GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

H	1 

HOUSE BILL 1022

Short Title:  NC Community Reinvestment Act.	(Public)
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Sponsors: Representatives Brubaker, Fitch; Beall, Easterling, Ethridge, Fletcher, Green, Hardaway, Hege, Holmes, H. Hunter, James, Jeralds, Jones, Luebke, Ramsey, Redwine, and Wainwright.
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Referred to:  Commerce.
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April 19, 1991

A BILL TO BE ENTITLED
AN ACT TO ESTABLISH THE NORTH CAROLINA COMMUNITY REINVESTMENT ACT.
The General Assembly of North Carolina enacts:
Section 1.  Chapter 53 of the General Statutes is amended by adding the following new Article to read:
"ARTICLE 21.
"North Carolina Community Reinvestment Act.
"§ 53-260.  Purpose.
The purpose of this act is to strengthen the capacity of banks to meet the credit needs of North Carolina communities.  The provisions of this act serve the following specific objectives:
(1)	Provide the North Carolina Commissioner of Banks with community reinvestment authority that is equivalent to that of federal bank regulators.  The purpose is to strengthen oversight of State-chartered banks, but without increasing their regulatory obligations.
(2)	Make the broad federal statement of credit needs specific to reflect North Carolina credit needs including the need for credit in rural areas, for small farms, and for small minority businesses.
(3)	Clarify the standards for evaluating the community reinvestment performance of State-chartered banks.  The purpose is to provide banks with clear options on how they can strengthen their capacity for community reinvestment lending.
(4)	Provide a central place for information that banks already disclose on community reinvestment performance for local officials and the general public.
"§ 53-261.  Definitions.
As used in this Article, unless the context clearly requires otherwise:
(a)	'Banks' means financial institutions that are chartered by the State of North Carolina, including commercial banks, savings associations, savings banks, and trust companies with banking powers that are owned by interstate holding companies.
(b)	'Commissioner' refers to the Commissioner of Banks.
"§ 53-262.  Role of the Commissioner.
(a)	The Commissioner must assess the record of a bank in meeting the credit needs of the entire community, including low- and moderate-income neighborhoods, consistent with safe and sound bank operations.  The occasions for doing so are the following:
(1)	If a bank applies under this Chapter to open a bank deposit facility, move an office or branch location, merge or consolidate with another bank, acquire assets of another bank, or assume liabilities of another bank, the Commissioner must consider the record of the bank in meeting community credit needs.  The Commissioner may deny the application or condition its approval on grounds of meeting community credit needs.
(2)	When the Commissioner routinely examines a bank under this Chapter, the Commissioner must assess the record of a bank in meeting community credit needs.  The Commissioner should use this process to counsel a bank in ways to strengthen its capacity for community lending.
(3)	In conjunction with each routine examination, but at least once every five years, the Commissioner must prepare a written community reinvestment evaluation under G.S. 53-263.
(b)	The Commissioner shall share information and work responsibility under this act with federal regulators.  The Commissioner shall work with federal regulators in order to minimize regulatory burdens of banks and to avoid the necessity of duplicating the work of assessing the record of a bank to meet community credit needs.
(c)	Public participation shall be encouraged in the implementation of this act, as follows:
(1)	Notice and hearing.
a.	A bank shall publish notice of an application in a newspaper of general circulation in the community(s) where the main office of all affected banks is located.
b.	The Commissioner shall prepare and update on a regular basis, but at least monthly, a bulletin that lists all pending applications.  The Commissioner must mail the bulletin without charge to any person upon request for a reasonable period of time.
c.	The Commissioner shall accept public comment on an application for at least 30 days from the date of final publication of notice in a newspaper or 30 days after the date that the bulletin notice is mailed by the Commissioner, whichever date is later.
(2)	Advisory Committee.
a.	The Commissioner shall create an advisory committee to provide comments on the administration of this act and on the role of banks in North Carolina economic development.
b.	The Commissioner shall appoint nine members who represent the following groups:
1.	Large State-chartered commercial banks;
2.	Small State-chartered commercial banks;
3.	State-chartered savings and loan institutions;
4.	Small minority-owned businesses;
5.	Nonprofit developers of housing for low-income families;
6.	Community Development Corporations;
7.	Family farms engaged in sustainable agriculture;
8.	Intermediary organization providing financial/technical assistance for community-lending purposes;
9.	Representative of local government.
c.	The Commissioner shall meet with the advisory committee at least quarterly for the first year, and at least annually in following years.
d.	The Commissioner shall give at least 30 days notice of proposed regulations, guidelines or other policy initiatives to members of the advisory committee.
(d)	At least once each year, the Commissioner shall gather information that both federal- and State-chartered banks in North Carolina are required to disclose, and make the information available to the public at a central place.  That information shall include all of the following and any other information that the Commissioner deems appropriate.
(1)	Community reinvestment performance:
a.	Federal or State community reinvestment act statements;
b.	Federal or State community reinvestment evaluations; and
c.	Public or private studies of community lending data under the federal Home Mortgage Disclosure Act if available.
(2)	Banking trends.
a.	Local market shares of banking assets for individual banks as well as for all banks controlled by a holding company; and
b.	Loan portfolio mix and loan-to-deposit ratios for each county in a bank's market area.
(e)	Each year, the Commissioner shall report to the Joint Legislative Commission on Government Operations a summary of information that the Commissioner gathers under this section regarding community reinvestment performance and banking trends that affect economic development in North Carolina.
"§ 53-263.  Evaluation of banks.
(a)	The Commissioner shall rate a bank on a four-tiered rating system.  The ratings include:
(1)	Outstanding record of meeting the community credit needs;
(2)	Satisfactory record of meeting community credit needs;
(3)	Needs to improve record of meeting community credit needs; or
(4)	Substantial noncompliance in meeting community credit needs.
(b)	The Commissioner shall consider the following factors in assessing a bank record of performance.
(1)	Ascertainment of community credit needs.
a.	Activities taken to ascertain the credit needs of the community, including the low- and moderate-income communities.
b.	The extent of participation by the board of directors in formulating policies and reviewing the institution's performance with respect to the purpose and intent of the CRA.
(2)	Marketing and types of credit extended.
a.	Efforts to market and enhance the availability of credit services to community members.  Community members who have been underserved include borrowers from rural areas or urban minority neighborhoods and small business people and farmers, particularly women and minorities in small businesses and farming.
b.	Origination of residential mortgage, housing rehabilitation, home improvement, small business, and small farm loans.
c.	Participation in governmentally-insured, guaranteed, or subsidized loan programs for housing, small business, and small farms.
d.	Participation in programs sponsored by intermediaries such as the Community Investment Corporation of North Carolina, the North Carolina Agricultural Finance Authority, the Coalition of Farm & Rural Families, the Microbusiness Loan Fund and the Self-Help Credit Union.
(3)	Geographic distribution.
a.	Geographic distribution of credit extensions, applications, and denials.
b.	Record of opening and closing offices in the local community, particularly low-and moderate-income areas. Accommodation of the community needs through business hours and services.
(4)	Discrimination and other illegal credit practices.
a.	Practices intended to discourage applications for types of credit. Development of policies, procedures, and training programs by the board of directors and senior management to prevent illegal discrimination and prescreening of applications.
b.	Evidence of prohibited discriminatory or other illegal credit practices.
(5)	Community development.
a.	Participation in local community development and redevelopment programs or projects. This includes working with government programs, and also working with community development corporations and nonprofit intermediaries that connect local borrowers with sources of funding the technical assistance.
b.	Ability to meet various community credit needs based upon the banks' financial condition, size, legal impediments, local economic conditions and other factors.
c.	Any other factors that reasonably bear upon the extent to which an institution is helping to meet the credit needs of its entire community.
(c)	The Commissioner must develop community reinvestment guidelines that clarify the assessment factors in a way that identifies North Carolina credit needs and opportunities. The guidelines must provide banks with clear options on how they can strengthen their capacity for risk management, marketing, staff expertise, liquidity, and public/private partnerships.
"§ 53-264.  Written evaluation and public disclosure.
After concluding each evaluation of a bank under G.S. 53-236, the Commissioner shall prepare a written evaluation of the bank's record of meeting community credit needs. Each evaluation shall include a public and a confidential section.
(1)	The public section of an evaluation shall include:
a.	The Commissioner's conclusions for each of the assessment factors under this act;
b.	A discussion of the facts supporting the Commissioner's conclusions; and
c.	A rating for the bank and a statement of the basis for the rating.
	   The Commissioner shall keep the public section of the evaluation in a file readily available for public inspection.
(2)	The confidential section of the evaluation the Commissioner shall include all references that identify any customer, employee, or officer of the bank, or person or organization that has provided information in confidence to a federal or State agency.
	   In the confidential section the Commissioner may include any statements obtained or made by the Commissioner in the course of an evaluation that is too sensitive or speculative in nature to disclose to the bank or the public.
	   The Commissioner may disclose all or part of the confidential section to the bank, if the Commissioner decides that disclosure will promote the purposes of this act.  However, the Commissioner shall not identify a person or organization that has provided information in confidence to the Commissioner or another agency.
"§ 53-265.  Requirements of banks.
(a)	Each bank shall annually delineate the local community or communities that it serves.  The bank shall use maps to portray community delineations.
For the purpose of this act, a community delineator must include contiguous areas surrounding each bank office or branch.  The community delineation must also include any low- and moderate-income neighborhoods in the contiguous areas.  A bank may include more than one office in the same community.  A community delineation need not take into account an off-premises electronic facility that receives deposits for more than one institution unless the Commissioner determines otherwise.
(b)	The board of directors or trustees of each bank shall adopt a community reinvestment statement for each delineated community, as follows:
(1)	The bank shall include at least the following in each community reinvestment statement:
a.	The delineation of its community service area.
b.	A list of specific types of credit within categories that the institution is prepared to extend within its community.
c.	A copy of the community reinvestment files.
(2)	The bank may include the following in each community reinvestment statement:
a.	A description of how its current efforts, including special credit-related programs, help to meet community credit needs.
b.	A periodic report regarding its record of helping to meet community credit needs.
c.	A description of its efforts to ascertain the credit needs of its community, including efforts to communicate with members of its community regarding credit needs.
d.	An annual business plan for community lending that identifies how the institution intends to strengthen bank capacity for community lending with respect to risk management, marketing, staff expertise, liquidity, and participation in public or private programs.
	   A bank board of directors or trustees shall review each community reinvestment statement at least annually and shall act upon any material changed in the statement at its first regular meeting after the change.
"§ 53-266.  Public disclosure of community reinvestment statements.
(a)	A bank shall make a current community reinvestment statement readily available for public inspection at the head office of the bank, and at each main office of the institution in its market areas, except off-premises electronic deposit facilities.
(b)	A bank shall provide copies of each current community reinvestment statement to the public upon request.  A bank may charge a fee for such copies not to exceed the actual cost of reproduction.
(c)	Each bank shall maintain files that are readily available for public inspection of:
(1)	 Any signed, written comments received from the public within the past two years that specifically relate to any community reinvestment statement or to the bank's record of meeting community credit needs:
(2)	Any responses to the comments that the bank has made; and
(3)	Each community reinvestment statements effect during the past two years.
(d)	A bank shall not include in the public file a comment or response that impairs the reputation of any person other than the institution, or a statement that would violate specific provisions of law.
(e)	A bank shall maintain its public file at the head office and shall maintain materials relating to each delineated community at a designated office in that community."
Sec. 2.  This act becomes effective January 1, 1992.