2005 California Financial Code Sections 1335-1338 Article 4. Investments

1335.  (a) A commercial bank may invest in gold and silver bullion
and United States mint certificates of ascertained value, and
purchase securities, except corporation shares, for its own account
which in the informed opinion of the bank it is prudent to invest the
funds of its depositors.
   (b) Notwithstanding the provisions of subdivision (a), a
commercial bank may purchase for its own account shares of stock of a
bank insured by the Federal Deposit Insurance Corporation if the
stock of such bank is owned exclusively by other banks, except to the
extent that any provision of law requires directors' qualifying
shares, and if such bank is engaged exclusively in providing services
for other banks and their officers, directors, or employees.
1336.  Unless otherwise approved by the commissioner, a commercial
bank shall not invest an amount exceeding 15 percent of its
shareholders' equity in the securities of any one obligor or maker,
except:
   (a) Obligations of the United States and those for which the faith
and credit of the United States are pledged for the payment of
principal and interest.
   (b) Bonds, consolidated bonds, collateral trust debentures, or
other obligations issued by the Federal Financing Bank, the United
States Postal Service, federal land banks or federal intermediate
credit banks established under the Federal Farm Loan Act, as amended;
in debentures and consolidated debentures issued by  the Central
Bank for Cooperatives and banks for cooperatives established under
the Farm Credit Act of 1933, as amended; in consolidated notes,
bonds, debentures and other obligations issued by federal land banks,
federal intermediate credit banks, and banks for cooperatives under
the Farm Credit Act of 1971; in the bonds of any federal home loan
bank established under the Federal Home Loan Bank Act; and in stock,
bonds, debentures, participations, and other obligations of or issued
by the Student Loan Marketing Association, the Federal National
Mortgage Association, the Government National Mortgage Association,
and the Federal Home Loan Mortgage Corporation.
   (c) Obligations of the State of California and those for which the
credit of the State of California is pledged for the payment of
principal and interest.
   (d) Obligations of a local agency or district of the State of
California having the power, without limit as to rate or amount, to
levy taxes to pay the principal and interest of the bonds upon all
property within its boundaries subject to taxation by the local
agency or district.
1337.  If any commercial bank has made investments which it was
authorized to make at the time they were made it shall not be
required to dispose of such investments by reason of adoption of the
Banking Code, this code, or any amendments to this article.
1338.  A commercial bank 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 bank who sell
these securities meet such standards with respect to training,
experience, and sales practices as established by the Secretary of
the Business, Transportation and Housing Agency or the secretary's
designee.  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.).