As trust firms find SD, officials seek to beef up examinersPIERRE — Next month, the state Banking Commission will consider raising annual registration fees on trust companies.
By: Bob Mercer, Republic Capitol Bureau
PIERRE — Next month, the state Banking Commission will consider raising annual registration fees on trust companies.
The commission and state Banking Director Bret Afdahl are looking to hire additional examiners, in response to the rapid growth of trust companies headquartered in South Dakota.
The commission also will consider changing the requirements for a trust company to receive charter status in South Dakota.
Currently, trust companies need to wholly or partly perform in South Dakota only one of six activities established in state law to qualify.
The proposed rules would require at least three activities be performed wholly or partly in South Dakota, and the list of possible qualifying activities would be changed.
The Legislature and state banking officials have worked for several decades to make South Dakota into a preferred site for new trust companies to start and for existing trusts to relocate their charters from other states. There were 13 trusts chartered in South Dakota in 2001 and 39 by 2009. There were 50 in 2010 and 56 last year. Currently, there are 62 with $110 billion under management.
“All of these companies must be examined no less frequently than every three years,” Afdahl said. A total of 70 are forecast for 2012, according to an estimate distributed by the Banking Division to the commission in May. The number is projected to grow by 10 annually and reach 110 in 2016. The division described the forecast as conservative. The plan calls for increasing the division’s examiners assigned to trusts from 2.5 in 2011 to 7.5 for 2016. The division paid about $219,000 in wages to its examiners in 2011 and proposed topping $616,000 for 2016. Education expenses for examiners also would be boosted.
The plan calls for charging 7 cents, rather than the present six cents, per $10,000 of assets, and setting a minimum annual fee of $3,750 for private trust companies, which would be an increase of $750, while keeping the cap at $20,000.
The proposed changes also would create a new set of fees for public trust companies ranging from a minimum of $4,500 to a maximum of $30,000.
Trust companies would remain responsible for the division’s costs for conducting examinations.
Afdahl said the proposed increases would generate an estimated $122,321 based on the current number of companies and amounts of assets.
A public hearing is set for Aug. 8 in Sioux Falls. The session begins at 11 a.m. in the Ramada Inn and Suites on West Russell Street.