DFI Monthly Bulletin – October 2003

Oct 1, 2003

Volume 7, Number 4

MTRA Elects Robert Venchiarutti Secretary

Acting Deputy Commissioner Elected at Annual Conference
Acting Deputy Commissioner Robert Venchiarutti was elected secretary of the Money Transmitters
Regulators Association (MTRA) at its annual conference in Orlando, Florida October 19-22, 2003. Mr.
Venchiarutti joined the Department of Financial Institutions (DFI) as Staff Counsel in December 2000
and was appointed Acting Deputy Commissioner for the Special Licensees program effective June 1,
2003. The Special Licensees Program regulates money transmitters, issuers of payment instruments
(money orders) and issuers of travelers checks.
Mr. Venchiarutti graduated from Georgetown University where he received a Bachelor of Arts degree in
Economics. He is a Graduate of Hastings College of the Law, where he was Associate Articles Editor of
the Hastings Law Journal. Before joining DFI, Mr. Venchiarutti was in private practice for over five
years at law firms in San Francisco.
MTRA fosters cooperation among states and federal agencies for the effective and efficient regulation of
money transmitters and check sellers.
Insurance Premium Finance Company Assessment Due
Invoices for the insurance premium finance company assessment were mailed on October 31, 2003. The
amount of the assessment on each insurance premium finance company is 0.0238548915780453 percent
of total assets. The invoice is due when received and becomes delinquent if not paid within 20 days.
After 20 days, the Commissioner shall assess and collect a penalty in addition to the assessment of one
(1) percent of the assessment for each month or part of a month that the payment is delayed or withheld,
as authorized by section 18351. If an insurance premium finance company fails to pay the assessment as
provided in section 18350 on or before the 30th day of December following the day upon which payment
is due, the Commissioner may by order summarily suspend or revoke that company’s authority to
conduct business.
2 Monthly Bulletin October, 2003
Highlights of 2003 State Chaptered Legislation
Attached is “Highlights of 2003 State Chaptered Legislation.” This summary is a compendium of most
but not all of the legislation that may have an impact on financial institutions. Included after a brief
description of each measure is a link to the chaptered version of that measure.
We hope you find the “2003 Highlights of State Chaptered Legislation” a productive tool. We encourage
any suggestions you may have to improve its usefulness to you and your organization. Please submit
your suggestions to Meg Svoboda, Legislative Director for the Department, at (916) 322-5963 or by
email at msvoboda@dfi.ca.gov.
Foreign Language Contract Requirement Expanded
Two new bills signed into law this year, SB 146 (Escutia) and AB 309 (Chu), both modify and expand
Civil Code Section 1632, which requires businesses in California to provide a Spanish translation of
contracts where certain kinds of agreements entered with a consumer were negotiated primarily in
Spanish. When the bills are effective next year, the translation requirement will apply to four other
languages that have been determined to be the most prevalent in this state after English and Spanish,
namely: Chinese, Tagalog, Vietnamese and Korean.
The types of agreements affected include retail installment contracts, automobile sales and leases, certain
secured and unsecured loans for personal, family, or household purposes, residential rental agreements
for a period of longer than one month, and legal service fee agreements.
The bills clarify that providing a blank, incomplete form of a contract will no longer satisfy the
requirement, but that every term and condition of a covered contract must be translated. However, the
bill also provides that certain elements of a contract need not be translated. These are: names and titles
of individuals and other persons, addresses, brand names, trade names, trademarks, registered service
marks, full or abbreviated designations of the make and model of good or services, alphanumeric codes,
numerals, dollar amounts expressed in numerals, dates, and individual words and expressions having no
generally accepted non-English translation.
Failure to comply with the law may result in rescission of the contract. There are no provisions for
damages, though in California, a violation may result in an action under the Unfair Competition Law,
codified in Business & Professions Code Section 17200.
The provisions of the bill other than the addition of the four other languages are effective January 1,
2004. The law applies to the additional languages as of July 1, 2004.
3 Monthly Bulletin October, 2003
Managing the Securities Portfolio
When reviewing their balance sheets many banks are finding a major asset component that wasn’t there
five years ago, the securities portfolio. In the 1970’s, and earlier, it was common for the average
community bank to have twenty to forty percent of its total assets invested in securities. However, over
the last 20 years we had seen such investments decline dramatically as a result of accounting changes,
the decline in core deposits, and the effects of persistent high rates of inflation which made the holding
of long-term, fixed-rate assets unattractive. Securities portfolios were often reduced to the minimum
level necessary to meet obligations for pledging against public deposits, and other special liabilities.
During the past two years, however, this situation has changed. Many banks have found themselves
holding more deposits than they have quality loan demand to fund, and the very low nominal rates of
interest on deposits have afforded an opportunity to lock in a favorable spreads between funding costs
and securities yields. Management expertise has not, however, kept pace with the growth in assets
committed to holding securities, and the desirability of actively managing the portfolios due to the
accounting rules in effect. The situation has been further exacerbated by the disappearance of the advice
from their principal correspondent banks that the community bank used to be able to rely upon as part of
the overall correspondent relationship.
In far too many of our examinations we are finding that the responsibility for managing the securities
portfolio has been delegated to a Chief Financial Officer with minimal prior experience in this area,
often with a lack of any policy guidance from the board, any established procedures, or meaningful
oversight by either the board or the Chief Executive Officer. This can, and has, proven a formula for
disaster. At a minimum every bank should have policies which cover:
1. Permissible investments by type of security, obligor, and maturity and investment grade.
2. An approved list of brokers.
3. A policy concerning concentrations.
4. A target average maturity, duration, with acceptable ranges.
5. A prior credit review and analysis of any imbedded options such as call features before purchase.
6. Standards concerning the liquidity of securities held, or available, for sale.
7. Dual control over purchases and sale of securities.
8. Preparation of detailed transaction reports of purchases and sales, including the reasons for such
transactions, for review by the board.
9. Periodic analysis of the portfolio for compliance with existing policies.
10. And finally, a policy concerning the permissible use of derivatives as either primary investments,
or part of a plan for hedging of risk.
A well managed securities portfolio can be very beneficial to any bank, and reduce overall risk and
provide stability to earnings. However, securities are not risk-free, and like any other new line of
business require an investment of management’s time both in pre-planning and ongoing supervision and
control of those risks.
4 Monthly Bulletin October, 2003
MoneySmart Receives Service to America Medal
MoneySmart recently received a Service to America Medal for making a significant contribution to the
nation in activities related to business and commerce by bringing financial education to more than
100,000 low- and moderate-income Americans across the country. The award is sponsored by
Partnership for Public Service; a nonpartisan, nonprofit organization dedicated to revitalizing public
service through a campaign of educational efforts, policy research, public-private partnerships and
legislative advocacy.
The Federal Deposit Insurance Corporation (FDIC) developed the MoneySmart program to help adults
outside the financial mainstream enhance their money skills and create positive banking relationships.
The Money Smart curriculum, which is available in English, Spanish, Chinese and Korean helps
individuals build financial knowledge, develop financial confidence, and use banking services
The Department of Financial Institutions (DFI) is proud to be an alliance member of MoneySmart. We
encourage all DFI licensees to learn about and participate in this important program. For more
information, visit the Money Smart page on the FDIC Web site at:
Commercial Bank Activity
New Bank
Bank of Escondido
200 West Grand Avenue, Escondido, San Diego County
(760) 520-0400
Web Site: www.bankofescondido.com
Officers: Michael R. Peters, President and Chief Executive Officer
Glenn Marshall, Executive Vice President and Chief Credit Officer
Linda Blakley, Vice President and Operations Manager
Capitalization: $9,900,000.00
Opened: 10/14/03
Continental Bank of America
17700 Castleton Street, City of Industry, Los Angeles County
(626) 363-8988
Officers: Peter Koos, President and Chief Executive Officer
Terry Lou, Managing Director
Robert Scott, Chief Credit Officer
Capitalization: $8,385,000.00
Opened: 10/6/03
5 Monthly Bulletin October, 2003
New Bank (Continued)
Diablo Valley Bank
402 Railroad Avenue, City of Danville, Contra Costa County
(925) 314-9109
Web site: www.diablovalleybank.com
Officers: James A. Mayer, President and Chief Executive Officer
John J. Hounslow, Chairman and Chief Administrative Officer
Carmela D. Johnson, Senior Vice President and Chief Financial Officer
Capitalization: $16,500,000.00
Opened: 10/20/03
Five Star Bank Natomas
2400 Del Paso Road, Sacramento, Sacramento County
Correspondent: Gary Steven Findley, Esq.
Gary Steven Findley & Assoc.
1470 North Hundley Street
Anaheim, CA 92806
(714) 630-7136
E-mail: gsf@findley-reports.com
Approved: 10/1/03
(Name was amended from Five Star Bank of Natomas on 8/13/03)
(Address was corrected from 2400 Del Paso Boulevard, Sacramento)
The Private Bank of the Peninsula
505 Hamilton Avenue, Palo Alto, Santa Clara County
(650) 843-2265
Web Site: www.the-private-bank.com
Officers: James C. Wall, Chairman and Chief Executive Officer
Robert S. Holden, President and Chief Lending Officer
Stephen R. Jones, Chief Financial Officer
Capitalization: $18,430,000.00
Opened: 10/1/03
Redwood Capital Bank
In the city of Eureka, Humboldt County
Correspondent: John E. Dalby
200 East Higgins, Eureka, CA 95503
Phone: (707) 616-9690
Approved: 10/28/03
6 Monthly Bulletin October, 2003
New Bank (Continued)
San Diego Trust Bank
2550 Fifth Avenue , Suite 120, San Diego, San Diego County
(619) 525-1700
Web site: www.sandiegotrust.com
Officers: Michael E. Perry, President and Chief Executive Officer
James T. “Toby” Reschan, Executive Vice President and Chief Administrative Officer
J. M. “Mike” Justice, Jr., Executive Vice President and Chief Financial Officer
Capitalization: $12,000,000.00
Opened: 10/30/03
Feather River State Bank, Yuba City, with and into Humboldt Bank, Eureka
Filed: 10/1/03
General Bank, Los Angeles, with and into Cathay Bank, Los Angeles
Effected: 10/20/03
North Coast Bank, National Association, Santa Rosa, with and into American River Bank, Sacramento
Filed: 10/16/03
Ojai Valley Bank, Ojai, with and into Mid-State Bank & Trust, Arroyo Grande
Effected: 10/31/03
Purchase of Partial Business Unit
Bank of Visalia, Visalia, to acquire Fresno branch office of Humboldt Bank, Eureka
Effected: 10/10/03
Acquisition of Control
Boston Private Financial Holdings, Inc., to acquire control of First State Bank of California, Granada
Filed: 10/30/03
L. Dale Crandall, to acquire control of Pacific Union Bank, Los Angeles
Filed: 10/17/03
Approved: 10/23/03
Final Order (Financial Code 1913)
California Oaks State Bank, Thousand Oaks
Issued: 10/30/03
7 Monthly Bulletin October, 2003
Premium Finance Company Activity
New Premium Finance Company
ING Finance
2780 Skypark Drive, Suite 300, Torrance, Los Angeles County
Approved: 10/22/03
Insurance Premium Plan, Inc.
6046 Cornerstone Court West, San Diego, San Diego County
Approved: 9/18/03
Opened: 10/13/03
Professional Premium Finance Corporation
2501 E. Chapman Ave., Suite 100, Fullerton, Orange County
Approved: 10/22/03
Spartan Premium Finance Company, Inc.
2751 Alpine Boulevard, Alpine, San Diego County
Filed: 10/28/03
West Coast Premium Finance Corp.
2501 East Chapman Avenue, Suite 100, Fullerton, Orange County
Opened: 10/7/03
Acquisitions of Control
Hudson United Bank, to acquire control of FPCAL, Inc., Woodland Hills
Approved: 10/24/03
Hudson United Bank, to acquire control of Westchester Premium Acceptance Corporation of California,
Woodland Hills
Approved: 10/24/03
Voluntary Surrender of License
Bay Budget Plan, Inc.
2501 East Chapman Avenue, Fullerton, Orange County
Effected: 10/20/03
Brokers Premium Finance, Inc.
2501 East Chapman Avenue, Fullerton, Orange County
Effected: 10/20/03
8 Monthly Bulletin October, 2003
Foreign (Other State) Bank Activity
New Facility
Crescent Bank & Trust (Facility – Insured Bank)
4614 Sheridan Road, Oceanside, San Diego County
Opened: 10/20/03
Credit Union Activity
Gentelco West Federal Credit Union, Long Beach, into Pacific Community Credit Union, Fullerton
Effected: 9/30/03
San Francisco Joint Board I.L.G.W.U. Credit Union, San Francisco, into Bay Media Federal Credit
Union, San Francisco
Effected: 10/22/03
Change of Name
America’s Choice Credit Union to change its name to My Credit Union
Filed: 10/1/03
Church/Co-Op Credit Union to change its name to Capital City Credit Union
Approved: 10/22/03
Field of Membership
Eight credit unions received approvals to add 15 new fields of membership during September 2003.
Bylaw Amendment
Two credit unions received approval for two bylaw amendments during September 2003.
Amendment of Articles of Incorporation
Three credit unions received approvals for three amendments of articles of incorporation during
September 2003.
Three credit unions received approvals for three requests for variance to sections of the California Code
of Regulations during September 2003.
9 Monthly Bulletin October, 2003
Transmitter of Money Abroad Activity
Acquisitions of Control
Global Payments Inc., to acquire control of DolEX Dollar Express, Inc.
Filed: 10/27/03
Approved: 10/29/03
Voluntary Surrender of License
Travelex Inc.
Effected: 7/30/03
Commissioner of Financial Institutions
Bulletin for Month ended
October 2003, issued pursuant
to Financial Code, Section 258
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