To update statutory citations in the text and history of the rules, update materials incorporated by reference, revise, clarify or delete language that is outdated, ambiguous, or duplicative of statutory provisions, and ....

 

DEPARTMENT OF FINANCIAL SERVICES

FSC - Financial Institution Regulation

RULE NOS.:RULE TITLES:

69U-120.001List of Stockholders

69U-120.003Stock Options; Requirements for OFR Approval; Stock Bonuses Prohibited

69U-120.004Loans Secured by Secondary Liens on Real Estate

69U-120.005Lease Financing; Purchase of Leases

69U-120.045Minimum Internal Audit Procedures

69U-120.330List of Directors and Officers; Director's Oath

69U-120.670Investments/Deposits in Foreign Banks

PURPOSE AND EFFECT: To update statutory citations in the text and history of the rules, update materials incorporated by reference, revise, clarify or delete language that is outdated, ambiguous, or duplicative of statutory provisions, and to propose new Rule 69U-120.330, F.A.C. to incorporate by reference two new forms to implement section 658.33, F.S., regarding the list of officers and directors elected during the annual shareholder’s meeting and the form for the director’s oath. The proposed rule amendments include those intended to respond to the findings and comments by the Joint Administrative Procedures Committee pursuant to its authority in Joint Rule 4.6 of the Florida Legislature to review existing rules.

SUMMARY: The proposed rules amend Rule 69U-120.001, F.A.C. to delete language that duplicates section 658.16, F.S., regarding good faith reliance on a rule or order of the OFR; Rule 69U-120.003, F.A.C. to remove language that is ambiguous or lacking in delegated authority regarding “foreseeably detrimental” stock option plans, director liability for certain losses, and direct stock bonuses; Rule 69U-120.004, F.A.C. to replace a vague and ambiguous term (“appropriate”) with clear, definite language; Rule 69U-120.005, F.A.C. to update a citation in the introductory paragraph; and Rule 69U-120.045, F.A.C. to delete a reference to an outdated guidebook on auditing standards. The proposed rules also amend Rule 69U-120.670 to delete subsection (1), which duplicates statutory language in section 658.67(11), F.S., delete the definition of “exposure” as a result of the deletion of the portion of the rule that references that term, and update material incorporated by reference (the federal rule on the 20 percent risk weight category in 12 C.F.R. § 324.32(d)(2) applicable to investments in foreign bank deposits). The proposed rules also include new Rule 69U-120.330, F.A.C. to implement section 658.33, F.S., by incorporating by reference proposed forms OFR-U-658-List, List of Directors and Officers, and Form OFR-U-658-Oath, Director’s Oath.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: The Agency completed the SERC analysis and checklist for each proposed rule to determine the need for a SERC. Based on this information at the time of the analysis and pursuant to section 120.541, F.S., the rules will not require legislative ratification.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 655.012(2), 658.33 FS.

LAW IMPLEMENTED: 655.045, 655.057(8), 658.33, 658.34, 658.35, 658.48, 658.67(8), 658.67(11), 665.013(32) FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE SCHEDULED AND ANNOUNCED IN THE FAR.

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Leslie Bryson, Senior Attorney, Division of Financial Institutions, [phone], [e-mail]

 

THE FULL TEXT OF THE PROPOSED RULE IS:

69U-120.001 List of Stockholders.

(1) Within 2 calendar weeks of any demand therefor made by the Office of Financial Regulation (OFR), a state bank or trust company shall file with OFR a list containing the name of each stockholder of the bank or trust company together with the number of shares held by each according to its records as of the close of business on a date specified by OFR.

(2) Action in compliance with any such demand by OFR shall be deemed action in good faith in reliance upon a subsisting order or regulation by OFR and in reliance upon section 655.016, F.S.

 

Rulemaking Authority 655.012(2)(3) FS. Law Implemented 655.057(8) 655.012 FS. History–New 7-31-75, Amended 6-30-81, Formerly 3C-11.15, 3C-11.015, 3C-120.001, Amended          .

 

69U-120.003 Stock Options; Requirements for OFR Approval; Stock Bonuses Prohibited.

(1) through (2) No change.

(3) Any plan which is detrimental or which may be foreseeably detrimental to the bank, its depositors or creditors or which is contrary to safe and sound banking practices may not be approved. OFR shall may not approve any stock option plan where:

(a) No change.

(b) The number of shares subject to the plan is unreasonable in relation to the bank’s capital structure and anticipated growth; or

(c) No change.

(4) The option shall may not be assignable by the optionee, except that the personal representative or legal guardian of the optionee’s estate may have a reasonable time to exercise such option.

(5) The plan or agreement shall not permit board of directors of the bank may be liable to reimburse the bank for any loss sustained by reason of the grant of an option at less than par value or fair market value where such grant would result in a loss to the bank.

(6) The Florida Financial Institutions Code does not authorize stock bonuses; accordingly, direct stock bonuses will not be permitted.

 

Rulemaking Authority 655.012(2)(3) FS. Law Implemented 658.34, 658.35 FS. History–New 2-13-77, Amended 6-30-81, Formerly 3C-11.16, 3C-11.016, Amended 10-29-97, Formerly 3C-120.003, Amended           .

 

69U-120.004 Loans Secured by Secondary Liens on Real Estate.

For computation of total loans to any one borrower, loans secured by secondary liens will be considered unsecured unless the following criteria are met:

(1) No change.

(2) The state bank shall maintain records Appropriate records shall be maintained to fully establish the bank’s equity in the their mortgage at the time the loan is made.

(3) through (4) No change.

Rulemaking Authority 655.012(2) FS. Law Implemented 658.48 FS. (See also 12 U.S.C. 371) History–New 6-13-77, Amended 4-23-78, 6-30-81, Formerly 3C-11.17, 3C-11.017, 3C-120.004, Amended 10-29-12,           .

 

69U-120.005 Lease Financing; Purchase of Leases.

State banks may purchase leases (in addition to those leases where the bank is the owner and lessor) covering specified goods as defined in section 679.1021(1)(rr), 679.105(1)(h), F.S., except the unborn young of animals and growing crops, with or without recourse or guarantee by the lessor, subject to the following conditions:

(1)    through (3) No change.

Rulemaking Authority 655.012(2)(3) FS. Law Implemented 658.48, 658.67(8) FS. History–New 9-26-78, Amended 6-30-81, Formerly 3C-11.19, 3C-11.019, 3C-120.005, Amended            .

 

69U-120.045 Minimum Internal Audit Procedures.

(1) through (3) No change.

(4) To satisfy the requirements of this section, each internal audit shall:

(a) Assess the effectiveness of the financial institution’s internal control policies and procedures, including the electronic data processing function; and,

(b) Be conducted in accordance with generally accepted auditing principles as set forth in the 1996 GAAS Guide and Sshall include an assessment of each of the following areas:

(b)1. through 5. No change.

(5) through (7) No change.

 

Rulemaking Authority 655.012(2)(3) FS. Law Implemented 655.012(3), 655.045 FS. History–New 7-18-74, Amended 1-5-77, 6-30-81, Formerly 3-1.13, 3C-11.13, 3C-11.013, Amended 1-31-96, Formerly 3C-120.045, Amended          .

 

69U-120.330 List of Directors and Officers; Director’s Oath.

(1) Within 30 days following the annual meeting or any other meeting at which directors or officers are elected as provided in section 658.33(3), F.S., each bank or trust company must file with OFR the names and residence addresses of those persons on Form OFR-U-658-List, List of Directors and Officers (effective __/____), incorporated herein by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXXX.

(2) The signed copy of the director’s oath required by section 658.33(4), F.S., shall be completed on Form OFR-U-658-Oath, Director’s Oath (effective __/_____), incorporated herein by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXXX, and filed with OFR within 30 days after election.

(3) Forms shall be filed with OFR by mail or email as follows:

 

Division of Financial Institutions

Office of Financial Regulation

200 East Gaines Street

Tallahassee, Florida 32399-0371

[e-mail]

 

Rulemaking Authority 655.012(2), 658.33(3) FS. Law Implemented 658.33(3)-(4) FS. History—New          .

 

69U-120.670 Investments/Deposits in Foreign Banks.

(1) Sections 658.67(11) and 665.013(34), F.S., provides that the Financial Services Commission may, by rule, approve additional investments for banks, trust companies, or associations.

(1)(2) As used in this rule, “foreign bank” section, the following definitions shall apply:

(a) “Foreign bank” means a person organized under the laws of a foreign country, or of a dependency or insular possession of the United States or a foreign country, which is principally engaged in the business of a commercial bank; recognized as a bank by the appropriate supervisory or monetary authorities of the country of its organization or principal banking operations; receives deposits to a substantial extent in the regular course of business; and has the power to accept demand deposits.

(b) “Exposure” means the potential that an obligation will not be paid timely or in full. Exposure includes credit and liquidity risks, including operational risks, related to intraday and interday transactions. It also includes the same credit risks and country risks as an extension of credit.

(2)(3) State-chartered banks, trust companies, and associations may invest in foreign bank deposits, both demand and time, of the 20 percent risk weight category, as provided in 12 C.F.R. § 324.32(d)(2) (Apr. 13, 2020), which is adopted and incorporated herein by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXXX, Category 2-20% Risk Weight, as defined in the FDIC Rules and Regulations, Part 325, Appendix A, Procedure For Computing Risk-Weighted Assets (effective 1-27-94), up to an aggregate of 25 percent % of the capital of the investing bank, trust company, or association in all foreign banks within a foreign country.

(3)(4) The board of directors of each bank, trust company, or association shall adopt standards and policies for the investment of funds in foreign bank deposits. Such standards and policies shall be reviewed and approved at least annually by the board of directors with the approval recorded in the minutes of the meetings of the board of directors.

(4)(5) At a minimum, the standards and policies shall include:

(a) through (b) No change.

(c) An aggregate limitation on the currency of deposit; and,

(d) No change.

(6) The board of directors shall assure itself that adequate procedures have been implemented to comply with its policy on foreign bank deposits and safeguard the bank, trust company or association against undue exposure.

 

Rulemaking Authority 120.53(1)(b), 655.012(2)(3) FS. Law Implemented 658.67(11), 665.013(32)(34) FS. History–New 11-14-94, Formerly 3C-120.670, Amended           .

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Jeremy W. Smith, Director, Division of Financial Institutions

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Financial Services Commission

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: September 22, 2020

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: August 31, 2020