Financial Code, 1951

This section preserves state departments’ or agencies’ authority to regulate financial institutions within their jurisdiction.

This division overrides local ordinances and regulations about financial institutions’ use and sharing of nonpublic personal information, and it applies both forward and backward in time.

An insurer may combine certain required forms, if the combined form meets the stated requirements.

This section says the division is severable, so if part of it is invalid or preempted by federal law or regulation, the rest still stands.

The commissioner must annually collect an assessment from national and out-of-state banks that operate trust departments in California.

This division becomes operative on July 1, 2004.

When the commissioner makes an assessment under Sections 405 or 406, the commissioner must set the due date and send each assessed bank and trust company an invoice showing the amount and due date.

The commissioner must collect and assess an examination fee from each bank authorized to engage in the trust business, send an invoice to the institution, and the institution must pay within 30 days.

If a bank or trust company does not timely pay an assessment under Sections 405, 406, or 408, the commissioner may cancel its certificate of authority or impose a civil penalty.

The State Banking Fund is converted into a separate account called the State Banking Account, and its money, assets, and liabilities are transferred to that account.

A supervised financial institution must not reissue a consumer deposit account number to a customer if that number was previously used by another customer, until at least three years after the other account was closed.

The department’s salaries and other expenses are generally paid from the State Banking Account in the Financial Institutions Fund, except as Sections 413 or 414 provide otherwise.

The commissioner must deliver most money the commissioner receives or collects to the Treasurer, and the Treasurer must deposit it into the State Banking Account of the Financial Institutions Fund.

The commissioner may charge certain financial funds and programs their pro rata share of department expenses, and those shares must be paid as ordered by the commissioner.

The commissioner may pay department expenses from specified accounts and funds during a fiscal year, but must reimburse an account or fund if an expense was paid from a source that was not otherwise permitted.

The commissioner may share information with certain governmental agencies and with some other specified persons, including in cases involving financial institutions, loan programs, business-activity regulation, suspected crimes, and licensees.

A foreign financial regulatory agency may examine a licensee and its offices only with the commissioner’s prior approval and if the agency has a regulatory interest in the licensee.

Certain licensee insiders may not disclose confidential information from the commissioner, except for listed legal and regulatory disclosures and other written authorization; improper disclosure can trigger a civil penalty.

Licensees must file commissioner-required reports in the prescribed form, and the verification must say the officers know the report’s contents and believe it is true.

The commissioner must call for the Section 453 report from all licensees at least four times each year.

The commissioner may require a licensee to file a special report with specified information, and may set the form, filing date, and verification requirements.

A licensee must keep its corporate records, financial records, and books of account in English and in a form acceptable to the commissioner.

Every licensee must notify the commissioner when certain listed officers change, if those officers exist in the licensee.

Licensees must file required reports with the commissioner when the commissioner requires, and late or missing reports can trigger a daily money liability.

Licensees must file one copy of material they submit to certain federal or law-enforcement agencies with the commissioner, and those copies are generally public unless confidential treatment applies.

A person who intentionally makes a false statement in a report required under this article or other law administered by the commissioner is guilty of perjury.

A licensee must charge off any debt with interest that has been past due and unpaid for one year, unless the debt is well secured or being collected.

People who provide services to a licensee must submit to an examination by the commissioner when asked. If the commissioner thinks an examination is necessary or desirable, the examined person pays for it. If the person refuses the examination, the commissioner may order affected licensees to stop using that person’s services or doing business with them, and the licensees must comply.

The commissioner may require a licensee’s financial statements or accounting items to be prepared using a method other than U.S. GAAP, if the commissioner finds that method necessary or appropriate to carry out this code.

A financial institution officer must provide specified asset information to the State Department of Health Care Services or its designee when the person has authorized disclosure under Section 14013.5.

This section names the division the “Depository Corporation Sale, Merger, and Conversion Law” and says it may be cited by that short title.

This section says references to statutes, regulations, agencies, and public officers should be read broadly to include amended, substituted, or successor versions.

If part of this division is invalid, the rest still applies if it can work without the invalid part.

If a provision of this division is preempted by federal law, it does not apply and cannot be enforced.

This section says the article’s definitions apply throughout the division, subject to any additional division-specific definitions and the context.

This section defines “bank” and “foreign (other nation) bank” for this division.

This section defines when “California” refers to a savings association, industrial loan company, office, or other corporation.

This section defines “California federally licensed foreign (other nation) bank” for sales or mergers.

This section defines “California state-licensed foreign (other nation) bank” for sale or merger transactions.

This section defines “Commissioner” as the Commissioner of Financial Protection and Innovation.

“Depository corporation” means a state or federal depository corporation.

This section defines “federal depository corporation” as a national banking association or a federal savings association.

This section defines “federal savings association” as a savings association or savings bank organized under Section 5 of the Home Owners’ Loan Act.

This section defines when a person, company, or office is “foreign” or “foreign (other state)” by reference to whether it is organized or located in another U.S. state rather than this state.

This section defines “industrial loan company” as an industrial bank as defined in Section 111.

This section defines “insured” for a depository corporation as one whose deposits are insured by the FDIC under the Federal Deposit Insurance Act.

This section defines “law of the domicile” for federal depository corporations, state depository corporations, and foreign banks.

For this division, “merger” can also include a qualifying consolidation involving a federal depository corporation.

This section defines “share” for certain California state and federal savings associations.

This section defines “shareholder” for certain savings associations.

This section defines “state depository corporation” as a state bank, a state savings association, or an industrial loan company.

“Uninsured” means a deposit, or part of a deposit, that is not insured by the FDIC under the Federal Deposit Insurance Act.

For this division, national banking associations and federal savings associations are treated as corporations.

For this division, depository corporations are classified as banks, savings associations, or industrial loan companies.

For transactions covered by this division, the General Corporation Law applies unless it conflicts with this division or a regulation/order under it.

Some certificates, licenses, or other authorizations are treated as if they were issued under the Division 1.1 or Division 2 provisions that would otherwise apply.

This section says how voting references are interpreted for California state depository corporations, including how to count votes and quorum when shares have unequal voting rights or are disqualified from voting.

In this division, “shareholders’ equity” means shareholders’ equity determined under generally accepted accounting principles, with specific provisions applying to certain California banks, industrial loan companies, and savings associations.

When deciding whether a California state depository corporation has adequate shareholders’ equity, the commissioner must consider Section 1150 factors or equivalent factors depending on the type of conversion.

A California state depository corporation may merge with a non-depository business entity if it is the surviving corporation, and the merger must follow Division 1 of the Corporations Code.

A savings association or industrial loan company may not convert into a bank if the same ownership would not be allowed to establish or control a new state bank or national banking association under Section 3(d) of the Bank Holding Company Act.

This section says Chapter 19 of Division 1.1 applies to transactions covered by this division, and Chapter 19 controls if there is a conflict.

This section says certain covered sales, mergers, and conversions of depository corporations are not blocked or subject to extra approval under specified other code divisions if they are carried out with the commissioner’s approval under this division.

This section limits sales or mergers involving a foreign (other nation) bank unless the bank is licensed or otherwise authorized at the effective time.

This section generally forbids certain California depository corporations from transferring or acquiring deposits or fiduciary accounts in sales, mergers, or conversions if the receiving institution is not authorized to accept them.

The commissioner may give certain California depository institutions time to divest assets, liabilities, or activities, or bring them into compliance, after a sale, merger, or conversion.

A California state bank or industrial loan company may buy all of another depository corporation’s shares only with commissioner and board approval, and under a plan that leads to sale, winding up, conversion, or merger as described here.

This section sets rules for certain sales and mergers of California state-licensed foreign banks, including license surrender and reporting to the commissioner.

Commissioner acts under this division are subject to judicial review.

The commissioner may issue regulations and orders, define terms, classify matters, and waive issued provisions when the commissioner thinks it is not necessary in the public interest.

The commissioner may impose conditions on an order or license issued under this division if the commissioner thinks they are necessary to carry out the division’s purposes.

In proceedings under this division, the applicant must prove the application should be approved, and a person claiming an exemption or exception must prove it.

The commissioner may choose to honor applications from interested persons seeking interpretive opinions on this division, or on regulations or orders issued under it.

Applications and reports filed with the commissioner under this division must use the required form, include required information, and be signed as required; if the commissioner requires, they must also be verified.

No person may make a material false statement or willfully omit a required material fact in an application or report filed with the commissioner under this division or related regulations or orders.

The commissioner may consider an applicant’s proposals when deciding whether to approve an application, and may make findings based on those proposals if implementation seems probable.

The commissioner may deny an application if required information is missing or if the proposed implementation would violate applicable law.

Fees must be paid to the commissioner for certain applications, certificates, and examinations under this division.

This section defines terms used in this chapter on the sale of depository corporation business units.

Section 1001 of the Corporations Code does not apply to transactions covered by this chapter.

If a trust is transferred under this chapter, that transfer is good cause to remove the trustee under the Trust Law.

If a qualifying national banking association or federal savings association sells a partial business unit in California to another such association under federal law, the sale has the same effect as under Section 4879.14 and is also subject to Section 4842.

This section defines “sale” for this article as any sale described in Section 4846.

Banks, industrial loan companies, and depository corporations may sell their whole business unit only with the commissioner’s approval, subject to the article and any applicable federal or domicile law.

A seller and purchaser must make a sale agreement for the seller’s whole business unit.

The sale agreement must be approved by the seller and purchaser, with the approval method depending on whether the sale is a reorganization and whether the corporation is a California state depository corporation or another depository corporation.

Amendments to a sale agreement must be approved by the seller and purchaser, with special approval rules for California state depository corporations and for corporations governed by their domicile law.

If the seller or purchaser is a California state depository corporation, required approval of the outstanding shares may be given before or after board approval.

When approval of outstanding shares is needed for a sale agreement, the purchaser and sometimes the seller must give shareholders whatever information the commissioner requires.

Certain purchasers or sellers may abandon the sale before it becomes effective if the stated approval conditions are met.

If the purchaser is a California state depository corporation, Chapter 13 of the Corporations Code does not apply to the purchaser’s shareholders in the sale.

A purchaser must file specified sale documents with the commissioner.

The commissioner must approve a sale application only if the listed findings are satisfied; otherwise, the application must be denied.

Once the sale application is approved and all required conditions are met, the commissioner must approve and endorse the agreement of sale, and the sale then becomes effective.

After the sale becomes effective, the purchaser may open and keep certain offices, and the commissioner must issue the authorizations needed to carry this out.

When the sale becomes effective, the purchaser generally takes the seller’s rights and property, assumes its debts and liabilities, and may continue or be substituted into pending proceedings.

A lawsuit against the seller for a debt or liability assumed by the purchaser must be started within one year after the sale becomes effective.

After a sale becomes effective, the seller must surrender its authority or license certificates and file any sale report the commissioner requires. If the seller is a California state depository corporation, it must wind up and dissolve. If the seller is a California state bank, it may instead convert into a nonbank corporation with the commissioner's approval.

After a sale becomes effective, the commissioner must issue a certificate on application and under official seal.

This section defines “sale” for this article as the sales described in Section 4871, unless the context requires otherwise.

Certain California banking entities may sell their whole business unit to specified types of banks or depository corporations, subject to this article and sometimes federal law or the purchaser’s domicile law.

Certain California banking and savings-and-loan sellers are not blocked by the specified code provisions from making a sale, subject to the stated exception for Chapter 19 of Division 1.1.

A sale must follow the rules in Sections 4847 to 4850 and 4852, and is treated as a sale of the type defined in Section 4845.

For a sale of the type defined in Section 4845, the sale has the same effect as under Sections 4859 and 4860.

After a sale becomes effective, the seller must surrender its certificates or licenses to the commissioner, file any required sale report, and wind up and dissolve. A California state bank may instead convert into a nonbank corporation with the commissioner’s approval.

After a sale becomes effective, the seller or purchaser may issue an officer’s certificate about the sale and when it became effective.

This section defines “sale” for this article as any sale described in Section 4876.02, unless the context requires otherwise.

A California state independent trust company may sell its whole business unit, but only with the commissioner’s approval.

A sale under this section must be treated as subject to Sections 4847 to 4852, as if it were the kind of sale described in Section 4845.

A seller must file specified documents with the commissioner.

The commissioner must approve a sale application if all listed findings are made; otherwise, the commissioner must deny it.

After approval and completion of all required conditions, the commissioner must approve and endorse the sale agreement. The sale then becomes effective, unless the purchaser’s domicile law makes it effective later.

A sale has the same legal effect as described in Sections 4859 and 4860 for the kind of sale defined in Section 4845.

After a sale becomes effective, the seller must surrender its certificates of authority and file any report the commissioner requires; the seller must also wind up and dissolve, unless it gets the commissioner’s approval to become a nonbank corporation instead.

After a sale becomes effective, the seller or purchaser may issue an officers’ certificate about the sale and its effective time.

This section defines “sale” for this article as the sales described in Section 4877.02, unless context requires otherwise.

A California state bank or California industrial loan company may sell a California branch business unit to certain insured foreign banks or industrial loan companies, if the sale follows this article and the buyer’s home-law requirements.

Division 1.1 generally does not prohibit or restrict a sale when the seller is a California state bank or a California industrial loan company, except for Chapter 19 of Division 1.1.

A sale is subject to specified provisions, as if it were the type of sale defined in another section.

For a covered sale, the sale has the same effect as specified in Sections 4879.14 and 4879.15.

After a sale becomes effective, the seller must promptly surrender the related certificate or license to the commissioner and file any sale report the commissioner requires.

After a sale becomes effective, the seller or purchaser may issue an officer’s certificate about the sale of a California branch business unit.

This section defines “sale” for this article as a sale described in Section 4878.02, unless the context requires otherwise.

A California state bank or savings association may sell a partial trust business unit, but only with the commissioner’s approval.

A sale is treated as subject to Sections 4879.03 to 4879.09, inclusive, as if it were the sale type defined in Section 4879.01.

The commissioner must approve a sale application if specified findings are made, and must deny it if those findings are not made.

After the commissioner approves the sale and all required conditions are met, the commissioner must approve and endorse the agreement of sale, and the sale becomes effective.

A sale under this section has the same effect as provided in Sections 4879.14 and 4879.15 if it is the kind of sale described in Section 4879.01.

If a California state commercial bank sells all of its trust business, the commissioner must issue replacement commercial banking certificates when the sale takes effect, and the seller must promptly surrender specified certificates and file any required sale report.

After a sale becomes effective, the seller or purchaser may issue an officers’ certificate about the sale and the business unit sold.

In this article, “sale” means the sales described in Section 4879.02, unless context requires otherwise.

This section allows certain banks and depository corporations to sell partial business units, but some sales require the commissioner’s approval and several cross-references to other laws apply.

A seller and purchaser must enter into an agreement of sale for a partial business unit.

This section requires approval of an agreement of sale, with the approval body depending on the type and size of the depository corporation.

Amendments to an agreement of sale must be approved by the seller and purchaser, with extra approval requirements depending on the type of depository corporation.

If the seller or purchaser is a California state depository corporation, approval of the outstanding shares may be given either before or after the board approves the depository corporation.

Certain California state depository corporations involved in a sale must give shareholders information that the commissioner requires.

Certain purchasers or sellers may abandon a sale before it becomes effective if the stated approval conditions are met.

Certain purchasers or sellers must file sale documents and approval certificates with the commissioner.

The commissioner must approve a sale application if the statute’s required findings are met, and must deny it if they are not.

Once the commissioner has approved the sale application and all conditions precedent are met, the commissioner must approve and endorse the agreement of sale, and the sale then becomes effective.

After a sale becomes effective, the purchaser may set up equivalent offices at transferred locations, and in some cases may also transact trust business. The commissioner must issue the authorizations needed to carry this out.

If a California state commercial bank sells all of its trust business, the commissioner must issue replacement certificates of authority when the sale takes effect, and the seller must promptly surrender its old certificates for cancellation.

When a sale becomes effective, the purchaser takes the seller’s sold rights and property and assumes the sold debts and liabilities. If trust business is included, the purchaser also succeeds to related fiduciary capacities; if it is all or substantially all of the seller’s trust business, the purchaser may take the appointment to those capacities.

An action against the seller for a debt or liability assumed by the purchaser must be brought within one year after the sale becomes effective.

After a sale becomes effective, the seller must surrender relevant certificates or licenses to its regulator and file any sale report the regulator requires.

After a sale becomes effective, the commissioner must issue a sealed certificate on application.

This section defines “agreement of merger” and “merger” for this article, unless the context requires otherwise.

With the commissioner’s approval, certain banks, industrial loan companies, and depository corporations may merge into specified California institutions, subject to additional law depending on the type and domicile of the disappearing institution.

For a merger, the surviving depository corporation—and the disappearing one if securities will be issued for the merger—must give shareholders whatever information the commissioner requires.

In a merger, Chapter 13 of the Corporations Code does not apply to the shareholders of the surviving depository corporation.

A surviving depository corporation must file an application with the commissioner to get merger approval.

The commissioner must approve a merger application if specified competition, financial, management, fairness, and housing-financing findings are satisfied.

If merger approval has already been granted and all conditions are met, the commissioner must approve and endorse the merger agreement. After the agreement is filed with the Secretary of State, the surviving depository corporation must file a Secretary of State-certified copy with the commissioner, and the merger then becomes effective for all purposes.

After a merger becomes effective, the surviving depository corporation may open and maintain certain offices, may continue trust business in some cases, and the commissioner must issue needed authorizations.

When a merger takes effect, references to the disappearing depository corporation are treated as references to the surviving corporation, and the surviving corporation succeeds to certain trust-related rights and obligations.

After a merger becomes effective, the surviving depository corporation must surrender the disappearing corporation’s authority/licenses and file a merger report; the commissioner must also file a report with the Secretary of State.

After a merger becomes effective, the commissioner must issue a certificate on application.

This section defines “merger” for this article as the mergers described in Section 4895.02, unless the context requires otherwise.

A California depository corporation, and certain out-of-state depository corporations with a branch in California, may merge into a California state-licensed foreign (other nation) bank if the commissioner approves.

If the disappearing depository corporation is a California state depository corporation, the merger must follow Section 1108 of the Corporations Code.

A merger of a disappearing depository corporation has the same legal effect as stated in other referenced code sections, with the effect depending on whether the corporation is a California state depository corporation.

A merger cannot take effect unless the commissioner approves it.

A merger is treated as subject to specified merger provisions from other sections, as if it were the type of merger defined in Section 4880.

This section defines “merger” for this article as the mergers described in Section 4901, unless context requires otherwise.

This section allows certain California banks, industrial loan companies, and depository corporations to merge into specified federal or foreign banking entities, subject to the stated governing-law conditions.