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l l5K

Federal Reserve Bank
of Dallas

September 18, 2001

DALLAS, TEXAS
75265-5906

Notice 01-65

TO: The Chief Executive Officer of each
financial institution and others concerned
in the Eleventh Federal Reserve District
SUBJECT
Interagency Questions and Answers
Regarding Community Reinvestment
DETAILS
The Consumer Compliance Task Force of the Federal Financial Institutions Examination Council has supplemented, amended, and republished its Interagency Questions and
Answers Regarding Community Reinvestment.
The document was prepared by staff of the Board of Governors, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Office of Thrift
Supervision to answer frequently asked questions about community reinvestment. These interagency questions and answers, which became effective July 11, 2001, contain informal staff
guidance for agency personnel, financial institutions, and the public.
A PDF copy (requires Adobe Acrobat® for viewing) of the 36-page interagency
notice as it appears on pages 36620–53, Vol. 66, No. 134 of the Federal Register dated July 12,
2001, is available on our web site at http://www.dallasfed.org/banking/notices/2001/0165.pdf.
Additionally, you may obtain a hard copy of the document by contacting the Public Affairs
Department at (214) 922-5254.
MORE INFORMATION
For more information, please contact Nancy Vickrey, Community Affairs Division, (214) 922-5271.
For additional copies of this Bank’s notice, contact the Public Affairs Department at (214) 922-5254
or access District Notices on our web site at http://www.dallasfed.org/banking/notices/index.html.

For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal
Reserve Bank of Dallas: Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012;
Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.

Thursday,
July 12, 2001

Part II

Federal Financial
Institutions
Examination Council
Community Reinvestment Act;
Interagency Questions and Answers
Regarding Community Reinvestments;
Notice

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36620

Federal Register / Vol. 66, No. 134 / Thursday, July 12, 2001 / Notices

FEDERAL FINANCIAL INSTITUTIONS
EXAMINATION COUNCIL
Community Reinvestment Act;
Interagency Questions and Answers
Regarding Community Reinvestment
AGENCY: Federal Financial Institutions
Examination Council.
ACTION: Notice.
SUMMARY: The Consumer Compliance
Task Force (we) of the Federal Financial
Institutions Examination Council
(FFIEC) is supplementing, amending,
and republishing its Interagency
Questions and Answers Regarding
Community Reinvestment. The
Interagency Questions and Answers
have been prepared by staff of the Office
of the Comptroller of the Currency
(OCC), the Board of Governors of the
Federal Reserve System (Board), the
Federal Deposit Insurance Corporation
(FDIC), and the Office of Thrift
Supervision (OTS) (collectively, the
agencies) to answer frequently asked
questions about community
reinvestment. These Interagency
Questions and Answers contain
informal staff guidance for agency
personnel, financial institutions, and
the public.
DATES: Effective Date of Amended
Interagency Questions and Answers on
Community Reinvestment: July 11,
2001.
FOR FURTHER INFORMATION CONTACT:
OCC: Karen Tucker, National Bank
Examiner, Community and Consumer
Policy Division, (202) 874–4446; or
Margaret Hesse, Special Counsel,
Community and Consumer Law
Division, (202) 874–5750, Office of the
Comptroller of the Currency, 250 E
Street, SW., Washington, DC 20219.
Board: Catherine M.J. Gates, Senior
Review Examiner, (202) 452–3946; or
Kathleen C. Ryan, Senior Attorney,
(202) 452–3667, Board of Governors of
the Federal Reserve System, 20th Street
and Constitution Avenue, NW.,
Washington, DC 20551.
FDIC: Robert W. Mooney, Assistant
Director, Division of Compliance and
Consumer Affairs, (202) 942–3378;
Stephanie Caputo, Senior Fair Lending
Specialist, Division of Compliance and
Consumer Affairs, (202) 942–3413; or A.
Ann Johnson, Counsel, Legal Division,
(202) 898–3573, Federal Deposit
Insurance Corporation, 550 17th Street,
NW., Washington, DC 20429.
OTS: Theresa A. Stark, Project
Manager, Compliance Policy, (202) 906–
7054; or Richard R. Riese, Director,
Compliance Policy, (202) 906–6134,
Office of Thrift Supervision, 1700 G
Street, NW., Washington, DC 20552.

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SUPPLEMENTARY INFORMATION:

Background
In 1995, the agencies revised the
Community Reinvestment Act (CRA)
regulations by issuing a joint final rule,
which was published on May 4, 1995
(60 FR 22156). See 12 CFR parts 25, 228,
345 and 563e, implementing 12 U.S.C.
2901 et seq. The agencies published
related clarifying documents on
December 20, 1995 (60 FR 66048) and
May 10, 1996 (61 FR 21362).
The revised regulations are
interpreted primarily through
‘‘Interagency Questions and Answers
Regarding Community Reinvestment,’’
which provide informal staff guidance
for use by agency personnel, financial
institutions, and the public, and which
are supplemented periodically. We
published our most recent guidance on
April 28, 2000 (2000 Interagency
Questions and Answers). 65 FR 25088.
In addition to issuing the 2000
Interagency Questions and Answers, we
re-proposed revisions to one question
and answer, as well as a conforming
amendment to another question and
answer, in the accompanying
supplementary information. The
proposed revised question and answer
addressed whether there must be a
direct benefit from community
development loans and services and
qualified investments to an institution’s
assessment area. We specifically
requested comment addressing the
proposed revised question and answer,
as well as general comments and
questions regarding the CRA
regulations. 65 FR at 25090–92.
We received 17 letters in response to
our request for comments in the 2000
Interagency Questions and Answers.
Comments came from financial
institutions or financial institution
holding companies (7), community
organizations (2), financial institution
trade associations (4), one state agency,
and others (3). This document
supplements, revises, and republishes
the 2000 Interagency Questions and
Answers based, in part, on questions
and comments received from examiners,
financial institutions, and other
interested parties, and on comments
received in response to our request for
comments.
As discussed below, this document
adopts the revisions to the question and
answer about whether there must be a
direct benefit to an institution’s
assessment area for an activity to benefit
the assessment area that we proposed in
April 2000, along with conforming
changes to another existing question
and answer, which addresses what is
meant by a ‘‘regional area.’’ We are also

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making slight clarifying revisions to
eight existing questions and answers
and adopting six new questions and
answers.
The Interagency Questions and
Answers has an index to aid readers in
locating specific information in the
document. The index contains
keywords, listed alphabetically, along
with numerical indicators of questions
and answers that relate to that keyword.
The list of questions and answers
addressing each keyword in the index is
not intended to be exhaustive. We
welcome suggestions for additional
entries to the index. Further, when this
new version of the Interagency
Questions and Answers is made
available on the agencies’ and the
FFIEC’s World Wide Web sites, the
index question and answer numbers
will be linked by hypertext to the
questions and answers in the document
to facilitate quick reference to relevant
information.
Questions and answers are grouped
by the provision of the CRA regulations
that they discuss and are presented in
the same order as the regulatory
provisions. The Interagency Questions
and Answers employ an abbreviated
method to cite to the regulations.
Because the regulations of the four
agencies are substantially identical,
corresponding sections of the different
regulations usually bear the same suffix.
Therefore, the Interagency Questions
and Answers typically cite only to the
suffix. For example, the small bank
performance standards for national
banks appear at 12 CFR 25.26; for
Federal Reserve System member banks
supervised by the Board, they appear at
12 CFR 228.26; for nonmember state
banks, at 12 CFR 345.26; and for thrifts,
at 12 CFR 563e.26. Accordingly, the
citation in this document would be to
§ ll.26. In the few instances in which
the suffix in one of the regulations is
different, the specific citation for that
regulation is provided. The question
numbering system consists of the
regulatory citation (as described above)
and a number, connected by a dash. For
example, the first question addressing
§ ll.21(a) would be identified as
§ ll.21(a)–1.
Adopting Question and Answer ReProposed in April 2000 and Conforming
Revisions to One Question and Answer
We are adopting the revisions that we
re-proposed in April 2000 to the
question and answer about whether
there must be a direct benefit to an
institution’s assessment area for an
activity to benefit the assessment area.
We are also adopting conforming
revisions to another existing question

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Federal Register / Vol. 66, No. 134 / Thursday, July 12, 2001 / Notices
and answer to provide consistency with
the amended question and answer.
Must There Be Some Immediate or
Direct Benefit to the Institution’s
Assessment Area(s) To Satisfy the
Regulations’ Requirement That
Qualified Investments and Community
Development Loans or Services Benefit
an Institution’s Assessment Area(s) or a
Broader Statewide or Regional Area
That Includes the Assessment Area(s)?
The fifth question and answer
addressing §§ ll.12(i) and 563e.12(h)
(§§ ll.12(i) & 563e.12(h)–5) addresses
whether there must be an immediate or
direct benefit to an institution’s
assessment area(s) to satisfy the
regulations’ requirement that qualified
investments and community
development loans or services benefit
an institution’s assessment area(s) or a
broader statewide or regional area that
includes the assessment area(s). This
question and answer currently states
that an institution’s assessment area(s)
need not receive an immediate or direct
benefit from the institution’s specific
participation in the broader statewide or
regional organization or activity,
provided the purpose, mandate, or
function of the organization or activity
includes serving geographies or
individuals located in the assessment
area(s).
In May 1999, we first proposed
revising this question and answer to
permit consideration of support for
community development organizations
or activities serving individuals or
geographies located somewhere in the
broader statewide or regional area that
includes the institution’s assessment
area. This consideration would be given
even if the organization or activity did
not have the purpose, mandate or
function of serving geographies or
individuals within the institution’s
assessment area(s). Most commenters
responding to the 1999 proposal
appeared to favor the original proposed
revision, as it would provide increased
flexibility in engaging in community
development activities. However, it
appeared that a number of those
commenters did not recognize the
revised answer as an expansion of
existing options for institutions to
engage in community development
activities outside their assessment
area(s). Therefore, we re-proposed for
public comment a slightly revised
question and answer to ensure that the
public understood that the revised
question and answer expands the
current guidance.
The question and answer, as it was reproposed in April 2000, contained two
approaches to determine whether

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qualified investments and community
development loans or services benefit
an institution’s assessment area(s) or a
broader statewide or regional area that
includes the institution’s assessment
area(s). First, as the agencies have
always maintained, if an activity
supports an organization or program
that benefits the institution’s assessment
area or a broader statewide or regional
area that is larger than, but includes, the
assessment area(s), the activity will be
considered if the purpose, mandate, or
function of the organization or activity
includes serving the assessment area(s).
Second, if, in light of its performance
context, an institution has adequately
addressed the community development
needs of its assessment area(s),
examiners will consider community
development activities that benefit lowand moderate-income individuals or
geographies somewhere in the broader
statewide or regional area that includes
the assessment area(s), even if those
activities do not have a purpose,
mandate, or function of benefiting the
institution’s assessment area(s).
The following example explained the
two approaches. An institution is
located in Chicago. Its assessment area
is the Chicago metropolitan area. Its
community development activities
include loans, investments, and services
in organizations and projects located in
and benefiting Chicago, its assessment
area. These activities would be
considered under the first approach.
The institution’s community
development activities also include
loans and investments in several
projects that benefit the entire state of
Illinois, including Chicago. These
activities also are considered under the
first approach. In addition, the
institution participated in a community
development activity that benefits the
entire Great Lakes region, including the
Chicago metropolitan area. This activity
would also be considered under the first
approach. Assume that, after
considering its performance context,
examiners have determined that the
institution has adequately addressed the
community development needs of its
assessment area through loans,
investments or services considered
under the first approach. Examiners
then would also consider the
institution’s investment in a community
development organization located in
Decatur, IL, that will serve only the
Decatur area—with no potential that it
will ever benefit Chicago, the
institution’s assessment area. Decatur, of
course, is in the statewide area (Illinois)
that includes the institution’s
assessment area. The institution would

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36621

receive consideration for this activity
under the second approach.
The agencies received 14 letters
commenting on the proposed question
and answer. All of the commenters were
generally in favor of the proposed
question and answer. As one financial
institution commenter stated, ‘‘We
believe that community development
organizations and programs that operate
on a local, statewide, or even multi-state
basis ultimately provide benefit to all
surrounding areas. Such initiatives help
stabilize these markets and provide a
ripple effect on neighboring
geographies. As the capacity of one area
grows, it is possible to leverage that
effort to build community development
momentum.’’
The agencies are adopting the
amended question and answer,
§§ ll.12(i) & 563e.12(h)–5, as it was
proposed in April 2000.
What Is Meant by the Term ‘‘Regional
Area’’?
In addition, the agencies are also
adopting the conforming amendment to
question and answer, §§ ll.12(i) &
563e.12(h)–6, which was also proposed
in April 2000. This revised question and
answer is necessary so that, in cases
where an institution has already
adequately addressed the community
development needs of its assessment
area(s), examiner discretion does not
unduly impede the broader choice and
judgment permitted to institutions for
performing community development
activities in the relevant statewide or
regional area. This conforming
amendment clarifies that, if an
institution has adequately addressed the
community development needs of its
assessment area(s), examiners will
consider its community development
activities that benefit geographies or
individuals located somewhere within
the broader statewide or regional area
that includes the institution’s
assessment area(s), even if those
activities do not benefit its assessment
area(s).
New Questions and Answers
The agencies are adopting six new
questions and answers, which are
discussed below.
Revitalize and Stabilize Low- and
Moderate-Income Areas
Financial institutions and examiners
have asked us about the types of
activities that are considered to
revitalize and/or stabilize low- and
moderate-income areas. In response, the
agencies are adopting a new question
and answer, §§ ll.12(h)(4) &
563e.12(g)(4)–1, which provides

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Federal Register / Vol. 66, No. 134 / Thursday, July 12, 2001 / Notices

guidance about such activities. It states
that activities that revitalize or stabilize
a low- or moderate-income geography
are activities that help to attract and
retain businesses and residents.
Examiners will presume that an activity
revitalizes or stabilizes a low- or
moderate-income geography if the
activity has been approved by the
governing board of an Enterprise
Community or Empowerment Zone
(designated pursuant to 26 U.S.C. 1391)
and is consistent with the board’s
strategic plan. They will make the same
presumption if the activity has received
similar official designation as consistent
with a federal, state, local, or tribal
government plan for the revitalization or
stabilization of the low- or moderateincome geography. To determine
whether other activities revitalize or
stabilize a low- or moderate-income
geography, examiners will evaluate the
activity’s actual impact on the
geography, if information about this is
available. If not, examiners will
determine whether the activity is
consistent with the community’s formal
or informal plans for the revitalization
and stabilization of the low- or
moderate-income geography.
Types of Lending Activities That May
Warrant Favorable Consideration as
Activities Responsive to the Credit
Needs of an Institution’s Community
Credit needs vary from community to
community. However, there are some
lending activities that are likely to be
responsive in helping to meet the credit
needs of many communities. The
agencies are adopting a new question
and answer, § ll.22(a)–1, which
identifies the following activities as
being responsive to the needs of an
institution’s assessment area:
• Providing loan programs that
include a financial education
component about how to avoid lending
activities that may be abusive or
otherwise unsuitable;
• Establishing loan programs that
provide small, unsecured consumer
loans in a safe and sound manner (i.e.,
based on the borrower’s ability to repay)
and with reasonable terms;
• Offering lending programs, which
feature reporting to consumer reporting
agencies, that transition borrowers from
loans with higher interest rates and fees
(based on credit risk) to lower-cost
loans, consistent with safe and sound
lending practices. Reporting to
consumer reporting agencies allows
borrowers accessing these programs the
opportunity to improve their credit
histories and thereby improve their
access to competitive credit products.
Examiners may consider favorably such

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lending activities, which have features
augmenting the success and
effectiveness of the institution’s lending
programs.
Indirect Community Development
Services
The agencies are adopting a new
question and answer, § ll.24(e)–1,
that addresses the conditions under
which an institution may receive
consideration for community
development services offered by
affiliates or third parties. The guidance
states that, at an institution’s option, the
agencies will consider services
performed by an affiliate or by a third
party on the institution’s behalf under
the service test if the services provided
enable the institution to help meet the
credit needs of its community. Indirect
services that enhance an institution’s
ability to deliver credit products or
deposit services within its community
and that can be quantified may be
considered under the service test if
those services have not been considered
already under the lending or investment
test. For example, an institution that
contracts with a community
organization to provide home
ownership counseling to low- and
moderate-income home buyers as part of
the institution’s mortgage program may
receive consideration for that indirect
service under the service test. In
contrast, donations to a community
organization that offers financial
services to low- or moderate-income
individuals may be considered under
the investment test, but would not also
be eligible for consideration under the
service test. Services performed by an
affiliate will be treated the same as
affiliate loans and investments made in
the institution’s assessment area and
may be considered if the service is not
claimed by any other institution.
Credit Card Banks’ Activities
The agencies are adopting a new
question and answer, § ll.25(a)–1,
that applies only to credit card banks
that are exempt from the definition of
‘‘bank’’ in the Bank Holding Company
Act (BHCA), as amended by the
Competitive Equality Banking Act of
1987 (CEBA credit card banks). This
new guidance explains how a CEBA
credit card bank (if designated as a
limited-purpose institution) can meet its
community’s credit needs without
losing its exemption from the definition
of ‘‘bank.’’ This guidance memorializes
a letter issued in 1996 by staff at the
Board of Governors of the Federal
Reserve System to the president of the
Association of Financial Services
Holding Companies. The guidance

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clarifies that, although the BHCA
restricts CEBA credit card banks to
credit card operations, a CEBA credit
card bank can engage in community
development activities without losing
its exemption under the BHCA. A CEBA
credit card bank could provide
community development services and
investments without engaging in
operations other than credit card
operations. For example, the bank could
provide credit card counseling, or the
financial expertise of its executives, free
of charge, to community development
organizations. In addition, a CEBA
credit card bank could make qualified
investments, as long as the investments
meet the guidelines for passive and
noncontrolling investments provided in
the BHCA and the Board’s Regulation Y.
Finally, although a CEBA credit card
bank cannot make any loans other than
credit card loans, under § ll.25(d)(2)
(community development test— indirect
activities), the bank could elect to have
part of its qualified passive and
noncontrolling investments in a thirdparty lending consortium considered as
community development lending,
provided that the consortium’s loans
otherwise meet the requirements for
community development lending. When
assessing a CEBA credit card bank’s
CRA performance under the community
development test, examiners will take
into account the bank’s performance
context. In particular, examiners will
consider the legal constraints imposed
by the BHCA on the bank’s activities as
part of the bank’s performance context
in § ll.21(b)(4).
Effect of Evidence of Other Illegal Credit
Practices
Section ll.28(c) of our regulations
states that evidence of discriminatory or
other illegal credit practices adversely
affects the evaluation of an institution’s
performance. The agencies are adopting
a new question and answer addressing
this provision. The new question and
answer, § ll.28(c)–1, discusses what
is meant by ‘‘discriminatory or other
illegal credit practices.’’ It explains that
an institution engages in discriminatory
credit practices if it discourages or
discriminates against credit applicants
or borrowers on a prohibited basis, in
violation, for example, of the Fair
Housing Act or the Equal Credit
Opportunity Act (as implemented by
Regulation B). Examples of other illegal
credit practices inconsistent with
helping to meet community credit needs
include violations of:
• The Truth in Lending Act regarding
rescission of certain mortgage
transactions and regarding disclosures
and certain loan term restrictions in

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connection with credit transactions that
are subject to the Home Ownership and
Equity Protection Act;
• The Real Estate Settlement
Procedures Act regarding the giving and
accepting of referral fees, unearned fees
or kickbacks in connection with certain
mortgage transactions; and
• The Federal Trade Commission Act
regarding unfair or deceptive acts or
practices.
Examiners will determine the effect of
evidence of illegal credit practices as set
forth in examination procedures and
§ ll.28(c) of the regulations.
Violations of other provisions of the
consumer protection laws generally will
not adversely affect an institution’s CRA
rating, but may warrant the inclusion of
comments in an institution’s
performance evaluation. These
comments may address the institution’s
policies, procedures, training programs,
and internal assessment efforts.
Electronic Public Files
Some financial institutions have
inquired whether it is acceptable to
maintain the required public file
information electronically on an
intranet or the Internet. The agencies
believe that an institution may keep all
or part of its public file on an intranet
or the Internet, provided that the
institution maintains all of the
information, either in paper or
electronic form, that is required in
§ ll.43 of the regulations. An
institution that opts to keep part or all
of its public file on an intranet or the
Internet must follow the rules in
§ ll.43(c)(1) and (2) as to what
information is required to be kept at a
main office and at a branch. The
institution must also ensure that the
information required to be maintained
at a main office and branch, if kept
electronically, can be readily
downloaded and printed for any
member of the public who requests a
hard copy of the information.
The agencies are adopting a new
question and answer, § ll.43(c)–2,
which addresses maintaining public
files on an intranet or the Internet.
Revised Questions and Answers
The agencies are revising eight
existing questions and answers, which
are discussed below.
New Markets Venture Capital
Companies
The Consolidated Appropriations Act
of 2001 (Pub. L. 106–554), enacted
December 21, 2000, included the New
Markets Venture Capital Program Act of
2000. The New Markets Venture Capital
Program, which is administered by the

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Small Business Administration (SBA),
allows the SBA to designate New
Market Venture Capital companies
(NMVCCs). NMVCCs are investment
funds that will promote economic
development and create wealth and job
opportunities in low-income
geographies and among individuals
living in such areas through equity-type
investments in smaller enterprises
located in those low-income
geographical areas.
Based on the statutory mandate for
NMVCCs, the agencies will presume
that any loan to or lawful investment in
NMVCCs will promote economic
development. Therefore, we are revising
§ ll.12(h)(3)–1 to reflect this
presumption.
Reporting Loans With a Business
Purpose That Are Secured by
Residential Real Estate
The agencies are adopting revisions to
two existing questions and answers to
accommodate the difference in
treatment between the Call Report and
Thrift Financial Report (TFR)
instructions concerning loans secured
by residential real estate that have a
business purpose. Under the Call Report
instructions, loans secured by nonfarm
residential real estate that are used to
finance small businesses must be
reported as ‘‘loans secured by real
estate’’ unless the security interest in
the nonfarm residential real estate is
taken only as an abundance of caution.
The TFR instructions, however, allow
an institution to classify a loan that
meets the definition of a mortgage loan,
but that is used to finance small
businesses, as a mortgage loan or as a
nonmortgage loan according to the
purpose of the loan, at the option of the
reporting institution. As a result,
institutions that file Call Reports and
those that file TFRs may treat loans
secured by nonfarm residential real
estate, but that are for the purpose of
financing a small business, in different
ways.
The agencies are revising
§§ ll.12(u) & 563e.12(t)–3 and
§ ll.42(c)(2)–1 to be consistent with
guidance provided in the Call Report
and TFR instructions. The agencies are
bifurcating the answer to §§ ll.12(u) &
563e.12(t)–3 to account for the different
treatment in the Call Report and TFR
instructions. The guidance states that,
for banks filing Call Reports, loans
secured by nonfarm residential real
estate to finance small businesses will
typically not be included as ‘‘loans to
small businesses’’ for Call Report
purposes, unless the security interest in
the property is taken only as an
abundance of caution. The agencies

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recognize that many small businesses
are financed by loans that would not
have been made or would have been
made on less favorable terms had they
not been secured by residential real
estate. If these loans have a primary
purpose of community development, as
defined in the regulations, they may be
reported as community development
loans. Otherwise, at an institution’s
option, the institution may collect and
maintain data separately concerning
these loans and request that the data be
considered in its CRA evaluation as
‘‘Other Secured Lines/Loans for
Purposes of Small Business.’’
For institutions that file TFRs,
depending on how a loan is classified,
it is possible that a loan secured by
nonfarm residential real estate that
finances a small business will be
reported as a ‘‘small business loan.’’
Loans secured by nonfarm residential
real estate to finance small businesses
may be reported as small business loans
if they are reported on the TFR as
nonmortgage, commercial loans.
Otherwise, loans that meet the
definition of mortgage loans, for TFR
reporting purposes, may be classified as
mortgage loans. These loans may be
reported as community development
loans, if appropriate, or collected as
‘‘Other Secured Lines/Loans for
Purposes of Small Business.’’
The guidance provided in
§ ll.42(c)(2)–1 is being revised to be
applicable only to banks that file Call
Reports. This question and answer is
inapplicable to thrifts that file TFRs.
The question and answer reiterates that
banks that make loans to finance small
businesses, which are secured by
nonfarm, residential real estate, and for
which the security interest was not
taken only as an abundance of caution,
may either report the loans as
community development loans, if
appropriate, or may collect and
maintain loan information as ‘‘Other
Secured Lines/Loans for Purposes of
Small Business.’’
Clarification of § ll.21(b)(5)–1
Addressing Assigned Ratings Being
Adversely Affected by Poor Past
Performance
The agencies are clarifying the
wording of the answer to this question.
We intend no substantive change.
Home Mortgage Loan Modification,
Extension, and Consolidation
Agreements (MECAs)
In several states, financial institutions
use MECAs as an alternative to
refinancings for their customers.
Existing guidance § ll.22(a)(2)–3
states that an institution may receive

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consideration under CRA as ‘‘other loan
data’’ for MECAs, in which it obtains
loans from other institutions without
actually purchasing or refinancing the
loans. The agencies are clarifying this
guidance to indicate that it applies only
to home mortgage loans.
Reporting Lines of Credit
The agencies have received inquiries
from examiners and our institutions
about how institutions should report
increases to small business or small
farm lines of credit once the total line
exceeds the $1 million or $500,000 limit
for reporting a loan to a small business
or a loan to a small farm, respectively,
as described in the Call Report or TFR
instructions. Because the Call Report
and TFR no longer consider lines of
credit that have exceeded the $1 million
or $500,000 thresholds as loans to small
businesses or loans to small farms,
respectively, such lines would also no
longer be considered small business or
small farm loans for CRA purposes.
The agencies are revising existing
question and answer § ll.42–3 to
clarify this view.
Clarification of § ll.42(a)–5
Addressing Reporting Data on
Refinancings and Renewals of Small
Business and Small Farm Loans
In the 2000 Interagency Questions and
Answers, the agencies adopted a revised
version of § ll.42(a)–5, which
discusses collection and reporting of
data on small business and farm loans
that are refinanced or renewed. The
2000 guidance suggests that if a renewal
of $15,000 and new money of $5,000 are
provided in connection with the same
loan to the same borrower, the two
amounts should be reported separately
as two separate originations. In response
to several communications from
institutions indicating that their data
systems may not allow such a
transaction to be reported as two
originations, the agencies are clarifying
that institutions may report the two
originations (the renewal and the
increase in the line) together as a single
origination. In the example above, an
institution may report one origination of
$20,000.
We have also deleted from the answer
to this question information that was
relevant to data collected in the year
2000 and reported in 2001. Because this
data should have been reported by
March 1, 2001, this portion of the
answer is no longer pertinent. The
remaining answer is applicable
beginning with data on small business
and small farm collected in 2000 and
reported in 2001.

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Updating § ll.42–4
Consistent with the deletion of the
out-dated portion of the answer to
§ ll.42(a)–5, we are also deleting the
part of the answer to § ll.42 ‘‘ – that
was relevant only to data that was
collected in 2000 and reported in 2001.
The remaining answer is applicable
beginning with data about renewals of
lines of credit collected in 2000 that will
be reported in 2001.
Small Business Regulatory Enforcement
Fairness Act of 1996 (SBREFA)
The SBREFA requires an agency, for
each rule for which it prepares a final
regulatory flexibility analysis, to publish
one or more compliance guides to help
small entities understand how to
comply with the rule.
Pursuant to section 605(b) of the
Regulatory Flexibility Act, the agencies
certified that their proposed CRA rule
would not have a significant economic
impact on a substantial number of small
entities and invited public comments on
that determination. See 58 FR 67478
(Dec. 21, 1993); 59 FR 51250 (Oct. 7,
1994). In response to public comment,
the agencies voluntarily prepared a final
regulatory flexibility analysis for the
joint final rule, although the analysis
was not required because it supported
the agencies’ earlier certification
regarding the proposed rule. Because a
regulatory flexibility analysis was not
required, section 212 of the SBREFA
does not apply to the final CRA rule.
However, in their continuing efforts to
provide clear, understandable
regulations and to comply with the
spirit of the SBREFA, the agencies have
compiled the Interagency Questions and
Answers. The Interagency Questions
and Answers serve the same purpose as
the compliance guide described in the
SBREFA by providing guidance on a
variety of issues of particular concern to
small banks and thrifts.
The text of the Interagency Questions
and Answers follows:
Interagency Questions and Answers
Regarding Community Reinvestment
§ ll.11—Authority, Purposes, and
Scope
§ ll.11(c) Scope
§§ ll.11(c)(3) & 563e.11(c)(2) Certain
Special Purpose Institutions
§§ ll.11(c)(3) & 563e.11(c)(2)–1: Is
the list of special purpose institutions
exclusive?
A1. No, there may be other examples
of special purpose institutions. These
institutions engage in specialized
activities that do not involve granting
credit to the public in the ordinary

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course of business. Special purpose
institutions typically serve as
correspondent banks, trust companies,
or clearing agents or engage only in
specialized services, such as cash
management controlled disbursement
services. A financial institution,
however, does not become a special
purpose institution merely by ceasing to
make loans and, instead, making
investments and providing other retail
banking services.
§ ll.11(c)(3) & 563e.11(c)(2)–2: To
be a special purpose institution, must
an institution limit its activities in its
charter?
A2. No. A special purpose institution
may, but is not required to, limit the
scope of its activities in its charter,
articles of association or other corporate
organizational documents. An
institution that does not have legal
limitations on its activities, but has
voluntarily limited its activities,
however, would no longer be exempt
from Community Reinvestment Act
(CRA) requirements if it subsequently
engaged in activities that involve
granting credit to the public in the
ordinary course of business. An
institution that believes it is exempt
from CRA as a special purpose
institution should seek confirmation of
this status from its supervisory agency.
§ ll.12—Definitions
§ ll.12(a)

Affiliate

§ ll.12(a)–1: Does the definition of
‘‘affiliate’’ include subsidiaries of an
institution?
A1. Yes, ‘‘affiliate’’ includes any
company that controls, is controlled by,
or is under common control with
another company. An institution’s
subsidiary is controlled by the
institution and is, therefore, an affiliate.
§§ ll.12(f) & 563e.12(e)

Branch

§§ ll.12(f)–563e.12(e) & 1: Do the
definitions of ‘‘branch,’’ ‘‘automated
teller machine (ATM),’’ and ‘‘remote
service facility (RSF)’’ include mobile
branches, ATMs, and RSFs?
A1. Yes. Staffed mobile offices that
are authorized as branches are
considered ‘‘branches’’ and mobile
ATMs and RSFs are considered ‘‘ATMs’’
and ‘‘RSFs.’’
§§ ll.12(f) & 563e.12(e)–2: Are loan
production offices (LPOs) branches for
purposes of the CRA?
A2. LPOs and other offices are not
‘‘branches’’ unless they are authorized
as branches of the institution through
the regulatory approval process of the
institution’s supervisory agency.

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§§ ll.12(h)–563e.12(g)
Development

Community

§§ ll.12(h) & 563e.12(g)–1: Are
community development activities
limited to those that promote economic
development?
A1. No. Although the definition of
‘‘community development’’ includes
activities that promote economic
development by financing small
businesses or farms, the rule does not
limit community development loans
and services and qualified investments
to those activities. Community
development also includes communityor tribal-based child care, educational,
health, or social services targeted to
low- or moderate-income persons,
affordable housing for low- or moderateincome individuals, and activities that
revitalize or stabilize low- or moderateincome areas.
§§ ll.12(h) & 563e.12(g)–2: Must a
community development activity occur
inside a low- or moderate-income area
in order for an institution to receive
CRA consideration for the activity?
A2. No. Community development
includes activities outside of low- and
moderate-income areas that provide
affordable housing for, or community
services targeted to, low- or moderateincome individuals and activities that
promote economic development by
financing small businesses and farms.
Activities that stabilize or revitalize
particular low- or moderate-income
areas (including by creating, retaining,
or improving jobs for low- or moderateincome persons) also qualify as
community development, even if the
activities are not located in these lowor moderate-income areas. One example
is financing a supermarket that serves as
an anchor store in a small strip mall
located at the edge of a middle-income
area, if the mall stabilizes the adjacent
low-income community by providing
needed shopping services that are not
otherwise available in the low-income
community.
§§ ll.12(h) & 563e.12(g)–3: Does the
regulation provide flexibility in
considering performance in high-cost
areas?
A3. Yes, the flexibility of the
performance standards allows
examiners to account in their
evaluations for conditions in high-cost
areas. Examiners consider lending and
services to individuals and geographies
of all income levels and businesses of
all sizes and revenues. In addition, the
flexibility in the requirement that
community development loans,
community development services, and
qualified investments have as their
‘‘primary’’ purpose community

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development allows examiners to
account for conditions in high-cost
areas. For example, examiners could
take into account the fact that activities
address a credit shortage among middleincome people or areas caused by the
disproportionately high cost of building,
maintaining or acquiring a house when
determining whether an institution’s
loan to or investment in an organization
that funds affordable housing for
middle-income people or areas, as well
as low- and moderate-income people or
areas, has as its primary purpose
community development.
§§ ll.12(h)(1) & 563e.12(g)(1)
Affordable Housing (Including
Multifamily Rental Housing) for Low- or
Moderate-Income Individuals
§§ ll.12(h)(1) & 563e.12(g)(1)–1:
When determining whether a project is
‘‘affordable housing for low- or
moderate-income individuals,’’ thereby
meeting the definition of ‘‘community
development,’’ will it be sufficient to use
a formula that relates the cost of
ownership, rental or borrowing to the
income levels in the area as the only
factor, regardless of whether the users,
likely users, or beneficiaries of that
affordable housing are low- or
moderate-income individuals?
A1. The concept of ‘‘affordable
housing’’ for low- or moderate-income
individuals does hinge on whether lowor moderate-income individuals benefit,
or are likely to benefit, from the
housing. It would be inappropriate to
give consideration to a project that
exclusively or predominately houses
families that are not low- or moderateincome simply because the rents or
housing prices are set according to a
particular formula.
For projects that do not yet have
occupants, and for which the income of
the potential occupants cannot be
determined in advance, or in other
projects where the income of occupants
cannot be verified, examiners will
review factors such as demographic,
economic and market data to determine
the likelihood that the housing will
‘‘primarily’’ accommodate low- or
moderate-income individuals. For
example, examiners may look at median
rents of the assessment area and the
project; the median home value of either
the assessment area, low- or moderateincome geographies or the project; the
low- or moderate-income population in
the area of the project; or the past
performance record of the
organization(s) undertaking the project.
Further, such a project could receive
consideration if its express, bona fide
intent, as stated, for example, in a

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prospectus, loan proposal or community
action plan, is community development.
§§ ll.12(h)(3) & 563e.12(g)(3)
Activities That Promote Economic
Development by Financing Businesses
or Farms That Meet Certain Size
Eligibility Standards
§ ll.12(h)(3) & 563e.12(g)(3)–1:
‘‘Community development’’ includes
activities that promote economic
development by financing businesses or
farms that meet certain size eligibility
standards. Are all activities that finance
businesses and farms that meet these
size eligibility standards considered to
be community development?
A1. No. To be considered as
‘‘community development’’ under
§§ ll.12(h)(3) and 563e.12(g)(3), a
loan, investment or service, whether
made directly or through an
intermediary, must meet both a size test
and a purpose test. An activity meets
the size requirement if it finances
entities that either meet the size
eligibility standards of the Small
Business Administration’s Development
Company (SBDC) or Small Business
Investment Company (SBIC) programs,
or have gross annual revenues of $1
million or less. To meet the purpose
test, the activity must promote
economic development. An activity is
considered to promote economic
development if it supports permanent
job creation, retention, and/or
improvement for persons who are
currently low- or moderate-income, or
supports permanent job creation,
retention, and/or improvement either in
low- or moderate-income geographies or
in areas targeted for redevelopment by
Federal, state, local or tribal
governments. The agencies will
presume that any loan to or investment
in a SBDC, SBIC, or New Markets
Venture Capital Company promotes
economic development.
In addition to their quantitative
assessment of the amount of a financial
institution’s community development
activities, examiners must make
qualitative assessments of an
institution’s leadership in community
development matters and the
complexity, responsiveness, and impact
of the community development
activities of the institution. In reaching
a conclusion about the impact of an
institution’s community development
activities, examiners may, for example,
determine that a loan to a small
business in a low- or moderate-income
geography that provides needed jobs
and services in that area may have a
greater impact and be more responsive
to the community credit needs than
does a loan to a small business in the

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same geography that does not directly
provide additional jobs or services to
the community.
§§ ll.12(h)(4) & 563e.12(g)(4)
Activities That Revitalize or Stabilize
Low- or Moderate-Income Geographies
§ ll.12(h)(4) & 563e.12(g)(4)–1:
What are activities that revitalize or
stabilize a low- or moderate-income
geography?
A1. Activities that revitalize or
stabilize a low- or moderate-income
geography are activities that help to
attract and retain businesses and
residents. Examiners will presume that
an activity revitalizes or stabilizes a
low- or moderate-income geography if
the activity has been approved by the
governing board of an Enterprise
Community or Empowerment Zone
(designated pursuant to 26 U.S.C. 1391)
and is consistent with the board’s
strategic plan. They will make the same
presumption if the activity has received
similar official designation as consistent
with a federal, state, local or tribal
government plan for the revitalization or
stabilization of the geography. To
determine whether other activities
revitalize or stabilize a low- or
moderate-income geography, examiners
will evaluate the activity’s actual impact
on the geography, if information about
this is available. If not, examiners will
determine whether the activity is
consistent with the community’s formal
or informal plans for the revitalization
and stabilization of the low- or
moderate-income geography. For more
information on what activities revitalize
or stabilize a low- or moderate-income
geography, see §§ ll.12(h) &
563e.12(g)–2 and §§ ll.12(i) &
563e.12(h)–4.
§§ ll.12(i) & 563e.12(h) Community
Development Loan
§§ ll.12(i) & 563e.12(h)–1: What are
examples of community development
loans?
A1. Examples of community
development loans include, but are not
limited to, loans to:
• Borrowers for affordable housing
rehabilitation and construction,
including construction and permanent
financing of multifamily rental property
serving low- and moderate-income
persons;
• Not-for-profit organizations serving
primarily low- and moderate-income
housing or other community
development needs;
• Borrowers to construct or
rehabilitate community facilities that
are located in low- and moderateincome areas or that serve primarily
low- and moderate-income individuals;

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• Financial intermediaries including
Community Development Financial
Institutions (CDFIs), Community
Development Corporations (CDCs),
minority- and women-owned financial
institutions, community loan funds or
pools, and low-income or community
development credit unions that
primarily lend or facilitate lending to
promote community development.
• Local, state, and tribal governments
for community development activities;
and
• Borrowers to finance environmental
clean-up or redevelopment of an
industrial site as part of an effort to
revitalize the low- or moderate-income
community in which the property is
located.
The rehabilitation and construction of
affordable housing or community
facilities, referred to above, may include
the abatement or remediation of, or
other actions to correct, environmental
hazards, such as lead-based paint, that
are present in the housing, facilities, or
site.
§§ ll.12(i) & 563e.12(h)–2: If a retail
institution that is not required to report
under the Home Mortgage Disclosure
Act (HMDA) makes affordable home
mortgage loans that would be HMDAreportable home mortgage loans if it
were a reporting institution, or if a small
institution that is not required to collect
and report loan data under CRA makes
small business and small farm loans
and consumer loans that would be
collected and/or reported if the
institution were a large institution, may
the institution have these loans
considered as community development
loans?
A2. No. Although small institutions
are not required to report or collect
information on small business and small
farm loans and consumer loans, and
some institutions are not required to
report information about their home
mortgage loans under HMDA, if these
institutions are retail institutions, the
agencies will consider in their CRA
evaluations the institutions’ originations
and purchases of loans that would have
been collected or reported as small
business, small farm, consumer or home
mortgage loans, had the institution been
a collecting and reporting institution
under the CRA or the HMDA. Therefore,
these loans will not be considered as
community development loans.
Multifamily dwelling loans, however,
may be considered as community
development loans as well as home
mortgage loans. See also § ll.42(b)(2)–
2.
§§ ll.12(i) & 563e.12(h)–3: Do
secured credit cards or other credit card
programs targeted to low- or moderate-

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income individuals qualify as
community development loans?
A3. No. Credit cards issued to low- or
moderate-income individuals for
household, family, or other personal
expenditures, whether as part of a
program targeted to such individuals or
otherwise, do not qualify as community
development loans because they do not
have as their primary purpose any of the
activities included in the definition of
‘‘community development.’’
§§ ll.12(i) & 563e.12(h)–4: The
regulation indicates that community
development includes ‘‘activities that
revitalize or stabilize low- or moderateincome geographies.’’ Do all loans in a
low- to moderate-income geography
have a stabilizing effect?
A4. No. Some loans may provide only
indirect or short-term benefits to low- or
moderate-income individuals in a lowor moderate-income geography. These
loans are not considered to have a
community development purpose. For
example, a loan for upper-income
housing in a distressed area is not
considered to have a community
development purpose simply because of
the indirect benefit to low- or moderateincome persons from construction jobs
or the increase in the local tax base that
supports enhanced services to low- and
moderate-income area residents. On the
other hand, a loan for an anchor
business in a distressed area (or a
nearby area), that employs or serves
residents of the area, and thus stabilizes
the area, may be considered to have a
community development purpose. For
example, in an underserved, distressed
area, a loan for a pharmacy that
employs, and provides supplies to,
residents of the area promotes
community development.
§§ ll.12(i) & 563e.12(h)–5: Must
there be some immediate or direct
benefit to the institution’s assessment
area(s) to satisfy the regulations’
requirement that qualified investments
and community development loans or
services benefit an institution’s
assessment area(s) or a broader
statewide or regional area that includes
the institution’s assessment area(s)?
A5. No. The regulations recognize that
community development organizations
and programs are efficient and effective
ways for institutions to promote
community development. These
organizations and programs often
operate on a statewide or even multistate basis. Therefore, an institution’s
activity is considered a community
development loan or service or a
qualified investment if it supports an
organization or activity that covers an
area that is larger than, but includes, the
institution’s assessment area(s). The

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institution’s assessment area(s) need not
receive an immediate or direct benefit
from the institution’s specific
participation in the broader organization
or activity, provided that the purpose,
mandate, or function of the organization
or activity includes serving geographies
or individuals located within the
institution’s assessment area(s).
In addition, a retail institution that,
considering its performance context, has
adequately addressed the community
development needs of its assessment
area(s) will receive consideration for
certain other community development
activities. These community
development activities must benefit
geographies or individuals located
somewhere within a broader statewide
or regional area that includes the
institution’s assessment area(s).
Examiners will consider these activities
even if they will not benefit the
institution’s assessment area(s).
§§ ll.12(i) & 563e.12(h)–6: What is
meant by the term ‘‘regional area’’?
A6. A ‘‘regional area’’ may be as small
as a city or county or as large as a
multistate area. For example, the ‘‘midAtlantic states’’ may comprise a regional
area.
Community development loans and
services and qualified investments to
statewide or regional organizations that
have a bona fide purpose, mandate, or
function that includes serving the
geographies or individuals within the
institution’s assessment area(s) will be
considered as addressing assessment
area needs. When examiners evaluate
community development loans and
services and qualified investments that
benefit a regional area that includes the
institution’s assessment area(s), they
will consider the institution’s
performance context as well as the size
of the regional area and the actual or
potential benefit to the institution’s
assessment area(s). With larger regional
areas, benefit to the institution’s
assessment area(s) may be diffused and,
thus less responsive to assessment area
needs.
In addition, as long as an institution
has adequately addressed the
community development needs of its
assessment area(s), it will also receive
consideration for community
development activities that benefit
geographies or individuals located
somewhere within the broader
statewide or regional area that includes
the institution’s assessment area(s), even
if those activities do not benefit its
assessment area(s).
§§ ll.12(i) & 563e.12(h)–7: What is
meant by the term ‘‘primary purpose’’ as
that term is used to define what
constitutes a community development

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loan, a qualified investment or a
community development service?
A7. A loan, investment or service has
as its primary purpose community
development when it is designed for the
express purpose of revitalizing or
stabilizing low-or moderate-income
areas, providing affordable housing for,
or community services targeted to, lowor moderate-income persons, or
promoting economic development by
financing small businesses and farms
that meet the requirements set forth in
§§ ll.12(h) or 563e.12(g). To
determine whether an activity is
designed for an express community
development purpose, the agencies
apply one of two approaches. First, if a
majority of the dollars or beneficiaries of
the activity are identifiable to one or
more of the enumerated community
development purposes, then the activity
will be considered to possess the
requisite primary purpose.
Alternatively, where the measurable
portion of any benefit bestowed or
dollars applied to the community
development purpose is less than a
majority of the entire activity’s benefits
or dollar value, then the activity may
still be considered to possess the
requisite primary purpose if (1) the
express, bona fide intent of the activity,
as stated, for example, in a prospectus,
loan proposal, or community action
plan, is primarily one or more of the
enumerated community development
purposes; (2) the activity is specifically
structured (given any relevant market or
legal constraints or performance context
factors) to achieve the expressed
community development purpose; and
(3) the activity accomplishes, or is
reasonably certain to accomplish, the
community development purpose
involved. The fact that an activity
provides indirect or short-term benefits
to low-or moderate-income persons does
not make the activity community
development, nor does the mere
presence of such indirect or short-term
benefits constitute a primary purpose of
community development. Financial
institutions that want examiners to
consider certain activities under either
approach should be prepared to
demonstrate the activities’
qualifications.
§§ ll.12(j) & 563e.12(i) Community
Development Service
§§ ll.12(j) & 563e.12(i)–1: In
addition to meeting the definition of
‘‘community development’’ in the
regulation, community development
services must also be related to the
provision of financial services. What is
meant by ‘‘provision of financial
services’’?

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A1. Providing financial services
means providing services of the type
generally provided by the financial
services industry. Providing financial
services often involves informing
community members about how to get
or use credit or otherwise providing
credit services or information to the
community. For example, service on the
board of directors of an organization
that promotes credit availability or
finances affordable housing is related to
the provision of financial services.
Providing technical assistance about
financial services to community-based
groups, local or tribal government
agencies, or intermediaries that help to
meet the credit needs of low-and
moderate-income individuals or small
businesses and farms is also providing
financial services. By contrast, activities
that do not take advantage of the
employees’ financial expertise, such as
neighborhood cleanups, do not involve
the provision of financial services.
§§ ll.12(j) & 563e.12(i)–2: Are
personal charitable activities provided
by an institution’s employees or
directors outside the ordinary course of
their employment considered
community development services?
A2. No. Services must be provided as
a representative of the institution. For
example, if a financial institution’s
director, on her own time and not as a
representative of the institution,
volunteers one evening a week at a local
community development corporation’s
financial counseling program, the
institution may not consider this
activity a community development
service.
§§ ll.12(j) & 563e.12(i)–3: What are
examples of community development
services?
A3. Examples of community
development services include, but are
not limited to, the following:
• Providing technical assistance on
financial matters to nonprofit, tribal or
government organizations serving lowand moderate-income housing or
economic revitalization and
development needs;
• Providing technical assistance on
financial matters to small businesses or
community development organizations,
including organizations and individuals
who apply for loans or grants under the
Federal Home Loan Banks’ Affordable
Housing Program;
• Lending employees to provide
financial services for organizations
facilitating affordable housing
construction and rehabilitation or
development of affordable housing;
• Providing credit counseling, homebuyer and home-maintenance
counseling, financial planning or other

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financial services education to promote
community development and affordable
housing;
• Establishing school savings
programs and developing or teaching
financial education curricula for low-or
moderate-income individuals;
• Providing electronic benefits
transfer and point of sale terminal
systems to improve access to financial
services, such as by decreasing costs, for
low- or moderate-income individuals;
and
• Providing other financial services
with the primary purpose of community
development, such as low-cost bank
accounts, including ‘‘Electronic Transfer
Accounts’’ provided pursuant to the
Debt Collection Improvement Act of
1996, or free government check cashing
that increases access to financial
services for low- or moderate-income
individuals.
Examples of technical assistance
activities that might be provided to
community development organizations
include:
• Serving on a loan review
committee;
• Developing loan application and
underwriting standards;
• Developing loan processing
systems;
• Developing secondary market
vehicles or programs;
• Assisting in marketing financial
services, including development of
advertising and promotions,
publications, workshops and
conferences;
• Furnishing financial services
training for staff and management;
• Contributing accounting/
bookkeeping services; and
• Assisting in fund raising, including
soliciting or arranging investments.
§§ ll.12(k) & 563e.12(j) Consumer
Loan
§§ ll.12(k) & 563e.12(j)–1: Are
home equity loans considered
‘‘consumer loans’’?
A1. Home equity loans made for
purposes other than home purchase,
home improvement or refinancing home
purchase or home improvement loans
are consumer loans if they are extended
to one or more individuals for
household, family, or other personal
expenditures.
§§ ll.12(k) & 563e.12(j)–2: May a
home equity line of credit be considered
a ‘‘consumer loan’’ even if part of the
line is for home improvement purposes?
A2. If the predominant purpose of the
line is home improvement, the line may
only be reported under HMDA and may
not be considered a consumer loan.
However, the full amount of the line

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may be considered a ‘‘consumer loan’’ if
its predominant purpose is for
household, family, or other personal
expenditures, and to a lesser extent
home improvement, and the full amount
of the line has not been reported under
HMDA. This is the case even though
there may be ‘‘double counting’’ because
part of the line may also have been
reported under HMDA.
§§ ll.12(k) & 563e.12(j)–3: How
should an institution collect or report
information on loans the proceeds of
which will be used for multiple
purposes?
A3. If an institution makes a single
loan or provides a line of credit to a
customer to be used for both consumer
and small business purposes, consistent
with the Call Report and TFR
instructions, the institution should
determine the major (predominant)
component of the loan or the credit line
and collect or report the entire loan or
credit line in accordance with the
regulation’s specifications for that loan
type.
§§ ll.12(m) & 563e.12(l) Home
Mortgage Loan
§§ ll.12(m) & 563e.12(l)–1: Does the
term ‘‘home mortgage loan’’ include
loans other than ‘‘home purchase
loans’’?
A1. Yes. ‘‘Home mortgage loan’’
includes a ‘‘home improvement loan’’ as
well as a ‘‘home purchase loan,’’ as both
terms are defined in the HMDA
regulation, Regulation C, 12 CFR part
203. This definition also includes
multifamily (five-or-more families)
dwelling loans, loans for the purchase of
manufactured homes, and refinancings
of home improvement and home
purchase loans.
§§ ll.12(m) & 563e.12(l)–2: Some
financial institutions broker home
mortgage loans. They typically take the
borrower’s application and perform
other settlement activities; however,
they do not make the credit decision.
The broker institutions may also
initially fund these mortgage loans, then
immediately assign them to another
lender. Because the broker institution
does not make the credit decision,
under Regulation C (HMDA), they do
not record the loans on their HMDA–
LARs, even if they fund the loans. May
an institution receive any consideration
under CRA for its home mortgage loan
brokerage activities?
A2. Yes. A financial institution that
funds home mortgage loans but
immediately assigns the loans to the
lender that made the credit decisions
may present information about these
loans to examiners for consideration
under the lending test as ‘‘other loan

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data.’’ Under Regulation C, the broker
institution does not record the loans on
its HMDA–LAR because it does not
make the credit decisions, even if it
funds the loans. An institution electing
to have these home mortgage loans
considered must maintain information
about all of the home mortgage loans
that it has funded in this way.
Examiners will consider this other loan
data using the same criteria by which
home mortgage loans originated or
purchased by an institution are
evaluated.
Institutions that do not provide
funding but merely take applications
and provide settlement services for
another lender that makes the credit
decisions will receive consideration for
this service as a retail banking service.
Examiners will consider an institution’s
mortgage brokerage services when
evaluating the range of services
provided to low-, moderate-, middleand upper-income geographies and the
degree to which the services are tailored
to meet the needs of those geographies.
Alternatively, an institution’s mortgage
brokerage service may be considered a
community development service if the
primary purpose of the service is
community development. An institution
wishing to have its mortgage brokerage
service considered as a community
development service must provide
sufficient information to substantiate
that its primary purpose is community
development and to establish the extent
of the services provided.
§§ ll.12(n) & 563e.12(m)
Level

Income

§§ ll.12(n) & 563e.12(m)–1: Where
do institutions find income level data
for geographies and individuals?
A1. The income levels for
geographies, i.e., census tracts and block
numbering areas, are derived from
Census Bureau information and are
updated every ten years. Institutions
may contact their regional Census
Bureau office or the Census Bureau’s
Income Statistics Office at (301) 763–
8576 to obtain income levels for
geographies. See Appendix A of these
Interagency Questions and Answers for
a list of the regional Census Bureau
offices. The income levels for
individuals are derived from
information calculated by the
Department of Housing and Urban
Development (HUD) and updated
annually. Institutions may contact HUD
at (800) 245–2691 to request a copy of
‘‘FY [year number, e.g., 1996] Median
Family Incomes for States and their
Metropolitan and Nonmetropolitan
Portions.’’

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Alternatively, institutions may obtain
a list of the 1990 Census Bureaucalculated and the annually updated
HUD median family incomes for
metropolitan statistical areas (MSAs)
and statewide nonmetropolitan areas by
calling the Federal Financial Institution
Examination Council’s (FFIEC’s) HMDA
Help Line at (202) 452–2016. A free
copy will be faxed to the caller through
the ‘‘fax-back’’ system. Institutions may
also call this number to have ‘‘faxedback’’ an order form, from which they
may order a list providing the median
family income level, as a percentage of
the appropriate MSA or
nonmetropolitan median family income,
of every census tract and block
numbering area (BNA). This list costs
$50. Institutions may also obtain the list
of MSA and statewide nonmetropolitan
area median family incomes or an order
form through the FFIEC’s home page on
the Internet at <http://www.ffiec.gov>.
§§ ll.12(o) & 563e.12(n)
Purpose Institution

Limited

§§ ll.12(o) & 563e.12(n)–1: What
Constitutes a ‘‘Narrow Product Line’’ in
the Definition of ‘‘Limited Purpose
Institution’’?
A1. An institution offers a narrow
product line by limiting its lending
activities to a product line other than a
traditional retail product line required
to be evaluated under the lending test
(i.e., home mortgage, small business,
and small farm loans). Thus, an
institution engaged only in making
credit card or motor vehicle loans offers
a narrow product line, while an
institution limiting its lending activities
to home mortgages is not offering a
narrow product line.
§§ ll.12(o) & 563e.12(n)–2: What
factors will the agencies consider to
determine whether an institution that, if
limited purpose, makes loans outside a
narrow product line, or, if wholesale,
engages in retail lending, will lose its
limited purpose or wholesale
designation because of too much other
lending?
A2. Wholesale institutions may
engage in some retail lending without
losing their designation if this activity is
incidental and done on an
accommodation basis. Similarly, limited
purpose institutions continue to meet
the narrow product line requirement if
they provide other types of loans on an
infrequent basis. In reviewing other
lending activities by these institutions,
the agencies will consider the following
factors:
• Is the other lending provided as an
incident to the institution’s wholesale
lending?

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• Are the loans provided as an
accommodation to the institution’s
wholesale customers?
• Are the loans made only
infrequently to the limited purpose
institution’s customers?
• Does only an insignificant portion
of the institution’s total assets and
income result from the other lending?
• How significant a role does the
institution play in providing that type(s)
of loan(s) in the institution’s assessment
area(s)?
• Does the institution hold itself out
as offering that type(s) of loan(s)?
• Does the lending test or the
community development test present a
more accurate picture of the
institution’s CRA performance?
§§ ll.12(o) & 563e.12(n)–3: Do
‘‘niche institutions’’ qualify as limited
purpose (or wholesale) institutions?
A3. Generally, no. Institutions that are
in the business of lending to the public,
but specialize in certain types of retail
loans (for example, home mortgage or
small business loans) to certain types of
borrowers (for example, to high-end
income level customers or to
corporations or partnerships of licensed
professional practitioners) (‘‘niche
institutions’’) generally would not
qualify as limited purpose (or
wholesale) institutions.
§§ ll.12(s) & 563e.12(r) Qualified
Investment
§§ ll.12(s) & 563e.12(r)–1: Does the
CRA regulation provide authority for
institutions to make investments?
A1. No. The CRA regulation does not
provide authority for institutions to
make investments that are not otherwise
allowed by Federal law.
§§ ll.12(s) & 563e.12(r)–2: Are
mortgage-backed securities or
municipal bonds ‘‘qualified
investments’’?
A2. As a general rule, mortgagebacked securities and municipal bonds
are not qualified investments because
they do not have as their primary
purpose community development, as
defined in the CRA regulations.
Nonetheless, mortgage-backed securities
or municipal bonds designed primarily
to finance community development
generally are qualified investments.
Municipal bonds or other securities
with a primary purpose of community
development need not be housingrelated. For example, a bond to fund a
community facility or park or to provide
sewage services as part of a plan to
redevelop a low-income neighborhood
is a qualified investment. Housingrelated bonds or securities must
primarily address affordable housing
(including multifamily rental housing)

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needs in order to qualify. See also
§ ll.23(b)–2.
§§ ll.12(s) & 563e.12(r)–3: Are
Federal Home Loan Bank stocks and
membership reserves with the Federal
Reserve Banks ‘‘qualified investments’’?
A3. No. Federal Home Loan Bank
(FHLB) stock and membership reserves
with the Federal Reserve Banks do not
have a sufficient connection to
community development to be qualified
investments. However, FHLB member
institutions may receive CRA
consideration for technical assistance
they provide on behalf of applicants and
recipients of funding from the FHLB’s
Affordable Housing Program. See
§§ ll.12(j) & 563e.12(i)–3.
§§ ll.12(s) & 563e.12(r)–4: What are
examples of qualified investments?
A4. Examples of qualified
investments include, but are not limited
to, investments, grants, deposits or
shares in or to:
• Financial intermediaries (including,
Community Development Financial
Institutions (CDFIs), Community
Development Corporations (CDCs),
minority- and women-owned financial
institutions, community loan funds, and
low-income or community development
credit unions) that primarily lend or
facilitate lending in low- and moderateincome areas or to low- and moderateincome individuals in order to promote
community development, such as a
CDFI that promotes economic
development on an Indian reservation;
• Organizations engaged in affordable
housing rehabilitation and construction,
including multifamily rental housing;
• Organizations, including, for
example, Small Business Investment
Companies (SBICs) and specialized
SBICs, that promote economic
development by financing small
businesses;
• Facilities that promote community
development in low- and moderateincome areas for low- and moderateincome individuals, such as youth
programs, homeless centers, soup
kitchens, health care facilities, battered
women’s centers, and alcohol and drug
recovery centers;
• Projects eligible for low-income
housing tax credits;
• State and municipal obligations,
such as revenue bonds, that specifically
support affordable housing or other
community development;
• Not-for-profit organizations serving
low- and moderate-income housing or
other community development needs,
such as counseling for credit, homeownership, home maintenance, and
other financial services education; and
• Organizations supporting activities
essential to the capacity of low- and

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moderate-income individuals or
geographies to utilize credit or to
sustain economic development, such as,
for example, day care operations and job
training programs that enable people to
work.
§§ ll.12(s) & 563e.12(r)–5: Will an
institution receive consideration for
charitable contributions as ‘‘qualified
investments’’?
A5. Yes, provided they have as their
primary purpose community
development as defined in the
regulations. A charitable contribution,
whether in cash or an in-kind
contribution of property, is included in
the term ‘‘grant.’’ A qualified investment
is not disqualified because an
institution receives favorable treatment
for it (for example, as a tax deduction
or credit) under the Internal Revenue
Code.
§§ ll.12(s) & 563e.12(r)–6: An
institution makes or participates in a
community development loan. The
institution provided the loan at belowmarket interest rates or ‘‘bought down’’
the interest rate to the borrower. Is the
lost income resulting from the lower
interest rate or buy-down a qualified
investment?
A6. No. The agencies will, however,
consider the innovativeness and
complexity of the community
development loan within the bounds of
safe and sound banking practices.
§§ ll.12(s) & 563e.12(r)–7: Will the
agencies consider as a qualified
investment the wages or other
compensation of an employee or
director who provides assistance to a
community development organization
on behalf of the institution?
A7. No. However, the agencies will
consider donated labor of employees or
directors of a financial institution in the
service test if the activity is a
community development service.
§§ ll.12(t) & 563e.12(s) Small
Institution
§§ ll.12(t) & 563e.12(s)–1: How are
the ‘‘total bank and thrift assets’’ of a
holding company determined?
A1. ‘‘Total banking and thrift assets’’
of a holding company are determined by
combining the total assets of all banks
and/or thrifts that are majority-owned
by the holding company. An institution
is majority-owned if the holding
company directly or indirectly owns
more than 50 percent of its outstanding
voting stock.
§§ ll.12(t) & 563e.12(s)–2: How are
Federal and State branch assets of a
foreign bank calculated for purposes of
the CRA?
A2. A Federal or State branch of a
foreign bank is considered a small

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institution if the Federal or State branch
has less than $250 million in assets and
the total assets of the foreign bank’s or
its holding company’s U.S. bank and
thrift subsidiaries that are subject to the
CRA are less than $1 billion. This
calculation includes not only FDICinsured bank and thrift subsidiaries, but
also the assets of any FDIC-insured
branch of the foreign bank and the
assets of any uninsured Federal or State
branch (other than a limited branch or
a Federal agency) of the 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)).
§§ ll.12(u) & 563e.12(t) Small
Business Loan
§§ ll.12(u) & 563e.12(t)–1: Are
loans to nonprofit organizations
considered small business loans or are
they considered community
development loans?
A1. To be considered a small business
loan, a loan must meet the definition of
‘‘loan to small business’’ in the
instructions in the ‘‘Consolidated
Reports of Conditions and Income’’ (Call
Report) and ‘‘Thrift Financial Reports’’
(TFR). In general, a loan to a nonprofit
organization, for business or farm
purposes, where the loan is secured by
nonfarm nonresidential property and
the original amount of the loan is $1
million or less, if a business loan, or
$500,000 or less, if a farm loan, would
be reported in the Call Report and TFR
as a small business or small farm loan.
If a loan to a nonprofit organization is
reportable as a small business or small
farm loan, it cannot also be considered
as a community development loan,
except by a wholesale or limited
purpose institution. Loans to nonprofit
organizations that are not small business
or small farm loans for Call Report and
TFR purposes may be considered as
community development loans if they
meet the regulatory definition.
§§ ll.12(u) & 563e.12(t)–2: Are
loans secured by commercial real estate
considered small business loans?
A2. Yes, depending on their principal
amount. Small business loans include
loans secured by ‘‘nonfarm
nonresidential properties,’’ as defined in
the Call Report and TFR, in amounts
less than $1 million.
§§ ll.12(u) & 563e.12(t)–3: Are
loans secured by nonfarm residential
real estate to finance small businesses
‘‘small business loans’’?
A3. Applicable to banks filing Call
Reports: Typically not. Loans secured
by nonfarm residential real estate that
are used to finance small businesses are
not included as ‘‘small business’’ loans

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for Call Report purposes unless the
security interest in the nonfarm
residential real estate is taken only as an
abundance of caution. (See Call Report
Glossary definition of ‘‘Loan Secured by
Real Estate.’’) The agencies recognize
that many small businesses are financed
by loans that would not have been made
or would have been made on less
favorable terms had they not been
secured by residential real estate. If
these loans promote community
development, as defined in the
regulation, they may be considered as
community development loans.
Otherwise, at an institution’s option, the
institution may collect and maintain
data separately concerning these loans
and request that the data be considered
in its CRA evaluation as ‘‘Other Secured
Lines/Loans for Purposes of Small
Business.’’
Applicable to institutions that file
TFRs: Possibly, depending how the loan
is classified for TFR purposes. Loans
secured by nonfarm residential real
estate to finance small businesses may
be included as small business loans
only if they are reported on the TFR as
nonmortgage, commercial loans. (See
TFR Q&A No. 62.) Otherwise, loans that
meet the definition of mortgage loans,
for TFR reporting purposes, may be
classified as mortgage loans.
§§ ll.12(u) & 563e.12(t)–4: Are
credit cards issued to small businesses
considered ‘‘small business loans’’?
A4. Credit cards issued to a small
business or to individuals to be used,
with the institution’s knowledge, as
business accounts are small business
loans if they meet the definitional
requirements in the Call Report or TFR
instructions.
§§ ll.12(w) & 563e.12(v)
Institution

Wholesale

§§ ll.12(w) & 563e.12(v)–1: What
factors will the agencies consider in
determining whether an institution is in
the business of extending home
mortgage, small business, small farm, or
consumer loans to retail customers?
A1. The agencies will consider
whether:
• The institution holds itself out to
the retail public as providing such
loans; and
• The institution’s revenues from
extending such loans are significant
when compared to its overall
operations.
A wholesale institution may make
some retail loans without losing its
wholesale designation as described
above in §§ ll.12(o) & 563e.12(n)–2.

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§ ll.21—Performance Tests,
Standards, and Ratings, in General
§ ll.21(a) Performance Tests and
Standards
§ ll.21(a)–1: Are all community
development activities weighted equally
by examiners?
A1. No. Examiners will consider the
responsiveness to credit and community
development needs, as well as the
innovativeness and complexity of an
institution’s community development
lending, qualified investments, and
community development services.
These criteria include consideration of
the degree to which they serve as a
catalyst for other community
development activities. The criteria are
designed to add a qualitative element to
the evaluation of an institution’s
performance.
§ ll.21(b) Performance context
§ ll.21(b)–1: Is the performance
context essentially the same as the
former regulation’s needs assessment?
A1. No. The performance context is a
broad range of economic, demographic,
and institution-and community-specific
information that an examiner reviews to
understand the context in which an
institution’s record of performance
should be evaluated. The agencies will
provide examiners with much of this
information prior to the examination.
The performance context is not a formal
or written assessment of community
credit needs.
§ ll.21(b)(2) Information Maintained
by the Institution or Obtained From
Community Contacts
§ ll.21(b)(2)–1: Will examiners
consider performance context
information provided by institutions?
A1. Yes. An institution may provide
examiners with any information it
deems relevant, including information
on the lending, investment, and service
opportunities in its assessment area(s).
This information may include data on
the business opportunities addressed by
lenders not subject to the CRA.
Institutions are not required, however,
to prepare a needs assessment. If an
institution provides information to
examiners, the agencies will not expect
information other than what the
institution normally would develop to
prepare a business plan or to identify
potential markets and customers,
including low-and moderate-income
persons and geographies in its
assessment area(s). The agencies will
not evaluate an institution’s efforts to
ascertain community credit needs or
rate an institution on the quality of any
information it provides.

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§ ll.21(b)(2)–2: Will examiners
conduct community contact interviews
as part of the examination process?
A2. Yes. Examiners will consider
information obtained from interviews
with local community, civic, and
government leaders. These interviews
provide examiners with knowledge
regarding the local community, its
economic base, and community
development initiatives. To ensure that
information from local leaders is
considered—particularly in areas where
the number of potential contacts may be
limited—examiners may use
information obtained through an
interview with a single community
contact for examinations of more than
one institution in a given market. In
addition, the agencies will consider
information obtained from interviews
conducted by other agency staff and by
the other agencies. In order to augment
contacts previously used by the agencies
and foster a wider array of contacts, the
agencies will share community contact
information.
§ ll.21(b)(4) Institutional Capacity
and Constraints
§ ll.21(b)(4)–1: Will examiners
consider factors outside of an
institution’s control that prevent it from
engaging in certain activities?
A1. Yes. Examiners will take into
account statutory and supervisory
limitations on an institution’s ability to
engage in any lending, investment, and
service activities. For example, a savings
association that has made few or no
qualified investments due to its limited
investment authority may still receive a
low satisfactory rating under the
investment test if it has a strong lending
record.
§ ll.21(b)(5) Institution’s Past
Performance and the Performance of
Similarly Situated Lenders
§ ll.21(b)(5)–1: Can an institution’s
assigned rating be adversely affected by
poor past performance?
A1. Yes. The agencies will consider
an institution’s past performance in its
overall evaluation. For example, an
institution that received a rating of
‘‘needs to improve’’ in the past may
receive a rating of ‘‘substantial
noncompliance’’ if its performance has
not improved.
§ ll.21(b)(5)–2: How will examiners
consider the performance of similarly
situated lenders?
A2. The performance context section
of the regulation permits the
performance of similarly situated
lenders to be considered, for example,
as one of a number of considerations in
evaluating the geographic distribution of

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an institution’s loans to low-, moderate, middle-, and upper-income
geographies. This analysis, as well as
other analyses, may be used, for
example, where groups of contiguous
geographies within an institution’s
assessment area(s) exhibit abnormally
low penetration. In this regard, the
performance of similarly situated
lenders may be analyzed if such an
analysis would provide accurate insight
into the institution’s lack of
performance in those areas. The
regulation does not require the use of a
specific type of analysis under these
circumstances. Moreover, no ratio
developed from any type of analysis is
linked to any lending test rating.
§ ll.22—Lending Test
§ ll.22(a)

Scope of Test

§ ll.22(a)–1: Are there any types of
lending activities that help meet the
credit needs of an institution’s
assessment area(s) and that may
warrant favorable consideration as
activities that are responsive to the
needs of the institution’s assessment
area(s)?
A1. Credit needs vary from
community to community. However,
there are some lending activities that are
likely to be responsive in helping to
meet the credit needs of many
communities. These activities include:
• Providing loan programs that
include a financial education
component about how to avoid lending
activities that may be abusive or
otherwise unsuitable;
• Establishing loan programs that
provide small, unsecured consumer
loans in a safe and sound manner (i.e.,
based on the borrower’s ability to repay)
and with reasonable terms;
• Offering lending programs, which
feature reporting to consumer reporting
agencies, that transition borrowers from
loans with higher interest rates and fees
(based on credit risk) to lower-cost
loans, consistent with safe and sound
lending practices. Reporting to
consumer reporting agencies allows
borrowers accessing these programs the
opportunity to improve their credit
histories and thereby improve their
access to competitive credit products.
Examiners may consider favorably
such lending activities, which have
features augmenting the success and
effectiveness of the institution’s lending
programs.
§ ll.22(a)(1) Types of Loans
Considered
§ ll.22(a)(1)–1: If a large retail
institution is not required to collect and
report home mortgage data under the

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HMDA, will the agencies still evaluate
the institution’s home mortgage lending
performance?
A1. Yes. The agencies will sample the
institution’s home mortgage loan files in
order to assess its performance under
the lending test criteria.
§ ll.22(a)(1)–2: When will
examiners consider consumer loans as
part of an institution’s CRA evaluation?
A2. Consumer loans will be evaluated
if the institution so elects; and an
institution that elects not to have its
consumer loans evaluated will not be
viewed less favorably by examiners than
one that does. However, if consumer
loans constitute a substantial majority of
the institution’s business, the agencies
will evaluate them even if the
institution does not so elect. The
agencies interpret ‘‘substantial majority’’
to be so significant a portion of the
institution’s lending activity by number
or dollar volume of loans that the
lending test evaluation would not
meaningfully reflect its lending
performance if consumer loans were
excluded.
§ ll.22(a)(2) Loan Originations and
Purchases/Other Loan Data
§ ll.22(a)(2)–1: How are lending
commitments (such as letters of credit)
evaluated under the regulation?
A1. The agencies consider lending
commitments (such as letters of credit)
only at the option of the institution.
Commitments must be legally binding
between an institution and a borrower
in order to be considered. Information
about lending commitments will be
used by examiners to enhance their
understanding of an institution’s
performance.
§ ll.22(a)(2)–2: Will examiners
review application data as part of the
lending test?
A2. Application activity is not a
performance criterion of the lending
test. However, examiners may consider
this information in the performance
context analysis because this
information may give examiners insight
on, for example, the demand for loans.
§ ll.22(a)(2)–3: May a financial
institution receive consideration under
CRA for home mortgage loan
modification, extension, and
consolidation agreements (MECAs), in
which it obtains home mortgage loans
from other institutions without actually
purchasing or refinancing the home
mortgage loans, as those terms have
been interpreted under CRA and HMDA,
as implemented by 12 CFR pt. 203?
A3. Yes. In some states, MECAs,
which are not considered loan
refinancings because the existing loan
obligations are not satisfied and

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replaced, are common. Although these
transactions are not considered to be
purchases or refinancings, as those
terms have been interpreted under CRA,
they do achieve the same results. An
institution may present information
about its MECA activities with respect
to home mortgages to examiners for
consideration under the lending test as
‘‘other loan data.’’
§ ll.22(a)(2)–4: Do institutions
receive consideration for originating or
purchasing loans that are fully
guaranteed?
A4. Yes. The lending test evaluates an
institution’s record of helping to meet
the credit needs of its assessment area(s)
through the origination or purchase of
specified types of loans. The test does
not take into account whether or not
such loans are guaranteed.
§ ll.22(b) Performance Criteria
§ ll.22(b)–1: How will examiners
apply the performance criteria in the
lending test?
A1. Examiners will apply the
performance criteria reasonably and
fairly, in accord with the regulations,
the examination procedures, and this
Guidance. In doing so, examiners will
disregard efforts by an institution to
manipulate business operations or
present information in an artificial light
that does not accurately reflect an
institution’s overall record of lending
performance.
§ ll.22(b)(1) Lending Activity
§ ll.22(b)(1)–1: How will the
agencies apply the lending activity
criterion to discourage an institution
from originating loans that are viewed
favorably under CRA in the institution
itself and referring other loans, which
are not viewed as favorably, for
origination by an affiliate?
A1. Examiners will review closely
institutions with (1) a small number and
amount of home mortgage loans with an
unusually good distribution among lowand moderate-income areas and lowand moderate-income borrowers and (2)
a policy of referring most, but not all, of
their home mortgage loans to affiliated
institutions. If an institution is making
loans mostly to low- and moderateincome individuals and areas and
referring the rest of the loan applicants
to an affiliate for the purpose of
receiving a favorable CRA rating,
examiners may conclude that the
institution’s lending activity is not
satisfactory because it has
inappropriately attempted to influence
the rating. In evaluating an institution’s
lending, examiners will consider
legitimate business reasons for the
allocation of the lending activity.

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§ ll.22(b)(2) & (3) Geographic
Distribution and Borrower
Characteristics
§ ll.22(b)(2) & (3)–1: How do the
geographic distribution of loans and the
distribution of lending by borrower
characteristics interact in the lending
test?
A1. Examiners generally will consider
both the distribution of an institution’s
loans among geographies of different
income levels and among borrowers of
different income levels and businesses
of different sizes. The importance of the
borrower distribution criterion,
particularly in relation to the geographic
distribution criterion, will depend on
the performance context. For example,
distribution among borrowers with
different income levels may be more
important in areas without identifiable
geographies of different income
categories. On the other hand,
geographic distribution may be more
important in areas with the full range of
geographies of different income
categories.
§ ll.22(b)(2) & (3)–2: Must an
institution lend to all portions of its
assessment area?
A2. The term ‘‘assessment area’’
describes the geographic area within
which the agencies assess how well an
institution has met the specific
performance tests and standards in the
rule. The agencies do not expect that
simply because a census tract or block
numbering area is within an
institution’s assessment area(s) the
institution must lend to that census tract
or block numbering area. Rather the
agencies will be concerned with
conspicuous gaps in loan distribution
that are not explained by the
performance context. Similarly, if an
institution delineated the entire county
in which it is located as its assessment
area, but could have delineated its
assessment area as only a portion of the
county, it will not be penalized for
lending only in that portion of the
county, so long as that portion does not
reflect illegal discrimination or
arbitrarily exclude low- or moderateincome geographies. The capacity and
constraints of an institution, its business
decisions about how it can best help to
meet the needs of its assessment area(s),
including those of low- and moderateincome neighborhoods, and other
aspects of the performance context, are
all relevant to explain why the
institution is serving or not serving
portions of its assessment area(s).
§ ll.22(b)(2) & (3)–3: Will examiners
take into account loans made by
affiliates when evaluating the

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proportion of an institution’s lending in
its assessment area(s)?
A3. Examiners will not take into
account loans made by affiliates when
determining the proportion of an
institution’s lending in its assessment
area(s), even if the institution elects to
have its affiliate lending considered in
the remainder of the lending test
evaluation. However, examiners may
consider an institution’s business
strategy of conducting lending through
an affiliate in order to determine
whether a low proportion of lending in
the assessment area(s) should adversely
affect the institution’s lending test
rating.
§ ll.22(b)(2) & (3)–4: When will
examiners consider loans (other than
community development loans) made
outside an institution’s assessment
area(s)?
A4. Consideration will be given for
loans to low- and moderate-income
persons and small business and farm
loans outside of an institution’s
assessment area(s), provided the
institution has adequately addressed the
needs of borrowers within its
assessment area(s). The agencies will
apply this consideration not only to
loans made by large retail institutions
being evaluated under the lending test,
but also to loans made by small
institutions being evaluated under the
small institution performance standards.
Loans to low- and moderate-income
persons and small businesses and farms
outside of an institution’s assessment
area(s), however, will not compensate
for poor lending performance within the
institution’s assessment area(s).
§ ll.22(b)(2) & (3)–5: Under the
lending test, how will examiners
evaluate home mortgage loans to
middle- or upper-income individuals in
a low- or moderate-income geography?
A5. Examiners will consider these
home mortgage loans under the
performance criteria of the lending test,
i.e., by number and amount of home
mortgage loans, whether they are inside
or outside the financial institution’s
assessment area(s), their geographic
distribution, and the income levels of
the borrowers. Examiners will use
information regarding the financial
institution’s performance context to
determine how to evaluate the loans
under these performance criteria.
Depending on the performance context,
examiners could view home mortgage
loans to middle-income individuals in a
low-income geography very differently.
For example, if the loans are for homes
or multifamily housing located in an
area for which the local, state, tribal, or
Federal government or a communitybased development organization has

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developed a revitalization or
stabilization plan (such as a Federal
enterprise community or empowerment
zone) that includes attracting mixedincome residents to establish a
stabilized, economically diverse
neighborhood, examiners may give more
consideration to such loans, which may
be viewed as serving the low- or
moderate-income community’s needs as
well as serving those of the middle- or
upper-income borrowers. If, on the other
hand, no such plan exists and there is
no other evidence of governmental
support for a revitalization or
stabilization project in the area and the
loans to middle- or upper-income
borrowers significantly disadvantage or
primarily have the effect of displacing
low- or moderate-income residents,
examiners may view these loans simply
as home mortgage loans to middle- or
upper-income borrowers who happen to
reside in a low- or moderate-income
geography and weigh them accordingly
in their evaluation of the institution.
§ ll.22(b)(4); Community
Development Lending
§ ll.22(b)(4)–1: When evaluating an
institution’s record of community
development lending, may an examiner
distinguish among community
development loans on the basis of the
actual amount of the loan that advances
the community development purpose?
A1. Yes. When evaluating the
institution’s record of community
development lending under
§ ll.22(b)(4), it is appropriate to give
greater weight to the amount of the loan
that is targeted to the intended
community development purpose. For
example, consider two $10 million
projects (with a total of 100 units each)
that have as their express primary
purpose affordable housing and are
located in the same community. One of
these projects sets aside 40 percent of its
units for low-income residents and the
other project allocates 65 percent of its
units for low-income residents. An
institution would report both loans as
$10 million community development
loans under the § ll.42(b)(2) aggregate
reporting obligation. However,
transaction complexity, innovation and
all other relevant considerations being
equal, an examiner should also take into
account that the 65 percent project
provides more affordable housing for
more people per dollar expended.
Under § ll.22(b)(4), the extent of
CRA consideration an institution
receives for its community development
loans should bear a direct relation to the
benefits received by the community and
the innovation or complexity of the
loans required to accomplish the

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activity, not simply to the dollar amount
expended on a particular transaction. By
applying all lending test performance
criteria, a community development loan
of a lower dollar amount could meet the
credit needs of the institution’s
community to a greater extent than a
community development loan with a
higher dollar amount, but with less
innovation, complexity, or impact on
the community.
§ ll.22(b)(5) Innovative or Flexible
Lending Practices
§ ll.22(b)(5)–1: What is the range of
practices that examiners may consider
in evaluating the innovativeness or
flexibility of an institution’s lending?
A1. In evaluating the innovativeness
or flexibility of an institution’s lending
practices (and the complexity and
innovativeness of its community
development lending), examiners will
not be limited to reviewing the overall
variety and specific terms and
conditions of the credit products
themselves. In connection with the
evaluation of an institution’s lending,
examiners also may give consideration
to related innovations when they
augment the success and effectiveness
of the institution’s lending under its
community development loan programs
or, more generally, its lending under its
loan programs that address the credit
needs of low- and moderate-income
geographies or individuals. For
example:
• In connection with a community
development loan program, a bank may
establish a technical assistance program
under which the bank, directly or
through third parties, provides
affordable housing developers and other
loan recipients with financial consulting
services. Such a technical assistance
program may, by itself, constitute a
community development service
eligible for consideration under the
service test of the CRA regulations. In
addition, the technical assistance may
be favorably considered as an
innovation that augments the success
and effectiveness of the related
community development loan program.
• In connection with a small business
lending program in a low- or moderateincome area and consistent with safe
and sound lending practices, a bank
may implement a program under which,
in addition to providing financing, the
bank also contracts with the small
business borrowers. Such a contracting
arrangement would not, standing alone,
qualify for CRA consideration. However,
it may be favorably considered as an
innovation that augments the loan
program’s success and effectiveness,
and improves the program’s ability to

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serve community development purposes
by helping to promote economic
development through support of small
business activities and revitalization or
stabilization of low- or moderate-income
geographies.
§ ll.22(c)

Affiliate Lending

§ ll.22(c)(1) In General
§ ll.22(c)(1)–1: If an institution
elects to have loans by its affiliate(s)
considered, may it elect to have only
certain categories of loans considered?
A1. Yes. An institution may elect to
have only a particular category of its
affiliate’s lending considered. The basic
categories of loans are home mortgage
loans, small business loans, small farm
loans, community development loans,
and the five categories of consumer
loans (motor vehicle loans, credit card
loans, home equity loans, other secured
loans, and other unsecured loans).
§ ll.22(c)(2)
Lending

Constraints on Affiliate

§ ll.22(c)(2)(i) No Affiliate May Claim
a Loan Origination or Loan Purchase if
Another Institution Claims the Same
Loan Origination or Purchase
§ ll.22(c)(2)(i)–1: How is this
constraint on affiliate lending applied?
A1. This constraint prohibits one
affiliate from claiming a loan origination
or purchase claimed by another affiliate.
However, an institution can count as a
purchase a loan originated by an
affiliate that the institution
subsequently purchases, or count as an
origination a loan later sold to an
affiliate, provided the same loans are
not sold several times to inflate their
value for CRA purposes.
§ ll.22(c)(2)(ii) If an Institution
Elects To Have Its Supervisory Agency
Consider Loans Within a Particular
Lending Category Made by One or More
of the Institution’s Affiliates in a
Particular Assessment Area, the
Institution Shall Elect To Have the
Agency Consider All Loans Within That
Lending Category in That Particular
Assessment Area Made by All of the
Institution’s Affiliates
§ ll.22(c)(2)(ii)–1: How is this
constraint on affiliate lending applied?
A1. This constraint prohibits ‘‘cherrypicking’’ affiliate loans within any one
category of loans. The constraint
requires an institution that elects to
have a particular category of affiliate
lending in a particular assessment area
considered to include all loans of that
type made by all of its affiliates in that
particular assessment area. For example,
assume that an institution has one or
more affiliates, such as a mortgage bank

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that makes loans in the institution’s
assessment area. If the institution elects
to include the mortgage bank’s home
mortgage loans, it must include all of
mortgage bank’s home mortgage loans
made in its assessment area. The
institution cannot elect to include only
those low- and moderate-income home
mortgage loans made by the mortgage
bank affiliate and not home mortgage
loans to middle- and upper-income
individuals or areas.
§ ll.22(c)(2)(ii)–2: How is this
constraint applied if an institution’s
affiliates are also insured depository
institutions subject to the CRA?
A2. Strict application of this
constraint against ‘‘cherry-picking’’ to
loans of an affiliate that is also an
insured depository institution covered
by the CRA would produce the
anomalous result that the other
institution would, without its consent,
not be able to count its own loans.
Because the agencies did not intend to
deprive an institution subject to the
CRA of receiving consideration for its
own lending, the agencies read this
constraint slightly differently in cases
involving a group of affiliated
institutions, some of which are subject
to the CRA and share the same
assessment area(s). In those
circumstances, an institution that elects
to include all of its mortgage affiliate’s
home mortgage loans in its assessment
area would not automatically be
required to include all home mortgage
loans in its assessment area of another
affiliate institution subject to the CRA.
However, all loans of a particular type
made by any affiliate in the institution’s
assessment area(s) must either be
counted by the lending institution or by
another affiliate institution that is
subject to the CRA. This reading reflects
the fact that a holding company may, for
business reasons, choose to transact
different aspects of its business in
different subsidiary institutions.
However, the method by which loans
are allocated among the institutions for
CRA purposes must reflect actual
business decisions about the allocation
of banking activities among the
institutions and should not be designed
solely to enhance their CRA evaluations.
§ ll.22(d) Lending by a Consortium
or a Third Party
§ ll.22(d)–1: Will equity and equitytype investments in a third party receive
consideration under the lending test?
A1. If an institution has made an
equity or equity-type investment in a
third party, community development
loans made by the third party may be
considered under the lending test. On
the other hand, asset-backed and debt

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securities that do not represent an
equity-type interest in a third party will
not be considered under the lending test
unless the securities are booked by the
purchasing institution as a loan. For
example, if an institution purchases
stock in a community development
corporation (‘‘CDC’’) that primarily
lends in low- and moderate-income
areas or to low-and moderate-income
individuals in order to promote
community development, the institution
may claim a pro rata share of the CDC’s
loans as community development loans.
The institution’s pro rata share is based
on its percentage of equity ownership in
the CDC. § ll.23(b)–1 provides
information concerning consideration of
an equity or equity-type investment
under the investment test and both the
lending and investment tests.
§ ll.22(d)–2: How will examiners
evaluate loans made by consortia or
third parties under the lending test?
A2. Loans originated or purchased by
consortia in which an institution
participates or by third parties in which
an institution invests will only be
considered if they qualify as community
development loans and will only be
considered under the community
development criterion of the lending
test. However, loans originated directly
on the books of an institution or
purchased by the institution are
considered to have been made or
purchased directly by the institution,
even if the institution originated or
purchased the loans as a result of its
participation in a loan consortium.
These loans would be considered under
all the lending test criteria appropriate
to them depending on the type of loan.
§ ll.22(d)–3: In some
circumstances, an institution may invest
in a third party, such as a community
development bank, that is also an
insured depository institution and is
thus subject to CRA requirements. If the
investing institution requests its
supervisory agency to consider its pro
rata share of community development
loans made by the third party, as
allowed under 12 CFRll.22(d), may
the third party also receive
consideration for these loans?
A3. Yes, as long as the financial
institution and the third party are not
affiliates. The regulations state, at 12
CFRll.22(c)(2)(i), that two affiliates
may not both claim the same loan
origination or loan purchase. However,
if the financial institution and the third
party are not affiliates, the third party
may receive consideration for the
community development loans it
originates, and the financial institution
that invested in the third party may also
receive consideration for its pro rata

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share of the same community
development loans under 12
CFRll.22(d).
§ ll.23—Investment Test
§ ll.23(a)

Scope of Test

§ ll.23(a)–1: May an institution
receive consideration under the CRA
regulations if it invests indirectly
through a fund, the purpose of which is
community development, as that is
defined in the CRA regulations?
A1: Yes, the direct or indirect nature
of the qualified investment does not
affect whether an institution will
receive consideration under the CRA
regulations because the regulations do
not distinguish between ‘‘direct’’ and
‘‘indirect’’ investments. Thus, an
institution’s investment in an equity
fund that, in turn, invests in projects
that, for example, provide affordable
housing to low- and moderate-income
individuals, would receive
consideration as a qualified investment
under the CRA regulations, provided the
investment benefits one or more of the
institution’s assessment area(s) or a
broader statewide or regional area(s)
that includes one or more of the
institution’s assessment area(s).
Similarly, an institution may receive
consideration for a direct qualified
investment in a nonprofit organization
that, for example, supports affordable
housing for low- and moderate-income
individuals in the institution’s
assessment area(s) or a broader
statewide or regional area(s) that
includes the institution’s assessment
area(s).
§ ll.23(b)

Exclusion

§ ll.23(b)–1: Even though the
regulations state that an activity that is
considered under the lending or service
tests cannot also be considered under
the investment test, may parts of an
activity be considered under one test
and other parts be considered under
another test?
A1. Yes, in some instances the nature
of an activity may make it eligible for
consideration under more than one of
the performance tests. For example,
certain investments and related support
provided by a large retail institution to
a CDC may be evaluated under the
lending, investment, and service tests.
Under the service test, the institution
may receive consideration for any
community development services that it
provides to the CDC, such as service by
an executive of the institution on the
CDC’s board of directors. If the
institution makes an investment in the
CDC that the CDC uses to make
community development loans, the

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institution may receive consideration
under the lending test for its pro-rata
share of community development loans
made by the CDC. Alternatively, the
institution’s investment may be
considered under the investment test,
assuming it is a qualified investment. In
addition, an institution may elect to
have a part of its investment considered
under the lending test and the
remaining part considered under the
investment test. If the investing
institution opts to have a portion of its
investment evaluated under the lending
test by claiming a share of the CDC’s
community development loans, the
amount of investment considered under
the investment test will be offset by that
portion. Thus, the institution would
only receive consideration under the
investment test for the amount of its
investment multiplied by the percentage
of the CDC’s assets that meet the
definition of a qualified investment.
§ ll.23(b)–2: If home mortgage
loans to low- and moderate-income
borrowers have been considered under
an institution’s lending test, may the
institution that originated or purchased
them also receive consideration under
the investment test if it subsequently
purchases mortgage-backed securities
that are primarily or exclusively backed
by such loans?
A2. No. Because the institution
received lending test consideration for
the loans that underlie the securities,
the institution may not also receive
consideration under the investment test
for its purchase of the securities. Of
course, an institution may receive
investment test consideration for
purchases of mortgage-backed securities
that are backed by loans to low- and
moderate-income individuals as long as
the securities are not backed primarily
or exclusively by loans that the same
institution originated or purchased.
§ ll.23(e) Performance Criteria
§ ll.23(e)–1: When applying the
performance criteria of § ll.23(e), may
an examiner distinguish among
qualified investments based on how
much of the investment actually
supports the underlying community
development purpose?
A1. Yes. Although § ll.23(e)(1)
speaks in terms of the dollar amount of
qualified investments, the criterion
permits an examiner to weight certain
investments differently or to make other
appropriate distinctions when
evaluating an institution’s record of
making qualified investments. For
instance, an examiner should take into
account that a targeted mortgage-backed
security that qualifies as an affordable
housing issue that has only 60 percent

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of its face value supported by loans to
low -or moderate-income borrowers
would not provide as much affordable
housing for low- and moderate-income
individuals as a targeted mortgagebacked security with 100 percent of its
face value supported by affordable
housing loans to low- and moderateincome borrowers. The examiner should
describe any differential weighting (or
other adjustment), and its basis in the
Public Evaluation. However, no matter
how a qualified investment is handled
for purposes of § ll.23(e)(1), it will
also be evaluated with respect to the
qualitative performance criteria set forth
in § ll.23(e)(2), (3) and (4) . By
applying all criteria, a qualified
investment of a lower dollar amount
may be weighed more heavily under the
Investment Test than a qualified
investment with a higher dollar amount,
but with fewer qualitative
enhancements.
§ ll.23(e)–2: How do examiners
evaluate an institution’s qualified
investment in a fund, the primary
purpose of which is community
development, as that is defined in the
CRA regulations?
A2. When evaluating qualified
investments that benefit an institution’s
assessment area(s) or a broader
statewide or regional area that includes
its assessment area(s), examiners will
look at the following four performance
criteria:
(1) The dollar amount of qualified
investments;
(2) The innovativeness or complexity
of qualified investments;
(3) The responsiveness of qualified
investments to credit and community
development needs; and
(4) The degree to which the qualified
investments are not routinely provided
by private investors.
With respect to the first criterion,
examiners will determine the dollar
amount of qualified investments by
relying on the figures recorded by the
institution according to generally
accepted accounting principles (GAAP).
Although institutions may exercise a
range of investment strategies, including
short-term investments, long-term
investments, investments that are
immediately funded, and investments
with a binding, up-front commitment
that are funded over a period of time,
institutions making the same dollar
amount of investments over the same
number of years, all other performance
criteria being equal, would receive the
same level of consideration. Examiners
will include both new and outstanding
investments in this determination. The
dollar amount of qualified investments
also will include the dollar amount of

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legally binding commitments recorded
by the institution according to GAAP.
The extent to which qualified
investments receive consideration,
however, depends on how examiners
evaluate the investments under the
remaining three performance criteria—
innovativeness and complexity,
responsiveness, and degree to which the
investment is not routinely provided by
private investors. Examiners also will
consider factors relevant to the
institution’s CRA performance context,
such as the effect of outstanding longterm qualified investments, the pay-in
schedule, and the amount of any cash
call, on the capacity of the institution to
make new investments.

funds to an IDA program, designing or
implementing IDA programs, providing
consumer financial education to IDA
account holders or prospective account
holders, or other means. The extent of
financial institutions’ involvement in
IDAs and the products and services they
offer in connection with the accounts
will vary. Thus, subject to § ll.23(b),
examiners evaluate the actual services
and products provided by an institution
in connection with IDA programs as one
or more of the following: community
development services, retail banking
services, qualified investments, home
mortgage loans, small business loans,
consumer loans, or community
development loans.

§ ll.24—Service Test

§ ll.24(d)(3) Availability and
Effectiveness of Alternative Systems for
Delivering Retail Banking Services?
§ ll.24(d)(3)–1: How will examiners
evaluate alternative systems for
delivering retail banking services?
A1. The regulation recognizes the
multitude of ways in which an
institution can provide services, for
example, ATMs, banking by telephone
or computer, and bank-by-mail
programs. Delivery systems other than
branches will be considered under the
regulation to the extent that they are
effective alternatives to branches in
providing needed services to low-and
moderate-income areas and individuals.
The list of systems in the regulation is
not intended to be inclusive.
§ ll.24(d)(3)–2: Are debit cards
considered under the service test as an
alternative delivery system?
A2. By themselves, no. However, if
debit cards are a part of a larger
combination of products, such as a
comprehensive electronic banking
service, that allows an institution to
deliver needed services to low- and
moderate-income areas and individuals
in its community, the overall delivery
system that includes the debit card
feature would be considered an
alternative delivery system.

§ ll.24(d) Performance Criteria—
Retail Banking Services
§ ll.24(d)–1: How do examiners
evaluate the availability and
effectiveness of an institution’s systems
for delivering retail banking services?
A1. Convenient access to full service
branches within a community is an
important factor in determining the
availability of credit and non-credit
services. Therefore, the service test
performance standards place primary
emphasis on full service branches while
still considering alternative systems,
such as automated teller machines
(‘‘ATMs’’). The principal focus is on an
institution’s current distribution of
branches; therefore, an institution is not
required to expand its branch network
or operate unprofitable branches. Under
the service test, alternative systems for
delivering retail banking services, such
as ATMs, are considered only to the
extent that they are effective alternatives
in providing needed services to lowand moderate-income areas and
individuals.
§ ll.24(d)–2: How do examiners
evaluate an institution’s activities in
connection with Individual
Development Accounts (IDAs)?
A2. Although there is no standard
IDA program, IDAs typically are deposit
accounts targeted to low- and moderateincome families that are designed to
help them accumulate savings for
education or job-training, downpayment and closing costs on a new
home, or start-up capital for a small
business. Once participants have
successfully funded an IDA, their
personal IDA savings are matched by a
public or private entity. Financial
institution participation in IDA
programs comes in a variety of forms,
including providing retail banking
services to IDA account holders,
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§ ll.24(e) Performance Criteria—
Community Development Services
§ ll.24(e)–1: Under what conditions
may an institution receive consideration
for community development services
offered by affiliates or third parties?
A1. At an institution’s option, the
agencies will consider services
performed by an affiliate or by a third
party on the institution’s behalf under
the service test if the services provided
enable the institution to help meet the
credit needs of its community. Indirect
services that enhance an institution’s
ability to deliver credit products or
deposit services within its community

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and that can be quantified may be
considered under the service test, if
those services have not been considered
already under the lending or investment
test (see § ll.23(b)–1). For example, an
institution that contracts with a
community organization to provide
home ownership counseling to low- and
moderate-income home buyers as part of
the institution’s mortgage program may
receive consideration for that indirect
service under the service test. In
contrast, donations to a community
organization that offers financial
services to low- or moderate-income
individuals may be considered under
the investment test, but would not also
be eligible for consideration under the
service test. Services performed by an
affiliate will be treated the same as
affiliate loans and investments made in
the institution’s assessment area and
may be considered if the service is not
claimed by any other institution. See
§§ ll.22(c) and .23(c).
§ ll.25 Community Development
Test for Wholesale or Limited Purpose
Institutions
§ ll.25(a) Scope of Test
§ ll.25(a)–1: How can certain credit
card banks help to meet the credit needs
of their communities without losing
their exemption from the definition of
‘‘bank’’ in the Bank Holding Company
Act (the BHCA), as amended by the
Competitive Equality Banking Act of
1987 (CEBA)?
A1. Although the BHCA restricts
institutions known as CEBA credit card
banks to credit card operations, a CEBA
credit card bank can engage in
community development activities
without losing its exemption under the
BHCA. A CEBA credit card bank could
provide community development
services and investments without
engaging in operations other than credit
card operations. For example, the bank
could provide credit card counseling, or
the financial expertise of its executives,
free of charge, to community
development organizations. In addition,
a CEBA credit card bank could make
qualified investments, as long as the
investments meet the guidelines for
passive and noncontrolling investments
provided in the BHC Act and the
Board’s Regulation Y. Finally, although
a CEBA credit card bank cannot make
any loans other than credit card loans,
under § ll.25(d)(2) (community
development test—indirect activities),
the bank could elect to have part of its
qualified passive and noncontrolling
investments in a third-party lending
consortium considered as community
development lending, provided that the

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consortium’s loans otherwise meet the
requirements for community
development lending. When assessing a
CEBA credit card bank’s CRA
performance under the community
development test, examiners will take
into account the bank’s performance
context. In particular, examiners will
consider the legal constraints imposed
by the BHCA on the bank’s activities, as
part of the bank’s performance context
in § ll.21(b)(4).
§ ll.25(d)

Indirect Activities

§ ll.25(d)–1: How are investments
in third party community development
organizations considered under the
community development test?
A1. Similar to the lending test for
retail institutions, investments in third
party community development
organizations may be considered as
qualified investments or as community
development loans or both (provided
there is no double counting), at the
institution’s option, as described above
in the discussion regarding §§ ll.22(d)
and ll.23(b).
§ ll.25(e)
Area(s)

Benefit to Assessment

§ ll.25(e)–1: How do examiners
evaluate a wholesale or limited purpose
institution’s qualified investment in a
fund that invests in projects nationwide
and which has a primary purpose of
community development, as that is
defined in the regulations?
A1. If examiners find that a wholesale
or limited purpose institution has
adequately addressed the needs of its
assessment area(s), they will give
consideration to qualified investments,
as well as community development
loans and community development
services, by that institution nationwide.
In determining whether an institution
has adequately addressed the needs of
its assessment area(s), examiners will
consider qualified investments that
benefit a broader statewide or regional
area that includes the institution’s
assessment area(s).
§ ll.25(f) Community Development
Performance Rating
§ ll.25(f)–1: Must a wholesale or
limited purpose institution engage in all
three categories of community
development activities (lending,
investment and service) to perform well
under the community development test?
A1. No, a wholesale or limited
purpose institution may perform well
under the community development test
by engaging in one or more of these
activities.

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§ ll.26—Small Institution
Performance Standards
§ ll.26(a) Performance Criteria
§ ll.26(a)–1: May examiners
consider, under one or more of the
performance criteria of the small
institution performance standards,
lending-related activities, such as
community development loans and
lending-related qualified investments,
when evaluating a small institution?
A1. Yes. Examiners can consider
‘‘lending-related activities,’’ including
community development loans and
lending-related qualified investments,
when evaluating the first four
performance criteria of the small
institution performance test. Although
lending-related activities are specifically
mentioned in the regulation in
connection with only the first three
criteria (i.e., loan-to-deposit ratio,
percentage of loans in the institution’s
assessment area, and lending to
borrowers of different incomes and
businesses of different sizes), examiners
can also consider these activities when
they evaluate the fourth criteria—
geographic distribution of the
institution’s loans.
§ ll.26(a)–2: What is meant by ‘‘as
appropriate’’ when referring to the fact
that lending-related activities will be
considered, ‘‘as appropriate,’’ under the
various small institution performance
criteria?
A2. ‘‘As appropriate’’ means that
lending-related activities will be
considered when it is necessary to
determine whether an institution meets
or exceeds the standards for a
satisfactory rating. Examiners will also
consider other lending-related activities
at an institution’s request.
§ ll.26(a)–3: When evaluating a
small institution’s lending performance,
will examiners consider, at the
institution’s request, community
development loans originated or
purchased by a consortium in which the
institution participates or by a third
party in which the institution has
invested?
A3. Yes. However, a small institution
that elects to have examiners consider
community development loans
originated or purchased by a consortium
or third party must maintain sufficient
information on its share of the
community development loans so that
the examiners may evaluate these loans
under the small institution performance
criteria.
§ ll.26(a)–4: Under the small
institution performance standards, will
examiners consider both loan
originations and purchases?

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A4. Yes, consistent with the other
assessment methods in the regulation,
examiners will consider both loans
originated and purchased by the
institution. Likewise, examiners may
consider any other loan data the small
institution chooses to provide,
including data on loans outstanding,
commitments and letters of credit.
§ ll.26(a)–5: Under the small
institution performance standards, how
will qualified investments be considered
for purposes of determining whether a
small institution receives a satisfactory
CRA rating?
A5. The small institution performance
standards focus on lending and other
lending-related activities. Therefore,
examiners will consider only lendingrelated qualified investments for the
purposes of determining whether the
small institution receives a satisfactory
CRA rating.
§ ll.26(a)(1) Loan-to-Deposit Ratio
§ ll.26(a)(1)–1: How is the loan-todeposit ratio calculated?
A1. A small institution’s loan-todeposit ratio is calculated in the same
manner that the Uniform Bank
Performance Report/Uniform Thrift
Performance Report (UBPR/UTPR)
determines the ratio. It is calculated by
dividing the institution’s net loans and
leases by its total deposits. The ratio is
found in the Liquidity and Investment
Portfolio section of the UBPR and
UTPR. Examiners will use this ratio to
calculate an average since the last
examination by adding the quarterly
loan-to-deposit ratios and dividing the
total by the number of quarters.
§ ll.26(a)(1)–2: How is the
‘‘reasonableness’’ of a loan-to-deposit
ratio evaluated?
A2. No specific ratio is reasonable in
every circumstance, and each small
institution’s ratio is evaluated in light of
information from the performance
context, including the institution’s
capacity to lend, demographic and
economic factors present in the
assessment area, and the lending
opportunities available in the
assessment area(s). If a small
institution’s loan-to-deposit ratio
appears unreasonable after considering
this information, lending performance
may still be satisfactory under this
criterion taking into consideration the
number and the dollar volume of loans
sold to the secondary market or the
number and amount and innovativeness
or complexity of community
development loans and lending-related
qualified investments.
§ ll.26(a)(1)–3: If an institution
makes a large number of loans off-shore,
will examiners segregate the domestic

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loan-to-deposit ratio from the foreign
loan-to-deposit ratio?
A3. No. Examiners will look at the
institution’s net loan-to-deposit ratio for
the whole institution, without any
adjustments.

available, examiners may use proxies
such as loan size for estimating
borrower characteristics, where
appropriate.

§ ll.26(a)(2) Percentage of Lending
Within Assessment Area(s)
§ ll.26(a)(2)–1: Must a small
institution have a majority of its lending
in its assessment area(s) to receive a
satisfactory performance rating?
A1. No. The percentage of loans and,
as appropriate, other lending-related
activities located in the bank’s
assessment area(s) is but one of the
performance criteria upon which small
institutions are evaluated. If the
percentage of loans and other lending
related activities in an institution’s
assessment area(s) is less than a
majority, then the institution does not
meet the standards for satisfactory
performance only under this criterion.
The effect on the overall performance
rating of the institution, however, is
considered in light of the performance
context, including information
regarding economic conditions, loan
demand, the institution’s size, financial
condition and business strategies, and
branching network and other aspects of
the institution’s lending record.

§ ll.26(b)–1: How can a small
institution achieve an ‘‘outstanding’’
performance rating?
A1. A small institution that meets
each of the standards for a ‘‘satisfactory’’
rating and exceeds some or all of those
standards may warrant an
‘‘outstanding’’ performance rating. In
assessing performance at the
‘‘outstanding’’ level, the agencies
consider the extent to which the
institution exceeds each of the
performance standards and, at the
institution’s option, its performance in
making qualified investments and
providing services that enhance credit
availability in its assessment area(s). In
some cases, a small institution may
qualify for an ‘‘outstanding’’
performance rating solely on the basis of
its lending activities, but only if its
performance materially exceeds the
standards for a ‘‘satisfactory’’ rating,
particularly with respect to the
penetration of borrowers at all income
levels and the dispersion of loans
throughout the geographies in its
assessment area(s) that display income
variation. An institution with a high
loan-to-deposit ratio and a high
percentage of loans in its assessment
area(s), but with only a reasonable
penetration of borrowers at all income
levels or a reasonable dispersion of
loans throughout geographies of
differing income levels in its assessment
area(s), generally will not be rated
‘‘outstanding’’ based only on its lending
performance. However, the institution’s
performance in making qualified
investments and its performance in
providing branches and other services
and delivery systems that enhance
credit availability in its assessment
area(s) may augment the institution’s
satisfactory rating to the extent that it
may be rated ‘‘outstanding.’’
§ ll.26(b)–2: Will a small
institution’s qualified investments,
community development loans, and
community development services be
considered if they do not directly benefit
its assessment area(s)?
A2. Yes. These activities are eligible
for consideration if they benefit a
broader statewide or regional area that
includes a small institution’s
assessment area(s), as discussed more
fully in §§ ll.12(i) & 563e.12(h)–6.

§ ll.26(a)(3) & (4) Distribution of
Lending Within Assessment Area(s) by
Borrower Income and Geographic
Location
§ ll.26(a)(3) & (4)–1: How will a
small institution’s performance be
assessed under these lending
distribution criteria?
A1. Distribution of loans, like other
small institution performance criteria, is
considered in light of the performance
context. For example, a small institution
is not required to lend evenly
throughout its assessment area(s) or in
any particular geography. However, in
order to meet the standards for
satisfactory performance under this
criterion, conspicuous gaps in a small
institution’s loan distribution must be
adequately explained by performance
context factors such as lending
opportunities in the institution’s
assessment area(s), the institution’s
product offerings and business strategy,
and institutional capacity and
constraints. In addition, it may be
impracticable to review the geographic
distribution of the lending of an
institution with few demographically
distinct geographies within an
assessment area. If sufficient
information on the income levels of
individual borrowers or the revenues or
sizes of business borrowers is not

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§ ll.26(b)

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§ ll.27—Strategic Plan
§ ll.27(c) Plans in General
§ ll.27(c)–1: To what extent will the
agencies provide guidance to an
institution during the development of its
strategic plan?
A1. An institution will have an
opportunity to consult with and provide
information to the agencies on a
proposed strategic plan. Through this
process, an institution is provided
guidance on procedures and on the
information necessary to ensure a
complete submission. For example, the
agencies will provide guidance on
whether the level of detail as set out in
the proposed plan would be sufficient to
permit agency evaluation of the plan.
However, the agencies’ guidance during
plan development and, particularly,
prior to the public comment period, will
not include commenting on the merits
of a proposed strategic plan or on the
adequacy of measurable goals.
§ ll.27(c)–2: How will a joint
strategic plan be reviewed if the
affiliates have different primary Federal
supervisors?
A2. The agencies will coordinate
review of and action on the joint plan.
Each agency will evaluate the
measurable goals for those affiliates for
which it is the primary regulator.
§ ll.27(f)

Plan Content

§ ll.27(f)(1) Measurable Goals
§ ll.27(f)(1)–1: How should
‘‘measurable goals’’ be specified in a
strategic plan?
A1. Measurable goals (e.g., number of
loans, dollar amount, geographic
location of activity, and benefit to lowand moderate-income areas or
individuals) must be stated with
sufficient specificity to permit the
public and the agencies to quantify what
performance will be expected. However,
institutions are provided flexibility in
specifying goals. For example, an
institution may provide ranges of
lending amounts in different categories
of loans. Measurable goals may also be
linked to funding requirements of
certain public programs or indexed to
other external factors as long as these
mechanisms provide a quantifiable
standard.
§ ll.27(g)

Plan Approval

§ ll.27(g)(2) Public Participation
§ ll.27(g)(2)–1: How will the public
receive notice of a proposed strategic
plan?
A1. An institution submitting a
strategic plan for approval by the
agencies is required to solicit public
comment on the plan for a period of

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thirty (30) days after publishing notice
of the plan at least once in a newspaper
of general circulation. The notice should
be sufficiently prominent to attract
public attention and should make clear
that public comment is desired. An
institution may, in addition, provide
notice to the public in any other manner
it chooses.
§ ll.28—Assigned Ratings
§ ll.28–1: Are innovative lending
practices, innovative or complex
qualified investments, and innovative
community development services
required for a ‘‘satisfactory’’ or
‘‘outstanding’’ CRA rating?
A1. No. Moreover, the lack of
innovative lending practices, innovative
or complex qualified investments, or
innovative community development
services alone will not result in a
‘‘needs to improve’’ CRA rating.
However, the use of innovative lending
practices, innovative or complex
qualified investments, and innovative
community development services may
augment the consideration given to an
institution’s performance under the
quantitative criteria of the regulations,
resulting in a higher level of
performance rating.
§ ll.28–2: How is performance
under the quantitative and qualitative
performance criteria weighed when
examiners assign a CRA rating?
A2. The lending, investment, and
service tests each contain a number of
performance criteria designed to
measure whether an institution is
effectively helping to meet the credit
needs of its entire community,
including low- and moderate-income
neighborhoods, in a safe and sound
manner. Some of these performance
criteria are quantitative, such as number
and amount, and others, such as the use
of innovative or flexible lending
practices, the innovativeness or

complexity of qualified investments,
and the innovativeness and
responsiveness of community
development services, are qualitative.
The performance criteria that deal with
these qualitative aspects of performance
recognize that these loans, qualified
investments, and community
development services sometimes require
special expertise and effort on the part
of the institution and provide a benefit
to the community that would not
otherwise be possible. As such, the
agencies consider the qualitative aspects
of an institution’s activities when
measuring the benefits received by a
community. An institution’s
performance under these qualitative
criteria may augment the consideration
given to an institution’s performance
under the quantitative criteria of the
regulations, resulting in a higher level of
performance and rating.
§ ll.28(a)

Ratings in General

§ ll.28(a)–1: How are institutions
with domestic branches in more than
one state assigned a rating?
A1. The evaluation of an institution
that maintains domestic branches in
more than one state (‘‘multistate
institution’’) will include a written
evaluation and rating of its CRA record
of performance as a whole and in each
state in which it has a domestic branch.
The written evaluation will contain a
separate presentation on a multistate
institution’s performance for each
metropolitan statistical area and the
nonmetropolitan area within each state,
if it maintains one or more domestic
branch offices in these areas. This
separate presentation will contain
conclusions, supported by facts and
data, on performance under the
performance tests and standards in the
regulation. The evaluation of a
multistate institution that maintains a

domestic branch in two or more states
in a multistate metropolitan area will
include a written evaluation (containing
the same information described above)
and rating of its CRA record of
performance in the multistate
metropolitan area. In such cases, the
statewide evaluation and rating will be
adjusted to reflect performance in the
portion of the state not within the
multistate metropolitan statistical area.
§ ll.28(a)–2: How are institutions
that operate within only a single state
assigned a rating?
A2. An institution that operates
within only a single state (‘‘single-state
institution’’) will be assigned a rating of
its CRA record based on its performance
within that state. In assigning this
rating, the agencies will separately
present a single-state institution’s
performance for each metropolitan area
in which the institution maintains one
or more domestic branch offices. This
separate presentation will contain
conclusions, supported by facts and
data, on the single-state institution’s
performance under the performance
tests and standards in the regulation.
§ ll.28(a)–3: How do the agencies
weight performance under the lending,
investment and service test for large
retail institutions?
A3. A rating of ‘‘outstanding,’’ ‘‘high
satisfactory,’’ ‘‘low satisfactory,’’ ‘‘needs
to improve,’’ or ‘‘substantial
noncompliance,’’ based on a judgment
supported by facts and data, will be
assigned under each performance test.
Points will then be assigned to each
rating as described in the first matrix set
forth below. A large retail institution’s
overall rating under the lending,
investment and service tests will then
be calculated in accordance with the
second matrix set forth below, which
incorporates the rating principles in the
regulation.

POINTS ASSIGNED FOR PERFORMANCE UNDER LENDING, INVESTMENT AND SERVICE TESTS
Lending
Outstanding ..................................................................................................................................
High Satisfactory ..........................................................................................................................
Low Satisfactory ..........................................................................................................................
Needs to Improve ........................................................................................................................
Substantial Noncompliance .........................................................................................................

Service
12
9
6
3
0

Investment
6
4
3
1
0

6
4
3
1
0

COMPOSITE RATING POINT REQUIREMENTS
[Add points from three tests]
Rating

Total points

Outstanding ...................................................................................................................................................................................
Satisfactory ....................................................................................................................................................................................
Needs to Improve ..........................................................................................................................................................................
Substantial Noncompliance ...........................................................................................................................................................

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20 or over.
11 through 19.
5 through 10.
0 through 4.

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Note: There is one exception to the
Composite Rating matrix. An institution may
not receive a rating of ‘‘satisfactory’’ unless
it receives at least ‘‘low satisfactory’’ on the
lending test. Therefore, the total points are
capped at three times the lending test score.

§ ll.28(c) Effect of Evidence of
Discriminatory or Other Illegal Credit
Practices
§ ll.28(c)–1: What is meant by
‘‘discriminatory or other illegal credit
practices’’?
A1. An institution engages in
discriminatory credit practices if it
discourages or discriminates against
credit applicants or borrowers on a
prohibited basis, in violation, for
example, of the Fair Housing Act or the
Equal Credit Opportunity Act (as
implemented by Regulation B).
Examples of other illegal credit
practices inconsistent with helping to
meet community credit needs include
violations of:
• The Truth in Lending Act regarding
rescission of certain mortgage
transactions and regarding disclosures
and certain loan term restrictions in
connection with credit transactions that
are subject to the Home Ownership and
Equity Protection Act;
• The Real Estate Settlement
Procedures Act regarding the giving and
accepting of referral fees, unearned fees
or kickbacks in connection with certain
mortgage transactions; and
• The Federal Trade Commission Act
regarding unfair or deceptive acts or
practices. Examiners will determine the
effect of evidence of illegal credit
practices as set forth in examination
procedures and § ll.28(c) of the
regulation.
Violations of other provisions of the
consumer protection laws generally will
not adversely affect an institution’s CRA
rating, but may warrant the inclusion of
comments in an institution’s
performance evaluation. These
comments may address the institution’s
policies, procedures, training programs,
and internal assessment efforts.
§ ll.29—Effect of CRA Performance
on Applications
§ ll.29(a) CRA Performance
§ ll.29(a)–1: What weight is given to
an institution’s CRA performance
examination in reviewing an
application?
A1. In cases in which CRA
performance is a relevant factor,
information from a CRA performance
examination of the institution is a
particularly important consideration in
the applications process because it
represents a detailed evaluation of the
institution’s CRA performance by its

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Federal supervisory agency. In this
light, an examination is an important,
and often controlling, factor in the
consideration of an institution’s record.
In some cases, however, the
examination may not be recent or a
specific issue raised in the application
process, such as progress in addressing
weaknesses noted by examiners,
progress in implementing commitments
previously made to the reviewing
agency, or a supported allegation from
a commenter, is relevant to CRA
performance under the regulation and
was not addressed in the examination.
In these circumstances, the applicant
should present sufficient information to
supplement its record of performance
and to respond to the substantive issues
raised in the application proceeding.
§ ll.29(a)–2: What consideration is
given to an institution’s commitments
for future action in reviewing an
application by those agencies that
consider such commitments?
A2. Commitments for future action
are not viewed as part of the CRA record
of performance. In general, institutions
cannot use commitments made in the
applications process to overcome a
seriously deficient record of CRA
performance. However, commitments
for improvements in an institution’s
performance may be appropriate to
address specific weaknesses in an
otherwise satisfactory record or to
address CRA performance when a
financially troubled institution is being
acquired.
§ ll.29(b) Interested Parties
§ ll.29(b)–1: What consideration is
given to comments from interested
parties in reviewing an application?
A1. Materials relating to CRA
performance received during the
applications process can provide
valuable information. Written
comments, which may express either
support for or opposition to the
application, are made a part of the
record in accordance with the agencies’
procedures, and are carefully
considered in making the agencies’
decision. Comments should be
supported by facts about the applicant’s
performance and should be as specific
as possible in explaining the basis for
supporting or opposing the application.
These comments must be submitted
within the time limits provided under
the agencies’ procedures.
§ ll.29(b)–2: Is an institution
required to enter into agreements with
private parties?
A2. No. Although communications
between an institution and members of
its community may provide a valuable
method for the institution to assess how

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best to address the credit needs of the
community, the CRA does not require
an institution to enter into agreements
with private parties. These agreements
are not monitored or enforced by the
agencies.
§ ll.41—Assessment Area
Delineation
§ ll.41(a) In General
§ ll.41(a)–1: How do the agencies
evaluate ‘‘assessment areas’’ under the
revised CRA regulations compared to
how they evaluated ‘‘local
communities’’ that institutions
delineated under the original CRA
regulations?
A1. The revised rule focuses on the
distribution and level of an institution’s
lending, investments, and services
rather than on how and why an
institution delineated its ‘‘local
community’’ or assessment area(s) in a
particular manner. Therefore, the
agencies will not evaluate an
institution’s delineation of its
assessment area(s) as a separate
performance criterion as they did under
the original regulation. Rather, the
agencies will only review whether the
assessment area delineated by the
institution complies with the limitations
set forth in the regulations at
§ ll.41(e).
§ ll.41(a)–2: If an institution elects
to have the agencies consider affiliate
lending, will this decision affect the
institution’s assessment area(s)?
A2. If an institution elects to have the
lending activities of its affiliates
considered in the evaluation of the
institution’s lending, the geographies in
which the affiliate lends do not affect
the institution’s delineation of
assessment area(s).
§ ll.41(a)–3: Can a financial
institution identify a specific ethnic
group rather than a geographic area as
its assessment area?
A3. No, assessment areas must be
based on geography.
§ ll.41(c) Geographic Area(s) for
Institutions Other than Wholesale or
Limited Purpose Institutions
§ ll.41(c)(1) Generally Consist of
one or More MSAs or one or More
Contiguous Political Subdivisions
§ ll.41(c)(1)–1: Besides cities,
towns, and counties, what other units of
local government are political
subdivisions for CRA purposes?
A1. Townships and Indian
reservations are political subdivisions
for CRA purposes. Institutions should
be aware that the boundaries of
townships and Indian reservations may
not be consistent with the boundaries of

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the census tracts or block numbering
areas (‘‘geographies’’) in the area. In
these cases, institutions must ensure
that their assessment area(s) consists
only of whole geographies by adding
any portions of the geographies that lie
outside the political subdivision to the
delineated assessment area(s).
§ ll.41(c)(1)–2: Are wards, school
districts, voting districts, and water
districts political subdivisions for CRA
purposes?
A2. No. However, an institution that
determines that it predominantly serves
an area that is smaller than a city, town
or other political subdivision may
delineate as its assessment area the
larger political subdivision and then, in
accordance with § ll.41(d), adjust the
boundaries of the assessment area to
include only the portion of the political
subdivision that it reasonably can be
expected to serve. The smaller area that
the institution delineates must consist
of entire geographies, may not reflect
illegal discrimination, and may not
arbitrarily exclude low- or moderateincome geographies.
§ ll.41(d) Adjustments to
Geographic Area(s)
§ ll.41(d)–1: When may an
institution adjust the boundaries of an
assessment area to include only a
portion of a political subdivision?
A1. Institutions must include whole
geographies (i.e., census tracts or block
numbering areas) in their assessment
areas and generally should include
entire political subdivisions. Because
census tracts and block numbering areas
are the common geographic areas used
consistently nationwide for data
collection, the agencies require that
assessment areas be made up of whole
geographies. If including an entire
political subdivision would create an
area that is larger than the area the
institution can reasonably be expected
to serve, an institution may, but is not
required to, adjust the boundaries of its
assessment area to include only portions
of the political subdivision. For
example, this adjustment is appropriate
if the assessment area would otherwise
be extremely large, of unusual
configuration, or divided by significant
geographic barriers (such as a river,
mountain, or major highway system).
When adjusting the boundaries of their
assessment areas, institutions must not
arbitrarily exclude low- or moderateincome geographies or set boundaries
that reflect illegal discrimination.

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§ ll.41(e) Limitations on Delineation
of an Assessment Area
§ ll.41(e)(3) May not Arbitrarily
Exclude Low- or Moderate-Income
Geographies
§ ll.41(e)(3)–1: How will examiners
determine whether an institution has
arbitrarily excluded low- or moderateincome geographies?
A1. Examiners will make this
determination on a case-by-case basis
after considering the facts relevant to
the institution’s assessment area
delineation. Information that examiners
will consider may include:
• Income levels in the institution’s
assessment area(s) and surrounding
geographies;
• Locations of branches and deposittaking ATMs;
• Loan distribution in the
institution’s assessment area(s) and
surrounding geographies;
• The institution’s size;
• The institution’s financial
condition; and
• The business strategy, corporate
structure and product offerings of the
institution.
§ ll.41(e)(4) May Not Extend
Substantially Beyond a CMSA Boundary
or Beyond a State Boundary Unless
Located in a Multistate MSA
§ ll.41(e)(4)–1: What are the
maximum limits on the size of an
assessment area?
A1. An institution shall not delineate
an assessment area extending
substantially across the boundaries of a
consolidated metropolitan statistical
area (CMSA) or the boundaries of an
MSA, if the MSA is not located in a
CMSA. Similarly, an assessment area
may not extend substantially across
state boundaries unless the assessment
area is located in a multistate MSA. An
institution may not delineate a whole
state as its assessment area unless the
entire state is contained within a CMSA.
These limitations apply to wholesale
and limited purpose institutions as well
as other institutions.
An institution shall delineate separate
assessment areas for the areas inside
and outside a CMSA (or MSA if the
MSA is not located in a CMSA) if the
area served by the institution’s branches
outside the CMSA (or MSA) extends
substantially beyond the CMSA (or
MSA) boundary. Similarly, the
institution shall delineate separate
assessment areas for the areas inside
and outside of a state if the institution’s
branches extend substantially beyond
the boundary of one state (unless the
assessment area is located in a
multistate MSA). In addition, the

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institution should also delineate
separate assessment areas if it has
branches in areas within the same state
that are widely separate and not at all
contiguous. For example, an institution
that has its main office in New York
City and a branch in Buffalo, New York,
and each office serves only the
immediate areas around it, should
delineate two separate assessment areas.
§ ll.41(e)(4)–2: Can an institution
delineate one assessment area that
consists of an MSA and two large
counties that abut the MSA but are not
adjacent to each other?
A2. As a general rule, an institution’s
assessment area should not extend
substantially beyond the boundary of an
MSA if the MSA is not located in a
CMSA. Therefore, the MSA would be a
separate assessment area, and because
the two abutting counties are not
adjacent to each other and, in this
example, extend substantially beyond
the boundary of the MSA, the
institution would delineate each county
as a separate assessment area (so, in this
example, there would be three
assessment areas). However, if the MSA
and the two counties were in the same
CMSA, then the institution could
delineate only one assessment area
including them all.
§ ll.42—Data collection, reporting,
and disclosure
§ ll.42–1: When must an institution
collect and report data under the CRA
regulations?
A1. All institutions except small
institutions are subject to data collection
and reporting requirements. A small
institution is a bank or thrift that, as of
December 31 of either of the prior two
calendar years, had total assets of less
than $250 million and was independent
or an affiliate of a holding company
that, as of December 31 of either of the
prior two calendar years, had total
banking and thrift assets of less than $1
billion.
For example:
Institution’s
asset size
(in millions)

Date

12/31/94
12/31/95
12/31/96
12/31/97
12/31/98

........
........
........
........
........

$240
260
230
280
260

Data collection
required for
following calendar year?
No.
No.
No.
No.
Yes, beginning 1/01/
99.

All institutions that are subject to the
data collection and reporting
requirements must report the data for a
calendar year by March 1 of the

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subsequent year. In the example, above,
the institution would report the data
collected for calendar year 1999 by
March 1, 2000.
The Board of Governors of the Federal
Reserve System is handling the
processing of the reports for all of the
primary regulators. The reports should
be submitted in a prescribed electronic
format on a timely basis. The mailing
address for submitting these reports is:
Attention: CRA Processing, Board of
Governors of the Federal Reserve
System, 1709 New York Avenue, NW.,
5th Floor, Washington, DC 20006.
§ ll.42–2: Should an institution
develop its own program for data
collection, or will the regulators require
a certain format?
A2. An institution may use the free
software that is provided by the FFIEC
to reporting institutions for data
collection and reporting or develop its
own program. Those institutions that
develop their own programs must
follow the precise format for the new
CRA data collection and reporting rules.
This format may be obtained by
contacting the CRA Assistance Line at
(202) 872–7584.
§ ll.42–3: How should an
institution report data on lines of credit?
A3. Institutions must collect and
report data on lines of credit in the same
way that they provide data on loan
originations. Lines of credit are
considered originated at the time the
line is approved or increased; and an
increase is considered a new
origination. Generally, the full amount
of the credit line is the amount that is
considered originated. In the case of an
increase to an existing line, the amount
of the increase is the amount that is
considered originated and that amount
should be reported. However, consistent
with the Call Report and TFR
instructions, institutions would not
report an increase to a small business or
small farm line of credit if the increase
would cause the total line of credit to
exceed $1 million, in the case of a small
business line, or $500,000, in the case
of a small farm line. Of course,
institutions may provide information
about such line increases to examiners
as ‘‘other loan data.’’
§ ll.42–4: Should renewals of lines
of credit be collected and/or reported?
A4. Renewals of lines of credit for
small business, small farm or consumer
purposes should be collected and
reported, if applicable, in the same
manner as renewals of small business or
small farm loans. See § ll.42(a)–5.
Institutions that are HMDA reporters
continue to collect and report home
equity lines of credit at their option in

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accordance with the requirements of 12
CFR part 203.
§ ll.42–5: When should merging
institutions collect data?
A5. Three scenarios of data collection
responsibilities for the calendar year of
a merger and subsequent data reporting
responsibilities are described below.
• Two institutions are exempt from
CRA collection and reporting
requirements because of asset size. The
institutions merge. No data collection is
required for the year in which the
merger takes place, regardless of the
resulting asset size. Data collection
would begin after two consecutive years
in which the combined institution had
year-end assets of at least $250 million
or was part of a holding company that
had year-end banking and thrift assets of
at least $1 billion.
• Institution A, an institution
required to collect and report the data,
and Institution B, an exempt institution,
merge. Institution A is the surviving
institution. For the year of the merger,
data collection is required for Institution
A’s transactions. Data collection is
optional for the transactions of the
previously exempt institution. For the
following year, all transactions of the
surviving institution must be collected
and reported.
• Two institutions that each are
required to collect and report the data
merge. Data collection is required for
the entire year of the merger and for
subsequent years so long as the
surviving institution is not exempt. The
surviving institution may file either a
consolidated submission or separate
submissions for the year of the merger
but must file a consolidated report for
subsequent years.
§ ll.42–6: Can small institutions get
a copy of the data collection software
even though they are not required to
collect or report data?
A6. Yes. Any institution that is
interested in receiving a copy of the
software may send a written request to:
Attn.: CRA Processing, Board of
Governors of the Federal Reserve
System, 1709 New York Ave, NW., 5th
Floor, Washington, DC 20006.
They may also call the CRA
Assistance Line at (202) 872–7584 or
send Internet e-mail to
CRAHELP@FRB.GOV.
§ ll.42–7: If a small institution is
designated a wholesale or limited
purpose institution, must it collect data
that it would not otherwise be required
to collect because it is a small
institution?
A7. No. However, small institutions
must be prepared to identify those
loans, investments and services to be

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evaluated under the community
development test.
§ ll.42(a) Loan Information
Required To Be Collected and
Maintained
§ ll.42(a)–1: Must institutions
collect and report data on all
commercial loans under $1 million at
origination?
A1. No. Institutions that are not
exempt from data collection and
reporting are required to collect and
report only those commercial loans that
they capture in the Call Report,
Schedule RC-C, Part II, and in the TFR,
Schedule SB. Small business loans are
defined as those whose original
amounts are $1 million or less and that
were reported as either ‘‘Loans secured
by nonfarm or nonresidential real
estate’’ or ‘‘Commercial and Industrial
loans’’ in Part I of the Call Report or
TFR.
§ ll.42(a)–2: For loans defined as
small business loans, what information
should be collected and maintained?
A2. Institutions that are not exempt
from data collection and reporting are
required to collect and maintain in a
standardized, machine readable format
information on each small business loan
originated or purchased for each
calendar year:
• A unique number or alpha-numeric
symbol that can be used to identify the
relevant loan file;
• The loan amount at origination;
• The loan location; and
• An indicator whether the loan was
to a business with gross annual
revenues of $1 million or less.
The location of the loan must be
maintained by census tract or block
numbering area. In addition,
supplemental information contained in
the file specifications includes a date
associated with the origination or
purchase and whether a loan was
originated or purchased by an affiliate.
The same requirements apply to small
farm loans.
§ ll.42(a)–3: Will farm loans need
to be segregated from business loans?
A3. Yes.
§ ll.42(a)–4: Should institutions
collect and report data on all
agricultural loans under $500,000 at
origination?
A4. Institutions are to report those
farm loans that they capture in the Call
Report, Schedule RC–C, Part II and
Schedule SB of the TFR. Small farm
loans are defined as those whose
original amounts are $500,000 or less
and were reported as either ‘‘Loans to
finance agricultural production and
other loans to farmers’’ or ‘‘Loans

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secured by farmland’’ in Part I of the
Call Report and TFR.
§ ll.42(a)–5: Should institutions
collect and report data about small
business and small farm loans that are
refinanced or renewed?
A5. An institution should collect
information about small business and
small farm loans that it refinances or
renews as loan originations. (A
refinancing generally occurs when the
existing loan obligation or note is
satisfied and a new note is written,
while a renewal refers to an extension
of the term of a loan. However, for
purposes of small business and small
farm CRA data collection and reporting,
it is no longer necessary to distinguish
between the two.) When reporting small
business and small farm data, however,
an institution may only report one
origination (including a renewal or
refinancing treated as an origination)
per loan per year, unless an increase in
the loan amount is granted.
If an institution increases the amount
of a small business or small farm loan
when it extends the term of the loan, it
should always report the amount of the
increase as a small business or small
farm loan origination. The institution
should report only the amount of the
increase if the original or remaining
amount of the loan has already been
reported one time that year. For
example, a financial institution makes a
term loan for $25,000; principal
payments have resulted in a present
outstanding balance of $15,000. In the
next year, the customer requests an
additional $5,000, which is approved,
and a new note is written for $20,000.
In this example, the institution should
report both the $5,000 increase and the
renewal or refinancing of the $15,000 as
originations for that year. These two
originations may be reported together as
a single origination of $20,000.
§ ll.42(a)–6: Does a loan to the
‘‘fishing industry’’ come under the
definition of a small farm loan?
A6. Yes. Instructions for Part I of the
Call Report and Schedule SB of the TFR
include loans ‘‘made for the purpose of
financing fisheries and forestries,
including loans to commercial
fishermen’’ as a component of the
definition for ‘‘Loans to finance
agricultural production and other loans
to farmers.’’ Part II of Schedule RC–C of
the Call Report and Schedule SB of the
TFR, which serve as the basis of the
definition for small business and small
farm loans in the revised regulation,
capture both ‘‘Loans to finance
agricultural production and other loans
to farmers’’ and ‘‘Loans secured by
farmland.’’

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§ ll.42(a)–7: How should an
institution report a home equity line of
credit, part of which is for home
improvement purposes, but the
predominant part of which is for small
business purposes?
A7. The institution has the option of
reporting the portion of the home equity
line that is for home improvement
purposes under HMDA. That portion of
the loan would then be considered
when examiners evaluate home
mortgage lending. If the line meets the
regulatory definition of a ‘‘community
development loan,’’ the institution
should collect and report information
on the entire line as a community
development loan. If the line does not
qualify as a community development
loan, the institution has the option of
collecting and maintaining (but not
reporting) the entire line of credit as
‘‘Other Secured Lines/Loans for
Purposes of Small Business.’’
§ ll.42(a)–8: When collecting small
business and small farm data for CRA
purposes, may an institution collect and
report information about loans to small
businesses and small farms located
outside the United States?
A8. At an institution’s option, it may
collect data about small business and
small farm loans located outside the
United States; however, it cannot report
this data because the CRA data
collection software will not accept data
concerning loan locations outside the
United States.
§ ll.42(a)–9: Is an institution that
has no small farm or small business
loans required to report under CRA?
A9. Each institution subject to data
reporting requirements must, at a
minimum, submit a transmittal sheet,
definition of its assessment area(s), and
a record of its community development
loans. If the institution does not have
community development loans to
report, the record should be sent with
‘‘0’’ in the community development
loan composite data fields. An
institution that has not purchased or
originated any small business or small
farm loans during the reporting period
would not submit the composite loan
records for small business or small farm
loans.
§ ll.42(a)–10: How should an
institution collect and report the
location of a loan made to a small
business or farm if the borrower
provides an address that consists of a
post office box number or a rural route
and box number?
A10. Prudent banking practices
dictate that an institution know the
location of its customers and loan
collateral. Therefore, institutions
typically will know the actual location

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of their borrowers or loan collateral
beyond an address consisting only of a
post office box.
Many borrowers have street addresses
in addition to post office box numbers
or rural route and box numbers.
Institutions should ask their borrowers
to provide the street address of the main
business facility or farm or the location
where the loan proceeds otherwise will
be applied. Moreover, in many cases in
which the borrower’s address consists
only of a rural route number or post
office box, the institution knows the
location (i.e., the census tract or block
numbering area) of the borrower or loan
collateral. Once the institution has this
information available, it should assign a
census tract or block numbering area to
that location (geocode) and report that
information as required under the
regulation.
For loans originated or purchased in
1998 or later, if the institution cannot
determine the borrower’s street address,
and does not know the census tract or
block numbering area, the institution
should report the borrower’s state,
county, MSA, if applicable, and ‘‘NA,’’
for ‘‘not available,’’ in lieu of a census
tract or block numbering area code.
§ ll.42(a)(2) Loan Amount at
Origination
§ ll.42(a)(2)–1: When an institution
purchases a small business or small
farm loan, which amount should the
institution collect and report—the
original amount of the loan or the
amount at purchase?
A1. When collecting and reporting
information on purchased small
business and small farm loans, an
institution collects and reports the
amount of the loan at origination, not at
the time of purchase. This is consistent
with the Call Report’s and TFR’s use of
the ‘‘original amount of the loan’’ to
determine whether a loan should be
reported as a ‘‘loan to a small business’’
or a ‘‘loan to a small farm’’ and in which
loan size category a loan should be
reported. When assessing the volume of
small business and small farm loan
purchases for purposes of evaluating
lending test performance under CRA,
however, examiners will evaluate an
institution’s activity based on the
amounts at purchase.
§ ll.42(a)(2)–2: How should an
institution collect data about multiple
loan originations to the same business?
A2. If an institution makes multiple
originations to the same business, the
loans should be collected and reported
as separate originations rather than
combined and reported as they are on
the Call Report or TFR, which reflect
loans outstanding, rather than

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originations. However, if institutions
make multiple originations to the same
business solely to inflate artificially the
number or volume of loans evaluated for
CRA lending performance, the agencies
may combine these loans for purposes
of evaluation under the CRA.
§ ll.42(a)(2)–3: How should an
institution collect data pertaining to
credit cards issued to small businesses?
A3. If an institution agrees to issue
credit cards to a business’ employees,
all of the credit card lines opened on a
particular date for that single business
should be reported as one small
business loan origination rather than
reporting each individual credit card
line, assuming the criteria in the ‘‘small
business loan’’ definition in the
regulation are met. The credit card
program’s ‘‘amount at origination’’ is the
sum of all of the employee/business
credit cards’ credit limits opened on a
particular date. If subsequently issued
credit cards increase the small business
credit line, the added amount is
reported as a new origination.
§ ll.42(a)(3) The Loan Location
§ ll.42(a)(3)–1: Which location
should an institution record if a small
business loan’s proceeds are used in a
variety of locations?
A1. The institution should record the
loan location by either the location of
the business headquarters or the
location where the greatest portion of
the proceeds are applied, as indicated
by the borrower.
§ ll.42(a)(4) Indicator of Gross
Annual Revenue
§ ll.42(a)(4)–1: When indicating
whether a small business borrower had
gross annual revenues of $1 million or
less, upon what revenues should an
institution rely?
A1. Generally, an institution should
rely on the revenues that it considered
in making its credit decision. For
example, in the case of affiliated
businesses, such as a parent corporation
and its subsidiary, if the institution
considered the revenues of the entity’s
parent or a subsidiary corporation of the
parent as well, then the institution
would aggregate the revenues of both
corporations to determine whether the
revenues are $1 million or less.
Alternatively, if the institution
considered the revenues of only the
entity to which the loan is actually
extended, the institution should rely
solely upon whether gross annual
revenues are above or below $1 million
for that entity. However, if the
institution considered and relied on
revenues or income of a cosigner or
guarantor that is not an affiliate of the

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borrower, such as a sole proprietor, the
institution should not adjust the
borrower’s revenues for reporting
purposes.
§ ll.42(a)(4)–2: If an institution that
is not exempt from data collection and
reporting does not request or consider
revenue information to make the credit
decision regarding a small business or
small farm loan, must the institution
collect revenue information in
connection with that loan?
A2. No. In those instances, the
institution should enter the code
indicating ‘‘revenues not known’’ on the
individual loan portion of the data
collection software or on an internally
developed system. Loans for which the
institution did not collect revenue
information may not be included in the
loans to businesses and farms with gross
annual revenues of $1 million or less
when reporting this data.
§ ll.42(a)(4)–3: What gross revenue
should an institution use in determining
the gross annual revenue of a start-up
business?
A3. The institution should use the
actual gross annual revenue to date
(including $0 if the new business has
had no revenue to date). Although a
start-up business will provide the
institution with pro forma projected
revenue figures, these figures may not
accurately reflect actual gross revenue.
§ ll.42(a)(4)–4: When collecting and
reporting the gross annual revenue of
small business or farm borrowers, do
institutions collect and report the gross
annual revenue or the adjusted gross
annual revenue of its borrowers?
A4. Institutions collect and report the
gross annual revenue, rather than the
adjusted gross annual revenue, of their
small business or farm borrowers. The
purpose of this data collection is to
enable examiners and the public to
judge whether the institution is lending
to small businesses and farms or
whether it is only making small loans to
larger businesses and farms.
The regulation does not require
institutions to request or consider
revenue information when making a
loan; however, if institutions do gather
this information from their borrowers,
the agencies expect them to collect and
report the borrowers’ gross annual
revenue for purposes of CRA. The CRA
regulations similarly do not require
institutions to verify revenue amounts;
thus, institutions may rely on the gross
annual revenue amount provided by
borrowers in the ordinary course of
business. If an institution does not
collect gross annual revenue
information for its small business and
small farm borrowers, the institution
would not indicate on the CRA data

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collection software that the gross annual
revenues of the borrower are $1 million
or less. (See § ll.42(a)(4)–2.)
§ ll.42(b) Loan Information
Required To Be Reported
§ ll.42(b)(1) Small Business and
Small Farm Loan Data
§ ll.42(b)(1)–1: For small business
and small farm loan information that is
collected and maintained, what data
should be reported?
A1. Each institution that is not
exempt from data collection and
reporting is required to report in
machine-readable form annually by
March 1 the following information,
aggregated for each census tract or block
numbering area in which the institution
originated or purchased at least one
small business or small farm loan
during the prior year:
• The number and amount of loans
originated or purchased with original
amounts of $100,000 or less;
• The number and amount of loans
originated or purchased with original
amounts of more than $100,000 but less
than or equal to $250,000;
• The number and amount of loans
originated or purchased with original
amounts of more than $250,000 but not
more than $1 million, as to small
business loans, or $500,000, as to small
farm loans; and To the extent that
information is available, the number
and amount of loans to businesses and
farms with gross annual revenues of $1
million or less (using the revenues the
institution considered in making its
credit decision).
§ ll.42(b)(2) Community
Development Loan Data
§ ll.42(b)(2)–1: What information
about community development loans
must institutions report?
A1. Institutions subject to data
reporting requirements must report the
aggregate number and amount of
community development loans
originated and purchased during the
prior calendar year.
§ ll.42(b)(2)–2: If a loan meets the
definition of a home mortgage, small
business, or small farm loan AND
qualifies as a community development
loan, where should it be reported? Can
FHA, VA and SBA loans be reported as
community development loans?
A2. Except for multifamily affordable
housing loans, which may be reported
by retail institutions both under HMDA
as home mortgage loans and as
community development loans, in order
to avoid double counting, retail
institutions must report loans that meet
the definitions of home mortgage, small

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Federal Register / Vol. 66, No. 134 / Thursday, July 12, 2001 / Notices
business, or small farm loans only in
those respective categories even if they
also meet the definition of community
development loans. As a practical
matter, this is not a disadvantage for
retail institutions because any affordable
housing mortgage, small business, small
farm or consumer loan that would
otherwise meet the definition of a
community development loan will be
considered elsewhere in the lending
test. Any of these types of loans that
occur outside the institution’s
assessment area can receive
consideration under the borrower
characteristic criteria of the lending test.
See § ll.22(b)(2) & (3)–4.
Limited purpose and wholesale
institutions also must report loans that
meet the definitions of home mortgage,
small business, or small farm loans in
those respective categories; however,
they must also report any loans from
those categories that meet the regulatory
definition of ‘‘community development
loans’’ as community development
loans. There is no double counting
because wholesale and limited purpose
institutions are not subject to the
lending test and, therefore, are not
evaluated on their level and distribution
of home mortgage, small business, small
farm and consumer loans.
§ ll.42(b)(2)–3: When the primary
purpose of a loan is to finance an
affordable housing project for low-or
moderate-income individuals, but, for
example, only 40 percent of the units in
question will actually be occupied by
individuals or families with low or
moderate incomes, should the entire
loan amount be reported as a
community development loan?
A3. Yes. As long as the primary
purpose of the loan is a community
development purpose, the full amount
of the institution’s loan should be
included in its reporting of aggregate
amounts of community development
lending. However, as noted in
§ ll.22(b)(4)–1, examiners may make
qualitative distinctions among
community development loans on the
basis of the extent to which the loan
advances the community development
purpose.
§ ll.42(b)(3) Home Mortgage Loans
§ ll.42(b)(3)–1: Must institutions
that are not required to collect home
mortgage loan data by the HMDA collect
home mortgage loan data for purposes
of the CRA?
A1. No. If an institution is not
required to collect home mortgage loan
data by the HMDA, the institution need
not collect home mortgage loan data
under the CRA. Examiners will sample
these loans to evaluate the institution’s

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home mortgage lending. If an institution
wants to ensure that examiners consider
all of its home mortgage loans, the
institution may collect and maintain
data on these loans.
§ ll.42(c) Optional Data Collection
and Maintenance
§ ll.42(c)(1)

Consumer Loans

§ ll.42(c)(1)–1: What are the data
requirements regarding consumer loans?
A1. There are no data reporting
requirements for consumer loans.
Institutions may, however, opt to collect
and maintain data on consumer loans. If
an institution chooses to collect
information on consumer loans, it may
collect data for one or more of the
following categories of consumer loans:
motor vehicle, credit card, home equity,
other secured, and other unsecured. If
an institution collects data for loans in
a certain category, it must collect data
for all loans originated or purchased
within that category. The institution
must maintain these data separately for
each category for which it chooses to
collect data. The data collected and
maintained should include for each
loan:
• A unique number or alpha-numeric
symbol that can be used to identify the
relevant loan file;
• The loan amount at origination or
purchase;
• The loan location; and
• The gross annual income of the
borrower that the institution considered
in making its credit decision.
Generally, guidance given with
respect to data collection of small
business and small farm loans,
including, for example, guidance
regarding collecting loan location data,
and whether to collect data in
connection with refinanced or renewed
loans, will also apply to consumer
loans.
§ ll.42(c)(1)(iv)

Income of Borrower

§ ll.42(c)(1)(iv)–1: If an institution
does not consider income when making
an underwriting decision in connection
with a consumer loan, must it collect
income information?
A1. No. Further, if the institution
routinely collects, but does not verify, a
borrower’s income when making a
credit decision, it need not verify the
income for purposes of data
maintenance.
§ ll.42(c)(1)(iv)–2: May an
institution list ‘‘0’’ in the income field
on consumer loans made to employees
when collecting data for CRA purposes
as the institution would be permitted to
do under HMDA?
A2. Yes.

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§ ll.42(c)(1)(iv)–3: When collecting
the gross annual income of consumer
borrowers, do institutions collect the
gross annual income or the adjusted
gross annual income of the borrowers?
A3. Institutions collect the gross
annual income, rather than the adjusted
gross annual income, of consumer
borrowers. The purpose of income data
collection in connection with consumer
loans is to enable examiners to
determine the distribution, particularly
in the institution’s assessment area(s), of
the institution’s consumer loans, based
on borrower characteristics, including
the number and amount of consumer
loans to low-, moderate-, middle-, and
upper-income borrowers, as determined
on the basis of gross annual income.
The regulation does not require
institutions to request or consider
income information when making a
loan; however, if institutions do gather
this information from their borrowers,
the agencies expect them to collect the
borrowers’ gross annual income for
purposes of CRA. The CRA regulations
similarly do not require institutions to
verify income amounts; thus,
institutions may rely on the gross
annual income amount provided by
borrowers in the ordinary course of
business.
§§ ll.42(c)(1)(iv)–4: Whose income
does an institution collect when a
consumer loan is made to more than
one borrower?
A4. An institution that chooses to
collect and maintain information on
consumer loans collects the gross
annual income of all primary obligors
for consumer loans, to the extent that
the institution considered the income of
the obligors when making the decision
to extend credit. Primary obligors
include co-applicants and co-borrowers,
including co-signers. An institution
does not, however, collect the income of
guarantors on consumer loans, because
guarantors are only secondarily liable
for the debt.
§ ll.42(c)(2) Other Loan Data
§ ll.42(c)(2)–1: Schedule RC–C, Part
II of the Call Report does not allow
banks to report loans for commercial
and industrial purposes that are secured
by residential real estate, unless the
security interest in the nonfarm
residential real estate is taken only as
an abundance of caution. (See
§§ ll.12(u) & 563e.12(t)–3.) Loans
extended to small businesses with gross
annual revenues of $1 million or less
may, however, be secured by residential
real estate. May a bank collect this
information to supplement its small
business lending data at the time of
examination?

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A1. Yes. If these loans promote
community development, as defined in
the regulation, the bank should collect
and report information about the loans
as community development loans.
Otherwise, at the bank’s option, it may
collect and maintain data concerning
loans, purchases, and lines of credit
extended to small businesses and
secured by nonfarm residential real
estate for consideration in the CRA
evaluation of its small business lending.
A bank may collect this information as
‘‘Other Secured Lines/Loans for
Purposes of Small Business’’ in the
individual loan data. This information
should be maintained at the bank but
should not be submitted for central
reporting purposes.
§ ll.42(c)(2)–2: Must an institution
collect data on loan commitments and
letters of credit?
A2. No. Institutions are not required
to collect data on loan commitments
and letters of credit. Institutions may,
however, provide for examiner
consideration information on letters of
credit and commitments.
§ ll.42(c)(2)–3: Are commercial and
consumer leases considered loans for
purposes of CRA data collection?
A3. Commercial and consumer leases
are not considered small business or
small farm loans or consumer loans for
purposes of the data collection
requirements in 12 CFR ll.42(a) &
(c)(1). However, if an institution wishes
to collect and maintain data about
leases, the institution may provide this
data to examiners as ‘‘other loan data’’
under 12 CFR ll.42(c)(2) for
consideration under the lending test.
§ ll.42(d)

Data on Affiliate Lending

§ ll.42(d)–1: If an institution elects
to have an affiliate’s home mortgage
lending considered in its CRA
evaluation, what data must the
institution make available to examiners?
A1. If the affiliate is a HMDA reporter,
the institution must identify those loans
reported by its affiliate under 12 CFR
part 203 (Regulation C, implementing
HMDA). At its option, the institution
may either provide examiners with the
affiliate’s entire HMDA Disclosure
Statement or just those portions
covering the loans in its assessment
area(s) that it is electing to consider. If
the affiliate is not required by HMDA to
report home mortgage loans, the
institution must provide sufficient data
concerning the affiliate’s home mortgage
loans for the examiners to apply the
performance tests.

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§ ll.43—Content and Availability of
Public File
§ ll.43(a)
the Public

Information Available to

§ ll.43(a)(1)

Public Comments

§ ll.43(a)(1)–1: What happens to
comments received by the agencies?
A1. Comments received by a Federal
financial supervisory agency will be on
file at the agency for use by examiners.
Those comments are also available to
the public unless they are exempt from
disclosure under the Freedom of
Information Act.
§ ll.43(a)(1)–2: Is an institution
required to respond to public
comments?
A2. No. All institutions should review
comments and complaints carefully to
determine whether any response or
other action is warranted. A small
institution subject to the small
institution performance standards is
specifically evaluated on its record of
taking action, if warranted, in response
to written complaints about its
performance in helping to meet the
credit needs in its assessment area(s)
(§ ll.26(a)(5)). For all institutions,
responding to comments may help to
foster a dialogue with members of the
community or to present relevant
information to an institution’s Federal
financial supervisory agency. If an
institution responds in writing to a
letter in the public file, the response
must also be placed in that file, unless
the response reflects adversely on any
person or placing it in the public file
violates a law.
§ ll.43(a)(1)–3: May an institution
include a response to its CRA
Performance Evaluation in its public
file?
A3. Yes. However, the format and
content of the evaluation, as transmitted
by the supervisory agency, may not be
altered or abridged in any manner. In
addition, an institution that received a
less than satisfactory rating during it
most recent examination must include
in its public file a description of its
current efforts to improve its
performance in helping to meet the
credit needs of its entire community.
The institution must update the
description on a quarterly basis.
§ ll.43(b) Additional Information
Available to the Public
§ ll.43(b)(1) Institutions Other Than
Small Institutions
§ ll.43(b)(1)–1: Must an institution
that elects to have affiliate lending
considered include data on this lending
in its public file?

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A1. Yes. The lending data to be
contained in an institution’s public file
covers the lending of the institution’s
affiliates, as well as of the institution
itself, considered in the assessment of
the institution’s CRA performance. An
institution that has elected to have
mortgage loans of an affiliate considered
must include either the affiliate’s
HMDA Disclosure Statements for the
two prior years or the parts of the
Disclosure Statements that relate to the
institution’s assessment area(s), at the
institution’s option.
§ ll.43(b)(1)–2: May an institution
retain the compact disc provided by the
Federal Financial Institution
Examination Council that contains its
CRA Disclosure Statement in its public
file, rather than printing a hard copy of
the CRA Disclosure Statement for
retention in its public file?
A2. Yes, if the institution can readily
print out from the compact disc (or a
duplicate of the compact disc) its CRA
Disclosure Statement for a consumer
when the public file is requested. If the
request is at a branch other than the
main office or the one designated
branch in each state that holds the
complete public file, the bank should
provide the CRA Disclosure Statement
in a paper copy, or in another format
acceptable to the requestor, within 5
calendar days, as required by
§ ll.43(c)(2)(ii).
§ ll.43(c) Location of Public
Information
§ ll.43(c)–1: What is an institution’s
‘‘main office’’?
A1. An institution’s main office is the
main, home, or principal office as
designated in its charter.
§ ll.43(c)–2: May an institution
maintain a copy of its public file on an
intranet or the Internet?
A2. Yes, an institution may keep all
or part of its public file on an intranet
or the Internet, provided that the
institution maintains all of the
information, either in paper or
electronic form, that is required in
§ ll.43 of the regulations. An
institution that opts to keep part or all
of its public file on an intranet or the
Internet must follow the rules in
§§ ll.43(c)(1) and (2) as to what
information is required to be kept at a
main office and at a branch. The
institution also must ensure that the
information required to be maintained
at a main office and branch, if kept
electronically, can be readily
downloaded and printed for any
member of the public who requests a
hard copy of the information.

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§ ll.44—Public Notice by Institutions

Appendix A to Part ll—Ratings

§ ll.44–1: Are there any placement
or size requirements for an institution’s
public notice?
A1. The notice must be placed in the
institution’s public lobby, but the size
and placement may vary. The notice
should be placed in a location and be of
a sufficient size that customers can
easily see and read it.

Appendix A to Part ll—1: Must an
institution’s performance fit each aspect of a
particular rating profile in order to receive
that rating?
A1. No. Exceptionally strong performance
in some aspects of a particular rating profile
may compensate for weak performance in
others. For example, a retail institution that
uses non-branch delivery systems to obtain
deposits and to deliver loans may have
almost all of its loans outside the institution’s
assessment area. Assume that an examiner,
after consideration of performance context
and other applicable regulatory criteria,
concludes that the institution has weak
performance under the lending test criteria
applicable to lending activity, geographic
distribution, and borrower characteristics
within the assessment area. The institution
may compensate for such weak performance
by exceptionally strong performance in
community development lending in its
assessment area or a broader statewide or
regional area that includes its assessment
area.

§ ll.45—Publication of Planned
Examination Schedule
§ ll.45–1: Where will the agencies
publish the planned examination
schedule for the upcoming calendar
quarter?
A1. The agencies may use the Federal
Register, a press release, the Internet, or
other existing agency publications for
disseminating the list of the institutions
scheduled to for CRA examinations
during the upcoming calendar quarter.
Interested parties should contact the
appropriate Federal financial
supervisory agency for information on
how the agency is publishing the
planned examination schedule.
§ ll.45–2: Is inclusion on the list of
institutions that are scheduled to
undergo CRA examinations in the next
calendar quarter determinative of
whether an institution will be examined
in that quarter?
A2. No. The agencies attempt to
determine as accurately as possible
which institutions will be examined
during the upcoming calendar quarter.
However, whether an institution’s name
appears on the published list does not
conclusively determine whether the
institution will be examined during that
quarter. The agencies may need to defer
a planned examination or conduct an
unforeseen examination because of
scheduling difficulties or other
circumstances.

Appendix B to Part ll—CRA Notice
Appendix B to Partll—1: What agency
information should be added to the CRA
notice form?
A1. The following information should be
added to the form:
OCC-supervised institutions only: The
address of the deputy comptroller of the
district in which the institution is located
should be inserted in the appropriate blank.
These addresses can be found at 12 CFR
4.5(a).
OCC-, FDIC-, and Board-supervised
institutions: ‘‘Officer in Charge of
Supervision’’ is the title of the responsible
official at the appropriate Federal Reserve
Bank.

Appendix A—Regional Offices of the
Bureau of the Census
To obtain median family income
levels of census tracts, MSAs, block
numbering areas and statewide
nonmetropolitan areas, contact the
appropriate regional office of the Bureau
of the Census as indicated below. The

list shows the states covered by each
regional office.
Atlanta
(404) 730–3833
Alabama, Florida, Georgia
Boston
(617) 424–0510
Connecticut, Maine, Massachusetts,
New Hampshire, Rhode Island,
Vermont
Charlotte
(704) 344–6144
Kentucky, North Carolina, South
Carolina, Tennessee, Virginia
Chicago
(312) 353–9747
Illinois, Indiana, Wisconsin
Dallas
(214) 655–3050
Louisiana, Mississippi, Texas
Denver
(303) 969–7750
Arizona, Colorado, Montana,
Nebraska, Nevada, New Mexico,
North Dakota, South Dakota, Utah,
Wyoming
Detroit
(313) 259–1875
Michigan, Ohio, West Virginia
Kansas City
(913) 551–6711
Arkansas, Iowa, Kansas, Minnesota,
Missouri, Oklahoma
Los Angeles
(818) 904–6339
Southern California, Hawaii
New York
(212) 264–4730
New York, New Jersey—selected
counties
Philadelphia
(215) 656–7578
Delaware, District of Columbia,
Maryland, New Jersey—selected
counties, Pennsylvania
Seattle
(206) 553–5835
Alaska, Northern California, Idaho,
Oregon, Washington

INDEX
Keyword

Q&A

Affiliate lending .................................................................................................................................

Affiliates ............................................................................................................................................
Affordable housing ...........................................................................................................................

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§ ll.22(b)(1)–1
§ ll.22(b)(2) & (3)–3
§ ll.22(c)(1)–1
§ ll.22(c)(2)(i)–1
§ ll.22(c)(2)(ii)–1
§ ll.41(a)–2
§ ll.42(d)–1
§ ll.43(b)(1)–1
§ ll.12(a)–1
§ ll.27(c)–2
§§ ll.12(h) & 563e.12(g)–1
§§ ll.12(h) & 563e.12(g)–2
§§ ll.12(h)(1) & 563e.12(g)(1)–1
§ ll.42(b)(2)–3

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INDEX—Continued
Keyword

Q&A

Alternative delivery systems ............................................................................................................
Applications, corporate .....................................................................................................................
Assessment area .............................................................................................................................

Assessment area, benefit to ............................................................................................................

Assets ...............................................................................................................................................
ATMs ................................................................................................................................................

Borrower characteristics ...................................................................................................................

Branch ..............................................................................................................................................
Brokerage .........................................................................................................................................
CEBA credit card banks ...................................................................................................................
Charitable contributions or activities ................................................................................................
Child care services ...........................................................................................................................
Commercial loans ............................................................................................................................
Commitments ...................................................................................................................................

Community contact interviews .........................................................................................................
Community development .................................................................................................................

Community development activities ..................................................................................................
Community development loan .........................................................................................................

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§ ll.24(d)–1
§ ll.24(d)(3)–1
§ ll.24(d)(3)–2
§ ll.29(a)–1
§ ll.29(a)–2
§ ll.29(b)–1
§ ll.22(b)(2) & (3)–2
§ ll.22(b)(2) & (3)–3
§ ll.22(b)(2) & (3)–4
§ ll.26(a)(2)–1
§ ll.41(a)–1
§ ll.41(a)–2
§ ll.41(a)–3
§ ll.41(c)(1)–1
§ ll.41(c)(1)–2
§ ll.41(d)–1
§ ll.41(e)(3)–1
§ ll.41(e)(4)–1
§ ll.41(e)(4)–2
§§ ll.12(i) & 563e.12(h)–5
§§ ll.12(i) & 563e.12(h)–6
§ ll.25(e)–1
§ ll.26(b)–2
§§ ll.12(t) & 563e.12(s)–1
§§ ll.12(t) & 563e.12(s)–2
§§ ll.12(f) & 563e.12(e)–1
§ ll.24(d)–1
§ ll.24(d)(3)–1
§ ll.41(e)(3)–1
§ ll.22(b)(2) & (3)–1
§ ll.22(b)(2) & (3)–5
§ ll.26(a)(3) & (4)–1
§ ll.42(c)(1)(iv)–3
§§ ll.12(f) & 563e.12(e)–1
§ ll.28(a)–1
§ ll.41(e)(3)–1
§§ ll.12(m) & 563e.12(l)–2
§ ll.25(a)–1
§§ ll.12(j) & 563e.12(i)–2
§§ ll.12(s) & 563e.12(r)–4
§§ ll.12(s) & 563e.12(r)–5
§§ ll.12(h) & 563e.12(g)–1
§ ll.12(u) & 563e.12(t)–2
§ ll.42(a)–1
§ ll.42(c)(2)–1
§ ll.22(a)(2)–1
§ ll.26(a)–4
§ ll.29(a)–2
§ ll.42(c)(2)–2
§ ll.21(b)(2)–2
§§ ll.12(h) & 563e.12(g)–1
§§ ll.12(h) & 563e.12(g)–2
§§ ll.12(h) & 563e.12(g)(3)–1
§ ll.42(b)(2)–3
§ ll.21(a)–1
§§ ll.12(i) & 563e.12(h)–1
§§ ll.12(i) & 563e.12(h)–2
§§ ll.12(i) & 563e.12(h)–3
§§ ll.12(i) & 563e.12(h)–4
§§ ll.12(i) & 563e.12(h)–5
§§ ll.12(i) & 563e.12(h)–6
§§ ll.12(i) & 563e.12(h)–7
§§ ll.12(s) & 563e.12(r)–6
§§ ll.12(u) & 563e.12(t)–1
§ ll.22(b)(4)–1
§ ll.22(d)–3
§ ll.23(b)–1
§ ll.25(d)–1
§ ll.26(a)–1
§ ll.26(a)–3
§ ll.26(b)–2

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INDEX—Continued
Keyword

Q&A

Community development service .....................................................................................................

Community development test ..........................................................................................................
Community services .........................................................................................................................
Complexity ........................................................................................................................................
Consortia ..........................................................................................................................................
Consumer loan .................................................................................................................................

CRA disclosure statement ...............................................................................................................
Credit cards ......................................................................................................................................
Data collection ..................................................................................................................................

Data reporting ..................................................................................................................................

Debit cards .......................................................................................................................................

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§ ll.42(b)(2)–2
§ ll.42(b)(2)–3
§§ ll.12(i) & 563e.12(h)–5
§§ ll.12(i) & 563e.12(h)–7
§§ ll.12(j) & 563e.12(i)–1
§§ ll.12(j) & 563e.12(i)–2
§§ ll.12(j) & 563e.12(i)–3
§§ ll.12(s) & 563e.12(r)–7
§ ll.23(b)–1
§ ll.26(b)–2
§ ll.42(c)(2)–1
§ ll.25(f)–1
§§ ll.12(h) & 563e.12(g)–2
§ ll.25(d)–1
§ ll.22(b)(5)–1
§ ll.23(e)–2
§ ll.28–1
§ ll.22(d)–2
§ ll.26(a)–3
§§ ll.12(k) & 563e.12(j)–1
§§ ll.12(k) & 563e.12(j)–2
§§ ll.12(k) & 563e.12(j)–3
§ ll.22(a)(1)–2
§ ll.42(c)(1)–1
§ ll.42(c)(1)(iv)–1
§ ll.42(c)(1)(iv)–2
§§ ll.42(c)(1)(iv)–4
§ ll.43(b)(1)–2
§§ ll.12(i) & 563e.12(h)–3
§§ ll.12(u) & 563e.12(t)–4
§ ll.42(a)(2)–3
§ ll.42–1
§ ll.42–2
§ ll.42–5
§ ll.42–7
§ ll.42(a)–1
§ ll.42(a)–2
§ ll.42(a)–4
§ ll.42(a)–5
§ ll.42(a)–8
§ ll.42(a)–10
§ ll.42(a)(2)–1
§ ll.42(a)(2)–2
§ ll.42(a)(2)–3
§ ll.42(a)(3)–1
§ ll.42(a)(4)–2
§ ll.42(a)(4)–4
§ ll.42(b)(1)–1
§ ll.42(b)(3)–1
§ ll.42(c)(1)–1
§ ll.42(c)(1)(iv)–1
§ ll.42(c)(1)(iv)–2
§ ll.42(c)(1)(iv)–3
§ ll.42(c)(2)–1
§ ll.42(c)(2)–2
§ ll.42–1
§ ll.42–3
§ ll.42–4
§ ll.42(a)–1
§ ll.42(a)–5
§ ll.42(a)–8
§ ll.42(a)–9
§ ll.42(a)–10
§ ll.42(a)(2)–1
§ ll.42(a)(4)–4
§ ll.42(b)(1)–1
§ ll.42(b)(2)–1
§ ll.42(b)(2)–2
§ ll.42(b)(2)–3
§ ll.42(d)(3)–2

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INDEX—Continued
Keyword

Q&A

Economic development ....................................................................................................................
Educational services ........................................................................................................................
Employees’ charitable activities .......................................................................................................
Employees’ income ..........................................................................................................................
Examination schedule ......................................................................................................................
Federal branch .................................................................................................................................
Federal Home Loan Bank ................................................................................................................
Federal Reserve Bank membership reserves .................................................................................
Financial services, provision of ........................................................................................................
Fisheries ...........................................................................................................................................
Flexibility ...........................................................................................................................................
Forestries .........................................................................................................................................
Geographic distribution ....................................................................................................................

Geography ........................................................................................................................................
Guaranteed loans .............................................................................................................................
Guarantor .........................................................................................................................................
Health services .................................................................................................................................
High cost area ..................................................................................................................................
HMDA reporting ...............................................................................................................................
Home equity line of credit ................................................................................................................
Home equity loan .............................................................................................................................
Home mortgage lending ...................................................................................................................
Home mortgage loan .......................................................................................................................

Illegal credit practices ......................................................................................................................
Income ..............................................................................................................................................
Income level .....................................................................................................................................
Indirect investments .........................................................................................................................
Individual development accounts (IDAs) .........................................................................................
Innovativeness .................................................................................................................................

Institutional capacity and constraints ...............................................................................................
Internet .............................................................................................................................................
Intranet .............................................................................................................................................
Leases ..............................................................................................................................................
Lending activity ................................................................................................................................
Lending distribution ..........................................................................................................................
Lending within assessment area .....................................................................................................
Letters of credit ................................................................................................................................
Limited purpose institution ...............................................................................................................

Lines of credit ...................................................................................................................................
Loan amount ....................................................................................................................................
Loan application activity ...................................................................................................................
Loan location ....................................................................................................................................
Loan originations, multiple ...............................................................................................................
Loan production office (LPO) ...........................................................................................................
Loans, outside-assessment area .....................................................................................................

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§§ ll.12(h) & 563e.12(g)–2
§§ ll.12(h) & 563e.12(g)–1
§§ ll.12(j) & 563e.12(i)–2
§ ll.42(c)(1)(iv)–2
§ ll.45–1
§ ll.45–2
§§ ll.12(t) & 563e.12(s)–2
§§ ll.12(s) & 563e.12(r)–3
§§ ll.12(s) & 563e.12(r)–3
§§ ll.12(j) & 563e.12(i)–1
§ ll.42(a)–6
§ ll.22(b)(5)–1
§ ll.42(a)–6
§ ll.22(b)(2) & (3)–1
§ ll.22(b)(2) & (3)–2
§ ll.22(b)(2) & (3)–3
§ ll.22(b)(2) & (3)–4
§ ll.26(a)(3) & (4)–1
§ ll.41(d)–1
§ ll.22(a)(2)–4
§§ ll.42(c)(1)(iv)–4
§§ ll.12(h) & 563e.12(g)–1
§§ ll.12(h) & 563e.12(g)–3
§§ ll.12(i) & 563e.12(h)–2
§ ll.42(b)(3)–1
§§ ll.12(k) & 563e.12(j)–2
§ ll.42(a)–7
§§ ll.12(k) & 563e.12(j)–1
§§ ll.22(a)(1)–1
§ ll.42(d)–1
§§ ll.12(m) & 563e.12(1)–1
§§ ll.12(m) & 563e.12(1)–2
§ ll.23(b)–2
§ ll.42(b)(2)–2
§ ll.42(b)(3)–1
§ ll.28(c)–1
§ ll.42(c)(1)(iv)–1
§ ll.42(c)(1)(iv)–2
§ ll.42(c)(1)(iv)–3
§§ ll.12(n) & 563e.12(m)–1
§ ll.23(a)–1
§ ll.24(d)–2
§ ll.22(b)(5)–1
§ ll.23(e)–2
§ ll.28–1
§ ll.21(b)(4)–1
§ ll.43(c)–2
§ ll.43(c)–2
§ ll.42(c)(2)–3
§ ll.22(b)(1)–1
§ ll.26(a)(3) & (4)–1
§ ll.22(b)(2) & (3)–3
§ ll.26(a)(2)–1
§ ll.26(a)(3) & (4)–1
§ ll.22(a)(2)–1
§ ll.26(a)–4
§ ll.42(c)(2)–2
§§ ll.12(o) & 563e.12(n)–1
§§ ll.12(o) & 563e.12(n)–2
§§ ll.12(o) & 563e.12(n)–3
§ ll.42–7
§ ll.42–3
§ ll.42–4
§ ll.42(a)(2)–1
§ ll.22(a)(2)–2
§ ll.42(a)–10
§ ll.42(a)(3)–1
§ ll.42(a)(2)–2
§§ ll.12(f) & 563e.12(e)–2
§ ll.22(b)(2) & (3)–4

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INDEX—Continued
Keyword

Q&A

Loan-to-deposit ratio ........................................................................................................................

Main office ........................................................................................................................................
Measurable goals .............................................................................................................................
MECAs .............................................................................................................................................
Merging institutions ..........................................................................................................................
Mortgage-backed securities .............................................................................................................
Multi-purpose loan ............................................................................................................................
Municipal bonds ...............................................................................................................................
National fund ....................................................................................................................................
New Markets Venture Capital Company .........................................................................................
Niche institution ................................................................................................................................
Nonprofit organization ......................................................................................................................
Past performance .............................................................................................................................
Performance context ........................................................................................................................

Performance criteria .........................................................................................................................

Performance evaluation ...................................................................................................................
Performance rating ...........................................................................................................................

Political subdivision ..........................................................................................................................

Primary purpose ...............................................................................................................................
Public comment ................................................................................................................................

Public file ..........................................................................................................................................

Public notice .....................................................................................................................................
Qualified investment .........................................................................................................................

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§ ll.26(a)(1)–1
§ ll.26(a)(1)–2
§ ll.26(a)(1)–3
§ ll.43(c)–1
§ ll.27(f)(1)–1
§ ll.22(a)(2)–3
§ ll.42–5
§§ ll.12(s) & 563e.12(r)–2
§ ll.23(b)–2
§§ ll.12(k) & 563e.12(j)–3
§ ll.42(a)–7
§§ ll.12(s) & 563e.12(r)–2
§ ll.25(e)–1
§§ ll.12(h)(3) & 563e.12(g)(3)–1
§§ ll.12(o) & 563e.12(n)–3
§§ ll.12(u) & 563e.12(t)–1
§ ll.21(b)(5)–1
§ ll.21(b)–1
§ ll.21(b)(2)–1
§ ll.21(b)(2)–2
§ ll.21(b)(4)–1
§ ll.21(b)(5)–1
§ ll.21(b)(5)–2
§ ll.22(b)–1
§ ll.23(e)–1
§ ll.23(e)–2
§ ll.26(a)–1
§ ll.26(a)–2
§ ll.28–2
§ ll.43(a)(1)–3
§ ll.26(a)–2
§ ll.26(a)–5
§ ll.26(b)–1
§ ll.28–1
§ ll.28–2
§ ll.28(a)–1
§ ll.28(a)–2
§ ll.28(a)–3
Appendix A to Part ll–1
§ ll.41(c)(1)–1
§ ll.41(c)(1)–2
§ ll.41(d)–1
§§ ll.12(i) & 563e.12(h)–7
§ ll.42(b)(2)–3
§ ll.27(g)(2)–1
§ ll.29(b)–1
§ ll.29(b)–2
§ ll.43(a)(1)–1
§ ll.43(a)(1)–2
§ ll.43(a)(1)–2
§ ll.43(a)(1)–3
§ ll.43(b)(1)–1
§ ll.43(b)(1)–2
§ ll.43(c)–2
§ ll.44–1
Appendix B to Part ll–1
§§ ll.12(i) & 563e.12(h)–5
§§ ll.12(i) & 563e.12(h)–7
§§ ll.12(s) & 563e.12(r)–1
§§ ll.12(s) & 563e.12(r)–2
§§ ll.12(s) & 563e.12(r)–3
§§ ll.12(s) & 563e.12(r)–4
§§ ll.12(s) & 563e.12(r)–5
§§ ll.12(s) & 563e.12(r)–6

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INDEX—Continued
Keyword

Q&A

Qualitative factors ............................................................................................................................

Ratings matrix ..................................................................................................................................
Refinancings .....................................................................................................................................
Regional area ...................................................................................................................................
Remote service facility (RSF) ..........................................................................................................
Renewals ..........................................................................................................................................
Responsiveness ...............................................................................................................................
Retail banking services ....................................................................................................................
Revenue ...........................................................................................................................................

Revitalize or stabilize .......................................................................................................................

SBIC or SBDC .................................................................................................................................
Similarly situated lenders .................................................................................................................
Small business loan .........................................................................................................................

Small farm loan ................................................................................................................................

Small institution ................................................................................................................................

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§§ ll.12(s) & 563e.12(r)–7
§ ll.23(b)–1
§ ll.23(b)–2
§ ll.23(e)–1
§ ll.23(e)–2
§ ll.25(d)–1
§ ll.26(a)–1
§ ll.26(a)–5
§ ll.26(b)–2
§ ll.21(a)–1
§ ll.22(b)(4)–1
§ ll.22(b)(5)–1
§ ll.23(e)–1
§ ll.23(e)–2
§ ll.28–1
§ ll.28–2
§ ll.28(a)–3
§ ll.42(a)–5
§§ ll.12(i) & 563e.12(h)–6
§§ ll.12(f) & 563e.12(e)–1
§ ll.42–4
§ ll.42(a)–5
§ ll.22(a)–1
§ ll.23(e)–2
§ ll.24(d)–1
§ ll.42(a)(4)–1
§ ll.42(a)(4)–2
§ ll.42(a)(4)–3
§ ll.42(a)(4)–4
§§ ll.12(h) & 563e.12(g)–1
§§ ll.12(h) & 563e.12(g)–2
§§ ll.12(h)(4) & 563e.12(g)(4)–1
§§ ll.12(i) & 563e.12(h)–4
§ ll.12(h)(3)ll563e.12(g)(3)–1
§ ll.21(b)(5)–2
§§ ll.12(u) & 563e.12(t)–1
§§ ll.12(u) & 563e.12(t)–2
§§ ll.12(u) & 563e.12(t)–3
§§ ll.12(u) & 563e.12(t)–4
§ ll.42(a)–2
§ ll.42(a)–3
§ ll.42(a)–5
§ ll.42(a)–8
§ ll.42(a)(2)–1
§ ll.42(a)(2)–3
§ ll.42(a)(3)–1
§ ll.42(a)(4)–1
§ ll.42(a)(4)–2
§ ll.42(a)(4)–4
§ ll.42(b)(1)–1
§ ll.42(b)(2)–2
§ ll.42(c)(2)–1
§ ll.42(a)–3
§ ll.42(a)–4
§ ll.42(a)–5
§ ll.42(a)–6
§ ll.42(a)–8
§ ll.42(a)(2)–1
§ ll.42(a)(4)–2
§ ll.42(a)(4)–4
§ ll.42(b)(1)–1
§ ll.42(a)(2)–2
§§ ll.12(t) & 563e.12(s)–1
§§ ll.12(t) & 563e.12(s)–2
§ ll.42–6
§ ll.42–7

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INDEX—Continued
Keyword

Q&A

Small institution performance standards ..........................................................................................

Social services .................................................................................................................................
Software for data collection and reporting .......................................................................................
Special purpose insitution ................................................................................................................
State branch .....................................................................................................................................
Strategic plan ...................................................................................................................................

Subsidiary .........................................................................................................................................
Third party investments ....................................................................................................................

Wholesale institution ........................................................................................................................

End of text of the Interagency Questions
and Answers

Dated: July 5, 2001.
Joanne Giese,
Assistant Executive Secretary, Federal
Financial Institutions Examination Council.

Billing Codes
OCC: 4810–33–P (25%)

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§ ll.26(a)–1
§ ll.26(a)–2
§ ll.26(a)–3
§ ll.26(a)–4
§ ll.26(a)–5
§ ll.26(a)(3) & (4)–1
§ ll.26(b)–1
§ ll.26(b)–2
§§ ll.12(h) & 563e.12(g)–1
§ ll.42–2
§ ll.42–6
§ ll.42(c)(2)–1
§§ ll.11(c)(3) & 563e.11(c)(2)–1
§§ ll.11(c)(3) & 563e.11(c)(2)–2
§§ ll.12(t) & 563e.12(s)–2
§ ll.27(c)–1
§ ll.27(c)–2
§ ll.27(f)(1)–1
§ ll.27(g)(2)–1
§ ll.12(a)–1
§ ll.22(d)–1
§ ll.22(d)–2
§ ll.22(d)–3
§ ll.25(d)–1
§ ll.26(a)–3
§§ ll.12(o) & 563e.12(n)–2
§§ ll.12(w) & 563e.12(v)–1
§ ll.42–7

FRB: 6210–01–P (25%)
FDIC: 6714–01–P (25%)
OTS: 6720–01–P (25%)
[FR Doc. 01–17246 Filed 7–11–01; 8:45 am]
BILLING CODES 4810–33–P; 6210–01–P; 6714–01–P;
6720–01–P

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Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102