AN ACT

Ch. 152 Financial Institutions 1051

)))))

Capital letters indicate new material added to existing statutes; dashes through words indicate deletions

from existin g statutes a nd such materia l not pa rt of act.

CHAPTER 152

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FINANCIAL INSTITUTIONS

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HOUSE BILL 03-1257

BY REPRESENTATIVE(S) Marshall, Bo yd, Col eman, Decker, Madden , Stengel, and Williams T.;

also SENATOR(S) Lamborn.

AN ACT

CONCERNING A NONSUBSTANTIVE RECODIFICATION OF COLORADO 'S BANKING LAWS.

Be it enacted by the General Assembly of the State of Colorado:

SECTION 1. Repeal of provisions being relocated in this act. Articles 1 to 10,

11, 20, 22, 23, and 25 of title 11, Colorado Revised Statutes, are repealed.

SECTION 2. Repeal of provisions not being relocated in this act. 11-1-104,

11-6-110, 11-6-111, 11-22-613 to 11-22-616, and 11-23-101, Colorado Revised

Statutes, are repealed.

SECTION 3. Title 11, Colorado Revised Statutes, is amended BY THE

ADDITION OF THE FOLLOWING NEW ARTICLES CONTAINING

RELOCATED PROVISIONS, WITH AMENDMENTS, to read:

ARTICLE 101

General Provisions

PART 1

SHORT TITLE AND POLICY

11-101-101. [Formerly 11-1-101] Short title. Articles 1 to 11 and 22 and 23

101 TO 109 AND ARTICLE 10.5 of this title shall be known and may be cited as the

"Colorado Banking Code". of 1957". A reference to the code means the COLORADO

BANKING Code as amended from time to time.

11-101-102. [Formerly 11-1-101.5] Declaration of policy. (1) It is hereby

declared to be the policy of the state of Colorado that, to protect the public interest,

the business of all state banks be supervised and regulated in such manner as to:

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(a) Preserve and promote:

(I) Sound and constructive competition among financial services institutions;

(II) A dual federal and state banking system;

(III) The security of deposits;

(IV) The safe and sound conduct of the business of state banks; and

(V) A statewide safe and sound banking system;

(b) Seek:

(I) Regulatory coordination and cooperation; and

(II) Regulatory parity among financial services institutions; and

PART 2

EFFECT ON EXISTING BANKS

11-101-201. [Formerly 11-1-103] Effect on existing banks. The charters of the

state banks organized and existing prior to July 1, 1957 2003, under the laws of this

state shall continue in full force and effect. All such state banks, and, to the extent

applicable, all national banks doing business in this state on or after July 1, 1957

2003, shall, from that date, be subject to the provisions of this article. Any such state

bank, by filing an application under this code for an amendment of its charter or for

a merger, consolidation, or sale of all, or substantially all, of its assets, or the assets

of any department of such bank, shall be deemed to have expressly recognized that

it is so subject.

PART 3

APPLICATION

11-101-301. [Formerly 11-1-105] Application of code. (1) The provisions of

this code shall govern the incorporation, organization, corporate functions, merger,

consolidation, sale of assets, liquidation, dissolution, and reorganization procedures

of corporations operating as banks (whether or not, as a part of and in conjunction

with such operations, they engage in the trust or safe deposit business) in the state of

Colorado; but the provisions of articles 1 to 11 10.5 AND 101 TO 107 of this title only

apply to industrial banks and trust companies organized and operating under the

provisions of articles 22 and 23 108 AND 109 of this title when specifically provided

in said articles 1 to 11, 22, or 23 10.5 AND 101 TO 109 of this title, and articles 22

and 23 108 AND 109 of this title shall otherwise govern exclusively industrial banks

and trust companies.

(2) (a) (I) The regulation of banking is a matter of statewide concern, and in order

to maintain a uniform statewide system of banking and bank regulatory policy in

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Colorado, the regulation by a political subdivision of deposits, lending, or other

services or products provided by banks in accordance with applicable state or federal

law shall be prohibited EXCEPT TO THE EXTENT EXPRESSLY PERMITTED UNDER

ARTICLE 10.5 OF THIS TITLE.

(II) Nothing in this subsection (2) shall preclude a political subdivision from

enacting and enforcing laws or rules of general applicability concerning public health,

safety, or welfare.

(b) For the purposes of this section, "political subdivision" means and includes

every county, city and county, city, town, school district, special district, and housing

authority within the state.

11-101-302. [Formerly 11-1-106] No private right of action. Except as

expressly provided in this code, no person, other than the banking board, shall have

the right to bring or maintain any private action, at law or in equity, for a violation

of or enforcement of this code.

PART 4

DEFINITIONS

11-101-401. [Formerly 11-1-102, 11-4-101, 11-6.3-101 (1), 11-6.4-102,

11-6.5-103, 11-7-100.3, 11-9-101, 11-25-102, and 11-10-105] Definitions. As

used in this code, unless the context otherwise requires:

(1) "Account holder" means a person having an established demand, savings, or

loan account at a Colorado bank.

(2) "Account overline" means a banking transaction pursuant to which an account

holder debits his existing demand or savings account even though such debit may

create or extend a negative balance to be covered by an extension of credit, or would

create a negative balance but for an extension of credit to such account by the

Colorado bank.

(1) (3) "Action", in the sense of a judicial proceeding, includes MEANS A

recoupment, counterclaim, third party claims, cross-claims THIRD-PARTY CLAIM,

CROSS-CLAIM, setoff, suit in equity, arbitration, and any other proceedings

PROCEEDING in which rights are determined.

(1) (4) "Affiliate financial institution" means any bank, industrial bank, or savings

and loan association which THAT has its principal place of business in Colorado and

which THAT is controlled by a financial institution.

(2) (5) "Bank" means a state bank (other than an industrial bank) or bank and trust

company, chartered by this state or a national bank; EXCEPT THAT, FOR THE PURPOSE

OF PART 2 OF ARTICLE 104 OF THIS TITLE, "bank" means any bank organized or

chartered under articles 1 to 11 10.5 AND 101 TO 109 of this title, any bank organized

or chartered as a bank under the laws of any other jurisdiction, or any bank organized

or chartered under chapter 2 of Title 12 of the United States Code. The singular

"bank" includes the plural "banks".

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(2) (6) "Bank holding company" means any company which THAT has direct or

indirect control over any bank BANKING INSTITUTION.

(4) (7) "BANKING board" means the banking board WITHIN THE DIVISION

ESTABLISHED PURSUANT TO SECTION 11-102-103.

(b) (8) "Banking institution" means any institution organized or chartered under

this code or under chapter 2 of Title 12 of the United States Code, but does not

include a credit card national bank.

(3) (9) "Banking transactions" means cash withdrawals, deposits, account

transfers, payments from bank accounts, disbursements under a preauthorized credit

agreement, and loan payments initiated by an account holder at a communications

facility and accessing his OR HER account at a Colorado bank.

(2) (10) "Branch" means any branch bank, branch office, branch agency,

additional office, or any branch place of business of a financial institution located in

this state at which deposits are received, or checks ARE paid, or money IS lent, or trust

powers ARE exercised.

(1) (11) "Capital and surplus" or "capital stock and unimpaired surplus fund"

means paid-in capital stock plus surplus, undivided profits, subordinated notes and

debentures, reserves for contingencies and other capital reserves, and the reserve for

possible loan losses.

(1) (12) "Colorado affiliate", with respect to a Colorado bank or Colorado trust

company, means:

(a) Any company which THAT is controlled by a bank holding company which

THAT controls a Colorado bank or Colorado trust company; or

(b) Any company which THAT is controlled by or which THAT controls a Colorado

bank or Colorado trust company.

(3) (13) "Colorado bank" means a bank having its principal place of business in

Colorado.

(4) (14) "Colorado bank holding company" means a registered bank holding

company the operations of which are principally conducted in Colorado. "Colorado

bank holding company" does not include an out-of-state bank holding company that

acquires control of one or more Colorado bank holding companies or Colorado banks,

whether or not its operations are principally conducted in Colorado subsequent to

AFTER such acquisition, or any Colorado bank holding company the control of which

or as to which a majority nonvoting equity interest is first acquired by an out-of-state

bank holding company on or after July 1, 1988.

(4.5) (15) "Colorado financial institution" means a financial institution having its

principal place of business in Colorado.

(3) (16) "Colorado trust company" means:

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(a) A national banking association which THAT has its principal office in Colorado

and to which the comptroller of the currency has issued a certificate authorizing the

commencement of business and which THAT is required by said comptroller to limit

its operations to those of a trust company and any activities related thereto; or

(b) A trust company organized under article 23 109 of this title, which trust

company has its principal office in Colorado.

(3) (17) "Commissioner" means the state bank commissioner appointed and

serving pursuant to section 11-2-101 (2) 11-102-101 (2), who shall be the

commissioner of banking referred to in articles 1 to 11 101 TO 109 of this title.

(6) (18) "Communications facility" means an attended or unattended electronic

information processing device, other than an ordinary telephone instrument, located

in this state separate and apart from a Colorado bank or detached facility and through

which account holders and Colorado banks may engage in banking transactions by

means of either the instant transmission (on-line) of electronic impulses to and from

the Colorado bank or its data processing agent or the recording of electronic impulses

or other indicia of a banking transaction for delayed transmission (off-line) to a

Colorado bank or its data processing agent. Such a device located on the premises

of a Colorado bank or its detached facility shall be a communications facility if such

device is utilized by the account holders of other Colorado banks.

(4) (19) "Community" means a city, town, or incorporated village of this state, or

a trade area in this state in unincorporated territory.

(5) (20) "Company" means any corporation, partnership, business trust,

association, or similar organization; EXCEPT THAT, FOR THE PURPOSE OF ARTICLE 106

OF THIS TITLE, "company" means a bank or trust company that is authorized by the

division of banking or the comptroller of the currency to conduct fiduciary business

in Colorado.

(2) (21) "Constituent bank" means a party to a merger.

(5) (22) "Continuing bank" means a merging bank the charter of which becomes

the charter of the resulting bank.

(5) (23) (a) EXCEPT AS OTHERWISE PROVIDED IN PARAGRAPHS (b) AND (c) OF THIS

SUBSECTION (23), A COMPANY WITH "control" means:

(a) (I) A company which THAT, either directly, indirectly, or acting through one or

more persons, owns, controls, or has the power to vote twenty-five percent or more

of the voting securities of another company; or

(b) (II) A company which THAT controls in any manner the election of a majority

of the directors, managers, or trustees of another company.

(6) (b) FOR THE PURPOSE OF PART 2 OF ARTICLE 104 OF THIS TITLE, "control"

means that:

(a) (I) A company, either directly, indirectly, or acting through one or more

1056 Financial Institutions Ch. 152

persons, owns, controls, or has power to vote twenty-five percent or more of the

voting securities of a bank holding company or of a bank; or

(b) (II) A company controls in any manner the election of a majority of the

directors, managers, or trustees of a bank holding company or of a bank.

(d) (c) FOR THE PURPOSE OF SECTION 11-104-101, "control" means that:

(I) Any company directly or indirectly or acting through one or more persons owns,

controls, or has power to vote twenty-five percent or more of the voting securities of

the banking institution; or

(II) The company controls in any manner the election of a majority of the directors,

managers, or trustees of the banking institution.

(3) (24) "Converted bank" means the same bank after the conversion.

(6) (25) "Converting bank" means a bank converting from a state to a national

bank, or the reverse.

(7) (26) "Court" means a court of competent jurisdiction.

(e) (27) "Credit card national bank" means an institution which THAT is organized

or chartered as a national bank under chapter 2 of Title 12 of the United States Code,

which THAT engages only in credit card operations, and which THAT qualifies for

exception from the definition of a "bank" under section 2 (c) (2) (F) of the federal

"Bank Holding Company Act of 1956", Public Law 84-511, 12 U.S.C. sec. 1841 (c)

(2) (F).

(6.5) (28) "De novo branch" means a branch of a financial institution which THAT:

(a) Is originally established by the financial institution as a branch; and

(b) Does not become a branch of such financial institution as a result of:

(I) The acquisition by the financial institution of a depository institution or a

branch of a depository institution; or

(II) The conversion, merger, or consolidation of any such institution or branch.

(6.7) (29) "Deposit production office" means an office or branch used primarily

for the purpose of deposit production.

(1) (30) "Depositor" means a person delivering property or documents to a lessor

for safekeeping.

(8) (31) "Division" means the division of banking of this state created by this code.

(9) (32) "Executive officer", when referring to a bank, means a person who

participates or has authority to participate, other than in the capacity of a director, in

major policy-making functions of the bank, whether or not the officer has an official

Ch. 152 Financial Institutions 1057

title, the title designates the officer as an assistant, or the officer is serving without

salary or other compensation. "Executive officer" includes the chairman of the board

of directors and the president, every vice-president, and the cashier of a bank, unless

any such officer is excluded by resolution of the board of directors or by the bylaws

of the bank from participation, other than in the capacity of a director, in major

policy-making functions of the bank and such officer does not actually participate

therein.

(7) (33) "Federal bank holding company act" means the federal "Bank Holding

Company Act of 1956", Public Law 84-511, 12 U.S.C. sec. 1841, et seq., as

amended.

(10) (34) "Fiduciary" means original or successor trustee of an expressed or

implied trust, including but not limited to a resulting or constructive trust, special

administrator, executor, administrator, administrator c.t.a., guardian, guardian-trustee

or conservator for a minor or other incompetent person, receiver, trustee in

bankruptcy, assignee for creditors, or any holder of a similar position of trust acting

alone or with others.

(6) (35) "Fiduciary business" means estate and trust administration,

conservatorship, agency, escrow, and custodian business and any other fiduciary

business.

(7.1) (36) "Financial institution" means any bank, bank holding company,

industrial bank, industrial bank holding company, savings and loan association,

federal savings bank, or thrift holding company.

(7.3) (37) (a) "Foreign bank" means any bank, including any commercial bank,

merchant bank, or other institution that engages in banking activities which THAT are

usual in connection with the business of banking in the nations where such institution

is organized or operating, other than a bank which THAT is organized under the laws

of a state of the United States or a national bank which THAT maintains its head office

in a state of the United States.

(b) As used in this subsection (7.3) (37), "foreign nation" means any nation other

than the United States, including any subdivision, territory, trust territory,

dependency, or possession of any such nation. "Foreign nation" includes Puerto Rico,

Guam, American Samoa, the Virgin Islands, and any territory, trust territory,

dependency, or insular possession of the United States.

(11) (38) "Good faith" means honesty in fact in the transaction and some

reasonable ground for belief that the transaction is rightful or authorized.

(7.5) (39) "Home state" means:

(a) In the case of a national bank, the state in which the main office of the bank is

located; and

(b) In the case of a state bank, the state in which the bank is chartered.

(7) (40) "Interested party" means, with respect to the fiduciary business of a

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transferor for which a successor is substituted:

(a) Each person who is readily identifiable as a beneficiary or devisee because of

such person's receipt of statements of account;

(b) A parent, custodian, conservator, or guardian who receives statements of

account on behalf of a minor beneficiary or devisee;

(d) Each surviving settlor of a trust;

(e) Each issuer of a security for which the transferor acts as a fiduciary;

(f) The plan sponsor for every employee benefit plan;

(g) The principal of every agency account; and

(h) The guardian or conservator of the person under guardianship.

(13) (41) "Item" means any instrument for the payment of money even though not

negotiable, but does not include money.

(2) (42) "Lessee" means a person contracting with a lessor for the use of a safe

deposit box.

(3) (43) "Lessor" means a bank, as defined in section 11-1-102 (2) SUBSECTION

(5) OF THIS SECTION, or subsidiary thereof, including any company operating pursuant

to section 11-9-102 11-105-501, or any other person or persons renting or

maintaining safe deposit facilities. "Lessor" includes any company organized and

operating on July 1, 1957, under the jurisdiction of the division solely for the purpose

of leasing safe deposit facilities. "Lessor" does not include any financial institutions

regulated by article 22, 23, 30, or 46 of this title or a credit union chartered under the

laws of the United States.

(14) (44) "Merger" includes consolidation.

(15) (45) "Merging bank" means a party to a merger.

(16) (46) "National bank" means a national banking association.

(17) (47) "Officer", when referring to a bank, means any person designated as

such in the bylaws and includes, whether or not so designated, any executive officer,

the chairman of the board of directors, the chairman of the executive committee, and

any trust officer, assistant trust officer, assistant vice-president, assistant treasurer,

assistant cashier, assistant comptroller, assistant secretary, auditor, or any person

who performs the duties appropriate to those offices.

(8) (48) The state where "operations are principally conducted" means that state

where the largest percentage of the aggregate deposits of all bank subsidiaries of the

bank holding company are held.

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(18) (49) "Order" means all or any part of the final disposition, whether

affirmative, negative, injunctive, or declaratory in form, by the commissioner or the

banking board of any matter other than the making of regulations RULES of general

application.

(9) (50) "Out-of-state bank" means a bank the home state of which is another state.

The term "out-of-state bank" includes a foreign bank.

(10) (51) "Out-of-state bank holding company" means a registered bank holding

company the operations of which are principally conducted outside of Colorado.

(19) (52) "Person" means an individual, corporation, partnership, joint venture,

trust estate, unincorporated association, or any other legal or commercial entity.

(14) (53) "Registered bank holding company" means a bank holding company

registered with the federal reserve board pursuant to the federal "Bank Holding

Company Act".

(20) (54) "Resulting bank" means the combined banks and trust companies

carrying on business upon completion of a merger.

(7) (55) "Retailer" means a person primarily engaged in the business of selling or

leasing goods or services to consumers.

(8) (56) "Retail location" means a location where the primary business is selling

or leasing goods or services to consumers. The term includes only that portion of the

building or structure in which such goods or services are offered for sale or lease, but

it does not include a wholesale or manufacturing business.

(4) (57) "Safe deposit box" means a safe deposit box, vault, or other safe deposit

receptacle maintained by a lessor.

(21) (58) "State bank" means a bank (other than an industrial bank), or bank and

trust company, chartered by this state.

(8) (59) "Successor" means a company which THAT replaces the transferor as

fiduciary for all or part of the fiduciary business of the transferor.

(9) (60) "Transferor" means a company which THAT is replaced as fiduciary by a

successor for all or part of the ITS fiduciary business. of the transferor.

ARTICLE 102

Division of Banking

PART 1

COMMISSIONER AND BANKING BOARD

11-102-101. [Formerly 11-2-101] Division of banking - creation - subject to

termination - repeal of article. (1) There is hereby created a division of banking

within the department of regulatory agencies. The division shall be charged with

functions provided by law. Whenever any law of this state refers to the banking

1060 Financial Institutions Ch. 152

department, said law shall be construed as referring to the division of banking.

(2) The administrative head of the division shall be the commissioner of banking,

who shall be the state bank commissioner appointed and serving as provided by law,

and the deputies and employees of the commissioner shall also be deputies and

employees of the division of banking hereby created. The bank commissioner, at the

time of his OR HER appointment, shall be experienced in the theory and practice of the

business and regulation of financial services institutions under the jurisdiction of the

banking board.

(3) to (9) Repealed.

(10) (3) (a) The provisions of section 24-34-104, C.R.S., concerning the

termination schedule for regulatory bodies of the state unless extended as provided

in that section, are applicable to the division of banking created by this section.

(b) This article is repealed, effective July 1, 2004.

11-102-102. [Formerly 11-2-106] Powers of commissioner. (1) The

commissioner shall be the administrative head of the division, and shall set

administrative policy therefor, and shall be responsible for the internal administration

thereof, including personnel matters, records, reports, systems, and procedures.

(2) The commissioner shall be the appointing authority for employees of the

division under the state personnel system.

(3) The bank commissioner shall be responsible for all examination and

enforcement functions of the division of banking subject to the policy-making and

rule-making authority of the banking board. In carrying out the responsibilities for

examinations and enforcement, in addition to other powers conferred by this code and

delegated by the BANKING board, the commissioner has the power to require a bank

to:

(a) Comply with the standards which THAT the BANKING board may prescribe for

determining the value of various types of assets;

(b) Charge off the whole or any part of an asset which THAT, at the time of the

commissioner's action, could not lawfully be acquired;

(d) File, record, or otherwise make effective liens and other interests in property;

(e) Obtain a financial statement from a person with present or prospective liability

to the bank to the extent that the bank can do so;

(f) Obtain insurance against damage to real estate taken as security;

(g) Obtain title insurance for real estate taken as security;

(h) Maintain adequate insurance against such other risks as the commissioner or

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the BANKING board may determine to be necessary and appropriate for the protection

of depositors and the public.

(4) The commissioner shall have primary responsibility for the preparation of the

preliminary budget draft for the division for review and comment by the banking

board prior to its submission to the department of regulatory agencies.

(5) The commissioner shall have the power to perform any acts and to make any

decisions incidental to or necessary for carrying out any functions specified by this

code or delegated by the banking board pursuant to this code.

(6) The commissioner has the power, subject to the approval of the banking board

and subject to the laws and state constitution, to appoint a chief deputy commissioner

and such other deputy commissioners as shall be necessary to efficiently perform the

duties of the commissioner. All such officers and employees shall receive such

compensation for their services as shall be fixed under general provisions of law

relating to the compensation of state officers and employees.

(7) The commissioner, the deputies, and all other employees of the division shall,

before entering upon the discharge of their duties, in addition to any oath required by

the state constitution, take and subscribe an oath to keep secret all information

acquired by them in the discharge of their duties, except as may be otherwise required

by this code or by law. Willful violation of this oath is declared to be a criminal

offense. The commissioner, all deputies, and all other employees of the division shall

be subject to article 18 of title 24, C.R.S.

(8) The commissioner may delegate to any officer or employee of the division any

of the commissioner's powers and may designate any officer or employee of the

division to perform any of the commissioner's duties.

(9) The commissioner, and such other officers and employees handling money or

securities in the course of their duties as the banking board may determine, shall be

bonded in such amount as the banking board may fix. The cost thereof shall be

charged as an expense of the division.

(10) The commissioner, all deputies, and all the employees, except special deputies

and assistants employed in liquidating failed banks, shall devote their entire time and

attention to the duties of their several positions and shall not, during their term TERMS

of service, receive any salary or compensation whatsoever from any bank.

(11) In the case of a vacancy in the office of the commissioner for any cause, and

until such vacancy is filled, the chief deputy commissioner shall have and exercise all

the powers and duties conferred by law or by the BANKING board upon the

commissioner, with the same authority as if those powers and duties were exercised

and performed by the commissioner. If there is no chief deputy at the time of such

vacancy, a chief deputy shall be appointed.

(12) The commissioner shall have a seal of office containing the words

"Commissioner of Banking of Colorado" in the form of a circle and the word "seal"

within the circle.

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(13) Repealed.

11-102-103. [Formerly 11-2-102] Banking board. (1) (a) There is hereby

established in the division a banking board, which shall consist of eight members AS

FURTHER SPECIFIED IN THIS SECTION.

(b) THE MEMBERS OF THE BANKING BOARD SERVING ON JUNE 30, 2003, SHALL

CONTINUE TO SERVE UNTIL THE EXPIRATION OF THEIR TERMS O F OFFICE IN

ACCORDANCE WITH THE PROVISIONS OF THIS SECTION.

(2) (a) There shall be four members who during their tenure are, and shall remain,

executive officers of state banks, and EACH OF WHOM shall have not less than five

years' practical experience as an active executive officer of a bank.

(a.1) (b) There shall be one member who during his or her tenure is, and shall

remain, the executive officer of an industrial bank.

(a.2) (c) There shall be one member who during his or her tenure is, and shall

remain, the executive officer of a trust company.

(b) (d) There shall also be two members to serve as public members of the banking

board who shall have expertise in finance through their current experience in

business, industry, agriculture, or education.

in a bank in which another member of the banking board has any such interest. Not

more than one of the members shall be an executive officer or employee of any one

bank holding company or affiliate thereof.

(d) (4) Of the eight members appointed under this subsection (2) OF THIS SECTION,

not more than four shall be of the same major political party. At all times, at least

one member shall reside west of the continental divide.

(3) (5) Members shall be appointed by the governor, with the consent of a majority

of the elected members of the senate at the next meeting thereof. Appointments made

to take effect on January 1, 1983, shall be made in accordance with section 24-1-135,

C.R.S. Persons holding office on June 15, 1987, are subject to the provisions of

section 24-1-137, C.R.S. Thereafter, except as provided in subsection (9) of this

section, The term of office of each member shall be four years. In the event of the

death, resignation, nonresidency in the congressional district from which appointed,

inability TO ACT, or refusal to act of any member of the banking board, or the

occurrence of any other event which THAT disqualifies the member from serving the

remainder of his OR HER term on the BANKING board, the governor within forty-five

days thereafter, or in the event of his THE GOVERNOR'S failure to act, the banking

board, shall make an interim appointment of a member to serve for the unexpired term

on the banking board, subject to the approval of a majority of the elected members

of the senate at the next meeting thereof. A member who moves out of the

congressional district from which appointed shall promptly notify the governor of the

date of such move, but such notice is not a condition precedent to the occurrence of

the vacancy. The governor may, after notice and hearing, remove a member for

cause. Any banking board member who is absent from three consecutive BANKING

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board meetings is subject to immediate removal by the governor.

(4) (6) Each member of the BANKING board shall receive the same per diem

compensation and reimbursement of expenses as those provided for members of

boards and commissions in the division of registrations pursuant to section 24-34-102

(13), C.R.S. Payment for all such expenses and allowances shall be made upon

vouchers therefor, which shall be filed with the department of personnel.

(5) (7) The BANKING board shall meet at least once in each calendar month. The

chairman of the BANKING board may call additional meetings of the BANKING board

upon at least seventy-two hours' notice to all members of the BANKING board and

shall do so upon the request of two members. All members of the BANKING board

shall be subject to immediate call in the event of an emergency. Four members of the

BANKING board shall constitute a quorum, and action taken by a majority of those

present at any meeting at which a quorum is present shall be the action of the

BANKING board. Upon the affirmative vote of a majority of those present at any

meeting at which a quorum is present, one or more members may be authorized to

conduct any hearing required under this code. In the event that less than a quorum

of the BANKING board is present during the conduct of the hearing, at least a quorum

of the BANKING board shall read the entire record before voting thereon. No member

shall participate in a proceeding before the BANKING board when any corporation,

partnership, or unincorporated association of which he OR SHE is, or was at any time

in the preceding twelve months, a director, officer, partner, employee, member, or

stockholder is a party to such proceedings. A member may disqualify himself OR

HERSELF from participating in a proceeding for any other cause deemed by him OR

HER to be sufficient.

(6) (a) Repealed.

(b) (8) A quorum may be established by means of a conference telephone call,

which shall be recorded in the BANKING board's minutes. Upon the affirmative vote

of a majority of those present at any meeting at which a quorum is present, the

BANKING board may hold an executive session to consider certain matters required

by statute to be kept confidential under this code. Any agenda and the minutes of

executive sessions shall be kept confidential by the BANKING board.

(7) (9) THE DIVISION SHALL PROVIDE such clerical, technical, and legal assistance

as the BANKING board may require. shall be provided by the division.

(8) (10) The members of the BANKING board shall, before entering upon the

discharge of their duties, in addition to any oath required by the state constitution,

take and subscribe an oath to keep secret all information acquired by them in the

discharge of their duties, except as may be otherwise required by law. Willful

violation of this oath shall be a criminal offense.

(9) On July 1, 1989, the terms of office of the members of the banking board

serving immediately prior to such date shall continue, except as necessary to comply

with the requirements of subsection (2) of this section. The governor shall appoint

members to the board, to fill the vacancies so created. Such appointments shall be

subject to confirmation by the senate at the next meeting thereof. Of the members

appointed to take office pursuant to this subsection (9), three shall be appointed to

1064 Financial Institutions Ch. 152

serve until July 1, 1989, and four shall be appointed to serve until July 1, 1991.

Appointments to fill vacancies created to comply with the requirements of subsection

(2) of this section shall take effect July 1, 1989, for the remainder of the term so

vacated. Thereafter the term of office of each member shall be four years.

(10) (11) The BANKING board shall elect a chairman CHAIRPERSON from among

its members to serve for a term not exceeding two years, as determined by the

BANKING board. No chairman CHAIRPERSON shall be eligible to serve as such for

more than two successive terms. In addition to the amounts received pursuant to

subsection (4) (6) of this section, the chairman CHAIRPERSON shall receive per diem

compensation and reimbursement of expenses in the amounts provided by section

24-34-102 (13), C.R.S., for each day spent in attending to the duties of the banking

board.

(11) (12) The banking board may enter into contracts with temporary employees

and for the provision of such other services as it may deem necessary in accordance

with section 13 of article XII of the state constitution.

11-102-104. [Formerly 11-2-103] Powers of banking board. (1) The banking

board is the policy-making and rule-making authority for the division of banking and

has the power to:

(a) Make, modify, reverse, and vacate rules and regulations for the proper

enforcement and administration of this code and the "Public Deposit Protection Act",

article 10.5 of this title;

(b) Make, promulgate, alter, amend, or revise reasonable rules and regulations as

may be necessary for the enforcement and execution of the provisions of the "Money

Order Act", article 52 of title 12, C.R.S.; and

(2) In addition to any other powers conferred on it by this code, the banking board

has the power to:

(a) Make all final decisions with respect to ownership including, but not limited

to:

(I) Chartering and conversions;

(II) Mergers;

(III) Acquisitions; and

(IV) Change of control;

(b) Make all final decisions with respect to certification pursuant to sections

11-6.4-103 and 11-6.4-104 SECTION 11-104-202;

or reorganization of banks and the emergency grant of new charters and branch

Ch. 152 Financial Institutions 1065

facilities;

(d) Make all final decisions with respect to requests for detached facilities;

(e) (d) Make all final decisions with respect to requests to exercise trust, fiduciary,

and agency powers.

(3) The banking board has the power to prohibit the taking of deposits or to restrict

the withdrawal of deposits, or both, from any one or more state banks when the

banking board finds that extraordinary circumstances make such a restriction

necessary for the proper protection of depositors in the affected state bank.

(4) The banking board has the power to authorize state banks under circumstances

in which state banks are not given authority under this code to act without the

approval of the banking board; to participate in any public agency created after July

1, 1957, under the laws of this state or the United States, the purpose of which is to

afford advantages or safeguards to banks or depositors; and to authorize compliance

with all requirements and conditions imposed upon such participants.

(5) The banking board has the power to authorize such banks to engage in any

banking activity in which state banks could engage were they operating as national

banks at the time such authority is granted, so long as such activity is not prohibited

elsewhere in this code and to the extent permissible under rules and regulations of the

banking board promulgated pursuant to subsection (1) of this section consistent with

the policies set forth in section 11-1-101.5 11-101-102, or under any other provision

of this code. State banks may engage in interstate branching to the same extent as if

they were operating as national banks so long as such activity is in accordance with

the rules and regulations of the banking board.

(6) The banking board has the power to affirm, modify, reverse, vacate, or stay the

enforcement of any order of OR ruling made by a hearing officer acting pursuant to

section 11-2-103.6 (1) 11-102-201 or the bank commissioner acting pursuant to

authority delegated by the banking board.

(7) The banking board has the power to order any person to cease violating a

provision of this code or a rule or a regulation issued pursuant to this code or to cease

engaging in any unsound banking practice, to impose civil money penalties pursuant

to section 11-2-117 11-102-503, to suspend or remove a director or officer pursuant

to section 11-2-119 11-102-505, and to take such other enforcement action as is

authorized by sections 11-2-120 to 11-2-122 11-102-506 TO 11-102-508 and any

other provision of this code.

(8) With respect to any action pursuant to subsection (3) or (7) of this section, ten

days' notice by certified mail, return receipt requested, and THE OPPORTUNITY FOR A

hearing shall be provided to the bank, the directors of the bank, and any person

ordered to cease violating provisions of this code pursuant to subsection (7) of this

section in advance of any action taken by the banking board. In cases found by the

banking board to involve extraordinary circumstances requiring immediate action, the

banking board may take such action without notice or hearing but shall promptly

afford a subsequent OPPORTUNITY FOR hearing upon application by the bank or

directors of the bank to rescind the action taken. With respect to any authorization

1066 Financial Institutions Ch. 152

requested pursuant to subsection (4) or (5) of this section, the banking board may, on

its own motion, or shall if requested by the applicant, hold a hearing on such request.

(9) The banking board has the power to issue a declaratory order with respect to

the applicability of this code or a rule and regulation issued by the banking board to

any person, property, or state of facts under this code.

(10) The banking board has the power to review and comment on the preliminary

budget draft for the division prior to its submission to the department of regulatory

agencies.

(11) The banking board shall annually establish such fees and assessments and the

percentages thereof as are necessary to generate the moneys appropriated by the

general assembly for the division.

(12) The banking board has the power to comment on who shall be the bank

commissioner and to recommend the termination of the commissioner for cause. The

banking board's comments and recommendations shall be given to the appropriate

office or officer of the state having appointment or termination powers with regard

to the commissioner.

(13) The banking board has the power to perform any acts and make any decisions

incidental to or necessary for carrying out its functions as set forth in this code.

(14) The banking board shall not delegate to the commissioner any of its powers

under subsections (1) to (12) of this section except informal enforcement powers

arising under section 11-2-121 11-102-507, which POWERS shall be delegable

pursuant to subsection (15) of this section.

(15) Except as provided in subsection (14) of this section, the banking board may,

in its discretion, delegate to the commissioner any of its powers, duties, and functions;

except that all powers under this code vest in the banking board unless delegated to

the commissioner by statute.

(16) The banking board may, in its discretion, require the commissioner to report

to the banking board periodically with respect to any powers delegated pursuant to

subsection (15) of this section.

(17) The banking board shall have a seal of office containing the words "Banking

Board of Colorado" in the form of a circle and the word "seal" within the circle.

11-102-105. [Formerly 11-2-103.5 and 11-2-107] Roles and authority of

banking board and commissioner - rules - exercise of powers.

(1) to (3) Repealed.

(4) (1) All rules of the commissioner lawfully adopted prior to April 15, 1988,

shall continue to be effective until revised, amended, repealed, or nullified pursuant

to law.

(5) Repealed.

Ch. 152 Financial Institutions 1067

(2) The banking board and the commissioner in the exercise of their powers

pursuant to this code shall be guided by and shall act in a manner consistent with the

policies of the state of Colorado with respect to state banks as set forth in section

11-1-101.5 11-101-102.

PART 2

PROCEEDINGS

11-102-201. [Formerly 11-2-103.6] Hearing officers - powers - procedure -

order final. (1) The BANKING board has the power to designate a person to act as

a hearing officer to conduct any public hearing authorized or required by this code

except in the case of charter applications which THAT have been timely protested

pursuant to the rules and regulations of the banking board. The BANKING board may

determine the qualifications required for a person to be designated pursuant to this

subsection (1) based upon the education and experience required for the particular

hearing. Such person may, but need not be, an administrative law judge serving

pursuant to section 24-30-1003, C.R.S.

(2) Any such hearing officer shall have the powers of a hearing officer prescribed

in section 24-4-105, C.R.S.

(3) After the conclusion of a hearing, the hearing officer shall prepare in writing

his WRITTEN findings and recommendations based thereon ON THE HEARING and shall

certify the same SUCH FINDINGS AND RECOMMENDATIONS to the BANKING board and

to each party. If the BANKING board does not affirm, modify, reverse, remand for

further findings, or vacate such written recommendations within sixty days after

receipt thereof OF THE RECOMMENDATIONS, the same shall be deemed the

determination and order of the banking board. The BANKING board may extend such

sixty-day period by no more than thirty additional days.

11-102-202. [Formerly 11-2-104] Subpoenas - witnesses - production of

records. (1) The commissioner, or the banking board, has the power to subpoena

witnesses, compel their attendance, require the production of evidence, administer an

oath, and examine any person under oath in connection with any subject relating to

a duty imposed upon, or a power vested in, the commissioner or the banking board.

(2) In case of a refusal of any person to comply with a lawful subpoena or order

of the commissioner or of the banking board issued pursuant to this section, upon

proper petition by the commissioner or the BANKING board to the district court, the

court shall require compliance therewith, and further refusal shall be punishable as

contempt of court.

11-102-203. [Formerly 11-2-104.5] Effect of good faith reliance on orders

or rules of banking board. No person who in good faith relies on any order OR rule

or regulation of the banking board shall be subjected to any civil or criminal liability

for any act or omission to act, notwithstanding a subsequent decision by a court

invalidating any such order OR rule. or regulation.

11-102-204. [Formerly 11-2-105] Court review. (1) Any person aggrieved and

directly affected by an order of the banking board issued under this code may seek a

review in the district court in and for the county in which the bank is located, or

1068 Financial Institutions Ch. 152

proposed bank is to be located, within thirty days after receipt of written notice of the

issuance of said order; except that any person aggrieved or directly affected by an

order of the banking board pursuant to section 11-3-110 11-103-304 granting or

denying a charter for a new state bank may seek a review in the court of appeals and

not the district court. Such review in the court of appeals shall be in accordance with

section 24-4-106 (11), C.R.S. The validity of an order may be tested only by such

a review and may not be placed in issue in an action to enforce it. The filing of such

a petition for review shall not, of itself, stay enforcement of an order, but the court

may order a stay upon such terms as it deems proper.

(2) The court may affirm the order of the banking board or may direct the banking

board to take any action deemed proper. It may reverse or modify the order of the

banking board if it THE ORDER was issued pursuant to an unconstitutional statutory

provision, was in excess of statutory authority, was issued upon unlawful procedure,

or is not supported by substantial evidence in the record.

PART 3

RECORDS, REPORTING, AND INFORMATION

11-102-301. [Formerly 11-2-108] Examinations and examiner's reports.

(1) The commissioner shall examine the books and records of every state bank as

often as deemed advisable and to the extent required by the banking board, shall

make and file in his OR HER office a correct report in detail disclosing the results of

such examination, and shall mail a copy of such report to the bank examined.

(1.1) (2) The commissioner shall examine, as often as deemed advisable and to the

extent required by the banking board, any electronic data processing centers of a state

bank or any electronic data processing centers which THAT serve a state bank, without

regard to the location of the electronic data processing center; shall make and file in

his OR HER office a correct report in detail disclosing the results of such examination;

and shall mail a copy of such report to the data processing centers examined and the

state bank which THAT they serve.

(1.2) (3) (a) The commissioner, if he OR SHE deems it necessary or if required by

the banking board, may examine the books and records of the controlling shareholder

of a state bank and any affiliated entities of the controlling shareholder for the

purpose of determining the safety and soundness of the state bank.

(b) If the controlling shareholder or affiliate's records are located outside this state,

the controlling shareholder or affiliate shall either make them available to the

commissioner at a convenient location within this state or pay the reasonable and

necessary expenses for the commissioner or his THE COMMISSIONER'S representative

to examine them THE RECORDS at the place where they are located.

officials of the state in which the records are located, to inspect them THE RECORDS

on his THE COMMISSIONER'S behalf.

(d) If a controlling shareholder or affiliate refuses to permit the commissioner to

make an examination, the banking board may fine such controlling shareholder or

affiliate an amount not to exceed one thousand dollars for each day any such refusal

Ch. 152 Financial Institutions 1069

continues.

(e) In lieu of any examination required by this subsection (1.2) (3), the

commissioner may accept an audit for the previous fiscal year prepared by an

independent certified public accountant, independent registered accountant, or other

independent qualified person. If the commissioner accepts an audit prepared by such

independent person, no costs thereof OF THE AUDIT shall be borne by the

commissioner and all costs of such audit shall remain the obligation of the controlling

shareholder or affiliate.

(b) (f) For purposes of this subsection (1.2) (3):

(I) "Affiliated entity" or "affiliate" means an entity in control of a controlling

shareholder.

(II) "Controlling shareholder" means a shareholder in control of a state bank.

(III) "In control of" means that an entity or shareholder meets the same criteria for

acquiring control as is set forth in section 11-2-109 (4) 11-102-303 for acquiring

control of a state bank.

(2) (4) If the commissioner deems it necessary, he THE COMMISSIONER may

examine any corporation the majority of the stock of which is owned by a state bank

or which CORPORATION is found by the BANKING board to be controlled by a state

bank, but the provisions of this subsection (2) (4) shall not apply when such stock is

held in a fiduciary capacity by the bank.

(3) (5) If the banking board finds any officer, director, or employee of any state

bank to be dishonest, reckless, incompetent, or acting in violation of this code, it

shall, in writing, report the facts regarding such officer, director, or employee to the

board of directors of said THE state bank, and, if the directors of said THE STATE bank

fail or refuse to take action on such report within ten days, the banking board may,

if it deems it advisable, send a copy of such report to the surety on the bond of said

officer.

11-102-302. [Formerly 11-2-109] Bank reports to banking board - generally.

(1) Every state bank shall make and file with the banking board not less than three

reports during each calendar year according to the form which THAT may be

prescribed by such THE BANKING board, verified by the oath of either the president,

the vice-president, the cashier, or the secretary and attested by the signature of three

or more of the directors. Each such report shall exhibit in detail, as may be required

by the banking board, the resources and liabilities of the state bank at the close of

business on the day past to be DATE specified by said THE banking board. in writing.

(2) Said reports shall be transmitted to the banking board within thirty days after

its request. therefor.

(3) The banking board has power to call for special reports from any particular

state bank if, in its THE BANKING BOARD'S judgment, the same SPECIAL REPORTS are

necessary to ESTABLISH a full and complete knowledge of its THE STATE BANK'S

condition. No such special report, nor any summary thereof OF A SPECIAL REPORT,

1070 Financial Institutions Ch. 152

shall be required to be published. The reports required by, and filed pursuant to, this

section shall be in lieu of all others required by law from state banks. Every state

bank which THAT fails to comply with this section shall pay to the banking board a

penalty in an amount set by the banking board pursuant to section 11-2-103 (11)

11-102-104 (11). The banking board, for valid reasons and good cause, may waive

such penalty.

11-102-303. [Formerly 11-2-109] Bank reports to banking board -

requirements for acquiring control. (4) (a) (1) As used in this subsection (4)

SECTION, unless the context otherwise requires:

(I) (a) "Person" means an individual, a corporation, a partnership, a trust, or any

other legal entity.

(II) (b) "Controlling person" means a person who is in control of a state bank or

would be in control of a state bank after a proposed acquisition.

(b) (2) A person shall be deemed to have acquired control of a state bank if, as a

result of acquisition, such person:

(I) (a) Directly or indirectly owns, controls, holds with the power to vote, or holds

proxies representing twenty-five percent or more of the outstanding voting stock

thereof;

(II) (b) Controls in any manner the election of a majority of the directors thereof;

(III) (c) Exercises a controlling influence over the management or policies thereof.

such person shall first make application to the banking board for approval. Without

approval from the banking board pursuant to paragraph (d) of this subsection (4) OF

THIS SECTION, a person shall be prohibited from making such an acquisition.

(II) (b) An application required by subparagraph (I) of this paragraph (c)

PARAGRAPH (a) OF THIS SUBSECTION (3) shall contain the following information to the

extent that it is known by the person making the application:

(A) (I) The number of shares involved;

(B) (II) The name of each seller or transferor;

(D) (IV) The name of each beneficial owner if the share or shares are registered

in another name;

(E) (V) The purchase price;

(F) (VI) Detailed information concerning any loans made in connection with the

acquisition;

Ch. 152 Financial Institutions 1071

(G) (VII) Such other information concerning the transaction as may be required

by the banking board regarding the effect of the transaction upon the control of the

state bank involved;

(H) (VIII) Biographical and financial information concerning each purchaser,

controlling person, or person in control of a controlling person participating in the

proposed acquisition; and

(I) (IX) The name of each controlling person and each person in control of a

controlling person participating in the proposed acquisition.

(d) (I) (4) (a) After receipt of an application, the commissioner shall make an

investigation, and the banking board shall approve the change of control only after

the BANKING board has determined:

(A) (I) That the person proposing to acquire control is qualified by character,

experience, and financial responsibility to control the state bank in a legal and proper

manner;

(B) (II) That the interests of the public generally will not be jeopardized by the

proposed acquisition; and

requirements of subsections (4) and (5) (1) TO (7) of this section and the other

provisions of articles 1 to 11 101 TO 109 of this title.

(II) (b) The general assembly declares that the acquisition of control of, or of any

ownership interest in, state banks by persons owned or controlled by a country with

which it has been determined to be against the national interest to trade without

export controls for national security purposes by the president of the United States or

another appropriate agency of the federal government as directed by the president

pursuant to the "Export Administration Act of 1979", 50 U.S.C. Appendix sec. 2401

et seq., the "International Emergency Economic Powers Act", 50 U.S.C. sec. 1701

et seq., or any rule, regulation, order, or decision promulgated in connection

therewith, is against the public interest. If the application or the commissioner's

investigation indicates that any person seeking to have control of or any ownership

interest in a state bank is owned or controlled by such a country, the banking board

may SHALL not approve any such change of control.

(e) (5) This subsection (4) SECTION shall not apply to the acquisition of:

(I) (a) Voting proxies acquired in the normal course of business as a result of a

proxy solicitation in conjunction with a stockholders' meeting;

(II) (b) Stock held in a fiduciary capacity unless the acquiring person has sole

discretionary authority to exercise voting rights with respect thereto;

(III) (c) Stock acquired in securing or collecting, in whole or in part, a debt

contracted in good faith or stock acquired through testate or intestate succession or

bona fide gift, if the acquirer advises the banking board of such acquisition within

thirty days after the acquisition and provides any information required or requested

1072 Financial Institutions Ch. 152

by the banking board or commissioner;

(IV) (d) Stock acquired by an underwriter in good faith and without any intent to

evade the purpose of this subsection (4) SECTION if the shares are held only for such

reasonable period of time as will permit the sale thereof OF THE SHARES; or

(V) (e) Pro rata stock dividends.

(f) (6) If the BANKING board has not acted upon a completed application within

sixty days of AFTER receipt thereof, unless extended for an additional thirty days by

the banking board, such application shall be considered approved.

(5) (7) Whenever any person proposes to acquire control of any state bank and is

required by the "Change in Bank Control Act of 1978" (section 7 (j) of the "Federal

Deposit Insurance Act", 12 U.S.C. 1817 (j)), as such act may be amended from time

to time, to give the appropriate federal banking agency prior written notice of such

proposed acquisition, a copy of such notice with supporting information shall be given

concurrently to the banking board for information. The banking board may use such

information in evaluating applications submitted pursuant to subsection (4) of this

section and shall submit its recommendations and comments to the appropriate federal

regulatory authority in a timely manner.

(6) (8) Any person who becomes a director, executive officer, or other person who,

directly or indirectly, is responsible for the management, control, or operations of a

state bank shall within ninety days thereafter file a report with the banking board

containing: A statement describing any civil or criminal offenses affecting such

person's qualification to serve in such capacity with respect to which such person has

been found guilty or liable by any federal or state court or federal or state regulatory

agency; such biographical information as the banking board requires; and such other

information as the banking board requires pursuant to its rules. and regulations. If

any statement contained in such report subsequently becomes inaccurate or

misleading in any way, such person shall file an amended report within thirty days

after the date on which the statement in the report first becomes inaccurate or

misleading. Any person who fails to comply with this subsection (6) (8) shall be

required by the banking board to pay a penalty in an amount set by the banking board

by rule, and regulation, which PENALTY shall not exceed twenty-five dollars per day,

and such penalties PENALTY shall be deposited in the general fund. The banking

board, for valid reasons and good cause, may waive such penalty.

(7) (9) If any state bank changes any executive officer, director, or other person

who, directly or indirectly, is responsible for the management, control, or operations

of the state bank, such changes shall be promptly reported to the banking board, and

the state bank shall provide such information concerning such person as may be

requested by the banking board on such forms as the banking board may require,

including information about the reasons for termination from any prior employment

and whether such person was charged or convicted of any civil or criminal offenses

enumerated in subsection (6) (8) of this section. No civil liability shall arise for any

state bank, its directors, executive officers, employees, or agents, or other persons due

to compliance with the requirements of this subsection (7) (9). The purpose of such

information is to inform the banking board of the qualifications of such person as they

may affect the safety and soundness of the state bank. The information shall be

Ch. 152 Financial Institutions 1073

treated as confidential under this code. Any bank that fails to comply with this

subsection (7) (9) shall be required to pay a penalty in an amount set by the banking

board by rule, and regulation, which PENALTY shall not exceed twenty-five dollars

per day, and such penalties PENALTY shall be deposited in the general fund. The

banking board, for valid reasons and good cause, may waive such penalty.

11-102-304. [Formerly 11-2-110] Commissioner's annual report -

publications. For each calendar year, the commissioner shall compile and publish

an annual report in such form and containing such information as the commissioner

may determine necessary to reasonably summarize the operations of the division

during such year.

11-102-305. [Formerly 11-2-111] Records. (1) Information from the records

of the division shall be revealed only to members of the banking board, except insofar

as the same DISCLOSURE may be rendered necessary by law; except that any party

entitled to appear in a hearing on an application for bank charter shall have access to

the applicant's proposed articles or amended articles of incorporation, application for

charter, and proposed bylaws and except that the commissioner may exchange

information as to the condition of banks with the United States comptroller of the

currency, banking departments of other states, the federal reserve system and its

examiners, and the federal deposit insurance corporation and its examiners.

Notwithstanding any other provision of articles 1 to 11 101 TO 109 of this title to the

contrary, the commissioner, his THE COMMISSIONER'S deputies, and the members of

the banking board may disclose any information in the records of the division or

acquired by them in the discharge of their duties which THAT is publicly available

from the federal deposit insurance corporation, the United States comptroller of the

currency, or the federal reserve system or the disclosure of which has been

specifically authorized by the board of directors of the financial institution to which

such information relates.

(2) Reports of examinations made by the division shall be retained by it THE

DIVISION for seven years.

(3) Upon request and upon payment of such reasonable charges as the

commissioner shall prescribe, the commissioner shall furnish to any person a certified

copy of any document on file with the division which THAT is a public record. Such

certified copy shall be admissible in evidence in lieu of the original and shall

constitute prima facie evidence of the contents of the original.

11-102-306. [Formerly 11-2-111.5] Information confidential. The banking

board, the bank commissioner, and all deputies and employees of the division shall

not divulge any information acquired by them in the discharge of their duties except

insofar as the same DISCLOSURE may be rendered necessary by law. The banking

board, the commissioner, and their designees may exchange information with the

United States comptroller of the currency, the federal deposit insurance corporation,

the board of governors of the federal reserve system, the federal home loan bank in

which an institution is a member or is making an application to become a member,

the executive director of the department of regulatory agencies, the division of

financial services, and banking regulatory agencies of other states, subject to any

confidentiality agreement entered into between the banking board or the

commissioner and the United States comptroller of the currency, the federal deposit

1074 Financial Institutions Ch. 152

insurance corporation, the board of governors of the federal reserve system, or the

federal home loan bank in which an institution is a member or is making an

application to become a member. In addition, the BANKING board, the commissioner,

and their designees may exchange information obtained by the BANKING board as to

possible violations of the federal "Employee Retirement Income Security Act of

1974", 29 U.S.C. sec. 1001 et seq., with the federal department of labor or the

executive director of the department of regulatory agencies. In addition, the BANKING

board, the commissioner, and their respective designees may exchange information

obtained by the BANKING board as to possible criminal violations of federal law

relating to the activities of a federally-insured institution with the federal bureau of

investigation or the executive director of the department of regulatory agencies. The

executive director of the department of regulatory agencies and the state

commissioner of financial services and their deputies shall, before entering upon the

discharge of their duties specified in this section, in addition to an oath required by

the state constitution, take and subscribe an oath to keep secret all information

acquired by them in the discharge of such duties, except as may otherwise be required

by law. Willful violation of this oath shall be a criminal offense. Notwithstanding

any other provision of this article to the contrary, the bank commissioner, the

deputies, and the members of the banking board may disclose any information in the

records of the division of banking or acquired by them within the discharge of their

duties which THAT is publicly available from the federal deposit insurance

corporation, the United States comptroller of the currency, or the federal reserve

system and disclose information which THAT has been specifically authorized by the

board of directors of the bank to which such information relates. Nothing in this

section shall be construed to authorize the board of directors of a bank to waive any

privileges which THAT belong solely to the banking board, the division, or its

employees.

11-102-307. [Formerly 11-2-112] Access to records. The commissioner shall

have access to any record of the division relating to state banks, and the appointive

members of the BANKING board shall have such access upon the affirmative vote of

a majority of the members of the BANKING board.

11-102-308. [Formerly 11-2-113] Bank records - preservation -

reproduction. (1) Every state bank shall retain its business records for such periods

as are prescribed by or in accordance with the terms of this section.

(2) Each state bank shall retain permanently the minute books of meetings of its

stockholders and directors, its capital stock ledger and capital stock certificate ledger

or stubs, its general ledger (or the record kept by the bank in lieu thereof), its daily

statements of condition, and all records which THAT the banking board shall, in

accordance with the terms of this section, require to be retained permanently.

(3) All other state bank records shall be retained for such periods as the banking

board shall, in accordance with the terms of this section, prescribe.

(4) The banking board shall from time to time issue regulations RULES classifying

all records kept by state banks and prescribing the period for which records of each

class shall be retained. Such periods may be permanent or for a term of years. Such

regulations RULES may be amended or repealed. Prior to issuing any such regulation

RULE, the banking board shall consider:

Ch. 152 Financial Institutions 1075

(a) Actions and administrative proceedings in which the production of bank

records might be necessary or desirable;

(b) State and federal statutes of limitation applicable to such actions or

proceedings;

(d) Such other matters as the banking board deems pertinent in order that its

regulations RULES will require banks to retain their records for such periods as are

commensurate with the interests of bank customers and shareholders and of the

people of this state in having bank records available.

(5) Any state bank may dispose of any record which THAT has been retained for

the period prescribed, in accordance with the terms of this section for retention of

records of its class, and shall, after it has disposed of a record, thereafter be under no

duty to produce such record in any action or proceeding.

(6) In lieu of retention of the original records, any state bank may cause any of its

records and records at any time in its custody, including those held by it as a

fiduciary, to be photographed or otherwise reproduced in permanent form. Any such

photograph or reproduction shall have the same force and effect as the original

thereof and be admitted in evidence equally with the original.

(7) To the extent that they are not in contravention of any statute of the United

States or regulations ANY RULE promulgated thereunder, the provisions of this section

shall apply to all banks doing business in this state.

PART 4

ASSESSMENTS AND FEES

11-102-401. [Formerly 11-2-114] Assessments. (1) The banking board shall

annually establish fees and assessments pursuant to section 11-2-103 (11)

11-102-104 (11). Assessments may be made more frequently than annually at the

discretion of the banking board.

(2) For the fiscal year beginning July 1, 1992 2003, and for each fiscal year

thereafter, the banking board shall establish its annual AN assessment to be collected

at least semiannually in such amounts as are sufficient to generate the moneys

appropriated by the general assembly to the division of banking for each such fiscal

year.

(3) In addition to each assessment established pursuant to subsections (1) and (2)

of this section, for each fiscal year beginning July 1, 1992, and ending June 30, 1994,

and for the period ending January 31, 1995, the banking board shall collect a

semiannual repayment of the fiscal year 1991-1992 general fund advance to the

division of banking in an amount equal to one-sixth of the amount of the banking

board's assessment that would have been collected in September 1992.

11-102-402. [Formerly 11-2-114.1] Administrative fees.

1076 Financial Institutions Ch. 152

(1) Repealed.

(2) (1) The banking board shall assess filing fees to banks and bank holding

companies outside of Colorado which THAT are seeking to acquire a bank or bank

holding company in Colorado in such amount as determined to be sufficient to

reimburse the state for the cost of administration of sections 11-6.4-103 (8) and (9)

and 11-6.4-104 11-104-202 (8) AND (9) AND 11-104-203 and the requirements

thereof.

(3) (2) No moneys collected pursuant to this section shall be expended except upon

appropriation by the general assembly.

11-102-403. [Formerly 11-2-114.5] Division of banking cash fund - creation.

All fees and assessments collected by the banking board shall be transmitted to the

state treasurer, who shall credit the same to the division of banking cash fund, which

fund is hereby created in the state treasury. All moneys in the fund shall be subject

to appropriation by the general assembly for the direct and indirect costs of the

activities of the banking board and the division. All interest derived from the deposit

and investment of moneys in the fund shall be credited to the fund. Any moneys not

appropriated shall remain in the fund and shall not be transferred or revert to the

general fund of the state at the end of any fiscal year.

PART 5

CONFLICTS OF INTEREST, PENALTIES,

REMOVAL, SUSPENSION, ENFORCEMENT

11-102-501. [Formerly 11-2-115] Banking interests of officers and

employees. No officer or employee of the division shall be an officer, director,

attorney, owner, or shareholder in any bank, or, except as provided in this article,

receive, directly or indirectly, any payment or gratuity from any such bank, or be

indebted to any bank or other institution over which the division has supervisory

control. Willful violation of this section is declared to be a criminal offense. This

section shall not prohibit being a depositor or the lessee of a safe deposit box on the

same terms as are available to the public generally, or being indebted to a bank:

Upon a mortgage loan upon the mortgagor's own home, or upon an installment debt

transferred to a bank in the regular course of business by a seller of consumer goods

including automobiles purchased by the officer or employee. Further, this section

shall not prohibit the four banker members of the banking board, provided for in

section 11-2-102 (2) (a) 11-102-103 (2) (a), from being executive officers in banks

and from receiving bona fide compensation as such officers.

11-102-502. [Formerly 11-2-116] Exemption from liability - when. No

member of the banking board or officer or employee of the division shall be liable in

any civil action for damages for any act done or omitted in good faith in performing

the functions of his OR HER office.

11-102-503. [Formerly 11-2-117] Assessment of civil money penalties by

banking board. (1) (a) (I) After notice and a hearing as provided in article 4 of title

24, C.R.S., and after making a determination that no other appropriate governmental

agency has taken similar action against such person for the same act or practice, the

banking board may assess against and collect a civil penalty from:

Ch. 152 Financial Institutions 1077

(A) Any person who has violated any final cease and desist order issued by the

banking board pursuant to section 11-2-103 (7) 11-102-104 (7); and

(B) Any state bank which THAT, or any executive officer, director, employee,

agent, or other person participating in the conduct of the affairs of such bank who,

violates or knowingly permits any person to violate any of the provisions of this code

or any rule or regulation promulgated pursuant to this code, or engages or participates

in any unsafe or unsound practice in connection with a bank. The civil money penalty

shall not exceed one thousand dollars per day for each day such violation continues.

This provision shall include, but not be limited to, the following violations: Making,

or causing to be made, delinquent payment of assessments under section 11-2-114

11-102-401; submitting, or causing to be submitted, delinquent reports, including but

not limited to call reports; or knowingly submitting, or causing to be submitted, to the

banking board any report or statement which THAT contains materially false or

misleading information.

(II) The banking board may, in extraordinary circumstances, at its option, and upon

waiver of the right to a public hearing by a respondent, close to the public any hearing

concerning an assessment of a civil money penalty, an order of suspension or removal

from office, an order to cease and desist from any unlawful or unsafe and unsound

practices, or any other formal enforcement action by the banking board. Such

extraordinary circumstances occur when specific concern arises about prompt

withdrawal of moneys from or the safety and soundness of the institution.

(b) For the purposes of this section, a violation shall include, but is not limited to,

any action, by any person alone or with another person, which THAT causes, brings

about, or results in the participation in, counseling of, or aiding or abetting of a

violation.

(2) Civil money penalties shall be assessed by written notice of assessment of a

civil money penalty served upon the person to be assessed. The notice of assessment

of a civil money penalty shall state the amount of the penalty, the period for payment,

the legal authority for the assessment, and the matters of fact or law constituting the

grounds for assessment. The notice of assessment of a civil money penalty shall

constitute a final order for purposes of judicial review pursuant to section 24-4-106,

C.R.S.

(3) The banking board shall have authority to determine the amount of any civil

money penalty assessed against any executive officer, director, employee, agent, or

other person participating in the affairs of a bank, except as expressly limited by this

code. In determining the amount of the civil money penalty to be assessed, the

banking board shall consider the good faith of the person assessed, the gravity of the

violation, any previous violations by the person assessed, the nature and extent of any

past violations, and such other matters as the banking board may deem appropriate;

except that the civil money penalty shall be not more than one thousand dollars per

day for each day the person assessed remains in violation.

(4) Civil money penalties assessed pursuant to this section shall be due and

payable and collected within thirty days after the notice of assessment of a civil

money penalty is issued by the banking board; except that the banking board may, in

its discretion, compromise, modify, or set aside any civil money penalty. Any civil

1078 Financial Institutions Ch. 152

money penalty collected pursuant to this section shall be transmitted to the state

treasurer, who shall credit it to the general fund.

11-102-504. [Formerly 11-2-118] No indemnification or insurance against

civil money penalties. Notwithstanding any other provision of law, no state bank

shall indemnify or insure any executive officer, director, employee, agent, or person

participating in the conduct of affairs of such bank against civil money penalties.

11-102-505. [Formerly 11-2-119] Removal of director, officer, or other

person. (1) The banking board may serve any executive officer, director, employee,

agent, or other person participating in the conduct of the affairs of a bank with a

written notice of its intention to remove him SUCH PERSON from office whenever the

banking board determines:

(a) That any such person has committed any violation of this code, rule and

regulation OF THE BANKING BOARD, or cease and desist order of the banking board

which THAT has become final; or has engaged or participated in any unsafe or

unsound practice in connection with a bank; or has committed or engaged in any act,

omission, or practice which THAT constitutes a breach of his fiduciary duty to the

state bank; or has been found liable for or guilty of any of the civil or criminal

offenses enumerated in section 11-2-109 (6) 11-102-303 (8); and

(b) (I) That the state bank has suffered or probably will suffer substantial financial

loss or other damage or that the interests of its depositors could be seriously

prejudiced by reason of such violation, or practice, or breach of fiduciary duty, or

offense; or

(II) That such person has received financial gain by reason of such violation, or

practice, or breach of fiduciary duty, or offense; or

(III) That such violation is one involving personal dishonesty on the part of such

person or one which THAT demonstrates a willful or continuing disregard for the

safety or soundness of the state bank.

(2) Whenever the banking board determines that an executive officer, director,

employee, agent, or other person participating in the conduct of the affairs of a state

bank, by conduct or practice with respect to another bank or business institution

which THAT results in substantial financial loss or other damage, has evidenced either

his personal dishonesty or a willful or continuing disregard for such state bank's

safety and soundness, and, in addition, has evidenced his unfitness to continue his

SUCH PERSON'S relationship with the state bank, the banking board may serve upon

such person a written notice of its intention to remove him OR HER from office or to

prohibit his THE PERSON'S further participation in any manner in the conduct of the

affairs of the state bank.

(3) A notice of intention to remove a director, executive officer, or other person

from office or to prohibit his SUCH PERSON'S participation in the conduct of the affairs

of a state bank shall contain a statement of the facts constituting grounds therefor and

shall fix a time and place at which a hearing shall be held thereon. Such hearing shall

be fixed for a date not earlier than thirty days nor later than sixty days after the date

of service of such notice, unless an earlier or a later date is set by the banking board

Ch. 152 Financial Institutions 1079

at the request of such director or executive officer or other person, and for good cause

shown. Unless such director, executive officer, or other person appears at the hearing

in person or by a duly authorized representative, he SUCH PERSON shall be deemed to

have consented to the issuance of an order of removal or prohibition as specified in

the notice issued pursuant to subsection (1) or (2) of this section. In the event of such

consent or, if, upon the record made at any such hearing, the banking board finds that

any of the grounds specified in such notice have been established, the banking board

may issue such orders of suspension or removal from office as it may deem

appropriate. Any such order shall become effective at the expiration of thirty days

after service upon such bank and the director, executive officer, or other person

concerned except in the case of an order issued upon consent, which shall become

effective at the time specified therein. Such order shall remain effective and

enforceable except to such extent as it is stayed, modified, terminated, or set aside by

action of the banking board or a reviewing court.

11-102-506. [Formerly 11-2-120] Suspension of director, officer, or other

person. (1) The banking board may suspend an executive officer, director,

employee, agent, or other person participating in the conduct of the affairs of a state

bank who becomes ineligible to hold his SUCH position, or who after receipt of an

order of the banking board to cease and desist violates this code or a lawful rule and

regulation or order issued pursuant thereto, or who is dishonest, or who is reckless or

grossly incompetent in the conduct of banking business, or who may be subject to

removal under section 11-2-119 11-102-505. It shall be a criminal offense for any

such person, after receipt of a suspension order, to perform any duty or exercise any

power of any state bank until the BANKING board vacates such suspension order. A

suspension order shall specify the grounds thereof. A copy of the order shall be sent

to the bank concerned and to each member of its board of directors.

(2) With respect to any action pursuant to this section, ten days' notice, by certified

mail, return receipt requested, and AN OPPORTUNITY FOR hearing shall be provided

to the bank affected, in advance of any action taken by the banking board. In cases

found by the banking board to involve extraordinary circumstances requiring

immediate action, the banking board may take such action, without notice or hearing,

but shall promptly afford a subsequent OPPORTUNITY FOR hearing, upon application

to rescind the action taken.

11-102-507. [Formerly 11-2-121] Informal enforcement authority. The

banking board, or the commissioner if so authorized by the banking board, shall have

authority to initiate informal actions to enforce the provisions of this code. In this

regard the banking board or the commissioner may, in its or his THE BANKING

BOARD'S OR THE COMMISSIONER'S discretion, enter into written agreements such as

a memorandum of understanding with, or an informal commitment letter from, or

strongly worded letter of reprimand to any bank or any executive officer, director,

employee, agent, or other person participating in the conduct of the affairs of a bank.

11-102-508. [Formerly 11-2-122] Statements derogatory to state banks -

penalty. Any person who willfully makes, circulates, or transmits to another any

false statement, written or oral, which THAT is directly or by inference derogatory to

the financial condition of any state bank and which THAT results in an extraordinary

withdrawal of funds from such bank or which THAT results in impairing public

confidence in such bank and any person who shall counsel, aid, procure, or induce

1080 Financial Institutions Ch. 152

another to start, transmit, or circulate any such statement knowing the statement to

be false commits a class 2 misdemeanor and shall be punished as provided in section

18-1.3-501, C.R.S.

ARTICLE 103

Organization and Corporate Functions

PART 1

GENERAL CORPORATE POWERS

11-103-101. [Formerly 11-3-101] General corporate powers. (1) A state

bank may be organized to exercise the powers provided in this code.

(2) Subject to the provisions of section 11-3-102 11-103-102, a state bank

organized under the laws of this state shall, without specific mention thereof in its

charter, have all the powers conferred by this code and the following additional

general corporate powers:

(a) To continue perpetually as a corporation;

(b) To make contracts;

(d) To have a corporate seal, which may be altered at pleasure, and to use the same

by causing it or a facsimile thereof to be impressed or affixed, or in any manner

reproduced;

(e) To make, alter, amend, and repeal bylaws, not inconsistent with its charter or

with law, for the administration and regulation of the affairs of the corporation;

(f) To elect, appoint, or remove officers and agents of the bank and to define their

duties and fix their compensation;

(g) To adopt and operate reasonable bonus, profit-sharing, and pension plans for

officers and employees;

(h) To grant, subject to approval of the banking board, and by vote of two-thirds

of the outstanding voting stock voted at a meeting of the stockholders, options to

purchase, to sell, or enter into agreements to sell shares of its capital stock to its

employees, whether or not such transactions qualify for special tax treatment under

the "Internal Revenue Code", as amended, and regulations RULES promulgated

thereunder.

(2.5) (3) A state bank, organized under the laws of this state, if so provided in its

charter, has the general corporate power to eliminate or limit the personal liability of

a director to the corporation or to its stockholders for monetary damages for breach

of fiduciary duty as a director; except that such provision shall not eliminate or limit

the liability of a director to the corporation or to its shareholders for monetary

damages for: Any breach of the director's duty of loyalty to the corporation or its

stockholders, acts or omissions not in good faith or which THAT involve intentional

Ch. 152 Financial Institutions 1081

misconduct or a knowing violation of law, or any transaction from which the director

derived an improper personal benefit. No such provision shall eliminate or limit the

liability of a director to the corporation or to its shareholders for monetary damages

for any act or omission occurring prior to the date when such provision becomes

effective.

(3) (4) A state bank, organized under the laws of this state, without specific

mention in its charter, shall also have the power, in addition to all other powers, to

make contributions to, or for the use or benefit of, the following:

(a) The United States, any state, territory, or political subdivision thereof, the

District of Columbia, or any possession of the United States for exclusively public

purposes;

(b) A corporation, foundation, trust, community chest, or other organization

created or organized in the United States, or in any state or territory, or the District

of Columbia, or any possession of the United States, and organized and operated

exclusively for religious, charitable, scientific, veteran rehabilitation service, civic

enterprise, OR literary or educational purposes, or for the prevention of cruelty to

children or animals, no part of the net earnings of which inures to the benefit of any

private shareholder or individual, and no substantial part of the activities of which is

carrying on propaganda or otherwise attempting to influence legislation; or

authorized, approved, or ratified by action of the board of directors of the corporation,

except as otherwise specifically provided or limited by its articles of incorporation,

its bylaws, or resolution duly adopted by its stockholders.

(4) (5) A state bank organized under the laws of this state, without specific

mention in its charter, shall also have the power to act as escrow agent.

(5) (6) If the name of a state bank organized under the laws of this state contains

the word "bank", said bank need not comply with the requirements of part 6 of article

90 of title 7, C.R.S.

11-103-102. [Formerly 11-3-102] Trust, fiduciary, and agency powers - when

authorized. In addition to its other powers, a state bank which THAT is authorized

by its charter to exercise trust powers, upon proper qualification under this code, has

the power to act as a fiduciary in any capacity. It may also act as registrar, transfer

agent, fiscal agent, or attorney-in-fact and have the power to receive, manage, and

apply sinking funds. Every state bank which THAT is authorized by its charter to

exercise trust powers pursuant to this section shall make and file with the

commissioner an annual report of trust assets and such other reports as the banking

board may require by rule, and regulation, on such forms as may be prescribed by the

banking board. No report filed pursuant to this section shall be required to be

published.

PART 2

CAPITAL REQUIREMENTS

11-103-201. [Formerly 11-3-103] Capital. The banking board shall establish

1082 Financial Institutions Ch. 152

by rules and regulations RULE the capital standards and guidelines, the methods for

measuring capital, and the definitions of "capital", "capital adequacy", "capital

inadequacy", and other related terms for banks subject to this code, which THAT may

differ for specific purposes. In promulgating such rules, and regulations, the banking

board shall consider all relevant factors, including, without limitation, the policies set

forth in section 11-1-101.5 11-101-102 and relevant federal laws and regulations

RULES. Each bank subject to this code shall at all times comply with the capital rules

and regulations promulgated by the banking board.

11-103-202. [Formerly 11-3-104] Inadequacy of capital - assessments. (1) If

the banking board has reason to believe that the capital of any bank is inadequate

under the rules and regulations of the banking board, the banking board may ascertain

the facts and furnish the bank with a copy of its determination. If the banking board

determines an inadequacy of capital based upon such determination, the

commissioner, with the approval of the banking board, may direct the state bank to

levy an assessment in a designated amount upon the holders of record of common

stock to remedy an inadequacy of capital. Upon receipt of an order to levy an

assessment, the directors shall cause to be sent to all holders of common stock, at

their addresses, a copy of the order and a copy of this subsection (1). If an

assessment is not paid within the time prescribed in the order or such shorter period

as the directors decide, but not less than thirty days, the state bank may, within sixty

days thereafter as the banking board may prescribe in its order, offer the shares of the

defaulting stockholders for sale at public auction or private sale at a price which THAT

shall not be less than the amount of the assessment and the cost of the sale. Any

excess shall be paid to the prior owners. Except under circumstances where section

11-3-105 11-103-203 applies, the method of collection provided in this section shall

be the sole method of collecting assessments. If an assessment is not paid within

ninety days after the date of the order to levy or at such other date as may be specified

in the order, but in no event less than thirty days, the commissioner may, with the

approval of the banking board, proceed pursuant to PART 8 OF THIS article; 5 of this

title; however, for good cause shown to the banking board by the affected bank, the

BANKING board may extend the ninety-day limit.

(2) If the banking board determines that the capital or reserves of any bank are

inadequate, the banking board may order the bank not to make new loans or

discounts.

11-103-203. [Formerly 11-3-105] Liability of shareholders. (1) The

shareholders of every state bank shall be held individually responsible, equally and

ratably, and not for another, for all contracts, debts, and engagements of said bank,

to the extent of double the amount of their stock therein, at the par value thereof, in

addition to the amount invested in such shares.

(2) The term "shareholder" shall apply not only to such persons as appear on the

books of the bank as shareholders, but also to every owner of stock, legal or

equitable, although the stock may stand on such books in the name of another person,

but not to a person who holds the stock as collateral security for the payment of a

debt.

(3) Any shareholder of any state bank who has transferred his OR HER shares or

caused such transfer to appear on the books of the bank within sixty days next before

Ch. 152 Financial Institutions 1083

IMMEDIATELY PRECEDING the capital inadequacy of such bank, or who has made such

transfer with knowledge of such impending capital inadequacy, shall be liable to the

same extent that the transferee or subsequent transferee fails to meet such liability.

This section shall not be construed to affect in any way any recourse which THAT

such shareholder might otherwise have against those in whose names such shares

appear upon the books of the bank at the time of such capital inadequacy.

(4) If the capital of any state bank becomes inadequate, and its assets and affairs

have been taken possession of by the banking board pursuant to this code, and the

banking board is of the opinion that it will become necessary in the course of

liquidation of such bank to resort to the liability of the shareholders as provided for

in this section, in order to make good the contracts, debts, or engagements of such

bank, it shall be lawful for the banking board to file in the office of the county clerk

and recorder of any county in this state, wherein any real estate belonging to any

shareholder of such bank is situated, a statement in writing to the effect that such

person is a stockholder of such bank (naming it) AND that such bank is in process of

liquidation, and stating the number of shares held by such shareholder and their

aggregate par value and the extent of such shareholder's liability under this code.

(5) Such statement shall be duly endorsed as filed by such county clerk and

recorder, giving the date of filing, and shall be indexed with the name of the

shareholder as grantor and the name of the bank as grantee, and shall be recorded as

mortgages of real estate are required to be recorded, and from the date of filing of

such statement the same shall be a lien upon any real estate of such shareholder

located in such county.

(6) If such shareholder thereafter deposits with the banking board an amount of

money equal to double the amount of the par value of his OR HER shares, to be held

by the banking board as security for his THE SHAREHOLDER'S liability under this

section, then the banking board shall execute and file with such county clerk and

recorder a release of such lien and, upon completing the liquidation of such bank,

shall return to such shareholder any excess of such deposit, if such shareholder's

ultimate liability shall prove to be less than the amount so deposited with the banking

board; and in all cases where the liability of the shareholder has been satisfied, either

as the result of litigation or otherwise, such liens so filed shall be released by the

banking board. The expense of filing and recording such liens and releases thereof

shall be paid out of any assets of the bank in the possession of the banking board.

(7) The liability imposed by this section shall not extend to shareholders in any

bank that has become a member of the federal deposit insurance corporation; but if

any bank which THAT has become a member of the federal deposit insurance

corporation ceases to remain a member thereof, the double liability mentioned in this

section shall extend to the shareholders in any such bank as provided in this section.

(8) No stockholder of a state bank shall set off against his OR HER stockholder

liability any claim he OR SHE may have as a depositor in or creditor of any insolvent

bank.

PART 3

CHARTERING A STATE BANK

1084 Financial Institutions Ch. 152

11-103-301. [Formerly 11-3-106] Incorporators. Five or more individual

incorporators desiring to organize a state bank shall file with the banking board, in

triplicate, an application for charter on the form prescribed therefor and together with

all other documents required by section 11-3-109 11-103-303, all of which

instruments shall be duly signed by each of the incorporators and sworn to before an

officer authorized by the laws of this state to administer oaths. A majority of the

incorporators shall be residents of the state and citizens of the United States. Each

incorporator shall, prior to the filing of said application, subscribe and pay in full in

cash for stock having a par value of not less than one percent of the minimum capital

and paid-in surplus requirements.

11-103-302. [Formerly 11-3-107] Application fees. Each application for

charter shall be accompanied by a fee established by the banking board pursuant to

section 11-2-103 (11) 11-102-104 (11). The fee may be refunded to the

incorporators if the application for charter is withdrawn prior to the date set for public

hearing.

11-103-303. [Formerly 11-3-109] Application for charter. (1) After the

capital stock has been fully subscribed, the incorporators shall make application to

the banking board for a charter. The incorporators shall submit to the banking board

the following:

(a) Its proposed articles of incorporation in duplicate, in such form as the banking

board shall prescribe and as shall be acceptable to the secretary of state for purposes

of filing, containing the following information: The name of the state bank; whether

the state bank is to exercise trust powers; the community in which it is to be located;

the amount of capital, the number of shares of each class, the relative preferences,

powers, and the rights of each class, the par value of the shares of each class, and the

amount of the paid-in surplus; a statement whether voting for directors shall or shall

not be cumulative, and the extent of the preemptive rights of stockholders; and such

other proper provisions to govern the business and affairs of the state bank as may be

desired by the incorporators.

(b) An application for a charter in such form and containing such information as

the banking board requires, including but not limited to the following: The name,

business and residence address, and business and professional affiliations of each

director and executive officer; the name, residence, citizenship, and occupation of

each subscriber and the number of shares for which he OR SHE has subscribed; the

past and present connection with any bank, other than as a customer, on terms

generally available to the public of each director and each subscriber to more than

five percent of the capital stock; the amount to be borrowed and from whom borrowed

on any stock issued to a subscriber to more than five percent of the capital stock; the

address at which it is proposed that the state bank do business or, if such address is

not known, the area within a radius of one-half mile in which the proposed bank is to

be located and the community which THAT it proposes to serve; a statement that all

the proposed bylaws have been attached as an exhibit to the application; and such

other information as the banking board may reasonably require to enable it to

determine whether a charter should be issued. The proposed bylaws shall be attached

to the application as an exhibit.

(2) If the proposed articles of incorporation or application do not comply with the

Ch. 152 Financial Institutions 1085

requirements of this code, and with the requirements of the banking board issued

pursuant thereto, the banking board shall, within thirty days after the receipt thereof,

return both of the said documents to the incorporators, calling attention to the defects

therein. If such articles of incorporation and application are not so returned by the

banking board within thirty days of AFTER the receipt thereof, they shall be deemed

to have been filed with the banking board as of the date received in its office;

otherwise they shall be deemed filed as of the date the amended documents, with all

defects corrected, are received in the commissioner's office.

(3) Not more than forty days after the date upon which the completed application

and all required documents are properly filed with the banking board, the banking

board shall mail notice of such filing by registered or certified mail to each bank

within a three-mile radius of the location of the proposed bank and to such other

persons or banks as the banking board may designate. Such notice shall be in the

form prescribed therefor by the banking board and shall include a statement that an

application for a state banking charter has been filed, the date of such filing, the

names and addresses of the incorporators thereof, and the location of the proposed

bank. The banking board shall also cause such notice to be published, at least one

time, not more than forty days after the date of filing such completed application, in

a newspaper of general circulation within the community in which such proposed

bank is to be located.

11-103-304. [Formerly 11-3-110] Procedure for granting or denying charter.

(1) Within sixty days following the filing of the completed application for charter,

the commissioner shall make or cause to be made a careful investigation to determine

that the following requirements have been met:

(a) That the applicant has proceeded in a lawful manner;

(b) That the name is not deceptively similar to that of another bank or otherwise

misleading;

are known, possess the qualifications and experience required under rules

promulgated by the banking board and that the qualifications and financial status of

the incorporators, directors, officers, and persons in control of the bank, as defined

in section 11-2-109 (4) 11-102-302 (2), are consistent with their responsibilities and

duties;

(d) That the proposed capital satisfies the standards and guidelines in the rules and

regulations promulgated by the banking board;

(e) That the proposed or amended articles of incorporation and bylaws are

appropriate or may be amended to be appropriate.

(2) If the commissioner determines that any of the requirements in subsection (1)

of this section have not been met in any respect, he OR SHE shall notify the applicant

of such deficiencies and of corrective measures deemed appropriate. Within six

months after the filing of an application for charter, and prior to the hearing

prescribed in subsection (3) of this section, the commissioner shall report to the

banking board that the applicant has met all of the requirements of subsection (1) of

1086 Financial Institutions Ch. 152

this section, if such be the case, or shall report which requirements have been met and

which have not been met, together with the circumstances respecting such

deficiencies. This report shall be introduced by the banking board into the record of

the hearing on such application.

(3) (a) The banking board, within six months after the filing of an application for

charter, and subject to subsection (7) of this section, shall hold a public hearing to

consider the application; except that the banking board, for valid reasons and good

cause, may postpone such hearing. At such hearing, the applicant shall have the

burden of proving:

(I) That the proposed bank will serve a public need and advantage in the

community or area of the community which THAT the bank will serve; and

(II) That the volume of business in the community or area of the community which

THAT the proposed bank will serve is such that profitable operation of the bank may

be reasonably projected.

(b) In the event of an application for a charter in a county with one existing bank

which operates a detached facility pursuant to section 11-6-101 (1.5) or in a county

without a chartered bank but with a detached facility established pursuant to section

11-6-101 (1.6), the board shall not consider the existence of such detached facility

in its deliberations concerning the approval or denial of a charter; except that the

board may consider data regarding such detached facility in determining public need.

has given notice pursuant to subsection (5) of this section of a hearing on any

application for charter filed pursuant to this section and the BANKING board has

received no written protests against such charter application within ten days of ON OR

BEFORE THE TENTH DAY PRECEDING THE DATE FIXED FOR the hearing, the BANKING

board may grant such charter without a hearing as otherwise required in this section

if the applicants for such charter are known to the BANKING board.

(4) On hearing, the banking board may admit in evidence the application for

charter and any other relevant information in the files of the division. The applicant

and all others receiving notice by registered or certified mail under subsection (5) of

this section are also entitled to be heard and to introduce testimony at such hearing,

as well as such others as the banking board may determine to be necessary.

(5) The banking board shall give notice of the hearing on application for charter

provided in subsection (3) of this section at least thirty days in advance of the hearing

date fixed by the BANKING board, by registered or certified mail, to the applicant, to

each bank within a three-mile radius of the location of the proposed bank, and to such

other persons or banks as the banking board may designate. Such notice shall be in

the form prescribed by the banking board and shall include the names of the

incorporators, the name of each stockholder subscribing to ten percent or more of the

stock of the bank, the name and location of the proposed bank, the date, time, and

place of the hearing, and A STATEMENT DECLARING that the application and proposed

articles of incorporation or amended articles of incorporation are available for

inspection in the office of the banking board. The banking board shall also cause

such notice to be published at least one time not less than twenty days prior to the

Ch. 152 Financial Institutions 1087

date fixed for such hearing in a newspaper of general circulation within the

community in which the proposed bank is to be located.

(6) Within one hundred twenty days following the date of conclusion of the

hearing, the banking board shall issue a written order requiring the commissioner to

grant a charter if a majority of the banking board finds that the requirements of

subsection (1) of this section have been met and that the applicant has met the burden

of proof prescribed in subsection (3) of this section. The banking board shall make

execution of its order to grant a charter contingent upon the proposed bank making

a bona fide application for membership in the federal deposit insurance corporation

or the federal reserve system. In applications where management has not been fully

disclosed at the time of the hearing, the banking board may make execution of its

order to grant a charter contingent upon its subsequent approval of management. If

a majority of the banking board finds that the requirements of subsection (1) of this

section or the burden of proof of subsection (3) of this section have not been met, the

application for charter shall be denied. The banking board may revoke a charter

which THAT may have been granted in any case where the proposed bank has not

exercised its charter and opened for business within six months after the date of the

order to grant the charter.

(7) If within a ninety-day period there has HAVE been filed with the banking board

two or more applications for charter for state banks to serve the same community, the

banking board may hold a single hearing to consider such applications. The banking

board may grant or deny a charter to any one or more of the applicants without regard

to the priority in time of filing applications. The determination of the banking board

to deny a charter to an applicant who might otherwise qualify for a charter under

subsections (1) and (3) of this section shall be based upon a finding that the public

need or advantage of the community or area of the community in which the proposed

bank will be located will best be served by such denial and by the granting of a

charter on another application or other applications heard at such single hearing.

(8) It shall be a criminal offense against this code for a proposed state bank to

perform any act as a state bank other than to perfect its organization, obtain and equip

a place of business, and OR otherwise prepare to do business as a state bank prior to

receiving a charter.

(9) Unless otherwise provided by law to the contrary, articles of incorporation,

amended articles of incorporation, or amendments to articles of incorporation shall

be delivered and filed as follows:

(a) Duplicate originals shall be delivered to the secretary of state for filing in

accordance with the general corporate laws of this state;

(b) A verified copy shall be filed in the office of the clerk and recorder for the

county in which the state bank is located;

approval in the case of amendments, shall be delivered by the commissioner to the

applicant.

1088 Financial Institutions Ch. 152

PART 4

SHARES AND DISTRIBUTIONS

11-103-401. [Formerly 11-3-111] Subscription calls. After a charter has been

granted, the directors may call for the payment of the subscriptions in full within

thirty days from AFTER the date of the notice thereof THAT THE CHARTER HAS BEEN

GRANTED. No share shall be issued until the par value and the pro rata portion of the

paid-in surplus specified in the charter have been paid in full in cash.

11-103-402. [Formerly 11-3-112] First meetings of stockholders - director's

oath - bylaws. (1) After the capital and surplus have been fully paid in cash and

before any business shall be IS transacted, the incorporators shall call a meeting of

the stockholders, on at least ten days' notice, to elect directors and to adopt bylaws,

and shall direct the call, on at least five days' notice, of the first meeting of directors

for election of officers.

(2) Every director of a state bank shall take and subscribe to an oath before a

disinterested notary public that he THE DIRECTOR will, insofar as the duty devolves

upon him OR HER, diligently and honestly administer the affairs of the bank and that

he OR SHE will not knowingly violate nor willingly permit to be violated any provision

of the law.

(3) Bylaws may be adopted and amended by a majority vote at a stockholders'

meeting, but the bylaws may provide for adoption or amendment by the board of

directors of any provisions other than those relating to the duties, term of office,

remuneration, reimbursement, or indemnification of a director. Copies of all bylaws

and amendments thereto shall be filed with the commissioner.

11-103-403. [Formerly 11-3-113] Stockholders' meetings - voting trusts -

preemptive right - transfer of stock. (1) A regular annual meeting of stockholders

shall be held each year as the bylaws direct. A special meeting may be called at any

time by the banking board or the commissioner, by not less than one-third of the

directors, or by the holders of twenty-five percent of the outstanding voting shares.

The regular annual meeting and special meetings of the stockholders shall be held at

such place as may be designated in the bylaws. Notice shall be mailed at least ten

days before a meeting to every person who is a stockholder of record twenty days

before the date of the meeting or at such longer period as may be provided in the

bylaws. Such notice shall be mailed to the stockholder's address on the records of the

bank. No business shall be transacted at a special meeting which THAT is not

specified in the notice thereof or necessary or proper in connection with or incidental

to the business specified. The holders of a majority of the outstanding voting shares,

or their authorized representatives, shall constitute a quorum. In the absence of a

quorum, a meeting may be adjourned from time to time without notice to the

stockholders.

(2) Except on the election of directors, when cumulative voting is provided for in

the charter, each share of common stock shall have one vote, which may be cast by

the owner of record on the record date or his BY SUCH OWNER'S proxy, whether or not

the owner of record has the beneficial interest therein. The bank may not vote shares

which THAT it holds in any capacity other than as fiduciary.

Ch. 152 Financial Institutions 1089

(3) A stockholder authorized to vote may, by his MEANS OF A proxy executed in

writing, appoint a representative to cast his OR HER vote. The banking board may

promulgate rules governing proxies and the solicitation thereof.

(4) No shares deposited under a voting trust agreement shall be voted by the

trustee unless the agreement has been approved by the banking board. Approval shall

be withheld or, if previously granted, revoked if it appears that the existence of the

trust would tend to reduce competition among lending institutions or to affect

adversely the character or competence of the management or the bank's policies or

operating procedures. In the absence of such approval, the record owner may vote

his OR HER shares.

(5) Unless otherwise provided in the charter, if additional stock of a class is

offered for sale, stockholders of record of the same class on the date of the offer shall

have the right to subscribe to such proportion of the shares as the stock held by them

bears to the total of the outstanding stock. This right shall be transferable, but shall

terminate if not exercised within thirty days of AFTER the offer. If the right is not

exercised, the stock shall not be offered for sale to others at a lower price, or on other

more favorable terms, without the stockholders again being accorded a preemptive

right to subscribe.

(6) No transfer of shares of stock shall be effective with respect to the bank until

it has been entered upon the transfer books. The stock book shall be available for

examination by a stockholder of the corporation at the principal place of business

during its business hours.

11-103-404. [Formerly 11-3-116] Waiver of notice - meeting or vote.

(1) When a notice is required to be given to stockholders or directors under this code,

or the charter or bylaws of any state bank, a waiver thereof in writing, signed by the

person entitled to said notice, whether EITHER before or after the time stated therein,

shall be deemed equivalent thereto.

(2) If the vote of stockholders or directors at a meeting thereof is required or

permitted to be taken in connection with any corporate action by any section of this

code, the meeting and vote of stockholders or directors may be dispensed with, if all

of the stockholders or directors who would have been entitled to vote upon the action

if such meeting were held shall consent in writing to such corporate action being

taken.

(3) In the event that the action which THAT is consented to is such as would have

required the filing of a certificate under any of the other sections of this code if such

action had been voted upon by the stockholders or directors at a meeting thereof, the

certificate filed under such other section shall state that written consent has been

given under this section, in lieu of stating that the stockholders have voted upon the

corporate action in question, if such last mentioned statement is required thereby.

11-103-405. [Formerly 11-3-117] Amendment of articles - change of location

- authorized but unissued stock. (1) A state bank may apply to the banking board

to amend its articles of incorporation or to change its location.

(2) An application for an amendment of the articles of incorporation to change the

1090 Financial Institutions Ch. 152

authorized capital and the number and par value of the shares, to acquire or abandon

trust powers, or to change its location shall be authorized by the vote of two-thirds

of the outstanding voting stock voted at a meeting of the stockholders. Any other

application may be authorized by the vote of a majority of the outstanding voting

stock voted at a meeting of the stockholders.

(3) Notice of the application shall be sent to such persons and organizations as the

banking board may require.

(4) The banking board shall approve an application:

(a) To change the name of the corporation if the proposed name is not deceptive

or misleading;

(b) Repealed.

an amendment increasing the total capital shall not become effective until the banking

board finds that the new capital has been fully paid in cash; except that amendments

increasing the capital stock of the bank in the category of authorized but unissued

stock shall be approved pursuant to the provisions of subsection (6) of this section.

(5) In making its determination thereon, the banking board shall consider whether

the public need and advantage would be served by granting the application and shall

be guided by the standards prescribed for the approval of an application for a charter,

insofar as they are reasonably applicable. In making its determination upon an

application for change of location, the banking board shall consider the need and

advantage of both the community or area of the community in which the bank will be

located and the community or area of the community from which the bank will be

moved.

(6) A state bank, upon application to and approval by the banking board and by

vote of two-thirds of the outstanding voting stock voted at a meeting of the

stockholders, by an amendment of the articles of incorporation, may authorize an

increase in the capital stock of the bank in the category of authorized but unissued

stock. Such authorized but unissued stock may be issued from time to time to

employees of the bank pursuant to stock option or stock purchase plans adopted in

accordance with the provisions of section 11-3-101 (2) (h) 11-103-101 (2) (h), or in

exchange for convertible preferred stock or convertible capital debentures in

accordance with the terms and provisions of such securities. Authorized but unissued

stock may also be issued from time to time for such other purposes and considerations

as may be approved by the board of directors of the state bank and the banking board.

11-103-406. [Formerly 11-3-118] Dividends - when payable. The board of

directors of a state bank may declare dividends from retained earnings and from other

components of capital specifically approved by the banking board so long as the

declaration is made in compliance with the rules and regulations established by the

banking board.

PART 5

DIRECTORS AND OFFICERS

Ch. 152 Financial Institutions 1091

11-103-501. [Formerly 11-3-114] Directors and officers. (1) The affairs of

a state bank shall be managed by a board of directors, which shall exercise its powers

and be responsible for the discharge of its duties. The number of directors, not less

than three nor more than twenty-five, shall be as fixed by the bylaws, and the number

so fixed shall be the board, regardless of vacancies. At least three-fourths of the

directors shall be citizens of the United States, two-thirds shall be residents of this

state, and a majority shall reside within one hundred miles of the place of business of

the bank; except that, if the bank is organized solely to do business with other

financial institutions, is owned primarily by the financial institutions with which it

does business, and does not do business with the general public, at least three-fourths

of the directors shall be citizens of the United States and a majority shall be residents

of this state. A director need not own shares. No director may serve who has been

convicted of fraud involving any financial institution or of a felony, but the banking

board may waive this provision regarding a felony if it determines that the particular

felony does not jeopardize the person's ability to act as a director. A director who is

disqualified may be removed by the board of directors or by the banking board. No

action taken by a director prior to his OR HER resignation or removal shall be subject

to attack on the ground of his OR HER disqualification.

(2) Directors shall receive such reasonable compensation as the bylaws may

prescribe and shall serve until their successors are elected and qualify.

(3) Directors shall be elected by the stockholders at the first meeting, and

thereafter, at the annual meeting or at a special meeting called for the purpose. If the

charter provides for cumulative voting, the votes of each share may be cast for one

person or divided among two or more, as the stockholder may choose. The person (to

the number of directors to be elected) having the largest number of votes shall be

elected.

(4) The term of office of directors shall be one year. Vacancies may be filled by

vote of the board of directors until the next meeting of the stockholders.

(5) A director may be removed by the stockholders at a meeting. Where

cumulative voting for directors is provided in the charter, no director shall be

removed unless the votes cast against a motion for his OR HER removal are less than

the total number of shares outstanding divided by the number of authorized directors,

but all of the directors shall be removed if a majority of the outstanding shares

approves a motion for the removal of all.

(6) The officers designated by the bylaws shall be elected by the board of

directors. A member of the board of directors shall be elected president. No officer

shall be elected, or a contract executed for his THE OFFICER'S employment, for a

period longer than one year. No person may be employed as an officer of a state

bank who has been convicted of fraud involving any financial institution or of a

felony, but the banking board may waive this provision regarding a felony if it

determines that the particular felony does not jeopardize the person's ability to act as

an officer. An officer may be removed by the board of directors at any time, but

removal shall not prejudice any rights that he THE OFFICER may have to damages for

breach of contract of employment, unless he THE OFFICER falsely answered any

question or made any material misstatement of facts relating to any matter leading to

or constituting any inducement to such employment.

1092 Financial Institutions Ch. 152

(7) Repealed.

11-103-502. [Formerly 11-3-115] Directors' meetings - duties. (1) The board

of directors of a state bank shall meet at least once each calendar month. The

banking board, the commissioner, or an executive officer may call a special meeting.

A majority of the board of directors shall constitute a quorum. The board shall keep

minutes of each meeting, including a record of attendance. Any director who fails to

attend meetings of such board of directors for three consecutive months shall

automatically cease to be a director, unless his SUCH absence is satisfactorily

explained to the banking board or the commissioner, who shall, in such event, notify

the president of such bank of the approval thereof.

(2) The board of directors or the executive committee of the board shall review at

least monthly the following transactions occurring since the last review:

(a) Each loan, advance, discount, overdraft, and purchase or sale of a security

which THAT exceeds in amount one percent of the capital of the corporation pursuant

to the rules and regulations promulgated by the banking board, and each loan,

advance, discount, and overdraft which THAT makes the total obligations from one

obligor exceed that amount;

(b) Each purchase or sale of a security which THAT, together with the bank's other

purchases and sales in the security during the preceding two months, involves such

amount.

(3) (a) The board of directors shall cause the financial statements of the state bank

to be prepared in accordance with generally accepted accounting principles

consistently applied, except as the banking board may otherwise provide in order to

establish regulatory and competitive parity and pursuant to the policies expressed in

section 11-1-101.5 11-101-102.

(b) The board of directors shall cause an audit of the state bank to be completed

by an accounting firm composed of certified public accountants or a directors'

examination by a public accountant or any other independent person or persons as

determined by the banking board at least annually but at intervals of not more than

fifteen months, as may be required by the banking board or its rules. and regulations.

The banking board shall adopt regulations RULES regarding the qualifications of such

public accountant and other independent person or persons, who shall assume the

responsibility for due care in such director's examinations. The banking board's

regulations RULES shall also establish the scope of such directors' examinations,

which shall include safeguards to insure that such examinations adequately describe

the financial condition of the financial institution. The banking board may require an

audit to be completed by an accounting firm composed of certified public accountants

under certain circumstances. A report of the audit or directors' examination and any

related management letters and documents shall be completed and submitted to the

banking board within the time frames PERIODS, in the form, and containing such

information as the banking board may require in its rules. and regulations. Such

report of the audit or directors' examination and any related management letters and

documents shall be reviewed by the directors at the next meeting of the board of

directors.

Ch. 152 Financial Institutions 1093

of paragraph (b) of this subsection (3) may be fulfilled if:

(I) As required by the banking board and its rules, and regulations, the controlling

bank holding company is audited or examined in a directors' examination annually

at intervals of not more than fifteen months and the bank is included in the annual

audit or directors' examination of the bank holding company by that firm;

(II) A report of the audit or directors' examination for the controlling bank holding

company and any related management letters and documents is completed and

submitted to the banking board within the time frames PERIODS, in the form, and

containing such information as the banking board may require in its rules; and

regulations; and

(III) An annual internal examination of the bank is prepared by the internal

examination staff of the controlling bank holding company which shall be submitted

AND KEPT AVAILABLE FOR SUBMISSION to the banking board immediately upon its THE

BANKING BOARD'S request.

(d) A bank or bank holding company whose fiscal year ended during the period

from July 1, 1989, to June 7, 1990, shall be required to comply with the audit or

directors' examination requirements of this section annually at intervals of not more

than fifteen months and not necessarily as of its fiscal year end.

(4) A state bank authorized to exercise trust powers shall not accept, or voluntarily

relinquish, a fiduciary account without the approval or ratification of the board of

directors, or of a committee of officers or directors designated by the board to

perform this function, but the board of directors or the committee may prescribe

general rules governing acceptances or relinquishment of fiduciary accounts, and

action taken by an officer in accordance with these rules is sufficient approval. Any

committee so designated shall keep minutes of its meetings and report at each monthly

meeting of the board of directors all action taken since the previous meeting of the

board. The board of directors shall designate one or more committees of not less than

three qualified officers or directors to supervise the investment of fiduciary funds. No

such investment shall be made, retained, or disposed of without the approval of a

committee as to which the bank has investment or review responsibility. At least

once in every calendar year, the committee shall review the records of each fiduciary

account as to which the bank has investment or review responsibility and shall

determine the current value, safety, and suitability of the investments and whether the

same INVESTMENTS should be modified or retained. The committee shall keep

minutes of its meetings and shall report at each monthly meeting of the board of

directors its conclusions on all questions considered and all action taken since the

previous meeting of the board.

11-103-503. [Identical to 11-103-404.] Waiver of notice - meeting or vote.

(1) WHEN A NOTICE IS REQUIRED TO BE GIVEN TO DIRECTORS UNDER THIS CODE, OR

THE CHARTER OR BYLAWS OF ANY STATE BANK, A WAIVER THEREOF IN WRITING,

SIGNED BY THE PERSON ENTITLED TO SAID NOTICE, EITHER BEFORE OR AFTER THE TIME

STATED THEREIN, SHALL BE DEEMED EQUIVALENT THERETO.

(2) IF THE VOTE OF DIRECTORS AT A MEETING THEREOF IS REQUIRED OR PERMITTED

1094 Financial Institutions Ch. 152

TO BE TAKEN IN CONNECTION WITH ANY CORPORATE ACTION BY ANY SECTION OF THIS

CODE, THE MEETING AND VOTE OF DIRECTORS MAY BE DISPENSED WITH, IF ALL OF THE

DIRECTORS WHO WOULD HAVE BEEN ENTITLED TO VOTE UPON THE ACTION IF SUCH

MEETING WERE HELD CONSENT IN WRITING TO SUCH CORPORATE ACTION BEING

TAKEN.

(3) IN THE EVENT THAT THE ACTION THAT IS CONSENTED TO IS SUCH AS WOULD

HAVE REQUIRED THE FILING OF A CERTIFICATE UNDER ANY OF THE OTHER SECTIONS

OF THIS CODE IF SUCH ACTION HAD BEEN VOTED UPON BY THE DIRECTORS AT A

MEETING THEREOF, THE CERTIFICATE FILED UNDER SUCH OTHER SECTION SHALL STATE

THAT WRITTEN CONSENT HAS BEEN GIVEN UNDER THIS SECTION.

PART 6

INDEMNIFICATION AND INSURANCE

11-103-601. [Formerly 11-3-120] Director and officer insurance and fidelity

bonds - legislative declaration. (1) The directors of a state bank shall require good

and sufficient fidelity bonds on all active officers and employees, whether or not they

draw salary or compensation, which bonds shall provide for indemnity to such bank

on account of any losses sustained by it as the result of any dishonest, fraudulent, or

criminal conduct by them acting independently or in collusion or combination with

any person. Such bonds may be in individual, schedule, or blanket form, and the

premiums therefor shall be paid by the bank.

(2) The said directors shall also require suitable insurance protection to the bank

against burglary, robbery, theft, and other insurable hazard to which the bank may

be exposed in the operations of its business on the premises or elsewhere.

(3) The directors shall be responsible for prescribing, at least once in each

calendar year, the amount or penal sum of the bonds and policies specified in this

section and the sureties or underwriters thereon after giving due and careful

consideration to all known elements and factors constituting such risk or hazard.

Such action shall be recorded in the minutes of the board of directors.

(4) (a) The general assembly hereby finds, determines, and declares that the

following is enforceable and in conformity with the public policy of this state, as

expressed in this code, including the provisions of section 11-1-101.5 11-101-102:

(I) Any insurance policy, form, contract, endorsement, or certificate in effect or

issued on or after April 30, 1993, which THAT provides insurance coverage to

directors or officers, or both, of a bank but which THAT does not grant coverage or

which THAT excludes coverage for claims made by any depository insurance

organization or any other state or federal corporation, organization, or entity acting

as receiver, conservator, or liquidator of such bank, whether in its own name or in ON

behalf of any other person or entity; or

(II) Any fidelity bond, financial institution bond, or depository institution bond in

effect or issued on or after April 30, 1993, that provides for termination of such bond

upon the taking over of the bank by a receiver or other liquidator or by state or

federal officials.

Ch. 152 Financial Institutions 1095

(b) No provision of PART 8 THIS article 5 of this title shall be construed to

contravene or modify the expressed public policy set forth in this subsection (4).

11-103-602. [Formerly 11-3-121] Indemnification and personal liability of

directors, officers, employees, and agents. The state bank sha ll have the same

powers, rights, and obligations and shall be subject to the same limitations as apply

to corporations for profit as set forth in article 109 of title 7, C.R.S. State bank

directors, officers, employees, and agents shall have the same rights as directors,

officers, employees, and agents, respectively, of corporations for profit as set forth

in article 109 of title 7, C.R.S. State bank directors and officers shall have the benefit

of the same limitations on personal liability for any injury to person or property

arising out of a tort as set forth in section 7-108-402 (2), C.R.S., for directors and

officers, respectively, of corporations for profit. Any reference in said sections to

shareholders shall be construed to refer to stockholders for the purposes of this

section.

11-103-603. [Formerly 11-3-122] Deposit insurance - membership in federal

reserve system - federal national mortgage association. (1) A state bank is

authorized to do any act necessary to obtain insurance of its deposits by the United

States or any agency thereof and to acquire and hold membership in the federal

reserve system or to take advantage of any other act or resolution of congress that

may be enacted to aid, regulate, or safeguard state banks and their depositors,

including any amendments of the same or any substitutions thereof. It may also

subscribe for and acquire any stock, debentures, bonds, or other types of securities

of the federal deposit insurance corporation and comply with the lawful regulations

and requirements from time to time issued or made by such corporation.

(2) A state bank which THAT is a member of the federal reserve system, or of the

federal deposit insurance corporation, or of both may make payments to the federal

national mortgage association, a constituent agency of the national housing and home

finance agency, of nonrefundable capital contributions, receive stock evidencing such

capital contributions and hold and dispose thereof, contract with said association, and

incur the expenses and otherwise comply with the then lawful regulations and

requirements issued by said association from time to time to the extent a national

bank in like circumstances is authorized by any act or resolution by the United States

congress or by any lawful rule or regulation issued pursuant thereto.

PART 7

MERGER, CONSOLIDATION, CONVERSION,

AND SALE OF ASSETS

11-103-701. [Formerly 11-4-102] Merger or conversion. (1) Upon approval

of the banking board, banks may be merged with, or converted into, a resulting state

bank as prescribed in this article; except that the action by a constituent national bank

shall be taken in the manner prescribed by, and shall be subject to, any limitation or

requirements imposed by any law of the United States, which LAW shall also govern

the rights of its dissenting shareholders.

(2) Nothing in the law of this state shall restrict the right of a state bank to merge

with, or convert into, a resulting national bank. The action to be taken by a

constituent state bank and its rights and liabilities and those of its shareholders shall

1096 Financial Institutions Ch. 152

be the same as those prescribed for national banks at the time of the action by the

applicable laws of the United States and not by the law of this state.

11-103-702. [Formerly 11-4-103] Approval of merger by directors.

(1) Where there is to be a resulting state bank, the board of directors of each

constituent state bank shall, by a majority of the entire board, approve a merger

agreement, which AGREEMENT shall contain:

(a) The name of each constituent bank and the location of each office;

(b) With respect to the resulting bank, the name and the location of each proposed

office; the name and residence of each director to serve until the next annual meeting

of the stockholders; the name and residence of each officer; the amount of capital, the

number of shares, and the par value of each share; whether preferred stock is to be

issued and the amount, terms, and preferences; the amendments to the charter and

bylaws;

resulting bank;

(d) A statement that the agreement is subject to approval by the banking board and

by the stockholders of each constituent bank;

(e) Provisions governing the manner of disposing of the shares of the resulting state

bank not taken by dissenting shareholders of constituent banks;

(f) Such other provisions as the banking board requires to enable it to discharge

its duties with respect to the merger.

11-103-703. [Formerly 11-4-104] Approval by banking board. (1) After

approval by the board of directors of each constituent bank, the merger agreement

shall be submitted to the banking board for approval, together with certified copies

of the authorizing resolutions of the several boards of directors showing approval by

a majority of the entire board and evidence of proper action by the board of directors

of any constituent national bank.

(2) Without approval by the banking board, no asset shall be carried on the books

of the resulting bank at a valuation higher than that on the books of the constituent

bank at the time of the last examination by a state or national bank examiner before

the effective date of the merger.

(3) Within thirty days after receipt by the banking board of the papers specified in

subsection (1) of this section, the banking board shall approve or disapprove the

merger agreement. The banking board shall approve the agreement if it appears that:

(a) The resulting state bank meets all the requirements of state law as to the

formation of a new state bank;

(b) The agreement provides for adequate capital as established by the banking

board in its rules; and regulations;

Ch. 152 Financial Institutions 1097

(d) The merger is not contrary to the public interest.

(4) If the banking board disapproves an agreement, it shall state its objections and

give an opportunity to the constituent banks to amend the merger agreement to

obviate such objection.

(5) Where the resulting state bank is not to exercise trust powers, the banking

board shall not approve a merger until satisfied that adequate provision has been

made for successors to fiduciary positions held by constituent banks.

11-103-704. [Formerly 11-4-105] Approval by stockholders - rights of

dissenters. (1) To be effective, a merger must be approved by the stockholders of

each constituent state bank by a vote of two-thirds of the outstanding voting stock, at

a meeting called to consider such action, which vote shall constitute the adoption of

the charter and bylaws of the resulting state bank, including the amendments set forth

in the merger agreement.

(2) The notice of the meeting of stockholders shall state that dissenting

stockholders will be entitled to payment of the value of only those shares which THAT

are voted against the approval of the plan.

(3) The owners of shares which THAT were voted against the approval of the

merger shall be entitled to receive their value in cash, if and when the merger

becomes effective, upon written demand made to the resulting state bank at any time

within thirty days after the effective date of the merger, accompanied by the surrender

of the stock certificates. The value of such shares shall be determined as of the date

of the shareholders' meeting approving the merger by three appraisers, one to be

selected by the owners of two-thirds of the dissenting shares involved, one by the

board of directors of the resulting state bank, and the third by the two so chosen. The

valuation agreed upon by any two appraisers shall govern. If the appraisal is not

completed within ninety days after the merger becomes effective, the commissioner

shall cause an appraisal to be made.

(4) The expenses of appraisal shall be paid by the resulting state bank.

(5) The resulting state bank may fix an amount which THAT it considers to be not

more than the fair market value of the shares of a constituent bank at the time of the

stockholders' meeting approving the merger, which it will pay dissenting shareholders

of that constituent bank entitled to payment in cash. The amount due under such

accepted offer or under the appraisal shall constitute a debt of the resulting state

bank.

11-103-705. [Formerly 11-4-106] Effective date of merger - certificate.

(1) A merger shall, unless a later date is specified in the agreement, become effective

upon the filing with the banking board of the executed agreement, together with

copies of the resolutions of the stockholders of each constituent bank approving it,

certified by such bank's president or a vice-president and a secretary. The charters

of the constituent banks, other than the resulting bank, shall thereupon be deemed

surrendered.

1098 Financial Institutions Ch. 152

(2) The banking board shall thereupon issue to the resulting bank a certificate of

merger, setting forth the name of each constituent bank and the name of the resulting

state bank. Such certificate shall be conclusive evidence of the merger and of the

correctness of all proceedings therefor in all courts and places and may be recorded

in any office for the recording of deeds to evidence the new name in which the

property of the constituent banks is held.

11-103-706. [Formerly 11-4-107] Continuation of corporate entity. (1) The

resulting state bank shall be considered the same business and corporate entity as

each constituent bank with all of the rights, powers, and duties of each constituent

bank, except as limited by the charter and bylaws of the resulting state bank.

(2) The resulting state bank has the right to use the name of any constituent bank

whenever it can do any act under such name more conveniently.

(3) Any reference to any constituent bank in any writing, whether executed or

taking effect before or after the merger, shall be deemed a reference to the resulting

state bank if not inconsistent with the other provisions of such writing.

11-103-707. [Formerly 11-4-108] Conversion from state bank to national

and vice versa. (1) Nothing in the law of this state shall restrict the right of a state

bank to convert into a national bank upon compliance with the laws of the United

States, and, upon completion of such conversion, it shall surrender its charter as a

state bank.

(2) A national bank located in this state which THAT follows the procedure

prescribed by federal law to convert into a state bank shall be granted a state charter

if it meets the requirements for the incorporation of a state bank. Any requirement

that shares must be paid in cash may be satisfied by the exchange of shares of the

converted state bank for those of the converting national bank, which may be valued

at no more than their fair cash market value. The procedure for incorporation of a

state bank may be modified to the extent made necessary by the difference between

an ordinary incorporation and a conversion.

(3) The converted bank shall be considered the same business and corporate entity

as the converting bank with all of the rights, powers, and duties of the converting

bank except as limited by the charter and bylaws of the resulting bank. It may use

the name of the converting bank whenever it can do any act under such name more

conveniently.

(4) Any reference to the converting bank in any writing, whether executed or

taking effect before or after the conversion, shall be deemed a reference to the

converted bank if not inconsistent with the other provisions of such writing.

11-103-708. [Formerly 11-4-109] Nonconforming assets. If a constituent bank

has assets which THAT do not conform to the requirements of state law for the

resulting bank, or if a converting national bank has assets which THAT do not conform

to the requirements of a state law for the converted state bank, or if, in either case,

there are business activities which THAT are not permitted for the resulting or

converted state bank, the banking board may permit a reasonable time to conform

with state law.

Ch. 152 Financial Institutions 1099

11-103-709. [Formerly 11-4-110] Sale of all assets of bank or department.

(1) Any state bank may sell to any other bank all, or substantially all, of the selling

bank assets and business, or all, or substantially all, of the assets and business of any

department of the selling bank.

(2) Any state bank may, upon assuming the liabilities relating thereto, purchase all,

or substantially all, of the assets and business of another bank, or all, or substantially

all, of the assets and business of any department of another bank.

(3) The agreement of purchase and sale shall be authorized and approved by the

banking board and by the vote of a majority of the stockholders of the purchasing and

selling banks at meetings called for the purpose in like manner as meetings to approve

mergers are called, and filed with the commissioner, accompanied by evidence of

such stockholders' approval in like manner as agreements of merger are filed. After

such approval is given by the stockholders, a notice of such sale shall be published

once a week for three successive weeks in a newspaper of general circulation in the

county in which the selling bank has its principal office. Proof of such publication

shall be filed with the division.

(4) Notwithstanding any term of the agreement, or of his OR HER contract of

deposit, any depositor whose business is thus sold has the right, upon payment of any

indebtedness owing by him THE DEPOSITOR to the bank, to withdraw his OR HER

deposit in full on demand after such sale unless, by dealing with the purchasing bank

with knowledge of the purchase, he THE DEPOSITOR ratifies the transfer.

(5) The agreement of sale may provide for the transfer to the purchasing bank of

all fiduciary positions held by the selling bank pursuant to section 11-10-106

11-106-105.

(6) No right against, or obligation of, the selling bank, in respect of the assets or

business sold, shall be released or impaired by the sale until one year from the last

date of publication of the notice, pursuant to subsection (3) of this section, but, after

the expiration of such year, no action shall be brought against the selling bank on

account of any deposit, obligation, trust, or asset transferred to or liability assumed

by the purchasing bank.

PART 8

LIQUIDATION, DISSOLUTION, AND REORGANIZATION

11-103-801. [Formerly 11-5-101] Voluntary liquidation and dissolution.

(1) With the approval of the banking board, a state bank may liquidate and dissolve.

The banking board shall grant such approval if it appears that the proposal to

liquidate and dissolve has been approved by a vote of two-thirds of the outstanding

voting stock at a meeting called for that purpose and that the capital of the state bank

is adequate and such state bank has sufficient liquid assets to pay off depositors and

creditors immediately.

(2) (a) Upon approval by the banking board, the bank shall forthwith cease to do

business, shall have only the powers necessary to effect an orderly liquidation, and

shall proceed to pay its depositors and creditors and to wind up its affairs.

1100 Financial Institutions Ch. 152

(b) Within thirty days of AFTER the approval, a notice of liquidation shall be sent

by mail to each depositor, creditor, person interested in funds held as a fiduciary,

lessee of a safe deposit box, and bailor of property at the address of such person as

shown on the books of the bank. The notice shall be posted conspicuously on the

premises of the bank and shall be given such publication as the banking board may

require. The bank shall send with each notice a statement of the amount shown on

the books to be the claim of the depositor or creditor. The notice shall demand that

property held by the bank as bailee or in a safe deposit box be withdrawn by the

person entitled thereto and that claims of depositors and creditors, if the amount

claimed differs from that stated in the notice to be due, be filed with the bank before

a specified date not earlier than sixty days thereafter, in accordance with the

procedure prescribed in the notice.

fiduciary positions and take such action as may be necessary to settle its fiduciary

accounts.

(d) Safe deposit boxes, the contents of which have not been removed within thirty

days after demand, shall be opened. Sealed packages containing the contents of such

box, with a certificate of inventory of contents, together with any other unclaimed

property held by the bank as bailee and certified inventories thereof shall be

transferred to the banking board, which shall retain them for six years unless sooner

claimed by the person entitled to them. After six years the banking board shall sell

or otherwise appropriately dispose of the property. The proceeds of any sale shall be

transferred to the state treasurer as abandoned funds.

(e) The approval of an application for liquidation shall not impair any right of a

depositor or creditor to payment in full, and all lawful claims of creditors and

depositors shall promptly be paid. The unearned portion of the rental of a safe

deposit box shall be returned to the lessee.

(f) Any assets remaining after the discharge of all obligations shall be distributed

to the stockholders in accordance with their respective interests. No such distribution

shall be made before all claims of depositors and creditors have been paid or, in the

case of any disputed claim, the bank has transmitted to the banking board a sum

adequate to meet any liability that may be judicially determined and any funds

payable to a depositor or creditor and unclaimed have been transmitted to the banking

board.

(3) Any unclaimed distribution to a stockholder or depositor shall be held until

ninety days after the final distribution and then transmitted to the banking board.

Such unclaimed funds shall be held by the banking board for six years and, unless

sooner claimed by the person entitled thereto, shall be transferred to the treasury of

the county in which the bank is located. The county treasurer and his successors shall

hold such money in trust for a period of six years, unless the same shall be sooner

paid out to the beneficial owner thereof or a suit is instituted to recover such money

or a portion thereof. Any money remaining in said fund six years after the same is

paid into the treasury of the county, for the recovery of which no action is pending,

shall be transferred to the general fund of the county, and all rights of the former

beneficial owners therein to recover the same shall be forever barred.

Ch. 152 Financial Institutions 1101

(4) If the banking board finds that the assets will be insufficient for the full

discharge of all obligations, or that completion of the liquidation has been unduly

delayed, it may take possession and complete the liquidation in the manner provided

in this code for involuntary liquidations.

(5) The banking board may require reports of the progress of liquidation. If it is

satisfied that the liquidation has been properly completed, it shall cancel the charter

and enter an order of dissolution.

11-103-802. [Formerly 11-5-102] Involuntary liquidation by banking board

- reorganization. (1) (a) Except as otherwise provided in this code, only the

banking board may take possession of a state bank if, after a hearing before the

banking board, the banking board shall find FINDS: The bank's capital is inadequate

or it is otherwise in an unsound condition; the bank's business is being conducted in

an unlawful or unsound manner; the bank is unable to continue normal operations;

examination of the bank has been obstructed or impeded; or control of the bank has

been assumed by any person or persons convicted of fraud or a felony in this state or

any other jurisdiction, or by any partnership, association, or corporation controlled,

directly or indirectly, by any person so convicted, unless the BANKING board

determines that such person has been duly rehabilitated or otherwise that the bank

will be honestly and efficiently managed.

(b) Notice of hearing shall be mailed by first class mail to the bank and the

directors of the bank no less than ten days prior to the hearing. Any proceedings

conducted pursuant to this subsection (1) shall be exempt from any provision of law

requiring that proceedings of the banking board be conducted publicly.

(2) (a) The commissioner, upon order of the banking board, shall take possession

by posting upon the premises a notice reciting that he THE COMMISSIONER is assuming

possession pursuant to this code and the time, not earlier than the posting of the

notice, when his OR HER possession shall be deemed to commence. A copy of the

notice shall be filed in the district court in and for the county in which the bank is

located. The commissioner shall notify the federal reserve bank of the district of

taking possession of any state bank which THAT is a member of the federal reserve

system and shall notify the federal deposit insurance corporation of taking possession

of any state bank which THAT is a member of the federal deposit insurance

corporation.

(b) When the commissioner has taken possession of a state bank, he THE

COMMISSIONER shall be vested with the full and exclusive power of management and

control, including the power to continue or to discontinue the business; to stop or to

limit the payment of its obligations; to employ any necessary assistants, including

legal counsel; to execute any instrument in the name of the bank; to commence,

defend, and conduct in its name any action or proceeding to which it may be a party;

to terminate his SUCH possession by restoring the bank to its board of directors; and

to reorganize or liquidate the bank in accordance with this code. As soon as

practicable after taking possession, the commissioner shall make an inventory of the

assets and file a copy thereof with the court in which the notice of possession was

filed.

1102 Financial Institutions Ch. 152

possession continues, there shall be a postponement, until six months after such

taking, of the date upon which any period of limitation fixed by statute or agreement

would otherwise expire on a claim or right of action of the bank, or upon which a

review must be taken, or a pleading, or other document must be filed, by the bank in

any pending action or proceeding.

(3) (a) If the banking board determines, after hearing before the banking board, to

liquidate the state bank, it shall give notice of its determination by posting upon the

premises a notice reciting that the determination has been made to liquidate the bank.

A copy of the notice shall be filed in the district court in and for the county in which

the bank is located. The commissioner, upon order of the banking board, shall tender

to the federal deposit insurance corporation or its successor the appointment as

liquidator under section 11-5-105 11-103-805.

(b) If, in the opinion of the banking board, an emergency exists which THAT may

result in serious losses to the depositors, it may take possession of a state bank and

may immediately appoint the federal deposit insurance corporation or its successor

as liquidator in accordance with section 11-5-105 11-103-805 without notice of a

hearing. Notice of the banking board's emergency determination shall be posted and

filed in the same manner as prescribed in paragraph (a) of this subsection (3). Within

ten days after the banking board's emergency determination, the bank or the directors

of the bank may file an application with the banking board to rescind its

determination. The filing of an application shall not act as a stay of the banking

board's action pursuant to this subsection (3). The banking board shall grant the

application if it finds that its action was unauthorized and shall rescind its action

taking possession and restore the bank to its board of directors. If no application is

filed within ten days after the banking board's emergency determination, all action

taken by the banking board shall be final.

directors of the bank no less than ten days prior to the hearing. Any proceeding

conducted pursuant to this subsection (3) shall be exempt from any provision of law

requiring that proceedings of the banking board be conducted publicly.

(d) If the federal deposit insurance corporation or its successor does not accept the

tender of appointment as liquidator, the banking board as liquidator shall proceed to

liquidate the institution, upon first providing a bond executed by some surety

company authorized to do business in this state, running to the people of the state of

Colorado, which THAT meets with the approval of the banking board, for the faithful

discharge of its duties in connection with such liquidation and the accounting for all

moneys coming into its hands. The cost of such bond shall be paid from the assets of

the bank. Suit may be maintained on such bond by any person injured by a breach

of conditions thereof.

(e) If the commissioner determines to reorganize the state bank or if the banking

board, after staying its liquidation, orders such reorganization, the commissioner,

after according a hearing to all interested persons, shall enter an order proposing a

reorganization plan. A copy of the plan shall be sent to each depositor and creditor

who shall not receive payment of his OR HER claim in full under the plan, together

with notice that, unless within fifteen days the plan is disapproved in writing by

persons holding one-third or more of the aggregate amount of such claims, the

Ch. 152 Financial Institutions 1103

commissioner will proceed to effect the reorganization. A department, agency, or

political subdivision of this state holding a claim which THAT will not be paid in full

is authorized to participate as any other creditor.

(4) No judgment, lien, or attachment shall be executed upon any asset of the state

bank while it is in the possession of the banking board. Upon the election of the

banking board, in connection with a liquidation or reorganization:

(a) Any lien or attachment, other than an attorney's or mechanic's lien, obtained

upon any asset of the state bank during the banking board's possession, or within four

months prior to commencement thereof, shall be vacated and voided, except liens

created by the banking board while in possession and further excepting liens or

security interests obtained by the federal reserve bank;

(b) Any transfer of an asset of the state bank made after or in contemplation of its

insolvency, with intent to effect a preference, shall be voided.

(5) With the approval of the banking board, the commissioner may borrow money

in the name of the state bank and may pledge its assets as security for the loan.

(6) All necessary and reasonable expenses of the commissioner's possession of a

state bank and of its reorganization or liquidation shall be defrayed from the assets

thereof.

11-103-803. [Formerly 11-5-103] Reorganization plan. (1) A plan of

reorganization shall not be prescribed under this code unless:

(a) The plan is feasible and fair to all classes of depositors, creditors, and

stockholders;

(b) The aggregate face amount of the interest accorded to any class of depositors,

creditors, or stockholders under the plan does not exceed the value of the assets upon

liquidation, less the full amount of the claims of all prior classes, subject to any fair

adjustment for new capital that any class will pay in under the plan;

and other securities and instruments in an amount that will comply with the rules and

regulations promulgated by the banking board;

(d) Any exchange of new common stock for obligations or stock of the bank will

be effected in inverse order to the priorities in liquidation of the classes that will

retain an interest in the bank and upon terms that fairly adjust any change in the

relative interests of the respective classes that will be produced by the exchange;

(e) The plan assures the removal of any director, officer, or employee responsible

for any unsound or unlawful action or the existence of an unsound condition;

(f) Any merger or consolidation provided by the plan conforms to the requirements

of this code.

(2) If, in the course of reorganization, supervening conditions render the plan

1104 Financial Institutions Ch. 152

unfair or its execution impractical, the commissioner, upon approval of the banking

board, may modify the plan or liquidate the institution. Any such action shall be

taken by order of the banking board upon appropriate notice.

11-103-804. [Formerly 11-5-104] Liquidation by commissioner - procedure.

(1) In liquidating a state bank, the commissioner may exercise any power thereof, but

he THE COMMISSIONER shall not, without the approval of the court in which notice of

possession has been filed:

(a) Sell any asset of the bank having a value in excess of five hundred dollars;

(b) Compromise or release any claim if the amount of the claim exceeds five

hundred dollars, exclusive of interest;

incurred by the commissioner, before preparing and filing a schedule of his THE

COMMISSIONER'S determinations in accordance with this code.

(2) Within six months of AFTER the commencement of liquidation, the

commissioner may, by his OR HER election, terminate any executory contract for

services or advertising to which the state bank is a party, or any obligation of the

bank as a lessee. A lessor who receives at least sixty days' notice of the

commissioner's election to terminate the lease shall have no claim for rent, other than

rent accrued to the date of termination, nor for damages for such termination.

(3) As soon after the commencement of liquidation as is practicable, the

commissioner shall take the necessary steps to terminate all fiduciary positions held

by the state bank and take such action as may be necessary to surrender all property

held by the bank as a fiduciary and to settle its fiduciary accounts.

(4) The right of any agency of the United States insuring deposits to be subrogated

to the rights of depositors upon payment of their claims shall not be less extensive

than the law of the United States requires as a condition of the authority to issue such

insurance or make such payments to depositors of national banks.

(5) As soon after the commencement of liquidation as is practicable, the

commissioner shall send notice of the liquidation to each known depositor, creditor,

and lessee of a safe deposit box and bailor of property held by the bank at the address

shown on the books of the institution. The notice shall also be published in a

newspaper of general circulation in the county in which the institution is located once

a week for three successive weeks. The commissioner shall send with each notice a

statement of the amount shown on the books of the institution to be the claim of the

depositor or creditor. The notice shall demand that property held by the bank as

bailee, or in a safe deposit box, be withdrawn by the person entitled thereto and the

claim of a depositor or creditor, if the amount claimed differs from that stated in the

notice to be due, be filed with the commissioner before a specified date, not earlier

than sixty days thereafter, in accordance with the procedure prescribed in the notice.

(6) Safe deposit boxes, the contents of which have not been removed before the

date specified, shall be opened by the commissioner. Sealed packages containing the

contents of such box, with a certificate of inventory of contents, together with any

Ch. 152 Financial Institutions 1105

unclaimed property held by the bank as bailee and certified inventories thereof, shall

be held by the commissioner for six years unless sooner claimed by the person

entitled thereto. After six years the commissioner may sell or otherwise appropriately

dispose of the property. The proceeds of a sale shall be transferred and disposed of

in accordance with the provisions of subsection (11) of this section.

(7) Within six months after the last day specified in the notice for the filing of

claims, or within such longer period as may be allowed by the court in which notice

of possession has been filed, the commissioner shall:

(a) Reject any claim if he OR SHE doubts the validity thereof;

(b) Determine the amount, if any, owing to each known creditor or depositor and

the priority class of his SUCH claim under this code;

court in which notice of possession was filed;

(d) Notify each person whose claim has not been allowed in full and publish once

a week for three successive weeks, in a newspaper of general circulation in the county

in which the institution is located, a notice of the time when and the place where the

schedule of determinations will be available for inspection and the date, not sooner

than thirty days thereafter, when the commissioner will file his THE schedule in court.

(8) Within twenty days after the filing of the commissioner's schedule, any

creditor, depositor, or stockholder may file an objection to any determination made

which THAT adversely affects such objector. Any objections so filed shall be heard

and determined by the court upon such notice to the commissioner and interested

claimants as the court may prescribe. If the objection is sustained, the court shall

direct an appropriate modification of the schedule. After filing his THE schedule, the

commissioner may, from time to time, make partial distribution to the holders of

claims which THAT are undisputed or have been allowed by the court if a proper

reserve is established for the payment of disputed claims. As soon as is practicable

after the determination of all objections, the commissioner shall make final

distribution.

(9) (a) On liquidation of a state bank, after payment of federal deposit insurance,

claims for payment have the following priority:

(I) Obligations incurred by the commissioner, fees and assessments due to the

division, and expenses of liquidation, all of which may be covered by a proper reserve

of funds;

(II) Claims of depositors having an approved claim against the general liquidating

account of the bank;

(III) Claims of general creditors having an approved claim against the general

liquidating account of the bank;

(IV) Claims otherwise proper that were not filed within the time prescribed by this

code;

1106 Financial Institutions Ch. 152

(V) Approved claims of subordinate creditors; and

(VI) Claims of stockholders of the bank.

(b) On liquidation of a state bank, after payment of federal deposit insurance,

claims by governmental units for payment of uninsured deposits collateralized

pursuant to the "Public Deposit Protection Act of 1975", article 10.5 of this title, shall

be governed by the provisions of said article. Claims by governmental units for

payment of uninsured deposits not collateralized pursuant to article 10.5 of this title

shall have the same priority assigned to depositors under subparagraph (II) of

paragraph (a) of this subsection (9).

(10) Any assets remaining after all claims have been paid shall be distributed to

the stockholders in accordance with their respective interests.

(11) Unclaimed funds remaining after completion of the liquidation shall be

retained for six years by the commissioner unless sooner claimed by the owner. At

the expiration of such period, the remaining sum shall be transferred to the treasury

of the county in which the bank is located. The county treasurer and his OR HER

successors shall hold such money in trust for a period of six years, unless the same

is sooner paid out to the beneficial owner or owners thereof, or a suit is instituted to

recover such money or a portion thereof. Any money remaining in said fund six years

after the same is paid into the treasury of the county, for the recovery of which no

action is pending, shall be transferred to the general fund of the county, and all rights

of the former beneficial owners therein to recover the same shall be forever barred.

(12) When the assets have been distributed in accordance with this code, the

commissioner shall file an account with the court. Upon approval thereof, the

commissioner shall be relieved of liability in connection with the liquidation, and

shall cancel the charter.

11-103-805. [Formerly 11-5-105] Federal deposit insurance corporation or

successor as liquidator. (1) The federal deposit insurance corporation, created by

section 12B of the "Federal Reserve Act", as amended, or its successor is authorized

to act without bond as liquidator of any banking institution, the deposits in which are

to any extent insured by said corporation or its successor pursuant to section

11-5-102 11-103-802.

(2) Pursuant to section 11-5-102 11-103-802, the commissioner, upon order of the

banking board, shall tender to said corporation or its successor the appointment as

liquidator of such banking institution.

(3) After being notified in writing of the acceptance of such an appointment, the

commissioner shall file in the office of the clerk and recorder in the county in which

the bank is situated a certificate evidencing the appointment of the federal deposit

insurance corporation or its successor. Upon such an appointment, the possession of

all the assets, business, and property of such bank of every kind and nature,

wheresoever situated, shall be deemed transferred from such bank and the banking

board to the federal deposit insurance corporation or its successor. Without the

execution of any instruments of conveyance, assignment, transfer, or endorsement,

the title to all such assets and property shall be vested in the federal deposit insurance

Ch. 152 Financial Institutions 1107

corporation or its successor, and the banking board and the commissioner shall be

forever thereafter relieved from all responsibility and liability in respect to the

liquidation of such bank; except that the banking board may retain jurisdiction over

and responsibility for liquidation of eligible collateral pledged pursuant to the "Public

Deposit Protection Act", article 10.5 of this title, to secure public deposits not insured

by the federal deposit insurance corporation or its successor.

(4) If the corporation or its successor accepts said appointment, it has all the

powers and privileges provided by the laws of this state with respect to the liquidation

of a banking institution, its depositors, and other creditors.

(5) (a) When a state bank is liquidated, after payment of federal deposit insurance,

claims for payment shall have the following priority:

(I) Obligations incurred by the banking board, fees and assessments due to the

division of banking, and expenses of liquidation, all of which may be covered by a

proper reserve of funds;

(II) Claims of depositors having an approved claim against the general liquidating

account of the bank;

(III) Claims of general creditors having an approved claim against the general

liquidating account of the bank;

(IV) Claims otherwise proper that were not filed within the time prescribed by this

code;

(V) Approved claims of subordinate creditors; and

(VI) Claims of stockholders of the bank.

(b) When a state bank is liquidated, after payment of federal deposit insurance,

claims of official custodians of public funds for payment of uninsured public funds

pursuant to the "Public Deposit Protection Act", article 10.5 of this title, shall be

governed by the provisions of this subsection (5). In the event that the state bank

holds collateral which THAT is pledged for the safekeeping and protection of

uninsured public funds on deposit pursuant to article 10.5 of this title, such collateral

shall be considered to be held in trust in behalf of the official custodian, and the

liquidator shall not use such collateral to pay any claim or liability other than that of

the official custodian until all claims for uninsured public funds have been paid. In

the event that such collateral is insufficient to pay all claims made by official

custodians, the payment of such claims shall be made according to a pro rata formula.

Claims by official custodians for payment of uninsured deposits not collateralized

pursuant to article 10.5 of this title shall have the same priority as that assigned to

depositors under subparagraph (II) of paragraph (a) of this subsection (5).

11-103-806. [Formerly 11-5-106] Assets sold or pledged as security.

(1) With respect to any banking institution closed on account of inability to meet the

demands of its depositors or by action of the banking board or by action of its

directors or in the event of its capital inadequacy or suspension, the liquidator of such

institution may borrow from the federal deposit insurance corporation and furnish any

1108 Financial Institutions Ch. 152

part or all of the assets of said institution to said corporation as security for a loan

from same, but, if said corporation is acting as such liquidator, the order of a court

of record of competent jurisdiction shall be first obtained approving such loan. Upon

the order of a court of record of competent jurisdiction, all or any part of the assets

of such institution may be sold.

(2) The provisions of this section shall not be construed to limit the power of any

banking institution, the commissioner, or the liquidators to pledge or sell assets in

accordance with any existing law.

11-103-807. [Formerly 11-5-107] Enforcement of directors' liability. Among

its other powers, the federal deposit insurance corporation, in the performance of its

powers and duties as such liquidator, has the right and power, upon the order of a

court of record of competent jurisdiction, to enforce the individual liability of the

directors of any such banking institution.

11-103-808. [Formerly 11-5-108] Emergency grant of new charter. In

addition to powers regarding liquidation or reorganization, the banking board may,

in the interest of protecting the public and the depositors of a closed state bank or

national banking association with its principal office in this state, issue a new bank

charter to qualified individuals for the same location as the closed bank, contingent

upon the new bank assuming full liability for such deposits of the closed bank as may

be transferred to it. Under such conditions, a new charter may be issued summarily

without the publication of notice, without the holding of a public hearing, and without

complying with any of the other provisions and procedures specified in this code.

11-103-809. [Formerly 11-5-109] Emergency grant of branch facility -

legislative declaration. (1) The general assembly hereby finds, determines, and

declares that the economy of this state and its communities and the public interest will

be better served by permitting financial institutions, as defined in section 11-25-102

(3) 11-101-401 (35), to operate at the same location as a closed bank.

(2) (a) In addition to powers regarding liquidation or reorganization, the banking

board, in the interest of protecting the public and the depositors of a closed bank or

national banking association with its principal place of business in this state, may

issue an emergency grant of authority to another financial institution, which financial

institution has its principal place of business in this state and which financial

institution has acquired assets and liabilities of the closed bank, to operate a branch

facility at the same location as the closed bank, or within a one-half mile radius of the

location of the nearest point on the boundary of the premises of the closed bank's

place of business, contingent upon the bank assuming full liability for such deposits

of the closed bank as may be transferred to it. Such branch facility shall not be

located at any other location if such other location is within three hundred feet of the

boundary of the premises of another bank or another bank's detached facility unless

the other bank consents to a closer location.

(b) Under such conditions, the authority to operate the branch facility may be

issued summarily without the publication of notice, without the holding of a public

hearing, and without complying with any of the other provisions and procedures

specified in this code.

Ch. 152 Financial Institutions 1109

(3) No financial institution may hold, acquire, control, or operate more than two

branch facilities pursuant to this section; however, if the banking board determines

that, because of this limitation, no qualified financial institution can bid on the assets

and liabilities of the closed bank, the BANKING board may authorize and issue such

an emergency grant to another financial institution, in excess of such limit, but in no

event more than two additional branch facilities.

(4) (Deleted by amendment, L. 92, p. 945, § 1, effective May 29, 1992.)

(5) (a) (Deleted by amendment, L. 92, p. 945, § 1, effective May 29, 1992.)

(b) (4) Notwithstanding any other provision of this section, a branch facility

operated pursuant to this section on or before August 1, 1991, may continue to

operate in perpetuity as a branch without being subject to any percentage limitation

on branches as set forth in section 11-25-103 11-105-602.

ARTICLE 104

Holding Companies

PART 1

HOLDING COMPANIES GENERALLY

11-104-101. [Formerly 11-6.3-101 (2)] Prohibition on acquisition or control

- limited service banking institutions. (2) Notwithstanding any other provision of

law, no bank holding company or any other company may acquire or control any

banking institution located in this state that does not both accept deposits that the

depositor has a legal right to withdraw on demand and engage in the business of

making commercial loans.

PART 2

ACQUISITION OF CONTROL OF BANKS

AND BANK HOLDING COMPANIES

11-104-201. [Formerly 11-6.4-101] Legislative declaration. (1) The general

assembly finds, determines, and declares that, in authorizing expansion of interstate

banking to this state, primary consideration should be given to providing positive

benefits for the people of this state; to affording protection to bank depositors in this

state; to enhancing the opportunity of the people of this state to receive services

provided by banks and bank holding companies; and to setting forth the standards

under which out-of-state bank holding companies may acquire or control Colorado

banks and bank holding companies.

(2) In order to comply with the considerations set forth in subsection (1) of this

section with respect to interstate branch banking, the general assembly finds that it

is in the best interests of the citizens of this state to declare that interstate branching

in Colorado is prohibited prior to June 1997. The general assembly further finds and

declares that de novo interstate branching in this state is expressly prohibited and that

interstate branching through the acquisition of a branch of an insured financial

institution without the acquisition of such financial institution which THAT has been

in operation for at least five years at the time of acquisition is expressly prohibited.

1110 Financial Institutions Ch. 152

11-104-202. [Formerly 11-6.4-103] Acquisition of control of bank holding

companies and banks by bank holding companies in different states - interstate

banking and branching. (1) On and after January 1, 1991, A Colorado bank

holding company may acquire control of out-of-state bank holding companies and

out-of-state banks; and, on and after January 1, 1991, subject to the limitations of

subsections (2) to (6) of this section, an out-of-state bank holding company may

acquire control of Colorado financial institutions.

(2) An out-of-state bank holding company may not acquire control of, or acquire

all or substantially all of the assets of, a Colorado depository institution having its

principal place of business in Colorado unless such depository institution has been in

operation for at least five years at the time of the acquisition of control. An

out-of-state bank holding company acquiring control of a Colorado bank holding

company, industrial bank holding company, or thrift holding company may acquire

control of any Colorado depository institution having its principal place of business

in Colorado controlled by the Colorado bank holding company, industrial bank

holding company, or thrift holding company even though such depository institution

has been in operation for less than five years.

(3) A Colorado bank holding company may acquire control of any Colorado bank

by organizing or seeking to charter de novo a Colorado bank.

(4) A bank holding company may not acquire control of any financial institution

if such acquisition of control will result, at the time of such acquisition, in the bank

holding company controlling more than twenty-five percent of the aggregate of all

deposits in all banks, savings and loan associations, federal savings banks, and other

financial institutions located in Colorado, which are federally insured. For the

purpose of this subsection (4), deposits shall be determined based upon the public

reports most recently filed with the appropriate federal regulatory agency.

(5) A bank holding company may not acquire control of a Colorado financial

institution unless, immediately before such acquisition, such bank holding company

has such capital as the banking board may require by rule. and regulation.

(6) On and after June 1, 1997, Interstate branching through the acquisition of a

branch of an insured financial institution without the acquisition of such financial

institution is expressly prohibited. De novo interstate branching is expressly

prohibited. Deposit production offices are expressly prohibited.

(7) No bank holding company may acquire control of any financial institution

which THAT controls a Colorado financial institution except in accordance with the

provisions of this section and with prior approval of the federal reserve board under

section 3(a) of the federal "Bank Holding Company Act", 12 U.S.C. sec. 1842(a).

(8) A bank or bank holding company that intends to acquire control of any

Colorado financial institution or to conduct interstate branching in Colorado on or

after June 1, 1997, shall provide the banking board with the name or names under

which it proposes to conduct the business of such bank, bank holding company, or

branch. The bank or bank holding company shall not be eligible to conduct interstate

branching or make any such acquisition if the proposed name is either:

Ch. 152 Financial Institutions 1111

(a) Identical to or deceptively similar to the name of any existing Colorado

financial institution; except that this paragraph (a) shall not apply if the bank or bank

holding company obtains express written consent of the affected existing Colorado

financial institution; or

(b) Likely to cause the public to be confused, deceived, or mistaken.

(9) Concurrently with the filing of its application or notice with the appropriate

federal regulatory agency concerning the acquisition or control of a Colorado

financial institution, or concerning an interstate branch, on or after June 1, 1997, a

bank or bank holding company shall file a copy of said application or notice with the

banking board, which may submit advisory comments to the federal regulatory

agency.

(10) No bank or bank holding company may conduct interstate branching in

Colorado or acquire control, directly or indirectly, of any Colorado financial

institution without first obtaining a certificate from the banking board certifying that

such branch or acquisition complies with the provisions of this article. Such

certificate shall accompany any advisory comments submitted by the banking board

to the appropriate federal regulatory agency pursuant to subsection (9) of this section.

If the banking board refuses to issue a certificate pursuant to this subsection (10),

such refusal and the reasons therefor shall be submitted pursuant to subsection (9) of

this section to the appropriate federal regulatory agency with advisory comments.

The banking board shall act on any application or notice filed pursuant to subsection

(9) of this section and shall issue or refuse to issue the certificate required by this

subsection (10) within ninety days of AFTER the filing of any such application.

11-104-203. [Formerly 11-6.4-104] Authority of banking board to enforce

provisions of article. (1) Any bank holding company controlling any other bank

holding company or bank pursuant to the provisions of this code in this state shall, for

purposes of enforcing the provisions of this article, be subject to the jurisdiction of

the banking board with respect to its operations and affairs in the state of Colorado.

The banking board may utilize the applicable powers conferred by this code to carry

out the duties imposed by this section.

(2) The banking board shall have the authority to examine the records and affairs

of any bank holding company filing an application to acquire control of a Colorado

bank or Colorado bank holding company pursuant to this article. The banking board

shall have the power to subpoena witnesses, compel their attendance, require the

production of evidence, administer an oath, and examine any person under oath in

connection with any subject relating to a duty imposed upon, or power vested in, the

banking board pursuant to this section. In case of a refusal of any person to comply

with a lawful subpoena or order of the banking board issued pursuant to this section,

upon proper petition by the BANKING board to the district court, the court shall require

compliance therewith, and further refusal shall be punishable as contempt of court.

(3) The banking board may, after notice and hearing pursuant to article 4 of title

24, C.R.S., order any person to cease and desist from violating any provision of this

article.

(4) The banking board may, after notice and hearing pursuant to article 4 of title

1112 Financial Institutions Ch. 152

24, C.R.S., order any bank holding company controlling any other bank holding

company or any bank in this state in violation of the provisions of this article to divest

its interest in any such bank holding company or bank.

ARTICLE 105

Banking Practices

PART 1

GENERAL PROVISIONS

11-105-101. [Formerly 11-6-101] Branch banks and practices prohibited.

(1) Any bank, upon application to and approval by the banking board, may operate

one loan production office as defined by the banking board. Any bank, upon

application to and approval by the banking board, may also operate one detached

facility only if the detached facility is located within three thousand feet of the nearest

point on the boundary of the premises of the bank's place of business and is not

located within three hundred feet of the boundary of the premises of another bank or

another bank's detached facility unless the other bank consents to a closer location.

The banking board shall give written notice of every application to each bank located

within a three-mile radius of the applicant bank and may, in its discretion, order a

public hearing with respect thereto. Approval shall be granted by the banking board

only upon a showing of need. Banking activities at such detached facility shall be

restricted to receiving deposits, issuing money orders, cashiers' checks, and travelers'

checks or similar instruments, cashing checks or drafts, making change, receiving

note payments, receiving or delivering cash and instruments and securities, and

disbursing loan proceeds by machine.

(1.1) (2) For purposes of this subsection (1.1) (2), "elementary school" means any

public or private school with students in kindergarten through eighth grade. A bank

which THAT both opens accounts and accepts students' deposits at elementary schools

in conjunction with other educational programs presented by the bank is not engaged

in branch banking as defined in section 11-25-102 (2) 11-101-401 (10). Any bank

establishing a location in an elementary school pursuant to this section shall receive

the prior approval of the banking board. Approval shall be granted if the program is

predominantly educational.

(1.2) (3) Any other facility, agency, or paying or receiving station operated by any

bank or agent shall constitute a branch within the meaning of this section. Any

facility authorized by the United States treasury department shall not be subject to the

limitations of this section.

(1.5) In the case of a county wherein there is only one chartered bank, that bank,

upon application to and approval by the banking board, pursuant to subsection (1) of

this section, may operate one detached facility, which shall be located within the

county. In the event that a second bank charter is approved in a one-bank county in

which such a detached facility has been approved, said detached facility may continue

in operation or may be made operational only if the detached facility and approved

second bank are located in different communities within the county.

(1.6) In the case of a county wherein there is no chartered bank, any bank having

its principal place of business in a county contiguous to such county, upon application

Ch. 152 Financial Institutions 1113

to and approval by the banking board, may operate one detached facility in such

county wherein there is no chartered bank. In the event that a charter is approved for

a bank in a county having no chartered bank, said detached facility may continue in

operation or may be made operational only where the detached facility and approved

bank are located in different communities within the county.

(1.7) Repealed.

(2) (4) As authorized under section 10-2-601 (2), C.R.S., any bank may, pursuant

to federal law or under such rules and regulations as may be prescribed by the

banking board and subject to regulations RULES promulgated by the commissioner of

insurance concerning the sale of insurance by financial institutions as provided in

section 10-2-601, C.R.S., as such laws AND rules and regulations are applicable to

the bank, depending upon whether such bank is a national bank or a state bank, act

as the agent for any fire, life, or other insurance company authorized to do business

in this state by soliciting and selling insurance and collecting premiums on policies

issued by such company. For services so rendered, such bank may receive such fees

or commissions as may be agreed upon between the bank and the insurance company

for which it may act as agent. For purposes of this subsection (2) (4), "bank" shall

have the same meaning as set forth in section 11-1-102 (2) 11-101-401 (3).

(3) (5) Except as provided in the federal "Gramm-Leach-Bliley Financial

Modernization Act", Public Law 106-102, 113 Stat. 1388, it is unlawful for a bank,

or an officer, director, employee, or affiliate of a bank, to engage in the business of

issuing, floating, underwriting, distributing, or promoting the sale of stocks, bonds,

or other securities, or to be an officer, trustee, director, employee, stockholder, or

partner of any person engaged principally in any such business. Additional

exceptions to this section shall be securities issued or guaranteed as to principal and

interest by the United States or any agency thereof or by a state or territory of the

United States or a subdivision, instrumentality, or public authority organized under

the laws of such state or territory or pursuant to an interstate compact between two

or more states.

(4) (6) Except as expressly permitted in this code, a state bank shall not assume

liability as an insurer, nor shall it become a guarantor or endorser of any security

instrument or obligation in which, or with respect to which, it has no property interest.

(5) (7) No officer, director, employee, or agent of a state bank shall maintain, or

authorize the maintenance of, any account of the bank in a manner which THAT, to his

OR HER knowledge, does not conform to the requirements prescribed by this code OR

by the commissioner or the banking board.

(6) (8) No officer, director, employee, or agent of a state bank shall obstruct, or

endeavor to obstruct, a lawful examination of the institution by an officer or employee

of the division.

11-105-102. [Formerly 11-6-102] Accounts and interest. (1) A state bank

may maintain demand, savings, and time deposit accounts and any type of account

which THAT a national bank may maintain.

(2) Savings deposits shall be repaid to the depositors under such regulations RULES

1114 Financial Institutions Ch. 152

as the board of directors of the state bank shall, from time to time, prescribe. Such

regulations RULES shall be conspicuously exposed in some place accessible and

visible in the business office of the state bank. No alterations which THAT may at any

time be made in the rules and regulations shall in any manner affect the rights of a

depositor within the contract period in respect to deposits made previous to such

alteration.

(3) The banking board may by regulation RULE establish the maximum annual rate

of interest which THAT a state bank may pay on any type of deposit or account. In the

absence of such regulation RULE, a state bank shall be subject only to applicable

federal law in the payment of interest.

11-105-103. [Formerly 11-6-103] Saturday closing - notice - effect. Any state

bank or trust company, national banking association, or federal reserve bank may, by

brief notation on its front door, fully dispense with, or restrict to such extent as it may

determine, the hours within which it will be open for business on all, or less than all,

Saturdays. However, the fact that a bank remains open for business on all, or less

than all, Saturdays shall not make that day, or any part thereof, a banking day for the

purposes of section 4-4-104 (a) (3), C.R.S., of the "Uniform Commercial Code".

Any plan so adopted by any such organization may be changed by it from time to time

in its discretion. Every Saturday on which any such state bank, national banking

association, or federal reserve bank, in observance of such notation, is not open for

business shall be, with respect to the particular organization, the equivalent of a legal

holiday, as specified in section 24-11-101, C.R.S. Any act authorized, required, or

permitted to be performed at, by, or with respect to such organization on a Saturday

which THAT is for it a holiday may be performed on the next succeeding business day,

notwithstanding the provisions of any other law of this state to the contrary, and no

liability or loss of right of any kind shall result from such delay. The provisions of

this section shall not operate to invalidate or prohibit the doing on any Saturday of

any such act by any person or organization referred to in this section.

11-105-104. [Formerly 11-6-104] Minor or institutional deposits. (1) A bank

may operate a deposit account for a minor with the same effect upon its liability as

if the minor were of full age unless his SUCH MINOR'S guardian or conservator files

with the bank a certified copy of the order of a Colorado court having jurisdiction

appointing him OR HER and directs otherwise.

(2) Subject to such regulations RULES, not in conflict with section 11-6-101

11-105-101, as the banking board may prescribe for the protection of depositors, a

bank may contract with the proper authorities of any public or nonpublic elementary

or secondary school or any public or charitable institution caring for minors for the

participation by the bank in any school or institutional thrift or savings plan.

11-105-105. [Formerly 11-6-105] Joint deposits - right of survivor. Except

as to accounts, which are defined in and which shall be paid as provided in article 15

of title 15, C.R.S., when a bank deposit in any bank transacting business in this state

is made in the names of two or more persons payable to them or to any of them, such

deposit, or any part thereof or interest thereon, may be paid to any one of said persons

whether the others are living or not, and the receipt or acquittance of the person so

paid shall be valid and sufficient discharge to the paying bank from all said persons

and their heirs, executors, administrators, and assigns; such deposit shall be deemed,

Ch. 152 Financial Institutions 1115

so far as the rights and liabilities of the bank are concerned, to be owned by said

persons in joint tenancy with the right of survivorship, but the bank has the right of

setoff against such deposit, to the extent thereof, to collect a debt owed to the bank

by any joint depositor, which right shall not be affected by death.

11-105-106. [Formerly 11-6-106] Final adjustment - statement of account.

(1) When a statement of account has been rendered by a bank to a depositor and

accompanied by vouchers, if any, which THAT are the basis for debit entries in such

account, or when the depositor's passbook or savings account book has been written

up by the bank, showing the condition of the depositor's account, and delivered to

such depositor with like accompaniment of vouchers, if any, such account shall, after

the period of one year from the date of its rendition, in the event no objection thereto

has been theretofore made by the depositor, be deemed finally adjusted and settled

and its correctness conclusively presumed. Such depositor shall thereafter be barred

from questioning the correctness of such account for any cause.

(2) Nothing in this section shall be construed to relieve the depositor from the duty

of exercising due diligence in the examination of such account and vouchers, if any,

when rendered by the bank and of immediate notification to the bank upon discovery

of any error therein, nor from the legal consequences of neglect of such duty.

(3) A statement of account may be rendered to a depositor by mailing such

statement, with supporting vouchers, if any, to his SUCH DEPOSITOR'S address as

shown on the books of the bank.

11-105-107. [Formerly 11-6-107] Adverse claim deposits. (1) Notice to any

bank of an adverse claim to a deposit standing on its books to the credit of any

person, or to securities or other property deposited by any person with the bank, shall

not be effectual to cause said bank to recognize said adverse claimant, unless said

adverse claimant shall also either procure a restraining order, injunction, or other

appropriate process against and served upon said bank from a court of competent

jurisdiction in an action instituted by him SAID ADVERSE CLAIMANT wherein the

person to whose credit the deposit stands or for whose account the securities or other

property are held is made a party and served with summons or shall comply with

subsection (2) of this section.

(2) Such adverse claimant, in lieu of a court order, shall execute to said bank, in

form and amount and with sureties acceptable to it, a bond indemnifying said bank

from all liability, loss, damage, costs, and expenses, whether on account of the

payment of such adverse claim or the dishonor of the check or other order of the

person to whose credit the deposit stands on the books of said bank or on account of

the delivery of said securities or other property to the adverse claimant or the refusal

to comply with any order of the depositor of the securities or property held, as the

case may be.

(3) This section shall not apply in any instance where the person to whose credit

the deposit stands or for whose account the securities or other property is held, is a

fiduciary designated as such by words indicating the deposit or other property is, or

the securities are, held for the benefit of such adverse claimant, and the facts showing

reasonable cause of belief on the part of said claimant that the fiduciary is about to

misappropriate such deposit, securities, or other property are made to appear by the

1116 Financial Institutions Ch. 152

affidavit of such claimant.

11-105-108. [Formerly 11-6-108] Transmitting money - foreign exchange.

(1) A bank may accept money for transmission and may transmit money.

(2) A bank may buy and sell foreign exchange to the extent necessary to meet the

needs of customers.

11-105-109. [Formerly 11-6-109] Temporary closing of banks - when.

(1) Any bank doing business in this state may remain closed on any day on which,

by reason of an occasion of national mourning or rejoicing or national or local

emergency affecting the community in which such bank is located, the governor shall

by proclamation request the people of the state or of said community to close their

places of business.

(2) If the banking board is of the opinion that an emergency exists affecting banks

located in the state or in any part thereof, it may authorize banks located in the area

affected by the emergency to close any or all of their offices, and it shall make public

announcement of such authorization. In addition, if the banking board is of the

opinion that an emergency exists which THAT affects a particular bank or a particular

office thereof, but not banks located in the area generally, it may authorize the

particular bank or office so affected to close. As used in this subsection (2), the word

"emergency" shall include any condition which THAT may interfere with the conduct

of the normal operations of, or the transportation of employees to or from, a bank or

one or more offices thereof, or which THAT poses an existing or imminent threat to

the safety or security of bank personnel or property, including without limitation

conditions arising by reason of fire, flood, windstorm, snowstorm, or other casualty,

interruption of transportation or power facilities, war or other enemy action, riots,

civil commotion, or other acts of lawlessness or violence.

(3) If the officers of a bank are of the opinion that conditions exist which THAT

pose an existing or imminent threat to the safety or security of bank personnel or

property generally or at any one or more offices thereof, they may close the bank or

the office affected by such threat, as the case may be, irrespective of whether the

governor or the banking board has acted under this section. As used in this section,

the word "officers" shall mean the person designated by the board of directors, board

of trustees, or other governing body of a bank to act for the bank in carrying out the

provisions of this section or, in the absence of any such designation or the officer so

designated, the president or any other officer currently in charge of the operations of

the bank or of the office in question. A bank closing an office pursuant to this section

shall give as prompt notice to the banking board of such action as conditions permit.

(4) Any bank or office thereof which THAT is closed by action of the banking board

under this section may remain closed until it declares that the emergency has ended.

Any bank or office thereof which THAT is closed by decision of the officers of the

bank may remain closed until such officers determine that the threat has ended. In

either event, any bank or office thereof may remain closed for such further time

thereafter as may reasonably be required to reopen, but in any event not later than the

normal time of opening on the next business day.

(5) Any day on which a bank remains closed and any day on which a bank or any

Ch. 152 Financial Institutions 1117

one or more of its offices is closed during any part or all of its normal banking hours,

by decision of the banking board or by decision of its officers, shall be, with respect

to such bank, or if not all of its offices are closed, then with respect to those offices

which THAT are closed, the equivalent of a legal holiday, as specified in section

24-11-101, C.R.S., and any act authorized, required, or permitted to be performed at

or by or with respect to such bank or such office, as the case may be, on such day

may be performed on the next succeeding business day without any liability or loss

of rights resulting from such delay.

11-105-110. [Formerly 11-6-113] Disclosure of information pursuant to legal

process. Any bank, savings and loan association, industrial bank, credit union, or

any agent or employee of such financial institutions which THAT makes a disclosure

of records or information on the direction contained in a lawful notice, subpoena,

written request, search warrant, grand jury subpoena, or other process issued by any

governmental authority or by a court shall not be held civilly or criminally liable for

such disclosure, nor shall the financial institution be held liable to the customer or any

other person for such disclosure.

PART 2

ELECTRONIC FUNDS TRANSFERS

11-105-201. [Formerly 11-6.5-101] Short title. This article PART 2 shall be

known and may be cited as the "Bank Electronic Funds Act".

11-105-202. [Formerly 11-6.5-102] Legislative declaration. The purposes of

this article PART 2 are to authorize Colorado banks, notwithstanding the limitations

imposed by section 11-6-101 11-105-101, to engage in certain banking transactions

with their account holders through communications facilities and to own, establish,

control, and use such facilities under specified conditions and limitations and to

authorize and regulate these activities through the police powers of this state for

regulating the banking business and communications transmission facilities. This

article PART 2 does not authorize a bank which THAT has its principal place of

business outside this state to conduct banking business in this state.

11-105-203. [Formerly 11-6.5-104] Conditions of authority. (1) (a) Effective

January 1, 1978, A Colorado bank may engage in banking transactions with its

account holders through a communications facility and may own, establish, control,

or use a communications facility under the authority of this article PART 2 only if all

of the following conditions are met:

(I) (a) The communications facility is available to any Colorado bank for the use

of its account holders.

(II) (b) Any Colorado bank whose account holders use the communications facility

shall first have agreed with the person having control of the communications facility

to meet necessary and reasonable technical standards and to pay charges for the use

thereof; except that such standards and charges shall be fair, equitable, and

nondiscriminatory among Colorado banks and such charges shall not exceed an

equitable proportion of both the costs of establishing the communication facility,

including provision for amortization of development costs and capital expenditures

over a reasonable period of time, and the costs of operation and maintenance of the

1118 Financial Institutions Ch. 152

communications facility, plus a reasonable return on such costs, and shall be related

to the services provided to the bank or its account holders.

(III) Repealed.

(IV) (c) The communications facility and its operation meet all reasonable

standards of privacy, communications integrity, and financial safety as may be

imposed by rule regulation, or order of the BANKING board; except that no rule

regulation, or order of the BANKING board shall be imposed on any communications

facility owned or leased by a retailer to the extent that such facility is used for

nonbanking transactions.

(V) Repealed.

(VI) (d) The use of the communications facility has not been halted, prevented, or

terminated by order of the BANKING board.

(b) (2) The provisions of subparagraphs (I) to (III) of paragraph (a) of this

PARAGRAPHS (a) AND (b) OF subsection (1) OF THIS SECTION shall not apply to a

communications facility located on the premises of a Colorado bank. or its detached

facility. A Colorado bank having control of such a facility may, but is not required

to, make the use thereof available to account holders of other Colorado banks.

(2) Repealed.

11-105-204. [Formerly 11-6.5-105] Conditions for retailers.

(1) Notwithstanding the provisions of section 11-6.5-104 11-105-203, any

agreement between a person owning or establishing a communications facility or

utilizing a communications facility owned by another and the retailer at whose retail

location the facility is operated shall be upon such commercially reasonable terms and

conditions as the parties may agree. The parties to such agreement shall not

discriminate in price with the intent to destroy or prevent competition in the offering

of banking transactions through communications facilities, after making allowance

for the differences, if any, in costs. A retailer at whose retail location one or more

communications facilities are operated may limit by contract the types of banking

transactions performed at each such facility, but, subject to the exceptions in this

subsection (1), all such banking transactions, including those involving account

overlines, that are performed at each such communications facility shall be made

available upon request to all Colorado banks. Banking transactions, other than

account overline transactions, that involve a seller or lender credit card or similar

arrangement as defined in section 5-1-301 (24) and (43), C.R.S., are excepted from

the availability requirement of this subsection (1).

(2) Notwithstanding the provisions of section 11-6.5-106 11-105-205, a

communications facility owned or leased by a retailer and operated at a retail location

may be examined with respect to any banking transaction provided through that

facility only to the same extent as if such transaction were being performed by a

Colorado bank itself on its own premises. Facts and information obtained from such

examination shall be disclosed only to the retailer at whose retail location the facility

is operated and to the examinee Colorado bank, or as otherwise provided by law.

Ch. 152 Financial Institutions 1119

(3) A retailer at whose retail location a communications facility is established and

maintained may also utilize such facility to perform internal business functions of

such retailer.

(4) A retailer may limit the number of communications facilities located at a retail

location.

11-105-205. [Formerly 11-6.5-106] Powers of the banking board. (1) The

BANKING board shall have the authority to make rules and regulations and to issue

orders, including cease and desist orders, and issue subpoenas, necessary or incident

to the provisions and intent of this article PART 2, to examine periodically

communications facilities and the use thereof by Colorado banks, to require periodic

reports from Colorado banks pertaining to the communications facilities used by their

account holders, and to prescribe the form of notices and reports. The BANKING

board shall also hear and decide disputes which THAT may arise with respect to

access, technical standards, and charges for the use of communications facilities. If

the BANKING board determines that any communications facility or the operation or

use thereof is not in compliance with this article PART 2 and rules and regulations

issued by the BANKING board under this article PART 2 and if such deficiency is not

corrected pursuant to order of the BANKING board, the BANKING board shall order that

a Colorado bank's operation or use of the communications facility be prevented,

halted, or terminated. The BANKING board shall also hear and decide complaints by

a Colorado bank which THAT allege that it is precluded from effective use of any

communications facility by reason of imposition of technical standards or charges in

the process of transmitting and routing electronic messages between the

communications facility and the Colorado bank or its data processing agent, which

standards and charges are alleged to be discriminatory, unfair, or inequitable among

Colorado banks. If the BANKING board so finds, it shall order use of the

communications facility by Colorado banks prevented, halted, or terminated.

(2) Repealed.

(3) (2) Nothing contained in this section shall authorize the BANKING board to

impose any rule regulation, or order on a retailer who establishes and operates a

communications facility or to regulate the conduct of business functions of such

retailer.

11-105-206. [Formerly 11-6.5-107] Jurisdiction of the district court. The

district court in and for the county in which one or more communications facilities are

located shall hear and decide complaints and disputes and shall issue such orders as

the BANKING board is authorized to do in any case where the BANKING board does not

have jurisdiction over a party. Such district court shall also review orders of the

BANKING board on petition by an aggrieved person in the manner prescribed in

section 11-2-105 11-102-204.

11-105-207. [Formerly 11-6.5-108] Fees. The banking board shall annually

establish fees and assessments for the administration of this article PART 2 pursuant

to section 11-2-103 (11) 11-102-104 (11).

11-105-208. [Formerly 11-6.5-109] Consumer protection. (1) Every

Colorado bank using a communications facility shall provide its account holders, at

1120 Financial Institutions Ch. 152

the time the facility is used, with a receipt or record of each banking transaction

initiated at a facility. Such receipt or record shall be admissible as evidence in any

legal action or proceeding and shall constitute prima facie proof of the banking

transaction evidenced by such receipt or record. When a Colorado bank furnishes a

statement of a demand, savings, or loan account to an account holder, such statement

shall reflect each banking transaction affecting such account made by the account

holder at a communications facility during the period covered by the statement.

(2) With respect to any card or other device issued to an account holder for use at

a communications facility, any account holder whose card or device is lost or stolen

and subsequently used by an unauthorized person shall only be liable for the lesser

of fifty dollars or the amount of money, goods, or services obtained by the

unauthorized use prior to notice to the Colorado bank which THAT issued the card or

device of the theft or loss. If the unauthorized use occurs through no fault of the

account holder, no liability shall be imposed on the account holder.

(3) No account holder shall be held liable for any loss occurring as the result of

any tampering or manipulation of a communications facility unless he SUCH ACCOUNT

HOLDER performs or authorizes such acts.

(4) Commercial banks shall continue to offer customers the right to use checking

accounts. No bank shall make the use of such accounts burdensome with intent to

discourage such use. The banking board shall issue regulations RULES designed to

prevent violation of this provision.

11-105-209. [Formerly 11-6.5-110] Permissive sharing among dissimilar

institutions. A Colorado bank having control of a communications facility may, but

is not required to, make the use thereof available to savings and loan associations,

credit unions, and industrial banks located in this state. Any such use shall be on a

fair and reasonable contractual basis. Any savings and loan association, credit union,

or industrial bank, having been denied use of a communications facility on arbitrary

and capricious grounds, may seek review of such denied use by the BANKING board.

Nothing in this article PART 2 shall authorize any person to engage in any type of

banking transactions not otherwise permitted by applicable law.

11-105-210. [Formerly 11-6.5-111] No operation by bank employees. No

communications facility located separate and apart from a Colorado bank or detached

facility shall be operated by an employee or agent of any Colorado bank, and no

agent or employee of the retailer where a facility is located who operates it shall be

deemed to be the agent or employee of any financial institution using the facility or

with which transactions are accomplished by means of the facility. No employee or

agent of any Colorado bank shall be stationed at any communications facility located

separate and apart from a Colorado bank or detached facility except on a temporary

basis for the purpose of instructing customers in the use of facilities or for servicing

or observing the operation of such facilities.

PART 3

RESERVES, LOANS, AND INVESTMENTS

11-105-301. [Formerly 11-7-101] Reserves against deposits. State banks

which THAT are subject to reserve provisions of the "Federal Reserve Act" shall

Ch. 152 Financial Institutions 1121

maintain such reserves against deposits as may be required by the "Federal Reserve

Act", but, in addition thereto, the banking board may by regulation RULE impose

reserve requirements which THAT it deems prudent and sound on said banks or on

state banks not subject to reserve provisions of the "Federal Reserve Act".

11-105-302. [Formerly 11-7-102] Loans, acceptances, investments, and

letters of credit. A state bank may make such loans, secured or unsecured, accept

such drafts, make such investments, and issue such letters of credit as shall be

permissible pursuant to rules and regulations promulgated by the banking board or

otherwise permitted by this code. In promulgating such rules and regulations the

banking board shall consider all relevant factors, including without limitation the

policies set forth in section 11-1-101.5 11-101-102.

11-105-303. [Formerly 11-7-103] Corporate powers - interest and charges.

In addition to the general corporate powers granted by this code, a state bank has the

power, subject to the limitations and restrictions imposed by this code and the rules

and regulations of the banking board, to lend money either upon the security of real

property or personal property, or otherwise; to charge, or to receive in advance,

interest therefor; and to contract for a charge for a secured or unsecured installment

loan.

11-105-304. [Formerly 11-7-106] Bank investments - customers' orders.

(1) In addition to other investments, expressly authorized by this code or the rules

and regulations promulgated by the banking board, a state bank may purchase:

(a) Obligations which THAT satisfy the requirements of this code or the rules and

regulations promulgated by the banking board for loans;

(b) Obligations of, or fully guaranteed by, the United States, a state of the United

States, or the Dominion of Canada;

(d) Farm loan bonds issued by any federal land bank organized pursuant to an act

of congress approved July 17, 1916, entitled: "An Act to provide capital for

agricultural development, to create standard forms of investment based upon farm

mortgages, to furnish a market for United States bonds, to create government

depositories and financial agents for the United States, and for other purposes." and

known as the "Federal Farm Loan Act", and acts amendatory thereto. Such farm loan

bonds shall be accepted as security for all public deposits and in all cases where

bonds are required by law to be deposited with any department or public official of

this state, but this section shall not be so construed as to prohibit such moneys or

deposits from being invested in such other securities provided for by law.

(e) General obligations of a territory of the United States, a province of the

Dominion of Canada, a political subdivision or instrumentality of a state or territory

of the United States;

(f) Obligations of a corporation chartered by the United States or a state thereof

doing business in the United States; an authority organized under state law, an

interstate compact, or by substantially identical legislation adopted by two or more

1122 Financial Institutions Ch. 152

states if any of the foregoing under this paragraph (f) are approved by the banking

board for investment;

(g) Revenue obligations issued to provide, enlarge, or improve electric power, gas,

water, and sewer facilities by any city or town having a population of not less than

two thousand people at the time of the investment, located in any state in the United

States or territories thereof;

(h) Such other obligations as the general assembly has designated or may from

time to time designate as legal investments for public funds.

(2) A state bank may invest an amount not exceeding ten percent of its capital as

defined in the rules and regulations promulgated by the banking board in the stock of

a corporation exclusively engaged in trust business and incorporated as a trust

company under the "Colorado Trust Company Act", but every such investment shall

be subject to prior approval of the banking board.

(3) Repealed.

(4) (3) A state bank's investment in the stock of a safe deposit company is

governed by section 11-9-102 11-105-501.

(5) (4) A state bank may purchase or sell without recourse any security, including

corporate stock, upon the order of a customer and for his SUCH CUSTOMER'S account.

(6) (5) A state bank may, to the extent that banks subject to the laws of the federal

government are permitted so to do and to the extent permitted by the rules and

regulations of the banking board, purchase shares of stock in small business

investment companies organized under Public Law No. 85-699, 85th Congress,

known as the "Small Business Investment Act of 1958", and as amended, but in no

event shall any state bank hold shares in small business investment companies in an

amount aggregating more than three percent of the bank's capital and surplus.

(7) (6) No limitation or prohibition otherwise imposed by any provision of state

law relating to banks shall prevent a state bank from investing not more than ten

percent of the bank's capital as defined in the rules and regulations promulgated by

the banking board in a bank service corporation as defined in 12 U.S.C. 1861 to

1865, inclusive, and as amended, subject to the rights, powers, and limitations

contained therein, and such investment by state banks is expressly authorized to the

extent permitted by the rules and regulations of the banking board.

(8) (7) Notwithstanding any restrictions upon investments in obligations, powers,

or activities contained in this code, a state bank may invest in any obligation, exercise

such powers, and engage in such activities which THAT such bank could legally

acquire, exercise, and engage in were it operating as a national bank at the time such

investment was made, such powers were exercised, or such activities were engaged

in, to the extent permitted by the rules and regulations promulgated by the banking

board.

(9) (8) A state bank may invest an amount not exceeding ten percent of its capital

as defined in the rules and regulations promulgated by the banking board in the stock

Ch. 152 Financial Institutions 1123

of any bank or bank holding company which THAT provides services solely to

depository institutions and their shareholders, directors, officers, and employees,

wherein the ownership of stock of the bank or bank holding company, except for any

stock required by law to be owned by directors of the bank or bank holding company,

is restricted to banks or bank holding companies. The amount of stock owned by a

state bank in any such bank or bank holding company shall not be in excess of five

percent of the voting shares of such bank or bank holding company.

(10) (9) (a) Notwithstanding the provisions of section 11-6-101 (2) 11-105-102

(2), a state bank may directly engage in activities which THAT are primarily

investments in real estate or may acquire and hold the voting stock of one or more

corporations the activities of which are primarily investments in real estate. Such

activities may include subdividing and developing real property and building

residential housing or commercial improvements on such property and may also

include owning, renting, leasing, managing, operating for income, or selling such

property. Investments in real estate subject to section 11-8-101 11-105-401 may, at

the bank's option, be included in investments authorized in this subsection (10) (9)

and thereby be removed from the restrictions of section 11-8-101 11-105-401. Such

property shall be entered on the books at not more than cost or fair market value,

whichever is less, but without any charge off as required under section 11-8-101 (1)

(d) 11-105-401 (1) (d). The total of all investments made by a state bank pursuant

to the authority of this subsection (10) (9), including any loans and guarantees made

by the bank on such property or made to or for the benefit of corporations the stock

of which it holds pursuant to the authority of this subsection (10) (9), shall not exceed

ten percent of its total assets. The authority provided in this subsection (10) (9) is in

addition to investment in fixed assets of the bank pursuant to section 11-8-102

11-105-402.

(b) Upon finding that such restrictions are necessary according to the criteria set

forth in section 11-2-107 11-102-105 and the policies set forth in section 11-1-101.5

11-101-102, the banking board may adopt rules and regulations which THAT restrict

the total investments of a state bank under this subsection (10) (9) to a percentage

less than ten percent of the bank's total assets. Nothing in this subsection (10) (9)

shall authorize a state bank to contravene a lawful order of the BANKING board or

commissioner with respect to investments by the state bank in real estate or

corporations engaging in real estate activities. A state bank which THAT intends to

initiate a program of investments under the authority of this subsection (10) (9) shall

give sixty days' advance notice to the division of such intent; except that such notice

may be waived in the BANKING board's discretion where such notice is impracticable

or unnecessary. The state bank shall also notify the division within ten days after the

commencement of the investment program. If similar notices are required by the

bank's federal supervisory agency, the same form of notice may be used for purposes

of notice under this subsection (10) (9).

(11) (10) A state bank may invest in the securities of, or other interests in, any

open-end and closed-end management type investment company or investment trust

registered under the federal "Investment Company Act of 1940", 15 U.S.C. section

80(a)-1 et seq., if the portfolio of such investment company or investment trust is

limited to United States government obligations which THAT are backed by the full

faith and credit of the United States government and to repurchase agreements fully

collateralized by such obligations and if any such investment company or investment

1124 Financial Institutions Ch. 152

trust actually takes delivery of such collateral, either directly or through an authorized

custodian.

11-105-305. [Formerly 11-7-107] Acceptances - letters of credit. (1) A state

bank may accept:

(a) A draft which THAT has not more than six months' sight to run, exclusive of

days of grace, and is drawn to finance the purchase of goods with maturity in

accordance with the original terms of purchase, or is secured by shipping documents

transferring or securing title to goods, or by receipt of a licensed or bonded

warehouse or elevator transferring or securing title to readily marketable staples;

(b) A draft which THAT has no more than three months' sight to run, exclusive of

days of grace, and is drawn by a bank outside the continental limits of the United

States for the purpose of furnishing dollar exchange for trade.

(2) A state bank may issue letters of credit, but, unless the authority conferred to

draw upon the bank or its correspondents is limited to such drafts as a bank is

authorized by this section to accept, the amount of the credit outstanding at any one

time shall be deemed to be a loan to the person for whose account the credit was

issued.

PART 4

PROPERTY, SALES, BORROWING,

AND SIGNATURE GUARANTY

11-105-401. [Formerly 11-8-101] Acquisition of property to satisfy

indebtedness. (1) A state bank may take property of any kind to satisfy, in whole

or in part, or to protect indebtedness previously created in good faith by it. Property

acquired by a state bank to apply on an indebtedness to a state bank shall be held

subject to the following limitations:

(a) Stock shall be sold within six months or such additional period not exceeding

eighteen months as the banking board may allow.

(b) Real estate may be used in the banking business, subject to the conditions

prescribed by this code for property purchased for such use, or may be rented. Real

estate may be put in such condition as will reasonably facilitate its sale. Unless used

in the banking business, it shall be sold within fifteen years or such longer period as

the banking board may allow.

code, shall be sold within two years or such longer period as the banking board may

allow.

(d) (I) The property shall be entered on the books at not more than cost or fair

market value, whichever is less, except as otherwise provided by the banking board.

Each bank maintaining property acquired to satisfy indebtedness will obtain an initial

written appraisal and subsequent appraisals as to fair market value by a qualified

independent appraiser or such other person as the banking board may approve. Such

subsequent appraisals shall be obtained pursuant to rules and regulations of the state

Ch. 152 Financial Institutions 1125

banking board; except that, for purposes of this paragraph (d), an appraisal, as

defined in section 12-61-702 (1), C.R.S., by an appraiser certified, licensed, or

registered pursuant to section 12-61-708, C.R.S., shall not be required on properties

initially valued pursuant to this paragraph (d) at one hundred thousand dollars or less.

If such appraiser or other person approved by the banking board certifies in writing

such appraiser's or other person's opinion that the fair market value has not declined,

this opinion may be substituted for a subsequent appraisal.

(II) Repealed.

11-105-402. [Formerly 11-8-102] Banking property - acquisition. (1) A state

bank may invest in fixed assets of the bank or the stock or obligations of any

corporation holding such fixed assets or may make loans to or upon the security of the

stock of any such corporation, but the aggregate of all such investments and loans

shall not exceed one hundred percent of the bank's capital, as provided in the rules

and regulations promulgated by the banking board; except that the banking board may

approve a larger investment upon application of the bank if the banking board deems

the same prudent. As used in this subsection (1), "fixed assets" means real estate,

leasehold improvements, fixtures, furniture, and equipment; "real estate" and

"leasehold improvements" include land and buildings to be used in the transaction of

the bank's business and any excess space which THAT may be rented to others.

(2) Repealed.

(3) (2) The rate of depreciation of property so acquired may be prescribed by the

banking board.

11-105-403. [Formerly 11-8-103] Sale of assets. A state bank may sell any

asset in the ordinary course of business or, with the approval of the banking board,

in any other circumstance. The sale of all, or substantially all, of the assets of a bank

or of a department thereof shall be governed by section 11-4-110 11-103-709.

11-105-404. [Formerly 11-8-105] Pledge of assets. (1) A state bank may

pledge its assets to:

(a) Enable it to act as agent for the sale of obligations of the United States;

(b) Secure borrowed funds;

laws of the United States, by the terms of any interstate compact, by the laws of any

state, or by the order of a court of competent jurisdiction;

(d) Otherwise comply with the provisions of this code.

11-105-405. [Formerly 11-8-106] Signature guaranty. (1) A bank may

become guarantor of the genuineness of a signature.

(2) A bank guaranteeing the signature of a person on any document warrants to

any person relying on such guaranty only that:

1126 Financial Institutions Ch. 152

(a) The signature is that of a person signing;

(b) The signer is the holder, or the signer has purported authority to sign in the

name of the holder; except that, if the holder purports to act as a fiduciary, as

"fiduciary" is defined either in this code or in article 1 of title 15, C.R.S., or if his THE

HOLDER'S name is signed by a person purporting to act on the holder's behalf as such

a fiduciary, the bank warrants that such holder or such person so signing as such

fiduciary is in fact the fiduciary he OR SHE purports to be and warrants that the bank

has no actual knowledge that such fiduciary is committing a breach of his SUCH

FIDUCIARY'S obligation as such fiduciary in signing such document and that it has no

knowledge of such facts that its action in guaranteeing the signature amounts to bad

faith; and

(3) A bank may disclaim in its guaranty all or any part of the obligations set forth

in PARAGRAPH (b) OF subsection (2) (b) of this section.

PART 5

SAFE DEPOSIT AND SAFEKEEPING FACILITIES

11-105-501. [Formerly 11-9-102] Safe deposit boxes - leasing and subsidiary

company. (1) Subject to such regulations RULES as the banking board may

prescribe, a bank, company, other person or persons defined as a lessor in this article

PART 5, may maintain and lease safe deposit boxes and may accept property for

safekeeping if, except in the case of night depositories, it issues a receipt therefor.

(2) A bank may own stock in a safe deposit company located in the same

community in which the bank is doing business, not exceeding in aggregate cost

fifteen percent of its capital and surplus, but at least ninety percent of the stock in

such safe deposit company in which such stock is so owned must be owned by banks

or trust companies.

11-105-502. [Formerly 11-9-103] Access by fiduciaries. (1) Where a safe

deposit box is made available by a lessor to one or more persons acting as fiduciaries,

the lessor may, except as otherwise expressly provided in the lease or the writings

pursuant to which such fiduciaries are acting, allow access thereto as follows:

(a) By any one or more of the persons acting as executors or administrators;

(b) By any one or more of the persons otherwise acting as fiduciaries, when

authorized in writing, signed by all other persons so acting;

fiduciaries.

11-105-503. [Formerly 11-9-104] Lease to minor. A lessor may lease a safe

deposit box to, or accept property for safekeeping from, a minor and, in connection

therewith, deal with him SUCH MINOR to the same effect as if dealing with a person

of full legal capacity, unless and until his THE MINOR'S guardian or conservator files

with the lessor a certified copy of the order of a Colorado court having jurisdiction

Ch. 152 Financial Institutions 1127

appointing him SUCH GUARDIAN OR CONSERVATOR and directs otherwise.

11-105-504. [Formerly 11-9-105] Death of lessee - procedure. The provisions

of section 15-10-111, C.R.S., shall apply on the death of a lessee of a safe deposit

box as defined in section 11-9-101 11-101-401.

11-105-505. [Formerly 11-9-106] Adverse claims to safe deposit box. (1) An

adverse claim to the contents of a safe deposit box is not sufficient reason to require

the lessor to deny access to its lessee unless:

(a) The lessor is directed to do so by a court order issued in an action in which the

lessee is served with process and named as a party by a name which THAT identifies

him THE LESSEE with the name in which the safe deposit box is leased; or

(b) The safe deposit box is leased, or the property is held, in the name of a lessee

with the addition of words indicating that the contents, or property, are held in a

fiduciary capacity for a named beneficiary or beneficiaries, and the adverse claim is

supported by a sworn written statement of facts disclosing that it is made by, or on

behalf of, such a beneficiary and that there is reason to know that the fiduciary may

misappropriate the trust property.

(2) A claim is also an adverse claim where one of several lessees claims, contrary

to the terms of the lease, an exclusive right of access, or where one or more persons

claim a right of access as agents or officers of a lessee to the exclusion of others as

agents or officers, or where it is claimed that a lessee is the same person as one using

another name.

11-105-506. [Formerly 11-9-107] Annual fees. Every lessor, except a bank as

defined in section 11-1-102 (2) 11-101-401 (5) or subsidiary thereof, shall pay

annually to the division of banking such fees as are determined by the banking board

to be sufficient to defray the cost to the state of regulating such lessor.

PART 6

FINANCIAL INSTITUTIONS, OPERATION OF BRANCHES,

ORGANIZATIONAL AND OPERATIONAL EQUALITY

11-105-601. [Formerly 11-25-101] Legislative declaration. (1) The general

assembly finds, determines, and declares that distinctions in function and services of

various types of financial institutions have become so narrow that organizational and

operational equality should be encouraged and facilitated in this state. It is the intent

of the general assembly to enact legislation which THAT will promote the safety and

soundness of financial institutions for the benefit of the public, which will improve

efficiency for the economic operation of those financial institutions, and will ensure

that the state of Colorado, by its appropriate action, will continue its control of those

financial institutions within its jurisdiction.

(2) In order to provide equality among financial institutions, the banking board and

the financial services board shall monitor and require reports on the activities of each

financial institution conducting business at a location in Colorado.

11-105-602. [Formerly 11-25-103] Financial institutions - branches allowed

1128 Financial Institutions Ch. 152

- conversion of financial institutions to branches - acquisitions. (1) (a) On and

after August 1, 1991, Any financial institution may convert any affiliate financial

institution to a branch. pursuant to the following schedules and limitations:

Percentage

Commencing of Affiliates

August 1, 1991 60%

July 1, 1992 80%

July 1, 1993

and thereafter 100%

(b) Such percentages and minimum numbers are cumulative, and the failure to

convert in any year will nevertheless allow the conversion in any subsequent year up

to the cumulative total. In calculating the maximum number of affiliates which may

be converted according to the percentage limitations, a fractional number shall be

reduced to the next lower whole number, but not less than one.

(2) The number of affiliate financial institutions shall be determined as of April 1,

1991, including all affiliate financial institutions controlled by any financial

institution which are chartered, open, in organization, or conditionally or

preliminarily approved by the appropriate regulatory entity as of such date and if on

or after April 1, 1991, a financial institution acquires another financial institution, the

financial institution acquired and the number of affiliated institutions so acquired

shall be transferred to the acquiring financial institution for purposes of calculating

the maximum number of branches according to the percentage limitations set forth in

paragraph (a) of subsection (1) of this section.

(3) (2) Notwithstanding subsection (2) of this section, Any financial institution

which THAT has its principal place of business in Colorado may acquire any other

financial institution existing on such date for conversion to a branch or branches.

without regard to the percentage and numerical limitations set forth in paragraph (a)

of subsection (1) of this section. For purposes of this subsection (3), a financial

institution existing on April 1, 1991, includes the charter issued to a failed industrial

bank by the state of Colorado, if acquired separately from any other assets of that

failed industrial bank so long as those assets have not been finally liquidated and

subject to rules and regulations promulgated and adopted by the banking board. The

location of any financial institution acquired pursuant to this subsection (3) may be

changed pursuant to law.

(4) Except as provided in subsections (7) and (8) of this section, no de novo branch

of any financial institution shall be established or operated on or after August 1,

1991, nor shall any de novo financial institution charter approved or conditionally or

preliminarily approved after April 1, 1991, be converted to a branch of any financial

institution.

(5) Any detached facility in existence on April 1, 1991, may continue to be

operated as a detached facility of a financial institution or as a detached facility in

connection with the operations of a branch which previously had been the bank

operating such detached facility. For purposes of meeting the location requirements

set forth in section 11-6-101 (1), the distance requirements shall be complied with if

measured either from the financial institution or a branch thereof which previously

Ch. 152 Financial Institutions 1129

had been the bank operating such detached facility. No detached facility in existence

on April 1, 1991, shall be taken into account for purposes of calculating the maximum

number of branches according to the percentage limitations set forth in paragraph (a)

of subsection (1) of this section.

(6) Any branch in existence on April 1, 1991, may continue to be operated as a

branch of a financial institution and no such branch shall be taken into account for

purposes of calculating the maximum number of branches according to the percentage

limitations set forth in paragraph (a) of subsection (1) of this section.

(7) (a) (I) Notwithstanding any other provision of this title, any bank or industrial

bank upon application to and approval by the banking board or any savings and loan

association upon application to and approval by the state commissioner of financial

services may establish a de novo branch in any economically depressed community

or economically depressed area of a community in this state where the proposed

branch will serve a public need and advantage within such community or area of such

community, and where the volume of business in such community or area of such

community which the proposed branch will serve is such that profitable operation of

the bank, industrial bank, or savings and loan association and the proposed branch

may be reasonably projected.

(II) Not more than a total of ten de novo branches may be approved pursuant to

this subsection (7).

(b) The bank, industrial bank, or savings and loan association establishing such a

branch must have its principal place of business located in the county in which such

community or area of such community is situated or in a county in this state

contiguous to such county.

months after the filing of an application for such a branch shall hold a public hearing

to consider the application; except that the banking board or the state commissioner

of financial services, for valid reason and good cause may postpone such hearing. If

the banking board or the state commissioner of financial services has given written

notice pursuant to paragraph (e) of this subsection (7) of a hearing on any application

for such branch and the board or commissioner has received from those persons to

whom notice of the application has been given no written protest against such

application within five days of the hearing, the board or commissioner may grant such

application without a hearing, if the applicant has met the burden of proof prescribed

in paragraph (f) of this subsection (7).

(d) On hearing, the banking board or the state commissioner of financial services

may admit in evidence the application for such branch and any other relevant

information. The applicant and all others receiving notice are also entitled to be

heard and to introduce testimony at such hearing, as well as such others as the

banking board or the state commissioner of financial services may determine.

(e) The banking board or the state commissioner of financial services shall give

notice of the hearing on such application at least thirty days in advance of the hearing

date fixed by registered or certified mail to the applicant, to each bank and industrial

bank, if the applicant is a bank or industrial bank, or to each savings and loan

1130 Financial Institutions Ch. 152

association, if the applicant is a savings and loan association, and to any branch of

any of the foregoing located within a three-mile radius of the location of the proposed

branch and to such other persons as the board or the commissioner may designate.

The banking board or the state commissioner of financial services shall also cause

such notice to be published at least one time not less than twenty days prior to the

date fixed for such hearing in a newspaper of general circulation within the

community in which the proposed branch is to be located. Such notice shall be in the

form prescribed by the banking board or the state commissioner of financial services

and shall include the name of the applicant, the location of such proposed branch, and

the date, time, and place of the hearing.

(f) The applicant shall have the burden of proving:

(I) That the proposed branch will be established in a community or area of a

community in this state where the proposed branch will serve a public need and

advantage within such community or area of such community;

(II) That the volume of business in such community or area of such community

which the proposed branch will serve is such that profitable operation of the bank,

industrial bank, or savings and loan association and the proposed branch may be

reasonably projected; and

(III) That such community or area of such community is economically depressed.

(g) An "economically depressed" community or area of a community is defined as

a community or area of such community which meets at least two of the following

three criteria:

(I) An unemployment rate of at least twenty-five percent above the state average

for the most recent period of twelve consecutive months for which data are available

from the department of labor and employment;

(II) A per capita income less than seventy-five percent of the state average for the

most recent period for which data are available from the United States census bureau

or the department of local affairs;

(III) Assessed value of commercial and residential real property in the community

or area of a community of less than seventy-five percent of comparable commercial

and residential real property of the county or city and county where located, as

determined by the records of the county assessor.

(h) Any municipality with a population not exceeding two thousand, as determined

by the latest federal census, where there is no bank, industrial bank, savings and loan

association, federal savings bank, or any branch thereof, shall be deemed an

economically depressed community.

(i) A public need and advantage may be proven in this subsection (7) if an

applicant proves that the granting of authority to operate the proposed branch will,

among other things:

(I) Enhance the quality or quantity of services of banks, industrial banks, and

Ch. 152 Financial Institutions 1131

savings and loan associations available to the public in the community or area of the

community which the branch will serve; or

(II) Enhance the convenience of existing customers of the applicant.

(j) If within a forty-five day period there has been filed with the banking board or

the state commissioner of financial services two or more applications to establish a

branch in the same community or same area of the community, the board or the

commissioner may hold a single hearing to consider such applications. The banking

board or the state commissioner of financial services may grant the application of not

more than one applicant and may do so without regard to the priority in time of filing

applications. The determination of the banking board or state commissioner of

financial services to deny an application which might otherwise qualify under this

subsection (7) shall be based upon a finding that the public need for financial services

in the community or area of such community in which the proposed branch will be

located will be best served by such denial and by the granting of another application.

(k) Within sixty days following the date of the conclusion of the hearing, the

banking board or the state commissioner of financial services shall issue a written

order granting the application for such branch if the banking board or the state

commissioner of financial services finds that the requirements of paragraphs (a) and

(b) of this subsection (7) have been met and that the applicant has met the burden of

proof prescribed in paragraph (f) of this subsection (7).

(l) Nothing in this article or any other article of this title shall authorize interstate

branching prior to June 1, 1997.

(8) (3) (a) Notwithstanding any other provision of this title, on and after January

1, 1993, Any bank which THAT has its principal place of business in this state or any

industrial bank which THAT has its principal place of business in this state, upon thirty

days' prior written notice to the banking board, or any savings and loan association

which THAT has its principal place of business in this state, upon thirty days' prior

written notice to the state commissioner of financial services, may establish one OR

MORE de novo branch BRANCHES anywhere in this state.

(b) On and after January 1, 1997, any such bank, industrial bank, or savings and

loan association may, upon thirty days' written notice to the board or commissioner,

establish one or more de novo branches anywhere in this state.

and loan association which has had its charter approved or conditionally or

preliminarily approved on or after April 1, 1991, may, upon thirty days' written notice

to the BANKING board or commissioner, be converted to a branch of any bank,

industrial bank, or savings and loan association.

(d) (c) The BANKING board and the commissioner shall adopt policies and

procedures by regulation RULE no more restrictive than federal regulatory policies and

procedures relative to application and approval of branches to be established under

this subsection (8) (3).

(9) If any financial institution has, on or after June 1, 1991, established a branch

1132 Financial Institutions Ch. 152

in any county having a population of less than thirty thousand, as determined by the

latest federal census, which is located within the market area of any other financial

institution which has its principal place of business in such county, then such latter

financial institution, if it has no other branch, may establish one de novo branch

within that county.

11-105-603. [Formerly 11-25-104] Financial institutions - common powers

and limitations. (1) Nothing in this article shall be construed to authorize the

conversion of a detached facility to a branch of any financial institution.

(2) (1) Any acquisition of a branch from another financial institution shall be

subject to the percentage limitation set forth in subsection (7) (5) of this section.

Such an acquisition by a financial institution which THAT has its principal place of

business in Colorado is expressly authorized, and the location of such branch may be

changed pursuant to law.

(3) Any acquisition of a branch from another financial institution in connection

with the acquisition of such financial institution shall be subject to any percentage

limitation set forth in subsection (7) of this section. Such an acquisition by a

financial institution which has its principal place of business in Colorado is expressly

authorized, and the location of such branch may be changed pursuant to law.

(4) (2) Nothing in this article PART 6 shall be construed to apply to a branch

facility operating under an emergency grant pursuant to section 11-5-109 or

11-22-611 11-103-809 OR 11-108-611; however, such a branch facility may continue

to operate in perpetuity as a branch without being subject to any percentage limitation

on branches set forth in this article PART 6.

(5) (3) Nothing in this article or in article 6.4 PART 6 OR PART 2 OF ARTICLE 104

of this title shall be construed to prevent the acquisition of any financial institution

in this state by any other financial institution the principal operations of which are

located in this state; however, any conversion of all or any part thereof to a branch

shall be in accordance with the provisions of this article PART 6.

(6) (4) If any financial institution converts any affiliate financial institution to a

branch pursuant to the provisions of this article PART 6, such financial institution at

the time of such conversion or immediately thereafter shall meet the capital standards

for banks in Colorado as required by the "Colorado Banking Code", of 1957, by any

rules and regulations of the banking board, or by the commissioner.

(7) (5) Notwithstanding any other provision of this article PART 6, no financial

institution which THAT acquires any other financial institution on or after August 1,

1991, may convert the acquired financial institution to a branch or branches if such

conversion or conversions will result in the acquiring financial institution controlling

more than twenty-five percent of the aggregate of all deposits in all banks, savings

and loan associations, federal savings banks, and other financial institutions located

in Colorado which THAT are federally insured. For the purpose of this subsection (7)

(5), deposits shall be determined based upon the public reports most recently filed

with the appropriate federal regulatory agency.

11-105-604. [Formerly 11-25-105] Subsidiary depository institutions as

Ch. 152 Financial Institutions 1133

agent. (1) Any bank subsidiary of a bank holding company may receive deposits,

renew time deposits, close loans, service loans, and receive payments on loans and

other obligations as an agent for an affiliate financial institution, as such authority is

set forth in section 101(d) of the federal "Riegle-Neal Interstate Banking and

Branching Efficiency Act of 1994". Notwithstanding any other provision of law, a

bank acting as an agent in accordance with this subsection (1) for an affiliate

financial institution shall not be considered to be a branch of the affiliate.

(2) Any contract entered into pursuant to this section SECTION 11-25-105 as it

existed prior to July 1, 1995, shall remain valid and in effect according to the terms

of the contract and any subsequent agreement of the contracting financial institutions.

11-105-605. [Formerly 11-25-106] Rule-making by banking board and state

commissioner of financial services. (1) The banking board shall promulgate and

adopt such rules and regulations as are necessary to accomplish the purposes of this

article PART 6.

(2) The state commissioner of financial services shall promulgate and adopt such

rules and regulations as are necessary to accomplish the purposes of this article PART

(3) The banking board and the state commissioner of financial services shall

coordinate their rule-making which THAT implements the provisions of this article

PART 6 so that the procedures and time periods are the same for each type of financial

institution to make application for a branch thereunder.

11-105-606. [Formerly 11-25-107] Notice of branch closing. No later than

ninety days prior to the proposed date of any branch closing, the "notice of branch

closing" required to be filed with the appropriate federal regulatory agency shall be

filed with the banking board or the financial services board. The notice of branch

closing shall include a detailed statement of the reasons for the decision to close the

branch and statistical or other information in support of such reasons.

ARTICLE 106

Fiduciary Business

11-106-101. [Formerly 11-10-101] Bank as fiduciary. It shall be unlawful for

a state bank to act as fiduciary, other than as escrow agent, unless it is authorized by

its charter or amendments thereto to exercise trust powers.

11-106-102. [Formerly 11-10-102] Investment power. A bank acting as

fiduciary shall have the same investment powers as an individual fiduciary under like

circumstances.

11-106-103. [Formerly 11-10-103] General fiduciary powers. Unless

otherwise expressly provided by statute, a bank acting as a fiduciary shall have all

of the rights, powers, privileges, and immunities and be subject to the same

obligations and duties as an individual fiduciary under like circumstances.

11-106-104. [Formerly 11-10-104] Agency powers. In addition to its other

powers, any bank which THAT is authorized to exercise fiduciary powers shall, upon

1134 Financial Institutions Ch. 152

proper qualification under this code, have the power to act as a fiduciary in any

capacity. It may also act as registrar, transfer agent, or attorney-in-fact and have the

power to receive, manage, and apply sinking funds.

11-106-105. [Formerly 11-10-106] Substitution of Colorado bank or

Colorado trust company. (1) In addition to the procedures initiated by an

interested party concerning internal affairs of their trust under section 15-16-201,

C.R.S., or procedures otherwise permitted by Colorado law, and unless a will,

agreement, or trust instrument otherwise provides, a company may be substituted as

fiduciary for all or a part of the fiduciary business of another company without court

approval if:

(a) The successor is a Colorado affiliate of the transferor and the boards of

directors of the transferor and successor both adopt resolutions to cause the successor

to be substituted as fiduciary for all or part of the fiduciary business of the transferor;

(b) The transferor is discontinuing all or part of its fiduciary business and the

boards of directors of the transferor and successor both adopt resolutions to cause the

successor to be substituted as fiduciary for the fiduciary business of the transferor

which THAT is being discontinued; or

successor being the surviving entity, and the boards of directors of the transferor and

successor both adopt resolutions to cause the successor to be substituted as fiduciary

for all of the fiduciary business of the transferor.

(2) If the boards of directors adopt such resolutions as provided in subsection (1)

of this section and comply with the notice and delivery provisions pursuant to

subsection (3) of this section, the successor shall replace the transferor as fiduciary

and shall be the successor fiduciary possessing all the rights, powers, and duties

which THAT were granted to or imposed on the transferor. Such rights, powers, and

duties shall vest in the successor upon effectuation of the substitution, irrespective of

the date on which the fiduciary relationship is established or of the date of any related

written agreement establishing the fiduciary relationship or of the date of the death

of any decedent whose estate is being so administered. Nothing in connection with

a substitution affects a renunciation or revocation of any letters of administration or

letters testamentary pertaining to a fiduciary relationship or a removal or resignation

of the transferor as personal representative, trustee, custodian, or other fiduciary.

(3) At least thirty days prior to the effective date of the substitution, a certified

copy of the resolutions of the boards of directors of the transferor and successor shall

be delivered to the division of banking, and a written notice of such substitution shall

be delivered to each interested party. Delivery will be deemed to have occurred upon

the earlier of actual delivery or three days after depositing such resolutions or

notification in the United States mails, certified mail with return receipt prepaid. The

effective date of the substitution as fiduciary for all or part of the fiduciary business,

as set forth in the resolutions, shall be the date provided in the resolutions, which

shall not be earlier than thirty days after the date of delivery in accordance with this

subsection (3). If the resolutions provide no effective date, the effective date shall be

thirty days after the date of delivery in accordance with this subsection (3).

Ch. 152 Financial Institutions 1135

11-106-106. [Formerly 11-10-107] Investment in securities. Notwithstanding

any other law to the contrary and subject to the standard contained in sections

11-50-113 (2) and 15-1-304, C.R.S., a Colorado bank or trust company may invest

and reinvest the assets which THAT it maintains in its trust in the securities of any

open-end or closed-end management investment company or investment trust

registered under the federal "Investment Company Act of 1940", 15 U.S.C. sec.

80a1-64, as amended. A Colorado bank or trust company shall be allowed to make

such investment even if it exercises investment discretion as a fiduciary, custodian,

managing agent, or otherwise with respect to the investment and reinvestment of

assets that it maintains in its trust department. The fact that a Colorado bank or trust

company, or any affiliate thereof, is providing services to the investment company or

trust as investment advisor, sponsor, distributor, custodian, transfer agent, registrar,

or otherwise, and receiving reasonable remuneration for the services, does not

preclude such bank or trust company from investing in the securities of such

investment company or trust.

ARTICLE 107

Criminal Offenses

11-107-101. [Formerly 11-11-101] Unauthorized conduct of banking

business. It is a criminal offense for any person not authorized to carry on a banking

business under this code, falsely and with intent to defraud, to act as a bank or to

represent that he OR SHE is or is acting for a bank or to use an artificial or corporate

name which THAT is the name of a bank.

11-107-102. [Formerly 11-11-102] Receipt of deposits while insolvent. It is

a criminal offense if a state bank receives any deposit while insolvent, or an officer,

director, or employee knows or, in the proper performance of his OR HER duty should

know, of such insolvency and receives or authorizes the receipt of such deposit, or if

such state bank or person has knowingly concealed or misstated material facts

regarding the insolvency of the state bank from or to the banking board,

commissioner, or division of banking.

11-107-103. [Formerly 11-11-103] Unlawful service as officer or director.

(1) It is a criminal offense for any person to serve as an officer or director of a state

bank, or serve as commissioner, deputy commissioner, or employee of the division:

(a) Who has been convicted of an unpardoned offense constituting, in the

jurisdiction in which the conviction was had, a violation of the banking laws, a felony

involving moral turpitude, or a breach of trust;

(b) Who is indebted to the bank for more than thirty days upon a judgment that has

become final.

11-107-104. [Formerly 11-11-104] Unlawful gratuity, compensation, or

transactions. (1) It is a criminal offense for an affiliate of a state bank or for an

officer, director, or employee of a state bank or affiliate of a state bank:

(a) To solicit, accept, or agree to accept, directly or indirectly, from any person

other than the institution, any gratuity, compensation, or other personal benefit for

any action taken by the institution, or for endeavoring to procure any such action;

1136 Financial Institutions Ch. 152

(b) To have any interest, direct or indirect, in the purchase at less than its face

value of any evidence of indebtedness issued by the institution.

(2) In this section and section 11-6-101 (3) 11-105-101 (5), the term "affiliate" of

a state bank shall include:

(a) Any person who holds a majority of the stock of the bank or has been

determined by the banking board to hold a controlling interest therein, any other

corporation in which such person owns a majority of the stock, and any partnership

in which he SUCH PERSON has an interest;

(b) Any corporation in which the state bank or an officer, director, or employee

thereof holds a majority of the stock and any partnership in which such person has an

interest;

employees of the state bank or of which officers, directors, trustees, or employees

constitute a majority of the directors of the state bank.

11-107-105. [Formerly 11-11-105] Unlawful concealment of transactions.

(1) It is a criminal offense for an officer, director, employee, attorney, or agent of a

state bank:

(a) To conceal, or endeavor to conceal, any transaction of the bank from any

officer, director, or employee of the bank or any official or employee of the division

to whom it should properly be disclosed;

(b) With intent to deceive, to make any false or misleading statement or entry, or

omit any statement or entry that should be made in any book, account, report, or

statement of the institution.

(2) No bank shall sell, assign, or transfer any of its assets when insolvent, or in

contemplation of insolvency with the intent of preferring any credit, or preventing the

application of such assets to the subrogation of its debts; nor shall any officer,

director, or employee of any bank personally authorize or permit the same to be done.

11-107-106. [Formerly 11-11-106] Unlawful payment of penalties and

judgment against others. It is a criminal offense for a state bank to pay a fine, or

penalty imposed by law upon any other person, or any judgment against such person,

or to reimburse directly or indirectly any person by whom such fine, penalty, or

judgment has been paid, except in settlement of its own liability or in connection with

the acquisition of property against which such judgment is a lien or as provided in

section 11-3-121 11-103-602.

11-107-107. [Formerly 11-11-107] Embezzlement or misapplication of funds.

It is a criminal offense for any officer, director, shareholder, or employee of any bank

to directly or indirectly embezzle, abstract, or misapply, or cause to be embezzled,

abstracted, or misapplied, any of the funds or securities or other property of or under

the control of the bank with intent to deceive, injure, cheat, wrong, or defraud any

person.

Ch. 152 Financial Institutions 1137

11-107-108. [Formerly 11-11-108] Unlawful acts or omissions - penalties.

(1) Any person responsible for an act or omission expressly declared to be a criminal

offense by this code:

(a) Is guilty of a misdemeanor and, upon conviction thereof, shall be punished by

a fine of not more than one thousand dollars, or by imprisonment in the county jail for

not more than one year, or by both such fine and imprisonment;

(b) If the act or omission was intended to defraud, commits a class 6 felony and

shall be punished as provided in section 18-1.3-401, C.R.S.

(2) An officer, director, employee, agent, or attorney of a state bank shall be

criminally responsible for an act or omission of the institution declared to be a

criminal offense by this code if, knowing that such act or omission is a criminal

offense, he OR SHE participates in authorizing, executing, ratifying, or concealing such

act or in authorizing or ratifying such omission or, having a duty to take the required

action, omits to do so.

(3) Unless otherwise provided in this code, it is no defense to a criminal

prosecution under this code that the defendant did not know the facts establishing the

criminal character of the act or omission charged, if he THE DEFENDANT could and

should have known such facts in the proper performance of his OR HER duty.

11-107-109. [Formerly 11-20-117] Unlawful acts or failure to perform -

penalty. Any person who willfully or knowingly fails to perform any act required,

and as required by section 11-2-106 (10) or 11-2-115 11-102-102 (10) OR

11-102-501, or who commits any act in violation of said sections commits a class 5

felony and shall be punished as provided in section 18-1.3-401, C.R.S.

11-107-110. [Formerly 11-11-109] Injunction. (1) If a violation of this code

by a state bank or an officer, director, or employee thereof is threatened or impending

and may cause substantial injury to the institution or to the depositors, creditors, or

stockholders thereof, the district court in and for the county in which the bank is

located may, upon the suit of the banking board, issue an injunction restraining such

violation.

(2) If any person, not authorized to carry on a banking business under this code,

falsely acts as a bank, or falsely represents that he SUCH PERSON is acting for a bank,

or uses an artificial or corporate name which THAT is the name of a bank, the said

district court may, upon the suit of the banking board, issue an injunction restraining

such act.

11-107-111. [Formerly 11-11-110] General corporation laws applicable. The

provisions of articles 30 to 52, 101 to 117, and 121 to 137 of title 7, C.R.S., relating

to corporations and nonprofit corporations shall, insofar as the same are not

inconsistent with this code, govern corporations and nonprofit corporations operating

under the provisions of this code.

ARTICLE 108

Industrial Banks

1138 Financial Institutions Ch. 152

PART 1

GENERAL PROVISIONS

11-108-101. [Formerly 11-22-101] Definitions. As used in this article, unless

the context otherwise requires:

(1) "Bank" or "industrial bank" means an industrial bank incorporated under the

provisions of section 11-22-101.2 11-108-102.

(1.5) (2) "Banking board" means the banking board created in section 11-2-102

SHALL HAVE THE SAME MEANING AS IN SECTION 11-101-401 (7).

(2) (3) "Commissioner" means the state bank commissioner.

(3) "Guaranty corporation" means the industrial bank savings guaranty corporation

of Colorado.

(4) "Member" means a bank required by this article to be a member of the

guaranty corporation FEDERAL DEPOSIT INSURANCE CORPORATION and shall include

"new member" except where the term "new member" is used in the same section or

subsection.

(5) "New member" means a member which THAT had no outstanding savings

obligations as of the last day of the calendar year preceding the year in which an

assessment is made and which THAT has not filed with the commissioner an

undertaking not to issue savings obligations.

(6) "Primary service area" means the smallest geographical area from which it is

anticipated that the proposed industrial bank will draw seventy-five percent of its

individual, partnership, and corporate deposits.

(7) "Savings obligations" means savings deposits of any type including contracts,

agreements, certificates of deposit, however evidenced, and savings accounts and

unpaid interest accrued thereon.

11-108-102. [Formerly 11-22-101.1] Applicability of powers of banking

board and bank commissioner to industrial banks. The powers, duties, and

functions of the banking board and the commissioner contained in article 2 102 of this

title and the declaration of policy contained in section 11-1-101.5 11-101-102 shall

apply to the provisions of this article.

11-108-103. [Formerly 11-22-115.6] No private right of action. Except as

expressly provided in this article, no person, other than the banking board, shall have

the right to bring or maintain any private action, at law or in equity, for a violation

of or enforcement of this article.

PART 2

POWERS

11-108-201. [Formerly 11-22-106] Powers - general corporate - loans and

investments - rules of banking board. (1) Every industrial bank duly organized

Ch. 152 Financial Institutions 1139

and chartered under the provisions of this article has the powers granted general

business corporations by the laws of the state of Colorado to the extent the same are

not inconsistent with or contrary to this article, including such special powers

provided in this article, without the necessity of such powers or special powers being

specifically recited or set out in the articles of incorporation of said industrial bank

or any amendments thereto.

(2) No industrial bank shall be authorized to engage in any business or activity

except as may be authorized by this article.

(3) No stock shall be issued for any consideration other than cash, except stock

dividends.

(4) An industrial bank may make such loans, secured or unsecured, accept such

drafts, make such investments, and issue such letters of credit as shall be permissible

pursuant to rules and regulations promulgated by the banking board or otherwise

permitted by this article. In promulgating such rules and regulations the banking

board shall consider all relevant factors, including without limitation the policies set

forth in section 11-1-101.5 11-101-102.

(5) In addition to the general corporate powers granted by this code, an industrial

bank has the power, subject to the limitations and restrictions imposed by this code

and the rules and regulations of the banking board, to lend money either upon the

security of real property or personal property, or otherwise; to charge, or to receive

in advance, interest therefor; and to contract for a charge for a secured or unsecured

installment loan.

(6) As authorized pursuant to section 10-2-601 (2), C.R.S., an industrial bank

may, pursuant to federal law or under such rules as may be adopted by the banking

board or the commissioner of insurance pursuant to section 10-2-601, C.R.S., act as

the agent for any insurance company authorized to do business in this state by

soliciting and selling insurance and collecting premiums on policies issued by such

company. For such services, an industrial bank may receive such fees or

commissions as may be agreed between the industrial bank and the insurance

company.

(7) (a) It is unlawful for an industrial bank, or an officer, director, employee, or

affiliate of an industrial bank, to:

(I) Engage in the business of issuing, floating, underwriting, distributing, or

promoting the sale of stocks, bonds, or other securities; or

(II) Be an officer, trustee, director, employee, stockholder, or partner of any person

engaged principally in such A business DESCRIBED IN SUBPARAGRAPH (I) OF THIS

PARAGRAPH (a).

(b) Nothing in paragraph (a) of this subsection (7) shall include securities issued

or guaranteed as to principal and interest by:

(I) The United States or any agency of the United States;

1140 Financial Institutions Ch. 152

(II) A state or territory of the United States; or

(III) A subdivision, instrumentality, or public authority organized under the laws

of such state or territory pursuant to an interstate compact between two or more

states.

11-108-202. [Formerly 11-22-107] Special powers. (1) Every industrial bank,

in addition to the powers granted by this article or the rules and regulations

promulgated by the banking board, has all of the following powers:

(a) The right to purchase and carry obligations of, or fully guaranteed by, the

United States or a state of the United States; obligations of a corporation chartered

by the United States or a state of the United States doing business in the United

States; obligations of an authority organized under state law, under an interstate

compact, or by substantially identical legislation adopted by two or more states if any

such authority is approved for investment by the rules and regulations of the banking

board; revenue obligations issued to provide, enlarge, or improve electric power, gas,

water, and sewer facilities by any city or town having a population of not less than

two thousand people at the time of investment, located in any state of the United

States; general obligations of a territory of the United States, or a political

subdivision or instrumentality of a state or territory of the United States; obligations

which THAT the general assembly of Colorado designates from time to time as legal

investments for public funds; notes, secured or unsecured; mortgages; contracts;

acceptances; bills of exchange; or trust receipts. All assets and funds of an industrial

bank shall at all times be maintained within the United States and in legal investments

within the United States as recited in this paragraph (a); but, with the written consent

of the banking board, industrial banks may purchase and carry other types of assets

but shall only be permitted to make such investments as are permitted by law to

fiduciaries.

(b) The right to lend money upon the security of the character and earning capacity

of the borrower, comakers, personal chattels, real property, or any other property, or

a combination of the foregoing;

INSURANCE CORPORATION, the right to issue certificates of deposit, contracts, or

agreements under any descriptive name and receive savings deposits which THAT may

bear such interest as their terms may provide. except that industrial banks need not

be members of the guaranty corporation if they are members of the federal deposit

insurance corporation. Industrial banks may pay interest on savings deposits,

certificates of deposit, contracts, or agreements at a rate, without regard to

compounding, not to exceed one-half percent per annum greater than the rates of

interest which THAT any national or state bank, savings and loan association, or

building and loan association in the state is permitted by law to pay on the same type

of savings deposit, certificate of deposit, contract, or agreement, whichever is greater.

If any national or state bank, savings and loan association, or building and loan

association is not limited by applicable law or regulation RULE with regard to the rate

of interest on any type of savings deposit, certificate of deposit, contract, or

agreement, banks shall also not be limited in the same manner. Such certificates of

deposit, contracts, or agreements shall be issued with a maturity of not less than seven

days and shall be sold at not less than par.

Ch. 152 Financial Institutions 1141

(d) Repealed.

(e) (d) The right to issue, with the prior approval of the banking board based upon

the facts and circumstances of each case, capital notes, debentures, or evidences of

indebtedness which THAT will not be covered by a guaranty and may be included as

a part of the capital and surplus and which THAT:

(I) Have a maturity of not less than five years;

(II) Will be paid by the bank at or prior to maturity in part or in whole only upon

written permission of the banking board and are at all times and in all respects wholly

subject, subordinate, junior, and inferior to all senior debts of the bank with respect

to right of payment;

(III) Provide that the holder of the note by its acceptance thereof must agree that

the payment of the principal and interest of the note is expressly subordinated to the

prior payment of the principal and interest on all existing and future obligations of the

bank to its savings depositors and certificate holders; and

(IV) Contain a provision in the note that no amount shall be paid by the bank as

principal or interest unless the capital of the bank, as defined in rules and regulations

of the banking board, increases over its capital as of the date of the execution of the

note by not less than the amount of such principal or interest payment.

(f) (e) The right to invest not more than ten percent of its assets in personal

property leases to the same extent and in the same manner as allowed national or

other state banks; except that an industrial bank shall not invest in any lease in excess

of fifteen percent of its capital, as defined in rules and regulations of the banking

board, less any inadequacy of capital to any person, association, partnership, or

corporation and except that an industrial bank may exceed the limit established by

this paragraph (f) (e) subsequent to investing in the lease if such excess is necessary

to protect the lease.

(g) (f) The right to broker first mortgage loans.

11-108-203. [Formerly 11-22-107.5] Trust, fiduciary, and agency powers -

when. In addition to its other powers, an industrial bank that is authorized by its

charter to exercise trust powers, upon proper qualification under this article, has the

power to act as a fiduciary in any capacity. It may also act as registrar, transfer

agent, fiscal agent, or attorney-in-fact and have the power to receive, manage, and

apply sinking funds. Every industrial bank that is authorized by its charter to

exercise trust powers pursuant to this section shall make and file with the

commissioner an annual report of trust assets and such other reports, as the banking

board may require by rule, and regulation, on such forms as may be prescribed by the

banking board. No report filed pursuant to this section shall be required to be

published.

11-108-204. [Formerly 11-22-108] Forbidden powers. (1) No industrial bank

has power to do any of the following:

(a) To accept demand deposits that the depositor may withdraw by check or similar

1142 Financial Institutions Ch. 152

means for payment to third parties;

(b) and (c) Repealed.

(d) (b) To engage in, or acquire any interest in, any business except as permitted

by this article.

(2) In calculating the obligations of a single obligor or the obligations of a

specified class for the purposes of paragraph (b) of subsection (1) of this section,

there shall be included:

(a) In the case of obligations of a partnership or association, the obligations of

each general partner or each member of the association;

(b) In the case of obligations of a general partner or a member of an association,

the obligations of the partnership or association;

in which it owns, directly or indirectly, a majority of the outstanding voting stock;

(d) In the case of obligations of a corporation, the amount of a loan made to any

other person to the extent that the proceeds of such loan, directly or indirectly, are to

be loaned to the corporation; or used for the acquisition from the corporation of any

securities issued by the corporation, other than securities acquired by an underwriter

for public offering; or transferred to the corporation without fair and adequate

consideration. The discharge of an equivalent amount of debt previously incurred in

good faith for value shall be deemed fair and adequate consideration.

PART 3

CHARTERS

11-108-301. [Formerly 11-22-101.2] Incorporation. Three or more persons

desiring to form a bank, as permitted in this article, may incorporate such bank, and

said bank may be chartered by the banking board to engage in the business of a bank

upon compliance with the provisions of this article.

11-108-302. [Formerly 11-22-102] Charter - application - fee - issuance

procedure - change in location. (1) The incorporators of a proposed industrial

bank shall submit to the banking board an application for an industrial bank charter

and in support thereof shall submit the following:

(a) An application for a charter in such form as may be prescribed by the banking

board by rule, and regulation, including the following: The name, address, and

business affiliation of each director and proposed officer and the name and address

of any and all other industrial banks with which each director and proposed officer

may be affiliated as a director, officer, or stockholder; the name, address, and

business affiliation of each subscriber to stock and the amount of stock subscribed

for; the address at which it is proposed the industrial bank will maintain its place of

business or, if such address is not known, the area within a radius of one-half mile in

which the bank is to be located; a designation of the primary service area it proposes

to serve; and such other information as the banking board may reasonably require to

Ch. 152 Financial Institutions 1143

enable it to determine whether such charter should be issued;

(b) Proposed articles of incorporation, containing: The name of the proposed

industrial bank; the city or county in which it is to be located; the amount of capital;

the number and par value of the shares authorized; the number of directors; a

statement whether cumulative voting will be permitted for directors; preemptive

rights, if any, of stockholders; its term of existence; and such other proper provisions

as may be approved by the banking board to govern the affairs and business of the

proposed industrial bank, including such provisions required by law for the

incorporation of ordinary corporations. The name of the industrial bank need not

comply with the requirements of part 6 of article 90 of title 7, C.R.S. Only one class

of par value stock of not less than ten dollars per share shall be authorized, but the

foregoing shall not affect industrial banks chartered prior to July 1, 1965, having

other classes of stock or other par value than recited in this article. The articles of

incorporation shall not contain any provisions authorizing such proposed industrial

bank to engage in any business or activity except as may be authorized by this article.

(d) An application fee established by the banking board pursuant to section

11-2-103 (11) 11-102-103 (12). The fee may be refunded to the incorporators by the

banking board if the application for charter is withdrawn by the incorporators prior

to the date set for public hearing. The applicants shall also submit evidence

satisfactory to the banking board that the stock, in an amount not less than the

minimum required by section 11-22-105 11-108-305, has been fully subscribed and

paid in and that the subscribing stockholders have, in addition thereto, deposited an

estimated amount to cover organizational expense.

(1.5) Repealed.

(2) (a) Within sixty days of AFTER the submission of an application, the banking

board shall determine whether the application is complete or whether deficiencies

exist in the application and shall notify the applicant of such finding and shall specify

any deficiencies which THAT have been found to exist. In the event that the

application is not completed in accordance with this section and the rules of the

banking board within ninety days of AFTER the submission date, the application shall

be deemed withdrawn and the application fee forfeited.

(b) After the application has been properly completed within the required

ninety-day period, the hearing required by this section shall be held and a decision

rendered by the banking board on the charter application at least thirty days prior to

any hearing on any later filed application for a bank proposing to serve any portion

of the same primary service area.

a time and place for a hearing upon such application not less than thirty days nor

more than ninety days after such determination or not less than thirty days nor more

than ninety days after the banking board renders a decision on an earlier filed

application to serve a portion of the same primary service area. At least thirty days

prior to the hearing, the banking board shall notify the applicants thereof and mail

notices of the hearing upon such application to each industrial bank doing business

1144 Financial Institutions Ch. 152

in the primary service area to be served by the applicant and to such other persons

and organizations as the banking board may select. If any person or organization

objects to the application, such person or organization may file with the banking

board a written objection within twenty days after receipt of the notice of hearing.

At such hearing, applicants, persons notified by this subsection (2), and other persons

interested may appear and offer testimony in support of, or in opposition to, such

application, and such testimony shall be transcribed. The banking board may

continue the hearing from time to time for the purpose of taking additional testimony.

(d) Notwithstanding any other provision of this section, if the BANKING board has

given notice pursuant to paragraph (c) of this subsection (2) of a hearing on any

application for charter filed pursuant to this section and the BANKING board has

received no written protests against such charter application within ten days of PRIOR

TO the hearing, the BANKING board may grant such charter without a hearing as

otherwise required in this section if the applicants for such charter are known to the

BANKING board.

(3) (a) Upon the receipt of the instruments recited in subsection (1) of this section,

the banking board shall investigate the facts and the application and, after a hearing,

shall grant the charter if it finds that:

(I) Allowing the applicants to engage in such business will serve the public need

and advantage in the primary service area in which the business of the applicants is

to be conducted; and that the volume of business in the primary service area which

THAT the applicants propose to serve, attributable to industrial banking, is such that

profitable operation of the industrial bank may reasonably be projected;

(II) The experience, financial responsibility, character, and general fitness of the

proposed officers, directors, stockholders, and persons in control of the industrial

bank, as defined in section 11-22-101 (1) 11-108-101 (1), are such as to command

the confidence of the public and to warrant belief that the business will be operated

lawfully and within the purposes of this article. In making a determination under the

provisions of this subparagraph (II), the banking board shall be governed by the

provisions of section 24-5-101, C.R.S.; and

(III) The articles of incorporation and bylaws are in compliance with law and any

regulations RULES of the banking board and its proposed capital satisfies the

standards and guidelines in the rules and regulations promulgated by the banking

board.

(b) The applicants shall have the burden of proving the matters set forth in

paragraph (a) of this subsection (3).

(4) Such charter shall not be issued until: The articles of incorporation, duly

approved by the banking board, have been filed by the incorporators with the

secretary of state of Colorado and with the banking board; the proposed capital

satisfies the standards and guidelines in the rules and regulations promulgated by the

banking board; and the organization of said industrial bank, including adoption of the

bylaws, election of members to the board, and the election of its officers have been

duly completed.

Ch. 152 Financial Institutions 1145

(5) The banking board shall grant or deny an application for a charter within thirty

days after conclusion of the hearings thereon. Within ten days after the entry of an

order denying or granting an application, the banking board shall give written notice

thereof and the BANKING board's reasons therefor to the applicants and to such

industrial banks or other persons who appeared at the hearing in opposition to the

granting of such application. The banking board shall make execution of its order to

grant a charter contingent upon the proposed industrial bank's making a bona fide

application for, and receiving membership in, the federal deposit insurance

corporation or the federal reserve system.

(6) The proposed incorporators, or any industrial bank, or other persons aggrieved

by the order of denial or granting of the application may seek a review thereof in any

district court of Colorado within thirty days after written notice of the issuance of said

order. The court may affirm the order of the banking board, or may reverse or modify

the same, or direct the banking board to take any action deemed proper if it finds that

the banking board abused its discretion or exceeded its jurisdiction. Review by

appeal may be prosecuted from the final judgment of the district court as provided by

law and the Colorado appellate rules in the same manner as appeals are taken from

judgments of the district court in civil actions.

(7) (a) If a bank chartered under the provisions of this article desires to move from

the location for which the charter was granted, the bank shall submit to the banking

board in such form as the banking board may prescribe an application for change of

location. The application for change of location shall include the following: The new

address at which the bank proposes to maintain its place of business; a designation

of the primary service area it proposes to serve; evidence satisfactory to the banking

board that the requirements of section 11-22-105 (1) 11-108-305 (1) relating to the

proposed new location have been met; and such other information as the banking

board may reasonably require to enable it to determine whether the application for

change of location should be granted.

(b) If the proposed new location of the bank is over five hundred feet from the

location for which the charter was granted, then, within thirty days following the

submission of an application for change of location, the bank shall give notice to the

public of the proposed new location by publishing, at least twice in a newspaper of

general circulation in the primary service area that such bank serves, a notice

identifying the present location of the bank and the proposed new location. If the

proposed new location of the bank is five hundred feet or less from the location for

which the charter was granted, no such public notice shall be required under this

paragraph (b), and the banking board shall grant or deny the application for a change

of location within sixty days after submission by the applicant.

and within a radius of one-half mile of the location for which the charter was granted,

the banking board shall mail notice of such application for change of location within

thirty days following submission of the application to each bank doing business in the

primary service area to be served by the applicant. If no bank which received notice

of the application objects in writing to the banking board within thirty days of AFTER

mailing of such notice, the banking board may grant or deny the application, without

a hearing, based upon the merits of the application, but such application shall be

granted only if the provisions of section 11-22-105 (1) 11-108-305 (1) relating to the

1146 Financial Institutions Ch. 152

proposed new location have been met. If any bank receiving notice does object in

writing and requests a hearing on the application, the banking board shall determine

if a hearing is advisable, and, if it finds IT advisable the banking board shall mail a

notice of such hearing to the guaranty corporation and to each bank doing business

in the primary service area to be served.

(d) If the proposed new location of the bank is more than one-half mile from the

location for which the charter was granted, the banking board shall give notice within

thirty days following submission of the application to each bank doing business in the

primary service area to be served by the applicant to the guaranty corporation, and

to such other persons and organizations as the banking board determines. If no bank,

person, or organization receiving notice of the application objects in writing to the

banking board within thirty days of AFTER mailing of such notice, the banking board

may grant or deny the application, with or without a hearing, at its discretion, based

on the merits of the application, but such application shall be granted only if the

provisions of section 11-22-105 (1) 11-108-305 (1) relating to the proposed new

location have been met. If any bank, person, or organization receiving notice does

object in writing and requests a hearing on the application, the banking board shall

hold a hearing on the application, and the banking board shall mail a notice of such

hearing to all persons and organizations who were mailed notice of application to

change location.

(e) Any hearing held under the provisions of this subsection (7) shall be held

within ninety days following the date of mailing of the notice of hearing. At such

hearing, the applicant, persons, or organizations notified pursuant to this subsection

(7), and other persons interested may appear and offer testimony in support of, or in

opposition to, the application for change of location, and such testimony shall be

transcribed.

(f) The banking board shall grant or deny an application for change of location

within ninety days of AFTER the conclusion of any hearing held on the application or,

if no hearing is held, within ninety days of AFTER the receipt of the application.

11-108-303. [Formerly 11-22-103] Amendment - where filed. In the event of

an amendment to the certificate of incorporation of any industrial bank, certificates

setting forth such amendment shall be executed in duplicate and filed in the offices

of the secretary of state and the banking board.

11-108-304. [Formerly 11-22-104] Certificate approving amendment. If the

banking board is satisfied that such amendment has been legally made, and that it in

no way impairs the financial standing of said industrial bank, it shall issue to the

industrial bank a certificate approving the amendment and authorizing the bank to

conduct business pursuant thereto, and no such authority of amendment shall be

effective until so approved by the banking board.

11-108-305. [Formerly 11-22-105] Capital structure - inadequacy. (1) The

banking board shall establish by rules and regulations the capital standards and

guidelines, the methods for measuring capital, and the definitions of "capital",

"capital adequacy", "capital inadequacy", and other related terms for industrial banks

subject to this article, which may differ for specific purposes. In promulgating such

rules, and regulations, the banking board shall consider all relevant factors, including

Ch. 152 Financial Institutions 1147

without limitation the policies set forth in section 11-1-101.5 11-101-102 and

relevant federal laws and regulations. Each industrial bank subject to this article

shall at all times comply with the capital rules and regulations promulgated by the

banking board.

(2) The board of directors of an industrial bank may declare dividends from

retained earnings and from other components of capital specifically approved by the

banking board so long as the declaration is made in compliance with the rules and

regulations established by the banking board.

(3) If the banking board has reason to believe that the capital of any industrial

bank is inadequate under the rules and regulations of the banking board, the banking

board may ascertain the facts and furnish the bank with a copy of its determination.

If the banking board determines an inadequacy of capital based upon such

determination, the commissioner, with the approval of the banking board, may direct

the industrial bank to levy an assessment in a designated amount upon the holders of

record of common stock to remedy an inadequacy of capital. Upon receipt of an order

to levy an assessment, the directors shall cause to be sent to all holders of common

stock, at their addresses, a copy of the order and a copy of this subsection (3). If an

assessment is not paid within the time prescribed in the order or such shorter period

as the directors decide, but not less than thirty days, the bank may offer the shares of

the defaulting stockholders for sale at public auction or private sale at a price which

THAT shall not be less than the amount of the assessment and the cost of the sale.

Any excess shall be paid to the prior owners. Except under circumstances where

section 11-3-105 11-103-203 applies, the method of collection provided in this

section shall be the sole method of collecting assessments. If an assessment is not

paid within ninety days after the date of the order to levy or at such other date as may

be specified in the order, but in no event less than thirty days, the commissioner may,

with the approval of the banking board, proceed pursuant to part 6 of this article;

however, for good cause shown to the banking board by the affected bank, the

BANKING board may extend the ninety-day limit. If the banking board determines that

the capital or reserves of any bank are inadequate, the banking board may order the

bank not to make new loans or discounts.

(4) Any industrial bank upon application to and approval by the banking board,

may operate one loan production office as defined by the banking board. Any

industrial bank, upon application to and approval by the banking board, may also

operate one detached facility. Such facility shall be located within three thousand feet

of the nearest point on the boundary of the premises of the bank's place of business

but cannot be located within three hundred feet of the boundary of the premises of

another industrial bank, state bank, or national bank or any of such other banks'

detached facility, unless such other bank consents to a closer location. The banking

board shall give written notice of an application for a detached facility to each

industrial bank and each state or national bank located within a three-mile radius of

the applicant bank and, at its discretion, the banking board may order a public hearing

with respect to the application. Approval shall be granted by the board only upon a

showing of need. Banking activities at detached facilities shall be restricted to

receiving deposits, issuing money orders or drafts, cashing checks or drafts, making

change, receiving note payments, receiving or delivering cash, instruments, and

securities, and disbursing loan proceeds by machine. Any other facility, agency, or

paying or receiving station operated by any bank or agent shall constitute a branch

1148 Financial Institutions Ch. 152

within the meaning of this subsection (4). Notwithstanding the limitations of this

subsection (4), an industrial bank is authorized to engage in such deposit and loan

activities as are expressly authorized by this article through a communications

facility, as defined in section 11-48-103.

(5) Repealed.

11-108-306. [Formerly 11-22-111] Assessments. (1) The banking board shall

annually establish fees and assessments pursuant to section 11-2-103 (11)

11-102-104 (11). Assessments may be made more frequently than annually at the

discretion of the banking board.

(2) For the fiscal year beginning July 1, 1992, and for each fiscal year thereafter,

the banking board shall establish its annual assessment to be collected at least

semiannually in such amounts as are sufficient to generate the moneys appropriated

by the general assembly to the division of banking for each such fiscal year.

(3) In addition to each assessment established pursuant to subsections (1) and (2)

of this section, for each fiscal year beginning July 1, 1992, and ending June 30, 1994,

and for the period ending January 31, 1995, the banking board shall collect a

semiannual repayment of the fiscal year 1991-1992 general fund advance to the

division of banking in an amount equal to one-sixth of the amount of the banking

board's assessment that would have been collected in September 1992.

PART 4

RECORDS, REPORTING, AND INFORMATION

11-108-401. [Formerly 11-22-109] Subject to corporation laws - powers of

banking board - examinations by commissioner - reports by industrial banks.

(1) Industrial banks shall be subject to and governed by the laws relating to general

business corporations, except where inconsistent with the provisions of this article,

but, in addition thereto, the commissioner shall examine the books and records of

every industrial bank as often as deemed advisable and to the extent required by the

banking board. The cost of the examination shall be borne by the industrial bank at

the rate provided for in section 11-22-111 11-108-306.

(1.1) (2) The commissioner shall examine, as often as deemed advisable and to the

extent required by the banking board, any electronic data processing centers of an

industrial bank or any electronic data processing centers which THAT serve an

industrial bank, without regard to the location of the electronic data processing center;

shall make and file in his OR HER office a correct report in detail disclosing the results

of such examination; and shall mail a copy of such report to the data processing

centers examined and the industrial bank which THAT they serve.

(1.2) (3) (a) The commissioner, if he OR SHE deems it necessary or if required by

the banking board, may examine the books and records of the controlling shareholder

of an industrial bank and any affiliated entities of the controlling shareholder for the

purpose of determining the safety and soundness of the industrial bank. If the

controlling shareholder or affiliate's records are located outside this state, the

controlling shareholder or affiliate shall either make them available to the

commissioner at a convenient location within this state or pay the reasonable and

Ch. 152 Financial Institutions 1149

necessary expenses for the commissioner or his THE COMMISSIONER'S representative

to examine them at the place where they are located. The commissioner may

designate representatives, including comparable officials of the state in which the

records are located, to inspect them on his THE COMMISSIONER'S behalf. If a

controlling shareholder or affiliate refuses to permit the commissioner to make an

examination, the banking board may fine such controlling shareholder or affiliate an

amount not to exceed one hundred dollars for each day any such refusal continues.

In lieu of any examination required by this subsection (1.2) (3), the commissioner

may accept an audit for the previous fiscal year prepared by an independent certified

public accountant, independent registered accountant, or other independent qualified

person. If the commissioner accepts an audit prepared by such independent person,

no costs thereof shall be borne by the commissioner and all costs of such audit shall

remain the obligation of the controlling shareholder or affiliate.

(b) For purposes of this subsection (1.2) (3):

(I) "Affiliated entity" or "affiliate" means an entity in control of a controlling

shareholder.

(II) "Controlling shareholder" means a shareholder in control of an industrial bank.

(III) "In control of" means that an entity or shareholder meets the same criteria for

acquiring control as are set forth in section 11-2-109 (4) 11-102-303 for acquiring

control of a state bank.

(2) Repealed.

(2.1) (4) Any person who becomes a director, executive officer, or other person

who, directly or indirectly, is responsible for the management, control, or operations

of an industrial bank shall within ninety days thereafter file a report with the banking

board containing: A statement describing any civil or criminal offenses involving

fraud, dishonesty, moral turpitude, bribery, perjury, larceny, theft, robbery, extortion,

forgery, counterfeiting, embezzlement, misappropriation of property, or conspiracy

to commit any of such offenses, or an offense affecting such person's qualification to

serve in such capacity with respect to which such person has been found guilty or

liable by any federal or state court or federal or state regulatory agency; such

biographical information as the banking board requires; and such other information

as the banking board requires pursuant to its rules. and regulations. If any statement

contained in such report subsequently becomes inaccurate or misleading in any way,

such person shall file an amended report within thirty days after the date on which the

statement in the report first becomes inaccurate or misleading. Any person who fails

to comply with this subsection (2.1) (4) shall be required by the banking board to pay

a penalty in an amount set by the banking board by rule, and regulation, which shall

not exceed twenty-five dollars per day, and such penalties shall be deposited in the

general fund. The banking board, for valid reasons and good cause, may waive such

penalty.

(2.2) (5) If any industrial bank changes any executive officer, director, or other

person who, directly or indirectly, is responsible for the management, control, or

operations of the bank, such changes shall be promptly reported to the banking board,

and the bank shall provide such information concerning such person as may be

1150 Financial Institutions Ch. 152

requested by the banking board on such forms as the banking board may require,

including information about the reasons for termination from any prior employment

and whether such person was charged or convicted of any civil or criminal offenses

enumerated in subsection (2.1) (4) of this section. No civil liability shall arise for

any industrial bank, its directors, executive officers, employees, or agents, or other

persons due to compliance with the requirements of this subsection (2.2) (5). The

purpose of such information is to inform the banking board of the qualifications of

such person as they may affect the safety and soundness of the bank. The information

shall be treated as confidential under this article. Any industrial bank that fails to

comply with this section shall be required by the banking board to pay a penalty in

an amount set by the banking board by rule, and regulation, which shall not exceed

twenty-five dollars per day, and such penalties shall be deposited in the general fund.

The banking board, for valid reasons and good cause, may waive such penalty.

(3) (6) An industrial bank shall not permit other businesses to be carried on at its

place of business except as permitted by this article, unless such businesses were

carried on at the place of business of the bank prior to July 1, 1965. A bank shall

identify other businesses carried on at its place of business by conspicuous signs

placed in or upon the exterior of and adjacent to the principal entrance of its place of

business.

(4) (7) (a) Industrial banks which THAT are subject to reserve provisions of the

"Federal Reserve Act", as amended, shall maintain such reserves against deposits as

may be required by the "Federal Reserve Act", as amended, but in addition thereto

the banking board may by regulation RULE impose reserve requirements which THAT

it deems prudent and sound on said industrial banks. The banking board may also

impose reserve requirements by regulation RULE on industrial banks not subject to

reserve provisions of the "Federal Reserve Act", as amended.

(b) In addition to the reserve against deposit liability, a bank shall maintain a

reserve against bad debts as required by law and the banking board.

(5) (8) In addition to other powers conferred by this article, the banking board has

power to:

(a) Regulate the procedure and practice at hearings;

(b) Implement by order and regulation RULE any provision of this article and obtain

restraining orders and injunctions to prevent violation of, and enforce compliance

with, the provisions of this article and the orders and regulations RULES issued

thereunder. In the exercise of such power to make orders and regulations RULES to

implement the provisions of this article, the banking board shall act, consistent with

the policies expressed in section 11-1-101.5 11-101-102, in the interests of promoting

and maintaining a sound industrial banking system, the security of deposits and

depositors, and the protection of other customers.

any certificate of deposit, contract, or agreement when the banking board determines

that the capital of such industrial bank is inadequate pursuant to the provisions of

section 11-22-115 (1) (a) 11-108-501 (1) (a);

Ch. 152 Financial Institutions 1151

(d) Order any person or industrial bank to cease violating a provision of this

article, or a lawful regulation RULE issued thereunder, or to cease engaging in

unsound business practices. A copy of such order shall be mailed to each director of

the industrial bank involved.

(e) Require the board of directors of industrial banks to:

(I) (A) Cause an annual audit of the industrial bank to be completed by an

accounting firm composed of certified public accountants or a directors' examination

by a public accountant or any other independent person or persons as determined by

the banking board at least annually but at intervals of not more than fifteen months

as may be required by the banking board or its rules. and regulations. The banking

board shall adopt regulations RULES regarding the qualifications of such public

accountant and other independent person or persons who shall assume the

responsibility for due care in such directors' examinations. The banking board's

regulations RULES shall also establish the scope of such director's examinations,

which shall include safeguards to insure ENSURE that such examinations adequately

describe the financial condition of the financial institution. The banking board may

require an audit to be completed by an accounting firm composed of certified public

accountants under certain circumstances. A report of the audit or directors'

examination and any related management letters and documents shall be completed

and submitted to the banking board within the time frames, in the form, and

containing such information as the banking board may require in its rules. and

regulations. Such report of the audit or directors' examination and any related

management letters and documents shall be reviewed by the directors at the next

meeting of the board of directors.

(B) If an industrial bank is owned or controlled by a bank holding company, the

requirement of sub-subparagraph (A) of this subparagraph (I) may be fulfilled if: As

required by the banking board and its rules, and regulations, the controlling bank

holding company is audited or examined in a directors' examination annually at

intervals of not more than fifteen months and the industrial bank is included in the

annual audit or directors' examination of the bank holding company by that firm; a

report of the audit or directors' examination for the controlling bank holding company

and any related management letters and documents is completed and submitted to the

banking board within the time frames, in the form, and containing such information

as the banking board may require in its rules; and regulations; and an annual internal

examination of the industrial bank is prepared by the internal examination staff of the

controlling bank holding company which shall be submitted to the banking board

immediately upon its request.

(II) Repealed.

(III) (II) Cause the financial statements of the industrial bank to be prepared in

accordance with generally accepted accounting principles consistently applied, except

as the banking board may otherwise provide in order to establish regulatory and

competitive parity and pursuant to the policies expressed in section 11-1-101.5

11-101-102;

(IV) and (V) Repealed.

1152 Financial Institutions Ch. 152

(VI) (III) File, record, or otherwise make effective any lien or other interests in

property;

(VII) (IV) Obtain a financial statement from a person with present or prospective

liability to the industrial bank to the extent that the industrial bank can do so;

(f) (I) After notice and hearing, suspend any officer or director for fraud,

embezzlement, or failure to comply with any provision of this article or any valid

order or regulation RULE of the banking board.

(II) With respect to any action pursuant to this section, ten days' notice, by certified

mail, return receipt requested, and hearing shall be provided to the bank affected in

advance of any action taken by the banking board. In cases found by the banking

board to involve extraordinary circumstances requiring immediate action, the banking

board may take such action, without notice of hearing, but shall promptly afford a

subsequent hearing upon application to rescind the action taken.

(g) Order any industrial bank to cease making loans if the banking board

determines that the reserves against savings obligations as required in subsection (4)

(7) of this section, are deficient, or are not in compliance with this article, or are

otherwise inadequate, or order any industrial bank to cease taking savings obligations

if the banking board determines that the capital of such bank are inadequate.

(6) (9) The banking board has the power to subpoena witnesses, compel their

attendance, require the production of evidence, administer oaths, and examine any

person under oath in connection with any subject relating to a duty imposed upon, or

a power vested in, the BANKING board.

(7) Repealed.

(8) (10) Any industrial bank aggrieved and directly affected by an order or

regulation RULE of the banking board issued under this article may seek a review in

the district court of Colorado in and for the county in which the industrial bank is

located, within thirty days after receipt of written notice of the issuance of said order

or regulation RULE. The filing of such a petition for review shall not, of itself, stay

enforcement of an order or regulation RULE, but the court, upon a finding that

irreparable injury would otherwise result, may order a stay upon such terms as it

deems proper. The court may affirm the order of the banking board or may direct

said THE BANKING board to take any action deemed proper.

(9) Repealed.

(10) (11) (a) A bank shall not, without the written consent of the banking board,

(I) and (II) Repealed.

(III) purchase real estate or any interest therein or make substantial improvements

thereon; except that an industrial bank shall not be prohibited from purchasing or

otherwise acquiring real estate or any interest therein pursuant to section 11-22-119

11-108-704.

Ch. 152 Financial Institutions 1153

(b) Any consent given by the banking board under the provisions of paragraph (a)

of this subsection (10) (11) shall not constitute any determination by the banking

board as to the value of any real estate or the improvements thereon.

(11) (12) No industrial bank shall advertise, display, distribute, or broadcast, or

cause or permit to be advertised, displayed, distributed, or broadcasted, in any

manner whatsoever, false, misleading, or deceptive statements or representations with

regard to the charges for, or terms of, loans, or with reference to its savings deposits

or certificates of deposit. The banking board has the power to require that all

advertisements of any industrial bank be stated fully and clearly and in such manner

as the banking board may deem necessary to prevent misunderstanding thereof by

prospective borrowers, depositors, or purchasers of certificates of deposit.

(12) (13) The provisions of article 52 of title 12, C.R.S., known as the "Money

Order Act", shall not be applicable to industrial banks, nor shall industrial banks be

required to comply therewith.

(13) (14) No person who in good faith relies on any order OR rule or regulation of

the banking board shall be subjected to any civil or criminal liability for any act or

omission to act, notwithstanding a subsequent decision by a court invalidating any

such order OR rule. or regulation.

(14) (15) The banking board, the bank commissioner, and all deputies and

employees of the division of banking shall not divulge any information acquired by

them in the discharge of their duties except insofar as the same may be rendered

necessary by law. The banking board, the commissioner, and their designees may

exchange such information with the United States comptroller of the currency, the

federal deposit insurance corporation, the board of governors of the federal reserve

system, the executive director of the department of regulatory agencies, the division

of savings and loan, and banking regulatory agencies of other states. In addition, the

BANKING board, the commissioner, and their designees may exchange information as

to possible violations of the federal "Employee Retirement Income Security Act of

1974", as amended, with the federal department of labor or the executive director of

the department of regulatory agencies. The executive director of the department of

regulatory agencies and the state commissioner of savings and loan associations and

their deputies shall, before entering upon the discharge of their duties specified in this

section, in addition to an oath required by the state constitution, take and subscribe

an oath to keep secret all information acquired by them in the discharge of such

duties, except as may otherwise be required by law. Willful violation of this oath

shall be a criminal offense. Notwithstanding any provision of this article to the

contrary, the bank commissioner, the deputies, and the members of the banking board

may disclose any information in the records of the division of banking or acquired by

them within the discharge of their duties which THAT is publicly available from the

federal deposit insurance corporation, the United States comptroller of the currency,

or the federal reserve system and disclose information which THAT has been

specifically authorized by the board of directors of the bank to which such

information relates.

(15) (16) Any person who willfully makes, circulates, or transmits to another any

false statement, written or oral, which THAT is directly or by inference derogatory to

the financial condition of any industrial bank and which THAT results in an

1154 Financial Institutions Ch. 152

extraordinary withdrawal of funds from such bank or which THAT results in impairing

public confidence in such bank and any person who shall counsel, aid, procure, or

induce another to start, transmit, or circulate any such statement knowing the

statement to be false commits a class 2 misdemeanor and shall be punished as

provided in section 18-1.3-501, C.R.S.

11-108-402. [Formerly 11-22-109.5] Requirements for acquiring control of

industrial banks - definitions. (1) As used in this section, unless the context

otherwise requires:

(b) (a) "Controlling person" means a person who is in control of an industrial bank

or would be in control of an industrial bank after a proposed acquisition.

(a) (b) "Person" means an individual, a corporation, a partnership, a trust, or any

other legal entity.

(2) A person shall be deemed to have acquired control of an industrial bank if, as

a result of acquisition, such person:

(a) Directly or indirectly owns, controls, holds with the power to vote, or holds

proxies representing twenty-five percent or more of the outstanding voting stock

thereof;

(b) Controls in any manner the election of a majority of the directors thereof; or

(3) (a) Whenever a person proposes to acquire control of any industrial bank, such

person shall first make application to the banking board for approval. Without

approval from the banking board pursuant to subsection (4) of this section, a person

shall be prohibited from making such an acquisition.

(b) An application required by paragraph (a) of this subsection (3) shall contain

the following information to the extent that it is known by the person making the

application:

(I) The number of shares involved;

(II) The name of each seller or transferor;

(III) The name of each purchaser or transferee;

(IV) The name of each beneficial owner if the share or shares are registered in

another name;

(V) The purchase price;

(VI) Detailed information concerning any loans made in connection with the

acquisition;

(VII) Such other information concerning the transaction as may be available to

Ch. 152 Financial Institutions 1155

inform the commissioner of the effect of the transaction upon the control of the

industrial bank involved;

(VIII) Biographical and financial information concerning each purchaser,

controlling person, or person in control of a controlling person participating in the

proposed acquisition; and

(IX) The name of each controlling person and each person in control of a

controlling person participating in the proposed acquisition.

(4) (a) After receipt of an application, the commissioner shall make an

investigation, and the banking board shall approve the change of control only after

the BANKING board has determined:

(I) That the person proposing to acquire control is qualified by character,

experience, and financial responsibility to control the industrial bank in a legal and

proper manner;

(II) That the interests of the public generally will not be jeopardized by the

proposed acquisition; and

(III) That the person proposing to acquire control has satisfied the requirements of

this section and the other provisions of articles 1 to 11 101 TO 104, PARTS 1 TO 5 OF

ARTICLE 105, AND ARTICLES 106 AND 107 of this title and this article.

(b) The general assembly declares that the acquisition of control of or of any

ownership interest in industrial banks by persons owned or controlled by a country

with which it has been determined to be against the national interest to trade without

export controls for national security purposes by the president of the United States or

another appropriate agency of the federal government as directed by the president

pursuant to the "Export Administration Act of 1979", 50 U.S.C. Appendix sec. 2401

et seq., the "International Emergency Economic Powers Act", 50 U.S.C. sec. 1701

et seq., or any rule, regulation, order, or decision promulgated in connection therewith

is against the public interest. If the application or the commissioner's investigation

indicates that any person seeking to have control of or any ownership interest in an

industrial bank is owned or controlled by such a country, the banking board may not

approve any such change of control.

(5) This section shall not apply to the acquisition of:

(a) Voting proxies acquired in the normal course of business as a result of a proxy

solicitation in conjunction with a stockholders' meeting;

(b) Stock held in a fiduciary capacity unless the acquiring person has sole

discretionary authority to exercise voting rights with respect thereto;

in good faith or stock acquired through testate or intestate succession or bona fide

gift, if the acquirer advises the banking board of such acquisition within thirty days

after the acquisition and provides any information required or requested by the

banking board or commissioner;

1156 Financial Institutions Ch. 152

(d) Stock acquired by an underwriter in good faith and without any intent to evade

the purpose of this section if the shares are held only for such reasonable period of

time as will permit the sale thereof; or

(e) Pro rata stock dividends.

(6) If the BANKING board has not acted upon a completed application within sixty

days of AFTER receipt thereof, unless extended for an additional thirty days by the

banking board, such application shall be considered approved.

(7) Whenever any person proposes to acquire control of any industrial bank and

is required by the "Change in Bank Control Act of 1978" (section 7 (j) of the

"Federal Deposit Insurance Act", 12 U.S.C. 1817 (j)), as such act may be amended

from time to time, to give the appropriate federal banking agency prior written notice

of such proposed acquisition, a copy of such notice with supporting information shall

be given concurrently to the banking board for information. The banking board may

use such information in evaluating applications submitted pursuant to this section and

shall submit its recommendations and comments to the appropriate federal regulatory

authority in a timely manner.

11-108-403. [Formerly 11-22-109.6] Industrial banks reports on condition

and income to commissioner. (1) Every industrial bank shall make and file with

the commissioner not less than three reports during each calendar year according to

the form which THAT may be prescribed by him THE COMMISSIONER, verified by the

oath of either the president, the vice-president, the cashier, or the secretary and

attested by the signature of three or more of the directors. Each such report shall

exhibit in detail, as may be required by the commissioner, the resources and liabilities

of the industrial bank at the close of business on the day past to be specified by said

commissioner in writing.

(2) Said reports shall be transmitted to the commissioner within thirty days after

the request therefor.

(3) The commissioner has power to call for special reports from any particular

industrial bank if, in his THE COMMISSIONER'S judgment, the same are necessary to

a full and complete knowledge of its condition. No such special report, nor any

summary thereof, shall be required to be published. The reports required by, and

filed pursuant to, this section shall be in lieu of all others required by law from

industrial banks. Every industrial bank which THAT fails to comply with this section

shall pay to the commissioner a penalty in an amount set by the banking board

pursuant to section 11-2-103 (11) 11-102-104 (11) for each day's delay. The

commissioner, for valid reasons and good cause, may waive such penalty.

11-108-404. [Formerly 11-22-110] Industrial bank converted to state bank.

(1) Any industrial bank organized under the laws of this state may apply to the

banking board, in such form and with such exhibits as it shall prescribe, to be

converted into a state bank. Proposed amended articles of incorporation shall

accompany the application.

(2) Upon receipt of such application and proposed amended articles of

incorporation, the banking board shall proceed to process and hear such application

Ch. 152 Financial Institutions 1157

and grant or deny a charter in the same manner and upon the same standards as

prescribed in section 11-3-110 11-103-304, relating to the granting or denying of a

charter.

(3) In the event of a denial of an application for conversion, the applicant has the

right of review and appeal in the manner and form provided in section 11-22-102 (6)

11-108-302 (6).

(4) Upon a charter being granted, the industrial bank shall file amended articles

of incorporation and also certified copies of the resolution passed by the board of

directors and stockholders representing not less than two-thirds of the capital stock

of such bank authorizing such conversion. The resolutions of the stockholders shall

declare that the officers have been authorized and required to file amended articles

of incorporation and to take all steps necessary or proper to convert the industrial

bank into a state bank. Upon the filing of the amended articles of incorporation, the

banking board shall issue a charter to the industrial bank authorizing it to commence

business in the same form as is issued to a state bank. The officers, after executing

the amended articles of incorporation, have the power to execute all other papers and

perform all other acts as may be required in connection with the conversion of the

industrial bank.

(5) Upon the filing of the amended articles of incorporation, such bank and all of

its stockholders, officers, and employees have the same rights, powers, and privileges

and shall be subject to the same duties, liabilities, and obligations in all respects as

are applicable to state banks originally organized as such under the laws of this state.

The shares of stock of any such bank may continue to be for the same amount each

as they were before the conversion, and the directors and officers of such bank may

continue until others are elected or appointed.

(6) Upon the filing of the amended articles of incorporation, all of the property of

the industrial bank, including all of its right, title, and interest therein as to all

property of whatever kind, whether real, personal, or mixed, and things in action, and

every right, privilege, interest, and asset of any conceivable value then existing,

belonging to it or which THAT would inure to it, shall be vested, immediately by act

of law and without conveyance or transfer and without any further act or deed, in and

be the property of the state bank, which shall have, hold, and enjoy the same in its

own right as fully and to the same extent as the same was possessed, held, and

enjoyed by the industrial bank. The bank converted under this part 1 4, in every

respect, shall be subject to the provisions of the law pertaining to state banks and

shall be deemed to have a continuation of the entity and of the identity of the

industrial bank, and all the rights, obligations, and relations of the industrial bank to

or in respect to any person, creditor, or depositor shall remain unimpaired.

(7) If necessary, the banking board, for a period not to exceed one year from AFTER

the date of the issuance of the charter to commence business, subject to such

condition as it may prescribe, may permit the converted bank to continue and carry,

at a value determined by the banking board, such of the assets of the converted bank

as do not conform to the legal requirements relative to assets required and held by

state banks.

(8) Any industrial bank organized under this article has the power to purchase and

1158 Financial Institutions Ch. 152

hold, for the purpose of becoming a member of a federal reserve bank, so much of the

capital stock thereof as will qualify it for membership in such bank pursuant to the

"Federal Reserve Act", and acts amending such act; to become a member of such

federal reserve bank and to have and exercise all powers, not in conflict with the laws

of this state, which THAT are conferred upon any such member by the "Federal

Reserve Act", and acts amending such act. Such industrial bank and its directors,

officers, and stockholders shall continue to be subject to all liabilities and duties

imposed upon them by any law of the state and to all provisions of this article.

(9) Any industrial bank organized under this article has power to obtain federal

deposit insurance or other deposit insurance and to assume and discharge such

obligations to the federal deposit insurance corporation or other insurance

corporations as may be necessary or required for the purpose of maintaining deposit

insurance in such corporations.

PART 5

DIRECTORS, PENALTIES, REMOVAL,

SUSPENSION, AND ENFORCEMENT

11-108-501. [Formerly 11-22-115] Unsound business practices. (1) For the

purposes of this article, an unsound business practice includes, but is not limited to,

the following:

(a) The conducting of any business by a bank while the capital of any such bank

is inadequate under rules and regulations of the banking board. The capital of a bank

shall be deemed inadequate if the capital is less than the requirements set by the

banking board pursuant to the provisions of section 11-22-105 11-108-305.

(b) The violation by a bank of its articles of incorporation, of any provision of this

article or any regulation RULE promulgated pursuant thereto, or of any other law or

regulation RULE of this state which THAT may impair the financial soundness of the

bank;

(d) The refusal by a bank to submit its books, papers, and affairs for reasonable

inspection by any representative of the division of banking; or of the guaranty

corporation;

(e) The refusal by any officer, director, employee, or agent of any bank to be

examined under oath regarding the condition of such bank;

(f) The suspension by a bank of the payment of its obligations;

(g) The operation of a bank in a manner which THAT significantly impairs the

condition of the bank or otherwise materially affects the interests of its depositors;

(h) The failure to maintain adequate reserves for losses;

(i) The payment of management or other fees to any person, firm, corporation, or

other entity for services rendered in an amount not justified by the actual services

Ch. 152 Financial Institutions 1159

rendered;

(j) The payment by a bank of dividends if such payment results in an inadequacy

of capital as defined in paragraph (a) of this subsection (1). In making such a

determination, the adequacy of loss reserves maintained by the bank shall be taken

into consideration.

(k) The repayment of any capital notes, debentures, or evidences of indebtedness

which THAT have been included as part of the capital of a bank, without the express

prior written consent of the banking board;

(l) The extension of credit to any officer, director, or principal shareholder of a

bank, or any related interest of that person, unless the extension of credit:

(I) (A) Is made on substantially the same terms including interest rates, maturity,

and collateral as those prevailing at the time for comparable transactions by a bank

with other persons; or

(B) Is made pursuant to a benefit or compensation program that is widely available

to employees of the bank and does not give preference to any insider; and

(II) Does not involve more than the normal risk of repayment or present other

unfavorable features.

(III) Repealed.

(m) Repealed.

11-108-502. [Formerly 11-22-115.1] Assessment of civil money penalties by

banking board. (1) (a) (I) After notice and a hearing as provided in article 4 of title

24, C.R.S., and after making a determination that no other appropriate governmental

agency has taken similar action against such person for the same act or practice, the

banking board may assess against and collect a civil penalty from:

(A) Any person who has violated any final cease and desist order issued by the

banking board pursuant to section 11-22-109 (5) (d) 11-108-401 (8) (d); and

(B) Any industrial bank which THAT, or any executive officer, director, employee,

agent, or other person participating in the conduct of the affairs of such industrial

bank who, violates or knowingly permits any person to violate any of the provisions

of this article or any rule or regulation promulgated pursuant to this article, or

engages or participates in any unsafe or unsound practice in connection with an

industrial bank. The civil money penalty shall not exceed one thousand dollars per

day for each day such violation continues. This provision shall include, but need not

be limited to, the following violations: Making, or causing to be made, delinquent

payment of assessments under this section; submitting, or causing to be submitted,

delinquent reports, including but not limited to call reports; or knowingly submitting,

or causing to be submitted, to the banking board any report or statement which THAT

contains materially false or misleading information.

(II) The banking board may, at its option and upon waiver of the right to a public

1160 Financial Institutions Ch. 152

hearing by a respondent, close to the public any hearing concerning an assessment of

a civil money penalty, an order of suspension or removal from office, an order to

cease and desist from any unlawful or unsafe and unsound practices, or any other

formal enforcement action by the banking board.

(b) For the purposes of this section, a violation shall include but need not be

limited to any action, by any person alone or with another person, which causes,

brings about, or results in the participation in, counseling of, or aiding or abetting of

a violation.

(2) Civil money penalties shall be assessed by written notice of assessment of a

civil money penalty served upon the person to be assessed. The notice of assessment

of a civil money penalty shall state the amount of the penalty, the period for payment,

the legal authority for the assessment, and the matters of fact or law constituting the

grounds for assessment. The notice of assessment of a civil money penalty shall

constitute a final order for purposes of judicial review pursuant to section 24-4-106,

C.R.S.

(3) The banking board shall have authority to determine the amount of any civil

money penalty assessed against any executive officer, director, employee, agent, or

other person participating in the affairs of an industrial bank, except as expressly

limited by this article. In determining the amount of the civil money penalty to be

assessed, the banking board shall consider the good faith of the person assessed, the

gravity of the violation, any previous violations by the person assessed, the nature and

extent of any past violations, and such other matters as the banking board may deem

appropriate; except that the civil money penalty shall be not more than one thousand

dollars per day for each day the person assessed remains in violation.

(4) Civil money penalties assessed pursuant to this section shall be due and

payable and collected within thirty days after the notice of assessment of a civil

money penalty is issued by the banking board; except that the banking board may, in

its discretion, compromise, modify, or set aside any civil money penalty. Any civil

money penalty collected pursuant to this section shall be transmitted to the state

treasurer, who shall credit the same to the general fund.

11-108-503. [Formerly 11-22-115.2] No indemnification or insurance against

civil money penalties. Notwithstanding any other provision of law, no industrial

bank shall indemnify or insure any executive officer, director, employee, agent, or

person participating in the conduct of affairs of such industrial bank against civil

money penalties.

11-108-504. [Formerly 11-22-115.3] Removal of director, officer, or other

person. (1) The banking board may serve any executive officer, director, employee,

agent, or other person participating in the conduct of the affairs of an industrial bank

with a written notice of its intention to remove him SUCH PERSON from office

whenever the banking board determines:

(a) That any such person has committed any violation of this article, rule, and

regulation, or cease and desist order of the banking board, which THAT has become

final, or has engaged or participated in any unsafe or unsound practice in connection

with an industrial bank, or has committed or engaged in any act, omission, or practice

Ch. 152 Financial Institutions 1161

which THAT constitutes a breach of his SUCH PERSON'S fiduciary duty to the industrial

bank; and

(b) (I) That the industrial bank has suffered or probably will suffer substantial

financial loss or other damage or that the interests of its depositors could be seriously

prejudiced by reason of such violation or practice or breach of fiduciary duty or

offense; or

(II) That such person has received financial gain by reason of such violation or

practice or breach of fiduciary duty or offense; or

(III) That such violation is one involving personal dishonesty on the part of such

person or one which THAT demonstrates a willful or continuing disregard for the

safety or soundness of the trust company.

(2) Whenever the banking board determines that an executive officer, director,

employee, agent, or other person participating in the conduct of the affairs of an

industrial bank, by conduct or practice with respect to another industrial bank or

business institution which THAT results in substantial financial loss or other damage,

has evidenced either his personal dishonesty or a willful or continuing disregard for

its THE BANK'S safety and soundness and, in addition, has evidenced his unfitness to

continue his OR HER relationship with the industrial bank, the banking board may

serve upon such person a written notice of its intention to remove him OR HER from

office or to prohibit his OR HER further participation in any manner in the conduct of

the affairs of the industrial bank.

(3) A notice of intention to remove a director, executive officer, or other person

from office or to prohibit his SUCH PERSON'S participation in the conduct of the affairs

of an industrial bank shall contain a statement of the facts constituting grounds

therefor FOR REMOVAL and shall fix a time and place at which a hearing shall be held.

thereon. Such hearing shall be fixed for a date not earlier than thirty days nor later

than sixty days after the date of service of such notice, unless an earlier or a later date

is set by the banking board at the request of such director or executive officer or other

person, and for good cause shown. Unless such director, executive officer, or other

person appears at the hearing in person or by a duly authorized representative, he

SUCH PERSON shall be deemed to have consented to the issuance of an order of

removal or prohibition as specified in the notice issued pursuant to subsection (1) or

(2) of this section. In the event of such consent or, if, upon the record made at any

such hearing, the banking board finds that any of the grounds specified in such notice

have been established, the banking board may issue such orders of suspension or

removal from office as it may deem appropriate. Any such order shall become

effective at the expiration of thirty days after service upon such industrial bank and

the director, executive officer, or other person concerned except in the case of an

order issued upon consent, which shall become effective at the time specified therein

IN THE ORDER. Such order shall remain effective and enforceable except to such

extent as it is stayed, modified, terminated, or set aside by action of the banking board

or a reviewing court.

11-108-505. [Formerly 11-22-115.4] Suspension of director, officer, or other

person. (1) The banking board may suspend an executive officer, director,

employee, agent, or other person participating in the conduct of the affairs of an

1162 Financial Institutions Ch. 152

industrial bank who becomes ineligible to hold his SUCH PERSON'S position, or who

after receipt of an order of the banking board to cease and desist violates this article

or a lawful rule and regulation or order issued thereunder, or who is dishonest, or who

is reckless or grossly incompetent in the conduct of business of an industrial bank, or

who may be subject to removal under section 11-22-115.3 11-108-504. It shall be

a criminal offense for any such person, after receipt of a suspension order, to perform

any duty or exercise any power of any industrial bank until the banking board vacates

such suspension order. A suspension order shall specify the grounds thereof. A copy

of the order shall be sent to the industrial bank concerned and to each member of its

board of directors.

(2) With respect to any action pursuant to this section, ten days' notice, by certified

mail, return receipt requested, and hearing shall be provided to the industrial bank

affected, in advance of any action taken by the banking board. In cases found by the

banking board to involve extraordinary circumstances requiring immediate action, the

banking board may take such action, without notice or hearing, but shall promptly

afford a subsequent hearing, upon application to rescind the action taken.

11-108-506. [Formerly 11-22-115.5] Informal enforcement authority. The

banking board, or the commissioner if so authorized by the banking board, shall have

authority to initiate informal actions to enforce the provisions of this article. In this

regard the banking board or the commissioner may, in its or his THE COMMISSIONER'S

discretion, enter into written agreements such as a memorandum of understanding

with, or an informal commitment letter from, or a strongly worded letter of reprimand

to any industrial bank or any executive officer, director, employee, agent, or other

person participating in the conduct of the affairs of the industrial bank.

11-108-507. [Formerly 11-22-116] Director and officer insurance and

fidelity bonds - legislative declaration. (1) If any director or officer of a bank

knowingly engages in any unsafe or unsound business practice or knowingly violates,

in conducting the business of the bank, a law or rule or regulation or any condition

imposed in writing by the banking board or commissioner, every director or officer

participating in or knowingly assenting to such violation shall be held liable in his

SUCH PERSON'S individual capacity for all damages which THAT the bank, its

shareholders, the guaranty corporation, or any other person shall have sustained in

consequence of such violation.

(2) If the banking board deems any officer of any bank to be dishonest, to be

engaging in an unsafe or unsound business practice, or to be incompetent, it shall

report in writing the facts regarding such officer to the board of directors or owners

of said bank, and, if the directors or owners of said bank fail or refuse to take action

on such report within ten days, the commissioner, if he OR SHE deems it advisable,

may send a copy of such report to the surety on the bonds of said officer.

(3) For the purposes of this section, "officer" means any person or entity that has

the power to direct or cause the direction of the management and policies of the bank,

other than in the capacity of a director, through the ownership of voting stock, by

contract, or otherwise, and regardless of whether he SUCH PERSON has an official title,

whether his SUCH PERSON'S title contains a designation of assistant, and whether he

SUCH PERSON is serving without salary or other compensation.

Ch. 152 Financial Institutions 1163

(4) In the event of liquidation of a bank, the banking board may prosecute an

action under this section to collect damages from such director or officer on behalf

of such bank in any court of competent jurisdiction.

(5) (a) The general assembly hereby finds, determines, and declares that the

following is enforceable and in conformity with the public policy of this state, as

expressed in this article, including the provisions of section 11-1-101.5 11-101-102:

(I) Any insurance policy, form, contract, endorsement, or certificate which THAT

provides insurance coverage to directors or officers, or both, of an industrial bank but

which THAT does not grant coverage or which THAT excludes coverage for claims

made by any depository insurance organization or any other state or federal

corporation, organization, or entity acting as receiver, conservator, or liquidator of

such industrial bank, whether in its own name or in behalf of any other person or

entity; or

(II) Any fidelity bond, financial institution bond, or depository institution bond that

provides for termination of such bond upon the taking over of the industrial bank by

a receiver or other liquidator or by state or federal officials.

(b) No provision of part 6 of this article shall be construed to contravene or modify

the expressed public policy set forth in this subsection (5).

PART 6

LIQUIDATION AND DISSOLUTION

11-108-601. [Formerly 11-22-601] Voluntary liquidation and dissolution.

(1) With the approval of the banking board, a bank may liquidate and dissolve. The

banking board shall grant such approval if it appears that the proposal to liquidate

and dissolve has been approved by a vote of two-thirds of the outstanding voting

stock of the bank at a meeting called for that purpose and that the capital of the bank

is adequate and such bank has sufficient liquid assets to pay off depositors and

creditors immediately.

(2) (a) Upon approval by the banking board, the bank shall forthwith cease to do

business, shall have only the powers necessary to effect an orderly liquidation, and

shall proceed to pay its depositors and creditors and to wind up its affairs.

(b) Within thirty days of AFTER the approval, a notice of liquidation shall be sent

by mail to each depositor and creditor at the address of such person as shown in the

records of the bank. The notice shall be posted conspicuously on the premises of the

bank and shall be published in such a manner as the banking board may require.

With each notice, the bank shall send a statement of the amount shown in the records

of the bank to be the claim of the depositor or creditor. The notice shall require that

claims of depositors and creditors, if the amount claimed differs from the amount

stated in the notice to be due, be filed with the bank before a specified date not earlier

than sixty days thereafter, in accordance with the procedure prescribed in the notice.

depositor or creditor to payment in full, and all lawful claims of creditors and

depositors shall promptly be paid.

1164 Financial Institutions Ch. 152

(d) Any assets remaining after the discharge of all obligations shall be distributed

to the stockholders in accordance with their respective interests. No such distribution

shall be made before all claims of depositors and creditors have been paid or any

funds payable to a depositor or creditor and unclaimed have been transmitted to the

banking board or before, in the case of any disputed claim, the bank has transmitted

to the banking board a sum adequate to meet any liability that may be judicially

determined.

(3) Any unclaimed distribution to a stockholder or depositor shall be held until

ninety days after the final distribution and then transmitted to the banking board.

Such unclaimed funds shall be held by the banking board for six years and, unless

sooner claimed by the person entitled thereto, shall be transferred to the treasury of

the county in which the bank is located. The county treasurer and his THE

TREASURER'S successors shall hold such money in trust for a period of six years,

unless the same MONEY shall be sooner paid out to the beneficial owner thereof. Any

money remaining in said THE fund six years after the same MONEY is paid into the

treasury of the county, for the recovery of which no action is pending, shall be

transferred to the general fund of the county, and all rights of the beneficial owners

therein to recover the same shall be forever barred.

(4) If the banking board finds that the assets will be insufficient for the full

discharge of all obligations or that completion of the liquidation has been unduly

delayed, it may take possession and complete the liquidation in the manner provided

in this article for involuntary liquidations.

(5) The banking board may require reports of the progress of liquidation. If the

banking board is satisfied that the liquidation has been properly completed, it shall

cancel the charter and enter an order of dissolution.

11-108-602. [Formerly 11-22-602] Involuntary liquidation by banking board

- reorganization. (1) Except as otherwise provided in this article, only the banking

board may take possession of a bank if it finds, after a hearing before the banking

board, that: The bank's capital is inadequate; the bank is committing or has

committed an unsound business practice as defined in section 11-22-115 11-108-501;

the bank is unable to continue normal operations; or the control of the bank has been

assumed by any person or persons convicted of fraud or a felony involving moral

turpitude or financial dealings in this state or any other jurisdiction or by any

partnership, association, or corporation controlled, directly or indirectly, by any

person so convicted, unless the banking board determines that such person has been

duly rehabilitated or otherwise that the bank will be honestly and efficiently managed.

(2) (a) The banking board shall take possession of a bank by posting upon the

premises a notice reciting that it is assuming possession pursuant to this article and

the time, not earlier than the posting of the notice, when such possession shall be

deemed to commence. A copy of the notice shall be filed in the district court of the

county in which the bank is located. The banking board shall notify the federal

reserve bank of the district of its taking possession of any bank which THAT is a

member of the federal reserve system and shall notify the federal deposit insurance

corporation of its taking possession of any bank which THAT is a member of the

federal deposit insurance corporation.

Ch. 152 Financial Institutions 1165

(b) When the banking board has taken possession of a bank, it shall be vested with

the full and exclusive power of control, including the power to stop or to limit the

payment of its obligations, to employ any necessary assistants, including legal

counsel after possession of the bank has been taken, to execute any instrument in the

name of the bank, to commence, defend, and conduct in its name any action or

proceeding to which it may be a party, to appoint a bank receiver pursuant to section

11-22-613 11-108-612, to terminate its possession by restoring the bank to its board

of directors and stockholders upon conditions prescribed by the banking board, and

to reopen a closed bank or liquidate the bank in accordance with this article. As soon

as practicable after taking possession, the banking board shall make an inventory of

the assets and file a copy thereof with the court in which the notice of possession was

filed.

banking board's possession continues, there shall be a postponement of the date upon

which any period of limitation fixed by statute or agreement would otherwise expire

on a claim or right of action of the bank, or upon which a review must be taken, or

a pleading or other document must be filed by the bank in any pending action or

proceeding.

(d) If, in the opinion of the banking board, an emergency exists which THAT may

result in serious losses to the depositors, it may take possession of an industrial bank

without a prior hearing. Within ten days after the BANKING board has taken

possession, any interested person may file an application with the banking board for

an order vacating such possession. The banking board shall grant the application if

it finds its action was unauthorized.

(3) (a) For the purposes of the article, a bank shall be deemed to be closed when

the banking board has closed the bank for business for the purpose of liquidation.

Unless the banking board tenders to the federal deposit insurance corporation the

appointment as liquidator under section 11-22-606 11-108-606 and except as

otherwise provided in paragraphs (b) and (c) of this subsection (3), the banking board

shall mail notice of its intent to liquidate the bank to the directors, stockholders, and

depositors at their addresses as shown on the records of the bank, and the banking

board shall proceed to liquidate the bank. With each notice to the depositors, the

banking board shall send a statement of the amount shown in the records of the bank

to be the claim for each depositor. If the amount of a depositor's claim differs from

the amount stated in the notice to be due, the depositor's claim must be filed with the

banking board before a specified date, not earlier than sixty days thereafter, in

accordance with the procedure prescribed in the notice. The banking board may

appoint a liquidator to conduct the liquidation of the affairs of any bank. The

liquidator shall perform all of the duties required of the banking board under this

article and shall make such periodic reports as the banking board shall require. If the

bank is a member of the guaranty corporation, the banking board may offer the

position of liquidator first to the guaranty corporation, which may decline in its

discretion. The liquidator may employ such other assistants and legal counsel at such

reasonable compensation as the liquidator shall determine to be necessary. All

expenses incident to the liquidation shall be paid out of the assets of the bank. If a

liquidator is appointed, and is other than the guaranty corporation, the federal deposit

insurance corporation or an employee of the division of banking, the liquidator and

any assistants shall provide a bond executed by a surety company authorized to do

1166 Financial Institutions Ch. 152

business in this state, running to the people of the state of Colorado, which meets with

the approval of the banking board, for the faithful discharge of their duties in

connection with such liquidation and the accounting for all moneys coming into their

hands. The cost of such bond shall be paid from the assets of the bank. Suit may be

maintained on such bond by any person injured by a breach of the conditions thereof.

(b) Any notice sent to a depositor pursuant to paragraph (a) of this subsection (3)

may contain any additional information or forms as deemed appropriate by the

banking board. or the guaranty corporation. The banking board shall not be required

to send a notice to a depositor pursuant to paragraph (a) of this subsection (3) if no

address is shown in the records of the bank.

is less than ten dollars, no notices shall be required under this part 6. The banking

board or the guaranty corporation may satisfy such claim by mailing the full amount

of the claim to the address shown in the records of the bank. If no such address is

shown in the records of the bank, the unclaimed funds or property shall be held for

disposition pursuant to section 11-22-604 (10); except that any unclaimed funds

representing funds of the guaranty corporation shall be held for disposition pursuant

to section 11-22-501 (1) (b) 11-108-604.

(4) No judgment, lien, or attachment shall be executed upon any asset of the bank

while it is in the possession of the banking board. Upon the election of the banking

board, in connection with a liquidation:

(a) Any nonconsensual lien or attachment, other than an attorney's or mechanic's

lien, obtained upon any asset of the bank during the banking board's possession, or

within four months prior to commencement thereof, shall be vacated and voided,

except liens created by the banking board while in possession and further excepting

liens or security interests obtained by the federal reserve banks;

(b) Any transfer of an asset of the bank made after or in contemplation of its

capital inadequacy, with intent to effect or which THAT results in a preference, shall

be voided.

(5) With the approval of the court in which notice of possession has been filed, the

banking board may borrow money in the name of the bank and may pledge its assets

as security for the loan.

(6) All necessary and reasonable expenses of the banking board's possession of a

bank and of its liquidation shall be paid from the assets thereof.

11-108-603. [Formerly 11-22-603] Injunctions - appeals. (1) Whenever the

banking board has taken possession of a bank and the bank deems itself aggrieved

thereby, such bank, within ten days after such taking, may apply to the court in which

notice of possession has been filed to enjoin further proceedings. After citing the

banking board to show cause why further proceedings should not be enjoined and

after a hearing, the court may dismiss the application of the bank or may enjoin the

banking board from further liquidation proceedings and direct the banking board to

surrender possession of the bank.

Ch. 152 Financial Institutions 1167

(2) An appeal may be taken by the banking board or by the bank from the

judgment of the court in the manner provided by law for appeals from judgments of

the district court. An appeal from the judgment does not operate as a stay of

judgment. If the appeal is taken by the banking board, no bond need be given, but if

the appeal is taken by the bank, a bond shall be given as required by the Colorado

rules of civil procedure.

11-108-604. [Formerly 11-22-604] Liquidation by banking board -

procedure. (1) In liquidating a bank, the banking board may exercise any power

thereof and shall have the duty to collect all assets, debts, and claims belonging to the

bank. Unless the banking board obtains the approval of the court in which notice of

possession has been filed by petition setting forth the material facts and upon such

notice to the officers, directors, or stockholders in such form as the court may require,

the banking board shall not:

(a) Sell any asset of the bank having a value in excess of one thousand dollars;

(b) Compromise or release any claim if the amount to be compromised or released

exceeds one thousand dollars;

incurred by the banking board, before preparing and filing a schedule of its

determinations in accordance with this article.

(2) Within six months of AFTER the commencement of liquidation, the banking

board may, by its election, terminate any executory contract for services or

advertising to which the bank is a party or any obligation of the bank as a lessee. A

lessor who receives at least sixty days' notice of the banking board's election to

terminate the lease shall have no claim for rent, other than rent accrued to the date of

termination, nor for damages for such termination.

(3) The right of any agency of the United States insuring savings obligations to be

subrogated to the rights of depositors upon payment of their claims shall not be less

extensive than the law of the United States requires as a condition of the authority to

issue such insurance or make such payments to depositors of national banks.

(4) Except as otherwise provided in subsection (4.5) (5) of this section, as soon

after the commencement of liquidation as is practicable, the banking board shall send

notice of the liquidation to each known creditor and bailor of property held by the

bank at the address shown in the records of the bank. The notice shall also be

published once a week for three successive weeks in a newspaper of general

circulation in the city or county in which the bank is located. With each notice, the

banking board shall send a statement of the amount shown in the records of the bank

to be the claim of the creditor or bailor. The notice shall demand that property held

by the bank as bailee be withdrawn by the person entitled thereto and that the claim

of creditor, if the amount claimed differs from the amount stated in the notice to be

due, be filed with the banking board before a specified date, not earlier than sixty

days thereafter, in accordance with the procedure prescribed in the notice. The notice

may contain any additional information or forms deemed appropriate by the banking

board. or the guaranty corporation. The banking board shall not be required to send

a notice pursuant to this subsection (4) to a creditor or bailor if no address is shown

1168 Financial Institutions Ch. 152

in the records of the bank.

(4.5) (5) If the amount shown in the records of the bank to be the claim of a

creditor or bailor of property held by the bank is less than ten dollars, no notice shall

be required under this part 6. The banking board or the guaranty corporation may

satisfy such claim by mailing the full amount of the claim to the address shown in the

records of the bank. If no address is shown in the records of the bank, the unclaimed

funds or property shall be held for disposition pursuant to subsection (10) (11) of this

section.

(5) (6) Any unclaimed property held by the bank as bailee and certified inventories

thereof shall be held by the banking board for six years unless sooner claimed by the

person entitled thereto. After six years the banking board may sell or otherwise

appropriately dispose of the property. The proceeds of a sale shall be transferred and

disposed of in accordance with the provisions of subsection (10) (11) of this section.

(6) (7) Within six months after the last day specified in the notice for the filing of

claims, or within such longer period as may be allowed by the court in which notice

of possession has been filed, the banking board shall:

(a) Reject any claim if the banking board determines the invalidity thereof;

(b) Determine the amount, if any, owing to each known creditor or depositor and

the priority class of his SUCH claim under this article;

in which notice of possession was filed;

(d) Notify each person whose claim has not been allowed in full and publish once

a week for three successive weeks, in a newspaper of general circulation in the city

or county in which the bank is located, a notice of the time when and the place where

the schedule of determinations will be available for inspection and the date, not

sooner than thirty days thereafter, when the banking board will file its schedule in

court. If there is no newspaper of general circulation in such city or county, then

publication shall be in the newspaper of general circulation published nearest thereto.

(7) (8) Within twenty days after the filing of the banking board's schedule, the

guaranty corporation or any creditor, depositor, or stockholder may file an objection

to any determination made which THAT adversely affects or may adversely affect such

objector. Any objections so filed shall be heard and determined by the court upon

such notice to the banking board and interested claimants as the court may prescribe.

If the objection is sustained, the court shall direct an appropriate modification of the

schedule. After filing its schedule, the banking board may, from time to time, make

partial distribution to the holders of claims which THAT are undisputed or have been

allowed by the court if a proper reserve is established for the payment of disputed

claims. As soon as is practicable after the determination of all objections, the

banking board shall make final distribution.

(8) (9) (a) The following claims shall have priority in the order specified:

Obligations incurred by the banking board; wages and salaries of officers and

employees earned during the three-month period preceding the banking board's

Ch. 152 Financial Institutions 1169

possession in an amount not exceeding five thousand dollars for any one person; fees

and assessments due to the banking board; claims of the federal reserve as a secured

creditor to the extent of the value of its collateral; amounts which THAT the federal

deposit insurance corporation shall be entitled to receive on account of its subrogation

to the claims of depositors; amounts which the guaranty corporation shall be entitled

to receive on account of its subrogation to the claims of depositors; (except that, such

amounts shall be paid only when the liquidated assets of the bank exceed the total

amount of claims with higher priority as defined in this subsection (8) and the total

amount of savings obligations guaranteed under section 11-22-305); all other claims

for savings obligations; claims of secured creditors to the extent of the value of their

collateral; and all other claims.

(b) After the payment of all other claims, with interest at the legal rate, the banking

board shall pay claims otherwise proper which THAT were not filed within the time

prescribed. If the sum available for any class is insufficient to provide payment in

full, such sum shall be distributed to the claimants in the class pro rata.

(9) (10) Any assets remaining after all claims have been paid shall be distributed

to the stockholders in accordance with their respective interests.

(10) (11) Unclaimed funds remaining after final distribution has been made by the

banking board shall be retained for six years by the banking board unless sooner

claimed by the owner. At the expiration of such period, the remaining sum shall be

transferred to the treasury of the county in which the bank is located. The county

treasurer and his THE TREASURER'S successors shall hold such money in trust for a

period of six years, unless the same MONEY is sooner paid out to the beneficial owner

or owners thereof or a suit is instituted to recover such money or a portion thereof.

Any money remaining in said THE fund six years after the same MONEY is paid into

the treasury of the county, for the recovery of which no action is pending, shall be

transferred to the general fund of the county, and all rights of the former beneficial

owners therein to recover the same shall be forever barred.

(11) (12) When the final distribution of the proceeds of liquidation have been

made in accordance with this article, the banking board shall file an account with the

court in which notice of possession was filed. Upon approval thereof, the banking

board shall be relieved of liability in connection with the liquidation and shall cancel

the charter.

11-108-605. [Formerly 11-22-605] Sale of bank stock. After failure of the

stockholders of a bank whose capital is inadequate to cure such inadequacy pursuant

to section 11-22-105 11-108-305, the banking board, at its discretion and at any time

before or after taking possession of the bank, may offer the stock of the bank for sale

at public auction or at private sale at a price not less than the amount required to cure

the capital inadequacy and to cover the cost of sale. Any excess over this minimum

amount plus the expenses of the banking board shall be paid to the prior owners.

11-108-606. [Formerly 11-22-606] Federal deposit insurance corporation as

liquidator. (1) The federal deposit insurance corporation, created by section 12B

of the "Federal Reserve Act", as amended, or its successor is authorized to act

without bond as liquidator of any bank, the deposits of which are to any extent

insured by said corporation or its successor and which bank shall have been closed

1170 Financial Institutions Ch. 152

on account of inability to meet the demands of its depositors or for any other lawful

cause.

(2) In the event of such closing, the banking board may tender to said corporation

or its successor the appointment as liquidator of such bank.

(3) Upon being notified in writing of the acceptance of such an appointment, the

commissioner shall forthwith file in the office of the clerk and recorder in the county

in which the bank is situated a certificate evidencing the appointment of the federal

deposit insurance corporation or its successor. Upon the filing of such certificate, the

possession of all the assets, business, and property of such bank of every kind and

nature, wheresoever situated, shall be deemed transferred from such bank and the

banking board to the federal deposit insurance corporation or its successor. Without

the execution of any instruments of conveyance, assignment, transfer, or endorsement,

the title to all such assets and property shall be vested in the federal deposit insurance

corporation or its successor, and the banking board and the commissioner shall be

forever thereafter relieved from all responsibility and liability in respect to the

liquidation of such bank.

(4) If the federal deposit insurance corporation or its successor accepts said

appointment, it has all the powers and privileges provided by the laws of this state

with respect to the liquidation of a bank, its depositors, and other creditors.

11-108-607. [Formerly 11-22-607] Assets sold or pledged as security.

(1) With respect to any bank closed on account of inability to meet the demands of

its depositors or by action of the banking board or by action of its directors or in the

event of its capital inadequacy or suspension, the liquidator of such bank may borrow

from the federal deposit insurance corporation and furnish any part or all of the assets

of said institution to said corporation as security for a loan from same, but, if said

corporation is acting as liquidator, the order of a court of record of competent

jurisdiction shall be first obtained approving such loan. Upon the order of a court of

record of competent jurisdiction, all or any part of the assets of such bank may be

sold to the federal deposit insurance corporation by the banking board or by the

liquidator with the permission of the banking board.

(2) The provisions of this section shall not be construed to limit the power of any

bank, the banking board, or the liquidators to pledge or sell assets in accordance with

any existing law.

11-108-608. [Formerly 11-22-608] Enforcement of directors' liability.

Among its other powers, the federal deposit insurance corporation or its successor,

in the performance of its powers and duties as such liquidator, has the right and

power, upon the order of a court of record of competent jurisdiction, to enforce the

individual liability of the directors of any such bank.

11-108-609. [Formerly 11-22-609] Application of deposits. (1) Deposits of

all persons indebted to a bank in the possession of the banking board, whether such

indebtedness is due or to become due, shall be applied by the banking board on

account of such indebtedness; except that no stockholder shall set off against his OR

HER stockholder's liability any claim he OR SHE may have as a depositor in or creditor

of any bank in the possession of the banking board.

Ch. 152 Financial Institutions 1171

(2) The guaranty corporation, The banking board and any bank which THAT may

assume the liability for savings obligations of a bank in the possession of the banking

board need not honor and shall not be liable for any agreement between the bank in

the possession of the banking board and any other party relating to any savings

obligation which agreement is not disclosed on the records of the bank. Neither the

guaranty corporation nor any assuming bank nor any bank to which a savings

obligation is transferred shall be required to recognize as the owner of any portion of

a savings obligation any claimant whose name or interest is not disclosed on the

records of the bank of which the banking board has taken possession.

11-108-610. [Formerly 11-22-610] Emergency grant of new charter. (1) In

addition to powers regarding liquidation, the banking board, in the interest of

protecting the public and the depositors of a bank, may issue a new bank charter to

qualified individuals for the same location as the bank in its possession, contingent

upon the new bank assuming full liability for such savings obligations of the bank in

its possession as may be transferred to such new bank. Under such conditions, a new

charter may be issued summarily without the publication of notice, without the

holding of a public hearing, and without complying with any of the other provisions

and procedures specified in this article.

(2) The banking board may sell the right to assume the outstanding savings

obligations of a bank in its possession along with such other assets and under such

terms and conditions as it deems advisable. In such event the guaranty corporation,

to the extent it has not already done so and with the approval of the banking board,

may agree to fund to the assuming bank an amount not to exceed the total savings

obligations which are guaranteed in the bank in possession of the banking board as

determined by section 11-22-305. Thereafter, the guaranty corporation may make

claim against the proceeds of the liquidation. pursuant to section 11-22-501 (4). The

guaranty corporation may require the depositor to accept a new account at the newly

chartered bank within a reasonable time period in view of the claim procedure and

may impose such other reasonable requirements as it deems necessary to protect its

interests.

11-108-611. [Formerly 11-22-611] Emergency grant of branch facility.

(1) (a) In addition to powers regarding liquidation, the banking board may issue a

grant of authority to a financial institution, as defined in section 11-25-102 (3)

11-101-401 (36), which has its principal place of business in this state, to operate a

branch at the same location as a closed industrial bank.

(b) Under such conditions, the authority to operate the branch facility may be

issued summarily without the publication of notice, without the holding of a public

hearing, and without complying with any of the other provisions and procedures

specified in this article.

(2) (Deleted by amendment, L. 92, p. 946, § 2, effective May 29, 1992.)

(3) (a) (Deleted by amendment, L. 92, p. 946, § 2, effective May 29, 1992.)

(b) (2) Notwithstanding any other provision of this section, a branch facility

operated pursuant to this section on or before August 1, 1991, may continue to

operate in perpetuity as a branch without being subject to any percentage limitation

1172 Financial Institutions Ch. 152

on branches as set forth in section 11-25-103 11-105-602.

PART 7

BANKING PRACTICES

11-108-701. [Formerly 11-22-112] Saturday closing - notice - effect. Any

industrial bank, by brief notation on its front door, may fully dispense with or restrict

to such extent as it may determine the hours within which it will be open for business

on all or less than all Saturdays. The fact that a bank remains open for business on

all or less than all Saturdays shall not make that day, or any part thereof, a banking

day for purposes of section 4-4-104 (a) (3), C.R.S., of the "Uniform Commercial

Code". Any plan so adopted by any such organization may be changed by it from

time to time in its discretion. Every Saturday on which any such industrial bank, in

observance of such notation, is not open for business shall be with respect to the

particular organization the equivalent of a legal holiday as specified in section

24-11-101, C.R.S. Any act authorized, required, or permitted to be performed at, by,

or with respect to such organization on a Saturday which is for it a holiday may be

performed on the next succeeding business day, notwithstanding the provisions of any

other law of this state to the contrary, and no liability or loss of right of any kind shall

result from such delay. The provisions of this section shall not operate to invalidate

or prohibit the doing on any Saturday of any such act by any person or organization

referred to in this section.

11-108-702. [Formerly 11-22-113] Limitations on secured borrowing.

(1) Unless authorized by the banking board, no bank shall borrow money upon a

secured basis by a pledge or assignment of its notes, mortgages, contracts, or other

assets unless it shall retain notes, mortgages, contracts, or other assets which THAT

are not pledged or assigned in an aggregate amount, without taking into account

unearned charges, of not less than the total amount of its savings deposits, certificates

of deposit, contracts, or agreements permitted by section 11-22-107 (1) (c)

11-108-202 (1) (c). In the event that any industrial bank should create or incur any

such secured indebtedness within the limitations as provided by this section, every

financial statement or report of such industrial bank published, issued, or distributed

shall indicate clearly therein the extent to which its assets are encumbered.

(2) If liquidation of a bank occurs, any secured indebtedness shall be paid from

assets remaining after depositors, other prior claims, and the expenses of liquidation

have been paid.

(3) The limitations of this section on secured indebtedness shall not apply to a bank

borrowing money upon a secured basis from a federal reserve bank.

(4) For the purposes of this section, "borrowing money upon a secured basis" shall

include, but not be limited to, the sale, pledge, or assignment of its notes, mortgages,

contracts, or other assets whereby the bank remains or may become liable or partially

liable for any indebtedness evidenced by such notes, mortgages, contracts, or other

assets.

11-108-703. [Formerly 11-22-701] Federal deposit insurance corporation

membership required. (1) On and after July 1, 1989, No industrial bank may

accept or hold savings obligations unless its savings obligations are insured by the

Ch. 152 Financial Institutions 1173

federal deposit insurance corporation.

(2) Members shall apply to the federal deposit insurance corporation or the federal

reserve system for membership not later than September 1, 1987. If any member

does not apply for membership in the federal deposit insurance corporation or the

federal reserve system by September 1, 1987, it shall not accept any savings

obligations with a maturity date after July 1, 1989.

(3) Upon written application to the banking board submitted on or before May 1,

1989, showing good cause, the banking board may grant to any member an extension

of time, not to exceed twelve months, to obtain membership in the federal deposit

insurance corporation or the federal reserve system. A copy of such application shall

be provided to the guaranty corporation by the member at the time of filing such

application with the banking board.

(4) Each member shall immediately give notice to the banking board and the

guaranty corporation when it has applied for membership in the federal deposit

insurance corporation or the federal reserve system and, thereafter, shall give

bimonthly reports on the status of its membership application to the banking board

and the guaranty corporation until final disposition of the application is made.

(5) Any member that is not a member of the federal deposit insurance corporation

or the federal reserve system on July 1, 1989, shall, except when an extension is

granted by the banking board, immediately return all savings obligations to its

depositors without an early withdrawal penalty.

11-108-704. [Formerly 11-22-119] Acquisition of property to satisfy

indebtedness. (1) An industrial bank may take property of any kind to satisfy, in

whole or in part, or to protect indebtedness previously created in good faith by it, and

such property shall be held subject to the following limitations:

(a) Real estate may be used in the banking business, subject to the conditions

prescribed by this article for property purchased for such use, or may be leased. Real

estate may be put in such condition as will reasonably facilitate its sale. Unless used

in the banking business, it shall be sold within five years or such longer period as the

banking board may allow.

(b) Other property, the acquisition of which is not otherwise authorized by this

article, shall be sold within six months or such longer period as the banking board

may allow.

value, whichever is less. Except as otherwise provided, each bank maintaining

property acquired to satisfy indebtedness will obtain an initial written appraisal and

subsequent appraisals as to fair market value by a qualified independent appraiser or

such other person as the banking board may approve. Such subsequent appraisals

shall be obtained pursuant to rules and regulations of the state banking board; except

that, for purposes of this paragraph (c), an appraisal, as defined in section 12-61-702

(1), C.R.S., by an appraiser certified, licensed, or registered pursuant to section

12-61-708, C.R.S., shall not be required on properties initially valued pursuant to this

paragraph (c) at one hundred thousand dollars or less. If such appraiser or other

1174 Financial Institutions Ch. 152

person approved by the banking board certifies in writing such appraiser's or other

person's opinion that the fair market value has not declined, this opinion may be

substituted for a subsequent appraisal.

PART 8

CRIMINAL OFFENSES AND VIOLATIONS

11-108-801. [Formerly 11-22-114] Criminal offenses. (1) It shall be a

criminal offense for any officer, director, employee, or agent of any industrial bank

to:

(a) Receive, take, or authorize the receipt or taking of any savings obligation with

knowledge that such industrial bank is insolvent or after receipt of any notice or order

issued by the banking board directing said industrial bank to cease taking savings

obligations;

(b) Issue or cause to be issued, or to authorize or direct the issuance of, any

certificate of deposit, contract, or agreement under any descriptive name, under the

provisions of section 11-22-107 (1) (c) 11-108-202 (1) (c), with knowledge that such

industrial bank is insolvent or after receipt of any order or notice from the banking

board, ordering said industrial bank to cease issuing any such certificate of deposit,

contract, or agreement;

of deposit, contract, or agreement authorized by section 11-22-107 (1) (c)

11-108-202 (1) (c) at any place whatsoever other than its banking premises;

(d) With intent to deceive, withhold, or secrete information, fail to record any

transaction made by said industrial bank upon the books and records of said industrial

banks by the close of the third business day, exclusive of Sundays and holidays, from

the consummation or completion of any such transaction;

(e) Make investments of industrial bank funds other than those permitted by this

article;

(f) With intent to deceive, make any false or misleading statement or entry in any

book, account, report, or statement of the industrial bank, or fail to make an entry in

any book, account, report, or statement of the industrial bank affecting its operations,

assets, or liabilities;

(g) Cause, authorize, or permit any industrial bank to sell, assign, or transfer any

of its assets with knowledge that such industrial bank is insolvent, or in contemplation

of insolvency, with the intent of preferring any creditor or to prevent the application

of such assets to the payment of its debts;

(h) Receive or accept, or authorize the receipt or acceptance by and on behalf of

said industrial bank, of any false, bogus, or fictitious notes or other evidence of

indebtedness, knowing the same to be false, bogus, or fictitious.

(2) Any person responsible for any act or omission expressly declared in

subsection (1) of this section to be a criminal offense commits a class 1 misdemeanor

Ch. 152 Financial Institutions 1175

and shall be punished as provided in section 18-1.3-501, C.R.S.

(3) It is a criminal offense for any officer, director, shareholder, or employee of a

bank to directly or indirectly embezzle, abstract, or misapply, or cause to be

embezzled, abstracted, or misapplied, any of the funds, securities, or other property

of, or under the control of, such bank with the intent to deceive, injure, or defraud any

person. If the amount of funds, securities, or other property embezzled, abstracted,

or misapplied is less than five thousand dollars in total, a person commits a class 1

misdemeanor and shall be punished as provided in section 18-1.3-501, C.R.S. If the

amount of funds, securities, or other property embezzled, abstracted, or misapplied

is five thousand dollars or more in total, a person commits a class 6 felony and shall

be punished as provided in section 18-1.3-401, C.R.S. Any person found guilty of

a criminal offense under this subsection (3) shall be required to make restitution or

repayment of any funds, securities, or other property embezzled, abstracted, or

misapplied.

11-108-802. [Formerly 11-22-117] Certain violations. Any person willfully

or knowingly violating any of the provisions of this article for which no other

punishment is provided commits a class 1 misdemeanor and shall be punished as

provided in section 18-1.3-501, C.R.S.

11-108-803. [Formerly 11-22-118] Prosecutions. Whenever the banking board

determines that a violation of the provisions of this article constitutes a criminal

offense, it shall notify the district attorney for the district in which the bank involved

in the violation is located. The district attorney shall prosecute the party or parties

alleged to have committed the violation within sixty days following the date the

banking board notifies him THE DISTRICT ATTORNEY of such violation. Upon failure

or refusal of the district attorney to prosecute under this section, it shall be the duty

of the attorney general to prosecute such violation.

ARTICLE 109

Trust Companies

PART 1

GENERAL PROVISIONS

11-109-101. [Formerly 11-23-102] Definitions. As used in this article, unless

the context otherwise requires:

(1) "Act as a fiduciary" or "acting as a fiduciary" means to:

(a) Accept or execute trusts, including to:

(I) Act as trustee under a written agreement;

(II) Receive money or other property in the capacity as trustee for investment in

real or personal property;

(III) Act as trustee and perform the fiduciary duties committed or transferred to the

trustee by order of a court of competent jurisdiction;

1176 Financial Institutions Ch. 152

(IV) Act as personal representative or trustee of the estate of a deceased person;

(V) Act as trustee for a minor or incapacitated person;

(b) Administer real or tangible personal property in any other fiduciary capacity;

representative, executor, or administrator of the estate of a deceased person or as a

guardian or conservator for a minor or incapacitated person.

(2) "Banking board" means the banking board created in section 11-2-102 SHALL

HAVE THE SAME MEANING AS DEFINED IN SECTION 11-101-401 (7).

(3) "Commissioner" means the state bank commissioner.

(4) "Order" means all or any part of the final disposition, whether affirmative,

negative, injunctive, or declaratory in form, by the banking board of any matter other

than the making of rules of general application.

(5) "Person" means an individual, corporation, partnership, joint venture,

unincorporated association, or any other legal or commercial entity.

(6) "Representative trust office" means an office at which a trust company has

been authorized by the commissioner to engage in a trust business other than acting

as a fiduciary.

(7) "Savings deposit" means a deposit or account with respect to which the

depositor is not required by the deposit contract, but may at any time be required by

the trust company, to give written notice of an intended withdrawal not less than

seven days before withdrawal is made, and that is not payable on a specified date or

at the expiration of a specified time after the date of deposit, and funds deposited to

the credit of, or in which any beneficial interest is held by, a corporation, association,

partnership, or other organization operated for profit do not exceed one hundred fifty

thousand dollars per depositor at the trust company.

(8) "Time deposit" means a deposit that the depositor does not have a right to

withdraw for a period of seven days or more from the date of deposit. A "time

deposit" may be represented by a transferable or nontransferable, or a negotiable or

nonnegotiable, certificate, instrument, passbook, statement, or otherwise.

(9) "Transaction account" means a deposit or account that the depositor or account

holder may withdraw by check or by similar means for payment to third parties.

(10) "Trust business" means the holding out by a person to the public by

advertising, solicitation, or other means that the person is available to perform any

service authorized pursuant to section 11-23-103 11-109-201, including acting as a

fiduciary.

(11) "Trust company" means a corporation organized pursuant to and subject to

Ch. 152 Financial Institutions 1177

regulation by the provisions of this article.

(12) "Trust institution" means a trust company, a federal or state chartered bank

with trust powers, or a trust company chartered under the laws of another state.

(13) "Trust office" means an office, other than the principal office, at which a trust

company is authorized by the banking board to engage in the trust business and to act

as a fiduciary.

11-109-102. [Formerly 11-23-102.3] Use of words "trust" or "trust

company". (1) It is unlawful for any person, firm, association, or corporation to use

or advertise the words "trust" or "trust company" in the conduct of its business in such

a manner as is likely to cause the public to be confused, deceived, or mistaken that

such person, firm, association, or corporation has been authorized to transact business

as a regulated financial institution unless such person, firm, association, or

corporation is organized under the "Colorado Banking Code", of 1957", articles 1 to

11 and 22 and 23 101 TO 109 AND ARTICLE 10.5 of this title, the "Colorado Trust

Company Act", article 23 of this title, article 70 of this title, or the national banking

laws and is authorized to use the words "trust" or "trust company" as part of its name.

(2) The provisions of subsection (1) of this section shall not apply to state banks

with trust powers, national banking associations located in Colorado that have trust

powers, and trust companies incorporated in Colorado.

11-109-103. [Formerly 11-23-102.5] Applicability of powers of banking

board and bank commissioner to trust companies. The powers, duties, and

functions of the banking board and the commissioner contained in article 2 102 of this

title and the declaration of policy contained in section 11-1-101.5 11-101-102 shall

apply to the provisions of this article.

11-109-104. [Formerly 11-23-117] Powers - banking board - commissioner.

(1) In addition to the other powers conferred on the banking board by this article, the

banking board shall have the power to:

(a) Implement by order and regulation RULE any provision of this article and to

obtain restraining orders and injunctions to prevent violation of and to enforce

compliance with the provisions of this article and the orders and regulations RULES

issued thereunder. In the exercise of the power to make orders and issue regulations

RULES, the banking board shall act in the interests of maintaining sound trust

companies and the security of fiduciary funds.

(b) Regulate the procedure and the practice at hearings;

(d) (c) Order any person or a trust company to cease violating any provision of this

article or any regulation RULE and to mail a copy of the order to the person or trust

company and to each director of the trust company;

(e) (d) Suspend, after notice and hearing, any officer or director for fraud, theft,

or failure to comply with the provisions of this article or with any valid order or

1178 Financial Institutions Ch. 152

regulation RULE;

(f) (e) Subpoena witnesses, require the production of evidence, administer oaths,

and examine any person under oath in connection with any matter relating to the

powers and duties of the banking board;

(g) (f) Require that each trust company maintain such insurance and bonds as

necessary and appropriate;

(h) (g) Approve amendments to a trust company's articles of incorporation;

(i) (h) Approve or disapprove a change of location;

(j) (i) Approve or disapprove any merger or other corporate reorganization;

(k) Repealed.

(l) (j) Require a trust company holding fiduciary funds pursuant to section

11-23-113 11-109-906 to collateralize such funds as are in excess of federally

insured amounts in accordance with the rules and regulations adopted by the banking

board;

(m) (k) Require that a trust company that is accepting deposits pursuant to section

11-23-103 (1) (d) 11-109-201 (1) (d) limit the aggregate amount of such deposits.

(1.1) (2) If the banking board has reason to believe that the capital of any trust

company is inadequate under the rules of the banking board, the banking board may

ascertain the facts and furnish the trust company with a copy of its determination. If

the banking board finds an inadequacy of capital based upon such determination, the

commissioner, with the approval of the banking board, may direct the trust company

to levy an assessment in a designated amount upon the holders of record of common

stock to remedy the inadequacy of capital. Upon receipt of an order to levy an

assessment, the directors shall cause to be sent to all holders of common stock, at

their addresses, a copy of the order and a copy of this subsection (1.1) (2). If an

assessment is not paid within the time prescribed in the order or such shorter period

as the directors decide, but not less than thirty days, the trust company may, within

sixty days thereafter as the banking board may prescribe in its order, offer the shares

of the defaulting stockholders for sale at public auction or private sale at a price that

shall not be less than the amount of the assessment and the cost of the sale. Any

excess shall be paid to the prior owners. The method of collection provided in this

subsection (1.1) (2) shall be the sole method of collecting assessments. If an

assessment is not paid within ninety days after the date of the order to levy or at such

other date as may be specified in the order, but in no event less than thirty days, the

commissioner may, with the approval of the banking board, proceed pursuant to

section 11-23-122 11-109-702. However, for good cause shown to the banking

board by the affected trust company, the BANKING board may extend the ninety-day

limit.

(1.2) (3) The term "shareholder" shall apply not only to such persons as appear on

the books of the trust company as shareholders, but also to every owner of stock,

legal or equitable, although the stock may stand on such books in the name of another

Ch. 152 Financial Institutions 1179

person, but not to a person that holds the stock as collateral security for the payment

of a debt.

(1.3) (4) Any trust company shareholder that has transferred such shareholder's

shares, caused such transfer to appear on the books of the trust company within sixty

days before the capital inadequacy of such trust company, or that has made such

transfer with knowledge of such impending capital inadequacy shall be liable to the

same extent that the transferee or subsequent transferee fails to meet such liability.

This section shall not be construed to affect in any way any recourse that such

shareholder might otherwise have against those in whose names such shares appear

upon the books of the trust company at the time of such capital inadequacy.

(1.4) (5) No stockholder of a trust company shall set off against the stockholder's

liability any claim such stockholder may have as a depositor in or creditor of any

insolvent trust company.

(2) (6) The commissioner shall examine the books and records of every trust

company as often as deemed advisable and to the extent required by the banking

board; shall make and file a correct report in detail disclosing the results of such

examination; and shall mail a copy of such report to the trust company examined.

(3) (7) The commissioner shall examine, as often as deemed advisable and to the

extent required by the banking board, any electronic data processing centers of a trust

company or any electronic data processing centers which THAT serve a trust company,

without regard to the location of the electronic data processing center; shall make and

file in his THE COMMISSIONER'S office a correct report in detail disclosing the results

of such examination; and shall mail a copy of such report to the data processing

centers examined and the trust company which THAT they serve.

(4) (8) (a) The commissioner, if he OR SHE deems it necessary or if required by the

banking board, may examine the books and records of the controlling shareholder of

a trust company and any affiliated entities of the controlling shareholder for the

purpose of determining the safety and soundness of the trust company. If the