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Federal R eserve Bank
OF DALLAS
ROBERT
AND
D. M C T E E R , J R .
P E ID N
RS E T
C H IE F E X E C U T IV E
O F F IC E R
May 23, 1995
J
D A LLA S , TEXAS
75 2 6 5 -5 9 0 6
Notice 95-49
TO:
The Chief Executive Officer of each
member bank and others concerned in
the Eleventh Federal Reserve District
SUBJECT
Adoption of Revised Regulation BB
(Community Reinvestment) and Conforming Amendments
to Regulation C (Home Mortgage Disclosure)
DETAILS
The Board of Governors of the Federal Reserve System has issued a
completely revised Community Reinvestment Act (CRA) regulation (Regulation BB) and
related conforming amendments to its Home Mortgage Disclosure Act regulation
(Regulation C).
The revisions provide guidance to financial institutions on the assessment of
their CRA-related activities. The final procedures emphasize performance rather than
process, promote consistency in assessments, and reduce unnecessary compliance burden
while stimulating improved performance.
Provisions of the final rule become effective on January 1, 1996, for small
financial institutions and institutions electing to be evaluated under a strategic plan.
In addition, wholesale and limited-purpose institutions that have collected community
development lending data may elect to be evaluated under a separate test after
January 1. Large retail financial institutions will be subject to the final rule after July 1,
1997, unless they have elected to be evaluated under the new provisions and have
collected the required data before that date.
Data collection requirements become effective January 1, 1996, and data
reporting requirements become effective January 1, 1997.
F o r additional copies, bankers and others are encouraged to use one o f the following toll-free numbers in contacting the Federal
Reserve Bank o f Dallas: Dallas Office (800) 333 -4460; E l 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)
ATTACHMENT
A copy of the Board’s notice as it appears on pages 22156-223, Vol. 60,
No. 86, of the Federal Register dated May 4, 1995, is attached.
MORE INFORMATION
For more information regarding Regulation BB, please contact Gloria
Vasquez Brown at (214) 922-5266. For more information regarding Regulation C, please
contact Eugene Coy at (214) 922-6201.
For additional copies of this Bank’s notice, please contact the Public Affairs
Department at (214) 922-5254.
Sincerely yours,
FEDERAL RESERVE BANK OF DALLAS
NOTICE 95-49
Adoption
of
Revised Regulation BB
(Community Reinvestment)
and
Conforming Amendments to
Regulation C
(Home Mortgage Disclosure)
22156
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 25
[Docket No. 95-07]
RIN 1557-AB32
FEDERAL RESERVE SYSTEM
12 CFR Part 228
[Regulation BB; Docket No. R-0822]
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 345
RIN 3064-AB27
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 563e
[Docket No. 95-72]
RIN 1550-AA69
FEDERAL RESERVE SYSTEM
12 CFR Part 203
Community Reinvestment Act
Regulations
AGENCIES; Office of the Comptroller of
the Currency, Treasury (OCC); Board of
Governors of the Federal Reserve
System (Board); Federal Deposit
Insurance Corporation (FDIC); Office of
Thrift Supervision, Treasury (OTS).
ACTION: Joint final rule.
SUMMARY: The OCC, Board, FDIC, and
O TS, (collectively, the Federal financial
supervisory agencies or agencies) are
amending their regulations concerning
the Community Reinvestment Act
(CRA). The agencies published a joint
notice of proposed rulemaking on this
issue on December 21, 1993 (1993
proposal) and again on O ctober 7 ,1 9 9 4
(1994 proposal). This final rule reflects
com ments received on both proposals
and the agencies’ further internal
considerations.
The purpose of the CRA regulations is
to establish the framework and criteria
by which the agencies assess an
institution’s record of helping to meet
the credit needs of its com munity,
including low- and moderate-incom e
neighborhoods, Consistent with safe and
sound operations, and to provide that
the agencies’ assessm ent shall be taken
into account in reviewing certain
applications.
The final rule seeks to emphasize
performance rather than process, to
promote consistency in evaluations, and
to elim inate unnecessary burden. As
compared to the 1993 and 1994
proposals, the final rule reduces
recordkeeping and reporting
requirem ents and makes other
m odifications and clarifications.
EFFECTIVE DATES: T his joint rule is
effective July 1, 1995, except 12 CFR
25.3 through 25.7 and 2 5 .5 1 ,1 2 CFR
228.3 through 228.7 and 2 28.51, 12 CFR
345.3 through 345.7 and 3 45.51, and 12
CFR 563e.3 through 563e.7 and 563e.51
are removed effective July 1, 1997.
FOR FURTHER INFORMATION CONTACT:
OCC; Stephen M. Cross, Deputy
Comptroller for Com pliance, (202) 8 7 4 5216; or Matthew Roberts, Director,
Community and Consumer Law
Division, (202) 8 7 4 -5 7 5 0 , Office of the
Comptroller of the Currency, 250 E
Street, SW ., W ashington, DC 20219.
Board: Glenn E. Loney, A ssociate
Director, Division of Consumer and
Community Affairs, (202) 4 5 2 -3 5 8 5 ;
Robert deV. Frierson, A ssistant General
Counsel, Legal D ivision, (202) 4 5 2 3711; or Leonard N. Chanin, Managing
Counsel, Division of Consumer and
Community Affairs, (202) 4 5 2 —
3667,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue, NW., W ashington,
DC 20551.
FDIC: Bobbie Jean Norris, Chief, Fair
Lending Section, Division of
Compliance and Consumer Affairs,
(202) 9 4 2 -3 0 9 0 ; Robert W. M ooney, Fair
Lending Specialist, D ivision of
Compliance and Consumer Affairs,
(202) 9 4 2 -3 0 9 2 ; or Ann Hume Loikow,
Counsel, Regulation and Legislation
Section, Legal Division, (202) 8 9 8 -3 7 9 6 ,
Federal Deposit Insurance Corporation,
550 17th Street, NW., W ashington, DC
20429.
O TS: Tim othy R. Burniston, Assistant
Director for Com pliance P olicy, (202)
9 0 6 -5 6 2 9 ; Theresa A. Stark, Program
Analyst, Com pliance P olicy, (202) 9 0 6 7054; or Lewis A. Segall, Senior
Attorney, Regulations and Legislation
Division, C hief Counsel’s Office, (202)
9 0 6 -6 6 4 8 , Office of Thrift Supervision,
1700 G Street, NW., W ashington, DC
20552.
SUPPLEMENTARY INFORMATION:
Introduction
The Federal financial supervisory
agencies jointly are amending their
regulations im plem enting the CRA (12
U.S.C. 2901 et seq.). The amended
regulations w ill, when fully effective,
replace the existing regulations in their
entirety.
The CRA is designed to encourage
regulated financial institutions to help
meet the credit needs of their entire
com m unities, including low- and
m oderate-incom e neighborhoods,
consistent w ith safe and sound
operations. Despite the CRA’s notable
successes in improving access to credit,
banks and savings and loan institutions,
as w ell as com m unity and consumer
groups, m aintain that its full potential
has not been realized, in large part
because regulatory com pliance efforts
have focused on process rather than
performance.
In accordance w ith a request from the
President, the Federal financial
supervisory agencies have undertaken a
com prehensive effort to reform their
standards for evaluating com pliance
w ith CRA requirements. The final rule
im plem ents this reform effort by
substituting a new system that evaluates
institutions based on their actual
performance in helping to meet their
com m unities’ credit needs.
Background
In 1977, the Congress enacted the
CRA to encourage banks and thrifts to
help meet the credit needs of their
entire com m unities, including low- and
m oderate-incom e neighborhoods,
consistent w ith safe and sound lending
practices. In the CRA, the Congress
found that:
“ (1) regulated financial institutions
are required by law to demonstrate that
their deposit facilities serve the
convenience and needs of the
com m unities in w hich they are
chartered to do business;
(2) the convenience and needs of
com m unities include the need for credit
as well as deposit services; and
(3) regulated financial institutions
have continuing and affirmative
obligation^] to help m eet the credit
needs of the local com m unities in
w hich they are chartered.”
(12 U.S.C. 2901(a))
The CRA has come to play an
increasingly important role in
improving access to credit in
com m unities—both rural and urban—
across the country. Under the impetus
of the CRA, many banks and thrifts
opened new branches, provided
expanded services, and made
substantial com m itm ents to increase
lending to all segments o f society.
Despite these successes, the CRA
exam ination system has been criticized.
Financial institutions have indicated
that policy guidance from the agencies
on the CRA is unclear and that
exam ination standards are applied
inconsistently. Financial institutions
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
have also stated that the CRA
exam ination process encourages them to
generate excessive paperwork at the
expense of providing loans, services,
and investments to their com m unities.
Community, consumer, and other
groups have agreed with the industry
that there are inconsistencies in CRA
evaluations and that current
exam inations overemphasize process
and underemphasize performance.
Community and consum er groups also
have criticized the agencies for failing
aggressively to penalize banks and
thrifts for poor performance.
Noting that the CRA exam ination
process could be improved, President
Clinton requested in July 1993 that the
Federal financial supervisory agencies
reform the CRA regulatory system. The
President asked the agencies to consult
with the banking and thrift industries,
Congressional leaders, and leaders of
com munity-based organizations across
the country to develop new CRA
regulations and exam ination procedures
that “replace paperwork and
uncertainty with greater performance,
clarity, and objectivity.”
Sp ecifically, the President asked the
agencies to refocus the CRA
exam ination system on more objective,
performance-based assessment
standards that m inim ize com pliance
burden w hile stimulating improved
performance. He also asked the agencies
to develop a well-trained corps of
exam iners who would specialize in CRA
exam inations. The President requested
that the agencies promote consistency
and even-handedness, improve CRA
performance evaluations, and institute
more effective sanctions against
institutions with consistently poor
performance.
To im plem ent the P resid ent’s
initiative, the four agencies held a series
of seven public hearings across the
country in 1993. At those hearings, the
agencies heard from over 250 w itnesses.
Nearly 50 others submitted written
statements. The preamble to the 1993
proposal reviewed the results o f those
hearings.
The 1993 Proposal
The agencies published proposed
revisions to their CRA regulations on
December 21, 1993. The 1993 proposal
(58 FR 67466) would have elim inated
the twelve assessment factors in the
present CRA regulations and substituted
a more performance-based evaluation
system. Under the 1993 proposal, the
agencies would have evaluated
institutions based on their actual
lending, service, and investm ent
performance rather than on how well
they conducted their needs assessm ents,
documented their com m unity outreach,
and im plem ented other procedural
requirem ents of the existing regulations.
' Generally, large retail institutions
would have been evaluated based on
some com bination of lending, service,
and investm ent tests. Institutions would
have been required to report data on the
basis of the geographic distribution of
applications, denials, originations, and
purchases of loans. Sm all banks and
thrifts could have elected to be
evaluated under a stream lined method
that would not have required them to
report this data. Every institution also
could have elected to have its
perform ance evaluated on the basis of a
pre-approved strategic plan.
All banks and thrifts would have been
assigned one of four statutorily
mandated CRA ratings (12 U.S.C.
2906(b)(2)). However, five ratings would
have been used for the lending, service,
and investm ent tests, with the
satisfactory category split into low
satisfactory and high satisfactory.
Collectively, the agencies received
over 6,700 com m ent letters on the 1993
proposal. As a general matter, the vast
m ajority of com m enters expressed
support for the agencies’ goal of
developing more objective,
performance-based assessment
standards that m inim ize burden while
stimulating improved performance.
However, many expressed concern over
aspects of the 1993 proposal that they
viewed as allocating credit to particular
kinds of borrowers. After considering
the com m ents, the agencies published a
second proposal on October 7 ,1 9 9 4 ,
w hich responded to many of the
suggestions in the com m ents on the
1993 proposal, including concerns
about credit allocation, w hile preserving
the 1993 proposal’s goal o f emphasizing
perform ance over process.
The 1994 Proposal
The 1994 proposal (59 FR 51232)
retained the principles and structure
underlying the 1993 proposal but made
significant changes to the details in
order to respond to many o f the specific
concerns raised in the com m ent letters.
As in the 1993 proposal, the 1994
proposal would have replaced the
existing regulations’ tw elve assessm ent
factors with a performance-based
evaluation system. The 1994 proposal
retained, but modified, the lending,
investm ent, and service tests for large
retail institutions; the stream lined
evaluation for small institutions; an
alternative evaluation for lim ited
purpose and w holesale institutions; and
the pre-approved strategic plan option
available to all institutions.
22157
The 1993 proposal had been criticized
because o f certain objective criteria in
the proposal (including market share, a
presum ptively reasonable loan to
deposit ratio, loan m ix, investm ent to
capital ratios, and the number of
branches readily accessible to low- and
m oderate-incom e geographies) w hich
were intended to respond to concerns
about the need for more objective
standards for evaluating com pliance
with CRA requirements. Many
com m enters viewed these criteria as
calling for credit allocation, although
the agencies did not intend this result.
The 1994 proposal removed these
criteria from the regulatory language
and substituted a broader range of
qualitative and quantitative criteria. A
system for evaluating com pliance with
CRA should not elim inate exam iner
judgment, even if com pletely objective
criteria consistently applied were
achievable. Preservation of exam iner
judgment to take into account the
unique characteristics and needs of an
institu tion’s community and the
institu tion’s own capacity and relevant
constraints are essential for a workable
rule.
At the same tim e, consistency in
evaluations, reduction in the burden of
com pliance, and em phasis on
perform ance are fully consistent with
assuring a measure of exam iner
judgment. The 1994 proposal would
have provided a balance betw een
objective analysis and subjective
judgment through a series o f exam iner
d ecisions relying on detailed data
measuring an institution’s actual
lending, service and investment
performance. In order to m inim ize
unnecessary subjectivity, the agencies
provided guidance as to the standards
that exam iners would have applied in
making the required judgments.
Compared to the 1993 proposal, the
1994 proposal would have reduced data
reporting burdens by stream lining
reporting requirements. The one
significant new reporting requirem ent
was the collection and reporting of
inform ation on the race and gender of
sm all business and farm borrowers. The
agencies proposed this provision to
respond to concerns that the 1993
proposal did not give enough weight to
the fair lending aspect o f an institution’s
CRA performance.
In order to take into account
com m unity characteristics and needs,
the 1994 proposal would have made
exp licit the context in w hich the tests
and standards would have been applied
to individual institutions. In a specific
effort to reduce burden, the preamble
indicated that the agencies, rather than
institutions, would have collected and
22158
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
developed the information needed to
provide this “assessment context.”
The 1994 proposal also modified the
rating process from the 1993 proposal.
For large retail institutions, in
calculating the assigned rating, the
revised proposal would have given
primacy to lending performance, but an
institution’s performance on the service
and investment tests also would have
been reflected in the assigned rating.
The rating process for sm all institutions
sim ilarly would have given primacy to
lending performance, and would have
provided guidance on how the agencies
would have considered service and
investm ent performance. For all
institutions, evidence of discriminatory
or other illegal credit practices would
have adversely affected the evaluation
of an institution’s performance. In
addition, an appendix to the 1994
proposal included rating profiles to
guide the assessments.
The 1994 proposal revised and
clarified other important features of the
1993 proposal. It provided more detail
as to how the proposed strategic plan
option would operate in practice.
W holesale and lim ited purpose
institutions were made subject to a
com m unity developm ent test, which
would have incorporated both
com m unity developm ent lending and
com m unity developm ent services in
addition to qualified investm ents. Also,
the agencies revised the definition of
service area to include the local areas
around an institution’s deposit facilities
in w hich it has significant lending
activity and all other areas equally
distant from such facilities.
O ve rview o f Comments on the 1994
Proposal
Collectively, the agencies received
over 7,200 comment letters on the 1994
proposal. The agencies received
com m ent letters from individuals,
representatives of bank and thrift
institutions, consum er and community
groups, members of Congress, state,
local, and tribal governments, and
others, as shown in the follow ing table.
T a ble o f C o m m e n t s R ec e iv e d
Letters from
banks, thrifts
and their trade
associations
Agency
Letters from
consumer and
community
groups
669
607
1,007
261
839
832
788
623
OCC ...........................................................................................
Board .........................................................................................
FDIC ..........................................................................................
OTS ...........................................................................................
The agencies reviewed and
considered all of these com ments in
writing the final rule. T he section-bysection analysis of the final rule
discusses these com ments in greater
detail. As a general matter, the vast
majority of commenters expressed
support for the agencies’ goal of
developing more objective,
performance-based assessment
standards that minimize burden while
stimulating improved performance.
Many commenters believed that, under
the existing CRA regulations, the
agencies focus too closely on
documentation of CRA performance and
too little on actual performance. Some
commenters felt the present
documentation requirements are overly
burdensome. Many commenters also
supported the agencies’ goal of ensuring
consistency and evenhandedness among
the agencies in CRA evaluations,
without including specific criteria that
might be viewed as allocating credit to
specific borrowers. Commenters
supported enhanced CRA examiner
training to increase consistency.
Although most com menters generally
supported the agencies’ goals in
amending their CRA regulations, many
expressed concern over certain aspects
of the 1994 proposal.
The Final Rule
R ev iew o f C om m en ts on th e 1994
P ro p o sa l a n d R esp o n s es
The final rule retains, to a significant
extent, the principles and structure
underlying the 1993 and 1994
proposals, but makes important changes
to some details in order to respond to
concerns raised in the com m ent letters
and further agency consideration. The
following discussion describes by topic
the ways in w hich the agencies
addressed com m enters’ concerns. The
discussion also describes important
technical m odifications included in the
final rule.
Enforcement Authority
The agencies have removed two
provisions found in both the 1993 and
1994 proposals that engendered
considerable comment. These
provisions were the com munity
reinvestment obligation, w hich stated
that banks and thrifts have a specific
affirmative obligation to help meet the
credit needs of their com m unities, and
the enforcem ent provision, w hich
provided for penalties against banks and
thrifts with “substantial
noncom pliance” ratings using the
agencies’ general enforcem ent powers
under 12 U.S.C. 1818. Substantial
comment was received both in favor of,
and in opposition to, these provisions.
Based on further analysis of their
Letters from
government
entities
39
12
32
24
Letters from
others
672
482
237
173
Total
2,219
1,933
2,064
1,081
statutory authority, the agencies have
removed these provisions.
Consistent with the statute, the final
rule provides that an institution’s CRA
rating reflects its record of helping to
meet the credit needs of its entire
com m unity. The agencies w ill take into
account an institution’s record when
evaluating various types of applications,
such as applications for branches, office
relocations, mergers, consolidations,
and purchase and assumption
transactions, and may deny or condition
an application on the basis of the
institution’s record.
Scope
T he scope of the final rule does not
differ appreciably from the scope of the
current CRA regulations or the 1993 and
1994 proposals. The agencies
historically have excluded from CRA
coverage certain special purpose
institutions, such as banker’s banks, that
are not organized to grant credit to the
public in the ordinary course of
business. These institutions continue to
be treated as special purpose banks in
the final rule and are excluded from
coverage. Several com m enters were
concerned that the definition of banker’s
bank in the 1994 proposal may not have
conformed with that found in 12 U.S.C.
24 (Seventh), as modified by the
Interstate Banking E fficiency Act of
1994 (IBEA). Therefore, the final rule
references the definition of “banker’s
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
bank” found in 12 U .S.C. 24 (Seventh).
The rule also specifies that institutions
that provide only cash management
controlled disbursement services are
excluded from CRA coverage. In
addition, the final rule provides for the
CRA’s applicability to foreign
institutions consistent with the IBEA
and prior agency interpretations.
Definitions
M any o f the definitions in the 1994
proposal remain the same in the final
rule or have been adjusted only for
purposes of clarity, w ith no change in
substance. The agencies did, however,
change some definitions substantively.
A ssessm ent area. The agencies
replaced the term “ service area” in the
1994 proposal with “assessm ent area”
in the final rule for the reasons
explained in the d iscussion of
assessm ent area.
ATM and branch. The agencies
changed the definitions of ATM and
branch to elim inate the requirement that
an ATM or a branch be at a fixed site.
This change means that staffed mobile
offices that are licensed as branches will
be considered “branches” under the
final rule and that m obile ATM s w ill be
considered “A TM s.” This change may
affect the delineation of an institution’s
assessm ent area(s) because the
assessm ent area(s) must include the
geographies in w hich the institution has
its m ain office, branches and deposittaking ATMs. Including mobile
branches and ATMs in defining an
assessm ent area ensures that an
institution that uses these means in an
area not otherwise served by the
institution will be evaluated on its
success in helping to meet the credit
needs o f the area. Including mobile
branches in the definition of “branch”
w ill also affect evaluation o f an
institu tion’s service to its community
because the “service test” evaluates the
distribution of an institu tion’s branches
and the institu tion’s history of opening
and closing branches. In the revised Part
345, the FDIC uses the term “remote
service facility” instead of “A T M ” to
conform w ith the terminology used in
its regulations.
Community developm ent. The 1994
proposal did not provide a separate
definition of “com m unity
developm ent,” although the term was
used in defining com munity
development loans and services and
qualified investments. Several
com m enters requested further guidance
on the scope of activities that would
qualify. Som e com m enters were
concerned that, without further
specification, the regulation might
permit an overly broad range of
activities to be considered favorably as
supporting com m unity development.
Others were concerned that the
definition might be too narrow.
The final rule separately defines
com m unity developm ent to mean: (1)
Affordable housing (including
m ultifam ily rental housing) for low- or
m oderate-incom e individuals; (2)
com m unity services targeted to low- or
m oderate-incom e individuals; (3)
activities that promote econom ic
developm ent by financing businesses or
farms that meet the size eligibility
standards of 13 CFR 121.802(a)(2) or
have gross annual revenues of $1
m illion or less; or (4) activities that
revitalize or stabilize low- or moderateincom e geographies.
The definition of com m unity
developm ent restricts qualifying
activities to those that promote
com m unity welfare, w hile recognizing
that com m unity welfare can be
promoted in diverse ways. For example,
a number of com m enters, representing
both the industry and com m unity and
consum er groups, stated that the
requirem ent in the 1994 proposal that
com m unity developm ent loans and
services and qualified investm ents meet
“ com m unity econom ic developm ent
n eed s” inappropriately lim ited
com m unity developm ent to efforts that
meet “ econom ic” needs. The final rule
does not contain this lim itation, and
com m unity developm ent includes
com m unity- or tribal-based child care,
educational, health, or social services
targeted to low- or m oderate-incom e
persons or services that revitalize or
stabilize low- or m oderate-incom e
geographies.
In response to com m ents, the
definition clarifies the small businesses
and farms that the agencies intend to
cover. The section o f the definition that
discusses activities that promote
econom ic developm ent by financing
sm all businesses and farms refers to 13
CFR 121.802(a)(2), the size lim itations
for the Sm all Business A dm inistration’s
Sm all Business Investment Company
and Development Company programs,
as well as the $1 m illion gross annual
revenues threshold used for lending test
analysis.
Several com menters stated that
com m unity developm ent should require
benefit to low- and m oderate-incom e
areas. However, narrowing the focus to
only these areas would ignore some of
the beneficial purposes of com munity
developm ent lending for low- and
m oderate-incom e individuals. Under
the rule, com m unity development
includes activities outside of low- and
m oderate-incom e areas if the activities
provide affordable housing for, or
22159
com m unity services targeted to, low- or
m oderate-incom e individuals or if they
promote econom ic developm ent by
financing sm all businesses and farms.
A ctivities that create, retain, or improve
jobs for low- or m oderate-incom e
persons to stabilize or revitalize low- or
m oderate-incom e areas also qualify as
com m unity developm ent, even if the
activities are not located in low- or
m oderate-incom e areas.
The final rule also requires that, in
order to be com m unity development
loans or services or qualified
investm ents, activities must have
com m unity developm ent as their
primary purpose. A ctivities not
designed for the express purpose of
revitalizing or stabilizing low- or
m oderate-incom e areas, providing
affordable housing for, or com munity
services targeted to, low- or moderateincom e persons, or promoting econom ic
development by financing small
businesses and farms are not eligible.
The fact that an activity provides
indirect or short-term benefits to low- or
m oderate-incom e persons does not
make the activity com m unity
developm ent. Thus, a loan for upperincom e housing in a distressed area
would not qualify sim ply on the basis
of the indirect benefit to low- or
m oderate-incom e persons from
construction jobs or the increase in the
local tax base that supports enhanced
services to low- and m oderate-incom e
area residents.
The final rule removes the
requirem ent in the 1994 proposal that
com m unity developm ent loans and
services and qualified investm ents
prim arily benefit low- or moderateincom e persons or sm all businesses or
farms. This requirem ent is unnecessary
because the definitions of community
development loan and service and
qualified investm ent in the final rule
require that com m unity developm ent be
the primary purpose o f the activities.
Community development loan. The
agencies have amended the definition of
“com m unity developm ent loan” as
described in the discussion of
“com m unity developm ent” and in
several other ways to respond to
com m enters’ concerns.
First, many com m enters objected to
the requirem ent in the 1994 proposal
that com m unity developm ent loans
meet needs “not being met by the
private m arket.” Som e com menters
pointed out that financial institutions
are part of the private market so, if
financial institutions make the loans,
the needs addressed by the loans w ill,
as a matter of course, be met by the
private market. To respond to these
com m ents, the agencies removed this
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qualifier from the definition o f a
com m unity developm ent loan.
Second , some com m enters expressed
confusion about the extent to w hich the
definition of “com m unity development
loan” in the 1994 proposal would have
differed for w holesale and limited
purpose institutions. The agencies
amended the definition of “community
developm ent loan” in the final rule to
clarify the two ways in w hich a
“com m unity development loan” differs
for w holesale and lim ited purpose
institutions. First, w holesale and
lim ited purpose institutions may
consider loans as com m unity
developm ent loans wherever they are
located, if the institutions have
otherwise adequately addressed the
credit needs in their assessm ent area(s).
T his different treatment accounts for the
fact that w holesale and lim ited purpose
institutions typically draw their
resources from, and serve areas well
beyond, their immediate com m unities.
Second, a wholesale or lim ited purpose
institution may consider loans reported
as hom e mortgage, small business, small
farm or consum er loans to be
com m unity development loans.
Institutions subject to the lending test
may not consider loans reported in
those categories to be com munity
developm ent loans, unless the loans are
m ultifam ily dwelling loans. This
different treatment recognizes that the
rule does not separately assess
w holesale and limited purpose
institutions on these reported loans.
Som e com m enters also urged that the
agencies permit w holesale and limited
purpose institutions to include as a
com m unity development loan any loan
that primarily benefits low- or
m oderate-incom e individuals regardless
of the loan’s effect on com munity
development. The lending test evaluates
an institution’s performance in making
home mortgage, small business, small
farm, and consum er loans based on the
geographic distribution of loans to
borrowers of different incom es, not on
the basis of the total number and dollar
amount of loans to low- and moderateincom e borrowers. Because the
com m unity developm ent test does not
consider borrower distribution, but only
loan amount and volume, crediting any
loan that benefits low- and moderateincom e individuals could significantly
inflate performance under this test.
Therefore, the final rule does not
incorporate the suggested change.
Other com menters urged that
institutions that are not w holesale or
lim ited purpose institutions have the
option of treating a home mortgage,
small business, or small farm loan as a
com m unity development loan if it
would otherw ise qualify. The agencies
have not done so. For retail institutions,
the com m unity developm ent loan
category perm its consideration of loans
that do not meet the definitions of home
mortgage, small business or sm all farm
loans but deserve favorable
consideration in a CRA assessment.
Loans that do meet the definitions of
home mortgage, small business and
small farm loans are more appropriately
evaluated based on the criteria provided
for these loans in the lending test.
Som e com m enters requested that
retail institutions receive favorable
consideration for com munity
developm ent loans outside their
assessm ent areas. Under the final rule,
an institution that is not a w holesale or
lim ited purpose institution may receive
favorable consideration for a com munity
developm ent loan that benefits a
broader statewide or regional area that
includes the institu tion’s assessment
area(s). T h is approach m aintains a
balance betw een the broader purposes
of com m unity developm ent lending and
the focus of CRA on meeting the credit
needs of an institution’s local
com m unity. As previously noted,
because of their different operational
focus, w holesale and lim ited purpose
institutions receive consideration for
com m unity developm ent loans made
outside this broader area if they have
adequately addressed credit needs
w ithin the area.1
Community developm ent service. The
definition o f “com m unity development
service” has been moved to the
definition section of the rule for clarity.
The definition has been conformed to
the definitions of “com m unity
developm ent loan” and “ qualified
investm ent” by removing the reference
to “ needs not being m et by the private
1 Exam ples o f com m unity developm ent loans
in clud e, but are not lim ited to* loan s to: borrowers
for affordable housing reh abilitatio n and
co n stru ction , in clud ing co n stru ction and
perm anent fin an cin g o f m ultifam ily rental property
serving low - and m od erate-incom e persons; not-forprofit organizations serving prim arily low - and
m od erate-in com e h ou sing or other com m unity
developm ent n eeds; borrow ers in support of
com m un ity fa cilitie s in low- and m od erate-incom e
areas or that are targeted to low - and m oderatein co m e in d iv id u als; and fin an cial interm ed iaries
in clu d ing , but not lim ited to, Com m unity
D evelopm ent F in a n cia l In stitu tion s (CDFIs),
Com m unity D evelopm ent Corporations (CDCs),
m inority- and w om en-ow ned fin an cial institutions,
and low -in com e or com m unity developm ent credit
unions that prim arily lend or fa cilitate lending in
low - and m od erate-incom e areas or to low - and
m od erate-in com e in div iduals in order to prom ote
com m un ity developm ent. O ther exam ples include
loans to: local, state, and tribal governm ents for
com m un ity developm ent activ ities; and loans to
fin an ce en vironm ental clean -u p or redevelopm ent
o f an in dustrial site as part o f an effort to revitalize
the low - or m od erate-incom e com m un ity in w h ich
the property is located.
market” for the reasons described in the
discussion of “ com m unity development
loan.” In addition, com m unity
developm ent services are required to be
related to the provision of financial
services. For exam ple, service on the
board o f directors of an organization
that promotes credit availability or
affordable housing meets this
requirem ent. Providing technical
assistance in the financial services field
to com m unity-based groups, local, or
tribal government agencies, or
interm ediaries that help to meet the
credit needs o f low- and moderateincom e individuals or sm all businesses
and farms is-also related to the
provision o f financial services. By
contrast, general participation by bank
or thrift em ployees in com m unity
activities that do not take advantage of
the em ployee’s technical or financial
expertise would not qualify. Although
an adm irable civic contribution, such
employee participation is not
sufficiently related to the provision of
financial services to meet the purposes
of CRA. As m entioned in the preamble
to the 1994 proposal, electronic benefits
transfer and point-of-sale term inal
systems that are designed to improve
access, such as by decreasing costs, for
low- or m oderate-incom e individuals
would receive favorable consideration.2
Consumer loan. The definition of
“consum er loan” rem ains substantially
the same as in the 1994 proposal. As in
the 1994 proposal, a consum er loan
must be extended to one or more
individuals for household, fam ily, or
other personal expenditures. However,
as proposed in 1994, the definition
would have mirrored the definition of
consum er loan in the Consolidated
Report of Condition and Incom e (Call
Report) or Thrift Financial Report (TFR)
in an effort to reduce potential
regulatory burden. T he Call Report and
T FR d efinitions exclude loans secured
by real estate and loans used to
purchase or carry securities. Many
industry com m enters objected to these
exclusions. Commenters were
particularly concerned that home equity
loans that do not fall w ithin the
2 Exam ples o f com m un ity developm ent services
includ e, am ong other things: providing tech n ical
exp ertise for n ot-for-profit, tribal or governm ent
organizations serving low - and m oderate-incom e
housing n eeds or econ o m ic rev italization and
developm ent; len d in g execu tives to organizations
facilitatin g affordable h ou sing co n stru ction and
reh abilitation or developm ent o f affordable housing;
providing cred it co u n selin g , hom e buyers
coun selin g, h om e m ain ten an ce coun selin g , and/or
fin an cial p lan n in g to prom ote com m unity
developm ent and affordable housing; school
savings program s; and other fin an cial serv ices the
prim ary purpose o f w h ich is com m unity
developm ent, such as low -cost or free governm ent
ch eck cashing.
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
definition of home improvement loans
reportable under HMDA would not have
been considered consum er loans under
the proposed rule. The definition of
consum er loan in the final rule no
longer uses the definition in the Call
Report or TFR. As a result, home equity
loans that are not reportable under
HMDA are consum er loans i f they
otherwise meet the definition. However,
the agencies have clarified in the final
rule that consum er loans do not include
home mortgage, small business, or small
farm loans. These loans are considered
separately under the lending test so
treating them also as consum er loans
would result in double-counting.
The final rule contains definitions for
five categories of consumer loans: motor
vehicle loans, credit card loans, home
equity loans, other secured consum er
loans, and other unsecured consum er
loans. These definitions reflect the fact
that the final rule permits an institution
to elect evaluation o f its consum er
lending on a product-by-product basis.
Home mortgage loan. In the 1994
proposal’s definition of “home mortgage
loan,” the agencies referred to the
HMDA and its implementing
regulations. Some com menters pointed
out that the Board has refined the
definition o f home mortgage loan in its
HMDA regulations (12 CFR Part 203).
These com m enters indicated it would
be preferable and, perhaps, less
confusing if the agencies referred only
to the Board’s HMDA regulations, rather
than to both the HMDA and the
regulations. The agencies have amended
the definition of “home mortgage loan”
in the final rule accordingly. Under the
final rule, a honje mortgage loan means
a “home improvement loan” or a “home
purchase loan” as these terms are
defined in 12 CFR Part 203. This
definition includes m ultifam ily
dwelling loans and refinancings of
home improvement and home purchase
loans.
Incom e level. The incom e level
definitions under the 1994 proposal
would have included adjustm ents to
reflect high-cost areas and fam ily size. A
number of commenters suggested that,
although these adjustments would make
the incom e definitions more accurate,
the value o f the increased accuracy
would be outweighed by the
com plication and burden associated
with the use of adjusted figures. Other
com m enters pointed out that HMDA
disclosure statements, w hich are used,
in part, to evaluate CRA performance,
do not em ploy the adjustments. Som e
com m enters strongly supported the use
of adjusted area median incom e,
especially in high-cost com m unities.
However, the flexibility of the
performance standards allows
exam iners to account in their
evaluations under the tests for
conditions in high-cost com m unities,
such as a shortage o f credit for
m oderate-incom e persons or areas. In
addition, the flexibility in the
requirem ent that community
developm ent loans, com munity
developm ent services, and qualified
investm ents have as their “ prim ary”
purpose com m unity developm ent
allow s exam iners to account for
conditions in high-cost areas. Therefore,
the definitions of incom e level in the
final rule are based upon area median
incom e without adjustments. In
addition, the definition of “area median
incom e” for rural areas has been
sim plified and uses only the statewide
non-m etropolitan median rather than
the higher of county median or the
statewide figure.
Lim ited purpose institution and
w holesale institution. A number of
industry com m enters suggested that
“nonbank banks” permitted under the
Competitive Equality Banking A ct (12
U.S.C. 1843(f)) (CEBA banks) should
autom atically be considered limited
purpose institutions. These institutions
operate under a variety of different
business plans and legal constraints and
include retail and wholesale banks,
credit card banks, and industrial loan
com panies. CEBA banks may legally
engage in different activities, depending
on w hich activities a particular bank
engaged in as of March 1 ,1 9 8 7 . A
uniform treatment of these institutions
is therefore not practicable. T he final
rule provides the necessary flexibility to
assess the CRA performance of these
institutions and does not require any
institution to engage in proscribed
activities. Som e of these institutions
could be designated as w holesale or
lim ited purpose institutions on a caseby-case basis. Further, the final rule
permits the agencies to take into
account any legal constraints placed on
an institution in assessing performance.
As in the case of thrifts, adjustm ents can
be made in the ratings profiles to reflect
the legal constraints im posed on the
activities o f CEBA banks.
Other com m enters requested more
guidance on incidental lending
activities that wholesale and lim ited
purpose institutions could engage in
without losing their special designation.
W holesale institutions may engage in
some retail lending without losing their
designation if this activity is incidental
and done on an accom m odation basis.
Sim ilarly, a lim ited purpose institution
continues to meet the narrow product
line requirem ent if it provides other
types o f loans on an infrequent basis.
22161
Qualified investment. The definition
o f “ qualified investm ent” has been
moved to the definition section for
clarity and changed to reflect the new
definition of “community developm ent”
and to respond to comments. The
agencies have removed the requirem ent
that a qualified investment must address
com m unity development needs “not
being met by the private m arket.”
Instead, in evaluating performance, the
agencies w ill give greater weight to
qualified investm ents that are not
routinely provided by private investors.
The 1994 proposal clearly permitted
consideration of investments in
organizations that make qualified
investm ents, and the final rule is
unm odified in this respect. Some
com m enters asked that qualified
investm ents be required to benefit lowor m oderate-incom e areas or required to
benefit either low- or m oderate-incom e
people or areas. The agencies rejected
these suggestions for the reasons noted
in the discussion of “community
developm ent.”
The final rule clarifies specific aspects
o f qualified investm ents proposed in the
1994 proposal that raised issues in the
com ments. For example, the explicit
reference to investm ents in credit
unions has been removed to clarify that
no special treatment for these
institutions was intended under the
investm ent test. Deposits and
mem bership shares in any financial
institution that otherwise meet the
criteria discussed earlier for treatment
as a qualified investment qualify under
the investm ent test. In addition,
although some com ments suggested
otherwise, Federal Home Loan Bank
stock does not have a sufficient
conn ection to community development
to be considered a qualified investment.
The use of the term “standard”
mortgage backed securities in the
preamble to the 1994 proposal was
ambiguous and should be clarified to
mean “untargeted” mortgage backed
securities. Untargeted mortgage backed
securities and untargeted m unicipal
bonds are not qualified investm ents
because th eir primary purpose is not
com m unity development. Investments
in m unicipal bonds designed primarily
to finance com munity development
generally are qualified investm ents and
need not be housing-related. Housingrelated m unicipal bonds must primarily
address affordable housing (including
m ultifam ily rental housing) needs in
order to qualify.
T he term “grants” in the final rule
includes in-kind contributions of
property to com munity development
organizations. Grants do not
autom atically have less weight than
22162
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
investm ents, but the weight accorded a
grant is determ ined under the
perform ance criteria in the investment
test.3
Sm all institution. Under the 1994
proposal, institutions would have been
considered small institutions if they had
total assets of less than $ 2 5 0 m illion and
were either independent institutions or
affiliates o f holding com panies with less
than $ 2 5 0 m illion in total assets. This
definition o f “small institu tion”
received numerous com ments. Industry
com m enters generally believed that the
asset level for holding com panies
should be raised or elim inated entirely,
although some indicated that the $250
m illion asset level for small institutions
would be satisfactory. Some
com m enters representing institutions
with assets below $250 m illion affiliated
w ith a larger holding com pany
indicated that their institutions
typically operated independently from
the holding company in com plying with
CRA obligations. They stated that it
would be unfair for them to be
evaluated under the assessm ent tests for
a larger institution merely because of
their ow nership structure. On the other
hand, com munity and consum er groups
often com m ented that sm all institutions
should not be treated differently, or that
only institutions with fewer than $50
m illion in assets should be considered
small institutions for purposes of the
CRA rule.
The final rule modifies the definition
of “small institution” in light of these
com m ents. In the final rule, for any
Exam ples o f qu alified in vestm en ts in clud e, but
are n ot lim ited to, investm ents, grants, deposits or
sh ares: in or to fin an cial in term ed iaries (including,
but n ot lim ited to CDFIs, CDCs, m inority- and
w om en-ow ned fin an cial in stitu tio n s, and lowin co m e or com m unity developm ent credit unions)
that prim arily lend or facilitate lend ing in low - and
m od erate-incom e areas or to low - and m oderatein co m e in div iduals in order to prom ote com m unity
d evelop m ent, such as a CDFI that prom otes
econ o m ic developm ent on an In d ian reservation; in
support o f organizations engaged in affordable
housing reh abilitatio n and co n stru ction , includ ing
m u ltifam ily rental housing; in support of
organizations prom oting eco n o m ic developm ent by
fin an cin g sm all businesses, in clu d in g Sm all
B u sin ess Investm ent Com panies (SBIC s) and
sp ecialized SBIC s; to support or develop facilities
that prom ote com m unity develop m ent in low - and
m od erate-incom e areas for low - and m oderatein co m e in dividuals, such as day care facilities; in
projects elig ible for low -incom e h ou sing tax credits;
in state and m un icipal obligation s that sp ecifically
support affordable housing or other com m unity
developm ent; to not-for-profit organizations serving
low - and m oderate-incom e hou sing or other
com m un ity developm ent needs, su ch as hom eow nersh ip coun selin g, hom e m ain ten an ce
co u n selin g , credit counseling, and other financial
serv ices ed ucation ; and in or to organizations
supporting activ ities essen tial to the capacity of
low - and m od erate-incom e in d iv id u als or
geographies to u tilize credit or to sustain econom ic
developm ent.
independent institution to be
•o f the business or the farm, as was
considered a small institution, it mUst
originally proposed in 1993. The
have total assets of less than $250
agencies have concluded that, although
m illion. Moreover, an institution with
defining sm all business and sm all farm
total assets of less than $ 2 5 0 m illion
loans by the size o f the loan may not be
that is owned by a holding company
as precise as definitions based on
would be considered a small institution
business or farm asset size, following
if the total bank and thrift assets of its
the approach used in the Call Report
holding com pany are less than $1
and T FR w ill appreciably reduce the
billion. The agencies were persuaded
burden o f com pliance for institutions
that some sm aller holding com panies
and their borrowers. Also, the Call
may be unable to provide support to
Report and TFR definitions minim ize
their subsidiary banks and thrifts for
the need for institutions to collect
CRA com pliance. Larger holding
additional information. The danger of
com panies have the ability to provide
inaccuracy is lim ited, because loan size
support to their subsidiary banks and
roughly correlates with the size of a
thrifts, so sm all institutions owned by
business or farm borrower. Furthermore,
these holding com panies w ill not be
the agencies have retained the proposed
unfairly burdened by evaluation under
requirem ent that institutions indicate
the lending, investment, and service
whether a small business or small farm
tests used in the assessm ents of larger
loan is to a business or farm with gross
institutions. The choice of the $1 billion annual revenues of $1 m illion or less.
level reflects the weight o f the
T his requirem ent w ill provide
com m ents that suggested raising the
additional inform ation to identify loans
asset level and the agencies’ judgment
to sm all entities.
Several com menters requested that
regarding the size at w hich a holding
com pany should be expected to support the agencies clarify whether the
the com pliance activities of its bank and definitions o f small business and small
farm loans include loans made to
thrift subsidiaries. The agencies
nonprofit organizations as described in
estim ate that this change w ill add only
the Internal Revenue Code at 26 U.S.C.
a lim ited number of institutions, with
501(c)(3). Loans made to nonprofit
average assets of about $100 m illion, to
organizations are included to the same
those eligible under the sm all bank
extent they are included under the Call
perform ance standards.
Many com m enters also asked the
Report and T F R definitions o f small
agencies to clarify the date on w hich the business and small farm loans. Loans to
determ ination w ill be made whether an
nonprofits that are reported as small
institution is a small institution. The
business or small farm loans cannot also
agencies have amended the definition of be reported as com m unity development
“small institu tion ” to clarify that an
loans, except by w holesale and limited
institution w ill be considered a small
purpose institutions.
institution throughout any calendar year
Perform ance Tests, Standards and
if, as of D ecember 31 of eith er of the
Ratings in General
prior two calendar years, the total assets
Several changes have been made to
of the institution (and, if applicable, its
the section of the 1994 proposal on
holding company) fell below the asset
assessm ent tests, standards, and ratings.
lim its set out earlier for a small
As an initial matter, the terms
institution. T his definition ensures
“ perform ance tests,” “performance
some stability in whether an institution
standards,” and “perform ance criteria”
is classified as a sm all institution and
have been substituted for the terms
m inim izes the chance that an
“assessm ent tests,” “assessm ent
institu tion’s status w ill change
standards,” and "assessm ent criteria” to
repeatedly from year to year. The
reflect more accurately the final rule’s
definition also ensures that institutions
focus on performance rather than
that exceed the asset lim its have
process. T he agencies have also changed
adequate tim e to prepare to meet the
the term “assessm ent context” to
requirem ents applicable to larger
“perform ance con text” because the
institutions.
Sm all business loan and small farm
latter term better describes the role of
loan. T he agencies made no substantive
this inform ation in the CRA evaluation
changes to the definitions o f “small
process.
Perform ance context. An institution’s
business loan” and “sm all farm loan.”
perform ance under the tests and
The final rule cross-references the Call
Reports and T FR definitions rather than
standards in the rule is judged in the
restating the substance o f the definitions context of inform ation about the
institution, its com m unity, its
as the 1994 proposal would have done.
The definitions are based on the size of
com petitors, and its peers. Exam iners
the loans. Som e com m enters urged that
w ill consid er the following information,
the definitions be based on the asset size as appropriate, in order to assist in
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
understanding the context in w hich the
institu tion’s performance should be
evaluated: (1) The econom ic and
demographic characteristics of the
assessm ent area(s); (2) lending,
investm ent, and service opportunities in
the assessment area(s); (3) the
institu tion’s product offerings and
business strategy; (4) the institu tion’s
capacity and constraints; (5) the prior
perform ance of the institution and, in
appropriate circum stances, the
performance of sim ilarly situated
institutions; and (6) other relevant
information. The final rule clarifies that
a proposed strategic plan w ill also be
evaluated in the same context. However,
all of the factors described in the
performance context would not
necessarily apply to each strategic plan.
In this regard, the performance of
sim ilarly situated lenders would not
generally be appropriate for evaluating
future goals under a strategic plan.
Under the 1994 proposal, the
assessm ent context would have
included examiner-developed
inform ation on the credit needs of an
institu tion’s service area. Many
com m enters interpreted the proposal to
mean that the agencies would prepare a
detailed needs assessm ent for each
institu tion’s service area(s). Several
bank and thrift com m enters criticized
such a role for the agencies, reasoning
that institutions know their
com m unities far better than a regulatory
agency, and that agency-prepared
assessm ents would lead to credit
allocation. Some com munity
organization com m enters, w hile more
supportive of the concept of agency
prepared needs assessm ents, were
concerned that the proposal might
imply that institutions did not need to
make an effort to know their
com m unities’ credit needs, but could
instead look to the agencies for that
determ ination.
The agencies did not intend to suggest
that an agency-developed needs
assessm ent would prescribe the credit
needs an institution must address.
Instead, the exam iner-developed
inform ation on credit needs was
intended to help inform the exam iner’s
judgment about the institu tion’s record
of performance. Institutions are in the
better position to know their
com m unities, and it is neither
appropriate nor feasible for the agencies
to prepare a detailed assessment of the
credit needs of an institution’s
com m unity. Thus, under the final rule
the agencies will analyze the
inform ation an institution m aintains on
the credit needs of its com m unity along
with relevant information available from
other sources. At the same tim e, the
final rule does not establish a
requirem ent that each institution
prepare a “ needs assessm ent” to be
evaluated by the exam iner as urged in
some com m ents provided by financial
institutions and com munity
organizations.
Under the final rule, the agencies will
neither prepare a formal assessm ent of
com m unity credit needs nor evaluate an
institution on its efforts to ascertain
com m unity credit-needs. Instead, the
agencies w ill request any inform ation
that the institution has developed on
lending, investm ent, and service
opportunities in-its assessm ent area(s).
The agencies w ill not expect more
inform ation than what the institution
norm ally would develop to prepare a
business plan or to identify potential
markets and custom ers, including lowand m oderate-incom e persons and
geographies in its assessm ent area(s).
T his information from the institution
w ill be considered along w ith
information from com m unity,
government, civic and other sources to
enable the exam iner to gain a working
knowledge of the institu tion’s
com m unity. In response to com m ents,
the final rule also clarifies that
information about lending, investm ent,
and service opportunities in an
institu tion’s assessment area w ill, where
appropriate, be obtained from tribal
governments, as well as from other
sources.
Statutory lim its on investm ent
authority. Several thrift com m enters had
concerns about the application o f the
investm ent test to thrift institutions
because o f their lim ited investm ent
authority. Rather than providing a
blanket exem ption from the investm ent
test, the final rule m odifies the
“capacity and constraints” section of
the performance context to clarify that
exam iners should consider an
institu tion’s investm ent authority in
evaluating performance under the
investm ent test. A thrift that has few or
no qualified investm ents may still be
considered to be performing adequately
under the investm ent test if, for
exam ple, the institution is particularly
effective in responding to the
com m unity’s credit needs through
com m unity development lending
activities.
Safety and soundness. T he CRA
requires the agencies to assess an
in stitu tion’s record of helping to meet
the credit needs of its entire com m unity,
consistent with the safe and sound
operation of the institution. A number
o f industry com menters were concerned
that the 1994 proposal would not have
stressed the im portance o f the safety
and soundness of an institu tion’s
22163
operation to the same extent as the CRA
statute or the current regulations. These
com m enters responded primarily to the
om ission o f a statement in the 1993
proposal that the CRA does not require
any institution to make loans or
investm ents that are expected to result
in losses or are otherwise inconsistent
with safe and sound operations. The
agencies did not intend by this om ission
to encourage unprofitable or otherwise
unsafe and unsound practices. The
agencies firmly believe that institutions
can and should expect lending and
investm ents encouraged by the CRA to
be profitable. The final rule explicitly
reflects this b elief and addresses the
im portance of safety and soundness
considerations in several sections and in
the ratings appendix. The agencies
assess an institution’s record of helping
to meet com m unity credit needs w ith
careful attention to the constraints
imposed by safety and soundness. As in
other areas o f bank and thrift operations,
unsafe and unsound practices are
viewed unfavorably. The ratings
appendix specifically states: “The
bank’s overall performance, however,
must be consistent w ith safe and sound
banking practices. * * * ”
F lexib le underwriting approaches.
The final rule states that the agencies
permit and encourage an institu tion’s
use of flexible underwriting approaches
to facilitate lending to low- and
m oderate-incom e individuals and areas,
but only if consistent with safe and
sound operations. This is consistent
with, and clarifies, language in the 1994
proposal. Som e com m enters urged that
the rule expressly identify particular
types o f areas or borrowers covered by
this provision. M entioning particular
types of borrowers or areas in the
regulatory text is unnecessary and
inconsistent with the principle of
evaluating each institution and its
com m unity based on their
characteristics, capacity, and needs.
However, certain borrowers or areas,
such as Native Am ericans residing in
Indian country, may face difficulties
obtaining credit that could warrant
special consideration. The efforts of
lenders that utilize innovative or
flexible m ethods, in a safe and sound
m anner, to address these or other
unusual underwriting issues are
recognized under the lending test.
The Lending Test
The lending test in the final rule is
substantially sim ilar to the 1994
proposal. However, there are some
significant changes in response to the
com m ents.
Consideration of originations and
purchases. T he 1994 proposal would
22164
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
have evaluated home mortgage lending
based on HMDA data, w hich is based on
loan originations and purchases.
However, the proposal would have
required institutions to collect, report,
and be evaluated on loans outstanding
for other types o f loans. The agencies
took this approach in an effort to reduce
burden on the industry, because
institutions must already report loans
outstanding on Call Reports and TFRs.
The vast m ajority of com m enters who
addressed this issue (almost exclusively
industry com menters) stated that use of
originations would provide a
substantially more accurate picture of
actual lending activity, because current
activity would not be obscured by past
activity and the data would reflect
seasonal variations and sale of loans in
the secondary market. Moreover, using
originations rewards, rather than
penalizes, institutions for selling loans
on the secondary market, w hich frees up
capital for additional lending and
increases credit availability. The
com m enters did not support the
premise that use of originations would
be more burdensome than using loans
outstanding. Because institutions would
have to collect and report additional
information on each loan for CRA
purposes, using loans outstanding
would not significantly decrease
burden. The bulk, if not all, of the
burden reduction would be achieved by
using the Call Report and TFR
definitions. The final rule therefore uses
originations and purchases, instead of
loans outstanding, for all types of loans.
Lines of credit are considered
originated at the tim e the line is
approved or increased; and an increase
is considered a new origination.
Generally, the full amount of the credit
line (or in the case of an increase in an
existing line, the amount of the
increase) is the amount that is
considered originated. Although some
lines of credit may be for both home
improvement and other purposes, only
the amount that is considered to be for
home improvement purposes is reported
as a home improvement loan under
HMDA. Lines o f credit should be
considered in assessing an institu tion’s
lending activity in all applicable loan
types. Therefore, where a portion of a
line of credit is reported under HMDA
and another portion meets the definition
either of a “small business loan” or a
“consum er loan,” the full amount o f the
line of credit should be reported as a
small business loan or collected as a
consumer loan, as appropriate, and the
agencies w ill also consider as a home
mortgage loan the portion of the credit
line that is reported under HMDA.
The final rule contains an option for
mandatory. After considering these
lenders also to provide data on loans
com ments, the agencies have decided to
outstanding, w hich may, in certain
permit institutions to provide
information on one or more categories
circum stances, enhance an exam iner’s
understanding o f an institution’s
(motor vehicle, credit card, home
performance. Institutions may also
equity, other secured, and other
provide for exam iner consideration
unsecured) o f consum er loans.
Although an institution may have
information on letters of credit and
some opportunity to mask poor
com m itm ents, as well as any other loan
performance or otherwise
information. The language'of the
inappropriately influence its CRA
lending test (and the definition of
evaluation through selective provision
“com m unity developm ent loan”) has
of data, this opportunity will be lim ited
been adjusted as appropriate to reflect
by the provision in the final rule
these changes.
Consumer loan evaluation. Under the
requiring an institution to m aintain data
1994 proposal, consum er lending would on all loans in the category or categories
have been evaluated under the lending
in w hich it seeks to be evaluated. For
test only if an institution elected to have exam ple, if an institution provides
it evaluated and provided the necessary
information on its credit card lending, it
loan data. Thus, the 1994 proposal
would have to provide information on
would have permitted an institution
all its credit card lending, although it
that is prim arily a consumer lender not
need not provide information on its
to be evaluated on a substantial portion
motor vehicle lending. Furthermore,
o f its business i f it so chose. Under these under the final rule, if an institution is
circum stances, meaningful evaluation of a substantial consum er lender, the
certain institutions might have been
agencies w ill evaluate its consumer
very difficult. T h e final rule, therefore,
lending in appropriate categories
changes the treatment of consumer
regardless of whether the institution
lending. Under the rule, if a substantial
reports data for those categories.
Relative weight of different lending
majority of an institution’s business is
categories. The 1994 proposal explicitly
consum er lending, this lending is
stated that hom e mortgage, small
evaluated in the lending test. The rule
business, and small farm lending (and
does not im pose any reporting
consum er lending if it was considered)
requirem ents for consum er lending,
however. If an exam iner determ ines that would have been weighted to reflect the
relative im portance of the categories to
a substantial portion of an institu tion’s
the institu tion’s overall business. The
business is consum er lending, and the
proposal also stated that com m unity
institution has not elected to provide
developm ent lending would have been
consumer loan data, the exam iner will
evaluate consum er lending by analyzing weighted to reflect the characteristics
and needs of an institution’s assessment
an appropriate sample of the
area(s), the capacity and constraints of
institution’s consum er loan portfolio. In
the institution, and the opportunities
addition, this aspect of the final rule
available for this lending. Several
does not affect the evaluation of a
com m enters expressed concern about
lim ited purpose bank, because the bank
the lack of certainty in these provisions;
w ill be evaluated under the com m unity
some also believed that community
development test, not the lending test.
development lending would have
The 1994 proposal would have
required that institutions provide
received excessive weight. However, a
information on all consumer loans if
fixed formula for the relative weight of
they choose to provide information on
different categories would require a
any consum er loans. T he agencies
determ ination that some categories of
included this requirem ent because they
lending are uniform ly more important
were concerned that, otherwise, an
than others, when the appropriate
institution might provide information
weight depends on the specific
only on those consum er products that
institution and its com munity. The
would reflect w ell on the institution’s
agencies have removed the discussion of
CRA perform ance and would choose not the relative weight assigned to different
to provide information on those
lending categories because examiners
products that would reflect poorly.
will determ ine the appropriate weight
Many industry com m enters stated
based on the perform ance context.
that the prospect of reporting all their
Lending activity criterion. The
consumer loan information was so
lending test in the 1994 proposal, unlike
burdensome that they would not report
the current CRA regulations, did not
any information. On the other hand,
specifically consider the volume of
consum er and com munity groups
lending activity— the number and
commented that, if consumer lending is
amount of home mortgage, small
to be considered in CRA at all,
business, sm all farm, and consumer
consumer loan reporting should be
loans located in the institution’s
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
assessm ent area(s). Experience under
the current regulations has
demonstrated that this criterion can be
useful in assessing performance.
Therefore, based on further internal
agency considerations, the final rule
contains a lending activity performance
criterion. This criterion encourages an
institution that does not itself engage in
the categories o f lending evaluated
under the lending test to seek
designation as a w holesale or limited
purpose institution so that the
institution’s CRA performance can be
evaluated under criteria appropriate to
the institution. The criterion also creates
a disincentive for institutions to try to
influence inappropriately the evaluation
of their CRA perform ance by conducting
activities viewed favorably under CRA
in the institution and other activities in
an affiliate. An institu tion’s
performance on the lending activity
criterion w ill be assessed taking into
account the inform ation described in
the section of the preamble discussing
the performance context, including the
institution’s business strategy regarding
the lending conducted by the institution
itself and the lending conducted by
affiliates.
Market share analysis. Many
com menters, particularly community
and consumer groups, suggested that the
market share evaluation of the 1993
proposal be reinstated or that the
agencies substitute an alternative
objective ratio to serve as the linchpin
for an institu tion’s lending test rating.
Other com m enters, particularly those
representing the industry, opposed
using any market share analysis. In the
agencies’ opinion, the 1994 proposal
struck the appropriate balance between
objective perform ance measures and
subjective judgments. A single,
standardized set of performance
evaluation tools is not appropriate
because of the variety o f institutions and
the differences among the com m unities
that they serve. The public evaluation
prepared by the agencies will explain
the data and analytic tools used to
evaluate the institution.
The geographic distribution o f an
institution’s loans rem ains a com ponent
o f the lending test. One elem ent of the
geographic distribution analysis, both in
the 1994 proposal and in the final rule,
is the amount o f lending to low-,
moderate-, m iddle- and upper-income
geographies. As part o f the performance
context, exam iners would consider,
among other considerations described
earlier in this pream ble, the
performance of other sim ilarly-situated
lenders. In this regard, exam iners would
use market share and other analyses to
assist in evaluating the geographic
distribution of an institu tion’s lending
where such analyses would provide
accurate insight. However, the final rule
does not require exam iners to use any
single type of analysis, and would not
link a particular market share ratio, or
any ratio, w ith a particular lending test
rating.
Proportion o f lending within
assessment areas. Under the final rule,
as under the 1994 proposal, another
com ponent of the geographic
distribution criterion is the proportion
of total loans made in an institution’s
assessment area(s). Som e com menters
believed that this criterion.is
inappropriate; they noted that safety
and soundness considerations require
an institution to lend to a geographically
dispersed area. T his criterion is a
consideration under the existing CRA
rules and has proved over the years to
be one useful indicator of the degree to
w hich an institution is focused on
serving its local com m unity. Moreover,
the agencies believe the criterion
encourages an institution to draw its
assessment area broadly enough to
allow the dispersion of its lending and
distribution of its loans among
geographies of different incom e levels.
Therefore, the agencies retained the
provision unchanged in the final rule.
Dispersion. The third com ponent of
the geographic distribution criterion of
the lending test is the dispersion of the
institution’s lending activity. The 1994
proposal would have assessed the
degree of dispersion “throughout” an
institution’s assessm ent area(s). For
clarification, the word “throughout” has
been changed to “ in ” in the final rule.
The agencies w ill still exam ine the
entire assessment area; however, an
institution is not expected to lend
evenly throughout or to every geography
in its assessment area. Rather, an
institution’s lending pattern should not
exhibit conspicuous gaps that are not
adequately explained by the
performance context.
Borrower distribution. The lending
test also considers the distribution of an
institution’s loans among borrowers of
different incom e levels and businesses
o f different sizes. Favorable
consideration is given for loans to lowand moderate-incom e persons and small
businesses and farm loans outside o f the
institution’s assessm ent area, provided
that the institution has adequately
served borrowers w ithin its assessment
area. The im portance o f this criterion,
particularly in relation to the geographic
distribution criterion, w ill depend on
the performance context. For exam ple,
borrower distribution may be more
important in rural areas or in
assessment areas w ithout identifiable
22165
geographies of different income
categories; geographic distribution may
be more important in urban areas and
assessment areas with the full range of
geographies of different incom e
categories.
Some com m enters recommended that
the lending test evaluate an institution’s
record of lending to different racial and
ethnic groups and to women. The final
rule does not incorporate this
suggestion. The appropriate inquiry
regarding service to particular racial or
ethnic groups and men and women is
w hether the institution is operating in a
non-discrim inatory manner. Therefore,
in arriving at an institu tion’s assigned
rating, the agencies consider whether
there is evidence o f discrim ination in
violation of the Fair Housing Act or
Equal Credit O pportunity Act, or
evidence of other illegal credit practices.
Innovative or flexible lending
practices. The final rule, like the 1994
proposal, assesses an institution’s use of
innovative or flexible lending practices
in a safe and sound m anner to address
the credit needs of low- and moderateincom e individuals or geographies. An
innovative practice is one that serves
low- and m oderate-incom e creditworthy
borrowers in new ways or serves groups
o f creditworthy borrowers not
previously served by the institution.
Both innovative practices and flexible
practices are favorably considered.
Although a practice ceases to be
innovative if its use is widespread, it
may nonetheless receive consideration
if it is a flexible practice. An institution
need not provide lending data
connected with a practice in order to
receive consideration. For example, an
exam iner could consider an institution’s
secured credit card program as a flexible
lending practice even though the
institution has not provided its credit
card loan data for evaluation under the
other criteria of the lending test.
Compliance w ith private
com mitments. Som e com m enters
suggested that, in the lending test, the
agencies should consider the extent to
w hich an institution has fulfilled
lending agreements that the institution
has made with third parties. The final
rule does not incorporate this
suggestion. The CRA requires the
agencies to assess an institu tion’s record
o f helping to meet the credit needs of its
com m unity, not to enforce privately
negotiated agreements. Therefore, an
institu tion’s record o f fulfilling these
types o f agreements is not an
appropriate CRA perform ance criterion.
Affiliate lending. The 1994 proposal
would have permitted consideration of
affiliate lending at an institution’s
option or if the agency determ ined that
22166
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
the affiliate’s activity is integral to the
institu tion’s business. Many industry
com m enters opposed consideration of
affiliate lending except at the
institu tion’s option on the ground that
consideration without the institu tion’s
consent may be equivalent to extending
CRA coverage to affiliates that may not
be subject to the statute. Some
com m unity and consumer groups
supported consideration of affiliate
activity and urged that the regulatory
language be strengthened to require the
agencies to take affiliate lending into
account under certain circum stances. In
the final rule, affiliate lending is
considered only at the election of the
institution, except with regard to the
lending activity criterion, where, as
described earlier, it w ill provide context
for the assessm ent in order to
discourage an institution from
inappropriately influencing an
evaluation of its CRA perform ance by
conducting activities that would be
viewed unfavorably in an affiliate. The
agencies also received com m ents that
the phrase “integral to the institu tion’s
business” in the proposal was unclear.
The final rule does not use this phrase.
The other lim itations on
consideration of affiliate lending
contained in the 1994 proposal have
been retained in the final rule. However,
the lim itation against double-counting
of loans has been modified to clarify
that an institution can count as a
purchase a loan originated by an
affiliate, or count as an origination a
loan sold to an affiliate, provided the
same loans are not sold several tim es to
inflate their value for CRA purposes.
The agencies have added language to
the final rule to clarify that affiliate
lending is not considered in evaluating
the proportion of total lending made
within an institution’s assessm ent
area(s). The agencies also wish to clarify
that if an institution elects to have the
lending activities of its affiliates
considered in the evaluation of the
institution’s lending, the geographies
served by the affiliate’s lending
activities do not affect the institu tion’s
delineation of assessment area(s).
Furthermore, the final rule would not
change the existing supervisory
authority o f the agencies over
institutions and their affiliates.
Therefore, although lending by affiliates
may be treated as lending by an
institution, this treatment for CRA
purposes w ill not permit a regulatory
agency to exam ine any institution or its
affiliate if it does not otherwise have
such authority.
Direct and indirect lending. Many
consum er and com munity groups
expressed concern that the 1994
proposal did not adequately em phasize
direct lending by the institution as
com pared to indirect lending carried out
through consortia and third parties.
Other com m enters, particularly from the
industry, urged a return to the
provisions of the 1993 proposal that
would have treated direct and indirect
lending as interchangeable. The final
rule clarifies that loans originated or
purchased by third parties and consortia
in w hich an institution participates or
invests may only be considered if they
qualify as com m unity development
loans and may only be considered under
the com m unity development lending
criterion. Indirect loans w ill not affect
an institu tion’s performance under the
other four lending test criteria. Under
the final rule, direct lending
performance is an essential elem ent of
an institu tion’s CRA performance.
Som e com m enters requested
clarification w hether an institution is
required to participate directly in
making or funding each loan that is
made through a consortium or third
party in order for the loan to be
considered under the com m unity
developm ent lending criterion of the
lending test. An institution need not
directly participate in the making or
funding o f consortia- and third partyloans for the loans to be considered
(subject to the constraints set out in the
rule) under the com munity
developm ent lending criterion,
provided the loans meet the definition
of com m unity development loan. Loans
originated directly on the books o f the
institution or purchased by the
institution are considered to have been
made directly by the institution, even if
the institution originated or purchased
the loans as a result of its participation
in a loan consortium.
Investment Test
The 1994 proposal would have
focused on the dollar amount of an
in stitu tion’s qualified investm ents, the
innovativeness and com plexity o f the
qualified investm ents and their
responsiveness to the credit and
econom ic development needs of the
com m unity. The 1994 proposal also
would have clarified that the. investm ent
test considers all qualified investm ents
benefltting a broader statewide or
regional area that included an
institution’s assessment area. Most of
the com m ents on the investm ent test
concerned the definition of qualified
investm ent and have been discussed
earlier in the preamble.
Lim ited investm ent authority. One
group of com menters representing
institutions w ith statutory constraints
on their authority to make this type of
investm ent maintained that reliance on
an investm ent test in assigning a CRA
rating could unfairly stigmatize their
CRA performance. As previously
discussed, the final rule has modified
the perform ance context for CRA
evaluations to account for financial
institutions w ith limited investm ent
authority. These m odifications would
permit an institution w ith lim ited
authority to make investm ents to receive
a low satisfactory rating under the
investm ent test, although it has made
few or no qualified investments, if the
institution has a strong lending record,
thereby preventing potential anom alies
in the CRA performance ratings.
D isposition Of branch premises. To
im plem ent the statutory requirem ent in
12 U.S.C. 2907(a), the final rule
specifies that a donation, sale on
favorable terms or rent-free occupancy
of a branch (in whole or in part) in a
predom inantly m inority neighborhood
to any m inority- or women-owned
depository institution is a qualifying
investment. Sim ilar disposition of
branch prem ises to a financial
institution w ith a primary m ission of
promoting com munity developm ent is
also a qualified investment.
Service Test
Compared to the 1993 proposal, the
service test in the 1994 proposal would
have reduced the significance in the
CRA perform ance evaluation of an
institu tion’s full service, “brick and
m ortar” branch structure by elevating
the consideration given to alternative
systems for delivering retail banking
services (e.g., ATMs, m obile branches,
loan production offices, or banking-bytelephone or banking-by-computer). In
this regard, the provision of retail
banking services would have been
evaluated on the basis of an
institu tion’s: (1) Distribution of
branches and ATMs among low-,
moderate-, middle-, and upper-incom e
areas; (2) record of opening and closing
branches and ATMs; (3) range of '
services to low-, moderate-, middle-,
and upper-incom e areas; and (4) efforts
to make alternative delivery systems
responsive to the needs of low- and
m oderate-incom e areas and individuals.
In addition, the extent to w hich an
institution provided innovative and
responsive com munity development
services would also have been
considered under the service test. The
final rule retains the essential structure
and elem ents of the test as proposed but
makes some modifications.
Relative weight of branches and
alternative delivery systems. The
overwhelm ing majority of com m unity
and consum er group com m enters stated
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
that the 1994 proposal placed too little
em phasis on the location of an
institution’s full service branches in
evaluating perform ance under the
service test. Many of those commenters
also were concerned that the proposed
service test would have erroneously
equated ATMs with full service
branches. On the other hand, several
industry com m enters com mended the
proposal’s recognition that full service
branches should not be the determining
factor under the service test as
consistent w ith the trend in the industry
toward the use of alternative service
delivery systems.
The final rule responds to these issues
by adjusting the balance of the service
performance evaluation in favor o f fullservice branches w hile still considering
alternative systems. In this regard,
references to ATMs in the criteria for
evaluating the distribution of an
institution’s branches have been
removed, and conform ing changes have
been made in the ratings appendix.
These changes signify a recognition that
convenient access to full-service
branches within a com m unity is an
important factor in determ ining the
availability of credit and non-credit
services. The focus of the service test,
however, remains on an institution’s
current distribution of branches, and the
test does not require an institution to
expand its branch network or operate
unprofitable branches.
The final rule em phasizes that
alternative systems for delivering retail
banking services, such as ATMs, are to
be considered only to the extent that
they are effective alternatives in
providing needed services to low- and
moderate-incom e areas and individuals.
Furthermore, network ATMs owned by
other institutions do not receive the
same consideration in an institution’s
evaluation as ATM s owned by or
operated exclusively for that institution.
An institution’s branches and other
service delivery system s need not be
accessible to every part of an
institution’s assessm ent area. However,
the service delivery systems should not
exhibit conspicuous gaps in
accessibility, particularly to low- or
moderate-incom e areas or individuals,
unless the gaps are adequately
explained by the perform ance context.
Other issues. The final rule conforms
the com munity developm ent services
com ponent of the service test to that of
the investment test by giving
consideration to com m unity
development services that benefit a
broader statewide or regional area
encompassing an institution’s
assessment area.
Some of the specific suggestions in
the com ments were not im plem ented in
the final rule. For exam ple, the rule
does not require institutions to provide
basic banking services or low-cost
checking accounts, because the CRA
permits institutions substantial leeway
to determine the sp ecific policies and
programs that help m eet credit needs in
their com m unities. In addition, the final
rule does not evaluate the effectiveness
o f service performance on the basis of
deposit growth. T his m easurem ent is
not clearly related to helping to meet the
credit needs of the com m unity and
could necessitate burdensom e coding of
deposit accounts on a geographic basis.
Finally, debit cards are not a retail
credit delivery system , and therefore the
agencies have not included debit cards
in the list of exam ples of alternative
delivery systems for retail services.
Community Development Test
The performance of w holesale and
lim ited purpose institutions would have
been evaluated in the 1994 proposal
separately under the com m unity
development test. T his test would have
focused on the record o f these
institutions in helping to meet credit
needs through com m unity developm ent
lending, qualified investm ents, ■end
community developm ent services. The
1994 proposal also would have required
wholesale or lim ited purpose
institutions to serve a designated local
area and would have placed lim its on
consideration o f activities outside this
designated area. T he final rule
m aintains the com m unity development
test with some changes.
Request for designation as a wholesale
or limited purpose institution. In
response to com m ents on the 1994
proposal, the final rule provides more
detail on the process by w hich an
institution is designated wholesale or
limited purpose. An institution that
seeks designation as w holesale or
limited purpose must file a request in
writing at least three m onths prior to the
proposed effective date o f the
designation. If the designation is
approved, it rem ains in effect until the
institution requests revocation of the
designation or until one year after the
agency notifies the institution that the
agency has revoked the designation on
its own initiative. Thus, once an
institution has received a designation,
the institution need not reapply before
each CRA exam ination.
Benefit to assessm ent area. Many
com menters, including both industry
and some com m unity group
com m enters, m aintained that the
lim itations placed on considering outof-assessment area activities were too
22167
restrictive and did not account for the
broader business strategies and
operations of w holesale and limited
purpose institutions, w hich often serve
com m unities on a nationw ide basis.
The final rule removes the specific
lim itation that com m unity development
activities outside an in stitu tion’s
assessment area be considered only up
to the amount of activities within the
institution’s assessm ent area. Under the
final rule, the agencies consider all
activities that benefit the institu tion’s
assessment area(s) or a broader
statewide or regional area that includes
the assessment area(s). In addition,
other activities receive full
consideration as long as the institution
has adequately addressed the needs of
its assessment area.
Technical changes and clarifications.
T he final rule clarifies that investments
in third party com m unity development
organizations may be treated either as
qualified investm ents or as com munity
development loans (with the institution
receiving credit for a pro rata share of
the loans made by the third party, at the
institu tion’s option). In addition, the
agencies note that a w holesale or
lim ited purpose institution need not
engage in all three categories of
activities considered under the
com munity developm ent test but can
perform well under the test by engaging
in one or more of these categories.
T echnical changes have also been made
to conform with the m odifications,
previously discussed, to the definition
of com munity developm ent loans, the
definitions of w holesale and limited
purpose institutions, and the focus of
lending performance assessm ents on
originations and purchases rather than
loans outstanding.
Small Institution Perform ance
Standards
The small institution performance
standards have been retained in the
final rule essentially as proposed in
1994, except for the change in the
eligibility threshold described earlier.
As a technical matter, the final rule has
been changed to clarify that an
institution that was a sm all institution
as of the end o f the prior calendar year
is examined as a sm all institution.
Many com m enters, predominantly
representing com m unity organizations
but also including some larger
institutions, stated that the streamlined
approach would amount to a d e fa c t o
exem ption from CRA for small
institutions. Other com m enters,
predominantly representing the
industry, supported the proposal for
streamlined exam inations and an
exem ption from new data collection and
22168
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
reporting. Many com m enters
representing the industry stated that
data collection may place a greater
relative burden on sm aller institutions
than larger institutions due to
lim itations in staff and financial
resources. After considering the
com m ents, the agencies have decided
not to change m aterially the sm aller
institution performance standards.
Exam inations of sm all banks and thrifts
w ill be stream lined and w ill not require
the periodic reporting of new data.
Exam inations w ill be m eaningful and
w ill not be implem ented as d e fa c t o
exem ptions.
Perform ance criteria. The 1994
proposal provided that to determine
w hether a small institu tion’s CRA
record is satisfactory, the agencies
would consider the institu tion’s loan-todeposit ratio, adjusted for seasonal
variation and, as appropriate, other
lending-related activities, such as loan
originations for sale to the secondary
m arkets, com m unity developm ent loans
or qualified investm ents. This provision
o f the 1994 proposal responded to
concerns follow ing the 1993 proposal
that institutions that package and sell
their loans would be disadvantaged
when compared to portfolio lenders by
a strict loan-to-deposit ratio test. This
provision of the 19 9 4 proposal has been
retained in the final rule. Evaluations
w ill also take into account the
institu tion’s size, financial condition,
and the credit needs of its assessment
area.
The final rule also requires
consideration of the proportion of the
institu tion’s total lending made to
borrowers in its assessm ent area. The
agencies w ill take into account local
lending and investm ent opportunities in
assessing this criterion.
In addition, the agencies w ill evaluate
the distribution of loans and lendingrelated activities among individuals of
different incom e levels and businesses
and farms of different sizes. Where
appropriate, the agencies w ill also
evaluate the geographic distribution of
loans in the institution’s assessment
area, including low- and moderateincom e geographies. Contrary to the
concerns expressed by some
com m enters, however, a small
institution is not expected to lend
evenly throughout its service area;
rather, loan distribution w ill be
evaluated w ithin the context of an
institu tion’s capacity to lend, local
econom ic conditions, and lending
opportunities in the assessment area.
The agencies also will evaluate
whether an institution has taken
appropriate action, as warranted, in
response to written com plaints about
the institu tion’s perform ance in helping
to m eet the credit needs of its
assessm ent area(s). Som e com menters
suggested that com plaints resolved
satisfactorily for the com plainant not be
considered in the evaluation. The
agencies w ill consider those com plaints,
but their satisfactory resolution will be
a favorable elem ent in an evaluation.
O ther com m enters expressed concern
that the agencies might not adequately
consider bona fide com plaints from
com m unity members. However, the
agencies intend to consider all CRA
com plaints in the course of an
exam ination. Therefore, this criterion is
retained in the final rule as proposed.
Elem ents of outstanding performance.
Som e com m enters requested a
clarification o f the circum stances under
w hich a sm all institution could earn an
“outstanding” rating. Others urged that
some flexibility be provided to consider
a range of activities that enhance credit
availability and promote com m unity
developm ent. Under the final rule, in
addition to determ ining whether an
institution has exceeded some or all of
the standards for a satisfactory rating,
the agencies w ill consider a small
institu tion’s investm ent and service
perform ance based on the broad range of
investm ent and service activities
discussed in the rule for other
institutions.
Strategic Plan
T he provisions of the strategic plan in
the 1994 proposal have been adopted
largely as proposed, with some changes.
T he 1994 proposal provided that, as
an alternative to being rated under the
lending, service, and investm ent tests,
or the sm all institution performance
standards, a bank or thrift could submit
to its supervisory agency for approval a
strategic plan developed with
com m unity input detailing how the
institution proposed to meet its CRA
obligation. The 1994 proposal made
clear that an institution would not be
assessed under a plan unless the plan
had been approved by its supervisory
agency. To facilitate exam inations of
institutions with approved plans, the
final rule clarifies that an institution is
only evaluated under a plan if the plan
is in effect and if the institution has
operated under an approved plan
(although not necessarily the particular
plan currently in effect) for at least one
year. A ffiliates may prepare joint plans.
The final rule permits activities to be
allocated among affiliated institutions at
the institutions’ option, provided that
the same activities are not considered
for more than one institution. This
change was made in response to
com m ents requesting greater flexibility
and increased opportunities for
affiliated institutions sharing the same
assessm ent area(s) to work together to
help meet the credit needs of their
com m unities and, in particular, in lowand m oderate-incom e areas.
P ublic participation. The final rule
retains the public participation
provisions in the 1994 proposal. The
final rule requires an institution
inform ally to seek suggestions from the
public w hile developing a plan. Once
the institution has developed a plan, it
must publish notice of the plan and
solicit written public com m ent for at
least 30 days. In order to avoid unduly
lengthening the plan approval process,
the final rule does not extend the
m inim um com ment period. After the
com m ent period, the institution shall
subm it the plan to its regulator, along
w ith any written com m ents received. If
the plan was revised in light of the
com m ents received, the institution shall
also subm it the plan in the form
released for public com m ent. The
agencies have added in the final rule a
requirem ent that an institution submit
w ith its plan a description o f its
inform al efforts to seek suggestions from
members of the public. As under the
1994 proposal, the final rule states that
a plan w ill be approved if the agency
fails to act on it w ithin 60 days after
subm ission, unless the agency extends
the review period for good cause.
Because o f the im portance of
constructive com m unity involvement in
the plan process, the agencies have not
changed in the final rule the amount of
public participation required. Requiring
an institution to seek informal
suggestions in formulating a plan, and
then to solicit formal com m ent before
submitting a plan to the agency,
encourages consultation betw een an
institution and its com m unity,
including local government, community
leaders, the public and tribal
governments. There is no need for a
further com m ent period after the
institution submits its proposed plan to
the agency because such a comment
period could underm ine the direct
com m unication and consultation
betw een an institution and its
com m unity that is m ost beneficial to the
process.
Several com m ents appeared to
m isunderstand why the strategic plan
provides for com m ent from the public.
The strategic plan option provides
institutions an opportunity to tailor
their CRA objectives to the needs of
their com m unity and their capacity and
expertise. Several industry comments
were concerned that under the strategic
plan option, com m unity organizations
would play an inappropriate role in an
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
institu tion’s operations. However, the
purpose of the consultation is for the
institution to develop the fullest
possible inform ation about the needs of
its com munity and how these needs
might be met. The institution
nevertheless makes all decisions
regarding how it plans to help meet
those needs. In reviewing the public
participation, the agencies w ill not
consider whether com m unity
organizations unanim ously support the
plan, but whether the institution made
an appropriate investigation to
determ ine the needs of its com m unity,
and whether the goals of the plan serve
those needs.
As a technical clarification, the final
rule provides that an institution may
impose a reasonable charge for copying
or m ailing a plan but may not charge for
reviewing the plan.
Assessm ent of perform ance under the
plan. Under the final rule, as under the
1994 proposal, the agencies will
generally rate an institution’s
performance under an approved plan
solely in relation to goals set out in the
plan. An institution has the option,
however, to elect in its plan to be
subject to the standard tests should it
fail to meet substantially its
"satisfactory” goals under the plan. The
final rule makes this election clear. An
institution operating under an approved
plan would, during the period of the
plan, not be subject to assessm ent under
the standard tests, unless the institution
so chose. In considering whether an
institution has substantially met plan
goals, an agency w ill give consideration
to circum stances beyond the
institution’s control, such as econom ic
conditions, that have affected its ability
to perform.
Confidential inform ation. A number
of industry com m enters indicated that
the possibility of public disclosure of
confidential inform ation presented a
major disincentive to their u se of the
strategic plan alternative. In response to
sim ilar com m ents on the 1993 proposal,
the 1994 proposal would have permitted
institutions to submit additional
information to the relevant agency on a
confidential basis. The final rule
includes this provision, w hich
adequately addresses confidentiality
concerns.
Data collection and reporting
responsibilities. Despite industry
com ments to the contrary, the final rule
provides that approval of a plan does
not affect an institu tion’s data collection
responsibilities. T hese data are useful to
the agencies in assessing overall lending
in com m unities, and would also be of
value to the public. S ince the
institution’s plan w ill be in its public
file, the public w ill have the appropriate
context in w hich to evaluate the lending
data.
Assigned Ratings
In the final rule, as under the 1994
proposal, an institution w ill be assigned
one of the four assigned ratings required
by the statute: “ outstanding,”
“ satisfactory,” “needs to im prove,” or
“ substantial noncom pliance.” (12 U.S.C.
2906(b)(2)) For institutions that are
evaluated under the community
development test for wholesale or
limited purpose institutions, the small
institution perform ance standards, or an
approved strategic plan, the rating on
these tests w ill be the institution’s
assigned rating with adjustment for any
evidence of discrim ination. Retail
institutions that are evaluated under the
lending, investm ent and service tests
w ill be assigned a rating based upon the
assigned rating principles and the
matrix that im plem ents these principles,
also with adjustment for any evidence of
discrim ination.
Ratings principles and matrix. A
number of com m ents discussed the
principles and methodology by which
an assigned rating would be given to
retail institutions evaluated under the
lending, investm ent and service tests.
The 1994 proposal set forth five
principles that governed the assignment
of this rating. T he methodology for
calculating the assigned rating was
described in A ppendix A. The proposal
would have required that an
institution’s rating on the lending test
count for at least 50 percent o f its
assigned rating. Furthermore, an
institution would have been required to
achieve a “ satisfactory” rating on the
lending test in order to receive an
assigned rating of “ satisfactory.” In
addition, the 1994 proposal would have
allowed investm ent and service
performance to raise a institution’s
assigned rating if it had earned at least
a “satisfactory” rating on the lending
test. Poor perform ance on either the
investm ent or service test also could
have negatively affected an institu tion’s
assigned rating. T he proposal would
have required the agencies to adjust
ratings for all institutions, regardless of
w hich test the agencies used to evaluate
their performance, to take into
22169
consideration evidence of
discrim inatory or other illegal credit
practices. Finally, an institution that
otherwise would have received a “needs
to im prove” rating would have been
rated as “substantial noncom pliance” if
it received no better than a “needs to
im prove” rating on each of its two
previous exam inations.
Commenters generally supported the
1994 proposal’s em phasis on lending
performance, but a number were
concerned about several apparently
anom alous ratings that would have
resulted from applying the rating
principles and the m atrix in the
appendix. Several com menters,
particularly com m unity groups, were
concerned that an institution could
receive an assigned rating of
“ satisfactory” even if it received a rating
of “substantial noncom pliance” on both
the investment and service tests, if its
rating on the lending test was at least a
“ high satisfactory.” In addition, an
institution with a rating of “substantial
non com pliance” on either the service or
investment test could get an
“ outstanding” com posite rating if its
rating on the lending and the third test
was “outstanding.” These commenters
suggested revising the rating principles
and matrix to avoid these anomalous
results.
After considering the com ments, the
agencies have revised the final rule to
elim inate these anom alies. The agencies
elim inated the principle that an
“ outstanding” rating on the lending test
and either the service or investment test
would mean an “ outstanding” assigned
rating even if the rating on the third test
was “ substantial non com pliance.” The
agencies also elim inated the principle
that an institu tion’s rating on the
lending test would count for at least 50
percent of its assigned rating. This
change does not alter the agencies’
em phasis on the primacy of lending
when evaluating CRA performance,
because no institution may receive an
assigned rating of “satisfactory” unless
it receives a rating of at least “low
satisfactory” on the lending test.
In light o f the com m ents, the m atrix
that sets forth the methodology for
aggregating an institu tion’s scores on the
lending, service and investm ent tests to
arrive at an assigned rating has also
been revised. T he num ber of points to
be given for each rating on the lending,
service and investm ent tests remains
unchanged as shown in the following
table.
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Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
Component test ratings
Lending
Outstanding ............................................................................................................................................................................
High Satisfactory ...................................................................................................................................................................
Low Satisfactory.....................................................................................................................................................................
Needs to Improve..............................................................................................................................................................
Substantial Noncompliance..................................................................................................................................................
The number of points needed to
achieve each of the four com posite
assigned ratings has been modified
slightly, as shown in the following table,
to remove the anom alies discussed
earlier.
Points
Composite assigned rating
20 or over........
11 through 19 ..
5 through 10 ....
0 through 4
Outstanding.
Satisfactory.
Needs to Improve.
Substantial Noncompliance.
To ensure that an institution does not
receive an assigned rating of
“satisfactory” unless it receives a rating
of at least “ low satisfactory” on the
lending test, an institu tion’s assigned
rating w ill be calculated using three
tim es the lending test score if the
institu tion’s point total exceeds three
tim es the lending test score.
The agencies have removed the matrix
from Appendix A. T h is change will
allow the agencies some flexibility in
adjusting the matrix to prevent any
other unintended anom alies that may be
found during the exam ination process.
If the agencies change the m atrix in the
future, the new m atrix w ill be published
for inform ation, but not necessarily for
com m ent, in the Federal Register.
Autom atic downgrade of third “needs
to im prove” rating. The agencies have
also removed the requirem ent that an
institu tion’s CRA rating be downgraded
autom atically from “needs to im prove”
to “substantial noncom pliance” if it
received no better than a “needs to
im prove” rating on each of its two
previous exam inations. Even though the
automatic downgrading has been
elim inated in the final rule, the agencies
w ill consider an institution’s past
performance in its overall evaluation. If
the poor performance continues, an
institution could be rated “substantial
noncom pliance” if prior ratings were
“needs to im prove” and the institution
has not made efforts to improve its
performance.
Weight o f service test. Some
consum er groups urged that an
institution be required to get at least a
“ low satisfactory” on the service test in
order to get an assigned rating of
“satisfactory” or better. The agencies
considered this suggestion, but decided
that because the CRA’s focus is on
helping to meet a com m unity’s credit
needs, it would be inappropriate to
impose this requirem ent. However, the
changes to the ratings principles and
matrix increase the weight of both the
service and investm ent tests.
High satisfactory and low satisfactory
ratings. Som e com m enters found
confusing the use of a “high” and “ low ”
satisfactory rating on the lending,
service and investm ent tests and only a
“ satisfactory” on the assigned rating.
Because a wide range of performance
may be rated as satisfactory, the
agencies decided to keep the five ratings
on the underlying tests, even though the
assigned ratings are lim ited to the four
statutory ratings. This w ill permit the
agencies, banks and thrifts, and their
custom ers to recognize the stronger
perform ances on the lending,
investm ent, and service tests of those
institutions that are doing a very good,
but not quite outstanding, job o f helping
to m eet the credit needs o f their
com m unities.
Effect of CRA Perform ance on
Applications
The CRA requires the agencies to
consider an institu tion’s CRA
perform ance record when considering
an application by the institution to
establish a deposit facility. T he statute
defines applications for a deposit
facility as including applications for a
Federal financial institution charter or
FDIC deposit insurance, applications to
establish or relocate a branch or home
office, and applications for mergers,
consolidations, or the purchase of assets
or assumption of liabilities of a
regulated financial institution. The 1994
proposal provided that in considering
an institu tion’s application for a deposit
facility, the agencies would consider the
institu tion’s CRA performance and take
into account any views expressed by
interested parties submitted in
accordance w ith the applicable agency’s
rules and procedures. The proposal also
stated that an institu tion’s record of
CRA performance could provide a basis
for approving, denying, or conditioning
approval of an application.
A number of com m ents from financial
institutions asked the agencies to create
a “ safe harbor” from CRA protests for
banks w ith good CRA ratings that apply
Service
12
9
6
3
0
6
4
3
1
0
Invest
ment
6
4
3
1
0
to establish a deposit facility. Some
com m enters suggested that a “safe
harbor” would provide an incentive to
achieve an outstanding rating.
Community and consum er groups, on
the other hand, opposed any sort o f safe
harbor from CRA protests.
T he agencies have consistently
recognized that m aterials relating to
CRA perform ance received during the
applications process can and do provide
relevant and valuable information. The
agencies also continue to believe, as
provided in the Interagency Policy
Statem ent Regarding the Community
Reinvestm ent Act, that information from
an exam ination is a particularly
im portant consideration in the
applications process because it
represents the on-site evaluation of an
institu tion’s CRA performance by its
primary Federal regulator. The final rule
im plem ents without change the balance
given in the 1994 proposal between
CRA perform ance ratings and material
inform ation presented through public
com m ent in the applications process.
T he agencies noted in the preamble to
the 1993 proposal that the frequency
w ith w hich the agencies w ill examine
an institution w ill depend in part on its
record o f performance. A sim ilar
discussion was inadvertently omitted
from the 1994 proposal. Exam ination
frequency w ill be based, in part, on an
institu tion’s record of performance. This
policy com bines an efficient use of
agency resources w ith an incentive for
good performance.
Assessment Area Delineation
As a result o f numerous com ments
received on this issue, the final rule
makes several changes to the definition
o f service area in the 1994 proposal.
A ssessm ent area. The CRA requires
the agencies to assess an institution’s
record o f helping to m eet the credit
needs o f its local com m unity. The
assessm ent area as defined in the final
rule represents the com m unity within
w hich the agencies assess an
institu tion’s record o f CRA performance.
As noted earlier in the preamble, in
the final rule, the term “assessment
area” replaces the term “ service area,”
w hich was used in the 1993 and 1994
proposals. The agencies believe the term
“ assessm ent area” more accurately
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
describes the geographic area w ithin
w hich the specific performance criteria
in the rule w ill be assessed. Based on
the continuing criticism s o f the
“delineated com m unity” in the current
regulation and the “ service area” in
both the 1993 and 1994 proposals, the
agencies have decided to place a
different em phasis on the institu tion’s
specific delineation and the methods
used by the institution to establish that
delineation. The agencies do not expect
that, sim ply because a census tract or
block numbering area is w ithin an
institution’s assessm ent area, the
institution must lend to that census tract
or block numbering area. The capacity
and constraints o f the institution, its
business decisions about how it can best
help to meet the needs o f its assessm ent
area, including those of low- and
m oderate-incom e neighborhoods, and
other aspects of the performance
context, would be relevant to explain
why the institution is not serving
portions of the assessm ent area(s).
The rule also clarifies that an
institution’s delineation of its
assessment area(s) is not separately
evaluated as an aspect of CRA
performance, although the delineation
will be reviewed for com pliance with
the assessm ent area requirem ents of the
rule. If, for exam ple, an institution
delineated the entire county in w hich it
is located as its assessm ent area but
could have delineated its assessment
area as only a portion of the county, it
w ill not be penalized for lending only
in that portion o f the county, so long as
that portion does not reflect illegal
discrim ination or arbitrarily exclude
low- or m oderate-incom e geographies.
Assessm ent area boundaries. The
1994 proposal would have prohibited a
financial institution, other than a
wholesale or lim ited purpose
institution, from delineating a service
area that extends substantially across
boundaries o f a m etropolitan statistical
area (MSA) or state boundaries, unless
the service area was located in a
multistate M SA. Further, the proposal
would have prohibited an in stitu tion’s
service area from reflecting illegal
discrim ination or arbitrarily excluding
low- and m oderate-incom e geographies
(taking into account the institu tion’s
size and financial condition).
The final rule states that an institution
shall not delineate an assessm ent area
extending substantially across the
boundaries of a consolidated
metropolitan statistical area (CMSA). An
institution shall delineate separate,
assessment areas for the areas inside
and outside the CMSA and for different
CMSAs. The 1994 proposal expressed
these lim itations in terms of M SA s
rather than CM SAs. The change in the
final rule has been made to address a
technical shortcom ing in the 1994
proposal, but does not change its
substance. The final rule retains the
provision from both the 1993 and 1994
proposals that an assessm ent area not
extend substantially across state
boundaries unless the assessm ent area is
located in a m ultistate MSA. T he final
rule applies these lim itations to
wholesale and lim ited purpose
institutions as w ell as other institutions
because of changes made to the
com munity developm ent test.
To sim plify the process of delineating
an assessm ent area, the final rule
encourages institutions to establish
assessment area boundaries that
coincide w ith the boundaries of one or
more M SA s or one or more contiguous
political subdivisions, such as counties,
cities, or towns. An institution is
permitted, but is not required, to adjust
the boundaries of its assessm ent area(s)
so as to include only the portion of a
political subdivision it reasonably can
be expected to serve. This provision
gives institutions some flexibility in
their delineations, particularly in the
case of an area that would otherwise be
extrem ely large, o f unusual
configuration, or divided by significant
geographic barriers. As with the 1994
proposal, how ever, such adjustm ents
may not arbitrarily exclude low- and
m oderate-incom e geographies from the
institution’s assessm ent area(s). For
purposes of assessm ent area delineation,
an institution should use the M SA and
CMSA boundaries in effect on January
1 of the calendar year in w hich the
institution is making the delineation.
Equidistance principle. The 1994
proposal would have adopted the
effective lending territory principle from
the current regulations in slightly
modified form. T he 1994 proposal
would have exp licitly linked an
institution’s CRA obligations to the
areas around its branches and deposittaking ATMs, rather than its other non
deposit taking offices. The service area
delineated by the institution would
have had to include all geographies
around its branches in w hich the
institution originated or had
outstanding during the previous year a
significant num ber and amount of hom e
mortgage, sm all business and small
farm, and consum er loans and any other
geographies equidistant from its
branches and deposit-taking ATMs.
The final rule elim inates the
equidistance principle as a required part
of the delineation of an assessm ent area.
This change provides institutions
greater flexibility in their delineations.
Several com m enters suggested that, in
22171
certain circum stances, the equidistance
requirem ent could be inappropriate,
because institutions do not routinely
serve areas that are uniformly
equidistant from their deposit-taking
offices. The final rule retains the
requirem ent that an assessm ent area not
arbitrarily exclude low- or moderateincom e geographies.
W holesale and lim ited purpose
institutions. The final rule requires that
the assessment area(s) for a w holesale or
lim ited purpose institution must
generally consist of one or more M SAs
or one or more contiguous political
subdivisions in w hich the institution
has its m ain office, branches, and
deposit-taking ATMs. This requirem ent
is substantively consistent with the
1994 proposed delineation of service
area for w holesale and lim ited purpose
institutions, but the final rule differs
from the 1994 proposal in two ways.
First, the final rule specifies that the
assessment area must generally consist
of one or more M SAs or contiguous
political subdivisions; the 1994
proposal would have required the
institution to delineate “an area or areas
around its offices.” Second, the
assessment area has been modified to
conform to changes made to the scope
of the com m unity development test. The
com munity developm ent test permits
consideration of com munity
development activities that are outside
of an institu tion’s assessment area, but
that are in a broader statewide or
regional area that includes the
institution’s assessm ent area. As a
result, an institution need not delineate
a statewide or regional, rather than
local, assessm ent area in order to
receive consideration for these
activities.
Use of assessm ent area. In response to
com ments indicating concern that
examiners might modify the area
delineated by the institution, the final
rule explicitly provides that the
agencies w ill use the assessment area
delineated by the institution, unless
they determ ine that the assessment area
does not com ply w ith the requirem ents
for assessment areas set forth in the final
rule. If the assessm ent area fails to
com ply with the ru le’s requirem ents,
the exam iner w ill designate an area that
does com ply and w ill use that area in
evaluating the institution’s performance.
Technical changes and clarifications.
The final rule includes other technical
changes to provide clarification. For
example, some com m enters interpreted
the use of the phrase “significant
number and amount of loans” in the
1994 proposal to have a different
meaning than the phrase “substantial
portion of its loans” in the current
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Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1&95 / Rules and Regulations
regulations. The agencies did not intend
a different m eaning and have used the
wording from the current regulations in
the final rule. In addition, changes in
the final rule reflect the rule’s shift in
focus from loans outstanding to
originations and the different
circum stances under w hich the lending
test considers consum er loans.
Data Collection and Reporting
In the final rule, the agencies
continued their efforts to streamline
data collection and reporting
requirements in response to com ments
concerning potential burden. The final
rule sim plifies data requirements and
elim inates A ppendix C.
A pplication o f data collection
provisions to sm all institutions and
w holesale and lim ited purpose
institutions. The 1994 proposal would
not have applied small business and
farm loan and com m unity development
loan data requirem ents to small
institutions. Som e commenters
criticized the exem ption from data
collection and reporting requirements
for small institutions because only a
subset of data would actually be
collected, restricting the regulators’
ability accurately to assess the overall
performance o f institutions in helping to
meet credit needs. These commenters
stated that the benefits of collecting the
data across the industry outweighed the
associated burden. However, the burden
on small institutions would be
significant and the benefit less than the
com menters assert. Therefore, the final
rule does not subject a small institution
to additional data collection and
reporting requirem ents. The volume of
originations o f loans other than home
mortgage loans in a small institution
will generally be small enough that an
exam iner can view a substantial
sampling of loans without advance
collection and reporting o f information
by the institution. In addition, although
small institutions are large in number,
they have a relatively small percentage
of the total assets of the industry.
An institution that was a small
institution during the prior calendar
year but is no longer a small institution
would be subject to data collection and
m aintenance requirem ents but not data
reporting requirem ents. The data
reporting requirem ents do not apply
because the institution would not have
collected the data to report. The
institution would be subject to data
reporting requirem ents in the year
following the first year for w hich it was
required to collect data, provided the
institution does not qualify as a small
institution at the tim e the data must be
reported.
The 1994 proposal would have
required large wholesale and limited
purpose institutions to collect and
report data. Som e com m enters urged
that w holesale and limited purpose
institutions be exempt from data
collection and reporting. The final rule
does not include an exemption. The
data are necessary for the agencies to
determ ine whether the institutions
initially qualify and continue to remain
qualified for treatment as wholesale or
limited purpose institutions. The data
also w ill be helpful in understanding
the context in w hich the performance of
other institutions should be evaluated.
Collection and reporting of
originations and purchases rather than
loans outstanding. For the reasons
stated in the discussion of the lending
test earlier in the preamble, the final
rule requires reporting o f and evaluation
based on originations and purchases for
all categories o f loans. Institutions still
have the option to provide data on loans
outstanding, w hich exam iners would
consider to round out the picture of
lending performance.
Community development loan
reporting. The com m unity development
loan reporting provisions in the final
rule have been modified to reflect the
decision to rely on originations and
purchases. Institutions, except small
institutions and institutions that were
small institutions during the prior
calendar year, are required to report to
their primary regulator annually on
M arch 1 the aggregate number and
aggregate amount o f com munity
development loans originated and
purchased during the prior calendar
year. The agencies w ill include this
information in the CRA Disclosure
Statem ents that they prepare for each
institution, and w hich an institution
shall place in its public file within three
days of receipt.
Som e com m enters requested reporting
and disclosure of more detailed
information on com m unity
development loans, including a
breakdown by location and purpose of
the loan. The agencies did not adopt
these suggestions because the additional
burden would outweigh the potential
usefulness of more specific data. In
assessing an institu tion’s performance
under the lending or community
developm ent test, examiners w ill review
actual com m unity development loan
files to determ ine the com plexity and
innovativeness o f the loans and their
responsiveness to credit and community
developm ent needs. Exam iners will
discuss the com m unity development
loans reviewed in the public portion of
the institu tion’s CRA performance
evaluation. The discussion w ill include
the nature and location (if relevant) of
the activities supported by the loans
reviewed.
Consumer loan collection and
m aintenance. In the final rule, as in the
1994 proposal, data collection and
m aintenance are optional for consumer
loans, and there are no reporting
requirem ents. As described in the
discussion o f the lending test earlier in
the preamble, an institution may
provide data on one or more categories
o f consum er loans, such as motor
vehicle loans, and not on others.
However, if an institution provides data
for any loan in a category, it is required
to provide data for all loans in the
category. For each loan category for
w hich an institution elects to provide
data, the data must include for each
loan in the category originated or
purchased since the last CRA
exam ination: (1) the amount at
origination or purchase, (2) the loan
location, and (3) the gross annual
incom e of the borrower that the
institution considered in making the
credit decision. If the institution does
not consider incom e in making an
underwriting decision, it need not
collect incom e inform ation. Further, if
the institution routinely collects, but
does not verify, a borrower’s income
w hen making a credit decision, it need
not verify the incom e for purposes of
data m aintenance. The location of the
loan must be m aintained by census tract
or block numbering area.
Reporting of loan information outside
assessm ent areas and outside MSAs.
Som e com m enters asked that
institutions not be required to report
small business and small farm loans
located outside their assessm ent areas or
outside M SAs. The agencies have not
made this change in the final rule. The
data on lending in rural areas provide
important inform ation on how well
institutions are serving rural
com m unities where they have branches.
T he data are also necessary for the
lending test assessm ent criterion that
evaluates the degree to w hich an
institution’s lending is inside its
assessm ent area. Finally, the lending
data provide inform ation that assists
exam iners in understanding the context
in w hich the perform ance o f other
institutions should be evaluated. The
com m enters that opposed reporting of
sm all business and small farm loans
outside their assessm ent areas or
outside M SA s also generally opposed
the proposed change to require
institutions that are not small
institutions and are subject to HMDA to
report the location of applications and
originations of home mortgage loans
outside the M SA s in w hich the
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
institutions have offices. The agencies
have adopted the proposed change
despite these objections for the same
reasons that the agencies did not change
the final rule for collecting of small
business and sm all farm loans outside
M SAs or assessm ent areas. Conforming
amendments to Regulation C (HMDA)
have been adopted by the Board.
Race and gender information on small
business borrower not required. The
1994 proposal would have required
each institution, other than a small
institution, to collect and report data on
the race and gender of sm all business
and small farm borrowers. This
provision, w hich was the most
frequently addressed issue in the
com ments, was proposed in order to
support the fair lending com ponent of
the CRA assessm ent. The agencies have
removed this proposed requirement
from the final rule.
Many com m enters, including
virtually every com m unity or consum er
group that addressed the issue,
supported the provision. These
com m enters believed that the
information was critical to determine
whether discrim ination was occurring
in small business and sm all farm
lending. T h e com m enters noted the
value of HMDA data on race and gender
in m onitoring hom e mortgage lending.
Nearly every industry com ment
opposed the collection as proposed.
These com m enters stated that the
requirem ent w as burdensom e and the
data, as proposed to be collected and
reported, would be of lim ited utility.
They asserted that reporting institutions
would be at a com petitive disadvantage
because sm all institutions and nonfinancial institution lenders not only
would not be required to collect and
report the inform ation but actually
would be prohibited from doing so
(because o f the Board’s Regulation B,
im plem enting the Equal,Credit
Opportunity Act). Som e com m enters
also questioned the relevance o f the race
and gender data to CRA. A few industry
com m enters endorsed collection of race
and gender data, provided it was done
through Regulation B. A larger number
opposed collection , but believed that, if
the agencies concluded the data were
necessary, collection should be required
under Regulation B.
The agencies have removed the
proposed requirem ent from the final
rule. Although the agencies believe that
fair lending perform ance is directly
relevant to CRA performance, they
recognize the anom aly of requiring some
institutions to collect and report
information that other lenders are
prohibited from collecting. Therefore,
they believe that it is more appropriate
to address the issue o f race and gender
data in fair lending regulations that
apply equally to all lenders.
Sm all business data collection,
m aintenance, and reporting generally. In
response to industry com ments
regarding the burden associated w ith
the small business and small farm loan
data requirem ents, the final rule
stream lines the data collection,
m aintenance and reporting. The
agencies have replaced loan-by-loan
reporting using loan registers with
aggregate reporting by census tract.
The 1994 proposal would have
required lenders to indicate whether
small business borrowers had gross
annual revenues $1 m illion or less.
Som e com m enters suggested that the
requirem ent be elim inated because they
believed it was burdensom e and
unnecessary. T he final rule retains the
requirem ent. The burden of collecting
this inform ation is m inim al, because $1
m illion is already used in the Board’s
Regulation B as a threshold for certain
requirem ents related to adverse action
notifications and record retention.
Therefore, many institutions already
have a reason to track business and farm
loans based on this revenue figure.
The inform ation on the revenue size
of business and farm borrowers is useful
because, in com bination with loan
amount inform ation, it w ill enable the
agencies to make accurate judgments
about the size o f businesses and farms
receiving reported loans. Some
com m enters questioned whether an
institution should report the revenue of
the entity to w hich the loan is actually
extended or o f its parent corporation if
the entity is a subsidiary. An institution
should report the revenues that the
institution considered in making its
credit decision.
Som e com m enters asked that the
agencies require collection and
reporting of data on applications and
denials. T he agencies did not adopt this
suggestion. The sm all business lending
process is generally far less formal than
the consum er or hom e mortgage lending
process. Som etim es institutions do not
require w ritten applications for small
business loans; when they do,
applications often come after potential
problems have been addressed in
informal discussions. Because the
agencies do not believe inform ation on
applications and denials would be
particularly helpful, the final rule does
not require collection or reporting of
information on sm all business and small
farm applications and denials. Instead,
institutions are required to report all
small business and small farm loans that
they originate or purchase.
22173
Under the final rule, each covered
institution is required to collect and
maintain in a standardized, m achine
readable format the following
information on each small business loan
originated or purchased since the prior
CRA exam ination: (1) amount at
origination; (2) location; and (3) an
indicator w hether the loan was to a
business w ith $1 m illion or less in gross
annual revenues. The location of the
loan must be m aintained by census tract
or block numbering area.
Each covered institution is required to
report in m achine-readable form
annually on M arch 1 the following
information, aggregated for each census
tract/block numbering area in w hich the
institution made at least one small
business or sm all farm loan during the
prior calendar year: (1) number and
amount of loans w ith original amounts
o f $ 1 00,000 or less; (2) number and
amount of loans with original amounts
o f more than $ 1 0 0 ,0 0 0 but less than or
equal to $ 2 5 0 ,0 0 0 ; (3) number and
amount of loans w ith original amounts
of more than $ 2 5 0 ,0 0 0 ; and (4) number
and amount of loans to businesses and
farms w ith gross annual revenues of $1
m illion or less (using the revenues the
institution considered in making its
credit decision).
Need for data collection and
reporting. Som e com m enters continued
to question the validity and propriety of
any data collection and reporting for
larger institutions. As discussed earlier,
the agencies have significantly reduced
the data collection and reporting from
that originally proposed, and where
feasible the rule relies on existing data
collections. However, the rule continues
to provide for some additional data
collection and reporting by larger
institutions. In a performance-based
CRA process, these requirem ents are
necessary to perm it the agencies to carry
out their statutory obligation to exam ine
and assess institu tions’ CRA records anc
to prepare the public sections of CRA
performance evaluations. The emphasis
on actual perform ance responds to the
nearly universal criticism that current
CRA exam inations rely too heavily on
docum entation of an institu tion’s
policies, procedures and com munity
contacts rather than lending. W hile the
agencies recognize that the collection of
data regarding lending activity will
impose burden on many institutions,
the final rule has been tailored to rely
primarily on data readily available to or
already collected by institutions in
order to m inim ize the collection burden.
In addition, the burden o f collecting
actual loan perform ance data w ill be
offset somewhat by the elim ination of
requirem ents under the current CRA
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Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
evaluation schem e that institutions
document policies, procedures, and
CRA contacts. Finally, the agencies w ill
prescribe a standardized format for d a ta '
m aintenance and reporting and make
available software to facilitate data
m aintenance and reporting.
D isclosure o f small business and
small farm loan data. Under the 1994
proposal, every large institution would
have been required to include in its
public file the following information on
small business loans: (1) the number
and amount of loans in low-, moderate, m iddle- and upper-incom e census
tracts; (2) a list of each census tract w ith
at least one loan; (3) the number and
amount of loans inside the institution’s
service areas and outside the
institution’s service areas; (4) the
number and amount of loans to
businesses with gross annual revenues
of $1 m illion or less; (5) the number and
amount o f loans to minority-owned
businesses; and (6) the number and
amount of loans to women-owned
businesses. The proposal did not
provide that the agencies would make
any aggregate data available to the
public.
The vast m ajority of consumer and
community group commenters
maintained that the public disclosure
provisions of the 1994 proposal were
not sufficient. They asked that small
business loan data be made available to
the public in a HMDA-like format for
individual institutions and in
aggregated form. They asked that, at a
m inimum, data be available to the
public on an aggregate and institutionby-institution basis by individual
census tract, including for each census
tract the number and volume of loans.
Otherwise, the public would not be able
to judge how an institution is
performing in one low-income
neighborhood as compared to another
and, without incurring unreasonable
cost, would not be able to compare the
performance of one institution with the
performance of another. The
com menters also expressed concern
about the agencies’ using certain data to
evaluate institutions but not making the
data available to the public. Industry
com menters generally opposed detailed
data collection and reporting
requirements as burdensome.
Census tract-by-census tract
information provides the most detailed
information to the public. However,
some com m enters were concerned that
disclosure at this level for each
institution might invade the privacy of
small business and small farm
borrowers, could reveal protected
business inform ation, might erroneously
signal an expectation that an institution
lend in each census tract in its
assessm ent area(s), and might lead to
m isinterpretation o f the data.
Based on these considerations, under
the final rule, the agencies, rather than
the institutions, w ill prepare disclosure
statements in order to reduce burden on
the industry. The agencies w ill prepare
annually individual CRA Disclosure
Statem ents for each reporting institution
and aggregate disclosure statements for
each M SA and the non-M SA portion of
each state. The agencies w ill make both
the individual and the aggregate
disclosure statem ents available to the
public at central depositories.
The aggregate disclosure statements
will indicate, for each geography, the
number and amount of sm all business
and small farm loans originated or
purchased by all reporting institutions,
except that the agencies may adjust the
form o f the disclosure if necessary,
because of special circum stances, to
protect the privacy of a borrower or the
com petitive position of an institution.
The disclosure statem ents for the
individual institutions w ill be prepared
on a state-by-state basis and w ill contain
for each county (and each assessment
area sm aller than a county) w ith a
population of 500,000 or fewer in w hich
the institution reported a small business
or small farm loan: (1) The number and
amount of sm all business and small
farm loans located in low-, moderate-,
middle-, and upper-incom e census
tracts or block numbering areas; (2) a list
of each census tract or block numbering
area in the county or assessment area
grouped according to whether the
geography is low-, moderate-, m iddle-,
or upper incom e; (3) a list of each
census tract or block numbering area in
w hich the institution reported a small
business or sm all farm loan; and (4) the
number and amount of small business
and small farm loans to businesses and
farms with gross annual revenues of $1
m illion or less. For each county (and
each assessm ent area sm aller than a
county) with a population greater than
500,000, the num ber and amount of
small business and small farm loans
will be provided for geographies
grouped according to whether the
median incom e of the geography
relative to the area median incom e is
less than 10 percent, 10 or more but less
than 20 percent, 20 or more but less
than 30 percent, 30 or more but less
than 40 percent, 40 or more but less
than 50 percent, 50 or more but less
than 60 percent, 60 or more but less
than 70 percent, 70 or more but less
than 80 percent, 80 or more but less
than 90 percent, 90 or more but less
than 100 percent, 100 or more but less
than 110 percent, 110 or more but less
than 120 percent, or 120 percent or
more.
The disclosure statements w ill also
contain inform ation on the number and
amount o f loans inside each and outside
any assessm ent area of the institution
and the institu tion’s community
developm ent loan information. The
disclosure statem ents w ill include
affiliate lending if the institution
reported the affiliate lending for
consideration in its assessment.
An institution itself no longer has to
prepare inform ation on small business
and small farm lending or community
developm ent lending to place in its
public file. Instead, each institution is
required to put its CRA Disclosure
Statem ent in its public file within three
days of receipt of the statement from its
regulator.
List of geographies in assessment area
and map of each assessment area. The
1994 proposal also would have required
each institution to report (and include
in its public file) a list of the
geographies the institution considers to
be w ithin its assessm ent area and a map
of each assessm ent area showing its
geographies. Several industry com ments
suggested that this requirement was
overly burdensom e and that either a
map or a list of the geographies in the
assessm ent area(s) be reported but not
both. Under the final rule, institutions
would only report the list of geographies
in each assessm ent area, and small
institutions or institutions that were
small during the prior calendar year
would not have to report at all. In
addition, the agencies have changed the
reporting date to March 1 to provide a
uniform date for reporting of
information required under the final
rule.
A ll institutions would still have to
include a map o f each assessment area
in the public file because the agencies
believe a list of census tract numbers is
likely not to be useful to many members
of the public. To reduce burden, the
final rule clarifies that the map itself
need not show the geographies. The
geographies may be identified on the
map; alternatively, if the institution
provides a separate list o f the
geographies contained in the area, the
map may need to show only the
boundaries of the area.
Public File
Other aspects of the public file
requirem ents have also been amended
to.provide more clarity and to respond
to the criticism that the requirem ents in
the 1994 proposal were burdensome.
List of branches, ATMs, and services.
The 1994 proposal would have required
the public file to include a list of the
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
institu tion’s branches and ATM s, their
street addresses, and geographies; a list
of branches and A T M s opened or closed
by the institution during the current and
each of the prior two calendar years,
their street addresses, and geographies;
and a list of services offered at the
institu tion’s branches and ATMs. Many
industry com m enters stated that these
requirem ents were extrem ely
burdensom e, particularly the list of
services offered at the branches. Much
of this inform ation is central to the
institu tion’s performance under the
service test, and the public should have
access to it. The final rule therefore
retains the requirem ent that the public
file include a list of services offered at
the branches as well as the requirement
that the file include a list of the
branches, their street addresses, and
geographies and a list of branches
opened and closed during the current
and prior two calendar years.
However, the final rule does not
require institutions to list ATM s by
street address or geography. Nor does
the final rule require that institutions
provide a list of ATMs that have been
opened or closed in the current or prior
two years. This change reduces burden
on an institution in trying to keep the
public file current because ATM s may
be opened and closed m ore frequently
than branches. This change is also
consistent w ith other changes that
clarify that the agencies do not consider
ATMs as equivalent to branches in
providing services to the com munity.
Sm all business, small farm, consumer,
and com m unity developm ent loan data.
The 1994 proposal would have required
institutions that were not small
institutions (and sm all institutions that
elected to be evaluated under the
lending, investm ent, and service tests)
to include data collected or reported to
the agencies for each of the prior two
calendar years in their public file. The
1994 proposal would not have required
public disclosure of data if it might
reasonably be expected to d isclose the
identity of the borrower because of the
small number o f loans made in
particular geographies or to particular
groups o f borrowers.
Institutions w ill no longer have to
com pile information on sm all business,
small farm, and com m unity
developm ent loans for inclu sion in their
public files. As described earlier, the
inform ation regarding these loans that
continues to be relevant under the final
rule w ill be contained in the
institu tion’s CRA Disclosure Statement
prepared by the agencies.
Institutions that elect to have any
portion of their consum er lending
portfolios considered under the lending
test w ill be required to provide in the
public file inform ation on the number
and amount of consum er loans to
low-, moderate-, m iddle- and upperincom e borrowers and census tracts, as
w ell as inform ation on the num ber and
amount of consum er loans located both
inside and outside of the in stitu tion’s
assessm ent area.
The final rule also removes the
exception to providing data in the
public file that might reasonably be
expected to disclose the identity of the
borrower. Because of changes to data
disclosure in the final rule, the agencies
believe that a privacy exception is not
necessary for the individual CRA
D isclosure Statem ents. As described
earlier, the agencies w ill take privacy
concerns into account in preparing
aggregate disclosure statements.
Inclusion of com m ents received. The
1994 proposal would have required an
institution to include in the public file
all signed, written com m ents that it
received from the public for the past
two years. A few industry com m enters
did not perceive a need to keep
correspondence related to com plaints
that have been satisfactorily resolved.
The agencies have not made a change in
response to these com m ents because, as
discussed earlier, satisfactorily resolved
com m ents are relevant to assessm ent of
the institu tion’s performance. The final
rule removes the requirem ent that
w ritten com m ents be signed in order to
be included in the public file, because
all written com m ents should be
considered even if the com m enter
wishes to rem ain anonymous. O f course,
the response appropriate to a com m ent
may w ell vary depending on whether
the com m enter has provided h is or her
name.
Loan-to-deposit ratio for sm all
institutions. The 1994 proposal would
have required sm all institutions to
include in the public file their loan-todeposit ratios com puted at the end of
the most recent calendar year. Many
sm all institutions requested that the
public file requirem ent for loan-todeposit ratio inform ation be expanded
to inclu de loan-to-deposit ratios for each
quarter, or alternatively, that an annual
average loan-to-deposit ratio be placed
in the file in order to better convey
seasonal fluctuations in lending to the
public. In accordance w ith the
com m ents, the final rule requires a
sm all institution to place annually in
the public file the loan-to-deposit ratio
at the end o f each quarter o f the prior
calendar year.
Public file location and number of
copies. T he 1994 proposal would have
required that institutions m aintain a
com plete copy o f the p u blic file at the
22175
home office. At least one branch office
in each assessment area would have
been required to have the HMDA
Disclosure Statem ent and any m aterials
from the public file relating to that
assessment area available to the public.
In addition, if a request for the public
file was made at a branch office that did
not m aintain the file, the institution
would have been required to make a
com plete copy of the file for that
assessm ent area available for review at
the branch w ithin five days at no cost.
An institution could have imposed
reasonable copying and m ailing charges
if a member of the public requested
copies of inform ation in the file.
Industry com m enters m aintained that
the requirem ent to keep m ultiple copies
of the public file was extrem ely
burdensome, particularly given the large
amount o f inform ation in the file. These
com m enters suggested that only one
public file should be required.
Under the final rule, an institution
need m aintain only one copy of its
public file in each state in w hich it has
its m ain office or a branch. The final
rule provides that each institution shall
make available to the public for
inspection upon request and at no cost
the inform ation in the file at the main
office and, if the institution is an
interstate institution, at one branch
office in each state. At each branch, an
institution shall provide its public
evaluation and a list of services
provided at the branch. The institution
shall also make all inform ation in the
public file relating to the assessm ent
area in w hich the branch is located
available for review at the branch within
five calendar days of a request to review
the file. These changes reduce the
burden associated w ith the m aintenance
of public files at a branch in each
assessm ent area w hile making it easier
for the public to access the file at any
branch. They also reflect the statutory
provisions of the IBEA requiring
separate written evaluations for each
state in w hich an interstate institution
operates.
Additional clarifications. Some
com m enters requested the agencies to
specify a date on w hich the public file
inform ation should be updated. The
final rule provides that the public file be
updated as o f April 1 o f each year
unless the rule specifies another time
for a particular elem ent, such as the
CRA Disclosure Statem ent. The final
rule also clarifies that contents of the
public file can be supplem ented w ith
any other inform ation the institution
deems appropriate. The final rule
further clarifies that lending data
contained in the public file relate to
lending not only by the institution, but
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Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
also its affiliates, if the lending by
affiliates is considered in the assessment
o f the institution.
Transition
The 1994 proposal would have
established a transition period from July
1, 1995, to July 1 ,1 9 9 6 . Institutions
subject to data collection and reporting
requirem ents would have been required
to begin collecting hom e mortgage,
sm all business, and consum er loan data
on July 1 ,1 9 9 5 . Assessm ents under the
proposed standards would have begun
July 1 ,1 9 9 6 . However, small
institutions would have had the
opportunity to be exam ined, at their
option, under the small institution
assessment method anytime after July 1,
1995. Anytime on or after July 1 ,1 9 9 5 ,
an institution could have elected to
submit for approval a strategic plan, and
exam inations under approved strategic
plans would have begun July 1, 1996.
Many industry com m enters requested
that the transition period be lengthened
to provide institutions with more time
to develop procedures for satisfying the
data collection requirements. Also,
some of these com m enters
recommended against implementing the
data collection requirem ents on July 1,
because they believed that data
collected for a h alf year would not be
useful. Moreover, some industry
com m enters asked that data collection
begin on January 1, to fall in line with
other materials that are maintained on a
calendar-year basis.
In light of these com m ents and the
fact that the im plem entation dates set
forth in the 1994 proposal reflected
anticipated publication of the final rule
in January 1995, the data collection
requirem ents set forth in the final rule
w ill become effective January 1 ,1 9 9 6 .
The reporting requirem ents w ill become
effective January 1 ,1 9 9 7 . Evaluations
under the lending, investment, service,
and community development tests will
begin July 1 ,1 9 9 7 , in order to allow the
agencies to use the new ly reported data.
However, evaluations under the small
bank performance standards, which do
not utilize new data, w ill begin January
1, 1996. In addition, beginning January
1 ,1 9 9 6 , any institution may submit a
strategic plan for approval or elect to be
examined under the revised
performance tests, if the institution
provides the necessary data.
An institution that elects evaluation
under the lending, investment, and
service tests before July 1, 1997, must
provide, in m achine readable form, data
on small business and small farm loans
and community development loans for
the twelve month period preceding the
exam ination. The institution must also
provide, in m achine readable form, the
location of home mortgage loans located
outside M SA s in w hich the institution
has an office (or outside any MSA) for
that period. If the institution elects
evaluation of any category of consumer
loans, the institution must also provide
consum er loan data, in m achine
readable form, for that category for that
period. An institution that seeks
evaluation under the cpmmunity
developm ent test must apply for
designation as a w holesale or limited
purpose bank three months prior to its
exam ination and must provide data on
com munity developm ent loans for the
tw elve months prior to the exam ination.
A ll institutions evaluated under the
revised tests and standards or under an
approved strategic plan before July 1,
1997, must delineate their assessment
areas in accordance w ith the provisions
of the final rule.
CRA Notice
The 1994 proposal would have made
minor changes to the notice
requirem ents set forth in the 1993
proposal. The term “head office” was
changed to “main office” for clarity.
W ithin the notice, the statement of what
is included in the CRA performance file
would have been expanded to describe
more accurately the contents o f the file._
The final rule makes additional changes
to reflect changes in the public file
provisions.
Multiple Assessment Areas
The 1994 proposal did not address
how institutions with m ultiple
assessm ent areas would be examined or
how performance in different
assessm ent areas would affect the
overall rating. The agencies received
com m ents expressing a broad range of
opinions regarding the exam ination
treatment and assessm ent of institutions
w ith m altiple assessm ent areas. Several
com m unity group com menters stated
that “sam pling” among assessment
areas was unacceptable, while an
industry organization suggested an
elaborate sampling procedure. Other
com m enters proposed that certain
assessm ent area characteristics, such as
the percentage of the institution’s
deposits or assets in the assessment
area, should determ ine the weight that
performance in that assessment area
should have on the overall rating of the
institution. Other com menters were
concerned that such proposals could
mean that rural assessment areas would
not be given appropriate consideration
in the exam ination process.
The agencies continue to believe that
the exam ination treatment of multiple
assessm ent areas is best left for
exam ination procedures, rather than
stated in regulatory text. W hether an
institution has one assessm ent area or
several, the exam iner must have an
adequate factual basis on w hich to
assess an institution’s record of
performance, and the overall rating
m ust be fair and appropriate. These
objectives do not necessarily require
that an agency exam ine an institution’s
perform ance in every assessment area in
the same way or that the rule state how
perform ance in different assessment
areas is aggregated. Just as a single
m athem atical calculation cannot
determ ine perform ance in an
assessm ent area, so the appropriate
treatment of m ultiple assessment areas
cannot be reduced to a formula.
T he agencies note that the IBEA
amended the provisions of the CRA
regarding w ritten evaluations, and the
exam ination procedures w ill be
consistent w ith those requirements.
W ritten Evaluations
Although the 1994 proposal did not
directly address the content of the
written performance evaluations
required by the CRA statute, some
com m enters did. These commenters
focused on whether the agencies would
disclose an institu tion’s ratings on the
lending, investm ent, and service tests to
the institution and to the public.
T he agencies jointly w ill issue
guidelines for the contents and
disclosure of written evaluations
prepared under the final rule, and these
guidelines w ill im plem ent the IBEA
amendments regarding written
evaluations. To address the issue raised
in the com m ents, the agencies envision
that these guidelines w ill provide that
an institution’s ratings on the different
tests in the rule be disclosed both to the
institution and, as part of the public
section of the written evaluation, to the
public. A guiding principle of the CRA
reform effort has been to clarify for all
concerned the basis for an institution’s
rating, and the disclosure of ratings will
provide essential information regarding
the assessm ent o f an institution’s
performance. Contrary to the claim
raised in some com m ents, neither the
use of five ratings, nor the disclosure of
those ratings to the public, conflicts
w ith the statutory mandate that the
agencies use four ratings in assessing
the overall perform ance of an
institution.
Appeals
Many com m enters requested that the
agencies establish an interagency
appeals process. The final rule does not
adopt this suggestion. Each agency has
a process under w hich an institution
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
can appeal its CRA rating. The agencies
have recently reviewed and m odified, as
necessary, their appeals processes
pursuant to the Community
Development and Regulatory
Improvement Act of 1994. In light of the
recent review, the agencies do not
believe that it is necessary to adopt an
interagency appeals process in the final
rule.
Additional Interagency Initiatives
In addition to this rulemaking, the
agencies w ill work together to improve
training for exam iners, to increase
interagency efforts to apply standards
consistently and reliably, and to
m inim ize unnecessary com pliance
burden. These efforts w ill focus on
producing a CRA assessm ent process
that im poses fewer burdens on
institutions yet yields better results for
the local com m unities in w hich they are
chartered to do business.
The agencies have also agreed to
conduct a full review of the final rule in
the year 2002, five years after the rule
is fully implemented. This review will
be conducted to determine whether the
rule has been effective in achieving the
goals of the final rule, including
em phasizing performance rather than
process, promoting consistency in
evaluations, and elim inating
unnecessary burden. Any regulatory
changes that are determ ined to be
necessary to improve the ru le’s
effectiveness w ill be made at that time.
Paperw ork Reduction Act
OCC: The collections of inform ation
contained in this final rule have been
reviewed and approved by the Office of
Management and Budget in accordance
with the requirem ents o f the Paperwork
Reduction Act of 1980 (44 U.S.C.
3504(h)) under control number 1 5 5 7 0160.
The estim ated annual burden per
respondent varies, depending on
individual circum stances, from 2 hours
for a sm all bank required to perform
only recordkeeping, to 280 hours for a
large bank required to perform all
elem ents in part 25, with an estimated
average burden o f 18.5 hours.
The collections of inform ation in this
final rule are in 12 CFR 25.25, 25.27,
25.29, 25.41, 25.42, and 25.43.
Comments concerning the accuracy of
this burden estimate and suggestions for
reducing this burden should be directed
to Legislative and Regulatory A ctivities
Division, Attention: 1 5 5 7 -0 1 6 0 , Office
of the Comptroller of the Currency, 250
E Street, SW ., W ashington,£)C 20219,
and to the Office of Management and
Budget, Paperwork Reduction Project
(1 5 5 7 -0 1 6 0 ), W ashington, DC 20503.
Board: In accordance w ith section
3507 of the Paperwork Reduction Act of
1980 (44 U.S.C. Ch. 35; 5 CFR 1320.13),
the proposed inform ation collection was
reviewed by the Board under the
authority delegated to the Board by the
Office of Management and Budget after
consideration of the com m ents received
during the public com m ent period.
The collections of inform ation in this
rule are in 12 CFR 228.25, 228.27,
228.41, 228.42, and 228.43. This
inform ation is required to evidence the
efforts o f State member banks in helping
to m eet the credit needs of their entire
com m unities, including low- and
m oderate-incom e areas. This
inform ation w ill be used to assess State
member bank performance in satisfying
the credit needs of their com m unities
and in evaluating certain applications.
The estim ated annual burden per
respondent/recordkeeper varies from 2
to 280 hours, depending on individual
circum stances, with an estimated
average of 17 hours. There w ill be an
estim ated 969 recordkeepers, averaging
16 hours. Among those w ill be an
estim ated 274 respondents, responsible
for an additional average of 4 hours of
reporting burden. These estim ates
include a prediction that five percent of
respondents/recordkeepers w ill keep or
submit optional data.
Comments concerning the accuracy of
this burden estimate and suggestions for
reducing this burden should be directed
to Secretary, Board of Governors of the
Federal Reserve System , 20th and C
Streets, NW., W ashington, DC 20551;
and to the Office of M anagement and
Budget, Paperwork Reduction Project
(7 1 0 0 -0 2 4 7 ), W ashington, DC 20503.
FDIC: The collections of inform ation
contained in this final rule have been
review ed and approved by the Office of
Management and Budget in accordance
with the requirem ents of the Paperwork
Reduction Act o f 1980 (44 U.S.C.
3504(h)) under control num ber 3 0 6 4 0092.
The estim ated annual burden per
respondent varies, depending on
individual circum stances, from 2 hours
for a sm all bank required to perform
only recordkeeping, to 280 hours for a
large bank required to perform all
elem ents in part 345, w ith an estimated
average burden of 12 hours.
The collections of inform ation in this
final rule are in 12 CFR 345.25, 345.27,
345.29, 3 45.41, 345.42, and 345.43.
Comments concerning the accuracy of
this burden estimate and suggestions for
reducing this burden should be directed
to the O ffice of M anagement and
Budget, Paperwork Reduction Project
(3 6 0 4 -0 0 9 2 ), W ashington, DC 20503,
with copies of such com m ents to be sent
22177
to Steven F. Hanft, Office of the
Executive Secretary, room F -4 5 3 ,
Federal Deposit Insurance Corporation,
550 17th Street, NW., W ashington, DC
20429.
OTS: The collections of inform ation
contained in this final rule have been
reviewed and approved by the Office of
Management and Budget in accordance
with the requirem ents of the Paperwork
Reduction A ct of 1980 (44 U*S.C.
3504(h)) under control num ber 1 5 5 0 -
0012 .
The estim ated annual burden per
respondent varies, depending on
individual circum stances, from 2 hours
for a sm all savings association required
to perform only recordkeeping, to 214
hours for a large savings association
required to perform all elem ents in part
563e, w ith an estimated average burden
of 16 hours.
The collections of inform ation in this
final rule are in 12 CFR 563e,25,
563e.27, 563e.29, 563e.41, 563e.42, and
563e.43.
Comments concerning the accuracy of
this burden estim ate and suggestions for
reducing this burden should be directed
to the Office o f Management and
Budget, Paperwork Reduction Project
(1 5 5 0 -0 0 1 2 ), W ashington, DC 20503,
with copies to the Office of Thrift
Supervision, 1700 G Street, NW.,
W ashington, DC 20552.
Regulatory Flexibility Act
The agencies concluded that the 1994
proposal, i f adopted as a final rule,
would not have a significant econom ic
im pact on a substantial number of small
banks and thrifts and invited comment
on this determ ination. In response to
com m ents received, the agencies have
conducted an analysis under The
Regulatory Flexibility A ct (5 U.S.C.
6 0 1 -6 1 2 , the “A ct”)."
The Act requires an agency to take
certain considerations into account
when a rule w ill have a significant
econom ic im pact on a substantial
num ber o f sm all entities. Two of the
three requirem ents o f a final regulatory
flexibility analysis (5 U.S.C. 604)— (1) a
su ccin ct statem ent of the need for and
the objectives of the rule, and (2) a
summary o f the issues raised by the
public com m ents, the agency’s
assessm ent of the issues, and a
statement of the changes made in the
final rule in response to the com m ents—
are discussed earlier in the preamble.
The third requirem ent is for a
description o f the alternatives the
agency considered to the rule being
adopted that were designed to m inim ize
the effect on small entities subject to the
rule and why, if applicable, they were
rejected.
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Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
The agencies have carefully
considered the effects of the final rule
on small entities and the alternatives
available to mitigate its potential
burdens. The final rule provides
separate, less burdensome treatment for
small institutions, w hich are defined as
institutions w ith total assets o f $250
m illion or less that are either
independent or are affiliates o f a
holding company w ith banking and
thrift assets o f less than $1 billion. The
rule contains a specific small institution
performance evaluation that relies on
sim plified criteria, to account for the
operational differences between large
and small institutions. Sm all
institutions are also not subject to the
data collection and reporting provisions
in the rule for large institutions.
The agencies believe that the rule has
m inimized the burden on small
institutions, w hile still enabling the
agencies to fulfill their statutory
mandate to exam ine the CRA record of
these institutions. Although exempting
small institutions from evaluation under
the CRA would elim inate any possible
burden imposed by the final rule, the
CRA does not provide an exem ption for
small institutions.
Some small institutions would
continue to be subject to the same
potential burdens imposed on large
institutions if they were affiliates in a
holding company with banking and
thrift assets of more than $1 billion. The
agencies have rejected the alternative of
eliminating the holding company
lim itation altogether in order to prevent
holding com panies from manipulating
the asset size of their institutions to
qualify for the sm all institution
treatment.
However, by raising the holding
company asset lim it from $250 m illion
in the 1994 proposal to $1 billion in the
final rule, the agencies have sought to
mitigate any unfairness and unnecessary
burden resulting from the holding
company lim itation. The agencies
selected a higher asset level for the
holding company lim itation in
recognition that sm aller holding
com panies may be unable to provide the
necessary support for the CRA activities
of their small institution subsidiaries.
The agencies anticipate that larger
holding com panies under the final rule
would be capable of supporting the CRA
activities of their subsidiary small
institutions.
Executive Order 12866
OCC and O TS: The OCC and OTS
have determined that this document is
a significant regulatory action because
o f the legal and policy issues it raises.
Because of the significance of the rule,
the OCC and O TS w ill review its
effectiveness in achieving the goals of
the CRA prior to and in preparation for
the full CRA regulatory review in the
year 2002, discussed earlier.
Unfunded M andates Reform Act of
1995
OCC and O TS: Section 202 of the
Unfunded M andates Reform Act of
1995, signed into law on M arch 22,
1995, provides that before promulgating
certain rulemakings, covered agencies
must prepare a written statement
containing a cost/benefit analysis.
Under section 205, before promulgating
any rule for w hich a written statement
is required under section 202, covered
agencies must identify and consider a
reasonable number o f regulatory
alternatives, and from those alternatives,
select the least costly, m ost costeffective, or least burdensome one that
achieves the objective o f the
rulemaking.
In promulgating this rulemaking, the
Federal financial supervisory agencies
considered a wide range o f alternatives
described in notices of proposed
rulemaking published in 1993 and 1994.
In addition to the com m ents that the
agencies received in response to the
notices o f proposed rulemaking, the
agencies conducted a series o f seven
public hearings across the country in
1993, at w hich hundreds of witnesses
commented and others provided written
statements. Although the OCC and O TS
have determ ined that they are not
required to prepare a written statement
under section 202 or to make a finding
under section 205, they conclude that,
on balance, this final rule provides the
m ost cost-effective and least
burdensome alternative to achieve the
objectives of the rule, consistent with
statutory requirements.
List of Subjects
12 CFR P art 25
Community developm ent, Credit,
Investments, National banks, Reporting
and recordkeeping requirements.
recordkeeping requirem ents, Savings
associations.
Authority and Issuance
Office of the Comptroller o f the
Currency
12 CFR Chapter I
For the reasons outlined in the joint
preamble, the O ffice o f the Comptroller
of the Currency amends 12 CFR chapter
I as set forth below :
PART 25— COMMUNITY
REINVESTMENT ACT REGULATIONS
1. The authority citation for part 25 is
revised to read as follows:
Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36,
93a, 161, 215, 215a, 481, 1 8 1 4 ,1 8 1 6 ,1828(c),
and 2901 through 2907.
2. Part 25 is am ended by adding
Subparts A through D and Appendices
A and B to read as follows:
Subpart A—General
Sec.
25.11
2 5 .12
Authority, purposes, and scope.
D efinitions.
Subpart B— Standards for Assessing
Performance
25.21 Perform ance tests, standards, and
ratings, in general.
2 5.22 Lending test.
2 5.23 Investm ent test.
2 5 .24 Service test.
25.25 Comm unity developm ent test for
w holesale or lim ited purpose banks.
2 5 .26 Sm all bank perform ance standards.
2 5 .27 Strategic plan.
2 5 .28 Assigned ratings.
25.29 Effect of CRA perform ance on
applications.
Subpart C— Records, Reporting, and
Disclosure Requirements
25.41 A ssessm ent area delineation.
25.42 Data co llection , reporting, and
disclosure.
25.43 Content and availability o f public file.
25.44 P ublic notice by banks.
25.45 Publication o f planned exam ination
schedule.
Subpart D— Transition Rules
25.51
T ransition rules.
12 CFR Part 228
Appendix A to P art 25—Ratings
Banks, Banking, Community
development, Credit, Federal Reserve
System, Investments, Reporting and
recordkeeping requirem ents.
Appendix B to P art 25— CRA Notice
12 CFR Part 345
Banks, Banking, Community
development, Credit, Investments,
Reporting and recordkeeping
requirements.
12 CFR Part 5 6 3 e
Community developm ent, Credit,
Investments, Reporting and
Subpart A— General
§ 25.11
Authority, purposes, and scope.
(a)
A u th ority a n d OMB co n tro l
n u m b er—(1) A u thority. The authority
for this part is 12 U.S.C. 21, 22, 26, 27,
30, 36, 93a, 161, 215, 215a, 481, 1814,
1816, 1828(c), and 2901 through 2907.
(2)
OMB co n tro l n u m ber. The
information collection requirements
contained in this part were approved by
the Office of Management and Budget
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
22179
under the provisions o f 44 U.S.C. 3501
area that includes the bank’s assessm ent
given to that term in 12 U.S.C.
et seq . and have been assigned OMB
1841(a)(2), and a com pany is under
area(s).
(j) C om m u n ity d e v e lo p m e n t s e rv ic e
control number 1 5 5 7 -0 1 6 0 .
common control with another com pany
(b) P u rp oses. In enacting the
means a service that:
if both com panies are directly or
Community Reinvestm ent Act (CRA),
(1) Has as its primary purpose
indirectly controlled by the same
the Congress required each appropriate
com m unity development;
company.
(2) Is related to the provision of
Federal financial supervisory agency to
(b) A rea m e d ia n in c o m e means:
financial services; and
assess an institution’s record o f helping
(1) The m edian family incom e for the
(3) Has not been considered in the
M SA , if a person or geography is located
to meet the credit needs of the local
evaluation of the bank’s retail banking
in an M SA ; or
com m unities in w hich the institution is
services under § 25.24(d).
(2) T he statewide nonm etropolitan
chartered, consistent with the safe and
(k) C on su m er lo a n means a loan to
m edian fam ily incom e, if a person or
sound operation of the institution, and
one or more individuals for household,
geography is located outside an M SA.
to take this record into account in the
family, or other personal expenditures.
(c) A sses sm e n t a r e a means a
agency’s evaluation o f an application for
A consum er loan does not include a
a deposit facility by the institution. T h is geographic area delineated in
home mortgage, small business, or sm all
accordance w ith § 25.41.
part is intended to carry out the
(d) A u to m a te d teller m a c h in e (ATM)
farm loan. Consumer loans include the
purposes of the CRA by:
m eans an automated, unstaffed banking
following categories of loans:
(1) Establishing the framework and
(1) M otor v e h ic le lo a n , w hich is a
facility owned or operated by, or
criteria by w hich the Office of the
consum er loan extended for the
operated exclusively for, the bank at
Comptroller o f the Currency (OCC)
purchase o f and secured by a motor
w hich deposits are received, cash
assesses a bank’s record of helping to
vehicle;
dispersed, or money lent.
m eet the credit needs of its entire
(2) C red it c a r d loa n , w hich is a line
(e) B a n k m eans a national bank
com m unity, including low- and
of credit for household, fam ily, or other
(including a Federal branch as defined
m oderate-incom e neighborhoods,
in part 28 o f this chapter) with Federally personal expenditures that is accessed
consistent-w ith the safe and sound
by a borrow er’s use of a “credit card ,”
insured deposits, except as provided in
operation of the bank; and
as this term is defined in § 226.2 o f this
§ 25.11(c).
(2) Providing that the OCC takes that
(f) B ra n ch m eans a staffed banking
title;
record into account in considering
(3) H o m e e q u ity lo a n , w hich is a
facility authorized as a branch, whether
certain applications.
consum er loan secured by a residence of
(c) S c o p e — (l)G en era l. This part
shared or unshared, including, for
the borrower;
applies to all banks except as provided
exam ple, a m ini-branch in a grocery
(4) O ther s e c u r e d co n s u m e r lo a n ,
store or a branch operated in
in paragraphs (c)(2) and (c)(3) of this
w hich is a secured consum er loan that
section.
conjun ction w ith any other local
is not included in one o f the other
(2) F e d e r a l b r a n c h e s a n d a g en c ies, (i)
business or nonprofit organization.
This part applies to all insured Federal
categories o f consum er loans; and
(g) CMSA m eans a consolidated
(5) O th er u n se c u red c o n su m er lo a n ,
branches and to any Federal branch that m etropolitan statistical area as defined
w hich is an unsecured consum er loan
is uninsured that results from an
by the Director o f the Office of
that is not included in one o f the other
acquisition described in section 5(a)(8)
M anagement and Budget.
categories o f consum er loans.
o f the International Banking A ct of 1978
(h) C o m m u n ity d e v e lo p m e n t means:
(1)
G eo g ra p h y means a census tract or
(12 U.S.C. 3103(a)(8)).
(1) Affordable housing (including
(ii) Except as provided in paragraph
a block numbering area delineated by
m ultifam ily rental housing) for low- or
(c)(2)(i) of this section, this part does not m oderate-incom e individuals;
the United States Bureau of the Census
apply to Federal branches that are
(2) Community services targeted to
in the most recent decennial census.
(m) H o m e m o rtg a g e lo a n m eans a
uninsured, lim ited Federal branches, or
low- or m oderate-incom e individuals;
(3) A ctivities that promote econom ic
“hom e improvement loan” or a “home
Federal agencies, as those terms are
defined in part 28 of this chapter.
developm ent by financing businesses or purchase loan” as defined in § 203.2 of
(3) C ertain s p e c ia l p u r p o s e b a n k s.
this title.
farms that meet the size eligibility
This part does not apply to special
(n) In c o m e le v e l includes:
standards of 13 CFR 121.802(a)(2) or
(1) L o w -in co m e, w hich m eans an
purpose banks that do npt perform
have gross annual revenues of $1
individual incom e that is less than 50
com m ercial or retail banking services by m illion or less; or
percent o f the area median incom e, or
granting credit to the public in the
(4) A ctivities that revitalize or
a median fam ily incom e that is less than
ordinary course of business, other than
stabilize low- or moderate-incom e
geographies.
50 percent, in the case of a geography.
as incident to their specialized
(2) M o d era te-in co m e, w hich means an
(i) C om m u n ity d e v e lo p m e n t lo a n
operations. These banks include
means a loan that:
individual incom e that is at least 50
banker’s banks, as defined in 12 U.S.C.
(1) Has as its primary purpose
percent and less than 80 percent of the
24 (Seventh), and banks that engage
com m unity developm ent; and
area m edian incom e, or a median family
only in one or more of the following
(2) Except in the case o f a wholesale
incom e that is at least 50 and less than
activities: providing cash management
or lim ited purpose bank:
80 percent, in the case of a geography.
controlled disbursement services or
(i) Has not been reported or collected
(3) M id d le-in co m e, w hich means an
serving as correspondent banks, trust
by the bank or an affiliate for
individual incom e that is at least 80
com panies, or clearing agents.
consideration in the bank’s assessm ent
percent and less than 120 percent o f the
§25.12 Definitions.
as a hom e mortgage, small business,
area m edian incom e, or a median family
For purposes o f this part, the
small farm, or consum er loan, unless it
incom e that is at least 80 and less than
following definitions apply:
is a m ultifam ily dwelling loan (as
120 percent, in the case of a geography.
(a)
A ffilia te m eans any com pany that described in A ppendix A to Part 203 o f
(4) U p p e r-in co m et w hich m eans an
controls, is controlled by, or is under
this title); and
individual incom e that is 120 percent or
com mon control with another company.
(ii) B enefits the bank’s assessment
more of the area median incom e, or a
The term “control” has the meaning
area(s) or a broader statewide or regional median fam ily incom e that is 120
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Federal Register / Vol. 60, No. 86 7 Thursday, May 4, 1995 / Rules and Regulations
percent or more, in the case of a
geography.
(0) L im ited p u r p o s e b a n k means a
bank that offers only a narrow product
line (such as credit card or motor
vehicle loans) to a regional or broader
market and for w hich a designation as
a lim ited purpose bank is in effect, in
accordance with § 25.25(b).
Subpart B— Standards for Assessing
Performance
§ 25.21 Performance tests, standards, and
ratings, in general.
(a) P erfo rm a n c e tests a n d sta n d a rd s.
The OCC assesses the CRA performance
o f a bank in an exam ination as follows:
(1) L en din g, in v estm en t, a n d se rv ic e
tests. The OCC applies the lending,
investm ent, and service tests, as
(p) L oan lo c a tio n . A loan is located as
provided in § § 2 5 .2 2 through 25.24, in
follows:
evaluating the perform ance of a bank,
(1) A consum er loan is located in the
except as provided in paragraphs (a)(2),
geography where the borrower resides;
(a)(3), and (a)(4) of this section.
(2) A home mortgage loan is located
(2) C om m u n ity d e v e lo p m e n t test f o r
in the geography where the property to
w h o le s a le o r lim ite d p u r p o s e b a n k s. The
OCC applies the com m unity
w hich the loan relates is located; and
developm ent test for a w holesale or
(3) A small business or small farm
lim ited purpose bank, as provided in
loan is located in the geography where
§ 25.25, except as provided in paragraph
the main business facility or farm is
(a)(4) of this section.
located or where the loan proceeds
(3) S m a ll b a n k p e r fo r m a n c e
otherwise will be applied, as indicated
sta n d a rd s. The OCC applies the small
by the borrower.
bank performance standards as provided
(q) L oan p ro d u c tio n o ffic e means a
in § 25.26 in evaluating the performance
o f a sm all bank or a bank that was a.
staffed facility, other than a branch, that
sm all bank during the prior calendar
is open to the public and that provides
year, unless the bank elects to be
lending-related services, such as loan
assessed as provided in paragraphs
inform ation and applications.
(a)(1), (a)(2), or (a)(4) of this section. The
(r) MSA means a metropolitan
bank may elect to be assessed as
statistical area or a primary
provided in paragraph (a)(1) of this
m etropolitan statistical area as defined
section only if it collects and reports the
by the Director of the Office of
data required for other banks under
Management and Budget.
§ 2 5 .4 2 .
(s) Q u a lified in v estm en t m eans a
(4) S trateg ic p la n . T he OCC evaluates
lawful investm ent, deposit, membership the performance of a bank under a
strategic plan if the bank subm its, and
share, or grant that has as its primary
the OCC approves, a strategic plan as
purpose com munity development.
provided in § 25.27.
(t) S m a ll b a n k means a bank that, as
(b) P e rfo rm a n c e con tex t. The OCC
o f December 31 of either of the prior two
applies the tests and standards in
calendar years, had total assets of less
paragraph (a) of this section and also
than $250 m illion and was independent
considers whether to approve a
or an affiliate of a holding company
proposed strategic plan in the context
that, as of December 31 of either of the
of:
prior two calendar years, had total
(1) Demographic data on median
banking and thrift assets of less than $1
incom e levels, distribution of household
billion.
incom e, nature o f housing stock,
(u) S m a ll b u sin ess lo a n means a loan housing costs, and other relevant data
pertaining to a bank’s assessment
included in “ loans to small businesses”
area(s);
as defined in the instructions for
(2) Any inform ation about lending,
preparation of the Consolidated Report
investm ent, and service opportunities in
o f Condition and Incom e.
the bank’s assessm ent area(s)
(v) S m a ll fa r m lo a n means a loan
m aintained by the bank or obtained
included in “loans to small farm s” as
from com m unity organizations, state,
defined in the instructions for
local, and tribal governments, econom ic
preparation o f the Consolidated Report
developm ent agencies, or other sources;
o f Condition and Income.
(3) The bank’s product offerings and
(w) W h o le sa le b a n k m eans a bank that business strategy as determ ined from
is not in the business of extending home data provided by the bank;
(4) Institutional capacity and
mortgage, small business, small farm, or
constraints, including the size and
consum er loans to retail customers, and
financial condition of the bank, the
for w hich a designation as a wholesale
econom ic clim ate (national, regional,
bank is in effect, in accordance with
and local), safety and soundness
§ 25.25(b).
lim itations, and any other factors that
significantly affect the bank’s ability to
provide lending, investm ents, or
services in its assessm ent area(s);
(5) The bank’s past performance and
the performance of sim ilarly situated
lenders;
(6) The bank’s public file, as
described in § 25.43, and any written
com m ents about the bank’s CRA
perform ance submitted to the bank or
the OCC; and
(7) Any other inform ation deemed
relevant by the OCC.
(c) A ssig n ed ratin gs. The OCC assigns
to a bank one o f the follow ing four
ratings pursuant to § 25.28 and
A ppendix A of this part: “outstanding”;
“satisfactory” ; “needs to im prove”; or
“substantial noncom pliance” as
provided in 12 U.S.C. 2906(b)(2). The
rating assigned by the OCC reflects the
bank’s record of helping to meet the
credit needs of its entire community,
including low- and moderate-incom e
neighborhoods, consistent with the safe
and sound operation o f the bank.
(d) S a fe a n d s o u n d o p er a tio n s . This
part and the CRA do not require a bank
to make loans or investm ents or to
provide services that are inconsistent
w ith safe and sound operations. To the
contrary, the OCC anticipates banks can
m eet the standards of this part with safe
and sound loans, investm ents, and
services on w hich the banks expect to
make a profit. Banks are permitted and
encouraged to develop and apply
flexible underwriting standards for
loans that benefit low- or moderateincom e geographies or individuals, only
if consistent w ith safe and sound
operations.
§ 25.22
Lending test.
(a)
S c o p e o f test. (1) The lending test
evaluates a bank’s record o f helping to
meet the credit needs o f its assessment
area(s) through its lending activities by
considering a bank’s home mortgage,
sm all business, small farm, and
com m unity developm ent lending. If
consum er lending constitutes a
substantial m ajority of a bank’s
business, the OCC w ill evaluate the
bank’s consum er lending in one or more
o f the follow ing categories: motor
vehicle, credit card, home equity, other
secured, and other unsecured loans. In
addition, at a bank’s option, the OCC
w ill evaluate one or more categories of
consum er lending, if the bank has
collected and m aintained, as required in
§ 25.42(c)(1), the data for each category
that the bank elects to have the OCC
evaluate.
(2)
The OCC considers originations
and purchases o f loans. The OCC will
also consider any other loan data the
bank may choose to provide, including
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
data on loans outstanding, com m itm ents
and letters of credit.
(3)
A bank may ask the OCC to
consider loans originated or purchased
by consortia in w hich the bank
participates or by third parties in w hich
the bank has invested only if the loans
meet the d efinition of community
developm ent loans and only in
accordance w ith paragraph (d) of this
section. The OCC w ill not consider
these loans under any criterion of the
lending test except the com munity
developm ent lending criterion.
(b) P erfo rm a n c e criteria. The OCC
evaluates a b ank ’s lending performance
pursuant to the follow ing criteria:
(1) L en d in g activity. The number and
amount of the bank’s hom e mortgage,
small business, sm all farm, and
consum er loans, i f applicable, in the
bank’s assessm ent area(s);
(2) G eo g ra p h ic d istribu tion . The
geographic distribution of the bank’s
hom e mortgage, sm all business, small
farm, and consum er loans, if applicable,
based on the loan location, including:
(i) The proportion of the bank’s
lending in the bank’s assessm ent area(s);
(ii) The dispersion o f lending in the
bank’s assessm ent area(s); and
(iii) The num ber and am ount of loans
in low-, m oderate-, middle-, and upperincom e geographies in the bank’s
assessment area(s);
(3) B o rro w er ch a ra c teristics. The
distribution, particularly in the bank’s
assessm ent area(s), of the bank’s home
mortgage, sm all business, sm all farm,
and consum er loans, if applicable, based
on borrower characteristics, including
the number and amount of:
(i) Home mortgage loans to low-,
moderate-, m iddle-, and upper-income
individuals;
(ii) Sm all business and small farm
loans to businesses and farms w ith gross
annual revenues of $1 m illion or less;
(iii) Sm all business and Small farm
loans by loan amount at origination; and
(iv) Consumer loans, i f applicable, to
low-, moderate-, middle-, and upperincom e individuals;
(4 ) C om m u n ity d e v e lo p m e n t len d in g .
The bank’s com m unity developm ent
lending, including the number and
amount o f com m unity development
loans, and their com plexity and
innovativeness; and
(5) In n o v a tiv e o r fle x ib le len d in g
p ra c tic e s. The b ank ’s use o f innovative
or flexible lending practices in a safe
and sound m anner to address the credit
needs of low- or m oderate-incom e
individuals or geographies.
(c) A ffilia te len d in g . (1) At a bank’s
option, the OCC w ill consider loans by
an affiliate of the bank, if the bank
provides data on the affiliate’s loans
pursuant to § 25.42.
(2) T he OCC considers affiliate
lending subject to the following
constraints:
(i) No affiliate may claim a loan
origination or loan purchase if another
institution claim s the same loan
origination or purchase; and
(ii) If a bank elects to have the OCC
consider loans w ithin a particular
lending category made by one or more
o f the bank’s affiliates in a particular
assessm ent area, the bank shall elect to
have the OCC consider, in accordance
w ith paragraph (c)(1) of this section, all
the loans w ithin that lending category in
that particular assessm ent area made by
all o f the bank’s affiliates.
(3) T he OCC does not consider
affiliate lending in assessing a bank’s
perform ance under paragraph (b)(2)(i) of
this section.
(d) L en d in g b y a co n so rtiu m o r a th ird
party. Community developm ent loans
originated or purchased by a consortium
in w hich the bank participates or by a
third party in w h ich the bank has
invested:
(1) W ill be considered, at the bank’s
option, if the bank reports the data
pertaining to these loans under
§ 25.42(b)(2); and
(2) May be allocated among
participants or investors, as they choose,
for purposes o f the lending test, except
that no participant or investor:
(i) May claim a loan origination or
loan purchase if another participant or
investor claim s the same loan
origination or purchase; or
(ii) May claim loans accounting for
more than its percentage share (based on
the level of its participation or
investm ent) of the total loans originated
by the consortium or third party.
(e) L en d in g p e r fo r m a n c e rating. The
OCC rates a bank’s lending performance
as provided in A ppendix A of this part.
§ 25.23 Investment test.
(a) S c o p e o f test. The investm ent test
evaluates a b an k’s record o f helping to
meet the credit needs o f its assessm ent
area(s) through qualified investm ents
that benefit its assessm ent area(s) or a
broader statewide or regional area that
includes the b ank ’s assessm ent area(s).
(b) E x clu sion . A ctivities considered
under the lending or service tests may
not be considered under the investm ent
test.
(c) A ffilia te in v estm en t. At a bank’s
option, the OCC w ill consider, in its
assessm ent o f a bank’s investm ent
performance, a qualified investm ent
made by an affiliate of the bank, if the
qualified investm ent is not claim ed by
any other institution.
22181
(d) D isp ositio n o f b ra n ch p re m is es.
Donating, selling on favorable terms, or
making available on a rent-free basis a
branch o f the bank that is located in a
predom inantly m inority neighborhood
to a m inority depository institution or
w om en’s depository institution (as these
terms are defined in 12 U.S.C. 2907(b))
w ill be considered as a qualified
investm ent.
(e) P e r fo r m a n c e criteria. The OCC
evaluates the investm ent performance of
a bank pursuant to the following
criteria:
(1) The dollar amount of qualified
investm ents;
(2) The innovativeness or com plexity
of qualified investm ents;
(3) T he responsiveness of qualified
investm ents to credit and com munity
developm ent needs; and
(4) T he degree to w hich the qualified
investm ents are not routinely provided
by private investors.
(f) In v estm en t p e r fo r m a n c e rating.
The OCC rates a bank’s investment
perform ance as provided in Appendix A
of this part.
§ 25.24
Service test.
(a) S c o p e o f test. The service test
evaluates a b ank ’s record of helping to
meet the credit needs o f its assessment
area(s) by analyzing both the availability
and effectiveness of a bank’s systems for
delivering retail banking services and
the extent and innovativeness of its
com m unity developm ent services.
(b) A rea (s) b e n e fitte d . Community
developm ent services must benefit a
bank’s assessm ent area(s) or a broader
statewide or regional area that includes
the bank’s assessm ent area(s).
(c) A ffilia te serv ice. At a bank’s
option, the OCC w ill consider, in its
assessm ent of a bank’s service
performance, a com m unity development
service provided by an affiliate of the
bank, if the com m unity development
service is not claim ed by any other
institution.
(d) P erfo rm a n c e criteria —reta il
b a n k in g se rv ice s. The OCC evaluates the
availability and effectiveness of a bank’s
systems for delivering retail banking
services, pursuant to the following
criteria:
(1) The current distribution of the
bank’s branches among low-,
moderate-, m iddle-, and upper-income
geographies;
(2) In the context o f its current
distribution of the bank’s branches, the
bank’s record o f opening and closing
branches, particularly branches located
in low- or m oderate-incom e geographies
or prim arily serving low- or moderateincom e individuals;
(3) The availability and effectiveness
of alternative system s for delivering
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Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
retail banking services (e.g., ATM s,
ATM s not owned or operated by or
exclusively for the bank, banking by
telephone or com puter, loan production
offices, and bank-at-work or bank-bymail programs) in low- and moderateincom e geographies and to low- and
m oderate-incom e individuals; and
(4) The range of services provided in
low-, moderate-, m iddle-, and upperincom e geographies and the degree to
w hich the services are tailored to meet
the needs o f those geographies.
(e) P erfo rm a n c e criteria— co m m u n ity
d e v e lo p m e n t serv ices. The OCC
evaluates com m unity development
services pursuant to the following
criteria:
(1) The extent to w hich the bank
provides com m unity development
services; and
(2) The innovativeness and
responsiveness of community
developm ent services.
(f) S er v ice p e r fo r m a n c e rating. The
OCC rates a bank’s service performance
as provided in Appendix A of this part.
§ 25.25 Community development test tor
wholesale or limited purpose banks.
(a) S c o p e o f test. The OCC assesses a
w holesale or lim ited purpose bank’s
record of helping to meet the credit
needs of its assessm ent area(s) under the
com m unity development test through
■its com m unity development lending,
qualified investm ents, or community
development services.
(b) D esign ation a s a w h o le s a le o r
lim ited p u r p o s e b a n k . In order to
receive a designation as a wholesale or
lim ited purpose bank, a bank shall file
a request, in writing, with the OCC, at
least three m onths prior to the proposed
effective date o f the designation. If the
OCC approves the designation, it
remains in effect until the bank requests
revocation of the designation or until
one year after the OCC notifies the bank
that the OCC has revoked the
designation on its own initiative.
(c) P erfo rm a n c e criteria. The OCC
evaluates the com m unity developm ent
performance o f a w holesale or limited
purpose bank pursuant to the following
criteria:
(1) The num ber and amount of
com munity developm ent loans
(including originations and purchases of
loans and other community
development loan data provided by the
bank, such as data on loans outstanding,
com m itm ents, and letters of credit),
qualified investm ents, or community
development services;
(2) The use of innovative or com plex
qualified investm ents, community
development loans, or community
development services and the extent to
w hich the investm ents are not routinely
provided by private investors; and
(3) The bank’s responsiveness to
credit and com m unity developm ent
needs.
(d) In d irec t activ ities. At a bank’s
option, the OCC w ill consider in its
com m unity development performance
assessment:
(1) Qualified investm ents or
com munity developm ent services
provided by an affiliate of the bank, if
the investm ents or services are not
claim ed by any other institution; and
(2) Community developm ent lending
by affiliates, consortia and third parties,
subject to the requirem ents and
lim itations in § 25.22(c) and (d).
(e) B en efit to a ss e s s m e n t a re a (s)— (1)
B en efit in s id e a ss essm en t area(s). The
OCC considers all qualified
investm ents, com m unity developm ent
loans, and com m unity developm ent
services that benefit areas w ithin the
bank’s assessm ent area(s) or a broader
statewide or regional area that includes
the bank’s assessm ent area(s).
(2)
B en efit o u ts id e a ss essm en t area(s).
The OCC considers the qualified
investm ents, com m unity developm ent
loans, and com m unity development
services that benefit areas outside the
bank’s assessm ent area(s), i f the bank
has adequately addressed the needs of
its assessm ent area(s).
(f) C om m u n ity d e v e lo p m e n t
p e r fo r m a n c e rating. The OCC rates a
bank’s com m unity development
performance as provided in A ppendix A
of this part.
§ 25.26 Small bank performance
standards.
(a)
P erfo rm a n c e criteria. The OCC
evaluates the record of a small bank, or
a bank that was a small bank during the
prior calendar year, of helping to meet
the credit needs of its assessment area(s)
pursuant to the following criteria:
(1) The bank’s loan-to-deposit ratio,
adjusted for seasonal variation and, as
appropriate, other lending-related
activities, such as loan originations for
sale to the secondary markets,
com m unity development loans, or
qualified investm ents;
(2) The percentage of loans and, as
appropriate, other lending-related
activities located in the bank’s
assessment area(s);
(3) The bank’s record of lending to
and, as appropriate, engaging in other
lending-related activities for borrowers
of different incom e levels and
businesses and farms of different sizes;
(4) The geographic distribution of the
bank’s loans; and
(5) The bank’s record of taking action,
if warranted, in response to w ritten •
com plaints about its performance in
helping to m eet credit needs in its
assessment area(s).
(b)
S m a ll b a n k p e r fo r m a n c e rating.
The OCC rates the performance of a
bank evaluated under this section as
provided in A ppendix A of this part.
§ 25.27
Strategic plan.
(a) A ltern ativ e e lectio n . T he OCC w ill
assess a bank’s record of helping to m eet
the credit needs o f its assessment area(s)
under a strategic plan if:
(1) The bank has submitted the plan
to the OCC as provided for in this
section;
(2) The OCC has approved the plan;
(3) The plan is in effect; and
(4) The bank has been operating under
an approved plan for at least one year.
(b) D ata rep ortin g . The OCC’s
approval of a plan does not affect the
bank’s obligation, if any, to report data
as required by § 25.42.
(c) P lan s in g en era l.— (1) Term . A
plan may have a term of no more than
five years, and any m ulti-year plan must
include annual interim measurable
goals under w hich the OCC will
evaluate the bank’s performance.
(2) M u ltip le a ss essm en t a rea s. A bank
w ith more than one assessment area
may prepare a single plan for all of its
assessm ent areas or one or more plans
for one or more o f its assessm ent areas.
(3) T rea tm en t o f a ffilia tes. Affiliated
institutions may prepare a joint plan if
the plan provides measurable goals for
each institution. A ctivities may be
allocated among institutions at the
institutions’ option, provided that the
same activities are not considered for
more than one institution.
(d) P u b lic p a r tic ip a tio n in p la n
d ev e lo p m e n t. Before submitting a plan
to the OCC for approval, a bank shall:
(1) Informally seek suggestions from
members of the public in its assessment
area(s) covered by the plan while
developing the plan;
(2) Once the bank has developed a
plan, formally solicit public com ment
on the plan for at least 3 0 days by
publishing notice in at least one
newspaper of general circulation in each
assessm ent area covered by the plan;
and
(3) During the period of formal public
com ment, make copies of the plan
available for review by the public at no
cost at all offices of the bank in any
assessm ent area covered by the plan and
provide copies of the plan upon request
for a reasonable fee to cover copying
and m ailing, if applicable.
(e) S u b m issio n o f p la n . The bank shall
submit its plan to the OCC at least three
months prior to the proposed effective
date of the plan. The bank shall also
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
submit w ith its plan a description of its
(2) P u b lic p a rtic ip a tio n . In evaluating
informal efforts to seek suggestions from the plan’s goals, the OCC considers the
members o f the public, any written
p u blic’s involvem ent in formulating the
public com m ent received, and, if the
plan, written public com ment on the
plan was revised in light of the
plan, and any response by the bank to
comment received, the initial plan as
public com m ent on the plan.
released for public comment.
(3) C riteria f o r ev a lu a tin g p la n . The
(f) P lan con ten t.— (1) M easu ra b le
OCC evaluates a plan’s measurable goals
g oals, (i) A bank shall specify in its plan
using the following criteria, as
measurable goals for helping to meet the appropriate:
credit needs of each assessment area
(i) The extent and breadth o f lending
covered by the plan, particularly the
or lending-related activities, including,
needs o f low- and moderate-incom e
as appropriate, the distribution of loans
geographies and low- and moderateamong different geographies, businesses
income individuals, through lending,
and farms of different sizes, and
investment, and services, as
individuals o f different incom e levels,
appropriate.
the extent of com m unity development
(ii) A bank shall address in its plan all
lending, and the use of innovative or
three performance categories and,
flexible lending practices to address
unless the bank has been designated as
credit needs;
a w holesale or lim ited purpose bank,
(ii) T he amount and innovativeness,
shall emphasize lending and lendingcom plexity, and responsiveness of the
related activities. Nevertheless, a
bank’s qualified investm ents; and
different em phasis, including a focus on
(iii) The availability and effectiveness
one or more performance categories,
of the bank’s systems for delivering
may be appropriate if responsive to the
retail banking services and the extent
characteristics and credit needs of its
and innovativeness o f the bank’s
assessm ent area(s), considering public
com munity developm ent services.
com ment and the bank’s capacity and
(h) P lan a m e n d m en t. During the term
constraints, product offerings, and
of a plan, a bank may request the OCC
business strategy.
to approve an amendment to the plan on
(2) C o n fid en tia l in fo rm a tion . A bank
grounds that there has been a material
may submit additional information to
change in circum stances. The bank shall
the OCC on a confidential basis, but the
develop an amendment to a previously
goals stated in the plan must be
approved plan in accordance with the
sufficiently specific to enable the public
public participation requirements of
and the OCC to judge the m erits of the
paragraph (c) o f this section.
plan.
(i) P lan a ss essm en t. The OCC
(3) S a tisfa c to ry a n d o u tstan d in g g o a ls.
A bank shall specify in its plan
approves the goals and assesses
performance under a plan as provided
measurable goals that constitute
for in A ppendix A of this part.
“satisfactory” performance. A plan may
specify m easurable goals that constitute
§25.28 Assigned ratings.
“outstanding” performance. If a bank
(a) R atin gs in g en era l. Subject to
submits, and the OCC approves, both
paragraphs (b) and (c) o f this section,
“ satisfactory” and “ outstanding”
the OCC assigns to a bank a rating of
performance goals, the OCC will
“outstanding,” “ satisfactory,” “needs to
consider the bank eligible for an
im prove,” or “substantial
“outstanding” performance rating.
noncom pliance” based on the bank’s
(4) E lection i f sa tisfa c to ry g o a ls n o t
performance under the lending,
su b stan tially m et. A bank may elect in
investm ent and service tests, the
its plan that, if the bank fails to meet
com munity developm ent test, the small
substantially its plan goals for a
bank performance standards, or an
satisfactory rating, the OCC w ill
approved strategic plan, as applicable.
evaluate the bank’s performance under
(b) L en d in g , in v estm en t, a n d se rv ic e
the lending, investm ent, and service
tests. The OCC assigns a rating for a
tests, the com m unity development test,
bank assessed under the lending,
or the sm all bank performance
investm ent, and service tests in
standards, as appropriate.
(g) P lan a p p r o v a l— [ 1) Tim ing. The
accordance w ith the following
OCC w ill act upon a plan within 60
principles:
calendar days after the OCC receives the
(1) A bank that receives an
com plete plan and other material
“outstanding” rating on the lending test
required under paragraph (d) of this
receives an assigned rating of at least
section. If the OCC fails to act within
“satisfactory”;
this time period, the plan shall be
(2) A bank that receives an
deemed approved unless the OCC
“outstanding” rating on both the service
extends the review period for good
test and the investm ent test and a rating
cause.
of at least “high satisfactory” on the
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lending test receives an assigned rating
of “outstanding” ; and
(3)
No bank may receive an assigned
rating o f “satisfactory” or higher unless
it receives a rating of at least “low
satisfactory” on the lending test.
(c)
E ffe c t o f e v id e n c e o f
d isc rim in a to ry o r o th e r ille g a l cred it
p ra c tic e s. Evidence of discrim inatory or
other illegal credit practices adversely
affects the OCC’s evaluation of a bank’s
performance. In determ ining the effect
on the bank’s assigned rating, the OCC
considers the nature and extent of the
evidence, the policies and procedures
that the bank has in place to prevent
discrim inatory or other illegal credit
practices, any corrective action that the
bank has taken or has com mitted to
take, particularly voluntary corrective
action resulting from self-assessm ent,
and other relevant information.
§ 25.29 Effect of CRA performance on
applications.
(a) CRA p e r fo r m a n c e . Among other
factors, the OCC takes into account the
record of performance under the CRA of
each applicant bank in considering an
application for:
(1) The establishm ent of a domestic
branch;
(2) The relocation o f the main office
or a branch;
(3) Under the Bank Merger Act (12
U.S.C. 1828(c)), the merger or
consolidation with or the acquisition of
assets or assum ption o f liabilities o f an
insured depository institution; and
(4) The conversion of an insured
depository institution to a national bank
charter.
(b) C h arter a p p lic a tio n . An applicant
(other than an insured depository
institution) for a national bank charter
shall submit with its application a
description o f how it w ill meet its CRA
objectives. The OCC takes the
description into account in considering
the application and may deny or
condition approval on that basis.
(c) In teres ted p a rties . The OCC takes
into account any views expressed by
interested parties that are submitted in
accordance with the OCC’s procedures
set forth in part 5 of this chapter in
considering CRA performance in an
application listed in paragraphs (a) and
(b) of this section.
(d) D en ia l o r c o n d itio n a l a p p r o v a l o f
a p p lic a tio n . A bank’s record of
performance may be the basis for
denying or conditioning approval o f an
application listed in paragraph (a) of
this section.
(e) In su red d e p o s ito r y in stitu tion . For
purposes o f this section, the term
“insured depository institution” has the
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meaning given to that term in 12 U.S.C.
1813.
Subpart C— Records, Reporting, and
Disclosure Requirements
§ 25.41
Assessment area delineation.
(a) In g en e ra l. A bank shall delineate
one or more assessm ent areas within
w hich the OCC evaluates the bank’s
record of helping to meet the credit
needs of its com m unity. The OCC does
not evaluate the bank’s delineation o f its
assessment area(s) as a separate
performance criterion, but the OCC
reviews the delineation for com pliance
with the requirem ents of this section.
(b) G eo g ra p h ic a re a (s) f o r w h o le s a le
o r lim ited p u r p o s e b a n k s. The
assessment area(s) for a w holesale or
lim ited purpose bank must consist
generally of ope or more M SAs (using
the M SA boundaries that were in effect
as of January 1 of the calendar year in
w hich the delineation is made) or one
or more contiguous political
subdivisions, such as counties, cities, or
towns, in w hich the bank has its main
office, branches, and deposit-taking
ATMs.
(c) G eo g ra p h ic area (s) f o r o th e r b a n k s.
The assessm ent area(s) for a bank other
than a wholesale or lim ited purpose
bank must:
(1) Consist generally o f one or more
M SAs (using the M SA boundaries that
were in effect as of January 1 of the
calendar year in w hich the delineation
is made) or one or more contiguous
political subdivisions, such as counties,
cities, or towns; and
(2) Include the geographies in w hich
the bank has its m ain office, its
branches, and its deposit-taking ATMs,
as well as the surrounding geographies
in w hich the bank has originated or
purchased a substantial portion of its
loans (including hom e mortgage loans,
small business and small farm loans,
and any other loans the bank chooses,
such as those consum er loans on w hich
the bank elects to have its performance
assessed).
(d) A d ju stm en ts to g e o g r a p h ic a rea(s).
A bank may adjust the boundaries of its
assessment area(s) to include only the
portion of a political subdivision that it
reasonably can be expected to serve. An
adjustment is particularly appropriate in
the case of an assessm ent area that
otherwise would be extrem ely large, of
unusual configuration, or divided by
significant geographic barriers.
(e) L im itation s on th e d e lin e a tio n o f
an a ss essm en t area . Each bank’s
assessment area(s):
(1)
Must consist only of whole
geographies;
(2) May not reflect illegal
discrim ination;
(3) May not arbitrarily exclude low- or
m oderate-incom e geographies, taking
into account the bank’s size and
financial condition; and
(4) May not extend substantially
beyond a CMSA boundary or beyond a
state boundary un less the assessment
area is located in a m ultistate M SA . If
a bank serves a geographic area that
extends substantially'beyond a state
boundary, the bank shall delineate
separate assessm ent areas for the areas
in each state. If a bank serves a
geographic area that extends
substantially beyond a CMSA boundary,
the bank shall delineate separate
assessment areas for the areas inside
and outside the CMSA.
(f) B a n k s servin g m ilita ry p er so n n el.
Notwithstanding the requirem ents of
this section, a bank w hose business
predom inantly consists of serving the
needs of m ilitary personnel or their
dependents who are not located w ithin
a defined geographic area may delineate
its entire deposit custom er base as its
assessm ent area.
(g) U se o f a ss e s s m e n t area (s). The
OCC uses the assessment area(s)
delineated by a bank in its evaluation of
the bank’s CRA perform ance unless the
OCC determ ines that the assessm ent
area(s) do not com ply with the
requirements of this section.
§ 25.42 Data collection, reporting, and
disclosure.
(a) L oan in fo rm a tio n r e q u ire d to b e
c o lle c te d a n d m a in ta in ed . A bank,
except a small bank, shall collect, and
m aintain in m achine readable form (as
prescribed by the OCC) until the
com pletion of its next CRA
exam ination, the following data for each
small business or small farm loan
originated or purchased by the bank:
(1) A unique number or alpha
num eric symbol that can be used to
identify the relevant loan file;
(2) The loan amount at origination;
(3) The loan location; and
(4) An indicator whether the loan was
to a business or farm with gross annual
revenues of $1 m illion or less.
(b) L oan in fo rm a tio n re q u ir e d to b e
rep o rted . A bank, except a small bank or
a bank that was a small bank during the
prior calendar year, shall report
annually by M arch 1 to the OCC in
m achine readable form (as prescribed by
the OCC) the following data for the prior
calendar year:
(1) S m a ll b u sin ess a n d s m a ll fa r m
lo a n d a ta . For each geography in w hich
the bank originated or purchased a
small business or small farm loan, the
aggregate number and amount of loans:
(1) With an amount at origination of
$1 00,000 or less;
(ii) W ith amount at origination of
more than $ 1 0 0 ,0 0 0 but less than or
equal to $ 2 5 0 ,0 0 0 ;
(iii) W ith an amount at origination of
more than $ 2 5 0 ,0 0 0 ; and
(iv) To businesses and farms with
gross annual revenues o f $1 m illion or
less (using the revenues that the bank
considered in making its credit
decision);
(2) C om m u n ity d e v e lo p m e n t lo a n
d ata . The aggregate number an d '
aggregate amount o f com m unity
development loans originated or
purchased; and
(3) H o m e m o rtg a g e lo a n s . If the bank
is subject to reporting under part 2 0 3 of
this title, the location of each home
mortgage loan application, origination,
or purchase outside the M SAs in w hich
the bank has a home or branch office (or
outside any M SA) in accordance with
the requirements of part 2 0 3 of this title.
(c) O p tion al d a ta c o llec tio n a n d
m a in ten a n c e.— (1) C on su m er lo a n s. A
bank may collect and m aintain in
m achine readable form (as prescribed by
the OCC) data for consum er loans
originated or purchased by the bank for
consideration under the lending test. A
bank may m aintain data for one or more
of the following categories of consumer
loans: motor vehicle, credit card, home
equity, other secured, and other
unsecured. If the bank m aintains data
for loans in a certain category, it shall
maintain data for all loans originated or
purchased w ithin that category. The
bank shall m aintain data separately for
each category, including for each loan:
(1) A unique number or alpha-num eric
symbol that can be used to identify the
relevant loan file;
(ii) The loan amount at origination or
purchase;
(iii) The loan location; and
(iv) The gross annual incom e of the
borrower that the bank considered in
making its credit decision.
(2) O ther lo a n d a ta . At its option, a
bank may provide other information
concerning its lending performance,
including additional loan distribution
data.
(d) D ata on a ffilia t e len d in g . A bank
that elects to have the OCC consider
loans by an affiliate, for purposes of the
lending or com m unity development test
or an approved strategic plan, shall
collect, m aintain, and report for those
loans the data that the bank would have
collected, m aintained, and reported
pursuant to paragraphs (a), (b), and (c)
of this section had the loans been
originated or purchased by the bank. For
home mortgage loans, the bank shall
also be prepared to identify the home
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
mortgage loans reported under part 203
o f this title by the affiliate.
(e) D ata on le n d in g b y a con sortiu m
o r a th ird party. A bank that elects to
have the OCC consider community
developm ent loans by a consortium or
third party, for purposes of the lending
or com m unity developm ent tests or an
approved strategic plan, shall report for
those loans the data that the bank would
have reported under paragraph (b)(2) of
this section had the loans been
originated or purchased by the bank.
(f) S m a ll b a n k s elec tin g ev a lu a tio n
u n d er th e len d in g , in v estm en t, a n d
s e rv ic e tests. A bank that qualifies for
evaluation under the sm all bank
perform ance standards but elects
evaluation under the lending,
investm ent, and service tests shall
collect, m aintain, and report the data
required for other banks pursuant to
paragraphs (a) and (b) of this section.
■(g) A sses sm e n t a r e a d ata . A bank,
except a sm all bank or a bank that was
a sm all bank during the prior calendar
year, shall collect and report to the OCC
by March 1 of each year a list for each
assessm ent area show ing the
geographies w ithin the area.
(h) CRA D isclo su re S tatem en t. The
OCC prepares annually for each bank
that reports data pursuant to this section
a CRA D isclosure Statem ent that
contains, on a state-by-state basis:
(1)
For each county (and for each
assessm ent area sm aller than a county)
w ith a population o f 500,000 persons or
fewer in w hich the bank reported a
sm all business or sm all farm loan:
(i) The number and amount of sm all
business and small farm loans reported
as originated or purchased located in
low-, moderate-, m iddle-, and upperincom e geographies;
(ii) A list grouping each geography
according to whether the geography is
low-, moderate-, middle-, or upperincom e;
(iii) A list showing each geography in
w hich the bank reported a small
business or small farm loan; and
(iv) The number and amount of sm all
business and sm all farm loans to
businesses and farms with gross annual
revenues o f $1 m illion or less;
(2)
For each county (and for each
assessm ent area sm aller than a county)
with a population in excess o f 500,000
persons in w hich the bank reported a
sm all business or sm all farm loan:
(i)
The number and amount o f small
business and sm all farm loans reported
as originated or purchased located in
geographies with median income
relative to the area m edian incom e of
less than 10 percent, 10 or more but less
than 20 percent, 20 or more but less
than 30 percent, 30 or more but less
than 40 percent, 40 or more but less
than 50 percent, 50 or more but less
than 60 percent, 60 or more but less
than 70 percent, 70 or more but less
than 80 percent, 80 or more but less
than 90 percent, 90 or more but less
than 100 percent, 100 or more but less
than 110 percent, 110 or more but less
than 120 percent, and 120 percent or
more;
(ii) A list grouping each geography in
the county or assessm ent area according
to whether the m edian incom e in the
geography relative to the area median
incom e is less than 10 percent, 10 or
more but less than 20 percent, 20 or
more but less than 30 percent, 30 or
more but less than 40 percent, 40 or
more but less than 50 percent, 50 or
more but less than 60 percent, 60 or
more but less than 70 percent, 70 or
more but less than 80 percent, 80 or
more but less than 90 percent, 90 or
more but less than 100 percent, 100 or
more but less than 110 percent, 110 or
more but less than 120 percent, and 120
percent or more;
(iii) A list showing each geography in
w hich the bank reported a small
business or small farm loan; and
(iv) The number and amount of small
business and sm all farm loans to
businesses and farms with gross annual
revenues of $1 m illion or less;
(3) The number and amount of small
business and sm all farm loans located
inside each assessm ent area reported by
the bank and the number and amount of
small business and sm all farm loans
located outside the assessm ent area(s)
reported by the bank; and
(4) The num ber and amount of
com m unity developm ent loans reported
as originated or purchased.
(i)
A g g reg ate d is c lo s u r e statem en ts.
The OCC, in conjunction with the Board
o f Governors of the Federal Reserve
System , the Federal Deposit Insurance
Corporation, and the O ffice o f Thrift
Supervision, prepares annually, for each
M SA (including an M SA that crosses a
state boundary) and the non-M SA
portion of each state, an aggregate
disclosure statement of small business
and sm all farm lending by all
institutions subject to reporting under
this part or parts 228, 345, or 563e of
this title. These disclosure statements
indicate, for each geography, the
number and amount o f all small
business and small farm loans
originated or purchased by reporting
institutions, except that the OCC may
adjust the form of the disclosure if
necessary, because o f special
circum stances, to protect the privacy of
a borrower or the com petitive position
o f an institution.
22185
(j) C en tral d a ta d e p o s ito r ies . The OCC
makes the aggregate disclosure
statem ents, described in paragraph (i) of
this section, and the individual bank
CRA Disclosure Statem ents, described
in paragraph (h) of this section,
available to the public at central data
depositories. The OCC publishes a list
of the depositories at w hich the
statem ents are available.
§ 25.43
file.
Content and availability of public
(a) In fo rm a tion a v a ila b le to th e
p u b lic . A bank shall maintain a public
file that includes the following
information:
(1) All w ritten com m ents received
from the public for the current year and
each of the prior two calendar years that
specifically relate to the bank’s
performance in helping to meet
com m unity credit needs, and any
response to the com m ents by the bank,
if neither the com m ents nor the
responses contain statements that reflect
adversely on the good name or
reputation of any persons other than the
bank or publication o f w hich would
violate specific provisions of law;
(2) A copy of the public section of the
bank’s most recent CRA Performance
Evaluation prepared by the OCC. The
bank shall place this copy in the public
file w ithin 30 business days after its
receipt from the OCC;
(3) A list of the b ank ’s branches, their
street addresses, and geographies;
(4) A list of branches opened or closed
by the bank during the current year and
each of the prior two calendar years,
their street addresses, and geographies;
(5) A list of services (including hours
o f operation, available loan and deposit
products, and transaction fees) generally
offered at the bank’s branches and
descriptions of material differences in
the ayailability or cost of services at
particular branches, if any. At its option,
a bank may include information
regarding the availability of alternative system s for delivering retail banking
services (e.g., ATM s, ATMs not owned
or operated by or exclusively for the
bank, banking by telephone or
com puter, loan production offices, and
bank-at-work or bank-by-mail
programs);
(6) A map of each assessment area
showing the boundaries Of the area and
identifying the geographies contained
w ithin the area, either on the map or in
a separate list; and
(7) Any other inform ation the bank
chooses.
(b) A d d itio n a l in fo rm a tio n a v a ila b le
to th e p u b lic .— (1) B a n k s o th e r than
s m a ll b a n k s. A bank, except a small
bank or a bank that was a small bank
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Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
during the prior calendar year, shall
include in its public file the following
information pertaining to the bank and
its affiliates, if applicable, for each of
the prior two calendar years:
(1) If the bank has elected to have one
or more categories o f its consum er loans
considered under the lending test, for
each o f these categories, the num ber and
amount of loans:
(A) To low-, moderate-, m iddle-, and
upper-incom e individuals;
(B) Located in low-, moderate-,
m iddle-, and upper-incom e census
tracts; and
(C) Located inside the bank’s
assessment area(s) and outside the
bank’s assessm ent area(s); and
(ii) The bank’s CRA Disclosure
Statement. The bank shall place the
statement in the public file w ithin three
business days of its receipt from the
OCC.
(2) B a n k s r e q u ir e d to re p o rt H o m e
M ortgage D isclosu re A ct (HMDA) d ata .
A bank required to report home
mortgage loan data pursuant part 203 of
this title shall include in its public file
a copy of the HMDA Disclosure
Statement provided by the Federal
Financial Institutions Exam ination
Council pertaining to the bank for each
of the prior two calendar years. In
addition, a bank that elected to have the
OCC consider the mortgage lending of
an affiliate for any of these years shall
include in its public file the affiliate’s
HMDA D isclosure Statem ent for those
years. The bank shall place the
statement(s) in the public file w ithin
three business days after its receipt.
(3) S m a ll b a n k s. A small bank or a
bank that was a small bank during the
prior calendar year shall include in its
public file:
(i) The bank’s loan-to-deposit ratio for
each quarter o f the prior calendar year
and, at its option, additional data on its
loan-to-deposit ratio; and
(ii) The inform ation required for other
banks by paragraph (b)(1) of this section,
if the bank has elected to be evaluated
under the lending, investment, and
service tests.
(4) B a n k s w ith strateg ic p la n s . A bank
that has been approved to be assessed
under a strategic plan shall include in
its public file a copy of that plan. A
bank need not include information
submitted to the OCC on a confidential
basis in conjunction with the plan.
(5) B a n k s with le s s th an sa tisfa cto ry
ratings. A bank that received a less than
satisfactory rating during its most recent
exam ination shall include in its public
file a description o f its current efforts to
improve its performance in helping to
meet the credit needs of its entire
com munity. T he bank shall update the
description quarterly.
(c) L o ca tio n o f p u b lic in fo rm a tio n . A
bank shall make available to the public
for inspection upon request and at no
cost the inform ation required in this
section as follows:
(1) At the m ain office and, if an
interstate bank, at one branch office in
each state, all inform ation in the public
file; and
(2) At each branch:
(i) A copy of the public section of the
bank’s m ost recent CRA Perform ance
Evaluation and a list of services
provided by the branch; and
(ii) W ithin five calendar days of the
request, all the inform ation in the public
file relating to the assessm ent area in
w hich the branch is located.
(d) C op ies. Upon request, a bank shall
provide copies, either on paper or in
another form acceptable to the person
making the request, of the information
in its public file. The bank may charge
a reasonable fee not to exceed the cost
of copying and m ailing (if applicable).
(e) U pdating. Except as otherwise
provided in this section, a bank shall
ensure that the inform ation required by
this section is current as of April 1 of
each year.
§ 25.44
Public notice by banks.
A bank shall provide in the public
lobby of its m ain office and each of its
branches the appropriate public notice
set forth in A ppendix B of this part.
Only a branch of a bank having more
than one assessm ent area shall include
the bracketed material in the notice for
branch offices. Only a bank that is an
affiliate of a holding com pany shall
include the next to the last sentence of
the notices. A bank shall include the
last sentence o f the notices only if it is
an affiliate o f a holding com pany that is
not prevented by statute from acquiring
additional banks.
§25.45 Publication of planned
examination schedule.
The OCC publishes at least 30 days in
advance o f the beginning of each
calendar quarter a list of banks
scheduled for CRA exam inations in that
quarter.
Subpart D— Transition Rules
§25.51
Transition rules.
(a) E ffec tiv e d a te . Sections of this part
become applicable over a period o f time
in accordance w ith the schedule set
forth in paragraph (c) of this section.
(b) D ata c o lle c tio n a n d rep ortin g ;
strateg ic p la n ; p e r fo r m a n c e tests a n d
sta n d ard s. (1) D ata c o llec tio n a n d
reportin g, (i) On January 1 ,1 9 9 6 , the
data collection requirem ents set forth in
§ 2 5 .4 2 (except § 25.42 (b) and (g))
become applicable.
(ii) On January 1 ,1 9 9 7 , the data
reporting requirem ents set forth in
§ 2 5 .4 2 (b) and (g) becom e applicable.
(2) S m a ll b a n k s. Beginning January 1,
1996, the OCC evaluates banks that
qualify for the sm all bank performance
standards described in § 25.26 under
that section.
(3) S trateg ic p la n . Beginning January
1 ,1 9 9 6 , a bank that elects to be
evaluated under an approved strategic
plan pursuant to § 25.27 may submit its
strategic plan to the OCC for approval.
(4) O ther p e r fo r m a n c e tests, (i)
Beginning January 1 ,1 9 9 6 , a bank may
elect to be evaluated under the pertinent
revised perform ance tests described in
§ § 2 5 .2 2 , 25.23, 25.24, and 25.25, if the
bank provides the necessary data to
permit evaluation.
(ii) Beginning July 1 ,1 9 9 7 , the OCC
evaluates all banks under the pertinent
revised perform ance tests.
(c)
S c h ed u le. (1) On July 1 ,1 9 9 5 ,
§ § 2 5 .1 1 , 25.12, 25.29, and 25.51
become applicable, and §§ 25.1, 25.2,
25.8 and 25.101 expire.
(2) On January 1 ,1 9 9 6 , § 25.41 and
the pertinent provisions of Subpart B of
this part w ill apply to banks that elect
to be evaluated under §§ 25.22 through
25.25, banks that subm it for approval
strategic plans under § 25.27, and banks
that qualify for the sm all bank
performance standards described in
§ 2 5 .2 6 .
(3) On January 1 ,1 9 9 6 , §§ 25.42
(except § 25.42 (b) and (g)) and 25.45
become applicable.
(4) On January 1 ,1 9 9 7 , §§ 25.41 and
25.42 (b) and (g) becom e applicable.
(5) On July 1 ,1 9 9 7 , §§ 25.21 through
25.28, 25.43, and 25.44 become
applicable, and §§ 25.3 through 25.7,
and 25.51 expire.
Appendix A to P art 25— Ratings
(a} Ratings in general. (1) In assigning a
rating, the OCC evaluates a bank’s
perform ance under the applicable
perform ance criteria in this part, in
accordance w ith § 2 5 .21, and § 25.2 8 , w hich
provides for adjustm ents on the basis of
evidence of d iscrim inatory or other illegal
credit practices.
(2)
A ban k’s perform ance need not fit each
aspect o f a particular rating profile in order
to receive that rating, and exceptionally
strong perform ance w ith respect to some
aspects m ay com pensate for weak
perform ance in others. The bank’s overall
perform ance, how ever, m ust be consistent
w ith safe and sound banking practices and
generally w ith the appropriate rating profile
as follows.
(b)
Banks evaluated under the lending,
investment, and service tests. (1) Lending
perform ance rating. T h e OCC assigns each
bank’s lending perform ance one o f the five
follow ing ratings.
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
(i) Outstanding. T he OCC rates a bank’s
lending perform ance “ outstanding” if, in
general, it dem onstrates:
(A) E xcellen t responsiveness to credit
needs in its assessm ent area(s), taking into
account the num ber and am ount o f home
mortgage, sm all bu siness, sm all farm, and
consum er loans, if applicable, in its
assessm ent area(s);
(B) A substantial m ajority o f its loans are
m ade in its assessm ent area(s);
(C) An excellen t geographic distribution of
loans in its assessm ent area(s);
(D) An exce llen t distribution, particularly
in its assessm ent area(s), o f loans among
ind ivid uals o f different incom e levels and
bu sinesses (including farms) o f different
sizes, given the product lin es offered by the
bank;
(E) A n exce llen t record o f serving the
credit needs o f highly econom ically
disadvantaged areas in its assessm ent area(s),
low -incom e individuals, or businesses
(includ ing farms} w ith gross annual revenues
o f $1 m illio n or less, co nsisten t w ith safe and
sound operations;
(F) E xtensive use o f innovative or flexible
lending practices in a safe and sound m anner
to address the credit needs o f low- or
m oderate-incom e individuals or geographies;
and
(G) It is a leader in making com m unity
developm ent loans.
(ii) High satisfactory. The OCC rates a
bank’s lending perform ance “ high
satisfactory” if, in general, it dem onstrates:
(A) Good responsiveness to credit needs in
its assessm ent area(s), taking into account the
num ber and am ount o f hom e mortgage, sm all
business, sm all farm, and consum er loans, if
applicable, in its assessm ent area(s);
(B) A high percentage o f its loans are made
in its assessm ent area(s);
(C) A good geographic distribution of loans
in its assessm ent area(s);
(D) A good distribution, particularly in its
assessm ent area(s), o f loans among
individuals o f different incom e levels and
bu sinesses (including farms) o f different
sizes, given the product lin es offered by the
bank;
(E) A good record o f serving the credit
needs o f highly econom ically disadvantaged
areas in its assessm ent area(s), low -incom e
ind ividuals, or businesses (including farms)
w ith gross annual revenues of $1 m illion or
less, co nsisten t w ith safe and soiled
operations;
(F) U se o f innovative or flexible lending
practices in a safe and sound m anner to
address the credit needs o f low - or moderateincom e individuals or geographies; and
(G) It has m ade a relatively high level of
com m unity developm ent loans.
(iii) Low satisfactory. T he OCC rates a
ban k’s lending perform ance “ low
satisfactory” if, in general, it demonstrates:
(A) A dequate responsiveness to credit
needs in its assessm ent area(s), taking into
account the num ber and am ount o f home
mortgage, sm all bu siness, sm all farm, and
consu m er loans, if applicable, in its
assessm ent area(s);
(B) An adequate percentage o f its loans are
made in its assessm ent area(s);
(C) An adequate geographic distribution of
loans in its assessm ent area(s);
(D) An adequate distribution, particularly
in its assessm ent area(s), o f loans among
ind ivid uals o f different incom e levels and
bu sinesses (includ ing farms) o f different
sizes, given the product lines offered by the
bank;
(E) A n adequate record o f serving the credit
needs o f highly econom ically disadvantaged
areas in its assessm ent area(s), low -incom e
individuals, or businesses (including farms)
w ith gross annual revenues o f $1 m illion o r
less, co nsisten t w ith safe and sound
operations;
(F) Lim ited use o f innovative or flexible
lending practices in a safe and sound m anner
to address the credit needs o f low- or
m oderate-incom e individuals or geographies;
and
(G) It has m ade an adequate level of
com m unity developm ent loans.
(iv) N eeds to improve. T he OCC rates a
bank’s lending perform ance “ needs to
im prove” if, in general, it dem onstrates:
(A) Poor responsiveness to credit needs in
its assessm ent area(s), taking into account the
num ber and am ount of hom e mortgage, sm all
bu siness, sm all farm, and consum er loans, if
applicable, in its assessm ent area(s);
(B) A sm all percentage o f its loans are
m ade in its assessm ent area(s);
(C) A poor geographic d istribution of loans,
particularly to low- or m oderate-incom e
geographies, in its assessm ent area(s);
(D) A poor distribution, particularly in its
assessm ent area(s), o f loans among
individuals o f different incom e levels and
bu sinesses (including farms) o f different
sizes, given the product lin es offered by the
bank;
(E) A poor record o f serving the credit
needs o f highly econom ically disadvantaged
areas in its assessm ent area(s), low -incom e
individuals, or businesses (including farms)
w ith gross annual revenues o f $1 m illion or
less, co nsisten t w ith safe and sound
operations;
(F) Little use o f innovative or flexible
lending practices in a safe and sound m anner
to address the credit needs o f low - or
m oderate-incom e individuals or geographies;
and
(G) It has m ade a low level o f com m unity
developm ent loans.
(v) Substantial noncom pliance. T he OCC
rates a b an k ’s lending perform ance as being
in “ substantial noncom plian ce” if, in
general, it dem onstrates:
(A) A very poor responsiveness to credit
needs in its assessm ent area(s), taking into
account the num ber and am ount o f home
mortgage, sm all business, sm all farm, and
consum er loans, if applicable, in its
assessm ent area(s);
(B) A very sm all percentage o f its loans are
m ade in its assessm ent area(s);
(C) A very poor geographic distribution of
loans, particularly to low- or moderateincom e geographies, in its assessm ent area(s);
(D) A very poor distribution, particularly in
its assessm ent area(s), o f loans among
individuals o f different incom e levels and
bu sinesses (including farms) o f different
sizes, given the product lines offered by the
bank;
(E) A very poor record o f serving the credit
needs o f highly econom ically disadvantaged
22187
areas in its assessm ent area(s), low -incom e
ind ividuals, or bu sinesses (including farms)
w ith gross annual revenues o f $1 m illion or
less, co nsisten t w ith safe and sound
operations;
(F) No use o f innovative or flexible lending
practices in a safe and sound m anner to
address the cred it needs of low- or m oderateincom e individuals or geographies; and
(G) It has m ade few, if any, com m unity
developm ent loans.
(2) Investment perform ance rating. T he
OCC assigns each bank’s investm ent
perform ance one o f the five follow ing ratings.
(i) Outstanding. T he OCC rates a bank’s
investm ent perform ance “outstanding” if, in
general, it dem onstrates:
(A) An excellen t level o f qualified
investm ents, particularly those that are not
routinely provided by private investors, often
in a leadership position;
(B ) E xtensive use o f innovative or com plex
qualified investm ents; and
(C) E x celle n t responsiveness to credit and
com m unity developm ent needs.
(ii) High satisfactory. T he OCC rates a
b an k’s investm ent perform ance “ high
satisfactory” if, in general, it dem onstrates:
(A) A significant level o f qualified
investm ents, particularly those that are not
routinely provided by private investors,
occasion ally in a leadership position;
(B ) Sig n ificant use o f innovative or
com plex qualified investm ents; and
(C) Good responsiveness tQ cred it and
com m unity developm ent needs.
(iii) Low satisfactory. T he OCC rates a
bank’s investm ent perform ance “ low
satisfactory” if, in general, it dem onstrates:
(A) A n adequate level of qualified
investm ents, particularly those that are not
routinely provided by private investors,
although rarely in a leadership position;
(B ) O ccasional use o f innovative or
com plex qualified investm ents; and
(C) A dequate responsiveness to credit and
com m unity developm ent needs.
(iv) N eeds to improve. T he OCC rates a
bank’s investm ent perform ance “needs to
im prove” if, in general, it dem onstrates:
(A) A poor level o f qualified investm ents,
particularly those that are not routinely
provided by private investors;
(B ) Rare use o f innovative or com plex
qualified investm ents; and
(C) Poor responsiveness to credit and
com m unity developm ent needs.
(v) Substantial noncom pliance. T h e OCC
rates a b an k ’s investm ent perform ance as
being in “substantial n oncom p lian ce” if, in
general, it dem onstrates:
(A) Few , if any, qualified investm ents,
particularly those that are not routinely
provided by private investors;
(B ) No use o f innovative or com plex
qualified investm ents; and
(C) Very poor responsiveness to credit and
com m unity developm ent needs.
(3) Service perform ance rating. T he OCC
assigns each bank’s service perform ance one
o f the five follow ing ratings.
(i)
Outstanding. The OCC rates a bank’s
service perform ance "ou tstan d in g ” if, in
general, the bank dem onstrates:
(A) Its service delivery system s are readily
accessible to geographies arid individuals of
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Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
different incom e levels in its assessm ent
area(s);
(B ) T o the extent changes have been made,
its record o f opening and closing branches
has improved the a ccessibility o f its delivery
system s, particularly in low- or moderateincom e geographies or to low- or m oderateincom e individuals;
(C) Its services (including, where
appropriate, business hours) are tailored to
the convenience and needs o f its assessm ent
area(s), particularly low- or m oderate-incom e
geographies or low- or m oderate-incom e
individuals; and
(D) It is a leader in providing com m unity
developm ent services.
(ii) High satisfactory. T he OCC rates a
bank’s service perform ance “ high
satisfactory” if, in general, the bank
demonstrates:
(A) Its service delivery system s are
accessible to geographies and individuals of
different incom e levels in its assessm ent
area(s);
(B ) To the extent changes have been made,
its record o f opening and closing branches
has not adversely affected the accessibility o f
its delivery system s, particularly in low- and
m oderate-incom e geographies and to lowand m oderate-incom e individuals;
(C) Its services (including, where
appropriate, bu siness hours) do not vary in
a way that inconven iences its assessm ent
area(s), particularly low- and moderateincom e geographies and low- and moderateincom e individuals; and
(D) It provides a relatively high level of
com m unity developm ent services.
(iii) Low satisfactory. T he OCC rates a
bank’s service perform ance “ low
satisfactory” if, in general, the bank
demonstrates:
(A) Its service delivery system s are
reasonably accessible to geographies and
individuals o f different incom e levels in its
assessm ent area(s);
(B ) T o the extent changes have been made,
its record o f opening and closing branches
has generally not adversely affected the
a ccessibility o f its delivery system s,
particularly in low- and m oderate-incom e
geographies and to low- and moderateincom e individuals;
(C) Its services (including, where
appropriate, business hours) do not vary in
a way that inconven iences its assessm ent
area(s), particularly low- and moderateincom e geographies and low- and moderateincom e individuals; and
(D) It provides an adequate level o f
com m unity developm ent services.
(iv) Needs to improve. T h e OCC rates a
ban k’s service perform ance “ needs to
im prove” if, in general, the bank
dem onstrates:
(A) Its service delivery system s are
unreasonably in accessible to portions o f its
assessm ent area(s), particularly to low- or
m oderate-incom e geographies or to low- or
m oderate-incom e individuals;
(B) To the extent changes have been made,
its record of opening and closing branches
has adversely affected the accessibility its
delivery system s, particularly in low- or
m oderate-incom e geographies or to low- or
m oderate-incom e individuals;
qualified investm ents, particularly
(C) Its services (including, where
appropriate, business hours) vary in a way
investm ents that ai;e not routinely provided
that inconveniences its assessm ent area(s),
by private investors;
particularly low- or m oderate-incom e
(ii) Rare use o f innovative or com plex
geographies or low- or m oderate-incom e
qualified investm ents, com m unity
individuals; and
developm ent loans, or com m unity
(D) It provides a lim ited level of
developm ent services; and
com m unity developm ent services.
(iii) Poor responsiveness to credit and
(v)
Substantial noncom pliance. The OCC com m unity developm ent needs in its
rates a bank’s service perform ance as being
assessm ent area(s).
in "su bstan tial noncom p lian ce” if, in
(4)
Substantial noncom pliance. The OCC
general, the bank dem onstrates:
rates a w holesale or lim ited purpose bank’s
com m unity developm ent perform ance in
(A) Its service delivery system s are
unreasonably inaccessible to significant
“ substantial n oncom p lian ce” if, in general, it
portions o f its assessm ent area(s), particularly dem onstrates:
to low- or m oderate-incom e geographies or to
(i) Few , if any, com m unity developm ent
low - or m oderate-incom e individuals;
loans, com m unity developm ent services, or
qualified investm ents, particularly
(B) To the extent changes have been made,
its record o f opening and closing branches
investm ents that are not routinely provided
by private investors;
has significantly adversely affected the
accessibility o f its delivery system s,
(ii) No use o f innovative or com plex
particularly in low- or m oderate-incom e
qualified investm ents, com m unity
geographies or to low- or m oderate-incom e
developm ent loans, or com m unity
individuals;
developm ent services; and
(C) Its services (including, where
(iii) Very poor responsiveness to credit and
appropriate, business hours) vary in a way
com m unity developm ent needs in its
that significantly inconven iences its
assessm ent area(s).
(d)
Banks evaluated under the sm all bank
assessm ent area(s), particularly low- or
perform ance standards. T he OCC rates the
m oderate-incom e geographies or low - or
perform ance o f each bank evaluated under
m oderate-incom e individuals; and
(D) It provides few, if any, com m unity
the sm all bank perform ance standards as
developm ent services.
follow s:
(1) Eligibility fo r a satisfactory rating. T he
(c) Wholesale or limited purpose banks.
OCC rates a ban k’s perform ance
T he OCC assigns each w holesale or lim ited
“ satisfactory” if, in general, the bank
purpose bank’s com m unity developm ent
perform ance one o f the four follow ing
dem onstrates:
(1) A reasonable loan-to-deposit ratio
ratings.
(considering seasonal variations) given the
(1) Outstanding. T he OCC rates a
w holesale or lim ited purpose bank’s
bank’s size, financial cond ition, the credit
com m unity developm ent perform ance
needs o f its assessm ent area(s), and taking
“ outstanding” if, in general, it demonstrates:
into account, as appropriate, lending-related
(1) A high level of com m unity developm ent activities such as loan originations for sale to
the secondary m arkets and com m unity
loans, com m unity developm ent services, or
developm ent loans and qualified
qualified investm ents, particularly
investm ents;
investm ents that are not routinely provided
by private investors;
(ii) A m ajority o f its loans and, as
appropriate, other lending-related activities
(ii) Extensive use o f innovative or com plex
are in its assessm ent area(s);
qualified investm ents, com m unity
(iii) A distribution o f loans to and, as
developm ent loans, or com m unity
appropriate, other lending related-activities
developm ent services; and
(iii) E xcellent responsiveness to credit and
for individuals o f different incom e levels
(includ ing low- and m oderate-incom e
com m unity developm ent needs in its
assessm ent area(s).
individuals) and businesses and farms of
(2) Satisfactory. T he OCC rates a w holesale
d ifferent sizes that is reasonable given the
dem ographics o f the bank’s assessm ent
or lim ited purpose bank’s com m unity
developm ent perform ance “ satisfactory” if,
area(s);
(iv) A record o f taking appropriate action,
in general, it dem onstrates:
as w arranted, in response to w ritten
(i) An adequate level o f com m unity
com plaints, if any, about the bank’s
developm ent loans, com m unity developm ent
perform ance in helping to m eet the credit
services, or qualified investm ents,
needs o f its assessm ent area(s); and
particularly investm ents that are not
(v) A reasonable geographic distribution of
routinely provided by private investors;
(ii) O ccasional use of innovative or
loans given the bank’s assessm ent area(s).
(2) Eligibility fo r an outstanding rating. A
com plex qualified investm ents, com m unity
developm ent loans, or com m unity
bank that m eets each o f the standards for a
“ satisfactory” rating under this paragraph
developm ent services; and
(iii) Adequate responsiveness to credit and
and exceeds som e or all o f those standards
m ay w arrant consideration for an overall
com m unity developm ent needs in its
assessm ent area(s).
rating o f “ outstanding.” In assessing w hether
(3) N eeds to improve. T he OCC rates a
a ban k’s perform ance is “outstanding,” the
w holesale or lim ited purpose bank’s
OCC considers the extent to w hich the bank
com m unity developm ent perform ance as
exceeds each o f the perform ance standards
for a “ satisfactory” rating and its
“ needs to im prove” if, in general, it
dem onstrates:
perform ance in making qualified investm ents
(i)
A poor level o f com m unity developm entand its perform ance in providing branches
loans, com m unity developm ent services, or
and other services and delivery system s that
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
enhance credit availability in its assessm ent
area(s).
(3)
N eeds to improve or substantial
noncom pliance ratings. A bank also may
receive a rating o f “needs to im prove” or
"su bstan tial noncom plian ce” depending on
the degree to w hich its perform ance has
failed to m eet the standards for a
"satisfacto ry ” rating.
(e)
Strategic plan assessm ent and rating —
(1) Satisfactory goals. T he OCC approves as
"satisfacto ry ” m easurable goals that
adequately help to m eet the credit needs of
the ban k’s assessm ent area(s).
(2) Outstanding goals. If the plan identifies
a separate group of m easurable goals that
substantially exceed the levels approved as
“ satisfactory,” the OCC w ill approve those
goals as “ outstanding.”
(3) Bating. T he OCC assesses the
perform ance o f a bank operating under an
approved plan to determ ine if the bank has
m et its plan goals:
(i) If the bank substantially ach ieves its
plan goals for a satisfactory rating, the OCC
w ill rate the bank’s perform ance under the
plan as “ satisfactory.”
(ii) If the bank exceeds its plan goals for
a satisfactory rating and substantially
achieves its plan goals for an outstanding
rating, the OCC w ill rate the ban k’s
perform ance under the plan as
“ outstanding.”
(iii) If the bank fails to m eet substantially
its plan goals for a satisfactory rating, the
OCC w ill rate the bank as eith er “ needs to
im prove” or "su bstan tial n o ncom p lian ce,”
depending on the extent to w hich it falls
short o f its plan goals, unless the bank
-elected in its plan to be rated otherw ise, as
provided in § 25.27(f)(4).
Appendix B to Part 25— CRA Notice
(a)
Notice fo r main offices and, i f an
interstate bank, one branch office in each
state.
Community Reinvestment A ct Notice
Under the Federal Comm unity
R einvestm ent A ct (CRA), the Com ptroller of
the Currency evaluates our record o f helping
to m eet the credit needs of this com m unity
consistent w ith safe and sound operations.
T he Com ptroller also takes this record into
account w hen deciding on certain
applications subm itted by us.
Your involvem ent is encouraged.
You are entitled to certain inform ation
about our operations and our perform ance
under the CRA, including, for exam ple,
inform ation about our branches, such as their
location and services provided at them ; the
p u blic section o f our m ost recent CRA
Perform ance Evaluation, prepared by the
Com ptroller; and com m ents received from
the p u blic relating to our perform ance in
helping to m eet com m unity credit needs, as
w ell as our responses to those com m ents.
You may review this inform ation today.
At least 30 days before the beginning o f
each quarter, the Com ptroller publishes a
nationw ide list o f the banks that are
scheduled for CRA exam ination in that
quarter. T h is list is available from the Deputy
C om ptroller (address). You may send w ritten
com m ents about our perform ance in helping
to m eet com m unity credit needs to (nam e
and address o f official at bank) and Deputy
Com ptroller (address). Your letter, together
w ith any response by us, w ill be considered
by the Com ptroller in evaluating our CRA
perform ance and may be m ade public.
You m ay ask to look at any com m ents
received by the Deputy Com ptroller. You
may also request from the Deputy
Com ptroller an announcem ent o f our
applications covered by the CRA filed w ith
the Com ptroller. W e are an affiliate o f (nam e
o f holding com pany), a bank holding
com pany. You may request from the (title of
responsible official), Federal Reserve B ank of
________ (address) an announcem ent of
applications covered by the CRA filed by
bank holding com panies.
(b) Notice fo r branch offices.
Community Reinvestment A ct Notice
U nder the Federal Comm unity
R einvestm ent A ct (CRA), the Com ptroller of
the Currency evaluates our record o f helping
to m eet the credit needs o f this com m unity
consistent w ith safe and sound operations.
T he Com ptroller also takes this record into
account w hen deciding on certain
applications subm itted by us.
Y our involvem ent is encouraged.
You are entitled to certain inform ation
about our operations and our perform ance
under the CRA. You may review today the
p ublic section o f our m ost recent CRA
evaluation, prepared by the Com ptroller, and
a list o f services provided at this branch. You
may also have access to the follow ing
additional inform ation, w hich we w ill m ake
available to you at this branch w ithin five
calendar days after you m ake a request to us:
(1) A m ap show ing the assessm ent area
containing this branch, w hich is the area in
w hich the Com ptroller evaluates our CRA
perform ance in this com m unity; (2)
inform ation about our branches in this
assessm ent area; (3) a list o f services we
provide at those locations; (4) data on our
lending perform ance in this assessm ent area;
and (5) copies o f all w ritten com m ents
received by us that specifically relate to our
CRA perform ance in this assessm ent area,
and any responses we have m ade to those
com m ents. If we are operating under an
approved strategic plan, you may also have
access to a copy o f the plan.
[If you would like to review inform ation
about our CRA perform ance in other
com m unities served by us, the public file for
our entire bank is available at (nam e of office
located in state), located at (address).]
At least 30 days before the beginning of
each quarter, the Com ptroller pu blishes a
nationw ide list o f the banks that are
scheduled for CRA exam ination in that
quarter. T h is list is available from the Deputy
Com ptroller (address). You may send w ritten
com m ents about our perform ance in helping
to m eet com m unity credit needs to (nam e
and address o f official at bank) and Deputy
Com ptroller (address). Your letter, together
w ith any response by us, w ill be considered
by the Com ptroller in evaluating our CRA
perform ance and may be m ade public.
You may ask to look at any com m ents
received by the Deputy Com ptroller. You
m ay also request from the Deputy
22189
Com ptroller an announcem ent o f our
applications covered by the CRA filed w ith
the Com ptroller. W e are an affiliate o f (name
o f holding com pany), a bank holding
com pany. You may request from the (title of
responsible official), Federal Reserve B ank of
_________(address) an announcem ent of
applications covered by the CRA filed by
bank holding com panies.
§§25.1, 25.2, 25.8, and 25.101, and the
undesignated center heading preceding
§25.101 [Removed]
3. Sections 25.1, 25.2, 25.8 and 25.101
and the undesignated center heading
preceding § 25.101 are removed
effective July 1 ,1 9 9 5 .
§§ 25.3, 25.4, 25.5, 25.6, 25.7, and Subpart D
[Removed]
4. Sections 25.3, 25.4, 25.5, 25.6, and
25.7 and subpart D, consisting of
§ 25.51, are removed effective July 1,
1997.
Dated: A pril 19, 1995.
Eugene A. Ludwig,
Comptroller o f the Currency.
Federal Reserve System
12 CFR CHAPTER II
For the reasons outlined in the joint
preamble, the Board of Governors of the
Federal Reserve System amends 12 CFR
chapter II as set forth below:
PART 228— COMMUNITY
REINVESTMENT (REGULATION BB)
1. The authority citation for part 228
is revised to read as follows:
Authority: 12 U.S.C. 321, 325, 1828(c),
1 8 4 2 ,1 8 4 3 , 1844, and 2901 et seq.
2. Part 228 is amended by adding
Subparts A through D and Appendices
A and B to read as follows:
Subpart A—General
Sec.
228.11
228.12
A uthority, purposes, and scope.
D efinitions.
Subpart B— Standards for Assessing
Performance
228.21 Perform ance tests, standards, and
ratings, in general.
228.22 Lending test.
228.23 Investm ent test.
228.24 Service test.
228.25 Com m unity developm ent test for
w holesale or lim ited purpose banks.
22 8 .2 6 Sm all bank perform ance standards.
22 8 .2 7 Strategic plan.
228.28 A ssigned ratings.
22 8 .2 9 E ffect o f CRA perform ance on
applications.
Subpart C— Records, Reporting, and
Disclosure Requirements
228.41 A ssessm ent area delineation.
228.42 Data collection , reporting, and
disclosure.
228.43 Content and availability o f public
file.
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Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
22 8 .4 4 Public notice by banks.
2 2 8 .4 5 Publication o f planned exam ination
schedule.
Subpart D—Transition Rules
2 2 8 .5 1
T ransition rules.
Appendix A to P art 2 28— Ratings
A ppendix B to P art 228— CRA Notice
Subpart A— General
§ 228.11
Authority, purposes, and scope.
(a) A uthority. The Board o f Governors
o f the Federal Reserve System (the
Board) issues this part to implement the
Community Reinvestm ent Act (12
U.S.C. 2901 et seq.) (CRA). The
regulations com prising this part are
issued under the authority of the CRA
and under the provisions of the United
States Code authorizing the Board:
(1) To conduct exam inations of Statechartered banks that are members of the
Federal Reserve System (12 U.S.C. 325);
(2) To conduct exam inations of bank
holding com panies and their
subsidiaries (12 U.S.C. 1844); and
(3) To consider applications for;
(i) Domestic branches by State
member banks (12 U.S.C. 321);
(ii) Mergers in w hich the resulting
bank would be a State member bank (12
U.S.C. 1828(c));
(iii) Form ations of, acquisitions of
banks by, and mergers of, bank holding
com panies (12 U.S.C. 1842); and
(iv) The acquisition of savings
associations by bank holding com panies
(12 U.S.C. 1843).
(b) P u rp oses. In enacting the CRA, the
Congress required each appropriate
Federal financial supervisory agency to
assess an institution’s record of helping
to m eet the credit needs o f the local
com m unities in w hich the institution is
chartered, consistent w ith the safe and
sound operation of the institution, and
to take this record into account in the
agency’s evaluation o f an application for
a deposit facility by the institution. This
part is intended to carry out the
purposes of the CRA by:
(1) Establishing the framework and
criteria by w hich the Board assesses a
bank’s record of helping to meet the
credit needs o f its entire community,
including low- and moderate-income
neighborhoods, consistent with the safe
and sound operation of the bank; and
(2) Providing that the Board takes that
record into account in considering
certain applications.
(c) S c o p e — (1) G en eral. This part
applies to all banks except as provided
in paragraph (c)(3) of this section.
(2)
F oreign b a n k a cq u isition s. This
part also applies to an uninsured State
branch (other than a limited branch) of
a foreign bank that results from an
acquisition described in section 5(a)(8)
of the International Banking Act of 1978
(12 U.S.C. 3103(a)(8)). The terms “ State
branch” and “ foreign bank” have the
same meanings as in section 1(b) of the
International Banking A ct of 1978 (12
U.S.C. 3101 et seq.); the term
“uninsured State branch” means a State
branch the deposits of w hich are not
insured by the Federal Deposit
Insurance Corporation; the term
“lim ited branch” means a State branch
that accepts only deposits that are
perm issible for a corporation organized
under section 25A of the Federal
Reserve Act (12 U.S.C. 611 et seq.).
(3)
C ertain s p e c ia l p u r p o s e b an ks.
T his part does not apply to special
purpose banks that do not perform
com m ercial or retail banking services by
granting credit to the public in the
ordinary course of business, other than
as incident to their specialized
operations. These banks include
banker’s banks, as defined in 12 U.S.C.
24 (Seventh), and banks that engage
only in one or more of the following
activities: providing cash management
controlled disbursement services or
serving as correspondent banks, trust
com panies, or clearing agents.
§228.12
Definitions.
For purposes of this part, the
follow ing definitions apply:
(a) A ffilia te m eans any company that
controls, is controlled by, or is under
com mon control with another company.
T he term “control” has the meaning
given to that term in 12 U.S.C.
1841(a)(2), and a com pany is under
com m on control with another company
if both com panies are directly or
indirectly controlled by the same
company.
(b) A rea m e d ia n in c o m e means:
(1) The median fam ily incom e for the
M SA , if a person or geography is located
in an M SA; or
(2) The statewide nonmetropolitan
m edian family incom e, if a person or
geography is located outside an MSA.
(c) A sses sm e n t a re a means a
geographic area delineated in
accordance with § 228.41.
(d) A u to m a ted te lle r m a c h in e (ATM)
m eans an automated, unstaffed banking
facility owned or operated by, or
operated exclusively for, the bank at
w hich deposits are received, cash
dispersed, or money lent.
(e) B a n k means a State member bank
as that term is defined in section 3(d)(2)
o f the Federal Deposit Insurance Act (12
U .S.C. 1813(d)(2)), except as provided in
§ 228.11(c)(3), and includes an
uninsured State branch (other than a
lim ited branch) of a foreign bank
described in § 228.11(c)(2).
(f) B ra n ch means a staffed banking
facility approved as a branch, whether
shared or unshared, including, for
exam ple, a m ini-branch in a grocery
store or a branch operated in
conjunction w ith any other local
business or nonprofit organization.
(g) CMSA means a consolidated
m etropolitan statistical area as defined
by the Director o f the O ffice of
Management and Budget.
(h) C om m u n ity d e v e lo p m e n t means:
(1) Affordable housing (including
m ultifam ily rental housing) for low- or
moderate-incom e individuals;
(2) Community services targeted to
low- or m oderate-incom e individuals;
(3) A ctivities that promote econom ic
developm ent by financing businesses or
farms that meet the size eligibility
standards o f 13 CFR 121.802(a)(2) or
have gross annual revenues of $1
m illion or less; or
(4) A ctivities that revitalize or
stabilize low- or moderate-incom e
geographies.
(i) C om m u n ity d e v e lo p m e n t lo a n
m eans a loan that:
(1) Has as its primary purpose
com m unity developm ent; and
(2) Except in the case o f a wholesale
or lim ited purpose bank:
(i) Has not been reported or collected
by the bank or an affiliate for
consideration in the bank’s assessment
as a home mortgage, sm all business,
sm all farm, or consum er loan, unless it
is a m ultifam ily dwelling loan (as
described in A ppendix A to Part 203 of
this chapter); and
(ii) Benefits the bank’s assessment
area(s) or a broader statewide or regional
area that includes the bank’s assessment
area(s).
(j) C om m u n ity d e v e lo p m e n t serv ice
m eans a service that:
(1) Has as its primary purpose
com m unity developm ent;
(2) Is related to the provision of
financial services; and
(3) Has not been considered in the
evaluation of the bank’s retail banking
services under § 228.24(d).
(k) C o n su m er lo a n means a loan to
one or more individuals for household,
fam ily, or other personal expenditures.
A consum er loan does not include a
hom e mortgage, small business, or small
farm loan. Consumer loans include the
follow ing categories of loans:
(1) M otor v e h ic le lo a n , w hich is a
consum er loan extended for the
purchase of and secured by a motor
vehicle;
(2) C redit c a r d lo a n , w hich is a line
of credit for household, family, or other
personal expenditures that is accessed
by a borrow er’s use o f a “credit card,”
as this term is defined in § 226.2 of this
chapter;
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
(3) H om e e q u ity lo a n , w hich is a
consumer loan secured by a residence of
the borrower; (4) O ther se c u r e d co n s u m e r Joan ,
w hich is a secured consum er loan that
is not included in one of the other
categories o f consum er loans; and
(5 J O ther u n se c u red c o n s u m e r lo a n ,
w hich is an unsecured consum er loan
that is not included in one of the other
categories of consum er loans.
(1) G eo g ra p h y m eans a census tract or
a block numbering area delineated by
the United States Bureau of the Census
in the m ost recent decennial census.
(m) H o m e m ortg a g e lo a n m eans a
“home improvement loan” or a “home
purchase loan” as defined in § 203.2 of
this chapter.
(n) In c o m e le v e l includes:
(1) L o w -in co m e, w hich m eans an
individual incom e that is less than 50
percent of the area median incom e, or
a median fam ily incom e that is less than
50 percent, in the case of a geography.
(2) M o d er a te-in co m e , w hich m eans an
individual incom e that is at least 50
percent and less than 80 percent of the
area median incom e, or a m edian family
income that is at least 50 and less than
80 percent, in the case of a geography.
(3) M id d le-in co m e, w hich m eans an
individual incom e that is at least 80
percent and less than 120 percent of the
area median incom e, or a m edian fam ily
income that is at least 80 and less than
120 percent, in the case of a geography.
(4) U p p er-in com e, w hich m eans an
individual incom e that is 120 percent or
more of the area median incom e, or a
median fam ily incom e that is 120
percent or more, in the case o f a
geography.
(0) L im ited p u r p o s e b a n k m eans a
bank that offers only a narrow product
line (such as credit card, or motor
vehicle loans) to a regional or broader
market and for w hich a designation as
a limited purpose bank is in effect, in
accordance w ith § 228.25(b).
(p) L oan lo c a tio n . A loan is located as
follows:
(1) A consum er loan is located in the
geography where the borrower resides;
(2) A home mortgage loan is located
in the geography where the property to
which the loan relates is located; and
(3) A small business or sm all farm
loan is located in the geography where
the main business facility or farm is
located or where the loan proceeds
otherwise w ill be applied, as indicated
by the borrower.
(q) L oan p ro d u c tio n o ff ic e m eans a
staffed facility, other than a branch, that
is open to the public and that provides
lending-related services, such as loan
information and applications.
(r) MSA m eans a m etropolitan
statistical area or a primary
m etropolitan statistical area as defined
by the Director of the Office of
Management and Budget.
(s) Q u a lified in v estm en t m eans a
lawful investm ent, deposit, m em bership
share, or grant that has as its primary
purpose com m unity development.
(t) S m a ll b a n k means a bank that, as
of December 31 of either of the prior two
calendar years, had total assets of less
than $250 m illion and was independent
or an affiliate o f a holding com pany
that, as of December 31 of either of the
prior two calendar years, had total
banking and thrift assets of less than $1
billion.
(u)
S m a ll b u sin ess lo a n means a loan
included in “ loans to small busin esses”
as defined in the instructions for
preparation of the Consolidated Report
of Condition and Income.
(v)
S m a ll fa r m lo a n m eans a loan
included in “ loans to small farm s” as
defined in the instructions for
preparation o f the Consolidated Report
of Condition and Income.
(w) W h o le sa le b a n k m eans a bank that
is not in the business of extending hom e
mortgage, sm all business, sm all farm, or
consumer loans to retail custom ers, and
for w hich a designation as a w holesale
bank is in effect, in accordance with
§ 228.25(b).
Subpart B— Standards for Assessing
Performance
§ 228.21 Performance tests, standards,
and ratings, in general.
(a)
P erfo rm a n c e tests a n d sta n d a rd s.
The Board assesses the CRA
performance of a bank in an
exam ination as follows:
(1) L en d in g , in v estm en t, a n d s e rv ic e
tests. The Board applies the lending,
investment, and service tests, as
provided in §§ 228.22 through 228.24,
in evaluating the performance of a bank,
except as provided in paragraphs (a)(2),
(a)(3), and (a)(4) of this section.
(2) C om m u n ity d e v e lo p m e n t test f o r
w h o le s a le o r lim ite d p u r p o s e b a n k s. The
Board applies the com munity
development test for a w holesale or
limited purpose bank, as provided in
§ 228.25, except as provided in
paragraph (a)(4) o f this section.
(3) S m a ll b a n k p e r fo r m a n c e
sta n d a rd s. The Board applies the small
bank performance standards as provided
in § 228.26 in evaluating the
performance of a sm all bank or a bank
that was a small bank during the prior
calendar year, unless the bank elects to
be assessed as provided in paragraphs
(a)(1), (a)(2), or (a)(4) of this section. The
bank may elect to be assessed as
provided in paragraph (a)(1) of this
section only if it collects and reports the
22191
data required for other banks under
§ 2 2 8 .4 2 .
(4) S trateg ic p la n . T h e Board
evaluates the perform ance of a bank
under a strategic plan if the bank
submits, and the Board approves, a
strategic plan as provided in § 228.27.
(b) P erfo rm a n c e con tex t. The Board
applies the tests and standards in
paragraph (a) of this section and also
considers whether to approve a
proposed strategic plan in the context
of:
(1) Demographic data on median
incom e levels, distribution of household
incom e, nature of housing stock,
housing costs, and other relevant data
pertaining to a bank’s assessment
area(s);
(2) Any inform ation about lending,
investment, and service opportunities in
the bank’s assessm ent area(s)
maintained by the bank or obtained
from com m unity organizations, state,
local, and tribal governments, econom ic
development agencies, or other sources;
(3) The bank’s product offerings and
business strategy as determ ined from
data provided by the bank;
(4) Institutional capacity and
constraints, including the size and
financial condition of the bank, the
econom ic clim ate (national, regional,
and local), safety and soundness
lim itations, and any other factors that
significantly affect the bank’s ability to
provide lending, investm ents, or
services in its assessm ent area(s);
(5) The bank’s past performance and
the performance ofsh n ilarly situated
lenders;
(6) T he bank’s public file, as
described in § 2 2 8 .4 3 , and any written
com ments about the bank’s CRA
performance submitted to the bank or
the Board; and
(7) Any other information deemed
relevant by the Board.
(c) A ssig n ed ratin gs. The Board
assigns to a bank one o f the following
four ratings pursuant to § 228.28 and
Appendix A of this part: “ outstanding”;
“ satisfactory” ; “needs to im prove”; or
“ substantial noncom pliance” as
provided in 12 U.S.C. 2906(b)(2). The
rating assigned by the Board reflects the
bank’s record of helping to m eet the
credit needs of its entire com m unity,
including low- and moderate-incom e
neighborhoods, consistent with the safe
and sound operation of the bank.
(d) S a fe a n d so u n d o p er a tio n s . This
part and the CRA do not require a bank
to make loans or investm ents or to
provide services that are inconsistent
with safe and sound operations. To the
contrary, the Board anticipates banks
can meet the standards of this part with
safe and sound loans, investm ents, and
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Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
services on w hich the banks expect to
make a profit. Banks are permitted and
encouraged to develop and apply
flexible underw riting standards for
loans that benefit low- or moderateincom e geographies or individuals, only
if consistent w ith safe and sound
operations.
incom e geographies in the bank’s
assessm ent area(s);
(3) B o rro w er ch a ra c teristics. The
distribution, particularly in the bank’s
assessment area(s), of the bank’s home
mortgage, sm all business, small farm,
and consum er loans, if applicable, based
on borrower characteristics, including
the number and amount of:
§ 228.22 Lending test.
(1) Home mortgage loans to low-,
(a) S c o p e o f test. (1) The lending test
moderate-, m iddle-, and upper-income
evaluates a bank’s record of helping to
individuals;
meet the credit needs of its assessment
(ii) Sm all business and small farm
area(s) through its lending activities by
loans to businesses and farms with gross
considering a bank’s home mortgage,
annual revenues of $1 m illion or less;
small business, sm all farm, and
(iii) Sm all business and small farm
community developm ent lending. If
loans by loan amount at origination; and
consumer lending constitutes a
(iv) Consumer loans, if applicable, to
substantial m ajority of a bank’s
low-, moderate-, m iddle-, and upperbusiness, the Board w ill evaluate the
incom e individuals;
bank’s consum er lending in one or more
(4) C om m u n ity d e v e lo p m e n t len d in g .
of the following categories: motor
T he bank’s com m unity development
vehicle, credit card, home equity, other
lending, including the number and
secured, and other unsecured loans. In
amount of com m unity development
addition, at a bank’s option, the Board
loans, and their com plexity and
will evaluate one or more categories of
innovativeness; and
consumer lending, if the bank has
(5) In n o v a tiv e o r fl e x i b le len d in g
collected and m aintained, as required in p ra ctice s. The b ank ’s use of innovative
§ 228.42(c)(1), the data for each category
or flexible lending practices in a safe
that the bank elects to have the Board
and sound m anner to address the credit
evaluate.
needs of low- or moderate-incom e
(2) The Board considers originations
individuals or geographies.
and purchases o f loans. The Board will
(c) A ffilia te len d in g . (1) At a bank’s
also consider any other loan data the
option, the Board w ill consider loans by
bank may choose to provide, including
an affiliate o f the bank, if the bank
data on loans outstanding, com m itm ents provides data on the affiliate’s loans
and letters o f credit.
pursuant to § 228.42.
(3) A bank may ask the Board to
(2) The Board considers affiliate
consider loans originated or purchased
lending subject to the following
by consortia in w hich the bank
constraints:
participates or by third parties in w hich
(i) No affiliate may claim a loan
the bank has invested only if the loans
origination or loan purchase if another
meet the definition of community
institution claim s the same loan
development loans and only in
origination or purchase; and
accordance w ith paragraph (d) of this
(ii) If a bank elects to have the Board
section. The Board w ill not consider
consider loans w ithin a particular
these loans under any criterion of the
lending category made by one or more
lending test except the community
of the bank’s affiliates in a particular
development lending criterion.
assessm ent area, the bank shall elect to
(b) P e rfo rm a n c e criteria. The Board
have the Board consider, in accordance
evaluates a bank’s lending performance
with paragraph (c)(1) of this section, all
pursuant to the following criteria:
the loans w ithin that lending category in
(1) L en din g activity. The number and
that particular assessm ent area made by
amount o f the bank’s home mortgage,
all of the bank’s affiliates.
small business, sm all farm, and
(3) The Board does not consider
consum er loans, if applicable, in the
affiliate lending in assessing a bank’s
bank’s assessm ent area(s);
performance under paragraph (b)(2)(i) of
(2) G eo g ra p h ic distribu tion . The
this section.
geographic distribution of the bank’s
(d) L en d in g b y a co n so rtiu m o r a th ird
home mortgage, sm all business, small
party. Community development' loans
farm, and consum er loans, if applicable,
originated or purchased by a consortium
based on the loan location, including:
in w hich the bank participates or by a
(i) The proportion of the bank’s
third party in w hich the bank has
lending in the bank’s assessment area(s); invested:
(ii) The dispersion o f lending in the
(1)
W ill be considered, at the bank’s
bank’s assessm ent area(s); and
option, if the bank reports the data
(iii) The num ber and amount of loans
pertaining to these loans under
in low-, moderate-, m iddle-, and upper§ 228.42(b)(2); and
(2) May be allocated among
participants or investors, as they choose,
for purposes o f the lending test, except
that no participant or investor:
(i) May claim a loan origination or
loan purchase if another participant or
investor claim s the same loan
origination or purchase; or
(ii) May claim loans accounting for
more than its percentage share (based on
the level of its participation or
investment) of the total loans originated
by the consortium or third party.
(e)
L en d in g p e r fo r m a n c e rating. The
Board rates a bank’s lending
performance as provided in Appendix A
o f this part.
§ 228.23 Investment test
(a) S c o p e o f test. T he investment test
evaluates a bank’s record of helping to
m eet the credit needs of its assessment
area(s) through qualified investments
that benefit its assessm ent area(s) or a
broader statewide or regional area that
includes the bank’s assessm ent area(s).
(b) E x clu sion . A ctivities considered
under the lending or service tests may
n o t be considered under th e investment
test.
(c) A ffilia te in v estm en t. At a bank’s
option, the Board w ill consider, in its
assessment of a bank’s investment
performance, a qualified investment
made by an affiliate of the bank, if the
qualified investm ent is not claimed by
any other institution.
(d) D isp o sitio n o f b ra n ch p rem ises.
Donating, selling on favorable terms, or
making available on a rent-free basis a
branch of the bank that is located in a
predom inantly m inority neighborhood
to a m inority depository institution or
w om en’s depository institution (as these
terms are defined in 12 U.S.C. 2907(b))
w ill be considered as a qualified
investment.
(e) P erfo rm a n c e criteria. The Board
evaluates the investm ent performance of
a bank pursuant to the following
criteria:
(1) The dollar amount of qualified
investm ents;
(2) T he innovativeness or com plexity
of qualified investm ents;
(3) The responsiveness of qualified
investm ents to credit and com munity
developm ent needs; and
(4) The degree to w hich the qualified
investm ents are not routinely provided
by private investors.
(f) In v estm en t p e r fo r m a n c e rating.
The Board rates a bank’s investment
performance as provided in Appendix A
o f this part.
§ 228.24
Service test.
(a) S c o p e o f test. T he service test
evaluates a bank’s record of helping to
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
m eet the credit needs of its assessment
area(s) by analyzing both the availability
and effectiveness o f a bank’s systems for
delivering retail banking services and
the extent and innovativeness of its
com m unity developm ent services.
(b) A rea(s) b e n e fitte d . Community
developm ent services must benefit a
bank’s assessm ent area(s) or a broader
statewide or regional area that includes
the bank’s assessm ent area(s).
(c) A ffilia te serv ic e. At a bank’s
option, the Board w ill consider, in its
assessm ent of a bank’s service
performance, a com m unity developm ent
service provided by an affiliate of the
bank, i f the com m unity development
service is not claim ed by any other
institution.
(d) P erfo rm a n c e criteria—re ta il
b a n k in g serv ices. The Board evaluates
the availability and effectiveness of a
bank’s system s for delivering retail
banking services, pursuant to the
follow ing criteria:
(1) The current distribution of the
bank’s branches among low-,
moderate-, m iddle-, and upper-income
geographies;
(2) In th e context of its current
distribution of the bank’s branches, the
bank’s record of opening and closing
branches, particularly branches located
in low- or m oderate-incom e geographies
or primarily serving low- or moderateincom e individuals;
(3) The availability and effectiveness
o f alternative system s for delivering
retail banking services (e.g., ATMs,
ATMs not owned or operated by or
exclusively for the bank, banking by
telephone or com puter, loan production
offices, and bank-at-work or bank-bym ail programs) in low- and moderateincom e geographies and to low- and
m oderate-incom e individuals; and
(4) The range of services provided in
low-, moderate-, middle-, and upperincom e geographies and the degree to
w hich the services are tailored to m eet
the needs of those geographies.
(e) P erfo rm a n c e criteria— co m m u n ity
d e v e lo p m e n t serv ices. The Board
evaluates com m unity developm ent
services pursuant to the following
criteria:
(1) The extent to w hich the bank
provides com m unity development
services; and
(2) The innovativeness and
responsiveness of com m unity
developm ent services.
(f) S er v ice p e r fo r m a n c e rating. The
Board rates a bank’s service
performance as provided in A ppendix A
o f this part.
§ 228.25 Community development test for
wholesale or limited purpose banks.
(a) S c o p e o f test. The Board assesses
a w holesale or lim ited purpose bank’s
record o f helping to meet the credit
needs of its assessm ent area(s) under the
com m unity developm ent test through
its com m unity developm ent lending,
qualified investm ents, or com munity
developm ent services.
(b) D esig n ation a s a w h o le s a le o r
lim ite d p u r p o s e b a n k . In order to
receive a designation as a w holesale or
lim ited purpose bank, a bank shall file
a request, in writing, w ith the Board, at
least three m onths prior to the proposed
effective date of the designation. If the
Board approves the designation, it
rem ains in effect until the bank requests
revocation of the designation or until
one year after the Board notifies the
bank that the Board has revoked the
designation on its own initiative.
(c) P erfo rm a n c e criteria. The Board
evaluates the com m unity developm ent
perform ance of a w holesale or lim ited
purpose bank pursuant to the following
criteria:
(1) The num ber and amount of
com m unity developm ent loans
(including originations and purchases of
loans and other com m unity
developm ent loan data provided by the
bank, such as data on loans outstanding,
com m itm ents, and letters of credit),
qualified investm ents, or com munity
developm ent services;
(2) The use of innovative or com plex
qualified investm ents, com munity
developm ent loans, or com munity
developm ent services and the extent to
w hich the investm ents are not routinely
provided by private investors; and
(3) The bank’s responsiveness to
credit and com m unity development
needs.
(d) In d irec t a ctiv ities. At a bank’s
option, the Board w ill consider in its
com m unity developm ent performance
assessm ent:
(1) Qualified investm ents or
com m unity developm ent services
provided by an affiliate of the bank, if
the investm ents or services are not
claim ed by any other institution; and
(2) Community developm ent lending
by affiliates, consortia and third parties,
subject to the requirem ents and
lim itations in § 228.22(c) and (d).
(e) B en efit to a ss e s s m e n t a rea (s)— (1)
B en efit in s id e a s s e s s m e n t area(s). The
Board considers all qualified
investm ents, com m unity development
loans, and com m unity development
services that benefit areas w ithin the
bank’s assessm ent area(s) or a broader
statewide or regional area that includes
the bank’s assessm ent area(s).
22193
(2) B en efit o u ts id e a ss essm en t area(s).
The Board considers the qualified
investm ents, com m unity development
loans, and com m unity development
services that benefit areas outside the
bank’s assessm ent area(s), if the bank
has adequately addressed the needs of
its assessm ent area(s).
(f)
C om m u n ity d e v e lo p m e n t
p e r fo r m a n c e rating. The Board rates a
bank’s com m unity development
performance as provided in Appendix A
of this part.
§ 228.26 Small bank performance
standards.
(a) P e r fo r m a n c e criteria. The Board
evaluates the record of a small bank, or
a bank that was a sm all bank during the
prior calendar year, o f helping to meet
the credit needs of its assessment area(s)
pursuant to the follow ing criteria:
(1) The bank’s loan-to-deposit ratio,
adjusted for seasonal variation and, as
appropriate, other lending-related
activities, such as loan originations for
sale to the secondary markets,
com munity developm ent loans, or
qualified investm ents;
(2) The percentage of loans and, as
appropriate, other lending-related
activities located in the bank’s
assessm ent area(s);
(3) T he bank’s record of lending to
and, as appropriate, engaging in other
lending-related activities for borrowers
of different incom e levels and
businesses and farms of different sizes;
(4) The geographic distribution of the
bank’s loans; and
(5) The bank’s record of taking action,
if warranted, in response to written
com plaints about its performance in
helping to m eet credit needs in its
assessm ent area(s).
(b) S m a ll b a n k p e r fo r m a n c e rating.
The Board rates the performance of a
bank evaluated under this section as
provided in A ppendix A of this part.
§ 228.27 Strategic plan.
(a) A ltern a tiv e e lectio n . The Board
w ill assess a bank’s record of helping to
m eet the credit needs o f its assessment
area(s) under a strategic plan if:
(1) The bank has submitted the plan
to the Board as provided for in this
section;
(2) The Board has approved the plan;
(3) The plan is in effect; and
(4) The bank has been operating under
an approved plan for at least one year.
(b) D ata rep ortin g . T he Board’s
approval of a plan does not affect the
bank’s obligation, if any, to report data
as required by § 228.42.
(c) P lan s in g en e ra l— (1) Term . A plan
may have a term o f no more than five
years, and any m ulti-year plan must
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include annual interim measurable
goals under w hich the Board will
evaluate the bank’s performance.
(2) M u ltiple a s s e s s m e n t a re a s. A bank
with more than one assessment area
may prepare a single plan for all o f its
assessment areas or one or more plans
for one or more of its assessment areas.
(3) T reatm en t o f a ffilia tes. Affiliated
institutions may prepare a joint plan if
the plan provides measurable goals for
each institution. A ctivities may be
allocated among institutions at the
institutions’ option, provided that the
same activities are not considered for
more than one institution.
(d) P u blic p a rtic ip a tio n in p la n
d ev e lo p m e n t. Before submitting a plan
to the Board for approval, a bank shall:
(1) Informally seek suggestions from
members of the public in its assessm ent
area(s) covered by the plan while
developing the plan;
(2) Once the bank has developed a
plan, formally solicit public com ment
on the plan for at least 30 days by
publishing notice in at least one
newspaper of general circulation in each
assessment area covered by the plan;
and
(3) During the period of formal public
com ment, make copies of the plan
available for review by the public at no
cost at all offices of the bank in any
assessment area covered by the plan and
provide copies of the plan upon request
for a reasonable fee to cover copying
and mailing, if applicable.
(e) S u bm ission o f p la n . The bank shall
submit its plan to the Board at least
three months prior to the proposed
effective date o f the plan. The bank shall
also submit with its plan a description
of its informal efforts to seek suggestions
from members o f the public, any written
public com ment received, and, if the
plan was revised in light o f the
com ment received, the initial plan as
released for public comment.
(f) P lan con ten t— (1) M ea su ra b le
g o a ls , (i) A bank shall specify in its plan
measurable goals for helping to meet the
credit needs o f each assessment area
covered by the plan, particularly the
needs of low- and moderate-income
geographies and low- and moderateincom e individuals, through lending,
investment, and services, as
appropriate.
(ii) A bank shall address in its plan all
three performance categories and,
unless the bank has been designated as
a wholesale or limited purpose bank,
shall emphasize lending and lendingrelated activities. Nevertheless, a
different em phasis, including a focus on
one or more performance categories,
may be appropriate if responsive to the
characteristics and credit needs of its
assessm ent area(s), considering public
com ment and the bank’s capacity and
constraints, product offerings, and
business strategy.
(2) C o n fid en tia l in fo rm a tio n . A bank
may submit additional information to
the Board on a confidential basis, but
the goals stated in the plan must be
sufficiently specific to enable the public
and the Board to judge the m erits of the
plan.
(3) S a tisfa cto ry a n d o u tsta n d in g g o a ls.
A bank shall specify in its plan
measurable goals that constitute
“ satisfactory” performance. A plan may
specify measurable goals that constitute
“ outstanding” performance. If a bank
submits, and the Board approves, both
“ satisfactory” and “ outstanding”
performance goals, the Board will
consider the bank eligible for an
“ outstanding” performance rating.
(4) E lection i f sa tisfa c to ry g o a ls n ot
su b sta n tia lly m et. A bank may elect in
its plan that, if the bank fails to meet
substantially its plan goals for a
satisfactory rating, the Board w i l l '
evaluate the bank’s performance under
the lending, investm ent, and service
tests, the com m unity developm ent test,
or the small bank performance
standards, as appropriate.
(g)
P lan a p p r o v a l— (1) Tim ing. The
Board will act upon a plan w ithin 60
calendar days after the Board receives
the com plete plan and other material
required under paragraph (d) of this
section. If the Board fails to act within
this time period, the plan shall be
deemed approved unless the Board
extends the review period for good
cause.
(2) P u blic p a rticip a tio n . In evaluating
the plan’s goals, the Board considers the
p u blic’s involvem ent in formulating the
plan, written public com ment on the
plan, and any response by the bank to
public com ment on the plan.
(3) Criteria f o r ev a lu a tin g p la n . The
Board evaluates a plan’s measurable
goals using the follow ing criteria, as
appropriate:
(i) The extent and breadth of lending
or lending-related activities, including,
as appropriate, the distribution o f loans
among different geographies, businesses
and farms of different sizes, and
individuals of different incom e levels,
the extent of com m unity developm ent
lending, and the use of innovative or
flexible lending practices to address
credit needs;
(ii) The amount and innovativeness,
com plexity, and responsiveness of the
bank’s qualified investm ents; and
(iii) The availability and effectiveness
o f the bank’s system s for delivering
retail banking services and the extent
and innovativeness of the bank’s
com m unity development services.
(h) P lan a m en d m en t. During the term
of a plan, a bank may request the Board
to approve an amendment to the plan on
grounds that there has been a material
change in circum stances. The bank shall
develop an amendment to a previously
approved plan in accordance with the
public participation requirem ents of
paragraph (c) of this section.
(i) P lan a ssessm en t. The Board
approves the goals and assesses
performance under a plan as provided
for in Appendix A of this part.
§ 228.28
Assigned ratings.
(a) R atin gs in g en era l. Subject to
paragraphs (b) and (c) o f this section,
the Board assigns to a bank a rating of
“outstanding,” “satisfactory,” “ needs to
im prove,” or “ substantial
noncom pliance” based on the bank’s
performance under the lending,
investment and service tests, the
com m unity developm ent test, the small
bank performance standards, or an
approved strategic plan, as applicable.
(b) L en d in g , in v estm en t, a n d se rv ice
tests. The Board assigns a rating for a
bank assessed under the lending,
investment, and service tests in
accordance with the following
principles:
(1) A bank that receives an
“outstanding” rating on the lending test
receives an assigned rating of at least
“satisfactory” ;
(2) A bank that receives an
“ outstanding” rating on both the service
test and the investm ent test and a rating
of at least “high satisfactory” on the
lending test receives an assigned rating
of “outstanding” ; and
(3) No bank may receive an assigned
rating of “satisfactory” or higher unless
it receives a rating of at least “low
satisfactory” on the lending test.
(c) E ffec t o f e v id e n c e o f
d isc rim in a to ry o r o th e r ille g a l c r e d it
p ra c tic e s. Evidence of discrim inatory or
other illegal credit practices adversely
affects the Board’s evaluation of a bank’s
performance. In determining the effect
on the bank’s assigned rating, the Board
considers the nature and extent of the
evidence, the policies and procedures
that the bank has in place to prevent
discrim inatory or other illegal credit
practices, any corrective action that the
bank has taken or has com mitted to
take, particularly voluntary corrective
action resulting from self-assessm ent,
and other relevant information.
§ 228.29 Effect of CRA performance on
applications.
(a)
CRA p e r fo rm a n c e. Among other
factors, the Board takes into account the
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
perform ance criterion, but the Board
reviews the delineation for com pliance
w ith the requirem ents of this section.
(b) G e o g r a p h ic a rea (s) f o r w h o le s a le
o r lim ite d p u r p o s e b a n k s. The
assessm ent area(s) for a wholesale or
lim ited purpose bank must consist
generally o f one or more M SA s (using
the M SA boundaries that were in effect
as o f January 1 of the calendar year in
w hich the delineation is made) or one
or more contiguous political
subdivisions, such as counties, cities, or
tow ns, in w hich the bank has its main
office, branches, and deposit-taking
ATMs.
(c) G eo g ra p h ic a rea (s) f o r o th e r b a n k s.
T he assessm ent area(s) for a bank other
than a w holesale or lim ited purpose
bank must:
(1) Consist generally of one or more
M SA s (using the M SA boundaries that
were in effect as of January 1 of the
calendar year in w hich the delineation
is made) or one or more contiguous
political subdivisions, such as counties,
cities, or tow ns; and
(2) Include the geographies in w hich
the bank has its m ain office, its
branches, and its deposit-taking ATMs,
as w ell as the surrounding geographies
in w hich the bank has originated or
purchased a substantial portion of its
loans (including home mortgage loans,
sm all business and sm all farm loans,
and any other loans the bank chooses,
such as those consum er loans on w hich
the bank elects to have its performance
assessed).
(d) A d ju stm en ts to g e o g r a p h ic a rea(s).
A bank may adjust the boundaries of its
assessm ent area(s) to include only the
portion of a political subdivision that it
reasonably can be expected to serve. An
adjustm ent is particularly appropriate in
the case o f an assessm ent area that
otherw ise would be extrem ely large, of
unusual configuration, or divided by
significant geographic barriers.
(e) L im ita tio n s on th e d e lin e a tio n o f
an a s s e s s m e n t a rea . Each bank’s
assessm ent area(s):
(1) Must consist only of w hole
geographies;
(2) May not reflect illegal
discrim ination;
(3) May not arbitrarily exclude low- or
m oderate-incom e geographies, taking
into account the bank’s size and
Subpart C— Records, Reporting, and
financial condition; and
Disclosure Requirements
(4) May not extend substantially
§ 228.41 Assessment area delineation.
beyond a CM SA boundary or beyond a
(a)
In g en e ra l. A bank shall delineate state boundary unless the assessment
one or more assessment areas within
area is located in a m ultistate MSA. If
a bank serves a geographic area that
w hich the Board evaluates the bank’s
record o f helping to meet the credit
extends substantially beyond a state
needs of its com munity. The Board does boundary, the bank shall delineate
not evaluate the bank’s delineation of its separate assessm ent areas for the areas
assessm ent area(s) as a separate
in each state. If a bank serves a
record o f performance under the CRA
of:
(1) Each applicant bank for the:
(1) Establishm ent of a dom estic branch
by a State member bank; and
(ii) Merger, consolidation, acquisition
of assets, or assumption of liabilities
requiring approval under the Bank
Merger Act (12 U.S.C. 1828(c)) if the
acquiring, assuming, or resulting bank is
to be a State member bank; and
(2) Each insured depository
institution (as defined in 12 U.S.C.
1813) controlled by an applicant and
subsidiary bank or savings association
proposed to be controlled by an
applicant:
(i) To becom e a bank holding
com pany in a transaction that requires
approval under section 3 of the Bank
Holding Company Act (12 U.S.C. 1842);
(ii) To acquire ownership or control of
shares or all or substantially all o f the
assets of a bank, to cause a bank to
becom e a subsidiary o f a bank holding
com pany, or to merge or consolidate a
bank holding company with any other
bank holding company in a transaction
that requires approval under section 3 of
the Bank Holding Company A ct (12
U.S.C. 1842); and
(iii) To own, control or operate a
savings association in a transaction that
requires approval under section 4 of the
Bank Holding Company Act (12 U.S.C.
1843).
(b) In teres ted p a rties. In considering
CRA perform ance in an application
described in paragraph (a) of this
section, the Board takes into account
any views expressed by interested
parties that are submitted in accordance
with the Board’s Rules of Procedure set
forth in part 262 of this chapter.
(c) D en ial o r co n d itio n a l a p p r o v a l o f
a p p lic a tio n . A bank’s record of
perform ance may be the basis for
denying or conditioning approval of an
application listed in paragraph (a) of
this section.
(d) D efin ition s. For purposes of
paragraph (a)(2) of this section, “bank,”
“bank holding com pany,” “ subsidiary,”
and “savings association” have the
m eanings given to those terms in section
2 o f the Bank Holding Company Act (12
U.S.C. 1841).
22195
geographic area that extends
substantially beyond a CMSA boundary,
the bank shall delineate separate
assessm ent areas for the areas inside and outside the CMSA.
(f) B a n k s serv in g m ilita ry p er so n n el.
N otwithstanding the requirements of
this section, a bank whose business
predom inantly consists of serving the
needs o f m ilitary personnel or their
dependents who are not located w ithin
a defined geographic area may delineate
its entire deposit custom er base as its
assessm ent area.
(g) U se o f a s s e s s m e n t area(s). The
Board uses the assessm ent area(s)
delineated by a bank in its evaluation of
the bank’s CRA performance unless the
Board determ ines that the assessment
area(s) do not com ply w ith the
requirem ents of this section.
§ 228.42
Data collection, reporting, and
disclosure.
(a) L o a n in fo rm a tio n re q u ire d to b e
c o lle c t e d a n d m a in ta in ed . A bank,
except a sm all bank, shall collect, and
m aintain in m achine readable form (as
prescribed by the Board) until the
com pletion of its next CRA
exam ination, the following data for each
small business or small farm loan
originated or purchased by the bank:
(1) A unique number or alpha
num eric symbol that can be used to
identify the relevant loan file;
(2) T he loan amount at origination;
(3) T he loan location; and
(4) An indicator whether the loan was
to a business or farm with gross annual
revenues of $1 m illion or less.
(b) L o a n in fo rm a tio n re q u ire d to b e
re p o rted . A bank, except a small bank or
a bank that was a small bank during the
prior calendar year, shall report
annually by M arch 1 to the Board in
m achine readable form (as prescribed by
the Board) the following data for the
prior calendar year:
(1)
S m a ll b u sin ess a n d sm a ll fa r m
lo a n d a ta . For each geography in which
the bank originated or purchased a
small business or small farm loan, the
aggregate num ber and amount of loans:
(1) W ith an amount at origination of
$1 0 0 ,0 0 0 or less;
(ii) W ith amount at origination of
more than $ 1 0 0 ,0 0 0 but less than or
equal to $ 2 5 0 ,0 0 0 ;
(iii) W ith an amount at origination of
more than $ 2 5 0 ,0 0 0 ; and
(iv) To businesses and farms with
gross annual revenues of $1 m illion or
less (using the revenues that the bank
considered in making its credit
decision);
(2) C om m u n ity d e v e lo p m e n t lo a n
d ata . The aggregate number and
aggregate am ount o f community
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Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
developm ent loans originated or
purchased; and
(3)
H o m e m o rtg a g e loa n s. If the bank
is subject to reporting under part 203 of
this chapter, the location of each home
mortgage loan application, origination,
or purchase outside the M SAs in w hich
the bank has a hom e or branch office (or
outside any M SA) in accordance with
the requirem ents o f part 203 of this
chapter.
(c) O p tion al d a ta c o llec tio n a n d
m a in ten a n c e— (1) C on su m er loa n s. A
bank may collect and m aintain in
machine readable form (as prescribed by
the Board) data for consum er loans
originated or purchased by the bank for
consideration under the lending test. A
bank may m aintain data*for one or more
of the following categories of consumer
loans: motor vehicle, credit card, home
equity, other secured, and other
unsecured. If the bank m aintains data
for loans in a certain category, it shall
m aintain data for all loans originated or
purchased w ithin that category. The
bank shall m aintain data separately for
each category, including for each loan:
(1) A unique number or alpha-numeric
symbol that can be used to identify the
relevant loan file;
(ii) The loan amount at origination or
purchase;
(iii) The loan location; and
(iv) The gross annual incom e of the
borrower that the bank considered in
making its credit decision.
(2) O ther lo a n d a ta . At its option, a
bank may provide other information
concerning its lending performance,
including additional loan distribution
data.
(d) D ata on a ffilia t e len d in g . A bank
that elects to have the Board consider
loans by an affiliate, for purposes of the
lending or com m unity development test
or an approved strategic plan, shall
collect, m aintain, and report for those
loans the data that the bank would have
collected, m aintained, and reported
pursuant to paragraphs (a), (b), and (c)
of this section had the loans been
originated or purchased by the bank. For
home mortgage loans, the bank shall
also be prepared to identify the home
mortgage loans reported under part 203
of this chapter by the affiliate.
(e) D ata on le n d in g b y a con sortiu m
o r a th ird party. A bank that elects to
have the Board consider community
developm ent loans by a consortium or
third party, for purposes of the lending
or com m unity development tests or an
approved strategic plan, shall report for
those loans the data that the bank would
have reported under paragraph (b)(2) of
this section had the loans been
originated or purchased by the bank.
(f) S m a ll b a n k s elec tin g ev a lu a tio n
u n d er th e len d in g , in v estm en t, a n d
s e rv ic e tests. A bank that qualifies for
evaluation under the small bank
perform ance standards but elects
evaluation under the lending,
investm ent, and service tests shall
collect, m aintain, and report the data
required for other banks pursuant to
paragraphs (a) and (b) o f this section.
(g) A sses sm e n t a r e a d ata. A bank,
except a sm all bank or a bank that was
a small bank during the prior calendar
year, shall co llect and report to the
Board by M arch 1 o f each year a list for
each assessm ent area showing the
geographies w ithin the area.
(h) CRA D isclo su re S tatem en t. The
Board prepares annually for each bank
that reports data pursuant to this section
a CRA D isclosure Statem ent that
contains, on a state-by-state basis:
(1)
For each county (and for each
assessm ent area sm aller than a county)
with a population of 5 00,000 persons or
fewer in w h ich the bank reported a
small business or sm all farm lo a n :'
(i) The num ber and amount of small
business and sm all farm loans reported
as originated or purchased located in
low-, moderate-, middle-, and upperincom e geographies;
(ii) A list grouping each geography
according to w hether the geography is
low-, moderate-, middle-, or upperincome;
(iii) A list show ing each geography in
w hich the bank reported a small
business or sm all farm loan; and
(iv) The num ber and amount of small
business and sm all farm loans to
businesses and farms with gross annual
revenues of $1 m illion or less;
(2)
For each county (and for each
assessm ent area sm aller than a county)
with a population in excess of 500,000
persons in w hich the bank reported a
small business or sm all farm loan:
(i) The num ber and amount of small
business and sm all farm loans reported
as originated or purchased located in
geographies w ith m edian income
relative to the area m edian incom e of
less than 10 percent, 10 or more but less
than 20 percent, 20 or more but less
than 30 percent, 30 or more but less
than 40 percent, 4 0 or more but less
than 50 percent, 50 or more but less
than 60 percent, 60 or more but less
than 70 percent, 70 or more but less
than 80 percent, 80 or more but less
than 90 percent, 90 or more but less
than lOO percent, 100 or more but less
than 110 percent, 110 or more but less
than 120 percent, and 120 percent or
more;
(ii) A list grouping each geography in
the county or assessm ent area according
to whether the m edian incom e in the
geography relative to the area median
incom e is less than 10 percent, 10 or
more but less than 20 percent, 20 or
more but less than 30 percent, 30 or
more but less than 40 percent, 40 or
more but less than 50 percent, 50 or
more but less than 60 percent, 60 or
more but less than 70 percent, 70 or
more but less than 80 percent, 80 or
more but less than 90 percent, 90 or
more but less than 100 percent, 100 or
more but less than 110 percent, 110 or
more but less than 120 percent, and 120
percent or more;
(iii) A list show ing each geography in
w hich the bank reported a small
business or sm all farm loan; and
(iv) T he num ber and amount of small
business and small farm loans to
businesses and farms with gross annual
revenues of $1 m illion or less;
(3) The num ber and amount of small
business and small farm loans located
inside each assessm ent area reported by
the bank and the number and amount of
small business and sm all farm loans
located outside the assessm ent area(s)
reported by the bank; and
(4) The num ber and amount of
com m unity developm ent loans reported
as originated or purchased.
(i)
A g g reg ate d is c lo s u r e statem en ts.
T he Board, in conjunction with the
Office of the Com ptroller of the
Currency, the Federal Deposit Insurance
Corporation, and the Office of Thrift
Supervision, prepares annually, for each
M SA (including an M SA that crosses a
state boundary) and the non-MSA
portion of each state, an aggregate
disclosure statem ent of small business
and small farm lending by all
institutions subject to reporting under
this part or parts 25, 345, or 563e of this
title. These disclosure statements
indicate, for each geography, the
number and amount o f all small
business and small farm loans
originated or purchased by reporting
institutions, except that the Board may
adjust the form of the disclosure if
necessary, because o f special
circum stances, to protect the privacy of
a borrower or the com petitive position
o f an institution.
(j) C en tral d a ta d ep o s ito r ie s . The
Board makes the aggregate disclosure
statem ents, described in paragraph (i) of
this section, and the individual bank
CRA D isclosure Statem ents, described
in paragraph (h) o f th is section,
available to the public at central data
depositories. The Board publishes a list
o f the depositories at w hich the
statem ents are available.
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
§ 228.43
file.
Content and availability of public
(A) To low-, moderate-, middle-, and
upper-incom e individuals;
(B) Located in low-, moderate-,
(a) In fo rm a tio n a v a ila b le to th e
middle-, and upper-incom e census
p u b lic . A bank shall m aintain a public
tracts; and
file that includes the following
(C) Located inside the bank’s
information:
assessm ent area(s) and outside the
(1) A ll w ritten com ments received
bank’s assessm ent area(s); and
from the public for the current year and
(ii) The b ank ’s CRA Disclosure
each o f the prior two calendar years that
Statement. T h e bank shall place the
specifically relate to the bank’s
statem ent in the public file w ithin three
perform ance in helping to meet
business days o f its receipt from the
com m unity credit needs, and any
Board.
response to the com ments by the bank,
(2) B a n k s r e q u ir e d to rep o rt H o m e
if neither the com ments nor the
responses contain statem entsJhat reflect M ortgage D isclo su re A ct (HMDA) d ata.
A bank required to report home
adversely on the good name or
reputation of any persons other than the mortgage loan data pursuant to part 203
of this chapter shall include in its
bank or publication of w hich would
public file a copy o f the HMDA
violate specific provisions of law;
Disclosure Statem ent provided by the
(2) A copy o f the public section o f the
Federal F in an cial Institutions
bank’s m ost recent CRA Performance
Exam ination Council pertaining to the
Evaluation prepared by the Board. The
bank for each o f the prior two calendar
bank shall place this copy in the public
years. In addition, a bank that elected to
file w ithin 30 business days after its
have the Board consider the mortgage
receipt from the Board;
lending o f an affiliate for any o f these
(3) A list of the bank’s branches, their
years shall inclu de in its public file the
street addresses, and geographies;
affiliate’s HMDA Disclosure Statem ent
(4) A list of branches opened or closed
for those years. The bank shall place the
by the bank during the current year and
statement(s) in the public file w ithin
each o f the prior two calendar years,
three business days after its receipt.
their street addresses, and geographies;
(3) S m a ll b a n k s . A small bank or a
(5) A list of services (including hours
bank that was a sm all bank during the
of operation, available loan and deposit
prior calendar year shall include in its
products, and transaction fees) generally
public file:
offered at the bank’s branches and
(i) The bank’s loan-to-deposit ratio for
descriptions o f material differences in
each quarter o f the prior calendar year
the availability or cost of services at
and, at its option, additional data on its
particular branches, if any. At its option,
loan-to-deposit ratio; and
a bank may include information
(ii) The inform ation required for other
regarding the availability of alternative
banks by paragraph (b)(1) of this section,
systems for delivering retail banking
if the bank has elected to be evaluated
services (e.g., ATMs, ATMs not owned
under the lending, investm ent, and
or operated by or exclusively for the
service tests.
bank, banking by telephone or
(4) B a n k s w ith strateg ic p la n s . A bank
com puter, loan production offices, and
that has been approved to be assessed
bank-at-work or bank-by-mail
under a strategic plan shall include in
programs);
its public file a copy o f that plan. A
(6) A map of each assessment area
bank need not include information
showing the boundaries of the area and
submitted to the Board on a confidential
identifying the geographies contained
basis in conjunction with the plan.
w ithin the area, either on the map or in
(5) B a n k s w ith le s s th an sa tisfa c to ry
a separate list; and
ratings. A bank that received a less than
(7) Any other information the bank
satisfactory rating during its m ost recent
chooses.
exam ination shall include in its public
(b) A d d itio n a l in fo rm a tio n a v a ila b le
file-a description of its current efforts to
to th e p u b lic — (1) B a n k s o th e r than
improve its perform ance in helping to
s m a ll b a n k s. A bank, except a small
meet the credit needs of its entire
bank or a bank that was a small bank
com m unity. The bank shall update the
during the prior calendar year, shall
description quarterly.
include in its public file the following
(c)
L o c a tio n o f p u b lic in fo rm a tio n . A
inform ation pertaining to the bank and
bank shall m ake available to the public
its affiliates, if applicable, for each of
for inspection upon request and at no
the prior two calendar years:
cost the inform ation requ ired in this
(i)
If the bank has elected to have one section as follow s:
or more categories of its consum er loans
(1)
At the m ain office and, if an
considered under the lending test, for
interstate bank, at one branch office in
each o f these categories, the number and each state, all information in the public
amount o f loans:
file; and
22197
(2) At each branch:
(i) A copy of the public section of the
bank’s m ost recent CRA Performance
Evaluation and a list of services
provided by the branch; and
(ii) W ithin five calendar days of the
request, all the inform ation in the public
file relating to the assessm ent area in
w hich the branch is located.
(d) C op ies. Upon request, a bank shall
provide copies, either on paper or in
another form acceptable to the person
making the request, of the information
in its public file. The bank may charge
a reasonable fee not to exceed the cost
o f copying and m ailing (if applicable).
(e) U pdating. Except as otherwise
provided in this section, a bank shall
ensure that the inform ation required by
this section is current as of April 1 of
each year.
§ 228.44
Public notice by banks.
A bank shall provide in the public
lobby o f its m ain office and each of its
branches the appropriate public notice
set forth in A ppendix B of this part.
Only a branch o f a bank having more
than one assessm ent area shall include
the bracketed material in the notice for
branch offices. Only a bank that is an
affiliate of a holding company shall
include the next to the last sentence of
the notices. A bank shall include the
last sentence of the notices only if it is
an affiliate of a holding com pany that is
not prevented by statute from acquiring
additional banks.
§ 228.45 Publication of planned
examination schedule.
The Board publishes at least 30 days
in advance of the beginning of each
calendar quarter a list of banks
scheduled for CRA exam inations in that
quarter.
Subpart D— Transition Rules
§228.51
Transition rules.
(a) E ffec tiv e d a te . Sections of this part
becom e applicable over a period of tim e
in accordance w ith the schedule set
forth in paragraph (c) of this section.
(b) D ata c o lle c tio n a n d rep ortin g;
stra teg ic p la n ; p e r fo r m a n c e tests a n d
sta n d a rd s, (i) On January 1 ,1 9 9 6 , the
data collection requirem ents set forth in
§ 228.42 (except § 228.42(b) and (g))
becom e applicable.
(ii) On January 1, 1997, the data
reporting requirem ents set forth in
§ 228.42(b) and (g) become applicable.
(2) S m a ll b a n k s . Beginning January 1,
1996, the Board evaluates banks that
qualify for the sm all bank performance
standards described in § 228.26 under
that section.
(3) S trateg ic p la n . Beginning January
1 ,1 9 9 6 , a bank that elects to be
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Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
evaluated under an approved strategic
plan pursuant to § 228.27 may submit
its strategic plan to the Board for
approval.
(4) O ther p e r fo r m a n c e tests, (i)
Beginning January 1 ,1 9 9 6 , a bank may
elect to be evaluated under the pertinent
revised perform ance tests described in
§ § 2 2 8 .2 2 , 228.23, 228.24, and 228.25, if
the bank provides the necessary data to
permit evaluation.
(ii) Beginning July 1 ,1 9 9 7 , the Board
evaluates all banks under the pertinent
revised perform ance tests.
(c) S c h e d u le . (1) On July 1, 1995,
§§ 228.11, 228.12, 228.29, and 228.51
becom e applicable, and §§ 228.1, 228.2,
228.8, and 2 28 .10 0 expire.
(2) On January 1 ,1 9 9 6 , § 228.41 and
the pertinent provisions of Subpart B of
this part w ill apply to banks that elect
to be evaluated under §§ 228.22 through
228.25, banks that submit for approval
strategic plans under § 228.27, and
banks that qualify for the small bank
performance standards described in
§ 2 2 8 .2 6 .
(3) On January 1 ,1 9 9 6 , §§ 228.42
(except § 228.42(b) and (g)) and 228.45
becom e applicable.
(4) On January 1, 1997, §§ 228.41 and
228.42(b) and (g) becom e applicable.
(5) On July 1, 1997, §§ 228.21 through
228.28, 228.43, and 228.44 become
applicable, and §§ 228.3 through 228.7,
and 228.51 expire.
(C) An excellen t geographic distribution of
w ith gross annual revenues o f $1 m illion or
less, consistent w ith safe and sound
loans in its assessm ent area(s);
(D) An excellen t distribution, particularly
operations;
(F) Lim ited use o f innovative or flexible
in its assessm ent area(s), o f loans among
lending practices in a safe and sound m anner
individuals o f different incom e levels and
to address the credit needs of low- or
businesses (includ ing farms) of different
m oderate-incom e individuals or geographies;
sizes, given the product lines offered by the
and
bank;
(G) It has m ade an adequate level of
(E) An ex cellen t record of serving the
com m unity developm ent loans.
credit needs o f highly econom ically
(iv) N eeds to improve. The Board rates a
disadvantaged areas in its assessm ent area(s),
• bank’s lending perform ance “needs to
low -incom e ind ividuals, or businesses
im prove” if, in general, it demonstrates:
(including farms) w ith gross annual revenues
(A) Poor responsiveness to credit needs in
o f $1 m illion or less, consisten t w ith safe and
its assessm ent area(s), taking into account the
sound operations;
num ber and am ount o f home mortgage, sm all
(F) Extensive use o f innovative or flexible
business, sm all farm, and consum er loans, if
lending practices in a safe and sound m anner
applicable, in its assessm ent area(s);
to address the credit needs o f low- or
(B) A sm all percentage o f its loans are
m oderate-incom e individuals or geographies;
m ade in its assessm ent area(s);
and
(C) A poor geographic distribution o f loans,
(G) It is a leader in m aking com m unity
particularly to low- or m oderate-incom e
developm ent loans.
geographies, in its assessm ent area(s);
(ii) High satisfactory. T he Board rates a
(D) A poor d istribution, particularly in its
bank’s lending perform ance “high
assessm ent area(s), o f loans among
satisfactory” if, in general, it dem onstrates:
individuals o f different incom e levels and
(A) Good responsiveness to credit needs in
businesses (including farms) o f different
its assessm ent area(s), taking into account the
sizes, given the product lines offered by the
num ber and am ount o f hom e mortgage, sm all
bank;
business, sm all farm, and consum er loans, if
(E) A poor record o f serving the credit
applicable, in its assessm ent area(s);
needs o f highly econom ically disadvantaged
(B) A high percentage o f its loans are m ade
areas in its assessm ent area(s), low -incom e
in its assessm ent area(s);
individuals, or bu sinesses (including farms)
(C) A good geographic distribution of loans
w ith gross annual revenues o f $1 m illion or
in its assessm ent area(s);
less, consisten t w ith safe and sound
(D) A good distribution, particularly in its
operations;
assessm ent area(s), o f loans among
(F) L ittle use o f innovative or flexible
individuals o f different incom e levels and
lending practices in a safe and sound m anner
bu sinesses (in clud in g farms) o f different
to address the credit needs o f low- or
sizes, given the product lines offered by the
m oderate-incom e individuals or geographies;
bank;
and
(E) A good record o f serving the credit
(G) It has m ade a low level of com m unity
Appendix A to P art 228— Ratings
needs of highly econom ically disadvantaged
developm ent loans.
(a) Ratings in general. (1) In assigning a
areas in its assessm ent area(s), low -incom e
(v) Substantial noncom pliance. The Board
rating, the Board evaluates a bank’s
individuals, or bu sinesses (including farms)
rates a ban k’s lending perform ance as being
perform ance under the applicable
w ith gross annual revenues o f $1 m illion or
in “substantial noncom p lian ce” if, in
perform ance criteria in this part, in
less, consistent w ith safe and sound
general, it dem onstrates:
accordance w ith § 2 2 8.21, and § 228.28,
operations;
(A) A very poor responsiveness to credit
w hich provides for adjustm ents on the basis
(F) Use of innovative or flexible lending
needs in its assessm ent area(s), taking into
o f evidence o f discrim inatory or other illegal
practices in a safe and sound m anner to
account the num ber and am ount o f home
credit practices.
address the credit needs o f low- or moderatemortgage, sm all bu siness, sm all farm, and
(2)
A ban k’s perform ance need not fit each incom e ind ivid uals or geographies; and
consum er loans, if applicable, in its
aspect o f a particular rating profile in order
• (G) It has m ade a relatively high level of
assessm ent area(s);
to receive that rating, and exceptionally
com m unity developm ent loans.
(B) A very sm all percentage of its loans are
strong perform ance w ith respect to some
(iii) Low satisfactory. The Board rates a
m ade in its assessm ent area(6);
aspects m ay com pensate for weak
ban k’s lending perform ance “ low
(C) A very poor geographic distribution of
perform ance in others. The bank’s overall
satisfactory” if, in general, it demonstrates:
loans, particularly to low- or moderateperform ance, how ever, must be consistent
(A) Adequate responsiveness to credit
incom e geographies, in its assessm ent area(s);
w ith safe and sound banking practices and
needs in its assessm ent area(s), taking into
(D) A very poor distribution, particularly in
generally w ith the appropriate rating profile
account the num ber and am ount of hom e
its assessm ent area(s), o f loans among
as follows.
mortgage, sm all bu siness, sm all farm, and
individuals o f different incom e levels and
(b) Banks evaluated under the lending,
consum er loans, if applicable, in its
businesses (includ ing farms) of different
investment, and service tests— (1) Lending
assessm ent area(s);
sizes, given the product lines offered by the
perform ance rating. The Board assigns each
(B) An adequate percentage o f its loans are
bank;
bank’s lending perform ance one of the five
m ade in its assessm ent area(s);
(E) A very poor record o f serving the credit
follow ing ratings.
(C) An adequate geographic distribution of
needs o f highly econom ically disadvantaged
(i)
Outstanding. T h e Board rates a bank’s loans in its assessm ent area(s);
areas in its assessm ent area(s), low -incom e
lending perform ance “ outstanding” if, in
(D) An adequate d istribution, particularly
individuals, or bu sinesses (including farms)
general, it dem onstrates:
in its assessm ent area(s), o f loans among
w ith gross annual revenues o f $1 m illion o r (A) E xcelle n t responsiveness to credit
individuals o f different incom e levels and
less, consisten t w ith safe and sound
needs in its assessm ent area(s), taking into
bu sinesses (in clud in g farms) o f different
operations;
account the num ber and amount of home
sizes, given the product lines offered by the
(F) No use o f innovative or flexible lending
mortgage, sm all bu siness, sm all farm, and
bank;
practices in a safe and sound m anner to
consum er loans, if applicable, in its
(E) An adequate record o f serving the credit address the cred it needs o f low- or m oderateassessm ent area(s);
needs o f highly eco no m ically disadvantaged
incom e individuals or geographies; and
(B) A substantial m ajority o f its loans are
areas in its assessm ent area(s), low -incom e
(G) It has m ade few, if any, com m unity
m ade in its assessm ent area(s);
individuals, or bu sinesses (including farms)
developm ent loans.
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
(2) Investment perform ance rating. The
Board assigns each ban k’s investm ent
perform ance one o f the five follow ing ratings.
(i) Outstanding. T he Board rates a bank’s
investm ent perform ance “ outstanding” if, in
general, it dem onstrates:
(A) A n exce llen t level o f qualified
investm ents, particularly those that are not
routinely provided by private investors, often
in a leadership position;
(B) Extensive use o f innovative or com plex
qualified investm ents; and
(C) E xcellent responsiveness to credit and
com m unity developm ent needs.
(ii) High satisfactory. T he Board rates a
ban k’s investm ent perform ance “ high
satisfactory” if, in general, it dem onstrates:
(A) A significant level o f qualified
investm ents, particularly those that are not
routinely provided by private investors,
occasion ally in a leadership position;
(B) Sign ificant use o f innovative or
com plex qualified investm ents; and
(C) Good responsiveness to credit and
com m unity developm ent needs.
(iii) Low satisfactory. T he Board rates a
ban k’s investm ent perform ance “ low
satisfactory” if, in general, it dem onstrates:
(A) An adequate level o f qualified
investm ents, particularly those that are not
routinely provided by private investors,
although rarely in a leadership position;
(B) O ccasional use o f innovative or
com plex qualified investm ents; and
(C) Adequate responsiveness to credit and
com m unity developm ent needs.
(iv) Needs to improve. T h e Board rates a
bank’s investm ent perform ance “needs to
im prove” if, in general, it dem onstrates:
(A) A poor level o f qualified investm ents,
particularly those that are not routinely
provided by private investors;
(B) Rare use of innovative or com plex
qualified investm ents; and
(C) Poor responsiveness to credit and
com m unity developm ent needs.
(v) Substantial noncompliartce. T he Board
rates a bank’s investm ent perform ance as
being in “ substantial n o n com p lian ce” if, in
general, it dem onstrates:
(A) Few , if any, qualified investm ents,
particularly those that are not routinely
provided by private investors;
(B) No use of innovative or com plex
qualified investm ents; and
(C) Very poor responsiveness to credit and
com m unity developm ent needs.
(3) Service perform ance rating. T he Board
assigns each bank’s service perform ance one
o f the five follow ing ratings.
(i)
Outstanding. T he Board rates a bank’s
service perform ance “ou tstand ing” if, in
general, the bank dem onstrates:
(A) Its service delivery system s are readily
accessible to geographies and individuals of
different incom e levels in its assessm ent
area(s);
(B) To the extent changes have been made,
its record o f opening and closin g branches
has improved the accessib ility o f its delivery
system s, particularly in low - or moderateincom e geographies or to low- or moderateincom e individuals;
(C) Its services (including, w here
appropriate, business hours) are tailored to
the conven ien ce and needs o f its assessm ent
area(s), particularly low- or m oderate-incom e
geographies or low- or m oderate-incom e
individuals; and
(D)
It is a leader in providing com m unity
developm ent services.
(ii) High satisfactory. T h e Board rates a
bank’s service perform ance “ high
satisfactory” if, iii general, th e bank
dem onstrates:
(A) Its service delivery system s are
accessible to geographies and individuals o f
different incom e levels in its assessm ent
area(s);
(B) To the extent changes have been made,
its record o f opening and closin g branches
has not adversely affected the accessibility of
its delivery system s, particularly in low- and
m oderate-incom e geographies and to lowand m oderate-incom e ind ividuals;
(C) Its services (including, w here
appropriate, business hours) do not vary in
a w ay that inconven iences its assessm ent
area(s), particularly low - and m oderateincom e geographies and low - and moderateincom e individuals; and
(D) It provides a relatively high level of
com m unity developm ent services.
(iii) Low satisfactory. T h e Board rates a
bank’s service perform ance “ low
satisfactory” if, in general, the bank
demonstrates:
(A) Its service delivery system s are
reasonably accessible to geographies and
individuals o f different incom e levels in its
assessm ent area(s);
(B) To the extent changes have been made,
its record o f opening and clo sin g branches
has generally not adversely affected the
accessibility o f its delivery system s,
particularly in low- and m oderate-incom e
geographies and to low- and moderateincom e individuals;
(C) Its services (including, w here
appropriate, business hours) do not vary in
a way that inconven iences its assessm ent
area(s), particularly low- and moderateincom e geographies and low - and m oderateincom e individuals; and
(D) It provides an adequate level of
com m unity developm ent services.
(iv) N eeds to improve. T h e Board rates a
bank’s service perform ance “ needs to
im prove” if, in general, the bank
dem onstrates:
(A) Its service delivery system s are
unreasonably inaccessible to portions o f its
assessm ent area(s), particularly to low- or
m oderate-incom e geographies or to low- or m oderate-incom e ind ividuals;
(B) To the extent changes have been made,
its record o f opening and clo sin g branches
has adversely affected the accessibility its
delivery system s, particularly in low- or
m oderate-incom e geographies or to low- or
m oderate-incom e individuals;
(C) Its services (including, w here
appropriate, business hours) vary in a way
that inconven iences its assessm ent area(s),
particularly low- or m oderate-incom e
geographies or low- or m oderate-incom e
individuals; and
(D) It provides a lim ited level of
com m unity developm ent services.
(v) Substantial noncom pliance. T he Board
rates a ban k’s service perform ance as being
in “substantial n o n com p lian ce” if, in
general, the bank dem onstrates:
22199
(A) Its service delivery system s are
unreasonably in accessible to significant
portions o f its assessm ent area(s), particularly
to low - or m oderate-incom e geographies or to
low - or m oderate-incom e individuals;
(B) To the extent changes have been made,
its record o f opening and closin g branches
has significantly adversely affected the
accessibility o f its delivery system s,
particularly in low- or m oderate-incom e
geographies or to low- or m oderate-incom e
individuals;
(C) Its services (including, w here
appropriate, business hours) vary in a way
that significantly in co n ven ien ces its
assessm ent area(s), particularly low - or
m oderate-incom e geographies or low- or
m oderate-incom e individuals; and
(D) It provides few, if any, com m unity
developm ent services.
(c) W holesale or limited purpose banks.
T he Board assigns each w holesale or lim ited
purpose bank’s com m unity developm ent
perform ance one of the four follow ing
ratings.
(1) Outstanding. T he Board rates a
w holesale or lim ited purpose ban k’s
com m unity developm ent perform ance
“ outstanding” if, in general, it demonstrates:
(1) A high level of com m unity developm ent
loans, com m unity developm ent services, or
qualified investm ents, particularly
investm ents that are not routinely provided
by private investors;
(ii) Extensive use of innovative or com plex
qualified investm ents, com m unity
developm ent loans, or com m unity
developm ent services; and
(iii) E xcellent responsiveness to credit andcom m unity developm ent needs in its
assessm ent area(s).
(2) Satisfactory. T h e Board rates a
w holesale or lim ited purpose bank’s
com m unity developm ent perform ance
“ satisfactory” if, in general, it demonstrates:
(i) An adequate level o f com m unity
developm ent loans, com m unity developm ent
services, or qualified investm ents,
particularly investm ents that are not
routinely provided by private investors;
(ii) O ccasional use of innovative or
com plex qualified investm ents, com m unity
developm ent loans, or com m unity
developm ent services; and
(iii) Adequate responsiveness to credit and
com m unity developm ent needs in its
assessm ent area(s).
(3) N eeds to improve. T h e Board rates a
w holesale or lim ited purpose ban k’s
com m unity developm ent perform ance as
“needs to im prove” if, in general, it
demonstrates:
(i) A poor level o f com m unity developm ent
loans, com m unity developm ent services, or
qualified investm ents, particularly
investm ents that are not routinely provided
by private investors;
(ii) Rare use o f innovative or com plex
qualified investm ents, com m unity
developm ent loans, or com m unity
developm ent services; and
(iii) Poor responsiveness to cred it and
com m unity developm ent needs in its
assessm ent area(s).
(4) Substantial noncom pliance. T he Board
rates a w holesale or lim ited purpose bank’s
22200
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
com m unity developm ent perform ance in
‘‘substantial noncom p lian ce” if, in general, it
demonstrates:
(i) Few, if a n y , com m unity developm ent
loans, com m unity developm ent services, or
qualified investm ents, particularly
investm ents that are not routinely provided
by private investors;
(ii) No use o f innovative or com plex
qualified investm ents, com m unity
developm ent loans, or com m unity
developm ent services; and
(iii) V eiy poor responsiveness to credit and
com m unity developm ent needs in its
assessm ent area(s).
(d) Banks evaluated under the sm all bank
perform ance standards. T he Board rates the
perform ance o f each bank evaluated under
the sm all bank perform ance standards as
follows.
(1) Eligibility fo r a satisfactory rating. T he
Board rates a ban k’s perform ance
"satisfacto ry ” if, in general, the bank
demonstrates:
(1) A reasonable loan-to-deposit ratio
(considering seasonal variations) given the
bank’s size, fin ancial cond ition, the credit
needs o f its assessm ent area(s), and taking
into account, as appropriate, lending-related
activities such as loan originations for sale to
the secondary m arkets and com m unity
developm ent loans and qualified
investm ents;
(ii) A m ajority of its loans and, as
appropriate, other lending-related activities
are in its assessm ent area(s);
(iii) A distribution o f loans to and, as
appropriate, other lending related-activities
for individuals o f different incom e levels
(including low- and m oderate-incom e
individuals) and businesses and farm s of
different sizes that is reasonable given the
dem ographics o f the bank’s assessm ent
area(s); '
(iv) A record o f taking appropriate action,
as w arranted, in response to w ritten
com plaints, if any, about the ban k’s
perform ance in helping to m eet the credit
needs o f its assessm ent area(s); and
(v) A reasonable geographic distribution of
loans given the bank’s assessm ent area(s).
(2) Eligibility fo r an outstanding rating. A
bank that m eets each of the standards for a
“satisfactory” rating under this paragraph
and exceeds som e or all o f those standards
may warrant consideration for an overall
rating o f “outstanding.” In assessing w hether
a bank’s perform ance is “ ou tstanding,” the
Board consid ers the extent to w hich the bank
exceeds each of the perform ance standards
for a “ satisfactory” rating and its
perform ance in making qualified investm ents
and its perform ance in providing branches
and other services and delivery system s that
enhance credit availability in its assessm ent
area(s).
(3) N eeds to im prove or substantial
noncom pliance ratings. A bank also may
receive a rating o f “ needs to im prove” or
"su bstantial noncom p lian ce” depending on
the degree to w hich its perform ance has
failed to m eet the standards for a
“ satisfactory” rating.
(e) Strategic plan assessm ent an d rating—
(1) Satisfactory goals. T he Board approves as
“satisfactory” m easurable goals that
adequately help to m eet the cred it needs o f
the bank’s assessm ent area(s).
(2) Outstanding goals. If the plan identifies
a separate group o f m easurable goals that
substantially exceed the levels approved as
“ satisfactory,” the Board w ill approve those
goals as “ outstanding.”
(3) Bating. T h e Board assesses the
perform ance o f a bank operating under an
approved plan to determ ine if the bank has
m et its plan goals:
(i) If the bank substantially ach ieves its
plan goals for a satisfactory rating, the Board
w ill rate the ban k’s perform ance under the
plan as “ satisfactory.”
(ii) If the bank exceeds its plan goals for
a satisfactory rating and substantially
achieves its plan goals for an outstanding
rating, the Board w ill rate the b an k ’s
perform ance under the plan as
“ outstanding.”
(iii) If the bank fails to m eet substantially
its plan goals for a satisfactory rating, the
Board w ill rate the bank as eith er “needs to
im prove” or “ substantial n o n com p lian ce,”
depending on the extent to w h ich it falls
short o f its plan goals, unless the bank
elected in its plan to be rated otherw ise, as
provided in § 228.27(f)(4).
Appendix B to P art 228— CRA N otice
(a)
Notice for m ain offices and, if an
interstate bank, one branch office in each
state.
Community Reinvestment A ct Notice
Under the Federal Com m unity
R einvestm ent A ct (CRA), the Federal Reserve
Board (Board) evaluates our record o f helping
to meet the credit needs o f this com m unity
consistent w ith safe and sound operations.
The Board also takes this record into account
w hen deciding on certain applications
subm itted by us.
Your involvem ent is encouraged.
You are entitled to certain inform ation
about our operations and our perform ance
under the CRA, inclu ding, for exam ple,
inform ation about our branches, su ch as their
location and services provided at them ; the
public section o f our most recent CRA
Perform ance Evaluation, prepared by the
Federal Reserve B ank o f ________ (Reserve
Bank); and com m ents received from the
p ublic relating to our perform ance in helping
to m eet com m unity credit needs, as w ell as
our responses to those com m ents. You may
review this inform ation today.
At least 30 days before the beginning of
each quarter, the Federal Reserve System
publishes a list o f the banks that are
scheduled for CRA exam ination by the
Reserve B ank in that quarter. T h is list is
available from (title of responsible official),
Federal Reserve B ank o f ________ (address).
You may send w ritten com m ents about our
perform ance in helping to m eet com m unity
credit needs to (nam e and address o f official
at bank) and (title o f responsible official),
Federal Reserve B ank o f ________ (address).
Your letter, together w ith any response by us,
w ill be considered by the Federal Reserve
System in evaluating our CRA perform ance
and may be m ade public.
You may ask to look at any com m ents
received by the Reserve B ank. You m ay also
request from the Reserve B ank an
announcem ent o f our applications covered
by the CRA filed w ith the Reserve Bank. We
are an affiliate o f (name o f holding com pany),
a bank-holding com pany. Y ou m ay request
from (title o f responsible o fficial), Federal
Reserve B ank o f ________ (address) an
announcem ent o f applications covered by the
CRA filed by bank holding com panies.
(b) N otice for branch offices.
Community Reinvestment A ct Notice
Under the Federal Com m unity
Reinvestm ent A ct (CRA), the Federal Reserve
Board (Board) evaluates our record o f helping
to m eet the credit needs o f this com m unity
consisten t w ith safe and sound operations.
T he Board also takes this record into account
w hen deciding on certain applications
subm itted by us.
Your involvem ent is encouraged.
You are entitled to certain inform ation
about our operations and our perform ance
under the CRA. You may review today the
public section o f our m ost recent CRA
evaluation, prepared by the Federal Reserve
Bank o f ________ (address), and a list o f
services provided at this branch. Y ou may
also have access to the follow ing additional
inform ation, w hich we w ill m ake available to
you at this branch w ithin five calendar days
after you m ake a request to us: (1) a map
show ing the assessm ent area containing this
branch, w hich is the area in w h ich the Board
evaluates our CRA perform ance in this
com m unity; (2) inform ation about our
branches in this assessm ent area; (3) a list o f
services w e provide at those location s; (4)
data on our lending perform ance in this
assessm ent area; and (5) copies o f all w ritten
com m ents received by us that sp ecifically
relate to our CRA perform ance in this
assessm ent area, and any responses we have
made to those com m ents. If w e are operating
under an approved strategic plan, you may
also have access to a copy o f the plan.
[If you w ould like to review inform ation
abqut our CRA pierformance in other
com m unities served by us, the p u blic file for
our entire bank is available at (nam e o f office
located in state), located at (address).]
At least 30 days before the beginning of
each quarter, the Federal Reserve System
publishes a list o f the banks that are
scheduled for CRA exam ination by the
Reserve Bank in that quarter. T his list is
available from (title o f responsible official),
Federal Reserve B ank o f ______ (address).
You may send w ritten com m ents about our
perform ance in helping to m eet com m unity
credit needs to (name and address of official
at bank) and (title of responsible official),
Federal Reserve Bank o f ________ (address).
Your letter, together with any response by us,
w ill be considered by the Federal Reserve
System in evaluating our CRA perform ance
and may be m ade public.
You m ay ask to look at any com m ents
received by the Reserve Bank. You m ay also
request from the Reserve B ank an
announcem ent o f our applications covered
by the CRA filed w ith the Reserve Bank. We
are an affiliate of (name o f holding com pany),
a bank holding company. You m ay request
from (title of responsible official), Federal
Reserve B ank o f ________ (address) an
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
announcem ent o f applications coyered by the
CRA filed by bank holding com panies.
Subpart D—Transition Rules
§§228.1, 228.2, 228.8, and 228.100
[Removed]
A ppendix A to P art 345— Ratings
3. Sections 228.1, 228.2, 228.8, and
228.100 are removed effective July 1,
1995.
Subpart A— General
§§228.3, 228.4, 228.5, 228.6, and 228.7, and
Subpart D [Removed]
4. Sections 228.3, 228.4, 228.5, 228.6,
and 228.7, and Subpart D, consisting of
§ 228.51 are removed effective July 1,
1997.
By order of the Board of Governors o f th e
Federal Reserve System , A pril 2 4 ,1 9 9 5 .
Jennifer J. Johnson,
Deputy Secretary o f the Board.
Federal Deposit Insurance Corporation
12 CFR Chapter III
For the reasons outlined in the joint
preamble, the Board of Directors of the
Federal Deposit Insurance Corporation
amends 12 CFR chapter III as set forth
below:
PART 345— COMMUNITY
REINVESTMENT
1. The authority citation for part 345
is revised to read as follows:
Authority: 12 U .S.C. 1 8 1 4 - 1 8 1 7 ,1 8 1 9 1820, 1828, 1831u and 2 9 0 1 -2 9 0 7 , 3 1 0 3 3 1 0 4 , and 3108(a).
2. Part 345 is amended by adding
Subparts A through D and Appendices
A and B to read as follows:
Subpart A—General
Sec.
345.11
3 45.12
Authority, purposes, and scope.
Definitions.
Subpart B—Standards for Assessing
Performance
3 45.21 Perform ance tests„standards, and
ratings, in general.
345.22 Lending test.
345.23 Investm ent test.
345.24 Service test.
3 4 5 .2 5 Comm unity developm ent test for
w holesale or lim ited purpose banks.
3 4 5 .2 6 Sm all bank perform ance standards.
34 5 .2 7 Strategic plan.
3 4 5 .2 8 Assigned ratings.
3 4 5 .2 9 Effect of CRA perform ance on
applications.
Subpart C— Records, Reporting, and
Disclosure Requirements
345.41 Assessm ent area delineation.
3 4 5 .4 2 Data co llection , reporting, and
disclosure.
34 5 .4 3 Content and availability of pu blic
file.
3 45.44 Public notice by banks.
3 4 5 .4 5 Publication o f planned exam ination
schedule.
345.51
T ransition rules.
Appendix B to P art 345— CRA Notice
§ 345.11
Authority, purposes, and scope.
(a) A u th ority a n d OMB co n tro l
n u m b er— (1) A u thority. The authority
for this part is 12 U.S.C. 1 8 1 4 -1 8 1 7 ,
1 8 1 9 -1 8 2 0 , 1828, 1831u and 2 9 0 1 2 907, 3 1 0 3 -3 1 0 4 , and 3108(a).
(2) OMB co n tro l n u m ber. The
information collection requirem ents
contained in th is part were approved by
the Office of Management and Budget
under the provisions o f 44 U.S.C. 3501
et se q . and have been assigned OMB
control number 3 0 6 4 -0 0 9 2 .
(b) P u rp oses. In enacting the
Community Reinvestm ent Act (CRA),
the Congress required each appropriate
Federal financial supervisory agency to
assess an institution’s record of helping
to meet the credit needs o f the local
com m unities in w hich the institution is
chartered, consistent with the safe and
sound operation of the institution, and
to take this record into account in the
agency’s evaluation of an application for
a deposit facility by the institution. This
part is intended to carry out the
purposes of the CRA by:
(1) Establishing the framework and
criteria by w hich the Federal Deposit
Insurance Corporation (FDIC) assesses a
bank’s record of helping to m eet the
credit needs of its entire com m unity,
including low- and m oderate-incom e
neighborhoods, consistent w ith the safe
and sound operation of the bank; and
(2) Providing that the FDIC takes that
record into account in considering
certain applications.
(c) S c o p e — (1) G en eral. Except for
certain special purpose banks described
in paragraph (c)(3) of this section, this
part applies to all insured State
nonmem ber banks, including insured
State branches as described in
paragraph (c)(2) and any uninsured
State branch that results from an
acquisition described in section 5(a)(8)
o f the International Banking A ct of 1978
(12 U.S.C. 3103(a)(8)).
(2)
In su red S ta te b ra n ch e s. Insured
State branches are branches of a foreign
bank established and operating under
the laws of any State, the deposits of
which are insured in accordance with
the provisions o f the Federal Deposit
Insurance Act. In the case of insured
State branches, references in this part to
“m ain office” m ean the principal
branch w ithin the United States and the
term “branch” or “branches” refers to
any insured State branch or branches
22201
located w ithin the United States. The
“assessment area” of an insured State
branch is the com m unity or
com m unities located w ithin the United
States served by the branch as described
in § 3 4 5 .4 1 .
(3) Certain s p e c ia l p u r p o s e b a n k s.
T his part does not apply to special
purpose banks that do not perform
com m ercial or retail banking services by
granting credit to the public in the
ordinary course o f business, other than
as incident to their specialized
operations. These banks include
banker’s banks, as defined in 12 U.S.C.
24 (Seventh), and banks that engage
only in one or more of the following
activities: providing cash management
controlled disbursement services or
serving as correspondent banks, trust
com panies, or clearing agents.
§345.12
Definitions.
For purposes of this part, the
following definitions apply:
(a) A ffilia te m eans any com pany that
controls, is controlled by, or is under
com mon control with another company.
T he term “control” has the meaning
given to that term in 12 U.S.C.
1841(a)(2), and a com pany is under
com mon control with another com pany
if both com panies are directly or
indirectly controlled by the same
company.
(b) A rea m e d ia n in c o m e means:
(1) The median family incom e for the
M SA , if a person or geography is located
in an M SA; or
(2) The statewide nonm etropolitan
m edian family incom e, if a person or
geography is located outside an MSA.
(c) A ssessm en t a r e a means a
geographic area delineated in
accordance with § 345.41,
(d) R em o te S er v ice F a cility (RSF)
m eans an automated, unstaffed banking
facility owned or operated by, or
operated exclusively for, the bank, such
as an automated teller m achine, cash
dispensing m achine, point-of-sale
term inal, or other remote electronic
facility, at w hich deposits are received,
cash dispersed, or money lent.
(e) B a n k means a State nonmem ber
bank, as that term is defined in section
3(e)(2) of the Federal Deposit Insurance
A ct, as amended (FDIA) (12 U.S.C.
1813(e)(2)), w ith Federally insured
deposits, except as provided in
§ 345.11(c). The term bank also includes
an insured State branch as defined in
§ 345.11(c).
(f) B ran ch means a staffed banking
facility authorized as a branch, whether
shared or unshared, including, for
exam ple, a m ini-branch in a grocery
store or a branch operated in
conjunction with any other local
22202
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
business or nonprofit organization. The
term “branch” only includes a
“dom estic branch” as that term is
defined in section 3(o) of the FDIA (12
U.S.C. 1813(o)).
(g) CMSA means a consolidated
m etropolitan statistical area as defined
by the Director of the O ffice of
Management and Budget.
(h) C om m u n ity d e v e lo p m e n t means:
(1) Affordable housing (including
m ultifam ily rental housing) for low- or
moderate-incom e individuals;
(2) Community services targeted to
low- or moderate-incom e individuals;
(3) A ctivities that promote econom ic
development by financing businesses or
farms that meet the size eligibility
standards of 13 CFR 121.802(a)(2) or
have gross annual revenues o f $1
m illion or less; or
(4) A ctivities that revitalize or
stabilize low- or m oderate-incom e
geographies.
(i) C om m u n ity d e v e lo p m e n t lo a n
m eans a loan that:
(1) Has as its primary purpose
com m unity development; and
(2) Except in the case of a wholesale
or limited purpose bank:
(i) Has not been reported or collected
by the bank or an affiliate for
consideration in the bank’s assessm ent
as a home mortgage, sm all business,
sm all farm, or consum er loan, unless it
is a m ultifam ily dwelling loan (as
described in Appendix A to Part 203 of
this title); and
(ii) Benefits the bank’s assessment
area(s) or a broader statewide or regional
area that includes the bank’s assessm ent
area(s).
(j) C om m u n ity d e v e lo p m e n t se rv ic e
m eans a service that:
(1) Has as its primary purpose
com m unity development;
(2) Is related to the provision of
financial services; and
(3) Has not been considered in the
evaluation of the bank’s retail banking
services under § 345.24(d).
(k) C on su m er lo a n m eans a loan to
one or more individuals for household,
fam ily, or other personal expenditures.
A consum er loan does not include a
hom e mortgage, sm all business, or small
farm loan. Consumer loans include the
follow ing categories of loans:
(1) M otor v e h ic le lo a n , w hich is a
consum er loan extended for the
purchase of and secured by a motor
vehicle;
(2) C redit c a rd lo a n , w hich is a line
o f credit for household, fam ily, or other
personal expenditures that is accessed
by a borrower’s use of a “credit card ,”
as this term is defined in § 226.2 of this
title;
(3) H o m e eq u ity lo a n , w hich is a
metropolitan statistical area as defined
consum er loan secured by a residence of by the Director of the O ffice of
the borrower;
M anagement and Budget.
(4) O ther se c u r e d c o n s u m e r lo a n ,
(s) Q u a lifie d in v estm en t m eans a
w hich is a secured consum er loan that
lawful investment, deposit, membership
is not included in one of the other
share, or grant that has as its primary
categories of consum er loans; and
purpose com munity development,
(5) O ther u n secu red c o n s u m e r lo a n ,
(t) S m a ll b a n k means a bank that, as
w hich is an unsecured consum er loan
of D ecember 31 of either o f the prior two
that is not included in one o f the other
calend ar years, had total assets of less
categories of consum er loans.
than $ 2 5 0 m illion and was independent
(1)
G eo g ra p h y means a census tract or or an affiliate of a holding com pany
a block numbering area delineated by
that, as of D ecem ber 31 o f either of the
the United States Bureau of the Census
prior two calendar years, had total
in the most recent decennial census.
banking and thrift assets of less than $1
(m) H o m e m ortg ag e lo a n means a
billion.
“ home improvement loan ” or a “home
(u)
S m a ll b u sin ess lo a n m eans a loan
purchase loan” as defined in § 203.2 of
included in “ loans to sm all businesses”
this title.
as defined in the instructions for
(n) In c o m e le v e l includes:
preparation o f the Consolidated Report
(1) L ow -in com e, w hich means an
o f Condition and Income.
individual incom e that is less than 50
(v)
S m a ll fa r m lo a n means a loan
percent of the area m edian incom e or a
included in “ loans to sm all farm s” as
median family incom e that is less than
defined in the instructions for
50 percent in the case of a geography.
preparation of the Consolidated Report
(2) M o d era te-in co m e, w hich m eans an o f Condition and Income.
individual incom e that is at least 50
(w) W h o le sa le b a n k m eans a bank that
percent and less than 80 percent of the
is not in the business o f extending home
area median incom e or a m edian family
mortgage, small business, small farm, or
incom e that is at least 50 and less than
consum er loans to retail custom ers, and
80 percent in the case of a geography.
for w hich a designation as a wholesale
(3) M id d le-in co m e, w hich means an
bank is in effect, in accordance with
individual incom e that is at least 80
§ 345.25(b).
percent and less than 120 percent of the
area median incom e or a m edian family
Subpart B— Standards for Assessing
incom e that is at least 80 and less than
Performance
120 percent in the case of a geography.
§ 345.21 Performance tests, standards,
(4) U p p er-in com e, w hich means an
individual incom e that is 120 percent or and ratings, in general.
(a)
P erfo rm a n c e tests a n d sta n d ard s.
more of the area median incom e or a
T he FDIC assesses the CRA performance
m edian family incom e that is 120
of a bank in an exam ination as follows:
percent or more in the case of a
(1) L en d in g , in v estm en t, a n d se rv ice
geography.
tests. The FDIC applies the lending,
(0) L im ited p u r p o s e b a n k means a
investm ent, and service tests, as
bank that offers only a narrow product
provided in § § 3 4 5 .2 2 through 345.24,
line (such as credit card or motor
in evaluating the perform ance of a bank,
vehicle loans) to a regional or broader
except as provided in paragraphs (a)(2),
market and for w hich a designation as
(a)(3), and (a)(4) of this section.
a lim ited purpose bank is in effect, in
(2) C om m u n ity d e v e lo p m e n t test f o r
accordance with § 345.25(b).
w h o le s a le o r lim ited p u r p o s e b a n k s. The
(p) L oan lo c a tio n . A loan is located as
FDIC applies the com m unity
follows:
developm ent test for a w holesale or
(1) A consumer loan is located in the
lim ited purpose bank, as provided in
geography where the borrower resides;
§ 3 4 5 .2 5 , except as provided in
(2) A home mortgage loan is located
paragraph (a)(4) of this section.
in the geography where the property to
(3) S m a ll b a n k p e r fo r m a n c e
w hich the loan relates is located; and
sta n d a rd s. The FDIC applies the small
(3) A small business or sm all farm
bank perform ance standards as provided
loan is located in the geography where
in § 345.26 in evaluating the
the main business facility or farm is
perform ance of a small bank or a bank
located or where the loan proceeds
that was a small bank during the prior
otherwise will be applied, as indicated
calendar year, unless the bank elects to
by the borrower.
be assessed as provided in paragraphs
(q) L oan p ro d u c tio n o ffic e m eans a
(a)(1), (a)(2), or (a)(4) of this section. The
staffed facility, other than a branch, that
bank may elect to be assessed as
is open to the public and that provides
provided in paragraph (a)(1) o f this
lending-related services, such as loan
section only if it collects and reports the
inform ation and applications.
(r) MSA means a m etropolitan
data required for other banks under
statistical area or a primary
§ 3 4 5 .4 2 .
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
(4)
S trategic p la n . The FDIC evaluates
the performance o f a bank under a
strategic plan if the bank submits, and
the FDIC approves, a strategic.plan as
provided in § 345.27.
(b) P erfo rm a n c e con tex t. The FDIC
applies the tests and standards in
paragraph (a) o f this section and also
considers whether to approve a
proposed strategic plan in the context
of:
(1) Demographic data on median
incom e levels, distribution of household
incom e, nature of housing stock,
housing costs, and other relevant data
pertaining to a b ank’s assessment
area(s);
(2) Any inform ation about lending,
investment, and service opportunities in
the bank’s assessment area(s)
m aintained by the bank or obtained
from com munity organizations, state,
local, and tribal governments, econom ic
development agencies, or other sources;
(3) The bank’s product offerings and
business strategy as determined from
data provided by the bank;
(4) Institutional capacity and
constraints, including the size and
financial condition of the bank, the
econom ic clim ate (national, regional,
and local), safety and soundness
lim itations, and any other factors that
significantly affect the bank’s ability to
provide lending, investm ents, or
services in its assessm ent area(s);
(5) The bank’s past performance and
the performance of sim ilarly situated
lenders;
(6) The bank’s public file, as
described in § 345.43, and any written
com ments about the bank’s CRA
performance subm itted to the bank or
the FDIC; and
(7) Any other inform ation deemed
relevant by the FDIC.
(c) A ssig n ed ratings. The FDIC assigns
to a bank one of the following four
ratings pursuant to § 3 4 5 .2 8 and
Appendix A of this part: “outstanding” ;
“satisfactory”; “needs to im prove” ; or
“substantial noncom pliance” as
provided in 12 U.S.C. 2906(b)(2). The
rating assigned by the FDIC reflects the
bank’s record of helping to meet the
credit needs of its entire com munity,
including low- and m oderate-incom e
neighborhoods, consistent with the safe
and sound operation o f the bank.
(d) S a fe a n d s o u n d o p er a tio n s . This
part and the CRA do not require a bank
to make loans or investm ents or to
provide services that are inconsistent
w ith safe and sound operations. To the
contrary, the FDIC anticipates banks can
meet the standards of this part w ith safe
and sound loans, investm ents, and
services on w hich the banks expect to
make a profit. Banks are permitted and
encouraged to develop and apply
flexible underwriting standards for
loans that benefit low- or moderateincom e geographies or individuals, o n ly '
i f consistent w ith safe and sound
operations.
§ 345.22
Lending test.
(a) S c o p e o f test. (1) T he lending test
evaluates a bank’s record of helping to
m eet the credit needs o f its assessm ent
area(s) through its lending activities by
considering a bank’s home mortgage,
small business, sm all farm, and
com munity developm ent lending. If
consum er lending constitutes a
substantial m ajority o f a bank’s
business, the FDIC w ill evaluate the
bank’s consum er lending in one or more
o f the following categories: motor
vehicle, credit card, hom e equity, other
secured, and other unsecured loans. In
addition, at a bank’s option, the FDIC
w ill evaluate one or more categories of
consum er lending, if the bank has
collected and m aintained, as required in
§ 345.42(c)(1), the data for each category
that the bank elects to have the FDIC
evaluate.
(2) T he FDIC considers originations
and purchases of loans. The FDIC w ill
also consider any other loan data the
bank may choose to provide, including
data on loans outstanding, com m itm ents
and letters of credit.
(3) A bank may ask the FDIC to
consider loans originated or purchased
by consortia in w hich the bank
participates or by third parties in w hich
the bank has invested only if the loans
m eet the definition o f com m unity
development loans and only in
accordance w ith paragraph (d) of this
section. T he FDIC w ill not consider
these loans under any criterion of the
lending test except the com munity
developm ent lending criterion.
(b) P erfo rm a n c e criteria. The FDIC
evaluates a bank’s lending performance
pursuant to the following criteria:
(1) L en d in g activity. The number and
amount of the bank’s home mortgage,
small business, small farm, and
consum er loans, if applicable, in the
bank’s assessm ent area(s);
(2) G eo g ra p h ic d istribu tion . The
geographic distribution o f the bank’s
home mortgage, small business, small
farm, and consum er loans, if applicable,
based on the loan location, including:
(i) The proportion of the bank’s
lending in the bank’s assessm ent area(s);
(ii) The dispersion of lending in the
bank’s assessment area(s); and
(iii) The number and amount of loans
in low-, moderate-, middle-, and upperincom e geographies in the bank’s
assessment area(s);
22203
(3) B orro w er ch a ra c teristic s. The
distribution, particularly in the bank’s
assessment area(s), o f the bank’s hom e
mortgage, small business, sm all farm,
and consumer loans, if applicable, based
on borrower characteristics, including
the number and amount of:
(1) Home mortgage loans to low-,
moderate-, middle-, and upper-income
individuals;
(ii) Sm all business and sm all farm
loans to businesses and farms with gross
annual revenues of $1 m illion or less;
(iii) Sm all business and small farm
loans by loan amount at origination; and
(iv) Consumer loans, if applicable, to
low-, moderate-, middle-, and upperincom e individuals;
(4) C om m u n ity d e v e lo p m e n t len d in g .
T he bank’s com m unity development
lending, including the number and
amount of com m unity development
loans, and their com plexity and
innovativeness; and
(5) In n o v a tiv e o r fl e x i b le len d in g
p ra c tic e s. The bank’s use of innovative
or flexible lending practices in a safe
and sound manner to address the credit
needs of low- or moderate-incom e
individuals or geographies.
(c) A ffilia te len d in g . (1) At a bank’s
option, the FDIC w ill consider loans by
an affiliate of the bank, if the bank
provides data on the affiliate’s loans
pursuant to § 345.42.
(2) The FDIC considers affiliate
lending subject to the following
constraints:
(i) No affiliate may claim a loan
origination or loan purchase if another
institution claim s the same loan
origination or purchase; and
(ii) If a bank elects to have the FDIC
consider loans w ithin a particular
lending category made by one or more
o f the bank’s affiliates in a particular
assessment area, the bank shall elect to
have the FDIC consider, in accordance
w ith paragraph (c)(1) of this section, all
the loans within that lending category in
that particular assessm ent area made by
all of the bank’s affiliates.
(3) The FDIC does not consider
affiliate lending in assessing a bank’s
performance under paragraph (b)(2)(i) of
this section.
(d) L en d in g b y a co n so rtiu m o r a th ird
p arty. Community developm ent loans
originated or purchased by a consortium
in w hich the bank participates or by a
third party in w hich the bank has
invested:
(1) W ill be considered, at the bank’s
option, if the bank reports the data
pertaining to these loans under
§ 345.42(b)(2); and
(2) May be allocated among
participants or investors, as they choose,
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for purposes o f the lending test, except
that no participant or investor:
(i) May claim a loan origination or
loan purchase if another participant or
investor claim s the same loan
origination or purchase; or
(ii) May claim loans accounting for
more than its percentage share (based on
the level of its participation or
investment) of the total loans originated
by the consortium or third party.
(e)
L en d in g p e r fo r m a n c e rating. The
FDIC rates a bank’s lending performance
as provided in A ppendix A of this part.
§ 345.23
Investment test.
(a) S c o p e o f test. T he investm ent test
evaluates a bank’s record of helping to
m eet the credit needs o f its assessment
area(s) through qualified investments
that benefit its assessm ent area(s) or a
broader statewide or regional area that
includes the bank’s assessm ent area(s).
(b) E x clu sion . A ctivities considered
under the lending or service tests may
not be considered under the investm ent
test.
(c) A ffilia te in v estm en t. At a bank’s
option, the FDIC w ill consider, in its
assessment of a b ank ’s investm ent
performance, a qualified investm ent
made by an affiliate of the bank, if the
qualified investm ent is not claim ed by
any other institution.
(d) D isposition o f b ra n ch p rem ises.
Donating, selling on favorable terms, or
making available on a rent-free basis a
branch of the bank that is located in a
predom inantly m inority neighborhood
to a m inority depository institution or
w om en’s depository institution (as these
term s are defined in 12 U.S.C. 2907(b))
w ill be considered as a qualified
investment.
(e) P erfo rm a n c e criteria. The FDIC
evaluates the investm ent performance of
a bank pursuant to the following
criteria:
(1) The dollar amount of qualified
investm ents;
(2) The innovativeness or com plexity
of qualified investm ents;
(3) The responsiveness o f qualified
investm ents to credit and community
developm ent needs; and
(4) The degree to w hich the qualified
investm ents are not routinely provided
by private investors.
(f) In v estm en t p e r fo r m a n c e rating.
The FDIC rates a bank’s investm ent
performance as provided in Appendix A
of this part.
§ 345.24
Service test.
(a)
S c o p e o f test. The service test
evaluates a bank’s record of helping to
m eet the credit needs of its assessment
area(s) by analyzing both the availability
and effectiveness of a bank’s systems for
com m unity developm ent test through
its com m unity developm ent lending,
qualified investm ents, or com munity
developm ent services.
(b) D esig n ation a s a w h o le s a le o r
lim ite d p u r p o s e b a n k . In order to
receive a designation as a w holesale or
lim ited purpose bank, a bank shall file
a request, in writing, w ith the FDIC, at
least three m onths prior to the proposed
effective date o f the designation. If the
FDIC approves the designation, it
rem ains in effect until the bank requests
revocation o f the designation or until
one year after the FDIC notifies the bank
that the FDIC has revoked the
designation on its own initiative.
(c) P e rfo rm a n c e criteria. The FDIC
evaluates the com m unity development
perform ance o f a w holesale or limited
purpose bank pursuant to the following
criteria:
(1) The number and amount of
com m unity developm ent loans
(including originations and purchases of
loans and other com m unity
developm ent loan data provided by the
bank, such as data on loans outstanding,
com m itm ents, and letters of credit),
qualified investm ents, or community
developm ent services;
(2) The use o f innovative or com plex
qualified investm ents, com munity
developm ent loans, or com munity
developm ent services and the extent to
w hich the investm ents are not routinely
provided by private investors; and
(3) The bank’s responsiveness to
credit and com m unity development
needs.
(d) In d irect activ ities. At a bank’s
option, the FDIC w ill consider in its
com m unity developm ent performance
assessm ent:
(1) Qualified investm ents or
com m unity developm ent services
provided by an affiliate of the bank, if
the investm ents or services are not
claim ed by any Other institution; and
(2) Community developm ent lending
by affiliates, consortia and third parties,
subject to the requirem ents and
lim itations in § 345.22 (c) and (d).
(e) B en efit t o a s s e s s m e n t area(s)— (1)
B e n e fit in s id e a s s e s s m e n t a rea(s). The
FDIC considers all qualified
investm ents, com m unity development
loans, and com m unity development
services that benefit areas w ithin the
b ank’s assessm ent area(s) or a broader
statewide or regional area that includes
the bank’s assessm ent area(s).
§ 345.25 Community development test for
(2)
B en efit o u ts id e a ss e s s m e n t area(s).
wholesale or limited purpose banks.
The FDIC considers the qualified
(a)
S c o p e o f test. The FDIC assesses a investm ents, com m unity development
loans, and com m unity development
w holesale or lim ited purpose bank’s
services that benefit areas outside the
record of helping to m eet the credit
needs of its assessm ent area(s) under the b ank ’s assessm ent area(s), if the bank
delivering retail banking services and
the extent and innovativeness of its
com m unity developm ent services.
(b) A rea ls) b e n e fite d . Community
developm ent services must benefit a
bank’s assessm ent area(s) or a broader
statewide or regional area that includes
the bank’s assessm ent area(s).
(c) A ffilia te serv ice. At a bank’s
option, the FDIC w ill consider, in its
assessm ent of a bank’s service
performance, a com m unity development
service provided by an affiliate of the
bank, if the com m unity developm ent
service is not claim ed by any other
institution.
(d) P erfo rm a n c e criteria— re ta il
b a n k in g serv ices. The FDIC evaluates
the availability and effectiveness o f a
bank’s systems for delivering retail
banking services, pursuant to the
following criteria:
(1) The current distribution o f the
b ank ’s branches among low-,
moderate-, m iddle-, and upper-incom e
geographies;
(2) In the context of its current
distribution of the bank’s branches, the
bank’s record of opening and closing
branches, particularly branches located
in low- or m oderate-incom e geographies
or prim arily serving low- or moderateincom e individuals;
(3) The availability and effectiveness
of alternative system s for delivering
retail banking services (e.g., R SFs, RSFs
not owned or operated by or exclusively
for the bank, banking by telephone or
com puter, loan production offices, and
bank-at-work or bank-by-m ail programs)
in low- and m oderate-incom e
geographies and to low- and moderateincom e individuals; and
(4) The range o f services provided in
low-, moderate-, m iddle-, and upperincom e geographies and the degree to
w hich the services are tailored to meet
the needs of those geographies.
(e) P e rfo rm a n c e criteria — co m m u n ity
d e v e lo p m e n t serv ices. The FDIC
evaluates com m unity development
services pursuant to the following
criteria:
(1) The extent to w hich the bank
provides com m unity developm ent
services; and
(2) The innovativeness and
responsiveness o f com m unity
developm ent services.
(f) S er v ice p e r fo r m a n c e ratin g. The
FDIC rates a bank’s service performance
as provided in A ppendix A o f this part.
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
22205
the FDIC on a confidential basis, but the
assessm ent areas or one or m ore plans
goals stated in the plan must be
for one or more of its assessm ent areas.
(3)
T rea tm en t o f a ffilia te s . A ffiliated sufficiently specific to enable the public
institutions may prepare a joint plan if
and the FDIC to judge the m erits o f the
the plan provides m easurable goals for
plan.
(3) S a tisfa c to ry a n d ou tsta n d in g g oals.
each institution. A ctivities may be
A bank shall specify in its plan
allocated among institutions at the
m easurable goals that constitute
institu tions’ option, provided that the
§ 345.26 Small bank performance
“satisfactory” performance. A plan may
same activities are not considered for
standards.
specify measurable goals that constitute
more than one institution.
(a) P e rfo rm a n c e criteria. The FDIC
(d) P u b lic p a rtic ip a tio n in p la n
“ outstanding” performance. If a bank
evaluates the record o f a sm all bank, or
d e v e lo p m e n t. Before subm itting a plan
submits, and the FDIC approves, both
a bank that was a small bank during the
to the FDIC for approval, a bank shall:
“satisfactory” and “outstanding”
prior calendar year, of helping to meet
(1) Informally seek suggestions from
performance goals, the FDIC w ill
the credit needs of its assessm ent area(s) members o f the public in its assessm ent
consider the bank eligible for an
pursuant to the following criteria:
area(s) covered by the plan w hile
“outstanding” performance rating.
(1) The bank’s loan-to-deposit ratio,
developing the plan;
(4) E lectio n i f sa tisfa c to ry g o a ls n o t
adjusted for seasonal variation and, as
(2) O nce the bank has developed a
su b sta n tia lly m et. A bank may elect in
plan, formally solicit public com m ent
appropriate, other lending-related
its plan that, if the bank fails to meet
on the plan for at least 30 days by
activities, such as loan originations for
substantially its plan goals for a
publishing notice in at least one
sale to the secondary markets,
satisfactory rating, the FDIC w ill
newspaper of general circu lation in each evaluate the bank’s perform ance under
community developm ent loans, or
assessm ent area covered by the plan;
qualified investments;
the lending, investment, and service
(2) The percentage of loans and, as
and
tests, the com munity developm ent test,
(3) During the period o f formal public
appropriate, other lending-related
or the small bank performance
com ment, make copies o f the plan
activities located in the bank’s
standards, as appropriate.
available for review by the pu blic at no
assessment area(s);
(g) P lan a p p r o v a l— (1) Tim ing. The
cost at all offices of the bank in any
(3) The bank’s record o f lending to
FDIC w ill act upon a plan w ithin 60
assessm ent area covered by the plan and calendar days after the FDIC receives
and, as appropriate, engaging in other
provide copies of the plan upon request
lending-related activities for borrowers
the com plete plan and other material
for a reasonable fee to cover copying
of different incom e levels and
required under paragraph (d) o f this
and mailing, if applicable.
businesses and farms of different sizes;
section. If the FDIC fails to act w ithin
(e) S u b m ission o f p la n . T h e bank shall this time period, the plan shall be
(4) The geographic distribution of the
submit its plan to the FDIC at least three deemed approved unless the FDIC
bank’s loans; and
(5) The bank’s record o f taking action, m onths prior to the proposed effective
extends the review period for good
date of the plan. The bank shall also
if warranted, in response to written
cause.
submit w ith its plan a description of its
com plaints about its perform ance in
(2) P u b lic p a rtic ip a tio n . In evaluating
informal efforts to seek suggestions from the plan’s goals, the FDIC considers the
helping to meet credit needs in its
members of the public, any written
assessment area(s).
pu blic’s involvem ent in formulating the
public com m ent received, and, if the
(b) S m a ll b a n k p e r fo r m a n c e rating.
plan, written public com m ent on the
plan was revised in light of the
The FDIC rates the perform ance o f a
plan, and any response by the bank to
com ment received, the initial plan as
bank evaluated under this section as
public com ment on the plan.
released for public com m ent.
(3) C riteria f o r ev a lu a tin g p la n . The
provided in Appendix A of this part.
(f) P lan con ten t— (1) M ea s u ra b le
FDIC evaluates a plan’s measurable
§345.27 Strategic plan.
g o a ls, (i) A bank shall specify in its plan goals using the following criteria, as
(a) A ltern ativ e e lectio n . The FDIC will measurable goals for helping to m eet the appropriate:
assess a bank’s record of helping to meet credit needs of each assessm ent area
(i) The extent and breadth o f lending
the credit needs of its assessm ent area(s) covered by the plan, particularly the
or lending-related activities, including,
under a strategic plan if:
needs o f low- and m oderate-incom e
as appropriate, the distribution o f loans
(1) The bank has submitted the plan
geographies and low- and moderateamong different geographies, businesses
to the FDIC as provided for in this
incom e individuals, through lending,
and farms of different sizes, and
section;
investment, and services, as
individuals of different incom e levels,
(2) The FDIC has approved the plan;
appropriate.
the extent of com munity developm ent
(3) The plan is in effect; and
(ii) A bank shall address in its plan all lending, and the use of innovative or
(4) The bank has been operating under three performance categories and,
flexible lending practices to address
an approved plan for at least one year.
unless the bank has been designated as
credit needs;
(b) D ata reportin g . The FDIC’s
a w holesale or limited purpose bank,
(ii) The amount and innovativeness,
approval of a plan does not affect the
shall em phasize lending and lendingcom plexity, and responsiveness of the
bank’s obligation, if any, to report data
related activities. N evertheless, a
bank’s qualified investm ents; and
as required by § 345.42.
(iii) The availability and effectiveness
different em phasis, including a focus on
(c) P lan s in g en e ra l— (1) T erm . A plan one or more performance categories,
of the bank’s systems for delivering
may have a term of no more than five
retail banking services and the extent
may be appropriate if responsive to the
years, and any multi-year plan must
and innovativeness of the bank’s
characteristics and credit needs of its
include annual interim m easurable
com munity developm ent services.
assessm ent area(s), considering public
goals under w hich the FDIC w ill
(h) P lan a m en d m en t. During the term
com ment and the bank’s capacity and
of a plan, a bank may request the FDIC
evaluate the bank’s performance.
constraints, product offerings, and
(2) M u ltiple a ss essm en t a re a s. A bank business strategy.
to approve an amendment to the plan on
with more than one assessm ent area
(2) C o n fid en tia l in fo rm a tio n . A bank grounds that there has been a material
may prepare a single plan for all of its
change in circum stances. The bank shall
may subm it additional inform ation to
has adequately addressed the needs of
its assessm ent area(s). •
(f)
C om m u n ity d e v e lo p m e n t
p e r fo r m a n c e rating. The FDIC rates a
bank’s com m unity developm ent
performance as provided in A ppendix A
of this part.
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Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
develop an amendment to a previously
approved plan in accordance with the
public participation requirements of
paragraph (c) o f this section.
(i)
P lan a ss essm en t. The FDIC
approves the goals and assesses
perform ance under a plan as provided
for in A ppendix A of this part.
§ 345.28
Assigned ratings.
(a)
R atin gs in g en eral. Subject to
paragraphs (b) and (c) of this section,
the FDIC assigns to a bank a rating of
“outstanding,” “satisfactory,” “needs to
im prove,” or “substantial
non com pliance” based on the bank’s
perform ance under the lending,
investm ent and service tests, the
com m unity developm ent test, the small
bank perform ance standards, or an
approved strategic plan, as applicable.
lb) L en din g, in vestm en t, a n a s e rv ic e
tests. The FDIC assigns a rating for a
bank assessed under the lending,
investm ent, and service tests in
accordance w ith the following
principles:
(1) A bank that receives an
“ outstanding” rating on the lending test
receives an assigned rating of at least
“ satisfactory”;
(2) A bank that receives an
“outstanding” rating on both the service
test and the investm ent test and a rating
of at least “high satisfactory” on the
lending test receives an assigned rating
of “ outstanding”; and
(3) No bank may receive an assigned
rating of “satisfactory” or higher unless
it receives a rating of at least “low
satisfactory” on the lending test.
(c)
E ffe c t o f e v id e n c e o f
d is crim in a to ry o r o th e r ille g a l cred it
p r a c tic e s . Evidence of discrim inatory or
other illegal credit practices adversely
affects the FDlC’s evaluation of a bank’s
perform ance. In determining the effect
on the bank’s assigned rating, the FDIC
considers the nature and extent of the
evidence, the policies and procedures
that the bank has in place to prevent
discrim inatory or other illegal credit
practices, any corrective action that the
bank has taken or has com mitted to
take, particularly voluntary corrective
action resulting from self-assessm ent,
and other relevant information.
§ 345.29 Effect of CRA performance on
applications.
(a)
CRA p er fo r m a n c e . Among other
factors, the FDIC takes into account the
record of performance under the CRA of
each applicant bank in considering an
application for approval of:
(1) The establishm ent of a domestic
branch or other facility w ith the ability
to accept deposits;
(2) The relocation o f the bank’s main
office or a branch;
(3) T he merger, consolidation,
acquisition o f assets, or assumption of
liabilities; and
(4) Deposit insurance for a newly
chartered financial institution.
(b) N ew fin a n c ia l in stitu tion s. A
new ly chartered financial institution
shall subm it w ith its application for
deposit insurance a description of how
it w ill m eet its CRA objectives. The
FDIC takes the description into account
in considering the application and may
deny or cond ition approval on that
basis.
(c) In te r e s te d p a rties . The FDIC takes
into account any views expressed by
interested parties that are submitted in
accordance w ith the FDIC’s procedures
set forth in part 303 o f this chapter in
considering CRA performance in an
application listed in paragraphs (a) and
(b) o f this section.
(d) D e n ia l o r c o n d itio n a l a p p r o v a l o f
a p p lic a tio n . A bank’s record of
perform ance may be the basis for
denying or conditioning approval o f an
application listed in paragraph (a) of .
this section.
Subpart C— Records, Reporting, and
Disclosure Requirements
§ 345.41
Assessment area delineation.
(a) In g e n e r a l. A bank shall delineate
one or more assessm ent areas within
w hich the FDIC evaluates the bank’s
record of helping to meet the credit
needs o f its com m unity. The FDIC does
not evaluate the bank’s delineation of its
assessm ent area(s) as a separate
perform ance criterion, but the FDIC
review s the delineation for com pliance
w ith the requirem ents of this section.
(b) G eo g ra p h ic a rea (s) f o r w h o le s a le
o r lim ite d p u r p o s e b a n k s. The
assessm ent area(s) for a wholesale or
lim ited purpose bank must consist
generally o f one or more M SAs (using
the M SA boundaries that were in effect
as o f January 1 of the calendar year in
w hich the delineation is made) or one
or more contiguous political
subdivisions, such as counties, cities, or
tow ns, in w h ich the bank has its m ain
office, branches, and deposit-taking
RSFs.
(c) G eo g ra p h ic a re a (s) f o r o th e r b a n k s.
The assessm ent area(s) for a bank other
than a w holesale or lim ited purpose
bank must:
(1) Consist generally of one or more
M SA s (using the M SA boundaries that
were in effect as of January 1 of the
calendar year in w hich the delineation
is made) or one or more contiguous
political subdivisions, such as counties,
cities, or tow ns; and
(2) Includie the geographies in w hich
the bank has its m ain office, its
branches, and its deposit-taking R SFs,
as w ell as the surrounding geographies
in w hich the bank has originated or
purchased a substantial portion o f its
loans (including home mortgage loans,
sm all business and small farm loans,
and any other loans the bank chooses,
such as those consum er loans on w hich
the bank elects to have its performance
assessed).
(d) A d ju stm en ts to g e o g r a p h ic area(s).
A bank may adjust the boundaries o f its
assessm ent area(s) to include only the
portion of a political subdivision that it
reasonably can be expected to serve. An
adjustm ent is particularly appropriate in
the case of an assessment area that
otherw ise would be extrem ely large, of
unusual configuration, or divided by
significant geographic barriers.
(e) L im ita tio n s on th e d elin ea tio n o f
a n a s s e s s m e n t a re a . Each bank’s
assessm ent area(s):
(1) Must consist only of whole
geographies;
(2) May not reflect illegal
discrim ination;
(3) May not arbitrarily exclude low- or
m oderate-incom e geographies, taking
into account the bank’s size and
financial condition; and
(4) May not extend substantially
beyond a CM SA boundary or beyond a
state boundary unless the assessment
area is located in a m ultistate M SA. If
a bank serves a geographic area that
extends substantially beyond a state
boundary , the bank shall delineate
separate assessm ent areas for the areas
in each state. If a bank serves a
geographic area that extends
substantially beyond a CMSA boundary,
the bank shall delineate separate
assessm ent areas for the areas inside
and outside the CMSA.
(f) B a n k s serv in g m ilita ry p er so n n el.
N otwithstanding the requirem ents o f
this section, a bank whose business
predom inantly consists of serving the
needs o f m ilitary personnel or their
dependents who are not located w ithin
a defined geographic area may delineate
its entire deposit customer base as its
assessm ent area.
(g) U se o f a ss e s s m e n t a rea(s). The
FDIC uses the assessm ent area(s)
delineated by a bank in its evaluation of
the bank’s CRA performance unless the
FDIC determ ines that the assessment
area(s) do not com ply with the
requirem ents of this section.
§ 345.42 Data collection, reporting, and
disclosure.
(a)
L o a n in fo rm a tio n re q u ir e d to b e
c o lle c t e d a n d m a in ta in ed . A bank,
except a sm all bank, shall collect, and
m aintain in m achine readable form (as
prescribed by the FDIC) until the
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
com pletion of its next CRA
exam ination, the following data for each
small business or small farm loan
originated or purchased by the bank:
(1) A unique number or alpha
numeric symbol that can be used to
identify the relevant loan file;
(2) The loan amount at origination;
(3) The loan location; and
(4) An indicator whether the loan was
to a business or farm with gross annual
revenues of $1 m illion or less.
(b) L oan in fo rm a tio n r e q u ir e d to b e
rep o rted . A bank, except a small bank or
a bank that was a small bank during the
prior calendar year, shall report
annually by M arch 1 to the FDIC in
m achine readable form (as prescribed by
the FDIC) the follow ing data for the
prior calendar year:
(1) S m a ll b u sin ess a n d s m a ll fa r m
lo a n d ata. For each geography in w hich
the bank originated or purchased a
small business or small farm loan, the
aggregate number and amount of loans:
(1) W ith an amount at origination of
$100,000 or less;
(ii) With an amount at origination of
more than $100 ,0 0 0 but less than or
equal to $250,000;
(iii) W ith an amount at origination of
more than $25 0 ,0 0 0 ; and
(iv) To businesses and farms w ith
gross annual revenues o f $1 m illion or
less (using the revenues that the bank
considered in making its credit
decision);
(2) C om m u n ity d e v e lo p m e n t lo a n
d ata. The aggregate number and
aggregate amount o f com m unity
development loans originated or
purchased; and
(3) H o m e m ortg ag e lo a n s. If the bank
is subject to reporting under part 203 of
this title, the location of each home
mortgage loan application, origination,
or purchase outside the M SA s in w hich
the bank has a home or branch office (or
outside any M SA) in accordance with
the requirem ents o f part 203 of this title.
(c) O p tio n a l d a ta c o lle c tio n a n d
m a in ten a n c e.— (1) C o n su m er lo a n s . A
bank may collect and m aintain in
m achine readable form (as prescribed bythe FDIC) data for consum er loans
originated or purchased by the bank for
consideration under the lending test. A
bank may m aintain data for one or more
of the following categories of consum er
loans: motor vehicle, credit card, home
equity, other secured, and other
unsecured. If the bank m aintains data
for loans in a certain category, it shall
m aintain data for all loans originated or
purchased w ithin that category. The
bank shall m aintain data separately for
each category, including for each loan:
(1) A unique number or alpha-num eric
symbol that can be used to identify the
relevant loan file;
(ii) The loan amount at origination or
purchase;
(iii) The loan location; and
(iv) The gross annual incom e o f the
borrower that the bank considered in
making its credit decision.
(2) O ther lo a n d a ta . At its option, a
bank may provide other information
concerning its lending performance,
including additional loan distribution
data.
(d) D ata on a ffilia t e len d in g . A bank
that elects to have the FDIC consider
loans by an affiliate, for purposes of the
lending or com m unity developm ent test
or an approved strategic plan, shall
collect, m aintain, and report for those
loans the data that the bank would have
collected, m aintained, and reported
pursuant to paragraphs (a), (b), and (c)
of this section had the loans been
originated or purchased by the bank. For
home mortgage loans, the bank shall
also be prepared to identify the hom e
mortgage loans reported under part 203
o f this title by the affiliate.
(e) D ata on len d in g b y a co n so rtiu m
o r a th ird party. A bank that elects to
have the FDIC consider com m unity
developm ent loans by a consortium or
third party, for purposes of the lending
or com m unity developm ent tests or an
approved strategic plan, shall report for
those loans the data that the bank would
have reported under paragraph (b)(2) of
this section had the loans been
originated or purchased by the bank.
(f) S m a ll b a n k s electin g ev a lu a tio n
u n d er th e len d in g , in v estm en t, a n d
se rv ice tests. A bank that qualifies for
evaluation under the sm all bank
performance standards but elects
evaluation under the lending,
investment, and service tests shall
collect, m aintain, and report the data
required for other banks pursuant to
paragraphs (a) and (b) of this section.
(g) A ssessm en t a re a d ata . A bank,
except a small bank or a bank that was
a small bank during the prior calendar
year, shall collect and report to the FDIC
by March 1 o f each year a list for each
assessment area showing the
geographies w ithin the area.
(h) CRA D isclo su re S ta tem en t. The
FDIC prepares annually for each bank
that reports data pursuant to this section
a CRA D isclosure Statem ent that
contains, on a state-by-state basis:
(1)
For each county (and for each
assessment area sm aller than a county)
w ith a population o f 500,000 persons or
fewer in w hich the bank reported a
small business or small farm loan:
(i) The number and amount o f sm all
business and sm all farm loans reported
22207
as originated or purchased located in
low-, moderate-, middle-, and upperincom e geographies;
(ii) A list grouping each geography
according to whether the geography is
low-, moderate-, middle-, or upperincom e;
(iii) A list showing each geography in
w hich the bank reported a small
business or small farm loan; and
(iv) The number and amount of sm all
business and sm all farm loans to
businesses and farm s w ith gross annual
revenues of $1 m illion or less;
(2) For each county (and for each
assessm ent area sm aller than a county)
w ith a population in excess of 500,000
persons in w hich the bank reported a
small business' or sm all farm loan:
(i) The num ber and amount of small
business and small farm loans reported
as originated or purchased located in
geographies with median incom e
relative to the area median incom e of
less than 10 percent, 10 or more but less
than 20 percent, 20 or more but less
than 30 percent, 30 or more but less
than 40 percent, 40 or more but less
than 50 percent, 50 or more but less
than 60 percent, 60 or more but less
than 70 percent, 70 or more but less
than 80 percent, 80 or more but less
than 90 percent, 90 or more but less
than 100 percent, 100 or more but less
than 110 percent, 110 or more but less
than 120 percent, and 120 percent or
more;
(ii) A list grouping each geography in
the county or assessm ent area according
to whether the median incom e in the
geography relative to the area median
incom e is less than 10 percent, 10 or
more but less than 20 percent, 20 or
more but less than 30 percent, 30 or
more but less than 40 percent, 40 or
more but less than 50 percent, 50 or
more but less than 60 percent, 60 or
more but less than 70 percent, 70 or
more but less than 80 percent, 80 or
more but less than 90 percent, 90 or
more but less than 100 percent, 100 or
more but less than 110 percent, 110 or
more but less than 120 percent, and 120
percent or more;
(iii) A list showing each geography in
w hich the bank reported a small
business or sm all farm loan; and
(iv) The number and amount of sm all
business and small farm loans to
businesses and farms w ith gross annual
revenues of $1 m illion or less;
(3) The number and amount of small
business and small farm loans located
inside each assessm ent area reported by
the bank and the number and amount of
small business and small farm loans
located outside the assessm ent area(s)
reported by the bank; and
22208
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
(4)
The number and amount of
com m unity development loans reported
as originated or purchased.
(i)
A ggregate d is c lo s u re sta tem en ts.
The FDIC, in conjunction with the
Board of Governors of the Federal
Reserve System, the Office of the
Comptroller of the Currency, and the
O ffice of Thrift Supervision, prepares
annually, for each M SA (including an
M SA that crosses a state boundary) and
the non-M SA portion o f each state, an
aggregate disclosure statem ent o f small
business and small farm lending by all
institutions subject to reporting under
this part or parts 25, 228, or 563e of this
title. These disclosure statements
indicate, for each geography, the
num ber and amount of all small
business and small farm loans
originated or purchased by reporting
institutions, except that the FDIC may
adjust the form of the disclosure if
necessary, because of special
circum stances, to protect the privacy of
a borrower or the com petitive position
o f an institution.
(j) C en tral d a ta d e p o s ito r ies . The
FDIC makes the aggregate disclosure
statem ents, described in paragraph (i) of
this section, and the individual bank
CRA Disclosure Statem ents, described
in paragraph (h) of this section,
available to the public at central data
depositories. The FDIC publishes a list
o f the depositories at w hich the
statem ents are available.
§ 345.43
file.
Content and availability of public
(a)
In form ation a v a ila b le to th e
p u b lic . A bank shall m aintain a public
file that includes the following
information:
(1) All written com m ents received
from the public for the current year and
each of the prior two calendar years that
specifically relate to the bank’s
performance in helping to meet
com m unity credit needs, and any
response to the com ments by the bank,
if neither the com ments nor the
responses contain statem ents that reflect
adversely on the good name or
reputation of any persons other than the
bank or publication o f w hich would
violate specific provisions o f law;
(2) A copy of the pu blic section of the
b ank’s most recent CRA Perform ance
Evaluation prepared by the FDIC. The
bank shall place this copy in the public
file w ithin 30 business days after its
receipt from the FDIC;
(3) A list of the bank’s branches, their
street addresses, and geographies;
(4) A list of branches opened or closed
by the bank during the current year and
each of the prior two calendar years,
their street addresses, and geographies;
(5) A list of services (including hours
of operation, available loan and deposit
products, and transaction fees) generally
offered at the bank’s branches and
descriptions o f material differences in
the availability or cost of services at
particular branches, if any. At its option,
a bank may include inform ation
regarding the availability o f alternative
system s for delivering retail banking
services [e.g., R SFs, R SFs not owned or
operated by or exclusively for the bank,
banking by telephone or com puter, loan
production offices, and bank-at-work or
bank-by-mail programs);
(6) A map of each assessm ent area
show ing the boundaries of the area and
identifying the geographies contained
w ithin the area, either on the map or in
a separate list; and
(7) Any other information the bank
chooses.
(b)
A d d itio n a l in fo rm a tio n a v a ila b le
to th e p u b lic — (1) B a n k s o t h e r than
s m a ll b a n k s. A bank, except a small
bank or a bank that was a sm all bank
during the prior calendar year, shall
include in its public file the followinginform ation pertaining to the bank and
its affiliates, if applicable, for each of
the prior two calendar years:
(1) If the bank has elected to have one
or m ore categories o f its consum er loans
considered under the lending test, for
each of these categories, the number and
amount of loans:
(A) T o low-, moderate-, middle-, and
upper-incom e individuals;
(B) Located in low-, moderate-,
m iddle-, and upper-incom e census
tracts; and
(C) Located inside the bank’s
assessm ent area(s) and outside the
bank’s assessm ent area(s); and
(ii) The bank’s CRA D isclosure
Statem ent. The bank shall place the
statem ent in the public file w ithin three
business days of its receipt from the
FDIC.
(2) B a n k s re q u ire d to re p o rt H o m e
M ortgage D isclosu re A ct (HMDA) d a ta .
A bank required to report home
mortgage loan data pursuant part 203 of
this title shall include in its public file
a copy o f the HMDA Disclosure
Statem ent provided by the Federal
F inancial Institutions Exam ination
Council pertaining to the bank for each
of the prior two calendar years. In
addition, a bank that elected to have the
FDIC consider the mortgage lending of
an affiliate for any of these years shall
include in its public file the affiliate’s
HMDA Disclosure Statem ent for those
years. The bank shall place the
statement(s) in the public file within
three business days after receipt.
(3) S m a ll b a n k s. A sm all bank o ra
bank that was a small bank during the
prior calendar year shall include in its
public file:
(i) T he bank’s loan-to-deposit ratio for
each quarter o f the prior calendar year
and, at its option, additional data on its
loan-to-deposit ratio; and
(ii) The inform ation required for other
banks by paragraph (b)(1) of this section,
if the bank has elected to be evaluated
under the lending, investm ent, and
service tests.
(4) B a n k s w ith strateg ic p la n s . A bank
that has been approved to be assessed
under a strategic plan shall include in
its pu blic file a copy o f that plan. A
bank need not include information
subm itted to the FDIC on a confidential
basis in conjunction w ith the plan.
(5) B a n k s with le s s th an sa tisfa cto ry
ratin g s. A bank that received a less than
satisfactory rating during its most recent
exam ination shall include in its public
file a description of its current efforts to
im prove its performance in helping to
m eet the credit needs o f its entire
com m unity. The bank shall update the
description quarterly.
(c) L o c a tio n o f p u b lic in fo rm ation . A
bank shall make available to the public
for inspection upon request and at no
cost the inform ation required in this
section as follows:
(1) At the main office and, if an
interstate bank, at one branch office in
each state, all information in the public
file; and
(2) A t each branch:
(i) A copy o f the public section of the
bank’s m ost recent CRA Perform ance
Evaluation and a list of services
provided by the branch; and
(ii) W ithin five calendar days of the
request, all the inform ation in the public
file relating to the assessment area in
w hich the branch is located.
(d) C o p ies. Upon request, a bank shall
provide copies, either on paper or in
another form acceptable to the person
making the request, of the information
in its public file. The bank may charge
a reasonable fee not to exceed the cost
o f copying and m ailing (if applicable).
(e) U pdatin g. Except as otherwise
provided in this section, a bank shall
ensure that the information required by
th is section is current as o f April 1 of
each year.
§ 345.44
Public notice by banks.
A bank shall provide in the public
lobby o f its main office and each of its
branches the appropriate public notice
set forth in Appendix B of this part.
Only a branch of a bank having more
than one assessment area shall include
the bracketed material in the notice for
branch offices. Only a bank that is an
affiliate o f a holding com pany shall
include the next to the last sentence of
Federal Register / Vol. 60, No, 86 / Thursday, May 4, 1995 / Rules and Regulations
the notices. A bank shall include the
last sentence o f the notices only if it is
an affiliate o f a holding com pany that is
not prevented by statute from acquiring
additional banks.
§345.45 Publication of planned
examination schedule.
The FDIC publishes at least 30 days
in advance o f the beginning of each
calendar quarter a list of banks
scheduled for CRA exam inations in that
quarter.
Subpart D— Transition Rules
§345.51
Transition rules.
(a) E ffe c tiv e d a te. Sections of this part
becom e applicable over a period of tim e
in accordance w ith the schedule set
forth in paragraph (c) of this section.
(b) D ata c o lle c tio n a n d rep ortin g ;
strateg ic p la n ; p e r fo r m a n c e tests a n d
s ta n d a rd s — (1) D ata co lle c tio n a n d
rep ortin g , (i) On January 1 ,1 9 9 6 , the
data collection requirements set forth in
§ 345.42 (except § 345.42(b) and (g))
becom e applicable.
(ii)
On January 1 ,1 9 9 7 , the data
reporting requirem ents set forth in
§ 345.42(b) and (g) become applicable.
(2) S m a ll b a n k s. Beginning January 1,
1996, the FDIC evaluates banks that
qualify for the small bank performance
standards described in § 3 4 5 .2 6 under
that section.
(3) S trateg ic p la n . Beginning January
1 ,1 9 9 6 , a bank that elects to be
evaluated under an approved strategic
plan pursuant to § 345.27 may submit
its strategic plan to the FDIC for
approval.
(4) O th er p e r fo r m a n c e tests, (i)
Beginning January 1, 1996, a bank may
elect to be evaluated under the pertinent
revised perform ance tests described in
§§ 3 45.22, 345.23, 345.24, and 345.25, if
the bank provides the necessary data to
permit evaluation.
(ii) Beginning July 1 ,1 9 9 7 , the FDIC
evaluates all banks under the pertinent
revised perform ance tests.
(c) S c h e d u le . (1) On July 1, 1995,
§ § 3 4 5 .1 1 , 345.12, 345.29, and 345.51
becom e applicable, and §§ 345.1, 345.2,
345.8,
345.101 and 345.102 expire.
(2) On January 1 ,1 9 9 6 , § 345.41 and
the pertinent provisions of Subpart B of
this part w ill apply to banks that elect
to be evaluated under §§ 345.22 through
345.25, banks that submit for approval
strategic plans under § 345.27, and
banks that qualify for the small bank
perform ance standards described in
§ 3 4 5 .2 6 .
(3) On January 1 ,1 9 9 6 , §§ 345.42
(except § 345.42(b) and (g)) and 345.45
becom e applicable.
(4) On January 1 ,1 9 9 7 , §§ 345.41 and
345.42(b) and (g) become applicable.
22209
individuals of different income levels and
businesses (including farms) of different
sizes, given the product lines offered by the
bank;
(E) A good record of serving the credit
needs of highly economically disadvantaged
Appendix A to P art 345— Ratings
areas in its assessment area(s), low-income
(a) Ratings in general.— (1) In assigning a
individuals, or businesses (including farms)
rating, the FDIC evaluates a bank’s
with gross annual revenues of $1 million or
perform ance under the applicable
less, consistent with safe and sound
perform ance criteria in this part, in
operations;
accord ance w ith § 3 4 5 .2 1 , and § 3 4 5 .2 8 ,
(F) Use of innovative or flexible lending
w h ich provides for adjustm ents on the basis
practices in a safe and sound manner to
o f evidence o f discrim inatory or other illegal
address the credit needs of low- or moderatecred it practices.
income individuals or geographies; and
(2)
A ban k’s perform ance need not fit each
(G) It has made a relatively high level of
aspect o f a particular rating profile in order
community development loans.
to receive that rating, and exceptionally
(iii) Low satisfactory. The FDIC rates a
strong perform ance w ith respect to som e
bank’s lending performance “low
aspects m ay com pensate for weak
satisfactory” if, in general, it demonstrates:
perform ance in others. T he bank’s overall
(A) Adequate responsiveness to credit
perform ance, how ever, m ust be consisten t
needs in its assessment area(s), taking into
w ith safe and sound banking practices and
account the number and amount of home
generally w ith the appropriate rating profile
mortgage, small business, small farm, and
as follow s.
consumer loans, if applicable, in its
(b) Banks evaluated under the lending,
assessment area(s);
investment, an d service tests.— (1) Lending
(B) An adequate percentage o f its loans are
perform ance rating. T he FDIC assigns each
m ade in its assessm ent area(s);
(5) On July 1 ,1 9 9 7 , §§ 345.21 through
345.28, 3 4 5 .4 3 , and 345.44 becom e
applicable, and § § 3 4 5 .3 through 345.7,
and 345.51 expire.
ban k’s lending perform ance one o f the five
follow ing ratings.
(i) Outstanding. T he FDIC rates a ban k’s
lending perform ance “outstanding" if, in
general, it dem onstrates:
(A) E xcellen t responsiveness to credit
needs in its assessm ent area(s), taking into
accou n t the num ber and am ount o f hom e
mortgage, sm all bu siness, sm all farm , and
consu m er loan s, if applicable, in its
assessm ent area(s);
(B) A su bstantial m ajority of its loans are
made in its assessm ent area(s);
(C) An excellen t geographic distribution of
loans in its assessm ent area(s);
(D) An ex cellen t distribution, particularly
in its assessm ent area(s), of loans among
individuals o f different incom e levels and
bu sinesses (includ ing farms) o f different
sizes, given the product lines offered by the
bank;
(E) A n excellen t record o f serving the
credit needs o f highly econom ically
disadvantaged areas in its assessm ent area(s),
low -incom e individuals, or businesses
(including farm s) w ith gross annual revenues
of S I m illion or less, consistent w ith safe and
sound operations;
(F) E xten sive use of innovative or flexible
lending practices in a safe and sound m anner
to address the credit needs o f low - or
m oderate-incom e individuals or geographies;
and
(G) It is a leader in m aking com m unity
developm ent loans.
(ii) High satisfactory. T he FDIC rates a
ban k’s lending perform ance “high
satisfactory” if, in general, it dem onstrates:
(A) Good responsiveness to credit needs in
its assessm ent area(s), taking into account the
num ber and am ount o f hom e mortgage, sm all
bu siness, sm all farm, and consum er loans, if
applicable, in its assessm ent area(s);
(B) A high percentage o f its loans are m ade
in its assessm ent area(s);
(C) A good geographic distribution o f loans
in its assessm ent area(s);
(D) A good d istribution, particularly in its
assessm ent area(s), of loans among
(C) An adequate geographic distribution of
loans in its assessm ent area(s);
(D) An adequate distribution, particularly
in its assessm ent area(s), o f loans among
individuals o f different incom e levels and
bu sinesses (includ ing farms) o f different
sizes, given the product lines offered by the
bank;
(E) An adequate record o f serving the credit
needs o f high ly econom ically disadvantaged
areas in its assessm ent area(s), low -incom e
ind ividuals, or businesses (including farms)
w ith gross annual revenues of S I m illion or
less, co nsisten t w ith safe and sound
operations;
(F) Lim ited use o f innovative or flexible
lending practices in a safe and sound m anner
to address the credit needs o f low- or
m oderate-incom e individuals or geographies;
and
(G) It has m ade an adequate level of
com m unity developm ent loans.
(iv) Needs to improve. The FDIC rates a
ban k ’s lending perform ance “needs to
im prove” if, in general, it demonstrates:
(A) Poor responsiveness to credit needs in
its assessm ent area(s), taking into account the
num ber and am ount o f hom e mortgage, small
business, sm all farm, and consum er loans, if
applicable, in its assessm ent area(s);
(B) A sm all percentage o f its loans are
m ade in its assessm ent area(s);
(C) A poor geographic distribution o f loans,
particularly to low - or m oderate-incom e
geographies, in its assessm ent area(s);
(D) A poor distribution, particularly in its
assessm ent area(s), o f loans among
individuals of different incom e levels and
businesses (in clud in g farms) o f different
sizes, given the product lines offered by the
bank;
(E) A poor record o f serving the credit
needs o f highly econom ically disadvantaged
areas in its assessm ent area(s), low -incom e
ind ivid uals, or businesses (including farms)
w ith gross annual revenues of $1 m illion or
less, consisten t w ith safe and sound
operations;
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(F) Little use o f innovative or flexible
lending practices in a safe and sound m anner
to address the credit needs o f low- or
m oderate-incom e individuals or geographies;
and
(G) It has m ade a low level o f com m unity
developm ent loans.
(v)
Substantial noncom pliance. T he FDIC
rates a bank’s lending perform ance as being
in “ substantial no n com p lian ce” if, in
general, it dem onstrates:
(A) A very poor responsiveness to credit
needs in its assessm ent area(s), taking into
account the num ber and amount of home
mortgage, sm all business, sm all farm, and
consum er loans, if applicable, in its
assessm ent area(s);
(B) A very sm all percentage o f its loans are
made in its assessm ent area(s);
(C) A very poor geographic distribution of
loans, particularly to low- or moderateincom e geographies, in its assessm ent area(s);
(D) A very poor distribution, particularly in
its assessm ent area(s), o f loans-among
individuals o f different incom e levels and
businesses (including farms) o f different
sizes, given the product lines offered by the
bank;
(E) A very poor record o f serving the credit
needs of highly econom ically disadvantaged
areas in its assessm ent area(s), low -incom e
individuals, or businesses (including farms)
w ith gross annual revenues o f $1 m illion or
less, consistent w ith safe and sound
operations;
(F) No use o f innovative or flexible lending
practices in a safe and sound m anner to
address the credit needs o f low- or m oderateincom e individuals or geographies; and
(G) It has m ade few, if any, com m unity
developm ent loans.
(2)
Investment perform ance rating. The
FDIC assigns each ban k’s investm ent
perform ance one o f the five follow ing ratings.
(i) Outstanding. T he FDIC rates a bank’s
investm ent perform ance “outstand ing" if, in
general, it dem onstrates:
(A) An exce llen t level o f qualified
investm ents, particularly those that are not
routinely provided by private investors, often
in a leadership position;
(B) Extensive use o f innovative or com plex
qualified investm ents; and
(C) E xcellent responsiveness to credit and
com m unity developm ent needs.
(ii) High satisfactory. T he FDIC rates a
bank’s investm ent perform ance “ high
satisfactory” if, in general, it dem onstrates:
(A) A significant level o f qualified
investm ents, particularly those that are not
routinely provided by private investors,
occasionally in a leadership position;
(B) Sign ificant use o f innovative or
com plex qualified investm ents; and
(C) Good responsiveness to credit and
com m unity developm ent needs.
(iii) Low satisfactory. T he FDIC rates a
bank’s investm ent perform ance “ low
satisfactory” if, in general, it demonstrates:
(A) An adequate level of qualified
investm ents, particularly those that are not
routinely provided by private investors,
although rarely in a leadership position;
(B) O ccasional use of innovative or
com plex qualified investm ents; and
(C) Adequate responsiveness to credit and
com m unity developm ent needs.
(iv) N eeds to improve. T h e FDIC rates a
bank’s investm ent perform ance “needs to
im prove” if, in general, it demonstrates:
(A) A poor level o f qualified investm ents,
particularly those that are not routinely
provided by private investors;.
(B) Rare use o f innovative or com plex
qualified investm ents; and
(C) Poor responsiveness to credit and
com m unity developm ent needs.
(v) Substantial noncom pliance. T he FDIC
rates a ban k’s investm ent perform ance as
being in “ substantial n o n com p lian ce” if, in
general, it dem onstrates:
(A) Few , i f any, qualified investm ents,
particularly those that are not routinely
provided by private investors;
(B) No use of innovative or complex
qualified investments; and
(C) Very poor responsiveness to credit and
com m unity developm ent needs.
(3)
Service perform ance rating. T he FDIC
assigns each bank’s service perform ance one
o f the five follow ing ratings.
(i) Outstanding. T h e FDIC rates a bank's
service perform ance “ outstanding” if, in
general, the bank dem onstrates:
(A) Its service delivery system s are readily
accessible to geographies and individuals of
different incom e levels in its assessm ent
area(s);
(B) To the extent changes have been made,
its record o f opening and closing branches
has im proved the accessib ility o f its delivery
system s, particularly in low - or m oderateincom e geographies or to low- or m oderateincom e individuals;
(C) Its services (including, where
appropriate, bu siness hours) are tailored to
the convenience and needs o f its assessm ent
area(s), particularly low- or m oderate-incom e
geographies or low- or m oderate-incom e
individuals; and
(D) It is a leader in providing com m unity
developm ent services.
(ii) High satisfactory. T he FDIC rates a
bank’s service perform ance “high
satisfactory” if, in general, the bank
dem onstrates:
(A) Its service delivery system s are
accessible to geographies and individuals of
different incom e levels in its assessm ent
area(s);
(B) To the extent changes have been made,
its record o f opening and closing branches
has not adversely affected the accessibility of
its delivery system s, particularly in low- and
m oderate-incom e geographies and to lowand m oderate-incom e individuals;
(C) Its services (including, where
appropriate, bu siness hours) do not vary in
a way that in co n ven ien ces its assessm ent
area(s), particularly low- and moderateincom e geographies and low- and moderateincom e individuals; and
(D) It provides a relatively high level o f
com m unity developm ent services.
(iii) Low satisfactory. T he FDIC rates a
bank’s service perform ance “ low
satisfactory” if, in general, the bank
demonstrates:
(A) Its service delivery system s are
reasonably accessible to geographies and
individuals o f different incom e levels in its
assessm ent area(s);
(B) To the extent changes have been m ade,
its record of opening and closing branches
has generally not adversely affected the
a ccessibility o f its delivery system s,
particularly in low- and m oderate-incom e
geographies and to low- and moderateincom e individuals;
(C) Its services (including, w here
appropriate, bu siness hours) do not vary in
a way that in co n ven ien ces its assessm ent
area(s), particularly low- and moderateincom e geographies and low - and m oderateincom e individuals; and
(D) It provides an adequate level of
com m unity developm ent services.
(iv) N eeds to improve. T he FDIC rates a
b an k’s service perform ance “ needs to
im prove” if, in general, the bank
dem onstrates:
(A) Its service delivery system s are
unreasonably in accessib le to portions o f its
assessm ent area(s), particularly to low- or
m oderate-incom e geographies or to low- or
m oderate-incom e individuals;
(B) To the extent changes have been made,
its record of opening and closin g branches
has adversely affected the accessibility its
delivery system s, particularly in low- or
m oderate-incom e geographies or to low- or
m oderate-incom e ind ividuals;
(C) Its services (including, where
appropriate, bu sin ess hours) vary in a way
that inconven iences its assessm ent area(s),
particularly low- or m oderate-incom e
geographies or low- or m oderate-incom e
individuals; and
(D) It provides a lim ited level o f
com m unity developm ent services.
(v) Substantial noncom pliance. T he FDIC
rates a bank’s service perform ance as being
in “ substantial n o n com p lian ce” if, in
general, the bank dem onstrates:
(A) Its service delivery system s are
unreasonably in accessib le to significant
portions o f its assessm ent area(s), particularly
to low- or m oderate-incom e geographies or to
low- or m oderate-incom e individuals;
(B) T o the extent changes have been made,
its record o f opening and closing branches
has significantly adversely affected the
a ccessibility o f its delivery system s,
particularly in low- or m oderate-incom e
geographies or to low- or m oderate-incom e
individuals;
(C) Its services (including, w here
appropriate, bu siness hours) vary in a way
that significantly inconven iences its
assessm ent area(s), particularly low- or
m oderate-incom e geographies or low- or
m oderate-incom e ind ivid uals; and
(D) It provides few, if any, com m unity
developm ent services.
(c) W holesale or lim ited purpose banks.
T he FDIC assigns each w holesale or lim ited
purpose ban k’s com m unity developm ent
perform ance one o f the four follow ing
ratings.
(1) Outstanding. T he FDIC rates a
w holesale or lim ited purpose bank’s
com m unity developm ent perform ance
“outstanding” if, in general, it demonstrates:
(i) A high level o f com m unity developm ent
loans, com m unity developm ent services, or
qualified investm ents, particularly
investm ents that are not routinely provided
by private investors;
(ii) E xtensive use o f innovative or com plex
qualified investm ents, com m unity
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
developm ent loans, or com m unity
developm ent services; and
(iii) E xcellent responsiveness to cred it and
com m unity developm ent needs in its
assessm ent area(s).
(2) Satisfactory. T he FDIC rates a w holesale
or lim ited purpose ban k’s com m unity
developm ent perform ance “ satisfactory” if,
in general, it demonstrates:
(i) An adequate level o f com m unity
developm ent loans, com m unity developm ent
services, or qualified investm ents,
particularly investm ents that are not
routinely provided by private investors;
(ii) O ccasional use o f innovative or
com plex qualified investm ents, com m unity
developm ent loans, or com m unity
developm ent services; and
(iii) Adequate responsiveness to credit and
com m unity developm ent needs in its
assessm ent area(s).
(3) N eeds to improve. T h e FDIC rates a
w holesale or lim ited purpose bank’s
com m unity developm ent perform ance as
“ needs to im prove” if, in general, it
demonstrates:
(i) A poor level o f com m unity developm ent
loans, com m unity developm ent services, or
qualified investm ents, particularly
investm ents that are not routinely provided
by private investors;
(ii) Rare use of innovative or com plex
qualified investm ents, com m unity
developm ent loans, or com m unity
developm ent services; and
(iii) Poor responsiveness to credit and
com m unity developm ent needs in its
assessm ent area(s).
(4) Substantial noncom pliance. The FDIC
rates a w holesale or lim ited purpose bank’s
com m unity developm ent perform ance in
“ substantial noncom plian ce” if, in general, it
demonstrates:
(i) Few , if any, com m unity developm ent
loans, com m unity developm ent services, or
qualified investm ents, particularly
investm ents that are not routinely provided
by private investors;
(ii) No use o f innovative or com plex
qualified investm ents, com m unity
developm ent loans, or com m unity
developm ent services; and
(iii) Very poor responsiveness to credit and
com m unity developm ent needs in its
assessm ent area(s).
,
(d)
Banks evaluated under the sm all bank
perform ance standards. T h e FDIC rates the
perform ance o f each bank evaluated under
the sm all bank perform ance standards as
follow s.
(1)
Eligibility fo r a satisfactory rating. T he
FDIC rates a bank’s perform ance
“ satisfactory” if, in general, the bank
dem onstrates:
(i) A reasonable loan-to-deposit ratio
(considering seasonal variations) given the
b an k’s size, fin ancial cond ition, the credit
needs o f its assessm ent area(s), and taking
into account, as appropriate, lending-related
activities such as loan originations for sale to
the secondary m arkets and com m unity
developm ent loans and qualified
investm ents;
(ii) A m ajority o f its loans and, as
appropriate, other lending-related activities
are in its assessm ent area(s);
(iii) A distribution o f loans to and, as
appropriate, other lending related-activities
for individuals of different incom e levels
(includ ing low - and m oderate-incom e
individuals) and bu sinesses and farms o f
different sizes that is reasonable given the
dem ographics of the ban k’s assessm ent
area(s);
(iv) A record of taking appropriate action,
as w arranted, in response to w ritten
com plaints, if any, about the bank’s
perform ance in helping to m eet the credit
needs of its assessm ent area(s); and
(v) A reasonable geographic distribution of
loans given the bank’s assessm ent area(s).
(2) Eligibility fo r an outstanding rating. A
bank that m eets each of the standards for a
“ satisfactory” rating under this paragraph
and exceeds som e or all o f those standards
m ay w arrant consideration for an overall
rating of “outstanding.” In assessing w hether
a ban k’s perform ance is “outstanding,” the
FDIC considers the extent to w hich the bank
exceed s each o f the perform ance standards
for a “satisfactory” rating and its
perform ance in m aking qualified investm ents
and its perform ance in providing branches
and other services and delivery system s that
en han ce credit availability j n its assessm ent
area(s).
(3) N eeds to improve or substantial
noncom pliance ratings. A bank also may
receive a rating o f “needs to im prove” or
“ substantial noncom plian ce” depending on
the degree to w hich its perform ance has
failed to m eet the standards for a
“ satisfactory” rating.
(e) Strategic plan assessm ent and rating.
(1) Satisfactory goals. T h e FDIC approves as
“ satisfactory” m easurable goals that
adequately help to m eet the credit needs o f
the bank’s assessm ent area(s).
(2) Outstanding goals. If the plan identifies
a separate group o f m easurable goals that
substantially exceed the levels approved as
“ satisfactory,” the FDIC w ill approve those
goals as “outstanding.”
(3) Rating. T he FDIC assesses the
perform ance o f a bank operating under an
approved plan to determ ine if the bank has
m et its plan goals:
(i) If the bank substantially achieves its
plan goals for a satisfactory rating, the FDIC
w ill rate the bank’s perform ance under the
plan as “ satisfactory.”
(ii) If the bank exceeds its plan goals for
a satisfactory rating and substantially
achieves its plan goals for an outstanding
rating, the FDIC w ill rate the bank’s
perform ance under the plan as
“ outstanding.”
(iii) If the bank fails to m eet substantially
its plan goals for a satisfactory rating, the
FDIC w ill rate the bank as eith er “ needs to
im prove” or “ substantial n o n com p lian ce,”
depending on the extent to w hich it falls
short o f its plan goals, unless the bank
elected in its plan to be rated otherw ise, as
provided in § 345.27(f)(4).
A ppendix B to P art 3 4 5 — CRA Notice
(a)
Notice fo r main offices and, i f an
interstate bank, one branch office in each
state.
Community Reinvestment A ct Notice
22211
Under the Federal Com m unity
Reinvestm ent A ct (CRA), the Federal Deposit
Insurance Corporation (FDIC) evaluates our
record o f helping to m eet the credit needs o f
th is com m unity co nsisten t w ith safe and
sound operations. T he FDIC also takes this
record into account w hen deciding on certain
applications subm itted by us.
Y our involvem ent is encouraged.
You are entitled to certain inform ation
about our operations and our perform ance
under the CRA, including, for exam ple,
inform ation about our branches, such as their
location and services provided at them ; the
pu blic section o f our m ost recent CRA
Perform ance Evaluation, prepared by the
FDIC; and com m ents received from the
p u blic relating to our perform ance in helping
to m eet com m unity cred it needs, as w ell as
our responses to those com m ents. You may
review this inform ation today.
A t least 30 days before the beginning of
each quarter, the FDIC publishes a
nationw ide list o f the banks that are
scheduled for CRA exam ination in that
quarter. T h is list is available from the
Regional Manager, D ivision o f Com pliance
and Consum er Affairs, FDIC (address). You
m ay send w ritten com m ents about our
perform ance in helping to m eet com m unity
cred it needs to (name and address of official
at bank) and FDIC Regional Manager. Your
letter, together w ith any response by us, w ill
be considered by the FDIC in evaluating our
CRA perform ance and m ay be m ade public.
You may ask to look at any com m ents
received by the FDIC Regional Manager. You
m ay also request from the FDIC Regional
M anager an announcem ent o f our
applications covered by the CRA filed with
the FDIC. We are an affiliate o f (name of
holding com pany), a bank holding company.
Y ou may request from the (title of
responsible official), Federal Reserve Bank of
_______________ (address) an
announcem ent o f applications covered by the
CRA filed by bank holding com panies.
(b) Notice fo r branch offices.
Community Reinvestment A ct Notice
U nder the Federal Com m unity
R einvestm ent Act (CRA), the Federal Deposit
Insurance Corporation (FDIC) evaluates our
record of helping to m eet the credit needs o f
th is com m unity consisten t w ith safe and
sound operations. T he FDIC also takes this
record into account w hen deciding on certain
applications subm itted by us.
Y our involvem ent is encouraged.
You are entitled to certain inform ation
about our operations and our perform ance
under the CRA. You m ay review today the
p u blic section o f our m ost recent CRA
evaluation, prepared by the FDIC, and a list
o f services provided at th is branch. You may
also have access to the follow ing additional
inform ation, w hich we w ill m ake available to
you at this branch w ith in five calendar days
after you make a request to us: (1) a map
show ing the assessm ent area containing this
branch , w hich is the area in w hich the FDIC
evaluates our CRA perform ance in this
com m unity; (2) inform ation about our
branch es in this assessm ent area; (3) a list o f
services we provide at those locations; (4)
data on our lending perform ance in this
22212
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
assessm ent area; and (5) copies o f all w ritten
com m ents received by us that sp ecifically
relate to our CRA perform ance in this
assessm ent area, and any responses we have
m ade to those com m ents. If we are operating
under an approved strategic plan, you may
also have access to a copy o f the plan.
[If you w ould like to review inform ation
about our CRA perform ance in other
com m unities served by us, the public file for
our entire bank is available at (nam e o f office
located in state), located at (address).]
At least 30 days before the beginning o f
each quarter, the FDIC publishes a
nationw ide list o f the banks that are
scheduled for CRA exam ination in that
quarter. T his list is available from the
Regional Manager, Division o f Com pliance
and Consum er Affairs, FDIC (address). You
may send w ritten com m ents about our
performance in helping to m eet com m unity
credit needs to (nam e and address o f official
at bank) and the FDIC Regional Manager.
Y our letter, together w ith any response by us,
w ill be considered by the FDIC in evaluating
our CRA perform ance and may be m ade
public.
You may ask to look at any com m ents
received by the FDIC Regional Manager. You
may also request from the FDIC Regional
Manager an announcem ent of our
applications covered by the CRA filed w ith
the FDIC. We are an affiliate o f (nam e of
holding com pany), a bank holding com pany.
You may request from the (title of
responsible official), Federal Reserve B ank of
______________________(address) an
announcem ent o f applications covered by the
CRA filed by bank holding com panies.
§§345.1, 345.2, 345.8, 345.101, and 345.102,
and the undersigned center heading
preceding §345.101 [Removed]
3. Sections 345.1, 345.2, 345.8,
345.101 and 345.102, and the
undersigned center heading preceding
§ 345.101 are removed effective July 1,
1995.
§§345.3, 345.4, 345.5, 345.6, 345.7, and
subpart D [Removed]
Authority: 12 U.S.C. 1462a, 1 463, 1464,
1467a, 1814, 1816, 1828(c), and 2901 through
2907.
2.
Part 563e is amended by adding
Subparts A through D and A ppendices
A and B to read as follows:
Subpart A— General
Sec.
5 6 3 e .ll
5 6 3 e .l2
A uthority, purposes, and scope.
D efinitions.
Subpart B— Standards for Assessing
Performance
563e.21 Perform ance tests, standards, and
ratings, in general.
563e.22 Lending test.
563e.23 Investm ent test.
563e.24 Service test.
563e.25 Com m unity developm ent test for
w holesale or lim ited purpose savings
associations.
5 63e.26 Sm all savings association
perform ance standards.
5 63e.27 Strategic plan.
563e.28 Assigned ratings.
5 63e.29 Effect o f CRA perform ance on
applications.
Subpart C— Records, Reporting, and
Disclosure Requirements
563e.41 A ssessm ent area d elineation.
563e.42 Data co llection , reporting, and
disclosure.
5 63e.43 Content and availability o f public
file.
563e.44 P ublic notice by savings
associations.
5 63e.45 Publication of planned
exam ination schedule.
Subpart D—Transition Rules
563e.51
T ransition rules.
Appendix A to P art 563e— Ratings
A ppendix B to P art 563e— CRA N otice
Subpart A— General
§ 563e.11
Authority, purposes, and scope.
(a) A u th ority a n d OMB co n tro l
n u m b er—(1) A u thority. T his part is
4. Sections 345.3, 345.4, 345.5, 345.6,
issued under the Community
345.7, and 345.51 are removed effective
Reinvestment Act of 1977 (CRA), as
July 1 ,1 9 9 7 .
amended (12 U.S.C. 2901 et seq.)\
By order of the Board of Directors of the
section 5, as amended, and sections 3,
Federal Deposit Insurance Corporation:
4, and 10, as added, of the Home
Dated: April 24, 1995.
O wners’ Loan Act of 1933 (12 U.S.C.
1462a, 1463, 1464, and 1467a); and
Robert E. Feldm an,
sections 4, 6, and 18(c), as amended of
Acting Executive Secretary.
the Federal Deposit Insurance Act (12
Office of Thrift Supervision
U.S.C. 1814, 1816, 1828(c)).
(2) OMB co n tro l n u m ber. The
12 CFR Chapter V
information collection requirem ents
For the reasons outlined in the joint
contained in this part were approved by
preamble, the Office of Thrift
the Office of Management and Budget
Supervision amends 12 CFR chapter V
under the provisions of 44 U.S.C. 3501
as set forth below:
et seq . and have been assigned OMB
control number 1 5 5 0 -0 0 1 2 .
PART 563e— COMMUNITY
(b) P u rp oses. In enacting the CRA, the
REINVESTMENT
Congress required each appropriate
1.
The authority citation for part 563e Federal financial supervisory agency to
is revised to read as follows:
assess an institution’s record of helping
to meet the credit needs of the local
com m unities in w hich the institution is
chartered, consistent with the safe and
sound operation of the institution, and
to take this record into account in the
agency’s evaluation of an application for
a deposit facility by the institution. T his
part is intended to carry out the
purposes o f the CRA by:
(1) Establishing the framework and
criteria by w hich the O TS assesses a
savings association’s record of helping
to meet the credit needs o f its entire
com m unity, including low- and
m oderate-incom e neighborhoods,
consistent w ith the safe and sound
operation of the savings association; and
(2) Providing that the O TS takes that
record into account in considering
certain applications.
(c)
S c o p e. T his part applies to all
savings associations as defined in
§ 561.43 of this subchapter.
§563e.12
Definitions.
For purposes o f this part, the
following definitions apply:
(a) A ffilia te means any com pany that
controls, is controlled by, or is under
common control with another com pany.
The term “con trol” has the meaning
given to that term in 12 U.S.C.
1841(a)(2), and a com pany is under
common control with another com pany
if both com panies are directly or
indirectly controlled by the same
company.
(b) A rea m e d ia n in c o m e means:
(1) The median family incom e for the
MSA, if a person or geography is located
in an M SA; or
(2) The statewide nonm etropolitan
median family incom e, if a person or
geography is located outside an M SA.
(c) A ssessm en t a r e a m eans a
geographic area delineated in
accordance with § 563e.41.
(d) A u to m a ted teller m a c h in e (ATM)
means an automated, unstaffed banking
facility owned or operated by, or
operated exclusively for, the savings
association at w hich deposits are
received, cash dispersed, or money lent.
(e) B ran ch means a staffed banking
facility authorized as a branch, whether
shared or unshared, including, for
exam ple, a m ini-branch in a grocery
store or a branch operated in
conjunction with any other local
business or nonprofit organization.
(f) CMSA m eans a consolidated
metropolitan statistical area as defined
by the D irector of the Office of
Management and Budget.
(g) C om m u n ity d e v e lo p m e n t means:
(1) Affordable’ housing (including
m ultifam ily rental housing) for low or
m oderate-incom e individuals;
(2) Community services targeted to
low- or m oderate-incom e individuals;
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
(3) A ctivities that promote econom ic
developm ent by financing businesses or
farms that m eet the size eligibility
standards o f 13 CFR 121.802(a)(2) or
have gross annual revenues of $1
m illion or less; or
(4) A ctivities that revitalize or
stabilize low- or moderate-incom e
geographies.
(h) C om m u n ity d e v e lo p m e n t lo a n
means a loan that:
(1) Has as its primary purpose
com m unity developm ent; and
(2) Except in the case of a wholesale
or lim ited purpose savings association:
(i) Has not been reported or collected
by the savings association or an affiliate
for consideration in the savings
association’s assessm ent as a home
mortgage, sm all business, small farm, or
consum er loan, unless it is a
m ultifam ily dw elling loan (as described
in A ppendix A to Part 203 of this title);
and
(ii) B enefits the savings association’s
assessment area(s) or a broader
statewide or regional area that includes
the savings association’s assessment
area(s).
(i)
C om m u n ity d e v e lo p m e n t se rv ic e
means a service that:
(1) Has as its primary purpose
com m unity developm ent;
(2) Is related to the provision of
financial services; and
(3) Has not been considered in the
evaluation of the savings association’s
retail banking services under
§563e.24(d ).
(j) C on su m er lo a n means a loan to one
or more individuals for household,
family, or other personal expenditures.
A consum er loan does not include a
home mortgage, sm all business, or small
farm loan. Consumer loans include the
following categories of loans:
(1) M otor v e h ic le lo a n , w hich is a
consum er loan extended for the
purchase of and secured by a motor
vehicle;
*
(2) C redit c a r d lo a n , w hich is a line
of credit for household, family, or other
personal expenditures that is accessed
by a borrower’s use of a “credit card ,”
as this term is defined in § 226.2 of this
title;
(3) H o m e eq u ity lo a n , which is a
consum er loan secured by a residence of
the borrower;
(4) O ther s e c u r e d c o n su m er lo a n ,
w hich is a secured consumer loan that
is not included in one of the other
categories o f consum er loans; and
(5) O ther u n se c u red c o n su m er lo a n ,
w hich is an unsecured consumer loan
that is not included in one of the other
categories of consum er loans.
(k) G eo g ra p h y means a census tract or
a block num bering area delineated by
the United States Bureau of the Census
in the m ost recent decennial census.
(1) H o m e m o rtg a g e lo a n m eans a
“home im provem ent loan” or a “home
purchase loan” as defined in § 203.2 of
this title.
(m) In c o m e le v e l includes:
(1) L o w -in co m e, w hich means an
individual incom e that is less than 50
percent of the area median incom e or a
median fam ily incom e that is less than
50 percent in the case of a geography.
(2) M o d er a te-in c o m e , w hich means an
individual incom e that is at least 50
percent and less than 80 percent of the
area m edian incom e or a median fam ily
incom e that is at least 50 and less than
80 percent in the case of a geography.
(3) M id d le-in co m e, w hich means an
individual incom e that is at least 80
percent and less than 120 percent o f the
area m edian incom e or a median family
incom e that is at least 80 and less than
120 percent in the case of a geography.
(4) U p p er-in co m e, w hich means an
individual incom e that is 120 percent or
more of the area median income or a
median family incom e that is 120
percent or more in the case o f a
geography.
(n) L im ited p u r p o s e savin gs
a s s o c ia tio n m eans a savings association
that offers o n ly a narrow product line
(such as credit card or motor vehicle
loans) to a regional or broader market
and for w hich a designation as a limited
purpose savings association is in effect,
in accordance w ith § 563e.25(b).
(0) L o an lo c a tio n . A loan is located as
follows:
(1) A consum er loan is located in the
geography where the borrower resides;
(2) A hom e mortgage loan is located
in the geography where the property to
w hich the loan relates is located; and
(3) A sm all business or small farm
loan is located in the geography where
the m ain business facility or farm is
located or where the loan proceeds
otherwise w ill be applied, as indicated
by the borrower.
(p) L o a n p r o d u c tio n o ffic e means .a
staffed facility, other than a branch, that
is open to the public and that provides
lending-related services, such as loan
inform ation and applications.
(q) MSA m eans a metropolitan
statistical area or a primary
m etropolitan statistical area as defined
by the Director o f the Office of
M anagement and Budget.
(r) Q u a lified in v estm en t means a
lawful investm ent, deposit, membership
share, or grant that has as its primary
purpose com m unity development.
(s) S m a ll sa v in g s a s s o c ia tio n means a
savings association that, as of December
31 of either of the prior two calendar
years, had total assets of less than $250
22213
m illion and was independent or an
affiliate o f a holding company that, as of
December 31 of eith er of the prior two
calendar years, had total banking and
thrift assets o f less than $1 billion.
(t) S m a ll b u sin ess lo a n means a loan
included in “ loans to sm all businesses”
as defined in the instructions for
preparation o f the Thrift Financial
Report.
(u) S m a ll fa r m lo a n means a loan
included in “ loans to small farms” as
defined in the instructions for
preparation of the Thrift Financial
Report.
(v)
W h o le s a le sav in g s a ss o c ia tio n
means a savings association that is not
in the business of extending home
mortgage, small business, small farm, or
consum er loans to retail customers, and
for w hich a designation as a w holesale
savings association is in effect, in
accordance w ith § 563e.25(b).
Subpart B— Standards for Assessing
Performance
§ 563e.21 Performance tests, standards,
and ratings, in general.
(a)
P e r fo r m a n c e tests a n d sta n d ard s.
The O TS assesses the CRA performance
of a savings association in an
exam ination as follow s:
(1) L en d in g , in v estm en t, a n d serv ice
tests. The O TS applies the lending,
investm ent, and service tests, as
provided in § § 5 6 3 e .2 2 through 563e.24,
in evaluating the performance of a
savings association, except as provided
in paragraphs (a)(2), (a)(3), and (a)(4) of
this section.
(2) C om m u n ity d e v e lo p m e n t test fo r
w h o le s a le o r lim ite d p u r p o s e savin gs
a ss o c ia tio n s. The O TS applies the
com m unity developm ent test for a
w holesale or lim ited purpose savings
association, as provided in § 563e.25,
except as provided in paragraph (a)(4) of
this section.
(3) S m a ll sav in g s a ss o cia tio n
p e r fo r m a n c e sta n d a rd s. The OTS
applies the sm all savings association
perform ance standards as provided in
§ 563e.26 in evaluating the performance
o f a sm all savings association or a
savings association that was a small
savings association during the prior
calendar year, unless the savings
association elects to be assessed as
provided in paragraphs (a)(1), (a)(2), or
(a)(4) of this section. The savings
association may elect to be assessed as
provided in paragraph (a)(1) of this
section only if it collects and reports the
data required for other savings
associations under § 563e.42.
(4) S trateg ic p la n . The O TS evaluates
the perform ance of a savings association
under ,a strategic plan if the savings
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Federal Register / Vol. 60, No. 86
association submits, and the O TS
approves, a strategic plan as provided in
§ 563e.27.
(b) P erfo rm a n c e con tex t. The OTS
applies the tests and standards in
paragraph (a) of this section and also
considers whether to approve a
proposed strategic plan in the context
of:
(1) Demographic data on median
incom e levels, distribution of household
incom e, nature of housing stock,
housing costs, and other relevant data
pertaining to a savings association’s
assessment area(s);
(2) Any information about lending,
investment, and service opportunities in
the savings association’s assessm ent
area(s) m aintained by the savings
association or obtained from com munity
organizations, state, local, and tribal
governments, econom ic development
agencies, or other sources;
(3) The savings association’s product
offerings and business strategy as
determined from data provided by the
savings association;
(4) Institutional capacity and
constraints, including the size and
financial condition of the savings
association, the econom ic clim ate
(national, regional, and local), safety
and soundness lim itations, and any
other factors that significantly affect the
savings association’s ability to provide
lending, investments, or services in its
assessment area(s);
(5) The savings association’s past
performance and the performance of
sim ilarly situated lenders;
(6) The savings association’s public
file, as described in § 563e.43, and any
written com ments about the savings
association’s CRA performance
submitted to the savings association or
the O TS; and
(7) Any other information deemed
relevant by the O TS.
(c) A ssig n ed ratings. The O TS assigns
to a savings association one of the
following four ratings pursuant to
§ 563e.28 and Appendix A of this part:
“outstanding”; “satisfactory”; “needs to
im prove”; or "substantial
noncom pliance,” as provided in 12
U.S.C. 2906(b)(2). The rating assigned
by the O TS reflects the savings
association's record of helping to meet
the credit needs of its entire com m unity,
including low- and moderate-incom e
neighborhoods, consistent w ith the safe
and sound operation of the savings
association.
(d) S a fe a n d s o u n d o p era tio n s. This
part and the CRA do not require a
savings association to make loans or
investments or to provide services that
are inconsistent with safe and sound
operations. To the contrary, the O TS
!
Thursday, May 4, 1995 / Rules and Regulations
anticipates savings associations can
meet the standards of this part with safe
and sound loans, investm ents, and
services on w hich the savings
associations expect to make a profit.
Savings associations are permitted and
encouraged to develop and apply
flexible underwriting standards for
loans that benefit low- or moderateincom e geographies or individuals, only
if consistent with safe and sound
operations.
(2) G eo g ra p h ic distribu tion . The
geographic distribution of the savings
association’s home mortgage, small
business, small farm, and consum er
loans, if applicable, based on the loan
location, including:
(i) The proportion of the savings
association’s lending in the savings
association’s assessm ent area(s);
(ii) The dispersion o f lending in the
savings association’s assessm ent area(s);
and
(iii) The number and amount of loans
§ 563e.22 Lending test.
in low-, moderate-, middle-, and upperincom e geographies in the savings
(a) S c o p e o f test. (1) The lending test
association’s assessm ent area(s);
evaluates a savings association’s record
(3) B o rrow er c h a ra c teristics. The
of helping to meet the credit needs o f its
distribution, particularly in the savings
assessment area(s) through its lending
association’s assessm ent area(s), of the
activities by considering a savings
savings association’s hom e mortgage,
association’s home mortgage, small
sm all business, small farm, and
business, small farm, and com m unity
consum er loans, if applicable, based on
development lending. If consum er
borrower characteristics, including the
lending constitutes a substantial
number and amount of:
majority o f a savings association’s
(1) Home mortgage loans to low-,
business, the O TS w ill evaluate the
m oderate-, m iddle-, and upper-income
savings association’s consum er lending
individuals;
in one or more of the following
(ii) Sm all business and small farm
categories: motor vehicle, credit card,
loans to businesses and farms with gross
home equity, other secured, and other
annual revenues o f $1 m illion or less;
unsecured loans. In addition, at a
(iii) Sm all business and small farm
savings association’s option, the O TS
loans by loan amount at origination; and
w ill evaluate one or more categories of
(iv) Consumer loans, if applicable, to
consum er lending, if the savings
low-, moderate-, middle-, and upperassociation has collected and
incom e individuals;
m aintained, as required in
(4) C om m u n ity d e v e lo p m e n t len din g.
§ 563e.42(c)(1), the data for each
T h e savings association’s com munity
category that the savings association
developm ent lending, including the
elects to have the O TS evaluate.
num ber and amount o f com munity
(2) The O TS considers originations
developm ent loans, and their
and purchases of loans. The O TS w ill
com plexity and innovativeness; and
also consider any other loan data the
(5) In n ov a tiv e o r fl e x i b le len d in g
savings association may choose to
p r a c tic e s . T h e savings association’s use
provide, including data on loans
o f innovative or flexible lending
outstanding, com m itm ents and letters of
practices in a safe and sound manner to
credit.
address the credit needs of low- or
(3) A savings association may ask the
m oderate-incom e individuals or
O TS to consider loans originated or
geographies.
purchased by consortia in w hich the
(c)
A ffilia te len d in g . (1) At a savings
savings association participates or by
association’s option, the O TS will
third parties in w hich the savings
consider loans by an affiliate of the
association has invested only if the
savings association, if the savings
loans meet the definition o f com m unity
association provides data on the
development loans and only in
affiliate’s loans pursuant to § 563e.42.
accordance with paragraph (d) o f this
(2) The O TS considers affiliate
section. T he O TS will not consider
lending subject to the following
these loans under any criterion of the
constraints:
lending test except the com munity
(i) No affiliate may claim a loan
development lending criterion.
origination or loan purchase if another
(b) P erfo rm a n c e criteria. The O TS
institution claim s the same loan
evaluates a savings association’s lending origination or purchase; and
performance pursuant to the following
(ii) If a savings association elects to
criteria:
have the O TS consider loans w ithin a
(1) L en d in g activity. The number and particular lending category made by one
amount of the savings association’s
or more of the savings association’s
affiliates in a particular assessm ent area,
home mortgage, small business, small
farm, and consum er loans, if applicable, the savings association shall elect to
have the O TS consider, in accordance
in the savings association’s assessment
area(s);
w ith paragraph (c)(1) o f this section, all
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
the loans w ithin that lending category in a savings association pursuant to the
following criteria:
that particular assessment area made by
(1) The dollar amount of qualified
all of the savings association’s affiliates.
investments;
(3)
The O T S does not consider
(2) The innovativeness or com plexity
affiliate lending in assessing a savings
of qualified investm ents;
association’s performance under
(3) The responsiveness of qualified
paragraph (b)(2)(i) of this section.
(d) L en d in g b y a co n so rtiu m o r a th ird investm ents to Credit and com m unity
development needs; and
p arty. Community development loans
(4) The degree to w hich the qualified
originated or purchased by a consortium
investm ents are not routinely provided
in w hich the savings association
by private investors.
participates or by a third party in w hich
(f) In v estm en t p e r fo r m a n c e rating.
the savings association has invested:
The O TS rates a savings association’s
(1) W ill be considered, at the savings
investm ent perform ance as provided in
association’s option, if the savings
Appendix A o f this part.
association reports the data pertaining
to these loans under § 563e.42(b)(2); and § 563e.24 Service test.
(2) May be allocated among
(a) S c o p e o f test. The service test
participants or investors, as they choose, evaluates a savings association’s record
for purposes o f the lending test, except
of helping to m eet the credit needs of its
that no participant or investor:
assessm ent area(s) by analyzing both the
(i) May claim a loan origination or
availability and effectiveness of a
loan purchase if another participant or
savings association ’s systems for
investor claim s the same loan
delivering retail banking services and
origination or purchase; or
the extent and innovativeness of its
(ii) May claim loans accounting for
com m unity developm ent services.
more than its percentage share (based on
(b) A rea (s) b e n e fitte d . Community
the level of its participation or
developm ent services must benefit a
investm ent) of the total loans originated
savings association ’s assessment area(s)
by the consortium or third party.
or a broader statewide or regional area
(e) L en d in g p e r fo r m a n c e rating. The
that includes the savings association’s
O TS rates a savings association’s
assessm ent area(s).
lending perform ance as provided in
(c) A ffilia te serv ic e. At a savings
Appendix A o f this part.
association’s option, the O TS will
consider, in its assessment of a savings
§ 563e.23 I nvestment test.
association’s service performance, a
(a) S c o p e o f test. The investment test
com m unity developm ent service
evaluates a savings association’s record
provided by an affiliate of the savings of helping to m eet the credit needs o f its association, if the community
assessm ent area(s) through qualified
developm ent service is not claim ed by
investm ents that benefit its assessm ent
any other institution.
area(s) or a broader statewide or regional
(d) P e r fo r m a n c e criteria— reta il
area that includes the savings
b a n k in g se rv ic e s. The O TS evaluates the
association’s assessm ent area(s).
availability and effectiveness of a
(b) E x clu sion . A ctivities considered
savings association’s systems for
under the lending or service tests may
delivering retail banking services,
not be considered under the investment
pursuant to the following criteria:
test.
(1) The current distribution of the
(c) A ffilia te in v estm ep t. At a savings
savings association’s branches among
association’s option, the OTS will
low-, moderate-, middle-, and upperconsider, in its assessm ent of a savings
incom e geographies;
association’s investm ent performance, a
(2) In the context o f its current
qualified investm ent made by an
distribution of the savings association’s
affiliate of the savings association, if the
branches, the savings association’s
qualified investm ent is not claim ed by
record o f opening and closing branches,
any other institution.
particularly branches located in low- or
(d) D isp osition o f b ra n ch p rem ises.
m oderate-incom e geographies or
Donating, selling on favorable terms, or
primarily serving low- or moderatemaking available on a rent-free basis a
incom e individuals;
branch of the savings association that is
(3) The availability and effectiveness
located in a predom inantly minority
o f alternative system s for delivering
neighborhood to a m inority depository
retail banking services (e.g., ATMs,
institution or w om en’s depository
ATMs not owned or operated by or
institution (as these terms are defined in exclusively for the savings association,
12 U.S.C. 2907(b)) w ill be considered as
banking by telephone or com puter, loan
a qualified investment.
production offices, and bank-at-work or
(e) P e r fo r m a n c e criteria. The OTS
bank-by-mail programs) in low- and
evaluates the investm ent performance of moderate-incom e geographies and to
22215
low- and m oderate-incom e individuals;
and
(4) The range of services provided in
low-, moderate-, m iddle-, and upperincom e geographies and the degree to
w hich the services are tailored to meet
the needs of those geographies.
(e) P erfo rm a n c e criteria— co m m u n ity
d e v e lo p m e n t serv ices. The OTS
evaluates com m unity development
services pursuant to the following
criteria:
(1) The extent to w hich the savings
association provides com munity
developm ent services; and
(2) The innovativeness and
responsiveness o f com munity
developm ent services.
(f) S er v ice p e r fo r m a n c e rating. The
O TS rates a savings association’s service
perform ance as provided in Appendix A
of this part.
§ 563e.25 Community development test for
wholesale or limited purpose savings
associations.
(a) S c o p e o f test. The OTS assesses a
w holesale or lim ited purpose savings
association’s record of helping to meet
the credit needs of its assessment area(s)
under the com m unity development test
through its com m unity development
lending, qualified investments, or
com m unity developm ent services.
(b) D esig n ation a s a w h o le s a le or
lim ite d p u r p o s e sav in g s a ss o c ia tio n . In
order to receive a designation as a
w holesale or lim ited purpose savings
association, a savings association shall
file a request, in writing, with the O TS,
at least three m onths prior to the
proposed effective date of the
designation. If the O TS approves the
designation, it rem ains in effect until
the savings association requests
revocation of the designation or until
one year after the O TS notifies the
savings association that the O TS has
revoked the designation on its own
initiative.
(c) P erfo rm a n c e criteria. The OTS
evaluates the com m unity developm ent
perform ance o f a w holesale or lim ited
purpose savings association pursuant to
the follow ing criteria:
(1) The num ber and amount of
com m unity developm ent loans
(including originations and purchases of
loans and other com munity
developm ent loan data provided by the
savings association, such as data on
loans outstanding, com mitments, and
letters of credit), qualified investm ents,
or com m unity developm ent services;
(2) The use o f innovative or com plex
qualified investm ents, com munity
developm ent loans, or community
developm ent services and the extent to
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Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
w hich the investm ents are not routinely borrowers o f different incom e levels and
provided by private investors; and
businesses and farms o f different sizes;
(4) The geographic distribution of the
(3) The savings association’s
responsiveness to credit and community savings association’s loans; and
(5) T he savings association’s record of
development needs.
taking action, if warranted, in response
(d) In d irect a ctiv ities. At a savings
to written com plaints about its
association’s option, the O TS will
performance in helping to meet credit
consider in its com m unity development
needs in its assessm ent area(s).
performance assessm ent:
(b) S m a ll sa v in g s a s s o c ia tio n
(1) Qualified investm ents or
p e r fo r m a n c e rating. T h e O TS rates the
com m unity developm ent services
performance o f a savings association
provided by an affiliate of the savings
evaluated under this section as provided
association, if the investm ents or
in Appendix A of this part.
services are not claim ed by any other
institution; and
§563e.27 Strategic plan.
(2) Community developm ent lending
(a) A ltern a tiv e e le c tio n . The OTS w ill
by affiliates, consortia and third parties,
assess a savings association ’s record of
subject to the requirem ents and
helping to meet the credit needs of its
lim itations in § 563e.22 (c) and (d).
assessment area(s) under a strategic plan
(e) B en efit to a s s e s s m e n t area (s).— (1)
if:
B en efit in s id e a s s e s s m e n t a rea ls). The
(1) The savings association has
O TS considers all qualified investments, submitted the plan to the O TS as
com munity developm ent loans, and
provided for in this section;
com munity developm ent services that
(2) The O TS has approved the plan;
benefit areas w ithin the savings
(3) The plan is in effect; and
association’s assessm ent area(s) or a
(4) The savings association has been
broader statewide or regional area that
operating under an approved plan for at
includes the savings association’s
least one year.
assessment area(s).
(b) D ata rep ortin g . T he O T S ’s
(2) B en efit o u ts id e a ss e s s m e n t area(s). approval of a plan does not affect the
The O TS considers the qualified
savings association’s obligation, if any,
investm ents, com m unity development
to report data as required by § 563e.42.
loans, and com m unity development
(c) P lan s in g en e ra l. (1) Term . A plan
services that benefit areas outside the
may have a term o f no more than five
savings association’s assessm ent area(s), years, and any m ulti-year plan must
if the savings association has adequately include annual interim measurable
addressed the needs o f its assessment
goals under w hich the O TS will
area(s).
evaluate the savings association’s
(f) C om m u n ity d e v e lo p m e n t
performance.
p e r fo r m a n c e rating. The O TS rates a
(2) M u ltip le a s s e s s m e n t area s. A
savings association’s com m unity
savings association w ith more than one
development perform ance as provided
assessm ent area may prepare a single
in Appendix A of this part.
plan for all of its assessm ent areas or
one or more plans for one or more of its
§ 563e.26 Small savings association
assessment areas.
performance standards.
(3) T rea tm en t o f a ffilia te s . Affiliated
(a)
P erfo rm a n c e criteria. The OTS
institutions may prepare a joint plan if
evaluates the record o f a small savings
the plan provides m easurable goals for
association, or a savings association that each institution. A ctivities may be
was a small savings association during
allocated among institutions at the
the prior calendar year, of helping to
institu tions’ option, provided that the
meet the credit needs of its assessment
same activities are not considered for
area(s) pursuant to the following
more than one institution.
criteria:
(d) P u b lic p a r tic ip a tio n in p la n
(1) The savings association’s loan-tod ev e lo p m e n t. Before submitting a plan
deposit ratio, adjusted for seasonal
to the O TS for approval, a savings
variation and, as appropriate, other
association shall:
lending-related activities, such as loan
(1) Informally seek suggestions from
originations for sale to the secondary
members o f the public in its assessment
markets, com m unity development
area(s) covered by the plan while
loans, or qualified investm ents;
developing the plan;
(2) The percentage o f loans and, as
(2) O nce the savings association has
appropriate, other lending-related
developed a plan, formally solicit public
activities located in the savings
com ment on the plan for at least 30 days
association’s assessm ent area(s);
by publishing notice in at least one
(3) The savings association’s record of newspaper of general circulation in each
lending to and, as appropriate, engaging
assessm ent area covered by the plan;
in other lending-related activities for
and
(3) During the period o f formal public
com m ent, m ake cop ies o f the plan
available for review by the public at no
cost at all offices o f the savings
association in any assessm ent area
covered by the plan and provide copies
of the plan upon request for a
reasonable fee to cover copying and
mailing, if applicable.
(e) S u b m issio n o f p la n . The savings
association shall subm it its plan to the
O TS at least three m onths prior to the
proposed effective date o f the plan. The
savings association shall also submit
with its plan a description o f its
informal efforts to seek suggestions from
members of the public, any written
public com m ent received, and, if the
plan was-revised in light of the
com m ent received, the initial plan as
released for public com m ent.
(f) P lan c o n te n t— (1) M ea su ra b le
g o a ls, (i) A savings association shall
specify in its plan m easurable goals for
helping to m eet the credit needs of each
assessment area covered by the plan,
particularly the needs o f low- and
m oderate-incom e geographies and lowand m oderate-incom e individuals,
through lending, investm ent, and
services, as appropriate.
(ii) A savings association shall
address in its plan all three performance
categories and, unless the savings
association has been designated as a
wholesale or lim ited purpose savings
association, shall em phasize lending
and lending-related activities.
N evertheless, a different emphasis,
including a focus on one or more
performance categories, may be
appropriate if responsive to the
characteristics and credit needs of its
assessm ent area(s), considering public
com ment and the savings association’s
capacity and constraints, product
offerings, and business strategy.
(2) C o n fid en tia l in fo rm a tio n . A
savings association may submit
additional inform ation to the O TS on a
confidential basis, but the goals stated
in the plan must be sufficiently specific
to enable the public and the O TS to
judge the m erits o f the plan.
(3) S a tisfa c to ry a n d ou tstan d in g goals.
A savings association shall specify in its
plan measurable goals that constitute
“ satisfactory” performance. A plan may
specify m easurable goals that constitute
“ outstanding” performance. If a savings
association subm its, and the O TS
approves, both “satisfactory” and
“ outstanding” perform ance goals, the
O TS w ill consider the savings
association eligible for an “outstanding”
performance rating.
(4) E lec tio n i f s a tis fa c to r y g o a ls n ot
su b sta n tia lly m et. A savings association
may elect in its plan that, if the savings
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
association fails to meet substantially its
plan goals for a satisfactory rating, the
O TS w ill evaluate the savings
association’s performance under the
lending, investm ent, and service tests,
the com m unity development test, or the
small savings association performance
standards, as appropriate.
(gl P lan a p p r o v a l— (1) Tim ing. The
O TS w ill act upon a plan within 60
calendar days after the OTS receives the
com plete plan and other material
required under paragraph (d) of this
section. If the O T S fails to act within
this tim e period, the plan shall be
deemed approved unless the O TS
extends the review period for good
cause.
(2) P u b lic p a rticip a tio n . In evaluating
the plan’s goals, the O TS considers the
p u blic’s involvem ent in formulating the
plan, written public comment on the
plan, and any response by the savings
association to pu blic comment on the
plan.
(3) C riteria f o r ev alu a tin g p la n . The
O TS evaluates a plan ’s measurable goals
using the follow ing criteria, as
appropriate:
(i) The extent and breadth o f lending
or lending-related activities, including,
as appropriate, the distribution of loans
among different geographies, businesses
and farms o f different sizes, and
individuals o f different income levels,
the extent of com m unity development
lending, and the use of innovative or
flexible lending practices to address
credit needs;
(ii) The am ount and innovativeness,
com plexity, and responsiveness of the
savings association ’s qualified
investm ents; and
(iii) The availability and effectiveness
o f the savings association’s systems for
delivering retail banking services and
the extent and innovativeness of the
savings association’s community
developm ent services.
(h) P lan a m e n d m en t. During the term
of a plan, a savings association may
request the O T S to approve an
amendment to the plan on grounds that
there has been a material change in
circum stances. The savings association
shall develop an amendment to a
previously approved plan in accordance
with the public participation
requirem ents of paragraph (c) of this
section.
(i) P lan a ss essm en t. The OTS
approves the goals and assesses
perform ance under a plan as provided
for in A ppendix A of this part.
§ 563e.28
Assigned ratings.
(a)
R atin gs in g en era l. Subject to
paragraphs (b) and (c) of this section,
the O TS assigns to a savings association
a rating o f “ outstanding,” “satisfactory,”
“needs to im prove,” or “ substantial
noncom pliance” based on the savings
association’s perform ance under the
lending, investm ent and service tests,
the com m unity developm ent test, the
small savings association performance
standards, or an approved strategic plan,
as applicable.
(b) L en d in g , in v estm en t, a n d se rv ice
tests. The O T S assigns a rating for a
savings association assessed under the
lending, investm ent, and service tests in
accordance w ith the following
principles:
(1) A savings association that receives
an “ outstanding” rating on the lending
test receives an assigned rating o f at
least “ satisfactory” ;
(2) A savings association that receives
an “ outstanding” rating on both the
service test and the investm ent test and
a rating o f at least “high satisfactory” on
the lending test receives an assigned
rating of “ outstanding” ; and
(3) No savings association may receive
an assigned rating of “satisfactory” or
higher unless it receives a rating of at
least “ low satisfactory” on the lending
test.
(c) E ffe c t o f e v id e n c e o f
d is crim in a to ry o r o th e r ille g a l c red it
p r a c tic e s . Evidence of discrim inatory or
other illegal credit practices adversely
affects the O T S ’s evaluation of a savings
association’s performance. In
determ ining the effect on the savings
association’s assigned rating, the O TS
considers the nature and extent o f the
evidence, the policies and procedures
that the savings association has in place
to prevent discrim inatory or other
illegal credit practices, any corrective
action that the savings association has
taken or has com m itted to take,
particularly voluntary corrective action
resulting from self-assessm ent, and
other relevant inform ation.
§ 563e.29 Effect of CRA performance on
applications.
(a)
CRA p e r fo r m a n c e . Among other
factors, the O T S takes into account the
record of perform ance under the CRA of
each applicant savings association, and
for applications under section 10(e) of
the Home O w ners’ Loan Act (12 U.S.C.
1467a(e)), o f each proposed subsidiary
savings association, in considering an
application for:
(1) The establishm ent of a domestic
branch or other facility that would be
authorized to take deposits;
(2) The relocation of the main office
or a branch;
(3) The merger or consolidation with
or the acquisition of the assets or
assum ption o f the liabilities of an
insured depository institution requiring
22217
O TS approval under the Bank Merger
A ct (12 U.S.C. 1828(c));
(4) A Federal thrift charter; and
(5) A cquisitions subject to section
10(e) of the Home O wners’ Loan Act (12
U.S.C. 1467a(e)).
(b) C h a rter a p p lic a tio n . An applicant
for a Federal thrift charter shall submit
with its application a description of
how it w ill m eet its CRA objectives. The
O TS takes the description into account
in considering the application and may
deny or condition approval on that
basis.
(c) In teres ted p a rties . The O TS takes
into account any views expressed by
interested parties that are submitted in
accordance w ith the applicable
com ment procedures in considering
CRA perform ance in an application
listed in paragraphs (a) and (b) o f this
section.
(d) D en ia l o r c o n d itio n a l a p p r o v a l o f
a p p lic a tio n . A savings association’s
record of perform ance may be the basis
for denying or conditioning approval of
an application listed in paragraph (a) of
this section.
(e) In s u red d e p o s ito r y in stitution . For
purposes of this section, the term
“insured depository institution” has the
meaning given to that term in 12 U.S.C.
1813.
Subpart C— Records, Reporting, and
Disclosure Requirements
§ 563e.41
Assessment area delineation.
(a) In g en e ra l. A savings association
shall delineate one or more assessment
areas w ithin w hich the O TS evaluates
the savings association ’s record of
helping to m eet the credit needs o f its
com m unity. T he O TS does not evaluate
the savings association’s delineation of
its assessm ent area(s) as a separate
performance criterion, but the O TS
reviews the delineation for com pliance
with the requirem ents of this section.
(b) G eo g ra p h ic a rea (s) f o r w h o le s a le
o r lim ite d p u r p o s e sav in g s a ss o c ia tio n s.
The assessm ent area(s) for a wholesale
or lim ited purpose savings association
must con sist generally of one or more
M SAs (using the M SA boundaries that
were in effect as of January 1 of the
calendar year in w hich the delineation
is made) or one or more contiguous
p olitical subdivisions, such as counties,
cities, or tow ns, in w hich the savings
association has its main office,
branches, and deposit-taking ATMs.
(c) G eo g ra p h ic a rea (s) f o r o th e r
sav in g s a ss o c ia tio n s . The assessment
area(s) for a savings association other
than a w holesale or limited purpose
savings association must:
(1)
Consist generally o f one or more
M SA s (using the M SA boundaries that
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were in effect as of January 1 o f the
calendar year in which the delineation
is made) or one or more contiguous
political subdivisions, such as counties,
cities, or towns; and
(2)
Include the geographies in which
the savings association has its main
office, its branches, and its deposittaking ATM s, as well as the surrounding
geographies in which the savings
association has originated or purchased
a substantial portion of its loans
(including home mortgage loans, small
business and small farm loans, and any
other loans the savings association
chooses, such as those consum er loans
on w hich the savings association elects
to have its performance assessed).
(d) A d ju stm en ts to g e o g r a p h ic area(s).
A savings association may adjust the
boundaries of its assessment area(s) to
include only the portion of a political
subdivision that it reasonably can be
expected to serve. An adjustment is
particularly appropriate in the case of
an assessm ent area that otherwise
would be extrem ely large, of unusual
configuration, or divided by significant
geographic barriers.
(e) L im itation s on th e d elin ea tio n o f
an a s s e s s m e n t area. Each savings
association’s assessment area(s):
(1) Must consist only of whole
geographies;
(2) May not reflect illegal
discrim ination;
(3) May not arbitrarily exclude low- or
m oderate-incom e geographies, taking
into account the savings association’s
size and financial condition; and
(4) May not extend substantially
beyond a CMSA boundary or beyond a
state boundary unless the assessment
area is located in a multistate M SA. If
a savings association serves a
geographic area that extends
substantially beyond a state boundary,
the savings association shall delineate
separate assessm ent areas for the areas
in each state. If a savings association
serves a geographic area that extends
substantially beyond a CMSA boundary,
the savings association shall delineate
separate assessm ent areas for the areas
inside and outside the CMSA.
(f) S av in g s a ss o c ia tio n s servin g
m ilita ry p er so n n el. Notwithstanding the
requirem ents of this section, a savings
association whose business
predom inantly consists of serving the
needs of m ilitary personnel or their
dependents who are not located within
a defined geographic area may delineate
its entire deposit customer base as its
assessm ent area.
(g) U se o f a ss essm en t area(s). The
O T S uses the assessment area(s)
delineated by a savings association in its
evaluation o f the savings association’s
CRA perform ance unless the O TS
determ ines that the assessment area(s)
do not com ply w ith the requirem ents of
this section.
§ 563e.42 Data collection, reporting, and
disclosure.
(a) Loan information required to be
collected and maintained. A savings
association, except a small savings
association, shall collect, and m aintain
in m achine readable form (as prescribed
by the O TS) until the com pletion of its
next CRA exam ination, the following
data for each sm all business or small
farm loan originated or purchased by
the savings association:
(1) A unique number or alpha
num eric symbol that can be used to
identify the relevant loan file;
(2) The loan amount at origination;
(3) The loan location; and
(4) An indicator whether the loan was
to a busin ess or farm with gross annual
revenues o f $1 m illion or less.
(b) Loan information required to be
reported. A savings association, except
a small savings association or a savings
association that was a sm all sayings
association during the prior calendar
year, shall report annually by March 1
to the O T S in m achine readable form (as
prescribed by the OTS) the following
data for the prior calendar year:
(1) Small business and small farm
loan data. For each geography in w hich
the savings association originated or
purchased a small business or small
farm loan, the aggregate num ber and
amount o f loans:
(1) W ith an amount at origination of
$ 1 0 0 ,0 0 0 or less;
(ii) W ith amount at origination of
more than $ 1 0 0 ,0 0 0 but less than or
equal to $ 2 5 0 ,0 0 0 ;
(iii) W ith an amount at origination of
more than $ 2 5 0 ,0 0 0 ; and
(iv) To businesses and farms with
gross annual revenues of $1 m illion or
less (using the revenues that the savings
association considered in making its
credit d ecision);
(2) Community development loan
data. The aggregate number and
aggregate am ount of com munity
developm ent loans originated or
purchased; and
(3) Home mortgage loans. If the
savings association is subject to
reporting under part 203 of this title, the
location o f each home mortgage loan
ap plication, origination, or purchase
outside the M SA s in w hich the savings
association has a home or branch office
(or outside any MSA) in accordance
w ith the requirem ents of part 203 of this
title.
(c) Optional data collection and
maintenance — (1) Consumer loans. A
savings association may collect and
m aintain in m achine readable form (as
prescribed by the O TS) data for
consum er loans originated or purchased
by the savings association for
consideration under the lending test. A
savings association may m aintain data
for one or m ore of the following
categories o f consum er loans: motor
vehicle, credit card, home equity, other
secured, and other unsecured. If the
savings association m aintains data for
loans in a certain category, it shall
m aintain data for all loans originated or
purchased w ithin that category. The
savings association shall m aintain data
separately for each category, including
for each loan:
(1) A unique number or alpha-num eric
symbol that can be used to identify the
relevant loan file;
(ii) T he loan amount at origination or
purchase;
(iii) The loan location; and
(iv) T he gross annual incom e of the
borrower that the savings association
considered in making its credit
decision.
(2) O th er lo a n d ata . At its option, a
savings association may provide other
inform ation concerning its lending
perform ance, including additional loan
d istribution data.
(d) D ata on a ffilia t e len d in g. A
savings association that elects to have
the O TS consider loans by an affiliate,
for purposes o f the lending or
com m unity development test or an
approved strategic plan, shall collect,
m aintain, and report for those loans the
data that the savings association would
have collected , m aintained, and
reported pursuant to paragraphs (a), (b),
and (c) o f this section had the loans
been originated or purchased by the
savings association. For home mortgage
loans, the savings association shall also
be prepared to identify the home
mortgage loans reported under part 203
o f this title by the affiliate.
(e) D ata o n len d in g b y a con sortiu m
o r a th ird -p arty . A savings association
that elects to have the O TS consider
com m unity development loans by a
consortium or third party, for purposes
o f the lending or community
developm ent tests or an approved
strategic plan, shall report for those
loans the data that the savings
association would have reported under
paragraph (b)(2) of this section had the
loans been originated or purchased by
the savings association.
(f) S m a ll sav in g s a s s o c ia tio n s electin g
ev a lu a tio n u n d er th e len d in g,
in v estm en t, a n d s e rv ic e tests. A savings
association that qualifies for evaluation
under the sm all savings association
perform ance standards but elects
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
evaluation under the lending,
investm ent, and service tests shall
collect, m aintain, and report the data
required for other savings associations
pursuant to paragraphs (a) and (b) of
this section.
(g) A sses sm e n t a re a d ata . A savings
association, except a small savings
association or a savings association that
was a sm all savings association during
the prior calendar year, shall collect and
report to the O TS by March 1 o f each
year a list for each assessm ent area
showing the geographies w ithin the
area.
(h) CRA D isclosu re S tatem en t. The
O TS prepares annually for each savings
association that reports data pursuant to
this section a CRA Disclosure Statem ent
that contains, on a state-by-state basis:
(1) For each county (ana for each
assessm ent area sm aller than a county)
with a population o f 500,000 persons or
fewer in w hich the savings association
reported a sm all business or sm all farm
loan:
(i) The num ber and amount o f small
business and small farm loans reported
as originated or purchased located in
low-, moderate-, middle-, and upperincom e geographies;
(ii) A list grouping each geography
according to whether the geography is
low-, moderate-, middle-, or upperincom e;
(iii) A list showing each geography in
w hich the savings association reported
a small business or small farm loan; and
(iv) The number and amount of small
business and small farm loans to
businesses and farms with gross annual
revenues of $1 m illion or less;
(2)
For each county (and for each
assessm ent area smaller than a county)
w ith a population in excess of 5 00,000
persons in w hich the savings
association reported a small business or
small farm loan:
(i) The num ber and amount o f sm all
business and small farjn loans reported
'as originated or purchased located in
geographies w ith median incom e
relative to the area median incom e of
less than 10 percent, 10 or more but less
than 20 percent, 20 or more but less
than 30 percent, 30 or more but less
than 40 percent, 40 or more but less
than 50 percent, 50 or more but less
than 60 percent, 60 or more but less
than 70 percent, 70 or more but less
than 80 percent, 80 or more but less
than 90 percent, 90 or more but less
than 100 percent, 100 or more but less
than 110 percent, 110 or more but less
than 120 percent, and 120 percent or
more;
(ii) A list grouping each geography in
the county or assessment area according
to w hether the median incom e in the
geography relative to the area m edian
incom e is less than 10 percent, 10 or
more but less than 20 percent, 20 or
more but less than 30 percent, 30 or
more but less than 40 percent, 40 or
more but less than 50 percent, 50 or
more but less than 60 percent, 60 or
more but less than 70 percent, 70 or
more but less than 80 percent, 80 or
more but less than 90 percent, 90 or
more but less than 100 percent, 100 or
more but less than 1 1 0 percent, 110 or
more but less than 120 percent, and 120
percent or more;
§ 563e.43
file.
22219
Content and availability of public
(a) In fo rm a tio n a v a ila b le to th e
p u b lic. A savings association shall
m aintain a public file that includes the
follow ing information:
(1) All written com ments received
from the public for the current year and
each o f the prior two calendar years that
specifically relate to the savings
association’s performance in helping to
m eet com m unity credit needs, and any
response to the com m ents by the
savings association, if neither the
com m ents nor the responses contain
(iii) A list showing each geography in
statem ents that reflect adversely on the
w hich the savings association reported
good name or reputation of any persons
a small business or small farm loan; and
other than the savings association or
publication o f w hich would violate
(iv) The num ber and amount o f small
specific provisions of law;
business and small farm loans to
(2) A copy of the public section of the
businesses and farms with gross annual
savings association’s most recent CRA
revenues of $1 m illion or less;
Perform ance Evaluation prepared by the
(3) T he num ber and amount of small
O TS. The savings association shall place
business and sm all farm loans located
this copy in the public file w ithin 30
inside each assessm ent area, reported by
business days after its receipt from the
the savings association and the number
O TS;
and amount of small business and small
(3) A list of the savings association’s
farm loans located outside the
branches, their street addresses, and
assessm ent area(s) reported by the
geographies;
savings association; and
(4) A list of branches opened or closed
by the savings association during the
(4) T he num ber and amount of
com m unity developm ent loans reported current year and each o f the prior two
calendar years, their street addresses,
as originated or purchased.
(i)
A g g reg ate d is c lo s u re sta tem en ts. and geographies;
(5) A list of services (including hours
The O TS, in conjunction with the Board
of operation, available loan and deposit
of Governors of the Federal Reserve
products, and transaction fees) generally
System , the Federal Deposit Insurance
offered at the savings association’s
Corporation, and the Office of the
branches and descriptions of material
Com ptroller of the Currency, prepares
differences in the availability or cost of
annually, for each M SA (including an
services at particular branches, if any.
M SA that crosses a state boundary) and
At its option, a savings association may
the non-M SA portion o f each state, an
include inform ation regarding the
aggregate disclosure statement of small
availability o f alternative systems for
business and small farm lending by all
delivering retail banking services (e.g.,
institutions subject to reporting under
ATMs, ATMs not owned or operated by
this part or parts 25, 228, or 345 of this
or exclusively for the savings
title. T hese disclosure statements
association, banking by telephone or
indicate, for each geography, the
com puter, loan production offices, and
number and amount of all small
bank-at-work or bank-by-mail
business and small farm loans
programs);
originated or purchased by reporting
(6) A map o f each assessment area
institutions, except that the O TS may
showing the boundaries of the area and
adjust the form of the disclosure if
identifying the geographies contained
necessary, because of special
w ithin the area, either on the map or in
circum stances, to protect the privacy of
a separate list; and
a borrower or the com petitive position
(7) Any other inform ation the savings
o f an institution.
association chooses.
(b) A d d itio n a l in form a tion a v a ila b le
(j) C en tral d a ta d ep o s ito r ies . The O TS
to th e p u b lic — (1) S avin gs a s s o c ia tio n s
makes the aggregate disclosure
statem ents, described in paragraph (i) of o th e r th an s m a ll sav in g s a ss o c ia tio n s. A
savings association, except a small
this section, and the individual savings
savings association or a savings
association CRA Disclosure Statem ents,
association that was a sm all savings
described in paragraph (h) of this
section, available to the public at central association during the prior calendar
year, shall inclu de in its public file the
data depositories. The O TS publishes a
follow ing inform ation pertaining to the
list of the depositories at w hich the
savings association and its affiliates, if'
statem ents are available.
22220
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
applicable, for each of the prior two
calendar years:
(1) If the savings association has
elected to have one or more categories
of its consum er loans considered under
the lending test, for each o f these
categories, the number and amount of
loans:
(A) To low-, moderate-, middle-, and
upper-income individuals;
(B) Located in low-, moderate-,
middle-, and upper-incom e census
tracts; and
(C) Located inside the savings
association’s assessment area(s) and
outside the savings association’s
assessment area(s); and
(ii) The savings association’s CRA
Disclosure Statement. The savings
association shall place the statem ent in
the public file within three business
days of its receipt from the OTS.
(2) S avin gs a s s o c ia tio n s re q u ir e d to
rep ort H o m e M ortgage D isclo su re A ct
(HMDA) d a ta . A savings association
required to report home mortgage loan
data pursuant to part 203 of this title
shall include in its public file a copy of
the HMDA Disclosure Statem ent
provided by the Federal Financial
Institutions Exam ination Council
pertaining to the savings association for
each of the prior two calendar years. In
addition, a savings association that
elected to have the O TS consider the
mortgage lending o f an affiliate for any
of these years shall include in its public
file the affiliate’s HMDA Disclosure
Statement for those years. The savings
association shall place the statement(s)
in the public file w ithin three business
days after its receipt.
(3) S m a ll sav in g s a ss o c ia tio n s. A
small savings association or a savings
association that was a sm all savings
association during the prior calendar
year shall include in its public file:
(i) The savings association’s loan-todeposit ratio for each quarter of the
prior calendar year and, at its option,
additional data on its loan-to-deposit
ratio; and
(ii) The information required for other
savings associations by paragraph (b)(1)
of this section, if the savings association
has elected to be evaluated under the
lending, investm ent, and service tests.
(4) S avin gs a s s o c ia tio n s with strateg ic
p lan s. A savings association that has
been approved to be assessed under a
strategic plan shall include in its public
file a copy of that plan. A savings
association need not include
information submitted to the O TS on a
confidential basis in conjunction with
the plan.
(5) S avin gs a s s o c ia tio n s with le s s th an
sa tisfa cto ry ratings. A savings
association that received a less than
satisfactory rating during its m ost recent
exam ination shall include in its public
file a description o f its current efforts to
improve its performance in helping to
meet the credit needs o f its entire
community. The savings association
shall update the description quarterly.
(c) L o ca tio n o f p u b lic in fo rm a tio n . A
savings association shall make available
to the public for inspection upon
request and at no cost the inform ation
required in this section as follow s:
(1) At the m ain office and, if an
interstate savings association, at one
branch office in each state, all
information in the public file; and
(2) At each branch:
(i) A copy of the public section o f the
savings association’s most recent CRA
Perform ance Evaluation and a list of
services provided by the branch; and
(ii) W ithin five calendar days of the
request, all the inform ation in the public
file relating to the assessm ent area in
w hich the branch is located.
(d) C op ies. Upon request, a savings
association shall provide copies, either
on paper or in another form acceptable
to the person making the request, of the
information in its public file. The
savings association may charge a
reasonable fee not to exceed the cost of
copying and m ailing (if applicable).
(e) U pdating. Except as otherwise
provided in this section, a savings
association shall ensure that the
information required by this section is
current as of April 1 of each year.
§ 563e.44 Public notice by savings
associations.
A savings association shall provide in
the public lobby of its m ain office and
each of its branches the appropriate
public notice set forth in A ppendix B of
this part. Only a branch of a savings
association having more than one
assessment area shall include the
bracketed material in the notice for
branch offices. Only a savings
association that is an affiliate of a
holding com pany shall include the last
two sentences of the notices.
§563e.45 Publication of planned
examination schedule.
The O TS publishes at least 30 days in
advance of the beginning of each
calendar quarter a list of savings
associations scheduled for CRA
exam inations in that quarter.
(b) D ata c o lle c tio n a n d rep ortin g ;
stra teg ic p la n ; p e r fo r m a n c e tests a n d
sta n d a rd s— (1) D ata c o lle c tio n a n d
reportin g, (i) On January 1 ,1 9 9 6 , the
data collection requirem ents set forth in
§ 563e.42 (except § 563e.42(b) and (g))
becom e applicable.
(ii) On January 1 ,1 9 9 7 , the data
reporting requirem ents set forth in
§ 563e.42(b) and (g) becom e applicable.
(2) Small savings associations.
Beginning January 1 ,1 9 9 6 , the O TS
evaluates savings associations that
qualify for the sm all savings association
performance standards described in
§ 563e.26 under that section.
(3) S trateg ic p la n . Beginning January
1 ,1 9 9 6 , a savings association that elects
to be evaluated under an approved
strategic plan pursuant to § 563e.27 may
submit its strategic plan to the O TS for
approval.
(4) O ther p e r fo r m a n c e tests, (i)
Beginning January 1 ,1 9 9 6 , a savings
association may elect to be evaluated
under the pertinent revised perform ance
tests described in §§ 563e.22, 563e.23,
563e.24, and 563e.25, i f the savings
association provides the necessary data
to perm it evaluation.
(ii) Beginning July 1 ,1 9 9 7 , the O TS
evaluates all savings associations under
the pertinent revised performance tests.
(c) S c h ed u le. (1) On July 1 ,1 9 9 5 ,
§§ 5 6 3 e .ll , 5 6 3 e .l2 , 563e.29, and
563e.51 becom e applicable, and
§§ 5 6 3 e .l, 563e.2, and 563e.8 expire.
(2) On January 1 ,1 9 9 6 , § 563e.41 and
the pertinent provisions of Subpart B of
this part will apply to savings
associations that elect to be evaluated
under §§ 563e.22 through 563e.25,
savings associations that submit for
approval strategic plans under
§ 563e.27, and savings associations that
qualify for the sm all savings association
performance standards described in
§ 563e.26.
(3) On January 1 ,1 9 9 6 , §§ 563e.42
(except § 563e.42(b) and (g)) and
563e.45 becom e applicable.
(4) On January 1 ,1 9 9 7 , §§ 563e.41 and
563e.42(b) and (g) becom e applicable.
(5) On July 1, 1997, §§ 563e.21
through 563e.28, 563e.43, and 563e.44
become applicable, and §§ 563e.3
through 563e.7, and 563e.51 expire.
Appendix A to P art 563e— Ratings
(a)
Ratings in general. (1) In assigning a
rating, the O T S evaluates a savings
association’s perform ance under the
applicable perform ance criteria in this part,
Subpart D— Transition Rules
in accordance w ith § 563e.21 and § 5 6 3 e .2 8 ,
w hich provides for adjustm ents on the basis
§563e.51 Transition rules.
o f evidence pf discrim inatory or oth er illegal
(a)
E ffectiv e d a te. Sections of this part credit practices.
becom e applicable over a period o f tim e
(2)
A savings association’s perform ance
in accordance w ith the schedule set
need not fit each aspect o f a particular rating
profile in order to receive that rating, and
forth in paragraph (c) of this section.
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
exception ally strong perform ance w ith
respect to some aspects may com pensate for
w eak perform ance in others. T he savings
association’s overall perform ance, however,
jn u st be consisten t w ith safe and sound
banking practices and generally w ith the
appropriate rating profile as follows.
(b)
Savings associations evaluated under
the lending, investment, an d service tests. (1)
Lending perform ance rating. T he O T S assigns
each savings associatio n’s lending
perform ance one o f the five follow ing ratings.
(i) Outstanding. T h e O T S rates a savings
association’s lending perform ance
“ outstanding” if, in general, it demonstrates;
(A) E xcellen t responsiveness to credit
needs in its assessm ent area(s), taking into
account the num ber and am ount o f home
mortgage, sm all bu siness, sm all farm, and
consum er loans, if applicable, in its
assessm ent area(s);
(B) A substantial m ajority o f its loans are
m ade in its assessm ent area(s);
(C) An exce llen t geographic distribution of
loans in its assessm ent area(s);
(D) An excellen t d istribution, particularly
in its assessm ent area(s), o f loans among
individuals of different incom e levels and
businesses (includ ing farms) o f different
sizes, given the product lin es offered by the
savings association;
(E) A n exce llen t record o f serving the
cred it needs of highly econom ically
disadvantaged areas in its assessm ent area(s),
low -incom e individuals, or businesses
(including farms) w ith gross annual revenues
o f $1 m illion or less, co nsisten t w ith safe and
sound operations;
(F) Extensive use o f innovative or flexible
lending practices in a safe and sound m anner
to address the credit needs o f low- or
m oderate-incom e individuals or geographies;
and
(G) It is a leader in m aking com m unity
developm ent loans.
(ii) High satisfactory. T h e O T S rates a
savings associatio n’s lending performance
“ high satisfactory” if, in general, it
dem onstrates:
(A) Good responsiveness to credit needs in
its assessm ent area(s), taking into account the
num ber and am ount o f hom e mortgage, small
business, sm all farm, and consum er loans, if
applicable, in its assessm ent area(s);
(B) A high percentage o f its loans are made
in its assessm ent area(s);
,
(C) A good geographic distribution o f loans
in its assessm ent area{s);
(D) A good d istribution, particularly in its
assessm ent area(s), o f loans among
individuals o f different incom e levels and
businesses (includ ing farm s) o f different
sizes, given the product lin es offered by the
savings association;
(E) A good record o f serving the credit
needs o f highly eco n o m ically disadvantaged
areas in its assessm ent area(s), low -incom e
individuals, or bu sinesses (including farms)
w ith gross annual revenues o f $1 m illion or
less, consistent w ith safe and sound
operations;
(F) Use o f innovative or flexible lending
practices in a safe and sound m anner to
address the credit needs o f low- or moderateincom e individuals or geographies; and
(G) It has m ade a relatively high level of
com m unity developm ent loans.
(iii) Low satisfactory. T h e O T S rates a
savings association’s lending perform ance
“ low satisfactory” if, in general, it
dem onstrates:
(A) Adequate responsiveness to credit
needs in its assessm ent area(s), taking into
account the num ber and am ount o f home
mortgage, sm all bu siness, sm all farm, and
consum er loans, if applicable, in its
assessm ent area(s);
(B) An ad equate percentage o f its loans are
m ade in its assessm ent area(s);
(C) An adequate geographic distribution of
loans in its assessm ent area(s);
(D) An adequate d istribution, particularly
in its assessm ent area(s), o f loans among
individuals o f different incom e levels and
businesses (includ ing farms) of different
sizes, given the product lin es offered by the
savings association;
(E) An adequate record o f serving the credit
needs of highly eco no m ically disadvantaged
areas in its assessm ent area(s), low -incom e
individuals, or bu sinesses (including farms)
w ith gross annual revenues o f $1 m illion or
less, consistent w ith safe and sound
operations;
(F) Lim ited use o f innovative or flexible
lending practices in a safe and sound m anner
to address the credit needs o f low- or
m oderate-incom e ind ivid uals or geographies;
and
(G) It has m ade an adequate level of
com m unity developm ent loans.
(iv) Needs to improve. T h e O T S rates a
savings associatio n ’s lending perform ance
“needs to im prove” if, in general, it
dem onstrates:
(A) Poor responsiveness to credit needs in
its assessm ent area(s), taking into account the
num ber and am ount o f hom e mortgage, small
bu siness, sm all farm, and consum er loans, if
applicable, in its assessm ent area(s);
(B) A sm all percentage o f its loans are
m ade in its assessm ent area(s);
(C ) A poor geographic distribution of loans,
particularly to low- or m oderate-incom e
geographies, in its assessm ent area(s);
(D) A poor d istribution, particularly in its
assessm ent area(s), o f loans among
individuals o f different incom e levels and
businesses (including farms) of different
sizes, given the product lin es offered by the
savings association;
(E) A poor record o f serving the credit
needs of highly eco no m ically disadvantaged
areas in its assessm ent area(s), low -incom e
individuals, or bu sinesses (including farms)
w ith gross annual revenues o f $1 m illion or
less, consistent w ith safe and sound
operations;
(F) Little use o f innovative or flexible
lending practices in a safe and sound m anner
to address the credit needs o f low- or
m oderate-incom e ind ivid uals or geographies;
and
(G) It has m ade a low level o f com m unity
developm ent loans.
(v) Substantial noncom pliance. T he O TS
rates a savings associatio n ’s lending
perform ance as being in “substantial
noncom plian ce” if, in general, it
dem onstrates:
(A) A very poor responsiveness to credit
needs in its assessm ent area(s), taking into
account the num ber and am ount o f home
22221
mortgage, sm all bu siness, sm all farm, and
consum er loans, if applicable, in its
assessm ent area(s);
(B) A very sm all percentage of its loans are
m ade in its assessm ent area(s);
(C) A very poor geographic distribution of
loans, particularly to low- or moderateincom e geographies, in its assessm ent area(s);
(D) A very poor d istribution, particularly in
its assessm ent area(s), o f loans among
individuals o f different incom e levels and
businesses (including farms) o f different
sizes, given the product lin es offered by the
savings association;
(E) A very poor record o f serving the credit
needs of highly eco no m ically disadvantaged
areas in its assessm ent area(s), low -incom e
individuals, or businesses (includ ing farms)
w ith gross annual revenues o f $1 m illion or
less, consisten t w ith safe and sound
operations;
(F) No use o f innovative or flexible lending
practices in a safe and sound m anner to
address the credit needs o f low- or moderateincom e individuals or geographies; and
(G) It has m ade few, if any, com m unity
developm ent loans.
(2)
Investment perform ance rating. The
O T S assigns each savings associatio n’s
investm ent perform ance one o f the five
follow ing ratings.
(i) Outstanding. T he O T S rates a savings
association’s investm ent perform ance
“ outstanding” if, in general, it demonstrates:
(A) An excellen t level o f qualified
investm ents, particularly those that are not
routinely provided by private investors, often
in a leadership position;
(B) E xtensive use of innovative or com plex
qualified investm ents; and
(C) E xcellent responsiveness to credit and
com m unity developm ent needs.
(ii) High satisfactory. T he O T S rates a
savings association’s investm ent performance
“ high satisfactory” if, in general, it
dem onstrates:
(A) A significant level o f qualified
investm ents, particularly those that are not
routinely provided by private investors,
occasion ally in a leadership position;
(B) Significant use o f innovative or
com plex qualified investm ents; and
(C) Good responsiveness to credit and
com m unity developm ent needs.
(iii) Low satisfactory. T h e O T S rates a
savings associatio n ’s investm ent performance
"lo w satisfactory” if, in general, it
dem onstrates:
(A) An adequate level of qualified
investm ents, particularly those that are not
routinely provided by private investors,
although rarely in a leadership position;
(B) O ccasional use o f innovative or
com plex qualified investm ents; and
(C) Adequate responsiveness to credit and
com m unity developm ent needs.
(iv) N eeds to improve. T h e O T S rates a
savings associatio n ’s investm ent performance
“ needs to im prove” if, in general, it
dem onstrates:
(A) A poor level o f qualified investm ents,
particularly those that are not routinely
provided by private investors;
(B) Rare use o f innovative or com plex
qualified investm ents; and
(C) Poor responsiveness to credit and
com m unity developm ent needs.
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(v)
Substantial noncom pliance. T h e OTS
rates a savings association’s investm ent
perform ance as being in “ substantial
noncom pliance” if, in general, it
demonstrates:
(A) Few, if any, qualified investm ents,
particularly those that are not routinely
provided by private investors;
(B) No use o f innovative or com plex
qualified investm ents; and
(C) Very poor responsiveness to cred it and
com m unity developm ent needs.
(3)
Service perform ance rating. T h e O TS
assigns each savings associatio n ’s service
perform ance one o f the five follow ing ratings.
(i) Outstanding. T h e O T S rates a savings
association’s service perform ance
"ou tstanding” if, in general, the savings
association demonstrates:
(A) Its service delivery system s are readily
accessible to geographies and ind ivid uals of
different incom e levels in its assessm ent
area(s);
(B) To the extent changes have been made,
its record o f opening and closin g branches
has improved the accessibility o f its delivery
system s, particularly in low - or m oderateincom e geographies or to low- or m oderateincom e individuals;
(C) Its services (including, w here
appropriate, business hours) are tailored to
the convenience and needs o f its assessm ent
area(s), particularly low- or m oderate-incom e
geographies or low- or m oderate-incom e
individuals; and
(D) It is a leader in providing com m unity
developm ent services.
(ii) High satisfactory. T he O T S rates a
savings association’s service perform ance
“ high satisfactory” if, in general, the savings
association demonstrates:
(A) Its service delivery system s are
accessible to geographies and ind ivid uals of
different incom e levels in its assessm ent
area(s);
(B) T o the extent changes have been made,
its record o f opening and closin g branches
has not adversely affected the accessibility of
its delivery system s, particularly in low- and
m oderate-incom e geographies and to lowand m oderate-incom e individuals;
(C) Its services (including, w here
appropriate, business hours) do no t vary in
a way that inconveniences its assessm ent
area(s), particularly low- and m oderateincom e geographies and low- and m oderateincom e individuals; and
(D) It provides a relatively high level of
com m unity developm ent services.
(iii) Low satisfactory. The O T S rates a
savings association’s service perform ance
“ low satisfactory” if, in general, the savings
association demonstrates:
(A) Its service delivery system s are
reasonably accessible to geographies and
individuals o f different incom e levels in its
assessm ent area(s);
(B) To the extent changes have been made,
its record o f opening and closin g branches
has generally not adversely affected the
accessibility of its delivery system s,
particularly in low- and m oderate-incom e
geographies and to low- and m oderateincom e individuals;
(C) Its services (including, w here
appropriate, business hours) do no t vary in
a way that inconven iences its assessm ent
area(s), particularly low- and m oderateincom e geographies and low - and m oderateincom e individuals; and
(D) It provides an adequate level o f
com m unity developm ent services.
(iv) Needs to improve. T h e O T S rates a
savings associatio n’s service perform ance
“ needs to im prove” if, in general, the savings
association dem onstrates:
(A) Its service delivery system s are
unreasonably inaccessible to portions o f its
assessm ent area(s), particularly to low- or
m oderate-incom e geographies or to low- or
m oderate-incom e individuals;
• (B) To the extent changes have been m ade,
its record o f opening and closin g branches
has adversely affected the accessibility o f its
delivery system s, particularly in low - or
m oderate-incom e geographies or to low- or
m oderate-incom e individuals;
(C) Its services (including, w here
appropriate, business hours) vary in a way
that inconven iences its assessm ent area(s),
particularly low- or m oderate-incom e
geographies or low- or m oderate-incom e
individuals; and
(D) It provides a lim ited level o f
com m unity developm ent services.
(v) Substantial noncom pliance. T h e O T S
rates a savings association’s service
perform ance as being in “ substantial
noncom plian ce” if, in general, the savings
association dem onstrates:
(A) Its service delivery system s are
unreasonably inaccessible to significant
portions o f its assessm ent area(s), particularly
to low- or m oderate-incom e geographies or to
low- or m oderate-incom e individuals;
(B) To the extent changes have been made,
its record o f opening and closin g branches
has significantly adversely affected the
accessibility o f its delivery system s,
particularly in low- or m oderate-incom e
geographies or to low- or m oderate-incom e
individuals;
(C) Its services (including, w here
appropriate, business hours) vary in a way
that significantly inconven iences its
assessm ent area(s), particularly low - or
m oderate-incom e geographies or low - or
m oderate-incom e individuals; and
(D) It provides few, if any, com m unity
developm ent services.
(c)
W holesale or limited purpose savings
associations. T he O T S assigns each
w holesale or lim ited purpose savings
association’s com m unity developm ent
perform ance one o f the four follow ing
ratings.
(1) Outstanding. The O T S rates a w holesale
or lim ited purpose savings associatio n ’s
com m unity developm ent perform ance
“ outstanding” if, in general, it dem onstrates:
(i) A high level o f com m unity developm ent
loans, com m unity developm ent services, or
qualified investm ents, particularly
investm ents that are hot routinely provided
by private investors;
(ii) E xtensive use o f innovative or com plex
qualified investm ents, com m unity
developm ent loans, or com m unity
developm ent services; and
(iii) E xcellent responsiveness to credit and
com m unity developm ent needs in its
assessm ent area(s).
(2) Satisfactory. T he O T S rates a w holesale
or lim ited purpose savings associatio n ’s
com m unity developm ent perform ance
“ satisfactory” if, in general, it dem onstrates:
(i) An adequate level o f com m unity
developm ent loans, com m unity developm ent
services, or qualified investm ents,
particularly investm ents that are not
routinely provided by private investors;
(ii) O ccasional use o f innovative or
com plex qualified investm ents, com m unity
developm ent loans, or com m unity
developm ent services; and
(iii) Adequate responsiveness to cred it and
com m unity developm ent needs in its
assessm ent area(s).
(3) Needs to improve. The O T S rates a
w holesale or lim ited purpose savings
association’s com m unity developm ent
perform ance as “ needs to im prove” if, in
general, it dem onstrates:
(i) A poor level o f com m unity developm ent
loans, com m unity developm ent services, or
qualified investm ents, particularly
investm ents that are not routinely provided
by private investors;
(ii) Rare use o f innovative or com plex
qualified investm ents, com m unity
developm ent loans, or com m unity
developm ent services; and
(iii) Poor responsiveness to credit and
com m unity developm ent needs in its
assessm ent area(s).
(4) Substantial noncom pliance. T h e O T S
rates a w holesale or lim ited purpose savings
association’s com m unity developm ent
perform ance in “substantial no n com p lian ce”
if, in general, it dem onstrates:
(i) Few, if any, com m unity developm ent
loans, com m unity developm ent services, or
qualified investm ents, particularly
investm ents that are not routinely provided
by private investors;
(ii) No use o f innovative or com plex
qualified investm ents, com m unity
developm ent loans, or com m unity
developm ent services; and
(iii) Very poor responsiveness to credit and
com m unity developm ent needs in its
assessm ent area(s).
(d)
Savings associations evaluated under
the sm all savings association perform ance
standards. T he O T S rates the perform ance of
each savings association evaluated under the
sm all savings association perform ance
standards as follow s:
(1)
Eligibility fo r a satisfactory rating. The
O T S rates a savings associatio n ’s
perform ance “ satisfactory” if, in general, the
savings association dem onstrates:
(i) A reasonable loan-to-deposit ratio
(considering seasonal variations) given the
savings association’s size, fin ancial
condition, the credit needs o f its assessm ent
area(s), and taking into account, as
appropriate, lending-related activ ities su ch as
loan originations for sale to the secondary
markets and com m unity d evelopm ent loans
and qualified investm ents;
(ii) A m ajority o f its loans and, as
appropriate, other lending-related activities
are in its assessm ent area(s);
(iii) A distribution of loans to and, as
appropriate, other lending related-activities
for individuals of different incom e levels
(including low- and m oderate-incom e
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
individuals) and businesses and farms of
different sizes that is reasonable given the
dem ographics o f the savings association’s
assessm ent area(s);
(iv) A record o f taking appropriate action,
as w arranted, in response to w ritten
com plaints, if any, about the savings
association’s perform ance in helping to m eet
the cre d it needs o f its assessm ent area(s); and
(v) A reasonable geographic distribution of
loans given the savings associatio n ’s
assessm ent area(s).
(2) Eligibility fo r an outstanding rating. A
savings association that m eets each o f the
standards for a “satisfactory” rating under
this paragraph and exceeds som e or all of
those standards may w arrant consideration
for an overall rating o f "ou tstan d in g .” In
assessing w hether a savings association’s
perform ance is “outstanding,” the O TS
consid ers the extent to w hich the savings
association exceeds each o f the perform ance
standards for a "satisfacto ry ” rating and its
perform ance in m aking qualified investm ents
and its performance in providing branches
and other services and delivery system s that
enhance credit availability in its assessm ent
area(s).
(3) Needs to improve or substantial
noncom pliance ratings. A savings association
also may receive a rating o f “ needs to
im prove” or “ substan tial'noncom plian ce”
depending on the degree to w hich its
perform ance has failed to m eet the standards
for a “ satisfactory” rating.
(e) Strategic plan assessm ent and rating.
(1) Satisfactory goals. The O T S approves as
“ satisfactory” measurable goals that
adequately help to meet the credit needs of
the savings association’s assessm ent area(s).
(2) Outstanding goals. If the plan identifies
a separate group o f m easurable goals that
substantially exceed the levels approved as
“ satisfactory,” the O T S w ill approve those
goals as “ outstanding.”
(3) Bating. The O TS assesses the
perform ance of a savings association
operating under an approved plan to
determ ine if the savings association has m et
its plan goals:
(i) If the savings association substantially
achieves its plan goals for a satisfactory
rating, the O T S w ill rate the savings
associatio n ’s perform ance under the plan as
“ satisfactory."
(ii) If the savings association exceeds its
plan goals for a satisfactory rating and
substantially achieves its plan goals for an
outstanding rating, the O T S w ill rate the
savings association’s perform ance under the
plan as “ outstanding.”
(iii) If the savings association fails to m eet
substantially its plan goals for a satisfactory
rating, the O TS w ill rate the savings
association as either “needs to im prove” or
“ substantial noncom plian ce,” depending on
the extent to w hich it falls short o f its plan
goals, unless the savings association elected
in its plan to be rated otherw ise, as provided
in § 25.27(f)(4).
Appendix B to P art 563e— CRA Notice
Notice fo r main offices and, i f an
interstate savings association, one branch
office in each state.
(a)
Community Reinvestment A ct Notice
U nder the Federal Comm unity
Reinvestm ent A ct (CRA), the O ffice o f T hrift
Supervision (OTS) evaluates our record of
helping to m eet the credit needs o f this
com m unity consistent w ith safe and sound
operations. T he O T S also takes this record
into account w hen deciding o n certain
applications subm itted by us.
Your involvem ent is encouraged.
You are entitled to certain inform ation
about our operations and our perform ance
under the CRA, including, for exam ple,
inform ation about our branches, such as their
location and services provided at them ; the
p u blic section o f our m ost recent CRA
Perform ance Evaluation, prepared by the
O T S; and com m ents received from the public
relating to our perform ance in helping to
m eet com m unity credit needs, as w ell as our
responses to those com m ents. You may
review this inform ation today.
At least 30 days before the beginning of
each quarter, the O T S publishes a nationw ide
list o f the savings associations that are
sched uled for CRA exam ination in that
quarter. T h is list is available from the
Regional Director (address). You may send
w ritten com m ents about our perform ance in
helping to m eet com m unity credit needs to
(nam e and address o f official at savings
association) and O T S (address). Your letter,
together w ith any response by us, w ill be
considered by the O T S in evaluating our CRA
perform ance and may be m ade public.
You m ay ask to look at any com m ents
received by the Regional Director. You may
also request from the Regional Director an
announcem ent o f our applications covered
by the CRA filed w ith the O TS. We are an
affiliate o f (nam e o f holding com pany), a
savings and loan holding com pany. You m ay
request from the Regional D irector an
announcem ent o f applications covered by the
CRA filed by savings and loan holding
com panies.
(b) Notice fo r branch offices.
Comm unity Reinvestment A ct Notice
U nder the Federal Com m unity
Reinvestm ent A ct (CRA), the O ffice of T hrift
Su pervision (OTS) evaluates our record o f
helping to m eet the credit needs o f this
com m unity consistent w ith safe and sound
operations. T he O TS also takes this record
into account when deciding on certain
ap p licatio ns subm itted by us.
Y o u r involvem ent is encouraged.
You are en titled to certain inform ation
about our operations and our perform ance
under the CRA. You may review today the
p u blic section o f our m ost recent CRA
evaluation, prepared by the O T S, and a list
o f services provided at this branch. You may
also have access to the follow ing additional
inform ation, w h ich we w ill m ake available to
you at this branch w ithin five calendar days
after you make a request to us: (1) A map
show ing the assessm ent area containing this
branch, w hich is the area in w hich the O T S
evaluates our CRA perform ance in this
com m unity; (2) inform ation about our
branches in this assessm ent area; (3) a list of
services we provide at those locations; (4)
data on our lending perform ance in this
assessm ent area; and (5) copies o f all w ritten
22223
com m ents received by us that specifically
relate to our CRA perform ance in this
assessm ent area, and any responses we have
m ade to those com m ents. If w e are operating
under an approved strategic plan, you may
also have access to a copy of the plan.
[If you would like to review inform ation
about o u r CRA perform ance in other
com m unities served by us, the public file for
our entire savings association is available at
(nam e o f office located in state), located at
(address).]
At least 30 days before the beginning of
each quarter, the O TS publishes a nationw ide
list o f the savings associations that are
sched uled for CRA exam ination in that
quarter. T h is list is available from the
Regional Director (address). You may send
w ritten com m ents about our perform ance in
helping to m eet com m unity credit needs to
(nam e and address of official at savings
association) and the Regional Director
(address). Your letter, together w ith any
response by us, w ill be considered by the
O T S in evaluating our CRA perform ance and
m ay be m ade public.
You may ask to look at any com m ents
received by the Regional Director. You may
also request from the Regional Director an
annou ncem ent o f our applications covered
by the CRA filed w ith the O TS. We are an
affiliate o f (nam e o f holding com pany), a
savings and loan holding com pany. You may
request from the Regional Director an
annou ncem ent of applications covered by the
CRA filed by savings and loan holding
com panies.
§§ 563e.1, 563e.2, and 563e.8
[Removed]
3. Section s 5 6 3 e .l, 563e.2, and 563e.8
are removed effective July 1 ,1 9 9 5 .
§§ 563e.3, 563e.4, 563e.5,563e.6, and 563e.7
and Subpart D [Removed]
4. Sections 5 6 3 e.3 , 5 63e.4, 563e.5,
563e.6 and 563e.7, and subpart D,
consisting of 563e.51 are removed
effective July 1 ,1 9 9 7 .
Dated: April 19, 1995.
By the O ffice of Thrift Supervision.
Jon ath an L Fiechter,
Acting Director.
[FR Doc. 9 5 -1 0 5 0 3 Filed 5 - 3 - 9 5 ; 8:45 am]
BILLING COOES 4810-33-P, 6210-01-P, 6714-01-P,
6 720-01-P
FEDERAL RESERVE SYSTEM
12 CFR Part 203
[Regulation C; Docket No. R-0848]
Home Mortgage Disclosure
AGENCY: Board of Governors o f the
Federal Reserve System.
ACTION: Final rule.
SUMMARY: The Board is publishing a
final rule to amend Regulation C (Home
Mortgage Disclosure) and the
instructions that financial institutions
22224
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
must use to com ply w ith the annual
reporting requirem ents under the
regulation. The amendments conform
Regulation C to reflect revisions adopted
by the Board, the Office o f the
Comptroller of the Currency, the Federal
Deposit Insurance Corporation, and the
Office o f Thrift Supervision to their
regulations im plem enting the
Community Reinvestm ent A ct (CRA).
Under the joint CRA rule (published
elsewhere in today’s Federal Register),
banks or savings associations that report
data about their home mortgage lending
pursuant to the Home Mortgage
Disclosure Act (HMDA)— and that have
assets o f $250 m illion or m ore, or that
are subsidiaries o f a holding com pany
with total banking and thrift assets o f $1
billion or more— w ill collect and report
geographic information on loans and
loan applications relating to property
located outside the M etropolitan
Statistical Areas (MSAs) in w hich the
institution has a home or branch office,
or outside any M SA. Currently,
geographic identification is required
only w ithin M SA s where these lenders
have a hom e or branch office. Data will
be collected and reported in accordance
with the instructions in Regulation C.
The agencies believe that these data w ill
provide geographic detail on hom e
mortgage lending that w ill facilitate
more com plete CRA assessm ents for
institutions that do not qualify as small
banks or thrifts.
DATES: This final rule is effective May 1,
1995. Com pliance is mandatory for loan
and application data collected
beginning January 1 ,1 9 9 6 .
FOR FURTHER INFORMATION CONTACT: Jane
Jensen Gell or W. Kurt Schum acher,
Staff Attorneys, Division o f Consumer
and Community Affairs, Board of
Governors of the Federal Reserve
System, W ashington, DC 2 0 5 5 1 , at (202)
4 5 2 -2 4 1 2 or (202) 4 5 2 -3 6 6 7 . For the
hearing impaired on ly, contact Dorothea
Thompson, Telecom m unications Device
for the Deaf (TDD), at (202) 4 5 2 -3 5 4 4 .
SUPPLEMENTARY INFORMATION:
I. Background
The Board’s Regulation C (12 CFR
Part 203) im plem ents the Home
Mortgage Disclosure Act of 1975
(HMDA) (12 U.S.C. 2801 et seq ). HMDA
requires most mortgage lenders located
in m etropolitan areas to collect data
about their housing-related lending
activity. Annually, lenders must report
that data to their federal supervisory
agencies and disclose the data to the
public. The reports and disclosures
cover loan originations, applications
that do not result in originations (for
exam ple, applications that are denied or
withdrawn), and loan purchases.
Information reported inclu des the
location of the property to w hich the
loan or application relates; the race or
national origin, gender, and gross
annual incom e of the borrower or
applicant; and the type o f purchaser for
loans sold in the secondary market.
II. Sum mary of Amendment
In October 1994 (59 FR 51232,
October 7 ,1 9 9 4 ), the federal financial
regulatory agencies proposed
amendments to their CRA regulations
requiring banks or savings associations
that report data about their hom e
mortgage lending pursuant to HMDA—
and that have assets o f $ 2 5 0 m illion or
more, or that are subsidiaries of a
holding com pany w ith total banking
and thrift assets of $ 2 5 0 m illion or
more— to collect and report geographic
inform ation on loans and applications
relating to property located in
m etropolitan areas whether or not the
institution has a home or branch office
there. They also would report
geographic inform ation for property
located outside any M SA . (This
proposal did not affect the current
exem ption in § 203.3 o f Regulation C for
banks and savings associations;
institutions w hose assets are $10
m illion or less rem ain exem pt.)
Currently, lenders have the option of
collecting this inform ation but are not
required to do so. The agencies believed
that these data would provide
geographic detail on hom e mortgage
lending that would facilitate more
com plete CRA assessm ents for
institutions that do not qualify as small
banks or thrifts.
Commenters were divided on the
proposal. Several com m enters expressed
concern about the adm inistrative
burden and costs of com plying w ith the
expanded reporting requirem ents. Many
of those com m enters asserted that
com prehensive, accurate geographic
information often is difficult to obtain.
Other com m enters indicated that the
regulatory burden of the expanded
reporting requirem ents would not be
significant and noted that the additional
data would facilitate a m ore precise and
quantifiable CRA assessm ent process.
Several com m enters believed that it
would be difficult to com ply w ith the
proposed am endm ent by July 1995 and
that half-year data would be o f lim ited
usefulness. These com m enters
suggested that expanded data collection
requirem ents should go into effect on
January 1 ,1 9 9 6 . A num ber of
com menters addressed the reporting
exem ption for small banks, w ith some
suggesting that assets should be
measured at the level of the financial
institution, not the bank holding
company.
The Board believes that the expanded
reporting requirem ents w ill provide
information about lenders’ overall
mortgage lending activity that w ill assist
in developing a more accurate CRA
assessment. The final am endm ents
address concerns expressed by
com menters. As required by agency
regulations im plem enting CRA, bank
and savings associations that are
subsidiaries o f a holding com pany with
total banking and thrift assets of $1
billion or more are covered by the
reporting rules; the proposal would
have covered such subsidiaries o f a
holding com pany w ith total assets of
$250 m illion or more. Institutions must
collect these data if the bank or savings
association had assets o f $ 250 m illion or
more (or are subsidiaries o f a holding
company w ith total banking and thrift
assets o f $1 billion or more) for the prior
two consecutive years (as o f December
31). The data collection requirem ents go
into effect for calendar year 1996, w ith
institutions required to report the data
in 1997.
The Board believes that the benefits of
this additional inform ation outweigh
any additional com pliance burdens.
Based on the com m ents received and
further analysis, the Board is adopting
final amendments to Regulation C. Set
forth below is a discussion o f the final
rule.
S ection 2 0 3 .4 — C o m p ila tio n o f L oan
D ata
Paragraph (e)— Data Reporting Under
CRA
The final rule adds a new paragraph
to im plem ent revisions to the agencies’
CRA regulations. Under the joint CRA
rule, banks or savings associations that
report data about their hom e mortgage
lending pursuant to HMDA— and have
assets of $2 5 0 m illion or more, or are
subsidiaries o f a holding com pany w ith
total banking and thrift assets o f $1
billion or more— w ill collect and report
geographic inform ation for all loans and
applications, not just for loans and
applications relating to property in
M SAs where the institution has a hom e
or branch office. The requirem ent also
applies to property located outside any
MSA. T he agencies believe that
incorporating these reporting
requirem ents in Regulation C w ill
facilitate com pliance for lenders.
Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations
Appendix A—Form and Instructions for
Completion o f HMDA Loan/Application
Register
V. Instructions for Completion o f Loan/
A pplication Register
C. Property Location
The Board is adding a new paragraph
to conform Regulation C to the CRA
reporting requirem ents for banks and
savings associations w ith assets of $250
m illion or m ore and banks and savings
associations that are subsidiaries o f a
holding com pany w ith total banking
and thrift assets of $1 b illion or more.
III. Regulatory Flexibility Analysis
The Board’s O ffice of the Secretary
has prepared an econom ic im pact
analysis of the amendments to
Regulation C. A copy of the analysis
may be obtained from Publications
Services, Board of Governors of the
Federal Reserve System , W ashington,
D.C. 20551, or by telephone at (202)
4 5 2 -3 2 4 5 .
IV. Paperw ork Reduction Act
In accordance w ith section 3507 of
the Paperwork Reduction Act o f 1980
(44 U.S.C. Ch. 35; 5 CFR 1320.13), the
amended inform ation collection has
been review ed by the Board under the
authority delegated to the Board by the
Office of Management and Budget after
consideration o f com m ents received
during the public com m ent period.
The collection o f inform ation in this
rule is in 12 CFR 203.4. T his additional
information w ill provide geographic
detail on hom e mortgage lending that
w ill facilitate more com plete CRA
assessm ents for institutions that do not
qualify as sm all banks or thrifts.
The estim ated annual burden per
respondent varies from 10 to 10,000
hours, depending on individual
circum stances, with an estimated
average of 200 hours. The revision is
expected to affect about 5 percent o f the
22225
loans reported by large state members
banks, adding approxim ately 5 m inutes,
on average, to the tim e required to
com plete the report. There w ill be an
estimated 507 state member bank
reporters, averaging 202 hours and an
estimated 84 mortgage banking
subsidiaries, averaging 160 hours.
paragraph V.C. and by adding a new
paragraph V.C. 7. to read as follows:
List of Subjects in 12 CFR P art 203
C. Property Location
Banks, banking, Consumer protection,
Federal Reserve System , Mortgages,
Reporting and recordkeeping
requirements.
For the reasons set forth in the
preamble, the Board amends 12 CFR
part 203 to read as set forth below :
In these colu m ns enter the applicable
codes for the M SA , state, county, and census
tract for the property to w hich a loan relates.
For home purchase loans secured by one
dwelling, but m ade for the purpose of
purchasing another dwelling, report the
property location for the property in w hich
the security interest is to be taken. If the
hom e purchase loan is secured by m ore than
one property, report the location data for the
property being purchased. (See paragraphs 5.,
6., and 7. o f paragraph V.C. o f this appendix
for treatm ent o f loans on property outside the
M SA s in w hich you have offices.)
PART 203— HOME MORTGAGE
DISCLOSURE (REGULATION C)
1. The authority citation for part 203
continues to read as follows:
Authority: 12 U.S.C. 2 8 0 1 -2 8 1 0 .
2. Section 203.4 is amended by
adding a new paragraph (e) to read as
follows:
§ 203-4
*
*
Compilation of loan data.
*
*
*
(e) D ata rep o rtin g u n d er CRA fo r
b a n k s a n d sav in g s a s s o c ia tio n s w ith
tota l a ss ets o f $ 2 5 0 m illio n o r m o r e a n d
b a n k s a n d sav in g s a s s o c ia tio n s th a t a r e
su b s id ia ries o f a h o ld in g c o m p a n y
w h o se to tal b a n k in g a n d th rift a s s e ts a r e
$1 b illio n o r m o r e. As required by
agency regulations that im plem ent the
Community Reinvestm ent A ct, banks
and savings associations that had to ta l'
assets of $ 2 5 0 m illion or more (or are
subsidiaries o f a holding com pany with
total banking and thrift assets of $1
billion or more) as of D ecem ber 31 for
each of the im m ediately preceding two
years, shall also co llect the location of
property located outside the M SA s in
w hich the institution has a hom e or
branch office, or outside any M SAs.
3. A ppendix A to Part 203 is amended
by revising the introductory text of
Appendix A to P art 2 0 3 — Form and
Instructions for Completion of HMDA
Loan/Application Register
*
*
*
*
*
v ***
*
*
*
*
*
7. Data Reporting Under CRA fo r Banks and
Savings Associations With Total Assets o f
$250 Million or More and Banks and Savings
Associations That Are Subsidiaries o f a
Holding Company Whose Total Banking and
Thrift Assets Are $1 Billion or More
If you are a bank or savings association
w ith total assets o f $ 2 5 0 m illion or m ore as
o f Decem ber 31 for each o f the im m ediately
preceding two years, you m ust also en ter the
location o f property located outside the
M SA s in w hich you have a hom e or branch
office, or outside any M SA. You m ust also
enter this inform ation if you are a bank or
savings association that is a subsidiary o f a
holding com pany w ith total banking and
thrift assets o f $1 b illio n or m ore as of
Decem ber 31 for each of the im m ediately
preceding two years.
*
*
*
*
*
By order o f the Board o f Governors o f the
Federal Reserve System , April 24, 1995.
Jennifer J. Johnson,
Depu ty Secretary o f the Board.
[FR Doc. 9 5 -1 0 4 7 5 Filed 5 - 3 - 9 5 ; 8 :45 am]
BILLING CODE 6210-01-P
@FedFRASER