Bank of North Carolina "needs to improve" community investment, FDIC says

Bank of North Carolina "needs to improve" its community investments, the FDIC noted as part of a federally mandated examination.

The Thomasville-based bank received a satisfactory score on its Community Reinvestment Act examination overall, but showed a "poor level of qualified community development investments and grants," "poor responsiveness to credit and community economic development needs," and "rarely uses innovative and/or complex investments to support community development initiatives," the report -- made public this month -- says.

The Community Reinvestment Act, passed in 1977, requires banks to demonstrate they are investing and lending equitably in the communities where they take deposits. Banks are examined every few years.

Bank of North Carolina has been expanding of late, announcing or closing three deals in recent weeks. The bank operates around North and South Carolina. It has a lending office in Charlotte, though full-service branches are coming soon.

In the CRA exam, the bank scored well in lending, with a "high satisfactory" rating. A large percentage of its loans -- 82 percent in 2010 -- were in the communities they draw deposits from, and loan distribution reflected the demographics of the community, the report states.

But the bank had few qualified community investments, defined as investments or grants that promote affordable housing, low- and moderate-income community services, economic development, or community revitalization. Bank of North Carolina's qualified investments consisted of about $1.4 million in assets -- 0.07 percent of its total -- made up mostly of mortgage-backed securities from low- to moderate-income borrowers.