Department of Financial Institutions flags revenue gap after large bank’s charter conversion
Get AI-powered insights, summaries, and transcripts
Sign Up Free
Summary
DFI Commissioner Sean Barrett told lawmakers a planned conversion of a large industrial bank to a national charter will remove about 23% of the agency’s revenue and that the department will use restricted reserves while proposing fee formula adjustments next session.
The Utah Department of Financial Institutions (DFI) told the General Government Appropriations Subcommittee it expects a substantial near‑term revenue shortfall after a large industrial bank received conditional approval to convert to a national charter and leave state supervision.
Commissioner Sean Barrett said the conversion, expected to complete in spring, will remove an institution that "accounts for about 23% of our revenue" from the department’s asset base. DFI said about 96% of its recurring revenue comes from an asset‑based assessment set in statute; losing $115 billion (approx.) in assets under supervision will create a notable shortfall in FY26, the department said, though it added the restricted account balance is large enough to buffer the gap while staff and industry convene to propose statutory fee formula adjustments.
Why it matters: DFI’s budget relies on fees assessed to state‑chartered banks and credit unions. The departure of a major industrial bank will lower the asset base that feeds the assessment formula and may require statutory changes to restore long‑term revenue neutrality.
What DFI will do: The commissioner asked the committee to note the projected shortfall and indicated DFI will work with industry this summer to develop fee changes for next session; meanwhile, the restricted account will be drawn down to cover operating costs.
Next steps: DFI expects to return with proposed fee adjustments and requested time to work with stakeholders to minimize disruption to examinations and consumer protection activities.