Community banks can now accept millions more in state deposits -- and make additional funds available for local loans -- after a bill sponsored by Sen. Joseph A. Griffo and Assemblyman William Magee was signed into law Thursday.
The bill permits the state comptroller and state Taxation and Finance commissioner to deposit up to $20 million in state funds at each community bank, doubling the previous $10 million limit.
The Community Deposit Program allows up to $250 million of state funds to be deposited in all community banks.
Community banks are local banks that frequently focus on local lending, including small business and farm investment. According to a report in February from the state's Department of Financial Services, the number of community banks in the state has declined significantly, from 299 in 1992 to 169 in 2011, and their assets and deposits have also declined. But the report says that since 2001, they have seen an increase in their total assets in the highly competitive banking sector.
“Depositing more state money in local banks is just good practice,” said Griffo (R-Rome). “It supports jobs at the branches, in the back offices and in the headquarters, which are almost always in-state. And if the community banks have more money on deposit, they can make additional commercial loans to local businesses. I thank Assemblyman Magee for his assistance and the governor for signing this legislation.”
Magee, a Democrat from Nelson, added: "This new law will play an important role in the local economy since it will encourage the placement of State deposits in local banks. The community bank deposit program creates an opportunity for New York State to help stimulate local economic development.”
“Community banks hold just 22 percent of the assets of all FDIC banks in the state, yet we make 55 percent of small business loans and 90 percent of all small farm loans in New York,” said Frank J. Capaldo, president and CEO of the Independent Bankers Association of New York State. “The Community Bank Deposit Program allows community banks to accept placement of state deposits to reinvest them into loans in their local communities to encourage economic development.” Capaldo expressed gratitude to Griffo for his work on the bill.
Griffo represents New York’s 47th Senate District, which includes central St. Lawrence County townships in a strip from Massena down to Clifton and Fine, plus Lewis and Oneida counties.