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S.B. 124 Enrolled

             1     

FINANCIAL INSTITUTION AND SERVICES AMENDMENTS

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Curtis S. Bramble

             5     
House Sponsor: James A. Dunnigan

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies provisions related to financial institutions and financial services.
             10      Highlighted Provisions:
             11          This bill:
             12          .    modifies references to the Utah League of Credit Unions or Utah Bankers
             13      Association;
             14          .    clarifies dividend requirements;
             15          .    repeals provisions related to loans to or investment in affiliates;
             16          .    addresses stock ownership by banks;
             17          .    deletes references to the Office of Thrift Supervision;
             18          .    addresses voting requirements for voluntary mergers;
             19          .    modifies grandfathering of certain credit unions;
             20          .    modifies exempted transactions under the Utah Consumer Credit Code;
             21          .    addresses fees under the Utah Consumer Credit Code;
             22          .    modifies exemptions under the Financial Institution Mortgage Financing Regulation
             23      Act;
             24          .    removes a probable cause requirement for the commissioner of financial institutions
             25      requiring a lender, broker, or servicer to make records available to the
             26      commissioner;
             27          .    addresses fee restrictions;
             28          .    repeals anti-tying provisions;
             29          .    repeals surplus account provisions;


             30          .    repeals provisions related to charging off losses and replenishment of surplus
             31      accounts; and
             32          .    makes technical and conforming amendments.
             33      Money Appropriated in this Bill:
             34          None
             35      Other Special Clauses:
             36          None
             37      Utah Code Sections Affected:
             38      AMENDS:
             39           7-1-701 , as last amended by Laws of Utah 2013, Chapter 73
             40           7-3-15 , as last amended by Laws of Utah 1996, Chapter 182
             41           7-3-20 , as last amended by Laws of Utah 2000, Chapter 260
             42           7-3-21 , as enacted by Laws of Utah 1981, Chapter 16
             43           7-5-7 , as last amended by Laws of Utah 2010, Chapter 378
             44           7-8-11 , as last amended by Laws of Utah 2004, Chapter 92
             45           7-9-20 , as last amended by Laws of Utah 2008, Chapter 126
             46           7-9-36 , as last amended by Laws of Utah 1994, Chapter 200
             47           7-9-39 , as last amended by Laws of Utah 2003, Chapter 327
             48           7-9-43 , as last amended by Laws of Utah 2010, Chapters 286 and 324
             49           7-9-44 , as last amended by Laws of Utah 1989, Chapter 267
             50           7-9-51 , as last amended by Laws of Utah 2003, Chapter 327
             51           7-9-53 , as last amended by Laws of Utah 2010, Chapter 324
             52           70C-1-202 , as last amended by Laws of Utah 2006, Chapter 161
             53           70C-8-203 , as last amended by Laws of Utah 2009, Chapter 72
             54           70D-2-201 , as last amended by Laws of Utah 2009, Chapter 372 and renumbered and
             55      amended by Laws of Utah 2009, Chapter 72
             56           70D-2-203 , as renumbered and amended by Laws of Utah 2009, Chapter 72
             57           70D-2-305 , as renumbered and amended by Laws of Utah 2009, Chapter 72


             58           70D-3-102 , as last amended by Laws of Utah 2010, Chapter 379
             59      REPEALS:
             60           7-3-3.3 , as enacted by Laws of Utah 1989, Chapter 267
             61           7-3-16 , as last amended by Laws of Utah 1983, Chapter 8
             62           7-8-12 , as last amended by Laws of Utah 2004, Chapter 92
             63     
             64      Be it enacted by the Legislature of the state of Utah:
             65          Section 1. Section 7-1-701 is amended to read:
             66           7-1-701. Representing and transacting business as financial institution restricted
             67      -- Restricted names -- Penalty.
             68          (1) As used in this section, "transact business" includes:
             69          (a) advertising;
             70          (b) representing oneself in any manner as being engaged in transacting business;
             71          (c) registering an assumed name under which to transact business; or
             72          (d) using an assumed business name, sign, letterhead, business card, promotion, or
             73      other indication that one is transacting business.
             74          (2) Unless authorized by the department or an agency of the federal government to do
             75      so, it is unlawful for a person to:
             76          (a) transact business as a:
             77          (i) bank;
             78          (ii) savings and loan association;
             79          (iii) savings bank;
             80          (iv) industrial bank;
             81          (v) credit union;
             82          (vi) trust company; or
             83          (vii) other financial or depository institution; or
             84          (b) engage in any other activity subject to the jurisdiction of the department.
             85          (3) (a) Except as provided in Subsections (3)(b) through (d), only the following may


             86      transact business in this state under a name that includes "bank," "banker," "banking,"
             87      "banque," "banc," "banco," "bancorp," "bancorporation," a derivative of these words, or another
             88      word or combination of words reasonably identifying the business of a bank:
             89          (i) a national bank;
             90          (ii) a bank authorized to do business under Chapter 3, Banks;
             91          (iii) a bank holding company; or
             92          (iv) an industrial bank.
             93          (b) A person authorized to operate in this state as a credit card bank, as described in
             94      Section 7-3-3 :
             95          (i) may transact business under the name "credit card bank"; and
             96          (ii) may not transact business under the name of "bank" unless it is immediately
             97      preceded by "credit card."
             98          (c) A nonbank subsidiary of a bank holding company may transact business under a
             99      name restricted in Subsection (3)(a) if the name:
             100          (i) is also part of the name of its parent holding company; or
             101          (ii) is used for a group of subsidiaries of the parent holding company.
             102          (d) [The Utah Bankers Association or other] A bona fide trade association of
             103      authorized banks recognized by the commissioner may transact its affairs in this state under a
             104      name restricted under Subsection (3)(a) if it does not operate and does not hold itself out to the
             105      public as operating a depository or financial institution.
             106          (4) (a) Except as provided in Subsection (4)(b), only the following may transact
             107      business in this state under a name that includes "savings association," "savings and loan
             108      association," "building and loan association," "building association," a derivative of these
             109      words, or another word or combination of words reasonably identifying the business of a
             110      savings and loan association:
             111          (i) a federal savings and loan association; or
             112          (ii) a federal savings bank.
             113          (b) A national bank may transact business under a name restricted in Subsection (4)(a)


             114      if the restricted words are part of the bank's corporate name.
             115          (5) Only the following may transact business under the name "savings bank":
             116          (a) a depository institution listed in Subsection (3)(a);
             117          (b) a depository institution listed in Subsection (4)(a); or
             118          (c) a depository institution authorized under the law of another state to operate in this
             119      state as a savings bank.
             120          (6) (a) Only an industrial loan company authorized to do business under Chapter 8,
             121      Industrial Banks, to the extent permitted by Section 7-8-21 , may transact business in this state
             122      under a name that includes "industrial loan company," "ILC," or another word, combination of
             123      words, or abbreviation reasonably identifying the business of an industrial loan company.
             124          (b) Only an industrial bank authorized to do business under Chapter 8, Industrial
             125      Banks, may transact business in this state under a name that includes "industrial bank," "thrift,"
             126      or another word, combination of words, or abbreviation reasonably identifying the business of
             127      an industrial bank.
             128          (7) (a) Except as provided in Subsection (7)(b), only a credit union authorized to do
             129      business under the laws of the United States or Chapter 9, Utah Credit Union Act, may transact
             130      business in this state under a name that includes "credit union" or another word or combination
             131      of words reasonably identifying the business of a credit union.
             132          (b) The restriction in Subsection (7)(a) does not apply to [the Utah League of Credit
             133      Unions] a bona fide trade association of authorized credit unions recognized by the
             134      commissioner, a credit union chapter, or another association affiliated with [the Utah League of
             135      Credit Unions] a bona fide trade association of authorized credit unions recognized by the
             136      commissioner that restricts its services primarily to credit unions.
             137          (8) (a) Except as provided in Subsection (8)(b), only a person granted trust powers
             138      under Chapter 5, Trust Business, may transact business in this state under a name that includes
             139      "trust," "trustee," "trust company," or another word or combination of words reasonably
             140      identifying the business of a trust company.
             141          (b) A business entity organized as a business trust, as defined in Section 7-5-1 , may use


             142      "business trust" in its name if it does not hold itself out as being a trust company.
             143          (9) The restrictions of Subsections (3) through (8) do not apply to:
             144          (a) the name under which an out-of-state depository institution operates a loan
             145      production office in this state, if the commissioner approves the name as not being reasonably
             146      likely to mislead the public;
             147          (b) the name under which a service organization of a financial institution transacts
             148      business, if the commissioner approves the name as not being reasonably likely to mislead the
             149      public;
             150          (c) the name under which a subsidiary of a depository or financial institution transacts
             151      business, if the commissioner approves the name as not being reasonably likely to mislead the
             152      public; or
             153          (d) a trade association or other nonprofit organization composed of members of a
             154      particular class of financial institutions using words applicable to that class.
             155          (10) (a) Upon written request, the commissioner may grant an exemption to this
             156      section if the commissioner finds that the use of an otherwise restricted name or word is not
             157      reasonably likely to cause confusion or lead the public to believe that the person requesting the
             158      exemption is a depository or financial institution or is conducting a business subject to the
             159      jurisdiction of the department.
             160          (b) In granting an exemption under Subsection (10)(a), the commissioner may restrict
             161      or condition the use of the name or word or the activities of the person or business as the
             162      commissioner considers necessary to protect the public.
             163          (11) (a) A person and a principal and officer of a business entity violating this section
             164      is guilty of a class A misdemeanor. Each day of violation constitutes a separate offense.
             165          (b) In addition to a criminal penalty imposed under Subsection (11)(a), the
             166      commissioner may issue a cease and desist order against a person violating this section. The
             167      commissioner may impose a civil penalty of up to $500 for each day the person fails to comply
             168      with the cease and desist order.
             169          Section 2. Section 7-3-15 is amended to read:


             170           7-3-15. Dividends allowed -- Surplus requirements.
             171          (1) The board of directors of a bank may declare a cash or stock dividend out of the net
             172      profits of the bank after providing for all expenses, losses, interest, and taxes accrued or due
             173      from the bank, as it shall judge expedient.
             174          (2) Before any dividend is declared pursuant to Subsection (1), not less than 10% of the
             175      net profits of the bank for the period covered by the dividend shall be carried to a surplus fund
             176      until the surplus shall amount to 100% of its capital stock.
             177          (3) Under this section, any amounts paid into a fund for the retirement of any debenture
             178      capital or preferred stock of the bank from its net earnings for the period covered by the
             179      dividend shall be considered an addition to its surplus fund if, upon the retirement of the
             180      debenture capital or preferred stock, the amount paid into the retirement fund for the period
             181      may be properly carried to the surplus fund of the bank. In this case the bank shall be obligated
             182      to transfer to the surplus fund the amount paid into the retirement fund.
             183          Section 3. Section 7-3-20 is amended to read:
             184           7-3-20. Bank acquiring, holding, or accepting as collateral its own stock.
             185          (1) [(a)] A bank may not accept as collateral or acquire its own stock except when the
             186      taking of the collateral or acquisition of the stock is necessary to prevent loss upon a debt
             187      previously contracted in good faith.
             188          [(b)] (2) If a bank acquires stock as permitted under Subsection (1)[(a)], the bank shall
             189      sell the stock within 12 months from the date of the bank's acquisition.
             190          [(c)] (3) The value of all the stock held after acceptance or acquisition may not exceed
             191      10% of the total capital of the bank.
             192          [(2) (a) A bank may not:]
             193          [(i) make any loan or any extension of credit to any of its affiliates;]
             194          [(ii) invest any of its funds in the capital stock, bonds, debentures, or other obligations
             195      of any affiliate; or]
             196          [(iii) accept the capital stock, bonds, debentures, or other obligations of any affiliate as
             197      collateral security for advances made to any person unless authorized by the commissioner by


             198      order.]
             199          [(b) The exception of Subsection (2)(a)(iii) may not be inconsistent with similar
             200      exceptions applicable to national banks under federal law.]
             201          Section 4. Section 7-3-21 is amended to read:
             202           7-3-21. Stock ownership by banks.
             203          [Any] (1) A bank may purchase, own and hold, and sell or otherwise dispose of[, any
             204      of the shares of the capital stock of the Federal Deposit Insurance Corporation, the]:
             205          (a) shares of the Federal Reserve Bank of the Twelfth Federal Reserve District[,];
             206          (b) the stock of [any] a corporation [or corporations] organized under the laws of the
             207      United States for purposes similar to those of the federal reserve banks or the Federal Deposit
             208      Insurance Corporation[,];
             209          (c) shares of the Federal National Mortgage Association[,];
             210          (d) the stock of [any] a safe deposit company[,];
             211          (e) the stock of [any] a corporation owning the banking house in which any place of
             212      business of [such] the bank is located[,];
             213          (f) the stock of [any] a bank service corporation performing services for [such] the
             214      bank[, and];
             215          (g) the stock of [such other] a corporation acquired by [such] the bank in satisfaction of
             216      or on account of debts previously contracted in the course of [its] the bank's business[, and];
             217          (h) the stock of a foreign banking corporation;
             218          (i) the stock of a corporation authorized under Title IX of the Housing and Urban
             219      Development Act of 1968;
             220          (j) the stock of the Government National Mortgage Association authorized under 12
             221      U.S.C. Sec. 1716 et seq.;
             222          (k) the stock of a charitable foundation;
             223          (l) the stock of a community development corporation;
             224          (m) the stock of bankers' banks; and
             225          (n) the stock of an agricultural credit corporation.


             226          (2) A bank may invest in a small business investment [companies] company to the
             227      same extent allowed federally chartered banks.
             228          (3) Unless expressly authorized by this chapter, a bank may not purchase or own the
             229      stock of any other corporation except in a fiduciary capacity.
             230          Section 5. Section 7-5-7 is amended to read:
             231           7-5-7. Management and investment of trust money.
             232          (1) [Funds] Money received or held by [any] a trust company as agent or fiduciary,
             233      whether for investment or distribution, shall be invested or distributed as soon as practicable as
             234      authorized under the instrument creating the account and may not be held uninvested any
             235      longer than is reasonably necessary.
             236          (2) If the instrument creating an agency or fiduciary account contains provisions
             237      authorizing the trust company, its officers, or its directors to exercise their discretion in the
             238      matter of investments, [funds] money held in the trust account under that instrument may be
             239      invested only in those classes of securities which are approved by the directors of the trust
             240      company or a committee of directors appointed for that purpose. If a trust company acts in any
             241      agency or fiduciary capacity under appointment by a court of competent jurisdiction, it shall
             242      make and account for [all] the investments according to [the provisions of] Title 75, Utah
             243      Uniform Probate Code, unless the underlying instrument provides otherwise.
             244          (3) (a) [Funds] Money received or held as agent or fiduciary by any trust company
             245      which is also a depository institution, whether for investment or distribution, may be deposited
             246      in the commercial department or savings department of that trust company to the credit of its
             247      trust department. Whenever the [funds] money so deposited in a fiduciary or managing agency
             248      account exceed the amount of federal deposit insurance applicable to that account, the trust
             249      company shall deliver to the trust department or put under its control collateral security as
             250      outlined in Regulation 9.10 of the Comptroller of the Currency [or in Regulation 550.8 of the
             251      Office of Thrift Supervision, as amended]. However, if the instrument creating such a
             252      fiduciary or managing agency account expressly provides that [funds] money may be deposited
             253      to the commercial or savings department of the trust company, then the [funds] money may be


             254      so deposited without setting aside collateral securities as required under this section and the
             255      deposits in the event of insolvency of any such trust company shall be treated as other general
             256      deposits are treated. A trust company [which] that deposits trust funds in its commercial or
             257      savings department shall be liable for interest on the deposits only at the rates, if any, paid by
             258      the trust company on deposits of like kind not made to the credit of its trust department.
             259          (b) [Funds] Money received or held as agent or fiduciary by a trust company, whether
             260      for investment or distribution, may be deposited in an affiliated depository institution.
             261      Whenever the [funds] money so deposited in a fiduciary or managing agency account exceed
             262      the amount of federal deposit insurance applicable to that account, the depository institution
             263      shall deliver to the trust company or put under its control collateral security as outlined in
             264      Regulation 9.10 of the Comptroller of the Currency [or in Regulation 550.8 of the Office of
             265      Thrift Supervision as amended]. However, if the instrument creating the fiduciary or managing
             266      agency account expressly permits [funds] money to be deposited in the affiliated depository
             267      institution, the [funds] money may be so deposited without setting aside collateral securities as
             268      required under this section and deposits in the event of insolvency of the depository institution
             269      shall be treated as other general deposits are treated. A trust company [which] that deposits
             270      trust [funds] money in an affiliated depository institution is liable for interest on the deposits
             271      only at the rates, if any, paid by the depository institution on deposits of like kind.
             272          (4) In carrying out all aspects of its trust business, a trust company shall have all the
             273      powers, privileges, and duties as set forth in Sections 75-7-813 and 75-7-814 with respect to
             274      trustees, whether or not the trust company is acting as a trustee as defined in Title 75, Utah
             275      Uniform Probate Code.
             276          (5) Nothing in this section may alter, amend, or limit the powers of a trust company
             277      acting in a fiduciary capacity as specified in the particular instrument or order creating the
             278      fiduciary relationship.
             279          Section 6. Section 7-8-11 is amended to read:
             280           7-8-11. Dividends.
             281          (1) The board of directors of an industrial bank may declare a dividend out of the net


             282      profits of the industrial bank after providing for all expenses, losses, interest, and taxes accrued
             283      or due from the industrial bank in accordance with this section [and subject to Section 7-8-12 ].
             284          (2) The industrial bank shall transfer to a surplus fund at least 10% of its net profits
             285      before dividends for the period covered by the dividend, until the surplus reaches 100% of its
             286      capital stock.
             287          (3) Any amount paid from the industrial bank's net earnings into a fund for the
             288      retirement of any debenture capital or preferred stock for the period covered by the dividend is
             289      considered an addition to its surplus fund if, upon the retirement of the debenture capital or
             290      preferred stock, the amount paid into the retirement fund for the period may be properly carried
             291      to the surplus fund of the industrial bank. In this case the industrial bank shall transfer to the
             292      surplus fund the amount paid into the retirement fund.
             293          Section 7. Section 7-9-20 is amended to read:
             294           7-9-20. Board of directors -- Powers and duties -- Loan limitations.
             295          (1) At annual meetings the members shall elect from their number a board of directors
             296      consisting of an odd number of not less than five members.
             297          (2) The bylaws may provide balloting by:
             298          (a) mail;
             299          (b) ballot box; or
             300          (c) both mail and ballot box.
             301          (3) Voting may not be by proxy.
             302          (4) A member of the board of directors shall hold office for the term prescribed in the
             303      bylaws.
             304          (5) The board of directors shall meet at least monthly.
             305          (6) The board of directors shall have the general management of the affairs, funds, and
             306      records of the credit union. In particular, the board of directors shall:
             307          (a) act upon an application for membership;
             308          (b) act upon expulsion of a member;
             309          (c) fix the amount of surety bond required of each officer or employee having custody


             310      of funds;
             311          (d) determine the rate of interest or dividend allowed on shares and deposits;
             312          (e) determine the terms and conditions of credit granted to members;
             313          (f) lend money, borrow money, and pledge security for any borrowing;
             314          (g) fill a vacancy in the board of directors or in the credit committee, if applicable, or in
             315      the supervisory committee until the election and qualification of a person to fill the vacancy;
             316          (h) appoint up to two alternate directors as provided in the bylaws;
             317          (i) fix the amount of the entrance fee;
             318          (j) declare dividends and their amount;
             319          (k) make recommendations to meetings of the members relative to amendments to the
             320      articles of incorporation, and transact any other business of the credit union; and
             321          (l) fix the maximum amount of credit, secured and unsecured, that may be extended to
             322      any one member, up to the limitations described in Subsections (7) and (8).
             323          (7) (a) The credit that may be outstanding or available by a credit union at any one time
             324      is subject to the limitations described in this Subsection (7):
             325          (i) except as provided in Subsection (8); and
             326          (ii) except that the board of directors may:
             327          (A) set a lower limit than the limit in Subsection (7)(b)(i) or (7)(b)(ii)(A)(II); or
             328          (B) require that a person described in Subsection (7)(b)(ii)(A)(I) be a member of the
             329      credit union for more than six months before the date a member-business loan is extended.
             330          (b) (i) A credit union may not extend credit that is not a member-business loan to a
             331      member if as a result of that extension of credit the total credit that is not a member-business
             332      loan that the credit union has issued to that member exceeds at any one time:
             333          (A) for a credit union with less than $2,000,000 in capital and surplus, the greater of:
             334          (I) $1,000; or
             335          (II) 15% of capital and surplus up to a total of $25,000; or
             336          (B) for a credit union with $2,000,000 or more in capital and surplus, the greater of:
             337          (I) $25,000;


             338          (II) 4% of capital and surplus; or
             339          (III) 25% of the regular reserve.
             340          (ii) (A) Beginning March 24, 1999, a credit union may not extend a member-business
             341      loan to a person:
             342          (I) if the credit union is a successor to or was a credit union described in Subsection
             343      7-9-53 (2)[(d)](c) as of May 3, 1999:
             344          (Aa) if the person is a business entity, unless at least one individual having a
             345      controlling interest in that business entity has been a member of the credit union for at least six
             346      months prior to the date of the extension of the member-business loan; or
             347          (Bb) if the person is an individual, unless the individual is a member of the credit
             348      union for at least six months prior to the date of the extension of the member-business loan; or
             349          (II) if as a result of the extension of the member-business loan, the total amount
             350      outstanding for all member-business loans that the credit union has extended to that person at
             351      any one time exceeds the lesser of:
             352          (Aa) 10% of the credit union's capital and surplus; or
             353          (Bb) $250,000 adjusted as provided in Subsection (7)(b)(ii)(B).
             354          (B) The adjustment described in Subsection (7)(b)(ii)(A)(II)(Bb) shall be calculated by
             355      the commissioner as follows:
             356          (I) beginning May 5, 2008 with the adjustment for calendar year 2008 and for a
             357      calendar year beginning on or after January 1, 2009, the commissioner shall increase the dollar
             358      amount in Subsection (7)(b)(ii)(A)(II)(Bb) by a percentage equal to the percentage difference
             359      between the consumer price index for the preceding calendar year and the consumer price
             360      index for calendar year 2006;
             361          (II) after the commissioner increases the dollar amount listed in Subsection
             362      (7)(b)(ii)(B)(I), the commissioner shall round the dollar amount to the nearest whole dollar;
             363          (III) if the percentage difference under Subsection (7)(b)(ii)(B)(I) is zero or a negative
             364      percentage, the consumer price index increase for the year is zero; and
             365          (IV) for purposes of this Subsection (7)(b)(ii)(B), the commissioner shall calculate the


             366      consumer price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
             367          (c) (i) Beginning March 24, 1999, a credit union may not extend a member-business
             368      loan if as a result of that member-business loan the credit union's aggregate member-business
             369      loan amount calculated under Subsection (7)(c)(ii) at any one time exceeds 1.25 times the sum
             370      of:
             371          (A) the actual undivided earnings; and
             372          (B) the actual reserves other than the regular reserves.
             373          (ii) For purposes of Subsection (7)(c)(i), the aggregate member-business loan amount
             374      of a credit union equals:
             375          (A) the sum of the total amount financed under all member-business loans outstanding
             376      at the credit union; minus
             377          (B) the amount of the member-business loans described in Subsection (7)(c)(ii)(A):
             378          (I) that is secured by share or deposit savings in the credit union; or
             379          (II) for which the repayment is insured or guaranteed by, or there is an advance
             380      commitment to purchase by an agency of the federal government, a state, or a political
             381      subdivision of the state.
             382          (d) (i) A credit union service organization may extend credit to a member of a credit
             383      union holding an ownership interest in the credit union service organization only if the credit
             384      union in which the person is a member is not prohibited from extending that credit to that
             385      member under:
             386          (A) this Subsection (7) and Subsection (8); or
             387          (B) Section 7-9-58 .
             388          (ii) For purposes of determining whether under this Subsection (7) and Subsection (8) a
             389      credit union may extend credit, the total amount outstanding of credit extended by a credit
             390      union service organization to a person shall be treated as if the credit was extended by the
             391      credit union in which the person is a member.
             392          (iii) If a person seeking an extension of credit from a credit union service organization
             393      is a member of more than one credit union holding an ownership interest in the credit union


             394      service organization, the person shall specify the credit union to which the extension of credit
             395      is attributed under Subsection (7)(d)(ii).
             396          (iv) This Subsection (7)(d) effects only an extension of credit:
             397          (A) that is extended on or after May 5, 2003; and
             398          (B) by:
             399          (I) a credit union service organization; or
             400          (II) a credit union organized under this chapter.
             401          (e) Notwithstanding the other provisions of this section, a nonexempt credit union may
             402      not extend credit that the nonexempt credit union is prohibited from extending under Section
             403      7-9-58 .
             404          (8) (a) A credit union may extend credit that is not a member-business loan in an
             405      amount that exceeds the limits described in Subsection (7)(b)(i) only if the excess portion is
             406      fully secured by share or deposit savings in the credit union.
             407          (b) (i) Except as provided in Subsection (8)(b)(ii), a credit union may extend a
             408      member-business loan in an amount that exceeds the limits described in Subsection
             409      (7)(b)(ii)(A)(II) only if:
             410          (A) that portion that is in excess of the limits described in Subsection (7)(b)(ii)(A)(II)
             411      is secured by share or deposit savings in the credit union; or
             412          (B) the repayment of that portion that is in excess of the limits described in Subsection
             413      (7)(b)(ii)(A)(II) is insured or guaranteed by, or there is an advance commitment to purchase
             414      that excess portion by, an agency of:
             415          (I) the federal government;
             416          (II) a state; or
             417          (III) a political subdivision of the state.
             418          (ii) Notwithstanding Subsection (8)(b)(i), a credit union may not extend a
             419      member-business loan if the total amount financed by the credit union exceeds $1,000,000.
             420          (c) For a member-business loan that is extended through a loan participation
             421      arrangement in accordance with Subsection 7-9-5 (12):


             422          (i) in applying the limitation of Subsection (8)(b), each credit union participating in the
             423      member-business loan may extend up to $1,000,000 of the amount financed; and
             424          (ii) the requirement of Subsection (7)(b)(ii)(A)(I) applies to membership in a credit
             425      union that:
             426          (A) participates in the loan participation arrangement for the member-business loan;
             427          (B) is organized under this chapter; and
             428          (C) is a successor to or was a credit union described in Subsection 7-9-53 (2)[(d)](c) as
             429      of May 3, 1999.
             430          (9) As provided in this chapter or in the credit union bylaws, the board of directors:
             431          (a) within 30 days following the annual meeting of the members, shall appoint a
             432      supervisory committee consisting of not less than three members;
             433          (b) within 30 days after the annual meeting of the members, shall appoint:
             434          (i) a credit committee consisting of not less than three members; or
             435          (ii) a credit manager in lieu of a credit committee;
             436          (c) shall appoint a president to serve as general manager;
             437          (d) shall have an executive committee;
             438          (e) may appoint an investment officer;
             439          (f) shall elect a secretary;
             440          (g) may appoint other officers and committees that it considers necessary;
             441          (h) shall establish written credit policies, loan security requirements, loan investment,
             442      personnel, and collection policies; and
             443          (i) on or before January 31 of each year, shall provide for:
             444          (i) share insurance for the shares and deposits of the credit union from the National
             445      Credit Union Administration or successor federal agency; or
             446          (ii) security expressly pledged for the payment of the shares and deposits in accordance
             447      with Section 7-9-45 .
             448          (10) A person may not be a member of more than one committee except as otherwise
             449      provided in this chapter or in the credit union bylaws.


             450          (11) The president and secretary may not be the same person.
             451          Section 8. Section 7-9-36 is amended to read:
             452           7-9-36. Dissolution.
             453          (1) A credit union may be dissolved upon a majority vote of the entire membership.
             454          (2) A copy of a notice of a special meeting to consider the matter shall be mailed to the
             455      members of the credit union at least 10 days before the date of the meeting.
             456          (3) Any member not present at the meeting may within the following 20 days vote for
             457      or against dissolution by signing a statement approved by the commissioner. A vote cast in this
             458      manner has the same force and effect as if cast at the meeting. A member not voting within
             459      the 20-day period is considered to be in favor of the dissolution.
             460          (4) The officers of the credit union may appoint a liquidating agent, subject to the
             461      approval of the commissioner, who has the right to exercise all the powers of the dissolved
             462      credit union to wind up its affairs. If the liquidating agent is other than [the Utah League of
             463      Credit Unions] a bona fide trade association of authorized credit unions recognized by the
             464      commissioner, or the National Credit Union Administration, the liquidator shall provide a bond
             465      or other security, as required by the commissioner, for the faithful discharge of duties in
             466      connection with the liquidation, including accounting for all money collected.
             467          (5) Upon the vote required under this section, a certificate of dissolution, signed by the
             468      chair of the board and the secretary, shall be filed with the commissioner and shall state the
             469      vote cast in favor of dissolution, the proposed date upon which the credit union will cease to do
             470      business, the names and addresses of the directors and officers of the credit union and the name
             471      and address of the liquidating agent appointed by the officers of the credit union. The
             472      commissioner shall approve the dissolution unless he finds that the procedures set forth in this
             473      section have not been properly followed.
             474          (6) Upon approval, the credit union shall cease to do business except for the purpose of
             475      discharging its debts, collecting and distributing assets, and doing all acts required to adjust,
             476      wind up, and dissolve its business and affairs. It may sue and be sued for the purpose of
             477      enforcing debts or obligations until its affairs are fully adjusted.


             478          (7) If the board or the liquidating agent determines that all assets from which a
             479      reasonable return could be expected have been liquidated and distributed, it shall execute a
             480      certificate of dissolution in a form approved by the commissioner and file it with the
             481      department and the Division of Corporations and Commercial Code. After the certificate has
             482      been filed, the credit union is dissolved.
             483          Section 9. Section 7-9-39 is amended to read:
             484           7-9-39. Voluntary merger.
             485          (1) [Any] A credit union may merge with another credit union under the existing
             486      charter of the other credit union when all of the following have occurred:
             487          (a) the majority of the directors of each merging credit union votes in favor of the
             488      merger plan;
             489          (b) the commissioner approves the merger plan;
             490          (c) subject to Subsection (7):
             491          [(c)] (i) the majority of the members of each merging credit union present at a meeting
             492      called for the purpose of considering the merger plan votes to approve the merger plan[, but a
             493      vote of the membership of the surviving credit union is not required if its board of directors
             494      determines that the merger will not have any significant effect on the organization,
             495      membership, or financial condition of the credit union; and]; or
             496          (ii) the majority of the members of each merging credit union votes to approve the
             497      merger plan by means of United States Postal Service mail; and
             498          (d) (i) the National Credit Union Administration or its successor federal deposit
             499      insurance agency approves the merger plan and commits to insure deposits of the surviving
             500      credit union; or
             501          (ii) the commissioner approves the surviving credit union to operate without federal
             502      deposit insurance in accordance with Section 7-9-45 .
             503          (2) Upon merger, the chair of the board and secretary of each credit union shall
             504      execute, and file with the department, a certificate of merger setting forth:
             505          (a) the time and place of the meeting of the board of directors at which the plan was


             506      approved;
             507          (b) the vote by which the directors approved the plan;
             508          (c) a copy of the resolution or other action by which the plan was approved;
             509          (d) the time and place of the meeting of the members at which the plan was approved;
             510          (e) the vote by which the members approved the plan; and
             511          (f) the effective date of the merger, which shall be:
             512          (i) the date on which the last approval or vote required under Subsection (1) was
             513      obtained; or
             514          (ii) a later date specified in the merger plan.
             515          (3) On the effective date of [any] a merger:
             516          (a) [all] the property, property rights, and interests of the merged credit union shall vest
             517      in the surviving credit union without deed, endorsement, or other instrument of transfer; and
             518          (b) [all] the debts, obligations, and liabilities of the merged credit union are considered
             519      to have been assumed by the surviving credit union.
             520          (4) Except as provided in Subsection (5)(b), if the surviving credit union is chartered
             521      under this chapter, the residents of a county in the field of membership of the merging credit
             522      union may not be added to the field of membership of the surviving credit union, except that
             523      the surviving credit union:
             524          (a) may admit as a member any member of the merging credit union that is not in the
             525      field of membership of the surviving credit union if the member of the merging credit union
             526      was a member of that credit union at the time of merger; and
             527          (b) may service any member-business loan of the merging credit union until the
             528      member-business loan is paid in full.
             529          (5) (a) This section shall be interpreted, whenever possible, to permit a credit union
             530      chartered under this chapter to merge with a credit union chartered under any other law if the
             531      preservation of membership interest is concerned.
             532          (b) The commissioner may under Subsection (1)(b) approve a merger plan that
             533      includes the addition of the residents of a county in the field of membership of the merging


             534      credit union to the field of membership of the surviving credit union if the commissioner finds
             535      that:
             536          (i) the expansion of the field of membership of the surviving credit union is necessary
             537      for that credit union's safety and soundness; and
             538          (ii) the expanded field of membership of the surviving credit union meets the criteria
             539      stated in Subsection 7-9-52 (3)(c).
             540          (6) If the commissioner approves a merger plan under Subsection (5)(b) under which
             541      the surviving credit union's field of membership after the merger will include residents of more
             542      than one county, Subsections (6)(a) through (e) apply to the surviving credit union.
             543          (a) The domicile-county of the surviving credit union is:
             544          (i) if the credit union does not have a field of membership under Subsection
             545      7-9-53 (2)(c) [or (2)(d)], the county in which the credit union has located the greatest number of
             546      branches as of the date the merger is effective; or
             547          (ii) if the credit union has a field of membership under Subsection 7-9-53 (2)(c) [or
             548      (2)(d)], the county that is the domicile-county of the surviving credit union under Section
             549      7-9-53 ;
             550          (b) Within the surviving credit union's domicile-county, the surviving credit union may
             551      establish, relocate, or otherwise change the physical location of the credit union's:
             552          (i) main office; or
             553          (ii) branch.
             554          (c) Within a county other than the domicile-county that is in the field of membership of
             555      the surviving credit union after the merger, the surviving credit union may not:
             556          (i) establish a main office or branch if the main office or branch was not located in the
             557      county as of the date that the merger is effective;
             558          (ii) participate in a service center in which it does not participate as of the date that the
             559      merger is effective; or
             560          (iii) relocate the surviving credit union's main office or a branch located in the county
             561      as of the date that the merger is effective unless the commissioner finds that the main office or


             562      branch is being relocated within a three-mile radius of the original location of the main office
             563      or branch.
             564          (d) After the merger, the surviving credit union may admit as a member:
             565          (i) a person in the surviving credit union's field of membership after the date that the
             566      merger is effective; or
             567          (ii) a person belonging to an association that:
             568          (A) is added to the field of membership of the credit union; and
             569          (B) resides in the domicile-county of the surviving credit union, as defined in Section
             570      7-9-53 .
             571          (e) In addition to any requirement under this Subsection (6), a surviving credit union
             572      shall comply with any requirement under this title for the establishment, relocation, or change
             573      in the physical location of a main office or branch of a credit union.
             574          (7) A vote of the membership of the surviving credit union is not required under
             575      Subsection (1)(c) if its board of directors determines that the merger will not have a significant
             576      effect on the organization, membership, or financial condition of the credit union.
             577          Section 10. Section 7-9-43 is amended to read:
             578           7-9-43. Board of Credit Union Advisors.
             579          (1) (a) There is created a Board of Credit Union Advisors of five members to be
             580      appointed by the governor.
             581          [(1)] (b) Members of the advisory board shall be individuals who are familiar with and
             582      associated in the field of credit unions.
             583          [(2)] (c) At least three of the members of the advisory board shall be persons who have
             584      had three or more years of experience as a credit union officer and shall be selected from a list
             585      submitted to the governor by [the Utah League of Credit Unions] a bona fide trade association
             586      of authorized credit unions recognized by the commissioner.
             587          [(3)] (2) The advisory board shall meet quarterly.
             588          [(4)] (3) A chair of the advisory board shall be chosen each year from the membership
             589      of the advisory board by a majority of the members present at the advisory board's first meeting


             590      each year.
             591          [(5)] (4) (a) Except as required by Subsection [(5)] (4)(b), as terms of current board
             592      members expire, the governor shall appoint each new member or reappointed member to a
             593      four-year term.
             594          (b) Notwithstanding [the requirements of] Subsection [(5)] (4)(a), the governor shall, at
             595      the time of appointment or reappointment, adjust the length of terms to ensure that the terms of
             596      board members are staggered so that approximately half of the advisory board is appointed
             597      every two years.
             598          [(6)] (5) When a vacancy occurs in the membership for any reason, the [replacement
             599      shall be appointed] governor shall appoint a replacement for the unexpired term.
             600          [(7) All members] (6) A member shall serve until [their successors are] the member's
             601      successor is appointed and qualified.
             602          [(8)] (7) A member may not receive compensation or benefits for the member's service,
             603      but may receive per diem and travel expenses in accordance with:
             604          (a) Section 63A-3-106 ;
             605          (b) Section 63A-3-107 ; and
             606          (c) rules made by the Division of Finance pursuant to Sections 63A-3-106 and
             607      63A-3-107 .
             608          [(9)] (8) Meetings of the advisory board shall be held on the call of the chair. A
             609      majority of the members of the advisory board shall constitute a quorum.
             610          [(10)] (9) The [Board of Credit Union Advisors] advisory board has the duty to advise
             611      the governor and commissioner on problems relating to credit unions and to foster the interest
             612      and cooperation of credit unions in the improvement of their services to the people of the state.
             613          Section 11. Section 7-9-44 is amended to read:
             614           7-9-44. Corporate central credit union.
             615          (1) A credit union in which all credit unions, [the Utah League of Credit Unions] a
             616      bona fide trade association of authorized credit unions recognized by the commissioner, and its
             617      affiliates are eligible for membership may be established in this state and shall be known as a


             618      corporate central credit union.
             619          (2) The corporate central credit union has all the powers and rights granted credit
             620      unions established under this chapter. The maximum loan by a corporate central credit union
             621      shall be established in the corporate central credit union bylaws.
             622          (3) Beginning January 1, 1984, and at the end of each dividend period, the corporate
             623      central credit union, in lieu of a regular reserve as provided in Section 7-9-30 , shall transfer 2%
             624      of its gross earnings to its central reserve until the reserve equals 1-1/2% of total assets. If the
             625      central reserve falls below 1-1/2% of total assets, it shall be replenished by regular transfers of
             626      2% of gross earnings or by contributions, whichever is less, in such amounts as are needed to
             627      maintain the central reserve at 1-1/2% of total assets.
             628          (4) Charges may be made against the central reserve to the extent permitted against a
             629      regular reserve. No other charges may be made against the central reserve, except as
             630      authorized in writing by the commissioner.
             631          (5) The purposes of the corporate central credit union are:
             632          (a) to accumulate and prudently manage the liquidity of its member credit unions
             633      through interlending and investment services;
             634          (b) to act as an intermediary for credit union funds between members, other corporate
             635      credit unions, other financial institutions, and government agencies;
             636          (c) to obtain liquid funds from other credit union organizations, financial
             637      intermediaries, and other sources;
             638          (d) to foster and promote, in cooperation with other state, regional, and national
             639      corporate credit unions and credit union organizations or associations, the economic security,
             640      growth, and development of member credit unions; and
             641          (e) to perform other financial services of benefit to its members authorized by the
             642      commissioner.
             643          (6) The corporate central credit union is exempt from supervision fees but is subject to
             644      examination fees.
             645          Section 12. Section 7-9-51 is amended to read:


             646           7-9-51. Field of membership.
             647          (1) Except as provided in Subsection (3) or (5), the field of membership of a credit
             648      union may include only the following:
             649          (a) the immediate family of a member of the credit union;
             650          (b) the employees of the credit union;
             651          (c) residents of a single county;
             652          (d) one or more associations; and
             653          (e) residents of a city of the third, fourth, or fifth class or a town as classified in Section
             654      10-2-301 if:
             655          (i) the city or town is located in a county of the fourth through sixth class as classified
             656      in Section 17-50-501 ;
             657          (ii) at the time the residents of the city or town are included in the field of membership
             658      of a credit union, the credit union has not become a nonexempt credit union under Section
             659      7-9-55 ; and
             660          (iii) approved by the commissioner in accordance with Subsection 7-9-52 (6).
             661          (2) A credit union may have a field of membership that is more restrictive than the
             662      field of membership described in Subsection (1).
             663          (3) A credit union may have a field of membership that is less restrictive than the field
             664      of membership described in Subsection (1) if the field of membership of the credit union:
             665          (a) is determined under Subsection 7-9-53 (2)(c) [or (2)(d)];
             666          (b) is approved by the commissioner after a merger under Subsection 7-9-39 (5); or
             667          (c) is permitted by the commissioner after a merger in accordance with Section
             668      7-9-39.5 .
             669          (4) If a credit union includes the residents of one county in its field of membership, the
             670      credit union may not change its field of membership to include a different county than the
             671      county that is first included in the field of membership of the credit union.
             672          (5) Notwithstanding the other provisions of this section or any restrictions of Section
             673      7-9-53 , a credit union may have a field of membership that is less restrictive than the field of


             674      membership described in Subsection (1), under the following conditions:
             675          (a) the field of membership of the credit union may include no more than all the
             676      residents of two counties in addition to any association included in the field of membership of
             677      the credit union; and
             678          (b) both counties described in Subsection (5)(a) must be a county of the third through
             679      sixth class, as classified in Section 17-50-501 .
             680          Section 13. Section 7-9-53 is amended to read:
             681           7-9-53. Grandfathering.
             682          (1) As used in this section:
             683          (a) "Association that resides in a domicile-county" means an association that:
             684          (i) operates a place of business or other physical location in the domicile-county; or
             685          (ii) has at least 100 members that are residents of the domicile-county.
             686          (b) "Domicile-county" means the county:
             687          (i) in the field of membership of the credit union as of January 1, 1999; and
             688          (ii) in which the credit union has located the greatest number of branches as of January
             689      1, 1999.
             690          (c) "Grandfathered field of membership" means the field of membership as of May 3,
             691      1999, of a credit union described in Subsection (2)[(d)](c).
             692          (2) For each credit union formed before January 1, 1999, its field of membership as of
             693      May 3, 1999, is determined as follows:
             694          (a) if the field of membership stated in the bylaws of the credit union as of January 1,
             695      1999, complies with Section 7-9-51 , the credit union's field of membership is the field of
             696      membership indicated in its bylaws;
             697          (b) (i) the field of membership of a credit union as of May 3, 1999, is as provided in
             698      Subsection (2)(b)(ii) if:
             699          (A) the field of membership stated in the bylaws of the credit union as of January 1,
             700      1999, includes the residents of more than one county; and
             701          (B) as of January 1, 1999, the credit union's main office and any of its branches are


             702      located in only one county in its field of membership;
             703          (ii) as of May 3, 1999, the field of membership of a credit union described in
             704      Subsection (2)(b)(i) is:
             705          (A) the immediate family of a member of the credit union;
             706          (B) the employees of the credit union;
             707          (C) residents of the one county in which the credit union has its main office or
             708      branches as of January 1, 1999; and
             709          (D) any association that as of January 1, 1999, is in the field of membership of the
             710      credit union; and
             711          [(c) (i) the field of membership of a credit union as of May 3, 1999, is as provided in
             712      Subsection (2)(c)(ii) if:]
             713          [(A) the field of membership of a credit union stated in the bylaws of the credit union
             714      as of January 1, 1999, includes residents of more than one county;]
             715          [(B) as of January 1, 1999, the credit union has a main office or branch in more than
             716      one county; and]
             717          [(C) as a result of a merger pursuant to a supervisory action under Chapter 2,
             718      Possession of Depository Institution by Commissioner, or Chapter 19, Acquisition of Failing
             719      Depository Institutions or Holding Companies, that is effective on or after January 1, 1983, but
             720      before January 1, 1994, the credit union acquired a branch in a county in the field of
             721      membership of the credit union and the credit union did not have a branch in the county before
             722      the merger;]
             723          [(ii) as of May 3, 1999, the field of membership of a credit union described in
             724      Subsection (2)(c)(i) is the same field of membership that the credit union would have had
             725      under Subsection (2)(d) except that the credit union:]
             726          [(A) is not subject to Subsection (3); and]
             727          [(B) is subject to Subsection (4)(b); and]
             728          [(d)] (c) (i) the field of membership of a credit union as of May 3, 1999, is as provided
             729      in Subsection (2)[(d)](c)(ii) if:


             730          (A) the field of membership stated in the bylaws of the credit union as of January 1,
             731      1999, includes the residents of more than one county; and
             732          (B) as of January 1, 1999, the credit union has a main office or branch in more than one
             733      county;
             734          (ii) as of May 3, 1999, the field of membership of a credit union described in
             735      Subsection (2)[(d)](c)(i) is:
             736          (A) the immediate family of a member of the credit union;
             737          (B) the employees of the credit union;
             738          (C) residents of the credit union's domicile-county;
             739          (D) the residents of any county other than the domicile-county:
             740          (I) if, as of January 1, 1999, the county is in the field of membership of the credit
             741      union; and
             742          (II) in which, as of January 1, 1994, the credit union had located its main office or a
             743      branch; and
             744          (E) any association that as of January 1, 1999, is in the field of membership of the
             745      credit union.
             746          (3) If a credit union's field of membership is as described in Subsection (2)[(d)](c),
             747      beginning May 3, 1999, the credit union:
             748          (a) within the credit union's domicile-county, may establish, relocate, or otherwise
             749      change the physical location of the credit union's:
             750          (i) main office; or
             751          (ii) branch;
             752          (b) within a county other than a domicile-county that is in the credit union's
             753      grandfathered field of membership, may not:
             754          (i) establish a main office or branch that:
             755          (A) was not located in the county as of January 1, 1999; or
             756          (B) for which the credit union has not received by January 1, 1999, approval or
             757      conditional approval of a site plan for the main office or branch from the planning commission


             758      of the municipality where the main office or branch will be located;
             759          (ii) participate in a service center in which it does not participate as of January 1, 1999;
             760          (iii) relocate the credit union's main office or a branch located in the county as of
             761      January 1, 1999, unless the commissioner finds that the main office or branch is relocated
             762      within a three-mile radius of where it was originally located; or
             763          (iv) after a voluntary merger under Section 7-9-39 , operate a branch in the county if:
             764          (A) the effective date of the merger is on or after May 5, 2003;
             765          (B) the credit union with the field of membership described in Subsection (2)[(d)](c) is
             766      the surviving credit union after the merger; and
             767          (C) the credit union did not own and operate the branch before the effective date of the
             768      merger; and
             769          (c) may only admit as a member:
             770          (i) a person in the credit union's grandfathered field of membership; or
             771          (ii) a person belonging to an association that:
             772          (A) is added to the field of membership of the credit union; and
             773          (B) resides in the domicile-county of the credit union.
             774          (4) [(a)] If a credit union's field of membership is as described in Subsection (2)(b), as
             775      of May 3, 1999, the credit union may operate as a credit union having a field of membership
             776      under Section 7-9-51 .
             777          [(b) If a credit union's field of membership is as described in Subsection (2)(c), as of
             778      May 3, 1999, the credit union:]
             779          [(i) within the credit union's domicile-county, may establish, relocate, or otherwise
             780      change the physical location of the credit union's:]
             781          [(A) main office; or]
             782          [(B) branch;]
             783          [(ii) within a county other than its domicile-county that is in the credit union's field of
             784      membership under Subsection (2)(c), may not:]
             785          [(A) establish a main office or branch that was not located in the county as of January


             786      1, 1999;]
             787          [(B) participate in a service center in which it does not participate as of January 1,
             788      1999; or]
             789          [(C) relocate the credit union's main office or a branch located in the county as of
             790      January 1, 1999, unless the commissioner finds that the main office or branch is relocated
             791      within a three-mile radius of where it was originally located; and]
             792          [(iii) may only admit as a member:]
             793          [(A) a person in the credit union's field of membership under Subsection (2)(c); or]
             794          [(B) a person belonging to an association that is added to the field of membership of
             795      the credit union, regardless of whether the association resides in the domicile-county of the
             796      credit union.]
             797          (5) (a) Notwithstanding Subsections (1) through (4), after May 3, 1999, a credit union
             798      described in Subsection (2)(c) [or(d)] may:
             799          (i) operate an office or branch that is operated by the credit union on May 3, 1999, but
             800      that is not located in a county that is in the credit union's field of membership as of May 3,
             801      1999; and
             802          (ii) serve a member who is not in a credit union's field of membership as of May 3,
             803      1999, if the member is a member of the credit union as of March 15, 1999.
             804          (b) Subsection (5)(a) does not authorize a credit union to:
             805          (i) establish a branch in a county that is not in the credit union's field of membership as
             806      of May 3, 1999, unless the branch meets the requirements under this title for establishing a
             807      branch; or
             808          (ii) for a credit union described in Subsection (2)[(d)](c), include in its field of
             809      membership an association that:
             810          (A) as of January 1, 1999, is not included in the credit union's field of membership; and
             811          (B) does not reside within the credit union's domicile-county.
             812          (6) A credit union shall amend its bylaws in accordance with Section 7-9-11 by no later
             813      than August 3, 1999, to comply with this section.


             814          (7) In addition to any requirement under this section, a credit union shall comply with
             815      any requirement under this title for the establishment, relocation, or change in the physical
             816      location of a main office or branch of a credit union.
             817          Section 14. Section 70C-1-202 is amended to read:
             818           70C-1-202. Exempted transactions.
             819          (1) Notwithstanding the exceptions in Subsection (2), parties to a credit transaction that
             820      is otherwise exempt from this title may explicitly agree in writing that the transaction is subject
             821      to this title. The agreement shall specifically reference Title 70C, Utah Consumer Credit Code.
             822          (2) This title does not apply to any of the following:
             823          (a) [any] an extension of credit:
             824          (i) primarily for business, commercial, or agricultural purposes; or
             825          (ii) to other than a natural person including government agencies or instrumentalities;
             826          (b) [any] a closed-end extension of credit secured by a first lien or equivalent security
             827      interest on a dwelling or building lot;
             828          (c) [any] a transaction in securities or commodities accounts in which credit is
             829      extended by a broker-dealer registered with the:
             830          (i) Securities and Exchange Commission; or
             831          (ii) Commodity Futures Trading Commission;
             832          (d) [any] an extension of credit:
             833          (i) not secured by:
             834          (A) real property; or
             835          (B) personal property used or expected to be used as the principal dwelling of the
             836      consumer; and
             837          (ii) (A) in which the amount financed exceeds [$25,000] $50,000 adjusted annually for
             838      inflation by the commissioner by the annual percentage increase in the Consumer Price Index
             839      for Urban Wage Earners and Clerical Workers; or
             840          (B) in which there is an express written commitment to extend credit in excess of
             841      [$25,000] the amount determined under Subsection (2)(d)(ii)(A);


             842          (e) [any] a transaction under public utility or common carrier tariffs if a subdivision of
             843      this state or the United States regulates:
             844          (i) the charges for the services involved;
             845          (ii) the charges for delayed payment; and
             846          (iii) [any] a discount allowed for early payment;
             847          (f) [any] the sale of insurance by an insurer except as otherwise provided in Chapter 6,
             848      Insurance;
             849          (g) [any] a transaction with a party acting as a pawnbroker and licensed by any
             850      governmental authority in this state;
             851          (h) (i) a loan made, insured, or guaranteed pursuant to a program authorized by Title IV
             852      of the Higher Education Act of 1965, 20 U.S.C. [Sections] Sec. 1070, et seq.; or
             853          (ii) a loan:
             854          (A) that finances tuition and other expenses:
             855          (I) charged in connection with enrollment:
             856          (Aa) at a public or proprietary preprimary, secondary, vocational, or postsecondary
             857      school; or
             858          (Bb) in any tutorial, continuing education, test preparation, distance-learning, or similar
             859      program; and
             860          (II) including:
             861          (Aa) tuition;
             862          (Bb) fees;
             863          (Cc) books;
             864          (Dd) housing; and
             865          (Ee) other expenses;
             866          (B) that is:
             867          (I) made, insured, or guaranteed under a state program; or
             868          (II) made by a federally insured depository institution; and
             869          (C) including a loan that consolidates or refinances a loan described in this Subsection


             870      (2)(h)(ii); and
             871          (i) a rental purchase agreement as defined in Section 15-8-3 .
             872          Section 15. Section 70C-8-203 is amended to read:
             873           70C-8-203. Fees -- Examinations.
             874          (1) A party required to file notification under Section 70C-8-202 shall, on or before
             875      January 31 of each year, pay to the department an annual fee [equal to the sum of:] of $100.
             876          [(a) $25; and]
             877          [(b) $7 for each $100,000 or part thereof in excess of $100,000, of the original
             878      principal balance of all consumer credit the party extended during the preceding calendar year.]
             879          (2) In addition to filing notification, a party subject to this part, and a depository
             880      institution subject to this title:
             881          (a) may be required to make a book or record relating to a consumer credit transaction
             882      available to the department or its authorized representative for examination; and
             883          (b) shall pay to the department a fee to be set by the department based on an hourly rate
             884      per each examiner.
             885          (3) No portion of a fee paid or owed to the department under this part is refundable
             886      because a party voluntarily or involuntarily ceases to extend credit to consumers:
             887          (a) during the period covered by the fee; or
             888          (b) before the time of an examination by the department of a book or record pertaining
             889      to a preceding consumer credit transaction.
             890          Section 16. Section 70D-2-201 is amended to read:
             891           70D-2-201. Notification of department -- Exemptions.
             892          (1) Except as provided in Subsection (2), a person may not engage in business as a
             893      lender, broker, or servicer in this state before the day on which the person:
             894          (a) files written notification with the commissioner in accordance with Section
             895      70D-2-202 ; and
             896          (b) pays a fee required by Section 70D-2-203 .
             897          (2) The following persons are exempt from this part, except for a reimbursement or fee


             898      described in Subsection 70D-2-203 (2):
             899          (a) a federally insured depository institution [in this state];
             900          (b) a wholly owned subsidiary of a depository institution described in Subsection (2)(a);
             901      and
             902          (c) a person who:
             903          (i) is required to be licensed with the Division of Real Estate pursuant to Title 61,
             904      Chapter 2c, Utah Residential Mortgage Practices and Licensing Act; and
             905          (ii) is not a servicer.
             906          Section 17. Section 70D-2-203 is amended to read:
             907           70D-2-203. Fees -- Examination.
             908          (1) (a) A person required to file notification under this part shall pay to the
             909      commissioner:
             910          (i) a fee of $200 with the person's initial notification; and
             911          (ii) an annual fee, on or before January 31 of each year, in an amount to be set by rule
             912      of the commissioner subject to Subsection (1)(b).
             913          (b) The commissioner:
             914          (i) subject to Subsection (1)(b)(ii), shall set the annual renewal fee at an amount that
             915      generates sufficient revenue to cover the department's costs of administering this chapter; and
             916          (ii) may not set an annual renewal fee that exceeds $100 per renewal.
             917          (2) (a) [If the commissioner has probable cause to believe that a lender, broker, or
             918      servicer has violated this chapter, the] The commissioner may require [the] a lender, broker, or
             919      servicer to make a record of the lender, broker, or servicer relating to its activities as a lender,
             920      broker, or servicer available to the commissioner or the commissioner's authorized
             921      representative for examination.
             922          (b) A lender, broker, or servicer described in Subsection (2)(a) shall:
             923          (i) reimburse the department for travel and other reasonable and necessary costs
             924      incurred in the examination described in Subsection (2)(a); and
             925          (ii) pay to the commissioner a fee set by the commissioner based on an hourly rate per


             926      each examiner, not to exceed $55 per hour for each examiner.
             927          (3) No portion of a fee paid or owed to the commissioner under this section is
             928      refundable because a person voluntarily or involuntarily ceases to do business as a lender,
             929      broker, or servicer:
             930          (a) during the period covered by the fee; or
             931          (b) before the time of an examination by the commissioner of a record pertaining to a
             932      transaction preceding the day on which the person ceases to do business as a lender, broker, or
             933      servicer.
             934          Section 18. Section 70D-2-305 is amended to read:
             935           70D-2-305. Fee restrictions.
             936          (1) A lender or broker may not accept a fee or deposit from an applicant for a mortgage
             937      loan unless at the time the lender or broker accepts the fee or deposit there is a written
             938      statement:
             939          [(1)] (a) signed by the applicant;
             940          [(2)] (b) stating whether or not the fee or deposit is refundable; and
             941          [(3)] (c) describing the conditions, if any, under which all or a portion of the fee or
             942      deposit will be refunded to the applicant.
             943          (2) Notwithstanding Subsection (1), a lender or broker may accept a fee or deposit
             944      from an applicant for a mortgage loan if the lender or broker receives an email from the
             945      applicant acknowledging that the applicant was provided the information required by
             946      Subsections (1)(b) and (c).
             947          Section 19. Section 70D-3-102 is amended to read:
             948           70D-3-102. Definitions.
             949          As used in this chapter:
             950          (1) "Administrative or clerical tasks" means:
             951          (a) the receipt, collection, and distribution of information common for the process or
             952      underwriting of a loan in the mortgage industry; and
             953          (b) a communication with a consumer to obtain information necessary for the


             954      processing or underwriting of a residential mortgage loan.
             955          (2) "Affiliate" shall be defined by the commissioner by rule made in accordance with
             956      Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
             957          (3) "Applicant" means an individual applying for a license under this chapter.
             958          (4) "Approved examination provider" means a person approved by the nationwide
             959      database as an approved test provider.
             960          (5) "Business as a loan originator" means for compensation or in the expectation of
             961      compensation to engage in an act that makes an individual a loan originator.
             962          (6) "Clerical or support duties" includes after the receipt of an application for a
             963      residential mortgage loan:
             964          (a) the receipt, collection, distribution, and analysis of information common for the
             965      processing or underwriting of a residential mortgage loan; and
             966          (b) communicating with a consumer to obtain the information necessary for the
             967      processing or underwriting of the residential mortgage loan, to the extent that the
             968      communication does not include:
             969          (i) offering or negotiating a residential mortgage loan rate or term; or
             970          (ii) counseling a consumer about a residential mortgage loan rate or term.
             971          (7) "Compensation" means anything of economic value that is paid, loaned, granted,
             972      given, donated, or transferred to an individual or entity for or in consideration of:
             973          (a) services;
             974          (b) personal or real property; or
             975          (c) another thing of value.
             976          (8) "Continuing education" means education taken by an individual licensed under this
             977      chapter in order to meet the education requirements imposed by Section 70D-3-303 to renew a
             978      license under this chapter.
             979          (9) "Covered subsidiary" means a subsidiary that is:
             980          (a) owned and controlled by a depository institution; and
             981          (b) regulated by a federal banking agency.


             982          (10) "Federal banking agency" means:
             983          (a) the Board of Governors of the Federal Reserve System;
             984          (b) the Comptroller of the Currency;
             985          [(c) the Director of the Office of Thrift Supervision;]
             986          [(d)] (c) the National Credit Union Administration; or
             987          [(e)] (d) the Federal Deposit Insurance Corporation.
             988          (11) "Licensee" means an individual licensed under this chapter.
             989          (12) (a) Except as provided in Subsection (12)(b), "loan originator" means an
             990      individual who for compensation or in the expectation of compensation:
             991          (i) takes a residential mortgage loan application; or
             992          (ii) offers or negotiates a term of a residential mortgage loan.
             993          (b) "Loan originator" does not include:
             994          (i) an individual who is engaged solely as a loan processor or underwriter;
             995          (ii) unless compensated by a lender, broker, other loan originator, or an agent of a
             996      lender, broker, or other loan originator, a person who:
             997          (A) only performs real estate brokerage activities; and
             998          (B) is licensed under Title 61, Chapter 2f, Real Estate Licensing and Practices Act;
             999          (iii) a person who is solely involved in extension of credit relating to a timeshare plan,
             1000      as defined in 11 U.S.C. Sec. 101(53D); or
             1001          (iv) an attorney licensed to practice law in this state who, in the course of the attorney's
             1002      practice as an attorney, assists a person in obtaining a residential mortgage loan.
             1003          (13) "Loan processor or underwriter" means an individual who as an employee
             1004      performs clerical or support duties:
             1005          (a) at the direction of and subject to the supervision and instruction of:
             1006          (i) a licensee; or
             1007          (ii) a registered loan originator; and
             1008          (b) as an employee of:
             1009          (i) the licensee; or


             1010          (ii) a registered loan originator.
             1011          (14) "Nationwide database" means the Nationwide Mortgage Licensing System and
             1012      Registry, authorized under Secure and Fair Enforcement for Mortgage Licensing, 12 U.S.C.
             1013      Sec. 5101 et seq.
             1014          (15) "Nontraditional mortgage product" means a mortgage product other than a 30-year
             1015      fixed rate mortgage.
             1016          (16) "Owned and controlled by a depository institution" may be defined by rule made
             1017      by the commissioner in accordance with Title 63G, Chapter 3, Utah Administrative
             1018      Rulemaking Act.
             1019          (17) "Prelicensing education" means education taken by an individual seeking to be
             1020      licensed under this chapter in order to meet the education requirements imposed by Section
             1021      70D-3-301 for an individual to obtain a license under this chapter.
             1022          (18) "Registered loan originator" means an individual who:
             1023          (a) engages in an act as a loan originator only as an employee of:
             1024          (i) a depository institution;
             1025          (ii) a covered subsidiary; or
             1026          (iii) an institution regulated by the Farm Credit Administration; and
             1027          (b) is registered with, and maintains a unique identifier through, the nationwide
             1028      database.
             1029          (19) (a) Subject to Subsection (19)(b), "residential mortgage loan" means:
             1030          (i) a mortgage loan; or
             1031          (ii) a loan that is:
             1032          (A) secured by a mortgage; and
             1033          (B) subject to Title 70C, Utah Consumer Credit Code.
             1034          (b) A loan described in Subsection (19)(a) is a "residential mortgage loan" only if the
             1035      mortgage securing the loan is on:
             1036          (i) a dwelling located in the state; or
             1037          (ii) real property located in the state, upon which is constructed or intended to be


             1038      constructed a dwelling.
             1039          (20) "Unique identifier" is as defined in 12 U.S.C. Sec. 5102.
             1040          Section 20. Repealer.
             1041          This bill repeals:
             1042          Section 7-3-3.3 , Tying of other bank services prohibited.
             1043          Section 7-3-16 , Losses charged to surplus -- Replenishment of fund -- Dividend
             1044      restrictions.
             1045          Section 7-8-12 , Charge off of losses sustained on receivables and operating losses --
             1046      Replenishment of surplus account.


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