9-1301.   Deposit insurance or fidelity bond to insure deposits required;bond requirements; annual audit, when; revocation of authority to dobusiness, when; attorney general's duties.Every bank operating under the provisions of this act and authorized toreceive deposits of money shall insure the deposits of each depositor withthe federal deposit insurance corporation, or its successor, or with aninsurer approved by the statecommissioner of insurance in an amount not less than that provided bythe federal deposit insurance corporation and shall payall charges or assessments levied by such deposit insurance corporation,or its successor or such other insurer. Every state bank thataccepts deposits of money which does not insure with the federal depositinsurance corporation shall furnish a blanket fidelity bond on all ofits officers and employees in a principal amount of not less than 100% ofthe average total amount of all deposits inthe bank, that average total deposits shall mean the average of thetotal amounts on deposit in such bank on June 30 and December 31 nextpreceding. The bond shall be executed by a corporate surety authorizedto do business in the state and shall be held by the state bankcommissioner for the benefit of the depositors of the bank; and if areceiver is appointed, the commissioner shall collect any moneys dueunder such bond for the benefit of the depositors. The bond shallprovide that it cannot be canceled until at least 30 days afternotice has been given to the state bank commissionerunless the commissioner shall authorize its cancellation at an earlierdate. The premium on such bond shall be paid by the bank.

      Any bank furnishing the bond shall also cause acertified audit of its books and accounts to be made once in eachcalendar year by an independent certified public accountant licensed todo business in the state or an independent auditor approved by thecommissioner, and the accountant or auditor shall audit and verifyevery account of the bank. The cost of any such audit shall be paid bythe bank, and a copy of the report of such audit shall be filed with thestate bank commissioner. Upon receipt of the report, the bankcommissioner shall examine the report and shall transmit the report,with any recommendations as to action thereon, to the state bankingboard and the state banking board shall, without delay, take suchnecessary action as may be indicated by the audit report and therecommendations of the commissioner.

      Whenever a bank shall fail to comply with the provisions of thissection, the commissioner shall notify the bank that a continuation ofsuch failure will result in the revocation of its authority to dobusiness. If after receipt of such notice the bank fails or refuses tocomply, the commissioner shall after a hearing or an opportunity for ahearing has been given to such bank, revoke its authority to transactbusiness in this state. Hearings shall be conducted in accordance with theprovisions of the Kansas administrative procedure act. The bankcommissioner may grant a reasonable extension of time for compliancewith this section under such rules and regulations as the state bankingboard may adopt. During the period of any such extension of time, thebank receiving the same shall give notice to persons making deposits,and include in all advertisements made for the purpose of securingdeposits, a statement that the deposits of such bank are uninsured. Thecommissioner shall give written notice of such revocation to thepresident, cashier, or other managing officer of such bank, and bypublishing a copy of the order of revocation in theKansas register. The attorney general shall, at the request of the commissioner,then begin action for the appointment of a receiver for such bank and todissolve same; and the receiver appointed shall take charge of such bankand liquidate the affairs and business in the same manner asprovided in article 19 of chapter 9 of the Kansas Statutes Annotated,and any amendments thereto.

      History:   L. 1947, ch. 102, § 59; L. 1959, ch. 60, § 1; L.1975, ch. 45, § 2; L. 1981, ch. 54, § 1; L. 1981, ch. 324, § 6; L.1988, ch. 356, § 38; L. 1989, ch. 48, § 37; July 1.