Rule2021-27171
Community Reinvestment Act Regulations
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 15, 2021
Effective
January 1, 2022
Issuing agencies
Treasury DepartmentComptroller of the Currency
Abstract
The Comptroller of the Currency is adopting a final Community Reinvestment Act (CRA) rule that is based largely on the 1995 CRA rules, as revised, that were issued by the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), and Federal Deposit Insurance Corporation (FDIC). This final rule applies to national banks and savings associations. This action rescinds the CRA final rule published by the OCC on June 5, 2020, and facilitates the OCC's planned future issuance of updated interagency CRA rules with the Board and FDIC.
Full Text
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<title>Federal Register, Volume 86 Issue 238 (Wednesday, December 15, 2021)</title>
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[Federal Register Volume 86, Number 238 (Wednesday, December 15, 2021)]
[Rules and Regulations]
[Pages 71328-71354]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-27171]
[[Page 71327]]
Vol. 86
Wednesday,
No. 238
December 15, 2021
Part III
Department of the Treasury
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Office of the Comptroller of the Currency
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12 CFR Part 25
Community Reinvestment Act Regulations; Final Rule
Federal Register / Vol. 86 , No. 238 / Wednesday, December 15, 2021 /
Rules and Regulations
[[Page 71328]]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 25
[Docket No. OCC-2021-0014]
RIN 1557-AF12
Community Reinvestment Act Regulations
AGENCY: Office of the Comptroller of the Currency, Treasury.
ACTION: Final rule.
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SUMMARY: The Comptroller of the Currency is adopting a final Community
Reinvestment Act (CRA) rule that is based largely on the 1995 CRA
rules, as revised, that were issued by the Office of the Comptroller of
the Currency (OCC), Board of Governors of the Federal Reserve System
(Board), and Federal Deposit Insurance Corporation (FDIC). This final
rule applies to national banks and savings associations. This action
rescinds the CRA final rule published by the OCC on June 5, 2020, and
facilitates the OCC's planned future issuance of updated interagency
CRA rules with the Board and FDIC.
DATES: This final rule is effective on January 1, 2022. The compliance
date for Sec. Sec. 25.43 and 25.44 is April 1, 2022. The compliance
date for the remainder of the rule is January 1, 2022.
FOR FURTHER INFORMATION CONTACT: Emily Boyes, Counsel, Karen McSweeney,
Special Counsel, Heidi Thomas, Special Counsel, or Kevin Behne, Senior
Attorney, Chief Counsel's Office, (202) 649-5490; or Vonda Eanes,
Director for CRA and Fair Lending Policy, or Karen Bellesi, Director
for Community Development, Bank Supervision Policy, (202) 649-5470,
Office of the Comptroller of the Currency, 400 7th Street SW,
Washington, DC 20219.
SUPPLEMENTARY INFORMATION:
I. Background
Congress enacted the Community Reinvestment Act (CRA) \1\ in 1977
to encourage insured depository institutions (IDI) \2\ to help meet the
credit needs of their entire communities, including low- and moderate-
income (LMI) neighborhoods, consistent with the safe and sound
operation of the IDIs.\3\ Specifically, Congress found that ``(1)
regulated financial institutions are required by law to demonstrate
that their deposit facilities serve the convenience and needs of the
communities in which they are chartered to do business; (2) the
convenience and needs of communities include the need for credit
services as well as deposit services; and (3) regulated financial
institutions have continuing and affirmative obligation[s] to help meet
the credit needs of the local communities in which they are
chartered.'' \4\
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\1\ Public Law 95-128, 91 Stat. 1147 (1977) (codified at 12
U.S.C. 2901 et seq. (as amended)).
\2\ The CRA uses the term ``regulated financial institution,''
which it defines to mean an ``insured depository institution'' as
defined in 12 U.S.C. 1813(c)(2). See 12 U.S.C. 2902(2).
\3\ 12 U.S.C. 2903(a)(1). Congress enacted the CRA to promote
access to credit by encouraging IDIs to serve their entire
communities. During this period, Congress also enacted fair lending
laws to address fairness and access to housing and credit. For
example, in 1968, Congress passed a law that later became known as
the Fair Housing Act to prohibit discrimination in renting or buying
a home. See 42 U.S.C. 3601 et seq. (as amended). In 1974, Congress
passed the Equal Credit Opportunity Act to prohibit creditors from
discriminating against an applicant on the basis of race, color,
religion, national origin, sex, marital status, or age. See 15
U.S.C. 1691 et seq. (as amended). These fair lending laws provide a
legal basis for prohibiting discriminatory lending practices, such
as redlining. See Interagency Fair Lending Examination Procedures,
p. iv (Aug. 2009), available at <a href="https://www.ffiec.gov/PDF/fairlend.pdf">https://www.ffiec.gov/PDF/fairlend.pdf</a>.
\4\ 12 U.S.C. 2901(a).
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The Office of the Comptroller of the Currency (OCC or Agency),\5\
Board of Governors of the Federal Reserve System (Board), and Federal
Deposit Insurance Corporation (FDIC) (collectively, Agencies),\6\ along
with the Federal Home Loan Bank Board, first issued rules to implement
the CRA in 1978.\7\ The Agencies, along with the Office of Thrift
Supervision (OTS), significantly revised and clarified the CRA rules in
1995 (1995 Rules).\8\ On September 5, 2018, the OCC published an
Advance Notice of Proposed Rulemaking (ANPR) as part of its renewed
efforts to update the CRA regulatory framework.\9\ On January 9, 2020,
the OCC and FDIC published a joint CRA Notice of Proposed
Rulemaking,\10\ and on June 5, 2020, the OCC adopted the rule in final
form (June 2020 Rule).\11\ The June 2020 Rule applied to national
banks, Federal savings associations, and State savings associations
(collectively, banks).\12\
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\5\ The OCC is the primary regulator for national banks and
Federal savings associations.
\6\ In addition to the Agencies, Congress also charged the
Office of Thrift Supervision (OTS) and its predecessor agency, the
Federal Home Loan Bank Board, with implementing the CRA. The OTS had
CRA rulemaking and examination authority for all savings
associations. The OTS's rulemaking authority for CRA transferred to
the OCC in Title III of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, Public Law 111-203, 124 Stat. 1376, 1522
(2010) (Dodd-Frank Act). See also 12 U.S.C. 2905. With respect to
CRA examination authority, the OCC examines Federal savings
associations, and the FDIC examines State savings associations. See
Sec. 312(b) of the Dodd-Frank Act.
\7\ 43 FR 47144 (Oct. 12, 1978).
\8\ 60 FR 22156 (May 4, 1995). As used herein, the term ``1995
Rules'' refers to the regulatory framework adopted by the Agencies
and the OTS in 1995 and any revisions the Agencies and OTS made to
that regulatory framework (e.g., 70 FR 44256 (Aug. 2, 2005) and 75
FR 61035 (Oct. 4, 2010)), except for the changes made by the OCC in
the June 2020 Rule. The 1995 Rules were codified in 12 CFR parts 25,
563e (recodified as 195), 228, and 345.
\9\ The OCC worked with the Board and FDIC on this ANPR. 83 FR
45053.
\10\ 85 FR 1204.
\11\ 85 FR 34734.
\12\ As used herein, the term ``bank'' or ``banks'' also
includes uninsured Federal branches that result from an acquisition
described in section 5(a)(8) of the International Banking Act of
1978. 12 U.S.C. 3103(a)(8).
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The June 2020 Rule took effect October 1, 2020, although several of
its more material components had compliance dates of either January 1,
2023, or January 1, 2024.\13\ To implement certain provisions of the
June 2020 Rule with a compliance date of January 1, 2023, the OCC
published a Notice of Proposed Rulemaking on December 4, 2020,
(December 2020 NPR), which proposed an approach to determine the
benchmarks, thresholds, and minimums in the June 2020 Rule's
performance standards.\14\ In connection with the December 2020 NPR,
the OCC also published a CRA information collection survey (Information
Collection) \15\ to obtain the data necessary to calibrate the June
2020 Rule's performance standards.
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\13\ 12 CFR 25.01(c)(4).
\14\ 85 FR 78258.
\15\ 85 FR 81270 (Dec. 15, 2020).
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On May 18, 2021, the OCC announced that it was reconsidering the
June 2020 Rule.\16\ At the same time, the OCC announced that it did not
plan to finalize the December 2020 NPR and was discontinuing the
Information Collection.\17\ Collectively, these actions have enabled an
orderly reconsideration of the June 2020 Rule and provided banks with
the flexibility to deploy resources in response to the COVID-19
pandemic.
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\16\ See OCC Bulletin 2021-24, Community Reinvestment Act:
Implementation of the June 2020 Final Rule, available at <a href="https://www.occ.gov/news-issuances/bulletins/2021/bulletin-2021-24.html">https://www.occ.gov/news-issuances/bulletins/2021/bulletin-2021-24.html</a>.
\17\ Id.
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Although the OCC issued the June 2020 Rule independently, the
Agencies' joint CRA regulatory reform efforts have spanned the past
decade.\18\ In 2018, the
[[Page 71329]]
Agencies engaged with stakeholders, including civil rights
organizations, community groups, members of Congress, academics, and
IDIs, to obtain their perspectives and feedback on the CRA and
potential improvements to the CRA regulatory framework. Separately, the
Board explored ways to modernize the CRA regulatory framework to
address changes in the banking industry, which culminated with the
Board's publication of an ANPR on October 19, 2020 (Board ANPR).\19\
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\18\ For example, in 2014, pursuant to the Economic Growth and
Regulatory Paperwork Reduction Act of 1996 (EGRPRA), the Agencies
began a decennial review of all of their rules, with input from the
public, to identify outdated, unnecessary, or unduly burdensome
rules and to consider how to reduce regulatory burden on IDIs, while
at the same time ensuring the safety and soundness of these
institutions and the financial system. Public Law 104-208, 110 Stat.
3009 (1996) (codified at 12 U.S.C. 3311). In 2017, the Agencies
issued a report to Congress that included a summary of the public
comments and recommendations received during the EGRPRA review,
including those that addressed the CRA regulatory framework. See
Federal Financial Institutions Examination Council, Joint Report to
Congress. Economic Growth and Regulatory Paperwork Reduction Act,
pp. 41-48 (Mar. 3, 2017), available at <a href="https://www.ffiec.gov/pdf/2017_FFIEC_EGRPRA_Joint-Report_to_Congress.pdf">https://www.ffiec.gov/pdf/2017_FFIEC_EGRPRA_Joint-Report_to_Congress.pdf</a>.
\19\ 85 FR 66410.
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Throughout all of the Agencies' CRA modernization efforts,
stakeholders have repeatedly stressed the importance of the Agencies
issuing a single set of CRA rules applicable to all IDIs. On July 20,
2021, after considering (1) the disproportionate impacts of the
pandemic on LMI communities, (2) the comments provided on the Board
ANPR, and (3) the OCC's experience with implementation of the June 2020
Rule, the OCC announced it would propose to rescind the June 2020
Rule.\20\ On the same day, the Agencies announced that they are working
together to strengthen and modernize the rules implementing the
CRA.\21\ This final rule is an important step in this interagency
process because it reestablishes generally uniform rules that apply to
all IDIs. Thus, it better positions the Agencies to identify joint
solutions to the common issues affecting IDIs and the communities they
serve.
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\20\ NR 2021-76, OCC Statement on Rescinding its 2020 Community
Reinvestment Act Rule, available at <a href="https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-76.html">https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-76.html</a>.
\21\ NR 2021-77, Interagency Statement on Community Reinvestment
Act Joint Agency Action, available at <a href="https://www.occ.gov/news-issuances/news-releases/2021/nr-ia-2021-77.html">https://www.occ.gov/news-issuances/news-releases/2021/nr-ia-2021-77.html</a>.
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II. Proposed Rule
On September 8, 2021, the OCC issued its proposal to rescind the
June 2020 Rule and replace it with rules for banks largely based on the
1995 Rules (Proposal or Proposed Rule).\22\ The Proposal would have
aligned the OCC's CRA rules with the Board's and FDIC's CRA rules,
thereby reinstituting the regulatory uniformity for IDIs that existed
prior to the June 2020 Rule and facilitating the ongoing interagency
work to modernize the CRA rules. The OCC explained in the Proposal that
any future interagency CRA rules would replace any final rule(s) the
Agency issues pursuant to the Proposal.\23\
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\22\ NR 2021-94, OCC Issues Proposal to Rescind its 2020
Community Reinvestment Act Rule (Sept. 8, 2021), available at
<a href="https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-94.html">https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-94.html</a>. See also 86 FR 52026 (Sept. 17, 2021).
\23\ 86 FR 52026, 52027.
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The purpose of the Proposed Rule was to (1) create consistent and
transparent CRA rules for banks; (2) limit CRA-related burden on banks,
banks' communities, and examiners; and (3) ensure that the OCC
continues to encourage banks to help meet the credit needs of their
entire communities, including LMI neighborhoods, consistent with safe
and sound operations. A description of the Proposal and the comments
the OCC received is set forth below.
A. Overview
The Proposed Rule would have provided different performance tests
and standards for banks of different sizes, structures, and operations.
Specifically, the Proposed Rule would have provided an assessment
method for (1) small banks that would be streamlined and would
emphasize lending performance; (2) intermediate small banks (ISB) that
would consider lending and community development (CD) activities (i.e.,
loans, investments, and services); (3) large, retail banks that would
focus on lending, investment, and service performance; and (4)
wholesale and limited purpose banks that would be based on CD
activities. The Proposed Rule also would have given any bank,
regardless of its size or business strategy, the option for the
appropriate Federal banking agency to evaluate it under a strategic
plan.\24\
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\24\ As noted previously, the OCC has CRA examination authority
for Federal savings associations, and the FDIC has CRA examination
authority for State savings associations. See supra note 6.
References in this final rule to ``appropriate Federal banking
agency'' are intended to reflect this distinction.
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Under the proposed performance tests and standards, the appropriate
Federal banking agency would have considered a bank's performance
context in assessing its CRA performance. Specifically, the Agency
would have reviewed (1) demographic and economic data about the bank's
assessment area(s) and information about its local economic conditions;
(2) the bank's major business products and strategies; and (3) its
financial condition, including its capacity and ability to lend or
invest in its community. The Agency also would have reviewed any
information a bank chose to provide about lending, investment, and
service opportunities in its assessment area(s). Performance context
also would have included any other information the appropriate Federal
banking agency deemed relevant.
The Proposed Rule would have required a bank to identify one or
more assessment area(s) where the appropriate Federal banking agency
would evaluate its CRA performance. In most cases, the Proposed Rule
would have required a bank to delineate as its assessment area(s) the
town, city, county, or other political subdivision or a metropolitan
statistical area (MSA) where (1) its main office, branch(es), and
deposit-taking automated teller machines (ATMs) are located and (2) a
substantial portion of its loans are made. A bank's assessment area(s)
would not have needed to coincide with the boundaries of one or more
political subdivisions or MSAs so long as the assessment area(s) was
one that (1) the bank reasonably could have served; (2) satisfied
applicable regulatory requirements; (3) did not reflect illegal
discrimination; and (4) did not arbitrarily exclude LMI geographies
(i.e., census tracts).
Under the Proposed Rule, large banks \25\ (and in some
circumstances, other banks) would have needed to collect, maintain, and
report certain data related to the proposed performance tests and
standards. The OCC would have made this data available through
individual and aggregate disclosure statements. In addition, banks
would have made CRA-related information available in their public files
and posted CRA notices in specified locations.
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\25\ The term ``large banks'' is used in CRA guidance related to
the 1995 Rules to describe banks that exceed the ISB asset-size
threshold.
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For a more detailed description of the 1995 Rules, on which the
Proposed Rule was largely based, see the Supplemental Information
sections of the Federal Register documents in which the 1995 Rules were
issued.\26\
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\26\ See supra note 8.
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B. Summary of Key Provisions
The following is a summary of key provisions of the Proposed Rule.
1. Performance Tests and Standards.\27\
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\27\ The proposed performance tests and standards applicable to
a bank would have been based on the bank's asset size. The proposed
asset-size thresholds for determining whether a bank would be a
large bank, ISB, or small bank under the Proposed Rule would have
been adjusted annually and aligned with the current asset-size
thresholds in the Board's and FDIC's rules. See 12 CFR parts 228 and
345.
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[[Page 71330]]
[cir] Small bank \28\ performance standards would have included a
retail lending test for assessing CRA performance. The small bank
lending test could also have included consideration of CD loans.
Qualified investments and CD services could have been considered at the
bank's option for an ``outstanding'' rating, but only if the bank met
or exceeded the lending test criteria in the small bank performance
standards.
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\28\ Under the Proposed Rule, ``small bank'' means a bank that,
as of December 31 of either of the prior two calendar years, had
assets of less than $1.322 billion. ``ISB'' means a small bank with
assets of at least $330 million as of December 31 of both of the
prior two calendar years and less than $1.322 billion as of December
31 of either of the prior two calendar years. See 12 CFR 25.12(u),
of the Proposed Rule.
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[cir] The ISB \29\ performance standards would have included an
assessment of CRA performance under the small bank retail lending test
and a CD test. Under the ISB CD test, the appropriate Federal banking
agency would have evaluated all CD activities together.
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\29\ Id.
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[cir] Large bank (i.e., banks that exceed the ISB asset-size
threshold) \30\ lending and service tests would have considered both
retail and CD activity, while the large bank investment test would have
focused on qualified investments as defined in the Proposed Rule.
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\30\ Id.
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[cir] The appropriate Federal banking agency would have evaluated
wholesale and limited purpose banks under a CD test that considered
activities (1) within a bank's broader statewide or regional area(s)
that includes a bank's assessment area(s) as activities that benefit
the bank's assessment area(s) and (2) outside of the bank's broader
statewide or regional area that includes a bank's assessment area(s) if
the bank had been responsive to needs in its assessment area(s).
[cir] Any bank could have elected to be evaluated under a strategic
plan that set out measurable goals for lending, investment, and
services, as applicable, to achieve a ``satisfactory'' or
``outstanding'' rating. The bank would have developed its strategic
plan with community input, and the appropriate Federal banking agency
would have needed to approve the bank's plan.
2. Discriminatory or Other Illegal Credit Practices (DOICP). Under
the Proposal, the appropriate Federal banking agency's evaluation of a
bank's CRA performance would have been adversely affected by evidence
of DOICPs, including violations of the Equal Credit Opportunity Act;
\31\ Fair Housing Act; \32\ Homeownership and Equity Protection Act;
\33\ the prohibition against unfair or deceptive acts or practices in
section 5 of the Federal Trade Commission Act; \34\ section 8 of the
Real Estate Settlement Procedures Act; \35\ and the Truth in Lending
Act.\36\ The list of discriminatory or other illegal credit practices
in the Proposal was not exhaustive, and the OCC also would have
considered credit-related violations of the Military Lending Act (MLA)
and Servicemembers Civil Relief Act (SCRA) \37\ based on guidance that
predates the June 2020 Rule.\38\
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\31\ 15 U.S.C. 1691 et seq.
\32\ 42 U.S.C. 3601 et seq.
\33\ Public Law 103-325, 108 Stat. 2190 (1994) (codified at 15
U.S.C. 1601-02; 15 U.S.C. 1639-41).
\34\ 15 U.S.C. 45.
\35\ 12 U.S.C. 2607.
\36\ 15 U.S.C. 1601-1667f (as amended).
\37\ See 10 U.S.C. 987 and 50 U.S.C. 3901 et seq., respectively.
\38\ See OCC PPM 5000-43, Impact of Evidence of Discriminatory
or Other Illegal Credit Practices on Community Reinvestment Act
Ratings (Aug. 15, 2018).
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3. Retail and CD Activities. The appropriate Federal banking agency
would have evaluated banks' CRA performance based on (1) retail lending
(i.e., home mortgage loans, small business loans, small farm loans, and
consumer loans, as applicable) and CD loans; (2) qualified investments;
and (3) CD services, as each of these terms would have been defined in
the Proposed Rule and considered in the applicable performance tests
and standards.
4. Assessment Area(s).
[cir] A bank would have delineated assessment area(s) that
generally--
[ssquf] Included the geographies where the bank has its main
office, branch(es), and deposit-taking ATMs (as applicable), as well as
any surrounding geographies where the bank has originated or purchased
a substantial portion of its loans; and
[ssquf] Consisted of one or more MSAs, metropolitan divisions, or
political subdivisions with a bank permitted to adjust the boundaries
of its assessment area(s) to include only the portion of the political
subdivision that the bank could reasonably be expected to serve.
[cir] Assessment area(s) would have been required to:
[ssquf] Consist of whole geographies;
[ssquf] Not reflect illegal discrimination;
[ssquf] Not arbitrarily exclude LMI geographies; and
[ssquf] Not extend substantially beyond an MSA or State boundary
unless the bank's assessment area(s) was in a multistate MSA.
5. Data Collection, Recordkeeping, and Reporting.
[cir] Banks, other than small banks, would have collected,
maintained, and reported certain data related to small business loans,
small farm loans, CD loans, and assessment areas. Banks, other than
small banks, that are subject to the Home Mortgage Disclosure Act of
1975 (HMDA) reporting requirements \39\ also would have reported
certain information related to home mortgage lending outside of the
MSA(s) where a bank has a home or branch office (or outside any MSA).
The Proposed Rule also would have included certain optional data
collection and reporting provisions.
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\39\ 12 U.S.C. 2801 et seq.
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[cir] The Proposed Rule would have reinstated requirements
regarding the content and location of the public file and public
notices that were revised or eliminated in the June 2020 Rule.
6. Ratings. The appropriate Federal banking agency would have
determined a bank's CRA rating as provided in proposed appendix A.
7. Integration of National Bank and Savings Association Rules. The
Proposed Rule would have reinstated separate rules for national banks
(at 12 CFR part 25, subparts A through E and appendices A and B) and
savings associations (at 12 CFR part 195, subparts A through C and
appendices A and B). The June 2020 Rule integrated these rules in 12
CFR part 25.
8. Transition Period. The Proposed Rule would have required banks
to comply with the final rule as of the effective date with no option
to follow any provisions in the June 2020 Rule during the period
between when the OCC would adopt the Proposed Rule in final form and
the Agencies would adopt updated interagency CRA rules in final
form.\40\ The Proposal discussed whether the OCC should address certain
transition considerations in the final rule.
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\40\ The period of time between the effective date of this final
rule and the effective date of final updated interagency CRA rules
is referred to herein as the ``interim period.''
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III. Comments on the Proposed Rule
The OCC received 62 comment letters on the Proposed Rule, the
majority of which generally supported rescinding the June 2020 Rule and
the ongoing interagency effort to issue updated CRA rules. These
comments addressed a wide range of issues and came from a variety of
stakeholders and interested parties, including the banking industry,
community and other advocacy groups, State and local governments, and
the general public. The discussion below
[[Page 71331]]
identifies the significant issues raised by these commenters and
explains how the OCC addresses these issues in the final rule. This
final rule will provide certainty to stakeholders, eliminate burden
associated with continuing to transition to the June 2020 Rule, and
better position the OCC to engage in an interagency rulemaking process
to update and modernize the CRA rules.
Transition Provisions. The OCC proposed to replace the June 2020
Rule with rules for banks based on the 1995 Rules. The Proposed Rule
included a description of several transition considerations that the
OCC was contemplating to provide for a smooth transition from the June
2020 Rule. Although commenters generally supported rescission of the
June 2020 Rule, they expressed opposing views on replacing the June
2020 Rule with rules based on the 1995 Rules. Community groups and
other commenters generally supported the Proposal for reasons including
(1) the OCC should not have independently promulgated the June 2020
Rule; (2) there would be confusion and inconsistent CRA evaluations if
there were different CRA regulatory regimes applicable to different
types of IDIs; (3) the June 2020 Rule is not yet fully effective, which
lessens the impact of its rescission; (4) uniformity of CRA rules for
all IDIs during the interim period would facilitate the ongoing
interagency rulemaking process; and (5) the June 2020 Rule both failed
to ensure that banks meet their local communities' banking needs and
disincentivized investment in LMI communities and communities of color.
One commenter suggested that the final rule should return banks to the
1995 Rules but include certain innovations from the June 2020 Rule,
including deposit-based assessment areas and the list of qualifying
activities.
In contrast, industry and trade associations generally opposed
transitioning back to the 1995 Rules. Some of these commenters stated
that banks have already changed their CRA programs to comply with the
June 2020 Rule and another transition would be burdensome. They
requested that the OCC balance the benefits of interagency uniformity
with the need to minimize the disruption--for both banks and their CRA
reinvestment partners--that will result if the OCC adopts the Proposed
Rule. Similarly, others asserted that implementing the Proposed Rule
would be disruptive, wasteful, and confusing. They recommended that the
OCC minimize the number of regulatory transitions, the burden, and the
confusion that would result from multiple rule changes.\41\
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\41\ One commenter also expressed concern that reinstatement of
the 1995 Rules could lead to regressive financial policies in low-
income communities and suggested that the OCC consider lessons from
the financial crisis and solicit feedback from the most affected
communities.
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Several of these commenters requested that, during the interim
period, the OCC (1) retain the provisions of the June 2020 Rule with a
compliance date of October 1, 2020, and (2) revert to the 1995 Rules
only for provisions of the June 2020 Rule with a compliance date of
January 1, 2023, or January 1, 2024. Several commenters also requested
that the OCC provide banks with flexibility to continue to utilize
aspects of the June 2020 Rule or the 1995 Rules during the interim
period, including by (1) providing consideration for all activities
that qualify under either the June 2020 Rule or the 1995 Rules and (2)
allowing banks that were in the process of transitioning to the June
2020 Rule to retain the CRA programs they have in place as long as
their programs comply with either the 1995 Rules or the June 2020 Rule.
After considering the comments on transition issues, the OCC is
adopting the final rule largely without modification from the Proposed
Rule and with a delayed compliance date for two provisions: All banks
will need to comply with the rule by January 1, 2022, with the
exception of the public file and public notice provisions (Sec. Sec.
25.43 and 25.44 of the final rule). As discussed below, banks will need
to comply with Sec. Sec. 25.43 and 25.44 by April 1, 2022.
Notwithstanding commenters' concerns regarding the burden for banks to
transition back to a rule based on the 1995 Rules, it is the view of
the OCC that this burden will be limited because the June 2020 Rule has
only been partially implemented. Further, the alternatives suggested by
the commenters would create confusion. For example, allowing banks the
flexibility to elect to operate under either the June 2020 Rule or the
1995 Rules would create confusion for stakeholders regarding which
regulatory framework applied during banks' CRA evaluations. It also
would undermine the goal of a consistent set of rules for all IDIs and
could delay the issuance of the Agencies' updated interagency CRA rule.
For example, creating a hybrid regulatory framework that leverages
aspects of both the June 2020 Rule and the 1995 Rules could increase
the supervisory burden and draw OCC resources away from the interagency
CRA rulemaking efforts.
By finalizing this rule with an effective date of January 1, 2022,
and a compliance date of April 1, 2022, for Sec. Sec. 25.43 and 25.44,
all IDIs will be subject to the same general regulatory framework at
the earliest reasonable date, which will facilitate the Agencies'
issuance of updated interagency CRA rules. To address concerns
regarding the burden associated with this decision, the OCC will afford
banks the implementation flexibility permitted by the transition
provisions of the final rule and the Interagency Questions and Answers
Regarding Community Reinvestment (Q&As) for the 1995 Rules \42\ and
other CRA guidance, including the application of performance context.
For example, in evaluating a bank's performance from October 1, 2020,
through the interim period, the OCC will consider the impact that
regulatory changes had on the bank's ability to engage in qualifying
activities as part of its performance context. In addition, the final
rule's delayed compliance date of April 1, 2022, for the public file
and public notice provisions will ease burden associated with this
final rule.
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\42\ 81 FR 48506 (July 25, 2016).
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Qualifying Activities. The Proposed Rule would have replaced the
qualifying activities criteria in the June 2020 Rule with the 1995
Rules' home mortgage loan, small business loan, small farm loan,
consumer loan, and CD definitions. The Proposed Rule also would have
replaced the definitions related to the qualifying activities criteria
in the June 2020 Rule with the applicable definitions under the 1995
Rules. The Proposed Rule would have eliminated June 2020 Rule
definitions that did not exist in the 1995 Rules.
The Proposal also explained that banks would receive consideration
in their CRA examinations for activities that met the qualifying
activities criteria or definitions in effect at the time that the banks
conducted the activities.\43\ Under the final rule, as was also the
case under the June 2020 Rule, a CRA activity may include a legally
binding
[[Page 71332]]
commitment to lend or invest. A legally binding commitment will be
considered to have been conducted on the date that the commitment is
legally binding on the bank. This practice is consistent with the OCC's
longstanding treatment under the 1995 Rules of legally binding
commitments.\44\ Therefore, under the final rule, a legally binding
commitment to lend or invest will be considered under the CRA
regulatory framework that was in effect at the time the commitment
became legally binding on the bank.
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\43\ For example, if a bank originated a loan or entered into a
legally binding commitment to lend on December 20, 2021, to build a
charter school in which 40 percent of the students received free or
reduced price school lunch, that loan would receive consideration in
a bank's CRA examination even if the CRA examination took place
after the effective date of the final rule (January 1, 2022) because
this activity is a qualifying activity under the June 2020 Rule. See
June 2020 Rule, 12 CFR 25.04(c)(5)(i). However, if the bank made the
same loan or entered into the same legally binding commitment to
lend on January 20, 2022, that loan or commitment would not qualify
under the CD definitions in the final rule, and, therefore, would
not receive consideration in a future CRA examination. See 12 CFR
25.12(g) and (h) of this final rule.
\44\ See 12 CFR 25.21-27 of this final rule. See also Q&A Sec.
__.23(e); Q&A Sec. __.26(b)-4.
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The OCC asked whether its proposal to consider activities based on
whether they qualified at the time the bank (1) conducted the
activities or (2) entered into a legally binding commitment to conduct
the activities was a reasonable approach to address the proposed
changes to the activities that would receive consideration in CRA
examinations.
Many commenters supported the elimination of the June 2020 Rule's
qualifying activities criteria in the final rule and returning to the
definitions in the 1995 Rules.\45\ Other commenters advocated retaining
the June 2020 Rule's qualifying activities criteria, asserting that
their elimination would negatively affect banks' communities. For
example, one commenter asserted that the broader definition of
qualifying activities in the June 2020 Rule provides an incentive for
banks to engage in activities that benefit communities, including LMI
and underserved persons, and that this result is consistent with the
CRA's intent.\46\ Another commenter suggested that retaining the June
2020 Rule's approach for qualifying activities would minimize
disruptions in ongoing investment decisions. Other commenters supported
retaining the current framework because of the burdens associated with
changing regulatory regimes. One commenter suggested that the OCC give
CRA consideration to any activity that qualifies under either the 1995
Rules or June 2020 Rule.
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\45\ One commenter suggested that, if legally permissible, the
OCC should retroactively discount the expanded activities under the
June 2020 Rule, particularly if done in the normal course of
business, and all expanded activities should be re-evaluated to
assess whether they benefitted the intended beneficiaries of the
CRA.
\46\ One of these commenters specifically objected to
reinstating the 1995 Rules' CD services definition, asserting that
there are many CRA volunteer services that provide tremendous
benefits to banks' communities but do not focus on providing
financial services to these communities.
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Many commenters expressed support for the proposal to provide
consideration for activities based on whether they qualified at the
time the activities were conducted or subject to a legally binding
commitment, with some commenters describing this approach as both
reasonable and appropriate. One community group stated that it would be
unfair to revoke consideration for activities that qualified at the
time that the activities were conducted.
After considering the comments, the OCC is adopting the retail
lending, CD, and related definitions as proposed and adopts the
proposed treatment of consideration for activities under the CRA. This
outcome ensures that, going forward, (1) banks will receive
consideration for activities that the Agencies have collectively
recognized help to meet community credit needs; (2) consistent rules
will apply to all IDIs; (3) banks will receive credit for dollars that
are already legally committed; and (4) the OCC is likely to be able to
more effectively work with the Board and the FDIC to determine the
types of activities that should receive consideration under an updated
interagency CRA rule. The final rule includes a provision in subpart D
that explains when activities qualify for CRA consideration in CRA
examinations based on the rule in effect at the time that the
activities were conducted.
Confirmation Process. The June 2020 Rule included a confirmation
process for qualifying activities that permits banks and other
interested parties to request OCC confirmation that a loan, investment,
or service is consistent with that rule's qualifying activities
criteria prior to engaging in the activity. Under the Proposed Rule,
the OCC would have removed the qualifying activities confirmation
process from the rule and replaced it with OCC procedures that would be
operationally similar to the June 2020 Rule's confirmation process, but
the OCC would have adapted the substance to conform to the 1995 Rules.
The OCC requested comment on this approach.
Both industry and community group commenters expressed support for
retaining a confirmation process. One industry commenter noted that,
regardless of whether the process is included in the final rule,
retaining a confirmation process would be the least disruptive outcome
for banks and interested parties. A community organization noted that
any confirmation process should be equally accessible to community-
based organizations and banks. Another community group stated that any
OCC delay in issuing guidance on the final rule's confirmation process
should not affect banks' responsibilities to comply with the rule as of
its effective date.
Given the broad support for a confirmation process in general and
the clarity provided by the June 2020 Rule's confirmation process, the
OCC is adopting the proposed approach and will provide guidance on the
scope and mechanics of this CD activity confirmation process.\47\
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\47\ As of January 1, 2022, confirmation letters issued under
the June 2020 Rule for qualifying activities that a bank has not yet
engaged in, or entered into a legally binding commitment for, would
no longer serve as OCC confirmation that an activity qualifies for
CRA consideration. Nonetheless, the activity may still receive CRA
consideration if it meets the CD definitions and other requirements
of the final rule.
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Illustrative List. The June 2020 Rule provided an illustrative list
of examples of CRA qualifying activities. The OCC indicated in the
Proposal that it would maintain this list on its website to help banks
determine whether activities conducted while the June 2020 Rule was in
effect are eligible for CRA consideration. While the OCC received few
comments on this topic, all of those who commented supported the
proposed approach of continuing to maintain the list of examples.\48\
The OCC believes that it may be useful to banks and other interested
parties to continue to have access to the June 2020 Rule's illustrative
list; therefore, the OCC will continue to make the list available on
the Agency's website. After January 1, 2022, banks that newly engage in
the activities on the illustrative list will only receive CRA
consideration if the activities also meet the retail or CD definitions
in the final rule.
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\48\ One commenter requested that the OCC preserve the four
illustrative examples of qualifying activities that involve access
to digital services as part of any amended guidance on CRA
qualifying activities. These examples will remain on the
illustrative list; however, new activities consistent with these
examples that are conducted after January 1, 2022 will only receive
consideration to the extent that they also are consistent with the
retail or CD definitions in the final rule.
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Bank Asset-Size Thresholds. The June 2020 Rule increased the bank
asset-size thresholds for determining small, intermediate, and general
performance standards banks from the thresholds for determining small,
ISB, and large banks under the 1995 Rules.\49\ This increase
[[Page 71333]]
changed some banks' asset-size categories (e.g., certain banks that
were ISBs under the 1995 Rules are small banks under the 2020 Rule, and
certain banks that were large banks under the 1995 Rules became
intermediate banks under the June 2020 Rule). Under the Proposed Rule,
the OCC would have reinstated the bank asset-size thresholds of the
1995 Rules.\50\ For banks that would have transitioned from small banks
to ISBs as a result of this, under the Proposal, the OCC would have
considered this change in assessing the bank's performance context.
Although the proposed reinstatement of bank asset-size thresholds would
have applied as of January 1, 2022, the Proposal described a transition
period for the new data collection, recordkeeping, and reporting
requirements for intermediate banks that would return to being
designated as large banks or newly become designated as large banks,
which is addressed in more detail below.
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\49\ Prior to the enactment of the June 2020 Rule, (1) small
banks were banks with less than $326 million in assets; (2) ISBs
were banks with assets between $326 million but less than $1.305
billion; and (3) large banks were banks with assets of $1.305
billion and above. Under the June 2020 Rule, (1) small banks are
banks with assets up to $600 million; (2) intermediate banks are
banks with assets of greater than $600 million and up to $2.5
billion; and (3) general performance banks (referred to as large
banks under the 1995 Rules' framework) are banks with greater than
$2.5 billion in assets. As proposed, (1) small banks would have been
banks of less than $330 million in assets; (2) ISBs would have been
banks with assets between $330 million and less than $1.322 billion;
and (3) large banks would have been banks with assets of $1.322
billion and above.
\50\ The bank asset-size thresholds in this final rule reflect
the adjusted thresholds issued by the Board and FDIC on December 17,
2020, effective January 1, 2021. See, e.g., FDIC PR 140-2020,
Agencies Release Annual CRA Asset-Size Threshold Adjustments for
Small and Intermediate Small Institutions, available at <a href="https://www.fdic.gov/news/press-releases/2020/pr20140.html">https://www.fdic.gov/news/press-releases/2020/pr20140.html</a>. The Agencies
make annual adjustments to the bank asset-size thresholds based on
the change in the average of the Consumer Price Index for Urban Wage
Earners and Clerical Workers (CPI-W), not seasonally adjusted, for
each 12-month period ending in November. The adjusted thresholds are
typically available mid- to late-December and are effective January
1 of the following year. Once the Agencies determine the annual
adjustment for calendar year 2022, the OCC will publicize the
updated bank asset-size thresholds.
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The OCC received several comments on the proposed changes to the
bank asset-size thresholds. Generally, industry commenters did not
support the proposed changes, noting that banks recently adjusted their
CRA programs to satisfy the June 2020 Rule and that the Proposed Rule
would require another set of adjustments and associated burden (e.g.,
small banks that become ISBs would be subject to a CD test;
intermediate banks that become large banks would be subject to separate
lending, investment, and service tests and to new or reinstated data
collection, recordkeeping, and reporting requirements).
Commenters also noted that reinstating the 1995 Rules' bank asset-
size thresholds and then revising them again in a future interagency
rulemaking would both be wasteful and burdensome, in part due to
institutions' limited staff. One commenter also asserted that the
asset-size thresholds under the 1995 Rules were too low, do not reflect
the current banking industry, and should not be reinstated. Another
commenter noted that the proposed asset-size thresholds are problematic
because many banks now have inflated balance sheets due to government
programs related to the COVID-19 pandemic.
Other commenters stated that an immediate effective date for the
reinstated asset-size thresholds would require banks to quickly modify
their current procedures and processes (e.g., purchasing CRA software;
educating specific lines of business about the new requirements;
updating job aids; and implementing new requirements and testing
processes). Several commenters suggested that banks that would have to
comply with new standards or tests under a final rule (e.g., the ISB
performance standards or large bank lending, investment, and services
tests) should be provided with additional time to comply. One commenter
supported a transition period for banks that were below the 1995 Rules'
large bank asset-size threshold prior to the June 2020 Rule's effective
date but now exceed the proposed large bank asset-size threshold. This
commenter suggested a one-year transition, a two-year transition, or
retaining the June 2020 Rule's bank asset-size thresholds for the
duration of the interim period.
Community groups and other commenters generally supported the
Proposal to revert to the 1995 Rules' asset-size thresholds. These
commenters suggested that it should not be overly burdensome for banks
to transition back to their former bank types because many banks likely
retained their reporting infrastructure and software programs.
After considering these comments, the OCC is adopting the Proposed
Rule's bank asset-size thresholds without modification. Therefore, any
shift by banks to a new bank type (i.e., small bank, ISB, or large
bank) will be based on the final rule's definitions and effective
January 1, 2022. Reinstating the 1995 Rules' asset-size thresholds is
one way that the final rule establishes a consistent rule applicable to
all IDIs, which, as discussed elsewhere in this preamble, will likely
facilitate the interagency CRA rulemaking process. The final rule's
consideration of performance context should provide sufficient
flexibility to address commenters' concerns about the burden associated
with being evaluated under new tests and standards. For example, the
OCC will consider a bank's need to change its CRA procedures and
processes (e.g., reallocating staff and other resources; initiating or
increasing its CD activities; or purchasing new software) when
evaluating the bank under the final rule's applicable performance tests
and standards. Furthermore, as discussed below, the OCC will provide
banks that will be large banks for the first time under the final rule
with additional time to comply with the rule's data requirements.
Data Collection, Recordkeeping, and Reporting Requirements for
Banks Transitioning from Intermediate Banks to Large Banks. Under the
June 2020 Rule, banks with assets between $1.305 billion and $2.5
billion changed bank type from large bank (their classification under
the 1995 Rules) to intermediate bank. As a result, these banks were no
longer subject to large bank data collection and recordkeeping
requirements starting in 2021, and, under the June 2020 Rule, they
would not have been subject to large bank data reporting requirements
in 2022.
Under the Proposed Rule, the OCC would have (1) treated banks that
exceeded the ISB asset-size threshold \51\ as large banks and (2)
applied the large bank data requirements to banks that were designated
as intermediate banks under the June 2020 Rule beginning one year from
the final rule's effective date (one-year proposed grace period).\52\
This treatment is consistent with the OCC's general practice under the
1995 Rules.
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\51\ See supra note 28.
\52\ Under the June 2020 Rule, banks that exceeded the
intermediate bank threshold remained subject to the 1995 Rules' data
collection, recordkeeping, and reporting requirements, and,
therefore, the Proposed Rule would not have imposed new requirements
on these banks.
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As discussed above, industry commenters generally objected to the
proposed changes to the bank asset-size thresholds largely because of
the burden associated with the data requirements for the banks subject
to new data requirements (e.g., purchasing new software to comply with
the applicable data requirements). Several commenters recommended that
the OCC retain the June 2020 Rule's bank asset-size thresholds for the
interim period. Others requested additional transition time to comply
with the Proposed Rule's data requirements, or flexibility from the OCC
when assessing an affected bank's data integrity. For example, one
commenter suggested that the OCC apply a ``good faith'' standard in
evaluating CRA performance during the interim period, including by (1)
not issuing a ``Needs to Improve'' rating based on inaccuracies or
deficiencies in
[[Page 71334]]
an affected bank's data if the bank demonstrates its program was
developed and administered in good faith and (2) giving the bank a
reasonable period of time to correct inaccuracies or deficiencies prior
to issuing the bank's final performance evaluation rating.
Conversely, community groups generally supported the immediate
reinstatement of the 1995 Rules' large bank data requirements for all
large banks as of the effective date of the final rule. One commenter
noted that this data is critical for assessing whether the bank is
meeting community needs, and there should be no delay in providing it
to the public. The OCC also received a comment suggesting different
treatment for those banks that were large banks prior to the June 2020
Rule (redesignated large banks) and those banks that would, under the
Proposal, be large banks for the first time (newly designated large
banks).\53\
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\53\ As of September 30, 2021, approximately 36 OCC-regulated
redesignated large banks and 31 OCC-regulated newly designated large
banks would exceed the ISB threshold of the final rule and,
therefore, be considered large banks under the final rule.
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Because redesignated large banks have prior experience with the
data requirements in the 1995 Rules, it does not appear to be necessary
to provide them with a grace period for compliance with the large bank
data collection, recordkeeping, and reporting requirements. The OCC
notes that, although the final rule requires redesignated large banks
to report calendar year 2022 data by March 1, 2023--a period of 14
months from the final rule's effective date--it contains no specific
date during 2022 by which redesignated large banks must actually
commence the applicable data collection and recordkeeping. Therefore, a
redesignated large bank does not need to have its data collection and
recordkeeping systems in place by January 1, 2022, to be in compliance
with the final rule.\54\
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\54\ The OCC is not requiring data reporting for calendar year
2021 for any redesignated or newly designated large banks. OCC
guidance provided that intermediate banks under the June 2020 Rule
that were formerly large banks under the 1995 Rules were exempt from
data collection and recording requirements for calendar year 2021
and reporting requirements for calendar year 2022. See OCC Bulletin
2020-99, Community Reinvestment Act: Key Provisions of the June 2020
CRA Rule and Frequently Asked Questions (Nov. 9, 2020), available at
<a href="https://www.occ.gov/news-issuances/bulletins/2020/bulletin-2020-99.html">https://www.occ.gov/news-issuances/bulletins/2020/bulletin-2020-99.html</a>. Therefore, although one commenter expressed an interest in
having redesignated large banks report 2021 data, it would be
unreasonable for banks expressly exempt from data collection and
recordkeeping requirements in calendar year 2021 to be expected to
report that data by March 1, 2022. This approach is consistent with
the 1995 Rules, which did not require banks that were small banks or
ISBs in the prior calendar year to report data.
---------------------------------------------------------------------------
In addition, the OCC intends to work with these redesignated large
banks over the next year to ensure they are on track to report calendar
year 2022 data by March 1, 2023, and to provide them with any necessary
flexibility in terms of missing information or other limited error
tolerances for calendar year 2022 data. However, the error tolerances
afforded these banks will only last one year and the data collection,
recordkeeping, and reporting systems and processes of redesignated
large banks must be fully functional by January 1, 2023, including with
respect to data integrity. This approach should provide a sufficient
transition period to appropriately balance the need for CRA data from
redesignated large banks under the final rule with the practical
challenges these banks may encounter.
In contrast, the OCC has determined it is appropriate to apply the
proposed grace period approach to newly designated large banks. These
banks do not have the same prior experience with the data collection,
recordkeeping, and reporting requirements under the 1995 Rules, and it
is reasonable to provide them with additional time to establish the
systems and processes necessary to comply with the final rule's data
requirements. Therefore, the OCC is providing these banks with a one-
year grace period during which they will not be subject to the final
rule's data requirements. Specifically, the OCC will require these
banks to comply with the large bank data collection and recordkeeping
requirements beginning on January 1, 2023, and report calendar year
2023 data consistent with the large bank reporting requirements by
March 1, 2024. Additionally, the OCC will evaluate these banks under
the final rule's ISB lending and CD tests until they report the data
necessary to evaluate them under the rule's large bank lending,
investment, and service tests.
Affiliate Activities. The June 2020 Rule does not specifically
address how the CRA activities of bank affiliates are treated but
states that only activities conducted by a bank qualify for CRA
consideration. In January 2021, the OCC issued an interpretive letter
that limited the consideration of affiliate activities (IL 1177).\55\
Under the Proposed Rule, the OCC would have considered a bank's
affiliate's CRA activities consistent with the affiliate treatment
provisions in the 1995 Rules, which permitted banks to elect to include
affiliate activities in their CRA evaluations, subject to certain
limitations.\56\ As explained in the Proposal, the OCC also would have
rescinded IL 1177.
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\55\ The policy announced in that interpretive letter was set to
take effect April 1, 2022, and provided that a bank would not have
received CRA consideration for affiliate activities (including
activities conducted by the nonbank parent and sister companies of
the bank) unless the bank could demonstrate that it provided
financing for or otherwise supported the qualifying activities of
the affiliates. See IL 1177, OCC Senior Deputy Comptroller and Chief
Counsel's Interpretation: Community Reinvestment Act Qualifying
(CRA) Activities Conducted by a National Bank's or Savings
Association's Subsidiaries and Affiliates, Including Nonbank Parent
and Sister Companies of a National Bank or Savings Association Under
Certain Circumstances, Can Receive CRA Credit Under the June 2020
CRA Final Rule (Jan. 4, 2021), available at <a href="https://www.occ.gov/topics/charters-and-licensing/interpretations-and-actions/2021/int1177.pdf">https://www.occ.gov/topics/charters-and-licensing/interpretations-and-actions/2021/int1177.pdf</a>.
\56\ See Sec. Sec. 25.22(c), 25.23(c), 25.24(c), 25.25(d), and
25.27(c)(3) of the Proposed Rule. See also Q&A Sec. __.22(c)(2)(i)-
1; Q&A Sec. __.22(c)(2)(ii)-1; Q&A Sec. __.22(c)(2)(ii)-2; Q&A
Sec. __.24(e)-1; and Q&A Sec. __.26-1.
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Commenters that addressed affiliate activities generally supported
the OCC's proposed treatment of these activities, and the OCC adopts
the Proposed Rule as final on this issue. This decision should be
generally nondisruptive relative to the alternatives because it (1)
enables banks to retain their existing business models for engaging in
CRA activities; (2) ensures that banks receive consideration for CRA-
qualifying activities; and (3) promotes banks' continued efforts to
serve their communities. Consequently, as of January 1, 2022, this
final rule supersedes IL 1177, and banks may receive consideration for
affiliate activities as provided for in the final rule.\57\
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\57\ Consistent with this statement, the OCC will officially
rescind IL 1177 as of January 1, 2022.
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Strategic Plans. As explained in the Proposal, the June 2020 Rule
revised the requirements for strategic plans by, among other things,
permitting banks to include target market assessment areas in their
strategic plans. The OCC proposed to allow banks to maintain strategic
plans that the Agency had approved under the June 2020 Rule, including
plans that contained target market assessment areas.\58\ Although not
addressed in the Proposal, the OCC
[[Page 71335]]
had provided in guidance regarding the June 2020 Rule that banks could
establish goals for CRA-qualifying activities conducted outside of
their assessment areas.\59\
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\58\ The OCC stated in the Proposal that permitting strategic
plan banks to maintain their target market assessment areas was not
inconsistent with proposed 12 CFR 25.41 and would cause the least
disruption during the transition from the OCC's June 2020 Rule to
any future interagency final rules. The OCC notes that there are
currently no banks with strategic plans, or strategic plans pending
OCC approval by December 31, 2021, that include goals established
for target market assessment areas. As a result, the remaining
discussion of strategic plan transition issues focuses on issues
other than target market assessment areas.
\59\ Pursuant to OCC Bulletin 2020-99, a bank operating under an
approved strategic plan could receive consideration for qualifying
activities conducted outside of its assessment area(s) by
establishing a separate goal for those activities. The OCC would
judge the goal for outside qualifying activities independently of
the goals established for delineated assessment area(s). These
outside activities could elevate bank performance from satisfactory
to outstanding but could not compensate for less than satisfactory
overall performance inside a bank's assessment area(s). Poor
performance in one area could not be offset by performance that
exceeds plan goals in another area.
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Several commenters supported maintaining strategic plans approved
under the June 2020 Rule with one commenter generally advocating for
maintaining the status quo for portions of the June 2020 Rule. One
commenter supported maintaining these plans but only if the strategic
plan period is already in effect. A few commenters expressed concern
about how these strategic plans would be affected if the final rule
rescinds the June 2020 Rule's qualifying activities criteria, with some
recommending that affected banks be permitted to continue to rely on
those criteria while the plan is in effect.\60\ In contrast, a
community group commenter suggested that the OCC work with banks to
modify strategic plans including target market assessment areas. The
commenter noted that although this would put additional burden on the
OCC and banks, it would not be unreasonable considering the
circumstances and that it is not wholly sensible that banks would
utilize strategic plans based on a rule that no longer applies.
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\60\ The challenges associated with meeting strategic plan goals
was one reason commenters requested that, during the interim period,
the OCC retain either (1) the provisions of the June 2020 Rule with
an October 1, 2020, compliance date or (2) the qualifying activities
criteria and related definitions.
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Under the final rule, strategic plans approved under the June 2020
Rule may remain in effect but these plans must comply with the
provisions of the final rule, as applicable.\61\ This application of
the final rule to strategic plans would put all banks--those with
strategic plans and those without--on a level playing field. Because
banks will be subject to the applicable aspects of the final rule, the
guidance that permitted banks to develop outside of assessment areas
goals is no longer applicable.\62\ Specifically, for strategic plans,
the final rule provides that the OCC will consider a bank's record of
helping to meet the credit needs of its assessment area(s). Therefore,
provisions in strategic plans that include goals for activities outside
a bank's assessment area(s) will no longer be applicable, and the OCC
will no longer evaluate these activities when assessing the bank's
performance. Because the final rule does not address assessing
performance outside of a bank's assessment area(s), the OCC will not
rate a bank ``Needs to Improve'' or ``Substantial Noncompliance''
solely for failure to meet goals established under the June 2020 Rule
for any area(s) outside of its assessment area(s).
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\61\ Approved strategic plans will remain in effect for the
duration of the term set out in the plan, unless otherwise amended.
\62\ See supra note 59.
---------------------------------------------------------------------------
In addition, the OCC is committed to minimizing burden on banks
transitioning to the final rule by giving them the appropriate
flexibility permitted under the final rule, Q&As and other CRA
guidance, and longstanding OCC policy in evaluating their performance
relative to the goals outlined in strategic plans approved under the
June 2020 Rule. Therefore, the OCC will continue to consider a bank's
activities in the broader statewide or regional area(s) that include a
bank's assessment area(s), consistent with the guidance in the
Q&As.\63\
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\63\ Q&A Sec. __.12(h)-6.
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Nonetheless, if a bank is concerned that it will not be able to
meet the measurable goals specified in its strategic plan due to the
regulatory changes in the final rule, the bank may request to amend its
strategic plan based on the process outlined in Sec. 25.27(h) of the
final rule. While the OCC will not require any bank to amend its
strategic plan, the OCC will work expeditiously with banks that request
amendments. This approach will enable the OCC to balance its interest
in reestablishing consistency with respect to the CRA rules with banks'
individual circumstances.
CRA Activities Outside of a Bank's Assessment Area(s). The June
2020 Rule provides for nationwide consideration of qualifying
activities for banks evaluated under the general performance standards.
As explained in guidance addressing implementation of the June 2020
Rule, if certain conditions are met during the period transitioning
from the 1995 Rules to the June 2020 Rule, an OCC-regulated bank could
receive consideration for qualifying activities conducted outside of
its assessment area(s), even if those activities do not directly or
indirectly serve its assessment area(s).\64\
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\64\ See OCC Bulletin 2020-99.
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Under the Proposed Rule, the OCC would have considered a bank's
activities outside of its assessment area(s) in limited circumstances
and generally not on a nationwide basis, consistent with the 1995 Rules
and the Q&As. The OCC requested comment, however, on whether it should
continue to consider bank activities that do not directly or indirectly
serve either a bank's assessment area(s) or the broader statewide or
regional area(s) that include the bank's assessment area(s). For
commenters who supported consideration for those activities, the OCC
also requested comment on what conditions, if any, should apply.
Several community group commenters supported limiting consideration
for activities that do not directly or indirectly serve either a bank's
assessment area(s) or the broader statewide or regional area(s) that
include a bank's assessment area(s). The commenters noted that the
Agencies should have the same rules and apply the same standards to
activities conducted outside of the assessment areas of the IDIs they
supervise. One community group commenter also stated that consideration
of these activities should end on the effective date of the final rule.
In contrast, some industry commenters asserted that the OCC should
continue to consider activities conducted outside of banks' assessment
areas.
The final rule does not provide for consideration of activities
that do not directly or indirectly serve either a bank's assessment
area(s) or the broader statewide or regional area(s) that include a
bank's assessment area(s). This approach is more consistent with the
approach taken by the 1995 Rules and likely will enable the OCC to work
more effectively with the Board and the FDIC in the interagency
rulemaking process on a consistent approach for the geographic
consideration of CD activities.\65\
---------------------------------------------------------------------------
\65\ Under the final rule, banks may receive consideration for
investments in nationwide funds consistent with the guidance in Q&A
Sec. __.23(a)-2.
---------------------------------------------------------------------------
Public File. The June 2020 Rule included requirements for the
content and location of a bank's public file that differed from those
in the 1995 Rules. The Proposed Rule would have restored the public
file content and location requirements in the 1995 Rules. As such, the
Proposed Rule would have required banks to (1) include additional
information in their public files; (2) make all the information in
their public file available at their main offices and, if an interstate
bank, at one branch office in each State; and (3) make more limited
information available at each
[[Page 71336]]
branch. Because the Proposed Rule would have imposed these additional
public file content and location requirements, the OCC requested
comment on whether banks would need additional time to comply and, if
so, whether three months after the final rule's effective date would be
sufficient time.
Some industry commenters suggested that, under the final rule,
banks should be given the flexibility to comply with the public file
requirements of either the 1995 Rules or June 2020 Rule. They argued
that this flexibility would reduce the burden for banks that very
recently transitioned to the June 2020 Rule's public file requirements.
One industry commenter suggested that banks should have four months to
comply if the rules are finalized as proposed. In contrast, other
commenters suggested that three months was sufficient for banks to make
these changes, with some noting that the proposed approach was to
revert to a well understood and established process.
The final rule adopts the three-month transition provision for
compliance with the final rule's public file requirements as proposed.
Therefore, banks will be required to comply with the final rule's
public file requirements by April 1, 2022. This transition period
should strike an appropriate balance between providing community groups
and other interested parties with access to the information that banks
will have to provide in their public files under the final rule and
ensuring that banks have adequate time to update their public files in
accordance with the requirements of the final rule.
Public Notice. The June 2020 Rule's public notice requirements
differed from the 1995 Rules' requirements. Under the Proposed Rule,
the 1995 Rules' public notice content and location requirements would
have been restored, requiring each bank to provide the public notice
content set out in appendix B of the Proposed Rule and place the notice
in (1) the public lobby of its main office and (2) each branch, if any.
Although the Proposed Rule would not have provided a transition period
for complying with this provision, the OCC requested comment on this
issue.
Some industry commenters suggested that the OCC should permit banks
to comply with the public notice requirements under either the 1995
Rules or June 2020 Rule because it would be burdensome for banks that
already transitioned to the June 2020 Rule's public notice requirement.
One commenter requested four months for banks to make necessary
changes, to the extent the OCC does not permit banks to use either the
June 2020 Rule's or 1995 Rules' requirements as requested. In contrast,
one commenter opposed any transition period.
The OCC agrees that it would be unduly burdensome to require banks
to comply with the public notice requirements as of the January 1,
2022, effective date. Therefore, banks will be required to comply with
the public notice requirements three months after the effective date of
the final rule, April 1, 2022. The three-month delayed compliance date
for the final rule's public notice provisions will mitigate burden
associated with the revised content and location requirements while
ensuring that interested parties are appropriately provided with the
requisite notice.
DOICP. Prior to issuing the June 2020 Rule, OCC policy provided
that the Agency would consider a bank's violation of the MLA or SCRA in
its CRA examination of that bank.\66\ The June 2020 Rule codified this
policy by including MLA and SCRA violations in the non-exhaustive,
enumerated list of DOICPs included in the rule that the OCC considers
in evaluating a bank's CRA performance.
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\66\ See supra note 38.
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Under the Proposed Rule, the codification of this policy would be
rescinded. The OCC did not intend, however, for this change to have a
substantive effect. Because the list of violations included in the
Proposed Rule is non-exhaustive, the OCC would have continued to
consider violations of the MLA and SCRA consistent with its
longstanding policy.\67\
---------------------------------------------------------------------------
\67\ Id.
---------------------------------------------------------------------------
The OCC received only one comment on this issue that opposed the
change. This commenter stated that MLA and SCRA are designed to create
a national standard of conduct and CRA evaluations should assess banks'
compliance with these laws. As noted above, the OCC would have
continued to consider MLA and SCRA violations under the Proposed Rule.
Because one of the OCC's primary goals in issuing the Proposed Rule was
to re-establish consistent rules for all IDIs, and because it is not
necessary to include MLA and SCRA violations in the rule for the
appropriate Federal banking agency to consider them in CRA
examinations, the OCC adopts the Proposed Rule as final on this issue.
Publication of CRA Performance Evaluations. One community group
commenter suggested that the OCC should instruct banks to make CRA
exams more prominent on their websites and that all applications for
new charters or for a change in control include publicly released CRA
plans available from the banks and the regulatory agencies. The OCC has
elected not to make this change at this time given the interest in
reestablishing consistent requirements for all IDIs.
Integration of National Bank and Savings Association Rules. Under
the June 2020 Rule, there is currently a single CRA rule that applies
to both national banks and savings associations, located at 12 CFR part
25. The Proposed Rule would have reverted back to separate CRA rules
for national banks and savings associations, 12 CFR part 25 and 12 CFR
part 195, respectively, as was the case under the 1995 Rules. These
separate rules, originally issued on an interagency basis, are
materially the same, with only a few differences, described below.
The OCC sought input from commenters on whether it should retain
the integrated rule or reinstate separate rules. Commenters did not
provide significant input on this issue. One industry commenter opposed
integration if it would prevent or deter the Agency from implementing a
final rule that would allow OCC-regulated banks to continue to operate
under the June 2020 Rule, and a member of the public expressed general
support for separate rules. The OCC notes that integrating the national
bank and savings association CRA rules will not affect the timing of
the final rule's implementation.
As a general matter, the OCC has integrated many of its national
bank and savings association rules for a variety of reasons, including
to reduce regulatory duplication and clarify when the same substantive
rule applies to both types of entities.\68\ For these same reasons, the
final rule maintains the integration of the national bank and savings
association CRA rules in a single CRA rule. Furthermore, keeping an
integrated rule will cause less confusion for stakeholders. The OCC
also notes that integrating the CRA rules in this final rule will
simplify the process of amending the OCC's CRA rule during the
interagency rulemaking process and negate the need for OCC-specific
integration provisions in the updated interagency rulemaking.
Therefore, the OCC is not adopting the proposed separate rules for
national banks and savings associations but is instead adopting an
integrated CRA rule. Specifically, the final rule sets out, in 12
[[Page 71337]]
CFR part 25, subparts A through E \69\ and appendices A and B, the CRA
rule applicable to both national banks and savings associations. This
integration should not have a material impact on any bank or any other
person or entity.
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\68\ See, e.g., 79 FR 28393 (May 16, 2014); 80 FR 43240 (July
21, 2015).
\69\ Subpart E, Prohibition Against Use of Interstate Branches
Primarily for Deposit Production, only applies to national banks.
---------------------------------------------------------------------------
Parts 25 and 195 under the 1995 Rules contained two substantive
differences that were retained in the Proposed Rule. First, the
Proposed Rule contained a small difference with respect to the effect
of a national bank's CRA performance on an application for a deposit
facility compared to a savings association's application. Under the CRA
statute, the Agencies must take into account an institution's CRA
performance record when evaluating an ``application for a deposit
facility.'' \70\ The statute defines an ``application for a deposit
facility'' to include the ``establishment of a domestic branch or other
facility with the ability to accept deposits.'' \71\ Consistent with
the 1995 Rules, proposed Sec. 25.29(a)(1) stated that the OCC would
take into account an applicant bank's CRA performance record in
considering an application to establish a ``domestic branch,'' while
proposed Sec. 195.29(a)(1) would have permitted the appropriate
Federal banking agency to consider this record in a savings
association's application to establish a ``domestic branch or other
facility that would be authorized to take deposits.'' Second, proposed
Sec. 25.29(b) would have required an application for a national bank
charter filed by an applicant other than an IDI to include a
description of the how the applicant will meet its CRA objectives and
the OCC to take into account this description in considering the
application. The Proposed Rule did not include a similar requirement
for an IDI applicant for a national bank charter. The Proposed Rule for
savings associations, Sec. 195.29(b), differed from the Proposed Rule
for national banks by including this requirement for every applicant
for a savings association charter, not just non-IDI applicants. The OCC
is including in the final rule separate provisions to reflect these
differences for national banks and savings associations.
---------------------------------------------------------------------------
\70\ 12 U.S.C. 2903(a)(2).
\71\ 12 U.S.C. 2902(3).
---------------------------------------------------------------------------
The final rule also includes a number of non-substantive or
technical changes to proposed part 25 and its appendices to reflect the
integration of the national bank and savings association rules. For
example, Sec. 25.11(c)(1)(ii) of the final rule explains that the OCC
has the authority to prescribe these rules for national banks, Federal
savings associations, and State savings associations and to enforce
these rules for national banks and Federal savings associations. It
further explains that the FDIC has the authority to enforce these rules
for State savings associations. Section 25.11(c)(1)(iii) of the final
rule explains that the phrase ``appropriate Federal banking agency''
will mean the OCC when the institution is a national bank or Federal
savings association and the FDIC when the institution is a State
savings association. This allows a single rule to apply to different
institutions.
The final rule also revises the proposed definition of ``bank'' in
Sec. 25.12(e) to include a definition of ``banks or savings
associations'' and a definition of ``banks and savings associations.''
Revising the proposed definition of the term ``bank,'' as opposed to
adding a separate definition for ``savings associations,'' preserves in
the final rule the numbering convention that is used in the Q&As.
However, because ``bank'' and ``savings association'' are not
separately defined, the final rule also revises Sec. Sec. 25.29 and
25.44 to use the terms ``insured national bank'' and ``savings
association'' in the parts of those section that apply to only one type
of institution. Lastly, the final rule does not include proposed 12 CFR
part 195.
Interagency Rulemaking. The OCC received a number of comments on
the June 2020 Rule and recommendations and ideas for the Agencies'
efforts to develop updated interagency CRA rules. Such comments are
outside the scope of the current rulemaking. The OCC will share these
comments with the Board and FDIC, as they are more relevant to the
interagency rulemaking process.
Technical Changes. The OCC proposed a technical correction to an
error in the 1995 Rules' cross-reference to the definition of ``foreign
bank'' at 12 CFR 25.62(a)(2) by replacing ``12 CFR 28.11(j)'' with ``12
CFR 28.11(i).'' The Agency received no comments on this change and
adopts the correction as proposed.
The final rule also includes three other technical corrections.
First, the final rule corrects the 1995 Rules' cross-reference to the
definition of ``Federal branch'' in 12 CFR 25.62(c) by replacing ``12
CFR 28.11(i)'' with ``12 CFR 28.11(h).'' Second, the final rule
corrects the 1995 Rules' cross-reference to the definition of the
``home State of the foreign bank'' in 12 CFR 25.62(d)(4)(i) by
replacing ``12 CFR 28.11(o)'' with ``12 CFR 28.11(n).'' Third, in
appendix B, the final rule replaces (1) the reference to ``Comptroller
of the Currency'' with ``Office of the Comptroller of the Currency
(OCC)'' and (2) references to the ``Comptroller'' and ``Deputy
Comptroller'' with ``OCC.''
IV. The Final Rule
For the reasons discussed above, the OCC finalizes the rule as
proposed, except as discussed above.\72\
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\72\ As referenced throughout this preamble, the final rule
incorporates the guidance in the Q&As and any other applicable
guidance related to the 1995 Rules.
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V. Regulatory Analyses
A. Paperwork Reduction Act
Certain provisions of the final rule contain ``collection of
information'' requirements within the meaning of the Paperwork
Reduction Act (PRA) of 1995.\73\ In accordance with the requirements of
the PRA, the OCC may not conduct or sponsor, and a respondent is not
required to respond to, an information collection unless it displays a
currently valid Office of Management and Budget (OMB) control number.
The OCC submitted the information collection requirements to OMB in
connection with the Proposed Rule and received pre-approval under OMB
Control No. 1557-0160.
---------------------------------------------------------------------------
\73\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------
Under the final rule:
<bullet> 12 CFR 25.25(b)--Requests for designation as a wholesale
or limited-purpose bank shall be made in writing with the OCC at least
three months prior to the proposed effective date of the designation.
<bullet> 12 CFR 25.27--Strategic plans shall be submitted at least
three months prior to proposed effective dates. Plans shall include
measurable goals and address all the performance categories. Plans
shall include a description of informal efforts to solicit public
suggestions, any written public comments received, and if revised
pursuant to public comment, a copy of the initial plan. Amendments to
plans shall be submitted in the case of a change in material
circumstances.
<bullet> 12 CFR 25.42(a)--Large banks shall collect and maintain
certain small business and small farm loan data in a machine-readable
form and report it annually pursuant to 12 CFR 25.42(b)(1).
<bullet> 12 CFR 25.42(b)(2)--Large banks shall report annually in
machine readable form the aggregate number and aggregate amount of
community development loans originated or purchased.
<bullet> 12 CFR 25.42(b)(3)--A large bank, if subject to reporting
under HMDA, shall report the location of each home mortgage loan
application, origination,
[[Page 71338]]
or purchase outside the MSAs where the bank has a home or branch
office.
<bullet> 12 CFR 25.42(c)(1)--Each bank shall collect and maintain
in machine readable form certain data for consumer loans originated or
purchased by the bank for consideration under the lending test. Under
12 CFR 25.42(c)(2)-(4), other information shall be included concerning
a bank's lending performance, including additional loan distribution
data.
<bullet> 12 CFR 25.42(d)--A bank that elects to have the OCC
consider loans by an affiliate, for purposes of the lending or
community development test or an approved strategic plan, shall
collect, maintain, and report the data that the bank would have
collected, maintained, and reported pursuant to 12 CFR 25.42(a)-(c),
had the loans been originated or purchased by the bank. For home
mortgage loans, the bank shall also be prepared to identify the home
mortgage loans reported under HMDA by the affiliate.
<bullet> 12 CFR 25.42(e)--A bank that elects to have the OCC
consider community development loans by a consortium or a third party,
for purposes of the lending or community development tests or an
approved strategic plan, shall report for those loans the data that the
bank would have reported under 12 CFR 25.42(b)(2), had the loans been
originated or purchased by the bank.
<bullet> 12 CFR 25.42(f)--Small banks that qualify for evaluation
under the small bank performance standards but elect evaluation under
the lending, investment, and service tests shall collect, maintain, and
report the data required for other banks under 12 CFR 25.42(a) and
25.42(b).
<bullet> 12 CFR 25.42(g)--A bank, except a bank that was a small
bank during the prior calendar year, shall collect and report to the
OCC by March 1 of each year a list for each assessment area showing the
geographies within the area.
<bullet> 12 CFR 25.43(a)--A bank shall maintain a public file that
contains certain specified details: All written comments and responses;
a copy of the public section of the bank's most recent CRA performance
evaluation; a list of the bank's branches; a list of the branches
opened or closed; a list of services offered; and a map of each
assessment area delineated by the bank.
<bullet> 12 CFR 25.43(b)--A large bank shall include in its public
files certain information pertaining to the institution and its
affiliates, if applicable, for each of the prior two calendar years. If
the bank has elected to have one or more categories of its consumer
loans considered under the lending test, for each of these categories,
it shall include the number and amount of loans: To low-, moderate-,
middle-, and upper-income individuals; located in low-, moderate-,
middle-, and upper-income census tracts; and located inside and outside
the bank's assessment area(s); and its CRA Disclosure Statement. A bank
required to report home mortgage loan data pursuant to 12 CFR part 1003
shall include a written notice that the institution's HMDA Disclosure
Statement may be obtained on the Consumer Financial Protection Bureau's
(Bureau's) website. A bank that elected to have the OCC consider the
mortgage lending of an affiliate shall include the name of the
affiliate and a written notice that the affiliate's HMDA Disclosure
Statement may be obtained at the Bureau's website. A small bank or a
bank that was a small bank during the prior calendar year shall
include: Its loan-to-deposit ratio for each quarter of the prior
calendar year and, at its option, additional data on its loan-to-
deposit ratio; and the information required for other banks by 12 CFR
24.43(b)(1), if it has elected to be evaluated under the lending,
investment, and service tests. A bank that has been approved to be
assessed under a strategic plan shall include in its public file a copy
of that plan. A bank that received a less than ``Satisfactory'' rating
during its most recent examination shall include in its public file a
description of its current efforts to improve its performance in
helping to meet the credit needs of its entire community. The bank
shall update the description quarterly.
<bullet> 12 CFR 25.43(c)-(e)--A bank shall make available to the
public for inspection upon request and at no cost to the public the
information required in these provisions at the main office or branch
as specified. Upon request, a bank shall provide copies, either on
paper or in another form acceptable to the person making the request,
of the information in its public file. A bank shall ensure that this
information is current as of April 1 of each year.
OCC Title of Information Collection: Community Reinvestment Act.
Frequency: On Occasion.
Affected Public: Businesses or other for-profit.
Total estimated annual burden: 113,351 hours.
Comments continue to be invited on:
a. Whether the collections of information are necessary for the
proper performance of the OCC's functions, including whether the
information has practical utility;
b. The accuracy or the estimate of the burden of the information
collections, including the validity of the methodology and assumptions
used;
c. Ways to enhance the quality, utility, and clarity of the
information to be collected;
d. Ways to minimize the burden of the information collections on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
e. Estimates of capital or startup costs and costs of operation,
maintenance, and purchase of services to provide information.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) \74\ requires an agency, in
connection with a final rule, to prepare a Final Regulatory Flexibility
Analysis describing the impact of the rule on small entities (defined
by the Small Business Administration for purposes of the RFA to include
commercial banks and savings institutions with total assets of $600
million or less and trust companies with total assets of $41.5 million
or less) or to certify that the rule will not have a significant
economic impact on a substantial number of small entities. The RFA does
not required this analysis, however, if the agency certifies that the
final rule will not have a significant economic impact on a substantial
number of small entities and publishes its certification and a short
explanatory statement in the Federal Register, along with its rule.
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\74\ 5 U.S.C. 601 et seq.
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The final rule will impact approximately 669 small entities. The
OCC estimates the annual cost for small entities to comply with the
final rule will be approximately $1,824 per bank ($114 per hour x 16
hours). In general, the OCC classifies the economic impact on an
individual small entity as significant if the total estimated impact in
one year is greater than 5 percent of the small entity's total annual
salaries and benefits or greater than 2.5 percent of the small entity's
total non-interest expense. Based on these thresholds, the OCC
estimates that, if implemented, the final rule will have a significant
economic impact on zero small entities, which is not a substantial
number. Therefore, the OCC certifies that the final rule will not have
a significant economic impact on a substantial number of small
entities.
C. Unfunded Mandates Reform Act of 1995
Pursuant to the Unfunded Mandates Reform Act of 1995,\75\ the OCC
considers whether a final rule includes
[[Page 71339]]
a Federal mandate that may result in the expenditure by State, local,
and tribal governments, in the aggregate, or by the private sector, of
$100 million or more in any one year (adjusted for inflation). The OCC
estimates that expenditures associated with the mandates in the final
rule will be roughly $6.2 million and, therefore, concludes the rule
will not result in an expenditure of $100 million or more annually
(adjusted for inflation) by State, local, and tribal governments, or by
the private sector.
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\75\ 2 U.S.C. 1532.
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D. Administrative Procedure Act
Pursuant to section 553(b)(3)(B) of the Administrative Procedure
Act (APA),\76\ general notice and the opportunity for public comment
are not required with respect to a rulemaking when an ``agency for good
cause finds (and incorporates the finding and a brief statement of
reasons therefor in the rules issued) that notice and public procedure
thereon are impracticable, unnecessary, or contrary to the public
interest.'' \77\ As described in the final rule's SUPPLEMENTARY
INFORMATION section, the final rule includes a few technical amendments
that the OCC did not include in its Proposed Rule. Because these
amendments are not substantive and merely correct cross-references and
a reference to the OCC, the OCC believes that public notice of these
changes is unnecessary and, therefore, that it has good cause to adopt
these changes without notice and comment.
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\76\ 5 U.S.C. 551 et seq.
\77\ 5 U.S.C. 553(b)(3)(B).
---------------------------------------------------------------------------
Under the APA, an agency is required to provide a 30-day delayed
effective date when publishing a substantive rule, with certain
exceptions including for good cause.\78\ The OCC believes it has good
cause to issue this final rule without a 30-day delayed effective date
for several reasons.
---------------------------------------------------------------------------
\78\ 5 U.S.C. 553(d).
---------------------------------------------------------------------------
First, the OCC's CRA evaluations for banks consider CRA activities
in full calendar year increments (i.e., January 1-December 31). A 30-
day delayed effective date would cause the final rule to take effect
after the start of the 2022 calendar year. This would cause a bank to
be subject to two different regulatory regimes during any three-year
examination period that includes 2022, including different approaches
to the activities that receive consideration in CRA evaluations and
different data collection, recordkeeping, and reporting requirements.
As was the OCC's experience with the June 2020 Rule, this would result
in more complicated written CRA performance evaluations, create
confusion for banks and other stakeholders reviewing CRA performance
evaluations, and make it more difficult to compare CRA performance
across the banking industry.\79\ Second, data collected on a calendar-
year basis is more useful to stakeholders than data collected for a
partial year. Finally, banks currently are required to comply with many
of the provisions in the 1995 Rules, which this final rule reinstates,
because the June 2020 Rule is only partially in effect. Therefore,
banks will not have to make changes to adjust to these provisions of
the final rule.
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\79\ The June 2020 Rule had an effective date of October 1,
2020, which resulted in two regulatory regimes applying during
calendar year 2020.
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For these reasons, the OCC finds that there is good cause to
publish this rule without a 30-day delayed effective date.
E. Riegle Community Development and Regulatory Improvement Act of 1994
Under the Riegle Community Development and Regulatory Improvement
Act of 1994 (RCDRIA), in determining the effective date and
administrative compliance requirements for new rules that impose
additional reporting, disclosure, or other requirements on IDIs, the
OCC must consider, consistent with principles of safety and soundness
and the public interest, any administrative burdens that such rules
will place on depository institutions, including small depository
institutions, and customers of depository institutions, as well as the
benefits of such rules.\80\ In addition, the RCDRIA requires new rules
and amendments to rules that impose additional reporting, disclosure,
or other new requirements on IDIs generally to take effect on the first
day of a calendar quarter that begins on or after the date on which the
rules are published in final form.\81\ The OCC has determined that this
final rule will impose additional reporting, disclosure, or other new
requirements on IDIs and considered the rule's burdens and benefits in
determining its effective date and the administrative compliance
requirements. The final rule's effective date provisions are consistent
with the requirements of the RCDRIA.
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\80\ 12 U.S.C. 4802(a).
\81\ 12 U.S.C. 4802(b).
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F. Congressional Review Act
The Congressional Review Act provides that if the OMB makes a
determination that a final rule constitutes a ``major rule,'' the rule
may not take effect until at least 60 days following its
publication.\82\ The Congressional Review Act defines ``major rule'' as
any rule that the Administrator of the Office of Information and
Regulatory Affairs of the OMB finds has resulted in or is likely to
result in--(A) an annual effect on the economy of $100,000,000 or more;
(B) a major increase in costs or prices for consumers, individual
industries, Federal, State, or local government agencies or geographic
regions; or (C) significant adverse effects on competition, employment,
investment, productivity, innovation, or on the ability of United
States-based enterprises to compete with foreign based enterprises in
domestic and export markets.\83\ The OCC has submitted the final rule
to the OMB for this major rule determination. As required by the
Congressional Review Act, the OCC will also submit the final rule and
other appropriate reports to Congress and the Government Accountability
Office for review.\84\
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\82\ 5 U.S.C. 801.
\83\ 5 U.S.C. 804(2).
\84\ 5 U.S.C. 801.
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List of Subjects in 12 CFR Part 25
Community development, Credit, Investments, National banks,
Reporting and recordkeeping requirements, Savings associations.
Authority and Issuance
0
For the reasons discussed in the preamble, and under the authority of
12 U.S.C. 93a, the Office of the Comptroller of the Currency revises 12
CFR part 25 as follows:
PART 25--COMMUNITY REINVESTMENT ACT AND INTERSTATE DEPOSIT
PRODUCTION REGULATIONS
Subpart A--General
Sec.
25.11 Authority, purposes, and scope.
25.12 Definitions.
Subpart B--Standards for Assessing Performance
25.21 Performance tests, standards, and ratings, in general.
25.22 Lending test.
25.23 Investment test.
25.24 Service test.
25.25 Community development test for wholesale or limited purpose
banks and savings associations.
25.26 Small bank and savings association performance standards.
25.27 Strategic plan.
25.28 Assigned ratings.
25.29 Effect of CRA performance on applications.
Subpart C--Records, Reporting, and Disclosure Requirements
25.41 Assessment area delineation.
[[Page 71340]]
25.42 Data collection, reporting, and disclosure.
25.43 Content and availability of public file.
25.44 Public notice by banks and savings associations.
25.45 Publication of planned examination schedule.
Subpart D--Transition Provisions
25.51 Consideration of Bank Activities.
25.52 Strategic Plan Retention.
Subpart E--Prohibition Against Use of Interstate Branches Primarily for
Deposit Production
25.61 Purpose and scope.
25.62 Definitions.
25.63 Loan-to-deposit ratio screen.
25.64 Credit needs determination.
25.65 Sanctions.
Appendix A to Part 25--Ratings
Appendix B to Part 25--CRA Notice
Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36, 93a, 161, 215,
215a, 481, 1462a, 1463, 1464, 1814, 1816, 1828(c), 1835a, 2901
through 2908, 3101 through 3111, and 5412(b)(2)(B).
Subpart A--General
Sec. 25.11 Authority, purposes, and scope.
(a) Authority and OMB control number--(1) Authority. The authority
for subparts A, B, C, D, and E is 12 U.S.C. 21, 22, 26, 27, 30, 36,
93a, 161, 215, 215a, 481, 1462a, 1463, 1464, 1814, 1816, 1828(c),
1835a, 2901 through 2908, 3101 through 3111, and 5412(b)(2)(B).
(2) OMB control number. The information collection requirements
contained in this part were approved by the Office of Management and
Budget under the provisions of 44 U.S.C. 3501 et seq. and have been
assigned OMB control number 1557-0160.
(b) Purposes. In enacting the Community Reinvestment Act (CRA), the
Congress required each appropriate Federal financial supervisory agency
to assess an institution's record of helping to meet the credit needs
of the local communities in which the institution is chartered,
consistent with the safe and sound operation of the institution, and to
take this record into account in the agency's evaluation of an
application for a deposit facility by the institution. This part is
intended to carry out the purposes of the CRA by:
(1) Establishing the framework and criteria by which the Office of
the Comptroller of the Currency (OCC) or the Federal deposit Insurance
Corporation (FDIC), as appropriate, assesses a bank's or savings
association's record of helping to meet the credit needs of its entire
community, including low- and moderate-income neighborhoods, consistent
with the safe and sound operation of the bank or savings association;
and
(2) Providing that the OCC takes that record into account in
considering certain applications.
(c) Scope--(1) General. (i) Subparts A, B, C, and D, and Appendices
A and B, apply to all banks and savings associations except as provided
in paragraphs (c)(2) and (3) of this section. Subpart E only applies to
banks.
(ii) With respect to subparts A, B, C, and D, and Appendices A and
B--
(A) The OCC has the authority to prescribe these regulations for
national banks, Federal savings associations, and State savings
associations and has the authority to enforce these regulations for
national banks and Federal savings associations.
(B) The FDIC has the authority to enforce these regulations for
State savings associations.
(iii) With respect to subparts A, B, C, and D, and appendix A,
references to appropriate Federal banking agency will mean the OCC when
the institution is a national bank or Federal savings association and
the FDIC when the institution is a State savings association.
(2) Federal branches and agencies. (i) This part applies to all
insured Federal branches and to any Federal branch that is uninsured
that results from an acquisition described in section 5(a)(8) of the
International Banking Act of 1978 (12 U.S.C. 3103(a)(8)).
(ii) Except as provided in paragraph (c)(2)(i) of this section,
this part does not apply to Federal branches that are uninsured,
limited Federal branches, or Federal agencies, as those terms are
defined in part 28 of this chapter.
(3) Certain special purpose banks and savings associations. This
part does not apply to special purpose banks or special purpose savings
associations that do not perform commercial or retail banking services
by granting credit to the public in the ordinary course of business,
other than as incident to their specialized operations. These banks or
savings associations include banker's banks, as defined in 12 U.S.C. 24
(Seventh), and banks or savings associations that engage only in one or
more of the following activities: Providing cash management controlled
disbursement services or serving as correspondent banks or savings
associations, trust companies, or clearing agents.
Sec. 25.12 Definitions.
For purposes of subparts A, B, C, and D, and Appendices A and B, of
this part, the following definitions apply:
(a) Affiliate means any company that controls, is controlled by, or
is under common control with another company. The term ``control'' has
the meaning given to that term in 12 U.S.C. 1841(a)(2), and a company
is under common control with another company if both companies are
directly or indirectly controlled by the same company.
(b) Area median income means:
(1) The median family income for the MSA, if a person or geography
is located in an MSA, or for the metropolitan division, if a person or
geography is located in an MSA that has been subdivided into
metropolitan divisions; or
(2) The statewide nonmetropolitan median family income, if a person
or geography is located outside an MSA.
(c) Assessment area means a geographic area delineated in
accordance with Sec. 25.41.
(d) Automated teller machine (ATM) means an automated, unstaffed
banking facility owned or operated by, or operated exclusively for, the
bank or savings association at which deposits are received, cash
dispersed, or money lent.
(e)(1) Bank or savings association means, except as provided in
Sec. 25.11(c), a national bank (including a Federal branch as defined
in part 28 of this chapter) with Federally insured deposits or a
savings association;
(2) Bank and savings association means, except as provided in Sec.
25.11(c), a national bank (including a Federal branch as defined in
part 28 of this chapter) with Federally insured deposits and a savings
association.
(f) Branch means a staffed banking facility authorized as a branch,
whether shared or unshared, including, for example, a mini-branch in a
grocery store or a branch operated in conjunction with any other local
business or nonprofit organization.
(g) Community development means:
(1) Affordable housing (including multifamily rental housing) for
low- or moderate-income individuals;
(2) Community services targeted to low- or moderate-income
individuals;
(3) Activities that promote economic development by financing
businesses or farms that meet the size eligibility standards of the
Small Business Administration's Development Company or Small Business
Investment Company programs (13 CFR 121.301) or have gross annual
revenues of $1 million or less; or
(4) Activities that revitalize or stabilize--
(i) Low-or moderate-income geographies;
(ii) Designated disaster areas; or
(iii) Distressed or underserved nonmetropolitan middle-income
[[Page 71341]]
geographies designated by the Board of Governors of the Federal Reserve
System, FDIC, and the OCC, based on--
(A) Rates of poverty, unemployment, and population loss; or
(B) Population size, density, and dispersion. Activities revitalize
and stabilize geographies designated based on population size, density,
and dispersion if they help to meet essential community needs,
including needs of low- and moderate-income individuals.
(h) Community development loan means a loan that:
(1) Has as its primary purpose community development; and
(2) Except in the case of a wholesale or limited purpose bank or
savings association:
(i) Has not been reported or collected by the bank or savings
association or an affiliate for consideration in the bank's or savings
association's assessment as a home mortgage, small business, small
farm, or consumer loan, unless the loan is for a multifamily dwelling
(as defined in Sec. 1003.2(n) of this title); and
(ii) Benefits the bank's or savings association's assessment
area(s) or a broader statewide or regional area(s) that includes the
bank's or savings association's assessment area(s).
(i) Community development service means a service that:
(1) Has as its primary purpose community development;
(2) Is related to the provision of financial services; and
(3) Has not been considered in the evaluation of the bank's or
savings association's retail banking services under Sec. 25.24(d).
(j) Consumer loan means a loan to one or more individuals for
household, family, or other personal expenditures. A consumer loan does
not include a home mortgage, small business, or small farm loan.
Consumer loans include the following categories of loans:
(1) Motor vehicle loan, which is a consumer loan extended for the
purchase of and secured by a motor vehicle;
(2) Credit card loan, which is a line of credit for household,
family, or other personal expenditures that is accessed by a borrower's
use of a ``credit card,'' as this term is defined in Sec. 1026.2 of
this title;
(3) Other secured consumer loan, which is a secured consumer loan
that is not included in one of the other categories of consumer loans;
and
(4) Other unsecured consumer loan, which is an unsecured consumer
loan that is not included in one of the other categories of consumer
loans.
(k) Geography means a census tract delineated by the United States
Bureau of the Census in the most recent decennial census.
(l) Home mortgage loan means a closed-end mortgage loan or an open-
end line of credit as these terms are defined under Sec. 1003.2 of
this title, and that is not an excluded transaction under Sec.
1003.3(c)(1) through (10) and (13) of this title.
(m) Income level includes:
(1) Low-income, which means an individual income that is less than
50 percent of the area median income, or a median family income that is
less than 50 percent, in the case of a geography.
(2) Moderate-income, which means an individual income that is at
least 50 percent and less than 80 percent of the area median income, or
a median family income that is at least 50 and less than 80 percent, in
the case of a geography.
(3) Middle-income, which means an individual income that is at
least 80 percent and less than 120 percent of the area median income,
or a median family income that is at least 80 and less than 120
percent, in the case of a geography.
(4) Upper-income, which means an individual income that is 120
percent or more of the area median income, or a median family income
that is 120 percent or more, in the case of a geography.
(n) Limited purpose bank or savings association means a bank or
savings association that offers only a narrow product line (such as
credit card or motor vehicle loans) to a regional or broader market and
for which a designation as a limited purpose bank or savings
association is in effect, in accordance with Sec. 25.25(b).
(o) Loan location. A loan is located as follows:
(1) A consumer loan is located in the geography where the borrower
resides;
(2) A home mortgage loan is located in the geography where the
property to which the loan relates is located; and
(3) A small business or small farm loan is located in the geography
where the main business facility or farm is located or where the loan
proceeds otherwise will be applied, as indicated by the borrower.
(p) Loan production office means a staffed facility, other than a
branch, that is open to the public and that provides lending-related
services, such as loan information and applications.
(q) Metropolitan division means a metropolitan division as defined
by the Director of the Office of Management and Budget.
(r) MSA means a metropolitan statistical area as defined by the
Director of the Office of Management and Budget.
(s) Nonmetropolitan area means any area that is not located in an
MSA.
(t) Qualified investment means a lawful investment, deposit,
membership share, or grant that has as its primary purpose community
development.
(u) Small bank or savings association--(1) Definition. Small bank
or savings association means a bank or savings association that, as of
December 31 of either of the prior two calendar years, had assets of
less than $1.322 billion. Intermediate small bank or savings
association means a small bank or savings association with assets of at
least $330 million as of December 31 of both of the prior two calendar
years and less than $1.322 billion as of December 31 of either of the
prior two calendar years.
(2) Adjustment. The dollar figures in paragraph (u)(1) of this
section shall be adjusted annually and published by the appropriate
Federal banking agency, based on the year-to-year change in the average
of the Consumer Price Index for Urban Wage Earners and Clerical
Workers, not seasonally adjusted, for each twelve-month period ending
in November, with rounding to the nearest million.
(v) Small business loan means a loan included in ``loans to small
businesses'' as defined in the instructions for preparation of the
Consolidated Report of Condition and Income.
(w) Small farm loan means a loan included in ``loans to small
farms'' as defined in the instructions for preparation of the
Consolidated Report of Condition and Income.
(x) Wholesale bank or savings association means a bank or savings
association that is not in the business of extending home mortgage,
small business, small farm, or consumer loans to retail customers, and
for which a designation as a wholesale bank or savings association is
in effect, in accordance with Sec. 25.25(b).
Subpart B--Standards for Assessing Performance
Sec. 25.21 Performance tests, standards, and ratings, in general.
(a) Performance tests and standards. The appropriate Federal
banking agency assesses the CRA performance of a bank or savings
association in an examination as follows:
(1) Lending, investment, and service tests. The appropriate Federal
banking agency applies the lending, investment, and service tests, as
provided in Sec. Sec. 25.22 through 25.24, in evaluating the
performance of a bank or savings association, except as provided in
[[Page 71342]]
paragraphs (a)(2), (3), and (4) of this section.
(2) Community development test for wholesale or limited purpose
banks and savings associations. The appropriate Federal banking agency
applies the community development test for a wholesale or limited
purpose bank or savings association, as provided in Sec. 25.25, except
as provided in paragraph (a)(4) of this section.
(3) Small bank and savings association performance standards. The
appropriate Federal banking agency applies the small bank or savings
association performance standards as provided in Sec. 25.26 in
evaluating the performance of a small bank or savings association or a
bank or savings association that was a small bank or savings
association during the prior calendar year, unless the bank or savings
association elects to be assessed as provided in paragraphs (a)(1),
(2), or (4) of this section. The bank or savings association may elect
to be assessed as provided in paragraph (a)(1) of this section only if
it collects and reports the data required for other banks or savings
associations under Sec. 25.42.
(4) Strategic plan. The appropriate Federal banking agency
evaluates the performance of a bank or savings association under a
strategic plan if the bank or savings association submits, and the
appropriate Federal banking agency approves, a strategic plan as
provided in Sec. 25.27.
(b) Performance context. The appropriate Federal banking agency
applies the tests and standards in paragraph (a) of this section and
also considers whether to approve a proposed strategic plan in the
context of:
(1) Demographic data on median income levels, distribution of
household income, nature of housing stock, housing costs, and other
relevant data pertaining to a bank's or savings association's
assessment area(s);
(2) Any information about lending, investment, and service
opportunities in the bank's or savings association's assessment area(s)
maintained by the bank or savings association or obtained from
community organizations, state, local, and tribal governments, economic
development agencies, or other sources;
(3) The bank's or savings association's product offerings and
business strategy as determined from data provided by the bank or
savings association;
(4) Institutional capacity and constraints, including the size and
financial condition of the bank or savings association, the economic
climate (national, regional, and local), safety and soundness
limitations, and any other factors that significantly affect the bank's
or savings association's ability to provide lending, investments, or
services in its assessment area(s);
(5) The bank's or savings association's past performance and the
performance of similarly situated lenders;
(6) The bank's or savings association's public file, as described
in Sec. 25.43, and any written comments about the bank's or savings
association's CRA performance submitted to the bank or savings
association or the appropriate Federal banking agency; and
(7) Any other information deemed relevant by the appropriate
Federal banking agency.
(c) Assigned ratings. The appropriate Federal banking agency
assigns to a bank or savings association one of the following four
ratings pursuant to Sec. 25.28 and appendix A of this part:
``outstanding''; ``satisfactory''; ``needs to improve''; or
``substantial noncompliance'' as provided in 12 U.S.C. 2906(b)(2). The
rating assigned by the appropriate Federal banking agency reflects the
bank's or savings association's record of helping to meet the credit
needs of its entire community, including low- and moderate-income
neighborhoods, consistent with the safe and sound operation of the bank
or savings association.
(d) Safe and sound operations. This part and the CRA do not require
a bank or savings association to make loans or investments or to
provide services that are inconsistent with safe and sound operations.
To the contrary, the appropriate Federal banking agency anticipates
banks and savings associations can meet the standards of this part with
safe and sound loans, investments, and services on which the banks and
savings associations expect to make a profit. Banks and savings
associations are permitted and encouraged to develop and apply flexible
underwriting standards for loans that benefit low- or moderate-income
geographies or individuals, only if consistent with safe and sound
operations.
(e) Low-cost education loans provided to low-income borrowers. In
assessing and taking into account the record of a bank or savings
association under this part, the appropriate Federal banking agency
considers, as a factor, low-cost education loans originated by the bank
or savings association to borrowers, particularly in its assessment
area(s), who have an individual income that is less than 50 percent of
the area median income. For purposes of this paragraph, ``low-cost
education loans'' means any education loan, as defined in section
140(a)(7) of the Truth in Lending Act (15 U.S.C. 1650(a)(7)) (including
a loan under a State or local education loan program), originated by
the bank or savings association for a student at an ``institution of
higher education,'' as that term is generally defined in sections 101
and 102 of the Higher Education Act of 1965 (20 U.S.C. 1001 and 1002)
and the implementing regulations published by the U.S. Department of
Education, with interest rates and fees no greater than those of
comparable education loans offered directly by the U.S. Department of
Education. Such rates and fees are specified in section 455 of the
Higher Education Act of 1965 (20 U.S.C. 1087e).
(f) Activities in cooperation with minority- or women-owned
financial institutions and low-income credit unions. In assessing and
taking into account the record of a nonminority-owned and nonwomen-
owned bank or savings association under this part, the appropriate
Federal banking agency considers as a factor capital investment, loan
participation, and other ventures undertaken by the bank or savings
association in cooperation with minority- and women-owned financial
institutions and low-income credit unions. Such activities must help
meet the credit needs of local communities in which the minority- and
women-owned financial institutions and low-income credit unions are
chartered. To be considered, such activities need not also benefit the
bank's or savings association's assessment area(s) or the broader
statewide or regional area(s) that includes the bank's or savings
association's assessment area(s).
Sec. 25.22 Lending test.
(a) Scope of test. (1) The lending test evaluates a bank's or
savings association's record of helping to meet the credit needs of its
assessment area(s) through its lending activities by considering a
bank's or savings association's home mortgage, small business, small
farm, and community development lending. If consumer lending
constitutes a substantial majority of a bank's or savings association's
business, the appropriate Federal banking agency will evaluate the
bank's or savings association's consumer lending in one or more of the
following categories: motor vehicle, credit card, other secured, and
other unsecured loans. In addition, at a bank's or savings
association's option, the appropriate Federal banking agency will
evaluate one or more categories of consumer lending, if the bank or
savings association has collected and maintained, as required in Sec.
25.42(c)(1),
[[Page 71343]]
the data for each category that the bank or savings association elects
to have the appropriate Federal banking agency evaluate.
(2) The appropriate Federal banking agency considers originations
and purchases of loans. The appropriate Federal banking agency will
also consider any other loan data the bank or savings association may
choose to provide, including data on loans outstanding, commitments and
letters of credit.
(3) A bank or savings association may ask the appropriate Federal
banking agency to consider loans originated or purchased by consortia
in which the bank or savings association participates or by third
parties in which the bank or savings association has invested only if
the loans meet the definition of community development loans and only
in accordance with paragraph (d) of this section. The appropriate
Federal banking agency will not consider these loans under any
criterion of the lending test except the community development lending
criterion.
(b) Performance criteria. The appropriate Federal banking agency
evaluates a bank's or savings association's lending performance
pursuant to the following criteria:
(1) Lending activity. The number and amount of the bank's or
savings association's home mortgage, small business, small farm, and
consumer loans, if applicable, in the bank's or savings association's
assessment area(s);
(2) Geographic distribution. The geographic distribution of the
bank's or savings association's home mortgage, small business, small
farm, and consumer loans, if applicable, based on the loan location,
including:
(i) The proportion of the bank's or savings association's lending
in the bank's or savings association's assessment area(s);
(ii) The dispersion of lending in the bank's or savings
association's assessment area(s); and
(iii) The number and amount of loans in low-, moderate-, middle-,
and upper-income geographies in the bank's or savings association's
assessment area(s);
(3) Borrower characteristics. The distribution, particularly in the
bank's or savings association's assessment area(s), of the bank's or
savings association's home mortgage, small business, small farm, and
consumer loans, if applicable, based on borrower characteristics,
including the number and amount of:
(i) Home mortgage loans to low-, moderate-, middle-, and upper-
income individuals;
(ii) Small business and small farm loans to businesses and farms
with gross annual revenues of $1 million or less;
(iii) Small business and small farm loans by loan amount at
origination; and
(iv) Consumer loans, if applicable, to low-, moderate-, middle-,
and upper-income individuals;
(4) Community development lending. The bank's or savings
association's community development lending, including the number and
amount of community development loans, and their complexity and
innovativeness; and
(5) Innovative or flexible lending practices. The bank's or savings
association's use of innovative or flexible lending practices in a safe
and sound manner to address the credit needs of low- or moderate-income
individuals or geographies.
(c) Affiliate lending. (1) At a bank's or savings association's
option, the appropriate Federal banking agency will consider loans by
an affiliate of the bank or savings association, if the bank or savings
association provides data on the affiliate's loans pursuant to Sec.
25.42.
(2) The appropriate Federal banking agency considers affiliate
lending subject to the following constraints:
(i) No affiliate may claim a loan origination or loan purchase if
another institution claims the same loan origination or purchase; and
(ii) If a bank or savings association elects to have the
appropriate Federal banking agency consider loans within a particular
lending category made by one or more of the bank's or savings
association's affiliates in a particular assessment area, the bank or
savings association shall elect to have the appropriate Federal banking
agency consider, in accordance with paragraph (c)(1) of this section,
all the loans within that lending category in that particular
assessment area made by all of the bank's or savings association's
affiliates.
(3) The appropriate Federal banking agency does not consider
affiliate lending in assessing a bank's or savings association's
performance under paragraph (b)(2)(i) of this section.
(d) Lending by a consortium or a third party. Community development
loans originated or purchased by a consortium in which the bank or
savings association participates or by a third party in which the bank
or savings association has invested:
(1) Will be considered, at the bank's or savings association's
option, if the bank or savings association reports the data pertaining
to these loans under Sec. 25.42(b)(2); and
(2) May be allocated among participants or investors, as they
choose, for purposes of the lending test, except that no participant or
investor:
(i) May claim a loan origination or loan purchase if another
participant or investor claims the same loan origination or purchase;
or
(ii) May claim loans accounting for more than its percentage share
(based on the level of its participation or investment) of the total
loans originated by the consortium or third party.
(e) Lending performance rating. The appropriate Federal banking
agency rates a bank's or savings association's lending performance as
provided in appendix A of this part.
Sec. 25.23 Investment test.
(a) Scope of test. The investment test evaluates a bank's or
savings association's record of helping to meet the credit needs of its
assessment area(s) through qualified investments that benefit its
assessment area(s) or a broader statewide or regional area that
includes the bank's or savings association's assessment area(s).
(b) Exclusion. Activities considered under the lending or service
tests may not be considered under the investment test.
(c) Affiliate investment. At a bank's or savings association's
option, the appropriate Federal banking agency will consider, in its
assessment of a bank's or savings association's investment performance,
a qualified investment made by an affiliate of the bank or savings
association, if the qualified investment is not claimed by any other
institution.
(d) Disposition of branch premises. Donating, selling on favorable
terms, or making available on a rent-free basis a branch of the bank or
savings association that is located in a predominantly minority
neighborhood to a minority depository institution or women's depository
institution (as these terms are defined in 12 U.S.C. 2907(b)) will be
considered as a qualified investment.
(e) Performance criteria. The appropriate Federal banking agency
evaluates the investment performance of a bank or savings association
pursuant to the following criteria:
(1) The dollar amount of qualified investments;
(2) The innovativeness or complexity of qualified investments;
(3) The responsiveness of qualified investments to credit and
community development needs; and
(4) The degree to which the qualified investments are not routinely
provided by private investors.
(f) Investment performance rating. The appropriate Federal banking
agency
[[Page 71344]]
rates a bank's or savings association's investment performance as
provided in appendix A of this part.
Sec. 25.24 Service test.
(a) Scope of test. The service test evaluates a bank's or savings
association's record of helping to meet the credit needs of its
assessment area(s) by analyzing both the availability and effectiveness
of a bank's or savings association's systems for delivering retail
banking services and the extent and innovativeness of its community
development services.
(b) Area(s) benefitted. Community development services must benefit
a bank's or savings association's assessment area(s) or a broader
statewide or regional area that includes the bank's or savings
association's assessment area(s).
(c) Affiliate service. At a bank's or savings association's option,
the appropriate Federal banking agency will consider, in its assessment
of a bank's or savings association's service performance, a community
development service provided by an affiliate of the bank or savings
association, if the community development service is not claimed by any
other institution.
(d) Performance criteria--retail banking services. The appropriate
Federal banking agency evaluates the availability and effectiveness of
a bank's or savings association's systems for delivering retail banking
services, pursuant to the following criteria:
(1) The current distribution of the bank's or savings association's
branches among low-, moderate-, middle-, and upper-income geographies;
(2) In the context of its current distribution of the bank's or
savings association's branches, the bank's or savings association's
record of opening and closing branches, particularly branches located
in low- or moderate-income geographies or primarily serving low- or
moderate-income individuals;
(3) The availability and effectiveness of alternative systems for
delivering retail banking services (e.g., ATMs, ATMs not owned or
operated by or exclusively for the bank or savings association, banking
by telephone or computer, loan production offices, and bank-at-work or
bank-by-mail programs) in low- and moderate-income geographies and to
low- and moderate-income individuals; and
(4) The range of services provided in low-, moderate-, middle-, and
upper-income geographies and the degree to which the services are
tailored to meet the needs of those geographies.
(e) Performance criteria--community development services. The
appropriate Federal banking agency evaluates community development
services pursuant to the following criteria:
(1) The extent to which the bank or savings association provides
community development services; and
(2) The innovativeness and responsiveness of community development
services.
(f) Service performance rating. The appropriate Federal banking
agency rates a bank's or savings association's service performance as
provided in appendix A of this part.
Sec. 25.25 Community development test for wholesale or limited
purpose banks and savings associations.
(a) Scope of test. The appropriate Federal banking agency assesses
a wholesale or limited purpose bank's or savings association's record
of helping to meet the credit needs of its assessment area(s) under the
community development test through its community development lending,
qualified investments, or community development services.
(b) Designation as a wholesale or limited purpose bank or savings
association. In order to receive a designation as a wholesale or
limited purpose bank or savings association, a bank or savings
association shall file a request, in writing, with the appropriate
Federal banking agency, at least three months prior to the proposed
effective date of the designation. If the appropriate Federal banking
agency approves the designation, it remains in effect until the bank or
savings association requests revocation of the designation or until one
year after the appropriate Federal banking agency notifies the bank or
savings association that the it has revoked the designation on its own
initiative.
(c) Performance criteria. The appropriate Federal banking agency
evaluates the community development performance of a wholesale or
limited purpose bank or savings association pursuant to the following
criteria:
(1) The number and amount of community development loans (including
originations and purchases of loans and other community development
loan data provided by the bank or savings association, such as data on
loans outstanding, commitments, and letters of credit), qualified
investments, or community development services;
(2) The use of innovative or complex qualified investments,
community development loans, or community development services and the
extent to which the investments are not routinely provided by private
investors; and
(3) The bank's or savings association's responsiveness to credit
and community development needs.
(d) Indirect activities. At a bank's or savings association's
option, the appropriate Federal banking agency will consider in its
community development performance assessment:
(1) Qualified investments or community development services
provided by an affiliate of the bank or savings association, if the
investments or services are not claimed by any other institution; and
(2) Community development lending by affiliates, consortia and
third parties, subject to the requirements and limitations in Sec.
25.22(c) and (d).
(e) Benefit to assessment area(s)--(1) Benefit inside assessment
area(s). The appropriate Federal banking agency considers all qualified
investments, community development loans, and community development
services that benefit areas within the bank's or savings association's
assessment area(s) or a broader statewide or regional area that
includes the bank's or savings association's assessment area(s).
(2) Benefit outside assessment area(s). The appropriate Federal
banking agency considers the qualified investments, community
development loans, and community development services that benefit
areas outside the bank's or savings association's assessment area(s),
if the bank or savings association has adequately addressed the needs
of its assessment area(s).
(f) Community development performance rating. The appropriate
Federal banking agency rates a bank's or savings association's
community development performance as provided in appendix A of this
part.
Sec. 25.26 Small bank and savings association performance standards.
(a) Performance criteria--(1) Small banks and savings associations
that are not intermediate small banks or savings associations. The
appropriate Federal banking agency evaluates the record of a small bank
or savings association that is not, or that was not during the prior
calendar year, an intermediate small bank or savings association, of
helping to meet the credit needs of its assessment area(s) pursuant to
the criteria set forth in paragraph (b) of this section.
(2) Intermediate small banks and savings associations. The
appropriate Federal banking agency evaluates the record of a small bank
or savings association that is, or that was during the prior calendar
year, an intermediate small bank or savings association, of helping to
meet the credit needs of its
[[Page 71345]]
assessment area(s) pursuant to the criteria set forth in paragraphs (b)
and (c) of this section.
(b) Lending test. A small bank's or savings association's lending
performance is evaluated pursuant to the following criteria:
(1) The bank's or savings association's loan-to-deposit ratio,
adjusted for seasonal variation, and, as appropriate, other lending-
related activities, such as loan originations for sale to the secondary
markets, community development loans, or qualified investments;
(2) The percentage of loans and, as appropriate, other lending-
related activities located in the bank's or savings association's
assessment area(s);
(3) The bank's or savings association's record of lending to and,
as appropriate, engaging in other lending-related activities for
borrowers of different income levels and businesses and farms of
different sizes;
(4) The geographic distribution of the bank's or savings
association's loans; and
(5) The bank's or savings association's record of taking action, if
warranted, in response to written complaints about its performance in
helping to meet credit needs in its assessment area(s).
(c) Community development test. An intermediate small bank's or
savings association's community development performance also is
evaluated pursuant to the following criteria:
(1) The number and amount of community development loans;
(2) The number and amount of qualified investments;
(3) The extent to which the bank or savings association provides
community development services; and
(4) The bank's or savings association's responsiveness through such
activities to community development lending, investment, and services
needs.
(d) Small bank or savings association performance rating. The
appropriate Federal banking agency rates the performance of a bank or
savings association evaluated under this section as provided in
appendix A of this part.
Sec. 25.27 Strategic plan.
(a) Alternative election. The appropriate Federal banking agency
will assess a bank's or savings association's record of helping to meet
the credit needs of its assessment area(s) under a strategic plan if:
(1) The bank or savings association has submitted the plan to the
appropriate Federal banking agency as provided for in this section;
(2) The appropriate Federal banking agency has approved the plan;
(3) The plan is in effect; and
(4) The bank or savings association has been operating under an
approved plan for at least one year.
(b) Data reporting. The appropriate Federal banking agency 's
approval of a plan does not affect the bank's or savings association's
obligation, if any, to report data as required by Sec. 25.42.
(c) Plans in general--(1) Term. A plan may have a term of no more
than five years, and any multi-year plan must include annual interim
measurable goals under which the appropriate Federal banking agency
will evaluate the bank's or savings association's performance.
(2) Multiple assessment areas. A bank or savings association with
more than one assessment area may prepare a single plan for all of its
assessment areas or one or more plans for one or more of its assessment
areas.
(3) Treatment of affiliates. Affiliated institutions may prepare a
joint plan if the plan provides measurable goals for each institution.
Activities may be allocated among institutions at the institutions'
option, provided that the same activities are not considered for more
than one institution.
(d) Public participation in plan development. Before submitting a
plan to the appropriate Federal banking agency for approval, a bank or
savings association shall:
(1) Informally seek suggestions from members of the public in its
assessment area(s) covered by the plan while developing the plan;
(2) Once the bank or savings association has developed a plan,
formally solicit public comment on the plan for at least 30 days by
publishing notice in at least one newspaper of general circulation in
each assessment area covered by the plan; and
(3) During the period of formal public comment, make copies of the
plan available for review by the public at no cost at all offices of
the bank or savings association in any assessment area covered by the
plan and provide copies of the plan upon request for a reasonable fee
to cover copying and mailing, if applicable.
(e) Submission of plan. The bank or savings association shall
submit its plan to the appropriate Federal banking agency at least
three months prior to the proposed effective date of the plan. The bank
or savings association shall also submit with its plan a description of
its informal efforts to seek suggestions from members of the public,
any written public comment received, and, if the plan was revised in
light of the comment received, the initial plan as released for public
comment.
(f) Plan content--(1) Measurable goals. (i) A bank or savings
association shall specify in its plan measurable goals for helping to
meet the credit needs of each assessment area covered by the plan,
particularly the needs of low- and moderate-income geographies and low-
and moderate-income individuals, through lending, investment, and
services, as appropriate.
(ii) A bank or savings association shall address in its plan all
three performance categories and, unless the bank or savings
association has been designated as a wholesale or limited purpose bank
or savings association, shall emphasize lending and lending-related
activities. Nevertheless, a different emphasis, including a focus on
one or more performance categories, may be appropriate if responsive to
the characteristics and credit needs of its assessment area(s),
considering public comment and the bank's or savings association's
capacity and constraints, product offerings, and business strategy.
(2) Confidential information. A bank or savings association may
submit additional information to the appropriate Federal banking agency
on a confidential basis, but the goals stated in the plan must be
sufficiently specific to enable the public and the appropriate Federal
banking agency to judge the merits of the plan.
(3) Satisfactory and outstanding goals. A bank or savings
association shall specify in its plan measurable goals that constitute
``satisfactory'' performance. A plan may specify measurable goals that
constitute ``outstanding'' performance. If a bank or savings
association submits, and the appropriate Federal banking agency
approves, both ``satisfactory'' and ``outstanding'' performance goals,
the appropriate Federal banking agency will consider the bank or
savings association eligible for an ``outstanding'' performance rating.
(4) Election if satisfactory goals not substantially met. A bank or
savings association may elect in its plan that, if the bank or savings
association fails to meet substantially its plan goals for a
satisfactory rating, the appropriate Federal banking agency will
evaluate the bank's or savings association's performance under the
lending, investment, and service tests, the community development test,
or the small bank or savings association performance standards, as
appropriate.
(g) Plan approval--(1) Timing. The appropriate Federal banking
agency will act upon a plan within 60 calendar days after the
appropriate Federal banking agency receives the complete plan and other
material required under paragraph
[[Page 71346]]
(e) of this section. If the appropriate Federal banking agency fails to
act within this time period, the plan shall be deemed approved unless
the appropriate Federal banking agency extends the review period for
good cause.
(2) Public participation. In evaluating the plan's goals, the
appropriate Federal banking agency considers the public's involvement
in formulating the plan, written public comment on the plan, and any
response by the bank or savings association to public comment on the
plan.
(3) Criteria for evaluating plan. The appropriate Federal banking
agency evaluates a plan's measurable goals using the following
criteria, as appropriate:
(i) The extent and breadth of lending or lending-related
activities, including, as appropriate, the distribution of loans among
different geographies, businesses and farms of different sizes, and
individuals of different income levels, the extent of community
development lending, and the use of innovative or flexible lending
practices to address credit needs;
(ii) The amount and innovativeness, complexity, and responsiveness
of the bank's or savings association's qualified investments; and
(iii) The availability and effectiveness of the bank's or savings
association's systems for delivering retail banking services and the
extent and innovativeness of the bank's or savings association's
community development services.
(h) Plan amendment. During the term of a plan, a bank or savings
association may request the appropriate Federal banking agency to
approve an amendment to the plan on grounds that there has been a
material change in circumstances. The bank or savings association shall
develop an amendment to a previously approved plan in accordance with
the public participation requirements of paragraph (d) of this section.
(i) Plan assessment. The appropriate Federal banking agency
approves the goals and assesses performance under a plan as provided
for in appendix A of this part.
Sec. 25.28 Assigned ratings.
(a) Ratings in general. Subject to paragraphs (b) and (c) of this
section, the appropriate Federal banking agency assigns to a bank or
savings association a rating of ``outstanding,'' ``satisfactory,''
``needs to improve,'' or ``substantial noncompliance'' based on the
bank's or savings association's performance under the lending,
investment and service tests, the community development test, the small
bank or savings association performance standards, or an approved
strategic plan, as applicable.
(b) Lending, investment, and service tests. The appropriate Federal
banking agency assigns a rating for a bank or savings association
assessed under the lending, investment, and service tests in accordance
with the following principles:
(1) A bank or savings association that receives an ``outstanding''
rating on the lending test receives an assigned rating of at least
``satisfactory'';
(2) A bank or savings association that receives an ``outstanding''
rating on both the service test and the investment test and a rating of
at least ``high satisfactory'' on the lending test receives an assigned
rating of ``outstanding''; and
(3) No bank or savings association may receive an assigned rating
of ``satisfactory'' or higher unless it receives a rating of at least
``low satisfactory'' on the lending test.
(c) Effect of evidence of discriminatory or other illegal credit
practices. (1) The appropriate Federal banking agency 's evaluation of
a bank's or savings association's CRA performance is adversely affected
by evidence of discriminatory or other illegal credit practices in any
geography by the bank or savings association or in any assessment area
by any affiliate whose loans have been considered as part of the bank's
or savings association's lending performance. In connection with any
type of lending activity described in Sec. 25.22(a), evidence of
discriminatory or other credit practices that violate an applicable
law, rule, or regulation includes, but is not limited to:
(i) Discrimination against applicants on a prohibited basis in
violation, for example, of the Equal Credit Opportunity Act or the Fair
Housing Act;
(ii) Violations of the Home Ownership and Equity Protection Act;
(iii) Violations of section 5 of the Federal Trade Commission Act;
(iv) Violations of section 8 of the Real Estate Settlement
Procedures Act; and
(v) Violations of the Truth in Lending Act provisions regarding a
consumer's right of rescission.
(2) In determining the effect of evidence of practices described in
paragraph (c)(1) of this section on the bank's or savings association's
assigned rating, the appropriate Federal banking agency considers the
nature, extent, and strength of the evidence of the practices; the
policies and procedures that the bank or savings association (or
affiliate, as applicable) has in place to prevent the practices; any
corrective action that the bank or savings association (or affiliate,
as applicable) has taken or has committed to take, including voluntary
corrective action resulting from self-assessment; and any other
relevant information.
Sec. 25.29 Effect of CRA performance on applications.
(a) CRA performance. Among other factors, the appropriate Federal
banking agency takes into account the record of performance under the
CRA of each applicant bank or savings association, and for applications
under 10(e) of the Home Owners' Loan Act (12 U.S.C. 1467a(e)), of each
proposed subsidiary savings association, in considering an application
for:
(1) The establishment of:
(i) A domestic branch for insured national banks; or
(ii) A domestic branch or other facility that would be authorized
to take deposits for savings associations;
(2) The relocation of the main office or a branch;
(3) The merger or consolidation with or the acquisition of assets
or assumption of liabilities of an insured depository institution
requiring approval under the Bank Merger Act (12 U.S.C. 1828(c)); and
(4) The conversion of an insured depository institution to a
national bank or Federal savings association charter; and
(5) Acquisitions subject to section 10(e) of the Home Owners' Loan
Act (12 U.S.C. 1467a(e)).
(b) Charter application. (1) An applicant (other than an insured
depository institution) for a national bank charter shall submit with
its application a description of how it will meet its CRA objectives.
The OCC takes the description into account in considering the
application and may deny or condition approval on that basis.
(2) An applicant for a Federal savings association charter shall
submit with its application a description of how it will meet its CRA
objectives. The appropriate Federal banking agency takes the
description into account in considering the application and may deny or
condition approval on that basis.
(c) Interested parties. The appropriate Federal banking agency
takes into account any views expressed by interested parties that are
submitted in accordance with the applicable comment procedures in
considering CRA performance in an application listed in paragraphs (a)
and (b) of this section.
[[Page 71347]]
(d) Denial or conditional approval of application. A bank's or
savings association's record of performance may be the basis for
denying or conditioning approval of an application listed in paragraph
(a) of this section.
(e) Insured depository institution. For purposes of this section,
the term ``insured depository institution'' has the meaning given to
that term in 12 U.S.C. 1813.
Subpart C--Records, Reporting, and Disclosure Requirements
Sec. 25.41 Assessment area delineation.
(a) In general. A bank or savings association shall delineate one
or more assessment areas within which the appropriate Federal banking
agency evaluates the bank's or savings association's record of helping
to meet the credit needs of its community. The appropriate Federal
banking agency does not evaluate the bank's or savings association's
delineation of its assessment area(s) as a separate performance
criterion, but the appropriate Federal banking agency reviews the
delineation for compliance with the requirements of this section.
(b) Geographic area(s) for wholesale or limited purpose banks or
savings associations. The assessment area(s) for a wholesale or limited
purpose bank or savings association must consist generally of one or
more MSAs or metropolitan divisions (using the MSA or metropolitan
division boundaries that were in effect as of January 1 of the calendar
year in which the delineation is made) or one or more contiguous
political subdivisions, such as counties, cities, or towns, in which
the bank or savings association has its main office, branches, and
deposit-taking ATMs.
(c) Geographic area(s) for other banks and savings association. The
assessment area(s) for a bank or savings association other than a
wholesale or limited purpose bank or savings association must:
(1) Consist generally of one or more MSAs or metropolitan divisions
(using the MSA or metropolitan division boundaries that were in effect
as of January 1 of the calendar year in which the delineation is made)
or one or more contiguous political subdivisions, such as counties,
cities, or towns; and
(2) Include the geographies in which the bank or savings
association has its main office, its branches, and its deposit-taking
ATMs, as well as the surrounding geographies in which the bank or
savings association has originated or purchased a substantial portion
of its loans (including home mortgage loans, small business and small
farm loans, and any other loans the bank or savings association
chooses, such as those consumer loans on which the bank or savings
association elects to have its performance assessed).
(d) Adjustments to geographic area(s). A bank or savings
association may adjust the boundaries of its assessment area(s) to
include only the portion of a political subdivision that it reasonably
can be expected to serve. An adjustment is particularly appropriate in
the case of an assessment area that otherwise would be extremely large,
of unusual configuration, or divided by significant geographic
barriers.
(e) Limitations on the delineation of an assessment area. Each
bank's or savings associations assessment area(s):
(1) Must consist only of whole geographies;
(2) May not reflect illegal discrimination;
(3) May not arbitrarily exclude low- or moderate-income
geographies, taking into account the bank's or savings association's
size and financial condition; and
(4) May not extend substantially beyond an MSA boundary or beyond a
state boundary unless the assessment area is located in a multistate
MSA. If a bank or savings association serves a geographic area that
extends substantially beyond a state boundary, the bank or savings
association shall delineate separate assessment areas for the areas in
each state. If a bank or savings association serves a geographic area
that extends substantially beyond an MSA boundary, the bank or savings
association shall delineate separate assessment areas for the areas
inside and outside the MSA.
(f) Banks and savings association serving military personnel.
Notwithstanding the requirements of this section, a bank or savings
association whose business predominantly consists of serving the needs
of military personnel or their dependents who are not located within a
defined geographic area may delineate its entire deposit customer base
as its assessment area.
(g) Use of assessment area(s). The appropriate Federal banking
agency uses the assessment area(s) delineated by a bank or savings
association in its evaluation of the bank's or savings association's
CRA performance unless the appropriate Federal banking agency
determines that the assessment area(s) do not comply with the
requirements of this section.
Sec. 25.42 Data collection, reporting, and disclosure.
(a) Loan information required to be collected and maintained. A
bank or savings association, except a small bank or savings
association, shall collect, and maintain in machine readable form (as
prescribed by the appropriate Federal banking agency) until the
completion of its next CRA examination, the following data for each
small business or small farm loan originated or purchased by the bank
or savings association:
(1) A unique number or alpha-numeric symbol that can be used to
identify the relevant loan file;
(2) The loan amount at origination;
(3) The loan location; and
(4) An indicator whether the loan was to a business or farm with
gross annual revenues of $1 million or less.
(b) Loan information required to be reported. A bank or savings
association, except a small bank or savings association or a bank or
savings association that was a small bank or savings association during
the prior calendar year, shall report annually by March 1 to the
appropriate Federal banking agency in machine readable form (as
prescribed by the appropriate Federal banking agency) the following
data for the prior calendar year:
(1) Small business and small farm loan data. For each geography in
which the bank or savings association originated or purchased a small
business or small farm loan, the aggregate number and amount of loans:
(i) With an amount at origination of $100,000 or less;
(ii) With amount at origination of more than $100,000 but less than
or equal to $250,000;
(iii) With an amount at origination of more than $250,000; and
(iv) To businesses and farms with gross annual revenues of $1
million or less (using the revenues that the bank or savings
association considered in making its credit decision);
(2) Community development loan data. The aggregate number and
aggregate amount of community development loans originated or
purchased; and
(3) Home mortgage loans. If the bank or savings association is
subject to reporting under part 1003 of this title, the location of
each home mortgage loan application, origination, or purchase outside
the MSAs in which the bank or savings association has a home or branch
office (or outside any MSA) in accordance with the requirements of part
1003 of this title.
(c) Optional data collection and maintenance--(1) Consumer loans. A
bank or savings association may collect
[[Page 71348]]
and maintain in machine readable form (as prescribed by the appropriate
Federal banking agency) data for consumer loans originated or purchased
by the bank or savings association for consideration under the lending
test. A bank or savings association may maintain data for one or more
of the following categories of consumer loans: Motor vehicle, credit
card, other secured, and other unsecured. If the bank or savings
association maintains data for loans in a certain category, it shall
maintain data for all loans originated or purchased within that
category. The bank or savings association shall maintain data
separately for each category, including for each loan:
(i) A unique number or alpha-numeric symbol that can be used to
identify the relevant loan file;
(ii) The loan amount at origination or purchase;
(iii) The loan location; and
(iv) The gross annual income of the borrower that the bank or
savings association considered in making its credit decision.
(2) Other loan data. At its option, a bank or savings association
may provide other information concerning its lending performance,
including additional loan distribution data.
(d) Data on affiliate lending. A bank or savings association that
elects to have the appropriate Federal banking agency consider loans by
an affiliate, for purposes of the lending or community development test
or an approved strategic plan, shall collect, maintain, and report for
those loans the data that the bank or savings association would have
collected, maintained, and reported pursuant to paragraphs (a), (b),
and (c) of this section had the loans been originated or purchased by
the bank or savings association. For home mortgage loans, the bank or
savings association shall also be prepared to identify the home
mortgage loans reported under part 1003 of this title by the affiliate.
(e) Data on lending by a consortium or a third party. A bank or
savings association that elects to have the appropriate Federal banking
agency consider community development loans by a consortium or third
party, for purposes of the lending or community development tests or an
approved strategic plan, shall report for those loans the data that the
bank or savings association would have reported under paragraph (b)(2)
of this section had the loans been originated or purchased by the bank
or savings association.
(f) Small banks and savings associations electing evaluation under
the lending, investment, and service tests. A bank or savings
association that qualifies for evaluation under the small bank or
savings association performance standards but elects evaluation under
the lending, investment, and service tests shall collect, maintain, and
report the data required for other banks or savings association
pursuant to paragraphs (a) and (b) of this section.
(g) Assessment area data. A bank or savings association, except a
small bank or savings association or a bank or savings association that
was a small bank or savings association during the prior calendar year,
shall collect and report to the appropriate Federal banking agency by
March 1 of each year a list for each assessment area showing the
geographies within the area.
(h) CRA Disclosure Statement. The appropriate Federal banking
agency prepares annually for each bank or savings association that
reports data pursuant to this section a CRA Disclosure Statement that
contains, on a state-by-state basis:
(1) For each county (and for each assessment area smaller than a
county) with a population of 500,000 persons or fewer in which the bank
or savings association reported a small business or small farm loan:
(i) The number and amount of small business and small farm loans
reported as originated or purchased located in low-, moderate-, middle-
, and upper-income geographies;
(ii) A list grouping each geography according to whether the
geography is low-, moderate-, middle-, or upper-income;
(iii) A list showing each geography in which the bank or savings
association reported a small business or small farm loan; and
(iv) The number and amount of small business and small farm loans
to businesses and farms with gross annual revenues of $1 million or
less;
(2) For each county (and for each assessment area smaller than a
county) with a population in excess of 500,000 persons in which the
bank or savings association reported a small business or small farm
loan:
(i) The number and amount of small business and small farm loans
reported as originated or purchased located in geographies with median
income relative to the area median income of less than 10 percent, 10
or more but less than 20 percent, 20 or more but less than 30 percent,
30 or more but less than 40 percent, 40 or more but less than 50
percent, 50 or more but less than 60 percent, 60 or more but less than
70 percent, 70 or more but less than 80 percent, 80 or more but less
than 90 percent, 90 or more but less than 100 percent, 100 or more but
less than 110 percent, 110 or more but less than 120 percent, and 120
percent or more;
(ii) A list grouping each geography in the county or assessment
area according to whether the median income in the geography relative
to the area median income is less than 10 percent, 10 or more but less
than 20 percent, 20 or more but less than 30 percent, 30 or more but
less than 40 percent, 40 or more but less than 50 percent, 50 or more
but less than 60 percent, 60 or more but less than 70 percent, 70 or
more but less than 80 percent, 80 or more but less than 90 percent, 90
or more but less than 100 percent, 100 or more but less than 110
percent, 110 or more but less than 120 percent, and 120 percent or
more;
(iii) A list showing each geography in which the bank or savings
association reported a small business or small farm loan; and
(iv) The number and amount of small business and small farm loans
to businesses and farms with gross annual revenues of $1 million or
less;
(3) The number and amount of small business and small farm loans
located inside each assessment area reported by the bank or savings
association and the number and amount of small business and small farm
loans located outside the assessment area(s) reported by the bank or
savings association; and
(4) The number and amount of community development loans reported
as originated or purchased.
(i) Aggregate disclosure statements. The OCC, in conjunction with
the Board of Governors of the Federal Reserve System and the FDIC,
prepares annually, for each MSA or metropolitan division (including an
MSA or metropolitan division that crosses a state boundary) and the
nonmetropolitan portion of each state, an aggregate disclosure
statement of small business and small farm lending by all institutions
subject to reporting under this part or parts 228 or 345 of this title.
These disclosure statements indicate, for each geography, the number
and amount of all small business and small farm loans originated or
purchased by reporting institutions, except that the appropriate
Federal banking agency may adjust the form of the disclosure if
necessary, because of special circumstances, to protect the privacy of
a borrower or the competitive position of an institution.
(j) Central data depositories. The appropriate Federal banking
agency makes the aggregate disclosure statements, described in
paragraph (i) of
[[Page 71349]]
this section, and the individual bank or savings association CRA
Disclosure Statements, described in paragraph (h) of this section,
available to the public at central data depositories. The appropriate
Federal banking agency publishes a list of the depositories at which
the statements are available.
Sec. 25.43 Content and availability of public file.
(a) Information available to the public. A bank or savings
association shall maintain a public file that includes the following
information:
(1) All written comments received from the public for the current
year and each of the prior two calendar years that specifically relate
to the bank's or savings association's performance in helping to meet
community credit needs, and any response to the comments by the bank or
savings association, if neither the comments nor the responses contain
statements that reflect adversely on the good name or reputation of any
persons other than the bank or savings association or publication of
which would violate specific provisions of law;
(2) A copy of the public section of the bank's or savings
association's most recent CRA Performance Evaluation prepared by the
appropriate Federal banking agency. The bank or savings association
shall place this copy in the public file within 30 business days after
its receipt from the appropriate Federal banking agency;
(3) A list of the bank's or savings association's branches, their
street addresses, and geographies;
(4) A list of branches opened or closed by the bank or savings
association during the current year and each of the prior two calendar
years, their street addresses, and geographies;
(5) A list of services (including hours of operation, available
loan and deposit products, and transaction fees) generally offered at
the bank's or savings association's branches and descriptions of
material differences in the availability or cost of services at
particular branches, if any. At its option, a bank or savings
association may include information regarding the availability of
alternative systems for delivering retail banking services (e.g., ATMs,
ATMs not owned or operated by or exclusively for the bank or savings
association, banking by telephone or computer, loan production offices,
and bank-at-work or bank-by-mail programs);
(6) A map of each assessment area showing the boundaries of the
area and identifying the geographies contained within the area, either
on the map or in a separate list; and
(7) Any other information the bank or savings association chooses.
(b) Additional information available to the public--(1) Banks and
savings associations other than small banks or savings associations. A
bank or savings association, except a small bank or savings association
or a bank or savings association that was a small bank or savings
association during the prior calendar year, shall include in its public
file the following information pertaining to the bank or savings
association and its affiliates, if applicable, for each of the prior
two calendar years:
(i) If the bank or savings association has elected to have one or
more categories of its consumer loans considered under the lending
test, for each of these categories, the number and amount of loans:
(A) To low-, moderate-, middle-, and upper-income individuals;
(B) Located in low-, moderate-, middle-, and upper-income census
tracts; and
(C) Located inside the bank's or savings association's assessment
area(s) and outside the bank's or savings association's assessment
area(s); and
(ii) The bank's or savings association's CRA Disclosure Statement.
The bank or savings association shall place the statement in the public
file within three business days of its receipt from the appropriate
Federal banking agency.
(2) Banks and savings associations required to report Home Mortgage
Disclosure Act (HMDA) data. A bank or savings association required to
report home mortgage loan data pursuant part 1003 of this title shall
include in its public file a written notice that the institution's HMDA
Disclosure Statement may be obtained on the Consumer Financial
Protection Bureau's (Bureau's) website at <a href="http://www.consumerfinance.gov/hmda">www.consumerfinance.gov/hmda</a>.
In addition, a bank or savings association that elected to have the
appropriate Federal banking agency consider the mortgage lending of an
affiliate shall include in its public file the name of the affiliate
and a written notice that the affiliate's HMDA Disclosure Statement may
be obtained at the Bureau's website. The bank or savings association
shall place the written notice(s) in the public file within three
business days after receiving notification from the Federal Financial
Institutions Examination Council of the availability of the disclosure
statement(s).
(3) Small banks and savings associations. A small bank or savings
association or a bank or savings association that was a small bank or
savings association during the prior calendar year shall include in its
public file:
(i) The bank's or savings association's loan-to-deposit ratio for
each quarter of the prior calendar year and, at its option, additional
data on its loan-to-deposit ratio; and
(ii) The information required for other banks or savings
associations by paragraph (b)(1) of this section, if the bank or
savings association has elected to be evaluated under the lending,
investment, and service tests.
(4) Banks and savings associations with strategic plans. A bank or
savings association that has been approved to be assessed under a
strategic plan shall include in its public file a copy of that plan. A
bank or savings association need not include information submitted to
the appropriate Federal banking agency on a confidential basis in
conjunction with the plan.
(5) Banks and savings associations with less than satisfactory
ratings. A bank or savings association that received a less than
satisfactory rating during its most recent examination shall include in
its public file a description of its current efforts to improve its
performance in helping to meet the credit needs of its entire
community. The bank or savings association shall update the description
quarterly.
(c) Location of public information. A bank or savings association
shall make available to the public for inspection upon request and at
no cost the information required in this section as follows:
(1) At the main office and, if an interstate bank or savings
association, at one branch office in each state, all information in the
public file; and
(2) At each branch:
(i) A copy of the public section of the bank's or savings
association's most recent CRA Performance Evaluation and a list of
services provided by the branch; and
(ii) Within five calendar days of the request, all the information
in the public file relating to the assessment area in which the branch
is located.
(d) Copies. Upon request, a bank or savings association shall
provide copies, either on paper or in another form acceptable to the
person making the request, of the information in its public file. The
bank or savings association may charge a reasonable fee not to exceed
the cost of copying and mailing (if applicable).
(e) Updating. Except as otherwise provided in this section, a bank
or savings association shall ensure that the information required by
this section is current as of April 1 of each year.
[[Page 71350]]
Sec. 25.44 Public notice by banks and savings associations.
A bank or savings association shall provide in the public lobby of
its main office and each of its branches the appropriate public notice
set forth in appendix B of this part. Only a branch of a bank or
savings association having more than one assessment area shall include
the bracketed material in the notice for branch offices. Only an
insured national bank that is an affiliate of a holding company shall
include the next to the last sentence of the notices. An insured
national bank shall include the last sentence of the notices only if it
is an affiliate of a holding company that is not prevented by statute
from acquiring additional banks. Only a savings association that is an
affiliate of a holding company shall include the last two sentences of
the notices.
Sec. 25.45 Publication of planned examination schedule.
The appropriate Federal banking agency publishes at least 30 days
in advance of the beginning of each calendar quarter a list of banks
and savings associations scheduled for CRA examinations in that
quarter.
Subpart D--Transition Provisions
Sec. 25.51 Consideration of Bank Activities.
(a) In assessing a bank's CRA performance, the appropriate Federal
banking agency will consider any loan, investment, or service that was
eligible for CRA consideration at the time the bank conducted the
activity.
(b) Notwithstanding paragraph (a), in assessing a bank's CRA
performance, the appropriate Federal banking agency will consider any
loan or investment that was eligible for CRA consideration at the time
the bank entered into a legally binding commitment to make the loan or
investment.
Sec. 25.52 Strategic Plan Retention.
A bank or savings association strategic plan approved by the
appropriate Federal banking agency and in effect as of December 31,
2021, remains in effect, except that provisions of the plan that are
not consistent with this part in effect as of January 1, 2022, are
void, unless amended pursuant to Sec. 25.27.
Subpart E--Prohibition Against Use of Interstate Branches Primarily
for Deposit Production
Sec. 25.61 Purpose and scope.
(a) Purpose. The purpose of this subpart is to implement section
109 (12 U.S.C. 1835a) of the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 (Interstate Act).
(b) Scope. (1) This subpart applies to any national bank that has
operated a covered interstate branch for a period of at least one year,
and any foreign bank that has operated a covered interstate branch that
is a Federal branch for a period of at least one year.
(2) This subpart describes the requirements imposed under 12 U.S.C.
1835a, which requires the appropriate Federal banking agencies (the
OCC, the Board of Governors of the Federal Reserve System, and the
FDIC) to prescribe uniform rules that prohibit a bank from using any
authority to engage in interstate branching pursuant to the Interstate
Act, or any amendment made by the Interstate Act to any other provision
of law, primarily for the purpose of deposit production.
Sec. 25.62 Definitions.
For purposes of this subpart, the following definitions apply:
(a) Bank means, unless the context indicates otherwise:
(1) A national bank; and
(2) A foreign bank as that term is defined in 12 U.S.C. 3101(7) and
12 CFR 28.11(i).
(b) Covered interstate branch means:
(1) Any branch of a national bank, and any Federal branch of a
foreign bank, that:
(i) Is established or acquired outside the bank's home State
pursuant to the interstate branching authority granted by the
Interstate Act or by any amendment made by the Interstate Act to any
other provision of law; or
(ii) Could not have been established or acquired outside of the
bank's home State but for the establishment or acquisition of a branch
described in paragraph (b)(1)(i) of this section; and
(2) Any bank or branch of a bank controlled by an out-of-State bank
holding company.
(c) Federal branch means Federal branch as that term is defined in
12 U.S.C. 3101(6) and 12 CFR 28.11(h).
(d) Home State means:
(1) With respect to a State bank, the State that chartered the
bank;
(2) With respect to a national bank, the State in which the main
office of the bank is located;
(3) With respect to a bank holding company, the State in which the
total deposits of all banking subsidiaries of such company are the
largest on the later of:
(i) July 1, 1966; or
(ii) The date on which the company becomes a bank holding company
under the Bank Holding Company Act;
(4) With respect to a foreign bank:
(i) For purposes of determining whether a U.S. branch of a foreign
bank is a covered interstate branch, the home State of the foreign bank
as determined in accordance with 12 U.S.C. 3103(c) and 12 CFR 28.11(n);
and
(ii) For purposes of determining whether a branch of a U.S. bank
controlled by a foreign bank is a covered interstate branch, the State
in which the total deposits of all banking subsidiaries of such foreign
bank are the largest on the later of:
(A) July 1, 1966; or
(B) The date on which the foreign bank becomes a bank holding
company under the Bank Holding Company Act.
(e) Host State means a State in which a covered interstate branch
is established or acquired.
(f) Host state loan-to-deposit ratio generally means, with respect
to a particular host state, the ratio of total loans in the host state
relative to total deposits from the host state for all banks (including
institutions covered under the definition of ``bank'' in 12 U.S.C.
1813(a)(1)) that have that state as their home state, as determined and
updated periodically by the appropriate Federal banking agencies and
made available to the public.
(g) Out-of-State bank holding company means, with respect to any
State, a bank holding company whose home State is another State.
(h) State means state as that term is defined in 12 U.S.C.
1813(a)(3).
(i) Statewide loan-to-deposit ratio means, with respect to a bank,
the ratio of the bank's loans to its deposits in a state in which the
bank has one or more covered interstate branches, as determined by the
OCC.
Sec. 25.63 Loan-to-deposit ratio screen.
(a) Application of screen. Beginning no earlier than one year after
a covered interstate branch is acquired or established, the OCC will
consider whether the bank's statewide loan-to-deposit ratio is less
than 50 percent of the relevant host State loan-to-deposit ratio.
(b) Results of screen. (1) If the OCC determines that the bank's
statewide loan-to-deposit ratio is 50 percent or more of the host state
loan-to-deposit ratio, no further consideration under this subpart is
required.
(2) If the OCC determines that the bank's statewide loan-to-deposit
ratio is less than 50 percent of the host state loan-to-deposit ratio,
or if reasonably available data are insufficient to calculate the
bank's statewide loan-to-deposit ratio, the OCC will make a credit
needs determination for the bank as provided in Sec. 25.64.
[[Page 71351]]
Sec. 25.64 Credit needs determination.
(a) In general. The OCC will review the loan portfolio of the bank
and determine whether the bank is reasonably helping to meet the credit
needs of the communities in the host state that are served by the bank.
(b) Guidelines. The OCC will use the following considerations as
guidelines when making the determination pursuant to paragraph (a) of
this section:
(1) Whether covered interstate branches were formerly part of a
failed or failing depository institution;
(2) Whether covered interstate branches were acquired under
circumstances where there was a low loan-to-deposit ratio because of
the nature of the acquired institution's business or loan portfolio;
(3) Whether covered interstate branches have a high concentration
of commercial or credit card lending, trust services, or other
specialized activities, including the extent to which the covered
interstate branches accept deposits in the host state;
(4) The CRA ratings received by the bank, if any;
(5) Economic conditions, including the level of loan demand, within
the communities served by the covered interstate branches;
(6) The safe and sound operation and condition of the bank; and
(7) The OCC's CRA regulations (subparts A through D of this part)
and interpretations of those regulations.
Sec. 25.65 Sanctions.
(a) In general. If the OCC determines that a bank is not reasonably
helping to meet the credit needs of the communities served by the bank
in the host state, and that the bank's statewide loan-to-deposit ratio
is less than 50 percent of the host state loan-to-deposit ratio, the
OCC:
(1) May order that a bank's covered interstate branch or branches
be closed unless the bank provides reasonable assurances to the
satisfaction of the OCC, after an opportunity for public comment, that
the bank has an acceptable plan under which the bank will reasonably
help to meet the credit needs of the communities served by the bank in
the host state; and
(2) Will not permit the bank to open a new branch in the host state
that would be considered to be a covered interstate branch unless the
bank provides reasonable assurances to the satisfaction of the OCC,
after an opportunity for public comment, that the bank will reasonably
help to meet the credit needs of the community that the new branch will
serve.
(b) Notice prior to closure of a covered interstate branch. Before
exercising the OCC's authority to order the bank to close a covered
interstate branch, the OCC will issue to the bank a notice of the OCC's
intent to order the closure and will schedule a hearing within 60 days
of issuing the notice.
(c) Hearing. The OCC will conduct a hearing scheduled under
paragraph (b) of this section in accordance with the provisions of 12
U.S.C. 1818(h) and 12 CFR part 19.
Appendix A to Part 25--Ratings
(a) Ratings in general. (1) In assigning a rating, the
appropriate Federal banking agency evaluates a bank's or savings
association's performance under the applicable performance criteria
in this part, in accordance with Sec. Sec. 25.21 and 25.28. This
includes consideration of low-cost education loans provided to low-
income borrowers and activities in cooperation with minority- or
women-owned financial institutions and low-income credit unions, as
well as adjustments on the basis of evidence of discriminatory or
other illegal credit practices.
(2) A bank's or savings association's performance need not fit
each aspect of a particular rating profile in order to receive that
rating, and exceptionally strong performance with respect to some
aspects may compensate for weak performance in others. The bank's or
savings association's overall performance, however, must be
consistent with safe and sound banking practices and generally with
the appropriate rating profile as follows.
(b) Banks and savings associations evaluated under the lending,
investment, and service tests--(1) Lending performance rating. The
appropriate Federal banking agency assigns each bank's or savings
association's lending performance one of the five following ratings.
(i) Outstanding. The appropriate Federal banking agency rates a
bank's or savings association's lending performance ``outstanding''
if, in general, it demonstrates:
(A) Excellent responsiveness to credit needs in its assessment
area(s), taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in
its assessment area(s);
(B) A substantial majority of its loans are made in its
assessment area(s);
(C) An excellent geographic distribution of loans in its
assessment area(s);
(D) An excellent distribution, particularly in its assessment
area(s), of loans among individuals of different income levels and
businesses (including farms) of different sizes, given the product
lines offered by the bank or savings association;
(E) An excellent record of serving the credit needs of highly
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross
annual revenues of $1 million or less, consistent with safe and
sound operations;
(F) Extensive use of innovative or flexible lending practices in
a safe and sound manner to address the credit needs of low- or
moderate-income individuals or geographies; and
(G) It is a leader in making community development loans.
(ii) High satisfactory. The appropriate Federal banking agency
rates a bank's or savings association's lending performance ``high
satisfactory'' if, in general, it demonstrates:
(A) Good responsiveness to credit needs in its assessment
area(s), taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in
its assessment area(s);
(B) A high percentage of its loans are made in its assessment
area(s);
(C) A good geographic distribution of loans in its assessment
area(s);
(D) A good distribution, particularly in its assessment area(s),
of loans among individuals of different income levels and businesses
(including farms) of different sizes, given the product lines
offered by the bank or savings association;
(E) A good record of serving the credit needs of highly
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross
annual revenues of $1 million or less, consistent with safe and
sound operations;
(F) Use of innovative or flexible lending practices in a safe
and sound manner to address the credit needs of low- or moderate-
income individuals or geographies; and
(G) It has made a relatively high level of community development
loans.
(iii) Low satisfactory. The appropriate Federal banking agency
rates a bank's or savings association's lending performance ``low
satisfactory'' if, in general, it demonstrates:
(A) Adequate responsiveness to credit needs in its assessment
area(s), taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in
its assessment area(s);
(B) An adequate percentage of its loans are made in its
assessment area(s);
(C) An adequate geographic distribution of loans in its
assessment area(s);
(D) An adequate distribution, particularly in its assessment
area(s), of loans among individuals of different income levels and
businesses (including farms) of different sizes, given the product
lines offered by the bank or savings association;
(E) An adequate record of serving the credit needs of highly
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross
annual revenues of $1 million or less, consistent with safe and
sound operations;
(F) Limited use of innovative or flexible lending practices in a
safe and sound manner to address the credit needs of low- or
moderate-income individuals or geographies; and
(G) It has made an adequate level of community development
loans.
(iv) Needs to improve. The appropriate Federal banking agency
rates a bank's or
[[Page 71352]]
savings association's lending performance ``needs to improve'' if,
in general, it demonstrates:
(A) Poor responsiveness to credit needs in its assessment
area(s), taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in
its assessment area(s);
(B) A small percentage of its loans are made in its assessment
area(s);
(C) A poor geographic distribution of loans, particularly to
low- or moderate-income geographies, in its assessment area(s);
(D) A poor distribution, particularly in its assessment area(s),
of loans among individuals of different income levels and businesses
(including farms) of different sizes, given the product lines
offered by the bank or savings association;
(E) A poor record of serving the credit needs of highly
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross
annual revenues of $1 million or less, consistent with safe and
sound operations;
(F) Little use of innovative or flexible lending practices in a
safe and sound manner to address the credit needs of low- or
moderate-income individuals or geographies; and
(G) It has made a low level of community development loans.
(v) Substantial noncompliance. The appropriate Federal banking
agency rates a bank's or savings association's lending performance
as being in ``substantial noncompliance'' if, in general, it
demonstrates:
(A) A very poor responsiveness to credit needs in its assessment
area(s), taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in
its assessment area(s);
(B) A very small percentage of its loans are made in its
assessment area(s);
(C) A very poor geographic distribution of loans, particularly
to low- or moderate-income geographies, in its assessment area(s);
(D) A very poor distribution, particularly in its assessment
area(s), of loans among individuals of different income levels and
businesses (including farms) of different sizes, given the product
lines offered by the bank or savings association;
(E) A very poor record of serving the credit needs of highly
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross
annual revenues of $1 million or less, consistent with safe and
sound operations;
(F) No use of innovative or flexible lending practices in a safe
and sound manner to address the credit needs of low- or moderate-
income individuals or geographies; and
(G) It has made few, if any, community development loans.
(2) Investment performance rating. The appropriate Federal
banking agency assigns each bank's or savings association's
investment performance one of the five following ratings.
(i) Outstanding. The appropriate Federal banking agency rates a
bank's or savings association's investment performance
``outstanding'' if, in general, it demonstrates:
(A) An excellent level of qualified investments, particularly
those that are not routinely provided by private investors, often in
a leadership position;
(B) Extensive use of innovative or complex qualified
investments; and
(C) Excellent responsiveness to credit and community development
needs.
(ii) High satisfactory. The appropriate Federal banking agency
rates a bank's or savings association's investment performance
``high satisfactory'' if, in general, it demonstrates:
(A) A significant level of qualified investments, particularly
those that are not routinely provided by private investors,
occasionally in a leadership position;
(B) Significant use of innovative or complex qualified
investments; and
(C) Good responsiveness to credit and community development
needs.
(iii) Low satisfactory. The appropriate Federal banking agency
rates a bank's or savings association's investment performance ``low
satisfactory'' if, in general, it demonstrates:
(A) An adequate level of qualified investments, particularly
those that are not routinely provided by private investors, although
rarely in a leadership position;
(B) Occasional use of innovative or complex qualified
investments; and
(C) Adequate responsiveness to credit and community development
needs.
(iv) Needs to improve. The appropriate Federal banking agency
rates a bank's or savings association's investment performance
``needs to improve'' if, in general, it demonstrates:
(A) A poor level of qualified investments, particularly those
that are not routinely provided by private investors;
(B) Rare use of innovative or complex qualified investments; and
(C) Poor responsiveness to credit and community development
needs.
(v) Substantial noncompliance. The appropriate Federal banking
agency rates a bank's or savings association's investment
performance as being in ``substantial noncompliance'' if, in
general, it demonstrates:
(A) Few, if any, qualified investments, particularly those that
are not routinely provided by private investors;
(B) No use of innovative or complex qualified investments; and
(C) Very poor responsiveness to credit and community development
needs.
(3) Service performance rating. The appropriate Federal banking
agency assigns each bank's or savings association's service
performance one of the five following ratings.
(i) Outstanding. The appropriate Federal banking agency rates a
bank's or savings association's service performance ``outstanding''
if, in general, the bank or savings association demonstrates:
(A) Its service delivery systems are readily accessible to
geographies and individuals of different income levels in its
assessment area(s);
(B) To the extent changes have been made, its record of opening
and closing branches has improved the accessibility of its delivery
systems, particularly in low- or moderate-income geographies or to
low- or moderate-income individuals;
(C) Its services (including, where appropriate, business hours)
[…truncated; see source link]Indexed from Federal Register on December 15, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.