(1) The board of directors of a state bank shall meet at least once each calendar quarter, unless the banking board directs that meetings be held on a more frequent basis, or a less frequent basis in the case of disaster or emergency. The banking board, the commissioner, or an executive officer may call a special meeting. A majority of the board of directors constitutes a quorum. The board shall keep minutes of each meeting, including a record of attendance. Any director who fails to attend meetings of the board of directors for three consecutive months automatically ceases to be a director, unless the absence is satisfactorily explained to the banking board or the commissioner, who shall, in that event, notify the president of the bank of the approval of the continuation of the director. (2) The board of directors or the executive committee of the board shall review at least monthly the following transactions occurring since the last review: (a) Each loan, advance, discount, overdraft, and purchase or sale of a security that exceeds in amount one percent of the capital of the corporation pursuant to the rules promulgated by the banking board, and each loan, advance, discount, and overdraft that makes the total obligations from one obligor exceed that amount; (b) Each purchase or sale of a security that, together with the bank's other purchases and sales in the security during the preceding two months, involves such amount. (3) (a) The board of directors shall cause the financial statements of the state bank to be prepared in accordance with generally accepted accounting principles consistently applied, except as the banking board may otherwise provide in order to establish regulatory and competitive parity and pursuant to the policies expressed in section 11-101-102. (b) The board of directors shall cause an audit of the state bank to be completed by an accounting firm composed of certified public accountants or a directors' examination by a public accountant or any other independent person or persons as determined by the banking board at least annually but at intervals of not more than fifteen months, as may be required by the banking board or its rules. The banking board shall adopt rules regarding the qualifications of such public accountant and other independent person or persons, who shall assume the responsibility for due care in such director's examinations. The banking board's rules shall also establish the scope of such directors' examinations, which shall include safeguards to insure that such examinations adequately describe the financial condition of the financial institution. The banking board may require an audit to be completed by an accounting firm composed of certified public accountants under certain circumstances. A report of the audit or directors' examination and any related management letters and documents shall be completed and submitted to the banking board within the time periods, in the form, and containing such information as the banking board may require in its rules. Such report of the audit or directors' examination and any related management letters and documents shall be reviewed by the directors at the next meeting of the board of directors. (c) If a bank is owned or controlled by a bank holding company, the requirement of paragraph (b) of this subsection (3) may be fulfilled if: (I) As required by the banking board and its rules, the controlling bank holding company is audited or examined in a directors' examination annually at intervals of not more than fifteen months and the bank is included in the annual audit or directors' examination of the bank holding company by that firm; (II) A report of the audit or directors' examination for the controlling bank holding company and any related management letters and documents is completed and submitted to the banking board within the time periods, in the form, and containing such information as the banking board may require in its rules; and (III) An annual internal examination of the bank is prepared by the internal examination staff of the controlling bank holding company and kept available for submission to the banking board immediately upon the banking board's request. (4) A state bank authorized to exercise trust powers shall not accept, or voluntarily relinquish, a fiduciary account without the approval or ratification of the board of directors, or of a committee of officers or directors designated by the board to perform this function, but the board of directors or the committee may prescribe general rules governing acceptances or relinquishment of fiduciary accounts, and action taken by an officer in accordance with these rules is sufficient approval. Any committee so designated shall keep minutes of its meetings and report at each monthly meeting of the board of directors all action taken since the previous meeting of the board. The board of directors shall designate one or more committees of not less than three qualified officers or directors to supervise the investment of fiduciary funds. No such investment of any account for which the bank has investment discretionary authority shall be made, retained, or disposed of without the approval of a board-approved committee as to which the bank has investment or review responsibility. At least once in every calendar year, the committee shall review the records of each fiduciary account as to which the bank has investment or review responsibility and shall determine the current value, safety, and suitability of the investments and whether the investments should be modified or retained. The committee shall keep minutes of its meetings and shall report at each monthly meeting of the board of directors its conclusions on all questions considered and all action taken since the previous meeting of the board. The board of directors shall establish the policies and procedures necessary for the proper exercise of fiduciary powers by the state bank and in accordance with any rule established by the banking board.
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