80-5

STATE BANKING DEPARTMENT
OF CALIFORNIA
Los Angeles Office
October 6, 1980
ATTENTION: _______
President

Gentlemen:
We have reviewed your letter dated August 25, 1980 requesting permission for the bank to purchase the land underlying the residence of your Senior Vice President, _______. Purchase price would be approximately $90,000 with the bank granting an option to repurchase the land at the end of ten years for the same amount.
While Section 3354 of the Banking Law, permits a bank to purchase real property from a bank officer with the prior written consent of the Superintendent, and Section 750 permits a bank to purchase real property for various purposes including purchase of real property that is reasonably related to the conduct of a bank’s business, Section 3355 prohibits an officer of a bank from purchasing bank assets for an amount less than the then current market value thereof. Since it would appear that one purpose or by-product of the proposed transaction would be to enable a bank officer to purchase a bank asset at a future time for an amount less than the then current market value of the asset, it would appear the transaction would be in contravention of the intent of Section 3355 and therefore could not be approved under Section 3354.
As noted above, Section 750, does permit the bank to purchase (or lease) real property that is reasonably related to the conduct of its business. This Section together with Section 3370.5 which permits real estate loans to executive officers of the bank (under certain circumstances) may be avenues that would enable the bank to provide housing assistance for key officers of the bank.
Yours very truly,
RICHARD M. DOMINGUEZ
Superintendent of Banks
By:
ROBERT B. CAMERON
Deputy Superintendent of Banks

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