2.1

Amendments to Bylaws. A request for approval of amendments to the bylaws shall be submitted by the directors to the Commissioner in a form prescribed by the Commissioner. No bylaws amendment shall become effective until it has been approved by the Commissioner. CRS 11-30-102

3.1

Joint Tenancy Accounts. A credit union member may establish an account in joint tenancy with any other person regardless of whether or not that person would otherwise qualify within the field of membership of the credit union. The joint tenancy account must be clearly indicated and specified in writing. CRS 11-30-103 (4)

3.2

Small Groups.

(a) For purposes of implementing C.R.S. 11-30-103 (2), the Commissioner shall consider that small groups consisting of at least 1 but not more than 1,000 persons having a common bond of employment or association lack the potential membership to organize their own credit union and, therefore, may be accepted into the membership of an existing state-chartered credit union, provided that the following requirements are met:

(1) The bylaws of the credit union allow such groups as members.

(2) The credit union is not receiving financial assistance from the National Credit Union Administration pursuant to 12 U.S.C. 1788, in effect as of April, 13, 2007. Incorporation by reference of this federal statute does not include amendments to this federal statute made after April 13, 2007. The title and address of the division employee responsible for providing information regarding how the incorporated material may be obtained or examined is as follows: Commissioner, Division of Financial Services, 1560 Broadway, Suite 950, Denver, Colorado 80202. Any material that has been incorporated by reference in this rule may be examined at any state publications depository library.

(3) Within thirty days after the group is accepted for membership, the credit union has filed with the Commissioner, in a form prescribed by the Commissioner the following information:

(i) Name and address of the group.

(ii) Description of the group's common bond.

(iii) Size of the group.

(iv) Date accepted into membership.

(v)  Identification of any other credit union in which the group is eligible for membership.

(vi) An affidavit of the small group representing that the group is not interested in organizing its own credit union.

(b)  In cases where the size of the group exceeds 1,000 or where other exceptions to the requirements of subsection (a) of this rule exist, the credit union must apply for and receive the Commissioner's prior approval to accept the group into membership. Said application shall be in a form prescribed by the Commissioner.

(c)  Notwithstanding any other provision of this rule to the contrary, the Commissioner may, at any time, limit or prohibit a particular credit union from acceptance of small groups of any size or a particular small group into its membership if, in the opinion of the Commissioner, any of the following circumstances exist:

(1)  The credit union has failed to comply with the provisions of subsection (a) of this rule.

(2) The credit union is insolvent.

(3) The credit union is operating in an unsafe or unsound manner.

(4)The credit union has willfully violated any provisions of Article 30 of Title 11 or the regulations duly promulgated thereunder.

(5) The credit union's acceptance of a small group may result in an unsafe and unsound condition in another credit union that serves the same group. C.R.S. 11-30-103 (2)

4.2

Investments

(a)  A credit union may invest in deposit accounts in federally-insured financial institutions and in the shares and deposits of a central credit union, pursuant to C.R.S. 11-30-104(1)(d).

(b)  A credit union may invest in United States Government obligations, United States agency insured or guaranteed securities, obligations of any state or territory of the United States, and certain obligations of a political subdivision or instrumentality of a state or territory, pursuant to C.R.S. 11-30-104(1)(e).

(c) In accordance with C.R.S. 11-30-104(1)(j), a credit union may make any investment authorized for a federal credit union under the Federal Credit Union Act, 12 U.S.C. 1757, and National Credit Union Administration Rules and Regulations, 12 C.F.R. parts 703 and 712, in effect as of April 13, 2007. Incorporation by reference of this federal law and these federal rules does not include amendments to this federal law and these federal rules made after April 13, 2007. The title and address of the division employee responsible for providing information regarding how the incorporated material may be obtained or examined is as follows: Commissioner, Division of Financial Services, 1560 Broadway, Suite 950, Denver, Colorado 80202. Any material that has been incorporated by reference in this rule may be examined at any state publications depository library.

(d) Pursuant to CRS 11-30-104(1)(e), a credit union may make an investment in obligations or securities other than those specifically authorized in this Rule 4.2, provided it complies with the following conditions:

(1) The credit union's board of directors has adopted written investment policies that authorize such an investment.

(2)  The book value of the investment, when added to the book value of all other investments subject to the same limitation, does not exceed 10% of the credit union's shares, deposits and undivided earnings as of the month end preceding the date of investment.

(3) The credit union has received the Commissioner's prior written approval of the investment as prudent and sound

(e)  If the nature of an investment changes so that it is no longer in compliance with subsections (a), (b) or (c) of this rule, the credit union must promptly seek approval from the Commissioner, pursuant to subsection (d) of this rule, to maintain the investment or must divest itself of the investment.

(f)  Notwithstanding any other provision of this rule to the contrary, if at any time the Commissioner determines that any investment authorized in this rule is no longer a prudent and sound investment, approval under this rule may be modified or revoked.

(g) A corporate credit union may make any investment authorized under the National Credit Union Administration Rules and Regulations, 12 C.F.R. part 704.5, in effect as of April 13, 2007. Incorporation by reference of this federal rule does not include amendments to this rule made after April 13, 2007. The title and address of the division employee responsible for providing information regarding how the incorporated material may be obtained or examined is as follows: Commissioner, Division of Financial Services, 1560 Broadway, Suite 950, Denver, Colorado 80202. Any material that has been incorporated by reference in this rule may be examined at any state publications depository library. C.R.S. 11-30-104(1) (d), (e) and (j)

(a) In accordance with C.R.S. 11-30-104(1)(i), a credit union may engage in any activity authorized for a federal credit union as an incidental power under the National Credit Union Administration Rules and Regulations, 12 C.F.R. part 721, in effect as of April 13, 2007. The activities covered by the National Credit Union Administration Rules and Regulations, 12 C.F.R. part 701.30, in effect as of April 13, 2007 are incidental powers for purpose of this rule. Incorporation by reference of this federal rule does not include amendments to this rule made after April 13, 2007. The title and address of the division employee responsible for providing information regarding how the incorporated material may be obtained or examined is as follows: Commissioner, Division of Financial Services, 1560 Broadway, Suite 950, Denver, Colorado 80202. Any material that has been incorporated by reference in this rule may be examined at any state publications depository library.

(b) To engage in an activity that may be within a credit union's incidental powers, pursuant to C.R.S. 11-30-104(1)(j), but does not fall within a category of activities referenced in subsection (a) of this rule, a credit union may submit an application for the prior written approval of the Commissioner. The application shall be in such form and contain such information as prescribed by the Commissioner. In approving an application, the Commissioner may establish such terms or conditions to the approval as necessary to ensure that any approved activity does not adversely impact the credit union. C.R.S. 11-30-104(1)(i) and (j)

Sale of Loans. In accordance with CRS 11-30-104(1)(k), and without further approval by the Commissioner, a credit union may sell, in whole or in part, to any party, a loan or group of loans to its members, provided it complies with the following conditions:

(a) The credit union's board of directors has adopted written policies that authorize such loan sales.

(b) The credit union retains a written agreement and a schedule of the loans sold pursuant to the agreement. CRS 11-30-104(1)(k)

6.1

Financial Reports. Periodic financial reports shall be submitted by each credit union in a form prescribed by the Commissioner. Such reports shall be filed in the office of the Commissioner no later than the due date specified by the Commissioner. For failure to file a report when due, unless excused by the Commissioner for cause, a credit union shall pay to the Commissioner a penalty of $25.00 for each day of delinquency in filing. CRS 11-30-106 (2)

6.2

Establishment and Maintenance of Credit Union Books and Records.

(a) Each credit union, credit union service organization, as that term is defined in 12 C.F.R. part 712 of the National Credit Union Administration, in effect as of April 13, 2007 or joint venture in which a credit union has an investment or loan thereto, shall establish and maintain such accounting and other records that will provide an accurate and complete record of all business it transacts. Incorporation by reference of this federal rule does not include amendments to this federal rule made after April 13, 2007. The title and address of the division employee responsible for providing information regarding how the incorporated material may be obtained or examined is as follows: Commissioner, Division of Financial Services, 1560 Broadway, Suite 950, Denver, Colorado 80202. Any material that has been incorporated by reference in this rule may be examined at any state publications depository library.

(b) Credit unions shall maintain all books, records, accounting systems, and procedures in accordance with generally accepted accounting principles, except as may otherwise be approved in writing by the Commissioner. The board of directors of a credit union may utilize the National Credit Union Administration Accounting Manual For Federal Credit Unions, in effect as of April 13, 2007 as guidance in the maintenance of its accounting records. Incorporation by reference of this federal publication does not include amendments to this federal publication made after April 13, 2007. The title and address of the division employee responsible for providing information regarding how the incorporated material may be obtained or examined is as follows: Commissioner, Division of Financial Services, 1560 Broadway, Suite 950, Denver, Colorado 80202. Any material that has been incorporated by reference in this rule may be examined at any state publications depository library.

(c)  Unless otherwise approved by the Commissioner, all of the books, records, and papers of any credit union relating to its business in any fashion shall be available for inspection and examination by the Commissioner or his designee at any time between the hours of 8:00 a.m. and 5:00 p.m., Monday through Friday, except legal holidays falling within such periods of time. Noncompliance shall be conclusively presumed whenever the Commissioner or his designee shall call upon the credit union at its place of business within the times specified in this rule or otherwise approved by the Commissioner and determine that the books, records, and papers of the credit union are not available or made available for examination. CRS 11-30-106 (1) and (3)

6.4

Fixed Assets.

(a)    The definitions of terms used in this regulation are as follows:

(1)  "Premises" means any office, branch office, service center, parking lot, other facility, or real estate where the credit union transacts or intends to transact business.

(2)  "Furniture, fixtures, and equipment" means all office furnishings, office machines, computer hardware and software, automated terminals, automated teller machines, heating and cooling equipment.

(3)    "Fixed assets" means premises and furniture, fixtures, and equipment as those terms are defined above.

(4)   "Investment in fixed assets" means:

(i)  Any investment in real property improved or unimproved which is being used or is intended to be used as premises;

(ii) Any leasehold improvement on premises;

(iii)The aggregate of all capital and operating lease payments pursuant to lease agreements for fixed assets;

(iv) Any investment in the bonds, stock, debentures, or other obligations of a partnership or corporation, including a credit union service organization, holding any fixed assets used by the credit union and any loans to such partnership or corporation; or

(v) Any investment in furniture, fixtures and equipment.

(b)        Limitations on investment in fixed assets.

(1)  Without the prior written approval of the Commissioner, a credit union shall not make an investment in fixed assets if, after the investment, the aggregate of all such investments exceeds 5% of total assets.

(3) A credit union shall submit such information and reports as the Commissioner may require in support of any investment in fixed assets in excess of the limits specified above.

(4) If the Commissioner determines that the proposed investment will not adversely affect the credit union, the Commissioner shall approve an aggregate dollar amount or percentage of assets for investment in fixed assets. The Commissioner may establish other terms or conditions to the approval.

(5) The credit union may make such investment in fixed assets, unless the Commissioner within 30 days of receipt of a request for approval from the credit union, gives written notification of his objection and the grounds for his objection to the credit union or requests additional information. If the Commissioner requests additional information, the above 30-day period shall commence upon receipt of such information.

(c)        A credit union shall not acquire or lease premises or acquire or lease furniture, fixtures or equipment, without the prior written approval of the Commissioner, from any of the following parties:

(1)        Elected or appointed officials of the credit union.

(2)        Officers or employees of the credit union.

(3)        Immediate family members of any of the foregoing individuals.

(4)        A corporation, partnership, or other business in which any of the foregoing individuals have, directly or indirectly, an ownership interest of 10% or more, or are officers or directors thereof. CRS 11-30-106(1) and (3)

6.5

Appraisals. The Commissioner is authorized to obtain, or cause a credit union to obtain, at the credit union's expense, appraisals of real estate owned by the credit union or securing the credit union's assets when, in the opinion of the Commissioner, the credit union's policies or practices or operating results or trends are such as to cause supervisory concern as to the quality or value of such assets, or when it appears that real estate owned or assets secured by real estate are worth substantially less than the book value thereof, or when there are other indications of the need to evaluate appraisal practices and policies. This rule also shall apply to premises, as defined in Rule 6.4 (a) (1), either acquired or to be acquired by a credit union. CRS 11-30-106(1) and (5)

8.1

Report of Elections or Appointment. Within 20 days after election or appointment, the Commissioner shall be provided with a record of the names and addresses of all current members of the board of directors, supervisory committee members, credit committee members (and alternates, if any), or the credit officer, and the officers of such bodies. Such report of election or appointment shall be filed in a form prescribed by the Commissioner. In addition, the Commissioner shall be notified in writing of any appointments to such positions made between elections within 20 days after the appointment. CRS 11-30-108

9.1

Directors Policies and Business Plan.  (a) The board of directors of each credit union shall establish sufficient written policies to guide the credit union's operations.  The Directors shall annually review and revise as necessary all policies previously established. All policies of the board of directors and the current bylaws, shall be made available for inspection at the office of the credit union by any member during normal business hours. CRS 11-30-109

9.2

Compensation of Directors and Committee Members. Members of the board of directors, credit committee, and supervisory committee shall receive no compensation for the performance of duties for the credit union in such capacities. However, such persons may be reimbursed for reasonable and actual out-of-pocket expenses incurred by them in the normal performance of their duties. Such persons may also be reimbursed for actual wages or salary lost by virtue of the performance of duties for the credit union only if authorized by a majority of the members voting at an annual meeting or meeting specifically called for that purpose. CRS 11-30-109 (3)

9.3

Officer's Duty Upon Payment of Loan. It shall be the responsibility of the treasurer or general manager to insure that all promissory notes, evidence of indebtedness, and security instruments are promptly returned to each borrower upon repayment of the loan, except in the case of open-end credit. CRS 11-30-109 (2)

11.1

Supervisory Committee. The supervisory committee shall verify or cause to be verified members' share, deposit, and loan accounts at least once in each 2-year period. In order to satisfy this rule and the statute, the members' accounts must be verified under controlled conditions. Controlled conditions mean the records are controlled by the supervisory committee to prevent substitution, removal or alteration. CRS 11-30-111 (1)

16.1

Loans to Non-Members. Credit unions may not make loans to non-members or permit the assumption of existing loans by nonmembers if the member is no longer liable on the note. This shall not prevent a credit union from selling such items of property acquired by the credit union upon foreclosure or repossession to a non-member purchaser on an installment contract or similar document of time purchase. A nonmember joint tenant may neither borrow nor enjoy any of the remaining privileges of membership except as is otherwise specified in Rule 3.1. The following shall not be deemed to be a loan to a nonmember:

(a)  When a nonmember joint tenant acts as a comaker, cosignor or guarantor of a loan; or

(b)   In the case of a loan to a member with the participation of a nonmember as comaker, cosignor or guarantor, when the credit union considers the nonmember to receive little or no benefit from the loan for himself/herself and considers the nonmember as the secondary source of repayment. CRS 11-30-103 (4) and 11-30-116    

17.5

Confidentiality of Examinations.  The Commissioner's report of examination and report of supervision contact are the property of the Division of Financial Services and are furnished to the credit union for its confidential use.  Under no circumstances shall any of a credit union's directors, officers of employees disclose or make public in any manner such a report or any portion thereof.  However, a credit union may share such a report with a Federal Home Loan Bank of which the credit union is a member or has applied for membership. CRS 11-30-117.5 (4)

18.1

Dividends. The amount of a dividend shall not be paid until provisions for reserves as required by law and these regulations have been properly made. No dividend may be paid by a board of directors having knowledge at the time of such payment that an asset charge-off directed by the Commissioner has not been entered and reflected on the books of the credit union. CRS 11-30-118

20.1

Definition of Insolvency. A credit union shall be considered insolvent either when the book value of its shares and liabilities exceeds the book value of its assets or when it is unable to pay withdrawals of shares or deposits at the end of the notice period allowed by CRS 11-30-119(1) or to pay other obligations as they become due. CRS 11-30-120(1)

22.1

Mergers. The merger of two or more credit unions may take place if the requirements of CRS 11-30-122 are satisfied and the merger is approved by the Financial Services Board ("Board") or the State Commissioner of Financial Services ("Commissioner") acting under authority delegated by the Board and other applicable regulatory authority.
(a) When a determination has been made to effect a merger, the board of directors of each credit union shall develop the terms of the proposed merger. Some or all of the terms shall be set forth in a merger plan. The plan of merger shall address at least the following:

(1) probable asset/share ratios of the credit unions;

(2) share adjustments to member accounts, if any;

(3) amendments to the continuing credit union's field of membership;

(4) structure of the board and committees of the continuing credit union;

(5) senior management and employees of the merging credit union;

(6) existing contracts and agreements of both credit unions; and

(7) such other matters as the boards of directors of each credit union deem advisable or as required by other applicable regulatory authority.

(b) The merger plan must be approved by a majority of the directors of both the merging and continuing credit unions.

(c) A merger resolution of the board of directors of each credit union must be completed and forwarded to the Division of Financial Services ("Division").

(d) A merger agreement must be executed by the chair/president and treasurer of both the merging and continuing credit unions and submitted to the Division for approval. The merger agreement includes the merger plan.

(e) A proposed notice of special meeting of the members and a summary of the merger plan must be submitted to the Division at least 21 days prior to sending this information to the members of the merging credit union (if state-chartered).

(f) The meeting notice shall contain the date, time and place of the meeting and shall contain a summary of the merger plan, either as part of the notice or as a separate attachment. The summary of the merger plan shall contain the following, as applicable:

(1) current financial reports for each credit union;

(2) a combined financial report;

(3) an analysis of share values, and proposed share adjustments, if any;

(4) an explanation of any changes relative to insurance of member accounts;

(5) the reasons for the proposed merger;

(6) the name and location, including branches, of the continuing credit union;

(7) an explanation of any changes in the organization of the board of directors and committees of the continuing credit union;

(8) an explanation of any new or expanded products and services that may be made available to the members;

(9) an explanation of any contracts or agreements relating to any senior management officials of the merging credit union (by position only without identification of individuals);

(10) an explanation of any incentive plans or benefits offered to any employees of the merging credit union (by employee class only without identification of individuals);

(11) an itemized estimate of the cost of the merger if in excess of $25,000; and

(12) such other information, including any special merger terms, which the boards of directors of each credit union determine should be included or as required by other applicable regulatory authority.

The notice shall inform the members that they have the right to vote on the proposed merger in person at the meeting or by written ballot prior to the meeting. A form of ballot shall be included with the meeting notice.

(g) The Commissioner shall review the information submitted and evaluate the completeness and accuracy of the disclosure of members of the material terms of the merger. The Commissioner shall advise the merging credit union of the Division's finding in this regard.

(h) If the Division finds that the merger proposal complies with State Credit Union Law and Division Rules, the Board (or Commissioner) shall grant conditional approval to the merger application. The merger application consists of the information described in subsections (c) through (f) of this rule and any information required by other applicable regulatory authority. In making its finding, the Division may consider the interests of the members of the merging and continuing credit unions, whether the members of the merging credit union received sufficient information to make an informed decision on the benefits of the merger, and the safety and soundness of the continuing credit union following the merger.

(i) The merger proposal must be presented at a meeting of the members of the merging credit union. Notice of the meeting and the ballot for merger proposal shall be sent to each member of the credit union no more than 30 days nor less than 10 days prior to the time of the meeting. A quorum (at least 15 members) must be present at the special meeting to conduct business. The affirmative vote of not less than two-thirds of the members voting shall constitute approval. The requirements of this subsection (i) only apply in the case of a merging state-chartered credit union. A merging federal credit union shall follow the procedures and use the forms prescribed by the National Credit Union Administration for conducting the membership vote.

(j) In order to complete the merger, the credit unions must execute, in duplicate, a certificate of merger in a form prescribed by the Division and submit it to the Division for approval.

(k) The continuing credit union (if state-chartered) also shall execute, in duplicate, and submit a bylaws amendment to the Board (or Commissioner) for approval in order to add the merging credit union's field of membership.

(l) The Board (or Commissioner) shall execute, in duplicate, a certificate of approval of the merger and return it and the certificate of merger to the continuing credit union. The duplicate certificate of approval and certificate of merger shall be filed with the Secretary of State in order to record the merger. This action also cancels the charter of the merging credit union (if state-chartered).

(m) The requirements of this rule may be waived by the Board (or Commissioner) as necessary in the case of a merger initiated for supervisory reasons. CRS 11-30-122.

 SECTION ONE: IN-STATE OFFICES

1-1.

Definitions

(a)  "Principal office" is that office in this state which is designated as the principal office of the association in its articles of incorporation or bylaws.  Such office may be authorized to accept savings deposits.

(b)  "Branch office" is an office as defined by CRS 11-40-102 (1).

(d)  "Loan office" is an office, other than a principal office or branch office, established for the primary purpose of originating loans.  Activities incidental to the loan origination function may be carried out.  Savings deposits may not be solicited or accepted at such an office.

1-2.

Relocation of Principal Office.          Any relocation of a principal office shall be submitted to the Commissioner as an amendment to an association's articles of incorporation or bylaws.

1-3.

Opening or Relocation of Branches. An association shall give the Commissioner 30 days prior written notice of the opening date and address of any De Novo or relocated branch office.

1.4.

Other Actions Related To Offices. An association that seeks to open, close, or relocate loan office may do so without prior notification to or approval from the Commissioner, if the association deems such actions appropriate and consistent with safe and sound business practices.  An association that seeks to close a branch office must comply with CRS 11-105-606.

SECTION TWO: OUT-OF-STATE OFFICES AND FACILITIES

2-1.

In accordance with the provisions of CRS 11-41-116, an association may operate offices located outside of the State of Colorado which engage in the functions specified under Section 1-1(b) and (d) for branch and loan offices.

2-2.

The Commissioner will require, to the extent deemed applicable, the same procedure to be followed in the opening, relocation or closing of both in-state and out-of-state offices.

2-3.

The association must comply with the applicable laws and regulations of the jurisdiction in which it is to operate. The Commissioner may require appropriate evidence of such compliance.

2-4.

The Commissioner may, to the extent consistent with state law, enter into cooperative agreements with the appropriate supervisory authorities of other states regarding the examination and supervision of out-of-state offices.

SECTION FOUR: THE SAVINGS AND LOAN ASSOCIATION
PUBLIC DEPOSIT PROTECTION ACT

4-1.

Definitions.

(a)        "Association" means any state or federally chartered savings and loan association having an office in the State of Colorado.

(b)        "Custodian" means a state or national bank in Colorado, a savings and loan association in Colorado, a Federal Home Loan Bank or branch thereof or a Federal Reserve Bank or branch thereof which holds eligible collateral in trust, escrow, or safekeeping pursuant to CRS 11-47-109.

(c)        "Depository" means an association which has been designated an eligible public depository.

(d)        "Deposit pledge agreement" means a written agreement between the custodian and the depository wherein the depository transfers or delivers eligible collateral to a custodian in trust, escrow, or safekeeping pursuant to the Savings and Loan Association Public Deposit Protection Act for the purpose of securing 100% of the aggregate amount of public deposits accepted and held by the depository which exceed that amount insured by the Federal Deposit Insurance Corporation or its successor.

(e)        "Segregation of collateral" means the transfer and delivery of eligible collateral by an association pursuant to a deposit pledge agreement.

4-2.

Determination of Current Market Quotation of Eligible Collateral. The current market quotation of eligible collateral pledged by a depository under the Savings and Loan Association Public Deposit Protection Act shall be determined as follows:

(a)        Except as provided in subsection (d) hereof, if the eligible collateral is regularly traded and its value regularly quoted by the Federal Reserve Bank of New York or a securities dealer, the current market quotation shall be as reported by said Federal Reserve Bank of New York or securities dealer in its published quotation sheets.

(b)        Except as provided in subsections (a) and (d) hereof, the current market quotation of eligible collateral shall be as determined by a licensed Colorado securities dealer.

(c)        If the current market quotation is determined by a licensed Colorado securities dealer pursuant to subsection (b), the reports submitted to the Commissioner by the depository shall include written confirmation of a current market quotation. Such written confirmation shall be signed by said securities dealer.

(d)        For eligible collateral consisting of obligations wholly or partially guaranteed or insured as to payment of principal by the United States or any agency thereof, or other obligations evidenced by notes secured by first lien mortgages or deeds of trust, the current market quotation shall be the unpaid principal balance of the obligation discounted, using the computation for a 30-year obligation prepaid in 12 years for conventional loans and 15 years for guaranteed and insured loans, to yield a rate equal to the current average yield quoted by the Federal National Mortgage Association.

4-3.

Mandatory Segregation and Identification of Collateral. All eligible collateral required to be maintained or pledged under the Savings and Loan Association Public Deposit Protection Act shall be segregated from the other assets of the depository and held by a custodian in trust, escrow, or safekeeping, pursuant to a deposit pledge agreement. Each depository shall file a current executed copy of said deposit pledge agreement with the Commissioner. All collateral so held shall be clearly identified as being security maintained or pledged for the aggregate amount of uninsured public deposits accepted and held on deposit by the specific depository.

4-4.

Provisions to be Included in Deposit Pledge Agreements. With respect to the segregation of collateral, each deposit pledge agreement between the custodian and the depository shall be in a form prescribed by the Commissioner and shall contain the following provisions:

(a)        That upon receiving notice of default and seizure from the Commissioner, pursuant to CRS 11-47-113, the custodian maintaining custody of eligible collateral for the depository shall immediately surrender title and possession of said collateral to the Commissioner.

(b)        That for the purpose of transfer of collateral to the custodian, in the case of insured, guaranteed or conventional mortgage loans, the original note and deed of trust, at minimum, shall be transferred. For other types of collateral, the security instrument itself or the original safekeeping receipt for such security shall be transferred.

(c)        That the agreement shall be terminated (1) if the Commissioner seizes all eligible collateral pledged, or (2) by either party to the agreement, if 10 days' prior written notice thereof is given to the other party and if such termination is approved by the Commissioner. Upon any such termination, any remaining eligible collateral pledged hereunder shall be returned to depository, and the custodian shall be relieved of all further responsibility under the agreement.

(d)        That if said custodian is a Federal Home Loan Bank or a Federal Reserve Bank, the custodian shall promptly, upon the request of the Commissioner and in a form prescribed by the Commissioner, provide a written inventory of pledged collateral signed by one of its officers.

4-5.

Surrender of Files Relating to Mortgage Loan Collateral. Upon receiving notice of default and seizure of collateral from the Commissioner, pursuant to CRS 11-47-113, the depository, in the case of insured, guaranteed or conventional mortgage loans pledged as collateral, shall immediately surrender to the Commissioner all loan document files relating to any eligible collateral pledged pursuant to CRS 11-47-108.

4-6.

Release of Eligible Collateral. Upon written notice to a particular depository and custodian, the Commissioner may require that all releases of collateral receive the Commissioner's prior written approval. From the date of receipt of such notice from the Commissioner, the custodian shall not affect any release of collateral to the depository or any other person or entity in the absence of the Commissioner's written approval.

4-7.

Reports to the Commissioner. The Commissioner may require reports from any depository covering the information specified in CRS 11-47-112(1) in such form and at such frequency as he deems necessary. Such reports may include financial statements of the depository. In order to accomplish the purpose of CRS 11-47-112, the Commissioner or his designee may visit any office of a depository and shall have free access to the records of the depository relating to the Savings and Loan Association Public Deposit Protection Act.

4-8.

Additional Collateral Requirements and Restrictions on Amounts of Public Deposits Held.

(a)        If the tangible capital of a depository does not meet the following requirements at the end of any calendar quarter, pursuant to CRS 11-47-112 (6)(a), the depository shall pledge additional eligible collateral in the following manner:

(1)        If the depository's tangible capital is less than 4% but greater than or equal to 3% of total assets, the depository shall pledge eligible collateral having a market value at all times no less than 125% of the aggregate of uninsured deposits held by it.

(2)        If the depository's tangible capital is less than 3% but greater than or equal to 2% of total assets, the depository shall pledge eligible collateral having a market value at all times no less than 200% of the aggregate of uninsured deposits held by it.

(3)        If the depository's tangible capital is less than 2% of total assets, the depository shall pledge eligible collateral having a market value at all times not less than 300% of the aggregate of uninsured deposits held by it.

(b)        In addition to the requirements of subsection (a), if a depository's tangible capital is less than 3% of total assets, said depository shall not accept any additional uninsured public deposits or renew any uninsured public deposits that mature.

(c)        In addition to the requirements of subsections (a) and (b), if a depository's tangible capital is less than 2% of total assets, said depository shall eliminate its uninsured public deposit liability except its uninsured public deposit liability evidenced by a contract with a specific maturity.

(d)       Compliance with this regulation shall be the responsibility of each depository regardless of the frequency or form of the reports required by the Commissioner.

(e)      "Tangible capital" means the sum of perpetual preferred stock, common stock, paid-in-capital in excess of par value, retained earnings, and unrealized gains or losses on available-for-sale securities.

4-9.

Recordkeeping. Each depository shall maintain sufficient records to evidence its compliance with CRS 11-47-108(1) and to support the required reports filed with the Commissioner.

4-10.

Inclusion of Accrued and Credited Interest. Public deposits, as defined in CRS 11-47-103(11), shall include all interest or dividends accrued and credited to the individual account of the governmental unit or to any other liability account on the books of the depository.

4-11.

Verification of Collateral.

(a)        In addition to other required reports and examination procedures, the Commissioner may, as he deems necessary, make a direct verification with the custodian of all collateral pledged and held by the custodian on behalf of the depository. All collateral so held by the custodian shall, at all times, be accessible for verification by the Commissioner without the prior approval or notification of the depository.

(b)        After the effective date of this rule, the above subsection (a) shall be included as a provision in all future deposit pledge agreements executed between a depository and its custodian.

4-13.

Minimum Amount of Eligible Collateral.

(a)        In accordance with CRS 11-47-112(6)(a), the market value of the pledged eligible collateral of an eligible public depository shall, at all times, be no less than $250,000.

(b)        Compliance with this regulation shall be the responsibility of each depository regardless of the frequency or form of reports required by the Commissioner.

SECTION SIX: NEW CHARTER APPLICATIONS

6-1.

In addition to the items set forth in CRS 11-41-107(1)(c), as comprising an application for certificate of approval for a domestic savings and loan association to incorporate in this state, the following information is required and will be considered by the Commissioner:

(a)        A business plan pursuant to Section 14-1, including a itemized statement of estimated receipts and expenditures for the proposed association covering consecutive annual periods from the estimated opening date through the annual period in which the association is estimated to operate at a profit. Such itemized statement must be supported by estimates of the volumes of savings deposits or other sources of funds and loans to be generated by the association.

(b)        A statement of initial capitalization, including a list by name and amount of written withdrawable savings pledges or, if applicable, written subscriptions for permanent stock. A certified statement of total funds on deposit from cash receipts for permanent stock or withdrawable savings must be submitted by the financial institution holding such funds in escrow.

(c)        A description of proposed office facility arrangements, including the following factors: leased or owned office space, freestanding building or inline space, floor space, space to be leased to others, staffing, and an estimate of initial fixed asset investment.

(d)        Evidence of compliance with the applicable provisions of state securities laws.

(e)        Evidence that any solicitation of withdrawable savings pledges includes full disclosure of the status of the proposed association with regard to incorporation under state law and insurance of accounts by the Federal Deposit Insurance Corporation or its successor.

(f)         Other information deemed necessary by the Commissioner.

SECTION SEVEN: MERGER APPLICATIONS

7-1.

In addition to the agreement of merger, savings and loan associations proposing to merge shall submit to the Commissioner one copy of the application for merger filed with the Office of Thrift Supervision or the Federal Deposit Insurance Corporation or their successors.

7-2.

The following factors will be considered by the Commissioner in acting on a merger application:

(a)        The soundness of financial condition of the merging associations, with particular emphasis on the financial condition of the surviving association. The following indicators of soundness of financial condition will be considered:

(1)        Size of association and recent growth trends.

(2)        Capital position.

(3)        Recent trends in operating results.

(4)        Amount and character of substandard and other classified assets.

(b)        The degree of compliance with applicable laws and regulations and he existence of serious problems which have not been corrected by management or the board of directors.

7-3.

The procedures set forth in these regulations need not be followed if the merger is to be initiated by the Commissioner or a federal regulatory agency for supervisory reasons.

7-4.

The application filed pursuant to CRS 11-41-121(1.5)(c) shall contain sufficient information to demonstrate compliance with CRS 11-41-121(1.5)(a). The Commissioner may also request additional information in order to make the determinations under CRS 11-41-121(1.5). In addition, a copy of the application filed with the Federal Deposit Insurance Corporation or the Office of Thrift Supervision or their successors shall be filed with the Commissioner.

SECTION EIGHT: RECORDKEEPING FOR NONCONFORMING LOANS

8-1.

Savings and loan associations must maintain a listing or other record which is sufficient, at all times, to verify compliance with the 3%of assets limitation set forth in CRS 11-41-114(4).

SECTION NINE: TRUST POWERS APPLICATIONS

9-1.

Definition.   "Trust powers" means the power to act in any fiduciary capacity authorized by CRS 11-41-112(1)(l) or by the general fiduciary laws of this state.

9-2.

An association desiring to exercise trust powers shall file with the Commissioner an application indicating which trust services it wishes to offer and providing sufficient information to enable the Commissioner to make the evaluations under Section 9-3.

9-3.

The following factors will be evaluated by the Commissioner in acting on a trust powers application:

(a)        The financial condition of the association.

(b)        The degree of compliance with applicable laws and regulations and the existence of serious problems which have not been corrected by management or the board of directors.

(c)        The organizational and operational plan for providing trust services, including the availability of legal counsel and the qualifications, experience and character of the proposed officer or officers supervising the trust function.

9-4.

Failure of an association to exercise trust powers in a lawful and sound manner shall be grounds for the suspension or revocation of its authority to engage in trust services.

SECTION TEN: APPLICATIONS FOR ACQUISITION OF MAJORITY CONTROL OVER AN ASSOCIATION

10-1.

The application filed pursuant to CRS 11-41-133(2)(a) shall contain sufficient information to demonstrate compliance with CRS 11-41-133(3). In addition, a copy of the application filed with the Federal Deposit Insurance Corporation or the Office of Thrift Supervision or their successors shall be filed with the Commissioner.

10-2.

The application filed pursuant to CRS 11-41-133(6)(c) shall contain sufficient information to demonstrate compliance with CRS 11-41-133(6)(a). The Commissioner may also request additional information in order to make the determinations under CRS 11-41-133(6). In addition, a copy of the application filed with the Federal Deposit Insurance Corporation or the Office of Thrift Supervision or their successors shall be filed with the Commissioner.

SECTION ELEVEN: LETTERS OF CREDIT

11-1.

An association may issue commercial and standby letters of credit in conformance with the Uniform Commercial Code and may pledge collateral to secure its obligations thereunder, subject to the following requirements:

(a)        Each letter of credit must conspicuously state that it is a letter of credit.

(b)        The issuer's undertaking must contain a specified expiration date or be for a definite term and must be limited in amount.

(c)        The issuer's obligation to pay must be solely dependent upon the presentation of conforming documents as specified in the letter of credit, and not upon the factual performance or nonperformance by the parties to the underlying transaction.

(d)        The account party must have an unqualified obligation to reimburse the issuer for payments made under the letter of credit.

11-2.

To the extent funds are advanced under a letter of credit without compensation from the account party, the amount shall be treated as an extension of credit subject to percentage-of-assets limits and other requirements under applicable provisions of state law.

SECTION TWELVE: CONVERSION PROCEDURES

12-1.

For the purpose of conversion from a federal to a state savings and loan association pursuant to CRS 11-45-103, in the case of a permanent stock association, the requirement of subsection (1) of the above noted section for a majority vote of members shall be satisfied by a majority vote of the holders of permanent stock, who possess exclusive voting rights in accordance with CRS 11-42-107(6).

12-2.

The following items shall be submitted by the converting federal association to the Commissioner for approval:

(a)        A copy of the minutes of the proceedings of the meeting of members as required by CRS 11-45-103(1).

(b)        Two copies of the certificate of incorporation as required by CRS 11-45-103(2), which shall comply with the content requirements of CRS 11-41-104.

(c)        One copy of the bylaws as required by CRS 11-45-103(2), which shall comply with the content requirements of CRS 11-41-112(1)(g).

12-3.

If the Commissioner's review of the items submitted pursuant to Section 12-2 indicates compliance with state law, the Commissioner shall issue a certificate of approval to the converting federal association.

12-4.

The converting federal association shall file its certificate of incorporation, accompanied by the Commissioner's certificate of approval, with the Secretary of State in accordance with CRS 11-41-109(2).

12-5.

Upon the filing pursuant to Section 12-4 and the payment of required fees to the Secretary of State, the conversion of the federal savings and loan association into a state association shall be deemed completed.

SECTION THIRTEEN: INVESTMENTS PURSUANT TO CRS 11-41-114(5)

13-1.

Definition. The term "amount invested by the association in real estate through service corporations" means the association's investment in capital stock in any service corporation as well as any loans (including guarantees of loans and letters of credit) made by the association to the service corporation or to a joint venture in which the service corporation is a partner, shareholder or investor.

13-2.

For the purpose of determining the amount defined in Section 13-1, in the case of a service corporation involved in real estate investments as well as other permitted activities, an association shall maintain sufficient records to document a fair allocation of its investments between the real estate investments and non-real estate activities of the service corporation. In the absence of sufficient records to document the allocation, the Commissioner shall consider the entire service corporation investment to be an investment in real estate through service corporations.

SECTION FOURTEEN: BUSINESS PLANS AND DIRECTORS' POLICIES

14-1.

Business Plans. Each savings and loan association shall prepare a written business plan that specifies the association's operating goals and details the strategies to achieve the association's goals. The plan shall consist of a narrative and proforma financial statements.

14-2.

Each association's business plan and any amendments thereto shall be approved by the association's board of directors, at which time such plan or amendments shall become effective. Such approval shall be recorded in the minutes of the board of directors.

14-4.

Directors' Policies.  The board of directors of each savings and loan association shall establish sufficient written policies to guide the association's operations.  The directors shall annually review and revise, as necessary, all policies previously established.

17-1.

The Commissioner's report of examination is the property of the Division of Financial Services and is furnished to the savings and loan association for its confidential use.   Under no circumstances shall any of a savings and loan association's directors, officers or employees disclose or make public in any manner the report or any portion thereof. However, a savings and loan association may share the report with a Federal Home Loan Bank of which the association is a member or has applied for membership.

4.1

Release of Escrows.  According to CRS 12-13-104(1)(b), the release of escrowed entrance fees for previously unoccupied living units shall occur only after the Commissioner is satisfied that certain conditions exists as identified in CRS 12-13-104(1)(b) (I)-(III).   The provider shall file a letter application for such release which shall include adequate documentation to allow a determination that said conditions exist. The release of said escrows may occur only after the Commissioner has authorized such action in writing to the escrow agent.

4.2

Return of Unreleased Escrows - Time Limit.   Pursuant to CRS 12-13-104(2), funds in escrow required by CRS 12-13-104(1) not otherwise released shall be returned to the persons making payment to the provider no later than 180 days after said payment. Persons making said payments may, in writing, grant extensions to the escrow agent to continue holding funds in escrow. No more than two extensions of 180 days each may be granted by such persons making payment. Therefore, the escrow agent shall return all funds held in escrow to the persons making payment no later than 540 days after said funds were received by the escrow agent. Notwithstanding the above, escrowed funds which, pursuant to a written agreement between a provider and prospective resident, are fully returnable to the prospective resident upon demand shall not be subject to the provisions of this regulation.

5.1

7.1

Approved List of Stocks/Bonds.       Pursuant to CRS 12-13-107(2)(d), required reserves may include bonds and stocks selected from an approved list, as determined by the Commissioner. Said approved list shall consist of lawfully issued bonds and other evidences of indebtedness:

(a)        Of the United States or any agency or instrumentality thereof;

(b)        Guaranteed or insured as to the payment of principal and interest by the United States or any agency or instrumentality thereof; or

(c)        Of counties, districts, townships, municipalities, and political subdivisions within the states, territories and districts of the United States, provided that said bonds are rated no lower than the second highest grade by any major bond rating service.

8.1

Annual Report to Current/Prospective Residents. Pursuant to CRS 12-13-108(3), a provider must make its annual report available to residents upon request. The provider, at least annually, shall provide written notice of the right to receive the annual report to all residents of such provider. The provider also shall make its annual report available to prospective residents upon request. The provider shall provide written notice of this right to all prospective residents in materials distributed during the solicitation of said prospective residents.

10.1

Designation of Auditor to Examine Life Care Institutions. In accordance with the provisions of CRS 12-13-110, the Commissioner may designate an independent auditor, to conduct examinations of a provider. Upon the prior written request of a provider, the Commissioner may designate the same independent auditor engaged by a provider to prepare certified financial statements of the facility, pursuant to CRS 12-13-108(1). Such a designation shall be effective when the Commissioner approves, in writing, each periodic engagement letter between the independent auditor and the provider. The engagement letter shall clearly state the independent auditor's intention to conduct sufficient tests of the provider's records to be able to assess the provider's level of compliance with all sections of Title 12, Article 13 of the Colorado Revised Statues, as amended, and all Division regulations applicable to life care institutions. The independent auditor must include a statement of the level of compliance in the report on the audited financial statements, or in a separate document specifically for that purpose. The failure to provide an adequate statement of the level of compliance may result in the Commissioner's revocation of the independent auditor's designation.

11.1

Notice of Intent to Become Life Care Institution.   Pursuant to CRS 12-13-111 and 112, any person or entity that desires or intends to act in the capacity of a life care institution must notify the Commissioner, in writing, at least 90 days prior to the execution of the initial life care contract or the receipt of any consideration pursuant to said contract, whichever comes first. Said notification must include an affirmation of the provider's intent to comply with Title 12, Article 13 of the Colorado Revised Statutes, as amended. Failure to notify the Commissioner pursuant to this regulation will be considered a violation subject to CRS 12-13-112.

14.1

Required Disclosures to Prospective Residents. Pursuant to CRS 12-13-114, life care contracts must be written in a clear and coherent manner and, among other things, show the value of all property transferred to a life care provider. Also, pursuant to CRS 12-13-116, all printed matter used to solicit or induce persons to enter into a life care contract must clearly state the extent of the financial responsibility assumed by parties interested in or connected with the provider. Therefore, pursuant to CRS 12-13-111, in order to effectuate the above cited provisions, certain disclosures to prospective residents must be provided in writing, and acknowledged in writing, prior to the execution of any life care contract, as defined by CRS 12-13-106(6). The disclosures shall read as follows:

(a)

I/we, the undersigned, do hereby acknowledge that I/we fully understand that no state or federal government agency guarantees or insures against loss any portion of the entrance fees paid to a life care provider under the terms of a life care contract.

(b)

For questions concerning the regulation of the financial affairs of life care institutions by the State of Colorado, please contact:

Colorado Division of Financial Services
1560 Broadway, Suite 950
Denver, CO 80202
Phone: (303) 894-2336
Fax: (303) 894-7886

Said disclosures may be included in the main body of the life care contract; if so, they must:

(a)

Be in bold lettering of a type size no smaller than that of the main body of the contract.

(b)

Be contained in a paragraph, section, or subsection entitled "State of Colorado -Required Disclosures".

(c)

Be acknowledged in the paragraph, section, or subsection entitled "State of Colorado -Required Disclosures" by the complete signature or initials of the prospective resident(s).

Said disclosures may be provided to the prospective resident(s) in a document separate from the life care contract, provided that the document is:

(a)

Clearly titled "State of Colorado - Required Disclosures"

(b)

Acknowledged, on its face, by the complete signature or initials of the prospective resident(s).

(c)

Acknowledged by the prospective resident(s) no more than 14 days prior to the execution of a life care contract by the same prospective resident(s).

(d)

Maintained in the files of the life care provider with a copy given the prospective resident(s).