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Understanding Community Financial Institution in Banks & Banking
Definition & Meaning
A community financial institution is a type of bank or financial organization that primarily serves local communities. According to federal law, it is defined as a member institution whose deposits are insured under the Federal Deposit Insurance Act and that has less than one billion dollars in average total assets over the three years preceding a specific transaction date. This definition emphasizes the institution's role in supporting local economies and providing accessible financial services to residents.
Table of content
Legal Use & context
The term "community financial institution" is used in various legal contexts, particularly in banking and finance law. It is relevant in discussions about federal regulations, compliance, and the provision of financial services. These institutions often participate in programs aimed at supporting affordable housing and community development. Users may encounter forms related to loans, deposits, and other banking services that can be managed through legal templates available from platforms like US Legal Forms.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
For instance, a local bank that offers personal loans and savings accounts to residents while maintaining less than one billion dollars in assets qualifies as a community financial institution. Another example could be a credit union that serves a specific neighborhood and provides financial education programs to its members (hypothetical example).
Relevant laws & statutes
Key legislation includes the Federal Deposit Insurance Act, which outlines the insurance of deposits, and the regulations governing the Federal Home Loan Banks. These laws provide the framework within which community financial institutions operate.
State-by-state differences
State
Notes
California
Community financial institutions may have additional state regulations regarding consumer protection.
Texas
Local credit unions often have unique membership requirements based on community ties.
New York
State-chartered banks may have different asset limits and requirements compared to federal definitions.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Credit Union
A member-owned financial cooperative that provides credit at low interest rates.
Credit unions are member-focused, while community financial institutions can include banks.
Commercial Bank
A financial institution that offers services to the general public and businesses.
Commercial banks typically have higher asset limits and broader services than community financial institutions.
Common misunderstandings
What to do if this term applies to you
If you are considering using a community financial institution, research local options to find one that meets your needs. You can explore US Legal Forms for templates related to banking services, loans, and other financial agreements. If your situation is complex, consulting a legal professional may be beneficial.
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