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F ederal R eser ve Ba nk o f D allas DALLAS, TEXAS 75222 C irc u la r No. 79-14 Ja n u ary 22, 1979 REGULATION BB— CO M M UNITY REINVESTM ENT TO ALL MEMBER BANKS AND BANK HOLDING COMPANIES IN THE ELEVENTH FEDERAL RESERVE D IS T R IC T : Enclosed is the formal copy of Regulation BB, w hich was effective Novem ber 6, 1978, implem enting the Community Reinvestm ent Act (CRA) for state member b an ks. Each ban k must have a Community R einvest ment Act Statement p rep a re d by F e b ru a ry 4, 1979. In ad d itio n , the bank must post a CRA N otice, a copy of w hich may be found in the R egulation, in its lobby, and must establish a file to retain w ritte n comments received con cern in g its perform ance in meeting the c re d it needs of its local com m unity, including low and moderate income neighborhoods. Also enclosed only to member banks and others that m aintain Regulations B inders is a d iv id e r tab fo r the new reg u latio n . Questions concerning the Community Reinvestm ent A ct or Regu lation BB may be d irected to our Consumer A ffa irs Section, E x t. 6171. A dditional copies of the pam phlet a n d /o r tab w ill be fu rn is h e d upon re quest to the S e c re ta ry 's O ffice of this B an k, E x t. 6267. S in ce re ly y o u rs , Robert H . Boykin F irs t V ic e President Enclosures Banks and others are encouraged to use the follow ing incoming W A T S numbers in contacting this Bank: 1-8 0 0 -4 9 2 -4 4 0 3 (intrastate) and 1-8 0 0 -5 2 7 -4 9 7 0 (interstate). For calls placed locally, please use 651 plus the extension referred to above. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) BOARD OF GOVERNORS o f the FEDERAL RESERVE SYSTEM COMMUNITY REINVESTMENT REGULATION BB (12 CFR 228) Effective November 6, 1978 CONTENTS Page S ec. 228.1— A u t h o r it y 3 ..................................................................................................................... S e c . 228.2— P u r p o s e s ......................................................................................................... 3 S e c . 228.3— D e l i n e a t i o n of Co m m u n it y Se c . 228.4— C o m m u n i t y R e i n v e s t m e n t A Se c . 228.5— F il e s of Se c . 228.6— P u b l ic N Se c . 228.7— A 4 ...................... 4 .......................................................................................................... 4 and m ent R e c e n t C R A St a t e m 5 p p l i c a t i o n s ........................................................................................ 6 ....................................................................................................................... 7 I n t e r p r e t a t i o n s ................................................................................................................................ ® S e c . 228.8— E f f e c t St a t u t o r y A p p e n d ix on A of Perform ents ........................................................ ss e ss in g t h e R ecord ct St a t e 3 .................................................. P u b l ic C o m m e n t s o t ic e ............................................................................... ance STATUTORY AUTHORITY This regulation is based upon and issued pursuant to provisions o f section 806o f the C om m u n ity R e investm ent A c t o f 1977, U .S .C ., T itle 12, sec. 2901 et seq. REGULATION BB (12 CRF 228) Effective November 6, 1978 COMMUNITY REINVESTMENT S E C T IO N 228.3— D E L I N E A T I O N O F S E C T IO N 228.1— A U T H O R I T Y C O M M U N IT Y T h e B oard o f G o v e rn o rs o f the F ed eral R eserve System issues this P art to im plem ent the C o m (a ) E ach State m em ber bank shall prepare, and 2901 at least annually review , a delineation o f the local et seq.). T h e regulations com p risin g this P a rt are com m u n ity o r com m u nities that com prise its en issued tire m unity R einvestm ent under the A ct (12 authority o f U .S .C . the C om m u n ity R einvestm ent A c t and under the provisions o f the com m u nity, m od erate-in com e low - and shall be used duct exam inations o f State-chartered banks that are m em bers o f the F ed era l R eserve System (12 b y F ed era l R eserve System exam iners. to conduct exam inations of bank com m u n ity M aps reasonableness o f the delineations w ill be review ed 325), p ortray exclu ding U n ite d States C o d e authorizing the B oard to c on U .S .C . to w ith ou t neighborhoods. delineations. The ( b ) A lo c a l com m u n ity consists o f the c o n tig h old in g com panies and their subsidiaries (12 U .S .C . uous areas surounding each office 1844), and to con sid er applications f o r dom estic offices, including an y lo w - and m od erate-in com e branches neighborhoods in those areas. M o r e than one o f 321), by State m em b er banks f o r F ed era l deposit insurance (12 U .S.C . in con n ec o r group o f fice o f a State m em b er bank m ay be included in the the same local com m u nity. Unless the B oard d e F ed era l R eserve System b y State banks (12 U .S .C . termines otherw ise, a com m u n ity delineation need 321, not tion w ith application s 1814, 1816), fo r fo r m em bership m erg er in in w h ich the take account o f an off-prem ises electronic be a State m em b er bank fa c ility that receives deposits fo r m ore than one (1 2 U .S .C . 1828), and f o r fo rm a tio n o f, acquisi d epository institution. In preparing its delineation, resulting bank w ou ld tions o f banks by, and m ergers o f, bank hold in g a bank m ay use any one o f the three bases set com panies (1 2 U .S .C . 1842). fo rth below . (1 ) E xisting boundaries such as those o f stand ard m etropolitan statistical areas (S M S A ’s) or counties in w hich the bank’s offic e o r offices are S E C T IO N 228.2— P U R P O S E S located m ay be used to delineate a lo c a l c o m m unity. W h e re appropriate, p ortion s o f adjacent T h e purposes o f this regu lation are to encourage areas should be included. T h e bank m ay m ake State m em b er banks to help m eet the cred it needs adjustments in the case o f areas d ivided b y State o f th eir loca l com m u n ity o r com m unities; to p ro borders or significant geograp h ic barriers, o r areas v id e guidance to State m em ber banks as to h o w that are extrem ely large o r o f unusual con figu ra the B oard w ill assess the records o f State m em ber tion. In addition, a sm all bank m ay delineate those banks in satisfyin g th eir continuing and affirm a portions o f S M S A ’s o r counties it reasonably m ay tive ob ligation s to help m eet the cred it needs o f be expected to serve. and (2 ) A bank m a y use its e ffe c tiv e lending terri m oderate-in com e neighborhoods, consistent w ith tory, w h ich is defined as that loca l area o r areas th eir loca l com m unities, including low - the safe and sound op eration o f those banks; and around each office or group o f offices w h ere it to p ro v id e fo r takin g in to account those records m akes a substantial p ortion o f its loans and all in con nection w ith certain applications. other areas equidistant fro m its offices as those REGULATION BB § 228.6 areas. Adjustm ents such as those indicated in (3 ) A bank m ay use any other reasonably- delineated local area that meets the purposes o f the C om m u n ity R einvestm ent A ct (C R A ) (1 ) A t the head office o f the bank; and (2 ) A t each office o f the bank in the local c o m paragraph (b )(1 ) o f this section m ay be made. and m unity delineated in the Statement, except off- prem ises electron ic deposit facilities. (f) C op ies o f each current C R A Statem ent shall does not exclude low - and m oderate-in com e neigh be p rovided to the pu b lic upon request. A borhoods. m em b er bank m a y charge a fe e not to exceed the State cost o f reproduction. S E C T IO N 228.5— F IL E S O F P U B L I C S E C T IO N 228.4— C O M M U N I T Y R E I N V E S T M ENT AC T STATEM ENT STATEM ENTS (a ) W ith in 90 days a fte r the effective date o f this Part, the board o f directors o f each State m em ber bank shall adopt a C om m u n ity R ein vest m ent A c t ( C R A ) Statem ent fo r each delineated loca l com m unity. (b ) E ach C R A Statem ent shall include at least the fo llo w in g : (2 ) A list o f specific types o f credit w ith in cer tain categories, such as residential loans fo r l-to -4 fo r 5 d w ellin g units and over, housing rehabilitation loans, hom e im provem en t loans, small business loans, farm loans, com m u n ity developm en t loans, com m ercial loans, and consum er loans, that the bank is pre pared to extend within the local com m u nity; and (3 ) A co p y o f the C O M M U N I T Y R E I N V E S T MENT ACT N O T IC E p ro vid ed fo r in § 228.6. (c ) E ach State m em ber bank is encouraged to description o f how its current efforts, including special credit-related program s, help to m em b er bank shall m aintain consisting o f: (1 ) A n y signed, w ritten com m ents received fro m the public w ith in the past tw o years that specifi c a lly relate to any C R A Statem ent or to*the bank’ s its com m u n ity o r com m unities; (2 ) A n y responses to the com m ents that the bank wishes to m ake; and (3 ) A n y C R A Statements in effect during the past tw o years. (b ) T hese files shall not contain any com m ents or responses that reflect ad versely upon the g o o d nam e or reputation o f any person other than the bank, o r publication o f w h ich w ou ld v io la te spe cific p rovisions o f law. (c ) These files shall b e m aintained by each (1 ) A ll m aterials at the head office; and (2 ) M aterials relating to each loca l com m u nity, at a designated office in that com m u nity. m eet com m u nity credit needs; (2 ) A State State m em ber bank as fo llo w s : include the fo llo w in g in each C R A Statement: (1 ) A (a ) Each files that are readily available fo r public inspection p erform an ce in h elp in g to m eet the credit needs o f (1 ) T h e delineation o f the local com m u nity; d w e llin g units, residential loans CO M M ENTS A N D RECEN T C R A p eriodic report regard in g its record o f h elping to m eet com m u n ity cred it needs; and (3 ) A description o f its efforts to ascertain the S E C T IO N 228.6— P U B L IC N O T I C E cred it needs o f its com m u nity, including efforts to com m u nicate w ith m em bers o f its com m u nity regard in g cred it services. (d ) Each State m em ber bank’s board o f d irec tors shall re v ie w each C R A W ith in 90 days after the effective date o f this Part, each State m em ber bank shall provide, in the Statem ent at least public lob b y o f each o f its offices other than offprem ises electronic deposit facilities, the public annually and shall act upon any m aterial change n otice set forth below . B racketed m aterial shall be m ade in the interim at its first regular m eetin g used on ly by banks havin g m ore than one local after the change. Such actions shall be noted in com m unity. T h e last item in this n otice shall be its minutes. included on ly if the bank is a subsidiary o f a h old (e ) E ach current CRA Statem ent rea d ily availab le fo r public inspection: shall be ing com pany that is not prevented by statute fro m acquiring additional banks. § 228.7 REGULATION BB C O M M U N IT Y S E C T IO N R E IN V E S T M E N T A C T N O T IC E 228.7— A S S E S S IN G T H E RECORD OF PERFORM ANCE T h e F ed eral C o m m u n ity R einvestm ent A c t In con nection w ith its exam ination o f a State (C R A ) requires the F ed era l R eserve Board m em ber bank, the B oard shall assess the record to evaluate our p erform an ce in h elping to o f p erform an ce o f the bank in h elping to m eet m eet the cred it needs o f this com m u nity, the cre d it needs o f its entire com m u nity, including and low - to take this evalu ation into account and m oderate-in com e neighborhoods, c on w h en the B oard decides on certain applica sistent w ith safe and sound operation o f the bank. tions subm itted by us. Y o u r in vo lvem en t is The encouraged. m e n ts ) and any signed, w ritten com m ents retained w ill rev ie w the bank’s C R A State by the State m em ber bank or the F ed era l R eserve Y o u should k n o w that: •You B oard Bank. m ay obtain our current C R A State m ent fo r this com m u n ity in this office. [C u r rent C R A Statements fo r other com m unities served b y us are available at our head office, In addition, the B oard w ill consider the fo llo w in g factors in assessing a bank’s record o f perform an ce: (a ) A c tiv itie s conducted by the State m em ber bank to ascertain the cred it needs o f its c o m m unity, including the extent o f the bank’s efforts located at (address).] to com m u nicate w ith m em bers o f its com m u nity • Y o u m ay send signed, w ritten com m ents regard in g the cred it services b ein g p ro vid ed by about ou r C R A the bank; form a n ce in S ta te m e n ts ] or ou r per h elping to m eet com m u n ity (b ) T h e extent of the State m em ber bank’s cred it needs to (title and address o f State m arketin g and special credit-related program s to m em ber bank offic ia l) and to C om m u n ity m ake m em bers o f the com m u n ity aware o f the R einvestm ent O fficer, F ed eral R eserve Bank cred it services o ffe re d by the bank; o f ----------------- (address). gether w ith Your letter, to any response b y us, m ay be (c ) T h e extent o f participation by the State m em ber bank’s board o f directors in form u latin g the bank’s policies and re v ie w in g its p erform an ce m ade public. w ith respect to the purposes o f the C om m u n ity • You m ay loo k at a file of all signed, R ein vestm en t A c t; w ritten com m ents received by us w ith in the (d ) A n y practices intended to discourage ap p li past 2 years, any responses w e have m ade cations fo r types o f cred it set forth in the State to the com m ents, and all C R A Statements in m em ber bank’s C R A Statem ent(s); e ffect during the past 2 years at our office (e ) T h e geograp h ic distribution of the State located at (address). [Y o u also m ay lo o k at m em b er bank’s cred it extensions, cred it ap p lica the file about this com m u n ity at (nam e and tions, and credit denials; address o f designated office).] • You ( f ) E vid en ce m ay ask to loo k at any com m ents received b y the F ed eral R eserve Bank o f of proh ib ited d iscrim inatory or oth er illegal credit practices; (g ) T h e State m em b er bank’s record o f openin g and closing offices and p ro v id in g services at offices; (h ) T h e State m em b er bank’s participation, in • Y o u also m ay request fro m the F ed eral R eserve Bank o f _____________ an announce m ent o f applications covered by the C R A filed with the Federal R eserve System. clu d in g investm ents, in local com m u nity d e ve lo p m ent and red evelop m en t projects or program s; (i) T h e State m em b er bank’s origin ation o f resi dential m ortga ge loans, housing rehabilitation • W e are a subsidiary o f (nam e o f holding loans, hom e im provem en t loans, and sm all busi com p an y), a bank h old in g com pany. A p p li ness or small farm loans within its com m u nity, or cations filed by bank h old in g com panies that the purchase o f such loans originated in its co m are covered by the C R A are included in the m unity; F ed eral R eserve announcem ent o f app lica tions referred to in the previou s paragraph. ( j) T h e State m em b er bank’s participation in g overn m entally-in siired, guaranteed, o r subsidized REGULATION BB § 228.8 loan program s fo r housing, small businesses, or m eetin g the cred it needs o f its entire com m u nity small farms; o f each applicant bank, each subsidiary bank o f (k ) T h e State m em b er bank’s ab ility to m eet an applicant bank holding com p any, and each various com m u nity cred it needs based on its finan proposed subsidiary bank o f an applicant under cial con dition section 3 o f the B ank H o ld in g C om p a n y A c t (12 and size, and legal im pedim ents, loca l econ o m ic conditions, and other factors; and (1) O th er factors that, in the B oard ’s judgm ent, U .S .C . 1842) that has an officer, d irector, em p loyee, or significant stockholder associated w ith reasonably bear upon the extent to w h ich a State the applicant. T h o se records o f p erform a n ce m a y m em b er bank is helping to m eet the cred it needs be the basis f o r d enying the application. o f its entire com m u nity. (b) In the case o f each ap p lication f o r m em bership that w ou ld c o n fe r F ed era l deposit insur ance, each ap p lication b y a State m em b er bank, S E C T IO N 228.8— E F F E C T O N and each ap plication b y a bank hold ing com p an y A P P L IC A T IO N S w ith a State bank subsidiary, the B oard w ill c on sider any view s expressed by the respective State (а ) In con sidering any application bank supervisors as to w h ether the State-chartered (1 ) F o r m em bership in the F ed eral R eserve System w here m em bership w ou ld c o n fe r F ed eral deposit insurance on a bank, m ent o f a dom estic branch o r other fa c ility that w ou ld be authorized to rec e iv e deposits, o f a dom estic branch, or resulting acquisition of bank is to be a State m em ber bank, (5 ) T o b ecom e a bank hold in g com p any, and (б ) B y a bank and hold ing com p an y to m od erate-in com e neighborhoods, those banks. w ill include in its con sideration o f an ap plication the reco rd consolidation, assets, or assumption o f liabilities if the acquiring, assuming, low - consistent w ith the safe and sound op eration o f (c ) A t the request o f an applicant, the B oard (3 ) B y a State m em ber bank fo r the relocation m erger, have been h elping to m eet the cred it needs o f their entire com m unities, includ ing (2 ) B y a State m em ber bank fo r the establish (4 ) F o r banks in vo lved acquire o f p e rfo rm a n c e o f nonbanking sub sidiaries o f bank h old in g com panies in h elping to m eet the credit needs o f the com m unities served by affiliated applicant banks o r b y subsidiary and p roposed subsidiary banks of applicants under section 3 o f the Bank H o ld in g C o m p a n y A c t (12 U .S.C . 1842). ow nership or con tro l o f shares o r assets o f a bank, or to m erg e o r consolidate w ith any other bank h old in g com pany, (d ) A t the tim e an ap p lication fo r m em bership that w ou ld c o n fe r m ade, the F ed eral deposit insurance is prop osed State m em b er bank shall the B oard w ill take into account, am on g other submit to the B oard a p roposed C R A Statem ent factors it considers, the record o f p erform an ce in co n fo rm in g to the requirem ents o f § 228.4. STATUTORY APPENDIX otherw ise requ ired under F ed era l la w or reg S T A T U T O R Y A P P E N D IX ulations thereunder fo r — H ou sin g and C om m u n ity D e v elo p m e n t A c t ( A ) a charter fo r a national bank o r P u b lic L a w 9 5 -1 2 8 , as am ended F ed e ra l savings and loan association; T IT L E V II I— C O M M U N IT Y R E IN V E S T M E N T (B ) deposit S ec. 801. This title m ay be cited as the “ C o m m unity R einvestm ent A c t o f 1977” . S e c . 802. ( a ) insurance in con nection w ith a n e w ly chartered State bank, sav ings bank, savings and loan association T h e C ongress finds that— o r sim ilar institution; (1 ) regulated financial institutions are re (C ) the establishm ent o f a dom estic quired by la w to dem onstrate that their de branch o r oth er fa c ility w ith the ability posit to accept deposits o f a regulated finan facilities serve the con ven ien ce and needs o f the com m u nities in w hich they are cial institution; chartered to do business; (2 ) the con ven ien ce (D ) the relocation o f the hom e office and needs of com o r a branch office o f a regulated financial munities inclu de the need f o r credit services institution; as w e ll as deposit services; and (3 ) regulated financial (E ) the m erger o r con solidation with, institutions have o r the acquisition o f the assets, o r the continuing and affirm ative ob lig atio n to help assum ption o f the liabilities o f a regu m eet the cred it needs o f the local com m u ni lated financial institution requirin g ap p roval under section 18(c) o f the F ed era l ties in w hich they are chartered. (b ) D ep osit Insurance A c t o r under regula It is the purpose o f this title to requ ire each app rop riate F ed era l financial supervisory agency tions issued under the authority o f title to use its authority w hen exam in in g financial insti I V o f the N a tio n a l H ou sin g A c t; or tutions, to encourage such institutions to help meet the cred it needs o f the local com m u nities in w h ich assets o f, a regulated financial institution they are chartered (F ) the acquisition o f shares in, o r the consistent w ith the safe and requ irin g ap p roval under section 3 o f the sound op eration o f such institutions. Bank H o ld in g C om p a n y A c t o f 1956 or S e c . 803. F o r the purposes o f this title— section 4 0 8 (e) o f the N a tio n a l H ou sin g (1 ) the term “ app rop riate F ed eral financial A c t. (4 ) A finan cial institution w hose business supervisory agen cy” means— ( A ) the C o m p tro ller o f the C u rren cy p red om in a tely consists o f serving the needs w ith respect to national banks; (B ) the B oard o f of G ov e rn o rs o f the m ilita ry personnel w h o are not located within a defined geograp h ic area m a y define F ed era l R e se rv e System w ith respect to its “ entire com m u n ity” to include its entire State chartered banks w h ich are m em deposit custom er base w ith ou t regard to g e o bers o f the F ed era l R e serve System and graph ic p roxim ity. bank h old in g com panies; (C ) the F ed era l S e c . 804. In con nection w ith its exam ination o f D ep osit Insurance a C o rp o ra tio n w ith respect to State char tered banks and financial institution, the appropriate F ed eral finan cial supervisory agency shall— savings banks w hich (1 ) assess the institution’s reco rd o f m eet are not m em bers o f the F ed eral R eserve ing the cred it needs o f its entire com m u nity, System and the deposits o f w h ich are in including low - and m od erate-in com e n eigh sured b y the C orp o ra tion ; and borhoods, consistent w ith the safe and sound (D ) the F ed era l H om e Loan Bank operation o f such institution; and B oard w ith respect to institutions the d e (2 ) take such record into account in its posits o f w h ich are insured b y the F e d evalu ation o f eral Savings and L o a n Insurance C o r fa c ility b y such institution. poration and to savings and loan holding Se c . com panies; (2 ) the tio n ” term 805. E ach an application appropriate fo r a deposit F ed era l financial supervisory agency shall include in its annual re “ regulated financial institu p ort to the C ongress a section ou tlining the actions means an insured bank as defined in it has taken to c a rry out its responsibilities under section 3 o f the F ed eral D ep osit Insurance this title. A c t o r an insured institution as defined in S e c . 806. R egu lation s to carry out the purposes section 401 o f the N a tio n a l H ou sin g A c t; and o f this title shall be published by each appropriate (3 ) the term “ ap plication fo r a F ed eral deposit financial supervisory agency, and shall fa c ility ” means an ap plication to the ap p ro take e ffe c t no later than 390 days after the date o f priate enactm ent o f this title. F ed eral financial supervisory agen cy 7 REGULATION BB-INTERPRETATION B oard to encou rage banks to m eet the credit needs C O M M U N IT Y R E IN V E S T M E N T o f their local com m unities. T o this end, the B oard IN T E R P R E T A T IO N S O F R E G U L A T IO N BB m ust assess banks’ records o f p erform a n ce and take those records into account in acting o n cer tain applications affectin g the banks. T h e B oard SEC TIO N 228.1 b elieves that these provision s w ere intended to c o v e r all banks that are in the business o f extend S E C T IO N 228.101— A P P L I C A B I L I T Y O F T H E in g cred it to the public including both “ w h olesale” C O M M U N IT Y R E IN V E S T M E N T A C T T O and “ retail” banks. T h e lending activities o f these C E R T A IN S P E C IA L P U R P O S E B A N K S banks affect the econ o m ic health o f the com m u n i ties in w hich they are chartered. H o w e v e r , the (a ) In response to its prop osed R egu la tion BB to im plem ent the C om m u n ity R einvestm ent Act B o a rd believes it w ou ld be pointless to encou rage or to assess the credit-grantin g record o f institu re tions that are not organ ized to grant cred it to the that, p ublic in the o rd in ary course o f business, other although they are chartered as banks, d o not p er than as an incident to their specialized operations. (“ C R A ” ) c e ive d (1 2 several U .S .C . 2 9 0 1 -0 5 ), inquiries fro m the B oard institutions fo rm com m ercial or retail banking services. These institutions serve solely as correspondent banks, or (c ) A c c o r d in g ly the term “ State m em b er bank” as used in the B oard ’s R egu la tion BB (12 C F R as trust com panies, o r as clearin g agents, and they 22 8) does not include banks that engage solely in d o not extend cred it to the public fo r their ow n correspon den t account. T h e B oard concludes that the C R A is not business, o r acting as a clearin g agent. intended to c o v e r these institutions. 11/6/78 (b ) It is the purpose o f the C R A to requ ire the banking business, trust com p an y