Important Notices

July 09, 2009

DFI Guidance on Registered Warrants

Registered Warrants

On July 1, 2009, the State of California began issuing registered warrants. The Department of Financial Institutions has received inquiries on whether California state commercial banks, industrial banks, foreign (other nation) banks with state-chartered depositary agencies or branch offices and state-chartered credit unions (collectively "licensees") are subject to limitations in cashing and holding registered warrants.

The limitation in Financial Code section 1221, which limit the amount of obligations of any one person that may be owing to a bank at any one time are not applicable to registered warrants. Also, the limitations in Financial Code section 1330 which limit the amount a bank may invest in the security of any one obligor are not applicable to registered warrants. Credit unions may invest in registered warrants in accordance with Financial Code section 14652 without a specific limitation on the amount.

For reporting purposes registered warrants should be listed as securities of the State of California.

The federal financial institution regulatory agencies have issued FIL-41-2009 regarding the treatment of registered warrants for risk-based capital purposes. Licensees are encouraged to familiarize themselves with the federal regulators' position on registered warrants.