GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

H	1 

HOUSE BILL 1084

Short Title:  Linked Deposit Act.	(Public)
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Sponsors: Representatives McAllister; Barnhill, Beall, Beard, Cunningham, Dial, Easterling, Ethridge, Fitch, Fletcher, Gottovi, Green, Hardaway, Hensley, Sam Hunt, H. Hunter, James, Jeralds, Jones, Kahl, Luebke, Michaux, Oldham, Redwine, Wainwright, and Warner.
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Referred to:  Commerce.
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April 24, 1991

A BILL TO BE ENTITLED
AN ACT TO ESTABLISH THE NORTH CAROLINA LINKED DEPOSIT 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 Linked Deposit Act.
"§ 53-260.  Purpose.
The purpose of this Article is to provide incentives for banks to strengthen their capacity for meeting the credit needs of North Carolina communities.  The provisions of this Article serve the following specific objectives:
(1)	Invest surplus local and State deposits in banks that in the opinion of the Commissioner do at least a satisfactory job of reinvesting deposits to meet community credit needs, as determined by federal or State regulators under the Community Reinvestment Act.
(2)	Generate information on the extent to which banks are providing developmental loans, which serve high-priority needs for economic development in North Carolina.
(3)	Reward those banks with the strongest records of developmental lending and provide a stimulus for other banks to improve their record of developmental lending, through selection of depositories and through public information.
"§ 53-261.  Definitions.
As used in this Article, unless the context requires otherwise:
(1)	'Bank' means any financial institution chartered by the State of North Carolina or by the United States of America, including commercial banks and trust companies with banking powers that are owned by interstate holding companies.
(2)	'CRA' or 'Community Reinvestment Act' means the Community Reinvestment Act or Title VIII of the Housing and Community Development Act of 1977 (as amended) or any North Carolina law which encourages financial institutions to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions.
(3)	'Commissioner' means the North Carolina Commissioner of Banks.
(4)	'Developmental loan' means a loan that will further the economic and community development of a low and/or moderate income community including a loan to a minority-owned business, small farm, nonprofit community-based development organization, and an intermediary organization focusing on community borrowers; or loans in conjunction with the public sector or in designated economically distressed areas.
(5)	'Treasurer' means the State Treasurer of North Carolina.
"§ 53-262.  Linked deposit requirements.
Before the Treasurer or the finance officer of a unit of local government or public authority may deposit public funds for a term of six months or more in a bank, the bank shall certify that it has disclosed to the Commissioner of Banks the information on developmental loans under this Article, and has either:
(1)	Received a public rating of 'satisfactory' or 'outstanding' under the CRA; or
(2)	Not yet received a public rating under the CRA.
"§ 53-263.  Disclosure of developmental loans.
Before a bank may certify that it has disclosed the information on developmental loans, the bank shall provide the following information to the Commissioner:
(1)	A copy of the bank's current CRA statement.
(2)	A copy of the bank's most recent public CRA rating and evaluation or a statement that the bank has received no public CRA rating.
(3)	A completed form that discloses developmental loans made by the bank in the previous calendar year in the following categories:
a.	Loans to minority-owned small businesses, small farms focusing on sustainable agriculture and family farms.
b.	Loans to or made in conjunction with a nonprofit community-based development organization.
c.	Loans to or made in conjunction with a nonprofit intermediary organization that links community borrowers with sources of funding and technical assistance, including the Community Investment Corporation of North Carolina, the North Carolina Agricultural Finance Authority, the Coalition of Farms and Rural Families Project, the Microbusiness Loan Fund, and the Self-Help Credit Union.
d.	Loans or investments made in conjunction with a consortium of banks that meet community credit needs under the Community Reinvestment Act.
e.	Loans to any applicant for community development purposes within an economically distressed county as defined by the Department of Economic and Community Development under G.S. 143B-437A.
f.	Loans to small businesses or small farms that are insured or guaranteed by the U.S. Small Business Administration or other State or federal programs.
g.	Any other loan for community development made in conjunction with State or local government.
"§ 53-264.  Role of the Commissioner.
Each calendar year, the Commissioner shall:
(1)	Provide to the following officials or persons a list of all banks that have disclosed information on CRA statements, CRA evaluation reports, and developmental loans under this Article.
a.	State Treasurer.
b.	Chief finance officer of a unit of local government or public authority.
c.	Any person who requests the list.
(2)	Provide to the General Assembly a report on the developmental loan information that banks disclose under this Article including:
a.	For each bank, the total number and amount of developmental loans in each category under this Article.
b.	For each bank, a loan-to-deposit ratio of total developmental loans under this Article to total deposits from within the State.
c.	A list of banks, which are ranked in the order of their developmental loan-to-deposit ratio under this section such list shall reflect the size of each institution based on total deposits, with at least three, but not more than four groupings based on size."
Sec. 2.  This act becomes effective October 1, 1991.