BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de Le�n, Chair


          AB 1282  (Bonta) - Credit Unions
           
          Amended:  April 15, 2013        Policy Vote:  B&FI 8-0
          Urgency: No                     Mandate: No
          Hearing Date:  June 24, 2013                            
          Consultant: Maureen Ortiz       
          
          This bill does not meet the criteria for referral to the  
          Suspense File.
          
          
          Bill Summary: AB 1282 modifies the formula used to calculate  
          annual assessments paid by state-chartered credit unions to the  
          Department of Financial Institutions (DFI).

          Fiscal Impact: 
          
              No significant change in annual revenue to the DFI (Special  
              Fund).

          Background:  Existing law authorizes the DFI commissioner to  
          annually levy on and collect from each state-chartered credit  
          union an assessment which is sufficient to meet the expenses of  
          the department in administering the Credit Union Law and to  
          provide a reasonable reserve for contingencies.  The current  
          assessment is the greater of $1,500 or an amount calculated by a  
          step formula which requires credit unions to pay an amount that  
          is based on the total amount of assets under management.

          Proposed Law:  AB 1282 changes the assessment that  
          state-chartered credit unions pay to the DFI.  The annual  
          assessment will be the greater of $2,000 or the sum from  
          multiplying the assessment rate by the eligible amount of  
          assets.  The portion of assets subject to the levy is calculated  
          by multiplying a portion of the credit union's total assets, the  
          portion varying by the size of the credit union, by a percentage  
          specified in statute which declines with the size of the  
          institution. 

          Staff Comments:  AB 1282 is intended to create more parity  
          between the assessments paid by state-chartered credit unions  
          and the assessments paid by federally-chartered credit unions.   








          AB 1282 (Bonta)
          Page 1



          Under existing assessment formulas, California large credit  
          unions pay considerably more to DFI than they would be required  
          to pay to the federal National Credit Union Association if they  
          were federally chartered.

          At this time, it is estimated that the DFI requires  
          approximately $7.2 million annually to cover its cost of  
          operation.  AB 1282 is not intended to change DFI's total  
          revenue from credit union assessments, but to redistribute the  
          assessment among licensees so that most credit unions will pay  
          less for the state charter than if they were to switch and  
          become federally chartered. The current formula places a  
          relatively heavy burden on credit unions with large amounts of  
          assets.  For example, the Golden 1 Credit Union, California's  
          largest state-chartered credit union, currently pays an annual  
          assessment of approximately $710,000.  If it were to switch to a  
          federal charter, its assessment would drop to approximately  
          $480,000.  California currently has 246 federally-chartered  
          credit unions and 151 state-chartered credit unions