(a) Ten per centum of any amount up to and including one million dollars.

(b) Five per centum of any amount in excess of one million dollars. The aggregate of paid-up capital together with the surplus of every savings bank having a capital stock, and the reserve fund of every savings bank without a capital stock, must equal the following percentages of its deposit liabilities:

(c) Ten per centum of any amount up to and including one million dollars.

(d) Five per centum of any amount in excess of one million dollars up to and including three million dollars.

(e) Three per centum of any amount in excess of three million dollars up to and including twenty-five million dollars.

(f) One per centum of any amount in excess of twenty-five million dollars.

Any bank which maintains branch offices must, for each respective department, maintain an aggregate of paid-up capital and surplus equal to the foregoing percentages of its deposit liabilities, calculated on the basis of a separate total of such deposit liabilities for each city or town in which any such branch office may be maintained.

The deposits shall not be increased if such proportion of paid-up capital and surplus or reserve fund to deposit liabilities is not maintained, and in no event shall said paid-up capital be less than the minimum paid-up capital provided by this act; provided, that such deposit liabili ties shall be exclusive of United States and postal savings deposits and deposits of the state of California, the counties, cities and counties, eities and towns of said state of California and of any other governmental or political subdivision of the state of California which are secured as required by law. [Amendment approved April 24, 1923. Stats. 1923, p. 54.]

This section was also amended in 1913, 1919, 1921. Stats. 1913, p. 146; 1919, p. 623; 1921, p. 1368.

§ 20. Total reserves of commercial banks. If member of federal reserve bank. Penalty for not maintaining reserves. Reserve depositaries. Restoration of reserves. Every commercial bank shall maintain total reserves against its aggregate deposits, exclusive of United States and postal savings deposits and deposits of the state of California and of any county and municipality in the state of California, which are secured as required by law, as follows:

1. Eighteen per centum of such deposits if such bank has its principal place of business in a city having a population of one hundred thousand

or over.

2. Fifteen per centum of such deposits, if such bank is located in a eity having a population of fifty thousand or over and less than one hundred thousand.

3. Twelve per centum of such deposits if such bank is located elsewhere in the state.

At least one-half of the total reserves shall be maintained as reserves on hand and shall consist of gold bullion or any form of money or currency authorized by the laws of the United States, and the re

mainder of the total reserves required by the provisions of this section shall be maintained as reserves on deposit or as reserves on hand; such reserves on hand to consist of gold bullion or any form of money or currency authorized by the laws of the United States; provided, however, that all or any part of the reserves may be deposited, subject to call, with a federal reserve bank in the district in which such bank is located.

If any bank shall have become a member of a federal reserve bank, it shall comply with the reserve requirements of the federal reserve act and its amendments, and its compliance therewith shall be in lieu of, and shall relieve such bank from compliance with, the provisions of this section.

Penalty for not maintaining reserves. If any bank shall not maintain the total reserves required the superintendent of banks may impose a penalty upon it, based upon the length of time such encroachment upon its total reserves amounting to one per centum or more of its aggregate deposits shall continue, at the following rates:

1. At the rate of six per centum per annum upon any such encroachment not exceeding two per centum of such deposits.

2. At the rate of eight per centum per annum upon any additional encroachment in excess of two and not exceeding three per centum of such deposits.

3. At the rate of ten per centum per annum upon any additional encroachment in excess of three and not exceeding four per centum of such deposits.

4. At the rate of twelve per centum per annum upon any additional encroachment in excess of four per centum of such deposits.

Reserve depositaries. The superintendent of banks shall, in his discretion, upon the nomination of any bank, designate a depositary or depositaries for the reserves on deposit of such bank provided for by this act. Except as otherwise provided in this section, such depositary shall be a bank or national banking association located in this state. Every reserve depositary, which has its principal place of business in a judicial township or in a city located in this state in which the population is less than fifty thousand, shall have at all times as its total reserves an amount equal to the total reserves required by the provisions of this section for every bank which has its principal place of business in a city having a population of fifty thousand or over and less than one hundred thousand.

Capital and surplus of reserve depositary. But no bank or national banking association shall hereafter be designated as a depositary of any such reserves unless it shall have a combined capital and surplus of not less than the following amounts:

1. Two hundred fifty thousand dollars, if located in a city which has a population of three hundred thousand or over;

2. Two hundred thousand dollars, if located in a city which has a population of one hundred thousand or over and less than three hundred thousand;

3. One hundred fifty thousand dollars, if located in a city which has a population of fifty thousand or over and less than one hundred thousand;

4. One hundred thousand dollars, if located elsewhere in the state. Such depositary may also be a banking corporation with a capital and surplus of one million dollars or more, located in any city in the United States.

If the total reserves of any bank shall be less than the amount required by this section, such bank shall not increase its liabilities by making any new loans or discounts, otherwise than by discounting bills of exchange on sight, or by paying any dividends from profits until the full amount of its total reserves has been restored. The superintendent of banks may notify any bank whose total reserves shall be below the amount herein required, to restore such total reserves; and, if it shall fail for thirty days thereafter to restore such total reserves, such bank shall be deemed insolvent and may be proceeded against under the provisions of this act; provided, that all deposits of money herein permitted or required shall comply with the provisions of section fortythree of this act.

The term, "reserves on hand," when used in this act, means the reserves against deposits kept, pursuant to the provisions of this act, in the vault of any bank or in any safety deposit box in any other bank in this state, said box to be under the exclusive control of the depositing bank.

The term, "reserves on deposit," when used in this act, means the reserves against deposits maintained by any bank pursuant to this act in reserve depositaries, or in a federal reserve bank in the district in which such bank is located and not in excess of the amount authorized by this act.

The term, "total reserves," when used in this act, means the aggregate of reserves on hand and reserves on deposit maintained pursuant to the provisions of this act.

The term, "reserve depositary," when used in this act, means a bank, trust company or banking corporation designated by the superintendent of banks on the nomination of the depositing bank as a depositary for reserves on deposit. [Amendment approved May 15, 1919; Stats. 1919, p. 623.]

This section was also amended in 1911. Stats. 1911, p. 1909; 1911 (Ex. Sess.), p. 2; 1913, p. 147; 1915, p. 1107; 1917, p. 604.

§ 21. Dividends. Surplus fund. Charging loss to surplus. Depositors' prior claim. The directors of any bank having a capital stock may, at certain times, and in such manner as its by-laws prescribe, declare and pay dividends to depositors and stockholders of so much of the profits of the bank, and of the interest arising from the capital, sarplus and deposits, as may be appropriated for that purpose under its by-laws or under its agreements with depositors.

Surplus. But every such bank shall, before the declaration of any sneh dividend, carry at least one-tenth part of the net profits of the stockholders for the preceding half year, or for such period as is covered by the dividend, to its surplus, until such surplus shall amount to twenty-five per centum of its paid-up capital stock. The whole or any part of such surplus, if held as the exclusive property of the stockholders, may at any time be converted into paid-in capital, in which event such surplus shall be restored in the manner above provided until

it amounts to twenty-five per centum of the aggregate paid-up capital stock.

Charging loss to surplus. Subject to the provisions of section nineteen of this act, any losses sustained by any such bank in excess of its undivided profits may be charged to and paid from its surplus, in which event such surplus shall be restored in the manner above provided, to the amount required by law; provided, however, that any bank which has invested any portion of its surplus in its bank premises, furniture and fixtures, vaults, or safe deposit vaults and boxes necessary or proper to carry on its banking business shall not be permitted to charge any loss to that portion of its surplus so invested.

Creating larger surplus. A larger surplus may be created and nothing herein contained shall be construed as prohibitory thereof.

Depositor's prior claim. The capital and assets of such bank are a security to depositors and stockholders, depositors having the priority of security over stockholders. [Amendment approved May 6, 1913. Stats. 1913, p. 147.]

§ 21a. Terms and conditions on which bank may borrow money. No bank, banker, or bank officer, shall give preference to any depositor or creditor except as otherwise authorized by law; provided, that any commercial bank or commercial department of a departmental bank, is authorized and empowered for temporary purposes, to borrow money, or to borrow money and pledge or hypothecate as collateral security therefor, its assets not exceeding fifty per centum in excess of the amount borrowed, but only to the extent and upon terms and conditions as follows:

(1) Any amount up to, but not exceeding the amount of its capital and surplus, without consent of the superintendent of banks; provided, however, that any amount borrowed, except as otherwise provided in this section, in excess of the amount of its capital and surplus, at such time actually paid in and remaining undiminished by losses or otherwise, must first be approved in writing by the superintendent of banks; provided, also, that no excess loan made to any such bank shall be invalid or illegal as to the lender, even though made without the consent of the superintendent of banks; provided, also, that the rediscounting with or without guarantee or endorsement with a federal reserve bank, of notes, drafts, bills of exchange and loans secured by obligations of the United States, is hereby authorized and shall not be limited by the terms of this act, and shall not be considered as borrowed money within the meaning of this section.

(2) In the manner authorized by law and without the approval of the superintendent of banks, any amount of the moneys of the United States, state of California,. the counties, cities and counties, cities and towns of said state of California and of any other governmental or political subdivision of the state of California, and may receive such moneys or funds on deposit.

(3) Any amount of the United States moneys and postal savings moneys of the United States and moneys of bankrupt estates, and receive such moneys on deposit, and pledge or hypothecate such of its securities and upon such terms as may be required by the laws of the

United States or the rules and regulations of the secretary of the treasury of the United States, without the approval of the superintendent of banks.

(4) Any amount, in addition to the amounts authorized to be borrowed in this section, for the purpose of buying from the United States, United States bonds, United States treasury certificates, or notes or obligations of the United States.

(5) To rediscount with and sell to a federal reserve bank any and all such notes, drafts, bills of exchange, acceptances and any other securities, with no other restrictions, and as fully, and to the same extent as this privilege is given to national bank members under the terms of the federal reserve act, or by regulations of the federal reserve board made pursuant thereto. [Amendment approved April 24, 1923. Stats. 1923, p. 55.]

This section was added in 1913. Stats. 1913, p. 148. It was also amended in 1919 and 1921. Stats. 1919, p. 626; 1921, p. 1369.

§21b. Partial payments. (1) No bank shall make partial payments upon any certificate of deposit.

(2) Overdraft as asset. In no case shall an overdraft of more than ninety days' standing be allowed as an asset of any bank.

(3) Bad debts. Any debt due to any commercial bank, on which interest is past due and unpaid for the period of one year, unless the same is well secured, and is in process of collection, shall be considered a bad debt and shall be charged off to the profit and loss account at tho expiration of that time. [New section added June 3, 1921; Stats. 1921, p. 1370.]

§ 22. Commercial, savings and trust combination. Any corporation authorized by its articles of incorporation so to do, may combine the business of a commercial bank and savings bank and trust company, or any one or more or all of them; provided, that no corporation author. ized to transact a trust business and which is also organized to engage in the business of title insurance, shall engage in or combine the business of a commercial bank or savings bank. [Amendment approved May 6, 1913. Stats. 1913, p. 149.]

§ 23. Departmental business. Capital stock. When a bank desires to do a departmental business, it shall first obtain the consent of the superintendent of banks, and in its application therefor, file a statement making a segregation of its capital and surplus for each department. Such capital and surplus, when so apportioned and approved by the superintendent of banks, shall be considered and treated as the separate capital and surplus of such department as if each department was a separate bank. Thereafter a bank may, from time to time, with the previous consent and approval of the superintendent of banks and subject to the provisions of section nineteen of this act, change any segregation and apportionment of capital and surplus previously made and make a new segregation and apportionment of its capital and surplus. Every bank hereafter organized doing a departmental business shall have paid up, in cash, capital stock as follows:

(a) Place of five thousand persons. In any locality in which the population does not exceed five thousand persons, not less than twenty-five