Guidelines For Banking Development Program

              Guidelines For
Banking Development Program
Introduction
There are many communities in the State of Illinois that are under-served in the financial services area.
The Illinois State Treasurer would like to encourage financial institutions to open branches or offices in areas of the State in which neighborhoods and towns do not have access to a commercial bank or financial institution. The Treasurer believes that greater access to financial services will encourage the area’s residents, who may have no relationship with a financial institution, to become part of the financial mainstream. Establishment of banking services in a community should provide a foundation to stimulate the local economy by enhancing access to capital for local businesses. Long-term, this should result in economic development, job creation and promote community revitalization.
Definition
For the purpose of this program, “financial institution” shall mean bank, credit union, or savings and loan that are lawfully permitted to operate as such in the State of Illinois.
The Program
Below Market Rate Deposits: In order to encourage financial institutions in the State of Illinois to open full service offices or branches in under-served communities, the Treasurer will deposit State funds into the financial institution at an interest rate lower than the market rate. This will be calculated by taking the current Treasury note rate multiplied by 70%. The Treasurer will agree to accept this lower than market rate in order to stimulate investment in communities that are under-served by financial institutions.
Amount of Deposit: The Treasurer will deposit an amount equal to the financial institutions cost to acquire and open the branch. Existing financial institutions will be eligible for the deposit if they have recently upgraded the branch or office, or plan to do so in the near future. This will include the cost of acquiring land, construction costs, up to $5 million for a period of two years. Prior to the end of the two year period, the financial institution shall complete a compliance form that will be provided by the Treasurer. If the financial institution is in compliance with the terms and conditions of the program, the deposit may be renewed for up to three more years. The financial institution shall also file an annual report with the Treasurer.
Market Rate Services, Fees & Interest: The Treasurer will require that the financial institution open an office in the underserved community. This branch or full service office shall charge fees, either the same as or lower than they would in any of their other branch locations and offer the same services as every other branch. If this is a new office, rates must be offered that are competitive with other financial institutions in the community.
1 The near future means that the project must be started within one year of the project being funded and it is to be completed within two years.