reglab/statecodes huggingface dataset:
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:8-101 Definitions.

§412:8-101 Definitions.
In this article:
"Client" means a customer of a trust company, including without limitation a settlor or beneficiary with a vested interest, the grantor of a power, or the principal in an agency relationship. When context permits, both the settlor and the beneficiary may be clients at the same time.
"Nondepository trust company" means a type of trust company that is not authorized to accept deposits.
"Trust company" means a Hawaii financial institution which has been permitted to use the term "trust company" as part of its name, or a subsidiary, trust division or department of a bank that is a Hawaii financial institution, which engages primarily in the business of acting as a trustee, personal representative, guardian, agent, and other fiduciary, either by court appointment or by agreement.
"Trust holding company" means a financial institution holding company, other than a bank or a bank holding company which controls a trust company or another trust holding company. A bank which is authorized to engage in the business of a trust company through a subsidiary, division or department of the bank is not a trust holding company if its trust business is solely through such subsidiary, division or department. [L 1993, c 350, pt of §1; am L 2021, c 105, §4]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:8-102 Necessity for trust company charter.

§412:8-102
Necessity for trust company charter.
No person shall engage in the business of a trust company in this State or control any other person engaging in the business of a trust company in this State, except through a trust company incorporated in this State and chartered under this part or through a trust division, department, or subsidiary of a bank, pursuant to article 5. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:8-103 Authority to serve as trustee

§412:8-103 Authority to serve as trustee
. Unless chartered as a trust company under this chapter or otherwise specifically authorized by the laws of this State, no person shall hold itself out to the general public as being available to serve as a trustee or trust company, whether or not for compensation. No person shall use the term "trust company" as part of its name unless chartered as a trust company pursuant to this chapter. [L 1993, c 350, pt of §1; am L 2008, c 196, §6]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:8-200 General powers.

§412:8-200 General powers.
(a) Except as expressly prohibited or limited by this chapter, a trust company shall have the fiduciary powers specified in section 412:8-201, such powers as are granted to trustees generally by law, such other powers usual and incidental to the business of a trust company, and all rights, powers and privileges of a corporation organized under the laws of this State including but not limited to the power to:
(1) Borrow money from any source within or without the State; provided that a trust company shall not pledge or encumber any client assets for the purpose of borrowing money for its own account or benefit;
(2) Enter into repurchase agreements; and
(3) Make investments as permitted under this article.
(b) Except as otherwise expressly authorized by this chapter, a trust company shall not:
(1) Issue bills of exchange or letters of credit;
(2) Discount commercial paper;
(3) Solicit, accept, or hold deposits;
(4) Engage in a general banking, savings bank, or savings and loan association business;
(5) Engage in any business for which a real estate broker's license is required, in any business for which an insurance producer license is required, or in any business of a securities broker or dealer; and
(6) Make any loans or extensions of credit to any person; except, a trust company may:
(A) Make loans to its affiliates not exceeding in the aggregate amount twenty per cent of the trust company's capital and surplus;
(B) Make loans to its clients for the sole purpose of preventing overdrafts in the client's account or accounts or securing repayment of overdrafts in the client's account or accounts. A trust company may charge interest on such advances, subject to chapter 478. A trust company shall have a lien on the assets in the client's account or accounts for the amount of the advance or credit and interest; and
(C) Pay or advance premiums due and owing by any person to an insurance company, before the payment by the person; provided that the total amount of the payments and advances at any one time for the benefit of any one person shall not exceed two per cent of the capital and surplus of the trust company, and for the benefit of all such persons shall not exceed fifteen per cent of the capital and surplus of the trust company. [L 1993, c 350, pt of §1; am L 1995, c 56, §1; am L 2003, c 212, §12]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:8-201 Fiduciary powers.

§412:8-201 Fiduciary powers.
Every trust company shall have the power and authority to serve as a trustee, personal representative, conservator, assignee for the benefit of others, or receiver, subject to the duties imposed by the instrument or by law. As used herein, the term "instrument" means any trust agreement, declaration, or other agreement, any valid will, or any court order or decree in any probate, guardianship, conservatorship, or receivership. Pursuant thereto, a trust company is authorized and empowered to exercise powers as provided by law, including but not limited to:
(1) Perform such acts as may be prudent, consistent with, and reasonably necessary to carry out the legitimate purposes of the instrument;
(2) Administer, fulfill, and discharge all lawful duties imposed by the instrument or by law, for such remuneration as may be agreed upon or provided by law;
(3) Acquire principal and income on behalf of the estate administered by the trust company, including without limitation real property, insurance proceeds, rents, interest, dividends, mortgages, bonds, bills, notes, and securities;
(4) Buy, sell, issue, negotiate, register, transfer, or countersign certificates of stock, bonds, or other obligations of any corporation, association, or municipality;
(5) Lease, purchase, hold, and convey real and personal property to the extent authorized by the instrument or by law, or consistent with the purposes thereof; and
(6) Execute and issue on behalf of the estate any documents necessary to the prudent administration thereof, including without limitation any receipts, certificates, papers, and contracts which shall be signed by an appropriate trust officer designated by the trust company. [L 1993, c 350, pt of §1; am L 2004, c 161, §36; am L 2006, c 228, §41]
Cross References
Uniform Fiduciaries Act, see chapter 556.
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:8-202 Acting as agent.

§412:8-202 Acting as agent.
(a) A trust company may act as an agent on behalf of a principal in the transaction of any business or in the management of any property, real, personal or mixed, with such powers as the trust company may exercise under sections 412:8-200, 412:8-201, and 412:8-500; provided that its duties as agent and the terms and conditions of the agency or power are set forth either specifically or generally in a written memorandum signed by the principal.
(b) Every trust company undertaking or continuing to act as agent for any principal pursuant to this section shall mail or deliver to the principal or any authorized representative of the principal at stated intervals, not less frequently than once a year, and at the termination of the agency, a written statement of account setting forth:
(1) All receipts and disbursements since the inception of the agency or the last previous account rendered under this paragraph, as the case may be, in such detail as will identify all properties purchased or sold during the period;
(2) The credit or debit balance, as the case may be, as of the final date of the accounting period; and
(3) A complete inventory of all properties, whether real, personal, or mixed, title to or custody or safekeeping of which is then held by the trust company for the account of the principal. The account shall contain such segregation of principal and income as the principal in writing specifically requires.
(c) Unless previously barred by adjudication, consent or limitation, any claim against an agent for breach of fiduciary duty in connection with the agency relationship is barred as to any principal to whom the agent has mailed or delivered an annual or final accounting fully disclosing the matter in question unless a proceeding to assert the claim is commenced within two years after the annual or final accounting has been mailed or delivered to the principal. In any event and notwithstanding lack of full disclosure, an agent who has mailed or delivered an annual or final accounting to the principal and has informed the principal of the location and availability of records for the principal's examination is protected after three years from the date such accounting was mailed or delivered.
(d) Every trust company shall have on hand at all times in actual money of the United States an amount equal to at least twelve per cent of all agency credit balances payable on demand and of accounts payable, plus at least five per cent of all agency credit balances payable on time; provided that such reserve may be deposited payable on demand in banks and other trust companies approved by the commissioner or may be cash in the vaults of the trust company.
(e) The requirements of this section shall not apply to occasional or isolated acts performed under special instructions or at the special request of a principal who is not a general or regular client of the trust company. [L 1993, c 350, pt of §1; am L 2021, c 105, §5]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:8-203 Use of nominees.

§412:8-203
Use of nominees.
A trust company acting in a fiduciary or agency capacity, and any fiduciary acting as a co-fiduciary with a trust company, may cause any stock, bond, or other security held in such capacity to be registered or held in the name of a nominee or nominees of the trust company or in the name of the trust company, without disclosing such fiduciary or agency capacity unless expressly otherwise provided by the instrument creating the fiduciary or agency relationship; provided, that the trust company:
(1) Shall permit the nominee to have possession of or access to the stock, bond, or other security;
(2) Shall clearly show on its records the name of the nominee and that the security is held by such person; and
(3) Shall be responsible for any loss resulting from the act of the nominee. No liability for any loss occasioned by the acts of the trust company or its nominee or nominees, with respect to any stock, bond, or other security so registered or held, shall be imposed upon any corporation the stock, bond, or other security of which is registered in the name of the trust company or the nominee or nominees, or upon the transfer agent or registrar of the corporation. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:8-204 Agreement between trust companies and banks.

§412:8-204
Agreement between trust companies and banks.
A trust company granted full trust powers may contract by written agreement with any bank or national banking association to carry on trust services in the bank's or national banking association's name and for its account at one or more of the banking offices of a bank or national banking association. A bank may permit by written agreement any trust company having its principal office in this State and exercising full trust powers to carry on trust services at one or more of its banking offices but in the name and for the account of the trust company. Any agreement provided for in this section, including any lease, or modification or extension thereof, shall not be effective as to any trust company until and unless it is approved in writing by the commissioner. The commissioner may approve or disapprove the agreement upon consideration of the sufficiency of the capital and surplus of the trust company and the bank, the need for trust services and other facts or circumstances which the commissioner may deem appropriate. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:8-300 Applicability of part.

§412:8-300 Applicability of part.
This part sets forth the requirements and restrictions for investments made by all trust companies. No trust company shall invest its assets except as may be permitted by this part and as may be provided elsewhere in this chapter. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:8-400 General requirements.

Cross References
Uniform Fiduciaries Act, see chapter 556.
§412:8-400 General requirements.
Within the limits of the standard of a prudent investor, a trust company as fiduciary, custodian, agent, personal representative, or otherwise may acquire and retain every kind of property, real, personal, or mixed and every kind of investment, including without limitation bonds, debentures, and other corporate obligations, and corporate stocks, preferred or common, and securities of any open-end or closed-end management type investment company or unit investment trust registered under the federal Investment Company Act of 1940, as from time to time amended, and may retain property properly acquired without limitation as to time and without regard to its suitability for original purchase. Notwithstanding any other law, and unless expressly prohibited by the governing instrument, a trust company may invest fiduciary funds and other funds over which it has investment discretion in the securities of an investment company or trust to which the trust company, or an affiliate of the trust company, is providing services as investment advisor, sponsor, distributor, custodian, transfer agent, registrar, or otherwise, and is receiving reasonable remuneration for the services. Nothing herein shall authorize a departure from or variation of, the express terms or limitations set forth in the instrument creating the fiduciary relationship, but the terms "legal investment" or "authorized investment", or words of similar import, means any investment conforming to the foregoing standard. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:8-401 Trust funds awaiting investment.

§412:8-401
Trust funds awaiting investment.
(a) Except as may be otherwise provided by the terms of the trust, a trust company holding trust funds awaiting investment, distribution, or other use shall place any funds in excess of $100 or an amount equal to the aggregate sum it holds in trust in an interest-bearing account within a reasonable time and such interest shall be credited to the account of the trust whose funds are awaiting investment, distribution, or other use.
(b) This section shall not apply to funds held by the trust company as personal representative or guardian.
(c) The trust company shall be accountable for no other interest on such funds except as required by this section.
(d) Nothing in this section shall relieve the trust company from the obligation to invest all funds held in trust by it as required by law or the terms of the trust instrument. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:8-402 Common trust fund investments.

§412:8-402 Common trust fund investments.
(a) As used in this chapter the term "common trust funds" shall have the same meaning as under section 584 of the Internal Revenue Code of 1986, as the same may be hereafter amended, and shall also include any other type of collective investment fund which is exempt from federal income taxation under any other provision or regulation of the Code, or rule issued by the Internal Revenue Service or Department of Treasury.
(b) A trust company may establish one or more common trust funds for the collective investment and reinvestment of moneys contributed thereto by it as fiduciary, and by it and others as co-fiduciaries; and the trust company and its co-fiduciaries may invest funds held as trustee, guardian, or in any other fiduciary capacity in which it or they shall be authorized to invest funds, in any common trust fund, if the investment is not expressly forbidden by the instrument, decree, or order creating the fiduciary relationship. Common trust funds may be invested and reinvested in those investments in which trust companies are authorized to invest trust funds.
(c) The statutes, rules, regulations, interpretations or court decisions governing common trust funds of national banking associations, as they may be amended from time to time, shall also govern common trust funds of a trust company. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:8-403 Disclosure of fees.

§412:8-403 Disclosure of fees.
All fees and commissions charged by a trust company to its clients or the manner by which fees and commissions shall be determined shall be disclosed in writing prior to rendering the services for which the fees or commissions are charged. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:8-500 Powers and duties.

§412:8-500 Powers and duties.
(a) Unless otherwise prohibited or restricted by this section or any other law, a nondepository trust company shall have the general powers specified in section 412:8-200.
(b) Notwithstanding any other provision in this chapter, a nondepository trust company shall not:
(1) Solicit, accept, or hold deposits;
(2) Engage in banking business;
(3) Engage in business for which a real estate broker's license is required;
(4) Engage in any business for which an insurance producer license is required; or
(5) Engage in any business of a securities broker or dealer.
(c) A nondepository trust company shall not itself perform, and instead shall contract for, the following services for its clients, if needed:
(1) Financial advisors for client investments;
(2) Property management for client rental properties; or
(3) Real estate brokerages for client real estate transactions.
(d) A nondepository trust company shall be responsible for the performance of the service providers that it engages for its clients. [L 2021, c 105, §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-100 Definitions.

§412:9-100 Definitions.
In this article:
"Consumer loan" means a loan made to a natural person primarily for personal, family, or household purposes:
(1) In which the principal amount does not exceed $25,000 or in which there is an express written commitment to extend credit in a principal amount not exceeding $25,000; or
(2) Which is secured by real property, or by personal property used or expected to be used as the borrower's principal dwelling.
"Depository financial services loan company" means a financial services loan company that is authorized to accept deposits by this chapter and whose deposits are insured by the Federal Deposit Insurance Corporation.
"Financial services loan company" means a corporation which is engaged in making loans where the interest charged, contracted for or received is in excess of rates permitted by law other than this article. No person may use the term financial services loan company or hold itself out as engaging in the business of a financial services loan company unless licensed or authorized in accordance with this chapter. Financial services loan companies were previously known as "industrial loan companies".
"Nondepository financial services loan company" means a financial services loan company that is not authorized to accept deposits.
"Open-end credit" means a loan by a financial services loan company under a plan which:
(1) The financial services loan company reasonably contemplates repeated transactions;
(2) The financial services loan company may impose a finance charge from time to time on an outstanding unpaid balance; and
(3) The amount of credit that may be extended to the borrower during the term of the plan (up to any limit set by the financial services loan company) is generally made available to the extent that any outstanding balance is repaid.
"Principal" or "principal amount" means the face amount of the note or other form of contract.
"Service corporation" means a corporation whose stock is owned entirely by one or more depository financial services loan companies. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-101 Necessity for financial services loan company license.

§412:9-101 Necessity for financial services loan company license.
Except as expressly permitted by federal law or this chapter, no person shall engage in any activity for which a license to operate as a financial services loan company is required by this chapter, including without limitation, making loans and extensions of credit where the interest charged, contracted for, or received is in excess of rates permitted by law other than this article, the use of the term "financial services loan company", or the exercise of such other powers or privileges restricted to financial services loan companies under applicable law unless it is a corporation incorporated in this State and has such a license; provided that a nondepository financial services loan company shall not be required to be incorporated in this State. [L 1993, c 350, pt of §1; am L 1996, c 63, §6; am L 2002, c 40, §32]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-103 Display of license.

§412:9-103 Display of license.
Every financial services loan company shall display a copy of its principal office license in a conspicuous place at its principal office and shall display a copy of a branch office license in a conspicuous place at the branch office designated on the branch office license. [L 2008, c 196, §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-200 General powers.

§412:9-200 General powers.
Except as expressly prohibited or limited by this chapter, a financial services loan company shall have the power to make loans where the interest charged, contracted for, or received is in excess of rates permitted by law, other than this article, and to engage in other activities that are usual or incidental to the business for which it is licensed, and shall have all rights, powers, and privileges of a corporation organized under the laws of this State, including but not limited to, the power to:
(1) Make loans and extensions of credit of any kind, whether unsecured or secured by real or personal property of any kind or description;
(2) Borrow money from any source within or without this State;
(3) Charge or retain a fee for the originating, selling, brokering, or servicing of loans and extensions of credit;
(4) Discount, purchase, or acquire loans, including but not limited to notes, credit sales contracts, mortgage loans, or other instruments;
(5) Become the legal or beneficial owner of tangible personal property and fixtures and such other real property interests as shall be incidental thereto, to lease such property, to obtain an assignment of a lessor's interest in a lease of the property, and to incur obligations incidental to the financial services loan company's position as the legal or beneficial owner and the lessor of the property;
(6) Sell or refer credit related insurance products, and collect premiums or fees for the sale or referral thereof, including, but not limited to, credit life insurance, credit disability insurance, accident, and health or sickness insurance, involuntary unemployment insurance, personal property insurance, and mortgage protection insurance;
(7) Make investments as permitted under this article;
(8) Charge to a borrower a returned check fee if a check that has been tendered by the borrower in payment on account of a loan is returned unpaid; provided that:
(A) The fee shall not exceed $20;
(B) The fee shall be imposed under a separate billing, and shall not be added to a borrower's outstanding loan balance nor deducted from a loan payment; and
(C) A failure to pay the fee shall not constitute a default under any outstanding loan agreement between the borrower and the financial services loan company; and
(9) Charge to a borrower a "below minimum draft fee" of $10 per draft for the processing costs involved on a draft written below the minimum amount established on an open-ended loan. [L 1993, c 350, pt of §1; am L 1995, c 26, §1; am L 2005, c 38, §1; am L 2013, c 172, §8]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-201 Powers that require regulatory approval.

§412:9-201 Powers that require regulatory approval.
(a) A financial services loan company may sell or refer the following products and services and collect premiums or fees for the sale or referral thereof only after obtaining the approval of the commissioner:
(1) Accidental death and dismemberment insurance, whether or not connected with a loan, provided that the purchase of this insurance must be voluntary and not required as a condition of a loan. The approval of the insurance commissioner must also be obtained prior to the sale of any insurance product; and
(2) Auto club memberships and home and automobile security plans, whether or not connected with a loan and extension of credit, provided that the purchase of any such service or product must be voluntary and not required as a condition of a loan.
(b) In approving any request to sell or refer the products and services in subsection (a), the commissioner may impose such conditions and restrictions that are in the public interest.
(c) A financial services loan company may issue standby letters of credit only after obtaining the written approval of the commissioner. In approving any request to issue standby letters of credit pursuant to this subsection, the commissioner may impose conditions and restrictions that are in the public interest. Any depository financial services loan company issuing standby letters of credit shall include those standby letters of credit with all other loans and extensions of credit for the purpose of calculating the limit on loans and extensions of credit to one borrower under section 412:9-404. Any nondepository financial services loan company issuing standby letters of credit shall report the aggregate amount of their standby letters of credit outstanding under MEMORANDA - Total Standby Letters of Credit Outstanding, on their financial statements submitted to the commissioner pursuant to section 412:3-112. The aggregate amount of the standby letters of credit outstanding shall not exceed twenty per cent of a nondepository financial services loan company's capital and surplus. Standby letters of credit issued by a nondepository financial services loan company shall not be used for consumer loan transactions. The issuing nondepository financial services loan company shall identify itself as a nondepository financial services loan company in the standby letter of credit. [L 1993, c 350, pt of §1; am L 1996, c 9, §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-202 Prohibitions.

§412:9-202 Prohibitions.
Except as otherwise expressly authorized by this chapter, a financial services loan company shall not:
(1) Employ its funds, directly or indirectly, in trade or commerce by buying or selling ordinary goods, chattels, wares, and merchandise, or by owning or operating industrial or manufacturing plants of any kind;
(2) Issue commercial letters of credit;
(3) Sell real estate, securities, or insurance; or
(4) Engage in any activity requiring a charter as a trust company under article 8. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-300 General requirements for loans and extensions of credit.

§412:9-300 General requirements for loans and extensions of credit.
A financial services loan company shall make loans and extensions of credit that are consistent with prudent lending practices, and in compliance with all applicable federal and state laws. [L 1993, c 350, pt of §1]
Cross References
Credit sale contracts, finance charges on, see §476-28.
Foreign lender, exclusion, see §207-11.
Secured transactions, Uniform Commercial Code, see §490:9-203.
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-301 Interest computation methods.

§412:9-301 Interest computation methods.
A financial services loan company may charge, contract for, and receive interest on loans on a precomputed basis or a simple interest basis.
(1) Precomputed loans are loans where interest is paid or deducted in advance at the inception of the loans. The two types of precomputed loans, discount and add-on, are as follows:
(A) Under the discount method, interest is computed on the principal amount of the loan for the full term of the loan as though the principal amount were to remain outstanding and unpaid for the full term of the loan. The interest and other authorized and permitted charges may be deducted from the principal amount at the time the loan is made and may be retained by the financial services loan company and applied (in the case of other charges) for the purposes authorized by this article. Interest may be computed and retained in this manner notwithstanding the fact that periodic payments to reduce the principal amount are required on the loan and the borrower does not receive the full principal amount, but only the balance thereof after the deductions;
(B) Under the add-on method, interest is computed on the amount to be actually received by the borrower, as though the amount were to remain outstanding and unpaid for the full term of the loan. Interest and other authorized and permitted charges may be added to the amount to be actually received by the borrower, and the total amount produced by the addition may then be constituted the principal amount of the loan. The amount of the interest and other authorized and permitted charges so added may then be deducted from the principal amount and retained by the financial services loan company at the time the loan is made. Interest may be computed and retained in this manner notwithstanding the fact that periodic payments to reduce the principal amount are required on the loan and that the amount received by the borrower is less than the principal amount by the amount of the interest and other charges;
(2) Simple interest loans are loans on which interest is computed on the principal balance remaining unpaid from time to time. "Principal balance remaining unpaid" is defined as the original principal amount less payments applied to reduce the original principal amount. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-303 Effect of excessive interest.

§412:9-303 Effect of excessive interest.
If a greater rate of interest than that permitted under this article is contracted for in any loan under this article, the loan shall not, by reason thereof, be void. But, if in any action on the loan, proof is made that a greater rate of interest than that permitted by law has been directly or indirectly contracted for, the financial services loan company shall only recover the amount actually received by the borrower in cash, credit or the equivalent thereof plus the charges, if any, which were properly charged to the borrower and which have not been deducted from the principal amount of the contract or otherwise paid by the borrower. The borrower shall only recover costs. If interest has been paid, judgment shall be for the recoverable amount less the amount of interest paid. Sections 478-5 and 478-6 shall not apply to loans made under this article by financial services loan companies. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-305 Open-end consumer loans.

§412:9-305 Open-end consumer loans.
(a) Open-end consumer loans made under the authority of this article shall be subject to the following special restrictions:
(1) A financial services loan company shall not compound interest on any open-end consumer loan by adding any unpaid interest to the unpaid principal balance of the open-end loan. However, the unpaid principal balance may include charges other than interest and late charges;
(2) Regardless of the interest computation method used in each billing cycle under an open-end loan agreement, the unpaid principal balance of any day shall be determined by adding to any balance unpaid as of the beginning of that day all advances and other permissible amounts (other than interest) charged to the borrower, and deducting all payments and other credits made or received that day;
(3) If credit life insurance or credit disability insurance is provided, the additional charge for the insurance shall be calculated in each billing cycle by applying the current monthly premium rate (which may be calculated daily), as approved by the insurance commissioner, to the entire outstanding balances, or to as much of the outstanding balances that the insurance covers, using the same method used for the calculation of loan interest. A financial services loan company shall not be obligated to advance to the insurer any premiums for the insurance on a borrower who is delinquent in making the required minimum payments on the loan if one or more of the payments is past due for ninety days or more. However, the financial services loan company shall advance to the insurer the amounts required to keep the insurance in force during the ninety-day period. The advanced amounts may be debited to the borrower's open-end account; and
(4) A financial services loan company may retain any security interest in real or personal property securing the open-end loan until the open-end loan is terminated.
(b) A financial services loan company may impose charges on an open-end consumer loan for:
(1) Participation in an open-end loan account, whether assessed on an annual, periodic, or other basis; and
(2) Payment of items that overdraw an open-end loan account. [L 1993, c 350, pt of §1; am L 1995, c 45, §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-306 Refunds on prepayment of a precomputed loan.

§412:9-306 Refunds on prepayment of a precomputed loan.
(a) A borrower shall be entitled to a refund of the unearned interest that has been paid in advance when a precomputed loan is paid in full or refinanced prior to maturity, or on which judgment has been obtained:
(1) The amount of the refund on a loan with an original term of sixty months or less shall be computed under a method no less favorable to the borrower than the Rule of 78ths method (also known as the Sum of the Digits method). The refund shall represent at least as great a proportion of the total finance charge as the sum of the periodical time balances, after the day of prepayment, bears to the sum of all the periodical time balances under the schedule of payments in the loan agreement;
(2) If the original term of a precomputed loan exceeds sixty months, the amount of refund of unearned interest shall be equal to the difference between the total interest originally charged and the actuarially earned amount;
(3) Refunds on precomputed loans originated prior to July 1, 1993, shall be made in accordance with the terms of existing loan agreements, provided that the refund provision complied with applicable law at the consumer loan origination.
(b) No refund less than $1 need be made and the financial services loan company shall not be required to refund any portion of the unearned interest that has been paid in advance which results in a minimum interest retained on the precomputed loan of less than $15. [L 1993, c 350, pt of §1]
Revision Note
"July 1, 1993," substituted for "the effective date of this Act".
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-307 Fraction of a month.

§412:9-307 Fraction of a month.
In computing interest, late charges, or refunds for precomputed loans under sections 412:9-302, 412:9-304 and 412:9-306 any fraction of a month may be considered as a whole month. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-309 Assignments, sale or pledge of loans.

§412:9-309 Assignments, sale or pledge of loans.
Any loan made under this article may be assigned, sold, or pledged in whole or in part to any person. That person may charge, contract for, and receive interest on, and enforce the terms of, the loan to the same extent permitted except for the assignment, sale, or pledge; provided that no loan shall be assigned, sold or pledged to another person doing business in the State unless that other person is a financial institution or has the right to charge, contract for, or receive interest at the same interest rate and on the same terms as provided for in the loan, and if there is an assignment or sale, that loan is assigned or sold without recourse. Notwithstanding the foregoing, any financial services loan company may assign loans to a person or persons that are not financial institutions for purposes of collection of delinquent payments. That person or persons may enforce the terms of the loan to the same extent as the financial services loan company that originated the loan. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-400 Special powers of a depository financial services loan company.

§412:9-400 Special powers of a depository financial services loan company.
In addition to the powers granted in parts II and III of this article, depository financial services loan companies, but not nondepository financial services loan companies, shall have the right, power, and privilege to:
(1) Solicit, accept, and hold deposits from any person, whether or not a resident of or domiciled in this State, and issue documents evidencing the accounts; provided that a depository financial services loan company shall not solicit, accept, or hold demand deposits or authorize a depositor to make transfers by check, draft, debit card, negotiable order of withdrawal, or similar order, payable to third parties;
(2) Sell fixed rate annuities and collect premiums and fees for the sale or referral of those fixed rate annuities, if the written approval of the commissioner is first obtained. The depository financial services loan company shall comply with all applicable requirements of chapter 431. Sales shall be made by a producer licensed pursuant to chapter 431. In approving any request to sell or refer fixed rate annuities pursuant to this paragraph, the commissioner may impose conditions and restrictions that are in the public interest; and
(3) Offer gifts, premiums, other considerations, or promotional items to solicit deposits. Premiums may be offered in lieu of all or part of the interest on deposits. [L 1993, c 350, pt of §1; am L 1996, c 9, §2; am L 2003, c 212, §13]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-402 Membership in federal home loan bank.

§412:9-402 Membership in federal home loan bank.
Any depository financial services loan company may become a member of a federal home loan bank organized under authority of the Federal Home Loan Bank Act, or any successor or similar systems of federal home loan banks established by Congress, and may purchase and hold the shares of such federal home loan bank. The depository financial services loan company may have and exercise all powers not in conflict with the laws of this State incident to such membership; provided, however, that notwithstanding such membership the depository financial services loan company and its directors, officers, and shareholders shall continue to be subject to all liabilities and duties imposed upon them by any law of this State. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-405 Loans and extensions of credit fully secured by real property.

§412:9-405 Loans and extensions of credit fully secured by real property.
(a) For loans and extensions of credit fully secured by real property other than unimproved raw land, a depository financial services loan company may advance, directly or indirectly, up to and including ninety-five per cent of the appraised value or real property evaluation required under the Federal Deposit Insurance Act and the rules and regulations of the Federal Deposit Insurance Corporation of the real property securing the loan and extension of credit. The principal amount of the loan and extension of credit shall be added together with the outstanding balances of all prior liens on the real property to determine the ninety-five per cent loan-to-value ratio.
(b) For loans and extensions of credit fully secured by mortgages on unimproved raw land, the maximum loan-to-value ratio shall not exceed seventy per cent of the appraised value or real property evaluation required under the Federal Deposit Insurance Act and the rules and regulations of the Federal Deposit Insurance Corporation of the unimproved raw land. Parcels of land with direct access by road and served by electric power shall not be deemed unimproved raw land.
(c) Notwithstanding the provisions of subsections (a) and (b), depository financial services loan companies, which make loans fully secured by real property in excess of twenty per cent of their capital and surplus, shall obtain appraisals of the real property securing those loans. [L 1993, c 350, pt of §1; am L 1995, c 17, §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-407 Limits on transactions with affiliates, executive officers, directors or principal shareholders.

§412:9-407 Limits on transactions with affiliates, executive officers, directors or principal shareholders.
No depository financial services loan company shall make any loan and extension of credit or engage in any transaction in violation of section 18j of the Federal Deposit Insurance Act, 12 U.S.C. §1828(j) or sections 22(g), 22(h), 23A or 23B of the Federal Reserve Act, 12 U.S.C. § §375a, 375b, 371c and 371c-1. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-408 General requirement for investments.

§412:9-408 General requirement for investments.
(a) A depository financial services loan company shall make investments that are consistent with prudent banking practices and in compliance with all applicable federal and state law.
(b) The board of directors of a depository financial services loan company and any other person charged with the responsibility of investing the depository financial services loan company's assets shall exercise such reasonable diligence, discretion, judgment, and intelligence as would be expected of a prudent investor. Among other things, they shall not engage in speculative or unsound investments, and they shall at all times consider the probable safety as well as the probable income of the capital being invested.
(c) The board of directors shall establish written investment policies. [L 1993, c 350, pt of §1]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-410 Deposits made by depository financial services loan companies.

§412:9-410 Deposits made by depository financial services loan companies.
A depository financial services loan company may deposit any of its funds with:
(1) A Federal Reserve Bank or a Federal Home Loan Bank in any amount; or
(2) Another depository institution; provided that the deposits in any one depository institution do not exceed twenty-five per cent of the depository financial services loan company's capital and surplus, unless otherwise permitted by federal law. [L 1993, c 350, pt of §1; am L 1994, c 107, §17]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-500 Prohibitions.

§412:9-500 Prohibitions.
Except as otherwise expressly authorized by this chapter or other law, a nondepository financial services loan company shall not solicit, accept, or hold deposits, investment certificates, thrift certificates, or other accounts or instruments identical or similar to a deposit account, nor shall it borrow money in the form of, or issue, promissory notes, debentures, bonds, or other obligations to the public; provided that a nondepository financial services loan company may borrow funds from, and issue its notes, debentures, bonds, or other obligations to financial institutions and other institutional lenders and not more than twenty-five institution-affiliated parties at any one time. [L 1993, c 350, pt of §1; am L 1996, c 9, §3]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:9-501 Registration of nondepository financial services loan companies with NMLS.

§412:9-501 Registration of nondepository financial services loan companies with NMLS.
(a) A nondepository financial services loan company licensed under this chapter is not a mortgage loan originator company as defined in section 454F-1.
(b) A nondepository financial services loan company shall register with NMLS if any employee of the nondepository financial services loan company acts as a mortgage loan originator as defined in section 454F-1 or if the nondepository financial services loan company uses the services of an exclusive independent contractor mortgage loan originator, or loan processor or underwriter, as defined in chapter 454F.
(c) This section does not exempt an employee of a nondepository financial services loan company who originates mortgage loans, or an independent contractor providing mortgage loan originating, processing, or underwriting services to a nondepository financial services loan company, from licensure under chapter 454F. [L 2010, c 84, §2; am L 2013, c 168, § §1, 20]
2023 Hawaii Revised Statutes › Title 22. Banks and Financial Institutions › 412. Code of Financial Institutions › 412:10-101 Necessity for credit union charter.

§412:10-101 Necessity for credit union charter.
Except as expressly permitted by federal law or this chapter, no person shall engage in the business of a credit union, represent itself as a credit union, use a name or title containing the phrase "credit union" or any derivation thereof, or control any other person engaging in the business of a credit union. [L 1993, c 350, pt of §1; am L 2002, c 40, §33]