Pennsylvania would rate lenders on meeting local credit needs

The department would review banks' records of meeting community credit needs and publish ratings. The reviews would cover each bank's entire community, including low- and moderate-income neighborhoods. Reviews would use the applicable federal community reinvestment method and consider additional factors, including mortgage help, fair housing work, and written comments. The department would prepare the written evaluation after each required assessment; the bill does not state a review schedule.

Covered nonbank lenders would set assessment areas, and the department would review their community reinvestment performance. Covered entities are Pennsylvania community credit unions with at least $10 million in assets, mortgage brokers, and mortgage lenders. Areas must not arbitrarily leave out lower- or moderate-income neighborhoods or reflect illegal discrimination. An area may include only the part of a local government the lender reasonably expects to serve. Each covered entity must file its assessment areas by January 1, 2028, and promptly file any boundary change.

Banks and covered nonbank entities would keep public files and post notices about their reviews. The duties apply to banks and the nonbank entities covered by Chapter 72, at their Pennsylvania offices. Banks with a below-satisfactory rating must describe their improvement efforts and update that description quarterly. Nonbank entities rated low satisfactory or lower must do so until they earn a high satisfactory rating or better. Banks must use the additional state notice on and after July 1, 2028. They may use it earlier if it meets federal notice rules. Public files must be updated within 30 business days after receiving an evaluation.

The department could use performance records when deciding certain applications, and Treasury would limit state deposits by rating. The provisions cover banks and covered nonbank entities seeking specified approvals, and entities receiving deposits or other business from the State Treasurer. The department may consider nonbank performance on specified credit union charter, membership expansion, and merger approvals, and may withhold or condition approval. A bank's poor record may support denying or conditioning certain applications. Treasury may continue existing business for up to three extra years if it finds a change risks major disruption or significantly higher service costs, with written notice to legislative leaders. The deposit lists would be prepared by January 30 each year and use ratings received during the prior three calendar years.