DFI Monthly Bulletin – October 2004

Oct 1, 2004

Volume 8, Number 4

Highlights of 2004 State Chaptered Legislation

Attached is “Highlights of 2004 State Chaptered Legislation.” This summary is a compendium of most
but not all of the legislation that may have an impact on financial institutions. There is a brief
description of each measure with a link to the chaptered version of that legislation.
We hope you find the “2004 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 Paul Deiro, Legislative Deputy, at (916) 322-5963 or by email at pdeiro@dfi.ca.gov
Licensing Unit to Receive Most Bank
Applications Directly
Move should reduce turnaround time on most applications
Starting November 1, applications for new banks, industrial banks, conversions to state charter, mergers,
sale or purchase of partial or whole business units and sale of securities should be sent to the licensing
unit in the San Francisco Office instead of to the Los Angeles, Sacramento or San Diego Regional
Offices. This new procedure will facilitate the processing of applications by the Department.
Applications to be forwarded to the Licensing Division starting November 1 are:
• New bank
• New industrial bank
• Conversion
• Merger
• Purchase or sale of whole or partial business units
• Sale of securities (negotiating permit, sale of securities, etc.)
111 Pine Street, Suite 1100, San Francisco, CA 94111-5613 (415) 263-8500
300 South Spring Street, Suite 15513, Los Angeles, CA 90013-1204 (213) 897-2085
1810—13th Street, Sacramento, CA 95814-7118 (916) 322-5966
7575 Metropolitan Drive, Suite 108, San Diego, CA 92108-4421 (619) 682-7227
Consumer Compliance (800) 622-0620
2 Monthly Bulletin October 2004
Applications should be addressed to Patrick Carroll, Strategic Support Manager, Department of
Financial Institutions, 111 Pine Street, #1100 San Francisco, CA 94111-5613. Please direct questions
about the new procedure to Mr. Carroll at (415) 263-8559 or by email at pcarroll@dfi.ca.gov.
As announced in the September 2004 Monthly Bulletin, the licensing unit will serve as the portal for
most applications. Applications for new branches, places of business, branch relocations and place of
business relocations were transferred on October 1. Additional changes will be announced in the
Monthly Bulletin as they occur.
DFI hopes to achieve significant organizational efficiencies through process improvement and by
organizing duties around employees’ core competencies.
Bank Investments
Important Changes to Financial Code Section 772
When initially enacted, Financial Code Section 772 permitted a bank to invest in, subject to such
regulations and rules the commissioner may prescribe, the capital stock, obligations, or other securities
of one or more corporations.
Effective January 1, 2004, Financial Code Section 772 was amended to provide for the investment in
equity or other securities of one or more corporations, limited liability corporations, limited liability
companies, limited partnerships, trusts, business trusts, or other similar business organizations. A copy
of the amended statute is detailed below.

772. “Notwithstanding the provisions of Section 1335, except as provided in Section 1336, and
subject to regulations and rules the commissioner may prescribe, a bank may invest in equity
or other securities of one or more corporations, limited liability corporations, limited
liability companies, limited partnerships, trusts, business trusts, or other similar business
Any reference to “corporation” in regulations adopted by the commissioner to implement this
section shall be deemed to include limited liability corporations, limited liability companies,
limited partnerships, trusts, business trusts, or other similar business organizations.”
Among permitted equity investments, a bank’s investment in mutual funds is authorized by, and is
subject to the approval process and limitations under Section 772. If the portfolio of the mutual fund
consists solely of those instruments specified in Section 782, the approval of the commissioner is not
needed. Please be advised that in some cases, the registered name of the mutual fund may refer to debt
obligations in which banks are permitted to invest without limitation. However, the prospectus of the
mutual fund may allow the fund to invest in additional instruments that are subject to limitations, such
as commercial paper, banker’s acceptances, and certificates of deposit. Therefore, Section 772 does
apply to these mutual funds, despite what the name of the fund may imply. It is important to read the
prospectus to determine whether the portfolio of the mutual fund falls under the authority of Section 772
or of Section 782.
Banks may request either general authorization or specific authorization to purchase mutual funds,
depending upon the level of investment and other factors enumerated in Sections 10.19050 et seq. of
3 Monthly Bulletin October 2004
Title 10 of the California Code of Regulations. To exceed levels of investment beyond those under
general authorization, banks may request specific authorization to purchase specified mutual funds. The
Department will review all requests for appropriateness and safety and soundness concerns, including
concentration levels.
Requests for a general authorization to purchase mutual funds or securities of corporations, companies,
partnerships, etc. should include a description of the proposed investments, a statement that such
purchases are permissible under a Board-approved investment policy, and a proposed aggregate
percentage of the bank’s gross capital (shareholders’ equity, capital notes, and allowance for loan and
lease losses) for these investments.
In applying for specific authorization to purchase specified mutual funds, banks should provide the
following information:
• List of the mutual fund(s) to be purchased,
• Statement that the mutual fund purchases are permissible under a Board-approved investment
• Proposed maximum holding of each mutual fund as a percentage of gross capital, and
• Prospectus for each mutual fund.
Questions regarding the Financial Code should be directed to the appropriate Assistant Deputy.
Commercial Bank Activity
New Bank
Bank of Santa Clarita
27441 Tourney Road, Santa Clarita, Los Angeles County
Officers: James D. Hicken, President and Chief Executive Officer
Jeffery Pollard, Chief Operating Officer/Chief Financial Officer
Frank DiTomaso, Vice Chairman/Chief Business Development Officer
Capitalization: $13,750,000
Opened: 10/26/04
Great America Bank
801 E. Valley Boulevard, San Gabriel, Los Angeles County
Correspondent: Gary Steven Findley, Esq.
1470 North Hundley Street
Anaheim, CA 92806
(714) 630-7910
Filed: 10/5/04
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New Bank (Continued)
Security Pacific Bank
3403 Tenth Street, City and County of Riverside
Correspondent: Maryam Hamzeh
c/o Carpenter & Company
5 Park Plaza, Suite 950
Irvine, CA 92614
(949) 261-8888
Filed: 10/18/04
Bank of Amador, Jackson, with and into American River Bank, Sacramento
Approved: 10/7/04
Bank of Lodi, N.A., Lodi, with and into Placer Sierra Bank, Auburn
Filed: 10/14/04
Encino State Bank, Encino, with and into First State Bank of California, Granada Hills
Effected: 10/1/04
Five Star Bank Natomas, Sacramento, with and into Five Star Bank, Rocklin
Filed: 10/4/04
Approved: 10/6/04
Orange Savings Bank of Texas, SSB, Mauriceville, Texas, with and into Wilshire State Bank, Los
Approved: 10/6/04
Conversion to State Charter
Affinity Bank, Ventura, to convert from an industrial bank to a state-chartered bank
Effected: 10/14/04
Western Financial Bank, Irvine, to convert from a federal savings bank to a state-chartered bank under
the name Western Financial Bank
Approved: 10/14/04
Industrial Bank Activity
Acquisition of Control
Cass Information Systems, Inc. to acquire control of Franklin Bank of California
Filed: 10/7/04
Approved: 10/14/04
5 Monthly Bulletin October 2004
Trust Company Activity
Sale of Whole Business Unit
Deseret Trust Company of California, Los Angeles, to sell its business to Deseret Trust Company, Salt
Lake City, Utah
Effected: 9/30/04
Voluntary Surrender of License

Deseret Trust Company of California, Los Angeles
10880 Wilshire Boulevard, City and County of Los Angeles
Effected: 10/14/04
Foreign (Other State) Bank Activity
New Facility
Builders Bank
11111 Santa Monica Boulevard, Los Angeles, Los Angeles County (Facility – Insured Bank)
Opened: 8/18/04
Premium Finance Company Activity
New Premium Finance Company
Mutual Credit Corporation
1620 N. Placentia Ave., Suite 210, Placentia, Orange County
(714) 713-2060
Officers: Andres Harvey, President
Mike Brown, Vice President
Anthony Jacobson, Chief Financial Officer
Opened: 10/15/04
Credit Union Activity
New World Federal Credit Union, Lafayette, into Telesis Community Credit Union, Chatsworth
Filed: 10/29/04
Change of Name
Riverside County’s Credit Union to change its name to ALTURA CREDIT UNION
Filed: 9/28/04
Approved: 9/29/04
Effected: 9/30/04
6 Monthly Bulletin October 2004
Field of Membership
Thirteen credit unions received approvals to add 42 new fields of membership during September 2004.
Bylaw Amendment
One credit union received an approval for a bylaw amendment during September 2004.
One credit union received an approval to make an investment pursuant to California Financial Code
Section 14651(b)
Two credit unions received two approvals for requests for variance to sections of the California Code of
Regulations during September 2004.
Transmitter of Money Abroad Activity
New Transmitter
ABC Money Transactions, Inc.
Filed: 8/30/04
Withdrawn: 10/20/04
Intermex Wire Transfers, Inc.
Filed: 10/20/04
Commissioner of Financial Institutions
Bulletin for Month ended
October 2004, issued pursuant
to Financial Code, Section 258
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