Article 1 - General Powers

California Financial Code — §§ 6500-6530

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Sections (31)

Amended by Stats. 1984, Ch. 287, Sec. 16. Effective July 6, 1984.

(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

Repealed and added by Stats. 1983, Ch. 1091, Sec. 2.

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

Repealed and added by Stats. 1983, Ch. 1091, Sec. 2.

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

§ 6502.5

Added by Stats. 1990, Ch. 1118, Sec. 31.

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

Amended by Stats. 2006, Ch. 538, Sec. 165. Effective January 1, 2007.

(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

Amended by Stats. 1985, Ch. 983, Sec. 5. Effective September 26, 1985.

(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

Repealed and added by Stats. 1983, Ch. 1091, Sec. 2.

(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

Repealed and added by Stats. 1983, Ch. 1091, Sec. 2.

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

Repealed and added by Stats. 1983, Ch. 1091, Sec. 2.

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

Repealed and added by Stats. 1983, Ch. 1091, Sec. 2.

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

Repealed and added by Stats. 1983, Ch. 1091, Sec. 2.

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

§ 6511

Repealed and added by Stats. 1983, Ch. 1091, Sec. 2.

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

Repealed and added by Stats. 1983, Ch. 1091, Sec. 2.

An association may service loans and investments for others.

§ 6514

Amended by Stats. 1990, Ch. 1118, Sec. 32.5.

(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

Amended by Stats. 1996, Ch. 1064, Sec. 552. Effective January 1, 1997. Operative July 1, 1997.

(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

Repealed and added by Stats. 1983, Ch. 1091, Sec. 2.

(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

Repealed and added by Stats. 1983, Ch. 1091, Sec. 2.

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

Repealed and added by Stats. 1983, Ch. 1091, Sec. 2.

(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

Added by Stats. 1983, Ch. 1091, Sec. 2.

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

Amended by Stats. 1985, Ch. 983, Sec. 6.5. Effective September 26, 1985.

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

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§ 6522

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§ 6523

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§ 6524

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§ 6525

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§ 6525.5

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