Agency: Financial Institutions

Line Item: Financial Institutions Administration

Function

Financial Institutions has two programs: 1) Administration, which includes all department programs and activities; and 2) Building Operations and Maintenance, which tracks rent separately from everyday operations.

Funding Detail

For more detail about a particular source of finance or organizational unit, click a linked entry in the left column of the table(s) below.

Program: Administration

Function

The Administration program carries out all of the regulatory functions and other duties outlined in statute for the department and employs 53 people to accomplish these duties.

Background

The department regulates 88 depository institutions including:

• 28 commercial banks,
• 41 credit unions, and
• 19 industrial banks.

It also regulates:

• 2 trust companies,
• 61 travelers check or money order issuers,
• 3 independent escrow companies,
• 61 check cashers,
• 134 deferred deposit lenders,
• 77 title lenders, and
• 193 residential first mortgage loan servicers.

Performance

Two primary goals of the department are:

1. to complete the number of examinations required to maintain the health of the State-chartered banking and credit union systems in Utah, and
2. to remain accredited by its state regulatory peers in an interstate banking environment.

Examinations. Each depository institution, deferred deposit lender, check cashers, and title lender is examined at least once every 12 to 15 months.

The optimum number of examinations required each fiscal year is based upon the number of institutions under the department's jurisdiction. The financial condition of the institutions and the industry also influences the number of examinations.

The department performed 810 total examinations in FY 2013. These examinations include:

Safety and Soundness.

These are regularly scheduled examinations of each Utah-state chartered depository institution, where assessments are made as to the institution's capital adequacy, asset quality, management performance, earnings potential, liquidity position, and sensitivity to risk.

Specialty.

These are examinations at Utah-state chartered depository institution that evaluate specific programs or functions not examined during the safety and soundness examinations. These examinations are performed by experienced examiners who have received advanced training in the specialty area being evaluated. The examination can be performed independent of or concurrent with a safety and soundness examination.

Areas where specialty examinations are performed include information systems, consumer protection compliance, bank trust departments, holding companies, and capital market activity. Specialty examinations also include examinations of independent trust companies, independent escrow companies, money transmitters, mortgage servicing companies, and credit union service centers.

Follow-up.

These are interim reviews performed between each safety and soundness examination at Utah-state chartered depository institutions that are on the Department's "Watched Institutions" list. These are not full-scope examinations, but targeted reviews, focusing on and assessing progress made on weaknesses and findings noted during the last safety and soundness examination. Follow-up examinations are generally performed once or twice between each safety and soundness examination.

Non-depository lender.

These are annual examinations performed at each physical location in Utah of every check casher, deferred deposit lender, and title lender. It also includes the examination of every entity that extends deferred deposit and title loans over the internet to Utah residents.

All Deferred Deposit Lenders are Non-depository Lenders. But, there is more to Non-depository lenders than just Deferred Deposit Lenders.

Non-depository lenders include anyone outside of depository institutions (entities that have authority to take deposits from customers/members in addition to making loans) who extend credit to consumers (consumer lenders, mortgage lenders, deferred deposit lenders and title lenders).

All of the examinations on the Deferred Deposit graph are Non-depository Lender examinations. Many lenders have Check Cashing and Title Lending operations in the same location as their Deferred Deposit operations. The Department will do all three operations at the same time and count it as one examination. The FY 2013 number in the graph is the total number of examinations the Department performed at the 266 Deferred Deposit, 344 Check Casher, and 293 Title Lender locations.

Accreditation. The Conference of State Bank Supervisors (CSBS) and the National Association of State Credit Union Supervisors (NASCUS) are two organizations that oversee accreditation requirements and standards nationwide. In order to maintain their accreditation, departments must maintain a 75% rating with each of these organizations.

The department is rated every five years according to the following criteria:

1. Department Administration and Finances
2. Department Personnel, Hiring Process, and Performance Reviews
3. Personnel Development and Training Opportunities
4. Examination and Report Policies and Procedures
5. Supervision, Off-site Monitoring, and Enforcement Authority
6. Banking and Legislative Issues

Department Ratings:

• CSBS -- 86.2%
• NASCUS -- 92.92%

Funding Detail

Program: Building Operations and Maintenance

Function

The department of Financial Institutions is located on the second floor at 324 South State Street. This downtown Salt Lake City office space is located in an area of escalating lease expenses. Parking is provided on site. The Department's lease is well within the acceptable range established by the Division of Facilities Construction and Management (DFCM).

Funding Detail