PRINTER'S NO. 64
No. 54 Session of 1993
INTRODUCED BY THOMAS, DONATUCCI, COY, EVANS, CARN, JAMES,
BISHOP, KIRKLAND, ROEBUCK, WILLIAMS, HUGHES, RICHARDSON AND
ACOSTA, JANUARY 27, 1993
REFERRED TO COMMITTEE ON RULES, JANUARY 27, 1993
AN ACT
1 Providing for the encouragement of community reinvestment by
2 banks and similar institutions, for additional duties of the
3 Department of Banking, for the filing of certain reports and
4 the maintenance of certain records, for community
5 reinvestment statements, for a performance assessment, for
6 regional mortgage review boards and for regional small
7 business loan review boards.
8 The General Assembly of the Commonwealth of Pennsylvania
9 hereby enacts as follows:
10 Section 1. Short title.
11 This act shall be known and may be cited as the Community
12 Reinvestment Act.
13 Section 2. Definitions.
14 The following words and phrases when used in this act shall
15 have the meanings given to them in this section unless the
16 context clearly indicates otherwise:
17 "Bank." A bank, bank and trust company or a savings bank, as
18 defined in section 102 of the act of November 30, 1965 (P.L.847,
19 No.356), known as the Banking Code of 1965, and an association
20 as defined in section 102 of the act of December 14, 1967
1 (P.L.746, No.345), known as the Savings Association Code of
2 1967.
3 "Department." The Department of Banking of the Commonwealth.
4 "Secretary." The Secretary of Banking of the Commonwealth.
5 Section 3. Credit needs of local communities.
6 (a) Assessment.--The department shall assess the record of
7 each bank in satisfying its continuing and affirmative
8 obligation to help meet the credit needs of its local
9 communities, including low-income and moderate-income
10 neighborhoods, consistent with the safe and sound operation of
11 the bank and shall provide for taking into account those records
12 in connection with certain applications.
13 (b) Delineation of local community.--Each bank shall prepare
14 and, at least annually, review a delineation of the local
15 community or communities that comprise its entire community,
16 without excluding low-income and moderate-income neighborhoods.
17 Maps shall be used to portray community delineations. The
18 reasonableness of the delineations shall be reviewed by the
19 department.
20 (c) Preparation of delineation.--A local community shall
21 consist of the contiguous areas surrounding each office or group
22 of offices, including any low-income and moderate-income
23 neighborhoods in those areas. More than one office of a bank may
24 be included in the same local community. A community delineation
25 need not take into account an off-premises electronic facility
26 that receives deposits for more than one institution unless the
27 commissioner determines otherwise. In preparing its delineation,
28 a bank shall use any one of the following:
29 (1) Existing boundaries, such as those of Standard
30 Metropolitan Statistical Areas (SMSA's) or counties in which
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1 the bank's office or offices are located, may be used to
2 delineate a local community. Where appropriate, portions of
3 adjacent areas should be included. The bank may make
4 adjustments in the case of areas divided by significant
5 geographic barriers, or areas that are extremely large or of
6 unusual configuration. In addition, a small bank may
7 delineate those portions of SMSA's or counties it reasonably
8 may be expected to serve.
9 (2) A bank may use its effective lending territory,
10 which is defined as that local area or areas around each
11 office or group of offices where it makes a substantial
12 portion of its loans, and all other areas equidistant from
13 its offices as those areas. Adjustments such as those
14 indicated in paragraph (1) may be made.
15 (3) A bank may use any other reasonably delineated local
16 area that meets the purposes of this act and does not exclude
17 low-income and moderate-income neighborhoods.
18 Section 4. Community reinvestment statement.
19 (a) General rule.--The board of directors or trustees of
20 each bank shall adopt a statement, referred to as the community
21 reinvestment statement, for each delineated community.
22 (b) Required content.--Each statement shall include at least
23 the following:
24 (1) The delineation of the local community.
25 (2) A list of specific types of credit within certain
26 categories, such as residential loans for one-dwelling to
27 four-dwelling units, residential loans for five-dwelling
28 units and over, housing rehabilitation loans, home
29 improvement loans, small business loans, farm loans,
30 community development loans, commercial loans and consumer
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1 loans, that the bank is prepared to extend within the local
2 community.
3 (3) A copy of the community reinvestment notice as
4 provided in this act.
5 (c) Permissible content.--Each bank may include the
6 following in each community reinvestment statement:
7 (1) A description of how its current efforts, including
8 special credit-related programs, help to meet community
9 credit needs.
10 (2) A periodic report regarding its record of helping to
11 meet community credit needs.
12 (3) A description of its efforts to ascertain the credit
13 needs of its community, including efforts to communicate with
14 members of its community regarding credit services.
15 (d) Periodic review.--Each bank's board of directors or
16 trustees shall review each community reinvestment statement at
17 least annually and shall act upon any material change made in
18 the interim at its first regular meeting after the change. Such
19 actions shall be noted in its minutes.
20 (e) Public inspection.--Each current community reinvestment
21 statement shall be readily available for public inspection at
22 the head office of the bank and at each office of the bank in
23 the local community delineated in the statement, except off-
24 premises electronic deposit facilities.
25 (f) Copies.--Copies of each current community reinvestment
26 statement shall be provided to the public upon request. A bank
27 may charge a fee not to exceed the cost of reproduction.
28 Section 5. Public inspection of certain files.
29 (a) General rule.--Each bank shall maintain files that are
30 readily available for public inspection of:
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1 (1) Any signed, written comments received from the
2 public within the past two years that specifically relate to
3 any community reinvestment statement or to the bank's
4 performance in helping to meet the credit needs of its
5 community or communities.
6 (2) Any responses to the comments that the bank wishes
7 to make.
8 (3) Any community reinvestment statements in effect
9 during the past two years.
10 (b) Content.--The files shall not contain any comments or
11 responses that reflect adversely upon the good name or
12 reputation of any person other than the bank or publication of
13 which would violate specific provisions of law.
14 (c) File maintenance.--The files shall be maintained by each
15 bank as follows:
16 (1) all materials at the head office; and
17 (2) those materials relating to each local community at
18 a designated office in that community.
19 Section 6. Community reinvestment notice.
20 Each bank shall provide, in the public lobby of each of its
21 offices other than off-premises electronic deposit facilities, a
22 public notice substantially similar to the one set forth below.
23 Bracketed material shall be used only by a bank having more than
24 one local community. The last item shall be included only if the
25 bank is a subsidiary of a holding company that is not prevented
26 by statute from acquiring additional banks.
27 "COMMUNITY REINVESTMENT NOTICE
28 Community Reinvestment requires the evaluation of our
29 performance in helping to meet the credit needs of this
30 community and to take this evaluation into account when the
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1 commissioner decides on certain applications submitted by us.
2 Your involvement is encouraged.
3 You should know that:
4 You may obtain our current Community Reinvestment statement
5 for this community in this office. (Current Reinvestment
6 statements for other communities served by us are available at
7 our head office, located at:
8 ).
9 You may send signed, written comments about our Community
10 Reinvestment statements or our performance in helping to meet
11 community credit needs to (title and address of bank official)
12 and to the commissioner of banks (address). Your letter,
13 together with any responses by us, may be made public.
14 You may look at a file of all signed, written comments
15 received by us within the past two years, any response we have
16 made to the comments and all Community Reinvestment statements
17 in effect during the past two years at our office located at
18 (address). You also may look at the file about this community at
19 (name and address of designated office).
20 You may ask to look at any comments received by the
21 commissioner of banks.
22 We are a subsidiary of (name of holding company), a bank
23 holding company. You may request from the Federal Reserve Bank
24 of (city, address) an announcement of applications covered by
25 the Community Reinvestment filed by bank holding companies.
26 The information and disclosures required under this notice
27 may be combined or attached to the information and disclosures
28 required under the Community Reinvestment Act of 1977 (91 Stat.
29 1111, 12 U.S.C. § 2901 et seq.) or any regulations thereunder."
30 Section 7. Performance assessment.
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1 (a) Factors considered.--In connection with its examination
2 of a bank, the department shall assess the record of performance
3 of the bank and its holding company in helping to meet the
4 credit needs of its entire community, including low-income and
5 moderate-income neighborhoods, consistent with the safe and
6 sound operation of the bank. The holding company shall be
7 responsible for the actions of its subsidiaries. The department
8 shall review the bank's community reinvestment statement and any
9 signed, written comments retained by the bank or the department.
10 In addition, the department will consider the following factors
11 in assessing a bank's record of performance:
12 (1) Activities conducted by the bank to ascertain the
13 credit needs of its community, including the extent of the
14 bank's efforts to communicate with members of its community
15 regarding the credit services being provided by the bank.
16 (2) The extent of the bank's marketing and special
17 credit-related programs to make members of the community
18 aware of the credit services offered by the bank.
19 (3) The extent of participation by the bank's board of
20 directors or trustees in formulating the bank's policies and
21 reviewing its performance with respect to the purposes of
22 community reinvestment as set forth in this act.
23 (4) Any practices intended to discourage applications
24 for types of credit set forth in the bank's community
25 reinvestment statement.
26 (5) The geographic distribution of the bank's credit
27 extensions, credit applications and credit denials.
28 (6) Evidence of prohibited discriminatory or other
29 illegal credit practices.
30 (7) The bank's record of opening and closing offices and
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1 providing services at offices.
2 (8) The bank's participation, including investments, in
3 local community development and redevelopment projects or
4 programs.
5 (9) The bank's origination of residential mortgage
6 loans, housing rehabilitation loans, home improvement loans
7 and small business or small farm loans within its community,
8 the purchase of these loans originated in its community, and
9 the use of more flexible lending criteria, consistent with
10 safe and sound banking practices.
11 (10) The bank's participation in governmentally insured
12 guaranteed or subsidized loan programs for housing, small
13 businesses or small farms.
14 (11) The bank's ability to meet various community credit
15 needs based on its financial condition and size, its legal
16 impediments, local economic conditions and other factors.
17 (12) The bank's origination of loans and other efforts
18 to assist existing low-income and moderate-income residents
19 to be able to remain in affordable housing in their
20 neighborhoods and the bank's origination of loans that show
21 an undue concentration and a systematic pattern of lending
22 resulting in the loss of affordable housing units.
23 (13) Other factors that, in the department's judgment,
24 reasonably bear upon the extent to which a bank is helping to
25 meet the credit needs of its entire community.
26 (b) Use of record.--
27 (1) In considering an application for the establishment
28 of a domestic branch or other facility with the ability to
29 accept deposits, the relocation of the main office or a
30 branch office or a merger or consolidation with or the
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1 acquisition of assets or assumption of liabilities of another
2 bank or federally insured bank, the department shall
3 consider, but not be limited to, the bank's record of
4 performance.
5 (2) The assessment of a bank's record of performance in
6 helping to meet the credit needs of its community may be the
7 basis for denial of such an application.
8 (c) Evaluation.--Upon the completion of an examination of a
9 bank under this section, the department shall prepare a written
10 evaluation of the bank's record of performance in meeting the
11 credit needs of its entire community, including low-income and
12 moderate-income neighborhoods, which shall be open to public
13 inspection upon request. This written evaluation shall:
14 (1) state the department's conclusions for each
15 assessment factor identified in this section;
16 (2) discuss the fact supporting such conclusions; and
17 (3) contain the bank's descriptive rating and a
18 statement describing the basis for the rating. This rating
19 shall be one of the following:
20 (i) outstanding record of meeting community credit
21 needs;
22 (ii) satisfactory record of meeting community credit
23 needs;
24 (iii) needs to improve record of meeting community
25 credit needs; or
26 (iv) substantial noncompliance in meeting community
27 credit needs.
28 Section 8. Unsatisfactory rating.
29 (a) Ineligibility to be State depository.--The identity of
30 any bank whose performance assessment under section 7 is found
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1 to be unsatisfactory shall be given by the secretary to the
2 State Treasurer. Any bank so reported shall be ineligible to be
3 a State depository, as described in the act of February 17, 1906
4 (P.L.45, No.11), entitled "An act to regulate the deposits of
5 State funds, to prescribe the method of selecting State
6 depositories, to limit the amount of State deposits, to provide
7 for the security of such deposits, to fix the rate of interest
8 thereon, to provide for the publication of monthly statements of
9 moneys in the general and sinking funds, to declare it a
10 misdemeanor to give or take anything of value for obtaining the
11 same, and prescribing penalties for violations of this act," for
12 as long as that unsatisfactory rating remains in effect, as
13 determined by the secretary, but in no event for less than a
14 period of two years.
15 (b) Report to General Assembly.--The identity of any bank
16 found unsatisfactory, as described in subsection (a), shall also
17 be reported by the secretary to the General Assembly.
18 Section 9. Regional mortgage review boards.
19 (a) Appointment of members.--There shall be four regional
20 mortgage review boards operating in this Commonwealth in four
21 regions, as the department shall by regulation establish after
22 consultation with the Department of Community Affairs. Each
23 board shall consist of seven members appointed by the secretary,
24 three of whom shall be mortgagees, three of whom shall be
25 community representatives and one of whom shall be a member of
26 the general public. At least five of the members of each board
27 shall either live or work within the respective region. The
28 secretary shall provide proper minority and geographical
29 representation in the membership of each board.
30 (b) Terms, vacancies, etc.--Upon the expiration of the term
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1 of any member of a regional board, a successor shall be
2 appointed, in like manner, for a term of three years. In the
3 event of a vacancy, the secretary may, in like manner, appoint a
4 member who shall serve for the remainder of the unexpired term.
5 Members of each board shall serve without compensation and shall
6 be sworn to the faithful performance of their duties. Each
7 regional board shall suggest for consideration by the secretary
8 one or more names for each expiring term or vacancy. No member
9 shall be appointed for more than two consecutive three-year
10 terms.
11 (c) Review of mortgage denials.--The mortgage review boards
12 shall meet on a regular basis to review each residential
13 mortgage denial that an applicant believes was denied on the
14 basis of the location of the property. Any applicant whose
15 residential mortgage loan application is denied by any mortgagee
16 making five or more mortgage loans in any calendar year on
17 residential property located in this Commonwealth of four units
18 or less and occupied in whole or in part by the mortgagor shall
19 be instructed by the mortgagee in writing at the time of denial
20 of his right to appeal any such denial to the appropriate
21 mortgage review board.
22 (d) Procedure.--Each board shall review each submitted
23 mortgage application, make its determination and advise the
24 applicant thereof in writing within 45 days of an appeal of a
25 mortgage loan application denial. A decision of the board shall
26 be subject to review by the department and by the appellate
27 courts in the manner provided by law for the review of
28 administrative agency decisions.
29 (e) Rules and regulations.--The department may promulgate
30 rules and regulations governing the establishment, operation and
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1 procedures of mortgage review boards.
2 Section 10. Reports regarding Home Mortgage Disclosure Act.
3 (a) General rule.--Any bank subject to the provisions of the
4 Home Mortgage Disclosure Act of 1975 (Public Law 94-200, 12
5 U.S.C. § 2801 et seq.) shall annually file the reports required
6 under subsections (b) and (c) with the department. These reports
7 shall be filed on the forms and at those times as determined by
8 the department.
9 (b) PHFA loans.--The report shall include loans written in
10 conjunction with the Pennsylvania Housing Finance Agency loan
11 program.
12 (c) Rules and regulations.--THe department may by regulation
13 require other loan data to be submitted and shall define the
14 geographic area for which each bank shall submit a report. These
15 regulations shall conform to Federal regulations on the same
16 subject.
17 Section 11. Regional small business loan review boards.
18 (a) Appointment.--There shall be established four regional
19 small business loan review boards in this Commonwealth, as the
20 department shall by regulation establish after consultation with
21 the Department of Community Affairs. Each board shall consist of
22 five members appointed by the secretary, three of whom shall be
23 representatives of small business and two of whom shall be
24 representatives of banks or bank holding companies. At least
25 three of the members of each board shall either live or work
26 within the respective region.
27 (b) Terms, vacancies, etc.--Upon the expiration of the term
28 of any member of a regional board, a successor shall be
29 appointed, in like manner, for a term of three years. In the
30 event of a vacancy, the secretary may, in like manner, appoint a
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1 member who shall serve for the remainder of the unexpired term.
2 Members of each board shall be sworn to the faithful performance
3 of their duties. Each regional board shall suggest for
4 consideration by the secretary one or more names for each
5 expiring term or vacancy. No member shall be appointed for more
6 than two consecutive three-year terms.
7 (c) Review of loan denials.--The small business loan review
8 boards shall meet on a regular basis to review small business
9 loan denials that applicants believe were unreasonably denied.
10 In addition, the small business loan review board shall annually
11 conduct studies and issue reports on the availability of credit
12 to small businesses within their regions.
13 (d) Rules and regulations.--The department may promulgate
14 rules and regulations governing the establishment, operation and
15 procedures of small business loan review boards.
16 Section 12. Repeals.
17 All acts and parts of acts are repealed insofar as they are
18 inconsistent with this act.
19 Section 13. Effective date.
20 This act shall take effect in 60 days.
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