The Hill Scott Corporation “HSC” establishes Community Investment Treasuries CIT as Private Public Partnership Trust funds for Low– and Moderate-Income (LMI) residents in disadvantaged areas.

CIT is the act of pooling various types of contractual debt such as Invoices, IOU, Notes, and Bond obligations as Securitization in order to selling related equity or cash flows to HSC and third-party investors to raise working capital for community development programs.

HSC are designed for corporates, developers, investors, banking partners to help provide capital products and services that support qualified CIT activities that complement the Federal Government Community Re-Investment Act (CRA)

The Community Reinvestment Act (CRA) is a U.S. federal law enacted in 1977 (Public Law 95–128) that encourages banks and other insured depository institutions to help meet the credit needs of the communities in which they operate — particularly Low- and Moderate-Income (LMI) neighborhoods — in a safe and sound manner.

All community residents, families, businesses, organizations, banks etc. that are focused on community investment and development within local neighborhoods

Each participant must register and open an account and choose to be a stock or bond investor within a CIT within their state and district area.

A FBO (For Benefit Of) account is settlement account that refers to a payment made through a bank sweep structure used by Master Trust Account that manage CIT funds on behalf of their clients. The Funds are cleared and swept onto the FBO investment account on investment and vesting conditions. A FBO is a payout account for investment development that pays developers for work performance.

Developers must register with HSC’s Treasury Bank Portal by signing a limited partnership agreement and making an initial underwriting investment within the partnership which may vary based on business analysis.

Banking partners supply a Trust and For Benefit Of “FBO” account for investment deposit, cash management, and credit within community programs that meeting CRA standards; in return the banks can receive matching credit when they participate with the CIT based on the following CRA chart:

Bank Benefit

Large Deposits 

When HSC match CITs ledger directly with the bank’s, it increases bank’s reserves infrastructure.

Upfront Settlement Benefits

Bank receive preferred investment revenue based on the securities face value that paid on settlement.

New Fee-Based Revenue   

Turning “deposit accounts” into platform services with recurring revenue charge investment programs for:

• API connectivity
• Virtual account creation
• Real-time reporting
• Embedded treasury services

Data Transparency & Risk Insights  

• Helps in systematic risk factors, AML monitoring, and liquidity forecasting. 
• Business relation manages have direct access to corporate treasury ledger for direct ledger monitor, 24 /7 transaction data on flows, customers, and usage patterns.

Lower Operational Friction

• No manual file uploads, reconciliation, and delayed statements.
• QRC and Barcode data syncs instantly. 
  

Improved Compliance Control  

Inhouse compliance clearing with KYC, AML, and safeguarding rules — especially under regulatory “look-through” requirements.   

Liquidity Management Efficiency

Aggregated corporate cash positions transparency in real time and use them for intra-day liquidity planning, interest optimization, or credit exposure balancing. 

CRA legal standards for CIT and Bank is to have:

• Deposit relationship (bank serves as custodian or deposit partner)
• Document its mission clearly in organizing documents as qualified use of proceeds and partnering with banks that file CRA reports
• Funding purpose is to promote community and economic development benefiting low- and moderate-income individuals and areas.”
• Target qualified geographies: areas designated as LMI or federally identified redevelopment zones.
• Measure outcomes (jobs created, housing units built, local contracts awarded).

Offer CRA Participation Options:

• Equity investment (bank buys units or shares)
• Debt participation (bank lends to fund or co-finances deals)

• Annual Impact Statement (showing how proceeds benefit LMI areas),
• Geographic mapping of projects,
• Beneficiary income certifications or HUD data,
• Independent audit or verification (if it’s the bank’s policy).

This allows HSC, banks, developer and investor to document CRA eligibility easily when they invest or participate with the Portal.

1. Due Diligence:
   HSC conducts comprehensive background investigations and risk screening on all CIF participants, developers, and vendors.
2. Compliance Data Access:
   [Partner Bank Name] receives read-only access to relevant compliance and transaction data via API for oversight and audit readiness.
3. AML/KYC and Sanctions: Both parties maintain compliance under the Bank Secrecy Act (BSA), FinCEN, and OFAC requirements, with internal periodic audits

The following activities qualify under 12 C.F.R. §25.12(g) and the CRA Interagency Q&A (OCC, FDIC, Federal Reserve):

Community Services:
HSC and Bank technical assistance (financial literacy, underwriting, or advisory services) provided to CIT beneficiaries.

Community Development Margin:
Margins are made for the purpose of financing CIT Stock Accounts for affordable housing, small businesses, or community facilities serving LMI areas.

Qualified Investments:
When Investors or Bank purchases stake under limited partnership units, or subordinated debt in the CIT that support community development.

HSC shall:

• Ensure all activities meet the definitions of “community development” under CRA regulation and Louisiana Economic Development Act (R.S. 51:2311 et seq.).
• Maintain an annual Community Impact Report showing measurable CRA outcomes (e.g., number of LMI beneficiaries, census tract data, and project outcomes).
• Provide the Bank with documentation and data necessary to support CRA examination reviews.
• CIT obligations will be SEC and state noticed and filed with the parish court of records with the local area representing a Special District (See Special District).

Priority service areas include Louisiana parishes or other state counties to designated special districts as LMI or economic redevelopment zones, as defined by the U.S. Department of Housing and Urban Development (HUD) and Louisiana Economic Development.

• The bank’s investment or loan proceeds shall be used solely for CRA-qualified purposes.
• CIT shall maintain segregated ledgers for CRA-tracked capital and report annually to all participating institutions.
• CIT shall not engage in speculative investments or non–community-related financing.

CITs are held and transferred with HSC’s Treasury Bank Portal based on it internal policy under Article 3 negotiable instruments, Article 4 bank deposits and collections, Article 4A funds transfers, and Article 8 investment securities:

• Export and import securities, funds and quarterly audit trails with CRA Impact Statements Tag transactions under a CRA Qualified ledger field.
• Funds are transferred and reconciled as ledger-to-ledger value transfers in reference to wholesale payments under FFIEC using SFTP P2P JSON/XML API messaging.
• Financial data will accommodate with source of proof, source of funds and AML certification for banks’ compliance documentation.
• Stored value instruments are paper, plastic-based or digital security instruments with QRC or 128 Barcodes printed on it for debit or credit transfers via bank wholesale lockbox processing for disbursements.
• All community investors fiat payments are considered business investment activities and deposited within FDIC FBO account under the following federal and state law.  

The banking partners only functions as:

• A credit-receiving institution for your private credit instructions (QRC, 128-barcode, API instructions)
• A deposit/custodian partner
• A wholesale settlement account holder

A. No Need for the following bank’s treasury payment rails services

• ACH Origination
• Wire Origination
• SWIFT Messaging
• RTP/FedNow services
• ACH Positive Pay / ACH Filters
• Wire Templates / Wire Agreements

These are unnecessary since HSC’s Treasury Bank ledger pushes funds directly credit instructions to the bank, with no intermediary and rail-based payments.

Upfront Settlement Benefits

Banks receive preferred investment revenue upfront based on the securities face value that paid on settlement.

New Fee-Based Revenue  

Turning “deposit accounts” into platform services with recurring revenue charge investment programs for:

• API connectivity
• Virtual account creation
• Real-time reporting
• Embedded treasury services
• Processing Fee
• Exchange fee outside of swift leaving room for the bank to capitalize and cash in on

Data Transparency & Risk Insights 

• Helps in systematic risk factors, AML monitoring, and liquidity forecasting.
• Business relation managers have direct access to corporate treasury ledger for direct ledger monitors, 24 /7 transaction data on flows, customers, and usage patterns.

Lower Operational Friction

• No manual file uploads, reconciliation, and delayed statements.
• QRC and Barcode data sync instantly.
• Direct L2L transfer no ACH, Swift leaving a
• No ACH returns

Improved Compliance Control 

Inhouse compliance clearing with KYC, AML, and safeguarding rules — especially under regulatory “look-through” requirements.  

Fund provides community investment underwriting, escrow and electronic fund transfer services exclusively for low to moderate income areas LMI. The Fund is not a state or federal reserve bank as defined under US law, and do not engage in general FDIC banking services, and is not open to the consumer market.

CIT utilize “Treasury to Bank” integration service. It focuses on integration of community investment programs with external FDIC bank accounts with licensed bank. CIT activities are conducted solely for fiduciary, custodial settlement purposes among affiliates. All public-facing content, including websites, presentations, and publications, is intended solely for general awareness and informational of treasury storage clearing and investment bank settlement purposes. It does not imply, constitute, advertising, solicitation, or a public offering of consumer banking services.

• Tier 1: CRA-linked liquidity funding
• Tier 2: Custodial treasury support
• Tier 3: Full digital ledger integration (L2L transfer)

• HSC act as community fund management under statutory exemptions (e.g., LA RS 9:2129; RS 6:1055; RS 51:708; Reg U) directly within the partnership documents.
• HSC has “non-consumer NBFI” status — this signals professional-level credit and treasury handling.
• Offer co-reporting tools: shared dashboards or digital audit trails that allow banks to verify KYC/AML and liquidity compliance in real-time.

Result: This transforms your relationship is “unconventional, regulated and innovative.”

Goal: Reduce bank friction by providing ready-made digital treasury compatibility.

Action Steps:

• Provide open API documentation for your L2L (ledger-to-ledger) or H2H (host-to-host) transfer methods, compatible with:
  • ISO20022 CAMT, PACS, and PAIN message structures
  • JSON/EDI/XML real-time interfaces
• Offer integration toolkits (e.g., PHP/SQL templates) so local community banks can plug into HSC treasury system.
• Create an HSC Treasury Connector Sandbox:
  A test environment that simulates CIT flow and compliance data reporting for banks’ internal IT validation.
• Enable automated liquidity positions:
  Offer banks the ability to monitor aggregate CIT cash balances and settlement forecasts in real time for Treasury Ops and Risk Divisions.

Result: The relationship becomes tech-enabled and “bank grade,” reducing implementation cost for small banks.

Relationship Manager, Treasury Ops, and Risk Divisions have the ability to monitor aggregate CIT cash balances and settlement forecasts in real time.

Result: The relationship creates a tech-enabled and “bank grade,” relationship to reducing banks systematic risk by have authorized access to monitor CIT source of funds and proof within HSC’s Treasury Bank Portal.

Goal: Make partnership profitable for banks, not just philanthropic.

• Provides new recurring revenue lines:
  • API access fees (data integration)
  • Virtual account service fees
  • Settlement or exchange spreads outside SWIFT/ACH
• Revenue-sharing on CIT investment profits:
  Banks can receive a small % of profit from HSC-underwritten local investments that they help distribute or manage liquidity.
• Deposit-based benefit:
  Large CIT deposits increase banks’ reserve and liquidity ratios, which improves lending power under Basel III and CRA evaluation metrics.
• Preferred settlement advantage:
  Early first stage revenue for banks at securities face-value settlement liquidity incentive. Take advantage of CIT interest rates and fee without credit risk

Goal: Reinforce the mission alignment between HSC, local communities, and banks.

Action Steps:

• Local bank representatives have the option for advisory trustees in HSC Community Investment Authority or its CIT boards.
• HSC “electoral body” ensure that each local bank partner has governance input in regional CIT priorities.
• Launch community investment showcases:
  HSC has regular public meeting to demonstrate investment transparency, impact of joint HSC–bank investments (e.g., small business growth, investment growth for investors incentive).
• Integrate CRA reporting:
  Provide ready CRA reporting data for banks, linking HSC investments to measurable community reinvestment outcomes.

Result: Banks strengthen their public image and compliance with CRA and ESG commitments.

HSC maintain robust risk management frameworks that align with the complexity and nature of banks relationships.

Key practices include:

• Due Diligence: Assess third-party reliability and capability.
• Clear Contracts: Define roles and responsibilities explicitly.
• Ongoing Monitoring: Regularly evaluate third-party performance and identify issues.
• Contingency Planning: Prepare for operational disruptions.
• Internal Controls: Ensure strong oversight of deposit-related activities.
• Compliance Policies: Establish procedures for regulatory adherence.

Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT)

• Compliance Framework: Ensure adequate policies and procedures are in place to meet AML/CFT requirements, including monitoring for suspicious activities.
• Sanctions Compliance: Maintain oversight to ensure compliance with sanctions regulations.

Managing Growth, Liquidity, and Capital Implications

• Concentration Limits: Establish appropriate concentration limits and diversification strategies to manage liquidity risks.
• Liquidity Risk Management: Develop strategies to address unexpected deposit withdrawals and maintain capital adequacy.
• Brokered Deposits Analysis: Conduct analyses to determine if any parties involved in deposit placements qualify as deposit brokers, ensuring proper reporting in Call Reports.

Deposit Insurance Coverage

Addressing Misrepresentations of FDIC

• Monitoring Activities: Implement monitoring provisions that facilitate Non FDIC for investment deposit-related services.
• Policies and Procedures: Develop risk management practices that ensure compliance with regulations prohibiting misrepresentation of deposit insurance.

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