2007 California Financial Code Article 2. Loans To Insiders

CA Codes (fin:3370-3376)

3370.  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.



3371.  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 of this division 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 of this
division 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, as amended from
time to time.
   (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.




3372.  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
3371, the manager of each office of the type referred to in paragraph
(2) or (4) of subdivision (a) of Section 3371 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
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; or (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 is at issue does
not receive compensation in excess of one thousand dollars (,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.



3372.5.  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.



3373.  (a) Notwithstanding any other provisions of this article,
whenever Section 215.2, 215.3, 215.4, 215.5, 215.7, or 215.8 is
changed by the Board of Governors of the Federal Reserve System, the
commissioner may by regulation adopt that same change.  Any
regulation adopted under this section shall expire at 12 p.m. on
December 31 of the year following the calendar year in which it
becomes effective.
   (b) (1) Section 11343.4 and Article 5 (commencing with Section
11346) and Article 6 (commencing with Section 11349) of Chapter 3.5
of Part 1 of Division 3 of Title 2 of the Government Code do not
apply to any regulation adopted under subdivision (a).
   (2) The commissioner shall file any regulation adopted pursuant to
subdivision (a), together with a citation to subdivision (a) as
authority for the adoption and a citation to the provisions of
federal law made applicable by the regulation, with the Office of
Administrative Law for filing with the Secretary of State and
publication in the California Code of Regulations.
   (3) A regulation adopted under subdivision (a) shall become
effective on the date it is filed with the Secretary of State unless
the commissioner prescribed a later date in the regulation or in a
written instrument filed with the regulation.
   (c) A regulation adopted pursuant to subdivision (a) does not
expire as provided by subdivision (a) and is not subject to
subdivision (b) if the commissioner complies with all of the
provisions of Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of the Government Code in adopting the regulation,
including those listed in paragraph (1) of subdivision (b).



3374.  In making any extension of credit which is subject to this
article, a bank shall comply with all other applicable provisions of
this division relating to extensions of credit by banks.



3375.  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.



3375.5.  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.



3376.  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.