AB 1031

This bill makes changes relating to the authorized activities of state-chartered

savings and loan (S&L) associations.

Under current law, the Division of Banking (division) in the Department of

Financial Institutions regulates S&L associations. Current law specifies various

authorized activities, restrictions, and requirements applicable to S&L associations.

The bill makes the following changes related to these authorized activities,

restrictions, and requirements:

1. Current law authorizes an S&L association to make mortgage loans but

limits the lending area of an S&L association to a radius of 100 miles of the S&L

association's home office. In general, an S&L association may establish branch

offices within its lending area. The bill eliminates the lending-area restriction on

an S&L association and, consequently, the limitation that a branch office must be

located within the lending area.

2. Current law limits an S&L association's aggregate of mortgage loans to a

single borrower to 10 percent of the association's aggregate of savings accounts or its

net worth, whichever is less. The bill instead limits the aggregate of mortgage loans

to a single borrower to 10 percent of the S&L association's assets.

3. Current law authorizes an S&L association to sell mortgage loans and also

to service these loans for the purchaser under a servicing agreement, but the division

may establish a limit on the aggregate of loans sold in a calendar year. The bill

eliminates the division's authority to establish limits on the aggregate of mortgage

loans sold.

4. Current law authorizes an S&L association to make or invest its funds in

certain secured loans originated and serviced by or through a federally insured

financial institution, in an aggregate amount not exceeding 10 percent of the S&L

association's assets. This bill increases the permissible aggregate amount from 10

percent to 20 percent of the S&L association's assets.

5. Current law requires an S&L association to file an annual report with the

division that contains specified information, including a statement of condition and

a statement of operations. The bill eliminates the requirement that an S&L

association file an annual report with the division.

6. Current law requires an S&L association to either hire a certified public

accountant or other qualified person to conduct an annual audit of its records,

accounts, and affairs or appoint an auditing committee to annually audit the records,

accounts, and cash of the association and to verify customer accounts. A foreign

association, which is a savings and loan association chartered under another state's

law and doing business in this state, is also subject to this audit requirement. The

bill eliminates these audit requirements.

7. Current law requires the division to designate certain listed legal holidays

as days on which an S&L association may not be open for business. The bill