H.B. 26

1

DEPOSITORY INSTITUTION NAME AMENDMENTS
2 1997 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: Afton B. Bradshaw
5 AN ACT RELATING TO FINANCIAL INSTITUTIONS; AMENDING COMMISSIONER'S
6 AUTHORITY TO AUTHORIZE INDUSTRIAL LOAN CORPORATION TO CONDUCT
7 BUSINESS; MAKING TECHNICAL CORRECTIONS; AND PROVIDING AN EFFECTIVE
8 DATE.
9 This act affects sections of Utah Code Annotated 1953 as follows:
10 AMENDS:
11 7-1-701, as last amended by Chapter 49, Laws of Utah 1995
12 Be it enacted by the Legislature of the state of Utah:
13 Section 1. Section 7-1-701 is amended to read:
14 7-1-701. Representation and transacting business as financial institution restricted
15 -- Restricted names -- Penalty.
16 (1) As used in this section, "transact business" includes:
17 (a) advertising;
18 (b) representing oneself in any manner as being engaged in transacting business;
19 (c) registering an assumed name under which to transact business; [and] or
20 (d) using an assumed business name, sign, letterhead, business card, promotion, or other
21 indication that one is transacting business.
22 (2) [It] Unless authorized by the department or an agency of the federal government to do
23 so, it is unlawful for any person to:
24 (a) transact business as a:
25 (i) bank[,];
26 (ii) savings and loan association[,];
27 (iii) savings bank[,];

1 (iv) industrial loan corporation[,];
2 (v) credit union[,];
3 (vi) trust company[,]; or
4 (vii) other financial or depository institution; or [to]
5 (b) engage in any other activity subject to the jurisdiction of the department[, unless
6 authorized by the department or an agency of the federal government to do so].
7 (3) (a) Except as provided in Subsections (3)(b) through [(e)] (d), only [a national bank,
8 a bank authorized to do business under Chapter 3, and a bank holding company] the following may
9 transact business in this state under a name that includes "bank," "banker," "banking," "banque,"
10 "banc," "banco," "bancorp," "bancorporation," any derivative of these words, or any other word
11 or combination of words reasonably identifying the business of a bank[.]:
12 (i) a national bank;
13 (ii) a bank authorized to do business under Chapter 3, Banks;
14 (iii) a bank holding company; or
15 (iv) an industrial loan corporation authorized to:
16 (A) conduct business under Chapter 8, Industrial Loan Corporations; and
17 (B) accept or hold deposit accounts insured by a federal deposit insurance agency.
18 (b) A person authorized to operate in this state as a credit card bank, as defined in Section
19 7-3-3, may transact business under the name "credit card bank" and may not transact business
20 under the name of "bank" unless it is immediately preceded by "credit card."
21 (c) A nonbank subsidiary of a bank holding company may transact business under a name
22 restricted in Subsection (3)(a) if the name is also part of the name of its parent holding company
23 or is used for a group of subsidiaries of the parent holding company.
24 [(d) As provided in Subsection (4), an institution authorized under Chapter 7 or under
25 federal law to operate in this state as a savings bank may transact business under the name "savings
26 bank."]
27 [(e)] (d) The Utah Bankers Association or other bona fide trade association of authorized
28 banks may transact its affairs in this state under a name restricted under Subsection (3)(a) if it does
29 not operate and does not hold itself out to the public as operating a depository or financial
30 institution.
31 (4) (a) Except as provided in Subsection (4)(b), only [a federal savings and loan

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1 association, a federal savings bank, and a savings and loan association authorized to do business
2 under Chapter 7] the following may transact business in this state under a name that includes
3 "savings association," ["savings bank,"] "savings and loan association," "building and loan
4 association," "building association," any derivative of these words, or any other word or
5 combination of words reasonably identifying the business of a savings and loan association[.]:
6 (i) a federal savings and loan association;
7 (ii) a federal savings bank; or
8 (iii) a savings and loan association authorized to do business under Chapter 7, Savings and
9 Loan Associations Act.
10 (b) A national bank may transact business under a name restricted in Subsection (4)(a) if
11 the restricted words are part of the bank's corporate name.
12 (5) Only the following may transact business under the name "savings bank:"
13 (a) a depository institution listed in Subsection (3)(a);
14 (b) a depository institution listed in Subsection (4)(a); or
15 (c) a depository institution authorized under state law to operate in this state as a savings
16 bank.
17 [(5)] (6) Only an industrial loan corporation authorized to do business under Chapter 8,
18 Industrial Loan Corporations, may transact business in this state under a name that includes
19 "industrial loan corporation," "ILC," "thrift," or any other word, combination of words, or
20 abbreviation reasonably identifying the business of an industrial loan corporation.
21 [(6)] (7) (a) Except as provided in Subsection [(6)] (7)(b), only a credit union authorized
22 to do business under the laws of the United States or Chapter 9, Utah Credit Union Act, may
23 transact business in this state under a name that includes "credit union" or any other word or
24 combination of words reasonably identifying the business of a credit union.
25 (b) The restriction in Subsection [(6)] (7)(a) does not apply to the Utah League of Credit
26 Unions, any credit union chapter, or any other association affiliated with the Utah League of Credit
27 Unions that restricts its services primarily to credit unions.
28 [(7)] (8) (a) Except as provided in Subsection [(7)] (8)(b), only a person granted trust
29 powers under Chapter 5, Trust Business, may transact business in this state under a name that
30 includes "trust," "trustee," "trust company," or any other word or combination of words reasonably
31 identifying the business of a trust company.

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1 (b) A business entity organized as a business trust, as defined in Section 7-5-1, may use
2 "business trust" in its name if it does not hold itself out as being a trust company.
3 [(8)] (9) The restrictions of Subsections (3) through [(7)] (8) do not apply to:
4 (a) the name under which an out-of-state depository institution operates a loan production
5 office in this state, if the commissioner approves the name as not being reasonably likely to
6 mislead the public;
7 (b) the name under which a service organization of a financial institution transacts
8 business, if the commissioner approves the name as not being reasonably likely to mislead the
9 public;
10 (c) the name under which a subsidiary of a depository or financial institution transacts
11 business, if the commissioner approves the name as not being reasonably likely to mislead the
12 public; or
13 (d) a trade association or other nonprofit organization composed of members of a
14 particular class of financial institutions using words applicable to that class.
15 [(9)] (10) (a) Upon written request, the commissioner may grant an exemption to this
16 section if the commissioner finds that the use of an otherwise restricted name or word is not
17 reasonably likely to cause confusion or lead the public to believe that the person requesting the
18 exemption is a depository or financial institution or is conducting a business subject to the
19 jurisdiction of the department.
20 (b) In granting an exemption under Subsection (10)(a), the commissioner may restrict or
21 condition the use of the name or word or the activities of the person or business as the
22 commissioner considers necessary to protect the public.
23 [(10)] (11) (a) Each person, corporation, association, or other business entity and each
24 principal and officer of a business entity violating this section is guilty of a class A misdemeanor.
25 Each day of violation constitutes a separate offense.
26 (b) In addition to a criminal penalty imposed under Subsection [(10)] (11)(a), the
27 commissioner may issue a cease and desist order against a person violating this section. The
28 commissioner may impose a civil penalty of up to $500 for each day the person fails to comply
29 with the cease and desist order.
30 Section 2. Effective date.
31 If approved by two-thirds of all the members elected to each house, this act takes effect

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1 upon approval by the governor, or the day following the constitutional time limit of Utah
2 Constitution Article VII, Section 8, without the governor's signature, or in the case of a veto, the
3 date of veto override.




Legislative Review Note
as of 11-12-96 1:49 PM

A limited legal review of this bill raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel

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