Report Title:

Financial Institutions; Fees

 

Description:

Reduces franchise tax allocation to division of financial institutions. Assesses fees against state-chartered financial institutions to provide supplementary source of revenue to fund division's regulatory costs. (SD1)

THE SENATE

S.B. NO.

2735

TWENTY-FIRST LEGISLATURE, 2002

S.D. 1

STATE OF HAWAII

  

 

A BILL FOR AN ACT

 

RELATING TO FEES PAID TO THE DIVISION OF FINANCIAL INSTITUTIONS.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Chapter 412, Hawaii Revised Statutes, is amended by adding to part I of article 2 a new section to be appropriately designated and to read as follows:

"§412:2- Assessments; collection. (a) The commissioner, in October of each year or as soon thereafter as practicable, shall determine the need for an assessment from each financial institution and financial holding company under the commissioner’s supervision. An assessment shall be made if the division’s portion of the balance in the compliance resolution fund is less than $3,150,000 (a sum equivalent to one and a half times $2,100,000, the division’s budget for the fiscal year 2002—2003). If an assessment is needed, the commissioner shall charge and collect an assessment from each financial institution or financial institution holding company under the commissioner’s supervision. The total amount collected as an assessment under this section shall be an amount equal to the difference between $3,150,000 and the division's portion of the balance in the compliance resolution fund if this portion is less than $3,150,000. If an assessment is needed, the annual assessment for each financial institution and financial holding company shall not exceed the maximum annual assessment as determined under the rate schedules provided below for each type of financial institution. The percentage of the maximum annual assessment that shall be paid by each financial institution may vary annually as provided in subsection (b). The assessment schedule shall be as follows:

(1) For each bank, savings bank, savings and loan association, foreign bank, depository financial services loan company, and out—of—state state financial institution with a branch under the supervision of the commissioner, a maximum annual assessment payable on January 1 of each year, in an amount equal to two times the amount computed upon the financial institution’s total assets shown on its unaudited financial statement as of the preceding June 30, as follows:

MAXIMUM ANNUAL ASSESSMENT FEE

TOTAL ASSETS

(in millions)

ASSESSMENT

Over

But Not Over

This Amount

(in dollars)

Plus

Of Excess Over (in millions)

0

2

0

0.001605718

0

2

20

3,211

0.000200717

2

20

100

6,824

0.000160572

20

100

200

19,670

0.000104372

100

200

1,000

30,107

0.000088314

200

1,000

2,000

100,758

0.000072257

1,000

2,000

6,000

173,015

0.000064230

2,000

6,000

20,000

429,935

0.000054651

6,000

20,000

40,000

1,195,049

0.000050403

20,000

40,000

  

2,203,109

0.000033005

40,000

(2) For each credit union, a maximum annual assessment payable on January 1 of each year, computed upon the credit union's total assets shown on its unaudited financial statement as of the preceding June 30, as follows:

MAXIMUM ANNUAL ASSESSMENT FEE

TOTAL ASSETS (in dollars)

ASSESSMENT

Over

But Not

Over

This Amount

(in

dollars)

Plus

Of Excess Over

(in

dollars)

0

500,000

0

    

500,000

750,000

100

    

750,000

516,617,700

0

0.00022365

  

516,617,700

1,563,277,403

115,541.55

0.00006518

516,617,700

1,563,277,403

  

183,762.83

0.00002175

1,563,277,403

(3) For each financial institution holding company, a minimum annual assessment of $1,000 shall be payable on January 1 of each year; and

(4) For each nondepository financial services loan company, a maximum annual assessment payable on January 1 each year, computed upon the nondepository financial services loan company’s total outstanding loan balances, installment sales contract balances, and lease financing receivable balances shown on its most recent unaudited financial statement filed pursuant to section 412:3-112; provided that:

(A) The minimum annual assessment shall be $1,000 on the first $1,000,000 or less of the amount of the total outstanding loan balances, installment sales contract balances, and lease financing receivable balances less unearned finance charges;

(B) On the balances greater than $1,000,000, the maximum annual assessment shall be 50 cents per $1,000 on the remaining total outstanding loan balances, installment sales contract balances, and lease financing receivable balances less unearned finance charges above the first $1,000,000;

(C) "Total outstanding loan balances, installment sales contract balances, and lease financing receivable balances" means the balances of all loans, installment sales contracts, and lease financing receivables originated in this State and sold, plus the balances of all loans, installment sales contracts, and lease financing receivables acquired and held by the nondepository financial services loan company in this State; and

(D) On the financial statement filed with the commissioner pursuant to section 412:3—112, a nondepository financial services loan company shall report the total outstanding loan balances, total outstanding installment sales contract balances, total lease financing receivable balances, total unearned finance charges, and total balances of loans, installment sales contracts, and lease financing receivables originated in this State and sold within the six-month period covered by the unaudited financial statement.

The commissioner may increase, decrease, or repeal any maximum rate of assessment provided in this section when necessary pursuant to rules adopted in accordance with chapter 91.

(b) Before December 1 of each year, the commissioner shall prescribe by written order the percentage of the maximum annual assessment calculated in the rate schedules in subsection (a) that will be payable on January 1 of that fiscal year. This percentage shall be an amount that when multiplied by the maximum annual assessment results in a total assessment equal to the difference between $3,150,000 and the division’s portion of the balance in the compliance resolution fund if that portion is less than $3,150,000. Reasonable notice of this percentage rate shall be given to all interested parties. No written orders of the commissioner for the purpose of prescribing assessments shall be subject to chapter 91.

(c) On or before December 1 of each year, the commissioner shall send to the affected financial institution or financial institution holding company a statement of the amount of the assessment that will be next due under subsection (a)

(d) For purposes of determining the amount of the assessments on financial institutions that have one or more out-of—state branch offices:

(1) The assets of out-of-state branch offices shall be excluded from total assets; provided that the commissioner may order the assets of out—of—state branch offices to be included in total assets to the extent that it is necessary in the commissioner’s judgment to meet expenses of the division incurred on account of out-of-state branch offices; and

(2) If the commissioner finds that a financial institution allocated any asset to an out—of—state branch office for the purpose, in whole or in part, of reducing its assessment, the commissioner, for purposes of calculating the assessment on the financial institution, may reallocate the asset to the financial institutions s principal office.

(e) A Hawaii financial institution that fails to make a payment required by this section shall be subject to an administrative fine of not more than $250 per day for each day it is in violation of this section. This fine, together with the assessment due under this section, may be recovered pursuant to section 412:2—611 and shall be deposited into the compliance resolution fund established pursuant to section 26-9(o).

(f) All assessments collected by the commissioner under this section shall be deposited in the compliance resolution fund established pursuant to section 26-9(o)."

SECTION 2. Section 241-7, Hawaii Revised Statutes, is amended to read as follows:

"§241-7 Disposition of funds. All taxes collected under this chapter shall be state realizations; provided that, by June 30 of each fiscal year, the sum of [$2,000,000] $1,000,000 shall be deposited with the director of finance to the credit of the compliance resolution fund as established pursuant to section 26—9(o)."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2050.