If your bank is looking for a safe, streamlined way to foster economic growth in underserved areas—and earn CRA credit—check out the Advancing Communities TogetherSM, or ACTSM, Deposit Program.
The program offers banks a secure, efficient way to place funds into Community Development Financial Institution (CDFI) banks and Minority Depository Institution (MDI) banks and earn CRA credit under the regulation’s investment and community development tests.
Southern Bank, based in Poplar Bluff, Mo., is an early adopter, recently using ACT to have $5 million placed into CDFIs in Kansas City and Springfield, Mo., and an MDI in St. Louis.
“At Southern Bank, we recognize the importance of supporting underserved communities, even in parts of our assessment areas where we may not have a full retail branch network. One way we’re making a meaningful impact is through the ACT Deposit Program,” said Stefan Chkautovich, Southern Bank’s CFO. “This initiative allows us to invest directly in these communities, providing valuable financial resources and opportunities that might not otherwise be available. It’s a powerful way to bridge the gap in the industry and support local borrowers.”
A key feature of the program—access to FDIC insurance for large cash balances—is what allowed Southern Bank to make such a large deposit.“ The highlight of ACT is the FDIC insurance; that allowed us to do something larger than $250,000. That we’re able to earn CRA credit for this deposit is icing on the cake,” said Chkautovich, who was formerly a senior bank examiner at the St. Louis Fed.
The ACT Deposit Program’s minimum deposit is $1 million and the CDFIs and MDIs in the program pay near-market rates on the funds. Deposits placed through ACT remain liquid and are eligible for millions in aggregate FDIC insurance across IntraFi network banks because they are placed through the IntraFi Cash Service®. A list of MDIs and CDFIs participating in the ACT Deposit Program can be found here.
“IntraFi’s involvement is key for us; it allows us to invest this $5 million into these CDFIs and MDI and know that our money is safe and liquid and earning a return,” Chkautovich said.
The CDFIs receiving Southern Bank’s deposit are Central Bank of Kansas City, Legacy Bank and Trust in Springfield, Mo., and the MDI is Paramount Bank in St. Louis.
“The ACT Deposit Program allows us to bring in deposits we wouldn’t otherwise get, and we use those deposits to finance mission-driven lending like affordable housing,” said Vanessa Richardson, Central Bank’s CFO.
The $4.9 billion-asset Southern Bank serves more than 50 communities in Missouri, Arkansas, Illinois, and Kansas.
“It is important to us here at Southern Bank to give back, to help people in low- and moderate-income areas get the financing they need to buy homes and build businesses,” Chkautovich said. “And the ACT Deposit Program makes it so much easier for us to do that. The alternatives lock us in for longer, and if rates change with high effective duration, those alternatives might be under water. With ACT, I don’t have to worry about that.”
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