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The Oregon Administrative Rules contain OARs filed through March 15, 2014
 
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DEPARTMENT OF CONSUMER AND BUSINESS SERVICES,
DIVISION OF FINANCE AND CORPORATE SECURITIES

 

DIVISION 505

BANKING SECTION (IN GENERAL)

441-505-0000 [Renumbered to 441-505-3010]

441-505-0020 [Renumbered to 411-500-0020]

441-505-0030 [Renumbered to 411-500-0030]

441-505-1110

References to Federal Statutes and Regulations

Pursuant to ORS 706.015, references in the Bank Act to Federal statutes and regulations shall be construed to refer to statutes or regulations in effect on June 30, 2007, unless specifically provided otherwise in the Bank Act.

Stat. Auth.: ORS 706.015
Stats. Implemented: ORS 706.015
Hist.: FCS 1-2003, f. & cert. ef. 10-06-03; FCS 6-2007, f. & cert. ef. 10-22-07

441-505-1120

Report of Oregon Deposits

(1) Reporting Unit. This rule applies to:

(a) All Oregon commercial banks and Oregon savings banks;

(b) All non-Oregon institutions and federal banks that hold deposits of the State of Oregon or any political subdivision thereof where the institution or bank meets the requirements of ORS 714.045; and

(c) All insured institutions or trust companies authorized to take deposits in this state or to do trust business in this state that certify under ORS 295.005(2)(c) to the State Treasurer that the insured institutions or trust companies will furnish reports of Oregon deposits.

(2) Report date. A report shall be filed with the Director showing deposits as of June 30 of each year. A report filed electronically with the federal supervisory agency is considered filed with the Director.

(3) Report Form and Contents. A copy of the Summary of Deposits filed with the FDIC shall be used for reporting deposits, provided that:

(a) An Oregon chartered commercial or savings bank shall file its complete Summary of Deposits Report; and

(b) Non-Oregon institutions and federal banks complying with this rule shall provide deposits for each Oregon branch.

(4) The director reserves the right to call for additional deposit reports by Order.

Stat. Auth.: ORS 714.075
Stats. Implemented: ORS 714.075
Hist.: FCS 3-1997(Temp), f. & cert. ef. 10-6-97; FCS 1-1998, f. & cert. ef. 3-31-98, Renumbered from 441-510-0341; FCS 6-2007, f. & cert. ef. 10-22-07

441-505-1130

Call Reports

(1) Reporting Unit. This rule applies to banks, other than federal banks; and extranational institutions engaged in banking business in this state.

(2) Reports Called For. The Director calls for a quarterly report of condition, earnings and dividends.

(3) Report Form and Contents. The report shall be a copy of the Federal Financial Institutions Examination Council report of condition and income form that the institution is required to file with its federal regulator (hereafter "Report").

(a) A reporting unit that submits a hard copy Report to its federal supervisory agency shall concurrently file a copy of the same report with the Director.

(b) A reporting unit that files its Report electronically with the federal supervisory agency shall notify the Director in writing that it makes such electronic filings. Only one notice to the Director is required, unless the reporting unit changes its method of reporting to the respective federal supervisory agency, in which case it shall notify the Director of the change.

Stat. Auth.: ORS 706.630
Stats. Implemented: ORS 706.630
Hist.: FCS 3-1997(Temp), f. & cert. ef. 10-6-97; FCS 1-1998, f. & cert. ef. 3-31-98, Renumbered from 441-510-0342; FCS 6-2007, f. & cert. ef. 10-22-07

441-505-1150

Report of Trust Assets

(1) Reporting Unit. All companies doing trust business in Oregon and all Oregon banks having trust company powers shall file a Report of Fiduciary Activity ("Report") with the Director.

(2) The Report shall be a copy of Schedule RC-T -- Fiduciary and Related Services to the Federal Financial Institutions Examination Council call report form which the institution is required to file with its federal supervisory agency.

(3) The Report shall be filed with the Director with the same frequency and concurrently with the federal filing. Reports filed electronically with the federal supervisory agency are considered filed with the Director. Trust companies not affiliated with a depository institution must file a hard copy of the Report with the Director.

Stat. Auth.: ORS 706.630
Stats. Implemented: ORS 706.630(4)
Hist.: FCS 3-1997(Temp), f. & cert. ef. 10-6-97; FCS 1-1998, f. & cert. ef. 3-31-98, Renumbered from 441-510-0344; FCS 1-2002, f. & cert. ef. 5-23-02; FCS 6-2007, f. & cert. ef. 10-22-07

441-505-1160

Trust Company Financial Statements

(1) All companies doing trust business in Oregon must file with the Director annual financial statements prepared in accordance with generally accepted accounting principles.

(2) The financial statements must be reviewed by an independent accountant. If the company for its own business purposes has audited financial statements prepared, a copy of the audited financial statements may be filed.

(3) The financial statements must be filed no later than 120 days after the end of the company's fiscal year.

(4) A depository institution doing trust business in Oregon is not required to file financial statements for its trust business separate from its annual financial statements filed with the director.

Stat. Auth.: 706.790
Stats. Implemented: 706.630
Hist.: FCS 6-2007, f. & cert. ef. 10-22-07

441-505-2000

Regular Meetings of Banking Institution Board of Directors

(1) For purposes of this rule:

(a) “Regular meeting” means a meeting established by the banking institution’s bylaws or by board resolution that fix the time, date and location of the meeting on a re-occurring basis.

(b) “Special meeting” means a meeting not held on a re-occurring basis and under notice given to the board of directors consistent with the banking institution’s articles of incorporation or the bylaws.

(2) The board of directors of a banking institution shall hold a minimum of four regular meetings during each calendar year. No more than 100 days shall pass between any two regular meetings.

(3) Notwithstanding section (2) of this rule, if the director reasonably believes that the condition of a banking institution warrants additional regular meetings, the director may require the banking institution to hold regular board meetings at a frequency to be determined by the director. The director may also require the institution’s board of directors to convene special meetings as necessary.

Stat. Auth.: ORS 707.670
Stat. Implemented: ORS 707.670
Hist.: FCS 1-2014, f. & cert. ef. 2-12-14

441-505-2020

Exchange of Real Property for Stock

(1) An Oregon commercial bank, trust company or savings bank that applies for permission to accept real property in exchange for stock at the initial formation of capital shall file the following documents with the Director before accepting or committing to accept real property and improvements in exchange for stock:

(a) An appraisal within the scope of licensure of a General Appraiser or Residential Appraiser certified by the Oregon Appraiser Certification and Licensure Board, or like person approved by the Director in the case of real property located outside of this state, that is dated or updated within 30 days of the application, provided there is no material change to the appraised property within the 30 day period;

(b) Commitments or sales of stock for cash received to the date of the application; and

(c) A business plan adopted by the board:

(A) That includes the intended use or disposition of the property within a period that is consistent with the Bank Act for such property; and

(B) That shows a prudent and reasonable business purpose for such an exchange.

(2) The Director shall consider the business plan, capital adequacy, liquidity and management capabilities in determining whether the proposal is prudent and reasonable.

Stat. Auth.: ORS 707.050
Stats. Implemented: ORS 707.050
Hist.: FCS 1-1998, f. & cert. ef. 3-31-1998

441-505-3010

Insurance Activity Report

(1) Applicability.

(a) Except as provided in subsection (b) of this section, this rule applies to:

(A) All Oregon banks, Oregon savings banks and Oregon trust companies that acquire subsidiaries or invest in companies that engage in or intend to engage in insurance agency activities as a licensee under ORS 744.002; and

(B) All bank holding companies that are subject to ORS 715.075.

(b) Any entity described in subsection (a) that received permission from the Director to conduct insurance activities prior to the effective date of this rule is not required to reapply for permission but is required to comply with the reporting requirements in section (4) of this rule.

(2) Application for Permission. Applicant shall file a written request for permission with the Director. The request shall:

(a) Describe the activities to be performed;

(b) Identify the persons who will provide the services, including a description of any arrangement with third party companies;

(c) Provide a business plan for this activity; and

(d) If a subsidiary or investment in a separate insurance agency is involved, additionally describe the details of the transaction including amount to be invested and identity of additional shareholders, if any.

(3) The Director shall issue to the applicant, upon completion of the review, an order granting or denying permission to engage in insurance activities.

(4) Report. All entities engaged in insurance activities under this rule shall file a report with the Director.

(a) The report shall be on the Director's Form, "REPORT OF INSURANCE ACTIVITIES" and shall disclose for the preceding calendar year:

(A) Total number of insurance policies sold;

(B) Insurance policies sold in each class of insurance described in ORS 744.062(1);

(C) Total premium income from insurance policies sold;

(D) Total commission income from insurance policies sold;

(E) Number of annuity policies sold as a replacement of the customer's existing annuity policy;

(F) Number of annuity policies sold under the Internal Revenue Service section 1035 exchange provisions;

(G) Number of annuity policies sold to customers aged 70 years or older; and

(H) Amendments since the last reporting period to the institution's business plan for insurance activity.

(b) The report shall be filed annually no later than March 31 of each year.

Stat. Auth.: ORS 708A.120(7) & 716.594
Stats. Implemented: ORS 708A.120(7) & 716.594
Hist.: FCS 10-1988, f. & cert. ef. 4-18-88; Renumbered from 805-002-0055; Suspended by FCS 3-1997(Temp), f. 10-6-97; FCS 1-1998, f. & cert. ef. 3-31-98, Renumbered from 441-505-0000; FCS 6-2007, f. & cert. ef. 10-22-07

441-505-3020

Property Acquired for or Used for Place of Business; Disposition if Not Used

(1) An institution shall sell or dispose of real property referred to in ORS 708A.175:

(a) Purchased for future location or expansion of its business, if the real estate is not so used within two years after the date of acquisition; or

(b) Formerly used as a place to carry on the business of the institution, if it is not reused for a business purpose within two years after the business use is discontinued.

(2) The Director may grant an extension of the two-year period if justified by an asset utilization plan which is consistent with the institution's business plan.

(3) The Director shall also consider the capital adequacy, liquidity, profitability, cash flow and management capabilities in determining whether the proposal is prudent and reasonable.

Stat. Auth.: ORS 708A.175
Stats. Implemented: ORS 708A.175
Hist.: BB 13, f. & ef. 3-5-76, Renumbered from 805-024-0115; FCS 1-1998, f. & cert. ef. 3-31-98, Renumbered from 441-580-0030; FCS 2-2004, f. & cert. ef. 8-5-04

441-505-3030

Appraisal Required

(1) The carrying (book) value of real estate acquired by an institution pursuant to ORS 708A.175 shall be established by a real property appraisal that is current at the time of such acquisition. An appraisal is current if dated no more than one year prior to the acquisition.

(2) The real property appraisal must be reviewed by appropriate institution officers to determine whether it is a reliable indicator of the value and condition of the real estate acquired and complies with applicable standards for preparation of such appraisals.

(3) If the carrying (book) value of the real estate exceeds the appraised value on acquisition the difference shall be immediately charged off.

(4) ORS 708A.590, as relevant, shall thereafter be followed.

Stat. Auth.: ORS 706.790
Stats. Implemented: ORS 708A.175(3)
Hist.: BB 13, f. & ef. 3-5-76, Renumbered from 805-024-0130; FCS 1-1998, f. & cert. ef. 3-31-98, Renumbered from 441-580-0050; FCS 6-2007, f. & cert. ef. 10-22-07

441-505-3040

Real Estate Sales Contracts

Property sold under a contract of sale shall be carried as Real Estate Sold Under Contract until the contract is paid out or sold.

Stat. Auth.: ORS 706.790
Stats. Implemented: ORS 708A.195
Hist.: BB 13, f. & ef. 3-5-76, Renumbered from 805-024-0140; FCS 1-1998, f. & cert. ef. 3-31-98, Renumbered from 441-580-0060

441-505-3046

Contents of Foreclosure Notices

The sender of a notice form required by 2008 Or Laws, ch. 19, § 20 and as amended by 2009 Or Laws ch. 864, § 1 (Enrolled Senate Bill 628) must enter in the form and format adopted by this rule:

(1) The statewide telephone contact number for handling consumer queries as 855-480-1950;

(2) The telephone number of the Oregon State Bar’s Lawyer Referral Service as 503-684-3763;

(3) The Oregon State Bar’s Lawyer Referral Service toll-free number as 800-452-7636;

(4) The website address of the Oregon State Bar as http://www.osbar.org;

(5) The website address for the organization providing more information and a directory of legal aid programs as http://www.oregonlawhelp.org;

(6) The toll-free consumer mortgage foreclosure information number as 855-480-1950; and

(7) Information on federal loan modification programs as http://www.makinghomeaffordable.gov/.

Stat. Auth.: ORS 86.737
Stats. Implemented: ORS 86.737
Hist.: FCS 9-2008, f. 10-15-08, cert. ef. 10-16-08; FCS 6-2009(Temp), f. 8-21-09 thru 2-17-10; FCS 11-2009, f. 12-2-09, cert. ef. 12-7-09; FCS 13-2011(Temp), f. & cert. ef. 12-15-11 thru 6-12-12; Administrative correction, 6-27-12

441-505-3050

Guidelines for Exceeding Restrictions on Ownership of Real and Personal Property Used in Business

(1) A request for authorization to exceed the limitations of ORS 708A.560 shall contain:

(a) Details of the proposal;

(b) The reasons relied on for exceeding the limitations;

(c) An asset utilization plan which is consistent with the institution's business plan; and

(d) Such additional information required by the Director.

(2) The Director shall also consider the capital adequacy, liquidity, profitability, cash flow and management capabilities in determining whether the proposal is prudent and reasonable.

Stat. Auth.: ORS 708A.560
Stats. Implemented: ORS 708A.560
Hist.: BB 4-1978, f. 7-18-78, ef. 7-20-78; Renumbered from 805-024-0160; FCS 1-1998, f. & cert. ef. 3-31-98, Renumbered from 441-580-0080

441-505-3070

Combining Loans to Separate Borrowers

(1) For purposes of ORS 708A.295, the phrase “obligations in the name of one person for the benefit of another person” shall include the following situations:

(a) When proceeds of an obligation to a borrower are to be used for the direct benefit of the other person, as defined by OAR 441-505-3075, to the extent of the proceeds so used; or

(b) When a common enterprise exists between the borrower and the other person, as defined by OAR 441-505-3080.

(2) For the purposes of calculating if the loans and other obligations of a person to an Oregon commercial bank outstanding at any time exceed 15 percent of the Oregon commercial bank’s capital, the Oregon commercial bank shall include or aggregate obligations meeting the requirements under OAR 441-505-3075 or 441-505-3080 with obligations made to a borrower in the borrower’s individual capacity.

(3) Obligations that are outstanding prior to the effective date of this rule may be renewed or extended as long as no additional funds, other than those funds the Oregon commercial bank agreed to lend prior to the effective date of this rule, are granted to either person in violation of 441-505-3070 to 441-505-3080.

Stat. Auth.: ORS 706.790
Stats. Implemented: ORS 708A.295
Hist.: FCS 4-2009, f. & cert. ef. 8-7-09

441-505-3075

Existence of a Direct Benefit

(1) The amount of money received from an obligation incurred by a borrower will be considered to be for the direct benefit of another person and will be attributed to the other person when the amount of money received is transferred to another person, or the assets purchased with the money received are transferred to another person.

(2) This rule does not apply to bona fide transactions made in good faith where the money received from a loan obligation is used to acquire property, goods, or services.

Stat. Auth.: ORS 706.790
Stats. Implemented: ORS 708A.295
Hist.: FCS 4-2009, f. & cert. ef. 8-7-09

441-505-3080

Existence of a Common Enterprise

A common enterprise will be deemed to exist and obligations of separate borrowers will be aggregated when any of the following occur:

(1) When the expected source of repayment for each obligation is the same for each borrower and neither borrower has another source of income from which the obligation (together with the borrower's other obligations) may be fully repaid. An employer will not be treated as a source of repayment under this paragraph because of wages and salaries paid to an employee, unless the standards of section (2) of this rule are met;

(2) When obligations are incurred:

(a) By borrowers who are related directly or indirectly through common control, including where one borrower is directly or indirectly controlled by another borrower; and

(b) Substantial financial interdependence exists between or among the borrowers. “Substantial financial interdependence” exists when 50 percent or more of one borrower's gross receipts or gross expenditures on an annual basis are derived from transactions with the other borrower. Gross receipts and expenditures include gross revenues/expenses, inter-company loans, dividends, capital contributions, and similar receipts or payments;

(3) When separate persons borrow from a bank to acquire a business enterprise of which those borrowers will own more than 50 percent of the voting securities or voting interests, in which case a common enterprise is deemed to exist between the borrowers for purposes of combining the acquisition loans; or

(4) When the Director determines, based upon an evaluation of the facts and circumstances of particular transactions, that a common enterprise exists.

Stat. Auth.: ORS 706.790
Stats. Implemented: ORS 708A.295
Hist.: FCS 4-2009, f. & cert. ef. 8-7-09

441-505-3085

Lending Limit Rules for Loans to Partnerships

(1) Obligations to a partnership, joint venture, or association are obligations to each member of the partnership, joint venture, or association. This rule does not apply to limited partners in limited partnerships or to members of joint ventures or associations if the partners or members, by the terms of the partnership or membership agreement, are not held generally liable for the obligations or actions of the partnership, joint venture, or association, and those provisions are valid under applicable law.

(2)(a) Obligations to members of a partnership, joint venture, or association are not attributed to the partnership, joint venture, or association unless either OAR 441-505-3075 or 441-505-3080 is met. Both 441-505-3075 and 441-505-3080 are met between a member of a partnership, joint venture or association and such partnership, joint venture or association, when obligations are made to the member to purchase an interest in the partnership, joint venture or association.

(b) Obligations to members of a partnership, joint venture, or association are not attributed to other members of the partnership, joint venture, or association unless either OAR 441-505-3075 or 441-505-3080 are met.

Stat. Auth.: ORS 706.790
Stats. Implemented: ORS 708A.295
Hist.: FCS 4-2009, f. & cert. ef. 8-7-09

441-505-3090

Interest Rate Swap Transactions

(1) An Oregon commercial bank may engage in interest rate swap transactions as intermediary with and on behalf of the bank’s customers and pledge bank assets to secure the transactions if the bank receives prior written approval from the Director of the Department of Consumer and Business Services and the following conditions are met to the director’s satisfaction:

(a) The bank demonstrates to the director that it has the requisite knowledge and expertise to effectively analyze and engage in such transactions;

(b) The bank’s board of directors has considered and adopted specific written polices and procedures governing such transactions, including but not limited to risk limits; and

(2) The aggregate risk exposure, at any time, to each counterparty shall not exceed the bank’s legal lending limit.

Stat. Auth.: ORS 706.790
Stats. Implemented: ORS 706.795
Hist.: FCS 5-2012(Temp), f. 8-7-12, cert. ef. 8-8-12 thru 2-4-13; FCS 2-2013, f. & cert. ef. 1-23-13

441-505-4010

Exemption for Banking Institutions

(1) An exemption is created under ORS 709.030(4) from the trust company certificate of authority and deposit requirements for:

(a) A non-Oregon institution or extranational institution when the entities are involved in any activity described in section (2) of this rule; and

(b) A non-Oregon institution or extranational institution that indirectly engages in any activity covered in subsection (2) of this rule because of its beneficial interest in a pool of notes secured by real estate mortgages or trust deeds.

(2) The exemption applies to:

(a) The taking, acquiring, holding and enforcement of notes secured by real estate mortgages or trust deeds or making commitments to purchase such notes;

(b) The foreclosing of mortgages and trust deeds in the courts of this state, acquiring the mortgaged property, holding and operating the property for a period not exceeding five years or disposal of the property.

Stat. Auth.: ORS 709.030(4)(g)
Stats. Implemented: ORS 709.030(4)(g)
Hist.: FCS 1-1998, f. & cert ef. 3-31-98; FCS 6-2007, f. & cert. ef. 10-22-07; FCS 9-2009, f. 9-15-09, cert. ef. 9-25-09

441-505-4020

Exemption for Out of State Trust Company

An exemption from the trust company certificate of authority and deposit requirements is created under ORS 709.030(4) for an out-of-state trust company that:

(1) Has no office in this state;

(2) Is regulated in its home state by an authority comparable to the Division of Finance and Corporate Securities; and

(3) Does not engage in soliciting trust business in Oregon.

Stat. Auth.: ORS 709.030(4)(g)
Stats. Implemented: ORS 709.030(4)(g)
Hist.: FCS 1-1998, f. & cert ef. 3-31-98; FCS 6-2007, f. & cert. ef. 10-22-07

441-505-4030

Trust Company Exemption; Court Appointed Fiduciaries

(1) As authorized by ORS 709.030(4)(g), an exemption from trust company certificate of authority requirements under 709.005(1) is hereby created for any person appointed as a personal representative, trustee or conservator by a court of competent jurisdiction, provided that the court requires the person to post a bond suitable to the size of the estate for which the appointment is made.

(2) As authorized by ORS 709.030(4)(g), an exemption from trust company certificate of authority requirements under 709.005(1) is hereby created for any person appointed as a Personal Representative, as defined in 111.005, or as a Special Administrator as described in 113.005, by a court of competent jurisdiction.

Stat. Auth.: ORS 706.795 & 709.030
Stats. Implemented: ORS 708A.535 & 709.030
Hist.: FCS 3-2002, f. & cert. ef. 10-25-02; FCS 6-2007, f. & cert. ef. 10-22-07

441-505-6010

Deposits Required by Extranational Institutions

(1) The deposit required to be posted by extranational institutions under ORS 713.025(2) shall be:

(a) Five percent of the total liability of each office in this state to Oregon based depositors, plus all acceptances, but excluding accrued expenses and amounts due to and other liabilities of offices, branches, agencies and subsidiaries of the extranational institution; and

(b) An additional $2,500,000 for the protection of depositors and the public interest.

(2) The requirements of subsection (1)(a) shall be adjusted quarterly by the institution with notice to the Director, based on growth or loss of Oregon based deposits for the ending quarter, provided the amount of change is in excess of $25,000.

Stat. Auth.: ORS 713.025
Stats. Implemented: ORS 713.025(2)
Hist.: FCS 1-1998, f. & cert ef. 3-31-98

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