State of California
|Gray Davis, Governor||
Business Transportation and Housing Agency
|Department of Financial Institutions||
|Volume 4, Number 11||
The Department of Financial Institutions is issuing this advisory notice to alert California Financial Institutions concerning an expanding business that could affect the reputations and customers of State Chartered Financial Institutions. This expanding business performs transactions sometimes referred to as “cash advances”, “deferred deposits”, or a variety of other proprietary terms. For simplicity we will refer to these businesses as “payday lenders”. The rapid growth of payday lenders that perform payday loans indicates a significant market demand that is not being adequately met by traditional financial service providers.
Payday lending is a type of short-term credit that is often used by consumers with regular paychecks and bank accounts to meet unexpected financial emergencies or other temporary cash flow needs, or as an alternative to overdraft or credit card lines of credit. These “payday loans” are usually small-dollar, short-term loans that borrowers promise to repay out of their next paycheck or deposit of funds. Usually the customer provides a post-dated check and in exchange, the payday lender gives the customer cash, minus a fee. These loans often have high fees, may be renewed frequently, and, in the case of some lender or originators, may involve abusive lending practices such as the use of threats in their collection efforts.
One of the concerns that a financial institution should have regarding these lending programs is that a financial institution, as a depository institution, can be associated with some of the more negative consequences of these transactions. Unscrupulous payday lenders can utilize NSF charges and late payment fees that may result in connection with these payday loans as a tool to motivate a customer to rollover a “payday loan” when it is clear the customer will be unable to repay the loan as scheduled. As a result, an institution’s reputation may be associated and potentially damaged by the lending practices of some of these more unscrupulous payday lenders.
To the best of our knowledge, none of the banks, industrial banks, credit unions, or savings and loans licensed by the Department of Financial Institutions has chosen to become directly involved in the business of payday lending to date. There appears, however, to be a real public need for some type of service to address the demand for small, unsecured personal loans. We encourage our licensees to study this market to determine how to promote a new product, or an existing product, that meets these needs of customers who might be utilizing payday loans. We encourage our licensees to educate customers as to the risks involved with these types of loans. A market-based solution that provides a competitively priced product that is understandable to the customer is desirable to all those affected. For more information on the topic of Payday Lending please refer to OCC Advisory Letter 2000-10 at http://www.occ.treas.gov/ftp/advisory/2000-10.doc and NCUA Letter No.: 01-FCU-03 at http://www.ncua.gov .
A warning to cease and desist from doing business in California without a license from the Commissioner of Financial Institutions was issued to Ambrite Overseas Bank A.D., 23272 Creek Drive, Suite 340, Laguna Hills, CA 92653.
Ambrite Overseas Bank A.D. is not authorized to transact business in the way or manner of a bank, and is not authorized to transact business under a name which contains the word “bank” and indicates the business is that of a bank pursuant to Chapter 18 of Division 1 of the California Financial Code. All persons who have communicated with Ambrite Overseas Bank A.D. are asked to contact the California Department of Financial Institutions, Legal Division, San Francisco, at (415) 263-8511.
Proposed Transmitter of Money Abroad
The Department of Financial Institutions is proposing regulations for transmitters of money abroad. The full text of the regulations can be found at http://www.dfi.ca.gov/forms/tma/010131_tmra_regs.pdf. The regulations are proposed in order to assure consistent and standardized application procedures, consumer disclosures and improved regulatory oversight.
In accordance with Government Code Section 11346.45, two informal meetings have been scheduled to allow persons with licenses to transmit money abroad issued by the Department to give preliminary comments regarding the proposed transmitter regulations. The first meeting will be held in the Department’s San Francisco office on Wednesday, June 13, beginning at 10:00 a.m. The address of the San Francisco office is 111 Pine Street, Suite 1100. The second meeting will be held in the Department’s Los Angeles office on Monday, June 25, beginning at 10:00 a.m. The address of the Los Angeles Office is 300 S. Spring Street, Suite 15513.
The proposed regulations facilitate these applications procedures with consistent and standardized procedures, thereby reducing applicant and Department staff time and expenditures.
The proposed regulations expand the required contents of the receipt form and enable the consumer to determine whether a licensee or agent is duly authorized to engage in the transmission of money abroad. The proposed regulations also prohibit the inclusion of certain items on the disclosure statement. Consumer access to complaint procedures assists the consumer in resolving disputes with a licensee, and also provides the Department with additional information that may result in proposed legislation or regulation to further facilitate a consumers transmission of money abroad. The proposed regulations further the Department’s efforts to expand consumer awareness of transmitters of money abroad.
The expanded reporting requirements contained in the proposed regulations will enable the Department to more closely monitor the condition of licensees. The reporting of specified activities, such as changes in officers and directors of a licensee and any controlling person, legal proceedings, information on criminal activity, any material changes in its business, policies and procedures, suspension of payment on obligations, and filings with the Securities and Exchange Commission, will enable the Department to more closely monitor potentially significant changes to its transmitter licensees.
You may access the Department’s proposal through its Internet site at http://www.dfi.ca.gov/Laws&Regs.htm. (now the Department of Business Oversight https://dfpi.ca.gov) If you have any questions, please contact Kenneth Sayre-Peterson, Senior Counsel, at (916) 322-1570.
Annual Fee Reminder
The following licensees are reminded that annual fees are due in this office on or before July 1, 2001. Please remit fees to:
Department of Financial Institutions
111 Pine Street, #1100
San Francisco, CA 94111-5613
Attn: Patrick Carroll
Representative Offices of Foreign (Other Nation) Banks
The annual representative license fee for fiscal year 2001/2002 is due on or before July 1, 2001. The fee, as outlined in Section 1702(i) of the California Financial Code, is $250.00 for each California representative office of a foreign (other nation) bank doing business as of June 1, 2001. Those foreign (other nation) banks which also maintain agency or branch offices in California are not subject to this fee. Questions regarding fees may be directed to Patrick Carroll at (415) 263-8559 or by e-mail to firstname.lastname@example.org.
Branch Offices of Foreign (Other State) State Banks
The annual fee for fiscal year 2001/2002 is due on or before July 1, 2001. The fee, as outlined in Section 3804(d) of the California Financial Code, is $1,000.00 per California branch office; provided, however that the minimum fee shall not be less than $3,000.00 and the maximum fee shall not be more than $50,000.00. Questions regarding fees may be directed to Patrick Carroll at (415) 263-8559 or by e-mail to email@example.com.
Facilities of Foreign (Other State) Banks
The annual fee for fiscal year 2001/2002 is due on or before July 1, 2001. The fee, as outlined in Section 3804 (e) of the California Financial Code, is $250.00 for each facility doing business as of June 1, 2001. Those foreign (other state) banks which also maintain branch offices in California are not subject to this fee. Questions regarding fees may be directed to Patrick Carroll at (415) 263-8559 or by e-mail to firstname.lastname@example.org.
Facilities of Foreign (Other State) Industrial Banks
The annual fee for fiscal year 2001/2002 is due on or before July 1, 2001. The fee, as outlined in Section 18664 (b) of the California Financial Code, is $250.00 for each facility doing business as of June 1, 2001. Those foreign (other state) banks which also maintain branch offices in California are not subject to this fee. Questions regarding fees may be directed to Patrick Carroll at (415) 263-8559 or by e-mail to email@example.com.
Transmitters of Money Abroad
The annual fees for fiscal year 2001/2002 are due on or before July 1, 2001. The fees, as outlined in Section 1801(a) of the California Financial Code, are: $2,500.00 for each transmitter of money abroad license; $125.00 for each licensee branch office; $25.00 for each agent headquarters office, and $25.00 for each agent branch office. . Questions about transmitter of money abroad fees may be directed to Arlene Rutherford at (415) 263-8540 or by e-mail to firstname.lastname@example.org.
Business and Industrial Development Corporation (BIDCO)
The annual license fee for fiscal year 2001/2002 is due on or before July 1, 2001. The fee, as outlined in Section 31115(a)(6), is $2,000.00 for each BIDCO doing business as of June 1, 2001. Questions regarding fees may be directed to Patrick Carroll at (415) 263-8559 or by e-mail to email@example.com.
Monthly Activity Report
Commercial Bank Activity
Proposed Location: in the vicinity of Ventura Boulevard and Balboa Avenue,
Encino, Los Angeles County
Correspondent: S. Alan Rosen, Esq.
Horgan, Rosen, Beckham & Coren, L.L.P.
21700 Oxnard Street, Suite 1400
Woodland Hills, CA 91367
Phone: (818) 340-6100
Proposed Location: in the vicinity of Olympic Boulevard and Union Avenue, Los Angeles,
Los Angeles County
Correspondent: John J. Kennedy
1543 West Olympic Boulevard
Los Angeles, CA 90015
Phone: (213) 480-3003
Premier Valley Bank
Location: 8355 North Fresno Street, Fresno, Fresno County (93720)
Officers: J. Michael McGowan, President & Chief Executive Officer; David H. Wogan, Executive Vice President & Chief Credit Officer; Michael W. Martinez, Executive Vice President & Chief Financial Officer
Phone: (559) 438-2007
Sand Hill Private Bank & Trust Company
Proposed Location: in the vicinity of Sand Hill Road, Menlo Park, San Mateo County
Correspondent: John H. Sears
Sheppard, Mullin, Richter & Hampton LLP
4 Embarcadero Center, 17th Floor
San Francisco, CA 94111
Phone: (415) 434-9100
Bank of Stockdale, F.S.B., Bakersfield, with and into Valley Independent Bank, El Centro
First Bank & Trust, San Francisco, with and into Bank of San Francisco, San Francisco, and to change the name of the surviving bank to First Bank & Trust
Kermit State Bank, Kermit, Texas, with and into Cathay Bank, Los Angeles
Kings River State Bank, Reedley, with and into Valley Independent Bank, El Centro
Sacramento Commercial Bank, Sacramento, with and into Placer Sierra Bank, Auburn
Vineyard National Bank, Rancho Cucamonga, to convert to state chartered bank under the name Vineyard Bank
Acquisition of Partial Business Unit
Redding Bank of Commerce, Redding, to acquire the Citrus Heights Office of FirstPlus Bank, Tustin, located at 6950 Sunrise Boulevard, Citrus Heights
Sale of Partial Business Unit
Israel Discount Bank Limited, Beverly Hills, to sell a partial business unit to Israel Discount Bank of New York, New York
Application for Trust Powers
Community Bank of San Joaquin
22 West Yokuts Avenue, Stockton, San Joaquin County
Foreign Bank Activity
New Foreign (Other Nation) Bank- To Establish Office
555 South Flower Street, Los Angeles, Los Angeles County
Jack Wityak, Vice President
This application was filed and approved under the name Banca Intesa, S.p.A.
Foreign (Other Nation) Bank – To Discontinue Office
UniCredito Italiano S.p.A.
500 South Grand Avenue, Los Angeles, Los Angeles County
Business and Industrial Development Corporation (BIDCO) Activity
CNL Commercial Lending Inc., A California Business and Industrial Development Corporation
26137 La Paz Road, Mission Viejo, Orange County
James Seneff, Jr., Chief Executive Officer; David H. Scherer, Executive Vice President and Chief Operating Officer; Henry E. Moorhead, Senior Vice President & Chief Financial Officer
Phone: (949) 851-8070
Industrial Loan Company Activity
New Premium Finance Company
Collier Financial, Inc.
2501 East Chapman Avenue, Fullerton, Orange County
G.A.S. Premium Finance, Inc.
251 North Brand Boulevard, Suite 201
Glendale, CA 91203
Voluntary Surrender of License
Morgan Premium Finance of California, Inc.
1455 Oliver Road, Fairfield, Solano County
Credit Union Activity
Cal West Credit Union, Newport Beach with and into Financial Partners Credit Union, Downey
Citrus and Avocado Employees Federal Credit Union, Ventura with and into California Agribusiness Credit Union, Buena Park
Newport-Mesa Federal Credit Union, Newport Beach with and into LBS Financial Credit Union, Long Beach
Transmitters of Money Abroad Activity
Voluntary Surrender of License
Serfin Funds Transfer, Inc.
1000 South Fremont, Alhambra, Los Angeles County
Totta & Sottomayer
1644 Alum Rock Avenue, San Jose, Santa Clara County
DONALD R. MEYER
Commissioner of Financial Institutions
Bulletin for month ended
May, 2001, issued pursuant
to Financial Code, Section 258
The Monthly Bulletin is available without charge via email as a PDF attachment. To subscribe, please contact Mary Ann Havens at firstname.lastname@example.org.
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