DFI Monthly Bulletin – May 2008

May 1, 2008

Volume 11, Number 11

Message from the Commissioner

May 19, 2008
Hello Everyone.
Last month, I was sworn-in as Commissioner of Financial Institutions by Dale Bonner, Secretary of
Business, Transportation and Housing. I am grateful to the Governor for appointing me to this position.
I write today to introduce myself to all of you and to talk about my expectations for the Department and
our relationships with our licensees.
My career has spanned banking, academia, and now for the second time, government service.
Throughout, my career choices have been shaped by my strong belief in the importance of a healthy
well-functioning financial system to households, businesses and the overall economy. State-chartered
financial institutions are a vital component of this system, especially in California. The tremendous
diversity of our economy and our citizens is supported by the diversity and competitiveness of the
financial institutions operating here.
I have spent my first few weeks on the job doing my homework – getting to know the people in the
Department, understanding our approach to supervision, and scouring data on the condition of our
licensees, early warning indicators, and economic conditions across the state. More recently, I’ve begun
to meet with some of you, and I plan to step up my outreach in the weeks and months to come. You will
find me to be open, accessible and a good listener.
I have come to appreciate the dedication, loyalty, pride and competence of the people in the
Department. I have high expectations for them, and I have high expectations for all of you. I
particularly value open and honest communication between the Department and our licensees.
Speaking for the Department, we prefer to hear bad news sooner rather than later. In turn, when bad
news does arrive, you have my assurance that we will deal with it thoughtfully and judiciously.
The California economy is experiencing an economic slow down along with the rest of the country. No
one really knows how long it will last, how serious it will become, or how deeply it will affect financial
2 Monthly Bulletin May 2008
institutions operating in the state. Just last week, the Nobel Prize winner, Myron Scholes, was quoted as
saying: “From my perspective, I think that we don’t know if the storm has passed or if we are still in the
eye of the storm…Are there other shoes to drop and new events or new shocks that will come to the
In times like these, it is especially important that we use good judgment in exercising our
responsibilities. Those that are convinced the worst is over may be too complacent. All of us need to
stay ahead of the curve addressing our current problems and preparing for the possibility of trouble
ahead. We could be facing many challenges ahead, if we are not already.
You will find that I will work hard to maintain a high level of commitment to our Department’s values:
• Promoting the variety of financial services available through the State chartering system;
• Regulating and supervising our licensees in an appropriate manner with integrity and
• Delivering effective and timely service;
• Communicating in a respectful, timely and meaningful manner; and
• Maintaining a highly skilled, professional and diverse workforce.
At the end of the day, the foundation of all financial services businesses is trust and confidence. If these
are ever diminished, they are difficult to restore. You must work hard to maintain the trust and
confidence of your customers, and we at the Department have the responsibility to the citizens of
California to ensure that this trust and confidence is well-deserved.
I look forward to meeting you in person. I plan to be a frequent contributor to the Department’s Bulletin
and to the Sparklist, and I welcome your honest feedback.
William S. Haraf, Commissioner
Department of Financial Institutions
111 Pine St., Suite 1100, San Francisco, CA 94111
(415) 263.8507
(This message was previously sent out via Sparklist, DFI’s e-mail distribution list.)
T. Bert McLane Appointed Credit Union Division
Chief Examiner
Bert McLane was appointed to the newly established position of Chief Examiner of the Division of
Credit Unions on May 16, 2008. Mr. McLane will report directly to the Governor-appointed Deputy
Commissioner of Credit Unions.
Mr. McLane brings many years of regulatory experience to his new position. He began his career in
1985 as a thrift and loan examiner in the Los Angeles office of the Department of Corporations.
In 1990, he transferred to the Credit Union Division of the Department of Corporations and was
promoted as that Department’s only Credit Union Senior Examiner in 1993.
3 Monthly Bulletin May 2008
In 1997, Mr. McLane moved to the newly created Department of Financial Institutions as a result of the
merger of the Credit Union Division into the old State Banking Department.
Mr. McLane was promoted as a Credit Union Supervisor in February, 2002, and then as a Credit Union
Manager in December 2002, where he has served the Credit Union Division until this most recent
Mr. McLane is a National Association of State Credit Union Supervisors (“NASCUS”) Certified
Supervisor, and is a graduate of the DFI Leadership Challenge Program, which enabled him to lead in
the development of the Department’s compliance program for the California Financial Information
Privacy Act.
Mr. McLane will continue to work diligently toward meeting the mission and vision of the Department
of Financial Institutions, and participating in directing the activities of the Credit Union Division’s
regulatory and administrative program.
New Risk Focused IT/E-Banking Examination
Program to be Implemented in 2008
Recently, eighteen of our bank examiners received training on DFI’s new IT/E-Banking Examination
Program. This training program was developed and patterned after the IT/E-Banking training given to
Federal Deposit Insurance Corporation (FDIC) examiners. Our trainers were DFI Senior Financial
Institution Examiner Bob Lipot and Assistant Deputy Commissioner Richard Schorr. Participants in the
one-week IT Examination Course received training in reviewing a financial institution’s IT risk
management practices; operations security; IT audit/independent review program and processes; disaster
recovery/business continuity program; vendor management program; wire transfer and ACH activities;
and compliance with the Interagency Guidelines Establishing Information Security Standards. Because
we were able to develop this program and train our examiners internally, we were able to realize a
significant savings in our training costs.
The DFI IT/E-Banking Examination Program is a risk-based approach for conducting IT examinations
at our commercial bank, industrial bank, foreign (other nation) bank, and trust company licensees. Not
unlike the FDIC’s IT Risk Management Program (IT-RMP), DFI examinations will focus on
management’s implementation of an information security program and risk management practices in
securing information assets. The examination program refocuses IT risk as a business risk by
integrating IT examinations into safety and soundness examinations. As such, further improvement in
the effectiveness of DFI examinations is anticipated.
We expect to implement this risk focused IT/E Banking examination program starting in June, 2008.
If you have any questions about the IT/E-Banking Examination Program, please contact Deputy
Commissioner Doug Kirkpatrick at (213) 897-2223 or IT/E-Banking Program Manager Richard Schorr
at (213) 897-2225.
4 Monthly Bulletin May 2008
Patelco Credit Union to Absorb Cal State 9
Patelco Credit Union was selected by the National Credit Union Administration (NCUA) yesterday to
absorb Cal State 9 Credit Union based in Concord, CA. Patelco will provide Cal State 9 members with
uninterrupted credit union service during and following the consolidation of the two credit unions.
On November 2, 2007, the Department of Financial Institutions (DFI) placed Cal State 9 a statechartered, NCUA insured credit union, into conservatorship. The DFI and NCUA agreed that a
conservatorship was the best way to ensure the safety and soundness of Cal State 9, and to protect
member assets while addressing operational issues. The NCUA operated the credit union since
November with the goal of continuing credit union service to members through a merger with, or
purchase by, another credit union.
NCUA press release HUhttp://www.ncua.gov/news/press_releases/2008/MR08-0522-2.htmUH.
Transmitter of Money Abroad Voluntarily Suspends
its California Operations
Armenian Express, Inc. (“AEI”) has voluntarily suspended its California operations effective May 12,
2008. Contact information for AEI is Mr. Tigran Ovakimian, 620 South Glendale Avenue, Unit C,
Glendale, CA 91205, or by telephone, (818) 550-9909, or FAX (818) 550-9922. Consumers who wish to
file a claim should call the DFI Consumer Information Desk’s toll free number, 1-800-622-0620 or email
HUconsumer@dfi.ca.govUH. Consumer complaint forms in English and Spanish are available at
Annual Fee Reminder
Invoices for 2008-09 Fiscal Year due July 1, 2008
The following institution types are reminded that annual fees are due in this office on or before July 1,
DFI calculated annual fees from its database and mailed invoices based on that calculation to fee payers.
Representative offices of foreign (other nation) banks
The annual representative license fee for fiscal year 2008-09 is due on or before July 1, 2008. 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, 2008.
Invoices were mailed June 1 and must be paid on or before July 1. Fee payers that do not concur with
the calculated amounts have until Monday, June 18 to request recalculation or adjustment of the amount.
DFI will not entertain any requests received after that date. Those foreign (other nation) banks which
also maintain agency or branch offices in California are not subject to this fee. For questions about fees,
call (415) 263-8552 or e-mail Annie Constantino at HUrconstantino@dfi.ca.govUH.
5 Monthly Bulletin May 2008
Business and Industrial Development Corporation (BIDCO)
The annual license fee for fiscal year 2008-09 is due on or before July 1, 2008. The fee, as outlined in
Section 31115(a)(6), is $2,000.00 for each BIDCO doing business as of June 1, 2008. Invoices were
mailed June 1 and must be paid on or before July 1. For questions about fees, call (415) 263-8559 or
email Annie Constantino at HUrconstantino@dfi.ca.govUH.
Commercial Bank Activity
UNew Bank
El Camino Bank
20946 Devonshire Street, Chatsworth, Los Angeles County
Correspondent: James H. Avery
The Avery Company LLC
P.O. Box 3009
San Luis Obispo, CA 93403
(805) 544-5477
Filed: 5/9/08
Royal Business Bank
Vicinity of Figueroa Street and Wilshire Boulevard, City and County of Los Angeles
Correspondent: James H. Avery
The Avery Company LLC
P.O. Box 3009
San Luis Obispo, CA 93403
(805) 544-5477
Approved: 5/22/08
Suncrest Bank
400 West Center Avenue, Visalia, Tulare County
(559) 802-1000
(559) 802-1001 (fax)
Officers: Michael T. Wilson, President and Chief Executive Officer
Robert R. Moore III, Executive Vice President and Chief Financial Officer
Michael T. Wiley, Executive Vice President and Chief Credit Officer
Capitalization: $19,115,770.00
Website: HUhttp://www.suncrestbank.comU
Opened: 5/19/08
Spectrum Bank, Montebello, to merge with and into Professional Business Bank, Pasadena
Filed: 5/19/08
UAcquisition of Control
6 Monthly Bulletin May 2008
Carpenter Community BancFund-A Limited Partnership, Carpenter Fund Manager GP LLC and Edward
J. Carpenter, John D. Fleming, Howard Gould, James B. Jones and Arthur Hidalgo, to acquire control of
Mission Community Bank
Filed: 4/8/08
Oak Valley Bancorp, to acquire control of Oak Valley Community Bank
Filed: 5/13/08
Approved: 5/23/08
Patricia L. Childress and Carol Bates, to acquire control of Sierra Bancorp/Bank of the Sierra
Filed: 5/2/08
Approved: 5/13/08
Security Business Bancorp, to acquire control of Security Business Bank of San Diego
Filed: 5/23/08
Approved: 5/27/08
Industrial Bank Activity
UNew Industrial Bank
CapitalSource Bank
300 North Lake Avenue, Pasadena, Los Angeles County
Correspondent: James M. Rockett
Bingham McCutchen LLP
Three Embarcadero Center
San Francisco, CA 94111
(415) 393-2000
Filed: 5/20/08
UPurchase Partial Business Unit
CapitalSource Bank (Proposed), Pasadena, to acquire 22 branch offices of Fremont Investment & Loan,
Filed: 5/20/08
Premium Finance Company Activity
UNew Premium Finance Company
Xpress Capital Premium Finance Corp.
5862 Wedgewood Drive, Granite Bay, Placer County
Opened: 5/12/08
Foreign (Other Nation) Bank Activity
7 Monthly Bulletin May 2008
UNew Office
DEPFA Bank plc
Esquire Plaza, 1215 K Street, City and County of Sacramento
Filed: 5/1/08
Standard Chartered Bank
• Koll Center, 501 West Broadway, City and County of San Diego
• 49 Stevenson Street, City and County of San Francisco
Filed: 5/14/08
515 South Flower Street, City and County of Los Angeles
Filed: 5/5/08
DEPFA Bank plc
One Market Street, Steuart Tower, City and County of San Francisco
Filed: 5/1/08
Credit Union Activity
UField of Membership
Nine credit unions received approval to add 21 new fields of membership during April 2008.
UBylaw Amendment
Three credit unions received approval for six bylaw amendments during April 2008.
Arrow Credit Union, San Leandro, to merge with and into Spectrum Federal Credit Union, San
Approved: 4/7/08
California Preferred Credit Union, San Francisco, to merge with and into Redwood Credit Union, Santa
Approved: 2/5/08
Church/Co-op Credit Union, Sacramento, to merge with and into The Golden 1 Credit Union,
Approved: 4/29/08
UMerger (Continued)
8 Monthly Bulletin May 2008
First Future Credit Union, San Diego, to merge with and into California Coast Credit Union, San Diego
Approved: 5/1/08
Monterey Columbian Federal Credit Union, Monterey, to merge with and into Monterey County
Employees Credit Union, Salinas
Effected: 5/31/08
Transmitter of Money Abroad Activity
UAcquisition of Control
New Social Ventures, Inc., to acquire control of Omnex Group, Inc.
Filed: 5/8/08
Thomas H. Lee Partners, L.P., to acquire control of MoneyGram Payment Systems, Inc.
Filed: 5/5/08
Commissioner of Financial Institutions
Bulletin for Month ended
May 2008, issued pursuant
to Financial Code section 258
The Monthly Bulletin is available without charge via e-mail. To subscribe, go to HUhttp://www.dfi.ca.gov/bulletin/subscription/public.aspUH. To
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