Rep. Norm Thurston — Voting Record

Bill

Number

H.B. 44 (2017GS)

Sponsor

Rep. Peterson, V.

Final action

Governor Signed 3/21/2017

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• modifies definitions;
• permits the delegation of powers and duties under certain circumstances;
• changes the supervisor of trust to the supervisor of holding companies;
• modifies restrictions on acquisition of institutions and holding companies; and
• makes technical changes.

Every vote on this bill

Bill text

DEPARTMENT OF FINANCIAL INSTITUTIONS RELATED
AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Val L. Peterson
Senate Sponsor: 
Curtis S. Bramble
LONG TITLE
General Description:
This bill amends provisions related to financial institutions under the jurisdiction of the
department.
Highlighted Provisions:
This bill:
▸ modifies definitions;
▸ permits the delegation of powers and duties under certain circumstances;
▸ changes the supervisor of trust to the supervisor of holding companies;
▸ modifies restrictions on acquisition of institutions and holding companies; and
▸ makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
7-1-103
, as last amended by Laws of Utah 2016, Chapter 288
7-1-201
, as last amended by Laws of Utah 2013, Chapter 73
7-1-208.1
, as enacted by Laws of Utah 1989, Chapter 267
7-1-209
, as last amended by Laws of Utah 1994, Chapter 200
7-1-703
, as last amended by Laws of Utah 2014, Chapter 189
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
7-1-103
 is amended to read:
7-1-103.
Definitions.
As used in this title:
(1) (a) "Bank" means a person authorized under the laws of this state, another state, or
the United States to accept deposits from the public.
(b) "Bank" does not include:
(i) a federal savings and loan association or federal savings bank;
(ii) an industrial bank subject to Chapter 8, Industrial Banks;
(iii) a federally chartered credit union; or
(iv) a credit union subject to Chapter 9, Utah Credit Union Act.
(2) "Banking business" means the offering of deposit accounts to the public and the
conduct of such other business activities as may be authorized by this title.
(3) (a) "Branch" means a place of business of a financial institution, other than its main
office, at which deposits are received and paid.
(b) "Branch" does not include:
(i) an automated teller machine, as defined in Section 
7-16a-102
;
(ii) a point-of-sale terminal, as defined in Section 
7-16a-102
; or
(iii) a loan production office under Section 
7-1-715
.
(4) "Commissioner" means the Commissioner of Financial Institutions.
(5) "Control" means the power, directly or indirectly, 
or through or in concert with one
or more persons,
 to:
(a) direct or exercise a controlling influence over:
(i) the management or policies of a financial institution; or
(ii) the election of a majority of the directors or trustees of an institution;
(b) vote 20% or more of any class of voting securities of a financial institution by an
individual; or
(c) vote more than 10% of any class of voting securities of a financial institution by a
person other than an individual.
(6) "Credit union" means a cooperative, nonprofit association incorporated under:
(a) Chapter 9, Utah Credit Union Act; or
(b) 12 U.S.C. Sec. 1751 et seq., Federal Credit Union Act, as amended.
(7) "Department" means the Department of Financial Institutions.
(8) "Depository institution" means a bank, savings and loan association, savings bank,
industrial bank, credit union, or other institution that:
(a) holds or receives deposits, savings, or share accounts;
(b) issues certificates of deposit; or
(c) provides to its customers other depository accounts that are subject to withdrawal
by checks, drafts, or other instruments or by electronic means to effect third party payments.
(9) (a) "Depository institution holding company" means:
(i) a person other than an individual that:
(A) has control over [
any
] 
a
 depository institution; or
(B) becomes a holding company of a depository institution under Section 
7-1-703
; or
(ii) a person other than an individual that the commissioner finds, after considering the
specific circumstances, is exercising or is capable of exercising a controlling influence over a
depository institution by means other than those specifically described in this section.
(b) Except as provided in Section 
7-1-703
, a person is not a depository institution
holding company solely because it owns or controls shares acquired in securing or collecting a
debt previously contracted in good faith.
(10) "Financial institution" means [
any
] 
an
 institution subject to the jurisdiction of the
department because of this title.
(11) (a) "Financial institution holding company" means a person, other than an
individual that has control over [
any
] 
a
 financial institution or [
any
] 
a
 person that becomes a
financial institution holding company under this chapter, including an out-of-state or foreign
depository institution holding company.
(b) Ownership of a service corporation or service organization by a depository
institution does not make that institution a financial institution holding company.
(c) A person holding 10% or less of the voting securities of a financial institution is
rebuttably presumed not to have control of the institution.
(d) A trust company is not a holding company solely because it owns or holds 20% or
more of the voting securities of a financial institution in a fiduciary capacity, unless the trust
company exercises a controlling influence over the management or policies of the financial
institution.
(12) "Foreign depository institution" means a depository institution chartered or
authorized to transact business by a foreign government.
(13) "Foreign depository institution holding company" means the holding company of a
foreign depository institution.
(14) "Home state" means:
(a) for a state chartered depository institution, the state that charters the institution;
(b) for a federally chartered depository institution, the state where the institution's main
office is located; and
(c) for a depository institution holding company, the state in which the total deposits of
all depository institution subsidiaries are the largest.
(15) "Host state" means:
(a) for a depository institution, a state, other than the institution's home state, where the
institution maintains or seeks to establish a branch; and
(b) for a depository institution holding company, a state, other than the depository
institution holding company's home state, where the depository institution holding company
controls or seeks to control a depository institution subsidiary.
(16) "Industrial bank" means a corporation or limited liability company conducting the
business of an industrial bank under Chapter 8, Industrial Banks.
(17) "Industrial loan company" means the same as that term is defined in Section
7-8-21
.
(18) "Insolvent" means the status of a financial institution that is unable to meet its
obligations as they mature.
(19) "Institution" means:
(a) a corporation;
(b) a limited liability company;
(c) a partnership;
(d) a trust;
(e) an association;
(f) a joint venture;
(g) a pool;
(h) a syndicate;
(i) an unincorporated organization; or
(j) any form of business entity.
(20) "Institution subject to the jurisdiction of the department" means an institution or
other person described in Section 
7-1-501
.
(21) "Liquidation" means the act or process of winding up the affairs of an institution
subject to the jurisdiction of the department by realizing upon assets, paying liabilities, and
appropriating profit or loss, as provided in Chapter 2, Possession of Depository Institution by
Commissioner, and Chapter 19, Acquisition of Failing Depository Institutions or Holding
Companies.
(22) "Liquidator" means a person, agency, or instrumentality of this state or the United
States appointed to conduct a liquidation.
(23) (a) "Money services business" includes:
(i) a check casher;
(ii) a deferred deposit lender;
(iii) an issuer or seller of traveler's checks or money orders; and
(iv) a money transmitter.
(b) "Money services business" does not include:
(i) a bank;
(ii) a person registered with, and functionally regulated or examined by the Securities
Exchange Commission or the Commodity Futures Trading Commission, or a foreign financial
agency that engages in financial activities that, if conducted in the United States, would require
the foreign financial agency to be registered with the Securities Exchange Commission or the
Commodity Futures Trading Commission; or
(iii) an individual who engages in an activity described in Subsection (23)(a) on an
infrequent basis and not for gain or profit.
(24) "Negotiable order of withdrawal" means a draft drawn on a NOW account.
(25) (a) "NOW account" means a savings account from which the owner may make
withdrawals by negotiable or transferable instruments for the purpose of making transfers to
third parties.
(b) A "NOW account" is not a demand deposit.
(c) [
Neither the
] 
The
 owner of a NOW account [
nor
] 
or
 any third party holder of an
instrument requesting withdrawal from the account [
has
] 
does not have
 a legal right to make
withdrawal on demand.
(26) "Out-of-state" means, in reference to a depository institution or depository
institution holding company, an institution or company whose home state is not Utah.
(27) "Person" means:
(a) an individual;
(b) a corporation;
(c) a limited liability company;
(d) a partnership;
(e) a trust;
(f) an association;
(g) a joint venture;
(h) a pool;
(i) a syndicate;
(j) a sole proprietorship;
(k) an unincorporated organization; or
(l) any form of business entity.
(28) "Receiver" means a person, agency, or instrumentality of this state or the United
States appointed to administer and manage an institution subject to the jurisdiction of the
department in receivership, as provided in Chapter 2, Possession of Depository Institution by
Commissioner, and Chapter 19, Acquisition of Failing Depository Institutions or Holding
Companies.
(29) "Receivership" means the administration and management of the affairs of an
institution subject to the jurisdiction of the department to conserve, preserve, and properly
dispose of the assets, liabilities, and revenues of an institution in possession, as provided in
Chapter 2, Possession of Depository Institution by Commissioner, and Chapter 19, Acquisition
of Failing Depository Institutions or Holding Companies.
(30) "Savings account" means [
any
] 
a
 deposit or other account at a depository
institution that is not a transaction account.
(31) "Savings and loan association" means:
(a) a federal savings and loan association; and
(b) an out-of-state savings and loan association.
(32) "Service corporation" or "service organization" means a corporation or other
business entity owned or controlled by one or more financial institutions that is engaged or
proposes to engage in business activities related to the business of financial institutions.
(33) "State" means, unless the context demands otherwise:
(a) a state;
(b) the District of Columbia; or
(c) the territories of the United States.
(34) "Subsidiary" means a business entity under the control of an institution.
(35) "Technology service provider" means a person that provides a data processing
service or activity that supports the financial services or Internet related services of a depository
institution subject to the jurisdiction of the department, including supporting:
(a) lending;
(b) money transfers;
(c) fiduciary activities;
(d) trading activities;
(e) deposit taking;
(f) web services and electronic bill payments;
(g) mobile applications;
(h) system and software development and maintenance; and
(i) security monitoring.
(36) (a) "Transaction account" means a deposit, account, or other contractual
arrangement in which a depositor, account holder, or other customer is permitted, directly or
indirectly, to make withdrawals by:
(i) check or other negotiable or transferable instrument;
(ii) payment order of withdrawal;
(iii) telephone transfer;
(iv) other electronic means; or
(v) any other means or device for the purpose of making payments or transfers to third
persons.
(b) "Transaction account" includes:
(i) demand deposits;
(ii) NOW accounts;
(iii) savings deposits subject to automatic transfers; and
(iv) share draft accounts.
(37) "Trust company" means a person authorized to conduct a trust business, as
provided in Chapter 5, Trust Business.
(38) "Utah depository institution" means a depository institution whose home state is
Utah.
(39) "Utah depository institution holding company" means a depository institution
holding company whose home state is Utah.
Section 2. Section 
7-1-201
 is amended to read:
7-1-201.
Creation of department -- Organization.
(1) There is created the Department of Financial Institutions that is responsible for the
execution of the laws of this state relating to [
all
] 
a
 financial [
institutions and
] 
institution or
other [
persons
] 
person
 subject to this title, and relating to the businesses [
they conduct
] 
that the
financial institution or other person conducts
.
(2) The department organization includes:
(a) the commissioner of financial institutions, who shall be the chief executive officer
of the department;
(b) the Board of Financial Institutions;
(c) the chief examiner;
(d) the deputy commissioner;
(e) the supervisor of banks;
(f) the supervisor of industrial banks;
(g) the supervisor of credit unions;
(h) the supervisor of money services businesses; [
and
]
(i) the supervisor of holding companies; and
[
(i)
] 
(j)
 other supervisors, examiners, and personnel as may be required to carry out the
duties, powers, and responsibilities of the department.
(3) A power or duty of the commissioner under this title may be exercised by the
deputy commissioner or a supervisor described in Subsection (2) if the commissioner delegates
in writing the authority to exercise the power or duty to the deputy commissioner or supervisor.
Section 3. Section 
7-1-208.1
 is amended to read:
7-1-208.1.
Supervisor of holding companies -- Qualifications -- Responsibilities.
(1)
 The commissioner may designate an examiner as supervisor of [
trusts
] 
holding
companies
 who shall be a citizen of the United States and shall have sufficient training and
experience with regard to [
trusts
] 
holding companies
 to demonstrate [
his
] 
the examiner's
qualifications and fitness to perform the duties of [
his office
] 
the supervisor of holding
companies
.
(2)
 The supervisor of [
trusts
] 
holding companies
 is responsible, subject to the direction
and control of the commissioner, for the general supervision and examination of all [
trusts
]
holding companies
 subject to the jurisdiction of the department under this title. [
He
] 
The
supervisor of holding companies
 shall assist and advise the commissioner in the execution of
the laws of this state relating to [
trusts
] 
holding companies
 and shall perform other duties
prescribed in this title or assigned to [
him
] 
the supervisor of holding companies
 by the
commissioner.
Section 4. Section 
7-1-209
 is amended to read:
7-1-209.
Additional supervisors, examiners, and other personnel -- Compensation
-- Travel expenses.
(1) In addition to the supervisors under Sections 
7-1-205
 through 
7-1-208.1
and
7-1-208.3
, the commissioner may appoint additional supervisors as necessary. The
commissioner may assign to any supervisor responsibility, subject to the direction and control
of the commissioner, for the general supervision and examination of any class of financial
institutions or other persons not specifically assigned to another supervisor.
(2) The commissioner may employ examiners required for the proper conduct of the
department. These examiners may not be interested, directly or indirectly, in any institution
under the jurisdiction and supervision of the department. They shall perform duties prescribed
by this title or assigned to them by the commissioner.
(3) The commissioner may delegate to the chief examiner or any supervisor the duty of
conducting hearings in carrying out the duties, powers, and functions of the department
,
 or [
he
]
the commissioner
 may employ, on a regular or part-time basis, similarly qualified persons to
act as hearing officers for those purposes.
(4) The commissioner may appoint or employ, on a permanent or consulting basis,
other persons qualified by education, training, and experience for the needs of the department
as the commissioner considers necessary to carry out the duties, powers, and responsibilities of
the department.
(5) The commissioner may employ clerical help to properly carry on the work of the
department.
(6) The salaries of the employees of the department shall be fixed in accordance with
salary and merit standards adopted by the Division of Finance and are payable in the same
manner as the salaries of other state employees. All actual and necessary traveling expenses of
the commissioner, supervisors, examiners, and other employees of the department incurred in
the discharge of their duties shall be fully itemized upon proper vouchers and certified by the
commissioner to the director of the Division of Finance.
Section 5. Section 
7-1-703
 is amended to read:
7-1-703.
Restrictions on acquisition of institutions and holding companies --
Enforcement.
(1) Unless the commissioner gives prior written approval under Section 
7-1-705
, [
no
] 
a
person may 
not
:
(a) acquire, directly or indirectly, control of a depository institution or depository
institution holding company subject to the jurisdiction of the department;
(b) vote the stock of [
any
] 
a
 depository institution or depository institution holding
company subject to the jurisdiction of the department acquired in violation of Section 
7-1-705
;
(c) acquire all or [
any
] 
a material
 portion of the assets of a depository institution or a
depository institution holding company subject to the jurisdiction of the department;
(d) assume all or [
any
] 
a material
 portion of the deposit liabilities of a depository
institution subject to the jurisdiction of the department;
(e) take any action that causes a depository institution to become a subsidiary of a
depository institution holding company subject to the jurisdiction of the department;
(f) take any action that causes a person other than an individual to become a depository
institution holding company subject to the jurisdiction of the department;
(g) acquire, directly or indirectly, the voting or nonvoting securities of a depository
institution or a depository institution holding company subject to the jurisdiction of the
department if the acquisition would result in the person obtaining more than 20% of the
authorized voting securities of the institution if the nonvoting securities were converted into
voting securities; or
(h) merge or consolidate with a depository institution or depository institution holding
company subject to the jurisdiction of the department.
(2) [
Any
] 
A
 person who willfully violates [
any provision of
] this section or [
any
] 
a
 rule
or order issued by the department under this section is subject to a civil penalty of not more
than $1,000 per day during which the violation continues. The commissioner may assess the
civil penalty after giving notice and opportunity for hearing. The commissioner shall collect
the civil penalty by bringing an action in the district court of the county in which the office of
the commissioner is located. [
Any
] 
An
 applicant for approval of an acquisition is considered to
have consented to the jurisdiction and venue of the court by filing an application for approval.
(3) The commissioner may secure injunctive relief to prevent [
any
] 
a
 change in control
or impending violation of this section.
(4) The commissioner may lengthen or shorten any time period specified in Section
7-1-705
 if the commissioner finds it necessary to protect the public interest.
(5) The commissioner may exempt [
any
] 
a
 class of financial institutions from this
section by rule if the commissioner finds the exception to be in the public interest.
(6) The prior approval of the commissioner under Section 
7-1-705
 is not required for
the acquisition by a person other than an individual of voting securities or assets of a depository
institution or a depository institution holding company that are acquired by foreclosure or
otherwise in the ordinary course of collecting a debt previously contracted in good faith if these
voting securities or assets are divested within two years of acquisition. The commissioner may,
upon application, extend the two-year period of divestiture for up to three additional one-year
periods if, in the commissioner's judgment, the extension would not be detrimental to the
public interest. The commissioner may adopt rules to implement the intent of this Subsection
(6).
(7) (a) An out-of-state depository institution without a branch in Utah, or an
out-of-state depository institution holding company without a depository institution in Utah,
may acquire:
(i) a Utah depository institution only if it has been in existence for at least five years; or
(ii) a Utah branch of a depository institution only if the branch has been in existence
for at least five years.
(b) For purposes of Subsection (7)(a), a depository institution chartered solely for the
purpose of acquiring another depository institution is considered to have been in existence for
the same period as the depository institution to be acquired, so long as it does not open for
business at any time before the acquisition.
(c) The commissioner may waive the restriction in Subsection (7)(a) in the case of a
depository institution that is subject to, or is in danger of becoming subject to, supervisory
action under Chapter 2, Possession of Depository Institution by Commissioner, or Chapter 19,
Acquisition of Failing Depository Institutions or Holding Companies, or, if applicable, the
equivalent provisions of federal law or the law of the institution's home state.
(d) The restriction in Subsection (7)(a) does not apply to an acquisition of, or merger
transaction between, affiliate depository institutions.