COLORADO DIVISION OF BANKING

Proposed Amendment of Rules and Regulations

Fact Sheet

LEGISLATION: N/A

RECOMMENDATION DATE: March 19, 2015

RULE TO BE AMENDED: CB101.53 – Loan Production Office

Corresponding Rules: N/A

SUMMARY Due to the increasing number of Loan Production Offices (LPO) established in Colorado, the Banking Board made a recommendation to the Division of Banking (Division) that it commence with rulemaking to amend CB101.53, Loan Production Office (CB101.53). The proposed amendments would update the definition of a LPO, and clarify: 1) when an application is required, 2) the standard used to evaluate the name(s) of LPOs, and 3) the application processing procedures.

ANALYSIS On January 15, 2015, the Banking Board made a recommendation to the Division to commence rulemaking to amend CB101.53.The increasing number of LPOs established in Colorado in the past eighteen months prompted the Banking Board to clarify the rule defining a LPO and governing the name or names under which a LPO will conduct business.

Pursuant to Section 11-105-101(1), C.R.S., the Colorado Banking Code gives the Board explicit authority to define what a LPO is and approve applications of Colorado state banks and state banks chartered in another jurisdiction. When combined with the general rulemaking authority of the Banking Board to make rules for the proper enforcement and administration of the Colorado Banking Code, the Banking Board has implicit authority to regulate the name or names under which a LPO will conduct business. Among other things, this rulemaking clarifies that those state-chartered banks establishing LPOs cannot use a name that is identical, deceptively similar to a name of an existing Colorado financial institution or likely to cause the public to be confused, deceived, or mistaken. Under the rule as amended, a new LPO application must be filed whenever a bank proposes to operate a LPO under a name which differs in any way from the name approved by the Banking Board. New LPOs can be opened under a previously approved name without further application.

RECOMMENDATION Approve the proposed amendments to CB101.53 to incorporate the use of name standards applicable to interstate branches found in Section 11-104-202(8), C.R.S., update the definition of a LPO, and to clarify when an application is required and how it will be processed. March 19, 2015 Banking Board Meeting Proposed Amendment of CB101.53 – Loan Production Office Page 2 of 2

REFERENCES (Federal regulations, operating memorandum, interpretive letter, and other background material) N/A

STATUTORY AUTHORITY Section 11-101-102, C.R.S. - 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: (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 (c) Encourage diversity in financial products and services.

Section 11-102-104, C.R.S. - Powers and duties of the 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 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 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 (c) Regulate procedure and practice of the banking board.

Section 11-105-101, C.R.S., Branch banks and practices prohibited. (1) Any state bank or state bank chartered in another jurisdiction, upon application to and approval by the banking board may operate one or more loan production offices as defined by the banking board.

INCORPORATION BY REFERENCE None

I concur:______Kenneth Boldt Date Acting State Bank Commissioner

PROPOSED PUBLIC HEARING DATE: May 21, 2015 PUBLIC COMMENTS: FINAL DISPOSITION: