Code Section Group

Financial Code - FIN

DIVISION 5. CREDIT UNIONS [14000 - 16906]

  ( Division 5 repealed and added by Stats. 1979, Ch. 112. )

CHAPTER 4. Management and Operations [14400 - 14768]

  ( Chapter 4 added by Stats. 1979, Ch. 112. )

ARTICLE 1. General [14400 - 14410]
  ( Article 1 added by Stats. 1979, Ch. 112. )


The equity capital of the credit union shall consist of the credit union’s regular reserve account, the undivided earnings account, any appropriated undivided earnings accounts, and other forms of capital approved by the commissioner.

(Amended by Stats. 2018, Ch. 267, Sec. 1. (AB 2862) Effective January 1, 2019.)


A credit union may borrow money from any source in an aggregate amount not to exceed 50 percent of the paid-in and unimpaired capital and surplus of the credit union. Loans from the National Credit Union Central Liquidity Facility (12 U.S.C. Sec. 1795 et seq.) shall not be included in computing the aggregate borrowings of a credit union. For the purposes of this division, “certificate for funds” means borrowed money.

(Amended by Stats. 2004, Ch. 183, Sec. 107. Effective January 1, 2005.)


Every credit union may purchase and hold, either individually or jointly with other credit unions or affiliated organizations, a lot and building to be employed principally for the transaction of business, and to provide for future expansion of the facilities of those organizations. Any excess space that is not occupied by the organizations purchasing and holding the building may be leased to the public. The lot and building may be sold if all the holders of the property join in its sale.

(Amended by Stats. 2006, Ch. 538, Sec. 172. Effective January 1, 2007.)


Every credit union may purchase and hold, either individually or jointly with other credit unions or affiliated organizations, furniture, fixtures, vaults, and other personal property necessary or proper to carry on its business, and to equip or furnish any space in any building purchased or held individually or jointly with other credit unions or affiliated organizations under authorization of Section 14402, whether occupied by the credit union or leased to the public. The personal property may be sold, if all the holders of the property join in its sale.

(Amended by Stats. 1979, Ch. 811.)


A credit union shall not invest more than the amounts permitted pursuant to regulations which shall be promulgated by the commissioner for the investments set forth in Sections 14402, 14403, 14650 and 14651.

(Repealed and added by Stats. 1983, Ch. 743, Sec. 2. Operative July 1, 1984, by Sec. 11 of Ch. 743.)


Every credit union may:

(a) (1) Become a member of any organization or organizations composed of credit unions, credit associations, chambers of commerce, financial institutions, community economic development entities, or business or trade organizations.

(2) Become a member of any nonprofit organization approved by the board of directors.

(b) Pay dues and assessments as may be levied upon it by any organization of which it is a member.

(Amended by Stats. 2007, Ch. 148, Sec. 2. Effective January 1, 2008.)


The savings capital, undivided profits, and reserve funds of a credit union shall be deposited only in the following:

(a) Commercial banks or trust companies, incorporated under the laws of this state.

(b) National banks doing business in this state.

(c) Shares or periodic certificates for funds received by or any form of evidence of interest or indebtedness issued by any credit union organized under this division or by any other credit union if its member accounts are insured as provided for by Subchapter II of the Federal Credit Union Act (12 U.S.C. Sec. 1781 et seq.), or, alternatively, are insured by other means determined acceptable by the commissioner.

(d) Accounts with, investment certificates or withdrawable shares of, any savings and loan association doing business in this state that is an insured institution pursuant to the Federal Deposit Insurance Corporation Act (12 U.S.C. Sec. 1811 et seq.).

(Added by Stats. 2000, Ch. 529, Sec. 1. Effective January 1, 2001.)


(a) Whenever the losses of any credit union resulting from a depreciation in the value of its securities or otherwise exceed its undivided earnings and reserve fund so that the estimated value of its assets is less than the total amount due its shareholders, the credit union may, if approved by a majority of all members at a meeting called to consider the matter, order a reduction of the liability to each of its shareholders, so as to divide the loss equitably among the shareholders. If thereafter the credit union realizes from its assets a greater amount than was fixed in the order of reduction, the excess shall be divided among the shareholders whose assets were reduced, but to the extent of the reduction only.

(b) The commissioner may approve a reduction in the liability on shares approved by less than a majority of all members as provided in subdivision (a) if the commissioner finds, upon the written and verified application filed by the board of directors, that (1) notice of the meeting called to consider the question was mailed to each member entitled to vote upon the question, (2) the notice disclosed the purpose of the meeting and properly informed the membership that approval of the reduction in liability might be sought pursuant to this subdivision, and (3) that a majority of the votes cast upon the question were in favor of the reduction in liability.

(Amended by Stats. 1998, Ch. 539, Sec. 18. Effective January 1, 1999.)


No credit union shall make any gift or donation having a value in excess of twenty-five thousand dollars ($25,000) unless the gift or donation is in the best interest of the credit union, is approved by a resolution of the board of directors and is in conformance with any regulation or order that the commissioner may issue. The resolution of the board of directors approving the gift or donation shall identify the recipient of the gift or donation, state the value of the gift or donation, and specify the basis for the board’s determination that the gift or donation is in the best interests of the credit union. The board may establish a budget for gifts and donations and authorize appropriate officials of the credit union to select recipients and disburse budgeted funds among those recipients.

(Amended by Stats. 2007, Ch. 148, Sec. 3. Effective January 1, 2008.)


(a) Every credit union shall obtain adequate bond or insurance coverage, for each director, officer, supervisory committee member, and credit committee member, for the credit manager, and for each employee.

(b) The commissioner may adopt regulations setting forth guidelines with respect to the minimum amount of the bond or insurance coverage deemed adequate. The regulations may be based upon the gross assets of the credit union and may contain a formula or schedule for the calculation of minimum bond or insurance coverage.

(Amended by Stats. 1998, Ch. 539, Sec. 20. Effective January 1, 1999.)


(a) Notwithstanding the provisions of Sections 1051, 1052, and 1054 of the Labor Code and Section 2947 of the Penal Code, any credit union or officer or employee thereof may deliver fingerprints taken of an applicant for employment by the credit union to local, state, or federal law enforcement agencies for the purpose of obtaining information as to the existence and nature of a criminal record, if any, of the applicant relating to convictions, and to any arrest for which the applicant is released on bail or on his or her own recognizance pending trial, for the commission or attempted commission of a crime involving robbery, burglary, theft, embezzlement, fraud, forgery, bookmaking, receiving stolen property, counterfeiting, or involving checks or credit cards or using computers.

(b) The Department of Justice shall, pursuant to Section 11105 of the Penal Code, and a local agency may, pursuant to Section 13300 of the Penal Code, furnish to the officer of the credit union responsible for the final decision regarding employment of the applicant, or to his or her designees having responsibilities for personnel or security decisions in the usual scope and course of their employment with the credit union, summary criminal history information when requested pursuant to this section. If, upon evaluation of the criminal history information received pursuant to this section, the credit union determines that employment of the applicant would constitute an unreasonable risk to the credit union or its customers, the applicant may be denied employment.

(c) A request for records pursuant to this section made of the Department of Justice shall be on a form approved by the department. The department may charge a fee to be paid by the requesting credit union pursuant to subdivision (e) of Section 11105 of the Penal Code. No request shall be submitted without the written consent of the applicant.

(d) Any criminal history information obtained pursuant to this section is confidential and no recipient shall disclose its contents other than for the purpose for which it was acquired.

(Amended by Stats. 1982, Ch. 1203, Sec. 13. Effective September 22, 1982. Operative January 1, 1983, by Sec. 20 of Ch. 1203.)


(a) No member of the board of directors, supervisory committee, or credit committee shall receive any compensation for his or her services as a member of the board of directors, supervisory committee, or credit committee, but he or she may be provided with reasonable health, accident, and similar insurance. Nothing in this subdivision shall prohibit a member of the board of directors, supervisory committee, or credit committee from receiving nonmonetary compensation that is incidental to the person’s service as a member of the board of directors, supervisory committee, or credit committee, if and as approved by regulation or order of the commissioner.

(b) Notwithstanding subdivision (a), a director or committee member may be reimbursed for actual expenses incurred in the performance of his or her duties if reimbursement is made pursuant to the requirements of the commissioner’s regulations controlling expense reimbursement by the credit union. Reimbursement for actual expenses may include, among other things, travel expenses incurred on or relating to credit union business, and any other matters, categories, or items of expense that the commissioner may establish by regulation.

(c) Nothing in this section shall prevent any person from receiving compensation for actual services as a general manager, credit manager, loan officer, or other position as an employee of the credit union.

(Amended by Stats. 1998, Ch. 539, Sec. 21. Effective January 1, 1999.)

FINFinancial Code - FIN1.