State of California
|Gray Davis, Governor||
Business Transportation and Housing Agency
|Department of Financial Institutions||
|Volume 6, Number 1||
Compliance with the Provisions of Division 1.6 of the Financial Code
The provisions of Division 1.6 of the Financial Code, commencing with Section 4900, became effective for loans originated on, or after, July 1, 2002. This new law defines certain consumer loans as being “covered loans”, and establishes penalties for making loans in violation of the statute. The Department of Financial Institutions is responsible for enforcing the provisions of this law as it applies to licensees of the Department.
It is the intent of the Department to review compliance with Division 1.6 of the Financial Code as part of its regular safety and soundness examinations. Examinations will include not only a review of “covered loans” originated by licensees, but also a review of the policies adopted by the licensees to avoid any unintentional violations. Violations of the statute, even if unintentional, can have severe financial, reputational, and regulatory consequences. We strongly recommend that every board of directors adopt policies which, at a minimum, cover the following items:
- Whether the institution or its subsidiaries will make “covered loans”, and, if so, subject to what requirements and procedures. If the institution’s policy specifies that it will not make “covered loans”, methods for assuring compliance with such policy should be established.
- Whether the institution will provide financing to originators of “covered loans”, and the acceptance of “covered loans” as collateral for credit facilities, and, if so, subject to what requirements and procedures.
- Procedures to identify “covered loans” which are originated through independent brokers, or acquired by the institution in secondary market purchases.
- Compliance and legal reviews of all documentation used in making “covered loans”.
- Internal reviews of compliance with the provisions of Division 1.6 of the Financial Code.
- The handling of consumer inquiries and complaints concerning “covered loans”.
- Appropriate training of officers and staff concerning the requirements of Division 1.6 of the Financial Code.
The above list is not intended to be inclusive of all policy issues the board of directors may wish to address on this important topic. If your institution has not already made a detailed review of its present and future compliance with this important legislation it should do so immediately.
Monthly Bulletin Coverage Expanded
Starting with this issue of the Monthly Bulletin, coverage is being expanded to cover the following types of applications:
- Change of name applications.
- Acquisition of control applications.
- Final enforcement orders.
- The filing, approval, or denial under Article 2 (commencing with Section 16000) of Chapter 10 of Division 5 of an application for authority to establish a the first branch office of a foreign (other state) credit union, or the issuance of a license to the first branch office of a foreign (other) state credit union.
- The withdrawal, expiration or abandonment of an application under Article 2 (commencing with Section 16000) of Chapter 11 of Division 5 of an application for authority to establish the first facility of an uninsured foreign (other state) credit union.
- The filing, approval, or denial under Article 2 (commencing with Section 16525) of Chapter 11 of Division 5 of an application for authority to establish the first representative office of a foreign credit union, or the issuance of a license to a representative office of a foreign credit union.
- The withdrawal, expiration or abandonment of an application under Article 2 (commencing with Section 16525) of Chapter 11 of Division 5 of an application for authority to establish a representative office of a foreign credit union.
- The filing, approval, or denial under Article 3 (commencing with Section 16550) of Chapter 11 of Division 5 of an application for authority to establish the first agency or branch office of a foreign (other nation) credit union, or the issuance of a license to a representative office of a foreign credit union.
- The withdrawal, expiration or abandonment of an application under Article 3 (commencing with Section 16550) of Chapter 11 of Division 5 of an application for authority to establish an agency or branch office of a foreign credit union.
Assessment Rates to be Set after the Budget is Signed
As we announced in the last issue of the Monthly Bulletin, the assessment rates cannot be set until the State Budget has passed the Legislature and been signed by the Governor.
Invoices will be sent out as soon as that occurs and will be due thirty days from that date. For more information, please contact Patrick Carroll at (415) 263-8559 or by e-mail at email@example.com.
Reminder to Credit Unions
Credit unions are reminded that California Financial Code Section 14254.5 provides that within ten (10) business days of opening, closing, or relocating a branch office, a credit union shall notify the commissioner in writing of the action, including the street and mailing addresses of the branch office. Please send notices to:
Northern California credit unions:
Financial Institution Manager
111 Pine Street, Suite 1100
San Francisco, CA 94111
Southern California credit unions:
Financial Institution Manager
300 So. Spring Street, #15513
Los Angeles, CA 90013
If you are unsure where to send your notice please call Beverly Ryan at (415) 263-8560 or Joni Kimbrell at (213) 897-2168 ext. 123.
Unemployment Benefits to Increase Retroactively to September 11, 2001
Recent legislation signed into law by Governor Davis provides for an increase in unemployment insurance (UI) benefits retroactively to September 11, 2001. The bill takes effect on August 1, 2002.
In order to implement this one-time increase in UI benefits, adjustment checks of up to $2600 will be issued in August 2002. These adjustment checks will be for the difference between the amount of UI benefits an individual actually received for a week of unemployment compensation and the higher weekly benefit amount the individual would have received under Senate Bill 40 (Chapter 409, Statutes of 2001).
Since these checks are above the normal maximum dollar amount for UI checks issued by the state Employment Development Department, the Department is making efforts to alert financial institutions of this special one-time increase in UI benefits.
For more information, please contact the Employment Development Department at 1-800-300-5616.
Monthly Activity Report
Commercial Bank Activity
County Commerce Bank
3260 Telegraph Road, Ventura, Ventura County
Correspondent: Gary M. Horgan
Horgan, Rosen, Beckham & Coren
23975 Park Sorrento
Calabasas, CA 91302-4001
Phone: (818) 591-2121
2140 West Olympic Boulevard, Los Angeles, Los Angeles County
Officers: Eun Hak Paik, President and Chief Executive Officer
Chanho Park, Chief Financial Officer
Chang Young Kim, Chief Credit Officer
Phone: (213) 480-3003
Pacific City Bank
Proposed Location: 3701 Wilshire Boulevard, Suite 100, Los Angeles, Los Angeles County
Correspondent: Jung C. Chang
2975 Wilshire Boulevard, Suite 520
Los Angeles, CA 90010
Phone: (213) 383-0423
United American Bank
Proposed Location: 101 South Ellsworth Avenue, San Mateo, San Mateo County
Correspondent: John C. Schrup
1650 Borel Place, Suite 208, San Mateo, CA 94402
Phone: (650) 571-1015
Ventura County Business Bank
Proposed Location: 370 Esplanade Drive, Oxnard, Ventura County
Correspondent: Gerald J. Lukiewski
c/o NAI Capital Commercial
300 Esplanade Drive, Suite 1660
Oxnard, CA 93030
Phone: (805) 278-1400 ext. 114
Purchase of Partial Business Unit
Central California Bank, Sonora, to acquire the Sonora Main, Junction, Twain Harte and Columbia Branches and Arnold place of business of Western Sierra National Bank, Cameron Park
Chinatrust Savings Bank of Washington (In Organization), Bellevue, with and into Chinatrust Bank (U.S.A.), Torrance
Western Security Bank, N.A., Burbank, with and into Citizens Business Bank, Ontario Filed: 2/4/02
Application for Trust Powers
First Northern Bank of Dixon
195 N. First Street, Dixon, Solano County
Acquisition of Control
Center Financial Corporation, to acquire control of California Center Bank, Los Angeles
Industrial Bank Activity
Acquisition of Control
Affinity Bank Holdings, Inc. and Stephen Adams, to acquire control of Southern Pacific Bank, Torrance
Foreign (Other Nation) Bank Activity
Sale of Partial Business Unit
Banca di Roma, to sell the San Francisco depositary agency to Minghetti Finanziaria S.p.A.(which changed its name to Banca di Roma S.p.A. effective July 1, 2002)
Banca di Roma S.p.A
One Market Street, Stewart Tower, Suite 1000, San Francisco, San Francisco County (Depositary Agency)
Deutsche Hyp Deutsche Hypothekenbank Frankfurt-Hamburg Aktiengesellschaft
355 South Grand Avenue, Los Angeles, Los Angeles County (Representative Office)
Foreign (Other State) Bank Activity
Discontinuance of Facility
Sunrise Bank of Arizona
4570 Executive Drive, San Diego, San Diego County
Credit Union Activity
Conversions to State Charter
1st City Savings Federal Credit Union, Glendale, as 1st City Credit Union
California Bear Federal Credit Union, Los Angeles, as California Bear Credit Union
Foothill Federal Credit Union, Arcadia
Orange County Gardeners Credit Union, Anaheim, into Nikkei Credit Union, Gardena
Ventura Texaco Employees Federal Credit Union, Ventura, into Ventura County Credit Union, Ventura
Western Gear Federal Credit Union, City of Industry, into Credit Union of Southern California, Whittier
Fields of Membership
Eleven credit unions received approvals to add 45 new fields of membership during June 2002, including one credit union that received five new field of membership approvals in April 2002 that was not previously reported.
Five credit unions received five bylaw amendments during June 2002, including one that was approved in May 2002 and not previously reported.
One credit union received an approval for a request for variance to sections of the California Code of Regulations during June 2002.
CAROL D. CHESBROUGH
Chief Deputy Commissioner
Bulletin for month ended
July, 2002, issued pursuant
to Financial Code, Section 258
The Monthly Bulletin is available without charge via email as a PDF attachment. To subscribe, please <send e-mail with your name, e-mail address, and company name and phone number to firstname.lastname@example.org.
|111 Pine Street, Suite 11, San Francisco, CA 94111-5613||(415) 263-8550|
|300 South Spring Street, Suite 15513, Los Angeles, CA 90013-1204||(213) 897-2085|
|1810 – 13th Street, Sacramento, CA 95811||(916) 322-5966|
|9609 Waples Street, Suite 100, San Diego, CA 92121||(858) 642-4242|
|Consumer Compliance||(800) 622-0620|
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