H 4528 Session 110 (1993-1994)
H 4528 General Bill, By Scott, Anderson, Bailey, D.W. Beatty, Breeland,
G. Brown, J. Brown, A.W. Byrd, Canty, Cobb-Hunter, J.L.M. Cromer, T.L. Farr,
Govan, L.O. Graham, J.P. Harrelson, Harvin, B.H. Harwell, Haskins, J. Hines,
D.N. Holt, Inabinett, Kennedy, W.D. Keyserling, M.H. Kinon, Littlejohn,
M. McLeod, McMahand, D.E. McTeer, Moody-Lawrence, J.H. Neal, Neilson, Phillips,
T.F. Rogers, J.J. Snow, Spearman, L.S. Whipper, J.M. White, Wilder, J.B. Wilder,
Wilkes and D. Williams
A Bill to amend Title 34, Code of Laws of South Carolina, 1976, by adding
Chapter 14 so as to enact the Community Reinvestment Act, to provide for a
Community Reinvestment Board, its powers and duties, and to state the
requirements for community reinvestment.
01/18/94 House Introduced and read first time HJ-5
01/18/94 House Referred to Committee on Labor, Commerce and
Industry HJ-5
A BILL
TO AMEND TITLE 34, CODE OF LAWS OF SOUTH CAROLINA,
1976, BY ADDING CHAPTER 14 SO AS TO ENACT THE
COMMUNITY REINVESTMENT ACT, TO PROVIDE FOR A
COMMUNITY REINVESTMENT BOARD, ITS POWERS AND
DUTIES, AND TO STATE 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 capacity of banks
to meet the credit needs of communities. The provisions of this act serve
the following specific objectives:
(1) provide the Community Reinvestment Board with community
reinvestment authority equivalent to that of federal bank regulators to
strengthen oversight of state-chartered banks, but without increasing
their regulatory obligations;
(2) identify 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 (total community), and to encourage
partnerships between banks and intermediary organizations that link
community borrowers with sources of funding and technical assistance;
(3) clarify 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/private partnerships;
(4) provide 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 any national, state, and district bank, and any
federal branch and insured branch, any former savings association that
has converted from a savings association charter and is a Savings
Association Insurance Fund member.
(2) `Board' refers to the Community Reinvestment Board.
Section 34-14-30. (A) There is created a Community Reinvestment
Board 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. No member may serve more than
two consecutive terms. Of the members first appointed, the persons
chosen to represent the first, third, and fifth districts serve two years and
the remaining members serve four years.
In appointing the members, the General Assembly shall give
consideration to the following groups:
(1) minority real estate;
(2) minority business associations;
(3) community based organizations;
(4) consumer groups;
(5) state housing authority;
(6) rural areas;
(7) low income housing; and
(8) organizations representing interest of the homeless.
(B) The board at its first meeting shall select a chairman and make
rules governing the conduct of the meetings. The board shall meet on
a monthly basis.
(C) The board is authorized to hire a director and any staff as
necessary to fulfill the duties prescribed by this chapter. The
compensation of the director is set by the General Assembly to be
funded through the Housing Trust Fund. Members of the board are not
compensated but may receive per diem, subsistence, and mileage as
allotted to other boards and commissions by law.
Section 34-14-40. (A) The board 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 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 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
(FDIC) and the Resolution Trust Company, the board must 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 must assess the record of a bank in meeting community credit
needs. The board 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 board must prepare a written community
reinvestment evaluation as provided in this chapter.
(B) The board may coordinate with federal regulators and provide
information as necessary to fulfill its responsibilities under the
provisions of 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 that is 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 that
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 once each year, the board shall
gather information that both federal and state-chartered banks already
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; and
(9) other information the board considers necessary.
(B) Each year, the board shall report to the General Assembly a
summary of information that the board gathers under this section
regarding community reinvestment performance and banking trends that
affect economic development.
Section 34-14-60. (A) The board must 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 board shall consider the following factors in assessing a
bank record of performance. The factors 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 also working 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 banks' 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 must 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/private
partnerships.
Section 34-14-80. (A) After concluding each evaluation of a bank,
the board must 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 must 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) the board's conclusions for each of the assessment factors
under this chapter;
(b) a discussion of the facts supporting the board's conclusions;
and
(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 any customer, employee, or officer of
the bank, or person, or organization that has provided information in
confidence to a federal or state agency.
The board may include any statements obtained or made by the board
in the course of an evaluation that is 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 act. However, the board must 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 must annually delineate the local
community or communities that it serves. The bank must use maps and
other technological devices to portray community delineations.
For the purposes of this chapter, a community must include
contiguous area surrounding each bank office or branch. The
community must 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 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) any other local area that meets the purposes of this act and
does not exclude low and moderate income neighborhoods.
Section 34-14-100. (A) The board of directors or trustees of each
bank must adopt a community reinvestment statement for each
delineated community. The bank must include at a minimal 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 that 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; and
(9) other information the board considers appropriate.
(B) A bank board of directors or trustees must review each
community reinvestment statement at least annually and must act upon
any material change in the statement at its first regular meeting after the
change. The board must note these actions in its minutes.
Section 34-14-110. (A) A bank must make a current community
reinvestment statement readily available for public inspection at the head
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) any signed, written comments received from the public within
the past three 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 statement's effect during the
past two years.
(C) A bank must 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.
(D) A bank must maintain:
(1) its public file at the head office; and
(2) materials relating to each delineated community at a
designated office in that community."
SECTION 3. This act takes effect upon approval by the Governor.
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