§ 1515 Bank Stock Acquisition Rules

Financial Code·California

AI SummaryVerified

This law lets banks and trust companies take stock to settle a loan or investment loss, and they must sell that stock if it can fully repay the loss.

Key Takeaways

•Banks can receive stock instead of cash to settle a loan or investment loss.
•The usual restriction in Section 1510 does not apply to this stock.
•If the stock can fully reimburse the loss, the bank must sell it or convert it to another investment.

Example

A bank gave a $5 million loan to a local bakery. When the bakery couldn't repay, the bank accepted some of the bakery's shares as part of the settlement. Later, those shares are worth $5.5 million, enough to cover the loan loss.

Because the shares can reimburse the bank for the entire loss, the bank must either sell the shares or convert them into a new investment that follows Section 1510 rules.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source

View on CA.gov

§ 1515 Bank Stock Acquisition Rules

A bank or trust company may acquire stock in settlement or reduction of a loan or in exchange for an investment previously made in good faith where the acquisition of the stock is necessary in order to minimize or avoid loss arising out of the loan or investment. The limitation in Section 1510 shall not apply to the stock acquired in accordance with this section. Whenever any stock that is acquired in accordance with this section can be sold for an amount sufficient to reimburse the bank or trust company for all loss arising out of the loan for which the stock was security or arising out of the original investment by the bank or trust company, the bank or trust company shall sell the same or shall convert the stock to an investment subject to Section 1510. (Amended by Stats. 2013, Ch. 334, Sec. 40. (SB 537) Effective January 1, 2014.)

Last verified: January 11, 2026

Key Terms

acquire stock settlement or reduction of a loan Section 1510 minimize or avoid loss

References

Official text at leginfo.legislature.ca.gov
California Legislature. Financial Code. Section 1515.

§ 1515 Bank Stock Acquisition Rules

Financial Code·California

AI SummaryVerified

§ 1515 Bank Stock Acquisition Rules

This law lets banks and trust companies take stock to settle a loan or investment loss, and they must sell that stock if it can fully repay the loss.

Key Takeaways

•Banks can receive stock instead of cash to settle a loan or investment loss.
•The usual restriction in Section 1510 does not apply to this stock.
•If the stock can fully reimburse the loss, the bank must sell it or convert it to another investment.

Example

Because the shares can reimburse the bank for the entire loss, the bank must either sell the shares or convert them into a new investment that follows Section 1510 rules.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source

View on CA.gov

§ 1515 Bank Stock Acquisition Rules

Last verified: January 11, 2026

Key Terms

acquire stock settlement or reduction of a loan Section 1510 minimize or avoid loss

References

Official text at leginfo.legislature.ca.gov
California Legislature. Financial Code. Section 1515.

Key Takeaways

Example

Key Terms

Related Statutes

References

Key Takeaways

Example

Key Terms

Related Statutes

References