Chapter 30 Oregon Laws 1999

Session Law

AN ACT

SB 26

Relating to out-of-state financial institutions; creating new provisions; and amending ORS 713.025.

Be It Enacted by the People of the State of Oregon:

SECTION 1. Section 2 of this 1999 Act is added to and made a part of ORS chapter 316.

SECTION 2. (1) As used in this section:

(a) "Extranational institution" has the meaning given that term in ORS 706.008;

(b) "Foreign association" means a foreign association as defined in ORS 722.004 or a federal association as defined in ORS 722.004, the home state of which is a state other than Oregon; and

(c) "Out-of-state bank" has the meaning given that term in ORS 706.008.

(2) Except as provided in this section and section 4 of this 1999 Act, an out-of-state bank, extranational institution or foreign association described in section 4 of this 1999 Act, that engages in activities authorized under section 4 of this 1999 Act, is not subject to any tax, license fee or charge for the privilege of doing business in this state or to any tax measured by net or gross income.

(3) If the out-of-state bank, extranational institution or foreign association acquires any property given as security for a mortgage or trust deed, all income accruing to the out-of-state bank, extranational institution or foreign association solely from the ownership, sale or other disposition of such property is subject to taxation in the same manner and on the same basis as income of corporations doing business in this state.

SECTION 3. Section 4 of this 1999 Act is added to and made a part of ORS chapter 713.

SECTION 4. (1) For purposes of this section, "foreign association" means a foreign association as defined in ORS 722.004 or a federal association as defined in ORS 722.004, the home state of which is a state other than Oregon.

(2) Subject to subsection (3) of this section, any out-of-state bank, extranational institution or foreign association, without being authorized to transact banking business or savings and loan business in this state, may take, acquire, hold and enforce notes secured by mortgages or trust deeds and make commitments to purchase such notes. The out-of-state bank, extranational institution or foreign association may foreclose the mortgages or trust deeds in the courts of this state, acquire the mortgaged property, hold, own and operate the property for a period not exceeding five years and dispose of the property. The activities authorized under this subsection by an out-of-state bank, extranational institution or foreign association shall not constitute transacting business in this state for the purposes of ORS chapter 60.

(3) Before an out-of-state bank, extranational institution or foreign association engages in any of the activities described in subsection (2) of this section, the bank, institution or association shall first file with the Department of Consumer and Business Services a statement signed by its president, secretary, treasurer or general manager indicating that the bank, institution or association designates the Director of the Department of Consumer and Business Services its attorney for service of process. The out-of-state bank, extranational institution or foreign association shall pay an initial filing fee of $200 and an annual fee of $200. The statement shall include the address of the principal place of business of the out-of-state bank, extranational institution or foreign association.

(4) The Director of the Department of Consumer and Business Services, upon receiving service of process as authorized by subsection (3) of this section, immediately shall forward all documents served upon the director to the principal place of business of the out-of-state bank, extranational institution or foreign association.

(5) The filing requirements of subsection (3) of this section do not apply to an out-of-state bank or extranational institution that has obtained a certificate of authority to transact banking business in this state under ORS 713.020, or to a foreign association that has obtained a certificate of authority to transact savings and loan business in this state under ORS 722.502. Notwithstanding subsection (3) of this section, such an out-of-state bank, extranational institution or foreign association may take, acquire, hold and enforce notes secured by mortgages or trust deeds, make commitments to purchase such notes and participate with other lenders authorized to do business in this state in the making of loans for which such notes are executed and delivered.

(6) An out-of-state bank, extranational institution or foreign association that indirectly engages in the activities described in subsection (2) of this section because of its beneficial interest in a pool of notes secured by mortgages or trust deeds need not comply with subsection (3) of this section.

SECTION 5. ORS 713.025 is amended to read:

713.025. (1) Except as provided in subsection (4) of this section and section 4 of this 1999 Act, every extranational institution with one or more offices in this state shall deposit with the Director of the Department of Consumer and Business Services in an office located in this state of another bank approved by the director under an agreement satisfactory to the director for the protection of depositors of the extranational institution, free and clear of all other liens and encumbrances, assets in an amount set forth in subsection (2) of this section of the following types:

(a) Cash;

(b) Interest-bearing bonds, notes or obligations of the United States, including those of its agencies and instrumentalities, or bonds, notes or obligations for which the faith of the United States is pledged for the payment of the principal and interest;

(c) Bonds or other obligations of the State of Oregon, any county of this state or any incorporated city, town or school or port district of this state having a population of not less than 2,000 as shown by the last federal census, or bonds of any other state, any county, incorporated city, town or school or port district therein having a population of not less than 25,000, as shown by the last federal census, if:

(A) The bonds or obligations are issued in compliance with the constitution and laws of the applicable state;

(B) The bonds or obligations are general obligations of the state, city, town or school or port district issuing the bonds; and

(C) There has been no default in payment of either principal or interest on any of the general obligations of the state, county, incorporated city, town or school or port district for a period of five years preceding the date of the deposit;

(d) A surety bond issued by a surety company authorized to transact business in this state and in a form approved by the director, under which the principal and surety indemnify the depositors and creditors of the extranational institution against loss due to nonpayment by the extranational institution, including by reason of the failure of the extranational institution;

(e) An irrevocable letter of credit issued by an insured institution, as defined in ORS 706.008, satisfactory to the director; or

(f) Any combination of cash, securities complying with subsection (1)(b) and (c) of this section, surety bonds complying with subsection (1)(d) of this section, and letters of credit complying with subsection (1)(e) of this section.

(2) The market value of the assets deposited pursuant to subsection (1) of this section shall be not less than:

(a) Five percent of the total liabilities of the office including acceptances, but excluding accrued expenses and amounts due to and other liabilities of offices, branches, agencies and subsidiaries of the extranational institution; or

(b) Such other amount as the director may determine to be necessary for the protection of depositors and the public interest.

(3) The director shall determine the value of the assets maintained for the purposes of this section and shall value marketable securities according to accepted principles of accounting.

(4) The deposit requirements of subsection (1) of this section shall not apply to an office of an extranational institution that is an insured branch as defined in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 1813(s)).

SECTION 6. (1) Sections 2 and 4 of this 1999 Act and the amendments to ORS 713.025 by section 5 of this 1999 Act apply to activities occurring on or after the effective date of this 1999 Act.

(2) Notwithstanding subsection (1) of this section, section 2 (2) of this 1999 Act applies to tax years beginning on and after January 1, 1997.

Approved by the Governor April 16, 1999

Filed in the office of Secretary of State April 19, 1999

Effective date October 23, 1999

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