Utah Administrative Code

The Utah Administrative Code is the body of all effective administrative rules as compiled and organized by the Division of Administrative Rules (see Subsection 63G-3-102(5); see also Sections 63G-3-701 and 702).

NOTE: For a list of rules that have been made effective since October 1, 2019, please see the codification segue page.

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R333. Financial Institutions, Banks.

Rule R333-12. Investment by State-Chartered Banks in Real Property Other Than Bank Premises.

As in effect on October 1, 2019

Table of Contents

R333-12-1. Authority, Scope, and Purpose.

(1) This rule is issued pursuant to Sections 7-1-301 and 7-3-18.

(2) This rule applies to all banks chartered by the State of Utah.

(3) The purpose of this rule is to authorize state-chartered banks with sufficient capital to invest in real property other than bank premises and prescribe requirements and restrictions to govern such activities.

R333-12-2. Definitions.

(1) An "Affiliate" of a bank means any corporation, business trust, association, or other similar organization:

(a) of which the bank, directly or indirectly, owns or controls either a majority of the voting shares or more than 50% of the number of shares voted for the election of its directors, trustees, or other persons exercising similar functions at the preceding election, or controls in any manner the election of a majority of its directors, trustees, or other persons exercising similar functions; or

(b) of which control is held, directly or indirectly, through stock ownership or in any other manner, by the shareholders of the bank who own or control either a majority of the shares of the bank or more than 50% of the number of shares voted for the election of directors of the bank at the preceding election, or by trustees for the benefit of the shareholders of the bank; or

(c) of which a majority of its directors, trustees, or other persons exercising similar functions are directors of the bank; or

(d) which owns or controls, directly or indirectly, either a majority of the shares of capital stock of the bank or more than 50% of the number of shares voted for the election of directors of the bank at the preceding election, or controls in any manner the election of a majority of the directors of the bank, or for the benefit of whose shareholders or members all or substantially all of the capital stock of the bank is held by trustees.

(2) "Bank premises" means real property recorded as an asset on a bank's books or otherwise held by a bank which is used in the conduct of the bank's business, including leasehold improvements and capital leases of real property. It also includes real property acquired and held for future banking use where the minutes of the board of directors show the bank in good faith intends to utilize such property in the conduct of the bank's business within three years.

(3) "Capital stock" means the sum of

(a) the par value of all shares of the bank having a par value that have been issued,

(b) the amount of the consideration received by the bank for all shares of the bank without par value that have been issued, except such part of the consideration therefor as may have been allocated to capital surplus in a manner permitted by law, and

(c) such amounts not included in Subsections (a) and (b) as have been transferred to stated capital of the bank, whether upon the issue of shares as a share dividend or otherwise, minus all reductions from such sums as have been effected in a manner permitted by law.

(4) "Principal stockholder" means a person who owns 5% or more of any class of stock of a bank, any parent, or any affiliate thereof.

(5) "Surplus" means the total of

(a) the amount paid to the bank in excess of the par value of its capital stock, or, in the case of stock without par value, the amount designated as surplus of the total amount received for its capital stock,

(b) amounts received as capital contributions, and

(c) amounts transferred to the capital surplus account from undivided profits.

(6) "Total capital" means the sum of capital stock, surplus, undivided profits, reserve for contingencies, reserve for loan losses, and subordinated notes and debentures with more than one year maturity.

R333-12-3. Investment in Real Estate.

(1) A bank, directly or through a subsidiary, may invest an amount not exceeding 10 percent of the bank's capital stock and surplus in real property or in an entity organized to acquire interests in real property, for the purpose of producing income, for inventory and sale, or other development thereof, and may hold, sell, lease, operate, and otherwise exercise the rights it acquires in any such property if:

(a) the bank has total capital equal to at least 8% of its total assets as of the date the investment is made;

(b) no officer, director, employee, principal stockholder or affiliate has any interest in any property or entity in which the bank invests; and

(c) no officer, director, employee, principal stockholder or affiliate receives any compensation for arranging or effecting the investment by the bank.

(2) The limitations established in Subsection (1) do not apply to real property which the bank may acquire and hold:

(a) in satisfaction of debts previously contracted;

(b) at sales to foreclose liens or other security interests claimed by the bank in the properties acquired; and

(c) current and former bank premises and property originally acquired for future use as bank premises.

KEY

banks and banking, real estate investment

Date of Enactment or Last Substantive Amendment

1995

Notice of Continuation

September 22, 2017

Authorizing, Implemented, or Interpreted Law

7-1-301; 7-3-18


Additional Information

Contact

For questions regarding the content or application of rules under Title R333, please contact the promulgating agency (Financial Institutions, Banks). A list of agencies with links to their homepages is available at http://www.utah.gov/government/agencylist.html or from http://www.rules.utah.gov/contact/agencycontacts.htm.