S.B. 100 Enrolled

FINANCIAL INSTITUTION AMENDMENTS
1997 GENERAL SESSION
STATE OF UTAH
Sponsor: L. Alma Mansell
AN ACT RELATING TO FINANCIAL INSTITUTIONS; AMENDING POWERS AND
DUTIES OF COMMISSIONER OF FINANCIAL INSTITUTIONS; REVISING FEES;
AMENDING APPLICATION PROCEDURE; AMENDING POWERS, RIGHTS, AND
PRIVILEGES OF BANKS; AMENDING BANK PROHIBITED INVESTMENTS AND
LOANS; AMENDING COMMISSIONER'S AUTHORITY TO AUTHORIZE
INDUSTRIAL LOAN CORPORATIONS TO CONDUCT BUSINESSES; MAKING
TECHNICAL CORRECTIONS; AND PROVIDING AN EFFECTIVE DATE.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
7-1-301, as last amended by Chapter 49, Laws of Utah 1995
7-1-401, as last amended by Chapters 63 and 182, Laws of Utah 1996
7-1-706, as last amended by Chapter 161, Laws of Utah 1987
7-3-10, as last amended by Chapter 49, Laws of Utah 1995
7-3-12, as last amended by Chapter 30, Laws of Utah 1992
7-8-3, as last amended by Chapter 200, Laws of Utah 1994
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 7-1-301 is amended to read:
7-1-301. Powers and duties of commissioner -- Rulemaking.
Without limiting the other powers, duties, and responsibilities specified in this title, the
commissioner has all the functions, powers, duties, and responsibilities with respect to institutions,
persons, or businesses subject to the jurisdiction of the department contained in this [article] title,
including all of the following:
(1) The commissioner [has power to] may govern the administration and operation of the
department.
(2) The commissioner [has power to] may supervise the conduct, operation, management,

examination, and statements and reports of examinations of financial institutions and other persons
subject to the jurisdiction of the department.
(3) (a) The commissioner [has power to] may authorize a state chartered depository
institution to engage in any activity it could engage in, and to grant to that institution all additional
rights, powers, privileges, benefits, or immunities it would possess, if it were chartered under the
laws of the United States.
(b) The commissioner [has power to] may authorize a depository institution chartered by this
state to engage in any activity that a Utah branch of an out-of-state depository institution of the same
class can engage in, and to grant to the Utah institution all additional rights, powers, privileges,
benefits, or immunities it needs to engage in the activity.
(c) In granting authority under this Subsection (3), the commissioner shall consider:
(i) the need for competitive equality between institutions chartered by this state and
institutions operating in this state that are chartered by another state or by the federal government;
and
(ii) the adverse effect on shareholders, members, depositors, and other customers of
financial institutions chartered by this state if equal power and protection of those institutions,
compared with federally chartered or out-of-state institutions of the same class, are not promptly
available[; and].
[(iii) whether circumstances are such that awaiting action by the Legislature would unduly
prejudice institutions chartered by this state, their shareholders, members, depositors, or other
customers, or adversely affect the public interest.]
(4) The commissioner [has power to] may safeguard the interest of shareholders, members,
depositors, and other customers of institutions and other persons subject to the jurisdiction of the
department.
(5) (a) The commissioner [has power to] may establish criteria consistent with this title to
be applied in granting applications for approval of:
(i) a new institution[,];
(ii) a new branch[,];

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(iii) the relocation of an office or branch[,];
(iv) a merger[,];
(v) a consolidation[,];
(vi) a change in control of an institution or other person subject to the jurisdiction of the
department[,]; and
(vii) other applications specified in this title.
(b) The criteria established under Subsection (5)(a) may not be applied to make it more
difficult for a state chartered institution to obtain approval of an application than for a federally
chartered institution in the same class to obtain approval from the appropriate federal regulatory
agency or administrator.
(6) (a) The commissioner [has power to] may protect the privacy of the records of any
institution subject to the jurisdiction of the department pertaining to a particular depositor or other
customer of the institution. Rules adopted under this Subsection (6) shall be consistent with federal
laws and regulations applicable to the institution.
(b) Any institution that consents to produce records or that is required to produce records
in compliance with a subpoena or other order of a court of competent jurisdiction or in compliance
with an order obtained pursuant to Sections 78-27-45 through 78-27-50 shall be reimbursed for the
cost of retrieval and reproduction of the records by the party seeking the information. The
commissioner may by rule establish the rates and conditions under which reimbursement is made.
(7) (a) The commissioner [has power to] may classify all records kept by institutions subject
to the jurisdiction of the department and to prescribe the period for which each class of records is
retained. Rules adopted under this Subsection (7) for any class of financial institution shall be
consistent with federal laws and regulations applicable to the class. [These rules]
(b) Rules made under Subsection (7)(a) shall provide that [an]:
(i) An institution may dispose of any record after retaining it for the period prescribed by
the commissioner for retention of records of its class. If an institution disposes of a record after the
prescribed period, the institution has no duty to produce it in any action or proceeding and is not
liable to any person by reason of that disposition. [The rules shall also provide that any]

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(ii) Any institution may keep records in its custody in the form of microfilm or equivalent
reproduction. Any such reproduction shall have the same force and effect as the original and shall
be admissible into evidence as if it were the original.
(c) In adopting rules under this Subsection (7), the commissioner shall take into
consideration:
[(a)] (i) actions at law and administrative proceedings in which the production of the records
might be necessary or desirable;
[(b)] (ii) state and federal statutes of limitation applicable to the actions or proceedings;
[(c)] (iii) the availability from other sources of information contained in these records; and
[(d)] (iv) other matters the commissioner considers pertinent in formulating rules that require
institutions to retain their records for as short a period as commensurate with the interest in having
the records available of:
(A) customers, members, depositors, and shareholders of the institutions; and [of]
(B) the people of this state [in having the records available].
(8) (a) The commissioner [has power to] may establish reasonable classes of depository and
other financial institutions including separate classes for savings and loan associations and related
institutions, banks and related institutions, credit unions, and industrial loan corporations. [So long
as]
(b) If the restrictions or requirements the commissioner imposes are not more stringent than
those applicable under federal law or regulation to federally chartered institutions of the same class,
the commissioner [has power to] may establish the following for each class in a manner consistent
with this title:
[(a)] (i) eligible classes and types of investments for the deposits and other funds of those
financial institutions;
[(b)] (ii) minimum standards, in amounts sufficient to protect depositors and other creditors,
for the amount and types of capital required to engage in the business conducted by each class or to
obtain a license or to establish a branch or additional office of an institution of each class;
[(c)] (iii) eligible obligations, reserves, and other accounts to be included in the computation

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of capital;
[(d)] (iv) minimum liquidity requirements for financial institutions within each class in
amounts sufficient to meet the demands of depositors and other creditors for liquid funds;
[(e)] (v) limitations on the amount and type of borrowings by each class of financial
institution in relation to the amount of its capital and the character and condition of its assets and its
deposits and other liabilities;
[(f)] (vi) limitations on the amount and nature of loans and extensions of credit to any person
or related persons by each class of financial institution in relation to the amount of its capital; and
[(g)] (vii) limitations on the amount and nature of loans and extensions of credit by a
financial institution or other person within each class to an executive officer, director, or principal
shareholder of:
[(i)] (A) the institution or other person;
[(ii)] (B) any company of which the institution or other person is a subsidiary;
[(iii)] (C) any subsidiary of the institution or other person;
[(iv)] (D) any affiliate of the institution; and
[(v)] (E) a company controlled by an executive officer, director, or principal shareholder of
the institution.
(9) The commissioner [has power to] may define unfair trade practices of financial
institutions and other persons subject to the jurisdiction of the department and to prohibit or restrict
these practices.
(10) The commissioner [has power to] may establish reasonable standards to promote the
fair and truthful advertising of:
(a) services offered by a financial institution;
(b) the charges for [these] the services advertised under Subsection (10)(a);
(c) the interest or other compensation to be paid on deposits or any debt instrument offered
for sale by the institution;
(d) the nature and extent of any insurance on deposits, savings accounts, share accounts,
certificates of deposit, time deposit accounts, NOW accounts, share draft accounts, transaction

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accounts, or any evidence of indebtedness issued, offered for sale, offered to sell or sold by any
financial institution or other person subject to the jurisdiction of the department; and
(e) the safety or financial soundness of any financial institution or other person subject to
the jurisdiction of the department.
(11) The commissioner [has power to] may define what constitutes an impairment of capital
for each class of financial institution or other person subject to the jurisdiction of the department.
(12) The commissioner [has power to] may designate days on which depository institutions
are closed in accordance with Section 7-1-808.
(13) The commissioner [has power to] may regulate the issuance, advertising, offer for sale,
and sale of a security to the extent authorized by Section 7-1-503.
(14) The commissioner [has power to] may require the officers of any institution or other
person subject to the commissioner's jurisdiction to open and keep a standard set of books, computer
records, or both for the purpose of keeping accurate and convenient records of the transactions and
accounts of the institution in a manner to enable the commissioner, supervisors, and department
examiners to readily ascertain the institution's true condition. These requirements shall be consistent
with generally accepted accounting principles for financial institutions.
(15) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
commissioner may adopt and issue rules consistent with the purposes and provisions of this title, and
may revise, amend, or repeal [them] the rules adopted.
Section 2. Section 7-1-401 is amended to read:
7-1-401. Fees payable to commissioner.
(1) Each depository institution under the jurisdiction of the department, except an
out-of-state depository institution with a branch in Utah, shall pay an annual fee computed upon the
basis of aggregate assets [in Utah], as shown upon the year-end report of condition at the following
rates:
(a) on the first $5,000,000 of these assets, [77] 65 cents per $1,000 or $500, whichever is
greater;
(b) on the next $10,000,000 of these assets, [41] 35 cents per $1,000;

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(c) on the next $35,000,000 of these assets, [23] 15 cents per $1,000;
(d) on the next $50,000,000 of these assets, [15] 12 cents per $1,000;
(e) on the next $200,000,000 of these assets, [13] 10 cents per $1,000; [and]
(f) on [all amounts over] the next $300,000,000 of these assets, [9] 6 cents per $1,000[.]; and
(g) on all amounts over $600,000,000 of these assets, 4 cents per $1,000.
(2) A financial institution with a trust department shall pay a fee for each examination of
the trust department by state examiners.
(3) A credit union in its first year of operation shall pay a basic fee of $25 instead of the fee
required under Subsection (1).
(4) A trust company that is not a depository institution or a subsidiary of a depository
institution holding company shall pay an annual fee of $500 and an additional fee for each
examination by state examiners.
(5) All other persons and institutions under the jurisdiction of the department that do not pay
a fee under Subsections (1) through (4) shall pay an annual fee of $100 and an additional fee for each
examination by state examiners.
(6) An applicant under Section 7-1-503, 7-1-702, 7-1-703, 7-1-704, 7-1-713, 7-5-3, or
7-18a-202 shall pay:
(a) a filing fee of $500; and
(b) all reasonable expenses incurred in processing the application.
(7) Per diem assessments for examinations shall be calculated at the rate of $40 per hour for
each examiner up to a maximum of $320 per examiner per day. For examination of branches or
offices of financial institutions located outside of this state, the institution shall also pay all
reasonable travel, lodging, and other expenses incurred by each examiner while conducting the
examination.
[(8) Each out-of-state depository institution with a branch in Utah shall pay a basic fee of
the greater of $500 or .0001 of all deposits held in Utah branches on December 31 of the preceding
year. The institution shall also pay an additional per diem fee for each examiner as set forth in
Subsection (7).]

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Section 3. Section 7-1-706 is amended to read:
7-1-706. Application to commissioner to exercise power -- Procedure.
(1) Except as provided in Sections 7-1-704 and 7-1-705, by filing a request for agency action
with the commissioner, any person may request the commissioner to:
(a) issue any rule or order[, to];
(b) exercise any powers granted to the commissioner under this title[,]; or [to]
(c) act on any matter that is subject to the approval of the commissioner [by filing a request
for agency action with the commissioner].
(2) Within ten days of receipt of the request, the commissioner shall, at the applicant's
expense, cause a supervisor to make a careful investigation of the facts relevant or material to [such
application] the request.
(3) (a) The supervisor shall submit [his] written findings and recommendations [in writing]
to the commissioner [as required by the department's rules].
(b) The application, any additional information furnished by the applicant, and the findings
and recommendations of the supervisor may be inspected by any person at the office of the
commissioner, except those portions of the application or report that the [rules of the department
designate] commissioner designates as confidential [in order] to prevent a clearly unwarranted
invasion of privacy.
(4) (a) [Before the] If a hearing is held concerning the request, the commissioner shall
publish notice of the hearing at the applicant's expense in a newspaper of general circulation within
the county where the applicant is located at least once a week for three successive weeks before the
date of the hearing.
(b) The notice required by Subsection (4)(a) shall include the information required by the
department's rules.
(c) The commissioner shall [take action] act upon the request within 30 days after the close
of the hearing, based on the record before [him] the commissioner.
(5) (a) If no hearing is held, the commissioner shall approve or disapprove the [application]
request within 90 days of receipt of the request based on:

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(i) the [papers filed with him, together with] application;
(ii) additional information filed with the commissioner; and
(iii) the findings and recommendations of the supervisor[, within 90 days of receipt of the
application].
(b) The commissioner shall [take action] act on the [application] request by issuing [his]
findings of fact, conclusions, and an order, and shall mail a copy of each to:
(i) the applicant;
(ii) all persons who have filed protests to the granting of the application; and
(iii) [whatever] other persons that [he] the commissioner considers should receive copies
[under the circumstances].
(6) The commissioner may impose any conditions or limitations on [his] the approval or
disapproval of [an application] a request that [he] the commissioner considers proper to:
(a) protect the interest of creditors, depositors, and other customers of an institution;
(b) protect its shareholders or members; and
(c) carry out the purposes of this title.
Section 4. Section 7-3-10 is amended to read:
7-3-10. Powers, rights, and privileges of banking corporation -- Other business
activities.
(1) In addition to the powers granted under Title 16, Chapter 10a, Utah Revised Business
Corporation Act, a [banking corporation] bank has all the rights, privileges, and powers necessary
or incidental to carrying on the business of banking. [Necessary or incidental powers include all
rights, privileges, and powers held by national banks.]
[(2) Subject to the approval of the commissioner, after notice and opportunity for hearing,
any bank operating a main office or branch in this state may, either directly or indirectly through a
subsidiary or affiliate, engage in other business activities determined by the commissioner by rule
or order to be closely related to banking. This determination may not be inconsistent with rules,
regulations, or other actions of the board of governors of the Federal Reserve System under Section
4(c)(8) of the Bank Holding Company Act of 1956.]

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(2) The commissioner may, by rule or order, determine that necessary or incidental rights,
privileges, and powers include:
(a) the rights, privileges, and powers held by national banks; or
(b) other business activities so long as the commissioner's determination is not inconsistent
with the rules, regulations, or other actions of the board of governors of the Federal Reserve System
under Section 4(c)(8) of the Bank Holding Company Act of 1956, 12 U.S.C. Sec. 1843(c)(8).
(3) The commissioner shall implement this section in a manner consistent with the purposes
set forth in Section 7-1-102.
Section 5. Section 7-3-12 is amended to read:
7-3-12. Prohibited investments and loans.
[Unless the prior written approval of the commissioner is obtained and a reasonable need for
such investment can be shown, no bank may:]
(1) (a) Except as provided in Subsection (2), a bank may not make an investment or loan
described in Subsection (1)(b) if the aggregate of the investments and loans described in Subsections
(1)(b)(i) and (ii) plus any indebtedness incurred by any corporation holding the premises of the bank
which is an affiliate of the bank, exceeds the greater of:
(i) the amount of the capital stock and surplus of the bank; or
(ii) 50% of the total capital accounts of the bank.
(b) If an investment or loan will violate Subsection (1)(a), a bank may not:
[(1)] (i) invest in its own premises including furniture, fixtures and equipment, or in the
stock, bonds, debentures, or other obligations of any corporation holding the premises of the bank;
or
[(2)] (ii) make loans to or upon the security of the stock of any corporation holding the
bank's premises[, if the aggregate of these investments and loans, plus any indebtedness incurred by
any such corporation which is an affiliate of the bank, exceeds the amount of the capital stock and
surplus or 50% of the total capital accounts of the bank, whichever is greater. Upon application to
and approval by the commissioner, a bank may exceed this limitation].
(2) A bank may make an investment or loan prohibited under Subsection (1) with the prior

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written approval of the commissioner if the bank can demonstrate reasonable need for the investment
or loan to the commissioner.
Section 6. Section 7-8-3 is amended to read:
7-8-3. Organization under Business Corporation Act -- Authorization to conduct
business.
(1) Each domestic corporation organized to conduct the business of an industrial loan
corporation in this state shall be organized under Title 16, Chapter 10a, Utah Revised Business
Corporation Act. All rights, privileges, powers, duties, and obligations of the corporation and its
officers, directors, and stockholders shall be governed by [that chapter] Title 16, Chapter 10a, except
as otherwise provided in this title.
(2) The commissioner may authorize [an industrial loan corporation] a domestic corporation
to conduct business [or receive deposits from the public only if its corporate purposes are limited in
its articles of incorporation to the acquisition of, the merger with, the assumption of all or a portion
of the liabilities of, or the acquisition of all or a portion of the assets of a failing or failed] as an
industrial loan corporation.
Section 7. Effective date.
This act takes effect on July 1, 1997, except Section 7-8-3 takes effect if approved by
two-thirds of all the members elected to each house, upon approval by the governor, or the day
following the constitutional time limit of Utah Constitution, Article VII, Section 8, without the
governor's signature, or in the case of a veto, the date of the veto override.

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