SECTIONS 15050-15051 - California Statutes

FINANCIAL CODE

SECTION 15050-15051

15050. (a) For purposes of this section, "official" means a
director, officer, or member of the supervisory committee or the
credit committee of a credit union.
(b) No credit union shall enter into any obligation with any
official, directly or indirectly, unless the obligation complies with
all lawful requirements of this division with respect to obligations
permitted for other members of the credit union and is not on terms
more favorable than those extended to other members of the credit
union, and the obligation is entered into in accordance with a
written policy adopted by the directors establishing that all
officials shall have an equal opportunity to enter into obligations
with the credit union.
(c) No credit union shall enter into any obligation with any
official, directly or indirectly, not fully secured by shares or
certificates for funds unless all of the following requirements are
satisfied:
(1) Upon the making of the obligation, the aggregate amount of
obligations outstanding, except obligations fully secured by shares,
to all officials and alternate members of the credit committee will
not exceed 10 percent of the aggregate dollar amount of all savings
capital of the credit union, except that in credit unions whose
aggregate savings capital is five million dollars ($5,000,000) or
more but less than ten million dollars ($10,000,000), the aggregate
amount of obligations outstanding, except obligations fully secured
by shares, to all officials and alternate members of the credit
committee shall not exceed 15 percent of the aggregate dollar amount
of all savings capital of the credit union, and in credit unions
whose aggregate savings capital is less than five million dollars
($5,000,000), the aggregate amount of obligations outstanding, except
obligations fully secured by shares, to all officials and alternate
members of the credit committee shall not exceed 20 percent of the
aggregate dollar amount of all savings capital of the credit union.
(2) The obligation, except any portion of an obligation fully
secured by shares, does not exceed 1 percent of the aggregate dollar
amount of all savings capital of the credit union, or the maximum
obligation to the credit union prescribed by subdivisions (b) and (c)
of Section 15100, whichever is less, except that in credit unions
whose aggregate savings capital is five million dollars ($5,000,000)
or more but less than ten million dollars ($10,000,000), the
obligation, except any portion of an obligation fully secured by
shares, shall not exceed 3 percent of the aggregate dollar amount of
all savings capital of the credit union, or the maximum obligation to
the credit union prescribed by subdivisions (b) and (c) of Section
15100, whichever is less, and in credit unions whose aggregate
savings capital is less than five million dollars ($5,000,000), the
obligation, except any portion of an obligation fully secured by
shares, shall not exceed 5 percent of the aggregate dollar amount of
all savings capital of the credit union, or the maximum obligation to
the credit union prescribed by subdivisions (b) and (c) of Section
15100, whichever is less.
(3) (A) The obligation is approved by the credit committee, or in
the alternative the credit manager, and by the board of directors,
except that the credit manager shall not take part in any credit
decision directly or indirectly for his or her benefit. The board of
directors may select a loan officer to prepare a report and
recommendation as to any extension of credit or other obligation
requested by the credit manager.
(B) Subparagraph (A) does not apply to the creation of an
obligation on which an official is a direct obligor or an endorser,
cosigner, or guarantor, if the aggregate of all of the following does
not exceed fifty thousand dollars ($50,000) plus the amount of
shares, if any, that are pledged or will be pledged as collateral by
the official:
(i) The amount of the proposed obligation.
(ii) The outstanding balances of obligations, including the used
portion of any approved line of credit, extended to, or endorsed,
cosigned, or guaranteed by, the official.
(iii) The total unused portion of approved lines of credit
extended to, or endorsed, cosigned, or guaranteed by, the official.
(4) The credit union member entering into the obligation takes no
part in the consideration of his or her application and does not
attend any committee or board meeting while his or her application is
under consideration.
(5) The names of members of the credit committee, or in the
alternative, the credit manager, and board of directors who voted to
authorize or ratify the obligation shall be entered in their
respective minutes.
(d) No credit union shall permit an official or the credit manager
to become surety for any obligation created by the credit union for
anyone other than a member of their immediate family.
(e) No credit union shall enter into any obligation with any
credit manager or any officer employed by the credit union, directly
or indirectly, unless the obligation is in compliance with all
requirements of this division with respect to obligations permitted
for other members, and not on terms more favorable than those
extended to other employees, and approved by the board of directors.

15051. The board of directors shall declare the office of any
director, officer, committee member, or the credit manager vacant if
the person fails to reduce any obligation to the credit union for
which he or she is liable in a timely manner according to the terms
of the obligation.