Department of Financial Institutions details revenue, $2M buildout request and recent settlements

Daryl Rudy, deputy commissioner of the Utah Department of Financial Institutions, told the General Government Appropriation Subcommittee on Feb. 3 that DFI remains a largely fee-funded regulator overseeing depository and nondepository institutions, and described a series of current funding requests and one-time receipts.

The nut graf: DFI said its operating budget is paid by restricted fees and asset‑based assessments, the agency holds roughly $15–17 million in reserves, and it is seeking a $2 million nonlapsing appropriation to finance a planned office build-out and move; DFI also reported two recent regulatory settlements that generate funds proposed for consumer-awareness grants.

Rudy said the department enforces Title 7 of the Utah Code and supervises both depository institutions (banks, credit unions and industrial banks) and nondepositories (consumer lenders, money service businesses, mortgage servicers and trust companies). The department described itself as the fifth-largest state depository regulator by assets under supervision.

Finance director Lane Blanch explained the funding structure: DFI is fee-based and not supported by the general fund; depository fees are asset-based and graduated, while nondepository licenses and application fees are generally fixed amounts. For fiscal year 2024, the department reported approximately $10.3 million in revenue.

Blanch said DFI is seeking a $2,000,000 supplemental appropriation from its restricted account to cover build-out and relocation costs for new office space (including furnishings and workstations). He told the committee the restricted account contains approximately $15 million to $17 million and that the account is purposely sized to hold roughly a year of revenue so the agency can continue regulation if a chartered institution converts to a federal charter and stops paying state fees.

Rudy outlined additional ongoing funding requests included in the agency materials: roughly $550,000 ongoing beginning fiscal 2026 to cover inflation and rising operating costs (including higher DTS charges and travel), and about $168,000 to cover projected rent increases. The department said those ongoing increases reflect personnel as roughly 90% of expenses and higher facility costs.

Rudy also told the committee the agency recently received two settlements: a $1.6 million settlement from Block Inc. for alleged Bank Secrecy Act/AML deficiencies, and a separate $260,000 settlement from a mortgage servicer. DFI said it previously used settlement funds for consumer education and last year allocated $100,000; it asked to appropriate $116,000 remaining and proposed creating a $200,000-per-year grant program (10 years) from the larger settlement to support financial literacy and consumer-awareness programs, administered by competitive grants.

On staffing, DFI said it has 66 FTEs (62 employees at time of briefing) and has been improving retention after COVID-era turnover; the department reported promoting many examiners to fully certified positions and emphasized continued training. Chief examiner Sean Barrett reviewed performance metrics such as examination coverage and assets-per-examiner and said the metrics are useful but that some could be rethought to ensure they measure staff capacity accurately.

DFI officials told the committee they intend to request revised inspection and fee schedules where necessary; they described the $2 million build-out as a one-time capital need funded from the restricted account and said an appropriation with nonlapsing language is required because the project will span fiscal years.

Ending: Committee members asked about the reserve balance and the mechanics of restricted accounts; DFI said it will return with specifics during the budget process and thanked members for time.