BANKS AND BANKING AND SAVINGS AND LOAN ASSOCIATIONS ‑- SUPERVISORS ‑- AUTHORITY TO INCLUDE SHARE OF GENERAL OVERHEAD IN FIXING AMOUNT OF INVESTIGATION FEES

BANKS AND BANKING AND SAVINGS AND LOAN ASSOCIATIONS ‑- SUPERVISORS ‑- AUTHORITY TO INCLUDE SHARE OF GENERAL OVERHEAD IN FIXING AMOUNT OF INVESTIGATION FEES.

Supervisor of Banking Division may apportion share of overhead expenses relating to the examination of banks, Industrial Loan Companies, and Small Loan licenses to the "actual cost" of such examinations.  Such expense must relate to the examination made and total annual examination fees charges Small Loan Licensees may not exceed $150.

Supervisor of Division of Savings and Loan Associations may not charge Savings and Loan Associations for examinations, but may charge credit unions with their proper share of general overhead expenses of his division for their examination and supervision.

                                                                   - - - - - - - - - - - - -

                                                                February 14, 1951

Honorable Roderick A. Lindsay
Washington State Senator
Fourth District
Olympia, Washington                                                                                                Cite as:  AGO 49-51 No. 447

Dear Sir:

            You have requested our opinion as to the extent of authority of the Supervisor of the Division of Banking and of the Division of Savings and Loan Associations to include general overhead and operating expenses in their fees and charges for investigating and examining financial organizations under their respective regulation and control.

            Our conclusions are that:

            1. The Supervisor of the Division of Banking may include in his charge for examining banks, industrial loan companies, and small loan licensees under his supervision, such proportion of the general overhead and operating expenses of his division as may reasonably be determined to be connected with the making and processing of such examinations, but the total annual charge for examining a small loan licensee may not exceed One Hundred Fifty Dollars ($150.00).

             [[Orig. Op. Page 2]]

            2. The Supervisor of the Division of Savings and Loan Associations is not authorized to make any charge in addition to the annual license fees prescribed by statute, for his examination of savings and loan associations.  He may include in his charges against credit unions under his regulation, a proportion of the general overhead and operating expenses of his division reasonably connected with the examination and general supervision of such credit unions.

                                                                     ANALYSIS

            The provisions of Rem. Rev. Stat., section 3215 are:

            "The Supervisor shall collect from each bank, mutual savings bank, trust company, or industrial loan companiesfor each examination of itscondition the actual estimated cost of such examination."

            In an opinion rendered by this office to the Supervisor of Banking under date of August 1, 1929, and confirmed by a supplemental opinion rendered under date of February 7, 1930, we advised that these provisions of the statute authorized the inclusion of a portion of office overhead, in the supervisor's examination fee.  It was pointed out in those opinions, however, that any such item included in the fee must be connected with the examination involved and that the entire cost of operating the supervisor's division could not be distributed over such fees.  We adhere to the previous opinions of this office in this connection inasmuch as the fee which the statute permits the supervisor to charge relates to the examination only, and not to the general operation of the banking division.

            Under the schedule of fees set up under Rem. Rev. Stat., section 3219, the Supervisor of Banking is authorized to charge a fee for the cost of investigating an application for a charter, such fee to be not less than One Hundred Dollars ($100.00).  In this instance also, it is our opinion that the Supervisor of Banking may include in the cost of the investigation a proper proportion of the overhead and operating expenses of his division.

            Section 10 of the Small Loan Act, chapter 208, Laws of 1941 (8371-10, Rem. Supp., 1941) requires the Supervisor of the Division of Banking to make an examination of each licensee at least once each year and provides that "* * * the actual cost of every examination shall be paid to the supervisor by every licensee so examined:  Provided, however, that the actual cost of examining  [[Orig. Op. Page 3]] each licensed place of business shall not exceed the sum of One Hundred Fifty Dollars ($150.00) annually."  Here too, we believe that the fee charged may properly include a proportion of the overhead and operating expenses of the division related to the cost of the examination so long as the total annual fee for each licensee does not exceed One Hundred Fifty Dollars ($150.00).

            In connection with the supervisor's investigation of applications for licenses under the Small Loan Act, section 3 of the act prescribes a flat fee of Fifty Dollars ($50.00).

            As to industrial loan companies, the Supervisor of Banking is authorized under Rem. Rev. Stat. 3862-3, to charge for the cost of investigating an application for a certificate of authority to do business in an amount of not less than One Hundred Dollars ($100.00).  Under Rem. Rev. Stat., section 3862-15, the Supervisor is directed to make investigations of the condition of industrial loan companies at least once a year and to make such other or partial examinations as he deems necessary.  Rem. Rev. Stat., section 3862-16 authorizes charges for the cost of such complete and partial examinations in amounts of not less than Fifty Dollars ($50.00) and Twenty Five Dollars ($25.00) respectively.  In our opinion, such charges may properly include a proportion of general overhead expenses properly assigned to the cost of the examinations.

            Under section 7 of "The Savings and Loan Association Act of 1945", chapter 235, Laws of 1945 (section 3717-126, Rem. Supp. 1945), a flat fee of One Hundred Dollars ($100.00) is provided for in the investigation made by the Supervisor of the Division of the Savings and Loan Associations in connection with applications for charters.  Section 77 of the Act (section 3717-196, Rem. Supp. 1945) provides a schedule of annual license fees.  Section 79 (section 3717-198, Rem. Supp. 1945) provides that:

            "The fees herein provided for shall be in lieu of all other corporation fees, licenses, or excises for the purpose of doing business."

            Although section 95 (e) of the Act (section 3717-214 (e) Rem. Supp. 1945) requires the Supervisor to examine each association at least once a year, the Act makes no provision for an additional fee for such an examination.

             [[Orig. Op. Page 4]]

            Under section 26, chapter 131, Laws of 1943, as amended by section 5, chapter 213, Laws of 1947 (3923-26 Rem. Supp. 1947) the Supervisor of the Division of Savings and Loan Associations is required to examine into the affairs of each credit union at least once each year.  It is further provided that:

            "* * * the actual cost of examination and supervision shall be paid by the Credit Union examined * * *" (Emphasis supplied).

            Inasmuch as the charge to be made includes the cost of "supervision", it would appear that with respect to credit unions, the supervisor is authorized to include in the fees such proportion of general overhead and operating expenses as relate not only to the particular examination involved, but also to the general supervisory activities of his division pertaining to credit unions.

            In view of the absence of any statutory guide to be followed in determining the amount of general expense to be allocated in any particular instance where such allocation is permissible, the Supervisor in each instance must exercise his sound discretion in apportioning general operating and overhead expenses to the fee involved.

Very truly yours,

SMITH TROY
Attorney General

FRED L. HARLOCKER
Assistant Attorney General