808 KAR 1:160reg. Fees for services rendered to banks and trust companies

      Section 1. Definitions. (1) "Applicant" means a person or institution submitting a written application, plan, or notice pursuant to KRS Chapter 286.3.

      (2) "Commissioner" is defined by KRS 286.3-010(7).

      (3) "Department" is defined by KRS 286.3-010(8).

      (4) "Extraordinary services performed" means:

      (a) Review of a request for approval of a change of control made pursuant to KRS 286.3-095(1) unless the request was made concurrently with an application made pursuant to KRS 286.3-905; or

      (b) A special examination.

      (5) "Institution" means an institution that is subject to examination pursuant to KRS 286.3-450 or KRS 286.3-530.

      (6) "Special examination" means:

      (a) An abbreviated on-site review conducted in conjunction with a formal or informal enforcement action to determine an institution’s progress in achieving compliance with laws or administrative regulations or to address unsafe and unsound banking practices;

      (b) An off-site review of progress reports submitted by an institution to the commissioner in conjunction with a formal or informal enforcement action; or

      (c) A second examination conducted within the twenty-four (24) month timeframe set forth in KRS 286.3-450(1) that results from an institution failing to comply with laws or administrative regulations relating to banks or trust companies or from an institution engaging in unsafe and unsound banking practices.

 

      Section 2. Fees. An applicant or institution shall pay the department a fee for the services identified in the following table:

Service	Fee
Review of application submitted pursuant to KRS 286.3-020	$5,000, plus the hourly fee established in Section 3 of this administrative regulation for each examiner that conducts an investigation of the applicant.
Review of application submitted pursuant to KRS 286.3-135	$5,000, plus the hourly fee established in Section 3 of this administrative regulation for each examiner that conducts an investigation of the applicant.
Review of plan submitted pursuant to KRS 286.3-172	$5,000, plus the hourly fee established in Section 3 of this administrative regulation for each examiner that conducts an investigation of the applicant.
Review of amendments submitted pursuant to KRS 286.3-050(4) if at least one (1) amendment is being made pursuant to KRS 286.3-140(1)	$1,000
Review of amendments submitted pursuant to KRS 286.3-050(4) unless at least one (1) amendment is being made pursuant to KRS 286.3-140(1)	$250
Review of application required pursuant to KRS 286.3-180 unless the application is being made concurrently with an application required pursuant to KRS 286.3-920(2)	$500
Review of application required pursuant to KRS 286.3-820	$500
Review of application required pursuant to KRS 286.3-920(2) or 286.3-920(3) unless the application is being made concurrently with an application required pursuant to KRS 286.3-905	$2,500
Review of notice required pursuant to KRS 286.3-145(4)	$500
Review of notice required pursuant to KRS 286.3-145(5) or 286.3-146(4)	$1,000
Review of application required pursuant to KRS 286.3-185	$500
Examination conducted pursuant to KRS 286.3-480(1)(c)	The hourly fee established in Section 3 of this administrative regulation for each examiner that conducts the examination.
Extraordinary services performed	The hourly fee established in Section 3 of this administrative regulation for each examiner that conducts the review or special examination.

 

      Section 3. Hourly Fee. The hourly fee shall be fifty-five (55) dollars per hour.

 

      Section 4. Payment Terms. (1) Except for hourly fees, a fee shall be paid by the applicant at the time a written application, plan, or notice is made.

      (2) An hourly fee shall be paid within thirty (30) days of the date a fee invoice is mailed to the applicant or institution.

      (3) Except for clerical errors, a fee paid pursuant to this administrative regulation shall be nonrefundable.

 

CHARLES A. VICE, Commissioner

DAVID A. DICKERSON, Secretary

      APPROVED BY AGENCY: July 13, 2016

      FILED WITH LRC: July 14, 2016 at 9 a.m.

      PUBLIC HEARING AND PUBLIC COMMENT PERIOD: A public hearing on this administrative regulation shall be held on August 22, 2016, at 10:00 a.m., in the Department of Financial Institutions, 1025 Capital Center Drive, Suite 200, Frankfort, Kentucky 40601. Individuals interested in being heard at this hearing shall notify this agency in writing no later than five (5) working days prior to the hearing of their intent to attend. If no notification of intent to attend the hearing is received by that date, the hearing may be canceled. The hearing is open to the public. Any person who wishes to be heard will be given an opportunity to comment on the proposed administrative regulation. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments on the proposed administrative regulation. Written comments shall be accepted through the end of the calendar day, 11:59 p.m., August 31, 2016. Send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation by the above date to the contact person:

      CONTACT PERSON: Jessica R. Sharpe, General Counsel, Department of Financial Institutions, 1025 Capital Center Drive, Suite 200, Frankfort, Kentucky 40601, phone [phone], fax [phone], email [e-mail].

 

REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT

 

Contact Person: Jessica R. Sharpe

      (1) Provide a brief summary of:

      (a) What this administrative regulation does: This administrative regulation establishes fees for services rendered by the Department of Financial Institutions to banks and trust companies.

      (b) The necessity of this administrative regulation: This regulation is needed to comply with the statutes directing the commissioner to be paid fees for services rendered to banks and trust companies.

      (c) How this administrative regulation conforms to the content of the authorizing statutes: KRS 286.1-020(1) provides that the commissioner may promulgate administrative regulations as are necessary to interpret and carry out the provisions and intent of Chapter 286. KRS 286.3-145(4)(c) and KRS 286.3-145(5)(c) provide that a Kentucky state trust company shall pay a filing fee prescribed by the commissioner to establish or acquire and maintain a trust office or trust representative office in Kentucky or in a state other than Kentucky. KRS 286.3-146(4)(a)(3) provides that an out-of-state trust company shall pay a filing fee prescribed by the commissioner to establish or acquire and maintain a trust office or trust representative office in Kentucky. KRS 286.3-480(1)(a) provides that the commissioner shall be paid a fee by banks and trust companies for the investigation incident to the approval of articles of incorporation, applications for branch banks and loan production offices, and applications to relocate a main or branch office which is sufficient to cover the cost of investigation based upon fair compensation for time and actual expense. KRS 286.3-480(1)(c) provides that the commissioner shall be paid a fee by an institution for the examination of the assets held by the institution in a fiduciary capacity which is sufficient to cover the cost of the examination based upon fair compensation for time and actual expense. KRS 286.3-480(1)(d) provides that the commissioner shall be paid for extraordinary services performed for an institution upon the basis of fair compensation for time and actual expense.

      (d) How this administrative regulation currently assists or will assist in the effective administration of the statutes: This regulation assists in the effective administration of the statutes by providing fees to offset the cost to the Department of rendering services to banks and trust companies.

      (2) If this is an amendment to an existing administrative regulation, provide a brief summary of:

      (a) How the amendment will change this existing administrative regulation: This is a new regulation.

      (b) The necessity of the amendment to this regulation: This is a new regulation.

      (c) How the amendment conforms to the content of the authorizing statute: This is a new regulation.

      (d) How the amendment will assist in the effective administration of the statutes: This is a new regulation.

      (3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation: This regulation will affect trust companies and banks that are chartered in Kentucky. There are approximately five (5) trust companies that are chartered in Kentucky, and approximately 134 banks that are chartered in Kentucky. This regulation will affect applicants making an application for a Kentucky charter. There has been one (1) applicant for a Kentucky charter in the past two years. This regulation will also affect in-state and out-of-state banks seeking to establish or operate branches pursuant to an interstate merger transaction. The Department reviewed approximately one interstate merger transaction in each of the past two years. This regulation will affect out-of-state trust companies seeking to establish or acquire a trust office or trust representative office in Kentucky. There are approximately four (4) out-of-state trust companies that have established a trust office or trust representative office in Kentucky. Finally, this regulation could affect out-of-state bank branches and trust company offices that are subject to examination by the commissioner. There have been no examinations of such branches or offices in the past two years.

      (4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:

      (a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment: The new regulation will require these entities to pay the fee established for services rendered by the Department pursuant to KRS 286.3-145, 286.3-146, and 286.3-480.

      (b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3): The entities will have to pay the fee established by this regulation each time the entity is rendered the services specified by KRS 286.3-145, 286.3-146, and 286.3-480.

      (c) As a result of compliance, what benefits will accrue to the entities identified in question (3): The regulation will ensure that the Department is vested with sufficient resources and expertise to provide the services specified by KRS 286.3-145, 286.3-146, and 286.3-480 to banks and trust companies.

      (5) Provide an estimate of how much it will cost to implement this administrative regulation:

      (a) Initially: No cost anticipated.

      (b) On a continuing basis: No cost anticipated.

      (6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation: Funds generated from the fees prescribed by this regulation are anticipated to cover the cost of services provided.

      (7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment: It is anticipated that an increase in fees or funding will not be necessary to implement this administrative regulation.

      (8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees: This regulation establishes fees for services that are provided to banks and trust companies pursuant to KRS 286.3-145, 286.3-146, and 286.3-480.

      (9) TIERING: Is tiering applied? Yes. The filing fee for both in-state and out-of-state trust companies to obtain an office in a state other than the trust company’s chartering state is $1,000, while the filing fee for in-state trust companies to obtain an office in Kentucky is $500. These fees are tiered because the Department is required by KRS 286.3-146 and most out-of-state trust laws to engage in additional reciprocity analysis to approve requests for trust companies to obtain an office in a state other than the trust company’s chartering state. Tiering is also applied to the review of branch applications. A fee of $500 applies to requests to approve branches not established in accordance with an interstate merger transaction and a fee of $2,500 applies to applications to approve branches established pursuant to an interstate merger transaction. A higher fee is assessed for branches established pursuant to an interstate merger transaction because the Department is required by KRS 286.3-920 to engage in the additional review of an application and accompanying documentation and to ensure that additional statutory requirements are met. Tiering is also applied to the review of requests for approval to amend a bank’s articles of incorporation. A fee of $1,000 applies to a request for approval to amend a bank’s articles of incorporation pursuant to KRS 286.3-140(1) and a fee of $250 applies to a request for approval to amend a bank’s articles of incorporation for any other purpose. A higher fee is established for the amendment of articles pursuant to KRS 286.3-140(1) because the Department is required to engage in additional evaluation of factors set forth in KRS 286.3-020, which is generally not required for requests made for any other purpose.

 

FISCAL NOTE ON STATE OR LOCAL GOVERNMENT

 

      1. What units, parts or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation? The Kentucky Department of Financial Institutions will be impacted by this administrative regulation.

      2. Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation. The statutory authority for this administrative regulation is found in KRS 286.1-020(1), KRS 286.3-145, KRS 286.3-146, and KRS 286.3-480.

      3. Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.

      (a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year? This administrative regulation is estimated to generate revenue in the first full year of approximately $187,190 to $407,840.

      (b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years? Revenues from this administrative regulation are expected to remain within the range of $187,190 to $407,840 in subsequent years.

      (c) How much will it cost to administer this program for the first year? For the first year, it is estimated that the cost of the services provided pursuant to KRS 286.3-145, 286.3-146, and 286.3-480 is within the range of $187,190 to $407,840.

      (d) How much will it cost to administer this program for subsequent years? It is anticipated that the cost to administer this program in subsequent years will remain within the range of $187,190 to $407,840.

      Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.

      Revenues (+/-): See above.

      Expenditures (+/-): See above.

      Other Explanation: None.

Notation

      RELATES TO: KRS 286.3-010, 286.3-020, 286.3-050, 286.3-095, 286.3-135, 286.3-140, 286.3-145, 286.3-146, 286.3-170, 286.3-172, 286.3-174, 286.3-180, 286.3-185, 286.3-450, 286.3-480, 286.3-530, 286.3-820, 286.3-920

      STATUTORY AUTHORITY: KRS 286.1-020(1), 286.3-145, 286.3-146, 286.3-480

      NECESSITY, FUNCTION, AND CONFORMITY: KRS 286.1-020(1) authorizes the commissioner to promulgate administrative regulations to interpret and carry out the provisions and intent of KRS Chapter 286. KRS 286.3-145 and 286.3-146 provide for fees that shall be paid to establish or acquire and maintain a trust office or trust representative office. KRS 286.3-480 provides for fees that shall be paid for various services that are rendered by the commissioner. This administrative regulation establishes the fees for these services.