CO Code § 11-103-304 (2021)
2021 Colorado Code|Title 11 - Financial Institutions|Article 103 - Organization and Corporate Functions|Part 3 - Chartering a State Bank|§ 11-103-304. Procedure for Granting or Denying Charter

  Within sixty days following the filing of the completed application for a de novo charter or conversion of an established bank, the commissioner shall make or cause to be made a careful investigation to determine that the following requirements have been met:   That the applicant has proceeded in a lawful manner;    That the name is not deceptively similar to that of another bank or otherwise misleading;    That the persons who will serve as directors or officers, insofar as such persons 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 11-102-302 (2), are consistent with their responsibilities and duties;    That the proposed capital satisfies the standards and guidelines in the rules promulgated by the banking board;    That the proposed or amended articles of incorporation and bylaws are appropriate or may be amended to be appropriate.       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 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.      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 for a de novo bank charter has the burden of proving:   That the proposed bank will serve a public need and advantage in the community or area of the community that the bank will serve; and    That the volume of business in the community or area of the community that the proposed bank will serve is such that profitable operation of the bank may be reasonably projected.       Notwithstanding any other provision of this section, if the banking board 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 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.       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.    The banking board shall give notice of the hearing on application for a de novo bank 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. The notice must be in the form prescribed by the banking board and must 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 date fixed for such hearing in a newspaper of general circulation within the community in which the proposed bank is to be located.    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 for a de novo bank charter 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 de novo bank 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 the directors or 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 the directors and 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 banking board shall deny the application for a de novo charter. The banking board may revoke a charter 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.    If, within a ninety-day period, there have been filed with the banking board two or more applications for a de novo bank charter for state banks to serve the same community, the banking board may hold a single hearing to consider the applications. The banking board may grant or deny a de novo bank charter to 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 must 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 de novo bank charter on another application or other applications heard at such single hearing.    It is a criminal offense under this code for a proposed de novo state bank to perform any act as a state bank other than to perfect its organization, obtain and equip a place of business, or otherwise prepare to do business as a state bank prior to receiving a charter.    Unless otherwise provided by law to the contrary, the banking board must first approve the articles of incorporation, amended articles of incorporation, or amendments to articles of incorporation, which the applicant shall then deliver and file as follows:   Duplicate originals shall be delivered to the secretary of state for filing in accordance with the general corporate laws of this state;    A verified copy shall be filed in the office of the clerk and recorder for the county in which the state bank is located;    A copy to which the commissioner shall affix the charter, or certificate of approval in the case of amendments, shall be delivered by the commissioner to the applicant.         History. Source: L. 2003: Entire article added with relocations, p. 1085, § 3, effective July 1. L. 2013: IP(1), IP(3)(a), (5), (6), (7), (8), and IP(9) amended,(SB 13-154), ch. 282, p. 1479, § 42, effective July 1.    Editor's note:   This section is similar to former § 11-3-110 as it existed prior to 2003.   ANNOTATION   Annotator's note. Since § 11-103-304 is similar to § 11-3-110 as it existed prior to the 2003 recodification of the “Colorado Banking Code”, articles 101 to 109 of title 11, relevant cases construing that provision have been included in the annotations to this section.   Section mandatory. This section requiring the state banking board to consider properly filed applications is phrased in mandatory terms. Northern Nat'l Bank v. Banking Bd., 37 Colo. App. 135, 547 P.2d 253 (1975).   “Fully subscribed” is not unconditionally subscribed. There is nothing in the statutory language of this section or § 11-3-109 or 11-3-111 to indicate that “fully subscribed” means unconditionally and irrevocably subscribed. Banking Bd. v. Columbine State Bank, 194 Colo. 54 , 569 P.2d 871 (1977).   It is the responsibility of the board to maintain a sound banking structure in the state of Colorado and to grant charters only to those applicants which in its judgment will be financially successful and serve a public need and advantage in the area where the new bank seeks to be located. Walton v. Banking Bd., 36 Colo. App. 311, 541 P.2d 1254 (1975).   Board not required to determine whether federal approval obtained. The banking board is not required as a part of its prechartering duties to determine that the petitioners have obtained federal approval under the federal Bank Holding Company Act of 1956, 12 U.S.C. § 1841 et seq. Banking Bd. v. Columbine State Bank, 194 Colo. 54 , 569 P.2d 871 (1977).   The hearings clearly contemplated by the law are held for the purpose of giving to all interested persons an opportunity to furnish facts or opinions for the guidance of the commission in the performance of its duties in granting or denying a charter. Colorado Banking Bd. v. Finnigan, 139 Colo. 92 , 336 P.2d 98 (1959).   The state banking board may determine whether to grant bank charter and has jurisdiction to hold hearings to that effect. The district courts cannot usurp this power. Banking Bd. v. District Court, 177 Colo. 77 , 492 P.2d 837 (1972).   This section places the burden on the applicant at the hearing to show that the proposed bank will serve a public need and advantage in the community and that the volume of business in the community is such that profitable operation of the bank may be reasonably projected. Goldy v. Henry, 166 Colo. 401 , 443 P.2d 994 (1968).   Subsection (3) clearly places the burden of proof upon the applicants. Walton v. Banking Bd., 36 Colo. App. 311, 541 P.2d 1254 (1975).   Public need and advantage. The purpose of a similar requirement, i.e., a finding that the industrial bank “will promote the convenience and advantage of the community” is to protect prospective depositors and other creditors in their dealings with the bank and not to protect competitors. Banking Bd. v. Turner Indus. Bank, 165 Colo. 147 , 437 P.2d 531 (1968).   The board seems to have determined the “public need and advantage” to be synonymous with “so long as existing institutions are not affected by additional competition”. Such construction is contrary to the law, for competition may benefit the public by causing protestant banks to review their policies, increase interest rates on deposits, and even augment their service to the community in which they do business. Banking Bd. v. Turner Indus. Bank, 165 Colo. 147 , 437 P.2d 531 (1968).   Too strict a monopoly in the banking field is as undesirable as having an excessive number of banks. Banking Bd. v. Turner Indus. Bank, 165 Colo. 147 , 437 P.2d 531 (1968).   The nature of competition in banking in the area may be considered. Other factors, such as the already highly competitive nature of banking in the area, outweighed the convenience factor. It was within the board's competence, applying its expertise, to make this determination, and it should not be disturbed on review. Goldy v. Henry, 166 Colo. 401 , 443 P.2d 994 (1968); Banking Bd. v. Turner Indus. Bank, 165 Colo. 147 , 437 P.2d 531 (1968).   Board may not approve application which shows violation of branch bank prohibition. The procedure for incorporating a new bank, the proposed operation of the new bank, and the basis upon which the charter for the new bank was granted met with the approval of the banking board which was fully apprised of all the facts concerning the common ownership of stock, the common directors, and the other facts concerning the relationship between the two banks. None of the facts as shown from the record, necessarily and as a matter of law, reveal that the banking board's grant of the state charter to the applicant bank is in violation of the prohibition against branch banking. Peoples Bank v. Banking Bd., 164 Colo. 564 , 436 P.2d 681 (1968).   Court may not speculate on future violation of law. Where it would be necessary for the court to speculate that, after issuance of the bank's charter, the applicants and the bank would thereafter proceed to act in direct violation of applicable federal laws, such speculation by the court would be contrary to the settled legal principle that it is precluded from deciding abstract or contingent questions. Academy Blvd. Bank v. Banking Bd., 30 Colo. App. 331, 492 P.2d 76 (1971).   Board must also consider primary capitalizers. The clear wording of the applicable statutes directs the banking board to demand and consider specified information concerning those persons who have expressly committed themselves to the primary capitalization of the proposed bank through stock subscriptions. Academy Blvd. Bank v. Banking Bd., 30 Colo. App. 331, 492 P.2d 76 (1971).   The weight to be given to uncontroverted testimony is peculiarly within the province of the board. The board is not bound to accept testimony at face value merely because it is not directly contradicted. Walton v. Banking Bd., 36 Colo. App. 311, 541 P.2d 1254 (1975).   When record is barren, court may remand to board. Where the record of proceedings before the Colorado banking board, denying an application for a charter for a state bank, are devoid of information as to what transpired at a hearing held and a reviewing court cannot pass upon the validity of the board's order denying the charter, the matter will be remanded for the taking and recording of all testimony, exhibits, and other evidence and the making of specific findings as the basis for an order granting or denying such charter. Colo. Banking Bd. v. Finnigan, 139 Colo. 92 , 336 P.2d 98 (1959).   Court may not compel board to consider factors other than those in statute. The district court would be in error if it construed the governing statutes to require that the banking board consider factors other than those specified by the clear provisions of the statute. Academy Blvd. Bank v. Banking Bd., 30 Colo. App. 331, 492 P.2d 76 (1971).   Board's expertise utilized. In weighing the evidence and drawing inferences therefrom, the board may utilize its expertise in banking matters. Walton v. Banking Bd., 36 Colo. App. 311, 541 P.2d 1254 (1975).   Board, not court, weighs and evaluates evidence. The weighing and evaluation of the testimony and evidence offered as to an application for a charter is the statutorily delegated power and responsibility of the banking board, and it is beyond the power of a reviewing court to substitute its judgment for that of the fact-finding authority. Academy Blvd. Bank v. Banking Bd., 30 Colo. App. 331, 492 P.2d 76 (1971).   Where the inferences to be drawn from evidence are conflicting, the reviewing court may not displace an administrative agency's choice between two fairly conflicting views, even though the court could justifiably have made a different choice had the matter been before it de novo. Walton v. Banking Bd., 36 Colo. App. 311, 541 P.2d 1254 (1975).   Court may modify board order when basis is on record. Where the basis for modification of the banking board's order appears in the record, the court may modify and correct that order on appeal. Academy Blvd. Bank v. Banking Bd., 30 Colo. App. 331, 492 P.2d 76 (1971).   Applicants need not allege a substantial change of fact in filing a second application for a charter. Northern Nat'l Bank v. Banking Bd., 37 Colo. App. 135, 547 P.2d 253 (1975).   Res judicata is inapplicable. A literal reading of this section would prevent the board from using res judicata to deprive an applicant of his right to a hearing and would impose on it a statutory duty to examine each application for a license as an original proceeding. Northern Nat'l Bank v. Banking Bd., 37 Colo. App. 135, 547 P.2d 253 (1975).   When hearing considered concluded. Where additional time is granted for the filing of briefs after the close of an evidentiary hearing, the hearing cannot be considered concluded until such briefs are filed. Hyde v. Banking Bd., 38 Colo. App. 41, 552 P.2d 32 (1976).