Nebraska Rural Development Commission More Than Just Money York, Nebraska July 29, 2010

Nebraska Department of Banking & Finance (NDBF) State agency supervising Nebraska state-chartered financial institutions jointly with the FDIC and the Federal Reserve Bank of Kansas City Office of the Comptroller of the Currency (OCC) Federal agency supervising all nationally-chartered banks in the US

Goals of this Presentation Provide update on Nebraska banking conditions Share information on community development investments that financial institutions may make Note the differences in Community Development Corporation activities allowed for state- and nationally-chartered banks Relate microenterprise development opportunities

How are Nebraska’s banks doing? March 31, 2010 Nebraska US No. of banks 178 6,772 Annualized %ROA.99 (-.01)* 0.53 (+.44) % Unprofitable (-.50) (-10.95) % Non-perf. assets 1.54 (+.13) 3.47 (+.11) % Core deposits (-6.20) (-.82) * change since December 30, 2009

What types of community development? Area revitalization or stabilization Improving affordable housing and small business opportunities Helping attract and grow business and create jobs Equity/debt financing for small business Improving the quality of life by investing in neighborhood projects Strengthening community infrastructure

Guidelines for a Bank CDC State law has allowed banks to invest in CDCs since 1993 The CDC may be a for-profit or a non-profit corporation May be an investment in a multi-bank or multi-holding company CDC CDC May be an investment in a community-based CDC (e.g., low- income housing) income housing) Maximum of 15% of Tier 1 capital for any one project The activities of a bank CDC may not expose the bank to unlimited liability unlimited liability

Permissible CDC Investments OCC: CDCs of nationally chartered banks must fulfill one of the following-- primarily benefit low-to-moderate income (LMI) personsprimarily benefit low-to-moderate income (LMI) persons or areas or areas LMI defined as < 80% of the area median incomeLMI defined as < 80% of the area median income - Nebraska median income information available at - Nebraska median income information available at benefit areas targeted for redevelopment by abenefit areas targeted for redevelopment by a government entity (city, county or state) meet the definition of a “qualified investment” under themeet the definition of a “qualified investment” under the Community Reinvestment Act Community Reinvestment Act

Permissible CDC Investments NDBF: The investments of CDCs of Nebraska state-chartered banks must be of a predominately civic, community or public nature and not merely private and entrepreneurial. The “wild card” allowed by state law allows a state bank to follow NDBF or OCC guidelines

Other activities of a CDC OCC: At least 51% of the CDC investments of a nationally-chartered bank must meet the aforementioned requirements; up to 49% of the investments of the CDC may be for any other lawful activity NDBF: NDBF defines “predominately” as 70% of the total investments of the CDC; a Nebraska state-chartered bank may invest the other 30% in any other lawful activity

Benefits of a Bank CDC Double bottom-line investment: -return on investment -economic/community development Potential for increasing the economic capacity of the bank’s market the bank’s market Demonstrate commitment to the area the bank serves serves

Role of the Nebraska Enterprise Fund: Insure access to capital, training and technical assistance East Central Nebraska served through: CDR—statewide REAP—rural Nebraska EDGE—statewide GROW Nebraska—statewide Microenterprise Development

John Munn Director Phone: (402) Fax: (402) Address: Commerce Court, Suite ‘O’ Street Lincoln, NE