding employment of the person fingerprinted, or to his or her
designees having responsibilities for personnel or security decisions
in the usual scope and course of their employment with the
association, subsidiary, or affiliate summary criminal history
information when requested pursuant to this section. If, upon
evaluation of the criminal history information received pursuant to
this section, the association, subsidiary, or affiliate determines
that employment of the person fingerprinted would constitute an
unreasonable risk to the association, subsidiary, or affiliate or its
customers, the person fingerprinted may be denied employment.
   (c) A request for records pursuant to this section made of the
Department of Justice shall be on a form approved by the department.
The department may charge a fee to be paid by the requesting
association, subsidiary, or affiliate pursuant to subdivision (e) of
Section 11105 of the Penal Code. No request shall be submitted
without the written consent of the person fingerprinted.
   (d) Any criminal history information obtained pursuant to this
section is confidential and no recipient shall disclose its contents
other than for the purpose for which it was acquired.
   (e) "Affiliate," as used in this section, means any corporation
controlling, controlled by, or under common control with, a savings
association, whether directly, indirectly, or through one or more
intermediaries.



6525.5.  Except with the prior written consent of the commissioner:
   (a) No person who has been convicted of any criminal offense
involving dishonesty or breach of trust may participate, directly or
indirectly, in any manner in the conduct of the affairs of a savings
association.
   (b) A savings association shall not permit any person who has been
convicted of any criminal offense involving dishonesty or breach of
trust to participate, directly or indirectly, in any manner in the
conduct of the affairs of the savings association.



6526.  An association may issue commercial and standby letters of
credit in conformance with the Uniform Commercial Code or the Uniform
Customs and Practice for Documentary Credits Act and may pledge
collateral to secure its obligations thereunder. Except as otherwise
provided by regulations of the commissioner, such issuance shall be
subject to the following requirements:
   (a) Each letter of credit must conspicuously state that it is a
letter of credit.
   (b) The issuer's undertaking must contain a specified expiration
date or be for a definite term, and must be limited in amount.
   (c) The issuer's obligation to pay must be solely dependent upon
the presentation of conforming documents as specified in the letter
of credit, and not upon the factual performance or non-performance by
the parties to the underlying transaction.
   (d) The account party must have an unqualified obligation to
reimburse the issuer for payments made under the letter of credit.
   To the extent funds are advanced under a letter of credit without
compensation from the account party, the amount shall be treated as
an extension of credit subject to percentage of assets limits and
other requirements under an applicable provision of this division.



6527.  If a loan or other investment is authorized under more than
one section of this division an association may designate under which
section the loan or investment has been made. Such a loan or
investment may be apportioned among appropriate categories, and may
be moved, in whole or in part, from one category to another.




6528.  An association may provide correspondent services primarily
to other depository institutions to the extent that the activity does
not violate other provisions of law.
   (a) An association may maintain a noninterest-bearing account at
any institution at which accounts are insured by the Federal Deposit
Insurance Corporation, if the account is necessary or incidental to a
correspondent relationship.
   (b) An association may receive non-interest-bearing deposits from
correspondent institutions for use as compensating balances, for
settlement purposes, or for other purposes incidental to a
correspondent relationship. These deposits may be payable on demand
and subject to withdrawal by negotiable or transferable instrument,
order, or authorization. These deposits shall not give rise to voting
rights of membership in a state mutual association.



6529.  (a) No affiliated person of a savings association may
receive, either directly or indirectly, from the association, a
subsidiary thereof, or any other source any fee or other compensation
of any kind in connection with the procurement of a loan from that
association or subsidiary.
   (b) No savings association shall give and no person shall accept
any fee, kickback, or thing of value pursuant to any agreement or
understanding, oral or otherwise, that business incident to or part
of a real estate closing service shall be referred to any person by
the savings association or by a subsidiary or affiliated person
thereof, in connection with any loan on real property made by a
savings association or subsidiary thereof.
   (c) Other than for services actually performed, no person shall
give and no savings association or subsidiary or affiliated person
thereof shall accept any portion, split, or percentage of any charge
made or received for the rendering of a real estate closing service
in connection with a transaction involving a loan on real property
made by a savings association or subsidiary thereof.
   (d) For purposes of subdivisions (b) and (c), "real estate closing
service" includes any service provided in connection with the
execution of a real estate escrow transaction, including, but not
limited to, title searches, title examinations, the provision of
title reports, title insurance, services rendered by an attorney, the
preparation of documents, property surveys, the rendering of credit
reports or appraisals, pest and fungus inspections, services rendered
by a real estate licensee, and the handling of the processing.



6530.  (a) No savings association may discharge or otherwise
discriminate against any employee with respect to compensation,
terms, conditions, or privileges of employment because the employee
(or any person acting pursuant to the request of the employee)
provided information to the commissioner, the Attorney General, or
any district attorney regarding a possible violation of any law or
regulation by the savings association or any of its officers,
directors, or employees.
   (b) Any employee or former employee who believes he or she has
been discharged or discriminated against in violation of subdivision
(a) may file a civil action in superior court before the close of the
2-year period beginning on the date of that discharge or
discrimination. The plaintiff shall also file a copy of the complaint
initiating the civil action with the commissioner.
   (c) If the court determines that a violation of subdivision (a)
has occurred, it may order the association which committed the
violation to do any of the following:
   (1) Reinstate the employee to his or her former position.
   (2) Pay compensatory damages.
   (3) Take other appropriate actions to remedy any past
discrimination.
   (d) The protections of this section shall not apply to any
employee who does either of the following:
   (1) Deliberately causes or participates in the alleged violation
of law or regulation.
   (2) Knowingly or recklessly provides substantially false
information to the commissioner, the Attorney General, or any
district attorney.