State of California
| Gray Davis, Governor |
Business Transportation and Housing Agency |
| Department of Financial Institutions |
http://www.dfi.ca.gov |
 |
Monthly Bulletin |
| Volume 6, Number 3 |
September, 2002 |
Debt Cancellation Agreements
We have received several inquiries concerning the ability of California state licensed banks and credit unions to offer "Debt Cancellation Agreements" as a substitute for credit life and disability insurance contracts. While the Banking Law, and Credit Union Law, are silent on this topic, there is no statutory prohibition on offering such products in the laws the Department of Financial Institutions administers. While the Comptroller of the Currency ("OCC") has determined that debt cancellation agreements are not "insurance", we suggest that banks and credit unions contact the California Department of Insurance before commencing a program for the sale of such a product to avoid any potential conflict under the California Insurance Laws.
As a matter of safety and soundness we see no reason why such products cannot be offered to customers of banks and credit unions assuming prudent practices are followed. While the Department is not adopting the regulations recently promulgated by the OCC (Http://www.OCC.treas.gov/ftp/release/2002-73.pdf) on this topic, we believe that adherence to those regulations would constitute "Best Practices", in offering this type of product. In addition, we believe it would be prudent for banks and credit unions to seek the legal advice of their own counsels concerning the fees for such agreements being part of the calculation for the determination of a "Covered Loan" under Financial Code Section 4970.
Before commencing the offering of this, or any other unique or unusual product, we would expect our licensees to communicate with their primary contact officer at the Department of Financial Institutions. Such communication should include not only a notice of the bank or credit union’s intent to engage in this activity, but also an indication of the bank or credit union’s due diligence effort in studying the proposed activity. Issues we would expect to have been adequately addressed would include:
- Types of contracts to be offered and appropriate underwriting standards for each.
- Plans to adequately administer claims, especially on disability and unemployment coverage.
- Risk evaluation and appropriate mitigation procedures, including any plans for re-insurance.
Extraordinary Situation – Terrorism Reminder
Governor Gray Davis gave a directive to the California State Strategic Committee on Terrorism On October 21, 2001 to evaluate the potential of terrorist attack, review California’s current state of readiness to prevent and respond to a potential attack and establish and prioritize recommendations for prevention and response. Based upon this directive, all Department licensees were instructed to comply with the following on May 31, 2002:
- Review personnel policies dealing with hiring and background checks. These personnel policies shall then be reviewed and approved by the board of directors. A board resolution acknowledging the review and approval of the personnel policies shall be sent to the Department.
- Review business resumption and contingency planning policies, and to make whatever changes are warranted by the current situation. Licensee business resumption and contingency planning policies must then be reviewed and approved by the board or directors, with a board resolution acknowledging the review and approval.
- Designate one person who will receive information regarding alerts or threats to financial institutions in California. The designated person’s mailing address, e-mail address, telephone number, cellular phone number, and facsimile number shall be included with the designation.
The notice was published in the May 2002 issue of the Monthly Bulletin and each licensee received a copy by mail. It requested that each licensee designate a contact person and forward a resolution regarding review and approval of personnel policies and business resumption and contingency planning policies to the Department by September 30, 2002. If you have not complied, please contact Vivian Chen at (415) 263-8556 or by e-mail at vchen@dfi.ca.gov to make arrangements.
Monthly Activity Report
Commercial Bank Activity
New Bank
Coast Commerce Bank
Proposed Location: 296 H Street, Suite 100, Chula Vista, San Diego County
Correspondent: Larry L. Benthien
Proposed Director, President & Chief Executive Officer
Phone: (619) 425-2952
Approved: 9/13/02
The Private Bank of the Peninsula
within a two mile radius of the intersection of El Camino Real and Santa Cruz Avenue, City of Menlo Park, County of San Mateo
Correspondents: John H. Sears, Esq.
Sheppard Mullin Richter & Hampton LLP
4 Embarcadero Center, 17th Floor
San Francisco, CA 94111
Phone: (415) 774-3205
Or James C. Wall
(650) 619-8985
Filed: 9/18/02
Security Business Bank of San Diego
701 B Street, Suite 100, San Diego, San Diego County
Officers: Paul F. Rodeno, President and Chief Executive Officer
Michael J. Gilligan, Chief Financial Officer
Claire Fitzpatrick, Cashier
Phone: (619)231-8500
Capitalization: $10,142,958.17
Opened: 9/27/02
Mergers
Bank of Canton of California, San Francisco, with and into United Commercial Bank, San Francisco
Filed: 9/16/02
Bank of Los Altos, Los Altos, with and into Heritage Bank of Commerce, San Jose
Filed: 9/3/02
Heritage Bank East Bay, Fremont, with and into Heritage Bank of Commerce, San Jose
Filed: 9/3/02
Heritage Bank South Valley, Morgan Hill, with and into Heritage Bank of Commerce, San Jose
Filed: 9/3/02
Purchase of Partial Business Unit
Gateway Business Bank, Lakewood, to acquire the Laguna Hills Branch of eosbank, San Mateo
Effected: 9/13/02
Security Business Bank of San Diego, San Diego, to acquire the San Diego Branch of Manufacturers Bank, Los Angeles
Approved: 9/18/02
Effected: 9/27/02
Acquisition of Control
Sumitomo Mitsui Financial Group, Inc. to indirectly acquire Manufacturers Bank, Los Angeles
Filed: 9/23/02
Industrial Bank Activity
Merger
First Fidelity Investment and Loan, Tustin, with and into Hawthorne Savings F.S.B., Hawthorne
Effected: 8/23/02
Purchase of Partial Business Unit
Silvergate Bank, La Jolla, to acquire the Lancaster and Riverside Branches of Humboldt Bank, Eureka
Filed: 8/19/02
Approved: 9/24/02
Change of Name
Tustin Thrift and Loan Association to change its name to Tustin Community Bank
Notified: 9/10/02
Premium Finance Company Activity
New Premium Finance Company
Blackwater Premium Finance of CA, Inc.
6046 Cornerstone Court West, Suite 202, San Diego, San Diego County
Filed: 7/10/02
Mutual Credit Corporation
511 West Palm Drive, Suite 210, Placentia, Orange County
Filed: 8/19/02
Acquisition of Control
KIF, Inc. to acquire control of Universal Premium Acceptance Corporation/UPAC of California, Inc.
Filed: 3/15/02
Approved: 9/12/02
Foreign (Other Nation) Bank Activity
Discontinuance of Offices
Arab Banking Corporation (B.S.C.)
555 South Flower Street, Los Angeles, Los Angeles County (Representative Office)
Discontinued: 9/30/02
Voluntary Surrender of License
National Bank of Canada (Nondepositary Agency)
725 South Figueroa Street, Los Angeles, Los Angeles County
Effected: 1/15/02
Foreign (Other State) Bank Activity
New Facility
The Northern Trust Company of Connecticut (Facility – Uninsured Bank)
580 California Street, Suite 1300, San Francisco, San Francisco County
Opened: 9/15/02
Discontinuance of Facility
FTTrust Company (Facility – Uninsured Bank)
777 Mariners Island Boulevard, San Mateo, San Mateo County
Filed: 9/12/02
Approved: 9/16/02
Effected: 1/16/02 (nunc pro tunc)
JPMorgan Chase Bank (Facility – Insured Bank)
1800 Century Park East, Suite 400, Los Angeles, Los Angeles County
Discontinued: 9/1/02
United States Trust Company of New York (Facility – Insured Bank)
515 South Flower Street, Los Angeles, Los Angeles County
Notified: 9/19/02
Discontinued: 6/26/01 (nunc pro tunc)
Credit Union Activity
Conversion
Silicon Valley Federal Credit Union, Palo Alto, as Silicon Valley Credit Union
Approved: 8/21/02
Effected: 9/9/02
Mergers
Medi-Serv Credit Union, San Francisco, into San Francisco Fire Credit Union, San Francisco
Filed: 8/5/02
Approved: 9/5/02
San Gabriel Valley Credit Union, Walnut, into Credit Union of Southern California, Whittier
Filed: 9/20/02
Sharp Federal Credit Union, San Diego, into Cabrillo Credit Union, San Diego
Approved: 9/5/02
Western Gear Federal Credit Union, City of Industry, into Credit Union of Southern California, Whittier
Approved: 9/5/02
Field of Membership
Ten credit unions received approvals to add 21 new fields of membership during August 2002.
Bylaw Amendments
Seven credit unions received approvals for 10 bylaw amendments during August 2002.
Variances
One credit union received an approval for a request for variance to sections of the California Code of Regulations during August 2002.
Payment Instrument Activity
New Payment Instrument
American Payment Systems, Inc.
Contact person: Donna M. Estelle
2319 Whitney Avenue, 6th Floor
Hamden, CT 06518
Filed: 9/4/02
Transmitter of Money Abroad Activity
New Transmitters
GroupEx Financial Corporation Inc.
Contact person: Scott Tindall
14849 Firestone Boulevard
La Mirada, CA 90638
Filed: 9/4/02
PayPal, Inc.
Contact person: John Muller
303 Bryant Street
Mountain View, CA 94041
(650) 864-8000
Opened: 9/24/02
DONALD R. MEYER
Commissioner of Financial Institutions
Bulletin for month ended
September, 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 bulletin@dfi.ca.gov.
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