Utah Code » Title 7, Chapter 2 — Possession of Depository Institution by Commissioner
Utah Code

Utah Code § 7-2-1 (2026)

Supervisory actions by commissioner -- Grounds -- Mergers or acquisitions authorized by commissioner -- Possession of business and property taken by commissioner

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An institution under the jurisdiction of the department is subject to supervisory actions by the commissioner under this chapter or Chapter 19, Acquisition of Failing Depository Institutions or Holding Companies, if the commissioner, with or without an administrative hearing, finds that:
the institution is not in a safe and sound condition to transact its business;
an officer of the institution or other person has refused to be examined or has made false statements under oath regarding its affairs;
the institution or other person has violated its articles of incorporation or any law, rule, or regulation governing the institution or other person;
the institution or other person is conducting its business in an unauthorized or unsafe manner, or is practicing deception upon its depositors, members, or the public, or is engaging in conduct injurious to its depositors, members, or the public;
the institution or other person has been notified by its primary account insurer of the insurer's intention to initiate proceedings to terminate insurance;
the institution or other person has failed to maintain a minimum amount of capital as required by the department, any state, or the relevant federal regulatory agency;
the institution or other person is a depository institution that has failed or refused to pay its depositors in accordance with the terms under which the deposits were received, or has or is about to become insolvent;
the institution or other person or its officers or directors have failed or refused to comply with the terms of a legally authorized order issued by the commissioner or by any federal authority or authority of another state having jurisdiction over the institution or other person;
the institution or other person or its officers or directors have failed or refused, upon proper demand, to submit its records, books, papers, and affairs for inspection to the commissioner or to a supervisor or an examiner of the department;
the institution or other person or its officers or directors, after 30 days written notice, have failed to comply with or have continued to violate this title or any rule or regulation of the department issued under it;
any person who controls the institution or other person subject to the jurisdiction of the department has used the control to cause the institution or other person to be or about to be in an unsafe or unsound condition, to conduct its business in an unauthorized or unsafe manner, or to violate this title or any rule or regulation of the department issued under it; or
the remedies provided in Section 7-1-307, 7-1-308, or 7-1-313 are ineffective or impracticable to protect the interest of depositors, creditors, or members of the institution or other person, or to protect the interests of the public.
The commissioner may take any action described in Subsection (3) if:
he finds that:
any of the conditions set forth in Subsection (1) exist with respect to an institution under the jurisdiction of the department; and
an order issued pursuant to Section 7-1-307, 7-1-308, or 7-1-313 would not adequately protect the interests of the institution's depositors, creditors, members, or other interested persons from all dangers presented by the conditions found to exist; or
two-thirds of the voting shares of an institution under the jurisdiction of the department that are eligible to be voted at any regular or special meeting of the shareholders of the institution are voted at the meeting in favor of a resolution consenting to the commissioner taking or causing to be taken any of the actions described below.
After making the requisite findings or receiving the consenting vote of shareholders under Subsection (2), the commissioner may:
without taking possession of the institution, authorize, or by order require or give effect to the acquisition of control of, the merger with, the acquisition of all or a portion of the assets of, or the assumption of all or a portion of the liabilities of the institution or other person by any other institution or entity approved or designated by the commissioner in accordance with Chapter 19, Acquisition of Failing Depository Institutions or Holding Companies; or
take possession of the institution or other person subject to the jurisdiction of the department with or without a court order if an acquisition of control of, a merger with, an acquisition of all or a portion of the assets of, or an assumption of all or a portion of the liabilities of the institution or other person without taking possession does not appear to the commissioner to be practicable.
Upon taking possession of an institution or the person, the commissioner is vested by operation of law with the title to and the right to possession of all assets, the business, and property of the institution or other person subject to court order made under Section 7-2-3. While in possession of an institution or other person, the commissioner or any receiver or liquidator appointed by him may exercise any or all of the rights, powers, and authorities granted to the commissioner under this chapter, or may give effect to the acquisition of control of, the merger with, the acquisition of all or a portion of the assets of, or the assumption of all or a portion of the liabilities of an institution or other person subject to the jurisdiction of the department, under the provisions of Chapter 19, Acquisition of Failing Depository Institutions or Holding Companies.
An action of the commissioner under this section may only be enjoined or set aside upon a finding, after notice and hearing, that the action is arbitrary, capricious, an abuse of discretion, or otherwise contrary to law.
Notes of Decisions
Cited in 8 cases (1 in the last 5 years), 1989–2024 · leading case: Gillman v. Dep't of Fin. Institutions, 782 P.2d 506 (Utah 1989).
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Gillman v. Dep't of Fin. Institutions, 782 P.2d 506 (Utah 1989). · cites it 8× “In fact, the only intervention discussed in the Code concerning banking institutions is found in section 7-2-1, where the Department is authorized to take possession of any banking institution and suspend its privilege of conducting business when the Department becomes aware…”
Brown v. Weis, 871 P.2d 552 (Utah Ct. App. 1994). · cites it 10× “” Furthermore, defendants could not have promised to allow plaintiffs to control the thrift for a guarantied period of time because such action would conflict with their statutory duty to regulate the thrift pursuant to Utah Code Ann. §§ 7-2-1 to -20 (1982 & Supp.”
Doit, Inc. v. Touche, Ross & Co., 926 P.2d 835 (Utah 1996). · cites it 4× “This is entirely consistent with the fact that claims in receiver/liquidator actions are not brought pursuant to any section of the TSFA, but instead are governed by a separate chapter of the Utah Code, namely, sections 7-2-1 to -23. At the time the TSFA was passed, numerous…”
Am. West Bank Members L.C. v. State, 2014 UT 49, 342 P.3d 224. “§ 7-2-1. 70 . Fahey, 332 U.S. at 253-54 , 67 S.”
Hansen v. Dep't of Fin. Institutions, 858 P.2d 184 (Utah Ct. App. 1993). · cites it 2× “Coincident with this order, Borthick recommended that certain “corrective actions” be taken in order for MFT & L to avoid having the Commissioner of Financial Institutions take possession of MFT & L under Utah Code Ann. § 7-2-1 (1988). At the time of Borthick’s order, eighty…”
Am. West Bank Members v. State of Utah, The, No. 2:16-cv-00326 (D. Utah Apr. 2, 2020). · cites it 23× “Judge Morris’s Order Approving Possession of America West Bank provided that “[i]t appear[ed] to the Court that all conditions required by Utah Code Ann. § 7-2-1 (2)(a) (West 2004) ha[d] been met for the Commissioner to take possession of the Bank.”
Am. West Bank Members v. State of Utah, No. 23-4091 (10th Cir. Aug. 14, 2024). · cites it 7× “Utah Code Ann. § 7-2-1 (1). 3 One such supervisory action, relevant here, is taking “possession of [the] institution.”
Sutton v. Fed. Deposit Ins., 750 F. Supp. 481 (D. Utah 1990). · cites it 2× “On December 30, 1988, the Commissioner, pursuant to Utah Code section 7-2-1 (1988), determined that Tracy Collins was a failing depository institution within the meaning of section 7-19-1 of the Utah Code.”
Utah Code § 7-2-1(2): 1 case
Gillman v. Dep't of Fin. Institutions, 782 P.2d 506 (Utah 1989). “In fact, the only intervention discussed in the Code concerning banking institutions is found in section 7-2-1, where the Department is authorized to take possession of any banking institution and suspend its privilege of conducting business when the Department becomes aware…”
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