Current Status Bill Number:3198 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:19970114 Primary Sponsor:Scott All Sponsors:Scott Drafted Document Number:jic\5211sd.97 Residing Body:House Current Committee:Labor, Commerce and Industry Committee 26 HLCI Subject:Community Reinvestment Act, banks and savings and loan associations
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
House 19970114 Introduced, read first time, 26 HLCI
referred to Committee
House 19970108 Prefiled, referred to Committee 26 HLCI
View additional legislative information at the LPITS web site.
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:
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.