ARTICLE 4. Investments [1510. - 1515.]

Cal. Financial Code - FIN 4.

in effect

Cal. Financial Code - FIN § 1510. Section 1510.

The total amount invested by a bank in the securities issued by a person shall not exceed 15 percent of the sum of the shareholders’ equity, allowance for loan and lease losses, capital notes and debentures of the bank, 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; in debentures and consolidated debentures issued by the Central Bank for Cooperatives and banks for cooperatives established under the Farm Credit Act of 1933; 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. (e) Capital stock of the Federal Reserve bank serving the district in which the bank is located. (f) Capital stock of a federal home loan bank in the manner provided in the Federal Home Loan Bank Act. (g) Capital stock of the Federal Deposit Insurance Corporation.

Cal. Financial Code - FIN § 1511. Section 1511.

Section 1510 shall not apply to investments made pursuant to this section. A bank may invest in shares of an investment company (1) registered with the Securities and Exchange Commission pursuant to the federal Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.) and for which the shares are registered under the federal Securities Act of 1933 (15 U.S.C. Sec. 77a et seq.), and (2) the portfolio of which consists solely of the following: (a) Debt obligations in which a bank is permitted to invest without limitation pursuant to subdivision (a), (b), (c), or (d) of Section 1510 and repurchase agreements fully collateralized by those obligations. (b) Loans of federal funds and similar loans of unsecured day(s) funds, maturing in six months or less to institutions insured by the Federal Deposit Insurance Corporation Federal Funds. Loans under this subdivision are limited to transactions described in subsection (a) or (b) of Section 32.102 of Title 12 of the Code of Federal Regulations involving investment companies in which the entire beneficial interest is held exclusively by depository institutions, as permitted by Section 204.123 of Title 12 of the Code of Federal Regulations. (c) Cash or its equivalent.

Cal. Financial Code - FIN § 1512. Section 1512.

Notwithstanding Section 1510, a bank may purchase, acquire, or hold the stock of any corporation pursuant to a plan of reorganization approved by the commissioner by which all of the stock of one or more banks organized under the laws of this state shall be acquired and immediately reissued proportionately to the stockholders of the acquiring bank.

Cal. Financial Code - FIN § 1513. Section 1513.

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.

Cal. Financial Code - FIN § 1514. Section 1514.

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 Business, Consumer Services, and Housing 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.).

Cal. Financial Code - FIN § 1515. Section 1515.

A bank or trust company may acquire stock in settlement or reduction of a loan or in exchange for an investment previously made in good faith where the acquisition of the stock is necessary in order to minimize or avoid loss arising out of the loan or investment. The limitation in Section 1510 shall not apply to the stock acquired in accordance with this section. Whenever any stock that is acquired in accordance with this section can be sold for an amount sufficient to reimburse the bank or trust company for all loss arising out of the loan for which the stock was security or arising out of the original investment by the bank or trust company, the bank or trust company shall sell the same or shall convert the stock to an investment subject to Section 1510.

Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026