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F ederal R eserve Bank
OF DALLAS
ROBERT
D. M C T E E R , J R .
P R E S ID E N T
A N D C H IE F E X E C U T I V E O F F I C E R
November 6, 1996
DALLAS, TEXAS
75265-5906
Notice 96-113
TO:
The Chief Executive Officer of each
financial institution and others concerned
in the Eleventh Federal Reserve District
SUBJECT
Interagency Questions and
Answers Regarding Community Reinvestment
DETAILS
The Federal Financial Institutions Examination Council (FFIEC) announced
the publication of Interagency Questions and Answers Regarding Community Reinvestment,
a comprehensive reference document on the Community Reinvestment Act regulation.
The new publication answers questions the regulators have most frequently
been asked about CRA implementation. The agencies intend to update the publication
regularly, and invite public comment and new questions on CRA implementation.
ATTACHMENT
A copy of the Board’s notice as it appears on pages 54647-67, Vol. 61,
No. 204, of the Federal Register dated October 21, 1996, is attached.
MORE INFORMATION
For more information, please contact Jim Foster at (214) 922-5280 or Dean
Pankonien at (214) 922-6154. For additional copies of this Bank’s notice, please contact
the Public Affairs Department at (214) 922-5254.
Sincerely yours,
For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal
Reserve Bank o f Dallas: Dallas Office (800) 333 -4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston
Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
54647
Community Reinvestment Act;
interagency Questions and Answers
Regarding Community Reinvestment
F ederal F inan cial In stitutions
E xam ination Council.
ACTION: N otice an d request for com m ent.
AGENCY:
T he Consum er C om pliance
T ask Force of th e F ederal F inancial
In stitu tio n s E xam ination C ouncil
(FFIEC) is issuing Interagency Q uestions
a n d A nsw ers Regarding C om m unity
R einvestm ent (Interagency Q uestions
a n d A nsw ers). To h elp financial
in stitu tio n s m eet th e ir responsibilities
u n d e r th e C om m unity R einvestm ent Act
(CRA) an d to increase public
u n d erstan d in g of th e ir CRA regulations,
th e staffs of th e Office of th e
C om ptroller of the C urrency (OCC), the
F ederal Reserve Board (Board), the
F ederal D eposit Insurance C orporation
(FDIC), an d th e Office of T hrift
S uperv isio n (OTS) (collectively, the
“ agencies”) have prep ared answ ers to
th e m ost frequently asked questions
about com m unity reinvestm ent. The
Interagency Q uestions an d A nsw ers
co n tain inform al staff guidance for
agency p erso n n el, financial institu tio n s,
an d th e public.
DATES: P ub lic com m ent is in v ited on a
co n tin u in g basis.
ADDRESSES: Q uestions an d com m ents
m ay be sent to Joe M. Cleaver, Executive
Secretary, Federal F inancial Institutions
E xam ination Council, 2100
P en n sy lv an ia A venue NW., Suite 200,
W ashington, DC 20037, or by facsim ile
tran sm issio n to (202) 634-6556.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
OCC: M alloy H arris, N ational Bank
E xam iner, Consum er a n d F iduciary
C om pliance D ivision, (202) 8 7 4 ^ 4 4 6 ;
or M argaret Hesse, S enior A ttorney,
C om m unity an d Consum er Law
D ivision, (202) 874-5750, Office of the
C om ptroller of th e C urrency, 250 E
Street, SW., W ashington, DC 20219.
Board: G lenn E. Loney, A ssociate
D irector, D ivision of C onsum er a n d
C om m unity Affairs, (202) 452—3585; or
Robert deV. Frierson, A ssistant G eneral
Counsel, Legal D ivision, (202) 452
3711, Board o f G overnors of th e Federal
Reserve System , 20th S treet and
C onstitu tio n A venue, NW., W ashington,
DC 20551.
FDIC: Bobbie Jean N orris, Chief, Fair
L ending Section, D ivision of
C om pliance an d C onsum er Affairs,
(202) 942-3090; or A n n H um e Loikow,
C ounsel, Legal D ivision, (202) 898
3796, F ederal D eposit Insurance
C orporation, 550 17th Street, NW.,
W ashington, DC 20429.
OTS: T heresa A. Stark, Project
M anager, C om pliance Policy, (202) 9 0 6 -
54648
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
7054; or R ichard R. Riese, Project
M anager, C om pliance Policy, (202) 906
6134, Office of T hrift S upervision, 1700
G Street, NW., W ashington, DC 20552.
SUPPLEMENTARY INFORMATION:
Background
Last year, th e agencies rev ised th eir
CRA regulations b y issuing a joint final
ru le, w h ich w as p u b lish ed on May 4,
1995 (60 FR 22156). See 12 CFR parts
25, 228, 345 an d 563e, im plem enting 12
U.S.C. 2901 e t seq. T he agencies
p u b lish ed tw o n otices of proposed
rulem aking p rio r to p u b lish in g th e joint
final rule. See 58 FR 67466 (Dec. 21,
1993); 59 FR 51232 (Oct. 7,1994). The
agencies p u b lish ed related clarifying
d o cum ents on D ecem ber 20 ,1 9 9 5 (60
FR 66048) an d M ay 1 0 ,1 9 9 6 (61 FR
21362).
Since p u b lish in g th e jo in t final rule,
th e agencies have received n u m ero u s
q u estions from fin ancial in stitu tio n s,
exam iners, an d others ab o u t th e new
regulations. Som e of th e qu estions w ere
answ ered in th e pream bles to the tw o
prop o sed ru les an d th e fin al rules. Some
oth er questions w ere ad d ressed in the
FFIEC’s Q uestions an d A nsw ers
regarding com m unity reinvestm ent,
p u b lish ed in th e Federal Register on
February 1 9 ,1993, (58 FR 9176) in
co nnection w ith th e CRA regulations
th en in effect. T h e agencies answ ered
tech n ical data rep orting q uestions in an
u n p u b lish ed interagency docum ent,
Q uestions an d A n sw ers on CRA Data
C ollection and R eporting, issu ed in
D ecem ber 1995, an d m ailed directly to
financial in stitu tio n s a n d oth er
in terested parties. A dditio n ally , the
agencies have answ ered som e questions
th rough interagency staff letters and
oth er inform al com m unications.
T he purp o se of th ese Interagency
Q uestions an d A nsw ers is to
consolidate, to th e extent possible,
useful CRA inform ation in to a
com prehensive docum ent. These
Interagency Q uestions an d A nsw ers
su p p lem en t oth er d o cu m en ts th at the
agencies are no t specifically
superseding, inclu d in g , for exam ple,
interagency staff CRA interpretive
letters. See “R elated actio n ” below .
Sm all Business Regulatory Enforcement
Fairness Act o f 1996 (SBREFA)
T he SBREFA requires an agency, for
each ru le for w h ich it p rep ares a final
regulatory flexibility analysis, to p ublish
one or m ore com pliance guides to help
sm all entities u n d ersta n d h ow to
com ply w ith th e rule.
P u rsu an t to section 605(b) of the
R egulatory Flexibility A ct, th e agencies
certified th a t th e ir p ro p osed CRA rule
w o u ld n o t have a significan t econom ic
im pact o n a su b stan tial n u m b e r of sm all
en tities a n d in v ited p u b lic com m ents on
th a t determ in atio n. S ee 58 FR 67478
(Dec. 21,1993); 59 FR 51250 (Oct. 7,
1994). In respo n se to p u b lic com m ent,
th e agencies v o lu n tarily p rep ared a final
regulatory flexibility an aly sis for the
joint final ru le, alth o u g h th e analysis
w as no t req u ired b ecause it su p p o rted
th e agencies” earlier certification
regarding th e p ro p o sed ru le. Because a
regulatory flexibility a n aly sis w as not
req u ired , section 212 o f th e SBREFA
does n o t ap p ly to th e fin al CRA rule.
H ow ever, in th e ir co n tin u in g efforts to
p ro v id e clear, u n d erstan d ab le
regulations an d to com ply w ith the
sp irit of th e SBREFA, th e agencies have
co m p iled th e Interagency Q uestions an d
A nsw ers. T he Interagency Q uestions
a n d A nsw ers serve th e sam e p u rp o se as
th e com pliance gu id e d escrib ed in the
SBREFA by p rovidin g gu id an ce on a
variety of issu es o f p articu la r con cern to
sm all b ank s an d thrifts.
Related A ction
T he Q uestions a n d A nsw ers regarding
com m unity rein vestm en t p u b lish ed in
th e Federal Register on February 19, .
1993, (58 FR 9176) co n tin u e to ap p ly to
in stitu tio n s th at are ex am in ed u n d e r th e
12 assessm ent factors in th e CRA
regulations as th ey ex isted p rio r to th e ir
am en d m en t on M ay 4 ,1 9 9 4 (12 CFR
25.7, 228.7, 345.7, a n d 563e.7).
H ow ever, as in stitu tio n s becom e subject
to evalu atio n u n d e r th e perform ance
tests a n d stan d ard s o f th e am en d ed CRA
regulations, th ese Interagency Q uestions
a n d A nsw ers supersed e, an d , on July 1,
1997, th e FFIEC w ill w ith d raw in its
entirety, th e F ebruary 1993 Q uestions
a n d A nsw ers regarding com m unity
reinvestm ent. T hese Interagency
Q uestions an d A nsw ers su b sum e an d
sup ersed e th e D ecem ber 1995 Q uestions
a n d A nsw ers on CRA D ata C ollection
a n d Reporting.
Comments
T he agencies in v ite p u b lic com m ent
on a co n tin u in g basis. T he agencies
in te n d to u p d ate th e Interagency
Q uestions an d A nsw ers on a regular
basis. If, after read in g th e Interagency
Q uestions an d A nsw ers, fin ancial
in stitu tio n s, exam iners, com m unity
groups, or oth er in terested p arties have
u n an sw ered q u estio n s or com m ents
about th e agencies’ com m u n ity
reinvestm ent regulations, th ey sh o uld
subm it them to th e agencies. T he
agencies w ill co n sid er in clu d in g
qu estio n s received from th e p u b lic in
fiiture guidance.
In terag en cy Q uestions a n d A nsw ers
F o rm at
Q uestions an d answ ers are grouped
by th e p rovision of th e CRA regulations
th a t they explicate a n d are p resen ted in
th e sam e o rd er as th e regulatory
provisions.
T he Interagency Q uestio ns and
A nsw ers em ploy an abbreviated m ethod
to cite to th e regulations. B ecause th e
regulations of th e four agencies are
.
sub stantively id e n tic al.co rresp o n d in g
sections of th e different regulations
u su ally b ear th e sam e suffix. Therefore,
th e Interagency Q uestions an d A nsw ers
typically cite only to th e suffix. For
,
exam ple, th e sm all b an k perform ance
stan dard s for n atio n al banks ap p ear at
12 CFR 25.26; for F ederal Reserve
m em ber banks, th ey ap p ear a t 12 CFR
228.26; for n o nm em ber banks, at 12 CFR
345.26; an d for thrifts, at 12 CFR
563e.26. A ccordingly, th e citatio n in
th is d o cu m en t w o u ld b e to § ------.26. In
th e few instan ces w here th e suffix in
one of th e reg ulations is different, the
specific citatio n for th a t regulation is
provided.
T he text of th e Interagency Q uestions
an d A nsw ers follow s:
T ext o f th e In terag en cy Q uestions an d
A nsw ers
Interagency Q uestions a n d A nsw ers
R egarding C o m m u n ity R ein vestm en t
T able of C ontents
T he agencies are p ro v id in g answ ers to
q u estio n s pertain in g to th e follow ing
p rov isio n s an d to p ics of th e CRA
regulations:
Section___.11—Authority, purposes, and
scope
.
___ 11(c) Scope
25.11(c)(3), 228.11(c)(3) & 345.11(c)(3)
Certain special purpose banks
Section___.12—Definitions
___ .12(a) Affiliate
___ .12(f) & 563e.l2(e) Branch
___ .12(h) & 563e.l2(g) Community
development
___ .12(h)(3) & 563e,12(g)(3) Activities that
promote economic development by
financing businesses or farms that meet
certain size eligibility standards
___ .12(i) & 563e. 12(h) Community
development loan
___ .12(j) & 563e.l2(i) Community
development service
___ .12(k) & 563e.l2(j) Consumer loan
___ ,12(m) & 563e.l2(l) Home mortgage loan
___ .12(n) & 563e.l2(m) Income level
___ .12(o) & 563e.l2(n) Limited purpose
institution
___ .12(s) & 563e.l2(r) Qualified investment
__ ^.12(t) Small institution
__ _.12(u) Small business loan
___ .12(w) Wholesale institution
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
Section___ .21—Performance tests,
standards, and ratings, in general
___ .21(a) Performance tests and standards
___ .21(b) Performance context
___ .21(b)(2) Information maintained by
the institution or obtained from
community contacts
___ .21(b)(4) Institutional capacity and
constraints
___ .21(b)(5) Institution’s past performance
and the performance of similarly situated
lenders
Section___.22—Lending test
___ .22(a) Scope of test
___ .22(a)(1) Types of loans considered
___ .22(a)(2) Other loan data
___ .22(b) Performance criteria
___ .22(b)(1) Lending activity
___ .22(b)(2) and (3) Geographic
distribution and borrower characteristics
___ .22(c) Affiliate lending
___ .22(c)(1) In general
___ .22(c)(2) Constraints on affiliate
lending
___ .22(c)(2)(i) No affiliate may claim a
loan origination or loan purchase if
another institution claims the same loan
origination or purchase
___ ,22(c)(2)(ii) If an institution elects to
have its supervisory agency consider
loans within a particular lending
category made by one or more of the
institution's affiliates in a particular
assessment area, the institution shall
elect to have the agency consider all
loans within that lending category in that
particular assessment area made by all of
the institution’s affiliates
___ .22(d) Lending by a consortium or a third
party
Section___ .23—Investment test
___ .23(b) Exclusion
Section___ .24—Service test
___ .24(d) Performance criteria—retail
banking services
___ .24(d)(3) Availability and effectiveness
of alternative systems for delivering
retail banking services
Section___ .25 Community development test
for wholesale or limited purpose institutions
___ .25(d) Indirect activities
___ .25(f) Community development
performance rating
Section___ .26—Small institution
performance standards
___ .26(a) Performance criteria
___ .26(a)(1) Loan-to-deposit ratio
___ .26(a)(2) Percentage of lending within
assessment area(s)
___ .26(a)(3) and (4) Distribution of
lending within assessment area(s) by
borrower income and geographic
'
location
___ .26(b) Performance rating
Section___ .27—Strategic plan
___ .27(c) Plans in general
___ .27(f) Plan content
___ .27(f)(1) Measurable goals
___ .27(g) Plan approval
___ .27(g)(2) Public participation
Section___ .28—Assigned ratings
■28fa) Ratings in general
Section____.29—Effect of CRA performance
on applications
___ .29(a) CRA performance
___ .29(b) Interested parties
Section___.41—Assessment area
delineation
___ .41(a) In general
__ _.41(c) Geographic area(s) for institutions
other than wholesale or limited purpose
institutions
___ .41(c)(1) Generally consist of one or
more MSAs or one or more contiguous
political subdivisions
___ .41(d) Adjustments to geographic area(s)
___ .41(e) Limitations on delineation of an
assessment area
___ .41(e)(3) May not arbitrarily exclude
low- or moderate-income geographies
___ .41(e)(4) May not extend substantially
beyond a CMSA boundary or beyond a
state boundary unless located in a
multistate MSA
Section___ .42—Data collection, reporting,
and disclosure
___ .42(a) Loan information required to be
collected and maintained
___ .42(a)(2) Loan amount at origination
___ .42(a)(3) The loan location
__ _.42(a)(4) Indicator of gross annual
revenue
___ :_.4 2 (b ) Loan information required to be
reported
___ .42(b)(1) Small business and small
farm loan data
___ .42(b)(2) Community development
loan data
___ .42(b)(3) Home mortgage loans
___.42(c) Optional data collection and
maintenance
___ .42(c)(1) Consumer loans
___ .42(c)(l)(iv) Income of borrower
___ .42(c)(2) Other loan data
___ .42(d) Data on affiliate lending
Section____.43—Content and availability of
public file
___ .43(a) Information available to the public
___ .43(a)(1) Public comments
___ .43(b) Additional information available
to the public
___ .43(b)(1) Institutions other than small
institutions
___ .43(c) Location of public information
Section___ .44—Public notice by
institutions
Section___ .45—Publication of planned
examination schedule
A ppen d ix B to P art _ _ —CRA N otice
T he body of th e Interagency
Q uestions an d A nsw ers Regarding
C om m unity R einvestm ent follows:
S e c tio n ____.11—A uth o rity , P urp o ses,
an d Scope
____.11(c) Scope
25.11(c)(3), 228.11(c)(3) &■ 345.11(c)(3)
Certain S pecia l P urpose B anks
Q l. Is th e list o f sp ecial p u rp o se banks
exclusive?
A l. No, there m ay be other exam ples
of special pu rp o se banks. T hese banks
54649
engage in specialized activities th a t do
n o t involve granting cre d it to th e p u b lic
in th e ordinary course o f business.
S pecial purpose banks typically serve as
co rrespondent banks, tru st com panies,
or clearing agents or engage only in
specialized services, su ch as cash
m anagem ent controlled disbursem ent
services. A fin ancial institu tio n,
how ever, does n o t becom e a special
p u rp o se b ank m erely by ceasing to m ake
lo ans and, instead, m aking investm ents
an d providing oth er retail banking
services. x
Q2. To be a specia l p u rp o se bank, m u st
a b a n k lim it its activities in its charter?
A2. No. A special purp o se b ank m ay,
b u t is n o t required to, lim it th e scope of
its activities in its charter, articles of
association or oth er corporate
organizational docum ents. A b an k th at
does no t have legal lim itations on its
activities, b u t has v o lu n tarily lim ited its
activities, how ever, w o u ld n o longer be
exem pt from CRA requirem ents if it
subsequently engaged in activities th at
involve granting cred it to th e p u b lic in
th e ordinary course of business. A b ank
th a t believes it is exem pt from CRA as
a special pu rp o se b an k sh o u ld seek
confirm ation of th is statu s from its
supervisory agency.
S ectio n ___ .12—Definitions
____.12(a) A ffilia te
Q l. Does th e defin itio n o f “a ffilia te”
in c lu d e subsidiaries o f an in stitu tion ?
A l. Yes, “affiliate” in clu d es any
com pany th at controls, is con tro lled by,
or is u n d er com m on control w ith
an o th er com pany. A n in stitu tio n ’s
subsidiary is con tro lled b y the
in stitu tio n an d is, therefore, an affiliate.
_ _ .1 2 ( f ) &■ 563e. 12(e) Branch
Q l. Do th e d efin itio n s o f "branch,”
“au to m a ted teller m a ch in e (A T M ),” and
“rem o te service fa c ility (RSF)” in clu d e
m o b ile branches, A TM s, a n d RSFs?
A l. Yes. Staffed m obile offices th at
are au thorized as b ranch es are
consid ered “b ran ch es” an d m obile
ATM s and RSFs are considered “A TM s”
an d “RSFs.”
Q2. A re loan p ro d u ctio n offices (LPOs)
branches fo r p u rp oses o f th e CRA?
A2. LPOs an d oth er offices are not
“b ran ch es” u n less th ey are au thorized
as branches of th e in stitu tio n th rough
th e regulatory appro v al process of th e
in stitu tio n ’s supervisory agency.
54650
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
____.12(h) & 563e. 12(g) C om m u nity
d evelo p m en t
Q l. A re c o m m u n ity d evelo p m en t
activities lim ite d to th o se th a t prom ote
econom ic developm ent?
A l. No. A lthough th e d efin itio n of
“ com m unity d ev elop m ent” in clu d es
activities th a t prom ote econom ic
d evelopm ent by financing sm all
bu sin esses or farm s, th e ru le does n o t
lim it com m unity dev elopm ent loans
an d services an d q ualified investm ents
to th o se activities. C om m unity
d evelopm ent also in clu d es com m unityor tribal-based ch ild care, educational,
h ealth , or social services targeted to
low- or m oderate-incom e persons,
affordable housing for low - or m oderateincom e in d iv id u als, an d activities th a t
revitalize or stabilize low - or m oderateincom e areas.
Q2. M u st a c o m m u n ity d evelo p m en t
a ctivity occur in sid e a low - or m oderatein co m e area in order fo r an in stitu tio n
to receive CRA consideration fo r the
activity?
A2. No. C om m unity developm ent
in clu d es activities o u tsid e of low- and
m oderate-incom e areas th a t provide
affordable hou sin g for, or com m unity
services targeted to, low - or m oderateincom e in d iv id u als an d activities th a t
prom ote econom ic d evelopm ent by
financing sm all b u sin esses a n d farms.
A ctivities th a t stabilize or revitalize
p articu lar low- or m oderate-incom e
areas (including b y creating, retaining,
or im proving jobs for low - or m oderateincom e persons) also qualify as
com m unity developm ent, even if the
activities are n o t located in these lowor m oderate-incom e areas. O ne exam ple
is financing a su perm arket th a t serves as
an anchor store in a sm all strip m all
located at th e edge of a m iddle-incom e
area, if th e m all stabilizes th e adjacent
low -incom e com m unity by providing
n eed ed shopping services th a t are n o t
otherw ise available in th e low -incom e
com m unity.
Q3. Does th e regulation p rovide
fle x ib ility in considering p erform ance in
high-cost areas?
A3. Yes, th e flexibility of th e
perform ance stan d ard s allow s
exam iners to account in th e ir
evaluations for co n d itio n s in high-cost
areas. E xam iners co n sid er lending and
services to in d iv id u als an d geographies
of all incom e levels an d businesses of
all sizes and revenues. In additio n , the
flexibility in th e req u irem en t that
com m unity d evelopm ent loans,
com m unity d evelopm ent services, an d
qualified in v estm ents have as th eir
“ prim ary ” pu rp o se com m unity
d evelopm ent allow s exam iners to
acco u nt for c o n d itio n s in high-cost
areas. For exam ple, exam iners cou ld
take in to account th e fact th a t activities
ad d ress a cred it shortage am ong m iddleincom e people or areas caused by th e
dispro p o rtio n ately h igh cost of building,
m ain tain in g or acquiring a h o u se w h en
determ ining w h eth er an in stitu tio n ’s
loan to or in v estm en t in an organization
th at funds affordable h o u sin g for
m iddle-incom e peo p le or areas, as w ell
as low- an d m oderate-incom e people or
areas, h as as its prim ary purp o se
com m unity developm ent.
____.12(h)(3) S' 563e.l2(g)(3) A ctivities
th a t p ro m o te econ om ic d evelo p m en t b y
fin a n cin g b usinesses or fa rm s th a t m ee t
certain size elig ib ility standards
Q l. ‘‘C o m m u n ity d ev elo p m e n t"
in c lu d es activities th a t p ro m ote
econom ic d evelo p m en t b y fin a n cin g
busin esses or fa rm s th a t m e e t certain
size eligib ility standards. Do all
activities th a t fin a n c e these businesses
a n d fa rm s p rom ote econ om ic
developm ent?
A l. No, n o t necessarily. T h e agencies
w ill presum e th a t all financing for sm all
bu sin esses or farm s m ade th rough Sm all
B usiness A dm in istratio n program s, such
as an in vestm en t in a Sm all B usiness
Investm ent C om pany, h as an econom ic
developm ent purpose. O th er activities
th a t finance sm all b u sin esses or farms
th at m eet th e size eligibility standards
m u st su p p o rt p erm an en t job creation,
reten tio n , a n d /o r im provem ent for
perso n s w ho are cu rren tly low - or
m oderate-incom e or finance businesses
an d farm s located in low - or m oderateincom e geographies or in geographies
targeted for red ev elop m en t by federal,
state, local or trib al g overnm ents in
order to be co n sid ered as prom oting
econom ic developm ent.
____.12(i) &■ 56 3 e.l2 (h ) C o m m u n ity
develo p m en t loan
Q l. W hat are exa m p les o f co m m u n ity
develo p m en t loans?
A l. E xam ples of com m unity
dev elopm ent loans in clu d e, b u t are not
lim ite d to, loans to:
• B orrow ers for affordable housing
reh ab ilitatio n an d construction,
inclu d in g con stru ction a n d p erm anent
financing of m ultifam ily ren ta l property
serving low- and m oderate-incom e
persons;
• N ot-for-profit organizations serving
p rim arily low - an d m oderate-incom e
hou sin g or other com m unity
developm ent needs;
• B orrow ers to co n stru ct or
rehabilitate com m unity facilities that
are located in low- an d m oderate-
incom e areas or th a t serve prim arily
low- an d m oderate-incom e in d iv id u als;
• F in an cial in term ed iaries in clu d ing
C om m unity D evelopm ent F inancial
In stitu tio n s (CDFIs), C om m unity
D evelopm ent C orporations (CDCs),
m inority- an d w om en-ow ned financial
in stitu tio n s, com m unity lo an fun d s or
pools, a n d low -incom e or com m unity
developm ent cred it u n io n s th a t
prim arily len d or facilitate len d in g to
prom ote com m unity developm ent.
• Local, state, an d trib al governm ents
for com m unity d ev elopm ent activities;
an d
• B orrow ers to finance environm ental
clean-up or redevelo p m en t o f an
in d u strial site as p art of an effort to
revitalize th e low - or m oderate-incom e
com m unity in w h ich th e p roperty is
located.
Q2. I f a reta il in stitu tio n th a t is n o t
required to report u n d er th e H om e
M ortgage D isclosure A c t (HM DA) m a kes
affordable h o m e m ortgage lo a n s th at
w ould be H M D A-reportable ho m e
m ortgage loans i f it were a reporting
in stitu tio n , or i f a sm a ll in stitu tio n th a t
is n o t required to collect a n d report loan
data u n d er CRA m a kes sm a ll business
a n d sm a ll fa rm lo an s a n d consum er
lo an s th a t w ould be collected a n d /o r
reported i f th e in stitu tio n were a large
in stitu tio n , m a y th e in stitu tio n ha ve
th ese loans considered as co m m u n ity
d evelo p m en t loans?
A2. No. A lthough sm all in stitu tio n s
are not req u ired to rep o rt or collect
inform ation on sm all b u sin ess and sm all
farm loans an d co n su m er loans, an d
som e in stitu tio n s are n o t req u ired to
rep o rt inform ation ab ou t th e ir hom e
mortgage loans u n d e r HMDA, if these
in stitu tio n s are retail in stitu tio n s, the
agencies w ill co n sid er in th e ir CRA
evaluations th e in stitu tio n s’ originations
an d p u rchases of loans th a t w o u ld have
been collected or rep o rted as sm all
busin ess, sm all farm , co n su m er or hom e
mortgage loans, h ad th e in stitu tio n been
a collecting an d reporting in stitu tio n
u n d er th e CRA or d ie HMDA. Therefore,
these loans w ill n o t be co n sid ered as
com m unity d evelopm ent loans.
M ultifam ily dw elling loans, how ever,
m ay be considered as com m unity
developm ent loans as w ell as hom e
mortgage loans. S ee also Q&A2
ad d ressing § ____.42(b)(2).
Q3. Do secured credit cards or other
credit card program s targeted to-low- or
m oderate-incom e in d ivid u a ls q u a lify as
c o m m u n ity d evelo p m en t loans?
A3. No. C redit cards issu ed to low- or
m oderate-incom e in d iv id u als for
ho u seho ld, fam ily, or oth er personal
expen d itu res, w h eth e r as p art of a
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
program targ eted to such in d iv id u als or
otherw ise, do n o t qualify as com m unity
d evelopm ent loan s because th ey do n o t
have as th e ir p rim ary purp o se any of th e
activities in c lu d ed in th e d efin ition of
“com m u n ity developm ent.”
Q4. T he regulation in d ica tes th a t
c o m m u n ity d evelo p m en t in clu d es
"a ctivities th a t revita lize or sta b ilize
low - o r m oderate-incom e g eographies.”
Do a ll lo a n s in a low - to m oderatein co m e geography h ave a sta bilizing
effect?
A4. No: Som e loans m ay prov id e only
in d ire ct o r short-term benefits to low - or
m oderate-incom e ind iv id u als in a lowor m oderate-incom e geography. T hese
loans are n o t co n sid ered to have a
com m unity developm ent purpose. For
exam ple, a loan for upper-incom e
h ousing in a d istressed area is no t
co nsidered to have a com m unity
d evelopm ent pu rp o se sim ply b ecause of
th e in d irect b enefit to low- or m oderateincom e perso n s from constructio n jobs
or th e increase in th e local tax base th at
su p p o rts en h a n ce d services to low - an d
m oderate-incom e area residents. O n th e
other h an d , a loan for am anchor
business in a distressed area (or a
nearby area), th a t em ploys or serves
resid en ts of th e area, an d th u s stabilizes
th e area, m ay be considered to have a
com m unity d evelopm ent purpose. For
exam ple, in a n underserved, distressed
area, a loan for a pharm acy th a t
em ploys, an d p rovides su p p lies to,
resid en ts of th e area prom otes
com m unity developm ent.
Q5. M ust there be som e im m ed ia te or
direct b en e fit to th e in stitu tio n ’s
a ssessm ent area(s) to sa tisfy th e
regulations’ requirem ent th a t qu alified
in vestm en ts a n d co m m u n ity
develo p m en t lo a n s or services b en efit an
in stitu tio n ’s a ssessm ent area(s) or a
broader sta tew ide or regional area th a t
in clu d es th e in stitu tio n ’s assessm ent
area(s)?
A5. No, th e regulations, for exam ple,
recognize th a t com m unity developm ent
organizations an d program s are
frequently efficient and effective w ays
for in stitu tio n s to prom ote com m unity
developm ent. T hese organizations and
program s often operate on a statew ide or
even m ulti-state basis. Therefore, an
in stitu tio n ’s activity is co n sidered a
com m unity d evelopm ent loan or service
or a qualified investm ent if it supports
an organization or activity th at covers
an area th a t is larger than, b u t includes,
th e in stitu tio n ’s assessm ent area(s). The
in stitu tio n ’s assessm ent area n eed not
receive an im m ediate or direct benefit
from th e in stitu tio n ’s specific
p articip atio n in th e broader organization
or activity, p ro v id ed th e purpose,
m andate, or function of th e organization
or activity in c lu d es serving geographies
or in d iv id u als located w ith in th e
in stitu tio n ’s assessm ent area.
F urtherm ore, th e regulations p erm it a
w holesale or lim ited purp o se in stitu tio n
to co n sid er com m unity developm ent
loans, com m unity developm ent
services, an d q ualified investm ents
w herever th ey are located, as long as th e
in stitu tio n h as otherw ise adequately
ad d ressed th e cred it needs w ith in its
assessm ent area(s).
Q6. W hat is m e a n t b y a “regional area”
in th e requirem ent th a t a co m m u n ity
d evelo p m en t loan m u st benefit the
in stitu tio n ’s assessm en t area(s) or a
broader statew id e or regional area th a t
in clu d es th e in stitu tio n ’s assessm ent
area(s)?
A6. A “regional area” m ay b e as sm all
as a city or c o u n ty or as large as a
m u ltistate area. For exam ple, th e “m idA tlantic states” m ay com prise a regional
area. W hen exam iners evaluate
com m unity d evelopm ent loans th at
benefit a regional area th a t in clu d es th e
in stitu tio n ’s assessm ent area, how ever,
th e exam iners w ill consid er th e size of
th e regional area a n d th e actual or
po ten tial b enefit to th e in stitu tio n ’s
assessm ent area(s). In m ost cases, th e
larger th e regional area, th e m ore diffuse
th e benefit w ill be to the in stitu tio n ’s
assessm ent area(s). Exam iners m ay view
loans w ith m ore direct benefits to an
in stitu tio n ’s assessm ent area(s) as m ore
responsive to th e cred it needs of th e
area(s) th a n loans for w h ich the actual
benefit to th e assessm ent area(s) is
u n certain or for w h ich th e benefit is
diffused th ro u g h o ut a larger area th a t
in clu d es th e assessm ent area(s).
____,12(j) &■ 56 3 e.l2 (i) C om m unity
d evelo p m en t service
Q l. In ad ditio n to m eeting th e d efin itio n
o f “co m m u n ity d evelo p m en t” in th e
regulation, c o m m u n ity d evelo p m en t
services m u st also be related to th e
provision o f fin a n c ia l services. W hat is
m ea n t b y “provision o f fin a n cia l
services’?
A l. Providing financial services
m eans p roviding services of th e type
generally p ro v id ed by the financial
services in d ustry . P roviding financial
services often involves inform ing
com m unity m em bers about h ow to get
or u se cred it or otherw ise providing
cred it services or inform ation to the
com m unity. F o r exam ple, service on th e
b oard of directors of an organization
th a t prom otes cred it availability or
finances affordable housing is related to
th e p rovision of financial services.
54651
P roviding tech n ical assistance about
financial services to com m unity-based
groups, local or trib al governm ent
agencies, o r interm ediaries th a t h elp to
m eet th e cred it n eeds of low- and
m oderate-incom e ind iv id u als or sm all
b u sinesses an d farm s is also providing
financial services. By contrast, activities
th a t do n o t take advantage of the
em ployees’ financial expertise, su ch as
neighborhood cleanups, do no t involve
th e provision of financial services.
Q2. A re p erson al charitable activities
pro vid ed b y an in stitu tio n ’s em ployees
or directors oiitsid e th e ordinary course
o f th eir em p lo ym en t considered
c o m m u n ity develo p m en t services?
A2. No. Services m u st be p ro v id ed as
a representative of th e institu tio n . For
exam ple, if a financial in stitu tio n ’s
director, on h e r ow n tim e an d no t as a
representative of th e institu tio n ,
volunteers one evening a w eek at a local
com m unity d evelopm ent co rporation’s
financial counseling program , the
in stitu tio n m ay n o t consider th is
activity a com m unity developm ent
service.
Q3. W hat are exam ples o f co m m u n ity
d evelo p m en t services?
A3. Exam ples of com m unity
d evelopm ent services inclu d e, b u t are
n o t lim ited to, th e following:
• Providing tech n ical assistance on
financial m atters to nonprofit, trib al or
governm ent organizations serving lowan d m oderate-incom e housing or
econom ic revitalization and
developm ent needs;
• Providing tech n ical assistance on
financial m atters to sm all b u sinesses or
com m unity developm ent organizations;
• Lending em ployees to provide
financial services for organizations
facilitating affordable housing
co n struction an d rehab ilitatio n or
d evelopm ent of affordable housing;
• Providing cred it counseling, hom e
b uyers an d h o m e m aintenance
counseling, financial plan n in g or other
financial services education to prom ote
com m unity developm ent an d affordable
housing;
• E stablishing school savings
program s for low- or m oderate-incom e
individuals;
• P roviding electronic benefits
transfer an d p o in t of sale term inal
system s to im prove access to financial
services, su ch as b y decreasing costs, for
low- or m oderate-incom e individuals;
and
• Providing oth er financial services
w ith th e p rim ary purpose of com m unity
developm ent, su c h as low -cost b ank
accounts or free governm ent check
cashing th a t increases access to
54652
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
fin ancial services for low - or m oderateincom e indiv id u als.
Exam ples of tech n ical assistance
activities th a t m ight be p ro v id ed to
com m unity d ev elopm ent organizations
include:
• Serving on a loan review
com m ittee;
• D eveloping loan ap p licatio n and
u n d erw riting standards;
• D eveloping lo an processing
system s;
• D eveloping secondary m arket
v ehicles or program s;
• A ssisting in m arketing financial
services, in clu d in g d evelopm ent of
advertising an d prom otions,
publicatio n s, w orkshops and
conferences;
• F urnishing fin ancial services
training for staff an d m anagem ent;
• C ontributing accounting/
bookkeeping services; an d
• A ssisting in fu n d raising, in clu d ing
soliciting or arranging investm ents.
____.12(k) &■ 5 63 e.l2 (j) C onsum er Joan
Q l. A re h o m e eq u ity lo a n s considered
‘‘co nsum er lo a n s”?
A l. Home equity loans m ade for
p u rp oses other th an ho m e purchase,
hom e im provem ent or refinancing hom e
p u rch ase or hom e im provem ent loans
are consum er loans if th ey are extended
to one or m ore in d iv id u als for
h o u sehold, fam ily, or o th er personal
expenditures.
Q2. M ay a h o m e eq u ity lin e o f credit be
considered a “co n su m er lo a n ” even i f
p a rt o f th e lin e is fo r h o m e im p ro vem en t
purposes?
A2. If th e p red o m in an t purp o se of the
lin e is hom e im provem ent, the line m ay
only be rep o rted u n d e r HMDA an d m ay
n o t be considered a co n su m er loan.
H ow ever, th e full am o u n t of th e line
m ay be co n sid ered a “consum er loan ” if
its predom in m t purp o se is for
h o usehold, fam ily, or oth er personal
exp en d itu res, an d to a lesser extent
hom e im provem ent, a n d th e full am ount
o f th e line has n o t been rep o rted u n d er
HMDA. T his is th e case even though
th ere m ay be “ double co u n tin g ” because
p art of th e line may also have been
rep o rted u n d er HMDA.
Q3. H ow sh o u ld an in stitu tio n collect or
report inform ation on lo a n s the
proceeds o f w hich w ill be u sed fo r
m u ltip le purposes?
A3. If an in stitu tio n m akes a single
loan or provides a line of cred it to a
custom er to b e u sed for b o th consum er
a n d sm all b u sin ess purposes, co nsistent
w ith the Call Report a n d TFR
in stru ction s, th e in stitu tio n should
d eterm ine th e m ajor (predom inant)
com ponent of th e loan or th e cred it line
an d collect or rep o rt th e entire loan or
cred it line in accordance w ith th e
reg u latio n ’s specifications for th a t loan
type.
____.12(m ) 6- 5 6 3 e.l2 (l) H om e m ortgage
loan
Q l. Does th e term “h o m e m ortgage
lo a n ” in clu d e lo ans oth er than "hom e
p u rch a se lo a n s”?
A l. Yes. “Hom e mortgage lo an ”
in clu d es a “hom e im provem ent lo a n ” as
w ell as a “hom e p urchase lo an ,” as both
term s are d efined in th e HMDA
regulation, Regulation C, 12 CFR p art
203. T his d efin itio n also in clu d es
m ultifam ily (five-or-more fam ilies)
dw elling loans, loans for th e p urchase of
m anufactured hom es, an d refinancings
o f hom e im provem ent an d hom e
p u rch ase loans.
Q2. S o m e fin a n cia l in stitu tio n s broker
h o m e m ortgage loans. T h ey typ ica lly
take th e borrow er’s app licatio n a nd
perform other se ttle m en t activities;
how ever, th e y do n o t m a ke th e credit
decision. T he broker in stitu tio n s m a y
also in itia lly fu n d these m ortgage loans,
th en im m ed ia tely assign th em to
another lender. B ecause th e broker
in stitu tio n does n o t m a k e th e credit
decision, u n d er R egulation C(H M D A),
th e y do n o t record th e lo a n s on their
H M D A-LARs, even i f th e y fu n d the
loans. M ay an in stitu tio n receive a n y
consideration u n d er CRA fo r its h o m e
m ortgage loan brokerage activities?
A2. Yes. A fin ancial in stitu tio n th at
fun d s hom e m ortgage lo ans b u t
im m ediately assigns th e loans to th e
len d er th a t m ade th e cred it decisions
m ay p resen t inform ation about these
loans to exam iners for consideration
u n d e r th e lending test as “ oth er loan
d ata.” U nder R egulation C, th e broker
in stitu tio n does no t reco rd th e loans on
its HMDA-LAR because it does n o t
m ake th e cred it decisions, even if it
fun d s th e loans. A n in stitu tio n electing
to have these hom e m ortgage loans
considered m u st m aintain inform ation
about all of th e hom e mortgage loans
th at it h as fu nd ed in th is way.
Exam iners w ill co n sid er th is other loan
data using th e sam e criteria by w h ich
hom e mortgage loans originated or
p u rch ased by an in stitu tio n are
evaluated.
Institutio n s th a t do n o t provide
funding b u t m erely take applicatio n s
an d provide settlem ent services for
an o th er len d er th a t m akes th e credit
decisions w ill receive consideration for
th is service as a retail banking service.
E xam iners w ill co n sider an in stitu tio n ’s
mortgage brokerage services w hen
evaluating th e range of services
p ro vid ed to low-, m oderate-, m iddlean d u p per-incom e geographies an d th e
degree to w h ich th e services are tailo red
to m eet th e n eed s of th o se geographies.
A lternatively, an in stitu tio n ’s m ortgage
brokerage service m ay be co n sid ered a
com m unity developm ent service if the
p rim ary pu rp o se of th e service is
com m unity developm ent. A n in stitu tio n
w ish in g to have its m ortgage brokerage
service considered as a com m unity
d ev elopm ent service m u st provide
sufficient inform ation to substantiate
th a t its prim ary p u rp o se is com m unity
d ev elopm ent an d to estab lish th e extent
of th e services provided.
____.12(n) &■ 56 3 e.l2 (m ) In co m e level
Q l. W here do in stitu tio n s fin d in co m e
level data fo r geographies a n d
ind ividu als?
A l. T he.incom e levels for
geographies, i.e., census tracts an d block
num bering areas, are deriv ed from
Census B ureau inform ation an d are
u p d ated every te n years. In stitutio n s
m ay contact th e ir regional Census
B ureau office or th e C ensus B ureau’s
Incom e S tatistics Office at (301) 763
8576 to obtain incom e levels for
geographies. See A p p en d ix A for a list
of th e regional Census B ureau offices.
T he incom e levels for in d iv id u als are
deriv ed from inform ation calculated by
th e D epartm ent of H ousing an d U rban
D evelopm ent (HUD) a n d u p d ated
annually. Institu tio ns m ay contact HUD
at (800) 245-2691 to req u est a copy of
“FY [year num ber, e.g., 1996] M edian
F am ily Incom es for States an d th e ir
M etropolitan a n d N onm etropolitan
P o rtio n s.”
A lternatively, in stitu tio n s m ay obtain
a list of th e 1990 C ensus Bureaucalcu lated and th e an n u ally u p d ated
HUD m ed ian fam ily incom es for MSAs
an d statew ide n o n m etro p o litan areas by
calling th e Federal F in an cial In stitu tio n
Exam ination C o u n cil’s (FFIEC’s) HMDA
H elp Line at (202) 452-2016. A free
copy w ill be faxed to th e caller th rough
th e “ fax-back” system . In stitu tio n s m ay
also call th is n um b er to h av e “faxedback ” an order form, from w h ich th ey
m ay o rd er a list providing th e m ed ian
fam ily incom e level, as a percentage of
th e ap p ro p riate M SA or
nonm etro po litan m ed ian fam ily incom e,
of every census tract an d BNA. T his list
costs $50. Institutio n s m ay also obtain
th e list of MSA an d statew ide
nonm etro po litan area m ed ian fam ily
incom es or an order form through th e
FFIEC’s CRA hom e page on th e Intern et
at ‘http://w w w .ffiec.bog.frb.fed.U s/cra/’.
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
__ _.1 2 (o ) & 5 6 3 e.l2 (n ) L im ited p urpo se
in stitu tio n
Q l. W hat co n stitu tes a "na rro w p ro d u ct
lin e " in th e d efin itio n o f "lim ited
pu rpo se in stitu tio n ”
A l. A n in stitu tio n offers a narrow
p rod u ct lin e b y lim itin g its lending
activities to a p ro d u ct Une oth er th an a
traditio n al retail p ro d u ct lin e req u ired
to be evalu ated u n d e r th e lend in g test
(i.e., hom e m ortgage, sm all b u siness,
an d sm all farm loans). T hus, an
in stitu tio n engaged only in m aking
cred it card or m otor v ehicle lo ans offers
a narrow p ro d u ct lin e, w h ile an
in stitu tio n lim itin g its len d in g activities
to hom e m ortgages is no t offering a
narrow p ro d u ct line.
Q2. W hat fa cto rs w ill th e agencies
consider to d eterm in e w heth er an
in stitu tio n tha t, i f lim ite d purpose,
m a kes lo an s o u tsid e a narrow p ro d u ct
line, or, i f w holesale, engages in retail
lending, w ill lo se its lim ite d p u rp o se or
w holesale designation because o f too
m u ch other lending?
A2. W holesale in stitu tio n s m ay
engage in som e retail len din g w ith o u t
losing th e ir d esignation if th is activity is
in cid en tal an d don e on an
accom m odation basis. Sim ilarly, lim ited
purp o se in stitu tio n s co n tin u e to m eet
th e n arrow p ro d u ct lin e requ irem en t if
they provide o th er types of lo ans on an
infrequent basis. In review ing other
lending activ ities by these in stitu tion s,
th e agencies w ill co n sid er th e follow ing
factors:
• Is th e oth er len d in g p ro v id ed as an
in cid en t to th e in stitu tio n ’s w holesale
lending?
• A re th e loans p ro v id ed as an
accom m odation to th e in stitu tio n ’s
w holesale custom ers?
• A re th e loans m ade only
infrequently to th e lim ited purpose
in stitu tio n ’s custom ers?
• Does only an in significant portion
of th e in stitu tio n ’s to tal assets an d
incom e resu lt from th e other lending?
• H ow significant a role d oes th e
in stitu tio n play in p ro v id in g th a t type(s)
o f loan in th e in stitu tio n ’s assessm ent
area(s)?
• Does th e in stitu tio n h o ld itself ou t
as offering th a t type(s) of loan?
• Does th e len d in g test or th e
com m unity d evelopm ent test p resen t a
m ore accurate p ictu re of the
in stitu tio n ’s CRA perform ance?
Q3. D o "niche in stitu tio n s” q u a lify as
lim ited p u rp o se (or w holesale)
in stitu tions?
A3. G enerally, no. Institu tio n s th at are
in th e b u sin ess of lending to th e public,
b u t specialize in certain types of retail
loans (for exam ple, h om e m ortgage or
sm all b u siness loans) to certain ty pes of
borrow ers (for exam ple, to high-end
incom e level custom ers or to
corporations or p artn ersh ip s of licen sed
professional p ractitioners) (“n ich e
in stitu tio n s”) generally w o u ld n ot
qualify as lim ited p u rp o se (or
w holesale) in stitu tion s.
54653
low -incom e or com m unity developm ent
cred it u nions) th a t prim arily len d or
facilitate len d in g in low - an d m oderateincom e areas or to low - an d m oderateincom e in d iv id u als in order to prom ote
com m unity developm ent, such as a
CDFI th at prom otes econom ic
d evelopm ent on an In d ian reservation;
• O rganizations engaged in affordable
hou sin g reh ab ilitatio n an d co nstruction,
in clu d in g m ultifam ily rental housing;
Q l. Does th e CRA regulation provid e
• O rganizations, including, for
au th o rity fo r in stitu tio n s to m a ke
exam ple, Sm all B usiness Investm ent
investm ents?
C om panies (SBICs) an d specialized
SBICs, th a t prom ote econom ic
A l. No. T he CRA regulation does no t
provide au tho rity for in stitu tio n s to
d evelopm ent by financing sm all
m ake in vestm ents th a t are n o t otherw ise businesses;
allow ed by F ederal law.
• F acilities th a t prom ote com m unity
developm ent in low - an d m oderateQ2. A re m ortgage-backed securities or
m u n icip a l bon ds "qua lified
incom e areas for low - an d m oderatein v estm e n ts”?
incom e in d iv id u als, su ch as youth
program s, hom eless centers, soup
A2. As a general rule, mortgagekitchens, h ealth care facilities, b attered
backed securities an d m u n icip al b o n d s
w o m en ’s centers, an d alcohol and drug
are n o t qualified investm en ts because
recovery centers;
th ey do no t have as th e ir prim ary
purp o se com m unity developm ent, as
• Projects eligible for low -incom e
defined in th e CRA regulations.
housing tax credits;
N onetheless, m ortgage-backed securities
• State an d m u n icip al obligations,
or m u n icip al b o n d s designed prim arily
su ch as revenue b o n d s, th a t specifically
to finance com m unity developm ent
su p p o rt affordable h ou sin g or other
generally are qualified investm ents.
com m unity developm ent;
M unicipal b o n d s or oth er securities
w ith a p rim ary p u rp o se o f com m unity
• N ot-for-profit organizations serving
developm ent n eed n o t be housinglow - an d m oderate-incom e h ousing or
related. For exam ple, a b o n d to fund a
oth er com m unity developm ent needs,
com m unity facility or p ark or to provide su ch as counseling for credit, hom esewage services as p art of a p la n to
ow nership, hom e m aintenance, and
redevelop a low -incom e neighborhood
oth er fin ancial services education; an d
is a qualified investm ent. H ousing• O rganizations supp o rtin g activities
related b o n d s or securities m u st
essen tial to th e capacity of low- an d
prim arily add ress affordable h ousing
m oderate-incom e in div id u als or
(including m ultifam ily ren tal housing)
geographies to u tilize cred it or to
n eed s in order to qualify.
su stain econom ic developm ent, su ch as,
Q3. A re F ederal H om e Loan B a n k sto cks for exam ple, day care operations an d job
a n d m em bership reserves w ith the
training' program s th a t enable people to
Federal R eserve B an ks "qu alified
work.
in v estm e n ts”?
{
Q5. W ill an in stitu tio n receive
A3. No. F ederal H om e Loan Bank
stock an d m em bership reserves w ith the. consideration fo r charitable
con tributions as “qua lified
F ederal Reserve Banks do no t have a
in v estm e n ts”?
sufficient co n n ection to com m unity
developm ent to b e qualified
A5. Yes, p ro v ided th ey have as th e ir
investm ents.
prim ary purp o se com m unity
Q4. W hat are exa m p les o f qualified
developm ent as d efined in die
in vestm ents?
regulations. A ch aritable contribution,
w h eth er in cash or an in-kind
A4. Exam ples of qualified
investm ents in clu d e, b u t are n o t lim ited co n tribu tio n of p roperty, is in clu d ed in
to, investm ents, grants, d eposits or
th e term “g rant.” A q ualified investm ent
shares in or to:
is no t d isqualified b ecause an
•
F inancial interm ediaries (including, in stitu tio n receives favorable treatm ent
C om m unity D evelopm ent F inancial
for it (for exam ple, as a tax d ed u ctio n
In stitutions (CDFIs), C om m unity
or credit) u n d e r th e Internal Revenue
D evelopm ent C orporations (CDCs),
Code.
m inority- an d w om en-ow ned financial
in stitu tio n s, com m unity loan funds, an d
____.12(s) & 563 e.l2(r) Q ualified
in vestm en t
54654
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
Q6. A n in stitu tio n m a kes or pa rticip ates
in a c o m m u n ity d evelo p m en t loan. The
in stitu tio n p ro vid ed th e loan at belowm a rke t in terest rates or “bough t dow n ”
th e in tere st rate to the borrower. Is the
lo st in c o m e resulting fro m th e low er
in tere st rate or buy-dow n a q u a lified
in vestm en t?
A6. No. T h e agencies w ill, how ever,
co n sid er th e innovativeness an d
com plexity of th e com m unity
d ev elo p m en t loan w ith in th e b o u n d s of
safe an d so u n d banking practices.
Q7. W ill th e agencies consider as a
q u a lified in v estm e n t th e wages or other
com p en sa tio n o f an em p loyee or
director w ho p rovides assistan ce to a
co m m u n ity d evelo p m en t organization
on b e h a lf o f th e institutio n?
A7. No. H owever, the agencies w ill
co n sider d o n ated labor of em ployees or
d irectors of a financial in stitu tio n in the
service test if th e activity is a
com m unity d evelopm ent service.
____. 12(t) S m a ll in stitu tio n
Q l. H ow are th e “tota l b a n k a n d th rift
a sse ts” o f a ho lding co m p a n y
determ ined?
A l. “T otal banking an d th rift assets”
of a h o ld in g com pany are determ ined by
com bining th e total assets of all banks
a n d /o r th rifts th a t are m ajority-ow ned
by th e h o ld in g com pany. A n in stitu tio n
is m ajority-ow ned if th e h olding
com pany directly or ind irectly ow ns
m ore th a n 50 percent of its o utstanding
voting stock.
Q2. H ow are Federal a n d S tate branch
assets o f a foreign b a n k ca lculated fo r
pu rpo ses o f th e CRA?
A2. A F ederal or State b ran ch of a
foreign b an k is co nsidered a sm all
in stitu tio n if th e Federal or State b ranch
has less th a n $250 m illio n in assets an d
th e to tal assets of the foreign b a n k ’s or
its h o ld in g com pany’s U.S. b an k and
th rift su b sid iaries th at are subject to the
CRA are less them $1 billion. T his
calcu latio n in clu d es n o t only FDICin su red b an k a n d thrift su b sidiaries, b u t
also th e assets of any FDIC-insured
b ran ch of th e foreign b an k an d th e
assets of any u n in su red Federal or State
b ran ch (other th a n a lim ited b ran ch or
a F ederal agency) of th e foreign b an k
th a t resu lts from an acquisition
d escribed in section 5(a)(8) of th e
In tern ation al Banking A ct o f 1978 (12
U.S.C. § 3103(a)(8)).
____ ,.12(u) S m a ll busin ess loan
Q l. A re loan s to no n p ro fit organizations
con sid ered sm a ll business lo a n s or are
th e y con sidered co m m u n ity
d evelo p m en t loans?
■
A l. To b e co n sid ered a sm all business
loan, a lo an m u st m eet th e d efin itio n of
“ lo an to sm all b u sin e ss” in the
in stru c tio n s in th e “ C onsolidated
R eports of C onditions an d Incom e” (Call
Report) an d “T hrift F inancial R eports”
(TFR). In general, a loan to a n o n p ro fit
organization, for business or farm
p u rp o ses, w h ere th e loan is secu red by
nonfarm n o n resid en tial p roperty an d
th e original am o u n t of th e loan is $1
m illio n or less, if a b u sin ess loan, or
$500,000 or less, if a farm loan, w o uld
be rep o rted in th e Call R eport an d TFR
as a sm all b u sin ess or sm all farm loan.
If a lo an to a n onprofit organization is
rep o rtab le as a sm all b u sin ess or sm all
farm loan, it can n o t also be co n sid ered
as a com m u n ity d evelopm ent loan,
except b y a w h olesale or lim ited
p u rp o se in stitu tio n . Loans to nonp ro fit
organizations th a t are n o t sm all b u sin ess
or sm all farm loans for Call R eport an d
TFR p u rp o ses m ay be co n sid ered as
com m u n ity d evelopm ent loans if they
m eet th e regulatory definition.
Q2. A re lo an s secured b y com m ercial
real estate considered sm a ll business
loans?
A2. Yes, d ep en d in g on th e ir p rin cip al
am ount. Sm all b u sin ess loans in clu d e
loans secu red by “ nonfarm
n o n resid e n tia l p ro p erties,” as defined in
th e Call R eport an d TFR, in am ounts
less th a n $1 m illion.
Q3. A re lo an s secured b y nonfarm
resid en tia l real estate to fin a n c e sm a ll
b u sin esses “sm a ll bu sin ess lo a n s’?
A3. No. Loans secured b y nonfarm
resid e n tia l real estate th a t are u se d to
finance sm all businesses are n o t
in c lu d e d as “ sm all b u sin ess” loans for
Call R eport an d TFR p urposes. T he
agencies recognize th a t m any sm all
b u sin esses are financed by loans
secu red by resid en tial real estate. If
th ese lo ans prom ote com m unity
develo p m en t, as defined in th e
reg ulation, th ey m ay b e co nsid ered as
co m m u n ity developm ent loans.
O therw ise, at an in stitu tio n ’s option, the
in stitu tio n m ay collect an d m ain tain
d ata separately concerning th ese loans
an d req u est th a t th e data b e consid ered
in its CRA evalu atio n as “O ther Secured
L ines/L oans for P urposes of Sm all
B usiness.”
Q4. A re cred it cards issu ed to sm a ll
bu sin esses considered "sm a ll business
lo a n s”
A4. C redit card s issu ed to a sm all
b u sin ess or to in d iv id u als to b e used,
w ith th e in stitu tio n ’s know ledge, as
b u sin ess acco u n ts are sm all b u siness
loans if th ey m eet th e defin itio nal
req u irem en ts in th e Call R eport or TFR
in stru ctio ns.
____.12(w) W holesale in stitu tio n
Q l. W hat fa cto rs w ill th e agencies
con sider in determ ining w h ether an
in stitu tio n is in th e bu siness o f
e xten d in g h o m e m ortgage, sm a ll
bu sin ess, sm a ll fa rm , or co n su m er loans
to retail custom ers?
A l. T he agencies w ill co n sid er
w hether:
• T he in stitu tio n h o lds itself ou t to
th e retail p u b lic as p roviding such
loans; an d
• T he in stitu tio n ’s revenues from
ex tending su ch loans are significant
w h en com p ared to its overall
operations.
A w ho lesale in stitu tio n m ay m ake
som e retail loans w ith o u t losing its
w h olesale designation as described
above in Q&A2 addressing sections
____.12(o) an d 563e.l2(n).
S ectio n ____.21—Performance tests,
standards, and ratings, in general
____.21(a) P erform ance tests a n d
sta nd ard s
Q l. A re a ll co m m u n ity d evelo p m en t
a ctivities w eighted eq u a lly b y
exam iners?
A l. No, exam iners w ill co n sid er the
resp o n siv eness to credit an d com m unity
d ev elo pm en t needs, as w ell as th e
innovativ en ess an d com plexity of an
in stitu tio n ’s com m unity d evelopm ent
lending, qualified investm ents, an d
com m unity developm ent services.
T hese criteria in clu d e co n sid eratio n of
th e degree to w h ich th ey serve as a
catalyst for oth er com m unity
develo p m en t activities. T he criteria are
designed to ad d a q u alitative elem ent to
th e evalu atio n of an in stitu tio n ’s
perform ance.
____.21(b) P erform ance co n tex t
Q l. Is th e perform ance co n tex t
essen tia lly th e sam e as th e fo rm er
regu latio n’s n eed s assessm ent?
A l. No. T he perform ance context is a
b ro ad range o f econom ic, dem ographic,
a n d in stitu tio n - an d com m unity-specific
in form ation th a t an ex am iner review s to
u n d ersta n d th e context in w h ich an
in stitu tio n ’s record of perform ance
sh o u ld b e evaluated. T he agencies w ill
pro v id e exam iners w ith m u ch of th is
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
inform ation p rio r to th e exam ination.
T h e perform ance context is n o t a form al
or w ritte n assessm ent o f com m unity
cred it needs.
____.21(b)(2) Inform ation m a in ta in ed by
th e in stitu tio n or o btained from
co m m u n ity contacts
Q l. W ill exam iners consider
perform an ce co n text inform ation
p ro vid ed b y in stitutions?
A l. Yes. A n in stitu tio n m ay provide
exam iners w ith any inform ation it
deem s relevant, in clu din g inform ation
on th e lending, investm ent, a n d service
o p p o rtu n ities in its assessm ent area(s).
T h is inform ation m ay in clu d e data on
th e b u sin ess o p p o rtu n ities ad d ressed by
len d ers n o t subject to th e CRA.
In stitu tio n s are not required, how ever,
to p repare a n eed s assessm ent. If an
in stitu tio n p rovides inform ation to
exam iners, th e agencies w ill n o t expect
inform ation other th an w h at th e
in stitu tio n norm ally w o u ld develop to
prep are a b usin ess p lan or to identify
p o ten tial m arkets an d custom ers,
in clu d in g low - an d m oderate-incom e
persons an d geographies in its
assessm ent area(s). T he agencies w ill
n o t evaluate an in stitu tio n ’s efforts to
ascertain com m unity credit n eed s or
rate an in stitu tio n on th e quality of any
inform ation it provides.
Q2. W ill exam iners co nd uct co m m u n ity
con ta ct interview s as p a rt o f th e
exa m in a tio n process?
A2. Yes. Exam iners w ill consid er
inform ation obtained from interview s
w ith local com m unity, civic, and
governm ent leaders. T hese .interview s
p ro v id e exam iners w ith know ledge
regarding th e local com m unity, its
econom ic base, an d com m unity
d ev elopm ent initiatives. To en sure th at
inform ation from local leaders is
co nsidered—p articularly in areas w here
th e n u m b er of po tential contacts m ay be
lim ited—exam iners m ay use
inform ation obtained through an
in terv iew w ith a single com m unity
con tact for exam inations of m ore than
one in stitu tio n in a given m arket. In
ad d itio n , th e agencies w ill consider
inform ation obtained from interview s
co n d u cted by other agency staff an d by
th e oth er agencies. In order to augm ent
■ contacts previously u sed by th e agencies
an d foster a w id er array of contacts, the
agencies w ill share com m unity contact
inform ation.
____.21(b)(4) In stitu tio n a l ca p a city and
constraints
Q l. W ill exam iners consider facto rs
o u tsid e o f an in stitu tio n ’s control th a t
p re ve n t it fro m engaging in certain
activities?
A l. Yes. Exam iners w ill take into
account statu to ry an d supervisory
lim itatio n s on an in stitu tio n ’s ability to
engage in any lending, investm en t, an d
service activities. For exam ple, a savings
association th a t h as m ade few or no
q ualified in v estm ents d ue to its lim ited
investm ent au th o rity m ay still receive a
low satisfactory rating u n d e r th e
in v estm en t test if it has a strong lending
record.
.21(b)(5) In stitu tio n ’s p a st
p erform ance a n d th e p erform ance o f
sim ila rly situ a ted lenders
Q l. Can an in stitu tio n ’s assigned rating
be adversely affected b y p o o r p a st
perform ance?
A l. Yes. T he agencies w ill consider
an in stitu tio n ’s past perform ance in its
overall evaluation. For exam ple, an
in stitu tio n ’s p ast perform ance m ay
su p p o rt a rating of “ substantial
n o n com p lian ce” if th e in stitu tio n has
n o t im p ro v ed perform ance rated as
“n eed s to im p ro v e.”
Q2. H ow w ill exam iners consider the
perform a nce o f sim ila rly situ a ted
lenders?
A2. T h e perform ance context section
of th e regulation perm its the
p erform ance of sim ilarly situ ated
lend ers to b e considered, for exam ple,
as on e of a n u m b er of consid eratio n s in
evaluating th e geographic d istrib u tio n of
an in stitu tio n ’s loans to low-,
m oderate-, m iddle-, an d upper-incom e
geographies. T his analysis, as w ell as
other analyses, m ay be used, for
exam ple, w here groups of contiguous
geographies w ith in an in stitu tio n ’s
assessm ent area(s) ex hibit abnorm ally
low p enetration. In th is regard, th e
perform ance of sim ilarly situated
len ders m ay be analyzed if su ch an
analysis w o u ld provide accurate insight
in to th e in stitu tio n ’s lack of
perform ance in those areas. T he
regulation does n o t require th e u se of a
specific ty p e of analysis u n d er these
circum stances. M oreover, no ratio
d eveloped from any ty p e of analysis is
lin k ed to any len din g test rating.
54655
S ectio n ____.22—Lending test
____.22(a) S cope o f test
____.22(a)(1) T ypes o f loa ns considered
Q l. I f a large retail in stitu tio n is n o t
required to co llect a n d report h o m e
m ortgage data u n d er the HMDA, w ill th e
agencies still evaluate th e in stitu tio n ’s
h o m e m ortgage len d in g perform ance?
A l. Yes. T he agencies w ill sam ple th e
in stitu tio n ’s h o m e m ortgage loan files in
order to assess its perform ance u n d er
th e len d in g test criteria.
Q2. W hen w ill exa m in ers consider
co n su m er lo a n s as p a rt o f an
in stitu tio n ’s CRA evaluation?
A2. C onsum er loans w ill be evaluated
if th e in stitu tio n so elects; an d an
in stitu tio n th at elects no t to have its
consum er loans evaluated w ill n o t be
v iew ed less favorably by exam iners th an
o ne th at does. H ow ever, if consum er
loans co n stitu te a substantial m ajority of
th e in stitu tio n ’s b usiness, th e agencies
w ill evaluate th em even if th e
in stitu tio n does n o t so elect. T he
agencies in terp re t “substantial m ajority”
to be so significant a portio n of th e
in stitu tio n ’s len din g activity b y n u m b er
or d o llar volum e of loans th at th e
len d ing test ev aluation w o u ld no t
m eaningfully reflect its lending
perform ance if consum er loans w ere
excluded.
____.22(a)(2) O ther loan data
Q l. H ow are len d in g com m itm en ts
(such as letters o f credit) evaluated
u n d er th e regulation?
A l. T he agencies consider lending
com m itm ents (such as letters of credit)
only at th e optio n of th e institu tio n .
C om m itm ents m u st be legally b in d in g
betw een an in stitu tio n an d a b orrow er
in o rd er to be considered. Inform ation
ab o u t len d in g com m itm ents w ill be
u sed by exam iners to enhance th e ir
u n d erstan d in g of an in stitu tio n ’s
perform ance.
Q2. W ill exa m in ers review application
data as p a rt o f th e len d in g test?
A2. A p p licatio n activity is n o t a
perform ance criterio n of th e lending
test. H ow ever, exam iners m ay consider
th is inform ation in th e perform ance
context analysis because this
inform ation m ay give exam iners insight
on, for exam ple, th e dem an d for loans.
54656
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
Q3: M a y a fin a n c ia l in stitu tio n receive
consideration u nd er CRA fo r
m od ifica tio n , extension , a n d
consolidation agreem ents (MECAs), in
w hich it o bta ins lo an s fro m other
in stitu tio n s w ith o u t a ctu a lly pu rch asing
or refina ncing th e loans, as th o se term s
h a ve been in terp reted u n der CRA?
____.22(b)(2) a n d (3) G eographic
distribution a n d borrower
characteristics
A3: Yes. In som e states, MECAs,
w h ich are n o t consid ered loan
refinancings b ecause th e existing loan
obligations are n o t satisfied an d
replaced, are com m on. A lthough these
tran sactio n s are no t co nsid ered to be
pu rch ases or refinancings, as those
term s have b een in terp reted u n d e r CRA,
th ey do achieve the sam e results. A n
in stitu tio n m ay p resen t inform ation
about its MECA activities to exam iners
for con sid eratio n u n d er th e lending test
as “ oth er loan data.”
A l. E xam iners generally w ill consid er
b oth th e d istrib u tio n of an in stitu tio n ’s
loans am ong geographies of different
incom e levels an d am ong borrow ers of
different incom e levels an d bu sin esses
of different sizes. T he im portan ce of the
borrow er d istrib u tio n criterion,
p articularly in relation to th e geographic
d istrib u tio n criterion, w ill d ep e n d on
th e perform ance context. For exam ple,
d istrib u tio n am ong borrow ers w ith
different incom e levels m ay be m ore
im p o rtan t in areas w ith o u t id entifiable
geographies of different incom e
categories. O n th e other h an d ,
geographic d istrib u tio n m ay b e m ore
im p o rtant in areas w ith th e full range of
geographies of different incom e
categories.
____.22(b) P erform ance criteria
Q l. H ow w ill exam iners a p p ly the
perform a nce criteria in th e len d in g test?
A l: E xam iners w ill ap p ly the
perform ance criteria reasonably an d
fairly, in accord w ith th e regulations,
th e exam in ation procedures, an d th is
G uidance. In doing so, exam iners w ill
disregard efforts by an in stitu tio n to
m an ip u late b u sin ess operations or
presen t inform ation in an artificial light
th a t does n o t accurately reflect an
in stitu tio n ’s overall record of lending
perform ance.
____,22(b)( 1) L ending a ctivity
Q l. H ow w ill the agencies a p p ly th e
len d in g a ctivity criterion to discourage
an in stitu tio n fro m originating loans
th a t are view ed fa vo ra b ly u nd er CRA in
th e in stitu tio n its e lf a n d referring other
loans, w hich are n o t view ed as
favorably, fo r origination b y an affiliate?
A l. E xam iners w ill review closely
in stitu tio n s w ith (1) a sm all n u m b er an d
am ount of hom e m ortgage loans w ith an
u n u su ally good d istrib u tion am ong lowan d m oderate-incom e areas an d lowan d m oderate-incom e borrow ers an d (2)
a policy of referring m ost, b u t no t all, of
th e ir hom e mortgage loans to affiliated
in stitu tio n s. If an in stitu tio n is m aking
loans m ostly to low- an d m oderateincom e in d iv id u als an d areas and
referring th e rest of th e loan app lican ts
to an affiliate for the purp o se of
receiving a favorable CRA rating,
exam iners m ay co nclude th a t th e
in stitu tio n ’s lending activity is not
satisfactory because it has
in ap p ro p riately attem pted to influence
th e rating. In evaluating an in stitu tio n ’s
lending, exam iners w ill consider
legitim ate b u sin ess reasons for the
allocation of th e lending activity.
Q l. H ow do th e geographic d istribution
o f lo a n s a n d th e distribution o f len d in g
b y borrow er characteristics in tera ct in
th e le n d in g test?
Q2. M ust an in stitu tio n le n d to all
portio ns o f its a ssessm ent area?
A2. T he term “ assessm ent area”
describes th e geographic area w ith in
w h ich th e agencies assess ho w w ell an
in stitu tio n h as m et the specific
perform ance tests an d stan d ard s in th e
rule. T he agencies do no t expect th a t
sim ply b ecause a census tract or block
num bering area is w ith in an
in stitu tio n ’s assessm ent area(s) the
in stitu tio n m u st len d to th a t cen su s tract
or block n u m bering area. R ather the
agencies w ill be concerned w ith
consp icu o u s gaps in loan d istrib u tio n
th at are n o t explained by the
perform ance context. Sim ilarly, if an
in stitu tio n delin eated th e en tire co unty
in w h ich it is located as its assessm ent
area, b u t co u ld have delin eated its
assessm ent area as only a p o rtio n of the
county, it w ill n o t be p en alized for
lending only in th at portio n of the
county, so long as th at p o rtio n does no t
reflect illegal discrim in atio n or
arbitrarily ex clu d e low - or m oderateincom e geographies. T he capacity an d
con strain ts of an in stitu tio n , its business
decisions about how it can b est h elp to
m eet th e n eeds of its assessm ent area(s),
in clu d in g th o se of low- an d m oderateincom e neighborhoods, an d other
aspects of th e perform ance context, are
all relevant to explain w h y th e
in stitu tio n is serving or n o t serving
p o rtio n s of its assessm ent area(s).
Q3. W ill exam iners ta ke in to acco un t
lo ans m a d e b y affilia tes w hen
evalu atin g th e proportion o f an
in stitu tio n ’s le n d in g in its assessm en t
area(s)?
A3. E xam iners w ill n o t take into
acco u nt lo ans m ade b y affiliates w h en
determ ining th e pro p o rtio n of an
in stitu tio n ’s len d in g in its assessm ent
area(s), ev en if th e in stitu tio n elects to
have its affiliate lending consid ered in
th e rem ain d er of th e lending test
evaluation. H owever, exam iners m ay
co n sider a n in stitu tio n ’s b usiness
strategy o f co n d u ctin g lending th rough
an affiliate in order to determ ine
w h eth er a low p ro p o rtio n o f lending in
th e assessm ent area(s) sh o u ld adversely
affect th e in stitu tio n ’s lending test
rating.
Q4. W hen w ill exam iners consider lo a n s '
(other tha n co m m u n ity d evelo p m en t
loans) m a d e o u tsid e an in stitu tio n ’s
assessm en t area(s)?
A4. F avorable consideration w ill be
given for lo an s to low - an d m oderateincom e p erso n s an d sm all b u sin ess an d
farm loan s outsid e o f an in stitu tio n ’s
assessm ent area(s), p ro v id ed th e
in stitu tio n h as adequately ad dressed th e
n eed s of borrow ers w ith in its
assessm ent area(s). T he agencies w ill
ap p ly th is co n sid eration not only to
loans m ad e b y large retail in stitu tio n s
being ev alu ated u n d e r the lending test,
b u t also to lo ans m ade b y sm all
in stitu tio n s b eing ev aluated u n d er the
sm all in stitu tio n perform ance standards.
Loans to low - an d m oderate-incom e
perso n s a n d sm all b usinesses an d farm s
o u tside of an in stitu tio n ’s assessm ent
area(s), how ever, w ill no t com pensate
for p o o r len d in g perform ance w ith in the
in stitu tio n ’s assessm ent area(s).
____.22(c) A ffilia te lend ing
____.22(c)( 1) In general
Q l. I f an in stitu tio n elects to ha ve loans
b y its a ffiliate(s) considered, m a y it elect
to h a ve o n ly certain categories o f loans
considered?
A l. Yes. A n in stitu tio n m ay elect to
have o nly a p articu lar category of its
affiliate’s len d in g considered. T he basic
categories of loans are hom e m ortgage
loans, sm a llb u sin e ss loans, sm all farm
loans, co m m u n ity developm ent loans,
an d th e five categories of consum er
loans (m otor v ehicle loans, cred it card
loans, hom e equity loans, oth er secured
loans, a n d other u n secured loans).
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
____.22(c)(2) C onstraints on affiliate
len d in g
____.22(c)(2)(i) N o affiliate m a y claim a
loan origination or loan p urcha se i f
another in stitu tio n claim s th e sa m e loan
origination or pu rcha se
Q l. H ow is th is constra int on affilia te
len d in g applied?
A l. T his co n strain t proh ib its one
affiliate from claim ing a loan origination
or p urchase claim ed by an o th er affiliate.
H owever, an in stitu tio n can c o u n t as a
p urchase a lo an originated b y an
affiliate th at th e in stitu tio n
subsequently purchases, or co u n t as an
origination a loan later sold to an
affiliate, p ro v id ed th e same loans are
n o t sold several tim es to in flate th e ir
v alue for CRA purposes.
___ .22(c)(2)(ii) If an institution elects to have
its supervisory agency consider loans within
a particular lending category made by one or
more o f the institution’s affiliates in a
particular assessment area, the institution
shall elect to have the agency consider all
loans within that lending category in that
particular assessment area made by all o f the
institution's affiliates
Q l. H ow is th is con stra int on affiliate
len d in g applied?
A l. T his co n strain t p ro h ib its “ cherrypicking” affiliate loans w ith in any one
category of loans. T he constraint
requires an in stitu tio n th at elects to
have a p articu lar category of affiliate
lending in a p articu lar assessm ent area
considered to in c lu d e all lo ans of th a t
type m ade by all of its affiliates in th at
p articular assessm ent area. For exam ple,
assum e th at an in stitu tio n has one or
m ore affiliates, su ch as a m ortgage b an k
th at m akes loans in th e in stitu tio n ’s
assessm ent area. If th e in stitu tio n elects
to in clu d e th e m ortgage b an k ’s hom e
mortgage loans, it m u st in clu d e all of
mortgage b a n k ’s h o m e m ortgage loans
m ade in its assessm ent area. The
in stitu tio n can n o t elect to in c lu d e only
those low- an d m oderate-incom e hom e
mortgage loans m ade by th e m ortgage
ban k affiliate an d no t hom e m ortgage
loans to m iddle- an d upper-incom e
ind iv id u als or areas.
Q2. H ow is th is constraint a p p lied i f an
in stitu tio n ’s affiliates are also in su red
dep ository in stitu tio n s sub ject to the
CRA?
A2. S trict app licatio n of th is
co n strain t against “cherry-picking” to
loans of an affiliate th a t is also an
in su red depository in stitu tio n covered
by th e CRA w o u ld p rod u ce th e
anom alous resu lt th at th e other
in stitu tio n w ould, w ith o u t its consent,
n o t be able to co u n t its ow n loans.
Because th e agencies did. n o t in ten d to
deprive an in stitu tio n subject to th e
CRA of receiving consideration for its
ow n lending, th e agencies read th is
constraint slightly differently in cases
involving a group of affiliated
in stitu tio n s, som e of w h ich are subject
to th e CRA an d share th e sam e
assessm ent area(s). In those
circum stances, an in stitu tio n th at elects
to in clu d e all of its mortgage affiliate’s
hom e m ortgage loans in its assessm ent
area w ou ld n o t autom atically be
required to in c lu d e all hom e mortgage
loans in its assessm ent area of ano th er
affiliate in stitu tio n subject to th e CRA.
H owever, all loans of a p articu lar type
m ade by any affiliate in th e in stitu tio n ’s
assessm ent area(s) m u st eith er be
cou n ted by the lending in stitu tio n or by
another affiliate in stitu tio n th a t is
subject to th e CRA. T his reading reflects
th e fact th a t a holding com pany m ay, for
busin ess reasons, choose to transact
different aspects of its b u sin ess in
different subsidiary institutions.
H owever, th e m eth o d by w h ich loans
are allocated am ong th e in stitu tio n s for
CRA purposes m ust reflect actual
business decisions about th e allocation
of banking activities am ong th e
in stitu tio n s an d sh o u ld no t be designed
solely to enhance th e ir CRA evaluations.
____.22(d) L ending b y a consortium or a
th ird p a rty
Q l. W ill eq u ity a n d equity-type
in vestm en ts in a th ird p a rty receive
p o sitive consideration u n d er th e le n d in g
test?
A l. If an in stitu tio n h as m ade an
equity or equity-type investm ent in a
th ird party, loans m ade by th e th ird
party m ay be consid ered u n d er th e
lending test. O n th e other han d , assetbacked an d debt securities th a t do no t
represent an equity-type in terest in a
th ird party w ill n o t be co n sid ered u n d e r
th e lending test u n less th e securities are
booked by the p u rchasing in stitu tio n as
a loan. For exam ple, if an in stitu tio n
purchases stock in a com m unity
developm ent corporation (“CDC”) th a t
prim arily lends in low- an d m oderateincom e areas or to low- an d m oderateincom e in d iv id u als in order to prom ote
com m unity developm ent, th e in stitu tio n
m ay claim a pro rata share of th e CDC’s
loans as com m unity developm ent loans.
T he in stitu tio n ’s pro rata share is based
on its percentage of equity o w n ersh ip in
th e CDC. Q&Al ad d ressing section
____.23(b) provides inform ation
concerning co nsideration of an equity or
equity-type investm ent u n d e r th e
investm ent test an d b oth th e lend ing
an d investm ent tests.
54657
Q2. H ow w ill exam iners evaluate lo ans
m a d e b y consortia or third p arties u n d er
th e len d in g test?
7
.
A2. Loans originated or p u rch ased by
consortia in w h ich an institu tio n
participates or by th ird parties in w h ich
an in stitu tio n in v ests w ill only be
co nsidered if they qualify as com m unity
developm ent loans an d w ill only be
co nsidered u n d er th e com m unity
developm ent criterion of th e lending
test. H owever, loans originated d irectly
on th e books of an in stitu tio n or
p u rch ased by th e in stitu tio n are
co nsidered to have b een m ade or
p u rch ased d irectly b y th e in stitu tio n ,
even if th e in stitu tio n originated or
p u rch ased th e loans as a resu lt o f its
p articip atio n in a loan consortium .
T hese loans w o id d b e considered u n d e r
all th e lending test criteria ap p ro p riate
to them depending on the type of loan.
Q3. In som e circum stances, an
in stitu tio n m a y in v est in a th ird party,
such as a c o m m u n ity d evelop m ent
bank, th a t is also an in su red dep ository
in stitu tio n a n d is th u s subject to CRA
requirem ents. I f th e in vesting in stitu tio n
requests its su pervisory agency to
consider its p ro rata share o f c o m m u n ity
develo p m en t loa ns m a d e b y th e th ird
party, as allow ed u n d er 12 CFR
§ ____-22(d), m a y th e third p a rty also
receive consideration fo r these loans?
A3. Yes, as long as th e financial
in stitu tio n a n d the th ird party are no t
affiliates. The regulations state, at 12
CFR § ____,22(c)(2)(i), th at tw o affiliates
m ay n o t b oth claim th e sam e loan
origination or loan purchase. H owever,
if th e fin ancial in stitu tio n and th e th ird
party are n o t affiliates, th e th ird party
m ay receive co nsideration for the
com m unity developm ent loans it
originates, an d the financial in stitu tio n
th a t invested in th e th ird party m ay also
receive co nsideration for its pro rata
share of th e sam e com m unity
d evelopm ent loans u n d er 12 CFR
§ ____-22(d).
S e c tio n ___ .23-—Investm ent test
____.23(b) E xclusion
Q l. E ven though th e regulations sta te
th a t an a ctivity th a t is considered u n der
th e len d in g or service tests can not also
be considered u n der the in v estm e n t test,
m a y parts o f an a ctivity be considered
u n der one te st a n d other parts be
considered under an oth er test?
A l. Yes, in som e instances th e n atu re
of an activity m ay m ake it eligible for
co nsideration u n d er m ore th an one of
the perform ance tests. For exam ple,
certain in v estm ents an d related su p p o rt
pro v id ed by a large retail in stitu tio n to
a CDC m ay be evaluated u n d er the
54658
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
lending, inv estm en t, a n d service tests.
U nd er th e service test, th e in stitu tio n
m ay receive co n sid eratio n for any
com m unity dev elop m en t services th a t it
pro v id es to th e CDC, su ch as service by
an executive of th e in stitu tio n on the
CDC’s b oard of directors. If the
in stitu tio n m akes an investm ent in the
CDC th a t th e CDC uses to m ake
com m unity d evelopm ent loans, the
in stitu tio n m ay receive consideration
u n d er th e len d in g test for its pro-rata
share of com m unity developm ent loans
m ade by th e CDC. A lternatively, the
in stitu tio n ’s in vestm en t m ay be
considered u n d e r th e investm ent test,
assum ing it is a q ualified investm ent. In
ad d ition , an in stitu tio n m ay elect to
have a p art of its investm ent co nsidered
u n d er th e lending test an d the
rem aining p art co n sid ered u n d er the
investm ent test. If th e investing
in stitu tio n o pts to have a portio n of its
investm ent evalu ated u n d e r th e lending
test by claim ing a share of the CDC’s
com m unity dev elo p m en t loans, the
am ount of inv estm en t considered u n d er
th e investm ent test w ill be offset by th at
portion. T hus, th e in stitu tio n w ould
only receive consid eratio n u n d er the
investm ent test for th e am ount of its
investm ent m u ltip lied by th e percentage
of th e CDC’s assets th a t m eet the
d efinition of a qualified investm ent.
Section
.24— Service test
____.24(d) P erform ance criteria— retail
banking services
Q l. H ow do exam iners evaluate the
ava ilab ility a n d effectiveness o f an
in stitu tio n ’s system s fo r delivering retail
b anking services?
A l. C onvenient access to full service
branches w ith in a com m unity is an
im portant factor in determ ining the
availability of cre d it an d non-credit
services. Therefore, th e service test
perform ance stan d ard s place prim ary
em phasis on full service b ranches w h ile
still considering alternative system s,
such as au to m ated teller m achines
(“A TM s’). T he p rin cip al focus is on an
in stitu tio n ’s cu rren t d istrib u tio n of
branches; therefore, an in stitu tio n is not
req u ired to ex p an d its b ranch netw ork
or operate u nprofitable branches. U nder
th e service test, alternative system s for
delivering retail banking services, such
as ATMs, are co n sid ered only to the
exten t th a t th ey are effective alternatives
in providing n ee d ed services to lowan d m oderate-incom e areas and
in d iv id u als.
-
____.24(d)(3) A va ila b ility and
effectiveness o f alternative system s fo r
delivering reta il ba nking services
Q l. H ow w ill exam in ers evaluate
alternative system s fo r delivering retail
banking services?
A l. The regulation recognizes th e
m u ltitu d e of w ays in w h ich an
in stitu tio n can p ro v id e services, for
exam ple, ATM s, banking by telep h o n e
or com puter, an d bank-by-m ail
program s. D elivery system s other th an
branches w ill b e co n sid ered positively
u n d er th e regu latio n to th e extent that
th ey are effective alternatives to
b ranches in p ro v id in g need ed services,
to low- an d m oderate-incom e areas an d
in d iv id u als. T he list of system s in the
regulation is n o t in ten d ed to be
inclusive.
Q2. A re d ebit cards considered u nder
th e service test as an alternative delivery
system ?
A2. By them selves, no. H owever, if
debit cards are a p art of a larger
com bination of p ro d u cts, such as a
com prehensive electronic banking
service, th a t allow s an in stitu tio n to
deliver n eed ed services to low- an d
m oderate-incom e areas an d in d iv id u als
in its com m unity, th e overall delivery
system th a t in clu d es the debit card
feature w ould b e consid ered an
alternative delivery system .
S ectio n ___ .25—Community
developm ent test for w holesale or
lim ited purpose institutions
b y engaging in one or m ore of these
activities.
Section ___ .26 —Sm all institution
perform ance standards
___.26(a) P erform ance criteria
Q l. M ay exam iners consider, u n d er one
or m ore o f th e perform ance criteria o f
th e sm a ll in stitu tio n perform ance
standards, len din g-related activities,
su ch as c o m m u n ity d evelo p m en t loans
a n d len ding-related q u a lified
in vestm en ts, w hen evalu atin g a sm all
in stitu tio n ?
A l. Yes. E xam iners can consider
“ lending-related activ ities,” in cluding
com m unity dev elop m en t loans and
lending-related qualified investm ents,
w h en evaluating th e first four
perform ance criteria of th e sm all
in stitu tio n perform ance test. A lthough
lending-related activities are specifically
m en tio n ed in th e regu latio n in
con n ectio n w ith o nly th e first three
criteria (i.e., lo an-to-deposit ratio,
percentage of lo ans in th e in stitu tio n ’s
assessm ent area, an d lending to
borrow ers o f different incom es and
businesses of different sizes), exam iners
can also co n sid er th ese activities w hen
they evaluate th e fourth criteria—
geographic d istrib u tio n of the
in stitu tio n ’s loans.
Q2. W hat is m ea n t b y “as appropriate"
w hen referring to th e fa c t th a t lendingrelated activities w ill be considered, “as
a p pro pria te," u n d er th e various sm all
in stitu tio n perform an ce criteria?
.25(d) Indirect activities
Q l. H ow are in v estm e n ts in third p a rty
co m m u n ity d evelo p m en t organizations
considered u n d er th e co m m u n ity
d evelop m en t test?
'
A l. Sim ilar to th e lending test for
retail in stitu tio n s, in v estm ents in th ird
party com m unity developm ent
organizations m ay be co nsidered as
q ualified in v estm en ts or as com m unity
d evelopm ent loan s or b o th (provided
th ere is no double counting), at th e
in stitu tio n ’s op tio n , as described above
in th e d iscussio n regarding sections
____.22(d) a n d ___^.23(b).
____.25(f) C o m m u n ity developm ent
p erform ance rating
Q l. M ust a w holesale or lim ited p urpose
in stitu tio n engage in all three categories
o f c o m m u n ity d evelo p m en t activities
(lending, in v e stm e n t a nd service) to
perform w ell u n d er th e co m m u n ity
develo p m en t test?
A l. No, a w holesale or lim ited
purpose in stitu tio n m ay perform w ell
u n d er th e com m unity developm ent test
A2. “As ap p ro p riate” m eans that
lending-related activities w ill be
consid ered w h en it is necessary to
determ ine w h eth er an in stitu tio n m eets
or exceeds th e stan d ard s for a
s
satisfactory rating. E xam iners w ill also
co n sider oth er lending-related activities
at an in stitu tio n ’s request.
Q3. W hen evaluating a sm all
in stitu tio n ’s len d in g perform ance, will
exam iners consider, a t th e in stitu tio n ’?
request, co m m u n ity d evelo p m en t loans
originated or p u rch a sed b y a consortium
in w hich th e in stitu tio n p articipates or
b y a th ird p a rty in w hich th e in stitu tio n
h a s invested?
A3. Yes. H ow ever, a sm all in stitu tio n
th a t elects to have exam iners consider
com m unity dev elo p m ent loans
originated or p u rch ased by a consortium
or th ird party m u st m aintain sufficient
inform ation on its share of the
com m unity dev elo p m ent loans so that
th e exam iners m ay evaluate these loans
u n d e r th e sm all in stitu tio n perform ance
criteria.
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
Q4. U nder th e sm a ll in stitu tio n
perform an ce standards, w ill exam iners
con sider both loan originations a nd
purchases?
A4. Yes, co nsistent w ith th e other
assessm ent m ethods in th e regulation,
exam iners w ill consider b oth loans
o riginated an d p u rc h a se d b y th e
in stitu tio n . Likewise, exam iners m ay
co n sid er an y oth er loan data th e sm all
in stitu tio n chooses to provide,
in c lu d in g data on loans outstanding,
com m itm ents a n d letters of credit.
Q5. U nder th e sm all in stitu tio n
perform an ce standards, h o w w ill
q u a lified in vestm en ts be considered fo r
p u rpo ses o f determ ining w hether a
sm a ll in stitu tio n receives a satisfactory
CRA rating?
A5. T he sm all in stitu tio n perform ance
stan dard s focus on lending an d other
lending-related activities. Therefore,
exam iners w ill consider only lendingrelated q ualified investm ents for th e
p u rp oses of determ ining w h eth er th e
sm all in stitu tio n receives a satisfactory
CRA rating.
____.26(a )(l) L oan-to-deposit ratio
Q l. H ow is th e loan-to-deposit ratio
calculated?
A l. A sm all in stitu tio n ’s loan-tod ep o sit ratio is calculated in th e same
m an n er th a t th e U niform Bank
Perform ance R eport/U niform T hrift
P erform ance Report (UBPR/UTPR)
d eterm ines th e ratio. It is calculated by
div id in g th e in stitu tio n ’s n et loans a n d
leases by its total deposits. T he ratio is
found in th e L iquidity and Investm ent
Portfolio section of th e UBPR an d
UTPR. E xam iners w ill u se th is ratio to
calculate an average since th e last
exam ination by adding th e quarterly
loan-to-deposit ratios an d dividing the
to tal by th e num ber of quarters.
Q2. H ow is th e "reasonableness" o f a
loan -to -depo sit ratio evaluated?
A2. No specific ratio is reasonable in
every circum stance, an d each sm all
in stitu tio n ’s ratio is evaluated in light of
inform ation from the perform ance
context, in clu d in g th e in stitu tio n ’s
capacity to lend, dem ographic an d
econom ic factors presen t in the
assessm ent area, an d th e lending
o p p o rtu n ities available in th e
assessm ent area(s). If a sm all
in stitu tio n ’s loan-to-deposit ratio
app ears unreasonable after considering
th is inform ation, lending perform ance
m ay still b e satisfactory u n d e r this
criterio n taking into consideration the
n u m b er a n d th e dollar volum e of loans
sold to th e secondary m arket or the
n u m b er a n d am ount a n d innovativeness
or com plexity of com m unity
dev elopm ent loans an d lending-related
qualified investm ents.
54659
d istrib u tio n of th e lending of an
in stitu tio n w ith few dem ographically
d istin ct geographies w ith in an
assessm ent area. If sufficient
inform ation on th e incom e levels of
in d iv id u al borrow ers or th e revenues or
sizes of b u sin ess borrow ers is not
available, exam iners m ay u se proxies
such as loan size for estim ating
borrow er characteristics, w here
appropriate.
Q3. I f an in stitu tio n m a kes a large
n u m b er o f lo a n s off-shore, w ill
exam iners segregate th e do m estic loanto -d eposit ratio fro m th e foreign loan-tod ep o sit ratio?
A3. No. Exam iners w ill look at th e
in stitu tio n ’s n e t loan-to-deposit ratio for
th e w hole in stitu tio n , w ith o u t any
adjustm ents.
____.26(b) P erform ance rating
____.26(a)(2) Percentage o f len d in g
w ithin a ssessm ent area(s)
Q l. H ow can a sm a ll in stitu tio n achieve
an "o u tsta n d in g ” perform ance rating?
Q l. M u st a sm all in stitu tio n h a ve a
m a jo rity o f its len d in g in its a ssessm ent
area(s) to receive a satisfactory
perform ance rating?
A l. No. T he percentage of loans and,
as appro p riate, other lending-related
activities located in th e b an k ’s
assessm ent area(s) is b u t one of the
perform ance criteria u p o n w h ich sm all
in stitu tio n s are evaluated. If th e
percentage of loans an d other lending
related activities in an in stitu tio n ’s
assessm ent area(s) is less th a n a
m ajority, th e n th e in stitu tio n does n o t
m eet th e stan d ard s for satisfactory
perform ance only u n d er th is criterion.
T he effect on th e overall perform ance
rating o f th e in stitu tio n , how ever, is
con sid ered in light of th e perform ance
context, in c lu d in g inform ation
regarding econom ic conditions, loan
d em an d , th e in stitu tio n ’s size, financial
co n d itio n an d b u siness strategies, an d
bran ch in g n etw ork an d other aspects of
th e in stitu tio n ’s lending record.
A l. A sm all in stitu tio n th a t m eets
each of th e standards for a “ satisfactory”
rating a n d exceeds som e or all of those
stan d ard s m ay w arran t an
“ ou tstan d in g ” perform ance rating. In
assessing perform ance at the
“o u tstan d in g ” level, th e agencies
consider th e extent to w h ich the
in stitu tio n exceeds each of the
perform ance standards and, at the
in stitu tio n ’s option, its perform ance in
m aking qualified investm ents and
providing services th a t en h an ce cre d it
availability in its assessm ent area(s). In
som e cases, a sm all in stitu tio n m ay
qualify for an “ outstan din g ”
perform ance rating solely on th e b asis of
its len d in g activities, b u t only if its
perform ance m aterially exceeds th e
stan d ard s for a “ satisfactory” rating,
p articu larly w ith respect to the
p en etratio n of borrow ers at all incom e
levels a n d th e d ispersion of loans
throughout th e geographies in its
assessm ent area(s) th at disp lay incom e
variation. A n in stitu tio n w ith a high
loan-to-deposit ratio an d a high
percentage of loans in its assessm ent
area(s), b u t w ith only a reasonable
p en etratio n of borrow ers at all incom e
levels or a reasonable disp ersio n of
loans th ro ug h o u t geographies of
differing incom e levels in its assessm ent
area(s), generally w ill no t be rated
“ o u tstan d in g ” b ased only on its lending
perform ance. H owever, th e in stitu tio n ’s
perform ance in m aking qualified
in vestm ents an d its perform ance in
p roviding branches an d other services
an d d elivery system s th at enhance
cred it availability in its assessm ent
area(s) m ay augm ent th e in stitu tio n ’s
satisfactory rating to th e extent th a t it
m ay be rated “outstan d in g .”
..26(a) (3) a n d (4) D istribution o f
len d in g w ithin a ssessm ent area(s) b y
borrow er in co m e a nd geographic
location
Q l. H ow w ill a sm a ll in stitu tio n ’s
perform a nce be assessed u n der these
len d in g distribution criteria?
A l. D istribution of loans, like other
sm all in stitu tio n perform ance criteria, is
co n sidered in light of th e perform ance
context. For exam ple, a sm all in stitu tio n
is n o t req u ired to lend evenly
th ro u g h o ut its assessm ent area(s) or in
an y p articu la r geography. H ow ever, in
order to m eet th e standards for
satisfactory perform ance u n d e r th is
criterion, consp icu o u s gaps in a sm all
in stitu tio n ’s loan d istrib u tio n m u st be
adequately explained by perform ance
con tex t factors su ch as lending
o p p o rtu n ities in th e in stitu tio n ’s
assessm ent area(s), th e in stitu tio n ’s
p ro d u ct offerings an d b u sin ess strategy,
a n d in stitu tio n al capacity a n d
constraints. In addition , it m ay be
im p racticable to review th e geographic
Q2. W ill a sm a ll in stitu tio n ’s qua lified
in vestm en ts, co m m u n ity d evelo p m en t
loans, a n d c o m m u n ity d evelo p m en t
services be considered i f th e y do n o t
d irectly b en e fit its assessm en t area(s)?
A2. Yes, these activities are eligible
for con sideratio n if th ey benefit a
broader statew ide or regional area th at
54660
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
in clu d es a sm all in stitu tio n ’s
assessm ent area(s), as d iscu ssed m ore
fully in Q&A6 ad d ressing sections
____.12(i) an d 563e.l2(h).
____.27(g) Plan approval
S e c tio n ___ .27—S trategic p la n
A l. A n in stitu tio n subm itting a
strategic p lan for approval by th e
agencies is req u ired to solicit pu blic
com m ent on th e p la n for a p erio d of
th irty (30) days after p u b lish in g notice
of th e plan at least once in a n ew sp ap er
of general circulation. T he n otice sh o u ld
be sufficiently p ro m in en t to attract
p u b lic atten tio n an d sh o u ld m ake clear
th a t pu b lic com m ent is desired. A n
in stitu tio n m ay, in ad d ition , provide
n o tice to th e p u b lic in an y oth er m an ner
it chooses.
,
____ .27(c) P lans in general
Q l. To w hat e x te n t w ill th e agencies
provide g u ida nce to an in stitu tio n
during th e d evelo p m en t o f its strategic
plan?
A l. A n in stitu tio n w ill have an
o p p ortun ity to co n su lt w ith an d provide
inform ation to th e agencies on a
prop o sed strategic plan. T hrough th is
process, an in stitu tio n is p rovided
guidance on p ro cedures an d on th e
inform ation necessary to en sure a
com plete subm ission. For exam ple, th e
agencies w ill p ro v id e guidance on
w h eth er th e level of d etail as set ou t in
th e prop o sed p la n w o u ld be sufficient to
p erm it agency ev aluation of th e plan.
However, th e agencies’ guidance d uring
p lan d evelopm ent a n d, p articularly,
prio r to the p u b lic com m ent p eriod, w ill
n o t in clu d e com m enting on d ie m erits
of a proposed strategic p lan or on the
adequacy of m easurable goals.
Q2. H ow w ill a jo in t strategic p la n be
review ed i f the affiliates h a ve d ifferen t
p rim a ry fed era l supervisors?
A2. T he agencies w ill coordinate
review of an d action on th e joint plan.
Each agency w ill ev aluate the
m easurable goals for those affiliates for
w h ich it is th e prim ary regulator.
____.27(f) Plan co n ten t
____.27(f)( 1) M easurable goals
Q l. H ow sh o u ld “m easurable goa ls” be
sp ecified in a strategic plan?
A l. M easurable goals (e.g., n u m b er of
loans, d ollar am ount, geographic
location of activity, an d ben efit to lowan d m oderate-incom e areas or
indiv id u als) m u st b e stated w ith
sufficient specificity to p erm it th e
pu b lic an d th e agencies to quantify w h at
perform ance w ill be expected. H ow ever,
in stitu tio n s are p ro v id ed flexibility in
specifying goals. For exam ple, an
in stitu tio n m ay provide ranges of
len din g am ounts in different categories
of loans. M easurable goals m ay also be
lin k ed to fu nding requirem ents of
certain pu b lic program s or in d ex ed to
other external factors as long as these
m echanism s pro vid e a quantifiable
standard.
____.27(g)(2) P ublic p articip atio n
Q l. H ow w ill th e p u b lic receive n otice
o f a prop osed strategic plan?
Section ___.28— A ssigned ratin g s
____.28(a) R atings in general
Q l. H ow are in stitu tio n s w ith d om estic
branches in m ore than on e sta te
assigned a rating?
A l. T he ev aluation of an in stitu tio n
th a t m aintains dom estic b ran ch es in
m ore than one state (“m u ltistate
in stitu tio n ”) w ill in c lu d e a w ritten
ev aluation an d rating of its CRA record
of perform ance as a w ho le an d in each
state in w h ich it h as a dom estic branch.
T he w ritten evalu atio n w ill co n tain a
separate p resen tatio n on a m u ltistate
in stitu tio n ’s perform ance for each
m etropolitan statistical area an d the
nonm etrop o litan area w ith in each state,
if it m aintains one or m ore dom estic
b ran ch offices in these areas. T his
separate presentatio n w ill c o n tain
conclusions, su p p o rted by facts an d
data, on perform ance u n d er th e
perform ance te sts a n d stan d ard s in the
regulation. T he ev aluation o f a
m u ltistate in stitu tio n th at m ain tains a
dom estic b ran ch in tw o or m ore states
in a m u ltistate m etro p o litan area w ill
in c lu d e a w ritten evaluation (containing
th e sam e inform ation describ ed above)
an d rating of its CRA record of
perform ance in th e m ultistate
m etro p o litan area. In such cases, th e
statew ide evaluation an d ratin g w ill be
adju sted to reflect perform ance in the
p o rtio n of th e state n o t w ith in th e
m u ltistate m etro p olitan statistical area.
Q2. H ow are in stitu tio n s th a t operate
w ithin o n ly a single sta te assigned a
rating?
A2. A n in stitu tio n th a t operates
w ith in only a single state (“ single-state
in stitu tio n ”) w ill b e assigned a rating of
its CRA record b ased on its perform ance
w ith in th at state. In assigning th is
rating, th e agencies w illse p a ra te ly
p resent a single-state in stitu tio n ’s
perform ance for each m etro p o litan area
in w hich th e in stitu tio n m aintain s one
o r m ore dom estic b ran ch offices. T his
separate presen tatio n w ill contain
conclusions, su p p o rted by facts and
data, on th e single-state in stitu tio n ’s
perform ance u n d er th e perform ance
tests an d stan d ard s in th e regulation.
Q3. H ow do th e agencies w eight
p erform ance u n d er th e lending,
in v estm e n t a n d service test fo r large
retail in stitu tions?
- A3. A rating of “ o u tstan d in g ,” “high
satisfactory,” “low satisfactory,” “n eeds
to im prove,” or “su bstantial
n o nco m plian ce,” b ased on a judgm ent
su p p o rted by facts an d data, w ill b e
assigned u n d e r each perform ance test.
P oints w ill th e n be assigned to each
rating as describ ed in th e first m atrix set
forth below . A large retail in stitu tio n ’s
overall rating u n d e r th e lending,
investm ent a n d service tests w ill th en
be calcu lated in accordance w ith the
second m atrix set forth below , w h ich
in corporates th e rating p rin cip les in th e
regulation.
POINTS ASSIGNED FOR PERFORMANCE
U nder Lending , Investm ent and
S ervice T e st s
Lend
ing
Outstanding......
High satisfactory
Low satisfactory
Needs to im
prove .............
Substantial noncompliance ....
Service
Invest
ment
12
9
6
6
4
3
6
A
3
3
1
1
0
0
0
C om posite Rating P oint
R equirem ents
[Add points from three tests]
Rating
Needs to improve .....................
Substantial noncompliance .....
Total points
20 or over.
11 through
19.
5 through
10.
0 through 4.
Note: There is one exception to the Com
posite Rating matrix. An institution may not re
ceive a rating of “satisfactory” unless it re
ceives at least “low satisfactory” on the lend
ing test. Therefore, the total points are capped
at three times the lending test score.
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
S e c tio n ___ .29—Effect o f CRA
p erfo rm an ce o n ap p licatio n s
___ .29(a) CRA perform ance
Q l. W hat w eight is given to an
in stitu tio n ’s CRA perform ance
exam ina tion in review ing an
application?
A l. In cases in w h ich CRA
perform ance is a relevant factor,
inform ation from a CRA perform ance
exam ination of th e in stitu tio n is a
particu larly im p o rtan t consid eratio n in
th e ap p licatio n s process because it
rep resen ts a detailed evalu atio n of the
in stitu tio n ’s CRA perform ance by its
federal supervisory agency. In th is light,
an exam in atio n is an im p o rtant, an d
often controlling, factor in the
consid eratio n o f an in stitu tio n ’s record.
In som e cases, how ever, the
exam ination m ay n o t be recen t or a
specific issu e raised in th e ap p licatio n
process, su ch as progress in addressing
w eaknesses n o te d by exam iners,
progress in im plem enting com m itm ents
previously m ad e to th e review ing
agency, or a su p p o rted allegation from
a com m enter, is relevant to CRA
perform ance u n d e r th e regulation and
w as no t add ressed in the exam ination.
In these circum stances, th e ap p lican t
sh ou ld p rese n t sufficient inform ation to
su p p lem en t its record of perform ance
and to resp o n d to the substantive issues
raised in th e ap p licatio n proceeding.
Q2. W hat consideration is given to an
in stitu tio n ’s co m m itm en ts fo r fu tu re
action in review ing an ap plication b y
those agencies th at consider such
com m itm ents?
A2. C om m itm ents for future action
are not v iew ed as p art of th e CRA record
of perform ance. In general, in stitu tio n s
cannot u se com m itm ents m ade in th e
applicatio n s process to overcom e a
seriously d eficient record of CRA
perform ance. H owever, com m itm ents
for im provem ents in an in stitu tio n ’s
perform ance m ay be ap p ro p riate to
address specific w eaknesses in an
otherw ise satisfactory record or to
address CRA perform ance w h en a
financially tro u b led in stitu tio n is being
acquired.
____.29(b) Interested parties
Q l. W hat consideration is given to
com m ents fro m interested pa rties in
review ing an application?
A l. M aterials relating to CRA
perform ance received during the
ap p licatio n s process can provide
valuable inform ation. W ritten
com m ents, w h ich m ay express eith er
su p p o rt for or opposition to the
. applicatio n , are m ade a p art of th e
record in accordance w ith th e agencies’
p rocedures, an d are carefully
consid ered in m aking the ag encies’
decision. C om m ents sh o u ld be
su p p o rted by facts about th e ap p lic a n t’s
perform ance an d sh o uld be as specific
as possible in explaining th e basis for
su pporting or opposing th e application.
T hese com m ents m u st be subm itted
w ith in th e tim e lim its p ro v id ed u n d er
th e agencies’ procedures.
Q2. Is an in stitu tio n required to enter
in to agreem ents w ith p riva te parties?
A2. No. A lthough co m m unications
b etw een an in stitu tio n an d m em bers of
its com m unity m ay provide a v aluable
m ethod for th e in stitu tio n to assess how
best to ad d ress th e cred it n eed s of th e
com m unity, th e CRA does n o t require
an in stitu tio n to enter in to agreem ents
w ith p rivate parties. T hese agreem ents
are no t m onito red or enforced by th e
agencies.
S e c tio n ____.41—A ssessm ent area
d elin eatio n
____A lfa ) In general
Q l. H ow do th e agencies evaluate
"a ssessm ent a reas” u nd er th e revised
CRA regulations com pared to h o w th e y
evalu ated “local co m m u n ities” th a t
in stitu tio n s delin ea ted un d er th e
original CRA regulations?
A l. T he rev ised ru le focuses on th e
d istrib u tio n an d level of an in stitu tio n ’s
lending, investm ents, an d services
rath er th a n on h o w a n d w hy an
in stitu tio n d elineated its “local
com m u n ity ” or assessm ent area(s) in a
p articular m anner. T herefore, th e
agencies w ill n o t evaluate an
in stitu tio n ’s delineation of its
assessm ent area(s) as a separate
perform ance criterion as th ey d id u n d er
th e original regulation. Rather, the
agencies w ill only review w h eth er th e
assessm ent area delin eated by the
in stitu tio n com plies w ith the lim itations
set forth in th e regulations at section
____-41(e).
Q2. I f an in stitu tio n elects to h a ve th e
agencies con sider a ffiliate len d in g , w ill
th is decision a ffect th e in stitu tio n ’s
assessm ent area(s)?
A2. If an in stitu tio n elects to have the
lending activities of its affiliates
co nsid ered in th e evalu atio n of the
in stitu tio n ’s lending, th e geographies in
w h ich th e affiliate lends do n o t affect
th e in stitu tio n ’s delineation of
assessm ent area(s).
54661
Q3. Can a fin a n cia l in stitu tio n id e n tify
a sp ecific eth n ic group rather than a
geographic area as its a ssessm ent area?
A3. No, assessm ent areas m u st be
based on geography.
____.41(c) G eographic area (s)for
in stitu tio n s oth er than w holesale or
lim ite d p u rp o se in stitu tio n s
____.41(c)(1) G enerally co n sist o f o ne or
m ore M SA s or one or m ore contiguous
p o litica l subdivisions
Q l. B esides cities, tow ns, a n d counties,
w hat o ther u n its o f local g overnm ent are
p o litica l su bdivisio ns fo r CRA purposes?
A l. T o w nships a n d Indian
reservations are political subdivisions
for CRA purposes. Institu tion s sh ou ld
be aw are th a t th e b o undaries of
to w n sh ip s an d In d ian reservations may
n o t be co n sisten t w ith th e b o u n d aries of
th e census tracts or block n um bering
areas (“geographies”) in th e area. In
these cases, in stitu tio n s m u st ensure
th at th e ir assessm ent area(s) co nsists
only of w hole geographies by adding
any p o rtio n s of th e geographies th a t lie
o utside the political subd iv isio n to th e
d elin eated assessm ent area(s).
Q2. A re wards, school districts, voting
districts, a n d w ater districts p o litica l
subd ivision s fo r CRA purposes?
A2. No. However, an in stitu tio n th a t
d eterm ines th a t it pred o m in an tly serves
an area th a t is sm aller th a n a city, tow n
or other p o litical subdivision m ay
delineate as its assessm ent area th e
larger p o litical su bdivision a n d then , in
accordance w ith section _ _ _ .4 1 (d ),
adjust th e bo undaries of the assessm ent
area to in clu d e only the p o rtio n of th e
political su bdivision th at it reasonably
can be expected to serve. T he sm aller
area th a t th e in stitu tio n d elineates m u st
consist of entire geographies, m ay no t
reflect illegal discrim ination, an d m ay
n o t arbitrarily exclude low- or
m oderate-incom e geographies.
____.41(d) A d ju stm e n ts to geographic
area(s)
Q l. W hen m a y an in stitu tio n a d ju st the
boundaries o f an assessm ent area to
in clu d e o n ly a portion o f a p o litica l
subdivision?
A l. In stitu tion s m ust in c lu d e w hole
geographies (i.e., census tracts or block
num bering areas) in th e ir assessm ent
areas an d generally sh o u ld in clu d e
entire p o litical subdivisions. Because
census tracts an d block n u m bering areas
are the com m on geographic areas u sed
consistently natio n w id e for data
collection, th e agencies require th a t
assessm ent areas be m ade u p of w hole
geographies. If in clu d in g an entire
political subdiv isio n w o u ld create an
54662
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
area th a t is larger th an th e area th e
in stitu tio n can reasonably b e expected
to serve, an in stitu tio n m ay, b u t is n o t
req u ired to, ad ju st th e b o u n d aries of its
assessm ent area to in clu d e o n ly p o rtions
of th e p o litical subdivision. For
exam ple, th is adjustm ent is ap p ro p riate
if th e assessm ent area w o u ld otherw ise
b e extrem ely large, of u n u su a l
configuration, or d iv id ed b y significant
geographic barriers (such as a river,
m ountain, or m ajor highw ay system ).
W hen adjusting th e b o u n d aries of th eir
assessm ent areas, in stitu tio n s m u st no t
arbitrarily ex clu de low- or m oderateincom e geographies or set b o u n d aries
th at reflect illegal discrim ination.
____.41(e) L im itatio ns on d elin ea tion o f
an assessm en t area
____.41(e)(3) M ay n o t arbitrarily exclu de
low - or m oderate-incom e geographies
Q l. H ow w ill exam iners determ in e
w hether an in stitu tio n h a s arbitrarily
exclu d ed low - or m oderate-incom e
geographies?
A l. Exam iners w ill m ake this
determ in atio n on a case-by-case basis
after considering th e facts relev an t to
th e in stitu tio n ’s assessm ent area
delineation. Inform ation th a t exam iners
w ill consid er m ay include:
• Incom e levels in the in stitu tio n ’s
assessm ent area(s) an d surro u n d in g
geographies;
• Locations o f branches an d deposittaking ATMs;
• Loan d istrib u tio n in the
in stitu tio n ’s assessm ent area(s) an d
surro u n din g geographies;
• T he in stitu tio n ’s size;
• T he in stitu tio n ’s financial
condition; an d
• T he b u sin ess strategy, corporate
structure an d p ro d u ct offerings of th e
in stitution.
____.41(e)(4) M ay n o t exten d
su b sta n tia lly beyond a CM SA bou nd ary
or beyond a state boun da ry unless
lo ca ted in a m u ltista te M SA
Q l. W hat are th e m a xim u m lim its on
the size o f an assessm ent area?
A l. A n in stitu tio n sh all n o t delineate
an assessm ent area extending
su bstantially across th e b o u n d aries of a
consolidated m etropolitan statistical
area (CMSA) or th e b o u n daries of an
MSA, if th e M SA is no t located in a
CMSA. S im ilarly, an assessm ent area
m ay n o t extend substantially across
state b o u n d aries u n less th e assessm ent
area is located in a m u ltistate MSA. An
in stitu tio n m ay n o t delin eate a w hole
state as its assessm ent area u n less th e
entire state is co ntain ed w ith in a CMSA.
T hese lim itatio n s ap p ly to w holesale
an d lim ited p u rp o se in stitu tio n s as w ell
as other in stitu tio n s.
A n in stitu tio n sh all d elin eate separate
assessm ent areas for th e areas in sid e
an d outside a CMSA (or M SA if th e
MSA is n o t located in a CMSA) if th e
area served by th e in stitu tio n ’s b ranches
outside th e CMSA (or MSA) exten d s
substantially b ey o n d th e CMSA (or
MSA) boundary. S im ilarly, th e
in stitu tio n sh all delineate separate
assessm ent areas for th e areas in sid e
an d outside of a state if th e in stitu tio n ’s
branches ex ten d su b stan tially b ey o n d
th e b oundary of one state (unless th e
assessm ent area is located in a
m ultistate MSA). In ad d itio n , th e
in stitu tio n sh o u ld also d elin eate
separate assessm ent areas if it h as
branches in areas w ith in th e sam e state
th at are w idely separate an d n o t at all
contiguous. For exam ple, an in stitu tio n
th a t h as its m ain office in N ew Y ork
City an d a b ran ch in Buffalo, N ew York,
and each office serves o nly th e
im m ediate areas aro un d it, sh o u ld
delineate tw o separate assessm ent areas.
Q2. Can an in stitu tio n d elin ea te one
assessm ent area th a t con sists o f an M SA
a n d tw o large co un ties th a t ab ut th e
M SA b u t are n o t ad jacen t to each other?
A2. A s a general rule, an in stitu tio n ’s
assessm ent area sh o u ld n o t ex ten d
substantially b eyond th e b o u n d ary o f an
MSA if th e MSA is no t located in a
CMSA. Therefore, th e M SA w o u ld be a
separate assessm ent area, an d because
th e tw o abutting counties are n o t
adjacent to each oth er a n d , in th is
exam ple, ex ten d substantially b eyond
th e b oundary of th e M SA, th e
in stitu tio n w o u ld delin eate each co unty
as a separate assessm ent area (so, in this
exam ple, th ere w o u ld be th ree
assessm ent areas). H owever, if th e MSA
an d th e tw o co un ties w ere in th e sam e
CMSA, th e n th e in stitu tio n co u ld
delineate only one assessm ent area
in clu d in g them all.
S e c tio n ___ .42—D ata collection,
rep o rtin g , a n d d isclo su re
Q l. W hen m u st an in stitu tio n collect
a n d report data u n d er th e CRA
regulations?
A l. A ll in stitu tio n s except sm all
in stitu tio ns are subject to data collection
an d reporting requirem ents. A sm all
in stitu tio n is a b an k or th rift th at, as of
D ecem ber 31 o f eith er of th e p rio r tw o
calendar years, h a d total assets of less
th an $250 m illio n an d w as in d e p en d e n t
or an affiliate of a h olding com pany
that, as of D ecem ber 31 of eith er o f th e
p rio r tw o calen d ar years, h a d total
banking an d th rift assets o f less th a n $1
billion.
F or exam ple:
Date
12/31/94
12/31/95
12/31/96
12/31/97
12/31/98
Institution's
asset size
in millions
of dollars
240
260
230
280
260
Data collection re
quired for following
calendar year?
No.
No.
No.
No.
Yes, beginning 1/
01/99.
A ll in stitu tio n s th a t are subject to th e
data collection an d reporting
requirem ents m u st rep o rt th e d ata for a
calendar year by M arch 1 o f th e
subsequent year. In th e exam ple, above,
th e in stitu tio n w o u ld rep o rt th e data
collected for calen d ar year 1999 by
M arch 1, 2000.
T he Board of G overnors of th e Federal
Reserve System is h an d lin g th e
processing o f th e reports fo T all of th e
prim ary regulators. T he rep o rts sh o u ld
be subm itted in a p rescribed electronic
form at on a tim ely basis. T he m ailing
address for subm itting th ese rep o rts is:
A ttention: CRA Processing, B oard of
G overnors o f th e Federal Reserve
System , 1709 N ew York A venue, N.W.,
5th Floor W ashington, DC 20006
,
Q2. S h o u ld an in stitu tio n develop its
ow n program fo r data collection, or w ill
th e regulators require a certain form at?
A2. A n in stitu tio n m ay u se th e free
softw are th a t is p ro v ided by th e FFIEC
to reporting in stitu tio n s for data
collection an d reporting or develop its
ow n program . T hose in stitu tio n s th a t
develop th e ir ow n program s m u st
follow th e precise form at for th e new
CRA data collection an d rep orting rules.
T his form at m ay be obtained by
contacting th e CRA A ssistance Line at
(202) 872-7584.
Q3. H ow sh o u ld an in stitu tio n report
data on lin es o f credit?
A3. In stitu tio n s m u st collect an d
report data on lines of cred it in th e sam e
w ay th at they provide data o n loan
originations. Lines of cred it are
co nsidered originated at th e tim e th e
line is approved or increased; a n d an
increase is consid ered a new
origination. G enerally, th e fu ll am ount
of th e cred it lin e is th e am o u n t th a t is
co nsidered originated. In th e case of an
increase to an existing line, th e am o u n t
of th e increase is th e am o u n t th a t is
co nsidered originated an d th a t am o u n t
sh o uld be reported.
Q4. S h o u ld renew als o f lin es o f cred it be
reported?
■
A4. No. S im ilar to loan renew als,
renew als of lin es of credit are n o t
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
54663
co n sid ered loan originations an d sho u ld
n o t be reported.
evaluated u n d e r th e com m unity
d evelopm ent test.
secu red by farm lan d ” in P art I of the
Call R eport an d TFR.
Q5. W hen sh o u ld m erging in stitu tio n s
collect data?
____.42(a) L oan info rm ation required to
be collected a n d m a in ta in ed
A5. T hree scenarios of d ata collection
resp o n sibilities for th e calen d ar year of
a m erger an d sub seq u en t data reporting
resp o n sibilities are describ ed below.
• Tw o in stitu tio n s are exem pt from
CRA collection an d reporting
requirem ents b ecause of asset size. T he
in stitu tio n s m erge. No data collection is
req u ired for th e year in w h ich the
m erger takes place, regardless of the
resulting asset size. D ata collection
w o u ld begin after tw o consecutive years
in w h ich th e com bined in stitu tio n h ad
year-end assets of at least $250 m illio n
o r w as p art of a h o ld in g com pany th at
h a d year-end b anking an d th rift assets of
at least $1 billion.
• In stitu tio n A, an in stitu tio n
required to collect an d rep o rt th e data,
a n d In stitu tio n B, an exem pt institu tio n,
merge. In stitu tio n A is th e surviving
in stitu tio n . For th e year of th e merger,
data collection is req uired for In stitu tio n
A ’s transactions. D ata collection is
optional for th e tran sactio n s of the
previously exem pt in stitu tio n . For the
follow ing year, all transactions of the
surviving in stitu tio n m u st be collected
an d reported.
• Tw o in stitu tio n s th a t each are
req u ired to collect a n d rep o rt the data
merge. D ata collection is req u ired for
th e entire year of th e m erger an d for
subsequent years so long as the
surviving in stitu tio n is no t exem pt. The
surviving in stitu tio n m ay file eith er a
consolidated subm ission or separate
subm issions for th e year of th e m erger
b u t m u st file a con solid ated report for
subsequent years.
Q l. M ust in stitu tio n s collect and report
data on all com m ercial loans u nder $1
m illion a t origination?
Q5. S h o u ld in stitu tio n s collect and
report data a b o u t sm a ll business and
sm a ll fa rm loa ns th a t are refinanced or
renew ed?
Q6. Can sm a ll in stitu tio n s g et a co p y o f
th e data collection softw are even though
th e y are n o t required to collect or report
data?
A6. Yes. A ny in stitu tio n th a t is
in terested in receiving a copy of the
softw are m ay sen d a w ritten request to:
A ttn: CRA P rocessing, Board of
G overnors of th e F ederal Reserve
System , 1709 N ew York Ave, NW., 5th
Floor, W ashington, DC 20006. T hey m ay
also call th e CRA A ssistance Line at
(202) 872-7584 or sen d Internet e-m ail
to CRAHELP@FRB.GOV.
Q7. I f a sm a ll in stitu tio n is designated
a w holesale or lim ite d p urpose
in stitu tio n , m u st it collect data th a t it
w ould n o t otherw ise be required to
collect because it is a sm a ll institutio n?
A 7. No. H ow ever, sm all in stitutio n s
m u st be p rep ared to identify thoseloans, investm en ts an d services to be
A l. No. In stitu tio n s th a t are not
exem pt from d ata collection and
reporting are req u ired to collect and
report only those com m ercial loans th at
they cap tu re in th e Call Report,
S chedule RC-C, P art II, an d in th e TFR,
S chedule SB. Sm all b u sin ess loans are
defined as tho se w hose original
am ounts are $1 m illio n or less an d th at
w ere rep o rted as eith er “ Loans secured
by nonfarm or n o n resid en tial real
estate” or “Com m ercial an d Industrial
lo an s” in Part I o f th e Call Report or
TFR.
Q2. For loan s d efin ed as sm all business
loans, w h at in fo rm atio n sh o u ld be
collected a n d m aintained ?
A2. In stitu tio n s th a t are n o t exem pt
from data collection an d reporting are
required to collect an d m ain tain in a
standardized, m ach in e readable form at
inform ation on each sm all busin ess loan
originated or p u rch ased for each
calendar year:
• A u n iq u e n u m b er o r alpha-num eric
sym bol th at can be u sed to identify the
relevant loan file;
• T he loan am o u n t at origination;
• T he loan location; an d
• A n in d icato r w h eth er th e loan w as
to a b u sin ess w ith gross an n ual
revenues of $1 m illio n or less.
T he location of th e loan m ust be
m ain tain ed by cen su s tract or block
num bering area. In addition,
su pp lem en tal inform ation con tain ed in
th e file specifications in clu d es a date
associated w ith th e origination or
purchase an d w h eth e r a loan w as
originated or p u rch ased by an affiliate.
T he sam e requirem ents ap ply to sm all
farm loans.
Q3. W ill fa rm loan s n eed to be
segregated fro m business loans?
A3. Yes.
Q4. S h o u ld in stitu tio n s collect and
report data on all agricultural loans
under $500,000 at origination?
A4. In stitu tio n s are to report those
farm loans th a t th ey capture in th e Call
Report, S chedule RC-C, Part II and
Schedule SB of th e TFR. Sm all farm
loans are d efined as those w hose
original am ounts jare $500,000 or less
a n d w ere rep o rted as eith er “Loans to
finance ag ricultural p ro d u ctio n and
other loans to farm ers” or “Loans
A5. A n in stitu tio n collects and reports
inform ation ab o u t refinancings b u t does
n o t collect a n d rep o rt inform ation about
renew als. A refin an cin g typically
involves th e satisfaction of an existing
obligation th a t is replaced by a n ew
obligation u nd ertak en by th e same
borrow er. W hen an in stitu tio n
refinances a loan, it is co nsidered a new
origination an d loan data sh o uld be
collected an d rep o rted if otherw ise
required. C onsistent w ith HMDA,
how ever, if u n d e r th e original loan
agreem ent, th e in stitu tio n is
u n co n d itio n ally obligated to refinance
th e loan, or is obligated to refinance the
loan subject to co n d itio n s w ith in the
borrow er’s control, th e institu tio n
w o u ld n o t rep o rt th ese events as
originations.
For p u rp o ses of th e CRA data
collection an d rep o rting requirem ents,
an extension of th e m atu rity of an
existing loan is a renew al, an d is not
co nsid ered a loan origination.
Therefore, in stitu tio n s sh o u ld not
collect an d rep o rt data on loan
renew als.
Q6. D oes a loan to th e ‘‘f ish in g
in d u stry ” com e u n d er th e definition o f
a sm a ll farm loan?
A6. Yes. In stru ctio n s for Part I of th e
Call Report a n d S ched u le SB of th e TFR
in clu d e loans “m ade for th e purpose of
financing fisheries a n d forestries,
inclu d in g loans to com m ercial
fish erm en ” as a com p o n en t of the
d efin itio n for “ Loans to finance
agricultural p ro d u ctio n an d other loans
to farm ers.” Part II o f Schedule RC-C of
th e Call R eport an d S chedule SB of the
TFR, w h ich serve as th e basis of the
defin ition for sm all b u sin ess an d sm all
farm loans in th e rev ised regulation,
cap ture b oth “Loans to finance
agricultural p ro d u ctio n an d other loans
to farm ers” an d “ Loans secured by
farm land.”
Q7. H ow sh o u ld an in stitu tio n report a
h o m e eq u ity lin e o f credit, pa rt o f w hich
is fo r h o m e im p ro vem en t purposes, but
th e p red o m in a n t p a rt o f w hich is fo r
sm all b usin ess purposes?
A 7. T he in stitu tio n h as th e option of
reporting th e p o rtio n of th e hom e equity
line th a t is for hom e im provem ent
p u rpo ses u n d e r HMDA. T hat portion of
th e loan w ould th e n be considered
w h en exam iners evaluate hom e
m ortgage lending. If th e line m eets the
54664
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
reg u lato ry d efin itio n of a “ co m m u n ity
d ev e lo p m e n t lo a n ,” th e in stitu tio n
sh o u ld co llect an d re p o rt in fo rm atio n
o n th e en tire lin e as a co m m u n ity
d ev e lo p m e n t loan. If th e lin e does n o t
qualify as a co m m u n ity d ev elo p m en t
loan, th e in stitu tio n h as th e o p tio n of
co llectin g a n d m a in ta in in g (but n o t
rep o rtin g ) th e en tire lin e of cre d it as
“ O th er S ecu red L ines/L oans for
P u rp o ses of Sm all B u sin ess.”
Q8. When collecting small business and
small farm data for CRA purposes, m ay
an institution collect and report
information about loans to small
businesses and small farms located
outside the United States?
A8. A t an in s titu tio n ’s o p tio n , it m ay
co llect d ata ab o u t sm all b u sin e ss an d
sm all farm lo ans lo cated o u tsid e th e
U n ited States; h o w ever, it ca n n o t rep o rt
th is d ata b ecau se th e CRA data
co llec tio n softw are w ill n o t accep t data
co n cern in g lo an lo catio n s o u tsid e th e
U n ited States.
Q9. Is an institution that has no small
farm or small business loans required to
report under CRA?
A 9. E ach in stitu tio n su b ject to data
rep o rtin g req u irem en ts m u st, at a
m in im u m , su b m it a tran sm ittal sheet,
d efin itio n of its assessm en t area(s), an d
a reco rd o f its co m m u n ity d ev elo p m en t
loans. If th e in stitu tio n d oes n o t have
co m m u n ity d ev elo p m en t lo ans to
rep o rt, th e reco rd sh o u ld b e se n t w ith
“ 0 ” in th e co m m u n ity d ev elo p m en t
lo an co m p o site d ata fields. A n
in stitu tio n th a t h as n o t p u rc h a se d or
o rig in ated any sm all b u sin e ss or sm all
farm lo an s d u rin g th e rep o rtin g p erio d
w o u ld n o t su b m it th e co m p osite loan
reco rd s for sm all b u sin e ss or sm all farm
loans.
___ .42(a)(2) Loan amount at
origination
Ql. When an institution purchases a
small business or small farm loan,
which amount should the institution
collect and report—the original amount
of the loan or the amount at purchase?
A l. When collecting and reporting
information on purchased small
business and small farm loans, an
institution collects and reports the
amount of the loan at origination, not at
the time of purchase. This is consistent
with the Call Report’s and TFR’s use of
the “original amount of the loan” to
determine whether a loan should be
reported as a “loan to a small business”
or a “loan to a small farm” and in which
loan size category a loan should be
reported. When assessing the volume of
small business and small farm loan
purchases for purposes of evaluating
le n d in g te st p erfo rm an ce u n d e r CRA,
h o w ev er, ex am in ers w ill ev alu ate an
in stitu tio n ’s activ ity b ased on th e
am o u n ts at p u rch ase.
Q2. How should an institution collect
data about multiple loan originations to
the same business?
A2. If an in stitu tio n m akes m u ltip le
o rig in atio n s to th e sam e b u sin ess, th e
lo a n s sh o u ld be co llected an d rep o rted
as sep arate o rig in atio n s ra th e r th a n
co m b in ed a n d rep o rted as th ey are on
th e Call R eport or TFR, w h ich reflect
lo ans o u tstan d in g , ra th e r th a n
o rig in atio n s. H ow ever, if in stitu tio n s
m ake m u ltip le o rig in atio n s to th e sam e
b u sin e ss so lely to in flate artificially the
n u m b e r or v o lu m e of lo ans ev alu ated for
CRA len d in g perfo rm ance, th e agencies
m ay co m b in e th e se lo ans for p u rp o ses
of ev alu atio n u n d e r th e CRA.
Q3. How should an institution collect
data pertaining to credit cards issued to
small businesses?
A3. If an in stitu tio n agrees to issue
cre d it card s to a b u sin e ss’ em ployees,
all o f th e cre d it card lin es o p en e d on a
p a rtic u la r d ate for th a t sin g le b u sin ess
sh o u ld be re p o rte d as on e sm all
b u sin e ss lo an o rig in atio n ra th e r th a n
rep o rtin g each in d iv id u a l cre d it card
lin e, assu m in g th e criteria in th e “sm all
b u sin e ss lo a n ” d efin itio n in th e
reg u la tio n are m et. T he cre d it card
p ro g ram ’s “ am o u n t at o rig in a tio n ” is th e
su m o f all o f th e em p lo y ee/b u sin ess
cre d it c a rd s’ c re d it lim its o p en e d on a
p a rtic u la r date. If su b seq u en tly issu ed
cre d it cards in crease th e sm all b u sin ess
cre d it line, th e a d d e d am o u n t is
rep o rted as a n ew origination.
___ .42(a)(3) The loan location
Q l. Which location should an
institution record i f a small business
loan ’s proceeds are used in a variety of
locations?
A l. T he in stitu tio n sh o u ld reco rd th e
lo an locatio n by e ith er th e lo catio n of
th e b u sin e ss h ea d q u arte rs or th e
lo catio n w h ere th e greatest p o rtio n of
th e p ro ceed s are ap p lied , as in d icated
by th e borrow er.
___ .42(a)(4) Indicator o f gross annual
revenue
Ql. When indicating whether a small
business borrower had gross annual
revenues o f $1 million or less, upon
what revenues should an institution
rely?
A l. G enerally, an in stitu tio n sh o u ld
rely on th e rev en u es th a t it co n sid ered
in m aking its cre d it d ecision. For
exam ple, in th e case of affiliated
b u sin esses, su c h as a p are n t corp oratio n
an d its su b sid iary , if th e in stitu tio n
co n sid ered th e rev e n u es o f th e e n tity ’s
p are n t or a su b sid iary co rp o ratio n of th e
p are n t as w ell, th e n th e in stitu tio n
w o u ld aggregate th e rev en u es of b o th
co rp o ratio n s to d eterm in e w h e th e r th e
rev en u es are $1 m illio n or less.
A ltern ativ ely , if th e in stitu tio n
co n sid ered th e rev e n u es o f o n ly th e
en tity to w h ic h th e lo an is actu ally
ex ten d ed , th e in stitu tio n sh o u ld rely
solely u p o n w h e th e r gross an n u a l
rev en u es are above or b elo w $1 m illio n
for th a t entity . H ow ever, if th e
in stitu tio n c o n sid ered a n d relied on
rev en u es or in co m e of a cosig n er or
g u aran to r th a t is n o t an affiliate of th e
borrow er, th e in stitu tio n sh o u ld no t
ad ju st th e b o rro w er’s rev en u es for
rep o rtin g p u rp o ses.
Q2. If an institution that is not exempt
from data collection and reporting does
not request or consider revenue
information to m ake the credit decision
regarding a small business or small farm
loan, must the institution collect
revenue information in connection with
that loan?
A2. No. In th o se in stan ces, th e
in stitu tio n sh o u ld en ter th e code
in d icatin g “rev e n u es n o t k n o w n ” on th e
in d iv id u a l lo an p o rtio n of th e data
co llectio n softw are or on an in tern ally
d ev elo p ed system . L oans for w h ic h th e
in stitu tio n d id n o t co llect rev en u e
in fo rm atio n m ay n o t be in c lu d e d in th e
lo an s to b u sin e sse s an d farm s w ith gross
a n n u a l rev e n u es o f $1 m illio n or less
w h en rep o rtin g th is data.
Q3. What gross revenue should an
institution use in determining the gross
annual revenue o f a start-up business?
A3. T he in stitu tio n sh o u ld u se th e
actu al gross a n n u a l rev en u e to date
(in clu d in g $0 if th e n ew b u sin e ss has
h ad no rev en u e to date). A lth o u g h a
start-u p b u sin e ss w ill p ro v id e th e
in stitu tio n w ith p ro form a projected
rev en u e figures, th ese figures m ay n o t
accurately reflect actu al gross revenue.
___ .42(b) Loan information required to
be reported
___ .42(b)(1) Small business and small
farm loan data
Q l. For small business and small farm
loan information that is collected and
maintained, what data should be
reported?
A l. E ach in stitu tio n th a t is no t
ex em p t from d ata co llectio n an d
rep o rtin g is re q u ire d to rep o rt in
m ach in e-read ab le form an n u a lly by
M arch 1 th e follow ing info rm atio n ,
aggregated for each cen su s trac t or block
n u m b erin g area in w h ich th e in stitu tio n
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
originated or p u rch ased at least one
sm all b u sin e ss or sm all farm loan
d uring th e p rio r year:
• T he n u m b e r a n d am ount of loans
originated o r p u rch ased w ith original
am ounts o f $100,000 or less;
• T he n u m b e r an d am ount of loans
o riginated or p u rch ased w ith original
am ounts o f m ore th an $100,000 b u t less
th a n or eq u al to $250,000;
• T he n u m b e r an d am ount of loans
o riginated or p u rch ased w ith original
am ounts of m ore th a n $250,000 b u t n o t
m ore.than $1 m illio n ; and
• To th e ex ten t th a t inform ation is
available, th e n u m b er a n d am o u n t of
loans to b u sin esses an d farm s w ith gross
an n u al rev en u es of $1 m illio n or less
(using th e revenues th e in stitu tio n
con sid ered in m aking its credit
decision).
m eet th e d efin itio n s of hom e mortgage,
sm all b usin ess, or sm all farm loans in
tho se respective categories; how ever,
they m u st also rep o rt any loans from
those categories th a t m eet th e regulatory
d efin itio n of “com m unity developm ent
lo an s” as com m unity developm ent
loans. T here is n o double counting
because w holesale an d lim ited p urpose
in stitu tio n s are n o t subject to the
len d in g te st an d , therefore, are n o t
ev aluated on th e ir level an d d istrib u tio n
of hom e m ortgage, sm all b usiness, sm all
farm an d co n su m er loans.
____.42(b)(2) C o m m u n ity d evelo pm ent
loan data
A l. No. If an in stitu tio n is no t
req u ired to co llect hom e m ortgage loan
data by th e HMDA, th e in stitu tio n need
n o t collect h o m e m ortgage loan data
u n d e r th e CRA. Exam iners w ill sam ple
these loans to evaluate th e in stitu tio n ’s
hom e m ortgage lending. If an in stitu tio n
w an ts to en su re th a t exam iners co n sider
all of its hom e mortgage loans, th e
in stitu tio n m ay co llect an d m ain tain
data on th ese loans.
Q l. W hat info rm atio n about co m m u n ity
develo p m en t lo a n s m u st in stitu tio n s
report?
A l. In stitu tio n s subject to data
reporting requirem ents m u st report the
aggregate n u m b e r a n d am ount of
com m unity developm ent loans
originated an d p u rch ased d uring th e
prior calen d ar year.
Q2. I f a loa n m eets th e d efinition o f a
h o m e m ortgage, sm a ll business, or sm a ll
farm loan A N D q ualifies as a
c o m m u n ity d evelo p m en t loan, where
sh o u ld it be reported? Can FH A, VA and
SB A loa ns be reported as co m m u n ity
develo p m en t loans?
A2. E xcept for m ultifam ily affordable
housing loans, w h ich m ay be reported
by retail in stitu tio n s both u n d er HMDA
as hom e m ortgage loans a n d as
com m unity d evelopm ent loans, in order
to avoid dou b le counting, retail
in stitu tio n s m u st rep o rt loans th a t m eet
th e defin ition s o f hom e mortgage, sm all
business, or sm all farm loans only in
those resp ectiv e categories even if they
also m eet th e defin itio n of com m unity
developm ent loans. As a practical
m atter, th is is n o t a disadvantage for
retail in stitu tio n s because any affordable
housing m ortgage, sm all business, sm all
farm or co n su m er loan th at w ould
otherw ise m eet th e d efinition of a
com m unity developm ent loan w ill be
consid ered elsew here in th e lending
test. A ny of th ese types of loans that
occur o u tsid e th e in stitu tio n ’s
assessm ent area can receive favorable
consideration u n d er th e borrow er
characteristic criteria of th e lending test.
See Q&A4 u n d e r §____.22(b)(2) & (3).
L im ited p u rp o se and w holesale
in stitu tio n s also m u st report loans th at
____.42(b)(3) H om e m ortgage loans
Q l. M ust in stitu tio n s th a t are n o t
required to co llect h o m e m ortgage loan
data b y th e HMDA co llect ho m e
m ortgage loan data fo r purpo ses o f the
CRA?
.
____.42(c) O ptional data collection a nd
m a in ten a n ce
____.42(c)(1) C onsum er loans
Q l. W hat are th e data requirem ents
regarding co n su m er loans?
A l. T here are no data reporting
requirem ents for consum er loans.
In stitu tio n s m ay, how ever, o p t to collect
an d m ain tain d ata on consum er loans. If
an in stitu tio n chooses to collect
inform ation on consum er loans, it may
collect data for o n e or m ore of the
follow ing categories of consum er loans:
m otor vehicle, cred it card, hom e equity,
other secured, an d other u nsecured. If
an in stitu tio n collects data for loans in
a certain category, it m u st collect data
for a ll loans originated or p u rch ased
w ith in th a t category. T he in stitu tio n
m u st m ain tain th ese data separately for
each category for w h ich it chooses to
collect data. T he data collected an d
m ain tain ed sh o u ld in clu d e for each
loan:
• A u n iq u e n u m b er o r alpha-num eric
sym bol th a t c an be u sed to identify the
relevant loan file;
• T he loan am o u nt at origination or
purchase;
• T he loan location; an d
• T he gross an n u a l incom e of the
borrow er th at th e in stitu tio n considered
in m aking its cred it decision.
54665
____.42(c)(l)(iv) Inco m e o f borrower
Q l. I f an in stitu tio n does n o t consider
in co m e w hen m a kin g an underw riting
decision in conn ection w ith a consum er
loqn, m u st it collect inco m e
inform ation?
A l. No. F urther, if th e in stitu tio n
ro u tin ely collects, b u t does n o t verify, a
borro w er’s incom e w h en m aking a
.
credit d ecision, it need n o t verify the
incom e for p u rpo ses of data
m aintenance.
Q2. M ay an in stitu tio n list “0 ” in th e
in co m e fie ld on co nsu m er loans m a d e
to em ployees w hen collecting data fo r
CRA p u rp o ses as th e in stitu tio n w ould
be p erm itte d to do und er HMDA?
A2. Yes.
___ ..42(c)(2) O ther loan data
Q l. S ch ed u le RC-C, Part II o f the Call
R eport a n d sch ed u le SB o f th e TFR do
n o t allow fin a n c ia l in stitu tio n s to report
loans fo r com m ercial a n d indu stria l
p u rpo ses th a t are secured b y residen tial
real estate. Loans ex ten d ed to sm all
busin esses w ith gross a n nua l revenues
o f $1 m illio n or less m ay, how ever, be
secured b y residentia l real estate. Is
there a w ay to collect this inform ation
on th e softw are to su p p le m en t an
in stitu tio n ’s sm a ll business len d in g data
a t th e tim e o f exam ination?
A l. Yes. If these loans prom ote
com m unity developm ent, as defined in
th e regulation, th e in stitu tio n should
collect an d rep o rt inform ation about
these loan s as com m unity developm ent
loans. O therw ise, a t an in stitu tio n ’s
op tion, it m ay collect an d m aintain data
concerning loans, purchases, an d lines
of cred it exten d ed to sm all businesses
an d secured by resid en tial real estate for
consid eratio n in th e CRA evaluation of
its sm all b u sin ess lending. To facilitate
th is o p tional data collection, the
softw are d istrib u ted free-of-charge by
th e FFIEC pro v id es th a t an in stitu tio n
m ay collect th is inform ation to
su p p lem en t its sm all b usin ess lending
data by choosing loan type, “ O ther
S ecured L ines/L oans for P urposes of
Sm all B usiness,” in th e in d iv id u al loan
data. (The title of th e loan type, “ O ther
S ecured Lines of Credit for P urposes of
Sm all B usiness,” w h ich w as found in
th e in stru ctio n s accom panying th e 1996
data co llection softw are, is being
changed to “ O ther Secured Lines/L oans
for P urposes of Sm all B usiness” in order
to accurately reflect th a t lines, of cred it
a n d loans m ay b e rep o rted u n d er th is
loan type.) T his inform ation sh o u ld be
m ain tain ed at th e in stitu tio n b u t sh o u ld
n o t be sub m itted for central reporting
purposes.
54666
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
Q2. M u st an in stitu tio n collect data on
loan co m m itm e n ts a n d letters o f credit?
A2. No. In stitu tio n s are n o t required
to collect data on loan com m itm ents
an d letters of credit. In stitu tio n s may,
h ow ever, pro v id e for exam iner
co n sid eratio n inform ation on letters of
cre d it a n d com m itm ents.
Q3. A re com m ercial an d con sum er
lea ses considered lo an s fo r pu rp o ses o f
CRA data collection?
A3. Com m ercial an d co n sum er leases
are n o t co n sid ered sm all b u sin ess or
sm all farm loans or consum er loans for
p u rp o ses of th e data collection
req u irem en ts in 12 CFR §____.42(a) &
(c)(1)- H ow ever, if an in stitu tio n w ishes
to collect an d m ain tain d ata about
leases, th e in stitu tio n m ay p ro v id e this
data to exam iners as “oth er lo an d ata”
u n d e r 12 CFR §____.42(c)(2) for
co n sid eratio n u n d er th e len d in g test.
o th er actio n is w arranted. A sm all
in stitu tio n subject to th e sm all
in stitu tio n perform ance stan d ard s is
specifically evaluated on its reco rd of
taking action, if w arranted, in response
to w ritte n com plain ts about its
perform ance in h elp in g to m eet th e
cre d it n eed s in its assessm ent area(s)
(§____.26(a)(5)). For all in stitu tio n s,
resp o n d in g to com m ents m ay h elp to
foster a dialogue w ith m em bers of th e
com m u n ity or to presen t relevant
info rm atio n to an in stitu tio n ’s Federal
finan cial su pervisory agency. If an
in stitu tio n respo n d s in w ritin g to a
letter in th e pub lic file, th e response
m u st also b e p laced in th at file, u n less
th e resp o nse reflects adversely on any
p erso n or placing it in the p u b lic file
violates a law.
Q3. M a y an in stitu tio n in c lu d e a
resp onse to its CRA Perform ance
E valuation in its p u b lic file?
A3. Yes. H owever, the form at an d
____.42(d) Data on affilia te lend ing
co n ten t of th e evaluation, as tran sm itted
Q l. I f an in stitu tio n elects to h a ve an
by th e supervisory agency, m ay n o t be
a ffilia te ’s h o m e m ortgage len d in g
altered or abridged in any m anner. In
considered in its CRA evaluation, w hat
ad d itio n , an in stitu tio n th a t received a
data m u st th e in stitu tio n m a ke available
less th a n satisfactory rating d uring it
to exam iners?
m ost recen t exam ination m u st in clu d e
A l. If th e affiliate is a HMDA reporter, in its p u b lic file a descrip tio n of its
th e in stitu tio n m u st identify th o se loans cu rren t efforts to im prove its
rep o rted by its affiliate u n d e r 12 CFR
perform ance in h elp in g to m eet th e
p art 203 (Regulation C, im plem enting
cre d it n eed s of its entire com m unity.
•
HMDA). A t its option, th e in stitu tio n
T he in stitu tio n m u st u p d ate th e
m ay eith er p rovide exam iners w ith the
d escrip tio n on a quarterly basis.
affiliate’s entire HMDA D isclosure
____.43(b) A d d itio n a l inform ation
S tatem ent or ju st those p o rtions
available to th e p u b lic
covering th e loans in its assessm ent
area(s) th a t it is electing to consider. If
____.43(b)( 1) In stitu tio n s o th er than
th e affiliate is n o t req u ired by HMDA to
sm a ll in stitu tio n s
rep o rt hom e m ortgage loans, th e
Q l. M u st an in stitu tio n th a t elects to
in stitu tio n m ust provide sufficient data
h a ve a ffilia te le n d in g considered
co ncerning th e affiliate’s h o m e mortgage in c lu d e data on th is le n d in g in its
lo ans fo r th e exam iners to ap p ly the
p u b lic file?
perform ance tests.
A l. Yes. T he lending d ata to be
S ectio n ___ .43—Content and
co n tain ed in an in stitu tio n ’s p u b lic file
availability o f public file
covers th e lending of th e in stitu tio n ’s
affiliates, as w ell as of th e in stitu tio n
____.43(a) Inform ation available to th e
itself, con sid ered in th e assessm ent of
p u b lic
th e in stitu tio n ’s CRA perform ance. A n
____.43(a)( 1) P ublic co m m ents
in stitu tio n th a t h as elected to have
m ortgage loans of an affiliate considered
Q l. W hat h a p p en s to co m m ents
m u st in c lu d e eith er th e affiliate’s
received b y th e agencies?
HMDA D isclosure S tatem ents for the
A l. Com m ents received by a Federal
tw o p rio r years or th e parts o f th e
fin ancial supervisory agency w ill be on
D isclosure Statem ents th a t relate to the
file at th e agency for u se by exam iners.
in stitu tio n ’s assessm ent area(s), at the
T hose com m ents are also available to
in stitu tio n ’s option.
th e pu b lic u n less th ey are exem pt from
d isclo su re u n d er th e Freedom of
Inform ation Act.
____ .43(c) Location o f p u b lic
info rm atio n
Q2. Is an in stitu tio n required to respond
to p u b lic com m ents?
A2. No. A ll in stitu tio n s sh o u ld review
com m ents an d com plaints carefully to
d eterm in e w h eth er any resp o nse or
Q l. W hat is an in stitu tio n ’s “m ain
o ffic e ’?
A l. A n in stitu tio n ’s m ain office is th e
m ain, ho m e, or p rin cip al office as
desig n ated in its charter.
S ectio n ___ .44—Public notice by
institutions
Q l. A re there a n y p la c em en t or size
req uirem ents fo r an in stitu tio n ’s p u b lic
notice?
A l. T he n o tice m u st be p laced in th e
in stitu tio n ’s pu b lic lobby, b u t th e size
an d p lacem en t m ay vary. T he notice
sh o u ld b e p laced in a location an d be of
a sufficient size th a t custom ers can
easily see a n d read it.
Section ___.45— Publication o f
planned exam ination schedule
Q l. W here w ill th e agencies p u b lish the
p la n n e d exa m in a tio n sch ed u le fo r th e
u p co m in g ca lend ar quarter?
A l. T h e agencies m ay u se th e Federal
Register, a press release, th e Internet, or
o th er existing agency p u b licatio n s for
d issem in atin g th e list of th e in stitu tio n s
sc h ed u led to for CRA exam inations
d u rin g th e u pcom ing calendar quarter.
Interested p arties sh o u ld contact the
ap p rop riate F ederal financial
superv iso ry agency for inform ation on
h o w th e agency is pu b lishin g th e
p la n n ed exam in atio n schedule.
A ppendix B to Part
• —CRA Notice
Q l. W hat agency inform a tion sh o u ld be
a d d ed to th e CRA no tice form ?
A l. T h e follow ing inform ation sh o u ld
b e ad d e d to th e form:
O C C -supervised in stitu tio n s only: The
ad d ress o f th e d ep u ty com ptroller of the
d istrict in w h ich th e in stitu tio n is
located sh o u ld be in serted in th e
ap p ro p riate b lank. T hese addresses can
b e fo u n d at 12 CFR § 4.5(a).
OCC-, FDIC-, a n d B oard-supervised
in stitu tio n s: “O fficer in Charge of
S u p erv isio n ” is th e title of the
resp on sib le official at th e ap p ro p riate
F ederal Reserve Bank.
Appendix A—Regional Offices of the
Bureau of the Census
To obtain m ed ian fam ily incom e
levels of cen su s tracts, M SAs, block
n u m bering areas an d statew ide
n o n m etro p o litan areas, contact th e
ap p rop riate regional office of th e Bureau
of th e C ensus as in d icated below . T he
list show s th e states covered b y each
regional office.
A tlan ta
(404) 730-3833.
A labam a, Florida, Georgia
Boston
(617) 424-0510.
Federal Register / Vol. 61, No. 204 / Monday, October 21, 1996 / Notices
C onnecticut, M aine, M assachusetts,
N ew H am pshire, R hode Island, V erm ont
Charlotte
(704) 344-6144.
D istrict o f C olum bia, K entucky, N orth
Carolina, S o u th Carolina, Tennessee,
Virginia
Chicago
(708) 562-1740.
. Illinois, Ind ian a, W isconsin
Dallas
(214) 6 4 0 -4470 or (800) 835-9752.
Louisiana, M ississippi, Texas
Denver
(303) 969-7750.
A rizona, Colorado, N ebraska, N ew
M exico, N orth D akota, S ou th D akota,
Utah, W yom ing
Detroit
(313) 259-1875.
M ichigan, O hio, W est Virginia
Kansas City
(913) 551-6711.
A rkansas, Iowa, Kansas, M innesota,
M issouri, O klahom a
Los Angeles
(818) 904-6339.
California
N ew York
(212) 264—4730.
N ew York, P uerto Rico
Philadelphia
(215) 597-8313 or (215) 597-8312.
Delaware, M aryland, N ew Jersey,
P ennsylvania
Seattle
(206) 728-5314.
-
A laska , H aw aii, Idaho, M ontana,
N evada, Oregon, W ashington
E nd of text o f th e Interagency
Q uestions an d A nsw ers.
Dated: October 11,1996.
Joe M. Cleaver,
Executive Secretary, Federal Financial
Institutions Examination Council.
[FR Doc. 96-26743 Filed 10-18-96; 8:45 am]
BILUNG CODE 4810-33-P, 8210-01-P , 6714-01-P ,
6720-01-P
54667
@FedFRASER