2010 California Code
Financial Code
Article 2. Loans To Insiders

780.  It is the intent of the Legislature that the provisions of
this article, insofar as they are contained in Regulation O (12
C.F.R. Part 215) of the Federal Reserve Board, conform, and be
interpreted by anyone construing the provisions of this article to so
conform, to Regulation O, to any rule or interpretation promulgated
thereunder by the Board of Governors of the Federal Reserve System,
and to any interpretation issued by an official or employee of the
Federal Reserve System duly authorized to issue the interpretation.



781.  As used in this article:
   (a) "Bank" means:
   (1) Any commercial bank, industrial bank, or trust company
incorporated under the laws of this state.
   (2) Any foreign (other nation) bank that is licensed by the
commissioner under Article 3 (commencing with Section 1750) of
Chapter 13.5 to maintain a depositary agency or branch office, as
defined in Section 1700, in this state, with respect to any office of
that type.
   (3) Any corporation incorporated under the laws of this state that
is incorporated for the purpose of engaging in, or that is
authorized by the commissioner to engage in, business under Article 1
(commencing with Section 3500) of Chapter 19.
   (4) Any foreign corporation that is licensed by the commissioner
under Article 1 (commencing with Section 3500) of Chapter 19 to
maintain an office in this state and to transact at the office
business under that article, with respect to any office of that type.
   (5) When used to designate a person that extends credit, any
subsidiary of a bank, as defined in paragraph (1), (2), (3), or (4).
   (b) "Company" has the meaning set forth in subdivision (b) of
Section 215.2 of Regulation O.
   (c) "Executive officer" has the meaning set forth in paragraph (1)
of subdivision (e) of Section 215.2 of Regulation O. Also,
"executive officer," when used with respect to any bank of the type
described in paragraph (2) or (4) of subdivision (a), includes the
manager of each office of the type referred to in paragraph (2) or
(4) of subdivision (a) that the bank maintains in this state.
   (d) "Extension of credit" has the meaning set forth in Section
215.3 of Regulation O. However, for purposes of this subdivision, the
term "member bank," as used in Section 215.3, means a bank.
   (e) "Regulation O" means Regulation O (Part 215 (commencing with
Section 215.1) of Title 12 of the Code of Federal Regulations) of the
Board of Governors of the Federal Reserve System.
   (f) "Subsidiary" has the meaning set forth in Section 1841(d) of
Title 12 of the United States Code. However, for purposes of this
subdivision, the term "bank holding company," as used in Section 1841
(d) of Title 12 of the United States Code, means a bank holding
company, as defined in Section 1841(a) of Title 12 of the United
States Code, or a bank, and the term "board," as used in Section 1841
(d) of Title 12 of the United States Code, means the commissioner.




782.  Sections 215.2, 215.3, 215.4, 215.5, 215.8, and 215.9 of
Regulation O in all of their particulars, including footnotes, are
hereby referred to, incorporated by reference into this article, and
adopted, subject to the following:
   (a) The term "this Subpart," as used in the referenced sections of
Regulation O, means this article.
   (b) Subdivision (j) of Section 215.2 of Regulation O is not
applicable. Instead, the term "member bank," as used in the
referenced sections of Regulation O, means a bank.
   (c) The term "executive officer," as used in the referenced
sections of Regulation O, includes, in the case of a bank of the type
described in paragraph (2) or (4) of subdivision (a) of Section 781,
the manager of each office of the type referred to in paragraph (2)
or (4) of subdivision (a) of Section 781 that the bank maintains in
this state.
   (d) The definition of "lending limit" in subdivision (i) of
Section 215.2 of Regulation O is not applicable; instead, the term
"lending limit," as used in the referenced sections of Regulation O,
means an amount equal to the limit on obligations of a single obligor
set forth in Section 1221, and any reference in the referenced
sections of Regulation O to the lending limit specified in
subdivision (i) of Section 215.2 is considered to be a reference to
the limit specified in Section 1221.
   (e) (1) Any company which is majority owned by one or more
executive officers or directors of a bank, individually or
collectively, is deemed to be a related interest of each of those
executive officers or directors for purposes of the referenced
sections of Regulation O.
   (2) In case an individual who is an executive officer of a bank is
also a director or executive officer of a company, the company is
deemed to be a related interest of the individual for purposes of the
referenced sections of Regulation O except subdivision (c) of
Section 215.4. However, this paragraph shall not apply to an
extension of credit by a bank to any of the following companies:
   (A) A bank holding company of which the bank is a subsidiary.
   (B) Any subsidiary of the bank holding company.
   (C) Any nonprofit company engaged in religious, charitable,
educational, scientific, literary, social, or recreational purposes,
provided that the individual whose position as a director or
executive officer of the company at issue does not receive
compensation in excess of one thousand dollars ($1,000) per year for
serving as a director or executive officer of the company.
   (3) In case a bank in making an extension of credit becomes
subject to the requirements set forth in subdivision (b)(1)(i) of
Section 215.4 of Regulation O because of paragraph (1) or (2), the
bank shall be deemed to fulfill the requirement if the extension of
credit is promptly reported to the board of the bank.



783.  No bank shall extend credit in an aggregate amount greater
than the amount permitted in paragraph (4) of subdivision (c) of
Section 215.5 of Regulation O to any company that is majority owned
by one or more executive officers of the bank, individually or
collectively. For purposes of paragraph (4) of subdivision (c) of
Section 215.5 of Regulation O, the total amount of credit extended by
the bank to the company is considered to be extended to each of
those executive officers.



784.  In making any extension of credit that is subject to this
article, a bank shall comply with all other applicable provisions of
this division relating to extensions of credit by banks.



785.  No provision of this article or of Article 2 (commencing with
Section 1220) of Chapter 10 shall apply to an advance of money made
by a bank pursuant to Section 317 of the Corporations Code.



786.  A bank may make a loan, otherwise complying with the
provisions of this division, for the benefit of a trust,
notwithstanding that the bank or any one or more executive officers
or directors of the bank are trustees of the trust.



787.  Any bank that makes an extension of credit in violation of
this article is subject to a civil penalty pursuant to Section 216.3.
Any person, other than the bank making the extension of credit, who
knowingly makes or procures an extension of credit in violation of
this article is guilty of a felony.