Looking to diversify its investments under the Community Reinvestment Act (CRA), Midwest Regional Bank in Festus, MO, turned to the Advancing Communities Together® (ACT®) Deposit Program.

Under the ACT Deposit Program, banks may earn CRA credit by placing deposits at community development financial institutions and minority depository institutions (MDIs). The process is easy, the deposit earns a near-market rate, and all funds are eligible for FDIC insurance at network banks.

“CRA was the main reason we decided to make a deposit through ACT,” said Katie Giblin, Midwest Regional’s chief financial officer. “We knew we had an exam coming this year, so we wanted to diversify our investments. That was really the driving factor, but the rate was pretty good, too.”

Midwest Regional deposited $3 million with People’s Bank of Seneca, a Native-American MDI operating seven branches in southwest Missouri.

“Deposits are our fuel. We have robust loan demand in our market, but we just do not have ample deposit resources consistently,” said Deron Burr, People’s Bank president and CEO. “So, when we had the opportunity to receive a deposit of this magnitude, we made certain to reinvest it in our community through various small business loans.”

People’s Bank of Seneca’s presence is pervasive in its community, or as Burr put it: “If there is something positive happening in our community, our bank is part of it.” The $475 million-asset bank specializes in commercial and residential real estate loans but, like other community banks, it makes everything from C&I to consumer loans.

People’s Bank of Seneca’s high loan-to-deposit ratio makes placing money into the ACT Deposit Program an even more attractive investment for banks looking to diversify their CRA credits. “We did not place the deposit into the securities market; we strategically loaned it out within our marketplace.”

Midwest Regional’s Giblin said the $1.1 billion-asset bank’s CRA exam went smoothly and that the examiners gave the bank credit under the CRA’s investment test.

“The examiners didn’t ask us many questions; we had provided documents in anticipation of their exam, and the examiners accepted the deposit,” Giblin said.

Among the documents the seven-branch Midwest Regional gave its CRA examiners was an impact report from People’s Bank of Seneca, which described how the MDI put the deposit to use serving its community.

“That impact report was enough for the examiners,” Giblin said.

The ACT Deposit Program, created by the National Bankers Association and the Community Development Bankers Association, marked its one-year anniversary this summer by announcing it had attracted $100 million in deposits. IntraFi facilitates the program through IntraFi Cash Service®, or ICS®. To learn more, please visit the ACT Deposit Program website or contact Diane Ellis at dellis@intrafi.com.

IntraFi is not an FDIC-insured bank, and deposit insurance covers the failure of an insured bank. A list identifying IntraFi network banks appears at https://www.intrafi.com/network-banks. Certain conditions must be satisfied for “pass-through” FDIC deposit insurance coverage to apply.

Deposit placement in the ACT Deposit Program within ICS (“Program”) is subject to the terms, conditions, and disclosures in the applicable agreements, including the ACT Addendum to the Deposit Placement Agreement. A portion of a deposit placed in the Program may be allocated to IntraFi network banks that are not community development financial institutions or minority depository institutions. The interest rate earned on Program deposits will likely be lower than the interest rate available on deposits outside of the Program. Bank examiners will determine whether placement of funds through the ACT Deposit Program qualifies for CRA credit. The depositor may exclude banks from eligibility to receive its funds. Although deposits are placed in increments that do not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”) at any one bank, a depositor’s balances at the institution that places deposits may exceed the SMDIA before settlement for deposits or after settlement for withdrawals. The depositor must make any necessary arrangements to protect such balances consistent with applicable law and must determine whether placement through an IntraFi service satisfies any restrictions on its deposits. IntraFi, the IntraFi logo, IntraFi Cash Service, ICS, ACT, and Advancing Communities Together are registered service marks of IntraFi LLC.