21.8094.01000
Sixty-seventh
Legislative Assembly SENATE BILL NO. 2101
of North Dakota
Introduced by
Industry, Business and Labor Committee
(At the request of the Department of Financial Institutions)
1 A BILL for an Act to create and enact section 6-06-14.1 of the North Dakota Century Code,
2 relating to credit union loans; to amend and reenact subsection 3 of section 6-01-01.1, sections
3 6-01-04.3, 6-01-09, and 6-01-17, subsection 1 of section 6-03-05, sections 6-03-11, 6-03-13.3,
4 and 6-03-15.1, subsection 1 of section 6-03-47.2, sections 6-03-49.1, 6-05-15.4, and 6-06-06,
5 subsection 4 of section 6-06-08, and sections 6-06-11 and 6-08-08.1 of the North Dakota
6 Century Code, relating to the regulatory fund, assessment of civil money penalties, appointment
7 of receivers, supervision and examinations, assessments, real estate loans, bank mergers,
8 bank branches, bank investments, trust branches, credit union powers, credit union board
9 notice, and sale or purchase of banking institutions or holding companies; to repeal section
10 6-06-14 of the North Dakota Century Code, relating to credit union loans; and to provide a
11 penalty.
12 BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
13 SECTION 1. AMENDMENT. Subsection 3 of section 6-01-01.1 of the North Dakota Century
14 Code is amended and reenacted as follows:
15 3. Any cash balance in the financial institutions regulatory fund after all current biennium
16 expenditures are met must be carried forward in the financial institutions regulatory
17 fund for the next succeeding biennium. The balance in this fund at the end of the
18 current biennium, excluding fees collected for use in the next succeeding biennium,
19 may not exceed twenty percent of the department's next succeeding biennial budget.
20 SECTION 2. AMENDMENT. Section 6-01-04.3 of the North Dakota Century Code is
21 amended and reenacted as follows:
22 6-01-04.3. Assessment of civil money penalties.
23 1. The commissioner or the board may assess a civil money penalty against a financial
24 institution, financial corporation, or credit union, or an officer, director, employee,
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1 agent, or person participating in the conduct of the affairs of the financial corporation,
2 financial institution, or credit union upon finding one or more of the following:
3 a. Failure to comply with a permanent or temporary cease and desist order that has
4 been voluntarily consented to or issued pursuant to section 6-01-04.2;
5 b. Failure to comply with a final order that has been voluntarily consented to or
6 issued following formal proceedings under chapter 28-32;
7 c. Payment of dividends in violation of section 6-03-36;
8 d. Loans and leases to one borrower or concern which exceed the limitations set
9 forth in sections 6-03-59 and 6-03-59.1;
10 e. Loans to directors, officers, and employees in violation of section 6-03-60;
11 f. The intentional filing of inaccurate or misleading call reports required by section
12 6-03-70 or 6-06-08;
13 g. Violations of loan limitations under subsection 1 of section 6-06-12 or North
14 Dakota Administrative Code section 13-03-16-03, 13-03-16-05, or
15 13-03-16-08title 12, chapter 7, Code of Federal Regulations, subchapter A,
16 part 723, as amended February 5, 2019;
17 h. Loans in violation of section 6-06-14 or subsection 2 of section 13-03-16-02 of
18 the North Dakota Administrative Code or subsection 2 of section 13-03-16-05 of
19 the North Dakota Administrative Code6-06-14.1; or
20 i. Failure to file notice of change of control under section 6-08-08.1.
21 2. The commissioner or the board commences administrative proceedings to assess civil
22 money penalties by serving a complaint on the respondent stating the factual basis for
23 the commissioner's or board's belief that a violation has occurred and the amount of
24 civil penalties that the complaint seeks to impose. The complaint must contain a notice
25 of an opportunity for an administrative hearing conducted under chapter 28-32. The
26 date for the hearing must be set not less than thirty days after the date the complaint is
27 served upon the respondent. If assessment of civil money penalties are proposed
28 based on conditions described in subdivisions c through i of subsection 1, a complaint
29 may not be filed unless the respondent has been provided with prior orders,
30 examination reports, or other written communications, and has willfully refused to take
31 corrective action that the respondent was capable of taking at the time.
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1 3. If the respondent fails to answer the complaint within twenty days of its service, the
2 commissioner or board may enter an order imposing civil money penalties upon the
3 respondent. If a hearing is held and the board concludes that the record so warrants,
4 the board may enter an order imposing civil money penalties upon the respondent.
5 The assessment order is effective and enforceable immediately upon service or upon
6 a date specified in the order, and remains effective and enforceable until it is stayed,
7 modified, terminated, or set aside by action of the board or a reviewing court.
8 4. In determining the amount of civil penalty imposed, the commissioner or board shall
9 consider whether good faith was exercised, and the gravity of the violation and any
10 previous violations. The commissioner or board may not impose a civil money penalty
11 in excess of fiveone hundred thousand dollars for each occurrence and one
12 hundredthousand dollars per day for each day that the violation continues after service
13 of an order. Any civil money penalties collected under this section must be paid to the
14 department of financial institutions and deposited in the financial institutions regulatory
15 fund.
16 SECTION 3. AMENDMENT. Section 6-01-09 of the North Dakota Century Code is amended
17 and reenacted as follows:
18 6-01-09. Supervision and examination by commissioner of financial institutions.
19 The commissioner shall exercise a constant supervision over the business affairs of all
20 financial corporations, financial institutions, and credit unions, including all out-of-state branches
21 of financial corporations, financial institutions, and credit unions. Either the commissioner or one
22 or more examiners shall visitexamine each financial institution at least once each thirty-six
23 months to examine itsassess the affairs of the institution and ascertain itsthe institution's
24 financial condition. The commissioner shall inspect and verify the assets and liabilities of the
25 institution and branches to ascertain with reasonable certainty that the value of the assets and
26 the amounts of the liabilities are correctly carried on its books. The commissioner shall examine
27 the validity of mortgages held by savings institutions and shall see that all of the mortgages are
28 properly recorded. The commissioner shall investigate the method of operation and conduct of
29 the corporations and institutions and their systems of accounting to ascertain whether the
30 methods conform to the law and sound banking usage and principles. The commissioner shall
31 inquire into and report any infringement of the laws governing those corporations and
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1 institutions, and for that purpose the commissioner may examine the officers, agents, and
2 employees of the corporations and institutions and all persons doing business therewith. The
3 commissioner may examine, or cause to be examined, or review the books and records of any
4 subsidiary corporation of a bank or credit union service organization of a credit union under the
5 commissioner's supervision and may require the bank to provide information on the holding
6 company that owns the bank. The commissioner may also examine, or cause to be examined,
7 or review the books and records of any technology service provider that provides services to
8 financial corporations, credit unions, and financial institutions under the commissioner's
9 supervision, to evaluate that entity's risk management systems and controls and compliance
10 with applicable laws that affect such services provided to financial corporations, credit unions,
11 and financial institutions. The commissioner shall report the condition of the corporations and
12 institutions, together with the commissioner's recommendations or suggestions in connection
13 therewith, to the state banking board, state credit union board, or both, and the boardboards
14 may take such action as the exigencies may demand.
15 SECTION 4. AMENDMENT. Section 6-01-17 of the North Dakota Century Code is amended
16 and reenacted as follows:
17 6-01-17. Yearly assessmentSemiannual assessments of banks and interstate
18 branches.
19 Every state banking association and banking institution under the jurisdiction and control of
20 the commissioner and the commissioner's deputy examiners by this title, including the Bank of
21 North Dakota and every branch of an out-of-state state bank, shall pay a yearly
22 assessmentsemiannual assessment. This assessment is to be determined by the state banking
23 board as necessary to fund that portion of the department's budget relating to the regulation of
24 state-chartered banks and branches of out-of-state state banks, including the authority to enter
25 into cooperative fee sharing agreements and assessment of associated travel costs with other
26 state bank supervisors. Assessment fees may not be computed on the combined assets of the
27 bank and its trust department for those banks and branches exercising trust powers. Fees for
28 the examination of thea trust department must be computed in accordance with section
29 6-05-28. The assessment must be paid to the department of financial institutions within thirty
30 days of each June thirtieth and December thirty-first. Institutions and branches that have not
31 been examined by the commissioner or the state banking board for three years prior to any
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1 assessment date shall not be required to pay the assessment. If any such corporation or
2 institution or branch is delinquent more than twenty days in making such payment, the board
3 may make an order suspending the functionsmay seek other administrative remedies of such
4 delinquent corporation, institution, or branch until payment of the amount due. The
5 commissioner may assess a penalty of five dollarsone percent of the outstanding assessment
6 fee for each day that the assessment fee is delinquent. All fees and penalties under this section
7 must be deposited with the state treasurer and deposited in the financial institutions regulatory
8 fund.
9 SECTION 5. AMENDMENT. Subsection 1 of section 6-03-05 of the North Dakota Century
10 Code is amended and reenacted as follows:
11 1. Before any real estate loan equal to or more than twofour hundred fifty thousand
12 dollars is made, an appraisal must be conducted by a licensed or certified appraiser if
13 required by the federal Financial Reform, Recovery, and Enforcement Act of 1989
14 [Pub. L. 101-73; 103 Stat. 512; 12 U.S.C. 3332 et seq.].
15 SECTION 6. AMENDMENT. Section 6-03-11 of the North Dakota Century Code is amended
16 and reenacted as follows:
17 6-03-11. Conversion, consolidation, or merger.
18 Any two or more banking institutions upon making application to the commissioner or the
19 state banking board may consolidate or merge if authorized by the commissioner or board into
20 one banking institution under the charter of either existing banking institution on such terms and
21 conditions as lawfully may be agreed upon by a majority of the board of directors of each
22 banking institution proposing to consolidate or merge subject to rules adopted by the state
23 banking board. Before becoming final, such consolidation or merger must be ratified and
24 confirmed by the vote of the shareholders of each such banking institution owning at least
25 two-thirds of its capital stock outstanding at a meeting to be held on the call of the directors.
26 Notice of such meeting and of the purpose thereof must be given to each shareholder of record
27 by registered or certified mail at least ten days prior to the meeting. The shareholders may
28 unanimously waive such notice and may consent to such meeting and consolidation or merger
29 in writing. The capital stock and surplus of such consolidated banking institution must not be
30 less than that required under this title for the organization of a banking institution of the class of
31 the largest consolidating banking institution. Immediately after the consolidation or merger a full
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1 report thereof, including a statement of the assets and liabilities of the consolidated banking
2 institution, must be made to the commissioner by the surviving banking institution. Any banking
3 institution may without approval by any state authority convert into or merge or consolidate with
4 a national banking association as provided by federal law. A national bank proposing to merge
5 into a state-chartered bank shall grant the commissioner discretionary authority to conduct an
6 examination. The commissioner shall set fees for such examination at an hourly rate sufficient
7 to cover all reasonable expenses of the department of financial institutions associated with the
8 examination. Fees must be collected by the commissioner and deposited in the financial
9 institutions regulatory fund.
10 SECTION 7. AMENDMENT. Section 6-03-13.3 of the North Dakota Century Code is
11 amended and reenacted as follows:
12 6-03-13.3. Facts considered for approval.
13 1. Whenever any bank desires to maintain and operate a facility separate and apart from
14 its banking house, pursuant to section 6-03-13.1, or to move a facility previously
15 established to another location, it shall apply to the commissioner or the comptroller of
16 the currency, as the case may be, for such authority and provide the commissioner
17 with such relevant information as the commissioner may reasonably request. In
18 determining whether to approve the application for such facility, the commissioner
19 shall take into consideration the following facts:
20 1. a. The convenience, needs, and welfare of the people of the community and area
21 served.; and
22 2. b. The financial strength of the bank in relation to the cost of establishing and
23 maintaining such separate facility.
24 3. Whether other banks will be seriously injured by the approval of the application.
25 When considering an application for relocating an existing facility to another location within
26 the same corporate city limits, the commissioner may consider only subsection 2 as a factor for
27 approval.
28 2. Upon approval by the commissioner or state banking board of a merger application
29 under section 6-03-11, the former main office and facilities of the banking institutions
30 being merged will become facilities of the surviving banking institution and the banking
31 institution is not required to file an application under this section.
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1 3. If the commissioner's decision with respect to an application is unfavorable, the
2 applicant bank may appeal the decision to the state banking board by filing a notice of
3 appeal with the commissioner within twenty days after the commissioner has notified
4 the applicant bank of the decision.
5 If an interested party files a protest with respect to an application, the matter will be referred
6 to and decided by the state banking board.
7 SECTION 8. AMENDMENT. Section 6-03-15.1 of the North Dakota Century Code is
8 amended and reenacted as follows:
9 6-03-15.1. Temporary relocation of bank operations.
10 In the event of an emergency or other temporary relocation, a bank may apply toshall notify
11 the commissioner to relocate its main banking house or facility until the former location is
12 repaired to allow bank operations to resume. No notice or public hearing need be held to act
13 upon the temporary relocation request. The bank shall give the commissioner notice of the
14 bank's decision to relocate promptly and in any case within three days in the event of an
15 emergency, and at least thirty days prior for other temporary relocations. The notice must
16 describe the bank's actions and the expected duration of the bank's relocation. Unless extended
17 by the commissioner, a bank's authority to change the bank's location under this section may
18 not exceed sixty days. Notice