Community Reinvestment Act Regulations
| Published date | 17 September 2021 |
| Citation | 86 FR 52026 |
| Record Number | 2021-19738 |
| Section | Proposed rules |
| Court | The Comptroller Of The Currency Office |
Federal Register, Volume 86 Issue 178 (Friday, September 17, 2021)
[Federal Register Volume 86, Number 178 (Friday, September 17, 2021)]
[Proposed Rules]
[Pages 52026-52063]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-19738]
[[Page 52025]]
Vol. 86
Friday,
No. 178
September 17, 2021
Part III Department of the Treasury-----------------------------------------------------------------------Office of the Comptroller of the Currency-----------------------------------------------------------------------12 CFR Parts 25 and 195Community Reinvestment Act Regulations; Proposed Rule
Federal Register / Vol. 86 , No. 178 / Friday, September 17, 2021 /
Proposed Rules
[[Page 52026]]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Parts 25 and 195
[Docket ID OCC-2021-0014]
RIN 1557-AF12
Community Reinvestment Act Regulations
AGENCY: Office of the Comptroller of the Currency, Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Comptroller of the Currency proposes to replace the
current Community Reinvestment Act rule with rules based on the 1995
Community Reinvestment Act (CRA) rules, as revised, issued by the
Office of the Comptroller of the Currency (OCC), Board of Governors of
the Federal Reserve System (Board), and Federal Deposit Insurance
Corporation (FDIC). The proposal would replace the existing rule
applicable to both national banks and savings associations with two
separate rules, one for national banks and one for savings
associations. Such action would effectively rescind the CRA final rule
published by the Office of the Comptroller of the Currency on June 5,
2020, and facilitate the issuance of joint CRA rules with the Board and
FDIC.
DATES: Comments must be received on or before October 29, 2021.
ADDRESSES: Commenters are encouraged to submit comments through the
Federal eRulemaking Portal. Please use the title ``Community
Reinvestment Act Regulations'' to facilitate the organization and
distribution of the comments. You may submit comments by any of the
following methods:
[square] Federal eRulemaking Portal--Regulations.gov: Go to https://regulations.gov/. Enter ``Docket ID OCC-2021-0014'' in the Search Box
and click ``Search.'' Public comments can be submitted via the
``Comment'' box below the displayed document information or by clicking
on the document title and then clicking the ``Comment'' box on the top-
left side of the screen. For help with submitting effective comments
please click on ``Commenter's Checklist.'' For assistance with the
Regulations.gov site, please call (877) 378-5457 (toll free) or (703)
454-9859 Monday-Friday, 9am-5pm ET or email
[email protected].
[square] Mail: Chief Counsel's Office, Attention: Comment
Processing, Office of the Comptroller of the Currency, 400 7th Street
SW, Suite 3E-218, Washington, DC 20219.
[square] Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218,
Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
``Docket ID OCC-2021-0014'' in your comment. In general, the OCC will
enter all comments received into the docket and publish the comments on
the Regulations.gov website without change, including any business or
personal information provided, such as name and address information,
email addresses, or phone numbers. Comments received, including
attachments and other supporting materials, are part of the public
record and subject to public disclosure. Do not include any information
in your comment or supporting materials that you consider confidential
or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this action by the following method:
[square] Viewing Comments Electronically--Regulations.gov: Go to
https://regulations.gov/. Enter ``Docket ID OCC-2021-0014'' in the
Search Box and click ``Search.'' Click on the ``Documents'' tab and
then the document's title. After clicking the document's title, click
the ``Browse Comments'' tab. Comments can be viewed and filtered by
clicking on the ``Sort By'' drop-down on the right side of the screen
or the ``Refine Results'' options on the left side of the screen.
Supporting materials can be viewed by clicking on the ``Documents'' tab
and filtered by clicking on the ``Sort By'' drop-down on the right side
of the screen or the ``Refine Documents Results'' options on the left
side of the screen.'' For assistance with the Regulations.gov site,
please call (877) 378-5457 (toll free) or (703) 454-9859 Monday-Friday,
9am-5pm ET or email [email protected].
The docket may be viewed after the close of the comment period in
the same manner as during the comment period.
FOR FURTHER INFORMATION CONTACT: Emily Boyes, Counsel, Chief Counsel's
Office, (202) 649-5490; Vonda Eanes, Director for CRA and Fair Lending
Policy, Bobbie K. Kennedy, Technical Expert for CRA and Fair Lending,
or Karen Bellesi, Director for Community Development, Bank Supervision
Policy, (202) 649-5470, Office of the Comptroller of the Currency, 400
7th Street SW, Washington, DC 20219.
SUPPLEMENTARY INFORMATION:
I. Introduction
The Office of the Comptroller of the Currency (OCC) \1\ proposes to
rescind and replace its rule implementing the Community Reinvestment
Act (CRA) \2\ for national banks and savings associations \3\
(collectively, banks),\4\ that was published on June 5, 2020 (June 2020
Rule).\5\ The OCC would replace the June 2020 Rule with rules largely
based on those adopted by the OCC, Federal Deposit Insurance
Corporation (FDIC), and Board of Governors of the Federal Reserve
System (Board) (collectively, the Agencies) and the former Office of
Thrift Supervision on May 4, 1995, as revised (1995 Rules).\6\ The
proposal would align the OCC's CRA rules with the current Board and
FDIC CRA rules to facilitate on-going interagency work to modernize the
CRA rules \7\ and create consistency for all insured depository
institutions (IDIs).\8\
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\1\ The OCC is the primary regulator for national banks and
Federal savings associations.
\2\ Public Law 95-128, 91 Stat. 1147 (1977), codified at 12
U.S.C. 2901 et seq. The CRA was enacted to promote access to credit
by encouraging insured depository institutions to serve their entire
communities. During this period, Congress also enacted fair lending
laws to address fairness and access to housing and credit. For
example, in 1968, Congress passed the Fair Housing Act, 42 U.S.C.
3601 et seq., to prohibit discrimination in renting or buying a
home. In 1974, Congress passed the Equal Credit Opportunity Act, 15
U.S.C. 1691 et seq. (amended in 1976), to prohibit creditors from
discriminating against an applicant on the basis of race, color,
religion, national origin, sex, marital status, or age. These fair
lending laws provide a legal basis for prohibiting discriminatory
lending practices, such as redlining. Interagency Fair Lending
Examination Procedures, p. iv (Aug. 2009), available at https://www.ffiec.gov/PDF/fairlend.pdf.
\3\ The Office of Thrift Supervision (OTS) and its predecessor
agency, the Federal Home Loan Bank Board, also were charged with
implementing the CRA. The rulemaking authority of OTS with respect
to CRA transferred to the OCC in Title III of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, Public Law 111-203, 124
Stat. 1376, 1520 (2010). See also 12 U.S.C. 2905. The OCC has
responsibility for examining Federal savings associations for CRA
while the FDIC examines State savings associations for CRA.
\4\ As used throughout this notice, the term ``bank'' or
``banks' also includes uninsured Federal branches that result from
an acquisition described in section 5(a)(8) of the International
Banking Act of 1978 (12 U.S.C. 3103(a)(8)) and State savings
associations.
\5\ 85 FR 34734 (June 5, 2020).
\6\ 60 FR 22156 (May 4, 1995). As used herein, the 1995 Rules
refer to the regulatory framework adopted by the Agencies in 1995
and any revisions the Agencies have made to that regulatory
framework, except for the changes made by the OCC in the June 2020
Rule. E.g., 70 FR 44256 (Aug. 2, 22005).
\7\ NR 2021-77, Interagency Statement on Community Reinvestment
Act Joint Agency Action (July 20, 2021).
\8\ 12 U.S.C. 1813(c)(2).
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As explained in greater detail below, under this proposal, the June
2020 Rule would remain in effect until replaced by
[[Page 52027]]
final rules based on this proposal. The OCC proposes to apply a
transition for replacing certain aspects of the June 2020 Rule (e.g.,
bank type changes, approved strategic plans, and qualifying
activities). Subsequently, as part of the ongoing interagency CRA
rulemaking, the OCC would propose a joint revised CRA rule to replace
the rules in this proposal. The proposed transition considerations are
described in more detail in Section IV.
II. Background
Congress enacted the CRA in 1977 to encourage IDIs to help meet the
credit needs of their entire communities, including low- and moderate-
income (LMI) neighborhoods, consistent with safe and sound lending
practices. Specifically, Congress found that ``(1) regulated financial
institutions are required by law to demonstrate that their deposit
facilities serve the convenience and needs of the communities in which
they are chartered to do business; (2) the convenience and needs of
communities include the need for credit as well as deposit services;
and (3) regulated financial institutions have continuing and
affirmative obligation[s] to help meet the credit needs of the local
communities in which they are chartered.'' \9\
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\9\ 12 U.S.C. 2901(a).
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The Agencies first issued rules to implement the CRA in 1978.\10\
Between 1978 and 2018, the Agencies revised and sought to clarify the
CRA rules numerous times, most significantly in 1995.\11\ On September
5, 2018, the OCC published an Advance Notice of Proposed Rulemaking
(ANPR) as part of its renewed efforts to modernize the CRA regulatory
framework.\12\ Subsequently, on January 9, 2020, the OCC and FDIC
published a joint CRA Notice of Proposed Rulemaking (January 2020
NPR),\13\ and on June 5, 2020, the OCC issued the June 2020 Rule in an
effort to modernize its CRA rules.
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\10\ 43 FR 47144 (Oct. 12, 1978). The CRA rules of the Agencies
were codified in 12 CFR parts 25, 563e (recodified as 195), 228, and
345.
\11\ 60 FR 22156 (May 4, 1995).
\12\ The OCC, along with the Board and the FDIC, worked together
on an ANPR, which the OCC published on September 5, 2018. 83 FR
45053 (September 5, 2018).
\13\ 85 FR 1204 (January 9, 2020).
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The June 2020 Rule took effect October 1, 2020; however, several
provisions have delayed compliance dates of either January 1, 2023, or
January 1, 2024.\14\ To implement certain provisions of the June 2020
Rule with a January 1, 2023, compliance date, the OCC published a
Notice of Proposed Rulemaking on December 4, 2020 (December 2020 NPR),
that proposed an approach to determine the benchmarks, thresholds, and
minimums in the June 2020 Rule's new performance standards.\15\ In
connection with the December 2020 NPR, the OCC published a CRA
information collection survey (Information Collection) \16\ to obtain
data necessary to calibrate the June 2020 Rule's new performance
standards. Subsequently, on May 18, 2021, the OCC announced that it was
reconsidering the June 2020 Rule, did not plan to finalize the December
2020 NPR, and was discontinuing the Information Collection.\17\ The OCC
took these steps to provide for an orderly reconsideration of the June
2020 Rule and provide banks with the flexibility to deploy resources in
response to the COVID-19 pandemic.\18\
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\14\ 12 CFR 25.01(c)(4).
\15\ 85 FR 78258 (Dec. 4, 2020).
\16\ 85 FR 81270 (Dec. 15, 2020).
\17\ See OCC Bulletin 2021-24, Community Reinvestment Act:
Implementation of the June 2020 Final Rule (May 18, 2021), available
at https://www.occ.gov/news-issuances/bulletins/2021/bulletin-2021-24.html.
\18\ Id.
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While the June 2020 Rule and the subsequent December 2020 NPR and
Information Collection represent the OCC's most recent efforts to
modernize the CRA regulatory framework, the Agencies' efforts at reform
have spanned the past decade. For example, in 2014, pursuant to the
Economic Growth and Regulatory Paperwork Reduction Act of 1996
(EGRPRA),\19\ the Agencies began a decennial review of all of their
regulations, with input from the public, to identify outdated,
unnecessary, or unduly burdensome regulations and consider how to
reduce regulatory burden on IDIs--while, at the same time, ensuring the
safety and soundness of these institutions and of the financial system.
In 2017, the Agencies issued a report to Congress that included a
summary of the public comments and recommendations received during the
EGRPRA review, including those that addressed the CRA regulatory
framework.\20\ Among the most frequently raised CRA-related issues were
(1) the assessment area definition; (2) incentives for banks to serve
LMI, unbanked, underbanked, and rural communities; (3) regulatory
burdens associated with the recordkeeping and reporting requirements
and the asset thresholds for the various CRA examination methods; (4)
the need for clarity regarding performance measures and better examiner
training to ensure consistency and rigor in CRA examinations; and (5)
the refinement of the CRA ratings methodology.
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\19\ Public Law 104-208, 110 Stat. 3001 (1996) (codified at 12
U.S.C. 3311).
\20\ See Federal Financial Institutions Examination Council,
Joint Report to Congress. Economic Growth and Regulatory Paperwork
Reduction Act, pp. 41-48 (March 3, 2017), available at https://www.ffiec.gov/pdf/2017_FFIEC_EGRPRA_Joint-Report_to_Congress.pdf.
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On April 3, 2018, the U.S. Department of the Treasury released a
report on the implementation of the CRA, which included recommendations
for modernizing the CRA rules based on stakeholder input.\21\ Starting
in 2018, the Agencies also engaged with stakeholders, including civil
rights organizations, community groups, members of Congress, academics,
and IDIs, to obtain their perspectives and feedback on the CRA and
potential improvements to the CRA regulatory framework. Throughout all
phases of the OCC's recent CRA modernization efforts, including prior
to the issuance and during the implementation of the June 2020 Rule,
many stakeholders objected to the OCC independently issuing a CRA rule
and stressed the importance of the Agencies working together to issue
consistent CRA rules.
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\21\ See Memorandum from the U.S. Department of the Treasury to
the Office of the Comptroller of the Currency, Board of Governors of
the Federal Reserve System, and the Federal Deposit Insurance
Corporation, Community Reinvestment Act--Findings and
Recommendations (April 3, 2018), available at https://home.treasury.gov/sites/default/files/2018-04/4-3-18%20CRA%20memo.pdf.
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A. Board ANPR
Separately from the OCC, the Board has explored ways to modernize
the CRA regulatory framework to address changes in the banking
industry, including the increased use of technology to deliver banking
services. Specifically, the Board conducted stakeholder outreach
through a series of roundtable discussions \22\ and published a CRA
ANPR on October 19, 2020 (Board ANPR),\23\ that invited public comment
on an approach to modernize its CRA rule. The Board ANPR described its
objectives as including:
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\22\ See, e.g., Perspectives from Main Street: Stakeholder
Feedback on Modernizing the Community Reinvestment Act (June 2019)
available at https://www.federalreserve.gov/publications/files/stakeholder-feedback-on-modernizing-the-community-reinvestment-act-201906.pdf.
\23\ 85 FR 66410.
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Increasing the clarity, consistency, and transparency
regarding where, how, and what activities receive CRA consideration,
while minimizing data burden;
Tailoring CRA supervision to reflect differences in bank
sizes and business models, local market needs and opportunities, and
expectations across business cycles;
[[Page 52028]]
Updating performance standards to address changes in the
banking industry, particularly the increased use of mobile and internet
delivery channels;
Promoting community engagement;
Strengthening the special treatment of minority depository
institutions; and
Recognizing that CRA and fair lending responsibilities are
mutually reinforcing.
The Board ANPR invited public comment on different policy options
to address its objectives. For example, the Board invited comment on
how to delineate assessment areas around physical locations. It also
sought public comment on deposit-based and lending-based assessment
areas for IDIs that conduct a significant amount of lending and deposit
collection outside assessment areas around physical locations. In
addition, the Board ANPR invited comment on nationwide assessment areas
for internet banks.
The Board ANPR suggested a framework for evaluating CRA performance
based on a retail test (comprised of retail lending and retail services
subtests) and a community development (CD) test (comprised of CD
financing and CD services subtests) that would be applicable to Board-
regulated IDIs, depending on their size or business model. In addition,
the Board ANPR sought feedback on an evaluation framework based on IDI-
asset-size thresholds of $750 million or $1 billion. Under this
framework, smaller IDIs would be subject to a retail lending test but
would have the option to be evaluated based on their retail services
and CD activities, while larger IDIs would be evaluated under all four
subtests. The suggested framework would base CRA examinations for
wholesale and limited purpose IDIs on the CD test. The Board ANPR
generally suggested a metric-based approach for the retail lending and
CD financing subtests and a qualitative approach to evaluating retail
and CD services under their respective subtests. In addition, the Board
ANPR suggested a strategic plan option that would provide more clarity
and flexibility for establishing bank specific standards to assess
activities.
The Board ANPR also discussed ways to update the State, multistate
metropolitan statistical area (MSA), and institution ratings by basing
these ratings on local assessment area performance. The Board ANPR
suggested that the Board could consider certain activities outside of
IDIs' assessment areas at the institution level to achieve an
``outstanding'' rating. The Board also indicated it could revise how it
would consider discriminatory or other illegal credit practices (DOICP)
to both align that consideration with the Uniform Interagency Consumer
Compliance Rating System and include consideration of the Military
Lending Act (MLA),\24\ the Servicemembers Civil Relief Act (SCRA),\25\
and the Prohibition Against Unfair, Deceptive, or Abusive Acts or
Practices.\26\
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\24\ 10 U.S.C. 987 et seq.
\25\ 50 U.S.C. 3901 et seq.
\26\ 12 U.S.C. 5531.
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The Board further sought feedback on potential revisions to CRA
data collection and reporting requirements. The Board ANPR acknowledged
that an increased use of metrics would result in an increased need for
data collection and reporting and noted that the Board prioritized
using both existing data where possible and exempting small IDIs from
new data collection requirements.
B. OCC December 2020 NPR
The OCC's June 2020 Rule included new performance standards meant
to provide large banks with incentives to achieve specific performance
goals and to make CRA evaluations more consistent, reproducible, and
comparable over time. These performance standards included the CRA
evaluation measure, retail lending distribution tests, and CD minimums.
However, the June 2020 Rule did not include the specific benchmarks,
thresholds, and minimum values proposed in the January 2020 NPR because
the OCC believed that it was appropriate to gather more information to
further calibrate these measures. To do so, the OCC undertook an
Information Collection \27\ and issued the December 2020 NPR, in which
it proposed processes to calibrate the benchmark, threshold, and
minimum values more precisely.
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\27\ See supra note 16.
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The OCC received 13 comments on the December 2020 NPR.\28\ Although
one commenter generally supported the December 2020 NPR's approach to
setting the benchmarks, thresholds, and minimums, most commenters
expressed concerns with the proposal. These concerns included that the
proposed approach would (1) lead to inflated ratings; (2) set arbitrary
limits on ratings; (3) not account for local market conditions, which
could penalize banks that operate in high-cost markets; (4) not
adequately consider the innovative, rapid, and flexible funding
solutions offered by internet-based banks with national footprints; and
(5) be speculative and complicated.
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\28\ The OCC received eight comments from the banking industry
or industry trade associations, two comment from community groups,
two comments from the general public, and one comment from a state
government.
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One commenter stated that there should be hundreds of ratios as
opposed to the proposed 26 calibrated values. Another commenter favored
an approach where the OCC would take into consideration surpassing a
threshold, but it would not initially grant a presumption of a specific
rating. The commenter asserted that this would be a more incremental
change from the evaluation approach codified in the 1995 Rules and
could be used until more data was available for a presumption-based
approach. Other commenters stated that a one-size-fits-all model would
not work, with one commenter suggesting that the OCC should tie
benchmarks to historical, local bank performance data, and community
demographics, rather than set them at a nationwide level.\29\
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\29\ Stakeholders also offered comments on other aspects of the
December 2020 NPR, including the OCC's proposed approach for
addressing declines in CRA performance and the proposed technical
changes. Comments on the approach for addressing declines in CRA
performance questioned how the OCC would measure declines in
activities and whether the proposed ten percent decline was
appropriate. Comments regarding the technical changes generally
sought additional clarifications.
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Commenters also generally expressed concern with the Information
Collection, stating that (1) it would result in substantial burden and
costs for the banks responding to the survey; (2) the data requested
were not routinely available or did not exist; and (3) the collection
would likely yield inaccurate results. Due to these concerns, several
commenters requested that the OCC pause or rescind the Information
Collection.
Given the specific concerns with the December 2020 NPR and the
related Information Collection, the majority of commenters reiterated
the request that the Agencies work together to create a consistent CRA
framework. After considering these comments, the OCC announced that it
would not finalize the December 2020 NPR and would discontinue the
Information Collection.\30\ In addition, as noted, the OCC later
announced that it would work with the Board and FDIC on joint rules to
modernize the CRA.\31\
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\30\ See supra note 17.
\31\ See supra note 7.
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C. June 2020 Rule Implementation
Following publication of the June 2020 Rule, the OCC began its
implementation by developing transition policies and procedures to
address the phased compliance dates
[[Page 52029]]
provided in the rule. In addition, the OCC (1) issued guidance on
implementation of key provisions of the June 2020 Rule; (2) provided
training and outreach for examiners, community groups, and the banking
industry; and (3) instituted the CRA illustrative list and Qualifying
Activities Confirmation Request Form.
To implement the June 2020 Rule between the October 1, 2020,
effective date and the January 1, 2023, or January 1, 2024, compliance
dates, the OCC leveraged the flexibility provided by the June 2020
Rule's transition provision.\32\ It is the OCC's intention that the
June 2020 Rule and associated guidance would continue to apply until
such time as the OCC modifies the rule. A summary of the guidance
issued related to the transition provision in the June 2020 Rule
includes the following:
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\32\ 12 CFR 25.01(c)(5).
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Definitions.\33\
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\33\ 12 CFR 25.03.
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[cir] Compensation--The OCC issued guidance on the calculation of
the median hourly compensation value for the banking industry for use
in quantifying CD services. Effective October 1, 2020, through December
31, 2021, the median hourly compensation value is $39.03.\34\
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\34\ OCC Bulletin 2021-5, Community Reinvestment Act: Bank Type
Determinations, Distressed and Underserved Areas, and Banking
Industry Compensation Provisions of the June 2020 CRA (January 29,
2021) available at https://www.occ.gov/news-issuances/bulletins/2021/bulletin-2021-5.html.
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[cir] Partially--The OCC advised that OCC-regulated banks may
receive consideration in CRA evaluations that begin on or after October
1, 2020, for the full or partial value of qualifying CD activities, as
applicable, based on the qualifying activities criteria set forth in
the June 2020 Rule (e.g., affordable housing for LMI individuals,
community support services for LMI individuals, financial education,
essential community facilities, and economic development) if those
activities are conducted on or after October 1, 2020. For activities
conducted before October 1, 2020, the OCC explained that the 1995 Rules
and Interagency Questions and Answers Regarding Community Reinvestment
(Q&As) \35\ will continue to apply and provide partial credit for the
portion of mixed-income housing that provides affordable housing to LMI
individuals.\36\
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\35\ See Q&A Sec. __ .12(h)--8, 81 FR 48506 (July 25, 2016).
\36\ OCC Bulletin 2020-99, Community Reinvestment Act: Key
Provisions of the June 2020 CRA Rule and Frequently Asked Questions
(November 9, 2020), available at https://www.occ.gov/news-issuances/bulletins/2020/bulletin-2020-99.html.
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[cir] Retail lending activities and related definitions (i.e., home
mortgage loans, consumer loans, small loans to businesses, small loans
to farms, CRA-eligible businesses, and CRA-eligible farms)--In order to
provide OCC-regulated banks with sufficient time to update systems for
data collection, recordkeeping, and reporting, the OCC advised that
examiners will conduct CRA examinations of performance under the
applicable retail lending test criteria using the 1995 Rules'
definitions of home mortgage loan, small business loan, small farm
loan, and consumer loan and the business and farm gross annual revenue
threshold of $1 million or less during the transition period. However,
the OCC also provided that, at an OCC-regulated bank's option, the OCC
also will consider retail loans, as defined in the June 2020 Rule, as
``other loan data,'' or ``other lending-related activities,'' as
applicable, if those loans are not otherwise considered under the 1995
Rules' applicable lending test.\37\
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\37\ Id.
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[cir] Distressed areas and underserved areas--The June 2020 Rule
expanded the definition of what were termed ``distressed or underserved
nonmetropolitan middle-income geographies'' under the 1995 Rules to
include census tracts that met those definitions in MSAs and added to
the definition of underserved area census tracts that did not have a
branch within specified distances. On January 29, 2021 the OCC
published a list of census tracts that meet the revised
definitions.\38\
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\38\ OCC Bulletin 2021-5, Community Reinvestment Act: Bank Type
Determinations, Distressed and Underserved Areas, and Banking
Industry Compensation Provisions of the June 2020 CRA (January 29,
2021).
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[cir] Small banks and intermediate banks--The OCC applied the
asset-size thresholds in the June 2020 Rule's small bank and
intermediate bank definitions to determine bank type in December 2020
and communicated the revised bank types for OCC-regulated banks on
January 29, 2021.\39\ OCC-regulated banks that transitioned from large
banks under the 1995 Rules to intermediate banks under the June 2020
Rule are not required to collect data required under the 1995 Rules for
calendar years 2021 forward or report data for calendar years 2022
forward.\40\
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\39\ Id.
\40\ OCC Bulletin 2020-99, Community Reinvestment Act: Key
Provisions of the June 2020 CRA Rule and Frequently Asked Questions
(November 9, 22020).
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CD loans, CD investments, and CD services.\41\ The OCC
advised that during the June 2020 Rule transition period, examiners
will consider all CD activities under the June 2020 Rule that are
conducted by OCC-regulated banks on or after October 1, 2020. Further,
during the transition period, examiners also will consider all CD
activities defined in 12 CFR 25.12(g) of the 1995 Rules \42\ that are
conducted by OCC-regulated banks during the transition period to the
extent there are gaps between the 1995 Rules' CD activities and the
qualifying activities criteria in the June 2020 Rule in evaluating
performance under the applicable lending, investment, service, or CD
test.\43\
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\41\ 12 CFR 25.04(c).
\42\ See 12 CFR part 25, Appendix C.
\43\ OCC Bulletin 2020-99, Community Reinvestment Act: Key
Provisions of the June 2020 CRA Rule and Frequently Asked Questions
(November 9, 2020).
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Qualifying activities confirmation and illustrative
list.\44\ As of October 1, 2020, banks and interested parties may elect
to submit confirmation requests using the CRA Qualifying Activities
Confirmation Request Form to determine whether an activity is
consistent with the qualifying activities criteria in the June 2020
Rule.\45\ The OCC also published the illustrative list on www.OCC.gov
to provide examples of activities that meet the qualifying activities
criteria in the June 2020 Rule.\46\
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\44\ 12 CFR 25.05.
\45\ CRA Qualifying Activities Confirmation Request Guidance and
Form is available at https://www.occ.gov/topics/consumers-and-communities/cra/qualifying-activity-confirmation-request/index-cra-qualifying-activities-confirmation-request.html.
\46\ The CRA Illustrative List of Qualifying Activities is
available at https://www.occ.gov/topics/consumers-and-communities/cra/cra-illustrative-list-of-qualifying-activities.pdf.
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Small and intermediate bank performance standards \47\ and
wholesale and limited purpose bank performance standards.\48\ The OCC
explained that under the June 2020 Rule, the performance standards for
small and intermediate banks and wholesale and limited purpose banks
would apply beginning on October 1, 2020. The OCC further explained
that examiners would apply the Q&As and 1995 Rules' examination
procedures, as supplemented by the transition guidance issued by the
OCC, to evaluate CRA activities conducted between October 1, 2020, and
the effective date of new guidance or examination procedures applicable
to the particular activities.\49\ The OCC has not issued new guidance
replacing the Q&As or
[[Page 52030]]
examination procedures applicable to the June 2020 Rule.
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\47\ 12 CFR 25.14.
\48\ 12 CFR 25.15.
\49\ OCC Bulletin 2020-99, Community Reinvestment Act: Key
Provisions of the June 2020 CRA Rule and Frequently Asked Questions
(November 9, 2020).
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Consideration of performance context.\50\ With regard to
performance context (i.e., information about a bank, its community, and
its competitors), the OCC stated that it would continue to develop and
consider a bank's performance context according to the 1995 Rules'
performance context procedures during CRA evaluations until the OCC
develops and implements a system for electronic bank submission of
performance context under the June 2020 Rule.\51\ The OCC has not
implemented an electronic system and is still considering performance
context as provided in the 1995 Rules.
---------------------------------------------------------------------------
\50\ 12 CFR 25.16.
\51\ OCC Bulletin 2020-99, Community Reinvestment Act: Key
Provisions of the June 2020 CRA Rule and Frequently Asked Questions
(November 9, 2020).
---------------------------------------------------------------------------
DOICP.\52\ The June 2020 Rule added violations of SCRA and
the MLA to the list of enumerated credit-related violations considered
when assessing a bank's CRA performance. The addition of these
violations codified existing policy under the 1995 Rules, and,
therefore, did not substantively alter requirements for OCC-regulated
bank CRA examinations.\53\
---------------------------------------------------------------------------
\52\ 12 CFR 25.17.
\53\ SM 2019-03, Supervisory Policies and Processes for
Community Reinvestment Act Performance Evaluations (April 12, 2019),
available at https://el.occ/news-issuances/memorandums/sm-2019-3.pdf.
---------------------------------------------------------------------------
Strategic plans.\54\ As of October 1, 2020, OCC-regulated
banks operating under a strategic plan and those that submitted new
strategic plans for approval could create one or more target market
assessment areas, as permitted in 12 CFR 25.18(g)(2) of the June 2020
Rule, in addition to the bank's assessment areas delineated under 12
CFR 25.41 of the 1995 Rules.\55\
---------------------------------------------------------------------------
\54\ 12 CFR 25.18.
\55\ OCC Bulletin 2020-99, Community Reinvestment Act: Key
Provisions of the June 2020 CRA Rule and Frequently Asked Questions
(November 9, 2020).
---------------------------------------------------------------------------
Activity location.\56\ The June 2020 Rule provided for the
allocation of the dollar value of qualifying activities across multiple
assessment areas in 12 CFR 25.24(b)(2). This provision of the June 2020
Rule took effect October 1, 2020.\57\
---------------------------------------------------------------------------
\56\ 12 CFR 25.24.
\57\ OCC Bulletin 2020-99, Community Reinvestment Act: Key
Provisions of the June 2020 CRA Rule and Frequently Asked Questions
(November 9, 2020).
---------------------------------------------------------------------------
Content and availability of the public file.\58\ As of
October 1, 2020, the OCC required OCC-regulated banks to make the
public file information required by the June 2020 Rule available to the
public in a paper or electronic form. The OCC advised that OCC-
regulated banks could comply with this requirement by making the public
file available solely on their websites.\59\
---------------------------------------------------------------------------
\58\ 12 CFR 25.28.
\59\ OCC Bulletin 2020-99, Community Reinvestment Act: Key
Provisions of the June 2020 CRA Rule and Frequently Asked Questions
(November 9, 2020).
---------------------------------------------------------------------------
Public notice by banks.\60\ The OCC required OCC-regulated
banks to comply with the June 2020 Rule's public notice requirements by
March 1, 2021. To comply with the public notice requirements, OCC
guidance permitted these banks to display the notice in their main
office and branch office locations in either paper or an electronic
format, such as a digital display. In addition to the requirement for
display of the public notice in one of these formats, OCC guidance also
permitted these banks to post the notice on their websites.\61\
---------------------------------------------------------------------------
\60\ 12 CFR 25.30.
\61\ OCC Bulletin 2020-99, Community Reinvestment Act: Key
Provisions of the June 2020 CRA Rule and Frequently Asked Questions
(November 9, 2020).
---------------------------------------------------------------------------
As noted, it is the intention of the OCC that the June 2020 Rule
and related guidance will remain in effect until such time as the OCC
issues replacement rules associated with this proposal.
In addition to providing guidance on the above provisions that took
effect October 1, 2020, the OCC also provided guidance on other issues,
including the circumstances under which OCC-regulated banks would
receive credit for activities outside of their assessment areas, the
definition of disaster area (a term the June 2020 Rule did not define),
and consideration of affiliate activities through April 1, 2022.
In considering these and other issues, the OCC identified areas
where the June 2020 Rule would benefit from clarification and revision,
some of which the December 2020 NPR addressed.
While the OCC's June 2020 CRA Rule was an important step in
modernizing the CRA regulatory framework, its implementation revealed
to the OCC some of the rule's complexities and demonstrated where there
were opportunities for improvement. In particular, the partial
implementation of the June 2020 Rule and the responses to the December
2020 NPR made clear the extent of the burden and complexities
associated with the data collection and reporting integral to the June
2020 Rule. Moreover, the disproportionate effect of the COVID-19
pandemic on minorities and rural and LMI communities provided further
evidence of the need to revisit the June 2020 Rule with the goal of
better addressing the financial services needs of vulnerable
communities coming out of the pandemic.
In addition, through comment letters, stakeholders have identified
specific opportunities for improvement of the June 2020 Rule in areas
where the rule was not as clear and transparent as intended. For
example, stakeholders have stated that the change in the treatment of
affiliate activities was not clear because those activities are not
mentioned explicitly in the rule. Rather, stakeholders stated that the
lack of consideration for affiliate activities under the June 2020 Rule
is inferred from the definition of ``activity,'' which is ``a loan,
investment, or service by a bank.'' \62\ Stakeholders also said that
the rule is not clear on how the OCC would treat qualifying activities
outside of banks' assessment areas or the broader statewide or regional
areas that includes a bank's assessment areas for banks that are not
evaluated under the general performance standards. A third example of
where the June 2020 Rule could benefit from additional clarity involves
the ``CRA desert'' definition, which as defined in the June 2020 Rule
could encompass the vast majority of geographic areas in the country
and may be too general to ensure consistent application.
---------------------------------------------------------------------------
\62\ 12 CFR 25.03.
---------------------------------------------------------------------------
Stakeholder feedback on the lack of clarity with certain aspects of
the June 2020 Rule and the OCC's experience with its partial
implementation highlight that opportunities exist for improvements to a
modernized CRA regulatory framework. Such improvements could be
achieved through a joint rulemaking that leverages these lessons
learned as well as the other feedback the Agencies have received since
issuance of the June 2020 Rule.
The OCC has reviewed the June 2020 Rule with these considerations
in mind. Based on this review, the OCC proposes to rescind the June
2020 Rule and replace it with rules based on the 1995 Rules (subject to
a minor change explained below), while simultaneously working with the
Board and FDIC on a joint proposal to modernize the CRA rules.\63\ Both
of these actions are discussed in more detail below.
---------------------------------------------------------------------------
\63\ See supra note 7.
---------------------------------------------------------------------------
III. June 2020 Rule Proposed Rescission and Replacement
The OCC's initial reconsideration of the June 2020 Rule focused on
(1) creating consistency and transparency
[[Page 52031]]
in the rules applicable to IDIs; (2) limiting burden on banks, their
communities, and examiners; and (3) ensuring that the OCC continues to
advance the purpose of the CRA--to encourage banks to help meet the
credit needs of their entire communities, including LMI neighborhoods,
consistent with safe and sound operations. The OCC considered different
options for a revised regulatory framework, including proposing a
revised rule that retained aspects of the June 2020 Rule that
stakeholders generally supported. The OCC determined, however, that
proposing yet another regulatory framework would impose undue burden on
banks, their communities, and examiners who would need to learn and
implement a new framework that was neither the June 2020 Rule, the 1995
Rules, nor the prospective interagency CRA rules. Further, proposing a
new rule that retained aspects of the June 2020 Rule would fail to
harmonize the OCC's rule with those of the Board and FDIC, potentially
complicating an interagency rulemaking process by introducing unique
OCC considerations regarding necessary changes to the regulatory
framework and implementation of and transition to any prospective
interagency final rules.
In contrast, rescinding and replacing the June 2020 Rule with rules
based on the 1995 Rules would provide consistency throughout the
banking industry with respect to the rules that apply by statute to all
IDIs. A consistent regulatory framework would facilitate an interagency
rulemaking process because it would allow all the Agencies to propose
common solutions for the same issues. Further, replacing the June 2020
Rule with a regulatory framework that is familiar to all stakeholders
would limit the burden associated with adapting to new rules. The
partial implementation of the June 2020 Rule further limits the burden
on stakeholders because much of the 1995 regulatory framework remains
in effect. Specifically, for most banks, reverting to rules based on
the 1995 Rules would result in little change to how their CRA
performance is evaluated, whereas retaining the June 2020 Rule or some
other regulatory framework would require continued implementation
actions on the part of banks and the OCC. Finally, reverting to rules
based on the 1995 Rules would enable the OCC to continue to meet the
requirements of the CRA by ensuring that examiners are evaluating
banks' CRA performance based on a proven framework that is focused on
ensuring that banks meet the needs of LMI communities.
A. Proposed 12 CFR Part 25
The proposal would replace the June 2020 Rule with a revised 12 CFR
part 25 based on the 1995 Rules. Under the proposal, 12 CFR part 25
would be applicable to national banks. The proposed 12 CFR part 25
would be substantively identical to the 1995 Rules. Consequently, all
definitions, performance tests and standards, and related data
collection, recordkeeping, and reporting requirements would revert to
those in place prior to the issuance of the June 2020 Rule. Further,
the 1995 Rules' public file and public notice requirements would
replace the existing requirements. Proposed Subpart E would correct the
1995 Rules' cross-referenced regulatory citation in 12 CFR 25.62(a)(2)
to the definition of ``foreign bank,'' which would read ``12 CFR
28.11(i).''
B. Proposed 12 CFR Part 195
The proposal would reinstate 12 CFR part 195 for savings
associations.\64\ Under the proposal, the reinstated 12 CFR part 195
would apply to both Federal savings associations regulated by the OCC
and State savings associations regulated by the FDIC. Reinstating part
195 would enable the OCC to consult with the FDIC on the integration of
the CRA rules applicable to national banks and savings associations as
part of the interagency rulemaking process to ensure that the interests
of both regulatory agencies and their regulated entities are
considered. As with the proposed revised 12 CFR part 25, the proposed
12 CFR part 195 would be substantively identical to the 1995 Rules.
---------------------------------------------------------------------------
\64\ The OCC has CRA rulewriting authority for both Federal and
State savings associations, in addition to national banks. See 12
U.S.C. 2905.
---------------------------------------------------------------------------
In the alternative, the OCC is considering integrating parts 25 and
195 into a single rule in part 25 applicable to both national banks and
savings associations. An integrated part 25 rule applicable to both
national banks and savings associations would be substantively the same
as the separate rules. In an integrated rule in part 25, proposed
Subpart E (Prohibition Against Use of Interstate Branches Primarily for
Deposit Production) would apply only to national banks. The OCC
requests specific comment on whether:
The OCC should reinstate separate rules for national banks and
savings associations or integrate the rules so that part 25 is
applicable to both national banks and savings associations.
C. Summary of Proposed Rules
As with the 1995 Rules, the proposed rules would provide for
different evaluation methods to respond to basic differences in banks'
structures and operations. The proposed rules would provide (1) a
streamlined assessment method for small banks that emphasizes lending
performance; (2) an assessment method for intermediate small banks
(ISB) that considers lending and CD activities; (3) an assessment
method for large, retail banks that focuses on lending, investment, and
service performance; and (4) an assessment method for wholesale and
limited-purpose banks based on CD activities. Further, the proposed
rules also would give any bank, regardless of size or business
strategy, the choice to be evaluated under a strategic plan.
Under the proposed performance tests and standards, an examiner
would consider a bank's performance context in assessing its CRA
performance. Specifically, an examiner would review demographic and
economic data about the bank's assessment area(s) and information about
local economic conditions, the institution's major business products
and strategies, and its financial condition, capacity, and ability to
lend or invest in its community. The examiner also would review
information a bank chooses to provide about lending, investment, and
service opportunities in its assessment areas.
Banks would identify one or more assessment areas within which
examiners would evaluate CRA performance. In most cases, a bank would
delineate a town, municipality, county, some other political
subdivision, or an MSA where its main office, branches, and deposit-
taking ATMs are located and a substantial portion of its loans are made
as an assessment area. If a bank chooses, however, its assessment areas
would not need to coincide with the boundaries of one or more political
subdivisions (e.g., counties, cities, and towns or MSAs), so long as
the adjustments to those boundaries reflect the areas that the bank
reasonably could serve, meet regulatory requirements, and do not
arbitrarily exclude LMI census tracts.
Large banks, and in some circumstances, other banks, would need to
collect, maintain, and report certain data related to the proposed
performance tests and standards. The OCC would make bank CRA data
available through individual and aggregate disclosure statements. Banks
also would make CRA-related
[[Page 52032]]
information available in their public files and inform the public
through a CRA notice in specified locations.
For a more detailed description of the 1995 Rules, please see the
Supplemental Information section of the Federal Register document at:
60 FR 22156 (May 4, 1995).\65\ The following is a summary of key
provisions of the proposed rules.
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\65\ The proposed rules also include the 2005 substantive
revisions to the 1995 regulatory framework (e.g., the small bank and
ISB asset-size thresholds and associated changes and the inclusion
of activities to revitalize and stabilize distressed or underserved
rural areas and designated in the CD definition) as well as other
revisions made to the 1995 Rules since they were adopted by the
Agencies. See 70 FR 44256 (Aug. 2, 2005).
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Performance tests and standards.\66\
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\66\ The applicable proposed performance tests and standards
would be based on the asset size of a bank. The asset-size
thresholds for determining whether a bank is a large bank, ISB, or
small bank would be adjusted annually based on the Consumer Price
Index and be aligned with the current asset size thresholds in the
Board and FDIC rules. See 12 CFR parts 228 and 345.
---------------------------------------------------------------------------
[cir] The proposed rules' small bank (i.e., banks with less than
$330 million in assets) performance standards would establish a retail
lending test for assessing CRA performance. The proposed small bank
lending test may also consider CD loans. Qualified investments and CD
services could be considered at the bank's option for an
``outstanding'' rating, but only if the bank meets or exceeds the
lending test criteria in the small bank performance standards.
[cir] The proposed rules' ISB (i.e., banks with asset sizes of at
least $330 million and less than $1.322 billion) performance standards
would assess CRA performance under the small bank retail lending test
and a CD test. The ISB CD test would evaluate all CD activities
together.
[cir] The proposed rules would establish lending, investment, and
service tests applicable to large banks (i.e., banks with $1.322
billion or more in assets). The large bank lending and service tests
would consider both retail and CD activity, while the investment test
would focus on qualified investments as defined in the proposed rules.
[cir] The proposed rules would evaluate wholesale and limited
purpose banks under a CD test that considers activities in a bank's
broader statewide or regional area as activities that benefit the
bank's assessment area. Activities outside of the broader statewide or
regional area also would be considered if the bank has been responsive
to needs in its assessment area.
[cir] All banks could elect to be evaluated under a strategic plan
that sets out measurable goals for lending, investment, and services,
as applicable, to achieve a ``satisfactory'' or ``outstanding'' rating.
The bank would develop a strategic plan with community input and the
plan would be approved by the bank's primary regulator.
DOICP. Under the proposal MLA and SCRA violations would
not be included in the proposed rules' enumerated list of violations
considered in evaluating banks' CRA performance. Nonetheless, examiners
would continue to consider these violations in banks' CRA performance
evaluations based on guidance that predated the June 2020 Rule.\67\
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\67\ See supra note 53.
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Retail and CD Activities. Examiners would evaluate banks'
CRA performance based on retail lending (i.e., home mortgage loans,
small business loans, small farm loans, and consumer loans, as
applicable) and CD loans, qualified investments, and CD services as
defined in the proposed rules and considered in the applicable
performance tests and standards.
Assessment Areas.
[cir] Banks would delineate assessment areas that generally
[ssquf] Include the geographies (i.e., census tracts) where a bank
has its main office, branches, and deposit-taking automated teller
machines as well as the surrounding geographies where the bank has
originated or purchased a substantial portion of its loans; and
[ssquf] Consist of one or more MSAs, metropolitan divisions, or
political subdivisions with banks permitted to adjust the boundaries of
their assessment areas to include only the portion of the political
subdivision that banks can reasonably be expected to serve; and
[cir] Assessment areas would be required to
[ssquf] Consist of whole geographies,
[ssquf] Not reflect illegal discrimination,
[ssquf] Not arbitrarily exclude LMI geographies, and
[ssquf] Not extend substantially beyond an MSA or State boundary
unless the bank's assessment area is in a multistate MSA.
Data collection, recordkeeping, and reporting.
[cir] Banks other than small banks would collect, maintain, and
report certain data related to small business loans, small farm loans,
CD loans, and assessment areas. Banks subject to the Home Mortgage
Disclosure Act (HMDA) reporting requirements \68\ also would report
home mortgage lending outside of the MSAs where the bank has a home or
branch office. The proposed rules also would include certain optional
data collection and reporting.
---------------------------------------------------------------------------
\68\ 12 CFR part 1003.
---------------------------------------------------------------------------
[cir] The proposal would reinstate additional public file and
public notice requirements eliminated under the June 2020 Rule
regarding the content of the public file and the location of the public
file and public notices.
Ratings. Examiners would determine ratings as provided in
proposed Appendix A.
IV. Transition Considerations
As discussed above, the June 2020 Rule included a transition
provision, effective October 1, 2020, to provide for an orderly move to
the new regulatory framework. As a result, many aspects of the 1995
Rules remain in effect, limiting the potential disruption associated
with the proposed reversion to CRA rules based on the 1995 Rules.
Therefore, the OCC is considering an effective date of January 1, 2022,
for any final rules, provided they are published by December 1, 2021. A
January 1, 2022, effective date would provide all stakeholders with
certainty regarding the applicable rules and would eliminate the need
for banks to continue to expend resources developing new systems
necessary for compliance with the June 2020 Rule.
The OCC recognizes that banks have relied in part on the June 2020
Rule in planning for their ongoing compliance with the CRA. Following
publication of any final rules pertaining to this proposal, banks would
have a minimum of 30 days, as required by the Administrative Procedures
Act,\69\ before they would be required to comply with most of the
provisions described in the proposed rules. However, given the partial
implementation of the June 2020 Rule, its replacement would result in
certain changes to the regulatory framework that impact, among other
things, how banks would be evaluated and what activities would receive
consideration in CRA examinations. The OCC proposes to address such
considerations, as discussed below.\70\ While the proposal does not
include particular transition provisions in the proposed rule text, the
OCC invites comment on whether, for purposes of any final rules the OCC
should amend the proposed rule text to address any or all of the
following transition issues.
---------------------------------------------------------------------------
\69\ Public Law 79-404, 60 Stat. 237 (1946), codified at 5
U.S.C. 500 et seq.
\70\ Information related to the June 2020 Rule implementation is
discussed in Section II.C.
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[[Page 52033]]
A. Bank Type Changes
The June 2020 Rule resulted in a change in bank type for some banks
due to changes in the bank asset-size thresholds. For example, certain
ISBs became small banks (i.e., banks with assets between $326 million
and $600 million) and certain large banks became intermediate banks
(i.e., banks with assets between $1.305 billion and $2.5 billion).
These banks are subject to different performance standards for
activities conducted on or after October 1, 2020, than they were prior
to that date. In addition, OCC-regulated large banks under the 1995
Rules that became intermediate banks under the June 2020 Rule were no
longer required to collect data for calendar years 2021 forward and
report data for calendar years 2022 forward.
Under the proposed rules, many of these banks would transition back
to their prior bank type based on the proposed asset-size thresholds
(i.e., small banks would be banks with less than $330 million in
assets, ISBs would be banks with at least $330 million but less than
$1.322 billion, and large banks would be banks with assets of $1.322
billion or more, as adjusted). As a result, reinstated data collection
and reporting requirements would apply to banks redesignated as large
banks under the proposed rules.
The OCC proposes to treat banks that would transition from ISBs to
large banks under the proposed rules consistent with how the OCC has
historically treated these banks. Under the 1995 Rules, the OCC would
have required banks that transitioned from ISBs to large banks to begin
collecting loan data as provided in proposed 12 CFR 25.42 one year
after the bank type changed. Therefore, if the proposed rules take
effect on January 1, 2022, the OCC would require newly classified large
banks to begin collecting data on January 1, 2023, and reporting
required and optional data the following year.
For banks that would transition from small bank to ISBs under the
proposed rules, the OCC would not provide additional time to transition
to the ISB performance standards; however, the OCC would consider the
change in bank type as part of the bank's performance context when
evaluating the bank's CRA performance. Additionally, the OCC intends to
continue to issue bulletins to inform the public of the annual bank
asset-size threshold adjustments based on changes in the Consumer Price
Index for Urban Wage Earners and Clerical Workers (CPI-W).\71\ The OCC
requests specific comment on whether:
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\71\ See OCC Bulletin 2021-5, Community Reinvestment Act: Bank
Type Determinations, Distressed and Underserved Areas, and Banking
Industry Compensation Provisions of the June 2020 CRA (January 29,
2021).
The OCC should apply its historical policy for newly designated
large banks' data collection, recordkeeping, and reporting
requirements, with the result that certain large banks under the
final rules would not collect data until January 2023 and would not
report it until January 2024. In the alternative, should banks that
were formerly large banks under the 1995 Rules and that return to
large bank status as proposed begin data collection in 2022? Are
there alternative transition policies related to data collection,
recordkeeping, and reporting requirements that the OCC should
consider?
The OCC's plan to consider changes from small bank to ISB bank
type as part of performance context is a reasonable means of
addressing the transition from the June 2020 Rule to the proposed
rules' bank asset-size thresholds.
B. Qualifying Activities
As of the effective date of the final rules, the OCC would rescind
the qualifying activities criteria in the June 2020 Rule and replace it
with the 1995 Rules' home mortgage loan, small business loan, small
farm loan, consumer loan, and CD definitions. Also, as of the effective
date of any final rules, the definitions related to the qualifying
activities criteria in the June 2020 Rule, including the compensation,
distressed area, underserved area, CRA-eligible business, CRA-eligible
farm, small loans to businesses, small loans to farms, partially, and
primarily definitions would revert to the applicable definitions under
the 1995 Rules or be eliminated.
The OCC proposes to address these changes by explaining that OCC-
regulated banks would receive consideration in their CRA examinations
for activities that met the qualifying activities criteria or
definitions that were in effect at the time that the bank conducted
those activities. Consistent with the OCC's historical practice, the
OCC also would apply this policy to legally binding commitments to lend
or invest. For banks or interested parties that received confirmation
letters for qualifying activities under the June 2020 Rule, those
letters would be applicable while the June 2020 Rule was in effect but
would not apply to activities conducted after any final rules'
effective date. The OCC believes this policy is reasonable because it
honors the qualified status of activities when conducted by the bank.
The OCC requests specific comment on whether:
The proposal to consider activities based on whether they
qualified at the time the activities were conducted is a reasonable
approach to addressing the changes to the type of activities that
will receive consideration in CRA examinations.
C. Affiliates
As explained in a January 2021 interpretive letter, under the June
2020 Rule, generally, a bank would not receive CRA consideration for
affiliate activities, including activities conducted by the nonbank
parent and sister companies of the bank, unless the bank could
demonstrate that it provided financing for or otherwise supported the
qualifying activities of these affiliates.\72\ This policy represented
a significant change from how the OCC considered affiliate activities
under the 1995 Rules, and, as such, the OCC used the flexibility
provided by the transition provision to delay compliance with this
aspect of the June 2020 Rule until April 1, 2022.\73\
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\72\ OCC Senior Deputy Comptroller and Chief Counsel's
Interpretation: Community Reinvestment Act Qualifying (CRA)
Activities Conducted by a National Bank's or Savings Association's
Subsidiaries and Affiliates, Including Nonbank Parent and Sister
Companies of a National Bank or Savings Association Under Certain
Circumstances, Can Receive CRA Credit Under the June 2020 CRA Final
Rule (January 4, 2021), available at https://www.occ.gov/topics/charters-and-licensing/interpretations-and-actions/2021/interpretive-letter-affiliates.pdf.
\73\ OCC Bulletin 2020-99, Community Reinvestment Act: Key
Provisions of the June 2020 CRA Rule and Frequently Asked Questions
(November 9, 2020).
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The proposal would consider affiliate activities consistent with
their treatment under the 1995 Rules and the guidance in the Q&As,
which permit banks to elect to include affiliate activities in their
CRA evaluations, subject to certain limitations. Consequently, the OCC
would rescind the January 2021 interpretive letter regarding affiliate
activities as of the effective date of any final rules.
D. Outside Assessment Area Activities
Under the 1995 Rules, the agencies provided consideration for
activities conducted outside banks' assessment areas in limited
circumstances. Specifically, under the 1995 Rules, the performance
tests and standards generally provided that the Agencies would evaluate
an IDI's CRA performance in its assessment areas.\74\ In addition, the
1995 Rules provided that the Agencies may consider CD activities that
benefit the broader statewide or regional areas that include
[[Page 52034]]
an IDI's assessment areas.\75\ With respect to wholesale and limited
purpose institutions, the 1995 Rules provided that the Agencies may
consider CD activities nationwide if the IDI had adequately addressed
the needs of its assessment areas.\76\ The Q&As clarified the
circumstances in which the Agencies would provide consideration for
activities in the broader statewide or regional area but generally did
not provide consideration for activities nationwide.\77\
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\74\ See 12 CFR part 25, Appendix C.
\75\ Id.
\76\ Id.
\77\ Q&A Sec. __.12(h)--6; Q&A Sec. __.12(h)--7; and Q&A Sec.
__.23(a)--2.
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In contrast, the June 2020 Rule provided nationwide consideration
of qualifying activities for banks evaluated under the general
performance standards. To provide consistency across bank type during
the transition period, the OCC also explained in guidance that any OCC-
regulated bank may receive consideration for qualifying activities
outside of its assessment areas that do not directly or indirectly
serve its assessment areas provided certain conditions were met.\78\
The OCC requests specific comment on whether:
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\78\ See OCC Bulletin 2020-99, Community Reinvestment Act: Key
Provisions of the June 2020 CRA Rule and Frequently Asked Questions
(November 9, 2020).
The OCC should continue to provide consideration for activities
that do not directly or indirectly serve a bank's assessment areas
or the broader statewide or regional areas that include a bank's
assessment areas under the proposed rules. What conditions, if any,
should be met in order for the OCC to provide consideration for
activities that do not directly or indirectly serve a bank's
assessment areas or the broader statewide or regional areas that
include a bank's assessment areas?
E. CD Activity Confirmation Process and Illustrative List
Stakeholders generally supported the creation of the qualifying
activities confirmation process and illustrative list in the June 2020
Rule. These provisions clarified the activities that would receive
consideration in an OCC-regulated bank's CRA examination. Because the
qualifying activity confirmation process is procedural and applies
facts regarding a potential qualifying activity to qualifying activity
criteria set forth in the June 2020 Rule, the OCC could have
interpreted and provided guidance on which activities would receive
consideration in CRA examinations without codifying the process in the
June 2020 Rule.
The OCC is considering whether to implement a qualifying activities
confirmation process based on the CD definition in the 1995 Rules, as
interpreted through the Q&As, while the OCC is working on the
interagency CRA rulemaking process. Providing for a qualifying
activities confirmation process outside of the CRA rules would be the
least disruptive outcome for banks and interested parties that have
found the process beneficial. Moreover, maintaining a confirmation
process is not inconsistent with the Board ANPR, which included a
suggestion related to a qualifying activities confirmation process. The
OCC also would maintain the illustrative list of qualifying activities
on its website as a reference for banks to determine whether activities
that they conducted while the June 2020 Rule was in effect are eligible
for CRA consideration; however, activities included on the illustrative
list may not receive consideration if conducted after the effective
date of the final rules. The OCC requests specific comment on whether:
The OCC should implement a CD activity confirmation process
during the period between the rescission of the June 2020 Rule and
the issuance of prospective joint interagency rules.
F. Strategic Plans
The June 2020 Rule revised the requirements for requesting approval
of a strategic plan. Among other things, the June 2020 Rule permitted
banks requesting approval for a strategic plan to include target market
assessment areas. For purposes of any final rules, the OCC proposes to
maintain any strategic plans approved by the OCC under the June 2020
Rule and would not require these banks to amend their strategic plans.
The OCC believes that permitting strategic plan banks to maintain their
target market assessment areas is not inconsistent with proposed 12 CFR
25.41 and would cause the least disruption during the transition from
the OCC's June 2020 Rule to any future interagency final rules. The OCC
requests specific comment on whether:
The OCC's proposed plan to maintain strategic plans approved
under the June 2020 Rule with target market assessment areas is a
reasonable way of addressing this transition consideration.
G. June 2020 Rule Subpart E
Subpart E of the June 2020 Rule includes the data collection,
recordkeeping, and reporting provisions. Most of these provisions were
subject to a January 1, 2023, or January 1, 2024, compliance date, and,
therefore, do not require any transition. However, the changes to the
public file requirements took effect October 1, 2020. These changes
reduced the information required in the public file and changed the
requirements for how an OCC-regulated bank makes the public file
available to the public, including permitting these banks to make the
public file available solely on their websites. Under the proposed
rules, banks would need to include additional information in their
public file and make the file available at their main office, and for
interstate banks, at one branch in each State and more limited
information at each branch. Since the proposed rules would impose
additional public file content and availability requirements, the OCC
expects to provide in the final rules that banks would comply with
these requirements no later than three months after the effective date
of the final rules. The OCC specifically requests comment on whether:
Three months is sufficient time for banks to make the changes
necessary to comply with the public file content and availability
requirements of the proposed rules.
The OCC should enact a transition period for the public notice
requirements that took effect on October 1, 2020.
H. Summary Chart of Proposed Transition Considerations
OCC Rescind and Replace Transition Considerations
------------------------------------------------------------------------
Description of the proposed
provision Proposed transition plan
------------------------------------------------------------------------
Bank Type Changes
------------------------------------------------------------------------
Certain small banks (i.e., banks These small banks would become ISBs
with at least $330 million but as of the effective date of any
less than $600 million in assets). final rules. The change in bank
type would be considered as part of
performance context when evaluating
the bank's CRA performance. No
additional transition time would be
provided for adjusting to the ISB
performance standards.
[[Page 52035]]
Certain ISBs (i.e., banks with at These ISBs would become large banks
least $1.322 billion but not more as of the effective date of any
than $2.5 billion in assets). final rules. The newly classified
large banks would (1) begin
collecting data to be evaluated
under the large bank lending,
investment, and service tests on
January 1, 2023, and (2) report
required and optional data the
following year.
------------------------------------------------------------------------
Qualifying Activities
------------------------------------------------------------------------
Consideration of retail lending The proposed rules' revised
(i.e., home mortgage loans, small definitions would apply as of the
loans to businesses, small loans effective date of any final rules.
to farms, and consumer loans) and Banks would receive consideration
CD activities (i.e., CD loans, CD in their CRA examinations for
investments, and CD services-- activities that met the qualifying
including legally binding activities criteria or definitions
commitments to lend and invest) that were in effect at the time the
and their related definitions. bank conducted these activities.
Qualifying activities confirmation Confirmation letters would be
letters issued under the June applicable while the June 2020 Rule
2020 Rule. was in effect but would not apply
to activities conducted after any
final rules' effective date.
------------------------------------------------------------------------
Affiliates
------------------------------------------------------------------------
Affiliate activities conducted Banks may to elect to include
after the effective date of any affiliate activities in their CRA
final rules. evaluations, subject to certain
limitations. The OCC also would
rescind the January 2021
interpretive letter regarding
affiliate activities as of the
effective date of any final rules.
------------------------------------------------------------------------
Outside Assessment Area Activities
------------------------------------------------------------------------
Consideration of activities The OCC is considering whether it
conducted outside bank assessment should continue to provide
areas. consideration for activities that
do not directly or indirectly serve
a bank's assessment areas or the
broader statewide or regional areas
that include a bank's assessment
areas.
------------------------------------------------------------------------
CD Activity Confirmation Process and Illustrative List
------------------------------------------------------------------------
CD activities confirmation process The OCC is considering providing a
process for qualifying activities
confirmation outside of the CRA
rules.
Qualifying activities illustrative The OCC would maintain the
list. qualifying activities illustrative
list on its website as a reference
for banks to determine whether
activities conducted while the June
2020 Rule was in effect are
eligible for CRA consideration.
------------------------------------------------------------------------
Strategic Plans
------------------------------------------------------------------------
Strategic plans with target market The OCC would maintain any strategic
assessment areas approved under plans approved by the OCC under the
the June 2020 Rule. June 2020 Rule and would not
require these banks to amend their
strategic plans.
------------------------------------------------------------------------
June 2020 Rule Subpart E
------------------------------------------------------------------------
CRA public file content and Banks would comply with the
location requirements. additional public file content and
availability requirements no later
than three months after the
effective date of any final rules.
CRA notice requirements........... The OCC would not provide additional
time for banks to comply with the
CRA notice requirements.
------------------------------------------------------------------------
V. Interagency Rulemaking
As noted, on July 20, 2021, the Agencies announced they had
initiated an interagency rulemaking, stating that they are ``committed
to working together to jointly strengthen and modernize rules
implementing the [CRA].'' \79\ The Agencies' announcement stated that
``[j]oint agency action will best achieve a consistent, modernized
framework across all banks to help meet the credit needs of the
communities in which they do business, including [LMI] neighborhoods.''
\80\ A reinstatement of the 1995 Rules would allow for an orderly
transition to future, modernized CRA rules.
---------------------------------------------------------------------------
\79\ See supra note 7.
\80\ See supra note 7.
---------------------------------------------------------------------------
VI. Regulatory Analysis
A. Regulatory Flexibility Act
In general, the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et
seq.) requires an agency, in connection with a proposed rule, to
prepare an Initial Regulatory Flexibility Analysis describing the
impact of the rule on small entities (defined by the Small Business
Administration for purposes of the RFA to include commercial banks and
savings institutions with total assets of $600 million or less and
trust companies with total assets of $41.5 million of less). However,
under section 605(b) of the RFA, this analysis is not required if the
agency certifies that the rule would not have a significant economic
impact on a substantial number of small entities and publishes its
certification and a short explanatory statement in the Federal Register
along with its rule.
The OCC currently supervises approximately 669 small entities, all
of which may be impacted by the proposed rules. The OCC estimates the
annual cost for small entities to comply with the proposed rules would
be approximately $1,824 per bank ($114 per hour x 16 hours). In
general, the
[[Page 52036]]
OCC classifies the economic impact on an individual small entity as
significant if the total estimated impact in one year is greater than 5
percent of the small entity's total annual salaries and benefits or
greater than 2.5 percent of the small entity's total non-interest
expense.
Based on these thresholds, the OCC estimates that, if implemented,
the proposed rules would have a significant economic impact on zero
small entities, which is not a substantial number. Therefore, the OCC
certifies that the proposed rules would not have a significant economic
impact on a substantial number of small entities.
B. Paperwork Reduction Act
Certain provisions of the proposed rules contain ``collection of
information'' requirements within the meaning of the Paperwork
Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521). In accordance with
the requirements of the PRA, the OCC may not conduct or sponsor, and a
respondent is not required to respond to, an information collection
unless it displays a currently valid Office of Management and Budget
(OMB) control number. The OCC reviewed the proposed rules and
determined that it revises certain information collection requirements
previously cleared by OMB under OMB Control No. 1557-0160. The OCC has
submitted the revised information collection to OMB for review under
section 3507(d) of the PRA (44 U.S.C. 3507(d)) and section 1320.11 of
the OMB's implementing regulations (5 CFR1320).
Under the proposed rules:
12 CFR 25.25(b) and 195.25(b)--Requests for designation as
a wholesale or limited purpose bank would be made in writing with the
OCC at least three months prior to the proposed effective date of the
designation.
12 CFR 25.27 and 195.27--Strategic plans would be
submitted at least three months prior to proposed effective dates.
Plans would include measurable goals and address all the performance
categories. Plans would include a description of informal efforts to
solicit public suggestions, any written public comments received, and
if revised pursuant to public comment, a copy of the initial plan.
Amendments to plans could be submitted in the case of a change in
material circumstances.
12 CFR 25.42(a) and 195.42(a)--Large banks would collect
and maintain certain small business and small farm loan data in a
machine-readable form and report it annually pursuant to 12 CFR
25.42(b)(1) and 195.42(b)(1).
12 CFR 25.42(b)(2) and 195.42(b)(2)--Large banks would
report annually in machine readable form the aggregate number and
aggregate amount of community development loans originated or
purchased.
12 CFR 25.42(b)(3) and 195.42(b)(3)--Large banks, if
subject to reporting under HMDA, would report the location of each home
mortgage loan application, origination, or purchase outside the MSAs
where the bank has a home or branch office.
12 CFR 25.42(c)(1) and 195.42(c)(1)--All banks could
collect and maintain in machine readable form certain data for consumer
loans originated or purchased by a bank for consideration under the
lending test. Under 12 CFR 25.42(c)(2)-(4) and 195.42(c)(2)-(4), other
information could be included concerning a bank's lending performance,
including additional loan distribution data.
12 CFR 25.42(d) and 195.42(d)--Banks that elect to have
the OCC consider loans by an affiliate, for purposes of the lending or
community development test or an approved strategic plan, would
collect, maintain, and report the data that the bank would have
collected, maintained, and reported pursuant to 12 CFR 25.42(a)-(c) or
195.42(a)-(c), respectively, had the loans been originated or purchased
by the bank. For home mortgage loans, the bank would also be prepared
to identify the home mortgage loans reported under HMDA by the
affiliate.
12 CFR 25.42(e) and 195.42(e)--Banks that elect to have
the OCC consider community development loans by a consortium or a third
party, for purposes of the lending or community development tests or an
approved strategic plan, would report for those loans the data that the
bank would have reported under 12 CFR 25.42(b)(2) or 195.42(b)(2),
respectively, had the loans been originated or purchased by the bank.
12 CFR 25.42(f) and 195.42(f)--Small banks that qualify
for evaluation under the small bank performance standards but elect
evaluation under the lending, investment, and service tests would
collect, maintain, and report the data required for other banks under
12 CFR 25.42(a), 25.42(b), 195.42(a), and 195.42(b).
12 CFR 25.42(g) and 195.42(g)--Banks, except those that
were a small bank during the prior calendar year, would collect and
report to the OCC by March 1 each year a list for each assessment area
showing the geographies within the area.
12 CFR 25.43(a) and 195.43(a)--All banks would maintain a
public file that contains with certain specified details: all written
comments and responses; a copy of the public section of the bank's most
recent CRA performance evaluation; a list of the bank's branches; a
list of the branches opened or closed; a list of services offered; and
a map of each assessment area delineated by the bank.
12 CFR 25.43(b) and 195.43(b)--Large banks would include
in their public files certain information pertaining to the institution
and its affiliates, if applicable, for each of the prior two calendar
years. If the bank has elected to have one or more categories of its
consumer loans considered under the lending test, for each of these
categories, they would include the number and amount of loans: to low-,
moderate-, middle-, and upper-income individuals; located in low-,
moderate-, middle-, and upper-income census tracts; and located inside
the bank's assessment area(s) and outside the bank's assessment
area(s); and their CRA Disclosure Statement. A bank required to report
home mortgage loan data pursuant to 12 CFR part 1003 would include a
written notice that the institution's HMDA Disclosure Statement may be
obtained on the Consumer Financial Protection Bureau's (Bureau's)
website. A bank that elected to have the OCC consider the mortgage
lending of an affiliate would include the name of the affiliate and a
written notice that the affiliate's HMDA Disclosure Statement may be
obtained at the Bureau's website. A small bank or a bank that was a
small bank during the prior calendar year would include: its loan-to-
deposit ratio for each quarter of the prior calendar year and, at its
option, additional data on its loan-to-deposit ratio; and the
information required for other banks by 12 CFR 24.43(b)(1) or
195.43(b)(1), if it has elected to be evaluated under the lending,
investment, and service tests. A bank that has been approved to be
assessed under a strategic plan would include in its public file a copy
of that plan. A bank that received a less than satisfactory rating
during its most recent examination would include in its public file a
description of its current efforts to improve its performance in
helping to meet the credit needs of its entire community. The bank
would update the description quarterly.
12 CFR 25.43(c) through (e) and 12 CFR 195.43(c) through
(e)--A bank would make available to the public for inspection upon
request and at no cost the information required in these provisions at
the main office or branch as specified. Upon request, bank would
provide copies, either on paper or in
[[Page 52037]]
another form acceptable to the person making the request, of the
information in its public file. A bank would ensure that this
information is current as of April 1 of each year.
OCC Title of Information Collection: Community Reinvestment Act.
Frequency: On Occasion.
Affected Public: Businesses or other for-profit.
Total estimated annual burden: 113,351 hours.
Comments are invited on:
a. Whether the collections of information are necessary for the
proper performance of the OCC's functions, including whether the
information has practical utility;
b. The accuracy or the estimate of the burden of the information
collections, including the validity of the methodology and assumptions
used;
c. Ways to enhance the quality, utility, and clarity of the
information to be collected;
d. Ways to minimize the burden of the information collections on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
e. Estimates of capital or startup costs and costs of operation,
maintenance, and purchase of services to provide information.
C. Unfunded Mandates Reform Act of 1995
The OCC considers whether a proposed rule includes a Federal
mandate, under the Unfunded Mandates Reform Act of 1995 (UMRA) (2
U.S.C. 1501 et seq.), that may result in the expenditure by State,
local, and tribal governments, in the aggregate, or by the private
sector, of $100 million or more in any one year ($158 million as
adjusted annually for inflation). The UMRA does not apply to rules that
incorporate requirements specifically set forth in law.
The OCC estimates that expenditures associated with mandates in the
proposed rules would be approximately $6 million. Therefore, the OCC
concludes the proposed rules would not result in an expenditure of $158
million or more annually by State, local, and tribal governments or by
the private sector.
D. Riegle Community Development and Regulatory Improvement Act
Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act of 1994 (12 U.S.C. 4802(a)), in determining
the effective date and administrative compliance requirements for new
rules that impose additional reporting, disclosure, or other
requirements on insured depository institutions, the OCC will consider,
consistent with principles of safety and soundness and the public
interest (1) any administrative burdens that the proposed rules would
place on depository institutions, including small depository
institutions and customers of depository institutions; and (2) the
benefits of the proposed rules. The OCC requests comment on (1) any
administrative burdens that the proposed rules would place on
depository institutions, including small depository institutions, and
their customers and (2) the benefits of the proposed rules that the OCC
should consider in determining the effective date and administrative
compliance requirements for any final rules.
List of Subjects
12 CFR Part 25
Community development, Credit, Investments, National banks,
Reporting and recordkeeping requirements, Savings associations.
12 CFR Part 195
Banks, Banking, Community development, Credit, Investments,
Reporting and recordkeeping requirements.
Authority and Issuance
For the reasons discussed in the preamble, and under the authority
of 12 U.S.C. 93a, the Office of the Comptroller of the Currency
proposes to amend 12 CFR part 25 and proposes to add part 195 as
follows:
0
1. Part 25 is revised to read as follows:
PART 25--COMMUNITY REINVESTMENT ACT AND INTERSTATE DEPOSIT
PRODUCTION REGULATIONS
Subpart A--General
Sec.
25.11 Authority, purposes, and scope.
25.12 Definitions.
Subpart B--Standards for Assessing Performance
Sec.
25.21 Performance tests, standards, and ratings, in general.
25.22 Lending test.
25.23 Investment test.
25.24 Service test.
25.25 Community development test for wholesale or limited purpose
banks.
25.26 Small bank performance standards.
25.27 Strategic plan.
25.28 Assigned ratings.
25.29 Effect of CRA performance on applications.
Subpart C--Records, Reporting, and Disclosure Requirements
Sec.
25.41 Assessment area delineation.
25.42 Data collection, reporting, and disclosure.
25.43 Content and availability of public file.
25.44 Public notice by banks.
25.45 Publication of planned examination schedule.
Subpart D [Reserved]
Subpart E--Prohibition Against Use of Interstate Branches Primarily for
Deposit Production
Sec.
25.61 Purpose and scope.
25.62 Definitions.
25.63 Loan-to-deposit ratio screen.
25.64 Credit needs determination.
25.65 Sanctions.
Appendix A to Part 25--Ratings
Appendix B to Part 25--CRA Notice
Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36, 93a, 161, 215,
215a, 481, 1814, 1816, 1828(c), 1835a, 2901 through 2908, and 3101
through 3111.
Subpart A--General
Sec. 25.11 Authority, purposes, and scope.
(a) Authority and OMB control number--(1) Authority. The authority
for subparts A, B, C, D, and E is 12 U.S.C. 21, 22, 26, 27, 30, 36,
93a, 161, 215, 215a, 481, 1814, 1816, 1828(c), 1835a, 2901 through
2907, and 3101 through 3111.
(2) OMB control number. The information collection requirements
contained in this part were approved by the Office of Management and
Budget under the provisions of 44 U.S.C. 3501 et seq. and have been
assigned OMB control number 1557-0160.
(b) Purposes. In enacting the Community Reinvestment Act (CRA), the
Congress required each appropriate Federal financial supervisory agency
to assess an institution's record of helping to meet the credit needs
of the local communities in which the institution is chartered,
consistent with the safe and sound operation of the institution, and to
take this record into account in the agency's evaluation of an
application for a deposit facility by the institution. This part is
intended to carry out the purposes of the CRA by:
(1) Establishing the framework and criteria by which the Office of
the Comptroller of the Currency (OCC) assesses a bank's record of
helping to meet the credit needs of its entire community, including
low- and moderate-income neighborhoods, consistent with the safe and
sound operation of the bank; and
[[Page 52038]]
(2) Providing that the OCC takes that record into account in
considering certain applications.
(c) Scope--(1) General. This part applies to all banks except as
provided in paragraphs (c)(2) and (3) of this section.
(2) Federal branches and agencies. (i) This part applies to all
insured Federal branches and to any Federal branch that is uninsured
that results from an acquisition described in section 5(a)(8) of the
International Banking Act of 1978 (12 U.S.C. 3103(a)(8)).
(ii) Except as provided in paragraph (c)(2)(i) of this section,
this part does not apply to Federal branches that are uninsured,
limited Federal branches, or Federal agencies, as those terms are
defined in part 28 of this chapter.
(3) Certain special purpose banks. This part does not apply to
special purpose banks that do not perform commercial or retail banking
services by granting credit to the public in the ordinary course of
business, other than as incident to their specialized operations. These
banks include banker's banks, as defined in 12 U.S.C. 24 (Seventh), and
banks that engage only in one or more of the following activities:
Providing cash management controlled disbursement services or serving
as correspondent banks, trust companies, or clearing agents.
Sec. 25.12 Definitions.
For purposes of this part, the following definitions apply:
(a) Affiliate means any company that controls, is controlled by, or
is under common control with another company. The term ``control'' has
the meaning given to that term in 12 U.S.C. 1841(a)(2), and a company
is under common control with another company if both companies are
directly or indirectly controlled by the same company.
(b) Area median income means:
(1) The median family income for the MSA, if a person or geography
is located in an MSA, or for the metropolitan division, if a person or
geography is located in an MSA that has been subdivided into
metropolitan divisions; or
(2) The statewide nonmetropolitan median family income, if a person
or geography is located outside an MSA.
(c) Assessment area means a geographic area delineated in
accordance with Sec. 25.41.
(d) Automated teller machine (ATM) means an automated, unstaffed
banking facility owned or operated by, or operated exclusively for, the
bank at which deposits are received, cash dispersed, or money lent.
(e) Bank means a national bank (including a Federal branch as
defined in part 28 of this chapter) with Federally insured deposits,
except as provided in Sec. 25.11(c).
(f) Branch means a staffed banking facility authorized as a branch,
whether shared or unshared, including, for example, a mini-branch in a
grocery store or a branch operated in conjunction with any other local
business or nonprofit organization.
(g) Community development means:
(1) Affordable housing (including multifamily rental housing) for
low- or moderate-income individuals;
(2) Community services targeted to low- or moderate-income
individuals;
(3) Activities that promote economic development by financing
businesses or farms that meet the size eligibility standards of the
Small Business Administration's Development Company or Small Business
Investment Company programs (13 CFR 121.301) or have gross annual
revenues of $1 million or less; or
(4) Activities that revitalize or stabilize--
(i) Low-or moderate-income geographies;
(ii) Designated disaster areas; or
(iii) Distressed or underserved nonmetropolitan middle-income
geographies designated by the Board of Governors of the Federal Reserve
System, Federal Deposit Insurance Corporation, and OCC, based on--
(A) Rates of poverty, unemployment, and population loss; or
(B) Population size, density, and dispersion. Activities revitalize
and stabilize geographies designated based on population size, density,
and dispersion if they help to meet essential community needs,
including needs of low- and moderate-income individuals.
(h) Community development loan means a loan that:
(1) Has as its primary purpose community development; and
(2) Except in the case of a wholesale or limited purpose bank:
(i) Has not been reported or collected by the bank or an affiliate
for consideration in the bank's assessment as a home mortgage, small
business, small farm, or consumer loan, unless the loan is for a
multifamily dwelling (as defined in Sec. 1003.2(n) of this title); and
(ii) Benefits the bank's assessment area(s) or a broader statewide
or regional area that includes the bank's assessment area(s).
(i) Community development service means a service that:
(1) Has as its primary purpose community development;
(2) Is related to the provision of financial services; and
(3) Has not been considered in the evaluation of the bank's retail
banking services under Sec. 25.24(d).
(j) Consumer loan means a loan to one or more individuals for
household, family, or other personal expenditures. A consumer loan does
not include a home mortgage, small business, or small farm loan.
Consumer loans include the following categories of loans:
(1) Motor vehicle loan, which is a consumer loan extended for the
purchase of and secured by a motor vehicle;
(2) Credit card loan, which is a line of credit for household,
family, or other personal expenditures that is accessed by a borrower's
use of a ``credit card,'' as this term is defined in Sec. 1026.2 of
this title;
(3) Other secured consumer loan, which is a secured consumer loan
that is not included in one of the other categories of consumer loans;
and
(4) Other unsecured consumer loan, which is an unsecured consumer
loan that is not included in one of the other categories of consumer
loans.
(k) Geography means a census tract delineated by the United States
Bureau of the Census in the most recent decennial census.
(l) Home mortgage loan means a closed-end mortgage loan or an open-
end line of credit as these terms are defined under Sec. 1003.2 of
this title, and that is not an excluded transaction under Sec.
1003.3(c)(1) through (10) and (13) of this title.
(m) Income level includes:
(1) Low-income, which means an individual income that is less than
50 percent of the area median income, or a median family income that is
less than 50 percent, in the case of a geography.
(2) Moderate-income, which means an individual income that is at
least 50 percent and less than 80 percent of the area median income, or
a median family income that is at least 50 and less than 80 percent, in
the case of a geography.
(3) Middle-income, which means an individual income that is at
least 80 percent and less than 120 percent of the area median income,
or a median family income that is at least 80 and less than 120
percent, in the case of a geography.
(4) Upper-income, which means an individual income that is 120
percent or more of the area median income, or a median family income
that is 120 percent or more, in the case of a geography.
(n) Limited purpose bank means a bank that offers only a narrow
product line (such as credit card or motor vehicle loans) to a regional
or broader market and for which a designation as
[[Page 52039]]
a limited purpose bank is in effect, in accordance with Sec. 25.25(b).
(o) Loan location. A loan is located as follows:
(1) A consumer loan is located in the geography where the borrower
resides;
(2) A home mortgage loan is located in the geography where the
property to which the loan relates is located; and
(3) A small business or small farm loan is located in the geography
where the main business facility or farm is located or where the loan
proceeds otherwise will be applied, as indicated by the borrower.
(p) Loan production office means a staffed facility, other than a
branch, that is open to the public and that provides lending-related
services, such as loan information and applications.
(q) Metropolitan division means a metropolitan division as defined
by the Director of the Office of Management and Budget.
(r) MSA means a metropolitan statistical area as defined by the
Director of the Office of Management and Budget.
(s) Nonmetropolitan area means any area that is not located in an
MSA.
(t) Qualified investment means a lawful investment, deposit,
membership share, or grant that has as its primary purpose community
development.
(u) Small bank--(1) Definition. Small bank means a bank that, as of
December 31 of either of the prior two calendar years, had assets of
less than $1.322 billion. Intermediate small bank means a small bank
with assets of at least $330 million as of December 31 of both of the
prior two calendar years and less than $1.322 billion as of December 31
of either of the prior two calendar years.
(2) Adjustment. The dollar figures in paragraph (u)(1) of this
section shall be adjusted annually and published by the OCC, based on
the year-to-year change in the average of the Consumer Price Index for
Urban Wage Earners and Clerical Workers, not seasonally adjusted, for
each twelve-month period ending in November, with rounding to the
nearest million.
(v) Small business loan means a loan included in ``loans to small
businesses'' as defined in the instructions for preparation of the
Consolidated Report of Condition and Income.
(w) Small farm loan means a loan included in ``loans to small
farms'' as defined in the instructions for preparation of the
Consolidated Report of Condition and Income.
(x) Wholesale bank means a bank that is not in the business of
extending home mortgage, small business, small farm, or consumer loans
to retail customers, and for which a designation as a wholesale bank is
in effect, in accordance with Sec. 25.25(b).
Subpart B--Standards for Assessing Performance
Sec. 25.21 Performance tests, standards, and ratings, in general.
(a) Performance tests and standards. The OCC assesses the CRA
performance of a bank in an examination as follows:
(1) Lending, investment, and service tests. The OCC applies the
lending, investment, and service tests, as provided in Sec. Sec. 25.22
through 25.24, in evaluating the performance of a bank, except as
provided in paragraphs (a)(2), (3), and (4) of this section.
(2) Community development test for wholesale or limited purpose
banks. The OCC applies the community development test for a wholesale
or limited purpose bank, as provided in Sec. 25.25, except as provided
in paragraph (a)(4) of this section.
(3) Small bank performance standards. The OCC applies the small
bank performance standards as provided in Sec. 25.26 in evaluating the
performance of a small bank or a bank that was a small bank during the
prior calendar year, unless the bank elects to be assessed as provided
in paragraphs (a)(1), (2), or (4) of this section. The bank may elect
to be assessed as provided in paragraph (a)(1) of this section only if
it collects and reports the data required for other banks under Sec.
25.42.
(4) Strategic plan. The OCC evaluates the performance of a bank
under a strategic plan if the bank submits, and the OCC approves, a
strategic plan as provided in Sec. 25.27.
(b) Performance context. The OCC applies the tests and standards in
paragraph (a) of this section and also considers whether to approve a
proposed strategic plan in the context of:
(1) Demographic data on median income levels, distribution of
household income, nature of housing stock, housing costs, and other
relevant data pertaining to a bank's assessment area(s);
(2) Any information about lending, investment, and service
opportunities in the bank's assessment area(s) maintained by the bank
or obtained from community organizations, state, local, and tribal
governments, economic development agencies, or other sources;
(3) The bank's product offerings and business strategy as
determined from data provided by the bank;
(4) Institutional capacity and constraints, including the size and
financial condition of the bank, the economic climate (national,
regional, and local), safety and soundness limitations, and any other
factors that significantly affect the bank's ability to provide
lending, investments, or services in its assessment area(s);
(5) The bank's past performance and the performance of similarly
situated lenders;
(6) The bank's public file, as described in Sec. 25.43, and any
written comments about the bank's CRA performance submitted to the bank
or the OCC; and
(7) Any other information deemed relevant by the OCC.
(c) Assigned ratings. The OCC assigns to a bank one of the
following four ratings pursuant to Sec. 25.28 and appendix A of this
part: ``outstanding''; ``satisfactory''; ``needs to improve''; or
``substantial noncompliance'' as provided in 12 U.S.C. 2906(b)(2). The
rating assigned by the OCC reflects the bank's record of helping to
meet the credit needs of its entire community, including low- and
moderate-income neighborhoods, consistent with the safe and sound
operation of the bank.
(d) Safe and sound operations. This part and the CRA do not require
a bank to make loans or investments or to provide services that are
inconsistent with safe and sound operations. To the contrary, the OCC
anticipates banks can meet the standards of this part with safe and
sound loans, investments, and services on which the banks expect to
make a profit. Banks are permitted and encouraged to develop and apply
flexible underwriting standards for loans that benefit low- or
moderate-income geographies or individuals, only if consistent with
safe and sound operations.
(e) Low-cost education loans provided to low-income borrowers. In
assessing and taking into account the record of a bank under this part,
the OCC considers, as a factor, low-cost education loans originated by
the bank to borrowers, particularly in its assessment area(s), who have
an individual income that is less than 50 percent of the area median
income. For purposes of this paragraph, ``low-cost education loans''
means any education loan, as defined in section 140(a)(7) of the Truth
in Lending Act (15 U.S.C. 1650(a)(7)) (including a loan under a state
or local education loan program), originated by the bank for a student
at an ``institution of higher education,'' as that term is generally
defined in sections 101 and 102 of the Higher Education Act of 1965 (20
U.S.C. 1001 and 1002) and the implementing regulations published by the
U.S. Department of Education, with interest rates and fees no greater
than those of
[[Page 52040]]
comparable education loans offered directly by the U.S. Department of
Education. Such rates and fees are specified in section 455 of the
Higher Education Act of 1965 (20 U.S.C. 1087e).
(f) Activities in cooperation with minority- or women-owned
financial institutions and low-income credit unions. In assessing and
taking into account the record of a nonminority-owned and nonwomen-
owned bank under this part, the OCC considers as a factor capital
investment, loan participation, and other ventures undertaken by the
bank in cooperation with minority- and women-owned financial
institutions and low-income credit unions. Such activities must help
meet the credit needs of local communities in which the minority- and
women-owned financial institutions and low-income credit unions are
chartered. To be considered, such activities need not also benefit the
bank's assessment area(s) or the broader statewide or regional area
that includes the bank's assessment area(s).
Sec. 25.22 Lending test.
(a) Scope of test. (1) The lending test evaluates a bank's record
of helping to meet the credit needs of its assessment area(s) through
its lending activities by considering a bank's home mortgage, small
business, small farm, and community development lending. If consumer
lending constitutes a substantial majority of a bank's business, the
OCC will evaluate the bank's consumer lending in one or more of the
following categories: Motor vehicle, credit card, other secured, and
other unsecured loans. In addition, at a bank's option, the OCC will
evaluate one or more categories of consumer lending, if the bank has
collected and maintained, as required in Sec. 25.42(c)(1), the data
for each category that the bank elects to have the OCC evaluate.
(2) The OCC considers originations and purchases of loans. The OCC
will also consider any other loan data the bank may choose to provide,
including data on loans outstanding, commitments and letters of credit.
(3) A bank may ask the OCC to consider loans originated or
purchased by consortia in which the bank participates or by third
parties in which the bank has invested only if the loans meet the
definition of community development loans and only in accordance with
paragraph (d) of this section. The OCC will not consider these loans
under any criterion of the lending test except the community
development lending criterion.
(b) Performance criteria. The OCC evaluates a bank's lending
performance pursuant to the following criteria:
(1) Lending activity. The number and amount of the bank's home
mortgage, small business, small farm, and consumer loans, if
applicable, in the bank's assessment area(s);
(2) Geographic distribution. The geographic distribution of the
bank's home mortgage, small business, small farm, and consumer loans,
if applicable, based on the loan location, including:
(i) The proportion of the bank's lending in the bank's assessment
area(s);
(ii) The dispersion of lending in the bank's assessment area(s);
and
(iii) The number and amount of loans in low-, moderate-, middle-,
and upper-income geographies in the bank's assessment area(s);
(3) Borrower characteristics. The distribution, particularly in the
bank's assessment area(s), of the bank's home mortgage, small business,
small farm, and consumer loans, if applicable, based on borrower
characteristics, including the number and amount of:
(i) Home mortgage loans to low-, moderate-, middle-, and upper-
income individuals;
(ii) Small business and small farm loans to businesses and farms
with gross annual revenues of $1 million or less;
(iii) Small business and small farm loans by loan amount at
origination; and
(iv) Consumer loans, if applicable, to low-, moderate-, middle-,
and upper-income individuals;
(4) Community development lending. The bank's community development
lending, including the number and amount of community development
loans, and their complexity and innovativeness; and
(5) Innovative or flexible lending practices. The bank's use of
innovative or flexible lending practices in a safe and sound manner to
address the credit needs of low- or moderate-income individuals or
geographies.
(c) Affiliate lending. (1) At a bank's option, the OCC will
consider loans by an affiliate of the bank, if the bank provides data
on the affiliate's loans pursuant to Sec. 25.42.
(2) The OCC considers affiliate lending subject to the following
constraints:
(i) No affiliate may claim a loan origination or loan purchase if
another institution claims the same loan origination or purchase; and
(ii) If a bank elects to have the OCC consider loans within a
particular lending category made by one or more of the bank's
affiliates in a particular assessment area, the bank shall elect to
have the OCC consider, in accordance with paragraph (c)(1) of this
section, all the loans within that lending category in that particular
assessment area made by all of the bank's affiliates.
(3) The OCC does not consider affiliate lending in assessing a
bank's performance under paragraph (b)(2)(i) of this section.
(d) Lending by a consortium or a third party. Community development
loans originated or purchased by a consortium in which the bank
participates or by a third party in which the bank has invested:
(1) Will be considered, at the bank's option, if the bank reports
the data pertaining to these loans under Sec. 25.42(b)(2); and
(2) May be allocated among participants or investors, as they
choose, for purposes of the lending test, except that no participant or
investor:
(i) May claim a loan origination or loan purchase if another
participant or investor claims the same loan origination or purchase;
or
(ii) May claim loans accounting for more than its percentage share
(based on the level of its participation or investment) of the total
loans originated by the consortium or third party.
(e) Lending performance rating. The OCC rates a bank's lending
performance as provided in appendix A of this part.
Sec. 25.23 Investment test.
(a) Scope of test. The investment test evaluates a bank's record of
helping to meet the credit needs of its assessment area(s) through
qualified investments that benefit its assessment area(s) or a broader
statewide or regional area that includes the bank's assessment area(s).
(b) Exclusion. Activities considered under the lending or service
tests may not be considered under the investment test.
(c) Affiliate investment. At a bank's option, the OCC will
consider, in its assessment of a bank's investment performance, a
qualified investment made by an affiliate of the bank, if the qualified
investment is not claimed by any other institution.
(d) Disposition of branch premises. Donating, selling on favorable
terms, or making available on a rent-free basis a branch of the bank
that is located in a predominantly minority neighborhood to a minority
depository institution or women's depository institution (as these
terms are defined in 12 U.S.C. 2907(b)) will be considered as a
qualified investment.
(e) Performance criteria. The OCC evaluates the investment
performance of a bank pursuant to the following criteria:
(1) The dollar amount of qualified investments;
[[Page 52041]]
(2) The innovativeness or complexity of qualified investments;
(3) The responsiveness of qualified investments to credit and
community development needs; and
(4) The degree to which the qualified investments are not routinely
provided by private investors.
(f) Investment performance rating. The OCC rates a bank's
investment performance as provided in appendix A of this part.
Sec. 25.24 Service test.
(a) Scope of test. The service test evaluates a bank's record of
helping to meet the credit needs of its assessment area(s) by analyzing
both the availability and effectiveness of a bank's systems for
delivering retail banking services and the extent and innovativeness of
its community development services.
(b) Area(s) benefitted. Community development services must benefit
a bank's assessment area(s) or a broader statewide or regional area
that includes the bank's assessment area(s).
(c) Affiliate service. At a bank's option, the OCC will consider,
in its assessment of a bank's service performance, a community
development service provided by an affiliate of the bank, if the
community development service is not claimed by any other institution.
(d) Performance criteria--retail banking services. The OCC
evaluates the availability and effectiveness of a bank's systems for
delivering retail banking services, pursuant to the following criteria:
(1) The current distribution of the bank's branches among low-,
moderate-, middle-, and upper-income geographies;
(2) In the context of its current distribution of the bank's
branches, the bank's record of opening and closing branches,
particularly branches located in low- or moderate-income geographies or
primarily serving low- or moderate-income individuals;
(3) The availability and effectiveness of alternative systems for
delivering retail banking services (e.g., ATMs, ATMs not owned or
operated by or exclusively for the bank, banking by telephone or
computer, loan production offices, and bank-at-work or bank-by-mail
programs) in low- and moderate-income geographies and to low- and
moderate-income individuals; and
(4) The range of services provided in low-, moderate-, middle-, and
upper-income geographies and the degree to which the services are
tailored to meet the needs of those geographies.
(e) Performance criteria--community development services. The OCC
evaluates community development services pursuant to the following
criteria:
(1) The extent to which the bank provides community development
services; and
(2) The innovativeness and responsiveness of community development
services.
(f) Service performance rating. The OCC rates a bank's service
performance as provided in appendix A of this part.
Sec. 25.25 Community development test for wholesale or limited
purpose banks.
(a) Scope of test. The OCC assesses a wholesale or limited purpose
bank's record of helping to meet the credit needs of its assessment
area(s) under the community development test through its community
development lending, qualified investments, or community development
services.
(b) Designation as a wholesale or limited purpose bank. In order to
receive a designation as a wholesale or limited purpose bank, a bank
shall file a request, in writing, with the OCC, at least three months
prior to the proposed effective date of the designation. If the OCC
approves the designation, it remains in effect until the bank requests
revocation of the designation or until one year after the OCC notifies
the bank that the OCC has revoked the designation on its own
initiative.
(c) Performance criteria. The OCC evaluates the community
development performance of a wholesale or limited purpose bank pursuant
to the following criteria:
(1) The number and amount of community development loans (including
originations and purchases of loans and other community development
loan data provided by the bank, such as data on loans outstanding,
commitments, and letters of credit), qualified investments, or
community development services;
(2) The use of innovative or complex qualified investments,
community development loans, or community development services and the
extent to which the investments are not routinely provided by private
investors; and
(3) The bank's responsiveness to credit and community development
needs.
(d) Indirect activities. At a bank's option, the OCC will consider
in its community development performance assessment:
(1) Qualified investments or community development services
provided by an affiliate of the bank, if the investments or services
are not claimed by any other institution; and
(2) Community development lending by affiliates, consortia and
third parties, subject to the requirements and limitations in Sec.
25.22(c) and (d).
(e) Benefit to assessment area(s)--(1) Benefit inside assessment
area(s). The OCC considers all qualified investments, community
development loans, and community development services that benefit
areas within the bank's assessment area(s) or a broader statewide or
regional area that includes the bank's assessment area(s).
(2) Benefit outside assessment area(s). The OCC considers the
qualified investments, community development loans, and community
development services that benefit areas outside the bank's assessment
area(s), if the bank has adequately addressed the needs of its
assessment area(s).
(f) Community development performance rating. The OCC rates a
bank's community development performance as provided in appendix A of
this part.
Sec. 25.26 Small bank performance standards.
(a) Performance criteria--(1) Small banks that are not intermediate
small banks. The OCC evaluates the record of a small bank that is not,
or that was not during the prior calendar year, an intermediate small
bank, of helping to meet the credit needs of its assessment area(s)
pursuant to the criteria set forth in paragraph (b) of this section.
(2) Intermediate small banks. The OCC evaluates the record of a
small bank that is, or that was during the prior calendar year, an
intermediate small bank, of helping to meet the credit needs of its
assessment area(s) pursuant to the criteria set forth in paragraphs (b)
and (c) of this section.
(b) Lending test. A small bank's lending performance is evaluated
pursuant to the following criteria:
(1) The bank's loan-to-deposit ratio, adjusted for seasonal
variation, and, as appropriate, other lending-related activities, such
as loan originations for sale to the secondary markets, community
development loans, or qualified investments;
(2) The percentage of loans and, as appropriate, other lending-
related activities located in the bank's assessment area(s);
(3) The bank's record of lending to and, as appropriate, engaging
in other lending-related activities for borrowers of different income
levels and businesses and farms of different sizes;
(4) The geographic distribution of the bank's loans; and
(5) The bank's record of taking action, if warranted, in response
to written complaints about its performance in
[[Page 52042]]
helping to meet credit needs in its assessment area(s).
(c) Community development test. An intermediate small bank's
community development performance also is evaluated pursuant to the
following criteria:
(1) The number and amount of community development loans;
(2) The number and amount of qualified investments;
(3) The extent to which the bank provides community development
services; and
(4) The bank's responsiveness through such activities to community
development lending, investment, and services needs.
(d) Small bank performance rating. The OCC rates the performance of
a bank evaluated under this section as provided in appendix A of this
part.
Sec. 25.27 Strategic plan.
(a) Alternative election. The OCC will assess a bank's record of
helping to meet the credit needs of its assessment area(s) under a
strategic plan if:
(1) The bank has submitted the plan to the OCC as provided for in
this section;
(2) The OCC has approved the plan;
(3) The plan is in effect; and
(4) The bank has been operating under an approved plan for at least
one year.
(b) Data reporting. The OCC's approval of a plan does not affect
the bank's obligation, if any, to report data as required by Sec.
25.42.
(c) Plans in general--(1) Term. A plan may have a term of no more
than five years, and any multi-year plan must include annual interim
measurable goals under which the OCC will evaluate the bank's
performance.
(2) Multiple assessment areas. A bank with more than one assessment
area may prepare a single plan for all of its assessment areas or one
or more plans for one or more of its assessment areas.
(3) Treatment of affiliates. Affiliated institutions may prepare a
joint plan if the plan provides measurable goals for each institution.
Activities may be allocated among institutions at the institutions'
option, provided that the same activities are not considered for more
than one institution.
(d) Public participation in plan development. Before submitting a
plan to the OCC for approval, a bank shall:
(1) Informally seek suggestions from members of the public in its
assessment area(s) covered by the plan while developing the plan;
(2) Once the bank has developed a plan, formally solicit public
comment on the plan for at least 30 days by publishing notice in at
least one newspaper of general circulation in each assessment area
covered by the plan; and
(3) During the period of formal public comment, make copies of the
plan available for review by the public at no cost at all offices of
the bank in any assessment area covered by the plan and provide copies
of the plan upon request for a reasonable fee to cover copying and
mailing, if applicable.
(e) Submission of plan. The bank shall submit its plan to the OCC
at least three months prior to the proposed effective date of the plan.
The bank shall also submit with its plan a description of its informal
efforts to seek suggestions from members of the public, any written
public comment received, and, if the plan was revised in light of the
comment received, the initial plan as released for public comment.
(f) Plan content--(1) Measurable goals. (i) A bank shall specify in
its plan measurable goals for helping to meet the credit needs of each
assessment area covered by the plan, particularly the needs of low- and
moderate-income geographies and low- and moderate-income individuals,
through lending, investment, and services, as appropriate.
(ii) A bank shall address in its plan all three performance
categories and, unless the bank has been designated as a wholesale or
limited purpose bank, shall emphasize lending and lending-related
activities. Nevertheless, a different emphasis, including a focus on
one or more performance categories, may be appropriate if responsive to
the characteristics and credit needs of its assessment area(s),
considering public comment and the bank's capacity and constraints,
product offerings, and business strategy.
(2) Confidential information. A bank may submit additional
information to the OCC on a confidential basis, but the goals stated in
the plan must be sufficiently specific to enable the public and the OCC
to judge the merits of the plan.
(3) Satisfactory and outstanding goals. A bank shall specify in its
plan measurable goals that constitute ``satisfactory'' performance. A
plan may specify measurable goals that constitute ``outstanding''
performance. If a bank submits, and the OCC approves, both
``satisfactory'' and ``outstanding'' performance goals, the OCC will
consider the bank eligible for an ``outstanding'' performance rating.
(4) Election if satisfactory goals not substantially met. A bank
may elect in its plan that, if the bank fails to meet substantially its
plan goals for a satisfactory rating, the OCC will evaluate the bank's
performance under the lending, investment, and service tests, the
community development test, or the small bank performance standards, as
appropriate.
(g) Plan approval--(1) Timing. The OCC will act upon a plan within
60 calendar days after the OCC receives the complete plan and other
material required under paragraph (e) of this section. If the OCC fails
to act within this time period, the plan shall be deemed approved
unless the OCC extends the review period for good cause.
(2) Public participation. In evaluating the plan's goals, the OCC
considers the public's involvement in formulating the plan, written
public comment on the plan, and any response by the bank to public
comment on the plan.
(3) Criteria for evaluating plan. The OCC evaluates a plan's
measurable goals using the following criteria, as appropriate:
(i) The extent and breadth of lending or lending-related
activities, including, as appropriate, the distribution of loans among
different geographies, businesses and farms of different sizes, and
individuals of different income levels, the extent of community
development lending, and the use of innovative or flexible lending
practices to address credit needs;
(ii) The amount and innovativeness, complexity, and responsiveness
of the bank's qualified investments; and
(iii) The availability and effectiveness of the bank's systems for
delivering retail banking services and the extent and innovativeness of
the bank's community development services.
(h) Plan amendment. During the term of a plan, a bank may request
the OCC to approve an amendment to the plan on grounds that there has
been a material change in circumstances. The bank shall develop an
amendment to a previously approved plan in accordance with the public
participation requirements of paragraph (d) of this section.
(i) Plan assessment. The OCC approves the goals and assesses
performance under a plan as provided for in appendix A of this part.
Sec. 25.28 Assigned ratings.
(a) Ratings in general. Subject to paragraphs (b) and (c) of this
section, the OCC assigns to a bank a rating of ``outstanding,''
``satisfactory,'' ``needs to improve,'' or ``substantial
noncompliance'' based on the bank's performance under the lending,
investment and service tests, the community development test, the small
bank performance standards, or an approved strategic plan, as
applicable.
[[Page 52043]]
(b) Lending, investment, and service tests. The OCC assigns a
rating for a bank assessed under the lending, investment, and service
tests in accordance with the following principles:
(1) A bank that receives an ``outstanding'' rating on the lending
test receives an assigned rating of at least ``satisfactory'';
(2) A bank that receives an ``outstanding'' rating on both the
service test and the investment test and a rating of at least ``high
satisfactory'' on the lending test receives an assigned rating of
``outstanding''; and
(3) No bank may receive an assigned rating of ``satisfactory'' or
higher unless it receives a rating of at least ``low satisfactory'' on
the lending test.
(c) Effect of evidence of discriminatory or other illegal credit
practices. (1) The OCC's evaluation of a bank's CRA performance is
adversely affected by evidence of discriminatory or other illegal
credit practices in any geography by the bank or in any assessment area
by any affiliate whose loans have been considered as part of the bank's
lending performance. In connection with any type of lending activity
described in Sec. 25.22(a), evidence of discriminatory or other credit
practices that violate an applicable law, rule, or regulation includes,
but is not limited to:
(i) Discrimination against applicants on a prohibited basis in
violation, for example, of the Equal Credit Opportunity Act or the Fair
Housing Act;
(ii) Violations of the Home Ownership and Equity Protection Act;
(iii) Violations of section 5 of the Federal Trade Commission Act;
(iv) Violations of section 8 of the Real Estate Settlement
Procedures Act; and
(v) Violations of the Truth in Lending Act provisions regarding a
consumer's right of rescission.
(2) In determining the effect of evidence of practices described in
paragraph (c)(1) of this section on the bank's assigned rating, the OCC
considers the nature, extent, and strength of the evidence of the
practices; the policies and procedures that the bank (or affiliate, as
applicable) has in place to prevent the practices; any corrective
action that the bank (or affiliate, as applicable) has taken or has
committed to take, including voluntary corrective action resulting from
self-assessment; and any other relevant information.
Sec. 25.29 Effect of CRA performance on applications.
(a) CRA performance. Among other factors, the OCC takes into
account the record of performance under the CRA of each applicant bank
in considering an application for:
(1) The establishment of a domestic branch;
(2) The relocation of the main office or a branch;
(3) Under the Bank Merger Act (12 U.S.C. 1828(c)), the merger or
consolidation with or the acquisition of assets or assumption of
liabilities of an insured depository institution; and
(4) The conversion of an insured depository institution to a
national bank charter.
(b) Charter application. An applicant (other than an insured
depository institution) for a national bank charter shall submit with
its application a description of how it will meet its CRA objectives.
The OCC takes the description into account in considering the
application and may deny or condition approval on that basis.
(c) Interested parties. The OCC takes into account any views
expressed by interested parties that are submitted in accordance with
the OCC's procedures set forth in part 5 of this chapter in considering
CRA performance in an application listed in paragraphs (a) and (b) of
this section.
(d) Denial or conditional approval of application. A bank's record
of performance may be the basis for denying or conditioning approval of
an application listed in paragraph (a) of this section.
(e) Insured depository institution. For purposes of this section,
the term ``insured depository institution'' has the meaning given to
that term in 12 U.S.C. 1813.
Subpart C--Records, Reporting, and Disclosure Requirements
Sec. 25.41 Assessment area delineation.
(a) In general. A bank shall delineate one or more assessment areas
within which the OCC evaluates the bank's record of helping to meet the
credit needs of its community. The OCC does not evaluate the bank's
delineation of its assessment area(s) as a separate performance
criterion, but the OCC reviews the delineation for compliance with the
requirements of this section.
(b) Geographic area(s) for wholesale or limited purpose banks. The
assessment area(s) for a wholesale or limited purpose bank must consist
generally of one or more MSAs or metropolitan divisions (using the MSA
or metropolitan division boundaries that were in effect as of January 1
of the calendar year in which the delineation is made) or one or more
contiguous political subdivisions, such as counties, cities, or towns,
in which the bank has its main office, branches, and deposit-taking
ATMs.
(c) Geographic area(s) for other banks. The assessment area(s) for
a bank other than a wholesale or limited purpose bank must:
(1) Consist generally of one or more MSAs or metropolitan divisions
(using the MSA or metropolitan division boundaries that were in effect
as of January 1 of the calendar year in which the delineation is made)
or one or more contiguous political subdivisions, such as counties,
cities, or towns; and
(2) Include the geographies in which the bank has its main office,
its branches, and its deposit-taking ATMs, as well as the surrounding
geographies in which the bank has originated or purchased a substantial
portion of its loans (including home mortgage loans, small business and
small farm loans, and any other loans the bank chooses, such as those
consumer loans on which the bank elects to have its performance
assessed).
(d) Adjustments to geographic area(s). A bank may adjust the
boundaries of its assessment area(s) to include only the portion of a
political subdivision that it reasonably can be expected to serve. An
adjustment is particularly appropriate in the case of an assessment
area that otherwise would be extremely large, of unusual configuration,
or divided by significant geographic barriers.
(e) Limitations on the delineation of an assessment area. Each
bank's assessment area(s):
(1) Must consist only of whole geographies;
(2) May not reflect illegal discrimination;
(3) May not arbitrarily exclude low- or moderate-income
geographies, taking into account the bank's size and financial
condition; and
(4) May not extend substantially beyond an MSA boundary or beyond a
state boundary unless the assessment area is located in a multistate
MSA. If a bank serves a geographic area that extends substantially
beyond a state boundary, the bank shall delineate separate assessment
areas for the areas in each state. If a bank serves a geographic area
that extends substantially beyond an MSA boundary, the bank shall
delineate separate assessment areas for the areas inside and outside
the MSA.
(f) Banks serving military personnel. Notwithstanding the
requirements of this section, a bank whose business
[[Page 52044]]
predominantly consists of serving the needs of military personnel or
their dependents who are not located within a defined geographic area
may delineate its entire deposit customer base as its assessment area.
(g) Use of assessment area(s). The OCC uses the assessment area(s)
delineated by a bank in its evaluation of the bank's CRA performance
unless the OCC determines that the assessment area(s) do not comply
with the requirements of this section.
Sec. 25.42 Data collection, reporting, and disclosure.
(a) Loan information required to be collected and maintained. A
bank, except a small bank, shall collect, and maintain in machine
readable form (as prescribed by the OCC) until the completion of its
next CRA examination, the following data for each small business or
small farm loan originated or purchased by the bank:
(1) A unique number or alpha-numeric symbol that can be used to
identify the relevant loan file;
(2) The loan amount at origination;
(3) The loan location; and
(4) An indicator whether the loan was to a business or farm with
gross annual revenues of $1 million or less.
(b) Loan information required to be reported. A bank, except a
small bank or a bank that was a small bank during the prior calendar
year, shall report annually by March 1 to the OCC in machine readable
form (as prescribed by the OCC) the following data for the prior
calendar year:
(1) Small business and small farm loan data. For each geography in
which the bank originated or purchased a small business or small farm
loan, the aggregate number and amount of loans:
(i) With an amount at origination of $100,000 or less;
(ii) With amount at origination of more than $100,000 but less than
or equal to $250,000;
(iii) With an amount at origination of more than $250,000; and
(iv) To businesses and farms with gross annual revenues of $1
million or less (using the revenues that the bank considered in making
its credit decision);
(2) Community development loan data. The aggregate number and
aggregate amount of community development loans originated or
purchased; and
(3) Home mortgage loans. If the bank is subject to reporting under
part 1003 of this title, the location of each home mortgage loan
application, origination, or purchase outside the MSAs in which the
bank has a home or branch office (or outside any MSA) in accordance
with the requirements of part 1003 of this title.
(c) Optional data collection and maintenance--(1) Consumer loans. A
bank may collect and maintain in machine readable form (as prescribed
by the OCC) data for consumer loans originated or purchased by the bank
for consideration under the lending test. A bank may maintain data for
one or more of the following categories of consumer loans: Motor
vehicle, credit card, other secured, and other unsecured. If the bank
maintains data for loans in a certain category, it shall maintain data
for all loans originated or purchased within that category. The bank
shall maintain data separately for each category, including for each
loan:
(i) A unique number or alpha-numeric symbol that can be used to
identify the relevant loan file;
(ii) The loan amount at origination or purchase;
(iii) The loan location; and
(iv) The gross annual income of the borrower that the bank
considered in making its credit decision.
(2) Other loan data. At its option, a bank may provide other
information concerning its lending performance, including additional
loan distribution data.
(d) Data on affiliate lending. A bank that elects to have the OCC
consider loans by an affiliate, for purposes of the lending or
community development test or an approved strategic plan, shall
collect, maintain, and report for those loans the data that the bank
would have collected, maintained, and reported pursuant to paragraphs
(a), (b), and (c) of this section had the loans been originated or
purchased by the bank. For home mortgage loans, the bank shall also be
prepared to identify the home mortgage loans reported under part 1003
of this title by the affiliate.
(e) Data on lending by a consortium or a third party. A bank that
elects to have the OCC consider community development loans by a
consortium or third party, for purposes of the lending or community
development tests or an approved strategic plan, shall report for those
loans the data that the bank would have reported under paragraph (b)(2)
of this section had the loans been originated or purchased by the bank.
(f) Small banks electing evaluation under the lending, investment,
and service tests. A bank that qualifies for evaluation under the small
bank performance standards but elects evaluation under the lending,
investment, and service tests shall collect, maintain, and report the
data required for other banks pursuant to paragraphs (a) and (b) of
this section.
(g) Assessment area data. A bank, except a small bank or a bank
that was a small bank during the prior calendar year, shall collect and
report to the OCC by March 1 of each year a list for each assessment
area showing the geographies within the area.
(h) CRA Disclosure Statement. The OCC prepares annually for each
bank that reports data pursuant to this section a CRA Disclosure
Statement that contains, on a state-by-state basis:
(1) For each county (and for each assessment area smaller than a
county) with a population of 500,000 persons or fewer in which the bank
reported a small business or small farm loan:
(i) The number and amount of small business and small farm loans
reported as originated or purchased located in low-, moderate-, middle-
, and upper-income geographies;
(ii) A list grouping each geography according to whether the
geography is low-, moderate-, middle-, or upper-income;
(iii) A list showing each geography in which the bank reported a
small business or small farm loan; and
(iv) The number and amount of small business and small farm loans
to businesses and farms with gross annual revenues of $1 million or
less;
(2) For each county (and for each assessment area smaller than a
county) with a population in excess of 500,000 persons in which the
bank reported a small business or small farm loan:
(i) The number and amount of small business and small farm loans
reported as originated or purchased located in geographies with median
income relative to the area median income of less than 10 percent, 10
or more but less than 20 percent, 20 or more but less than 30 percent,
30 or more but less than 40 percent, 40 or more but less than 50
percent, 50 or more but less than 60 percent, 60 or more but less than
70 percent, 70 or more but less than 80 percent, 80 or more but less
than 90 percent, 90 or more but less than 100 percent, 100 or more but
less than 110 percent, 110 or more but less than 120 percent, and 120
percent or more;
(ii) A list grouping each geography in the county or assessment
area according to whether the median income in the geography relative
to the area median income is less than 10 percent, 10 or more but less
than 20 percent, 20 or more but less than 30 percent, 30 or more but
less than 40 percent, 40 or more but less than 50 percent, 50 or more
but less than 60 percent, 60 or more but less than 70 percent, 70 or
[[Page 52045]]
more but less than 80 percent, 80 or more but less than 90 percent, 90
or more but less than 100 percent, 100 or more but less than 110
percent, 110 or more but less than 120 percent, and 120 percent or
more;
(iii) A list showing each geography in which the bank reported a
small business or small farm loan; and
(iv) The number and amount of small business and small farm loans
to businesses and farms with gross annual revenues of $1 million or
less;
(3) The number and amount of small business and small farm loans
located inside each assessment area reported by the bank and the number
and amount of small business and small farm loans located outside the
assessment area(s) reported by the bank; and
(4) The number and amount of community development loans reported
as originated or purchased.
(i) Aggregate disclosure statements. The OCC, in conjunction with
the Board of Governors of the Federal Reserve System and the Federal
Deposit Insurance Corporation, prepares annually, for each MSA or
metropolitan division (including an MSA or metropolitan division that
crosses a state boundary) and the nonmetropolitan portion of each
state, an aggregate disclosure statement of small business and small
farm lending by all institutions subject to reporting under this part
or parts 195, 228, or 345 of this title. These disclosure statements
indicate, for each geography, the number and amount of all small
business and small farm loans originated or purchased by reporting
institutions, except that the OCC may adjust the form of the disclosure
if necessary, because of special circumstances, to protect the privacy
of a borrower or the competitive position of an institution.
(j) Central data depositories. The OCC makes the aggregate
disclosure statements, described in paragraph (i) of this section, and
the individual bank CRA Disclosure Statements, described in paragraph
(h) of this section, available to the public at central data
depositories. The OCC publishes a list of the depositories at which the
statements are available.
Sec. 25.43 Content and availability of public file.
(a) Information available to the public. A bank shall maintain a
public file that includes the following information:
(1) All written comments received from the public for the current
year and each of the prior two calendar years that specifically relate
to the bank's performance in helping to meet community credit needs,
and any response to the comments by the bank, if neither the comments
nor the responses contain statements that reflect adversely on the good
name or reputation of any persons other than the bank or publication of
which would violate specific provisions of law;
(2) A copy of the public section of the bank's most recent CRA
Performance Evaluation prepared by the OCC. The bank shall place this
copy in the public file within 30 business days after its receipt from
the OCC;
(3) A list of the bank's branches, their street addresses, and
geographies;
(4) A list of branches opened or closed by the bank during the
current year and each of the prior two calendar years, their street
addresses, and geographies;
(5) A list of services (including hours of operation, available
loan and deposit products, and transaction fees) generally offered at
the bank's branches and descriptions of material differences in the
availability or cost of services at particular branches, if any. At its
option, a bank may include information regarding the availability of
alternative systems for delivering retail banking services (e.g., ATMs,
ATMs not owned or operated by or exclusively for the bank, banking by
telephone or computer, loan production offices, and bank-at-work or
bank-by-mail programs);
(6) A map of each assessment area showing the boundaries of the
area and identifying the geographies contained within the area, either
on the map or in a separate list; and
(7) Any other information the bank chooses.
(b) Additional information available to the public--(1) Banks other
than small banks. A bank, except a small bank or a bank that was a
small bank during the prior calendar year, shall include in its public
file the following information pertaining to the bank and its
affiliates, if applicable, for each of the prior two calendar years:
(i) If the bank has elected to have one or more categories of its
consumer loans considered under the lending test, for each of these
categories, the number and amount of loans:
(A) To low-, moderate-, middle-, and upper-income individuals;
(B) Located in low-, moderate-, middle-, and upper-income census
tracts; and
(C) Located inside the bank's assessment area(s) and outside the
bank's assessment area(s); and
(ii) The bank's CRA Disclosure Statement. The bank shall place the
statement in the public file within three business days of its receipt
from the OCC.
(2) Banks required to report Home Mortgage Disclosure Act (HMDA)
data. A bank required to report home mortgage loan data pursuant part
1003 of this title shall include in its public file a written notice
that the institution's HMDA Disclosure Statement may be obtained on the
Consumer Financial Protection Bureau's (Bureau's) website at
www.consumerfinance.gov/hmda. In addition, a bank that elected to have
the OCC consider the mortgage lending of an affiliate shall include in
its public file the name of the affiliate and a written notice that the
affiliate's HMDA Disclosure Statement may be obtained at the Bureau's
website. The bank shall place the written notice(s) in the public file
within three business days after receiving notification from the
Federal Financial Institutions Examination Council of the availability
of the disclosure statement(s).
(3) Small banks. A small bank or a bank that was a small bank
during the prior calendar year shall include in its public file:
(i) The bank's loan-to-deposit ratio for each quarter of the prior
calendar year and, at its option, additional data on its loan-to-
deposit ratio; and
(ii) The information required for other banks by paragraph (b)(1)
of this section, if the bank has elected to be evaluated under the
lending, investment, and service tests.
(4) Banks with strategic plans. A bank that has been approved to be
assessed under a strategic plan shall include in its public file a copy
of that plan. A bank need not include information submitted to the OCC
on a confidential basis in conjunction with the plan.
(5) Banks with less than satisfactory ratings. A bank that received
a less than satisfactory rating during its most recent examination
shall include in its public file a description of its current efforts
to improve its performance in helping to meet the credit needs of its
entire community. The bank shall update the description quarterly.
(c) Location of public information. A bank shall make available to
the public for inspection upon request and at no cost the information
required in this section as follows:
(1) At the main office and, if an interstate bank, at one branch
office in each state, all information in the public file; and
(2) At each branch:
(i) A copy of the public section of the bank's most recent CRA
Performance Evaluation and a list of services provided by the branch;
and
[[Page 52046]]
(ii) Within five calendar days of the request, all the information
in the public file relating to the assessment area in which the branch
is located.
(d) Copies. Upon request, a bank shall provide copies, either on
paper or in another form acceptable to the person making the request,
of the information in its public file. The bank may charge a reasonable
fee not to exceed the cost of copying and mailing (if applicable).
(e) Updating. Except as otherwise provided in this section, a bank
shall ensure that the information required by this section is current
as of April 1 of each year.
Sec. 25.44 Public notice by banks.
A bank shall provide in the public lobby of its main office and
each of its branches the appropriate public notice set forth in
appendix B of this part. Only a branch of a bank having more than one
assessment area shall include the bracketed material in the notice for
branch offices. Only a bank that is an affiliate of a holding company
shall include the next to the last sentence of the notices. A bank
shall include the last sentence of the notices only if it is an
affiliate of a holding company that is not prevented by statute from
acquiring additional banks.
Sec. 25.45 Publication of planned examination schedule.
The OCC publishes at least 30 days in advance of the beginning of
each calendar quarter a list of banks scheduled for CRA examinations in
that quarter.
Subpart D [Reserved]
Subpart E--Prohibition Against Use of Interstate Branches Primarily
for Deposit Production
Sec. 25.61 Purpose and scope.
(a) Purpose. The purpose of this subpart is to implement section
109 (12 U.S.C. 1835a) of the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 (Interstate Act).
(b) Scope. (1) This subpart applies to any national bank that has
operated a covered interstate branch for a period of at least one year,
and any foreign bank that has operated a covered interstate branch that
is a Federal branch for a period of at least one year.
(2) This subpart describes the requirements imposed under 12 U.S.C.
1835a, which requires the appropriate Federal banking agencies (the
OCC, the Board of Governors of the Federal Reserve System, and the
Federal Deposit Insurance Corporation) to prescribe uniform rules that
prohibit a bank from using any authority to engage in interstate
branching pursuant to the Interstate Act, or any amendment made by the
Interstate Act to any other provision of law, primarily for the purpose
of deposit production.
Sec. 25.62 Definitions.
For purposes of this subpart, the following definitions apply:
(a) Bank means, unless the context indicates otherwise:
(1) A national bank; and
(2) A foreign bank as that term is defined in 12 U.S.C. 3101(7) and
12 CFR 28.11(i).
(b) Covered interstate branch means:
(1) Any branch of a national bank, and any Federal branch of a
foreign bank, that:
(i) Is established or acquired outside the bank's home State
pursuant to the interstate branching authority granted by the
Interstate Act or by any amendment made by the Interstate Act to any
other provision of law; or
(ii) Could not have been established or acquired outside of the
bank's home State but for the establishment or acquisition of a branch
described in paragraph (b)(1)(i) of this section; and
(2) Any bank or branch of a bank controlled by an out-of-State bank
holding company.
(c) Federal branch means Federal branch as that term is defined in
12 U.S.C. 3101(6) and 12 CFR 28.11(i).
(d) Home State means:
(1) With respect to a State bank, the State that chartered the
bank;
(2) With respect to a national bank, the State in which the main
office of the bank is located;
(3) With respect to a bank holding company, the State in which the
total deposits of all banking subsidiaries of such company are the
largest on the later of:
(i) July 1, 1966; or
(ii) The date on which the company becomes a bank holding company
under the Bank Holding Company Act;
(4) With respect to a foreign bank:
(i) For purposes of determining whether a U.S. branch of a foreign
bank is a covered interstate branch, the home State of the foreign bank
as determined in accordance with 12 U.S.C. 3103(c) and 12 CFR 28.11(o);
and
(ii) For purposes of determining whether a branch of a U.S. bank
controlled by a foreign bank is a covered interstate branch, the State
in which the total deposits of all banking subsidiaries of such foreign
bank are the largest on the later of:
(A) July 1, 1966; or
(B) The date on which the foreign bank becomes a bank holding
company under the Bank Holding Company Act.
(e) Host State means a State in which a covered interstate branch
is established or acquired.
(f) Host state loan-to-deposit ratio generally means, with respect
to a particular host state, the ratio of total loans in the host state
relative to total deposits from the host state for all banks (including
institutions covered under the definition of ``bank'' in 12 U.S.C.
1813(a)(1)) that have that state as their home state, as determined and
updated periodically by the appropriate Federal banking agencies and
made available to the public.
(g) Out-of-State bank holding company means, with respect to any
State, a bank holding company whose home State is another State.
(h) State means state as that term is defined in 12 U.S.C.
1813(a)(3).
(i) Statewide loan-to-deposit ratio means, with respect to a bank,
the ratio of the bank's loans to its deposits in a state in which the
bank has one or more covered interstate branches, as determined by the
OCC.
Sec. 25.63 Loan-to-deposit ratio screen.
(a) Application of screen. Beginning no earlier than one year after
a covered interstate branch is acquired or established, the OCC will
consider whether the bank's statewide loan-to-deposit ratio is less
than 50 percent of the relevant host State loan-to-deposit ratio.
(b) Results of screen. (1) If the OCC determines that the bank's
statewide loan-to-deposit ratio is 50 percent or more of the host state
loan-to-deposit ratio, no further consideration under this subpart is
required.
(2) If the OCC determines that the bank's statewide loan-to-deposit
ratio is less than 50 percent of the host state loan-to-deposit ratio,
or if reasonably available data are insufficient to calculate the
bank's statewide loan-to-deposit ratio, the OCC will make a credit
needs determination for the bank as provided in Sec. 25.64.
Sec. 25.64 Credit needs determination.
(a) In general. The OCC will review the loan portfolio of the bank
and determine whether the bank is reasonably helping to meet the credit
needs of the communities in the host state that are served by the bank.
(b) Guidelines. The OCC will use the following considerations as
guidelines when making the determination pursuant to paragraph (a) of
this section:
(1) Whether covered interstate branches were formerly part of a
failed or failing depository institution;
(2) Whether covered interstate branches were acquired under
[[Page 52047]]
circumstances where there was a low loan-to-deposit ratio because of
the nature of the acquired institution's business or loan portfolio;
(3) Whether covered interstate branches have a high concentration
of commercial or credit card lending, trust services, or other
specialized activities, including the extent to which the covered
interstate branches accept deposits in the host state;
(4) The CRA ratings received by the bank, if any;
(5) Economic conditions, including the level of loan demand, within
the communities served by the covered interstate branches;
(6) The safe and sound operation and condition of the bank; and
(7) The OCC's CRA regulations (subparts A through D of this part)
and interpretations of those regulations.
Sec. 25.65 Sanctions.
(a) In general. If the OCC determines that a bank is not reasonably
helping to meet the credit needs of the communities served by the bank
in the host state, and that the bank's statewide loan-to-deposit ratio
is less than 50 percent of the host state loan-to-deposit ratio, the
OCC:
(1) May order that a bank's covered interstate branch or branches
be closed unless the bank provides reasonable assurances to the
satisfaction of the OCC, after an opportunity for public comment, that
the bank has an acceptable plan under which the bank will reasonably
help to meet the credit needs of the communities served by the bank in
the host state; and
(2) Will not permit the bank to open a new branch in the host state
that would be considered to be a covered interstate branch unless the
bank provides reasonable assurances to the satisfaction of the OCC,
after an opportunity for public comment, that the bank will reasonably
help to meet the credit needs of the community that the new branch will
serve.
(b) Notice prior to closure of a covered interstate branch. Before
exercising the OCC's authority to order the bank to close a covered
interstate branch, the OCC will issue to the bank a notice of the OCC's
intent to order the closure and will schedule a hearing within 60 days
of issuing the notice.
(c) Hearing. The OCC will conduct a hearing scheduled under
paragraph (b) of this section in accordance with the provisions of 12
U.S.C. 1818(h) and 12 CFR part 19.
Appendix A to Part 25--Ratings
(a) Ratings in general. (1) In assigning a rating, the OCC
evaluates a bank's performance under the applicable performance
criteria in this part, in accordance with Sec. Sec. 25.21 and
25.28. This includes consideration of low-cost education loans
provided to low-income borrowers and activities in cooperation with
minority- or women-owned financial institutions and low-income
credit unions, as well as adjustments on the basis of evidence of
discriminatory or other illegal credit practices.
(2) A bank's performance need not fit each aspect of a
particular rating profile in order to receive that rating, and
exceptionally strong performance with respect to some aspects may
compensate for weak performance in others. The bank's overall
performance, however, must be consistent with safe and sound banking
practices and generally with the appropriate rating profile as
follows.
(b) Banks evaluated under the lending, investment, and service
tests--(1) Lending performance rating. The OCC assigns each bank's
lending performance one of the five following ratings.
(i) Outstanding. The OCC rates a bank's lending performance
``outstanding'' if, in general, it demonstrates:
(A) Excellent responsiveness to credit needs in its assessment
area(s), taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in
its assessment area(s);
(B) A substantial majority of its loans are made in its
assessment area(s);
(C) An excellent geographic distribution of loans in its
assessment area(s);
(D) An excellent distribution, particularly in its assessment
area(s), of loans among individuals of different income levels and
businesses (including farms) of different sizes, given the product
lines offered by the bank;
(E) An excellent record of serving the credit needs of highly
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross
annual revenues of $1 million or less, consistent with safe and
sound operations;
(F) Extensive use of innovative or flexible lending practices in
a safe and sound manner to address the credit needs of low- or
moderate-income individuals or geographies; and
(G) It is a leader in making community development loans.
(ii) High satisfactory. The OCC rates a bank's lending
performance ``high satisfactory'' if, in general, it demonstrates:
(A) Good responsiveness to credit needs in its assessment
area(s), taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in
its assessment area(s);
(B) A high percentage of its loans are made in its assessment
area(s);
(C) A good geographic distribution of loans in its assessment
area(s);
(D) A good distribution, particularly in its assessment area(s),
of loans among individuals of different income levels and businesses
(including farms) of different sizes, given the product lines
offered by the bank;
(E) A good record of serving the credit needs of highly
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross
annual revenues of $1 million or less, consistent with safe and
sound operations;
(F) Use of innovative or flexible lending practices in a safe
and sound manner to address the credit needs of low- or moderate-
income individuals or geographies; and
(G) It has made a relatively high level of community development
loans.
(iii) Low satisfactory. The OCC rates a bank's lending
performance ``low satisfactory'' if, in general, it demonstrates:
(A) Adequate responsiveness to credit needs in its assessment
area(s), taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in
its assessment area(s);
(B) An adequate percentage of its loans are made in its
assessment area(s);
(C) An adequate geographic distribution of loans in its
assessment area(s);
(D) An adequate distribution, particularly in its assessment
area(s), of loans among individuals of different income levels and
businesses (including farms) of different sizes, given the product
lines offered by the bank;
(E) An adequate record of serving the credit needs of highly
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross
annual revenues of $1 million or less, consistent with safe and
sound operations;
(F) Limited use of innovative or flexible lending practices in a
safe and sound manner to address the credit needs of low- or
moderate-income individuals or geographies; and
(G) It has made an adequate level of community development
loans.
(iv) Needs to improve. The OCC rates a bank's lending
performance ``needs to improve'' if, in general, it demonstrates:
(A) Poor responsiveness to credit needs in its assessment
area(s), taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in
its assessment area(s);
(B) A small percentage of its loans are made in its assessment
area(s);
(C) A poor geographic distribution of loans, particularly to
low- or moderate-income geographies, in its assessment area(s);
(D) A poor distribution, particularly in its assessment area(s),
of loans among individuals of different income levels and businesses
(including farms) of different sizes, given the product lines
offered by the bank;
(E) A poor record of serving the credit needs of highly
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross
annual revenues of $1 million or less, consistent with safe and
sound operations;
(F) Little use of innovative or flexible lending practices in a
safe and sound manner to address the credit needs of low- or
moderate-income individuals or geographies; and
[[Page 52048]]
(G) It has made a low level of community development loans.
(v) Substantial noncompliance. The OCC rates a bank's lending
performance as being in ``substantial noncompliance'' if, in
general, it demonstrates:
(A) A very poor responsiveness to credit needs in its assessment
area(s), taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in
its assessment area(s);
(B) A very small percentage of its loans are made in its
assessment area(s);
(C) A very poor geographic distribution of loans, particularly
to low- or moderate-income geographies, in its assessment area(s);
(D) A very poor distribution, particularly in its assessment
area(s), of loans among individuals of different income levels and
businesses (including farms) of different sizes, given the product
lines offered by the bank;
(E) A very poor record of serving the credit needs of highly
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross
annual revenues of $1 million or less, consistent with safe and
sound operations;
(F) No use of innovative or flexible lending practices in a safe
and sound manner to address the credit needs of low- or moderate-
income individuals or geographies; and
(G) It has made few, if any, community development loans.
(2) Investment performance rating. The OCC assigns each bank's
investment performance one of the five following ratings.
(i) Outstanding. The OCC rates a bank's investment performance
``outstanding'' if, in general, it demonstrates:
(A) An excellent level of qualified investments, particularly
those that are not routinely provided by private investors, often in
a leadership position;
(B) Extensive use of innovative or complex qualified
investments; and
(C) Excellent responsiveness to credit and community development
needs.
(ii) High satisfactory. The OCC rates a bank's investment
performance ``high satisfactory'' if, in general, it demonstrates:
(A) A significant level of qualified investments, particularly
those that are not routinely provided by private investors,
occasionally in a leadership position;
(B) Significant use of innovative or complex qualified
investments; and
(C) Good responsiveness to credit and community development
needs.
(iii) Low satisfactory. The OCC rates a bank's investment
performance ``low satisfactory'' if, in general, it demonstrates:
(A) An adequate level of qualified investments, particularly
those that are not routinely provided by private investors, although
rarely in a leadership position;
(B) Occasional use of innovative or complex qualified
investments; and
(C) Adequate responsiveness to credit and community development
needs.
(iv) Needs to improve. The OCC rates a bank's investment
performance ``needs to improve'' if, in general, it demonstrates:
(A) A poor level of qualified investments, particularly those
that are not routinely provided by private investors;
(B) Rare use of innovative or complex qualified investments; and
(C) Poor responsiveness to credit and community development
needs.
(v) Substantial noncompliance. The OCC rates a bank's investment
performance as being in ``substantial noncompliance'' if, in
general, it demonstrates:
(A) Few, if any, qualified investments, particularly those that
are not routinely provided by private investors;
(B) No use of innovative or complex qualified investments; and
(C) Very poor responsiveness to credit and community development
needs.
(3) Service performance rating. The OCC assigns each bank's
service performance one of the five following ratings.
(i) Outstanding. The OCC rates a bank's service performance
``outstanding'' if, in general, the bank demonstrates:
(A) Its service delivery systems are readily accessible to
geographies and individuals of different income levels in its
assessment area(s);
(B) To the extent changes have been made, its record of opening
and closing branches has improved the accessibility of its delivery
systems, particularly in low- or moderate-income geographies or to
low- or moderate-income individuals;
(C) Its services (including, where appropriate, business hours)
are tailored to the convenience and needs of its assessment area(s),
particularly low- or moderate-income geographies or low- or
moderate-income individuals; and
(D) It is a leader in providing community development services.
(ii) High satisfactory. The OCC rates a bank's service
performance ``high satisfactory'' if, in general, the bank
demonstrates:
(A) Its service delivery systems are accessible to geographies
and individuals of different income levels in its assessment
area(s);
(B) To the extent changes have been made, its record of opening
and closing branches has not adversely affected the accessibility of
its delivery systems, particularly in low- and moderate-income
geographies and to low- and moderate-income individuals;
(C) Its services (including, where appropriate, business hours)
do not vary in a way that inconveniences its assessment area(s),
particularly low- and moderate-income geographies and low- and
moderate-income individuals; and
(D) It provides a relatively high level of community development
services.
(iii) Low satisfactory. The OCC rates a bank's service
performance ``low satisfactory'' if, in general, the bank
demonstrates:
(A) Its service delivery systems are reasonably accessible to
geographies and individuals of different income levels in its
assessment area(s);
(B) To the extent changes have been made, its record of opening
and closing branches has generally not adversely affected the
accessibility of its delivery systems, particularly in low- and
moderate-income geographies and to low- and moderate-income
individuals;
(C) Its services (including, where appropriate, business hours)
do not vary in a way that inconveniences its assessment area(s),
particularly low- and moderate-income geographies and low- and
moderate-income individuals; and
(D) It provides an adequate level of community development
services.
(iv) Needs to improve. The OCC rates a bank's service
performance ``needs to improve'' if, in general, the bank
demonstrates:
(A) Its service delivery systems are unreasonably inaccessible
to portions of its assessment area(s), particularly to low- or
moderate-income geographies or to low- or moderate-income
individuals;
(B) To the extent changes have been made, its record of opening
and closing branches has adversely affected the accessibility its
delivery systems, particularly in low- or moderate-income
geographies or to low- or moderate-income individuals;
(C) Its services (including, where appropriate, business hours)
vary in a way that inconveniences its assessment area(s),
particularly low- or moderate-income geographies or low- or
moderate-income individuals; and
(D) It provides a limited level of community development
services.
(v) Substantial noncompliance. The OCC rates a bank's service
performance as being in ``substantial noncompliance'' if, in
general, the bank demonstrates:
(A) Its service delivery systems are unreasonably inaccessible
to significant portions of its assessment area(s), particularly to
low- or moderate-income geographies or to low- or moderate-income
individuals;
(B) To the extent changes have been made, its record of opening
and closing branches has significantly adversely affected the
accessibility of its delivery systems, particularly in low- or
moderate-income geographies or to low- or moderate-income
individuals;
(C) Its services (including, where appropriate, business hours)
vary in a way that significantly inconveniences its assessment
area(s), particularly low- or moderate-income geographies or low- or
moderate-income individuals; and
(D) It provides few, if any, community development services.
(c) Wholesale or limited purpose banks. The OCC assigns each
wholesale or limited purpose bank's community development
performance one of the four following ratings.
(1) Outstanding. The OCC rates a wholesale or limited purpose
bank's community development performance ``outstanding'' if, in
general, it demonstrates:
(i) A high level of community development loans, community
development services, or qualified investments, particularly
investments that are not routinely provided by private investors;
(ii) Extensive use of innovative or complex qualified
investments, community development loans, or community development
services; and
[[Page 52049]]
(iii) Excellent responsiveness to credit and community
development needs in its assessment area(s).
(2) Satisfactory. The OCC rates a wholesale or limited purpose
bank's community development performance ``satisfactory'' if, in
general, it demonstrates:
(i) An adequate level of community development loans, community
development services, or qualified investments, particularly
investments that are not routinely provided by private investors;
(ii) Occasional use of innovative or complex qualified
investments, community development loans, or community development
services; and
(iii) Adequate responsiveness to credit and community
development needs in its assessment area(s).
(3) Needs to improve. The OCC rates a wholesale or limited
purpose bank's community development performance as ``needs to
improve'' if, in general, it demonstrates:
(i) A poor level of community development loans, community
development services, or qualified investments, particularly
investments that are not routinely provided by private investors;
(ii) Rare use of innovative or complex qualified investments,
community development loans, or community development services; and
(iii) Poor responsiveness to credit and community development
needs in its assessment area(s).
(4) Substantial noncompliance. The OCC rates a wholesale or
limited purpose bank's community development performance in
``substantial noncompliance'' if, in general, it demonstrates:
(i) Few, if any, community development loans, community
development services, or qualified investments, particularly
investments that are not routinely provided by private investors;
(ii) No use of innovative or complex qualified investments,
community development loans, or community development services; and
(iii) Very poor responsiveness to credit and community
development needs in its assessment area(s).
(d) Banks evaluated under the small bank performance standards--
(1) Lending test ratings. (i) Eligibility for a satisfactory lending
test rating. The OCC rates a small bank's lending performance
``satisfactory'' if, in general, the bank demonstrates:
(A) A reasonable loan-to-deposit ratio (considering seasonal
variations) given the bank's size, financial condition, the credit
needs of its assessment area(s), and taking into account, as
appropriate, other lending-related activities such as loan
originations for sale to the secondary markets and community
development loans and qualified investments;
(B) A majority of its loans and, as appropriate, other lending-
related activities, are in its assessment area;
(C) A distribution of loans to and, as appropriate, other
lending-related activities for individuals of different income
levels (including low- and moderate-income individuals) and
businesses and farms of different sizes that is reasonable given the
demographics of the bank's assessment area(s);
(D) A record of taking appropriate action, when warranted, in
response to written complaints, if any, about the bank's performance
in helping to meet the credit needs of its assessment area(s); and
(E) A reasonable geographic distribution of loans given the
bank's assessment area(s).
(ii) Eligibility for an ``outstanding'' lending test rating. A
small bank that meets each of the standards for a ``satisfactory''
rating under this paragraph and exceeds some or all of those
standards may warrant consideration for a lending test rating of
``outstanding.''
(iii) Needs to improve or substantial noncompliance ratings. A
small bank may also receive a lending test rating of ``needs to
improve'' or ``substantial noncompliance'' depending on the degree
to which its performance has failed to meet the standard for a
``satisfactory'' rating.
(2) Community development test ratings for intermediate small
banks--(i) Eligibility for a satisfactory community development test
rating. The OCC rates an intermediate small bank's community
development performance ``satisfactory'' if the bank demonstrates
adequate responsiveness to the community development needs of its
assessment area(s) through community development loans, qualified
investments, and community development services. The adequacy of the
bank's response will depend on its capacity for such community
development activities, its assessment area's need for such
community development activities, and the availability of such
opportunities for community development in the bank's assessment
area(s).
(ii) Eligibility for an outstanding community development test
rating. The OCC rates an intermediate small bank's community
development performance ``outstanding'' if the bank demonstrates
excellent responsiveness to community development needs in its
assessment area(s) through community development loans, qualified
investments, and community development services, as appropriate,
considering the bank's capacity and the need and availability of
such opportunities for community development in the bank's
assessment area(s).
(iii) Needs to improve or substantial noncompliance ratings. An
intermediate small bank may also receive a community development
test rating of ``needs to improve'' or ``substantial noncompliance''
depending on the degree to which its performance has failed to meet
the standards for a ``satisfactory'' rating.
(3) Overall rating--(i) Eligibility for a satisfactory overall
rating. No intermediate small bank may receive an assigned overall
rating of ``satisfactory'' unless it receives a rating of at least
``satisfactory'' on both the lending test and the community
development test.
(ii) Eligibility for an outstanding overall rating. (A) An
intermediate small bank that receives an ``outstanding'' rating on
one test and at least ``satisfactory'' on the other test may receive
an assigned overall rating of ``outstanding.''
(B) A small bank that is not an intermediate small bank that
meets each of the standards for a ``satisfactory'' rating under the
lending test and exceeds some or all of those standards may warrant
consideration for an overall rating of ``outstanding.'' In assessing
whether a bank's performance is ``outstanding,'' the OCC considers
the extent to which the bank exceeds each of the performance
standards for a ``satisfactory'' rating and its performance in
making qualified investments and its performance in providing
branches and other services and delivery systems that enhance credit
availability in its assessment area(s).
(iii) Needs to improve or substantial noncompliance overall
ratings. A small bank may also receive a rating of ``needs to
improve'' or ``substantial noncompliance'' depending on the degree
to which its performance has failed to meet the standards for a
``satisfactory'' rating.
(e) Strategic plan assessment and rating--(1) Satisfactory
goals. The OCC approves as ``satisfactory'' measurable goals that
adequately help to meet the credit needs of the bank's assessment
area(s).
(2) Outstanding goals. If the plan identifies a separate group
of measurable goals that substantially exceed the levels approved as
``satisfactory,'' the OCC will approve those goals as
``outstanding.''
(3) Rating. The OCC assesses the performance of a bank operating
under an approved plan to determine if the bank has met its plan
goals:
(i) If the bank substantially achieves its plan goals for a
satisfactory rating, the OCC will rate the bank's performance under
the plan as ``satisfactory.''
(ii) If the bank exceeds its plan goals for a satisfactory
rating and substantially achieves its plan goals for an outstanding
rating, the OCC will rate the bank's performance under the plan as
``outstanding.''
(iii) If the bank fails to meet substantially its plan goals for
a satisfactory rating, the OCC will rate the bank as either ``needs
to improve'' or ``substantial noncompliance,'' depending on the
extent to which it falls short of its plan goals, unless the bank
elected in its plan to be rated otherwise, as provided in Sec.
25.27(f)(4).
Appendix B to Part 25--CRA Notice
(a) Notice for main offices and, if an interstate bank, one
branch office in each state.
Community Reinvestment Act Notice
Under the Federal Community Reinvestment Act (CRA), the
Comptroller of the Currency evaluates our record of helping to meet
the credit needs of this community consistent with safe and sound
operations. The Comptroller also takes this record into account when
deciding on certain applications submitted by us.
Your involvement is encouraged.
You are entitled to certain information about our operations and
our performance under the CRA, including, for example, information
about our branches, such as their location and services provided at
them; the public section of our most recent CRA
[[Page 52050]]
Performance Evaluation, prepared by the Comptroller; and comments
received from the public relating to our performance in helping to
meet community credit needs, as well as our responses to those
comments. You may review this information today.
At least 30 days before the beginning of each quarter, the
Comptroller publishes a nationwide list of the banks that are
scheduled for CRA examination in that quarter. This list is
available from the Deputy Comptroller (address). You may send
written comments about our performance in helping to meet community
credit needs to (name and address of official at bank) and Deputy
Comptroller (address). Your letter, together with any response by
us, will be considered by the Comptroller in evaluating our CRA
performance and may be made public.
You may ask to look at any comments received by the Deputy
Comptroller. You may also request from the Deputy Comptroller an
announcement of our applications covered by the CRA filed with the
Comptroller. We are an affiliate of (name of holding company), a
bank holding company. You may request from the (title of responsible
official), Federal Reserve Bank of ____ (address) an announcement of
applications covered by the CRA filed by bank holding companies.
(b) Notice for branch offices.
Community Reinvestment Act Notice
Under the Federal Community Reinvestment Act (CRA), the
Comptroller of the Currency evaluates our record of helping to meet
the credit needs of this community consistent with safe and sound
operations. The Comptroller also takes this record into account when
deciding on certain applications submitted by us.
Your involvement is encouraged.
You are entitled to certain information about our operations and
our performance under the CRA. You may review today the public
section of our most recent CRA evaluation, prepared by the
Comptroller, and a list of services provided at this branch. You may
also have access to the following additional information, which we
will make available to you at this branch within five calendar days
after you make a request to us: (1) A map showing the assessment
area containing this branch, which is the area in which the
Comptroller evaluates our CRA performance in this community; (2)
information about our branches in this assessment area; (3) a list
of services we provide at those locations; (4) data on our lending
performance in this assessment area; and (5) copies of all written
comments received by us that specifically relate to our CRA
performance in this assessment area, and any responses we have made
to those comments. If we are operating under an approved strategic
plan, you may also have access to a copy of the plan.
[If you would like to review information about our CRA
performance in other communities served by us, the public file for
our entire bank is available at (name of office located in state),
located at (address).]
At least 30 days before the beginning of each quarter, the
Comptroller publishes a nationwide list of the banks that are
scheduled for CRA examination in that quarter. This list is
available from the Deputy Comptroller (address). You may send
written comments about our performance in helping to meet community
credit needs to (name and address of official at bank) and Deputy
Comptroller (address). Your letter, together with any response by
us, will be considered by the Comptroller in evaluating our CRA
performance and may be made public.
You may ask to look at any comments received by the Deputy
Comptroller. You may also request from the Deputy Comptroller an
announcement of our applications covered by the CRA filed with the
Comptroller. We are an affiliate of (name of holding company), a
bank holding company. You may request from the (title of responsible
official), Federal Reserve Bank of ____ (address) an announcement of
applications covered by the CRA filed by bank holding companies.
0
2. Add 12 CFR part 195 to read as follows:
PART 195--COMMUNITY REINVESTMENT ACT
Subpart A--General
Sec.
195.11 Authority, purposes, and scope.
195.12 Definitions.
Subpart B--Standards for Assessing Performance
Sec.
195.21 Performance tests, standards, and ratings, in general.
195.22 Lending test.
195.23 Investment test.
195.24 Service test.
195.25 Community development test for wholesale or limited purpose
savings associations.
195.26 Small savings association performance standards.
195.27 Strategic plan.
195.28 Assigned ratings.
195.29 Effect of CRA performance on applications.
Subpart C--Records, Reporting, and Disclosure Requirements
Sec.
195.41 Assessment area delineation.
195.42 Data collection, reporting, and disclosure.
195.43 Content and availability of public file.
195.44 Public notice by savings associations.
195.45 Publication of planned examination schedule.
Appendix A to Part 195--Ratings
Appendix B to Part 195--CRA Notice
Authority: 12 U.S.C. 1462a, 1463, 1464, 1814, 1816, 1828(c),
2901 through 2908, and 5412(b)(2)(B).
Subpart A--General
Sec. 195.11 Authority, purposes, and scope.
(a) Authority. This part is issued under the Community Reinvestment
Act of 1977 (CRA), as amended (12 U.S.C. 2901 et seq.); section 5, as
amended, and sections 3, and 4, as added, of the Home Owners' Loan Act
of 1933 (12 U.S.C. 1462a, 1463, and 1464); and sections 4, 6, and
18(c), as amended of the Federal Deposit Insurance Act (12 U.S.C. 1814,
1816, 1828(c)).
(b) Purposes. In enacting the CRA, the Congress required each
appropriate Federal financial supervisory agency to assess an
institution's record of helping to meet the credit needs of the local
communities in which the institution is chartered, consistent with the
safe and sound operation of the institution, and to take this record
into account in the agency's evaluation of an application for a deposit
facility by the institution. This part is intended to carry out the
purposes of the CRA by:
(1) Establishing the framework and criteria by which the
appropriate Federal banking agency assesses a savings association's
record of helping to meet the credit needs of its entire community,
including low- and moderate-income neighborhoods, consistent with the
safe and sound operation of the savings association; and
(2) Providing that the appropriate Federal banking agency takes
that record into account in considering certain applications.
(c) Scope--(1) General. This part applies to all savings
associations except as provided in paragraph (c)(2) of this section.
(2) Certain special purpose savings associations. This part does
not apply to special purpose savings associations that do not perform
commercial or retail banking services by granting credit to the public
in the ordinary course of business, other than as incident to their
specialized operations. These associations include banker's banks, as
defined in 12 U.S.C. 24 (Seventh), and associations that engage only in
one or more of the following activities: Providing cash management
controlled disbursement services or serving as correspondent
associations, trust companies, or clearing agents.
Sec. 195.12 Definitions.
For purposes of this part, the following definitions apply:
(a) Affiliate means any company that controls, is controlled by, or
is under common control with another company. The term ``control'' has
the meaning given to that term in 12 U.S.C. 1841(a)(2), and a company
is under common control with another company if both companies are
directly or indirectly controlled by the same company.
(b) Area median income means:
(1) The median family income for the MSA, if a person or geography
is located
[[Page 52051]]
in an MSA, or for the metropolitan division, if a person or geography
is located in an MSA that has been subdivided into metropolitan
divisions; or
(2) The statewide nonmetropolitan median family income, if a person
or geography is located outside an MSA.
(c) Assessment area means a geographic area delineated in
accordance with Sec. 195.41.
(d) Automated teller machine (ATM) means an automated, unstaffed
banking facility owned or operated by, or operated exclusively for, the
savings association at which deposits are received, cash dispersed, or
money lent.
(e) [Reserved]
(f) Branch means a staffed banking facility authorized as a branch,
whether shared or unshared, including, for example, a mini-branch in a
grocery store or a branch operated in conjunction with any other local
business or nonprofit organization.
(g) Community development means:
(1) Affordable housing (including multifamily rental housing) for
low or moderate-income individuals;
(2) Community services targeted to low- or moderate-income
individuals;
(3) Activities that promote economic development by financing
businesses or farms that meet the size eligibility standards of the
Small Business Administration's Development Company or Small Business
Investment Company programs (13 CFR 121.301) or have gross annual
revenues of $1 million or less; or
(4) Activities that revitalize or stabilize--
(i) Low- or moderate-income geographies;
(ii) Designated disaster areas; or
(iii) Distressed or underserved, nonmetropolitan middle-income
geographies designated by the appropriate Federal banking agency based
on--
(A) Rates of poverty, unemployment, and population loss; or
(B) Population size, density, and dispersion. Activities revitalize
and stabilize geographies designated based on population size, density,
and dispersion if they help to meet essential community needs,
including needs of low- and moderate-income individuals.
(h) Community development loan means a loan that:
(1) Has as its primary purpose community development; and
(2) Except in the case of a wholesale or limited purpose savings
association:
(i) Has not been reported or collected by the savings association
or an affiliate for consideration in the savings association's
assessment as a home mortgage, small business, small farm, or consumer
loan, unless the loan is for a multifamily dwelling (as defined in
Sec. 1003.2(n) of this title); and
(ii) Benefits the savings association's assessment area(s) or a
broader statewide or regional area that includes the savings
association's assessment area(s).
(i) Community development service means a service that:
(1) Has as its primary purpose community development;
(2) Is related to the provision of financial services; and
(3) Has not been considered in the evaluation of the savings
association's retail banking services under Sec. 195.24(d).
(j) Consumer loan means a loan to one or more individuals for
household, family, or other personal expenditures. A consumer loan does
not include a home mortgage, small business, or small farm loan.
Consumer loans include the following categories of loans:
(1) Motor vehicle loan, which is a consumer loan extended for the
purchase of and secured by a motor vehicle;
(2) Credit card loan, which is a line of credit for household,
family, or other personal expenditures that is accessed by a borrower's
use of a ``credit card,'' as this term is defined in Sec. 1026.2 of
this title;
(3) Other secured consumer loan, which is a secured consumer loan
that is not included in one of the other categories of consumer loans;
and
(4) Other unsecured consumer loan, which is an unsecured consumer
loan that is not included in one of the other categories of consumer
loans.
(k) Geography means a census tract delineated by the United States
Bureau of the Census in the most recent decennial census.
(l) Home mortgage loan means a closed-end mortgage loan or an open-
end line of credit as these terms are defined under Sec. 1003.2 of
this title and that is not an excluded transaction under Sec.
1003.3(c)(1) through (10) and (13) of this title.
(m) Income level includes:
(1) Low-income, which means an individual income that is less than
50 percent of the area median income or a median family income that is
less than 50 percent in the case of a geography.
(2) Moderate-income, which means an individual income that is at
least 50 percent and less than 80 percent of the area median income or
a median family income that is at least 50 and less than 80 percent in
the case of a geography.
(3) Middle-income, which means an individual income that is at
least 80 percent and less than 120 percent of the area median income or
a median family income that is at least 80 and less than 120 percent in
the case of a geography.
(4) Upper-income, which means an individual income that is 120
percent or more of the area median income or a median family income
that is 120 percent or more in the case of a geography.
(n) Limited purpose savings association means a savings association
that offers only a narrow product line (such as credit card or motor
vehicle loans) to a regional or broader market and for which a
designation as a limited purpose savings association is in effect, in
accordance with Sec. 195.25(b).
(o) Loan location. A loan is located as follows:
(1) A consumer loan is located in the geography where the borrower
resides;
(2) A home mortgage loan is located in the geography where the
property to which the loan relates is located; and
(3) A small business or small farm loan is located in the geography
where the main business facility or farm is located or where the loan
proceeds otherwise will be applied, as indicated by the borrower.
(p) Loan production office means a staffed facility, other than a
branch, that is open to the public and that provides lending-related
services, such as loan information and applications.
(q) Metropolitan division means a metropolitan division as defined
by the Director of the Office of Management and Budget.
(r) MSA means a metropolitan statistical area as defined by the
Director of the Office of Management and Budget.
(s) Nonmetropolitan area means any area that is not located in an
MSA.
(t) Qualified investment means a lawful investment, deposit,
membership share, or grant that has as its primary purpose community
development.
(u) Small savings association--(1) Definition. Small savings
association means a savings association that, as of December 31 of
either of the prior two calendar years, had assets of less than $1.322
billion. Intermediate small savings association means a small savings
association with assets of at least $330 million as of December 31 of
both of the prior two calendar years and less than $1.322 billion as of
December 31 of either of the prior two calendar years.
(2) Adjustment. The dollar figures in paragraph (u)(1) of this
section shall be adjusted annually and published by the OCC based on
the year-to-year change in the average of the Consumer Price Index for
Urban Wage Earners and Clerical
[[Page 52052]]
Workers, not seasonally adjusted, for each twelve-month period ending
in November, with rounding to the nearest million.
(v) Small business loan means a loan included in ``loans to small
businesses'' as defined in the instructions for preparation of the
Thrift Financial Report (TFR) or Consolidated Reports of Condition and
Income (Call Report), as appropriate.
(w) Small farm loan means a loan included in ``loans to small
farms'' as defined in the instructions for preparation of the TFR or
Call Report, as appropriate.
(x) Wholesale savings association means a savings association that
is not in the business of extending home mortgage, small business,
small farm, or consumer loans to retail customers, and for which a
designation as a wholesale savings association is in effect, in
accordance with Sec. 195.25(b).
Subpart B--Standards for Assessing Performance
Sec. 195.21 Performance tests, standards, and ratings, in general.
(a) Performance tests and standards. The appropriate Federal
banking agency assesses the CRA performance of a savings association in
an examination as follows:
(1) Lending, investment, and service tests. The appropriate Federal
banking agency applies the lending, investment, and service tests, as
provided in Sec. Sec. 195.22 through 195.24, in evaluating the
performance of a savings association, except as provided in paragraphs
(a)(2), (3), and (4) of this section.
(2) Community development test for wholesale or limited purpose
savings associations. The appropriate Federal banking agency applies
the community development test for a wholesale or limited purpose
savings association, as provided in Sec. 195.25, except as provided in
paragraph (a)(4) of this section.
(3) Small savings association performance standards. The
appropriate Federal banking agency applies the small savings
association performance standards as provided in Sec. 195.26 in
evaluating the performance of a small savings association or a savings
association that was a small savings association during the prior
calendar year, unless the savings association elects to be assessed as
provided in paragraphs (a)(1), (2), or (4) of this section. The savings
association may elect to be assessed as provided in paragraph (a)(1) of
this section only if it collects and reports the data required for
other savings associations under Sec. 195.42.
(4) Strategic plan. The appropriate Federal banking agency
evaluates the performance of a savings association under a strategic
plan if the savings association submits, and the appropriate Federal
banking agency approves, a strategic plan as provided in Sec. 195.27.
(b) Performance context. The appropriate Federal banking agency
applies the tests and standards in paragraph (a) of this section and
also considers whether to approve a proposed strategic plan in the
context of:
(1) Demographic data on median income levels, distribution of
household income, nature of housing stock, housing costs, and other
relevant data pertaining to a savings association's assessment area(s);
(2) Any information about lending, investment, and service
opportunities in the savings association's assessment area(s)
maintained by the savings association or obtained from community
organizations, state, local, and tribal governments, economic
development agencies, or other sources;
(3) The savings association's product offerings and business
strategy as determined from data provided by the savings association;
(4) Institutional capacity and constraints, including the size and
financial condition of the savings association, the economic climate
(national, regional, and local), safety and soundness limitations, and
any other factors that significantly affect the savings association's
ability to provide lending, investments, or services in its assessment
area(s);
(5) The savings association's past performance and the performance
of similarly situated lenders;
(6) The savings association's public file, as described in Sec.
195.43, and any written comments about the savings association's CRA
performance submitted to the savings association or the appropriate
Federal banking agency; and
(7) Any other information deemed relevant by the appropriate
Federal banking agency.
(c) Assigned ratings. The appropriate Federal banking agency
assigns to a savings association one of the following four ratings
pursuant to Sec. 195.28 and appendix A of this part: ``outstanding'';
``satisfactory''; ``needs to improve''; or ``substantial
noncompliance,'' as provided in 12 U.S.C. 2906(b)(2). The rating
assigned by the appropriate Federal banking agency reflects the savings
association's record of helping to meet the credit needs of its entire
community, including low- and moderate-income neighborhoods, consistent
with the safe and sound operation of the savings association.
(d) Safe and sound operations. This part and the CRA do not require
a savings association to make loans or investments or to provide
services that are inconsistent with safe and sound operations. To the
contrary, the appropriate Federal banking agency anticipates savings
associations can meet the standards of this part with safe and sound
loans, investments, and services on which the savings associations
expect to make a profit. Savings associations are permitted and
encouraged to develop and apply flexible underwriting standards for
loans that benefit low- or moderate-income geographies or individuals,
only if consistent with safe and sound operations.
(e) Low-cost education loans provided to low-income borrowers. In
assessing and taking into account the record of a savings association
under this part, the appropriate Federal banking agency considers, as a
factor, low-cost education loans originated by the savings association
to borrowers, particularly in its assessment area(s), who have an
individual income that is less than 50 percent of the area median
income. For purposes of this paragraph, ``low-cost education loans''
means any education loan, as defined in section 140(a)(7) of the Truth
in Lending Act (15 U.S.C. 1650(a)(7)) (including a loan under a state
or local education loan program), originated by the savings association
for a student at an ``institution of higher education,'' as that term
is generally defined in sections 101 and 102 of the Higher Education
Act of 1965 (20 U.S.C. 1001 and 1002) and the implementing regulations
published by the U.S. Department of Education, with interest rates and
fees no greater than those of comparable education loans offered
directly by the U.S. Department of Education. Such rates and fees are
specified in section 455 of the Higher Education Act of 1965 (20 U.S.C.
1087e).
(f) Activities in cooperation with minority- or women-owned
financial institutions and low-income credit unions. In assessing and
taking into account the record of a nonminority-owned and nonwomen-
owned savings association under this part, the appropriate Federal
banking agency considers as a factor capital investment, loan
participation, and other ventures undertaken by the savings association
in cooperation with minority- and women-owned financial institutions
and low-
[[Page 52053]]
income credit unions. Such activities must help meet the credit needs
of local communities in which the minority- and women-owned financial
institutions and low-income credit unions are chartered. To be
considered, such activities need not also benefit the savings
association's assessment area(s) or the broader statewide or regional
area that includes the savings association's assessment area(s).
Sec. 195.22 Lending test.
(a) Scope of test. (1) The lending test evaluates a savings
association's record of helping to meet the credit needs of its
assessment area(s) through its lending activities by considering a
savings association's home mortgage, small business, small farm, and
community development lending. If consumer lending constitutes a
substantial majority of a savings association's business, the
appropriate Federal banking agency will evaluate the savings
association's consumer lending in one or more of the following
categories: Motor vehicle, credit card, other secured, and other
unsecured loans. In addition, at a savings association's option, the
appropriate Federal banking agency will evaluate one or more categories
of consumer lending, if the savings association has collected and
maintained, as required in Sec. 195.42(c)(1), the data for each
category that the savings association elects to have the appropriate
Federal banking agency evaluate.
(2) The appropriate Federal banking agency considers originations
and purchases of loans. The appropriate Federal banking agency will
also consider any other loan data the savings association may choose to
provide, including data on loans outstanding, commitments and letters
of credit.
(3) A savings association may ask the appropriate Federal banking
agency to consider loans originated or purchased by consortia in which
the savings association participates or by third parties in which the
savings association has invested only if the loans meet the definition
of community development loans and only in accordance with paragraph
(d) of this section. The appropriate Federal banking agency will not
consider these loans under any criterion of the lending test except the
community development lending criterion.
(b) Performance criteria. The appropriate Federal banking agency
evaluates a savings association's lending performance pursuant to the
following criteria:
(1) Lending activity. The number and amount of the savings
association's home mortgage, small business, small farm, and consumer
loans, if applicable, in the savings association's assessment area(s);
(2) Geographic distribution. The geographic distribution of the
savings association's home mortgage, small business, small farm, and
consumer loans, if applicable, based on the loan location, including:
(i) The proportion of the savings association's lending in the
savings association's assessment area(s);
(ii) The dispersion of lending in the savings association's
assessment area(s); and
(iii) The number and amount of loans in low-, moderate-, middle-,
and upper-income geographies in the savings association's assessment
area(s);
(3) Borrower characteristics. The distribution, particularly in the
savings association's assessment area(s), of the savings association's
home mortgage, small business, small farm, and consumer loans, if
applicable, based on borrower characteristics, including the number and
amount of:
(i) Home mortgage loans to low-, moderate-, middle-, and upper-
income individuals;
(ii) Small business and small farm loans to businesses and farms
with gross annual revenues of $1 million or less;
(iii) Small business and small farm loans by loan amount at
origination; and
(iv) Consumer loans, if applicable, to low-, moderate-, middle-,
and upper-income individuals;
(4) Community development lending. The savings association's
community development lending, including the number and amount of
community development loans, and their complexity and innovativeness;
and
(5) Innovative or flexible lending practices. The savings
association's use of innovative or flexible lending practices in a safe
and sound manner to address the credit needs of low- or moderate-income
individuals or geographies.
(c) Affiliate lending. (1) At a savings association's option, the
appropriate Federal banking agency will consider loans by an affiliate
of the savings association, if the savings association provides data on
the affiliate's loans pursuant to Sec. 195.42.
(2) The appropriate Federal banking agency considers affiliate
lending subject to the following constraints:
(i) No affiliate may claim a loan origination or loan purchase if
another institution claims the same loan origination or purchase; and
(ii) If a savings association elects to have the appropriate
Federal banking agency consider loans within a particular lending
category made by one or more of the savings association's affiliates in
a particular assessment area, the savings association shall elect to
have the appropriate Federal banking agency consider, in accordance
with paragraph (c)(1) of this section, all the loans within that
lending category in that particular assessment area made by all of the
savings association's affiliates.
(3) The appropriate Federal banking agency does not consider
affiliate lending in assessing a savings association's performance
under paragraph (b)(2)(i) of this section.
(d) Lending by a consortium or a third party. Community development
loans originated or purchased by a consortium in which the savings
association participates or by a third party in which the savings
association has invested:
(1) Will be considered, at the savings association's option, if the
savings association reports the data pertaining to these loans under
Sec. 195.42(b)(2); and
(2) May be allocated among participants or investors, as they
choose, for purposes of the lending test, except that no participant or
investor:
(i) May claim a loan origination or loan purchase if another
participant or investor claims the same loan origination or purchase;
or
(ii) May claim loans accounting for more than its percentage share
(based on the level of its participation or investment) of the total
loans originated by the consortium or third party.
(e) Lending performance rating. The appropriate Federal banking
agency rates a savings association's lending performance as provided in
appendix A of this part.
Sec. 195.23 Investment test.
(a) Scope of test. The investment test evaluates a savings
association's record of helping to meet the credit needs of its
assessment area(s) through qualified investments that benefit its
assessment area(s) or a broader statewide or regional area that
includes the savings association's assessment area(s).
(b) Exclusion. Activities considered under the lending or service
tests may not be considered under the investment test.
(c) Affiliate investment. At a savings association's option, the
appropriate Federal banking agency will consider, in its assessment of
a savings association's investment performance, a qualified investment
made by an affiliate of the savings association, if the qualified
investment is not claimed by any other institution.
(d) Disposition of branch premises. Donating, selling on favorable
terms, or making available on a rent-free basis a
[[Page 52054]]
branch of the savings association that is located in a predominantly
minority neighborhood to a minority depository institution or women's
depository institution (as these terms are defined in 12 U.S.C.
2907(b)) will be considered as a qualified investment.
(e) Performance criteria. The appropriate Federal banking agency
evaluates the investment performance of a savings association pursuant
to the following criteria:
(1) The dollar amount of qualified investments;
(2) The innovativeness or complexity of qualified investments;
(3) The responsiveness of qualified investments to credit and
community development needs; and
(4) The degree to which the qualified investments are not routinely
provided by private investors.
(f) Investment performance rating. The appropriate Federal banking
agency rates a savings association's investment performance as provided
in appendix A of this part.
Sec. 195.24 Service test.
(a) Scope of test. The service test evaluates a savings
association's record of helping to meet the credit needs of its
assessment area(s) by analyzing both the availability and effectiveness
of a savings association's systems for delivering retail banking
services and the extent and innovativeness of its community development
services.
(b) Area(s) benefitted. Community development services must benefit
a savings association's assessment area(s) or a broader statewide or
regional area that includes the savings association's assessment
area(s).
(c) Affiliate service. At a savings association's option, the
appropriate Federal banking agency will consider, in its assessment of
a savings association's service performance, a community development
service provided by an affiliate of the savings association, if the
community development service is not claimed by any other institution.
(d) Performance criteria--retail banking services. The appropriate
Federal banking agency evaluates the availability and effectiveness of
a savings association's systems for delivering retail banking services,
pursuant to the following criteria:
(1) The current distribution of the savings association's branches
among low-, moderate-, middle-, and upper-income geographies;
(2) In the context of its current distribution of the savings
association's branches, the savings association's record of opening and
closing branches, particularly branches located in low- or moderate-
income geographies or primarily serving low- or moderate-income
individuals;
(3) The availability and effectiveness of alternative systems for
delivering retail banking services (e.g., ATMs, ATMs not owned or
operated by or exclusively for the savings association, banking by
telephone or computer, loan production offices, and bank-at-work or
bank-by-mail programs) in low- and moderate-income geographies and to
low- and moderate-income individuals; and
(4) The range of services provided in low-, moderate-, middle-, and
upper-income geographies and the degree to which the services are
tailored to meet the needs of those geographies.
(e) Performance criteria--community development services. The
appropriate Federal banking agency evaluates community development
services pursuant to the following criteria:
(1) The extent to which the savings association provides community
development services; and
(2) The innovativeness and responsiveness of community development
services.
(f) Service performance rating. The appropriate Federal banking
agency rates a savings association's service performance as provided in
appendix A of this part.
Sec. 195.25 Community development test for wholesale or limited
purpose savings associations.
(a) Scope of test. The appropriate Federal banking agency assesses
a wholesale or limited purpose savings association's record of helping
to meet the credit needs of its assessment area(s) under the community
development test through its community development lending, qualified
investments, or community development services.
(b) Designation as a wholesale or limited purpose savings
association. In order to receive a designation as a wholesale or
limited purpose savings association, a savings association shall file a
request, in writing, with the appropriate Federal banking agency, at
least three months prior to the proposed effective date of the
designation. If the appropriate Federal banking agency approves the
designation, it remains in effect until the savings association
requests revocation of the designation or until one year after the
appropriate Federal banking agency notifies the savings association
that the appropriate Federal banking agency has revoked the designation
on its own initiative.
(c) Performance criteria. The appropriate Federal banking agency
evaluates the community development performance of a wholesale or
limited purpose savings association pursuant to the following criteria:
(1) The number and amount of community development loans (including
originations and purchases of loans and other community development
loan data provided by the savings association, such as data on loans
outstanding, commitments, and letters of credit), qualified
investments, or community development services;
(2) The use of innovative or complex qualified investments,
community development loans, or community development services and the
extent to which the investments are not routinely provided by private
investors; and
(3) The savings association's responsiveness to credit and
community development needs.
(d) Indirect activities. At a savings association's option, the
appropriate Federal banking agency will consider in its community
development performance assessment:
(1) Qualified investments or community development services
provided by an affiliate of the savings association, if the investments
or services are not claimed by any other institution; and
(2) Community development lending by affiliates, consortia and
third parties, subject to the requirements and limitations in Sec.
195.22(c) and (d).
(e) Benefit to assessment area(s)--(1) Benefit inside assessment
area(s). The appropriate Federal banking agency considers all qualified
investments, community development loans, and community development
services that benefit areas within the savings association's assessment
area(s) or a broader statewide or regional area that includes the
savings association's assessment area(s).
(2) Benefit outside assessment area(s). The appropriate Federal
banking agency considers the qualified investments, community
development loans, and community development services that benefit
areas outside the savings association's assessment area(s), if the
savings association has adequately addressed the needs of its
assessment area(s).
(f) Community development performance rating. The appropriate
Federal banking agency rates a savings association's community
development performance as provided in appendix A of this part.
Sec. 195.26 Small savings association performance standards.
(a) Performance criteria--(1) Small savings associations that are
not intermediate small savings associations.
[[Page 52055]]
The appropriate Federal banking agency evaluates the record of a small
savings association that is not, or that was not during the prior
calendar year, an intermediate small savings association, of helping to
meet the credit needs of its assessment area(s) pursuant to the
criteria set forth in paragraph (b) of this section.
(2) Intermediate small savings associations. The appropriate
Federal banking agency evaluates the record of a small savings
association that is, or that was during the prior calendar year, an
intermediate small savings association, of helping to meet the credit
needs of its assessment area(s) pursuant to the criteria set forth in
paragraphs (b) and (c) of this section.
(b) Lending test. A small savings association's lending performance
is evaluated pursuant to the following criteria:
(1) The savings association's loan-to-deposit ratio, adjusted for
seasonal variation, and, as appropriate, other lending-related
activities, such as loan originations for sale to the secondary
markets, community development loans, or qualified investments;
(2) The percentage of loans and, as appropriate, other lending-
related activities located in the savings association's assessment
area(s);
(3) The savings association's record of lending to and, as
appropriate, engaging in other lending-related activities for borrowers
of different income levels and businesses and farms of different sizes;
(4) The geographic distribution of the savings association's loans;
and
(5) The savings association's record of taking action, if
warranted, in response to written complaints about its performance in
helping to meet credit needs in its assessment area(s).
(c) Community development test. An intermediate small savings
association's community development performance also is evaluated
pursuant to the following criteria:
(1) The number and amount of community development loans;
(2) The number and amount of qualified investments;
(3) The extent to which the savings association provides community
development services; and
(4) The savings association's responsiveness through such
activities to community development lending, investment, and services
needs.
(d) Small savings association performance rating. The appropriate
Federal banking agency rates the performance of a savings association
evaluated under this section as provided in appendix A of this part.
Sec. 195.27 Strategic plan.
(a) Alternative election. The appropriate Federal banking agency
will assess a savings association's record of helping to meet the
credit needs of its assessment area(s) under a strategic plan if:
(1) The savings association has submitted the plan to the
appropriate Federal banking agency as provided for in this section;
(2) The appropriate Federal banking agency has approved the plan;
(3) The plan is in effect; and
(4) The savings association has been operating under an approved
plan for at least one year.
(b) Data reporting. The appropriate Federal banking agency's
approval of a plan does not affect the savings association's
obligation, if any, to report data as required by Sec. 195.42.
(c) Plans in general--(1) Term. A plan may have a term of no more
than five years, and any multi-year plan must include annual interim
measurable goals under which the appropriate Federal banking agency
will evaluate the savings association's performance.
(2) Multiple assessment areas. A savings association with more than
one assessment area may prepare a single plan for all of its assessment
areas or one or more plans for one or more of its assessment areas.
(3) Treatment of affiliates. Affiliated institutions may prepare a
joint plan if the plan provides measurable goals for each institution.
Activities may be allocated among institutions at the institutions'
option, provided that the same activities are not considered for more
than one institution.
(d) Public participation in plan development. Before submitting a
plan to the appropriate Federal banking agency for approval, a savings
association shall:
(1) Informally seek suggestions from members of the public in its
assessment area(s) covered by the plan while developing the plan;
(2) Once the savings association has developed a plan, formally
solicit public comment on the plan for at least 30 days by publishing
notice in at least one newspaper of general circulation in each
assessment area covered by the plan; and
(3) During the period of formal public comment, make copies of the
plan available for review by the public at no cost at all offices of
the savings association in any assessment area covered by the plan and
provide copies of the plan upon request for a reasonable fee to cover
copying and mailing, if applicable.
(e) Submission of plan. The savings association shall submit its
plan to the appropriate Federal banking agency at least three months
prior to the proposed effective date of the plan. The savings
association shall also submit with its plan a description of its
informal efforts to seek suggestions from members of the public, any
written public comment received, and, if the plan was revised in light
of the comment received, the initial plan as released for public
comment.
(f) Plan content--(1) Measurable goals. (i) A savings association
shall specify in its plan measurable goals for helping to meet the
credit needs of each assessment area covered by the plan, particularly
the needs of low- and moderate-income geographies and low- and
moderate-income individuals, through lending, investment, and services,
as appropriate.
(ii) A savings association shall address in its plan all three
performance categories and, unless the savings association has been
designated as a wholesale or limited purpose savings association, shall
emphasize lending and lending-related activities. Nevertheless, a
different emphasis, including a focus on one or more performance
categories, may be appropriate if responsive to the characteristics and
credit needs of its assessment area(s), considering public comment and
the savings association's capacity and constraints, product offerings,
and business strategy.
(2) Confidential information. A savings association may submit
additional information to the appropriate Federal banking agency on a
confidential basis, but the goals stated in the plan must be
sufficiently specific to enable the public and the appropriate Federal
banking agency to judge the merits of the plan.
(3) Satisfactory and outstanding goals. A savings association shall
specify in its plan measurable goals that constitute ``satisfactory''
performance. A plan may specify measurable goals that constitute
``outstanding'' performance. If a savings association submits, and the
appropriate Federal banking agency approves, both ``satisfactory'' and
``outstanding'' performance goals, the appropriate Federal banking
agency will consider the savings association eligible for an
``outstanding'' performance rating.
(4) Election if satisfactory goals not substantially met. A savings
association may elect in its plan that, if the savings association
fails to meet substantially its plan goals for a satisfactory rating,
the appropriate Federal banking agency will evaluate the savings
association's performance under the lending,
[[Page 52056]]
investment, and service tests, the community development test, or the
small savings association performance standards, as appropriate.
(g) Plan approval--(1) Timing. The appropriate Federal banking
agency will act upon a plan within 60 calendar days after it receives
the complete plan and other material required under paragraph (e) of
this section. If the appropriate Federal banking agency fails to act
within this time period, the plan shall be deemed approved unless the
appropriate Federal banking agency extends the review period for good
cause.
(2) Public participation. In evaluating the plan's goals, the
appropriate Federal banking agency considers the public's involvement
in formulating the plan, written public comment on the plan, and any
response by the savings association to public comment on the plan.
(3) Criteria for evaluating plan. The appropriate Federal banking
agency evaluates a plan's measurable goals using the following
criteria, as appropriate:
(i) The extent and breadth of lending or lending-related
activities, including, as appropriate, the distribution of loans among
different geographies, businesses and farms of different sizes, and
individuals of different income levels, the extent of community
development lending, and the use of innovative or flexible lending
practices to address credit needs;
(ii) The amount and innovativeness, complexity, and responsiveness
of the savings association's qualified investments; and
(iii) The availability and effectiveness of the savings
association's systems for delivering retail banking services and the
extent and innovativeness of the savings association's community
development services.
(h) Plan amendment. During the term of a plan, a savings
association may request the appropriate Federal banking agency to
approve an amendment to the plan on grounds that there has been a
material change in circumstances. The savings association shall develop
an amendment to a previously approved plan in accordance with the
public participation requirements of paragraph (d) of this section.
(i) Plan assessment. The appropriate Federal banking agency
approves the goals and assesses performance under a plan as provided
for in appendix A of this part.
Sec. 195.28 Assigned ratings.
(a) Ratings in general. Subject to paragraphs (b) and (c) of this
section, the appropriate Federal banking agency assigns to a savings
association a rating of ``outstanding,'' ``satisfactory,'' ``needs to
improve,'' or ``substantial noncompliance'' based on the savings
association's performance under the lending, investment and service
tests, the community development test, the small savings association
performance standards, or an approved strategic plan, as applicable.
(b) Lending, investment, and service tests. The appropriate Federal
banking agency assigns a rating for a savings association assessed
under the lending, investment, and service tests in accordance with the
following principles:
(1) A savings association that receives an ``outstanding'' rating
on the lending test receives an assigned rating of at least
``satisfactory'';
(2) A savings association that receives an ``outstanding'' rating
on both the service test and the investment test and a rating of at
least ``high satisfactory'' on the lending test receives an assigned
rating of ``outstanding''; and
(3) No savings association may receive an assigned rating of
``satisfactory'' or higher unless it receives a rating of at least
``low satisfactory'' on the lending test.
(c) Effect of evidence of discriminatory or other illegal credit
practices. (1) The appropriate Federal banking agency's evaluation of a
savings association's CRA performance is adversely affected by evidence
of discriminatory or other illegal credit practices in any geography by
the savings association or in any assessment area by any affiliate
whose loans have been considered as part of the savings association's
lending performance. In connection with any type of lending activity
described in Sec. 195.22(a), evidence of discriminatory or other
credit practices that violate an applicable law, rule, or regulation
includes, but is not limited to:
(i) Discrimination against applicants on a prohibited basis in
violation, for example, of the Equal Credit Opportunity Act or the Fair
Housing Act;
(ii) Violations of the Home Ownership and Equity Protection Act;
(iii) Violations of section 5 of the Federal Trade Commission Act;
(iv) Violations of section 8 of the Real Estate Settlement
Procedures Act; and
(v) Violations of the Truth in Lending Act provisions regarding a
consumer's right of rescission.
(2) In determining the effect of evidence of practices described in
paragraph (c)(1) of this section on the savings association's assigned
rating, the appropriate Federal banking agency considers the nature,
extent, and strength of the evidence of the practices; the policies and
procedures that the savings association (or affiliate, as applicable)
has in place to prevent the practices; any corrective action that the
savings association (or affiliate, as applicable) has taken or has
committed to take, including voluntary corrective action resulting from
self-assessment; and any other relevant information.
Sec. 195.29 Effect of CRA performance on applications.
(a) CRA performance. Among other factors, the appropriate Federal
banking agency takes into account the record of performance under the
CRA of each applicant savings association, and for applications under
section 10(e) of the Home Owners' Loan Act (12 U.S.C. 1467a(e)), of
each proposed subsidiary savings association, in considering an
application for:
(1) The establishment of a domestic branch or other facility that
would be authorized to take deposits;
(2) The relocation of the main office or a branch;
(3) The merger or consolidation with or the acquisition of the
assets or assumption of the liabilities of an insured depository
institution requiring appropriate Federal banking agency approval under
the Bank Merger Act (12 U.S.C. 1828(c));
(4) A Federal thrift charter; and
(5) Acquisitions subject to section 10(e) of the Home Owners' Loan
Act (12 U.S.C. 1467a(e)).
(b) Charter application. An applicant for a Federal thrift charter
shall submit with its application a description of how it will meet its
CRA objectives. The appropriate Federal banking agency takes the
description into account in considering the application and may deny or
condition approval on that basis.
(c) Interested parties. The appropriate Federal banking agency
takes into account any views expressed by interested parties that are
submitted in accordance with the applicable comment procedures in
considering CRA performance in an application listed in paragraphs (a)
and (b) of this section.
(d) Denial or conditional approval of application. A savings
association's record of performance may be the basis for denying or
conditioning approval of an application listed in paragraph (a) of this
section.
(e) Insured depository institution. For purposes of this section,
the term ``insured depository institution'' has the
[[Page 52057]]
meaning given to that term in 12 U.S.C. 1813.
Subpart C--Records, Reporting, and Disclosure Requirements
Sec. 195.41 Assessment area delineation.
(a) In general. A savings association shall delineate one or more
assessment areas within which the appropriate Federal banking agency
evaluates the savings association's record of helping to meet the
credit needs of its community. The appropriate Federal banking agency
does not evaluate the savings association's delineation of its
assessment area(s) as a separate performance criterion, but the
appropriate Federal banking agency reviews the delineation for
compliance with the requirements of this section.
(b) Geographic area(s) for wholesale or limited purpose savings
associations. The assessment area(s) for a wholesale or limited purpose
savings association must consist generally of one or more MSAs or
metropolitan divisions (using the MSA or metropolitan division
boundaries that were in effect as of January 1 of the calendar year in
which the delineation is made) or one or more contiguous political
subdivisions, such as counties, cities, or towns, in which the savings
association has its main office, branches, and deposit-taking ATMs.
(c) Geographic area(s) for other savings associations. The
assessment area(s) for a savings association other than a wholesale or
limited purpose savings association must:
(1) Consist generally of one or more MSAs or metropolitan divisions
(using the MSA or metropolitan division boundaries that were in effect
as of January 1 of the calendar year in which the delineation is made)
or one or more contiguous political subdivisions, such as counties,
cities, or towns; and
(2) Include the geographies in which the savings association has
its main office, its branches, and its deposit-taking ATMs, as well as
the surrounding geographies in which the savings association has
originated or purchased a substantial portion of its loans (including
home mortgage loans, small business and small farm loans, and any other
loans the savings association chooses, such as those consumer loans on
which the savings association elects to have its performance assessed).
(d) Adjustments to geographic area(s). A savings association may
adjust the boundaries of its assessment area(s) to include only the
portion of a political subdivision that it reasonably can be expected
to serve. An adjustment is particularly appropriate in the case of an
assessment area that otherwise would be extremely large, of unusual
configuration, or divided by significant geographic barriers.
(e) Limitations on the delineation of an assessment area. Each
savings association's assessment area(s):
(1) Must consist only of whole geographies;
(2) May not reflect illegal discrimination;
(3) May not arbitrarily exclude low- or moderate-income
geographies, taking into account the savings association's size and
financial condition; and
(4) May not extend substantially beyond an MSA boundary or beyond a
state boundary unless the assessment area is located in a multistate
MSA. If a savings association serves a geographic area that extends
substantially beyond a state boundary, the savings association shall
delineate separate assessment areas for the areas in each state. If a
savings association serves a geographic area that extends substantially
beyond an MSA boundary, the savings association shall delineate
separate assessment areas for the areas inside and outside the MSA.
(f) Savings associations serving military personnel.
Notwithstanding the requirements of this section, a savings association
whose business predominantly consists of serving the needs of military
personnel or their dependents who are not located within a defined
geographic area may delineate its entire deposit customer base as its
assessment area.
(g) Use of assessment area(s). The appropriate Federal banking
agency uses the assessment area(s) delineated by a savings association
in its evaluation of the savings association's CRA performance unless
the appropriate Federal banking agency determines that the assessment
area(s) do not comply with the requirements of this section.
Sec. 195.42 Data collection, reporting, and disclosure.
(a) Loan information required to be collected and maintained. A
savings association, except a small savings association, shall collect,
and maintain in machine readable form (as prescribed by the appropriate
Federal banking agency) until the completion of its next CRA
examination, the following data for each small business or small farm
loan originated or purchased by the savings association:
(1) A unique number or alpha-numeric symbol that can be used to
identify the relevant loan file;
(2) The loan amount at origination;
(3) The loan location; and
(4) An indicator whether the loan was to a business or farm with
gross annual revenues of $1 million or less.
(b) Loan information required to be reported. A savings
association, except a small savings association or a savings
association that was a small savings association during the prior
calendar year, shall report annually by March 1 to the appropriate
Federal banking agency in machine readable form (as prescribed by the
agency) the following data for the prior calendar year:
(1) Small business and small farm loan data. For each geography in
which the savings association originated or purchased a small business
or small farm loan, the aggregate number and amount of loans:
(i) With an amount at origination of $100,000 or less;
(ii) With amount at origination of more than $100,000 but less than
or equal to $250,000;
(iii) With an amount at origination of more than $250,000; and
(iv) To businesses and farms with gross annual revenues of $1
million or less (using the revenues that the savings association
considered in making its credit decision);
(2) Community development loan data. The aggregate number and
aggregate amount of community development loans originated or
purchased; and
(3) Home mortgage loans. If the savings association is subject to
reporting under part 1003 of this title, the location of each home
mortgage loan application, origination, or purchase outside the MSAs in
which the savings association has a home or branch office (or outside
any MSA) in accordance with the requirements of part 1003 of this
title.
(c) Optional data collection and maintenance--(1) Consumer loans. A
savings association may collect and maintain in machine readable form
(as prescribed by the appropriate Federal banking agency) data for
consumer loans originated or purchased by the savings association for
consideration under the lending test. A savings association may
maintain data for one or more of the following categories of consumer
loans: Motor vehicle, credit card, other secured, and other unsecured.
If the savings association maintains data for loans in a certain
category, it shall maintain data for all loans originated or purchased
within that category. The savings association shall maintain data
separately for each category, including for each loan:
(i) A unique number or alpha-numeric symbol that can be used to
identify the relevant loan file;
[[Page 52058]]
(ii) The loan amount at origination or purchase;
(iii) The loan location; and
(iv) The gross annual income of the borrower that the savings
association considered in making its credit decision.
(2) Other loan data. At its option, a savings association may
provide other information concerning its lending performance, including
additional loan distribution data.
(d) Data on affiliate lending. A savings association that elects to
have the appropriate Federal banking agency consider loans by an
affiliate, for purposes of the lending or community development test or
an approved strategic plan, shall collect, maintain, and report for
those loans the data that the savings association would have collected,
maintained, and reported pursuant to paragraphs (a), (b), and (c) of
this section had the loans been originated or purchased by the savings
association. For home mortgage loans, the savings association shall
also be prepared to identify the home mortgage loans reported under
part 1003 of this title by the affiliate.
(e) Data on lending by a consortium or a third-party. A savings
association that elects to have the appropriate Federal banking agency
consider community development loans by a consortium or third party,
for purposes of the lending or community development tests or an
approved strategic plan, shall report for those loans the data that the
savings association would have reported under paragraph (b)(2) of this
section had the loans been originated or purchased by the savings
association.
(f) Small savings associations electing evaluation under the
lending, investment, and service tests. A savings association that
qualifies for evaluation under the small savings association
performance standards but elects evaluation under the lending,
investment, and service tests shall collect, maintain, and report the
data required for other savings associations pursuant to paragraphs (a)
and (b) of this section.
(g) Assessment area data. A savings association, except a small
savings association or a savings association that was a small savings
association during the prior calendar year, shall collect and report to
the appropriate Federal banking agency by March 1 of each year a list
for each assessment area showing the geographies within the area.
(h) CRA Disclosure Statement. The appropriate Federal banking
agency prepares annually for each savings association that reports data
pursuant to this section a CRA Disclosure Statement that contains, on a
state-by-state basis:
(1) For each county (and for each assessment area smaller than a
county) with a population of 500,000 persons or fewer in which the
savings association reported a small business or small farm loan:
(i) The number and amount of small business and small farm loans
reported as originated or purchased located in low-, moderate-, middle-
, and upper-income geographies;
(ii) A list grouping each geography according to whether the
geography is low-, moderate-, middle-, or upper-income;
(iii) A list showing each geography in which the savings
association reported a small business or small farm loan; and
(iv) The number and amount of small business and small farm loans
to businesses and farms with gross annual revenues of $1 million or
less;
(2) For each county (and for each assessment area smaller than a
county) with a population in excess of 500,000 persons in which the
savings association reported a small business or small farm loan:
(i) The number and amount of small business and small farm loans
reported as originated or purchased located in geographies with median
income relative to the area median income of less than 10 percent, 10
or more but less than 20 percent, 20 or more but less than 30 percent,
30 or more but less than 40 percent, 40 or more but less than 50
percent, 50 or more but less than 60 percent, 60 or more but less than
70 percent, 70 or more but less than 80 percent, 80 or more but less
than 90 percent, 90 or more but less than 100 percent, 100 or more but
less than 110 percent, 110 or more but less than 120 percent, and 120
percent or more;
(ii) A list grouping each geography in the county or assessment
area according to whether the median income in the geography relative
to the area median income is less than 10 percent, 10 or more but less
than 20 percent, 20 or more but less than 30 percent, 30 or more but
less than 40 percent, 40 or more but less than 50 percent, 50 or more
but less than 60 percent, 60 or more but less than 70 percent, 70 or
more but less than 80 percent, 80 or more but less than 90 percent, 90
or more but less than 100 percent, 100 or more but less than 110
percent, 110 or more but less than 120 percent, and 120 percent or
more;
(iii) A list showing each geography in which the savings
association reported a small business or small farm loan; and
(iv) The number and amount of small business and small farm loans
to businesses and farms with gross annual revenues of $1 million or
less;
(3) The number and amount of small business and small farm loans
located inside each assessment area reported by the savings association
and the number and amount of small business and small farm loans
located outside the assessment area(s) reported by the savings
association; and
(4) The number and amount of community development loans reported
as originated or purchased.
(i) Aggregate disclosure statements. The appropriate Federal
banking agency, in conjunction with the Board of Governors of the
Federal Reserve System and the Federal Deposit Insurance Corporation or
the OCC, as appropriate, prepares annually, for each MSA or
metropolitan division (including an MSA or metropolitan division that
crosses a state boundary) and the nonmetropolitan portion of each
state, an aggregate disclosure statement of small business and small
farm lending by all institutions subject to reporting under this part
or parts 25, 228, or 345 of this title. These disclosure statements
indicate, for each geography, the number and amount of all small
business and small farm loans originated or purchased by reporting
institutions, except that the appropriate Federal banking agency may
adjust the form of the disclosure if necessary, because of special
circumstances, to protect the privacy of a borrower or the competitive
position of an institution.
(j) Central data depositories. The appropriate Federal banking
agency makes the aggregate disclosure statements, described in
paragraph (i) of this section, and the individual savings association
CRA Disclosure Statements, described in paragraph (h) of this section,
available to the public at central data depositories. The appropriate
Federal banking agency publishes a list of the depositories at which
the statements are available.
Sec. 195.43 Content and availability of public file.
(a) Information available to the public. A savings association
shall maintain a public file that includes the following information:
(1) All written comments received from the public for the current
year and each of the prior two calendar years that specifically relate
to the savings association's performance in helping to meet community
credit needs, and any response to the comments by the savings
association, if neither the comments nor the responses contain
[[Page 52059]]
statements that reflect adversely on the good name or reputation of any
persons other than the savings association or publication of which
would violate specific provisions of law;
(2) A copy of the public section of the savings association's most
recent CRA Performance Evaluation prepared by the appropriate Federal
banking agency. The savings association shall place this copy in the
public file within 30 business days after its receipt from the
appropriate Federal banking agency;
(3) A list of the savings association's branches, their street
addresses, and geographies;
(4) A list of branches opened or closed by the savings association
during the current year and each of the prior two calendar years, their
street addresses, and geographies;
(5) A list of services (including hours of operation, available
loan and deposit products, and transaction fees) generally offered at
the savings association's branches and descriptions of material
differences in the availability or cost of services at particular
branches, if any. At its option, a savings association may include
information regarding the availability of alternative systems for
delivering retail banking services (e.g., ATMs, ATMs not owned or
operated by or exclusively for the savings association, banking by
telephone or computer, loan production offices, and bank-at-work or
bank-by-mail programs);
(6) A map of each assessment area showing the boundaries of the
area and identifying the geographies contained within the area, either
on the map or in a separate list; and
(7) Any other information the savings association chooses.
(b) Additional information available to the public--(1) Savings
associations other than small savings associations. A savings
association, except a small savings association or a savings
association that was a small savings association during the prior
calendar year, shall include in its public file the following
information pertaining to the savings association and its affiliates,
if applicable, for each of the prior two calendar years:
(i) If the savings association has elected to have one or more
categories of its consumer loans considered under the lending test, for
each of these categories, the number and amount of loans:
(A) To low-, moderate-, middle-, and upper-income individuals;
(B) Located in low-, moderate-, middle-, and upper-income census
tracts; and
(C) Located inside the savings association's assessment area(s) and
outside the savings association's assessment area(s); and
(ii) The savings association's CRA Disclosure Statement. The
savings association shall place the statement in the public file within
three business days of its receipt from the appropriate Federal banking
agency.
(2) Savings associations required to report Home Mortgage
Disclosure Act (HMDA) data. A savings association required to report
home mortgage loan data pursuant part 1003 of this title shall include
in its public file a written notice that the institution's HMDA
Disclosure Statement may be obtained on the Consumer Financial
Protection Bureau's (Bureau's) website at www.consumerfinance.gov/hmda.
In addition, a savings association that elected to have the appropriate
Federal banking agency consider the mortgage lending of an affiliate
shall include in its public file the name of the affiliate and a
written notice that the affiliate's HMDA Disclosure Statement may be
obtained at the Bureau's website. The savings association shall place
the written notice(s) in the public file within three business days
after receiving notification from the Federal Financial Institutions
Examination Council of the availability of the disclosure statement(s).
(3) Small savings associations. A small savings association or a
savings association that was a small savings association during the
prior calendar year shall include in its public file:
(i) The savings association's loan-to-deposit ratio for each
quarter of the prior calendar year and, at its option, additional data
on its loan-to-deposit ratio; and
(ii) The information required for other savings associations by
paragraph (b)(1) of this section, if the savings association has
elected to be evaluated under the lending, investment, and service
tests.
(4) Savings associations with strategic plans. A savings
association that has been approved to be assessed under a strategic
plan shall include in its public file a copy of that plan. A savings
association need not include information submitted to the appropriate
Federal banking agency on a confidential basis in conjunction with the
plan.
(5) Savings associations with less than satisfactory ratings. A
savings association that received a less than satisfactory rating
during its most recent examination shall include in its public file a
description of its current efforts to improve its performance in
helping to meet the credit needs of its entire community. The savings
association shall update the description quarterly.
(c) Location of public information. A savings association shall
make available to the public for inspection upon request and at no cost
the information required in this section as follows:
(1) At the main office and, if an interstate savings association,
at one branch office in each state, all information in the public file;
and
(2) At each branch:
(i) A copy of the public section of the savings association's most
recent CRA Performance Evaluation and a list of services provided by
the branch; and
(ii) Within five calendar days of the request, all the information
in the public file relating to the assessment area in which the branch
is located.
(d) Copies. Upon request, a savings association shall provide
copies, either on paper or in another form acceptable to the person
making the request, of the information in its public file. The savings
association may charge a reasonable fee not to exceed the cost of
copying and mailing (if applicable).
(e) Updating. Except as otherwise provided in this section, a
savings association shall ensure that the information required by this
section is current as of April 1 of each year.
Sec. 195.44 Public notice by savings associations.
A savings association shall provide in the public lobby of its main
office and each of its branches the appropriate public notice set forth
in appendix B of this part. Only a branch of a savings association
having more than one assessment area shall include the bracketed
material in the notice for branch offices. Only a savings association
that is an affiliate of a holding company shall include the last two
sentences of the notices.
Sec. 195.45 Publication of planned examination schedule.
The appropriate Federal banking agency publishes at least 30 days
in advance of the beginning of each calendar quarter a list of savings
associations scheduled for CRA examinations in that quarter.
Appendix A to Part 195--Ratings
(a) Ratings in general. (1) In assigning a rating, the
appropriate Federal banking agency evaluates a savings association's
performance under the applicable performance criteria in this part,
in accordance with Sec. Sec. 195.21 and 195.28. This includes
consideration of low-cost education loans provided to low-income
borrowers and activities in cooperation with minority- or women-
owned financial institutions and low-income credit unions, as well
as
[[Page 52060]]
adjustments on the basis of evidence of discriminatory or other
illegal credit practices.
(2) A savings association's performance need not fit each aspect
of a particular rating profile in order to receive that rating, and
exceptionally strong performance with respect to some aspects may
compensate for weak performance in others. The savings association's
overall performance, however, must be consistent with safe and sound
banking practices and generally with the appropriate rating profile
as follows.
(b) Savings associations evaluated under the lending,
investment, and service tests--(1) Lending performance rating. The
appropriate Federal banking agency assigns each savings
association's lending performance one of the five following ratings.
(i) Outstanding. The appropriate Federal banking agency rates a
savings association's lending performance ``outstanding'' if, in
general, it demonstrates:
(A) Excellent responsiveness to credit needs in its assessment
area(s), taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in
its assessment area(s);
(B) A substantial majority of its loans are made in its
assessment area(s);
(C) An excellent geographic distribution of loans in its
assessment area(s);
(D) An excellent distribution, particularly in its assessment
area(s), of loans among individuals of different income levels and
businesses (including farms) of different sizes, given the product
lines offered by the savings association;
(E) An excellent record of serving the credit needs of highly
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross
annual revenues of $1 million or less, consistent with safe and
sound operations;
(F) Extensive use of innovative or flexible lending practices in
a safe and sound manner to address the credit needs of low- or
moderate-income individuals or geographies; and
(G) It is a leader in making community development loans.
(ii) High satisfactory. The appropriate Federal banking agency
rates a savings association's lending performance ``high
satisfactory'' if, in general, it demonstrates:
(A) Good responsiveness to credit needs in its assessment
area(s), taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in
its assessment area(s);
(B) A high percentage of its loans are made in its assessment
area(s);
(C) A good geographic distribution of loans in its assessment
area(s);
(D) A good distribution, particularly in its assessment area(s),
of loans among individuals of different income levels and businesses
(including farms) of different sizes, given the product lines
offered by the savings association;
(E) A good record of serving the credit needs of highly
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross
annual revenues of $1 million or less, consistent with safe and
sound operations;
(F) Use of innovative or flexible lending practices in a safe
and sound manner to address the credit needs of low- or moderate-
income individuals or geographies; and
(G) It has made a relatively high level of community development
loans.
(iii) Low satisfactory. The appropriate Federal banking agency
rates a savings association's lending performance ``low
satisfactory'' if, in general, it demonstrates:
(A) Adequate responsiveness to credit needs in its assessment
area(s), taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in
its assessment area(s);
(B) An adequate percentage of its loans are made in its
assessment area(s);
(C) An adequate geographic distribution of loans in its
assessment area(s);
(D) An adequate distribution, particularly in its assessment
area(s), of loans among individuals of different income levels and
businesses (including farms) of different sizes, given the product
lines offered by the savings association;
(E) An adequate record of serving the credit needs of highly
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross
annual revenues of $1 million or less, consistent with safe and
sound operations;
(F) Limited use of innovative or flexible lending practices in a
safe and sound manner to address the credit needs of low- or
moderate-income individuals or geographies; and
(G) It has made an adequate level of community development
loans.
(iv) Needs to improve. The appropriate Federal banking agency
rates a savings association's lending performance ``needs to
improve'' if, in general, it demonstrates:
(A) Poor responsiveness to credit needs in its assessment
area(s), taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in
its assessment area(s);
(B) A small percentage of its loans are made in its assessment
area(s);
(C) A poor geographic distribution of loans, particularly to
low- or moderate-income geographies, in its assessment area(s);
(D) A poor distribution, particularly in its assessment area(s),
of loans among individuals of different income levels and businesses
(including farms) of different sizes, given the product lines
offered by the savings association;
(E) A poor record of serving the credit needs of highly
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross
annual revenues of $1 million or less, consistent with safe and
sound operations;
(F) Little use of innovative or flexible lending practices in a
safe and sound manner to address the credit needs of low- or
moderate-income individuals or geographies; and
(G) It has made a low level of community development loans.
(v) Substantial noncompliance. The appropriate Federal banking
agency rates a savings association's lending performance as being in
``substantial noncompliance'' if, in general, it demonstrates:
(A) A very poor responsiveness to credit needs in its assessment
area(s), taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in
its assessment area(s);
(B) A very small percentage of its loans are made in its
assessment area(s);
(C) A very poor geographic distribution of loans, particularly
to low- or moderate-income geographies, in its assessment area(s);
(D) A very poor distribution, particularly in its assessment
area(s), of loans among individuals of different income levels and
businesses (including farms) of different sizes, given the product
lines offered by the savings association;
(E) A very poor record of serving the credit needs of highly
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross
annual revenues of $1 million or less, consistent with safe and
sound operations;
(F) No use of innovative or flexible lending practices in a safe
and sound manner to address the credit needs of low- or moderate-
income individuals or geographies; and
(G) It has made few, if any, community development loans.
(2) Investment performance rating. The appropriate Federal
banking agency assigns each savings association's investment
performance one of the five following ratings.
(i) Outstanding. The appropriate Federal banking agency rates a
savings association's investment performance ``outstanding'' if, in
general, it demonstrates:
(A) An excellent level of qualified investments, particularly
those that are not routinely provided by private investors, often in
a leadership position;
(B) Extensive use of innovative or complex qualified
investments; and
(C) Excellent responsiveness to credit and community development
needs.
(ii) High satisfactory. The appropriate Federal banking agency
rates a savings association's investment performance ``high
satisfactory'' if, in general, it demonstrates:
(A) A significant level of qualified investments, particularly
those that are not routinely provided by private investors,
occasionally in a leadership position;
(B) Significant use of innovative or complex qualified
investments; and
(C) Good responsiveness to credit and community development
needs.
(iii) Low satisfactory. The appropriate Federal banking agency
rates a savings association's investment performance ``low
satisfactory'' if, in general, it demonstrates:
(A) An adequate level of qualified investments, particularly
those that are not routinely provided by private investors, although
rarely in a leadership position;
(B) Occasional use of innovative or complex qualified
investments; and
(C) Adequate responsiveness to credit and community development
needs.
(iv) Needs to improve. The appropriate Federal banking agency
rates a savings
[[Page 52061]]
association's investment performance ``needs to improve'' if, in
general, it demonstrates:
(A) A poor level of qualified investments, particularly those
that are not routinely provided by private investors;
(B) Rare use of innovative or complex qualified investments; and
(C) Poor responsiveness to credit and community development
needs.
(v) Substantial noncompliance. The appropriate Federal banking
agency rates a savings association's investment performance as being
in ``substantial noncompliance'' if, in general, it demonstrates:
(A) Few, if any, qualified investments, particularly those that
are not routinely provided by private investors;
(B) No use of innovative or complex qualified investments; and
(C) Very poor responsiveness to credit and community development
needs.
(3) Service performance rating. The appropriate Federal banking
agency assigns each savings association's service performance one of
the five following ratings.
(i) Outstanding. The appropriate Federal banking agency rates a
savings association's service performance ``outstanding'' if, in
general, the savings association demonstrates:
(A) Its service delivery systems are readily accessible to
geographies and individuals of different income levels in its
assessment area(s);
(B) To the extent changes have been made, its record of opening
and closing branches has improved the accessibility of its delivery
systems, particularly in low- or moderate-income geographies or to
low- or moderate-income individuals;
(C) Its services (including, where appropriate, business hours)
are tailored to the convenience and needs of its assessment area(s),
particularly low- or moderate-income geographies or low- or
moderate-income individuals; and
(D) It is a leader in providing community development services.
(ii) High satisfactory. The appropriate Federal banking agency
rates a savings association's service performance ``high
satisfactory'' if, in general, the savings association demonstrates:
(A) Its service delivery systems are accessible to geographies
and individuals of different income levels in its assessment
area(s);
(B) To the extent changes have been made, its record of opening
and closing branches has not adversely affected the accessibility of
its delivery systems, particularly in low- and moderate-income
geographies and to low- and moderate-income individuals;
(C) Its services (including, where appropriate, business hours)
do not vary in a way that inconveniences its assessment area(s),
particularly low- and moderate-income geographies and low- and
moderate-income individuals; and
(D) It provides a relatively high level of community development
services.
(iii) Low satisfactory. The appropriate Federal banking agency
rates a savings association's service performance ``low
satisfactory'' if, in general, the savings association demonstrates:
(A) Its service delivery systems are reasonably accessible to
geographies and individuals of different income levels in its
assessment area(s);
(B) To the extent changes have been made, its record of opening
and closing branches has generally not adversely affected the
accessibility of its delivery systems, particularly in low- and
moderate-income geographies and to low- and moderate-income
individuals;
(C) Its services (including, where appropriate, business hours)
do not vary in a way that inconveniences its assessment area(s),
particularly low- and moderate-income geographies and low- and
moderate-income individuals; and
(D) It provides an adequate level of community development
services.
(iv) Needs to improve. The appropriate Federal banking agency
rates a savings association's service performance ``needs to
improve'' if, in general, the savings association demonstrates:
(A) Its service delivery systems are unreasonably inaccessible
to portions of its assessment area(s), particularly to low- or
moderate-income geographies or to low- or moderate-income
individuals;
(B) To the extent changes have been made, its record of opening
and closing branches has adversely affected the accessibility of its
delivery systems, particularly in low- or moderate-income
geographies or to low- or moderate-income individuals;
(C) Its services (including, where appropriate, business hours)
vary in a way that inconveniences its assessment area(s),
particularly low- or moderate-income geographies or low- or
moderate-income individuals; and
(D) It provides a limited level of community development
services.
(v) Substantial noncompliance. The appropriate Federal banking
agency rates a savings association's service performance as being in
``substantial noncompliance'' if, in general, the savings
association demonstrates:
(A) Its service delivery systems are unreasonably inaccessible
to significant portions of its assessment area(s), particularly to
low- or moderate-income geographies or to low- or moderate-income
individuals;
(B) To the extent changes have been made, its record of opening
and closing branches has significantly adversely affected the
accessibility of its delivery systems, particularly in low- or
moderate-income geographies or to low- or moderate-income
individuals;
(C) Its services (including, where appropriate, business hours)
vary in a way that significantly inconveniences its assessment
area(s), particularly low- or moderate-income geographies or low- or
moderate-income individuals; and
(D) It provides few, if any, community development services.
(c) Wholesale or limited purpose savings associations. The
appropriate Federal banking agency assigns each wholesale or limited
purpose savings association's community development performance one
of the four following ratings.
(1) Outstanding. The appropriate Federal banking agency rates a
wholesale or limited purpose savings association's community
development performance ``outstanding'' if, in general, it
demonstrates:
(i) A high level of community development loans, community
development services, or qualified investments, particularly
investments that are not routinely provided by private investors;
(ii) Extensive use of innovative or complex qualified
investments, community development loans, or community development
services; and
(iii) Excellent responsiveness to credit and community
development needs in its assessment area(s).
(2) Satisfactory. The appropriate Federal banking agency rates a
wholesale or limited purpose savings association's community
development performance ``satisfactory'' if, in general, it
demonstrates:
(i) An adequate level of community development loans, community
development services, or qualified investments, particularly
investments that are not routinely provided by private investors;
(ii) Occasional use of innovative or complex qualified
investments, community development loans, or community development
services; and
(iii) Adequate responsiveness to credit and community
development needs in its assessment area(s).
(3) Needs to improve. The appropriate Federal banking agency
rates a wholesale or limited purpose savings association's community
development performance as ``needs to improve'' if, in general, it
demonstrates:
(i) A poor level of community development loans, community
development services, or qualified investments, particularly
investments that are not routinely provided by private investors;
(ii) Rare use of innovative or complex qualified investments,
community development loans, or community development services; and
(iii) Poor responsiveness to credit and community development
needs in its assessment area(s).
(4) Substantial noncompliance. The appropriate Federal banking
agency rates a wholesale or limited purpose savings association's
community development performance in ``substantial noncompliance''
if, in general, it demonstrates:
(i) Few, if any, community development loans, community
development services, or qualified investments, particularly
investments that are not routinely provided by private investors;
(ii) No use of innovative or complex qualified investments,
community development loans, or community development services; and
(iii) Very poor responsiveness to credit and community
development needs in its assessment area(s).
(d) Savings associations evaluated under the small savings
association performance standard--(1)Lending test ratings. (i)
Eligibility for a satisfactory lending test rating. The appropriate
Federal banking agency rates a small savings association's lending
performance ``satisfactory'' if, in general, the savings association
demonstrates:
[[Page 52062]]
(A) A reasonable loan-to-deposit ratio (considering seasonal
variations) given the savings association's size, financial
condition, the credit needs of its assessment area(s), and taking
into account, as appropriate, other lending-related activities such
as loan originations for sale to the secondary markets and community
development loans and qualified investments;
(B) A majority of its loans and, as appropriate, other lending-
related activities, are in its assessment area;
(C) A distribution of loans to and, as appropriate, other
lending-related activities for individuals of different income
levels (including low- and moderate-income individuals) and
businesses and farms of different sizes that is reasonable given the
demographics of the savings association's assessment area(s);
(D) A record of taking appropriate action, when warranted, in
response to written complaints, if any, about the savings
association's performance in helping to meet the credit needs of its
assessment area(s); and
(E) A reasonable geographic distribution of loans given the
savings association's assessment area(s).
(ii) Eligibility for an ``outstanding'' lending test rating. A
small savings association that meets each of the standards for a
``satisfactory'' rating under this paragraph and exceeds some or all
of those standards may warrant consideration for a lending test
rating of ``outstanding.''
(iii) Needs to improve or substantial noncompliance ratings. A
small savings association may also receive a lending test rating of
``needs to improve'' or ``substantial noncompliance'' depending on
the degree to which its performance has failed to meet the standard
for a ``satisfactory'' rating.
(2) Community development test ratings for intermediate small
savings associations--(i) Eligibility for a satisfactory community
development test rating. The appropriate Federal banking agency
rates an intermediate small savings association's community
development performance ``satisfactory'' if the savings association
demonstrates adequate responsiveness to the community development
needs of its assessment area(s) through community development loans,
qualified investments, and community development services. The
adequacy of the savings association's response will depend on its
capacity for such community development activities, its assessment
area's need for such community development activities, and the
availability of such opportunities for community development in the
savings association's assessment area(s).
(ii) Eligibility for an outstanding community development test
rating. The appropriate Federal banking agency rates an intermediate
small savings association's community development performance
``outstanding'' if the savings association demonstrates excellent
responsiveness to community development needs in its assessment
area(s) through community development loans, qualified investments,
and community development services, as appropriate, considering the
savings association's capacity and the need and availability of such
opportunities for community development in the savings association's
assessment area(s).
(iii) Needs to improve or substantial noncompliance ratings. An
intermediate small savings association may also receive a community
development test rating of ``needs to improve'' or ``substantial
noncompliance'' depending on the degree to which its performance has
failed to meet the standards for a ``satisfactory'' rating.
(3) Overall rating--(i) Eligibility for a satisfactory overall
rating. No intermediate small savings association may receive an
assigned overall rating of ``satisfactory'' unless it receives a
rating of at least ``satisfactory'' on both the lending test and the
community development test.
(ii) Eligibility for an outstanding overall rating. (A) An
intermediate small savings association that receives an
``outstanding'' rating on one test and at least ``satisfactory'' on
the other test may receive an assigned overall rating of
``outstanding.''
(B) A small savings association that is not an intermediate
small savings association that meets each of the standards for a
``satisfactory'' rating under the lending test and exceeds some or
all of those standards may warrant consideration for an overall
rating of ``outstanding.'' In assessing whether a savings
association's performance is ``outstanding,'' the appropriate
Federal banking agency considers the extent to which the savings
association exceeds each of the performance standards for a
``satisfactory'' rating and its performance in making qualified
investments and its performance in providing branches and other
services and delivery systems that enhance credit availability in
its assessment area(s).
(iii) Needs to improve or substantial noncompliance overall
ratings. A small savings association may also receive a rating of
``needs to improve'' or ``substantial noncompliance'' depending on
the degree to which its performance has failed to meet the standards
for a ``satisfactory'' rating.
(e) Strategic plan assessment and rating--(1) Satisfactory
goals. The appropriate Federal banking agency approves as
``satisfactory'' measurable goals that adequately help to meet the
credit needs of the savings association's assessment area(s).
(2) Outstanding goals. If the plan identifies a separate group
of measurable goals that substantially exceed the levels approved as
``satisfactory,'' the appropriate Federal banking agency will
approve those goals as ``outstanding.''
(3) Rating. The appropriate Federal banking agency assesses the
performance of a savings association operating under an approved
plan to determine if the savings association has met its plan goals:
(i) If the savings association substantially achieves its plan
goals for a satisfactory rating, the appropriate Federal banking
agency will rate the savings association's performance under the
plan as ``satisfactory.''
(ii) If the savings association exceeds its plan goals for a
satisfactory rating and substantially achieves its plan goals for an
outstanding rating, the appropriate Federal banking agency will rate
the savings association's performance under the plan as
``outstanding.''
(iii) If the savings association fails to meet substantially its
plan goals for a satisfactory rating, the appropriate Federal
banking agency will rate the savings association as either ``needs
to improve'' or ``substantial noncompliance,'' depending on the
extent to which it falls short of its plan goals, unless the savings
association elected in its plan to be rated otherwise, as provided
in Sec. 195.27(f)(4).
Appendix B to Part 195--CRA Notice
(a) Notice for main offices and, if an interstate savings
association, one branch office in each state.
Community Reinvestment Act Notice
Under the Federal Community Reinvestment Act (CRA), the [Office
of the Comptroller of the Currency (OCC) or Federal Deposit
Insurance Corporation (FDIC)] evaluates our record of helping to
meet the credit needs of this community consistent with safe and
sound operations. The [OCC or FDIC] also takes this record into
account when deciding on certain applications submitted by us.
Your involvement is encouraged.
You are entitled to certain information about our operations and
our performance under the CRA, including, for example, information
about our branches, such as their location and services provided at
them; the public section of our most recent CRA Performance
Evaluation, prepared by the [OCC or FDIC]; and comments received
from the public relating to our performance in helping to meet
community credit needs, as well as our responses to those comments.
You may review this information today.
At least 30 days before the beginning of each quarter, the [OCC
or FDIC] publishes a nationwide list of the savings associations
that are scheduled for CRA examination in that quarter. This list is
available from the [OCC Deputy Comptroller (address) or FDIC
appropriate regional director (address)]. You may send written
comments about our performance in helping to meet community credit
needs to (name and address of official at savings association) and
the [OCC Deputy Comptroller (address) or FDIC appropriate regional
director (address)]. Your letter, together with any response by us,
will be considered by the [OCC or FDIC] in evaluating our CRA
performance and may be made public.
You may ask to look at any comments received by the [OCC Deputy
Comptroller or FDIC appropriate regional director]. You may also
request from the [OCC Deputy Comptroller or FDIC appropriate
regional director] an announcement of our applications covered by
the CRA filed with the [OCC or FDIC]. We are an affiliate of (name
of holding company), a savings and loan holding company. You may
request from the (title of responsible official), Federal Reserve
Bank of ____ (address) an announcement of applications covered by
the CRA filed by savings and loan holding companies.
(b) Notice for branch offices.
Community Reinvestment Act Notice
Under the Federal Community Reinvestment Act (CRA), the [Office
of the
[[Page 52063]]
Comptroller of the Currency (OCC) or Federal Deposit Insurance
Corporation (FDIC)] evaluates our record of helping to meet the
credit needs of this community consistent with safe and sound
operations. The [OCC or FDIC] also takes this record into account
when deciding on certain applications submitted by us.
Your involvement is encouraged.
You are entitled to certain information about our operations and
our performance under the CRA. You may review today the public
section of our most recent CRA evaluation, prepared by the [OCC or
FDIC] and a list of services provided at this branch. You may also
have access to the following additional information, which we will
make available to you at this branch within five calendar days after
you make a request to us: (1) A map showing the assessment area
containing this branch, which is the area in which the [OCC or FDIC]
evaluates our CRA performance in this community; (2) information
about our branches in this assessment area; (3) a list of services
we provide at those locations; (4) data on our lending performance
in this assessment area; and (5) copies of all written comments
received by us that specifically relate to our CRA performance in
this assessment area, and any responses we have made to those
comments. If we are operating under an approved strategic plan, you
may also have access to a copy of the plan.
[If you would like to review information about our CRA
performance in other communities served by us, the public file for
our entire savings association is available at (name of office
located in state), located at (address).]
At least 30 days before the beginning of each quarter, the [OCC
or FDIC] publishes a nationwide list of the savings associations
that are scheduled for CRA examination in that quarter. This list is
available from the [OCC Deputy Comptroller (address) or FDIC
appropriate regional office (address)]. You may send written
comments about our performance in helping to meet community credit
needs to (name and address of official at savings association) and
the [OCC or FDIC]. Your letter, together with any response by us,
will be considered by the [OCC or FDIC] in evaluating our CRA
performance and may be made public.
You may ask to look at any comments received by the [OCC Deputy
Comptroller or FDIC appropriate regional director]. You may also
request an announcement of our applications covered by the CRA filed
with the [OCC Deputy Comptroller or FDIC appropriate regional
director]. We are an affiliate of (name of holding company), a
savings and loan holding company. You may request from the (title of
responsible official), Federal Reserve Bank of ____ (address) an
announcement of applications covered by the CRA filed by savings and
loan holding companies.
Michael J. Hsu,
Acting Comptroller of the Currency.
[FR Doc. 2021-19738 Filed 9-16-21; 8:45 am]
BILLING CODE 4810-33-P
