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NO. 23. AN ACT RELATING TO BANKING REGULATION EXPENSES.

(H.354)

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1. 8 V.S.A. 78 is amended to read:

78. CHARGES FOR EXAMINATIONS, MERGERS, CONVERSIONS,

BRANCHES, CHARTERS, RELOCATION AND TRUST POWERS

(a) Every person, firm, association, or corporation subject to examinations by the commissioner shall pay the department the reasonable costs of any examinations and investigations conducted or caused to be conducted by the department at a rate to be determined by the commissioner. Those institutions subject to assessment under section 504 of this title shall not be billed for regularly scheduled examinations.

(b) The commissioner shall charge each financial institution or financial institution applicant for services rendered *[in connection with a petition to merge or consolidate with another institution, to convert from a national to a state-chartered institution or to establish and maintain a branch, including any off-premise remote service unit for the electronic transfer of funds, or to establish a new financial institution]*.

*[(c)]* Charges shall be billed as follows: *[for each new financial institution application $2,500.00; for each interim bank reorganization application $1,000.00; for each merger $1,000.00 per institution; for each conversion of charter $2,000.00; for establishment of each branch $500.00; for each remote service unit $250.00; for each relocation of main office, branch, or remote service unit $150.00; for trust powers subsequent to the granting of the charter $500.00.]*

(1) New financial institution application $5,000.00;

(2) Interim reorganization application $1,000.00;

(3) Merger or other reorganization $1,000.00;

(4) Conversion to a state charter $2,000.00;

(5) Establishment of a branch $ 500.00;

(6) Establishment of a remote service unit $ 250.00;

(7) Relocation of main office, branch, or remote service unit $ 150.00; (8) For trust powers subsequent to the granting of the charter $ 500.00;

(9) Sale of branch $ 500.00;

(10) Sale, lease or exchange of all an institution’s assets $1,500.00;

(11) Voluntary liquidation of an institution $5,000.00;

(12) Establishment of a limited purpose trust subsidiary $5,000.00;

(13) Establishment of a temporary agency $ 150.00;

(14) Activity at a school $ 250.00;

(15) Establish a loan production office $ 750.00;

(16) Permit a foreign exchange activity $ 500.00;

(17) Purchase or establish a subsidiary $2,500.00;

(18) Certificate (Good Standing) $ 50.00;

(19) Establish a development credit corporation $ 100.00;

(20) Any other corporate organizational

changes not covered above $ 250.00 plus

expenses.

Where more than one remote service unit performing identical services on single premises are petitioned at the same time, the total charge shall be $250.00. No petition shall be considered by the commissioner until payment for these charges has been received.

Sec. 2. 8 V.S.A. 504 is amended to read:

504. PAYMENT OF DEPARTMENT EXPENSES; ENFORCEMENT

(a) *[Each bank, savings and loan association, credit union, or licensee,]* Each person, within thirty days of notification, shall pay the department examination fees as prescribed by section 78 of this title, which fees shall be billed when they are incurred.

(b) *[Annually, before August 16]* Semiannually on or before February 15 and August 15, the commissioner shall apportion the expenses allowed under the title "department of banking" in the annual appropriation bill, after deducting all monies received by the banking division, among the several banks, savings and loan associations, and credit unions *[examined]* and special purpose trust banks regulated under this title, including any such entity organized in another jurisdiction. Banks, savings and loan associations and credit unions will be assessed in proportion to the amount of their *[gross assets as shownby their statements as of the close of business on the last day of]* average deposits held in this state for the preceding six-month period ending December 31 and June *[preceding, except that no]* 30. In the case of special purpose trust banks, the assessment will be based on assets under management in this state on the last day of December and June preceding. No such bank, savings and loan association, *[or]* credit union and special purpose trust bank may pay less than *[$50.00]* $125.00 per semiannual assessment. He or she shall notify each bank, savings and loan association, and credit union, special purpose trust bank, and independent trust company of the amount so apportioned to it, which shall be paid into the state treasury within thirty days after receipt of that notice.

(c) If any bank, savings and loan association, credit union, special purpose trust bank, or licensee fails to pay fees or expenses as herein required, within forty-five days after notice from the department of the amount due, the commissioner may issue an execution against the property of the delinquent for an amount equal to one hundred and fifty percent of the amount of the overdue payment. Such execution shall be enforced as an execution of the court.

(d) There is hereby created a fund to be known as the financial institutions supervision fund for the purpose of providing the financial means for the commissioner of banking, insurance, securities, and health care administration to administer part 2 and chapter 133 of this title, part 1 and part 3 of Title 9, and Title 9A. All fees and assessments received by the department pursuant to such administration shall be deposited in this fund.

All payments for the financial institutions supervision fund for the maintenance of staff and associated expenses, including contractual services as necessary, shall be disbursed from the state treasury only upon warrants issued by the commissioner of finance and management after receipt of proper documentation regarding services rendered and expenses incurred.

(e) Any bank, savings and loan association, credit union, or special purpose bank that converts or relinquishes its state charter or closes all of its branches or offices in this state will be responsible for a pro rata share of the assessment made under subsection (b) of this section for the final period its charter is in effect.

Sec. 3. 8 V.S.A. 1352(d) is amended to read:

(d) A foreign trust company organized under the laws of any state other than this state shall obtain the commissioner’s written approval before establishing a place of business in this state pursuant to this section. Before issuing such approval, the commissioner must find that the foreign trust company is adequately staffed, equipped and able to furnish trust services in this state. The commissioner may examine the activities of a foreign trust company operating in this state at any time he or she deems necessary to ensure its continued safety and soundness, ability to furnish trust services, and compliance with the laws of this state. Such foreign trust company shall make its books and records pertaining to its business in this state available to the commissioner for such examination. Each foreign trust company shall pay fees and assessments as prescribed by sections 78 and 504 of this title.

Sec. 4. 8 V.S.A. 2051 is amended to read:

2051. ORGANIZATION

Any seven or more residents of the state of Vermont, of legal age, who have a common bond referred to in section 2055 of this title may organize a credit union and become charter members thereof by:

(1) Executing in duplicate, articles of association by the terms of which they agree to be bound, which articles shall state:

(A) The name, which shall include the words "credit union" and which shall not be the same as that of any other existing credit union, and the city or town wherein the proposed credit union is to have its principal place of business.

(B) The term of existence of the credit union, which shall be perpetual, corporate, and a legal entity in and of itself.

(C) The par value of the shares of the credit union shall be in five dollar ($5.00) multiples of not less than five dollars ($5.00), nor more than twenty-five dollars ($25.00).

(D) The names and addresses of the subscribers to the articles of association, and the number of shares subscribed by each.

(E) That the credit union shall have the power to exercise such incidental powersas shall be necessary or requisite to enable it to carry on effectively the business for which it is incorporated.

(F) A statement that recognition as a credit union is desired under this chapter.

(2) Preparing and adopting bylaws for the general government of the credit union consistent with this chapter and executing them in duplicate.

(3) Forwarding the required charter fee *[of $10.00 and]*, the articles of association and the bylaws, to the commissioner of banking, insurance, securities, and health care administration. If they conform to the law, and after he or she has held a hearing to determine if the organization of the proposed credit union shall benefit its members and the public good, he or she shall issue a certificate of approval attached to the articles and return a copy of the bylaws and the articles to the applicants or their representative which shall be preserved in permanent files of the credit union. Application shall be acted upon within thirty days.

(4) The subscribers for a credit union charter shall not transact any business until formal approval of the charter has been received and properly filed. In order to simplify the organization of credit unions, the commissioner of banking, insurance, securities, and health care administration, upon the taking effect of this chapter, shall cause to be prepared a form of articles of association and a form of bylaws, consistent with this chapter, which may be used by credit union incorporators for their guidance. Those forms shall be available without charge to persons desiring to organize a credit union.

(5) Charges for services rendered may be assessed by the commissioner in accordance with section 78(b) of this title for credit unions with assets of $30 million or more. Credit unions with less than $30 million in assets shall be charged $100.00 per service.

Sec. 5. 8 V.S.A. 2069 is amended to read:

2069. EXAMINATIONS

(a) The department of banking, insurance, securities, and health care administration at least once every three years shall examine or cause to be examined each credit union, but the commissioner may, in his or her discretion, order such other examination orexaminations as he or she may deem to be necessary. Each credit union and all of its officers and agents shall be required to give to representatives of the department full access to all books, papers, securities, records and other sources of information under their control; and for the purpose of the examination those representatives may subpoena witnesses, administer oaths, compel the giving of testimony, and require the submission of documents. Each credit union shall pay to the department of banking, insurance, securities, and health care administration examination fees as prescribed by section 78 of this title, which fees shall be billed when they are incurred, but there shall be no charge for the first examination. *[An additional fee of $50.00 shall be paid by any credit union the books of which are not balanced to a date within thirty-one days before the examination.]*

(b) A report of the examination shall be forwarded to the president of each credit union within thirty days after the completion of the examinations. The report shall contain comments to the members relative to the management of the affairs of the credit union and also as to the general condition of its assets which shall be conspicuously posted upon receipt for at least 90 days. Within thirty days of the receipt of the report, a general meeting of the directors and *[committeemen]* committee members shall be called to consider matters contained in the report. Upon request, a representative of the department of banking, insurance, securities, and health care administration shall attend the meeting.

Sec. 6. 8 V.S.A. 2209 is amended to read:

2209. RENEWAL OF LICENSE

On or before December 1 of each year, every licensee shall pay to the commissioner a renewal of license fee for the next succeeding calendar year, and shall at the same time file with the commissioner a bond in the same amount and of the same character as required by section 2203 of this title or as required by the commissioner under section 2207 of this title. The fee shall be:

(1) For the renewal of lender's license, *[$900.00]* $1,200.00. For a person with ten or more licensed locations, the renewal fee under this subdivision shall be no more than $12,000.00;

(2) For the renewal of a mortgage broker's license, $250.00;

(3) For the renewal of a sales finance company's license, $300.00.

Sec. 6a. 8 V.S.A. 2222(c) is amended to read:

(c) The commissioner shall make an examination of the affairs, business, *[office,]* and records of each licensee at least once every three years. The commissioner may, in the case of those licensees who, under section 2233 of this title, do not maintain a Vermont office, accept reports of examinations prepared by another state or federal regulatory agency as substitutes if such reports are available to the commissioner and are determined to be adequate in exercising his or her powers and discharging his or her responsibilities under this chapter.

Sec. 7. 8 V.S.A. 558 is amended to read:

558. ADVERTISING; DOING BUSINESS OR USING NAME UNLAWFULLY,

PENALTY

(a) A person, firm, association or corporation*[, except corporations reporting to and under the supervision of the commissioner,]* shall not advertise or put forth any sign as a bank, banking association or trust company, or in any way solicit or receive deposits or transact business as a bank, banking association or trust company, or use the words "bank", "banking association" or "trust company" or other similar sounding word or name unless it is a company reporting to and under the supervision of the commissioner or unless the commissioner approves the activity or word or name used in writing after giving due consideration for whether the activity, word or name will confuse or mislead the public as to the nature of the business of the entity. However, this section shall not prevent an individual, as such, from acting in a trust capacity.

(b) A person, firm, association or corporation subject to the provisions of this section, who violates a provision hereof, shall be fined not more than $500.00 for each offense.

Sec. 8. 8 V.S.A. 653(a) is amended to read:

653. ESTABLISHMENT OF BRANCHES OUTSIDE OF VERMONT

(a) As used in this section and sections 651(h), 654, 655, 656, 657 and 658 of this title:

* * *

Sec. 9. 8 V.S.A. 806 is amended to read:

806. QUALIFYING SHARES

A trustee of a commercial bank or stock savings bank shall own not less than ten shares of the stock absolutely unpledged in the commercial bank or stock savings bank, or in any company which has control over the commercial bank or stock savings bank within the meaning of the Bank Holding Company Act of 1956 as amended. Shares of stock necessary to enable a director or trustee to qualify shall be lodged with the treasurer of the company *[and held by him]*, if certificated, or shall be registered upon the books of the commercial bank or stock savings bank maintained for that purpose, if uncertificated, and held by the treasurer or upon the books free from encumbrance during the term of office of the owner. On certificates of stock which are not subject to assessment, it shall be plainly printed on the face thereof that the same are nonassessable.

Sec. 10. 8 V.S.A. 1157(b) is amended to read:

(b) No bank may invest in the capital stock of other Vermont banks, except as provided in chapter 62 of this title, but shares of such stock held on January 1, 1970 may be retained.

Sec. 11. 8 V.S.A. 1472 is amended to read:

1472. ORGANIZATION OF SUBSIDIARY TRUST COMPANIES

A trust subsidiary may be incorporated and organized as a bank having capital stock under chapter 53 of this title, or under federal law relating to national banking associations, for the limited purpose of conducting a trust business and business incidental thereto, as set forth in this chapter and in chapter 59 of this title. By virtue of the scope of its permissible powers as contemplated in section 1473 of this title, a trust subsidiary shall not be required to obtain federal deposit insurance. All the outstanding voting shares of the trust subsidiary shall be owned directly, or indirectly through one or more subsidiaries, by a domestic bank holding company or*[, subject to compliance with chapter 56 of this title,]* by a bank holding company having a principal place of business outside the state of Vermont. A trust subsidiary organized as a state chartered bank shall be subject to regular examination and supervision by the commissioner to the same extent as any other bank chartered under Vermont law.

Sec. 12. 8 V.S.A. 2216 is amended to read:

2216. MORTGAGE LENDING; SPECIFIC REQUIREMENTS; EXCEPTIONS

Every licensee engaging in the making of loans secured by a lien against real estate located in this state, whether conducting its affairs as an agent or principal and whether operating from facilities within the state or by mail, telephone or by electronic means, shall comply with the general provisions of this chapter unless exempted herein. A licensee making such loans through a third person, shall only make loans through a person licensed as a mortgage broker under this chapter, unless such third person is exempt from such licensing provisions. Any lender who makes such loans through a third person required to be licensed and not so licensed, in addition to being subject to all applicable penalties under Vermont law, shall be responsible for the acts or omissions of the third person as a principal is responsible for the acts and omissions of its agent. Every licensee making loans secured by a lien against real estate shall comply with sections 1211, 1256, and 1260, and subchapter 6 of chapter 55 of this title, and shall also be subject to the following specific limitations:

* * *

(5) Permitted charges shall be as specified in sections 42, 44 and 46 of Title 9, instead of sections *[2230]* 2231 and *[2232]* 2233 of this title.

Sec. 13. EFFECTIVE DATE

Secs. 7, 8, 9, 10, 11, and this section shall take effect upon passage. Sec. 12 shall take effect and apply retroactively to January 1, 1997. The remaining sections of this act shall take effect on July 1, 1997, and shall affect assessments for fiscal years beginning on and after July 1, 1997, provided that the assessment imposed pursuant to Sec. 2, 8 V.S.A.

504(e), shall take effect on July 1, 1996, and shall apply according to its terms to any bank, savings and loan association, credit union and special purpose trust bank on and after July 1, 1996.

Approved: May 8, 1997