IBA Compliance Connection

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Can public funds be deposited into a bank that has a less than satisfactory Community Reinvestment Act (CRA) rating? We are aware that the Deposit of State Moneys Act restricts state funds from being deposited into banks with such a rating, but what about local funds (such as funds from counties, municipalities, and fire protection districts)?

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No, public funds cannot be deposited into a bank with a less than satisfactory CRA rating under Illinois law. Effective January 1, 2022, the Public Funds Investment Act prohibits public funds from being deposited in a financial institution with a federal CRA rating that is less than satisfactory. The Act defines “public funds” as “funds of any kind or character belonging to or in the custody of any public agency,” and it defines “public agencies” to include counties, townships, cities, towns, villages, and fire protection districts, among other political subdivisions of the state of Illinois.

For resources related to our guidance, please see:

  • Public Funds Investment Act, 30 ILCS 235/8(a-5) (“Effective January 1, 2022, no public funds may be deposited in a financial institution subject to the federal Community Reinvestment Act of 1977 unless the institution has a current rating of satisfactory or outstanding under the Community Reinvestment Act of 1977.”)
  • Public Funds Investment Act, 30 ILCS 235/1 (“The words ‘public funds’, as used in this Act, mean current operating funds, special funds, interest and sinking funds, and funds of any kind or character belonging to or in the custody of any public agency.”)
  • Public Funds Investment Act, 30 ILCS 235/1 (“The words ‘public agency’, as used in this Act, mean the State of Illinois, the various counties, townships, cities, towns, villages, school districts, educational service regions, special road districts, public water supply districts, fire protection districts, drainage districts, levee districts, sewer districts, housing authorities, the Illinois Bank Examiners’ Education Foundation, the Chicago Park District, and all other political corporations or subdivisions of the State of Illinois, now or hereafter created, whether herein specifically mentioned or not. . . . This Act does not apply to the Illinois State Treasurer, whose investment of State funds shall be governed by the Deposit of State Moneys Act.”)
  • Deposit of State Moneys Act, 15 ILCS 520/16.3(a-5) (“Effective January 1, 2022, no State funds may be deposited in a financial institution subject to the federal Community Reinvestment Act of 1977 unless the institution has a current rating of satisfactory or outstanding under the Community Reinvestment Act of 1977.”)