HAR §16-28-27. Criteria for proposed escrow depositories

The criteria applied to license applications includes, but is not limited to: (1) General character of management. The quality of an escrow depository's management is vital and perhaps the single most important element in determining the applicant's acceptability as an escrow depository. When the management of a proposed escrow depository does not have an operating record as a functioning unit to assist in forming a judgment, the management review may require an evaluation of the individual officers, directors, and escrow officer. An evaluation of shareholders who are subscribing to five per cent or more of the aggregate par value of stock to be issued may also be appropriate in reviewing the general character of management. (A) In evaluating each officer, director, and escrow officer, and each shareholder subscribing to more than five per cent of the stock to be issued, the division shall consider, among other things, the following factors: (i) Their current and past business experiences, financial capacities, and financial interests; 28-8 §16-28-27 (ii) Their proposed duties and responsibilities as related to their business experience and capabilities; (iii) Their familiarity with the community or trade area; and (iv) Any financing arrangements to purchase stock of the proposed escrow depository. (B) The following information may also be evaluated in reviewing the proposed management: (i) Arrangements such as buy-sell, voting trust or proxy agreements between various individuals or other entities; and (ii) Plans for management changes prior to opening or after the commencement of operations. (2) Adequacy of capital structure. A proposed escrow depository shall have: (A) A minimum net capital structure of the amount dictated by statute; (B) Sufficient balances in shareholder equity accounts against which initial start-up costs and foreseeable contingencies can be charged; and (C) An adequate capital structure as related to its proposed type and volume of business, projected growth, and projected level of earnings. (3) Financial history and condition. The pro forma statement of the proposed escrow depository as of the beginning of business, a schedule and appraisal of all assets with which the proposed escrow depository intends to begin business, and projected financial statements for the first three years of operation shall be considered in analyzing this factor. If pertinent, consideration may be given to the history of other escrow depositories presently and formerly operating in the trade area of the applicant. (4) Future earnings prospects. Detailed estimates of operating income and expenses for the first three years of operation and the assumptions used in determining the projections shall be analyzed. Information shall include the applicant's plans for payment of cash dividends, bonuses, director's fees, retainer fees, and the accounting method to be used. Regarding the accounting systems, the division requires use of the accrual method from the outset of operations. (5) Convenience and needs of the community. A clear definition of the proposed escrow depository's trade area, a description of the principal economic activities in the trade area, and population figures and 28-9 §16-28-27 trends are essential factors to consider in determining the convenience and needs of the community. [Eff 8/13/87; am and comp 1/27/01; comp 8/04/05] (Auth: HRS §449-2) (Imp: HRS §§449-6, 449-7, 449-7.4, 449-7.5, 449-8, 449-8.5)