BILL NUMBER:  S3756

 TITLE OF BILL :  An act to amend the banking law, in relation to
community reinvestment evaluations

 PURPOSE :

Exempts banking organizations with total assets of less than one
billion and have received a satisfactory or outstanding rating by
their primary federal regulator shall be exempt from the community
reinvestment evaluation by the Department of Financial Services

 SUMMARY OF PROVISIONS :

Amends the banking law by adding a new § 46 exempting banking
organizations with total assets of less than one billion and have
received a satisfactory or outstanding rating by their primary federal
regulator shall be exempt from the community reinvestment evaluation
by the Department of Financial Services

 EXISTING LAW :

According to the Departmental of Financial Services Website:

On a biennial basis, New York State bank examiners conduct an
evaluation, pursuant to the Community Reinvestment Act (CRA), of an
              

institution's performance in helping to meet the credit needs of
communities, including those of low or moderate income within its
assessment area. An institution's assessment area reflects those areas
in which it operates branches, accepts deposits and/or does a
significant amount of lending. Based on the evaluation, a rating of
1-4 is assigned.


1- indicates an Outstanding record of helping to meet community credit
needs.
2 - indicates a Satisfactory record of helping to meet community
credit needs.
3 - indicates that the bank Needs to Improve its record of helping to
meet community credit needs.
4 - indicates Substantial Non-compliance in helping to meet the credit
needs of its community.


These ratings, along with a Performance Evaluation provide the bank
and the public an understanding of how well the bank is performing
under CRA.

 JUSTIFICATION :

Community banks are facing challenges from increased regulatory and
technology demands. The thousands of pages of new federal regulations
from Dodd Frank apply to banks irrespective of size or their business
model. Community banks have additional costs and staff to respond to
compliance requirements. This increased regulatory burden reflected in
the continuing loss of community banks in New York State. From 1992 to
2011, the number if community banks in New York State has shrunk from
299 to 169. This trend has not dissipated.

There is pressure to consolidate in part to achieve scale to meet
compliance requirements in a cost-effective manner.

For banks with assets under $1 billion , this bill would provide an
exemption from a Department of Financial Services community
reinvestment evaluation if the bank received a rating of satisfactory
or outstanding in their most recent community reinvestment examination
conducted by the bank's federal regulator. Only 12 states have their
own CRA exams. The fact is that it is extremely rare for a community
banks under $1 billion is assets to fail to meet the credit needs of
their entire communities as required by CRA. Community banks under $1
billion in assets have a limited geographical area to serve and to
survive must focus exclusively on the financial needs of their
community. In the event of a bank's failure of a federal CRA
examination, the bank would be subject to a state examination. The
dual examination model when applied to community banks that
consistently achieve a rating of satisfactory or outstanding is
duplicative. The same issues are reviewed by both the state and
federal regulators. One exam would relieve banks of the additional
commitment of time, manpower and assets.

This bill would not only benefit community banks by limiting their
regulatory burden but would also enable DFS to use it examiners more
effectively to focus on institutions with problems in achieving the
required results. This measure would be helpful in responding to the
regulatory squeeze on community banks with no negative impacts to
achieving the goals of CRA.

 LEGISLATIVE HISTORY :

2015-16 Session - New Legislation - passed Senate in both 2015 and
2016 Session

 FISCAL IMPLICATIONS :

None

 EFFECTIVE DATE :
Sixty days after being signed into law.