H 3198 Session 112 (1997-1998)
H 3198 General Bill, By Scott
A BILL TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 14
TO TITLE 34 SO AS TO ENACT THE COMMUNITY REINVESTMENT ACT BY PROVIDING FOR A
COMMUNITY REINVESTMENT BOARD, ITS POWERS AND DUTIES, AND THE REQUIREMENTS FOR
COMMUNITY REINVESTMENT.
01/08/97 House Prefiled
01/08/97 House Referred to Committee on Labor, Commerce and Industry
01/14/97 House Introduced and read first time HJ-78
01/14/97 House Referred to Committee on Labor, Commerce and
Industry HJ-78
A BILL
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA,
1976, BY ADDING CHAPTER 14 TO TITLE 34 SO AS TO
ENACT THE COMMUNITY REINVESTMENT ACT BY
PROVIDING FOR A COMMUNITY REINVESTMENT BOARD,
ITS POWERS AND DUTIES, AND THE REQUIREMENTS FOR
COMMUNITY REINVESTMENT.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. The purpose of this act is to strengthen the capacity
of banks to meet the credit needs of communities. It serves the
following specific objectives:
(1) provides the Community Reinvestment Board with community
reinvestment authority equivalent to that of federal bank regulators
to strengthen the oversight of state-chartered banks but without
increasing their regulatory obligations;
(2) identifies credit needs and opportunities in a way that is
compatible with federally defined community credit needs to
supplement the broad federal statement of needs, to provide credit for
low and moderate income families in urban and rural areas and for
small farmers and small businesses, the total community, and to
encourage partnerships between banks and intermediary
organizations that link community borrowers with sources of funding
and technical assistance;
(3) clarifies the standards for evaluating the community
reinvestment performance of banks to provide banks with clear
options on how they can strengthen their capacity for risk
management, marketing, staff expertise, liquidity, and public and
private partnerships;
(4) provides a central place for information that banks already
disclose on community reinvestment performance and trends in the
banking industry.
SECTION 2. Title 34 of the 1976 Code is amended by adding:
"CHAPTER 14
Community Reinvestment Act
Section 34-14-10. This chapter may be cited as the `Community
Reinvestment Act'.
Section 34-14-20. As used in this chapter:
(1) `Bank' means a national, state, or district bank, federal and
insured branches, and former savings associations that have
converted from savings association charters and are Savings
Association Insurance Fund members.
(2) `Board' means the Community Reinvestment Board.
Section 34-14-30. (A) A Community Reinvestment Board is
created composed of seven members appointed by the General
Assembly. One member must be appointed from each of the six
congressional districts of the State and one at large. The members
serve for four years or until their successors are appointed and
qualify. No member may serve more than two consecutive terms.
(B) In appointing the members the General Assembly shall
consider representation by:
(1) minority real estate organizations;
(2) minority business associations;
(3) community based organizations;
(4) consumer groups;
(5) the State Housing Finance and Development Authority;
(6) rural areas;
(7) organizations providing low income housing;
(8) organizations for the homeless.
(C) The board at its first meeting shall elect a chairman and make
rules governing the conduct of the meetings. The board shall meet
monthly.
(D) The board may hire a director and staff necessary to fulfill the
duties prescribed by this chapter. The compensation of the director
is set by the General Assembly through the Housing Trust Fund.
Members of the board are not compensated but may receive per diem,
subsistence, and mileage provided other boards and commissions by
law.
Section 34-14-40. (A) The board shall 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 board may accomplish this directive by
reviewing the following information:
(1) If a bank applies under this chapter to open a bank deposit
facility, move an office or a branch location, merge or consolidate
with another bank, acquire assets of another bank, assume liabilities
of another bank, or assume or purchase the assets of the federal
government including, but not limited to, the Federal Deposit
Insurance Corporation and the Resolution Trust Company, the board
shall consider the record of the bank in meeting community credit
needs. The board may deny the application or condition its approval
on grounds of meeting community credit needs.
(2) When the board routinely examines a bank under this
chapter, the board shall assess the record of a bank in meeting
community credit needs. The board shall 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 board shall prepare a written community
reinvestment evaluation as provided in this chapter.
(B) The board may coordinate with federal regulators and provide
information necessary to fulfill its responsibilities under this chapter.
The board may coordinate with federal regulators to minimize
regulatory burdens of banks and to avoid the necessity of duplicating
the work of assessing the record of a bank meeting community credit
needs.
(C)(1) Upon receipt of an application for community credit, a bank
shall publish notice of the application in a newspaper of general
circulation in each community affected by the application. The board
shall prepare and update with each new application a bulletin that
lists all pending applications. The bulletin must be mailed, without
charge, to any person upon request. The board shall accept public
comment on an application for at least sixty days from the date of
final publication of the notice in a newspaper or sixty days after the
date the bulletin notice is mailed by the board, whichever date is
later.
(2) The board has at least thirty days for a member to offer
written comments on an application. The board shall provide a
written response to that comment as part of the written decision on
the application.
Section 34-14-50. (A) At least annually, the board shall gather
information that federal and state-chartered banks disclose and make
the information available to the public at a central place. That
information includes, but is not limited to:
(1) federal or state community reinvestment act statements;
(2) federal or state community reinvestment evaluations;
(3) public or private studies of community lending data under
the federal Home Mortgage Disclosure Act if available;
(4) public or private studies of agreements between banks and
community organizations if available;
(5) concentration of banking assets for individual banks as well
as for all banks controlled by a holding company;
(6) loan portfolio mix and loan-to-deposit ratios for each bank;
(7) number of branches, offices, and off-premises electronic
facilities;
(8) profitability of each bank;
(9) other information the board considers necessary.
(B) Annually, the board shall report to the General Assembly a
summary of information the board gathers under this section
regarding community reinvestment performance and banking trends
that affect economic development.
Section 34-14-60. (A) The board shall rate a bank on a four-tiered
rating system. The ratings include:
(1) outstanding record of meeting community credit needs;
(2) satisfactory record of meeting community credit needs;
(3) unacceptable record of meeting community credit needs;
(4) substantial noncompliance in meeting community credit
needs.
(B) The board shall consider the following factors in assessing a
bank record of performance, which are divided into five performance
categories:
(1) ascertainment of community credit needs:
(a) activities taken to ascertain the credit needs of the
community;
(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 federal Community
Reinvestment Act;
(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 business and farming;
(b) origination of residential mortgage, housing rehabilitation,
home improvement, small business, and small farm loans;
(c) participation in governmental-insured, guaranteed, or
subsidized loan programs for housing, small business, and small
farms;
(3) geographic distribution:
(a) geographic distribution of credit extensions, applications,
loan acceptance, 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 with community development
corporations, nonprofit organizations, and nonprofit intermediaries
that connect local borrowers with sources of funding and technical
assistance;
(b) ability to meet various community credit needs based
upon the bank's financial condition, size, legal impediments, local
economic conditions, and other factors;
(c) other factors that reasonably bear upon the extent to
which an institution is helping to meet the credit needs of its entire
community.
Section 34-14-70. The board shall develop community
reinvestment guidelines that clarify the assessment factors in a way
that identifies 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 and private partnerships.
Section 34-14-80. (A) After concluding each evaluation of a bank,
the board shall prepare a written evaluation of the bank's record of
meeting community credit needs. Each evaluation includes a public
and a confidential section. The board shall keep the public section of
the evaluation in a file readily available for public inspection
pursuant to this chapter.
(1) In the public section of an evaluation the board must include:
(a) its conclusions for each of the assessment factors under this
chapter;
(b) a discussion of the facts supporting the conclusions;
(c) a rating for the bank and a statement of the basis for the
rating.
(2) In the confidential section of the evaluation the board must
include all references that identify a customer, an employee, or an
officer of the bank or a person or an organization that has provided
information in confidence to a federal or state agency. The board
may include statements obtained or made by the board in the course
of an evaluation too sensitive or speculative in nature to disclose to
the bank or the public. The board may disclose all or part of the
confidential section to the bank if the board decides that disclosure
will promote the purposes of this chapter. However, the board may
not identify a person or organization that has provided information in
confidence to the board or another agency.
(B) After an evaluation of all the banks, the board shall send a list
of the banks and their ratings to the State Treasurer with the
recommendation that the State Treasurer deposit funds only in those
banks located in the State that receive a rating of outstanding or
satisfactory.
Section 34-14-90. (A) Each bank annually shall delineate the
local communities it serves through maps and other technological
devices. For the purposes of this chapter, a community includes the
contiguous area surrounding each bank office or branch and 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 board determines otherwise.
(B) In preparing its delineation, a bank may use any of the
following:
(1) existing boundaries such as those of Standard Metropolitan
Statistical Areas, census tracts, or counties in which bank offices are
located. The bank may make adjustments to existing boundaries in
the case of areas divided by state borders, significant geographic
barriers, or areas that are extremely large or of unusual configuration;
(2) actual lending territory and all other areas equidistant from
its offices;
(3) other local areas that meet the purposes of this chapter and
do not exclude low and moderate income neighborhoods.
Section 34-14-100. (A) The board of directors or trustees of each
bank shall adopt a community reinvestment statement for each
delineated community. The bank must include at a minimum the
following information in each community reinvestment statement:
(1) the delineation of its community service area;
(2) a list of specific types of credit within categories the
institution is prepared to extend within its community;
(3) a copy of the community reinvestment files;
(4) a description of how its current efforts, including special
credit-related programs, help to meet community credit needs;
(5) a periodic report regarding its record of helping to meet
community credit needs;
(6) 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;
(7) 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;
(8) a statement that the public has a right to make comments
regarding information contained in the community reinvestment
statement which must be kept by the bank in a file for access by the
public;
(9) other information the board considers appropriate.
(B) The board of directors or trustees of each bank shall review
each community reinvestment statement at least annually and act
upon material changes in the statement at its first regular meeting
after the changes. The board shall note these actions in its minutes.
Section 34-14-110. (A) A bank shall make a current community
reinvestment statement readily available for public inspection at the
main office of the bank and at each office of the institution in the
delineation community, except off-premises electronic deposit
facilities. Copies of each current community reinvestment statement
must be made available to the public upon request. A bank may
charge a fee not to exceed the cost of reproduction.
(B) Each bank shall maintain files that are readily available for
public inspection of:
(1) signed, written comments received from the public within
the past three years that specifically relate to community reinvestment
statements or to the bank's record of meeting community credit
needs;
(2) responses to the comments the bank has made;
(3) each community reinvestment statement's effect during the
past two years.
(C) A bank may 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 violates law.
(D) A bank shall maintain its public file at the main office and
materials relating to each delineated community at a designated office
in that community."
SECTION 3. The initial terms of the members of the Community
Reinvestment Board provided for in Section 34-14-30 of the 1976
Code are as follows:
(1) members representing the first, third, and fifth congressional
districts: two years;
(2) members representing the second, fourth, and sixth
congressional districts: four years.
SECTION 4. This act takes effect upon approval by the Governor.
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