Magazine article American Banker

Colorado Grants 10 Branches, Only One in a Poor Area

Magazine article American Banker

Colorado Grants 10 Branches, Only One in a Poor Area

Article excerpt

Colorado Grants 10 Branches, Only One in a Poor Area

An unintended effect of a liberalized branching law in Colorado may allow some banks to score Community Reinvestment Act credit without directly serving low-income communities.

On May 31, Colorado loosened what had previously been one of the most restrictive branching laws in the nation. The new legislation permits Colorado holding companies to convert most of their subsidiary banks and all newly acquired banks into branches over a period of time.

Provision Allowed Branches

New branches cannot be opened on an unrestricted basis until 1997. But one provision of the law let 10 financial institutions open new branches immediately provided they were in "economically depressed areas."

As initially reported in the Denver Post, only one of the 10 banks qualifying actually placed its branch in an inner-city neighborhood, which is a major focus of community reinvestment activities.

The other nine banks opened outposts in wealthy parts of economically depressed counties or in ghost towns that are being primed for new recreational activities.

According to the Denver newspaper, the state law was meant to augment the federal Community Reinvestment Act.

In perhaps the most conspicuous moves, two banks set up branches in Central City and Black Hawk, former silver mining towns that soon will host gambling casinos as a result of recent legislation.

Another bank opened a branch in a middle-class neighborhood of Pueblo, a county that was designated as impoverished. …

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