California Department of Business Oversight
Volume 4, Number 09 – April 2017
Eric Davies Is DBO’s New Special Administrator for CFLL
Eric Davies has been named Special Administrator for the Department of Business Oversight’s (DBO) California Finance Lenders Law (CFLL) program. The promotion took effect Mar. 13. Eric previously served as supervising examiner for the DBO’s Division of Corporations. He has been with the DBO for 30 years, and has spent the majority of that time working with the CFLL.
Eric has served on DBO’s Management Call Report committee where he helped develop the current mortgage call report. He also helped develop the California-state-specific test questions for mortgage loan originators. Eric graduated from California State University, San Diego with a degree in accounting and earned his CPA license while working at the DBO.
2016 DBO Enforcement Numbers Rise
DBO posted a productive and successful 2016 for enforcement of the laws it administers. DBO collected nearly $2.9 million in restitution for consumers compared to $920,000 in 2015. Other highlights:
- Overall in 2016, DBO enforcement actions, including administrative actions and desist and refrain orders, increased eight percent. That included an 11 percent increase in desist and refrain orders and a seven percent rise in administrative actions.
- The largest number of desist and refrain orders targeted unlicensed securities offerings. Actions brought for violations of the California Residential Mortgage Lenders Act comprised the largest share of administrative actions (31 percent).
- California Finance Lenders Law (CFLL) actions increased 62 percent. This was due, in part, to an initiative to revoke licenses for net worth deficiencies and because more entities petitioned to have their suspended CFLL licenses reinstated.
- DBO collected 32 percent more in penalties in 2016 for a total of $9,066,102.
- The $2.9 million of consumer restitution collected in 2016 more than tripled the 2015 total. This was primarily attributable to settlements with deferred deposit and installment lender LendUp, and mortgage companies Prospect and PrimeLending. Consumers received more than $1 million in refunds as a result of those settlements.
IT System Survey for Banks and Credit Unions Available Apr. 17
The DBO on Apr. 17 will email its biennial IT survey to all banks and credit unions. Emails will be sent to each institution’s designated email address in accordance with the Commissioner’s Order on Electronic Communications (PDF).
The email will contain information on accessing and submitting the electronic 2017 IT Systems Survey. The purpose of the biennial survey is to help the DBO determine the level of each licensee’s IT risk, and prepare for its examinations. Licensees are required to submit the survey pursuant to Financial Code section 455. Responses will be kept confidential and used only in the examination process.
All surveys will be due May 19. If you have questions regarding the survey, contact Senior IT Examiner Robert J. Lipot at email@example.com, or Senior Financial Institutions Examiner Rochelle Rapada at firstname.lastname@example.org. For email or technical issues contact email@example.com.
Proposed Finders Exemption for Broker-Dealers
The DBO has noticed modifications to proposed regulations that would implement a new exemption for finders from the broker-dealer requirements under the Corporate Securities Law of 1968. The exemption was created by statute in 2015 (Assembly Bill 667, Wagner).
DBO To Hold Escrow Roundtable Meeting
Commissioner of Business Oversight Jan Lynn Owen invites licensed escrow companies to participate in an informal roundtable discussion with key DBO staff on Apr. 13 from 1-3 p.m. at the DBO’s Sacramento office located at 1515 K Street.
The purpose of the meeting is to discuss issues of mutual interest to licensees and the DBO.
To suggest agenda items, or to ask questions regarding the meeting, contact Deputy Commissioner Chuck Lilly at (213) 576-7554 or Charles.Lilly@dbo.ca.gov. If you plan to attend, please RSVP directly to Lizzett Gamez at (213) 576-7662 or Lizzett.Gamez@dbo.ca.gov.
CYBER-ALERT: Smishing Attacks Are On The Rise
“Smishing” (SMS phishing) is a text messaging scam that has been on the rise, according to cybersecurity experts. Smishing is similar to older email “phishing” scams and the bottom line is identity theft.
A smishing attack uses a text message to trick an unsuspecting target into divulging valuable information, such as an account or card number, card expiration date, password/pin, Social Security number and the like. Once obtained, attackers can use the information to generate, among other things, counterfeit ATM cards. It can take as little as one hour from the time the information is obtained for an attacker to conduct a fraudulent cash withdrawal.
Financial institutions can help fight this cyber threat in the following ways:
- Educate your customers about potential threats related to this type of crime.
- Ensure card processing and fraud rule configurations are made to help reduce the likelihood counterfeit cards can be used.
- If possible, subscribe to a brand abuse mitigation service. The vendor can help expedite the take-down of the attacker’s number.
- Work with law enforcement when the scam is actively occurring with your customers.
- Ensure your cybersecurity incident response program, procedures and processes are up-to-date.
More information on smishing and cybersecurity can be found on the Federal Financial Institutions Examination Council’s (FFIEC) website.
FFIEC Regulatory Report to Congress
The Federal Financial Institutions Examination Council (FFIEC) on Mar. 21 released its Joint Report to Congress: Economic Growth and Regulatory Paperwork Reduction Act (EGRPA), which reviews rules related to financial institutions. The report highlights the effect of regulations on smaller institutions.
The EGRPA requires a review of regulations at least once every 10 years. The report was produced by FFIEC members, including: the Office of the Comptroller of the Currency; the Board of Governors of the Federal Reserve System; the Federal Deposit Insurance Corporation; and the National Credit Union Administration.
The report specifies several joint efforts of FFIEC members, including initiatives to:
- Simplify regulatory capital rules for community banks and savings associations.
- Streamline reports of condition and income (call reports).
- Increase the appraisal threshold for commercial real estate loans.
- Expand the number of institutions eligible for less frequent examination cycles.
The report also describes actions taken by FFIEC member agencies to “update rules, eliminate unnecessary requirements and streamline supervisory procedures.”
Less Than 10% of State Remains in Drought Conditions
The U.S. Drought Monitor has reported that, as of the end of March, less than 10% of the state remains in drought conditions, although some parts of central and southern California remain abnormally dry.
Meanwhile, the winter storms of 2016-17 have resulted in one of the largest Sierra Nevada snowpacks in California history, according to State water officials. The snowpack across the range is the largest since 2011 and the seventh-deepest since 1950. The snowpack is source of a third of California’s drinking water. For more information on the drought and conservation programs, go to www.drought.ca.gov/.
Commercial Bank Activity
Endeavor Bank 401 West A Street, San Diego, San Diego County
Correspondent: Maryam Hamzeh
Carpenter & Company 5 Park Plaza, Suite 950, Irvine, CA 92614
Heritage Oaks Bank, Paso Robles, to merge with and into Pacific Premier Bank, Irvine
Valley Business Bank, Visalia, to merge with and into Citizens Business Bank, Ontario
UniBank, Lynwood, Washington, to merge with and into Bank of Hope, Los Angeles, California
United Business Bank, FSB, Oakland, to merge with and into Bay Commercial Bank, Walnut Creek
Acquisition of Control
Alan Chi, to acquire control of California Pacific Bank Filed: 2/14/17
Acquisition of Control (Continued)
River Valley Community Bancorp, to acquire control of River Valley Community Bank
Filed: 3/9/17 Approved: 3/20/17
Conversion to State-Chartered Bank
United Business Bank, FSB, to convert to state-chartered bank under the name of United Business Bank
Change of Name
Bay Commercial Bank to change its name to United Business Bank
Premium Finance Company Activity
New Premium Finance Company
TAFS Premium Finance California, Inc. 6200 Canoga Avenue, Woodland Hills
Western Finance Company 660 Newport Center Drive, Newport Beach
Voluntary Surrender of License
LG Premium Finance
Credit Union Activity
Chevron Valley Credit Union, Bakersfield, to merge with and into Safe 1 Credit Union, Bakersfield
North Island Financial Credit Union, San Diego, to merge with and into California Credit Union, Glendale
Foreign (Other Nation) Bank Activity
Sumitomo Mitsui Banking Corporation 101 Jefferson Drive, Menlo Park (Representative Office)
Foreign (Other Nation) Bank Activity
Depository Trust Company of Delaware, LLC 1695 Adolfo Lopez Drive, Seal Beach (Facility – Uninsured Trust Company)
Money Transmitter Activity
New Money Transmitter
Tech Friends, Inc. Filed: 3/16/17
Acquisition of Control
APIS Growth 5, Inc. to acquire control of Trans-Fast Remittance, Inc.
Filed: 12/22/16 Approved: 3/29/17
PayPal, Inc., to acquire control of Softgate Systems of California, Inc.
JAN LYNN OWEN Commissioner of Business Oversight
The April 2017 Monthly Bulletin covers the month ended March 31, 2017. It is issued pursuant to Financial Code section 376. The Monthly Bulletin is available without charge via e-mail. To subscribe, go to: https://dfpi.ca.gov/Resources/subscription.asp.