The Community Bank Deposit Program
The Community Bank Deposit Program deposits State funds in banks that have a history of meeting local business needs as demonstrated by their small business, small farm, community development and home mortgage lending. The program’s deposits enable participating banks to provide more capital to small businesses.
Authority
Article 2-C of New York State Banking Law provides for the creation of the Community Deposit Program (CBDP). Both the New York State Comptroller (Comptroller) and the New York State Department of Tax and Finance are authorized to provide these programs.
The New York State Department of Financial Services (Department) serves in an advisory role to each of these two agencies with respect to the implementation of their programs.
Purpose
The stated purpose of Article 2-C of the Banking Law is to authorize and encourage the Comptroller to deposit a portion of the funds under his control into local banks so as to obtain for New York State the economic benefits and stimulus which result from the placement of deposits in local banks. It is expected that banks receiving such deposits shall use these funds to stimulate local economic development.
It is anticipated that all CBDP deposits will be at such rates, and for such periods of time, as established by the Comptroller. The minimum interest rate on CBDP deposits will be equivalent to the then current six month Treasury Bill rate. Interest will be based on a 360 day year and the actual number of days that the deposit is outstanding. All principal and interest shall be repaid by the bank at maturity. Failure to do so will result in additional interest charges based on New York State’s Short Term Investment Pool rate.
The maximum amount of funds that the Comptroller can deposit under this program will not exceed $250 million. Individual deposits at any one institution will not exceed $20 million.
Eligibility
Both state and federally chartered banking institutions are eligible to participate in the program.
All applicants must have a Community Reinvestment Act (CRA) rating of at least "satisfactory" and a Kroll Bond or comparable rating of at least “C+”.
Given the purposes of the statute, the Comptroller will require that all successful applicant institutions will have demonstrated a history of meeting community needs as measured by their home mortgage, small business, small farm and community development lending.
Applicants must either be chartered by the Department or, if federally chartered, have its principal office (for this purpose meaning main or head office) in New York State.
Only institutions that demonstrate that the aggregate of their home mortgage, small business, small farm and community development lending in their assessment areas in New York State in their prior fiscal year exceeded 40% of their total lending in that year will be selected to receive CBDP deposits. (The terms “home mortgage lending”, “small business lending”, “small farm lending”, “community development lending” and “assessment areas” shall have the meanings ascribed to them in the applicable state or federal CRA regulations.) Consideration also will be given to the supervisory status of any bank applicant. It is anticipated that federal bank regulatory agencies will be contacted as necessary in this regard. No assurances are given that any application(s) will be approved.
Banks receiving CBDP deposits will be required to collateralize all such deposits consistent with existing laws and the Comptroller’s guidelines.
The Department will evaluate all applications submitted and will provide its recommendation to the Comptroller. It is expected that a bank’s eligibility under the CBDP will automatically terminate 12 months after the end of the fiscal year for which the institution’s lending data was submitted. The Department will provide a CBDP participating bank with an application for renewal of CBDP deposits at least 90 days before the deposits mature.
It is anticipated that CBDP deposits will be made in the form of six month certificates of deposit, through a bidding process, with the minimum rate being the then current six month Treasury Bill rate.
Approval Process
Applications are considered on a rolling basis; there is no deadline for application submission.
An acknowledgement of the receipt of the application will be sent to the applicant within five days of receipt of application by the Department.
Applicants will receive written notice of the Department’s recommendation to the Comptroller within 60 days of receipt of the completed application.
Upon receipt of the Department’s favorable recommendation, the applicant should contact the Comptroller for approval.
Submission Form and Questions
Questions related to the preparation of the application, should be directed to:
Yulitza S. Franklin
Deputy Director for Community Development
New York State Department of Financial Services
(212) 709-1699
[email protected]