About the Division

Activities || Funding Sources || Trends   

In 1931, Colorado began chartering credit unions, when the General Assembly passed the Credit Union Act. Regulation of credit unions, savings and loan institutions and trust companies is conducted by what is now known as the Division of Financial Services. The Division seeks to fulfill this mission in its own areas of statutory responsibility, which are as follows:

• Examination and supervision of state-chartered credit unions

• Examination and supervision of state-chartered savings and loan associations

• Administration and enforcement of the Savings and Loan Public Deposit Protection Act

• Regulation of certain financial activities of life care institutions

Activities

The Division's eleven-member staff operates under the policy-making and rule-making authority of the Financial Services Board, which consists of five members appointed by the Governor and confirmed by the State Senate. The Financial Services Board issues rules and regulations governing the industries regulated by the Division, may delegate many of its authorities to the State Commissioner of Financial Services, and hears appeals of actions taken by the Commissioner under delegated authority.

The Division is wholly or partially responsible for administering and/or enforcing the following Colorado Revised Statutes (C.R.S.):

• Credit Unions: §11-30-101, CRS

• Savings and Loan Associations: §11-40-101, CRS

• Protection of Deposits of Public Moneys: §11-47-101, CRS

• Life Care Institutions: §12-13-101, CRS

• Uniform Consumer Credit Code: §5-1-101, CRS

• Electronic Funds Transfers: §11-48-101, CRS
  

State-chartered credit unions operate under the supervision of the Division. The Division is empowered to approve applications to incorporate new state credit unions and to approve mergers between credit unions. State credit unions are examined regularly by the Division staff to evaluate their financial condition and compliance with applicable laws and regulations. The Division's credit union examination and supervision program has been accredited by the National Association of State Credit Union Supervisors for a five-year period ending in October 2006, subject to annual review. 

The Division is empowered to approve applications to incorporate new state-chartered savings and loan associations, approve branch office applications for existing associations, approve mergers between associations, and approve changes of ownership. The Division staff examines state savings and loan associations on a regular basis to evaluate their financial condition and compliance with applicable laws and regulations.

For the protection of consumer savings, all state savings and loan associations and all credit unions that serve Colorado citizens are required to maintain federal deposit insurance. 

The Division also administers and enforces the Public Deposit Protection Act for savings and loan associations. State and federal savings and loans designated by the Division as eligible public depositories must pledge collateral to secure any deposits in excess of the federally-insured limit accepted from Colorado governmental units. 

The Division regulates certain financial activities of life care institutions, which provide long-term residence and care for the elderly. The Division may initiate enforcement action against violations of the law by life care providers.

The Division also handles consumer complaints and information requests regarding the industries it regulates.

Funding Sources

The state legislature appropriates the Division's budget for each fiscal year. In state government terminology, the Division is considered a "cash funded" agency because it receives the revenue to fund its budget from the industries it regulates instead of from general tax dollars. Institutions are assessed twice a year, with the amount each institution pays determined for the most part by the amount of its assets. 

Revenue will not always equal expenditures. Revenue needs (and assessments) are based on estimated expenses, which normally vary from actual expenses. Revenue collected that exceeds expenditures remains with the agency as a fund balance and is considered when calculating total revenue needs for the following semiannual period. Revenue shortfalls are adjusted for the following period as well. 

The Division's actual revenue and expenditures for the last two fiscal years and the current fiscal year estimate are as follows:

The following table shows the sources of revenue for fiscal year 09-10:

The following table shows the distribution of expenditures for fiscal year 09-10:   

Trends

• The Division of Financial Services believes that it is good public policy to preserve and nurture the concept of dual chartering of financial institutions, which refers to the fact that both the federal government and the states charter and regulate financial institutions such as credit unions, savings and loan associations and banks. The dual chartering system continues to foster innovation in financial services and provide a necessary check and balance against regulatory excess on the part of either federal or state government.
  
  Mergers have become the dominant credit union industry structural trend. Many state-chartered credit unions have merged with larger credit unions primarily to increase services available to their members. The result of all this activity has been that while the number of state-chartered credit unions has decreased, their assets have grown tremendously and, beginning in mid-2000, exceeded the levels of federal credit unions for the first time in decades.
  
   
• State-chartered credit union and savings and loan assets continue to increase as more Colorado citizens are served by these institutions. Credit union and savings and loan earnings generally have declined. However, capital levels remain strong and the overall financial health of the state-chartered credit unions and savings and loan associations is very good.
  
  State-chartered credit unions and savings and loan associations continue to face intense competition in the financial services marketplace. This could cause some institutions to engage in higher-risk activities without the proper expertise or controls. For instance, more financial institutions are expected to take advantage of technological advances by offering their members/customers "Internet banking" services, which may pose security and other risks. Also, as the national and regional economies recover from the recent recession and new bankruptcy laws took effect, institutions have experienced increased loan delinquencies and losses, lower loan demand, and depressed earnings. In turn, these forces have pressured the institutions' capital levels. 
  
  Because of the above noted risk factors, it is critically important that the Division continues to conduct thorough and timely examinations to identify and correct unsafe or unlawful business practices. In this manner, examinations can perform a "preventative maintenance" function that often prevents large losses and threats to institutional solvency.
  
  The number of state-chartered savings and loan associations remained at four during 2009. Including the four home offices and 13 branches, there were 17 state-chartered savings and loan offices at year's end.
  
  

During 2009, the number of state-chartered credit unions decreased from 54 to 51 due to the following changes:
 

• 53 - Sunrise Credit Union merged into Norbel Credit Union effective January 1, 2009.
   
• 52 - Jeffco Credit Union merged into Westerra Credit Union effective July 1, 2009.
   
• 51 - SunCorp Corporate Credit Union converted to a federal credit union effective August 13, 2009.
   

During 2010, the following changes have taken place:
 

• 50 - Colorado United Credit Union merged into Premier Members Federal Credit Union effective January 1, 2010.
   

• 49 - Lake County Credit Union merged into Mountain River Credit Union effective May 1, 2010.