Section 40.501 - Certificate Ratio: Application and Criteria for Increasing Ratio Under Section 18320 of the Financial Code(a) The application filed by an industrial loan company for authority to increase its ratio of certificates to capital and surplus restricted as to payment of cash dividends pursuant to subdivisions (b), (c) and (d) of Section 18320 of the Financial Code shall be accompanied by the following documents: (1) A balance sheet as of the month end prior to the date of filing;(2) An income statement for the current calendar year and the prior year if the current period is less than six months;(3) Monthly income statements for the six months prior to the date of filing;(4) An analysis of the reserve for losses for the current calendar year showing the balance at the beginning of the year and all additions and charges to the reserve. If the period covered is less than four months, the analysis should include the prior calendar year; and(5) Any other report or schedules required by the Commissioner.(b) The Commissioner may limit the ratio of certificates to capital and surplus to a ratio less than provided in Section 18320 if in the Commissioner's judgment such lower ratio is reasonable and necessary or advisable for the protection of the public. The industrial loan company must demonstrate to the Commissioner that it is entitled to the ratio permitted by Section 18320. In determining the ratio to be permitted, the Commissioner will consider (together with all relevant attendant circumstances) all of the following facts together with such other information and facts as are relevant under the circumstances: (1) It maintains adequate reserves for losses, as defined in Article 4 of these Rules;(2) The ratio of losses to volume of receivables for the six-month period preceding its application is not greater than the industry average for the last three years as shown by the latest reports filed with the Commissioner pursuant to Section 18405 of the Financial Code;(3) The current ratio of accounts which are three or more contractual payments past due and unpaid to total receivables is not greater as shown by the company's most recent report to the Commissioner than the industry average as shown on the latest reports filed with the Commissioner pursuant to Section 18407 of the Financial Code and 1250 of these Regulations;(4) Uncollectible accounts are charged off pursuant to the provisions of these Regulations;(5) The company must have had net earnings from operations for the six-month period prior to the date of filing of the application and must have had net earnings from operations for each of the three months prior to the date of filing of the application;(6) The company must have diversification of receivables, including but not limited to the character and source of loans made and contracts purchased;(7) The company has created and maintains an adequate system of internal controls, and;(8) The company must have demonstrated sound and efficient management in its dealings with borrowers and thriftholders.Cal. Code Regs. Tit. 10, § 40.501
1. Change without regulatory effect renumbering former section 1151.1 to new section 40.501 filed 8-19-97 pursuant to section 100, title 1, California Code of Regulations (Register 97, No. 34). Note: Authority cited: Section 18347, Financial Code. Reference: Section 18320, Financial Code.
1. Change without regulatory effect renumbering former section 1151.1 to new section 40.501 filed 8-19-97 pursuant to section 100, title 1, California Code of Regulations (Register 97, No. 34).