Article 1. General Provisions of California Financial Code >> Division 1.1. >> Chapter 14. >> Article 1.
A commercial bank shall not rediscount, borrow money, or
hypothecate its assets as security for money borrowed except to the
extent and upon the conditions set forth in this division.
Assets hypothecated by a commercial bank as security for
moneys borrowed shall not exceed in value the amount borrowed by more
than 50 percent except with the prior written consent of the
A commercial bank may borrow money by discounting or
otherwise, and may borrow money secured by real property owned by the
bank, to an amount not in excess of its shareholders' equity, but
shall not borrow money except as provided in Sections 1464 and 1465
in excess of such amount without the prior written approval of the
The amounts of moneys so borrowed by a commercial bank together
with the amount of any of its deposits secured by surety bonds shall
not at any one time exceed the amount of its shareholders' equity
without the prior written approval of the commissioner.
A commercial bank may hypothecate its assets in any manner
provided by law to secure the deposits of moneys of the United
States, of postal savings funds, of estates in bankruptcy cases, of
the State of California, or of any political subdivision, public
corporation, or district of the State of California. With the prior
approval of the commissioner a bank may hypothecate its assets to
secure moneys payable to other states.
A commercial bank may borrow for the purpose of buying from
the United States, United States bonds, United States Treasury
certificates, or notes or other obligations of the United States.
A commercial bank may rediscount with, borrow money from, or
hypothecate its assets as security for money borrowed from a Federal
Reserve bank, the Federal Deposit Insurance Corporation, or the
Federal Home Loan Bank.
A commercial bank may issue negotiable certificates of
deposit transferable by endorsement and delivery and nonnegotiable
certificates transferable only on the books of the bank.
A commercial bank located in a place the population of which
does not exceed 5,000 persons according to the most recent official
federal or state census may act as agent for any fire, life, or other
insurance company authorized to do business in California by
soliciting and selling insurance and collecting premiums and may
receive for such services such fees and commissions as may be agreed
upon with the insurance company if the bank is engaged in such
business on October 1, 1949, and is duly licensed under the Insurance
Code, and may act also as the broker or agent for others in making
or procuring loans on real property located within 100 miles of the
place in which the bank is located and may receive for such services
a fee or a commission if it is engaged in such business on October 1,
1949, and is duly licensed. In engaging in either of such businesses
the bank shall comply with all rules and regulations of the
commissioner relating thereto and shall not guarantee either the
principal or interest of any loan procured by it as broker or agent
or assume or guarantee the payment of any premium on insurance
policies written through it as agent or broker or guarantee the truth
of any statement made by an insured in filing an application for