Financial institutions: California Community Reinvestment Act.

Assembly Member Bonta's California Community Reinvestment Act establishes new obligations for banks, large credit unions, and certain mortgage lenders to meet the financial services needs of their local communities, with particular focus on low- and moderate-income areas and communities of color.

The legislation requires covered financial institutions to undergo regular assessments of their community service performance every three years. The Department of Financial Protection and Innovation will evaluate institutions based on multiple factors, including branch distribution, mortgage lending patterns, small business loan origination, participation in community development programs, and responses to customer delinquencies. Based on these evaluations, institutions receive one of five ratings ranging from "outstanding" to "substantial noncompliance."

Institutions rated as "needs to improve" or "substantial noncompliance" must submit improvement plans and face restrictions on receiving state deposits or contracts. The department can levy administrative penalties up to $100,000 for institutions that consistently fail to meet their obligations. These penalties fund a new Community Reinvestment Fund to support the program's administration.

The bill mandates a statewide financial services disparity study by 2027, followed by implementation rules in 2028. Covered institutions must complete initial community needs assessments by 2029, incorporating public input and making results publicly available. The legislation also requires institutions to post notices about the evaluation process and accept public comments on their community service performance.