Innovation and Responsiveness Community Development Opportunities Jeanne Milliken

Innovation and Responsiveness: Community Development Opportunities Jeanne Milliken Bonds, Kenan-Flagler Business School, UNC; Former, Federal Reserve Bank of Richmond Genny Chow, Officer of the Comptroller of the Currency Victor Galloway, Federal Deposit Insurance Corporation 1

Topics FDIC Affordable Mortgage Center Natural Disaster Recovery Building Resiliency Single Family Rehab Financing Programs Bank Financing for Rural Broadband Initiatives Indian Country Financing Partnerships with Minority Depository Institutions 2

FDIC Affordable Mortgage Center Victor Galloway (slide deck) 3

Natural Disaster Recovery Ginny Chow 4

Disaster Area Recovery Banks can play a role in the recovery, rebuilding and resilience of a designated disaster area (DDA) and receive favorable CRA consideration • Activity considered “community development” if related to disaster recovery and if it helps to attract new or retain existing businesses or residents within DDA. • Must provide long-term benefit to area. • Activity is presumed to revitalize or stabilize if consistent with a bona fide government revitalization, stabilization, or disaster recovery plan. • CRA consideration for up to 36 months after disaster designation date. Resources: https: //www. occ. gov/topics/community-affairs/publications/factsheets/pub-fact-sheet-desig-disaster-areas-cra-aug-2018. pdf https: //www. dallasfed. org/cd/pubs/storm 1. aspx 5

Disaster Area Recovery Potential CRA Opportunities Housing Community Services Economic Development UNMET NEEDS Health Care Workforce Development Infrastructure 6

Disaster Recovery: Examples of Qualifying Activities Qualifying activities may include the following, as long as they include LMI individuals: providing financing to help retain businesses in the area that employs local residents providing financing to attract a major new employer that will create long-term job opportunities providing financing or other assistance for essential communitywide infrastructure, community services, and rebuilding needs activities that provide housing, financial assistance, and services to individuals in DDAs and to individuals who have been displaced from those areas 7

Designated Disaster Areas Activities to Consider: Waiving ATM fees for customers and non‐customers Increasing ATM daily cash withdrawal limits Waiving overdraft fees Waiving early withdrawal penalties on time deposits Reducing availability restrictions on insurance checks Easing restrictions on cashing out‐of‐state and non‐customer checks Easing credit card limits and credit terms for new loans Allowing loan customers to defer payments Waiving late fees for credit card and other loan balances Delaying the submission of delinquency notices to the credit bureaus 8

Designated Disaster Areas CRA Performance Evaluation – How much weight is given? Greater weight given to those activities that are most responsive to community needs, including those for LMI individuals or neighborhoods Banks located outside the designated disaster areas may receive positive CRA consideration for activities that revitalize or stabilize the designated disaster must first adequately meet the CRA-related needs of its assessment area Banks may provide CRA-related activities directly or through a third party 9

Designated Disaster Areas Resources: FFIEC– www. ffiec. gov/cra OCC – www. occ. treas. gov FDIC – www. fdic. gov FRB – www. federalreserve. gov/communitydev/cra_about. htm FEMA – www. fema. gov 10

Building Resiliency Jeanne Milliken Bonds 11

Response and Building Resiliency: Natural Disaster (slide deck) Case Study for Small Business Recovery – North Carolina Data from Small Business Credit Survey Case Study – Private Sector Recovery – North Carolina New Papers Climate Adaptation Investment and the Community Reinvestment Act CDFI Pre-Disaster Lending Programs 2019 CONFERENCE: The Three Ps of Resilience: Planning, Partnerships, and Paying for it All November 15, 2019 William and Mary Law School Panel: Resilience Funding Efforts in the Banking Industry 12

Single Family Rehab Financing Ginny Chow 13

Single Family Rehab Financing Programs The OCC encourages banks to continue to develop responsible, innovative lending strategies intended to meet the credit needs of individual borrowers and support revitalization efforts. OCC Guidance for Higher-Loan-to-Value Lending Programs in Communities Targeted for Revitalization (OCC BULLETIN 2019 -28 https: //www. occ. gov/news-issuances/bulletins/2019/bulletin-201928. html ) FHA 203(k) Rehabilitation Mortgage Insurance Program Fannie Mae’s Home. Style Renovation Mortgage Program Purchase-Rehabilitation Programs National Community Stabilization Trust—A Bridge for National Bank and Community-Based Partnerships Others 14

Rural Broadband Ginny Chow 15

Rural Broadband Initiatives and CRA Banks can help rural communities gain reliable, high-speed internet access through broadband networks. Banks can receive favorable CRA consideration for activities that promote economic development and help revitalize distressed and LMI communities. CRA Q&As clarify that “financing for the construction, expansion, improvement, maintenance, or operation of essential infrastructure” may qualify for CRA consideration. Rural Broadband Financing is an example of a type of activity that may qualify Resources: https: //www. occ. gov/publications-by-type/other-publicationsreports/cdi-newsletter/rural-broadband-nov-2018/pub-cdi-nov-2018. pdf https: //bsr. stlouisfed. org/connectingcommunities/#67/broadband-under-thecommunity-reinvestment-act https: //www. dallasfed. org/assets/documents/cd/pubs/digitaldivide. pdf 16

Rural Broadband: Closing the Digital Divide Potential Public-Private Partnership Opportunities Banks can work with local governments, community groups, and nonprofit organizations in a wide range of roles to: Help organize and convene stakeholders or provide logistical or financial support for needs assessments and project planning. Offer financial planning expertise and technical assistance in project budget planning, financial forecasts, and investment options. Support the financing and funding of broadband deployment programs: Loans to finance the broadband infrastructure Working capital for operation and connectivity of network New Market Tax Credit projects Public sector programs (e. g. loan guarantees, grants, municipal bonds) 17

Rural Broadband Jeanne Milliken Bonds 18

Rural Broadband: North Carolina • Broadband Financing Models (Slide Deck) • November 20 th Mc. Kimmon Center Investment Session for Broadband • Resources for N. C. • North Carolina Broadband Infrastructure Office https: //www. ncbroadband. gov/ • North Carolina State Broadband Contact Jeff Sural, Director, Broadband Infrastructure Office, North Carolina Department of Information, Jeff. Sural@nc. gov • Local government or other groups that may be involved in local and regional broadband planning and digital inclusion alliances • National Broadband Map and service provider data collected by the FCC. • The National Telecommunications and Information Administration (NTIA: www. ntia. doc. gov ) • Broadband USA https: //broadbandusa. ntia. doc. gov/ • Re. Connect USDA www. usda. gov 19

Partnerships Ginny Chow 20

Partnerships with Minority Depository Institutions Banks may receive CRA consideration from partnerships with other financial institutions, MDIs, women-owned financial institutions, and low -income credit unions (MWLI financial institutions), including: • loans to a financial institution that lends primarily to promote community development. • purchasing or selling a loan participation made by another FI. • Investments, grants or deposits in an FI that primarily lends or facilitates lending or community development activities in LMI areas or to LMI individuals. • technical assistance, in-kind contributions, or other community development services to an FI whose primary purpose is community development. MDIs in NC/SC : Lumbee Guaranty Bank; Mechanics and Farmers Bank; South Carolina Community Bank Resource: https: //www. occ. gov/publications-by-type/other-publications-reports/cdinewsletter/minority-depository-may-2018/article-5 -texas-banks. html 21

MDI Partnership: Citibank ATM Community Network Citibank’s ATM Community Network Benefits more than 400, 000 clients of 8 minority-owned banks, 11 credit unions and 4 community banks Allows MDI partner clients to withdraw cash without surcharge fees Provides access to 2, 400 Citibank branch ATMs in Chicago, Los Angeles, Miami, New York, San Francisco and Washington D. C. 22

MDI Partnership: Texas Capital Bank MDI CDFI Program Texas Capital Bank’s MDI–CDFI Program Provides correspondent banking services to about 21 MDIs and community development financial institutions (CDFI). Program provides reciprocal deposit agreements and other correspondent bank services designed to meet the balance sheet needs and earning asset goals of its partners. MDI and CDFI partners are coast to coast and range in size from $80 million to $4 billion in assets. The partnerships have expanded the bank’s relationships with more than 340 banks in 40 states and have brought in a $25 billion commercial and private client bank, access to new business and consumer relationships in LMI communities across the nation. 23

Indian Country Financing Indian Loan Guarantee, Insurance, and Interest Subsidy Program Provides a guarantee or insurance coverage of up to 90 percent of the unpaid principal and accrued interest due on the loan. Administered by the Division of Capital Investment, part of the Office of Indian Energy and Economic Development Guarantee and insurance coverage reduce repayment risk for lenders. Borrower entity must be at least 51 percent native-owned; project must contribute to economy of an Indian reservation or tribal service area recognized by the Bureau of Indian Affairs. Lenders may receive CRA consideration for loans originated under the Program if they also benefit the bank’s assessment area(s) or the broader statewide or regional area that includes the bank’s assessment area(s). 24

Other Community Development Resources Seminars/Conferences: https: //www. occ. gov/topics/community-affairs/event-info. html Community Affairs Officers: https: //www. occ. gov/topics/community-affairs/contacts. html Federal Reserve Bank of Richmond CRA Videos: https: //www. richmondfed. org/community_development/resource_centers/cra OCC Publications: https: //www. occ. gov/topics/community-affairs/publications/indexcapublications. html UNC Kenan-Flagler “Invest to Sustain” Initiative (slide deck) 25