22156 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations

DEPARTMENT OF THE TREASURY The final rule seeks to emphasize The CRA is designed to encourage performance rather than process, to regulated financial institutions to help Office of the Comptroller of the promote consistency in evaluations, and meet the credit needs of their entire Currency to eliminate unnecessary burden. As communities, including low- and compared to the 1993 and 1994 moderate-income neighborhoods, 12 CFR Part 25 proposals, the final rule reduces consistent with safe and sound [Docket No. 95±07] recordkeeping and reporting operations. Despite the CRA’s notable requirements and makes other successes in improving access to credit, RIN 1557±AB32 modifications and clarifications. banks and savings and loan institutions, EFFECTIVE DATES: This joint rule is as well as community and consumer FEDERAL RESERVE SYSTEM effective July 1, 1995, except 12 CFR groups, maintain that its full potential 25.3 through 25.7 and 25.51, 12 CFR has not been realized, in large part 12 CFR Part 228 228.3 through 228.7 and 228.51, 12 CFR because regulatory compliance efforts [Regulation BB; Docket No. R±0822] 345.3 through 345.7 and 345.51, and 12 have focused on process rather than CFR 563e.3 through 563e.7 and 563e.51 performance. FEDERAL DEPOSIT INSURANCE are removed effective July 1, 1997. In accordance with a request from the CORPORATION FOR FURTHER INFORMATION CONTACT: President, the Federal financial OCC: Stephen M. Cross, Deputy supervisory agencies have undertaken a 12 CFR Part 345 Comptroller for Compliance, (202) 874– comprehensive effort to reform their standards for evaluating compliance RIN 3064±AB27 5216; or Matthew Roberts, Director, Community and Consumer Law with CRA requirements. The final rule DEPARTMENT OF THE TREASURY Division, (202) 874–5750, Office of the implements this reform effort by Comptroller of the Currency, 250 E substituting a new system that evaluates Office of Thrift Supervision Street, SW., Washington, DC 20219. institutions based on their actual Board: Glenn E. Loney, Associate performance in helping to meet their 12 CFR Part 563e Director, Division of Consumer and communities’ credit needs. [Docket No. 95±72] Community Affairs, (202) 452–3585; Background Robert deV. Frierson, Assistant General RIN 1550±AA69 Counsel, Legal Division, (202) 452– In 1977, the Congress enacted the 3711; or Leonard N. Chanin, Managing CRA to encourage banks and thrifts to FEDERAL RESERVE SYSTEM Counsel, Division of Consumer and help meet the credit needs of their Community Affairs, (202) 452–3667, entire communities, including low- and 12 CFR Part 203 Board of Governors of the Federal moderate-income neighborhoods, Reserve System, 20th Street and consistent with safe and sound lending Community Reinvestment Act Constitution Avenue, NW., Washington, practices. In the CRA, the Congress Regulations DC 20551. found that: ‘‘(1) regulated financial institutions AGENCIES: Office of the Comptroller of FDIC: Bobbie Jean Norris, Chief, Fair the Currency, Treasury (OCC); Board of Lending Section, Division of are required by law to demonstrate that Governors of the Federal Reserve Compliance and Consumer Affairs, their deposit facilities serve the System (Board); Federal Deposit (202) 942–3090; Robert W. Mooney, Fair convenience and needs of the Insurance Corporation (FDIC); Office of Lending Specialist, Division of communities in which they are Thrift Supervision, Treasury (OTS). Compliance and Consumer Affairs, chartered to do business; (202) 942–3092; or Ann Hume Loikow, (2) the convenience and needs of ACTION: Joint final rule. Counsel, Regulation and Legislation communities include the need for credit SUMMARY: The OCC, Board, FDIC, and Section, Legal Division, (202) 898–3796, as well as deposit services; and OTS, (collectively, the Federal financial Federal Deposit Insurance Corporation, (3) regulated financial institutions supervisory agencies or agencies) are 550 17th Street, NW., Washington, DC have continuing and affirmative amending their regulations concerning 20429. obligation[s] to help meet the credit the Community Reinvestment Act OTS: Timothy R. Burniston, Assistant needs of the local communities in (CRA). The agencies published a joint Director for Compliance Policy, (202) which they are chartered.’’ notice of proposed rulemaking on this 906–5629; Theresa A. Stark, Program (12 U.S.C. 2901(a)) issue on December 21, 1993 (1993 Analyst, Compliance Policy, (202) 906– The CRA has come to play an proposal) and again on October 7, 1994 7054; or Lewis A. Segall, Senior increasingly important role in (1994 proposal). This final rule reflects Attorney, Regulations and Legislation improving access to credit in comments received on both proposals Division, Chief Counsel’s Office, (202) communities—both rural and urban— and the agencies’ further internal 906–6648, Office of Thrift Supervision, across the country. Under the impetus considerations. 1700 G Street, NW., Washington, DC of the CRA, many banks and thrifts The purpose of the CRA regulations is 20552. opened new branches, provided to establish the framework and criteria SUPPLEMENTARY INFORMATION: expanded services, and made by which the agencies assess an substantial commitments to increase institution’s record of helping to meet Introduction lending to all segments of society. the credit needs of its community, The Federal financial supervisory Despite these successes, the CRA including low- and moderate-income agencies jointly are amending their examination system has been criticized. neighborhoods, consistent with safe and regulations implementing the CRA (12 Financial institutions have indicated sound operations, and to provide that U.S.C. 2901 et seq.). The amended that policy guidance from the agencies the agencies’ assessment shall be taken regulations will, when fully effective, on the CRA is unclear and that into account in reviewing certain replace the existing regulations in their examination standards are applied applications. entirety. inconsistently. Financial institutions Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22157 have also stated that the CRA documented their community outreach, The 1993 proposal had been criticized examination process encourages them to and implemented other procedural because of certain objective criteria in generate excessive paperwork at the requirements of the existing regulations. the proposal (including market share, a expense of providing loans, services, Generally, large retail institutions presumptively reasonable loan to and investments to their communities. would have been evaluated based on deposit ratio, loan mix, investment to Community, consumer, and other some combination of lending, service, capital ratios, and the number of groups have agreed with the industry and investment tests. Institutions would branches readily accessible to low- and that there are inconsistencies in CRA have been required to report data on the moderate-income geographies) which evaluations and that current basis of the geographic distribution of were intended to respond to concerns examinations overemphasize process applications, denials, originations, and about the need for more objective and underemphasize performance. purchases of loans. Small banks and standards for evaluating compliance Community and consumer groups also thrifts could have elected to be with CRA requirements. Many have criticized the agencies for failing evaluated under a streamlined method commenters viewed these criteria as aggressively to penalize banks and that would not have required them to calling for credit allocation, although thrifts for poor performance. report this data. Every institution also the agencies did not intend this result. Noting that the CRA examination could have elected to have its The 1994 proposal removed these process could be improved, President performance evaluated on the basis of a criteria from the regulatory language Clinton requested in July 1993 that the pre-approved strategic plan. and substituted a broader range of Federal financial supervisory agencies All banks and thrifts would have been qualitative and quantitative criteria. A reform the CRA regulatory system. The assigned one of four statutorily system for evaluating compliance with President asked the agencies to consult mandated CRA ratings (12 U.S.C. CRA should not eliminate examiner with the banking and thrift industries, 2906(b)(2)). However, five ratings would judgment, even if completely objective Congressional leaders, and leaders of have been used for the lending, service, criteria consistently applied were community-based organizations across and investment tests, with the achievable. Preservation of examiner the country to develop new CRA satisfactory category split into low judgment to take into account the regulations and examination procedures satisfactory and high satisfactory. unique characteristics and needs of an that ‘‘replace paperwork and institution’s community and the Collectively, the agencies received uncertainty with greater performance, institution’s own capacity and relevant over 6,700 comment letters on the 1993 clarity, and objectivity.’’ constraints are essential for a workable proposal. As a general matter, the vast Specifically, the President asked the rule. agencies to refocus the CRA majority of commenters expressed At the same time, consistency in examination system on more objective, support for the agencies’ goal of evaluations, reduction in the burden of performance-based assessment developing more objective, compliance, and emphasis on standards that minimize compliance performance-based assessment performance are fully consistent with burden while stimulating improved standards that minimize burden while assuring a measure of examiner performance. He also asked the agencies stimulating improved performance. judgment. The 1994 proposal would to develop a well-trained corps of However, many expressed concern over have provided a balance between examiners who would specialize in CRA aspects of the 1993 proposal that they objective analysis and subjective examinations. The President requested viewed as allocating credit to particular judgment through a series of examiner that the agencies promote consistency kinds of borrowers. After considering decisions relying on detailed data and even-handedness, improve CRA the comments, the agencies published a measuring an institution’s actual performance evaluations, and institute second proposal on October 7, 1994, lending, service and investment more effective sanctions against which responded to many of the performance. In order to minimize institutions with consistently poor suggestions in the comments on the unnecessary subjectivity, the agencies performance. 1993 proposal, including concerns provided guidance as to the standards To implement the President’s about credit allocation, while preserving that examiners would have applied in initiative, the four agencies held a series the 1993 proposal’s goal of emphasizing making the required judgments. of seven public hearings across the performance over process. Compared to the 1993 proposal, the country in 1993. At those hearings, the The 1994 Proposal 1994 proposal would have reduced data agencies heard from over 250 witnesses. reporting burdens by streamlining Nearly 50 others submitted written The 1994 proposal (59 FR 51232) reporting requirements. The one statements. The preamble to the 1993 retained the principles and structure significant new reporting requirement proposal reviewed the results of those underlying the 1993 proposal but made was the collection and reporting of hearings. significant changes to the details in information on the race and gender of order to respond to many of the specific small business and farm borrowers. The The 1993 Proposal concerns raised in the comment letters. agencies proposed this provision to The agencies published proposed As in the 1993 proposal, the 1994 respond to concerns that the 1993 revisions to their CRA regulations on proposal would have replaced the proposal did not give enough weight to December 21, 1993. The 1993 proposal existing regulations’ twelve assessment the fair lending aspect of an institution’s (58 FR 67466) would have eliminated factors with a performance-based CRA performance. the twelve assessment factors in the evaluation system. The 1994 proposal In order to take into account present CRA regulations and substituted retained, but modified, the lending, community characteristics and needs, a more performance-based evaluation investment, and service tests for large the 1994 proposal would have made system. Under the 1993 proposal, the retail institutions; the streamlined explicit the context in which the tests agencies would have evaluated evaluation for small institutions; an and standards would have been applied institutions based on their actual alternative evaluation for limited to individual institutions. In a specific lending, service, and investment purpose and wholesale institutions; and effort to reduce burden, the preamble performance rather than on how well the pre-approved strategic plan option indicated that the agencies, rather than they conducted their needs assessments, available to all institutions. institutions, would have collected and 22158 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations developed the information needed to or other illegal credit practices would the agencies revised the definition of provide this ‘‘assessment context.’’ have adversely affected the evaluation service area to include the local areas The 1994 proposal also modified the of an institution’s performance. In around an institution’s deposit facilities rating process from the 1993 proposal. addition, an appendix to the 1994 in which it has significant lending For large retail institutions, in proposal included rating profiles to activity and all other areas equally calculating the assigned rating, the guide the assessments. distant from such facilities. revised proposal would have given The 1994 proposal revised and Overview of Comments on the 1994 primacy to lending performance, but an clarified other important features of the Proposal institution’s performance on the service 1993 proposal. It provided more detail and investment tests also would have as to how the proposed strategic plan Collectively, the agencies received been reflected in the assigned rating. option would operate in practice. over 7,200 comment letters on the 1994 The rating process for small institutions Wholesale and limited purpose proposal. The agencies received similarly would have given primacy to institutions were made subject to a comment letters from individuals, lending performance, and would have community development test, which representatives of bank and thrift provided guidance on how the agencies would have incorporated both institutions, consumer and community would have considered service and community development lending and groups, members of Congress, state, investment performance. For all community development services in local, and tribal governments, and institutions, evidence of discriminatory addition to qualified investments. Also, others, as shown in the following table.

TABLE OF COMMENTS RECEIVED

Letters from Letters from banks, thrifts consumer and Letters from Letters from Agency and their trade community government others Total associations groups entities

OCC ...... 669 839 39 672 2,219 Board ...... 607 832 12 482 1,933 FDIC ...... 1,007 788 32 237 2,064 OTS ...... 261 623 24 173 1,081

The agencies reviewed and The Final Rule statutory authority, the agencies have considered all of these comments in removed these provisions. Review of Comments on the 1994 writing the final rule. The section-by- Proposal and Responses Consistent with the statute, the final section analysis of the final rule rule provides that an institution’s CRA discusses these comments in greater The final rule retains, to a significant rating reflects its record of helping to detail. As a general matter, the vast extent, the principles and structure meet the credit needs of its entire majority of commenters expressed underlying the 1993 and 1994 community. The agencies will take into support for the agencies’ goal of proposals, but makes important changes account an institution’s record when developing more objective, to some details in order to respond to evaluating various types of applications, performance-based assessment concerns raised in the comment letters such as applications for branches, office standards that minimize burden while and further agency consideration. The relocations, mergers, consolidations, stimulating improved performance. following discussion describes by topic and purchase and assumption Many commenters believed that, under the ways in which the agencies transactions, and may deny or condition the existing CRA regulations, the addressed commenters’ concerns. The an application on the basis of the agencies focus too closely on discussion also describes important institution’s record. technical modifications included in the documentation of CRA performance and Scope too little on actual performance. Some final rule. commenters felt the present Enforcement Authority The scope of the final rule does not documentation requirements are overly differ appreciably from the scope of the burdensome. Many commenters also The agencies have removed two current CRA regulations or the 1993 and supported the agencies’ goal of ensuring provisions found in both the 1993 and 1994 proposals. The agencies 1994 proposals that engendered historically have excluded from CRA consistency and evenhandedness among considerable comment. These coverage certain special purpose the agencies in CRA evaluations, provisions were the community institutions, such as banker’s banks, that without including specific criteria that reinvestment obligation, which stated are not organized to grant credit to the might be viewed as allocating credit to that banks and thrifts have a specific public in the ordinary course of specific borrowers. Commenters affirmative obligation to help meet the business. These institutions continue to supported enhanced CRA examiner credit needs of their communities, and be treated as special purpose banks in training to increase consistency. the enforcement provision, which the final rule and are excluded from Although most commenters generally provided for penalties against banks and coverage. Several commenters were supported the agencies’ goals in thrifts with ‘‘substantial concerned that the definition of banker’s amending their CRA regulations, many noncompliance’’ ratings using the bank in the 1994 proposal may not have expressed concern over certain aspects agencies’ general enforcement powers conformed with that found in 12 U.S.C. of the 1994 proposal. under 12 U.S.C. 1818. Substantial 24 (Seventh), as modified by the comment was received both in favor of, Interstate Banking Efficiency Act of and in opposition to, these provisions. 1994 (IBEA). Therefore, the final rule Based on further analysis of their references the definition of ‘‘banker’s Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22159 bank’’ found in 12 U.S.C. 24 (Seventh). activities to be considered favorably as community services targeted to, low- or The rule also specifies that institutions supporting community development. moderate-income individuals or if they that provide only cash management Others were concerned that the promote economic development by controlled disbursement services are definition might be too narrow. financing small businesses and farms. excluded from CRA coverage. In The final rule separately defines Activities that create, retain, or improve addition, the final rule provides for the community development to mean: (1) jobs for low- or moderate-income CRA’s applicability to foreign Affordable housing (including persons to stabilize or revitalize low- or institutions consistent with the IBEA multifamily rental housing) for low- or moderate-income areas also qualify as and prior agency interpretations. moderate-income individuals; (2) community development, even if the community services targeted to low- or activities are not located in low- or Definitions moderate-income individuals; (3) moderate-income areas. Many of the definitions in the 1994 activities that promote economic The final rule also requires that, in proposal remain the same in the final development by financing businesses or order to be community development rule or have been adjusted only for farms that meet the size eligibility loans or services or qualified purposes of clarity, with no change in standards of 13 CFR 121.802(a)(2) or investments, activities must have substance. The agencies did, however, have gross annual revenues of $1 community development as their change some definitions substantively. million or less; or (4) activities that primary purpose. Activities not Assessment area. The agencies revitalize or stabilize low- or moderate- designed for the express purpose of replaced the term ‘‘service area’’ in the income geographies. revitalizing or stabilizing low- or 1994 proposal with ‘‘assessment area’’ The definition of community moderate-income areas, providing in the final rule for the reasons development restricts qualifying affordable housing for, or community explained in the discussion of activities to those that promote services targeted to, low- or moderate- assessment area. community welfare, while recognizing income persons, or promoting economic ATM and branch. The agencies that community welfare can be development by financing small changed the definitions of ATM and promoted in diverse ways. For example, businesses and farms are not eligible. branch to eliminate the requirement that a number of commenters, representing The fact that an activity provides an ATM or a branch be at a fixed site. both the industry and community and indirect or short-term benefits to low- or This change means that staffed mobile consumer groups, stated that the moderate-income persons does not offices that are licensed as branches will requirement in the 1994 proposal that make the activity community be considered ‘‘branches’’ under the community development loans and development. Thus, a loan for upper- final rule and that mobile ATMs will be services and qualified investments meet income housing in a distressed area considered ‘‘ATMs.’’ This change may ‘‘community economic development would not qualify simply on the basis affect the delineation of an institution’s needs’’ inappropriately limited of the indirect benefit to low- or assessment area(s) because the community development to efforts that moderate-income persons from assessment area(s) must include the meet ‘‘economic’’ needs. The final rule construction jobs or the increase in the geographies in which the institution has does not contain this limitation, and local tax base that supports enhanced its main office, branches and deposit- community development includes services to low- and moderate-income taking ATMs. Including mobile community- or tribal-based child care, area residents. branches and ATMs in defining an educational, health, or social services The final rule removes the assessment area ensures that an targeted to low- or moderate-income requirement in the 1994 proposal that institution that uses these means in an persons or services that revitalize or community development loans and area not otherwise served by the stabilize low- or moderate-income services and qualified investments institution will be evaluated on its geographies. primarily benefit low- or moderate- success in helping to meet the credit In response to comments, the income persons or small businesses or needs of the area. Including mobile definition clarifies the small businesses farms. This requirement is unnecessary branches in the definition of ‘‘branch’’ and farms that the agencies intend to because the definitions of community will also affect evaluation of an cover. The section of the definition that development loan and service and institution’s service to its community discusses activities that promote qualified investment in the final rule because the ‘‘service test’’ evaluates the economic development by financing require that community development be distribution of an institution’s branches small businesses and farms refers to 13 the primary purpose of the activities. and the institution’s history of opening CFR 121.802(a)(2), the size limitations Community development loan. The and closing branches. In the revised Part for the Small Business Administration’s agencies have amended the definition of 345, the FDIC uses the term ‘‘remote Small Business Investment Company ‘‘community development loan’’ as service facility’’ instead of ‘‘ATM’’ to and Development Company programs, described in the discussion of conform with the terminology used in as well as the $1 million gross annual ‘‘community development’’ and in its regulations. revenues threshold used for lending test several other ways to respond to Community development. The 1994 analysis. commenters’ concerns. proposal did not provide a separate Several commenters stated that First, many commenters objected to definition of ‘‘community community development should require the requirement in the 1994 proposal development,’’ although the term was benefit to low- and moderate-income that community development loans used in defining community areas. However, narrowing the focus to meet needs ‘‘not being met by the development loans and services and only these areas would ignore some of private market.’’ Some commenters qualified investments. Several the beneficial purposes of community pointed out that financial institutions commenters requested further guidance development lending for low- and are part of the private market so, if on the scope of activities that would moderate-income individuals. Under financial institutions make the loans, qualify. Some commenters were the rule, community development the needs addressed by the loans will, concerned that, without further includes activities outside of low- and as a matter of course, be met by the specification, the regulation might moderate-income areas if the activities private market. To respond to these permit an overly broad range of provide affordable housing for, or comments, the agencies removed this 22160 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations qualifier from the definition of a would otherwise qualify. The agencies market’’ for the reasons described in the community development loan. have not done so. For retail institutions, discussion of ‘‘community development Second, some commenters expressed the community development loan loan.’’ In addition, community confusion about the extent to which the category permits consideration of loans development services are required to be definition of ‘‘community development that do not meet the definitions of home related to the provision of financial loan’’ in the 1994 proposal would have mortgage, small business or small farm services. For example, service on the differed for wholesale and limited loans but deserve favorable board of directors of an organization purpose institutions. The agencies consideration in a CRA assessment. that promotes credit availability or amended the definition of ‘‘community Loans that do meet the definitions of affordable housing meets this development loan’’ in the final rule to home mortgage, small business and requirement. Providing technical clarify the two ways in which a small farm loans are more appropriately assistance in the financial services field ‘‘community development loan’’ differs evaluated based on the criteria provided to community-based groups, local, or for wholesale and limited purpose for these loans in the lending test. tribal government agencies, or institutions. First, wholesale and Some commenters requested that intermediaries that help to meet the limited purpose institutions may retail institutions receive favorable credit needs of low- and moderate- consider loans as community consideration for community income individuals or small businesses development loans wherever they are development loans outside their and farms is also related to the located, if the institutions have assessment areas. Under the final rule, provision of financial services. By otherwise adequately addressed the an institution that is not a wholesale or contrast, general participation by bank credit needs in their assessment area(s). limited purpose institution may receive or thrift employees in community This different treatment accounts for the favorable consideration for a community activities that do not take advantage of fact that wholesale and limited purpose development loan that benefits a the employee’s technical or financial institutions typically draw their broader statewide or regional area that expertise would not qualify. Although resources from, and serve areas well includes the institution’s assessment an admirable civic contribution, such beyond, their immediate communities. area(s). This approach maintains a employee participation is not Second, a wholesale or limited purpose balance between the broader purposes sufficiently related to the provision of institution may consider loans reported of community development lending and financial services to meet the purposes as home mortgage, small business, small the focus of CRA on meeting the credit of CRA. As mentioned in the preamble farm or consumer loans to be needs of an institution’s local to the 1994 proposal, electronic benefits community development loans. community. As previously noted, transfer and point-of-sale terminal Institutions subject to the lending test because of their different operational systems that are designed to improve may not consider loans reported in focus, wholesale and limited purpose access, such as by decreasing costs, for those categories to be community institutions receive consideration for low- or moderate-income individuals development loans, unless the loans are community development loans made would receive favorable consideration.2 multifamily dwelling loans. This outside this broader area if they have Consumer loan. The definition of different treatment recognizes that the adequately addressed credit needs ‘‘consumer loan’’ remains substantially rule does not separately assess within the area.1 the same as in the 1994 proposal. As in wholesale and limited purpose Community development service. The the 1994 proposal, a consumer loan institutions on these reported loans. definition of ‘‘community development must be extended to one or more Some commenters also urged that the service’’ has been moved to the individuals for household, family, or agencies permit wholesale and limited definition section of the rule for clarity. other personal expenditures. However, purpose institutions to include as a The definition has been conformed to as proposed in 1994, the definition community development loan any loan the definitions of ‘‘community would have mirrored the definition of that primarily benefits low- or development loan’’ and ‘‘qualified consumer loan in the Consolidated moderate-income individuals regardless investment’’ by removing the reference Report of Condition and Income (Call of the loan’s effect on community to ‘‘needs not being met by the private Report) or Thrift Financial Report (TFR) development. The lending test evaluates in an effort to reduce potential an institution’s performance in making 1 Examples of community development loans regulatory burden. The Call Report and home mortgage, small business, small include, but are not limited to, loans to: borrowers TFR definitions exclude loans secured farm, and consumer loans based on the for affordable housing rehabilitation and construction, including construction and by real estate and loans used to geographic distribution of loans to permanent financing of multifamily rental property purchase or carry securities. Many borrowers of different incomes, not on serving low- and moderate-income persons; not-for- industry commenters objected to these the basis of the total number and dollar profit organizations serving primarily low- and exclusions. Commenters were amount of loans to low- and moderate- moderate-income housing or other community development needs; borrowers in support of particularly concerned that home equity income borrowers. Because the community facilities in low- and moderate-income loans that do not fall within the community development test does not areas or that are targeted to low- and moderate- consider borrower distribution, but only income individuals; and financial intermediaries 2 Examples of community development services loan amount and volume, crediting any including, but not limited to, Community include, among other things: providing technical loan that benefits low- and moderate- Development Financial Institutions (CDFIs), expertise for not-for-profit, tribal or government Community Development Corporations (CDCs), organizations serving low- and moderate-income income individuals could significantly minority- and women-owned financial institutions, housing needs or economic revitalization and inflate performance under this test. and low-income or community development credit development; lending executives to organizations Therefore, the final rule does not unions that primarily lend or facilitate lending in facilitating affordable housing construction and low- and moderate-income areas or to low- and rehabilitation or development of affordable housing; incorporate the suggested change. moderate-income individuals in order to promote providing credit counseling, home buyers Other commenters urged that community development. Other examples include counseling, home maintenance counseling, and/or institutions that are not wholesale or loans to: local, state, and tribal governments for financial planning to promote community limited purpose institutions have the community development activities; and loans to development and affordable housing; school finance environmental clean-up or redevelopment savings programs; and other financial services the option of treating a home mortgage, of an industrial site as part of an effort to revitalize primary purpose of which is community small business, or small farm loan as a the low- or moderate-income community in which development, such as low-cost or free government community development loan if it the property is located. check cashing. Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22161 definition of home improvement loans performance standards allows Qualified investment. The definition reportable under HMDA would not have examiners to account in their of ‘‘qualified investment’’ has been been considered consumer loans under evaluations under the tests for moved to the definition section for the proposed rule. The definition of conditions in high-cost communities, clarity and changed to reflect the new consumer loan in the final rule no such as a shortage of credit for definition of ‘‘community development’’ longer uses the definition in the Call moderate-income persons or areas. In and to respond to comments. The Report or TFR. As a result, home equity addition, the flexibility in the agencies have removed the requirement loans that are not reportable under requirement that community that a qualified investment must address HMDA are consumer loans if they development loans, community community development needs ‘‘not otherwise meet the definition. However, development services, and qualified being met by the private market.’’ the agencies have clarified in the final investments have as their ‘‘primary’’ Instead, in evaluating performance, the rule that consumer loans do not include purpose community development agencies will give greater weight to home mortgage, small business, or small allows examiners to account for qualified investments that are not farm loans. These loans are considered conditions in high-cost areas. Therefore, routinely provided by private investors. separately under the lending test so the definitions of income level in the The 1994 proposal clearly permitted treating them also as consumer loans final rule are based upon area median consideration of investments in would result in double-counting. income without adjustments. In organizations that make qualified The final rule contains definitions for addition, the definition of ‘‘area median investments, and the final rule is five categories of consumer loans: motor income’’ for rural areas has been unmodified in this respect. Some vehicle loans, credit card loans, home simplified and uses only the statewide commenters asked that qualified equity loans, other secured consumer non-metropolitan median rather than investments be required to benefit low- loans, and other unsecured consumer the higher of county median or the or moderate-income areas or required to loans. These definitions reflect the fact statewide figure. benefit either low- or moderate-income that the final rule permits an institution Limited purpose institution and people or areas. The agencies rejected to elect evaluation of its consumer wholesale institution. A number of these suggestions for the reasons noted lending on a product-by-product basis. industry commenters suggested that in the discussion of ‘‘community Home mortgage loan. In the 1994 ‘‘nonbank banks’’ permitted under the development.’’ proposal’s definition of ‘‘home mortgage Competitive Equality Banking Act (12 The final rule clarifies specific aspects loan,’’ the agencies referred to the U.S.C. 1843(f)) (CEBA banks) should of qualified investments proposed in the HMDA and its implementing automatically be considered limited 1994 proposal that raised issues in the regulations. Some commenters pointed purpose institutions. These institutions comments. For example, the explicit out that the Board has refined the operate under a variety of different reference to investments in credit definition of home mortgage loan in its business plans and legal constraints and unions has been removed to clarify that HMDA regulations (12 CFR Part 203). include retail and wholesale banks, no special treatment for these These commenters indicated it would credit card banks, and industrial loan institutions was intended under the be preferable and, perhaps, less companies. CEBA banks may legally investment test. Deposits and confusing if the agencies referred only engage in different activities, depending membership shares in any financial to the Board’s HMDA regulations, rather on which activities a particular bank institution that otherwise meet the than to both the HMDA and the engaged in as of March 1, 1987. A criteria discussed earlier for treatment regulations. The agencies have amended uniform treatment of these institutions as a qualified investment qualify under the definition of ‘‘home mortgage loan’’ is therefore not practicable. The final the investment test. In addition, in the final rule accordingly. Under the rule provides the necessary flexibility to although some comments suggested final rule, a home mortgage loan means assess the CRA performance of these otherwise, Federal Home Loan Bank a ‘‘home improvement loan’’ or a ‘‘home institutions and does not require any stock does not have a sufficient purchase loan’’ as these terms are institution to engage in proscribed connection to community development defined in 12 CFR Part 203. This activities. Some of these institutions to be considered a qualified investment. definition includes multifamily could be designated as wholesale or The use of the term ‘‘standard’’ dwelling loans and refinancings of limited purpose institutions on a case- mortgage backed securities in the home improvement and home purchase by-case basis. Further, the final rule preamble to the 1994 proposal was loans. permits the agencies to take into ambiguous and should be clarified to Income level. The income level account any legal constraints placed on mean ‘‘untargeted’’ mortgage backed definitions under the 1994 proposal an institution in assessing performance. securities. Untargeted mortgage backed would have included adjustments to As in the case of thrifts, adjustments can securities and untargeted municipal reflect high-cost areas and family size. A be made in the ratings profiles to reflect bonds are not qualified investments number of commenters suggested that, the legal constraints imposed on the because their primary purpose is not although these adjustments would make activities of CEBA banks. community development. Investments the income definitions more accurate, Other commenters requested more in municipal bonds designed primarily the value of the increased accuracy guidance on incidental lending to finance community development would be outweighed by the activities that wholesale and limited generally are qualified investments and complication and burden associated purpose institutions could engage in need not be housing-related. Housing- with the use of adjusted figures. Other without losing their special designation. related municipal bonds must primarily commenters pointed out that HMDA Wholesale institutions may engage in address affordable housing (including disclosure statements, which are used, some retail lending without losing their multifamily rental housing) needs in in part, to evaluate CRA performance, designation if this activity is incidental order to qualify. do not employ the adjustments. Some and done on an accommodation basis. The term ‘‘grants’’ in the final rule commenters strongly supported the use Similarly, a limited purpose institution includes in-kind contributions of of adjusted area median income, continues to meet the narrow product property to community development especially in high-cost communities. line requirement if it provides other organizations. Grants do not However, the flexibility of the types of loans on an infrequent basis. automatically have less weight than 22162 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations investments, but the weight accorded a independent institution to be of the business or the farm, as was grant is determined under the considered a small institution, it must originally proposed in 1993. The performance criteria in the investment have total assets of less than $250 agencies have concluded that, although test.3 million. Moreover, an institution with defining small business and small farm Small institution. Under the 1994 total assets of less than $250 million loans by the size of the loan may not be proposal, institutions would have been that is owned by a holding company as precise as definitions based on considered small institutions if they had would be considered a small institution business or farm asset size, following total assets of less than $250 million and if the total bank and thrift assets of its the approach used in the Call Report were either independent institutions or holding company are less than $1 and TFR will appreciably reduce the affiliates of holding companies with less billion. The agencies were persuaded burden of compliance for institutions than $250 million in total assets. This that some smaller holding companies and their borrowers. Also, the Call definition of ‘‘small institution’’ may be unable to provide support to Report and TFR definitions minimize received numerous comments. Industry their subsidiary banks and thrifts for the need for institutions to collect commenters generally believed that the CRA compliance. Larger holding additional information. The danger of asset level for holding companies companies have the ability to provide inaccuracy is limited, because loan size should be raised or eliminated entirely, support to their subsidiary banks and roughly correlates with the size of a although some indicated that the $250 thrifts, so small institutions owned by business or farm borrower. Furthermore, million asset level for small institutions these holding companies will not be the agencies have retained the proposed would be satisfactory. Some unfairly burdened by evaluation under requirement that institutions indicate commenters representing institutions the lending, investment, and service whether a small business or small farm with assets below $250 million affiliated tests used in the assessments of larger loan is to a business or farm with gross with a larger holding company institutions. The choice of the $1 billion annual revenues of $1 million or less. indicated that their institutions level reflects the weight of the This requirement will provide typically operated independently from comments that suggested raising the additional information to identify loans the holding company in complying with asset level and the agencies’ judgment to small entities. CRA obligations. They stated that it regarding the size at which a holding Several commenters requested that would be unfair for them to be company should be expected to support the agencies clarify whether the evaluated under the assessment tests for the compliance activities of its bank and definitions of small business and small a larger institution merely because of thrift subsidiaries. The agencies farm loans include loans made to their ownership structure. On the other estimate that this change will add only nonprofit organizations as described in hand, community and consumer groups a limited number of institutions, with the Internal Revenue Code at 26 U.S.C. often commented that small institutions average assets of about $100 million, to 501(c)(3). Loans made to nonprofit should not be treated differently, or that those eligible under the small bank organizations are included to the same only institutions with fewer than $50 performance standards. extent they are included under the Call million in assets should be considered Many commenters also asked the Report and TFR definitions of small small institutions for purposes of the agencies to clarify the date on which the business and small farm loans. Loans to CRA rule. determination will be made whether an nonprofits that are reported as small The final rule modifies the definition institution is a small institution. The business or small farm loans cannot also of ‘‘small institution’’ in light of these agencies have amended the definition of be reported as community development comments. In the final rule, for any ‘‘small institution’’ to clarify that an loans, except by wholesale and limited institution will be considered a small purpose institutions.

3 institution throughout any calendar year Examples of qualified investments include, but Performance Tests, Standards and if, as of December 31 of either of the are not limited to, investments, grants, deposits or Ratings in General shares: in or to financial intermediaries (including, prior two calendar years, the total assets but not limited to CDFIs, CDCs, minority- and of the institution (and, if applicable, its Several changes have been made to women-owned financial institutions, and low- the section of the 1994 proposal on income or community development credit unions) holding company) fell below the asset that primarily lend or facilitate lending in low- and limits set out earlier for a small assessment tests, standards, and ratings. moderate-income areas or to low- and moderate- institution. This definition ensures As an initial matter, the terms income individuals in order to promote community some stability in whether an institution ‘‘performance tests,’’ ‘‘performance development, such as a CDFI that promotes standards,’’ and ‘‘performance criteria’’ economic development on an Indian reservation; in is classified as a small institution and support of organizations engaged in affordable minimizes the chance that an have been substituted for the terms housing rehabilitation and construction, including institution’s status will change ‘‘assessment tests,’’ ‘‘assessment multifamily rental housing; in support of repeatedly from year to year. The standards,’’ and ‘‘assessment criteria’’ to organizations promoting economic development by reflect more accurately the final rule’s financing small businesses, including Small definition also ensures that institutions Business Investment Companies (SBICs) and that exceed the asset limits have focus on performance rather than specialized SBICs; to support or develop facilities adequate time to prepare to meet the process. The agencies have also changed that promote community development in low- and requirements applicable to larger the term ‘‘assessment context’’ to moderate-income areas for low- and moderate- institutions. ‘‘performance context’’ because the income individuals, such as day care facilities; in projects eligible for low-income housing tax credits; Small business loan and small farm latter term better describes the role of in state and municipal obligations that specifically loan. The agencies made no substantive this information in the CRA evaluation support affordable housing or other community changes to the definitions of ‘‘small process. development; to not-for-profit organizations serving business loan’’ and ‘‘small farm loan.’’ Performance context. An institution’s low- and moderate-income housing or other community development needs, such as home- The final rule cross-references the Call performance under the tests and ownership counseling, home maintenance Reports and TFR definitions rather than standards in the rule is judged in the counseling, credit counseling, and other financial restating the substance of the definitions context of information about the services education; and in or to organizations as the 1994 proposal would have done. institution, its community, its supporting activities essential to the capacity of low- and moderate-income individuals or The definitions are based on the size of competitors, and its peers. Examiners geographies to utilize credit or to sustain economic the loans. Some commenters urged that will consider the following information, development. the definitions be based on the asset size as appropriate, in order to assist in Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22163 understanding the context in which the final rule does not establish a operation to the same extent as the CRA institution’s performance should be requirement that each institution statute or the current regulations. These evaluated: (1) The economic and prepare a ‘‘needs assessment’’ to be commenters responded primarily to the demographic characteristics of the evaluated by the examiner as urged in omission of a statement in the 1993 assessment area(s); (2) lending, some comments provided by financial proposal that the CRA does not require investment, and service opportunities in institutions and community any institution to make loans or the assessment area(s); (3) the organizations. investments that are expected to result institution’s product offerings and Under the final rule, the agencies will in losses or are otherwise inconsistent business strategy; (4) the institution’s neither prepare a formal assessment of with safe and sound operations. The capacity and constraints; (5) the prior community credit needs nor evaluate an agencies did not intend by this omission performance of the institution and, in institution on its efforts to ascertain to encourage unprofitable or otherwise appropriate circumstances, the community credit needs. Instead, the unsafe and unsound practices. The performance of similarly situated agencies will request any information agencies firmly believe that institutions institutions; and (6) other relevant that the institution has developed on can and should expect lending and information. The final rule clarifies that lending, investment, and service investments encouraged by the CRA to a proposed strategic plan will also be opportunities in its assessment area(s). be profitable. The final rule explicitly evaluated in the same context. However, The agencies will not expect more reflects this belief and addresses the all of the factors described in the information than what the institution importance of safety and soundness performance context would not normally would develop to prepare a considerations in several sections and in necessarily apply to each strategic plan. business plan or to identify potential the ratings appendix. The agencies In this regard, the performance of markets and customers, including low- assess an institution’s record of helping similarly situated lenders would not and moderate-income persons and to meet community credit needs with generally be appropriate for evaluating geographies in its assessment area(s). careful attention to the constraints future goals under a strategic plan. This information from the institution imposed by safety and soundness. As in Under the 1994 proposal, the will be considered along with other areas of bank and thrift operations, assessment context would have information from community, unsafe and unsound practices are included examiner-developed government, civic and other sources to viewed unfavorably. The ratings information on the credit needs of an enable the examiner to gain a working appendix specifically states: ‘‘The institution’s service area. Many knowledge of the institution’s bank’s overall performance, however, commenters interpreted the proposal to community. In response to comments, must be consistent with safe and sound mean that the agencies would prepare a the final rule also clarifies that banking practices. * * * ’’ detailed needs assessment for each information about lending, investment, Flexible underwriting approaches. institution’s service area(s). Several and service opportunities in an The final rule states that the agencies bank and thrift commenters criticized institution’s assessment area will, where permit and encourage an institution’s such a role for the agencies, reasoning appropriate, be obtained from tribal use of flexible underwriting approaches that institutions know their governments, as well as from other to facilitate lending to low- and communities far better than a regulatory sources. moderate-income individuals and areas, agency, and that agency-prepared Statutory limits on investment but only if consistent with safe and assessments would lead to credit authority. Several thrift commenters had sound operations. This is consistent allocation. Some community concerns about the application of the with, and clarifies, language in the 1994 organization commenters, while more investment test to thrift institutions proposal. Some commenters urged that supportive of the concept of agency because of their limited investment the rule expressly identify particular prepared needs assessments, were authority. Rather than providing a types of areas or borrowers covered by concerned that the proposal might blanket exemption from the investment this provision. Mentioning particular imply that institutions did not need to test, the final rule modifies the types of borrowers or areas in the make an effort to know their ‘‘capacity and constraints’’ section of regulatory text is unnecessary and communities’ credit needs, but could the performance context to clarify that inconsistent with the principle of instead look to the agencies for that examiners should consider an evaluating each institution and its determination. institution’s investment authority in community based on their The agencies did not intend to suggest evaluating performance under the characteristics, capacity, and needs. that an agency-developed needs investment test. A thrift that has few or However, certain borrowers or areas, assessment would prescribe the credit no qualified investments may still be such as Native Americans residing in needs an institution must address. considered to be performing adequately Indian country, may face difficulties Instead, the examiner-developed under the investment test if, for obtaining credit that could warrant information on credit needs was example, the institution is particularly special consideration. The efforts of intended to help inform the examiner’s effective in responding to the lenders that utilize innovative or judgment about the institution’s record community’s credit needs through flexible methods, in a safe and sound of performance. Institutions are in the community development lending manner, to address these or other better position to know their activities. unusual underwriting issues are communities, and it is neither Safety and soundness. The CRA recognized under the lending test. appropriate nor feasible for the agencies requires the agencies to assess an to prepare a detailed assessment of the institution’s record of helping to meet The Lending Test credit needs of an institution’s the credit needs of its entire community, The lending test in the final rule is community. Thus, under the final rule consistent with the safe and sound substantially similar to the 1994 the agencies will analyze the operation of the institution. A number proposal. However, there are some information an institution maintains on of industry commenters were concerned significant changes in response to the the credit needs of its community along that the 1994 proposal would not have comments. with relevant information available from stressed the importance of the safety Consideration of originations and other sources. At the same time, the and soundness of an institution’s purchases. The 1994 proposal would 22164 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations have evaluated home mortgage lending The final rule contains an option for mandatory. After considering these based on HMDA data, which is based on lenders also to provide data on loans comments, the agencies have decided to loan originations and purchases. outstanding, which may, in certain permit institutions to provide However, the proposal would have circumstances, enhance an examiner’s information on one or more categories required institutions to collect, report, understanding of an institution’s (motor vehicle, credit card, home and be evaluated on loans outstanding performance. Institutions may also equity, other secured, and other for other types of loans. The agencies provide for examiner consideration unsecured) of consumer loans. took this approach in an effort to reduce information on letters of credit and Although an institution may have burden on the industry, because commitments, as well as any other loan some opportunity to mask poor institutions must already report loans information. The language of the performance or otherwise outstanding on Call Reports and TFRs. lending test (and the definition of inappropriately influence its CRA The vast majority of commenters who ‘‘community development loan’’) has evaluation through selective provision addressed this issue (almost exclusively been adjusted as appropriate to reflect of data, this opportunity will be limited industry commenters) stated that use of these changes. by the provision in the final rule originations would provide a Consumer loan evaluation. Under the requiring an institution to maintain data substantially more accurate picture of 1994 proposal, consumer lending would on all loans in the category or categories actual lending activity, because current have been evaluated under the lending in which it seeks to be evaluated. For activity would not be obscured by past test only if an institution elected to have example, if an institution provides activity and the data would reflect it evaluated and provided the necessary information on its credit card lending, it seasonal variations and sale of loans in loan data. Thus, the 1994 proposal would have to provide information on the secondary market. Moreover, using would have permitted an institution all its credit card lending, although it originations rewards, rather than that is primarily a consumer lender not need not provide information on its penalizes, institutions for selling loans to be evaluated on a substantial portion motor vehicle lending. Furthermore, on the secondary market, which frees up of its business if it so chose. Under these under the final rule, if an institution is capital for additional lending and circumstances, meaningful evaluation of a substantial consumer lender, the increases credit availability. The certain institutions might have been agencies will evaluate its consumer commenters did not support the very difficult. The final rule, therefore, lending in appropriate categories premise that use of originations would changes the treatment of consumer regardless of whether the institution lending. Under the rule, if a substantial reports data for those categories. be more burdensome than using loans majority of an institution’s business is Relative weight of different lending outstanding. Because institutions would consumer lending, this lending is categories. The 1994 proposal explicitly have to collect and report additional evaluated in the lending test. The rule stated that home mortgage, small information on each loan for CRA does not impose any reporting business, and small farm lending (and purposes, using loans outstanding requirements for consumer lending, consumer lending if it was considered) would not significantly decrease however. If an examiner determines that would have been weighted to reflect the burden. The bulk, if not all, of the a substantial portion of an institution’s relative importance of the categories to burden reduction would be achieved by business is consumer lending, and the the institution’s overall business. The using the Call Report and TFR institution has not elected to provide proposal also stated that community definitions. The final rule therefore uses consumer loan data, the examiner will development lending would have been originations and purchases, instead of evaluate consumer lending by analyzing weighted to reflect the characteristics loans outstanding, for all types of loans. an appropriate sample of the and needs of an institution’s assessment Lines of credit are considered institution’s consumer loan portfolio. In area(s), the capacity and constraints of originated at the time the line is addition, this aspect of the final rule the institution, and the opportunities approved or increased; and an increase does not affect the evaluation of a available for this lending. Several is considered a new origination. limited purpose bank, because the bank commenters expressed concern about Generally, the full amount of the credit will be evaluated under the community the lack of certainty in these provisions; line (or in the case of an increase in an development test, not the lending test. some also believed that community existing line, the amount of the The 1994 proposal would have development lending would have increase) is the amount that is required that institutions provide received excessive weight. However, a considered originated. Although some information on all consumer loans if fixed formula for the relative weight of lines of credit may be for both home they choose to provide information on different categories would require a improvement and other purposes, only any consumer loans. The agencies determination that some categories of the amount that is considered to be for included this requirement because they lending are uniformly more important home improvement purposes is reported were concerned that, otherwise, an than others, when the appropriate as a home improvement loan under institution might provide information weight depends on the specific HMDA. Lines of credit should be only on those consumer products that institution and its community. The considered in assessing an institution’s would reflect well on the institution’s agencies have removed the discussion of lending activity in all applicable loan CRA performance and would choose not the relative weight assigned to different types. Therefore, where a portion of a to provide information on those lending categories because examiners line of credit is reported under HMDA products that would reflect poorly. will determine the appropriate weight and another portion meets the definition Many industry commenters stated based on the performance context. either of a ‘‘small business loan’’ or a that the prospect of reporting all their Lending activity criterion. The ‘‘consumer loan,’’ the full amount of the consumer loan information was so lending test in the 1994 proposal, unlike line of credit should be reported as a burdensome that they would not report the current CRA regulations, did not small business loan or collected as a any information. On the other hand, specifically consider the volume of consumer loan, as appropriate, and the consumer and community groups lending activity—the number and agencies will also consider as a home commented that, if consumer lending is amount of home mortgage, small mortgage loan the portion of the credit to be considered in CRA at all, business, small farm, and consumer line that is reported under HMDA. consumer loan reporting should be loans located in the institution’s Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22165 assessment area(s). Experience under distribution of an institution’s lending geographies of different income the current regulations has where such analyses would provide categories; geographic distribution may demonstrated that this criterion can be accurate insight. However, the final rule be more important in urban areas and useful in assessing performance. does not require examiners to use any assessment areas with the full range of Therefore, based on further internal single type of analysis, and would not geographies of different income agency considerations, the final rule link a particular market share ratio, or categories. contains a lending activity performance any ratio, with a particular lending test Some commenters recommended that criterion. This criterion encourages an rating. the lending test evaluate an institution’s institution that does not itself engage in Proportion of lending within record of lending to different racial and the categories of lending evaluated assessment areas. Under the final rule, ethnic groups and to women. The final under the lending test to seek as under the 1994 proposal, another rule does not incorporate this designation as a wholesale or limited component of the geographic suggestion. The appropriate inquiry purpose institution so that the distribution criterion is the proportion regarding service to particular racial or institution’s CRA performance can be of total loans made in an institution’s ethnic groups and men and women is evaluated under criteria appropriate to assessment area(s). Some commenters whether the institution is operating in a the institution. The criterion also creates believed that this criterion is non-discriminatory manner. Therefore, a disincentive for institutions to try to inappropriate; they noted that safety in arriving at an institution’s assigned influence inappropriately the evaluation and soundness considerations require rating, the agencies consider whether of their CRA performance by conducting an institution to lend to a geographically there is evidence of discrimination in activities viewed favorably under CRA dispersed area. This criterion is a violation of the Fair Housing Act or in the institution and other activities in consideration under the existing CRA Equal Credit Opportunity Act, or an affiliate. An institution’s rules and has proved over the years to evidence of other illegal credit practices. performance on the lending activity be one useful indicator of the degree to Innovative or flexible lending criterion will be assessed taking into which an institution is focused on practices. The final rule, like the 1994 account the information described in serving its local community. Moreover, proposal, assesses an institution’s use of the section of the preamble discussing the agencies believe the criterion innovative or flexible lending practices the performance context, including the encourages an institution to draw its in a safe and sound manner to address institution’s business strategy regarding assessment area broadly enough to the credit needs of low- and moderate- the lending conducted by the institution allow the dispersion of its lending and income individuals or geographies. An itself and the lending conducted by distribution of its loans among innovative practice is one that serves affiliates. geographies of different income levels. low- and moderate-income creditworthy Market share analysis. Many Therefore, the agencies retained the borrowers in new ways or serves groups commenters, particularly community provision unchanged in the final rule. of creditworthy borrowers not and consumer groups, suggested that the Dispersion. The third component of previously served by the institution. market share evaluation of the 1993 the geographic distribution criterion of Both innovative practices and flexible proposal be reinstated or that the the lending test is the dispersion of the practices are favorably considered. agencies substitute an alternative institution’s lending activity. The 1994 Although a practice ceases to be objective ratio to serve as the linchpin proposal would have assessed the innovative if its use is widespread, it for an institution’s lending test rating. degree of dispersion ‘‘throughout’’ an may nonetheless receive consideration Other commenters, particularly those institution’s assessment area(s). For if it is a flexible practice. An institution representing the industry, opposed clarification, the word ‘‘throughout’’ has need not provide lending data using any market share analysis. In the been changed to ‘‘in’’ in the final rule. connected with a practice in order to agencies’ opinion, the 1994 proposal The agencies will still examine the receive consideration. For example, an struck the appropriate balance between entire assessment area; however, an examiner could consider an institution’s objective performance measures and institution is not expected to lend secured credit card program as a flexible subjective judgments. A single, evenly throughout or to every geography lending practice even though the standardized set of performance in its assessment area. Rather, an institution has not provided its credit evaluation tools is not appropriate institution’s lending pattern should not card loan data for evaluation under the because of the variety of institutions and exhibit conspicuous gaps that are not other criteria of the lending test. the differences among the communities adequately explained by the Compliance with private that they serve. The public evaluation performance context. commitments. Some commenters prepared by the agencies will explain Borrower distribution. The lending suggested that, in the lending test, the the data and analytic tools used to test also considers the distribution of an agencies should consider the extent to evaluate the institution. institution’s loans among borrowers of which an institution has fulfilled The geographic distribution of an different income levels and businesses lending agreements that the institution institution’s loans remains a component of different sizes. Favorable has made with third parties. The final of the lending test. One element of the consideration is given for loans to low- rule does not incorporate this geographic distribution analysis, both in and moderate-income persons and small suggestion. The CRA requires the the 1994 proposal and in the final rule, businesses and farm loans outside of the agencies to assess an institution’s record is the amount of lending to low-, institution’s assessment area, provided of helping to meet the credit needs of its moderate-, middle- and upper-income that the institution has adequately community, not to enforce privately geographies. As part of the performance served borrowers within its assessment negotiated agreements. Therefore, an context, examiners would consider, area. The importance of this criterion, institution’s record of fulfilling these among other considerations described particularly in relation to the geographic types of agreements is not an earlier in this preamble, the distribution criterion, will depend on appropriate CRA performance criterion. performance of other similarly-situated the performance context. For example, Affiliate lending. The 1994 proposal lenders. In this regard, examiners would borrower distribution may be more would have permitted consideration of use market share and other analyses to important in rural areas or in affiliate lending at an institution’s assist in evaluating the geographic assessment areas without identifiable option or if the agency determined that 22166 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations the affiliate’s activity is integral to the proposal did not adequately emphasize investment maintained that reliance on institution’s business. Many industry direct lending by the institution as an investment test in assigning a CRA commenters opposed consideration of compared to indirect lending carried out rating could unfairly stigmatize their affiliate lending except at the through consortia and third parties. CRA performance. As previously institution’s option on the ground that Other commenters, particularly from the discussed, the final rule has modified consideration without the institution’s industry, urged a return to the the performance context for CRA consent may be equivalent to extending provisions of the 1993 proposal that evaluations to account for financial CRA coverage to affiliates that may not would have treated direct and indirect institutions with limited investment be subject to the statute. Some lending as interchangeable. The final authority. These modifications would community and consumer groups rule clarifies that loans originated or permit an institution with limited supported consideration of affiliate purchased by third parties and consortia authority to make investments to receive activity and urged that the regulatory in which an institution participates or a low satisfactory rating under the language be strengthened to require the invests may only be considered if they investment test, although it has made agencies to take affiliate lending into qualify as community development few or no qualified investments, if the account under certain circumstances. In loans and may only be considered under institution has a strong lending record, the final rule, affiliate lending is the community development lending thereby preventing potential anomalies considered only at the election of the criterion. Indirect loans will not affect in the CRA performance ratings. institution, except with regard to the an institution’s performance under the Disposition of branch premises. To lending activity criterion, where, as other four lending test criteria. Under implement the statutory requirement in described earlier, it will provide context the final rule, direct lending 12 U.S.C. 2907(a), the final rule for the assessment in order to performance is an essential element of specifies that a donation, sale on discourage an institution from an institution’s CRA performance. favorable terms or rent-free occupancy inappropriately influencing an Some commenters requested of a branch (in whole or in part) in a evaluation of its CRA performance by clarification whether an institution is predominantly minority neighborhood conducting activities that would be required to participate directly in to any minority- or women-owned viewed unfavorably in an affiliate. The making or funding each loan that is depository institution is a qualifying agencies also received comments that made through a consortium or third investment. Similar disposition of the phrase ‘‘integral to the institution’s party in order for the loan to be branch premises to a financial business’’ in the proposal was unclear. considered under the community institution with a primary mission of The final rule does not use this phrase. development lending criterion of the promoting community development is The other limitations on lending test. An institution need not also a qualified investment. consideration of affiliate lending directly participate in the making or Service Test contained in the 1994 proposal have funding of consortia- and third party- been retained in the final rule. However, loans for the loans to be considered Compared to the 1993 proposal, the the limitation against double-counting (subject to the constraints set out in the service test in the 1994 proposal would of loans has been modified to clarify rule) under the community have reduced the significance in the that an institution can count as a development lending criterion, CRA performance evaluation of an purchase a loan originated by an provided the loans meet the definition institution’s full service, ‘‘brick and affiliate, or count as an origination a of community development loan. Loans mortar’’ branch structure by elevating loan sold to an affiliate, provided the originated directly on the books of the the consideration given to alternative same loans are not sold several times to institution or purchased by the systems for delivering retail banking inflate their value for CRA purposes. institution are considered to have been services (e.g., ATMs, mobile branches, The agencies have added language to made directly by the institution, even if loan production offices, or banking-by- the final rule to clarify that affiliate the institution originated or purchased telephone or banking-by-computer). In lending is not considered in evaluating the loans as a result of its participation this regard, the provision of retail the proportion of total lending made in a loan consortium. banking services would have been within an institution’s assessment evaluated on the basis of an area(s). The agencies also wish to clarify Investment Test institution’s: (1) Distribution of that if an institution elects to have the The 1994 proposal would have branches and ATMs among low-, lending activities of its affiliates focused on the dollar amount of an moderate-, middle-, and upper-income considered in the evaluation of the institution’s qualified investments, the areas; (2) record of opening and closing institution’s lending, the geographies innovativeness and complexity of the branches and ATMs; (3) range of served by the affiliate’s lending qualified investments and their services to low-, moderate-, middle-, activities do not affect the institution’s responsiveness to the credit and and upper-income areas; and (4) efforts delineation of assessment area(s). economic development needs of the to make alternative delivery systems Furthermore, the final rule would not community. The 1994 proposal also responsive to the needs of low- and change the existing supervisory would have clarified that the investment moderate-income areas and individuals. authority of the agencies over test considers all qualified investments In addition, the extent to which an institutions and their affiliates. benefitting a broader statewide or institution provided innovative and Therefore, although lending by affiliates regional area that included an responsive community development may be treated as lending by an institution’s assessment area. Most of services would also have been institution, this treatment for CRA the comments on the investment test considered under the service test. The purposes will not permit a regulatory concerned the definition of qualified final rule retains the essential structure agency to examine any institution or its investment and have been discussed and elements of the test as proposed but affiliate if it does not otherwise have earlier in the preamble. makes some modifications. such authority. Limited investment authority. One Relative weight of branches and Direct and indirect lending. Many group of commenters representing alternative delivery systems. The consumer and community groups institutions with statutory constraints overwhelming majority of community expressed concern that the 1994 on their authority to make this type of and consumer group commenters stated Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22167 that the 1994 proposal placed too little Some of the specific suggestions in restrictive and did not account for the emphasis on the location of an the comments were not implemented in broader business strategies and institution’s full service branches in the final rule. For example, the rule operations of wholesale and limited evaluating performance under the does not require institutions to provide purpose institutions, which often serve service test. Many of those commenters basic banking services or low-cost communities on a nationwide basis. also were concerned that the proposed checking accounts, because the CRA The final rule removes the specific service test would have erroneously permits institutions substantial leeway limitation that community development equated ATMs with full service to determine the specific policies and activities outside an institution’s branches. On the other hand, several programs that help meet credit needs in assessment area be considered only up industry commenters commended the their communities. In addition, the final to the amount of activities within the proposal’s recognition that full service rule does not evaluate the effectiveness institution’s assessment area. Under the branches should not be the determining of service performance on the basis of final rule, the agencies consider all factor under the service test as deposit growth. This measurement is activities that benefit the institution’s consistent with the trend in the industry not clearly related to helping to meet the assessment area(s) or a broader toward the use of alternative service credit needs of the community and statewide or regional area that includes delivery systems. could necessitate burdensome coding of the assessment area(s). In addition, The final rule responds to these issues deposit accounts on a geographic basis. other activities receive full by adjusting the balance of the service Finally, debit cards are not a retail consideration as long as the institution performance evaluation in favor of full- credit delivery system, and therefore the has adequately addressed the needs of service branches while still considering agencies have not included debit cards its assessment area. alternative systems. In this regard, in the list of examples of alternative Technical changes and clarifications. references to ATMs in the criteria for delivery systems for retail services. The final rule clarifies that investments in third party community development evaluating the distribution of an Community Development Test institution’s branches have been organizations may be treated either as The performance of wholesale and removed, and conforming changes have qualified investments or as community limited purpose institutions would have been made in the ratings appendix. development loans (with the institution been evaluated in the 1994 proposal receiving credit for a pro rata share of These changes signify a recognition that separately under the community the loans made by the third party, at the convenient access to full-service development test. This test would have institution’s option). In addition, the branches within a community is an focused on the record of these agencies note that a wholesale or important factor in determining the institutions in helping to meet credit limited purpose institution need not availability of credit and non-credit needs through community development engage in all three categories of services. The focus of the service test, lending, qualified investments, and activities considered under the however, remains on an institution’s community development services. The community development test but can current distribution of branches, and the 1994 proposal also would have required perform well under the test by engaging test does not require an institution to wholesale or limited purpose in one or more of these categories. expand its branch network or operate institutions to serve a designated local Technical changes have also been made unprofitable branches. area and would have placed limits on to conform with the modifications, The final rule emphasizes that consideration of activities outside this previously discussed, to the definition alternative systems for delivering retail designated area. The final rule of community development loans, the banking services, such as ATMs, are to maintains the community development definitions of wholesale and limited be considered only to the extent that test with some changes. purpose institutions, and the focus of they are effective alternatives in Request for designation as a wholesale lending performance assessments on providing needed services to low- and or limited purpose institution. In originations and purchases rather than moderate-income areas and individuals. response to comments on the 1994 loans outstanding. Furthermore, network ATMs owned by proposal, the final rule provides more other institutions do not receive the detail on the process by which an Small Institution Performance same consideration in an institution’s institution is designated wholesale or Standards evaluation as ATMs owned by or limited purpose. An institution that The small institution performance operated exclusively for that institution. seeks designation as wholesale or standards have been retained in the An institution’s branches and other limited purpose must file a request in final rule essentially as proposed in service delivery systems need not be writing at least three months prior to the 1994, except for the change in the accessible to every part of an proposed effective date of the eligibility threshold described earlier. institution’s assessment area. However, designation. If the designation is As a technical matter, the final rule has the service delivery systems should not approved, it remains in effect until the been changed to clarify that an exhibit conspicuous gaps in institution requests revocation of the institution that was a small institution accessibility, particularly to low- or designation or until one year after the as of the end of the prior calendar year moderate-income areas or individuals, agency notifies the institution that the is examined as a small institution. unless the gaps are adequately agency has revoked the designation on Many commenters, predominantly explained by the performance context. its own initiative. Thus, once an representing community organizations Other issues. The final rule conforms institution has received a designation, but also including some larger the community development services the institution need not reapply before institutions, stated that the streamlined component of the service test to that of each CRA examination. approach would amount to a de facto the investment test by giving Benefit to assessment area. Many exemption from CRA for small consideration to community commenters, including both industry institutions. Other commenters, development services that benefit a and some community group predominantly representing the broader statewide or regional area commenters, maintained that the industry, supported the proposal for encompassing an institution’s limitations placed on considering out- streamlined examinations and an assessment area. of-assessment area activities were too exemption from new data collection and 22168 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations reporting. Many commenters the institution’s performance in helping and increased opportunities for representing the industry stated that to meet the credit needs of its affiliated institutions sharing the same data collection may place a greater assessment area(s). Some commenters assessment area(s) to work together to relative burden on smaller institutions suggested that complaints resolved help meet the credit needs of their than larger institutions due to satisfactorily for the complainant not be communities and, in particular, in low- limitations in staff and financial considered in the evaluation. The and moderate-income areas. resources. After considering the agencies will consider those complaints, Public participation. The final rule comments, the agencies have decided but their satisfactory resolution will be retains the public participation not to change materially the smaller a favorable element in an evaluation. provisions in the 1994 proposal. The institution performance standards. Other commenters expressed concern final rule requires an institution Examinations of small banks and thrifts that the agencies might not adequately informally to seek suggestions from the will be streamlined and will not require consider bona fide complaints from public while developing a plan. Once the periodic reporting of new data. community members. However, the the institution has developed a plan, it Examinations will be meaningful and agencies intend to consider all CRA must publish notice of the plan and will not be implemented as de facto complaints in the course of an solicit written public comment for at exemptions. examination. Therefore, this criterion is least 30 days. In order to avoid unduly Performance criteria. The 1994 retained in the final rule as proposed. lengthening the plan approval process, proposal provided that to determine Elements of outstanding performance. the final rule does not extend the whether a small institution’s CRA Some commenters requested a minimum comment period. After the record is satisfactory, the agencies clarification of the circumstances under comment period, the institution shall would consider the institution’s loan-to- which a small institution could earn an submit the plan to its regulator, along deposit ratio, adjusted for seasonal ‘‘outstanding’’ rating. Others urged that with any written comments received. If variation and, as appropriate, other some flexibility be provided to consider the plan was revised in light of the lending-related activities, such as loan a range of activities that enhance credit comments received, the institution shall originations for sale to the secondary availability and promote community also submit the plan in the form markets, community development loans development. Under the final rule, in released for public comment. The or qualified investments. This provision addition to determining whether an agencies have added in the final rule a of the 1994 proposal responded to institution has exceeded some or all of requirement that an institution submit concerns following the 1993 proposal the standards for a satisfactory rating, with its plan a description of its that institutions that package and sell the agencies will consider a small informal efforts to seek suggestions from their loans would be disadvantaged institution’s investment and service members of the public. As under the when compared to portfolio lenders by performance based on the broad range of 1994 proposal, the final rule states that a strict loan-to-deposit ratio test. This investment and service activities a plan will be approved if the agency provision of the 1994 proposal has been discussed in the rule for other fails to act on it within 60 days after retained in the final rule. Evaluations institutions. submission, unless the agency extends will also take into account the the review period for good cause. Strategic Plan institution’s size, financial condition, Because of the importance of and the credit needs of its assessment The provisions of the strategic plan in constructive community involvement in area. the 1994 proposal have been adopted the plan process, the agencies have not The final rule also requires largely as proposed, with some changes. changed in the final rule the amount of consideration of the proportion of the The 1994 proposal provided that, as public participation required. Requiring institution’s total lending made to an alternative to being rated under the an institution to seek informal borrowers in its assessment area. The lending, service, and investment tests, suggestions in formulating a plan, and agencies will take into account local or the small institution performance then to solicit formal comment before lending and investment opportunities in standards, a bank or thrift could submit submitting a plan to the agency, assessing this criterion. to its supervisory agency for approval a encourages consultation between an In addition, the agencies will evaluate strategic plan developed with institution and its community, the distribution of loans and lending- community input detailing how the including local government, community related activities among individuals of institution proposed to meet its CRA leaders, the public and tribal different income levels and businesses obligation. The 1994 proposal made governments. There is no need for a and farms of different sizes. Where clear that an institution would not be further comment period after the appropriate, the agencies will also assessed under a plan unless the plan institution submits its proposed plan to evaluate the geographic distribution of had been approved by its supervisory the agency because such a comment loans in the institution’s assessment agency. To facilitate examinations of period could undermine the direct area, including low- and moderate- institutions with approved plans, the communication and consultation income geographies. Contrary to the final rule clarifies that an institution is between an institution and its concerns expressed by some only evaluated under a plan if the plan community that is most beneficial to the commenters, however, a small is in effect and if the institution has process. institution is not expected to lend operated under an approved plan Several comments appeared to evenly throughout its service area; (although not necessarily the particular misunderstand why the strategic plan rather, loan distribution will be plan currently in effect) for at least one provides for comment from the public. evaluated within the context of an year. Affiliates may prepare joint plans. The strategic plan option provides institution’s capacity to lend, local The final rule permits activities to be institutions an opportunity to tailor economic conditions, and lending allocated among affiliated institutions at their CRA objectives to the needs of opportunities in the assessment area. the institutions’ option, provided that their community and their capacity and The agencies also will evaluate the same activities are not considered expertise. Several industry comments whether an institution has taken for more than one institution. This were concerned that under the strategic appropriate action, as warranted, in change was made in response to plan option, community organizations response to written complaints about comments requesting greater flexibility would play an inappropriate role in an Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22169 institution’s operations. However, the responsibilities. These data are useful to consideration evidence of purpose of the consultation is for the the agencies in assessing overall lending discriminatory or other illegal credit institution to develop the fullest in communities, and would also be of practices. Finally, an institution that possible information about the needs of value to the public. Since the otherwise would have received a ‘‘needs its community and how these needs institution’s plan will be in its public to improve’’ rating would have been might be met. The institution file, the public will have the appropriate rated as ‘‘substantial noncompliance’’ if nevertheless makes all decisions context in which to evaluate the lending it received no better than a ‘‘needs to regarding how it plans to help meet data. improve’’ rating on each of its two those needs. In reviewing the public previous examinations. Assigned Ratings participation, the agencies will not Commenters generally supported the consider whether community In the final rule, as under the 1994 1994 proposal’s emphasis on lending organizations unanimously support the proposal, an institution will be assigned performance, but a number were plan, but whether the institution made one of the four assigned ratings required concerned about several apparently an appropriate investigation to by the statute: ‘‘outstanding,’’ anomalous ratings that would have determine the needs of its community, ‘‘satisfactory,’’ ‘‘needs to improve,’’ or resulted from applying the rating and whether the goals of the plan serve ‘‘substantial noncompliance.’’ (12 U.S.C. principles and the matrix in the those needs. 2906(b)(2)) For institutions that are appendix. Several commenters, As a technical clarification, the final evaluated under the community particularly community groups, were rule provides that an institution may development test for wholesale or concerned that an institution could impose a reasonable charge for copying limited purpose institutions, the small receive an assigned rating of or mailing a plan but may not charge for institution performance standards, or an ‘‘satisfactory’’ even if it received a rating reviewing the plan. approved strategic plan, the rating on of ‘‘substantial noncompliance’’ on both Assessment of performance under the these tests will be the institution’s the investment and service tests, if its plan. Under the final rule, as under the assigned rating with adjustment for any rating on the lending test was at least a 1994 proposal, the agencies will evidence of discrimination. Retail ‘‘high satisfactory.’’ In addition, an generally rate an institution’s institutions that are evaluated under the institution with a rating of ‘‘substantial performance under an approved plan lending, investment and service tests noncompliance’’ on either the service or solely in relation to goals set out in the will be assigned a rating based upon the investment test could get an plan. An institution has the option, assigned rating principles and the ‘‘outstanding’’ composite rating if its however, to elect in its plan to be matrix that implements these principles, rating on the lending and the third test subject to the standard tests should it also with adjustment for any evidence of was ‘‘outstanding.’’ These commenters fail to meet substantially its discrimination. suggested revising the rating principles ‘‘satisfactory’’ goals under the plan. The Ratings principles and matrix. A and matrix to avoid these anomalous final rule makes this election clear. An number of comments discussed the results. institution operating under an approved principles and methodology by which After considering the comments, the plan would, during the period of the an assigned rating would be given to agencies have revised the final rule to plan, not be subject to assessment under retail institutions evaluated under the eliminate these anomalies. The agencies the standard tests, unless the institution lending, investment and service tests. eliminated the principle that an so chose. In considering whether an The 1994 proposal set forth five ‘‘outstanding’’ rating on the lending test institution has substantially met plan principles that governed the assignment and either the service or investment test goals, an agency will give consideration of this rating. The methodology for would mean an ‘‘outstanding’’ assigned to circumstances beyond the calculating the assigned rating was rating even if the rating on the third test institution’s control, such as economic described in Appendix A. The proposal was ‘‘substantial noncompliance.’’ The conditions, that have affected its ability would have required that an agencies also eliminated the principle to perform. institution’s rating on the lending test that an institution’s rating on the Confidential information. A number count for at least 50 percent of its lending test would count for at least 50 of industry commenters indicated that assigned rating. Furthermore, an percent of its assigned rating. This the possibility of public disclosure of institution would have been required to change does not alter the agencies’ confidential information presented a achieve a ‘‘satisfactory’’ rating on the emphasis on the primacy of lending major disincentive to their use of the lending test in order to receive an when evaluating CRA performance, strategic plan alternative. In response to assigned rating of ‘‘satisfactory.’’ In because no institution may receive an similar comments on the 1993 proposal, addition, the 1994 proposal would have assigned rating of ‘‘satisfactory’’ unless the 1994 proposal would have permitted allowed investment and service it receives a rating of at least ‘‘low institutions to submit additional performance to raise a institution’s satisfactory’’ on the lending test. information to the relevant agency on a assigned rating if it had earned at least In light of the comments, the matrix confidential basis. The final rule a ‘‘satisfactory’’ rating on the lending that sets forth the methodology for includes this provision, which test. Poor performance on either the aggregating an institution’s scores on the adequately addresses confidentiality investment or service test also could lending, service and investment tests to concerns. have negatively affected an institution’s arrive at an assigned rating has also Data collection and reporting assigned rating. The proposal would been revised. The number of points to responsibilities. Despite industry have required the agencies to adjust be given for each rating on the lending, comments to the contrary, the final rule ratings for all institutions, regardless of service and investment tests remains provides that approval of a plan does which test the agencies used to evaluate unchanged as shown in the following not affect an institution’s data collection their performance, to take into table. 22170 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations

Invest- Component test ratings Lending Service ment

Outstanding ...... 12 6 6 High Satisfactory ...... 9 4 4 Low Satisfactory ...... 6 3 3 Needs to Improve ...... 3 1 1 Substantial Noncompliance ...... 0 0 0

The number of points needed to helping to meet a community’s credit to establish a deposit facility. Some achieve each of the four composite needs, it would be inappropriate to commenters suggested that a ‘‘safe assigned ratings has been modified impose this requirement. However, the harbor’’ would provide an incentive to slightly, as shown in the following table, changes to the ratings principles and achieve an outstanding rating. to remove the anomalies discussed matrix increase the weight of both the Community and consumer groups, on earlier. service and investment tests. the other hand, opposed any sort of safe High satisfactory and low satisfactory harbor from CRA protests. Points Composite assigned rating ratings. Some commenters found The agencies have consistently confusing the use of a ‘‘high’’ and ‘‘low’’ recognized that materials relating to 20 or over ...... Outstanding. satisfactory rating on the lending, CRA performance received during the 11 through 19 .. Satisfactory. 5 through 10 .... Needs to Improve. service and investment tests and only a applications process can and do provide 0 through 4 ...... Substantial Noncompliance. ‘‘satisfactory’’ on the assigned rating. relevant and valuable information. The Because a wide range of performance agencies also continue to believe, as To ensure that an institution does not may be rated as satisfactory, the provided in the Interagency Policy receive an assigned rating of agencies decided to keep the five ratings Statement Regarding the Community ‘‘satisfactory’’ unless it receives a rating on the underlying tests, even though the Reinvestment Act, that information from of at least ‘‘low satisfactory’’ on the assigned ratings are limited to the four an examination is a particularly lending test, an institution’s assigned statutory ratings. This will permit the important consideration in the rating will be calculated using three agencies, banks and thrifts, and their applications process because it times the lending test score if the customers to recognize the stronger represents the on-site evaluation of an institution’s point total exceeds three performances on the lending, institution’s CRA performance by its times the lending test score. investment, and service tests of those primary Federal regulator. The final rule The agencies have removed the matrix institutions that are doing a very good, implements without change the balance from Appendix A. This change will but not quite outstanding, job of helping given in the 1994 proposal between allow the agencies some flexibility in to meet the credit needs of their CRA performance ratings and material adjusting the matrix to prevent any communities. information presented through public other unintended anomalies that may be Effect of CRA Performance on comment in the applications process. found during the examination process. The agencies noted in the preamble to Applications If the agencies change the matrix in the the 1993 proposal that the frequency future, the new matrix will be published The CRA requires the agencies to with which the agencies will examine for information, but not necessarily for consider an institution’s CRA an institution will depend in part on its comment, in the Federal Register. performance record when considering record of performance. A similar Automatic downgrade of third ‘‘needs an application by the institution to discussion was inadvertently omitted to improve’’ rating. The agencies have establish a deposit facility. The statute from the 1994 proposal. Examination also removed the requirement that an defines applications for a deposit frequency will be based, in part, on an institution’s CRA rating be downgraded facility as including applications for a institution’s record of performance. This automatically from ‘‘needs to improve’’ Federal financial institution charter or policy combines an efficient use of to ‘‘substantial noncompliance’’ if it FDIC deposit insurance, applications to agency resources with an incentive for received no better than a ‘‘needs to establish or relocate a branch or home good performance. improve’’ rating on each of its two office, and applications for mergers, previous examinations. Even though the consolidations, or the purchase of assets Assessment Area Delineation automatic downgrading has been or assumption of liabilities of a As a result of numerous comments eliminated in the final rule, the agencies regulated financial institution. The 1994 received on this issue, the final rule will consider an institution’s past proposal provided that in considering makes several changes to the definition performance in its overall evaluation. If an institution’s application for a deposit of service area in the 1994 proposal. the poor performance continues, an facility, the agencies would consider the Assessment area. The CRA requires institution could be rated ‘‘substantial institution’s CRA performance and take the agencies to assess an institution’s noncompliance’’ if prior ratings were into account any views expressed by record of helping to meet the credit ‘‘needs to improve’’ and the institution interested parties submitted in needs of its local community. The has not made efforts to improve its accordance with the applicable agency’s assessment area as defined in the final performance. rules and procedures. The proposal also rule represents the community within Weight of service test. Some stated that an institution’s record of which the agencies assess an consumer groups urged that an CRA performance could provide a basis institution’s record of CRA performance. institution be required to get at least a for approving, denying, or conditioning As noted earlier in the preamble, in ‘‘low satisfactory’’ on the service test in approval of an application. the final rule, the term ‘‘assessment order to get an assigned rating of A number of comments from financial area’’ replaces the term ‘‘service area,’’ ‘‘satisfactory’’ or better. The agencies institutions asked the agencies to create which was used in the 1993 and 1994 considered this suggestion, but decided a ‘‘safe harbor’’ from CRA protests for proposals. The agencies believe the term that because the CRA’s focus is on banks with good CRA ratings that apply ‘‘assessment area’’ more accurately Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22171 describes the geographic area within rather than CMSAs. The change in the certain circumstances, the equidistance which the specific performance criteria final rule has been made to address a requirement could be inappropriate, in the rule will be assessed. Based on technical shortcoming in the 1994 because institutions do not routinely the continuing criticisms of the proposal, but does not change its serve areas that are uniformly ‘‘delineated community’’ in the current substance. The final rule retains the equidistant from their deposit-taking regulation and the ‘‘service area’’ in provision from both the 1993 and 1994 offices. The final rule retains the both the 1993 and 1994 proposals, the proposals that an assessment area not requirement that an assessment area not agencies have decided to place a extend substantially across state arbitrarily exclude low- or moderate- different emphasis on the institution’s boundaries unless the assessment area is income geographies. specific delineation and the methods located in a multistate MSA. The final Wholesale and limited purpose used by the institution to establish that rule applies these limitations to institutions. The final rule requires that delineation. The agencies do not expect wholesale and limited purpose the assessment area(s) for a wholesale or that, simply because a census tract or institutions as well as other institutions limited purpose institution must block numbering area is within an because of changes made to the generally consist of one or more MSAs institution’s assessment area, the community development test. or one or more contiguous political institution must lend to that census tract To simplify the process of delineating subdivisions in which the institution or block numbering area. The capacity an assessment area, the final rule has its main office, branches, and and constraints of the institution, its encourages institutions to establish deposit-taking ATMs. This requirement business decisions about how it can best assessment area boundaries that is substantively consistent with the help to meet the needs of its assessment coincide with the boundaries of one or 1994 proposed delineation of service area, including those of low- and more MSAs or one or more contiguous area for wholesale and limited purpose moderate-income neighborhoods, and political subdivisions, such as counties, institutions, but the final rule differs other aspects of the performance cities, or towns. An institution is from the 1994 proposal in two ways. context, would be relevant to explain permitted, but is not required, to adjust First, the final rule specifies that the why the institution is not serving the boundaries of its assessment area(s) assessment area must generally consist portions of the assessment area(s). so as to include only the portion of a of one or more MSAs or contiguous The rule also clarifies that an political subdivision it reasonably can political subdivisions; the 1994 institution’s delineation of its be expected to serve. This provision proposal would have required the assessment area(s) is not separately gives institutions some flexibility in institution to delineate ‘‘an area or areas evaluated as an aspect of CRA their delineations, particularly in the around its offices.’’ Second, the performance, although the delineation case of an area that would otherwise be assessment area has been modified to will be reviewed for compliance with extremely large, of unusual conform to changes made to the scope the assessment area requirements of the configuration, or divided by significant of the community development test. The rule. If, for example, an institution geographic barriers. As with the 1994 community development test permits delineated the entire county in which it proposal, however, such adjustments consideration of community is located as its assessment area but may not arbitrarily exclude low- and development activities that are outside could have delineated its assessment moderate-income geographies from the of an institution’s assessment area, but area as only a portion of the county, it institution’s assessment area(s). For that are in a broader statewide or will not be penalized for lending only purposes of assessment area delineation, regional area that includes the in that portion of the county, so long as an institution should use the MSA and institution’s assessment area. As a that portion does not reflect illegal CMSA boundaries in effect on January result, an institution need not delineate discrimination or arbitrarily exclude 1 of the calendar year in which the a statewide or regional, rather than low- or moderate-income geographies. institution is making the delineation. local, assessment area in order to Assessment area boundaries. The Equidistance principle. The 1994 receive consideration for these 1994 proposal would have prohibited a proposal would have adopted the activities. financial institution, other than a effective lending territory principle from Use of assessment area. In response to wholesale or limited purpose the current regulations in slightly comments indicating concern that institution, from delineating a service modified form. The 1994 proposal examiners might modify the area area that extends substantially across would have explicitly linked an delineated by the institution, the final boundaries of a metropolitan statistical institution’s CRA obligations to the rule explicitly provides that the area (MSA) or state boundaries, unless areas around its branches and deposit- agencies will use the assessment area the service area was located in a taking ATMs, rather than its other non- delineated by the institution, unless multistate MSA. Further, the proposal deposit taking offices. The service area they determine that the assessment area would have prohibited an institution’s delineated by the institution would does not comply with the requirements service area from reflecting illegal have had to include all geographies for assessment areas set forth in the final discrimination or arbitrarily excluding around its branches in which the rule. If the assessment area fails to low- and moderate-income geographies institution originated or had comply with the rule’s requirements, (taking into account the institution’s outstanding during the previous year a the examiner will designate an area that size and financial condition). significant number and amount of home does comply and will use that area in The final rule states that an institution mortgage, small business and small evaluating the institution’s performance. shall not delineate an assessment area farm, and consumer loans and any other Technical changes and clarifications. extending substantially across the geographies equidistant from its The final rule includes other technical boundaries of a consolidated branches and deposit-taking ATMs. changes to provide clarification. For metropolitan statistical area (CMSA). An The final rule eliminates the example, some commenters interpreted institution shall delineate separate equidistance principle as a required part the use of the phrase ‘‘significant assessment areas for the areas inside of the delineation of an assessment area. number and amount of loans’’ in the and outside the CMSA and for different This change provides institutions 1994 proposal to have a different CMSAs. The 1994 proposal expressed greater flexibility in their delineations. meaning than the phrase ‘‘substantial these limitations in terms of MSAs Several commenters suggested that, in portion of its loans’’ in the current 22172 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations regulations. The agencies did not intend The 1994 proposal would have the nature and location (if relevant) of a different meaning and have used the required large wholesale and limited the activities supported by the loans wording from the current regulations in purpose institutions to collect and reviewed. the final rule. In addition, changes in report data. Some commenters urged Consumer loan collection and the final rule reflect the rule’s shift in that wholesale and limited purpose maintenance. In the final rule, as in the focus from loans outstanding to institutions be exempt from data 1994 proposal, data collection and originations and the different collection and reporting. The final rule maintenance are optional for consumer circumstances under which the lending does not include an exemption. The loans, and there are no reporting test considers consumer loans. data are necessary for the agencies to requirements. As described in the determine whether the institutions discussion of the lending test earlier in Data Collection and Reporting initially qualify and continue to remain the preamble, an institution may In the final rule, the agencies qualified for treatment as wholesale or provide data on one or more categories continued their efforts to streamline limited purpose institutions. The data of consumer loans, such as motor data collection and reporting also will be helpful in understanding vehicle loans, and not on others. requirements in response to comments the context in which the performance of However, if an institution provides data concerning potential burden. The final other institutions should be evaluated. for any loan in a category, it is required rule simplifies data requirements and Collection and reporting of to provide data for all loans in the eliminates Appendix C. originations and purchases rather than category. For each loan category for Application of data collection loans outstanding. For the reasons which an institution elects to provide provisions to small institutions and stated in the discussion of the lending data, the data must include for each wholesale and limited purpose test earlier in the preamble, the final loan in the category originated or institutions. The 1994 proposal would rule requires reporting of and evaluation purchased since the last CRA not have applied small business and based on originations and purchases for examination: (1) the amount at farm loan and community development all categories of loans. Institutions still origination or purchase, (2) the loan loan data requirements to small have the option to provide data on loans location, and (3) the gross annual institutions. Some commenters outstanding, which examiners would income of the borrower that the criticized the exemption from data consider to round out the picture of institution considered in making the collection and reporting requirements lending performance. credit decision. If the institution does for small institutions because only a Community development loan not consider income in making an subset of data would actually be reporting. The community development underwriting decision, it need not collected, restricting the regulators’ loan reporting provisions in the final collect income information. Further, if ability accurately to assess the overall rule have been modified to reflect the the institution routinely collects, but performance of institutions in helping to decision to rely on originations and does not verify, a borrower’s income meet credit needs. These commenters purchases. Institutions, except small when making a credit decision, it need stated that the benefits of collecting the institutions and institutions that were not verify the income for purposes of data across the industry outweighed the small institutions during the prior data maintenance. The location of the associated burden. However, the burden calendar year, are required to report to loan must be maintained by census tract on small institutions would be their primary regulator annually on or block numbering area. significant and the benefit less than the March 1 the aggregate number and Reporting of loan information outside commenters assert. Therefore, the final aggregate amount of community assessment areas and outside MSAs. rule does not subject a small institution development loans originated and Some commenters asked that to additional data collection and purchased during the prior calendar institutions not be required to report reporting requirements. The volume of year. The agencies will include this small business and small farm loans originations of loans other than home information in the CRA Disclosure located outside their assessment areas or mortgage loans in a small institution Statements that they prepare for each outside MSAs. The agencies have not will generally be small enough that an institution, and which an institution made this change in the final rule. The examiner can view a substantial shall place in its public file within three data on lending in rural areas provide sampling of loans without advance days of receipt. important information on how well collection and reporting of information Some commenters requested reporting institutions are serving rural by the institution. In addition, although and disclosure of more detailed communities where they have branches. small institutions are large in number, information on community The data are also necessary for the they have a relatively small percentage development loans, including a lending test assessment criterion that of the total assets of the industry. breakdown by location and purpose of evaluates the degree to which an An institution that was a small the loan. The agencies did not adopt institution’s lending is inside its institution during the prior calendar these suggestions because the additional assessment area. Finally, the lending year but is no longer a small institution burden would outweigh the potential data provide information that assists would be subject to data collection and usefulness of more specific data. In examiners in understanding the context maintenance requirements but not data assessing an institution’s performance in which the performance of other reporting requirements. The data under the lending or community institutions should be evaluated. The reporting requirements do not apply development test, examiners will review commenters that opposed reporting of because the institution would not have actual community development loan small business and small farm loans collected the data to report. The files to determine the complexity and outside their assessment areas or institution would be subject to data innovativeness of the loans and their outside MSAs also generally opposed reporting requirements in the year responsiveness to credit and community the proposed change to require following the first year for which it was development needs. Examiners will institutions that are not small required to collect data, provided the discuss the community development institutions and are subject to HMDA to institution does not qualify as a small loans reviewed in the public portion of report the location of applications and institution at the time the data must be the institution’s CRA performance originations of home mortgage loans reported. evaluation. The discussion will include outside the MSAs in which the Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22173 institutions have offices. The agencies to address the issue of race and gender Under the final rule, each covered have adopted the proposed change data in fair lending regulations that institution is required to collect and despite these objections for the same apply equally to all lenders. maintain in a standardized, machine reasons that the agencies did not change Small business data collection, readable format the following the final rule for collecting of small maintenance, and reporting generally. In information on each small business loan business and small farm loans outside response to industry comments originated or purchased since the prior MSAs or assessment areas. Conforming regarding the burden associated with CRA examination: (1) amount at amendments to Regulation C (HMDA) the small business and small farm loan origination; (2) location; and (3) an have been adopted by the Board. data requirements, the final rule indicator whether the loan was to a Race and gender information on small streamlines the data collection, business with $1 million or less in gross business borrower not required. The maintenance and reporting. The annual revenues. The location of the 1994 proposal would have required agencies have replaced loan-by-loan loan must be maintained by census tract each institution, other than a small reporting using loan registers with or block numbering area. institution, to collect and report data on aggregate reporting by census tract. Each covered institution is required to the race and gender of small business The 1994 proposal would have report in machine-readable form and small farm borrowers. This required lenders to indicate whether annually on March 1 the following provision, which was the most small business borrowers had gross information, aggregated for each census frequently addressed issue in the annual revenues $1 million or less. tract/block numbering area in which the comments, was proposed in order to Some commenters suggested that the institution made at least one small support the fair lending component of requirement be eliminated because they business or small farm loan during the the CRA assessment. The agencies have believed it was burdensome and prior calendar year: (1) number and removed this proposed requirement unnecessary. The final rule retains the amount of loans with original amounts from the final rule. requirement. The burden of collecting of $100,000 or less; (2) number and Many commenters, including this information is minimal, because $1 amount of loans with original amounts virtually every community or consumer million is already used in the Board’s of more than $100,000 but less than or group that addressed the issue, Regulation B as a threshold for certain equal to $250,000; (3) number and supported the provision. These requirements related to adverse action amount of loans with original amounts commenters believed that the notifications and record retention. of more than $250,000; and (4) number information was critical to determine and amount of loans to businesses and Therefore, many institutions already whether discrimination was occurring farms with gross annual revenues of $1 have a reason to track business and farm in small business and small farm million or less (using the revenues the loans based on this revenue figure. lending. The commenters noted the institution considered in making its The information on the revenue size value of HMDA data on race and gender credit decision). in monitoring home mortgage lending. of business and farm borrowers is useful Need for data collection and Nearly every industry comment because, in combination with loan reporting. Some commenters continued opposed the collection as proposed. amount information, it will enable the to question the validity and propriety of These commenters stated that the agencies to make accurate judgments any data collection and reporting for requirement was burdensome and the about the size of businesses and farms larger institutions. As discussed earlier, data, as proposed to be collected and receiving reported loans. Some the agencies have significantly reduced reported, would be of limited utility. commenters questioned whether an the data collection and reporting from They asserted that reporting institutions institution should report the revenue of that originally proposed, and where would be at a competitive disadvantage the entity to which the loan is actually feasible the rule relies on existing data because small institutions and non- extended or of its parent corporation if collections. However, the rule continues financial institution lenders not only the entity is a subsidiary. An institution to provide for some additional data would not be required to collect and should report the revenues that the collection and reporting by larger report the information but actually institution considered in making its institutions. In a performance-based would be prohibited from doing so credit decision. CRA process, these requirements are (because of the Board’s Regulation B, Some commenters asked that the necessary to permit the agencies to carry implementing the Equal Credit agencies require collection and out their statutory obligation to examine Opportunity Act). Some commenters reporting of data on applications and and assess institutions’ CRA records and also questioned the relevance of the race denials. The agencies did not adopt this to prepare the public sections of CRA and gender data to CRA. A few industry suggestion. The small business lending performance evaluations. The emphasis commenters endorsed collection of race process is generally far less formal than on actual performance responds to the and gender data, provided it was done the consumer or home mortgage lending nearly universal criticism that current through Regulation B. A larger number process. Sometimes institutions do not CRA examinations rely too heavily on opposed collection, but believed that, if require written applications for small documentation of an institution’s the agencies concluded the data were business loans; when they do, policies, procedures and community necessary, collection should be required applications often come after potential contacts rather than lending. While the under Regulation B. problems have been addressed in agencies recognize that the collection of The agencies have removed the informal discussions. Because the data regarding lending activity will proposed requirement from the final agencies do not believe information on impose burden on many institutions, rule. Although the agencies believe that applications and denials would be the final rule has been tailored to rely fair lending performance is directly particularly helpful, the final rule does primarily on data readily available to or relevant to CRA performance, they not require collection or reporting of already collected by institutions in recognize the anomaly of requiring some information on small business and small order to minimize the collection burden. institutions to collect and report farm applications and denials. Instead, In addition, the burden of collecting information that other lenders are institutions are required to report all actual loan performance data will be prohibited from collecting. Therefore, small business and small farm loans that offset somewhat by the elimination of they believe that it is more appropriate they originate or purchase. requirements under the current CRA 22174 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations evaluation scheme that institutions lend in each census tract in its than 120 percent, or 120 percent or document policies, procedures, and assessment area(s), and might lead to more. CRA contacts. Finally, the agencies will misinterpretation of the data. The disclosure statements will also prescribe a standardized format for data Based on these considerations, under contain information on the number and maintenance and reporting and make the final rule, the agencies, rather than amount of loans inside each and outside available software to facilitate data the institutions, will prepare disclosure any assessment area of the institution maintenance and reporting. statements in order to reduce burden on and the institution’s community Disclosure of small business and the industry. The agencies will prepare development loan information. The small farm loan data. Under the 1994 annually individual CRA Disclosure disclosure statements will include proposal, every large institution would Statements for each reporting institution affiliate lending if the institution have been required to include in its and aggregate disclosure statements for reported the affiliate lending for public file the following information on each MSA and the non-MSA portion of consideration in its assessment. small business loans: (1) the number each state. The agencies will make both An institution itself no longer has to and amount of loans in low-, moderate- the individual and the aggregate prepare information on small business , middle- and upper-income census disclosure statements available to the and small farm lending or community tracts; (2) a list of each census tract with public at central depositories. development lending to place in its at least one loan; (3) the number and The aggregate disclosure statements public file. Instead, each institution is amount of loans inside the institution’s will indicate, for each geography, the required to put its CRA Disclosure service areas and outside the number and amount of small business Statement in its public file within three institution’s service areas; (4) the and small farm loans originated or days of receipt of the statement from its number and amount of loans to purchased by all reporting institutions, regulator. businesses with gross annual revenues except that the agencies may adjust the List of geographies in assessment area of $1 million or less; (5) the number and form of the disclosure if necessary, and map of each assessment area. The amount of loans to minority-owned because of special circumstances, to 1994 proposal also would have required businesses; and (6) the number and protect the privacy of a borrower or the each institution to report (and include amount of loans to women-owned competitive position of an institution. in its public file) a list of the businesses. The proposal did not The disclosure statements for the geographies the institution considers to provide that the agencies would make individual institutions will be prepared be within its assessment area and a map any aggregate data available to the on a state-by-state basis and will contain of each assessment area showing its public. for each county (and each assessment geographies. Several industry comments The vast majority of consumer and area smaller than a county) with a suggested that this requirement was community group commenters population of 500,000 or fewer in which overly burdensome and that either a maintained that the public disclosure the institution reported a small business map or a list of the geographies in the provisions of the 1994 proposal were or small farm loan: (1) The number and assessment area(s) be reported but not not sufficient. They asked that small amount of small business and small both. Under the final rule, institutions business loan data be made available to farm loans located in low-, moderate-, would only report the list of geographies the public in a HMDA-like format for middle-, and upper-income census in each assessment area, and small individual institutions and in tracts or block numbering areas; (2) a list institutions or institutions that were aggregated form. They asked that, at a of each census tract or block numbering small during the prior calendar year minimum, data be available to the area in the county or assessment area would not have to report at all. In public on an aggregate and institution- grouped according to whether the addition, the agencies have changed the by-institution basis by individual geography is low-, moderate-, middle-, reporting date to March 1 to provide a census tract, including for each census or upper income; (3) a list of each uniform date for reporting of tract the number and volume of loans. census tract or block numbering area in information required under the final Otherwise, the public would not be able which the institution reported a small rule. to judge how an institution is business or small farm loan; and (4) the All institutions would still have to performing in one low-income number and amount of small business include a map of each assessment area neighborhood as compared to another and small farm loans to businesses and in the public file because the agencies and, without incurring unreasonable farms with gross annual revenues of $1 believe a list of census tract numbers is cost, would not be able to compare the million or less. For each county (and likely not to be useful to many members performance of one institution with the each assessment area smaller than a of the public. To reduce burden, the performance of another. The county) with a population greater than final rule clarifies that the map itself commenters also expressed concern 500,000, the number and amount of need not show the geographies. The about the agencies’ using certain data to small business and small farm loans geographies may be identified on the evaluate institutions but not making the will be provided for geographies map; alternatively, if the institution data available to the public. Industry grouped according to whether the provides a separate list of the commenters generally opposed detailed median income of the geography geographies contained in the area, the data collection and reporting relative to the area median income is map may need to show only the requirements as burdensome. less than 10 percent, 10 or more but less boundaries of the area. Census tract-by-census tract than 20 percent, 20 or more but less information provides the most detailed than 30 percent, 30 or more but less Public File information to the public. However, than 40 percent, 40 or more but less Other aspects of the public file some commenters were concerned that than 50 percent, 50 or more but less requirements have also been amended disclosure at this level for each than 60 percent, 60 or more but less to provide more clarity and to respond institution might invade the privacy of than 70 percent, 70 or more but less to the criticism that the requirements in small business and small farm than 80 percent, 80 or more but less the 1994 proposal were burdensome. borrowers, could reveal protected than 90 percent, 90 or more but less List of branches, ATMs, and services. business information, might erroneously than 100 percent, 100 or more but less The 1994 proposal would have required signal an expectation that an institution than 110 percent, 110 or more but less the public file to include a list of the Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22175 institution’s branches and ATMs, their test will be required to provide in the home office. At least one branch office street addresses, and geographies; a list public file information on the number in each assessment area would have of branches and ATMs opened or closed and amount of consumer loans to been required to have the HMDA by the institution during the current and low-, moderate-, middle- and upper- Disclosure Statement and any materials each of the prior two calendar years, income borrowers and census tracts, as from the public file relating to that their street addresses, and geographies; well as information on the number and assessment area available to the public. and a list of services offered at the amount of consumer loans located both In addition, if a request for the public institution’s branches and ATMs. Many inside and outside of the institution’s file was made at a branch office that did industry commenters stated that these assessment area. not maintain the file, the institution requirements were extremely The final rule also removes the would have been required to make a burdensome, particularly the list of exception to providing data in the complete copy of the file for that services offered at the branches. Much public file that might reasonably be assessment area available for review at of this information is central to the expected to disclose the identity of the the branch within five days at no cost. institution’s performance under the borrower. Because of changes to data An institution could have imposed service test, and the public should have disclosure in the final rule, the agencies reasonable copying and mailing charges access to it. The final rule therefore believe that a privacy exception is not if a member of the public requested retains the requirement that the public necessary for the individual CRA copies of information in the file. file include a list of services offered at Disclosure Statements. As described Industry commenters maintained that the branches as well as the requirement earlier, the agencies will take privacy the requirement to keep multiple copies that the file include a list of the concerns into account in preparing of the public file was extremely branches, their street addresses, and aggregate disclosure statements. burdensome, particularly given the large geographies and a list of branches Inclusion of comments received. The amount of information in the file. These opened and closed during the current 1994 proposal would have required an commenters suggested that only one and prior two calendar years. institution to include in the public file public file should be required. However, the final rule does not all signed, written comments that it Under the final rule, an institution require institutions to list ATMs by received from the public for the past need maintain only one copy of its street address or geography. Nor does two years. A few industry commenters public file in each state in which it has the final rule require that institutions did not perceive a need to keep its main office or a branch. The final provide a list of ATMs that have been correspondence related to complaints rule provides that each institution shall opened or closed in the current or prior that have been satisfactorily resolved. make available to the public for two years. This change reduces burden The agencies have not made a change in inspection upon request and at no cost on an institution in trying to keep the response to these comments because, as the information in the file at the main public file current because ATMs may discussed earlier, satisfactorily resolved office and, if the institution is an be opened and closed more frequently comments are relevant to assessment of interstate institution, at one branch than branches. This change is also the institution’s performance. The final office in each state. At each branch, an consistent with other changes that rule removes the requirement that institution shall provide its public clarify that the agencies do not consider written comments be signed in order to evaluation and a list of services ATMs as equivalent to branches in be included in the public file, because provided at the branch. The institution providing services to the community. all written comments should be shall also make all information in the Small business, small farm, consumer, considered even if the commenter public file relating to the assessment and community development loan data. wishes to remain anonymous. Of course, area in which the branch is located The 1994 proposal would have required the response appropriate to a comment available for review at the branch within institutions that were not small may well vary depending on whether five calendar days of a request to review institutions (and small institutions that the commenter has provided his or her the file. These changes reduce the elected to be evaluated under the name. burden associated with the maintenance lending, investment, and service tests) Loan-to-deposit ratio for small of public files at a branch in each to include data collected or reported to institutions. The 1994 proposal would assessment area while making it easier the agencies for each of the prior two have required small institutions to for the public to access the file at any calendar years in their public file. The include in the public file their loan-to- branch. They also reflect the statutory 1994 proposal would not have required deposit ratios computed at the end of provisions of the IBEA requiring public disclosure of data if it might the most recent calendar year. Many separate written evaluations for each reasonably be expected to disclose the small institutions requested that the state in which an interstate institution identity of the borrower because of the public file requirement for loan-to- operates. small number of loans made in deposit ratio information be expanded Additional clarifications. Some particular geographies or to particular to include loan-to-deposit ratios for each commenters requested the agencies to groups of borrowers. quarter, or alternatively, that an annual specify a date on which the public file Institutions will no longer have to average loan-to-deposit ratio be placed information should be updated. The compile information on small business, in the file in order to better convey final rule provides that the public file be small farm, and community seasonal fluctuations in lending to the updated as of April 1 of each year development loans for inclusion in their public. In accordance with the unless the rule specifies another time public files. As described earlier, the comments, the final rule requires a for a particular element, such as the information regarding these loans that small institution to place annually in CRA Disclosure Statement. The final continues to be relevant under the final the public file the loan-to-deposit ratio rule also clarifies that contents of the rule will be contained in the at the end of each quarter of the prior public file can be supplemented with institution’s CRA Disclosure Statement calendar year. any other information the institution prepared by the agencies. Public file location and number of deems appropriate. The final rule Institutions that elect to have any copies. The 1994 proposal would have further clarifies that lending data portion of their consumer lending required that institutions maintain a contained in the public file relate to portfolios considered under the lending complete copy of the public file at the lending not only by the institution, but 22176 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations also its affiliates, if the lending by provide, in machine readable form, the examination procedures, rather than affiliates is considered in the assessment location of home mortgage loans located stated in regulatory text. Whether an of the institution. outside MSAs in which the institution institution has one assessment area or has an office (or outside any MSA) for several, the examiner must have an Transition that period. If the institution elects adequate factual basis on which to The 1994 proposal would have evaluation of any category of consumer assess an institution’s record of established a transition period from July loans, the institution must also provide performance, and the overall rating 1, 1995, to July 1, 1996. Institutions consumer loan data, in machine must be fair and appropriate. These subject to data collection and reporting readable form, for that category for that objectives do not necessarily require requirements would have been required period. An institution that seeks that an agency examine an institution’s to begin collecting home mortgage, evaluation under the community performance in every assessment area in small business, and consumer loan data development test must apply for the same way or that the rule state how on July 1, 1995. Assessments under the designation as a wholesale or limited performance in different assessment proposed standards would have begun purpose bank three months prior to its areas is aggregated. Just as a single July 1, 1996. However, small examination and must provide data on mathematical calculation cannot institutions would have had the community development loans for the determine performance in an opportunity to be examined, at their twelve months prior to the examination. assessment area, so the appropriate option, under the small institution All institutions evaluated under the treatment of multiple assessment areas assessment method anytime after July 1, revised tests and standards or under an cannot be reduced to a formula. 1995. Anytime on or after July 1, 1995, approved strategic plan before July 1, The agencies note that the IBEA an institution could have elected to 1997, must delineate their assessment amended the provisions of the CRA submit for approval a strategic plan, and areas in accordance with the provisions regarding written evaluations, and the examinations under approved strategic of the final rule. examination procedures will be plans would have begun July 1, 1996. consistent with those requirements. Many industry commenters requested CRA Notice that the transition period be lengthened The 1994 proposal would have made Written Evaluations to provide institutions with more time minor changes to the notice Although the 1994 proposal did not to develop procedures for satisfying the requirements set forth in the 1993 directly address the content of the data collection requirements. Also, proposal. The term ‘‘head office’’ was written performance evaluations some of these commenters changed to ‘‘main office’’ for clarity. required by the CRA statute, some recommended against implementing the Within the notice, the statement of what commenters did. These commenters data collection requirements on July 1, is included in the CRA performance file focused on whether the agencies would because they believed that data would have been expanded to describe disclose an institution’s ratings on the collected for a half year would not be more accurately the contents of the file. lending, investment, and service tests to useful. Moreover, some industry The final rule makes additional changes the institution and to the public. commenters asked that data collection to reflect changes in the public file The agencies jointly will issue begin on January 1, to fall in line with provisions. guidelines for the contents and other materials that are maintained on a disclosure of written evaluations calendar-year basis. Multiple Assessment Areas prepared under the final rule, and these In light of these comments and the The 1994 proposal did not address guidelines will implement the IBEA fact that the implementation dates set how institutions with multiple amendments regarding written forth in the 1994 proposal reflected assessment areas would be examined or evaluations. To address the issue raised anticipated publication of the final rule how performance in different in the comments, the agencies envision in January 1995, the data collection assessment areas would affect the that these guidelines will provide that requirements set forth in the final rule overall rating. The agencies received an institution’s ratings on the different will become effective January 1, 1996. comments expressing a broad range of tests in the rule be disclosed both to the The reporting requirements will become opinions regarding the examination institution and, as part of the public effective January 1, 1997. Evaluations treatment and assessment of institutions section of the written evaluation, to the under the lending, investment, service, with multiple assessment areas. Several public. A guiding principle of the CRA and community development tests will community group commenters stated reform effort has been to clarify for all begin July 1, 1997, in order to allow the that ‘‘sampling’’ among assessment concerned the basis for an institution’s agencies to use the newly reported data. areas was unacceptable, while an rating, and the disclosure of ratings will However, evaluations under the small industry organization suggested an provide essential information regarding bank performance standards, which do elaborate sampling procedure. Other the assessment of an institution’s not utilize new data, will begin January commenters proposed that certain performance. Contrary to the claim 1, 1996. In addition, beginning January assessment area characteristics, such as raised in some comments, neither the 1, 1996, any institution may submit a the percentage of the institution’s use of five ratings, nor the disclosure of strategic plan for approval or elect to be deposits or assets in the assessment those ratings to the public, conflicts examined under the revised area, should determine the weight that with the statutory mandate that the performance tests, if the institution performance in that assessment area agencies use four ratings in assessing provides the necessary data. should have on the overall rating of the the overall performance of an An institution that elects evaluation institution. Other commenters were institution. under the lending, investment, and concerned that such proposals could service tests before July 1, 1997, must mean that rural assessment areas would Appeals provide, in machine readable form, data not be given appropriate consideration Many commenters requested that the on small business and small farm loans in the examination process. agencies establish an interagency and community development loans for The agencies continue to believe that appeals process. The final rule does not the twelve month period preceding the the examination treatment of multiple adopt this suggestion. Each agency has examination. The institution must also assessment areas is best left for a process under which an institution Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22177 can appeal its CRA rating. The agencies Board: In accordance with section to Steven F. Hanft, Office of the have recently reviewed and modified, as 3507 of the Paperwork Reduction Act of Executive Secretary, room F–453, necessary, their appeals processes 1980 (44 U.S.C. Ch. 35; 5 CFR 1320.13), Federal Deposit Insurance Corporation, pursuant to the Community the proposed information collection was 550 17th Street, NW., Washington, DC Development and Regulatory reviewed by the Board under the 20429. Improvement Act of 1994. In light of the authority delegated to the Board by the OTS: The collections of information recent review, the agencies do not Office of Management and Budget after contained in this final rule have been believe that it is necessary to adopt an consideration of the comments received reviewed and approved by the Office of interagency appeals process in the final during the public comment period. Management and Budget in accordance rule. The collections of information in this with the requirements of the Paperwork rule are in 12 CFR 228.25, 228.27, Reduction Act of 1980 (44 U.S.C. Additional Interagency Initiatives 228.41, 228.42, and 228.43. This 3504(h)) under control number 1550– In addition to this rulemaking, the information is required to evidence the 0012. agencies will work together to improve efforts of State member banks in helping The estimated annual burden per training for examiners, to increase to meet the credit needs of their entire respondent varies, depending on interagency efforts to apply standards communities, including low- and individual circumstances, from 2 hours consistently and reliably, and to moderate-income areas. This for a small savings association required minimize unnecessary compliance information will be used to assess State to perform only recordkeeping, to 214 burden. These efforts will focus on member bank performance in satisfying hours for a large savings association producing a CRA assessment process the credit needs of their communities required to perform all elements in part that imposes fewer burdens on and in evaluating certain applications. 563e, with an estimated average burden institutions yet yields better results for The estimated annual burden per of 16 hours. the local communities in which they are respondent/recordkeeper varies from 2 The collections of information in this chartered to do business. to 280 hours, depending on individual final rule are in 12 CFR 563e.25, The agencies have also agreed to circumstances, with an estimated 563e.27, 563e.29, 563e.41, 563e.42, and conduct a full review of the final rule in average of 17 hours. There will be an 563e.43. the year 2002, five years after the rule estimated 969 recordkeepers, averaging Comments concerning the accuracy of is fully implemented. This review will 16 hours. Among those will be an this burden estimate and suggestions for be conducted to determine whether the estimated 274 respondents, responsible reducing this burden should be directed rule has been effective in achieving the for an additional average of 4 hours of to the Office of Management and goals of the final rule, including reporting burden. These estimates Budget, Paperwork Reduction Project emphasizing performance rather than include a prediction that five percent of (1550–0012), Washington, DC 20503, process, promoting consistency in respondents/recordkeepers will keep or with copies to the Office of Thrift evaluations, and eliminating submit optional data. Supervision, 1700 G Street, NW., unnecessary burden. Any regulatory Comments concerning the accuracy of Washington, DC 20552. changes that are determined to be this burden estimate and suggestions for Regulatory Flexibility Act necessary to improve the rule’s reducing this burden should be directed effectiveness will be made at that time. to Secretary, Board of Governors of the The agencies concluded that the 1994 Federal Reserve System, 20th and C proposal, if adopted as a final rule, Paperwork Reduction Act Streets, NW., Washington, DC 20551; would not have a significant economic OCC: The collections of information and to the Office of Management and impact on a substantial number of small contained in this final rule have been Budget, Paperwork Reduction Project banks and thrifts and invited comment reviewed and approved by the Office of (7100–0247), Washington, DC 20503. on this determination. In response to Management and Budget in accordance FDIC: The collections of information comments received, the agencies have with the requirements of the Paperwork contained in this final rule have been conducted an analysis under The Reduction Act of 1980 (44 U.S.C. reviewed and approved by the Office of Regulatory Flexibility Act (5 U.S.C. 3504(h)) under control number 1557– Management and Budget in accordance 601–612, the ‘‘Act’’). 0160. with the requirements of the Paperwork The Act requires an agency to take The estimated annual burden per Reduction Act of 1980 (44 U.S.C. certain considerations into account respondent varies, depending on 3504(h)) under control number 3064– when a rule will have a significant individual circumstances, from 2 hours 0092. economic impact on a substantial for a small bank required to perform The estimated annual burden per number of small entities. Two of the only recordkeeping, to 280 hours for a respondent varies, depending on three requirements of a final regulatory large bank required to perform all individual circumstances, from 2 hours flexibility analysis (5 U.S.C. 604)—(1) a elements in part 25, with an estimated for a small bank required to perform succinct statement of the need for and average burden of 18.5 hours. only recordkeeping, to 280 hours for a the objectives of the rule, and (2) a The collections of information in this large bank required to perform all summary of the issues raised by the final rule are in 12 CFR 25.25, 25.27, elements in part 345, with an estimated public comments, the agency’s 25.29, 25.41, 25.42, and 25.43. average burden of 12 hours. assessment of the issues, and a Comments concerning the accuracy of The collections of information in this statement of the changes made in the this burden estimate and suggestions for final rule are in 12 CFR 345.25, 345.27, final rule in response to the comments— reducing this burden should be directed 345.29, 345.41, 345.42, and 345.43. are discussed earlier in the preamble. to Legislative and Regulatory Activities Comments concerning the accuracy of The third requirement is for a Division, Attention: 1557–0160, Office this burden estimate and suggestions for description of the alternatives the of the Comptroller of the Currency, 250 reducing this burden should be directed agency considered to the rule being E Street, SW., Washington, DC 20219, to the Office of Management and adopted that were designed to minimize and to the Office of Management and Budget, Paperwork Reduction Project the effect on small entities subject to the Budget, Paperwork Reduction Project (3604–0092), Washington, DC 20503, rule and why, if applicable, they were (1557–0160), Washington, DC 20503. with copies of such comments to be sent rejected. 22178 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations

The agencies have carefully the OCC and OTS will review its recordkeeping requirements, Savings considered the effects of the final rule effectiveness in achieving the goals of associations. on small entities and the alternatives the CRA prior to and in preparation for Authority and Issuance available to mitigate its potential the full CRA regulatory review in the burdens. The final rule provides year 2002, discussed earlier. Office of the Comptroller of the separate, less burdensome treatment for Currency Unfunded Mandates Reform Act of small institutions, which are defined as 1995 12 CFR Chapter I institutions with total assets of $250 For the reasons outlined in the joint million or less that are either OCC and OTS: Section 202 of the preamble, the Office of the Comptroller independent or are affiliates of a Unfunded Mandates Reform Act of of the Currency amends 12 CFR chapter holding company with banking and 1995, signed into law on March 22, I as set forth below: thrift assets of less than $1 billion. The 1995, provides that before promulgating rule contains a specific small institution certain rulemakings, covered agencies PART 25ÐCOMMUNITY performance evaluation that relies on must prepare a written statement REINVESTMENT ACT REGULATIONS simplified criteria, to account for the containing a cost/benefit analysis. operational differences between large Under section 205, before promulgating 1. The authority citation for part 25 is and small institutions. Small any rule for which a written statement revised to read as follows: institutions are also not subject to the is required under section 202, covered Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36, data collection and reporting provisions agencies must identify and consider a 93a, 161, 215, 215a, 481, 1814, 1816, 1828(c), in the rule for large institutions. reasonable number of regulatory and 2901 through 2907. alternatives, and from those alternatives, The agencies believe that the rule has 2. Part 25 is amended by adding select the least costly, most cost- minimized the burden on small Subparts A through D and Appendices effective, or least burdensome one that institutions, while still enabling the A and B to read as follows: agencies to fulfill their statutory achieves the objective of the mandate to examine the CRA record of rulemaking. Subpart AÐGeneral these institutions. Although exempting In promulgating this rulemaking, the Sec. small institutions from evaluation under Federal financial supervisory agencies 25.11 Authority, purposes, and scope. the CRA would eliminate any possible considered a wide range of alternatives 25.12 Definitions. burden imposed by the final rule, the described in notices of proposed Subpart BÐStandards for Assessing CRA does not provide an exemption for rulemaking published in 1993 and 1994. Performance small institutions. In addition to the comments that the 25.21 Performance tests, standards, and Some small institutions would agencies received in response to the ratings, in general. continue to be subject to the same notices of proposed rulemaking, the 25.22 Lending test. potential burdens imposed on large agencies conducted a series of seven 25.23 Investment test. institutions if they were affiliates in a public hearings across the country in 25.24 Service test. holding company with banking and 1993, at which hundreds of witnesses 25.25 Community development test for thrift assets of more than $1 billion. The commented and others provided written wholesale or limited purpose banks. agencies have rejected the alternative of statements. Although the OCC and OTS 25.26 Small bank performance standards. eliminating the holding company have determined that they are not 25.27 Strategic plan. 25.28 Assigned ratings. limitation altogether in order to prevent required to prepare a written statement 25.29 Effect of CRA performance on holding companies from manipulating under section 202 or to make a finding applications. the asset size of their institutions to under section 205, they conclude that, qualify for the small institution on balance, this final rule provides the Subpart CÐRecords, Reporting, and Disclosure Requirements treatment. most cost-effective and least However, by raising the holding burdensome alternative to achieve the 25.41 Assessment area delineation. company asset limit from $250 million objectives of the rule, consistent with 25.42 Data collection, reporting, and in the 1994 proposal to $1 billion in the disclosure. statutory requirements. 25.43 Content and availability of public file. final rule, the agencies have sought to List of Subjects 25.44 Public notice by banks. mitigate any unfairness and unnecessary 25.45 Publication of planned examination burden resulting from the holding 12 CFR Part 25 schedule. company limitation. The agencies Community development, Credit, Subpart DÐTransition Rules selected a higher asset level for the Investments, National banks, Reporting holding company limitation in and recordkeeping requirements. recognition that smaller holding 25.51 Transition rules. companies may be unable to provide the 12 CFR Part 228 Appendix A to Part 25—Ratings necessary support for the CRA activities Banks, Banking, Community Appendix B to Part 25—CRA Notice of their small institution subsidiaries. development, Credit, Federal Reserve The agencies anticipate that larger System, Investments, Reporting and Subpart AÐGeneral holding companies under the final rule recordkeeping requirements. would be capable of supporting the CRA § 25.11 Authority, purposes, and scope. activities of their subsidiary small 12 CFR Part 345 (a) Authority and OMB control institutions. Banks, Banking, Community number—(1) Authority. The authority development, Credit, Investments, for this part is 12 U.S.C. 21, 22, 26, 27, Executive Order 12866 Reporting and recordkeeping 30, 36, 93a, 161, 215, 215a, 481, 1814, OCC and OTS: The OCC and OTS requirements. 1816, 1828(c), and 2901 through 2907. have determined that this document is (2) OMB control number. The a significant regulatory action because 12 CFR Part 563e information collection requirements of the legal and policy issues it raises. Community development, Credit, contained in this part were approved by Because of the significance of the rule, Investments, Reporting and the Office of Management and Budget Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22179 under the provisions of 44 U.S.C. 3501 given to that term in 12 U.S.C. area that includes the bank’s assessment et seq. and have been assigned OMB 1841(a)(2), and a company is under area(s). control number 1557–0160. common control with another company (j) Community development service (b) Purposes. In enacting the if both companies are directly or means a service that: Community Reinvestment Act (CRA), indirectly controlled by the same (1) Has as its primary purpose the Congress required each appropriate company. community development; Federal financial supervisory agency to (b) Area median income means: (2) Is related to the provision of assess an institution’s record of helping (1) The median family income for the financial services; and to meet the credit needs of the local MSA, if a person or geography is located (3) Has not been considered in the communities in which the institution is in an MSA; or evaluation of the bank’s retail banking chartered, consistent with the safe and (2) The statewide nonmetropolitan services under § 25.24(d). sound operation of the institution, and median family income, if a person or (k) Consumer loan means a loan to to take this record into account in the geography is located outside an MSA. one or more individuals for household, agency’s evaluation of an application for (c) Assessment area means a family, or other personal expenditures. a deposit facility by the institution. This geographic area delineated in A consumer loan does not include a part is intended to carry out the accordance with § 25.41. home mortgage, small business, or small purposes of the CRA by: (d) Automated teller machine (ATM) farm loan. Consumer loans include the (1) Establishing the framework and means an automated, unstaffed banking following categories of loans: criteria by which the Office of the facility owned or operated by, or (1) Motor vehicle loan, which is a Comptroller of the Currency (OCC) operated exclusively for, the bank at consumer loan extended for the assesses a bank’s record of helping to which deposits are received, cash purchase of and secured by a motor meet the credit needs of its entire dispersed, or money lent. vehicle; community, including low- and (e) Bank means a national bank (2) Credit card loan, which is a line moderate-income neighborhoods, (including a Federal branch as defined of credit for household, family, or other consistent with the safe and sound in part 28 of this chapter) with Federally personal expenditures that is accessed operation of the bank; and insured deposits, except as provided in by a borrower’s use of a ‘‘credit card,’’ (2) Providing that the OCC takes that § 25.11(c). as this term is defined in § 226.2 of this record into account in considering (f) Branch means a staffed banking title; certain applications. facility authorized as a branch, whether (3) Home equity loan, which is a (c) Scope—(1)General. This part shared or unshared, including, for consumer loan secured by a residence of applies to all banks except as provided example, a mini-branch in a grocery the borrower; in paragraphs (c)(2) and (c)(3) of this store or a branch operated in (4) Other secured consumer loan, section. conjunction with any other local which is a secured consumer loan that (2) Federal branches and agencies. (i) business or nonprofit organization. is not included in one of the other This part applies to all insured Federal (g) CMSA means a consolidated categories of consumer loans; and branches and to any Federal branch that metropolitan statistical area as defined (5) Other unsecured consumer loan, is uninsured that results from an by the Director of the Office of which is an unsecured consumer loan acquisition described in section 5(a)(8) Management and Budget. that is not included in one of the other of the International Banking Act of 1978 (h) Community development means: categories of consumer loans. (12 U.S.C. 3103(a)(8)). (1) Affordable housing (including (l) Geography means a census tract or (ii) Except as provided in paragraph multifamily rental housing) for low- or a block numbering area delineated by (c)(2)(i) of this section, this part does not moderate-income individuals; the United States Bureau of the Census apply to Federal branches that are (2) Community services targeted to in the most recent decennial census. uninsured, limited Federal branches, or low- or moderate-income individuals; (m) Home mortgage loan means a Federal agencies, as those terms are (3) Activities that promote economic ‘‘home improvement loan’’ or a ‘‘home defined in part 28 of this chapter. development by financing businesses or purchase loan’’ as defined in § 203.2 of (3) Certain special purpose banks. farms that meet the size eligibility this title. This part does not apply to special standards of 13 CFR 121.802(a)(2) or (n) Income level includes: purpose banks that do not perform have gross annual revenues of $1 (1) Low-income, which means an commercial or retail banking services by million or less; or individual income that is less than 50 granting credit to the public in the (4) Activities that revitalize or percent of the area median income, or ordinary course of business, other than stabilize low- or moderate-income a median family income that is less than as incident to their specialized geographies. 50 percent, in the case of a geography. operations. These banks include (i) Community development loan (2) Moderate-income, which means an banker’s banks, as defined in 12 U.S.C. means a loan that: individual income that is at least 50 24 (Seventh), and banks that engage (1) Has as its primary purpose percent and less than 80 percent of the only in one or more of the following community development; and area median income, or a median family activities: providing cash management (2) Except in the case of a wholesale income that is at least 50 and less than controlled disbursement services or or limited purpose bank: 80 percent, in the case of a geography. serving as correspondent banks, trust (i) Has not been reported or collected (3) Middle-income, which means an companies, or clearing agents. by the bank or an affiliate for individual income that is at least 80 consideration in the bank’s assessment percent and less than 120 percent of the § 25.12 Definitions. as a home mortgage, small business, area median income, or a median family For purposes of this part, the small farm, or consumer loan, unless it income that is at least 80 and less than following definitions apply: is a multifamily dwelling loan (as 120 percent, in the case of a geography. (a) Affiliate means any company that described in Appendix A to Part 203 of (4) Upper-income, which means an controls, is controlled by, or is under this title); and individual income that is 120 percent or common control with another company. (ii) Benefits the bank’s assessment more of the area median income, or a The term ‘‘control’’ has the meaning area(s) or a broader statewide or regional median family income that is 120 22180 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations percent or more, in the case of a Subpart BÐStandards for Assessing significantly affect the bank’s ability to geography. Performance provide lending, investments, or (o) Limited purpose bank means a services in its assessment area(s); § 25.21 Performance tests, standards, and (5) The bank’s past performance and bank that offers only a narrow product ratings, in general. the performance of similarly situated line (such as credit card or motor (a) Performance tests and standards. lenders; vehicle loans) to a regional or broader The OCC assesses the CRA performance (6) The bank’s public file, as market and for which a designation as of a bank in an examination as follows: described in § 25.43, and any written a limited purpose bank is in effect, in (1) Lending, investment, and service comments about the bank’s CRA accordance with § 25.25(b). tests. The OCC applies the lending, performance submitted to the bank or (p) Loan location. A loan is located as investment, and service tests, as the OCC; and follows: provided in §§ 25.22 through 25.24, in (7) Any other information deemed evaluating the performance of a bank, relevant by the OCC. (1) A consumer loan is located in the except as provided in paragraphs (a)(2), (c) Assigned ratings. The OCC assigns geography where the borrower resides; (a)(3), and (a)(4) of this section. to a bank one of the following four (2) A home mortgage loan is located (2) Community development test for ratings pursuant to § 25.28 and in the geography where the property to wholesale or limited purpose banks. The Appendix A of this part: ‘‘outstanding’’; which the loan relates is located; and OCC applies the community ‘‘satisfactory’’; ‘‘needs to improve’’; or (3) A small business or small farm development test for a wholesale or ‘‘substantial noncompliance’’ as limited purpose bank, as provided in loan is located in the geography where provided in 12 U.S.C. 2906(b)(2). The § 25.25, except as provided in paragraph rating assigned by the OCC reflects the the main business facility or farm is (a)(4) of this section. bank’s record of helping to meet the located or where the loan proceeds (3) Small bank performance credit needs of its entire community, otherwise will be applied, as indicated standards. The OCC applies the small including low- and moderate-income by the borrower. bank performance standards as provided neighborhoods, consistent with the safe (q) Loan production office means a in § 25.26 in evaluating the performance and sound operation of the bank. staffed facility, other than a branch, that of a small bank or a bank that was a (d) Safe and sound operations. This is open to the public and that provides small bank during the prior calendar part and the CRA do not require a bank lending-related services, such as loan year, unless the bank elects to be to make loans or investments or to information and applications. assessed as provided in paragraphs provide services that are inconsistent (a)(1), (a)(2), or (a)(4) of this section. The with safe and sound operations. To the (r) MSA means a metropolitan bank may elect to be assessed as contrary, the OCC anticipates banks can statistical area or a primary provided in paragraph (a)(1) of this meet the standards of this part with safe metropolitan statistical area as defined section only if it collects and reports the and sound loans, investments, and by the Director of the Office of data required for other banks under services on which the banks expect to Management and Budget. § 25.42. make a profit. Banks are permitted and (s) Qualified investment means a (4) Strategic plan. The OCC evaluates encouraged to develop and apply lawful investment, deposit, membership the performance of a bank under a flexible underwriting standards for share, or grant that has as its primary strategic plan if the bank submits, and loans that benefit low- or moderate- purpose community development. the OCC approves, a strategic plan as income geographies or individuals, only provided in § 25.27. (t) Small bank means a bank that, as if consistent with safe and sound (b) Performance context. The OCC operations. of December 31 of either of the prior two applies the tests and standards in calendar years, had total assets of less paragraph (a) of this section and also § 25.22 Lending test. than $250 million and was independent considers whether to approve a (a) Scope of test. (1) The lending test or an affiliate of a holding company proposed strategic plan in the context evaluates a bank’s record of helping to that, as of December 31 of either of the of: meet the credit needs of its assessment prior two calendar years, had total (1) Demographic data on median area(s) through its lending activities by banking and thrift assets of less than $1 income levels, distribution of household considering a bank’s home mortgage, billion. income, nature of housing stock, small business, small farm, and (u) Small business loan means a loan housing costs, and other relevant data community development lending. If included in ‘‘loans to small businesses’’ pertaining to a bank’s assessment consumer lending constitutes a as defined in the instructions for area(s); substantial majority of a bank’s preparation of the Consolidated Report (2) Any information about lending, business, the OCC will evaluate the bank’s consumer lending in one or more of Condition and Income. investment, and service opportunities in the bank’s assessment area(s) of the following categories: motor (v) Small farm loan means a loan maintained by the bank or obtained vehicle, credit card, home equity, other included in ‘‘loans to small farms’’ as from community organizations, state, secured, and other unsecured loans. In defined in the instructions for local, and tribal governments, economic addition, at a bank’s option, the OCC preparation of the Consolidated Report development agencies, or other sources; will evaluate one or more categories of of Condition and Income. (3) The bank’s product offerings and consumer lending, if the bank has (w) Wholesale bank means a bank that business strategy as determined from collected and maintained, as required in is not in the business of extending home data provided by the bank; § 25.42(c)(1), the data for each category mortgage, small business, small farm, or (4) Institutional capacity and that the bank elects to have the OCC constraints, including the size and consumer loans to retail customers, and evaluate. financial condition of the bank, the (2) The OCC considers originations for which a designation as a wholesale economic climate (national, regional, and purchases of loans. The OCC will bank is in effect, in accordance with and local), safety and soundness also consider any other loan data the § 25.25(b). limitations, and any other factors that bank may choose to provide, including Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22181 data on loans outstanding, commitments provides data on the affiliate’s loans (d) Disposition of branch premises. and letters of credit. pursuant to § 25.42. Donating, selling on favorable terms, or (3) A bank may ask the OCC to (2) The OCC considers affiliate making available on a rent-free basis a consider loans originated or purchased lending subject to the following branch of the bank that is located in a by consortia in which the bank constraints: predominantly minority neighborhood participates or by third parties in which (i) No affiliate may claim a loan to a minority depository institution or the bank has invested only if the loans origination or loan purchase if another women’s depository institution (as these meet the definition of community institution claims the same loan terms are defined in 12 U.S.C. 2907(b)) development loans and only in origination or purchase; and will be considered as a qualified accordance with paragraph (d) of this (ii) If a bank elects to have the OCC investment. section. The OCC will not consider consider loans within a particular (e) Performance criteria. The OCC these loans under any criterion of the lending category made by one or more evaluates the investment performance of lending test except the community of the bank’s affiliates in a particular a bank pursuant to the following development lending criterion. assessment area, the bank shall elect to criteria: (b) Performance criteria. The OCC have the OCC consider, in accordance (1) The dollar amount of qualified evaluates a bank’s lending performance with paragraph (c)(1) of this section, all investments; pursuant to the following criteria: the loans within that lending category in (2) The innovativeness or complexity (1) Lending activity. The number and that particular assessment area made by of qualified investments; (3) The responsiveness of qualified amount of the bank’s home mortgage, all of the bank’s affiliates. investments to credit and community small business, small farm, and (3) The OCC does not consider affiliate lending in assessing a bank’s development needs; and consumer loans, if applicable, in the (4) The degree to which the qualified bank’s assessment area(s); performance under paragraph (b)(2)(i) of this section. investments are not routinely provided (2) Geographic distribution. The by private investors. geographic distribution of the bank’s (d) Lending by a consortium or a third party. Community development loans (f) Investment performance rating. home mortgage, small business, small The OCC rates a bank’s investment farm, and consumer loans, if applicable, originated or purchased by a consortium in which the bank participates or by a performance as provided in Appendix A based on the loan location, including: of this part. (i) The proportion of the bank’s third party in which the bank has lending in the bank’s assessment area(s); invested: § 25.24 Service test. (ii) The dispersion of lending in the (1) Will be considered, at the bank’s (a) Scope of test. The service test bank’s assessment area(s); and option, if the bank reports the data evaluates a bank’s record of helping to (iii) The number and amount of loans pertaining to these loans under meet the credit needs of its assessment in low-, moderate-, middle-, and upper- § 25.42(b)(2); and area(s) by analyzing both the availability (2) May be allocated among income geographies in the bank’s and effectiveness of a bank’s systems for participants or investors, as they choose, assessment area(s); delivering retail banking services and for purposes of the lending test, except (3) Borrower characteristics. The the extent and innovativeness of its that no participant or investor: distribution, particularly in the bank’s community development services. (i) May claim a loan origination or assessment area(s), of the bank’s home (b) Area(s) benefitted. Community loan purchase if another participant or mortgage, small business, small farm, development services must benefit a investor claims the same loan and consumer loans, if applicable, based bank’s assessment area(s) or a broader origination or purchase; or on borrower characteristics, including statewide or regional area that includes (ii) May claim loans accounting for the bank’s assessment area(s). the number and amount of: more than its percentage share (based on (i) Home mortgage loans to low-, (c) Affiliate service. At a bank’s the level of its participation or option, the OCC will consider, in its moderate-, middle-, and upper-income investment) of the total loans originated individuals; assessment of a bank’s service by the consortium or third party. performance, a community development (ii) Small business and small farm (e) Lending performance rating. The loans to businesses and farms with gross service provided by an affiliate of the OCC rates a bank’s lending performance bank, if the community development annual revenues of $1 million or less; as provided in Appendix A of this part. service is not claimed by any other (iii) Small business and small farm § 25.23 Investment test. institution. loans by loan amount at origination; and (d) Performance criteria—retail (iv) Consumer loans, if applicable, to (a) Scope of test. The investment test banking services. The OCC evaluates the low-, moderate-, middle-, and upper- evaluates a bank’s record of helping to availability and effectiveness of a bank’s income individuals; meet the credit needs of its assessment systems for delivering retail banking (4) Community development lending. area(s) through qualified investments services, pursuant to the following The bank’s community development that benefit its assessment area(s) or a criteria: lending, including the number and broader statewide or regional area that (1) The current distribution of the amount of community development includes the bank’s assessment area(s). bank’s branches among low-, loans, and their complexity and (b) Exclusion. Activities considered moderate-, middle-, and upper-income innovativeness; and under the lending or service tests may geographies; (5) Innovative or flexible lending not be considered under the investment (2) In the context of its current practices. The bank’s use of innovative test. distribution of the bank’s branches, the or flexible lending practices in a safe (c) Affiliate investment. At a bank’s bank’s record of opening and closing and sound manner to address the credit option, the OCC will consider, in its branches, particularly branches located needs of low- or moderate-income assessment of a bank’s investment in low- or moderate-income geographies individuals or geographies. performance, a qualified investment or primarily serving low- or moderate- (c) Affiliate lending. (1) At a bank’s made by an affiliate of the bank, if the income individuals; option, the OCC will consider loans by qualified investment is not claimed by (3) The availability and effectiveness an affiliate of the bank, if the bank any other institution. of alternative systems for delivering 22182 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations retail banking services (e.g., ATMs, which the investments are not routinely complaints about its performance in ATMs not owned or operated by or provided by private investors; and helping to meet credit needs in its exclusively for the bank, banking by (3) The bank’s responsiveness to assessment area(s). telephone or computer, loan production credit and community development (b) Small bank performance rating. offices, and bank-at-work or bank-by- needs. The OCC rates the performance of a mail programs) in low- and moderate- (d) Indirect activities. At a bank’s bank evaluated under this section as income geographies and to low- and option, the OCC will consider in its provided in Appendix A of this part. moderate-income individuals; and community development performance (4) The range of services provided in assessment: § 25.27 Strategic plan. low-, moderate-, middle-, and upper- (1) Qualified investments or (a) Alternative election. The OCC will income geographies and the degree to community development services assess a bank’s record of helping to meet which the services are tailored to meet provided by an affiliate of the bank, if the credit needs of its assessment area(s) the needs of those geographies. the investments or services are not under a strategic plan if: (e) Performance criteria—community claimed by any other institution; and (1) The bank has submitted the plan development services. The OCC (2) Community development lending to the OCC as provided for in this evaluates community development by affiliates, consortia and third parties, section; services pursuant to the following subject to the requirements and (2) The OCC has approved the plan; criteria: limitations in § 25.22(c) and (d). (3) The plan is in effect; and (1) The extent to which the bank (e) Benefit to assessment area(s)—(1) (4) The bank has been operating under provides community development Benefit inside assessment area(s). The an approved plan for at least one year. services; and OCC considers all qualified (b) Data reporting. The OCC’s (2) The innovativeness and investments, community development approval of a plan does not affect the responsiveness of community loans, and community development bank’s obligation, if any, to report data development services. services that benefit areas within the as required by § 25.42. (f) Service performance rating. The bank’s assessment area(s) or a broader (c) Plans in general.—(1) Term. A OCC rates a bank’s service performance statewide or regional area that includes plan may have a term of no more than as provided in Appendix A of this part. the bank’s assessment area(s). five years, and any multi-year plan must (2) Benefit outside assessment area(s). include annual interim measurable § 25.25 Community development test for The OCC considers the qualified goals under which the OCC will wholesale or limited purpose banks. investments, community development evaluate the bank’s performance. (a) Scope of test. The OCC assesses a loans, and community development (2) Multiple assessment areas. A bank wholesale or limited purpose bank’s services that benefit areas outside the with more than one assessment area record of helping to meet the credit bank’s assessment area(s), if the bank may prepare a single plan for all of its needs of its assessment area(s) under the has adequately addressed the needs of assessment areas or one or more plans community development test through its assessment area(s). for one or more of its assessment areas. its community development lending, (f) Community development (3) Treatment of affiliates. Affiliated qualified investments, or community performance rating. The OCC rates a institutions may prepare a joint plan if development services. bank’s community development the plan provides measurable goals for (b) Designation as a wholesale or performance as provided in Appendix A each institution. Activities may be limited purpose bank. In order to of this part. allocated among institutions at the receive a designation as a wholesale or institutions’ option, provided that the limited purpose bank, a bank shall file § 25.26 Small bank performance same activities are not considered for a request, in writing, with the OCC, at standards. more than one institution. least three months prior to the proposed (a) Performance criteria. The OCC (d) Public participation in plan effective date of the designation. If the evaluates the record of a small bank, or development. Before submitting a plan OCC approves the designation, it a bank that was a small bank during the to the OCC for approval, a bank shall: remains in effect until the bank requests prior calendar year, of helping to meet (1) Informally seek suggestions from revocation of the designation or until the credit needs of its assessment area(s) members of the public in its assessment one year after the OCC notifies the bank pursuant to the following criteria: area(s) covered by the plan while that the OCC has revoked the (1) The bank’s loan-to-deposit ratio, developing the plan; designation on its own initiative. adjusted for seasonal variation and, as (2) Once the bank has developed a (c) Performance criteria. The OCC appropriate, other lending-related plan, formally solicit public comment evaluates the community development activities, such as loan originations for on the plan for at least 30 days by performance of a wholesale or limited sale to the secondary markets, publishing notice in at least one purpose bank pursuant to the following community development loans, or newspaper of general circulation in each criteria: qualified investments; assessment area covered by the plan; (1) The number and amount of (2) The percentage of loans and, as and community development loans appropriate, other lending-related (3) During the period of formal public (including originations and purchases of activities located in the bank’s comment, make copies of the plan loans and other community assessment area(s); available for review by the public at no development loan data provided by the (3) The bank’s record of lending to cost at all offices of the bank in any bank, such as data on loans outstanding, and, as appropriate, engaging in other assessment area covered by the plan and commitments, and letters of credit), lending-related activities for borrowers provide copies of the plan upon request qualified investments, or community of different income levels and for a reasonable fee to cover copying development services; businesses and farms of different sizes; and mailing, if applicable. (2) The use of innovative or complex (4) The geographic distribution of the (e) Submission of plan. The bank shall qualified investments, community bank’s loans; and submit its plan to the OCC at least three development loans, or community (5) The bank’s record of taking action, months prior to the proposed effective development services and the extent to if warranted, in response to written date of the plan. The bank shall also Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22183 submit with its plan a description of its (2) Public participation. In evaluating lending test receives an assigned rating informal efforts to seek suggestions from the plan’s goals, the OCC considers the of ‘‘outstanding’’; and members of the public, any written public’s involvement in formulating the (3) No bank may receive an assigned public comment received, and, if the plan, written public comment on the rating of ‘‘satisfactory’’ or higher unless plan was revised in light of the plan, and any response by the bank to it receives a rating of at least ‘‘low comment received, the initial plan as public comment on the plan. satisfactory’’ on the lending test. released for public comment. (3) Criteria for evaluating plan. The (c) Effect of evidence of (f) Plan content.—(1) Measurable OCC evaluates a plan’s measurable goals discriminatory or other illegal credit goals. (i) A bank shall specify in its plan using the following criteria, as practices. Evidence of discriminatory or measurable goals for helping to meet the appropriate: other illegal credit practices adversely credit needs of each assessment area (i) The extent and breadth of lending affects the OCC’s evaluation of a bank’s covered by the plan, particularly the or lending-related activities, including, performance. In determining the effect needs of low- and moderate-income as appropriate, the distribution of loans on the bank’s assigned rating, the OCC geographies and low- and moderate- among different geographies, businesses considers the nature and extent of the income individuals, through lending, and farms of different sizes, and evidence, the policies and procedures investment, and services, as individuals of different income levels, that the bank has in place to prevent appropriate. the extent of community development discriminatory or other illegal credit (ii) A bank shall address in its plan all lending, and the use of innovative or practices, any corrective action that the three performance categories and, flexible lending practices to address bank has taken or has committed to unless the bank has been designated as credit needs; take, particularly voluntary corrective a wholesale or limited purpose bank, (ii) The amount and innovativeness, action resulting from self-assessment, shall emphasize lending and lending- complexity, and responsiveness of the and other relevant information. related activities. Nevertheless, a bank’s qualified investments; and different emphasis, including a focus on § 25.29 Effect of CRA performance on (iii) The availability and effectiveness one or more performance categories, applications. of the bank’s systems for delivering may be appropriate if responsive to the (a) CRA performance. Among other characteristics and credit needs of its retail banking services and the extent and innovativeness of the bank’s factors, the OCC takes into account the assessment area(s), considering public record of performance under the CRA of comment and the bank’s capacity and community development services. (h) Plan amendment. During the term each applicant bank in considering an constraints, product offerings, and application for: business strategy. of a plan, a bank may request the OCC to approve an amendment to the plan on (1) The establishment of a domestic (2) Confidential information. A bank branch; may submit additional information to grounds that there has been a material (2) The relocation of the main office the OCC on a confidential basis, but the change in circumstances. The bank shall or a branch; goals stated in the plan must be develop an amendment to a previously sufficiently specific to enable the public approved plan in accordance with the (3) Under the Bank Merger Act (12 and the OCC to judge the merits of the public participation requirements of U.S.C. 1828(c)), the merger or plan. paragraph (c) of this section. consolidation with or the acquisition of (3) Satisfactory and outstanding goals. (i) Plan assessment. The OCC assets or assumption of liabilities of an A bank shall specify in its plan approves the goals and assesses insured depository institution; and measurable goals that constitute performance under a plan as provided (4) The conversion of an insured ‘‘satisfactory’’ performance. A plan may for in Appendix A of this part. depository institution to a national bank specify measurable goals that constitute charter. § 25.28 Assigned ratings. ‘‘outstanding’’ performance. If a bank (b) Charter application. An applicant submits, and the OCC approves, both (a) Ratings in general. Subject to (other than an insured depository ‘‘satisfactory’’ and ‘‘outstanding’’ paragraphs (b) and (c) of this section, institution) for a national bank charter performance goals, the OCC will the OCC assigns to a bank a rating of shall submit with its application a consider the bank eligible for an ‘‘outstanding,’’ ‘‘satisfactory,’’ ‘‘needs to description of how it will meet its CRA ‘‘outstanding’’ performance rating. improve,’’ or ‘‘substantial objectives. The OCC takes the (4) Election if satisfactory goals not noncompliance’’ based on the bank’s description into account in considering substantially met. A bank may elect in performance under the lending, the application and may deny or its plan that, if the bank fails to meet investment and service tests, the condition approval on that basis. substantially its plan goals for a community development test, the small (c) Interested parties. The OCC takes satisfactory rating, the OCC will bank performance standards, or an into account any views expressed by evaluate the bank’s performance under approved strategic plan, as applicable. interested parties that are submitted in the lending, investment, and service (b) Lending, investment, and service accordance with the OCC’s procedures tests, the community development test, tests. The OCC assigns a rating for a set forth in part 5 of this chapter in or the small bank performance bank assessed under the lending, considering CRA performance in an standards, as appropriate. investment, and service tests in application listed in paragraphs (a) and (g) Plan approval.—(1) Timing. The accordance with the following (b) of this section. OCC will act upon a plan within 60 principles: (d) Denial or conditional approval of calendar days after the OCC receives the (1) A bank that receives an application. A bank’s record of complete plan and other material ‘‘outstanding’’ rating on the lending test performance may be the basis for required under paragraph (d) of this receives an assigned rating of at least denying or conditioning approval of an section. If the OCC fails to act within ‘‘satisfactory’’; application listed in paragraph (a) of this time period, the plan shall be (2) A bank that receives an this section. deemed approved unless the OCC ‘‘outstanding’’ rating on both the service (e) Insured depository institution. For extends the review period for good test and the investment test and a rating purposes of this section, the term cause. of at least ‘‘high satisfactory’’ on the ‘‘insured depository institution’’ has the 22184 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations meaning given to that term in 12 U.S.C. (2) May not reflect illegal (i) With an amount at origination of 1813. discrimination; $100,000 or less; (3) May not arbitrarily exclude low- or (ii) With amount at origination of Subpart CÐRecords, Reporting, and moderate-income geographies, taking more than $100,000 but less than or Disclosure Requirements into account the bank’s size and equal to $250,000; (iii) With an amount at origination of § 25.41 Assessment area delineation. financial condition; and (4) May not extend substantially more than $250,000; and (a) In general. A bank shall delineate beyond a CMSA boundary or beyond a (iv) To businesses and farms with one or more assessment areas within state boundary unless the assessment gross annual revenues of $1 million or which the OCC evaluates the bank’s area is located in a multistate MSA. If less (using the revenues that the bank record of helping to meet the credit a bank serves a geographic area that considered in making its credit needs of its community. The OCC does extends substantially beyond a state decision); not evaluate the bank’s delineation of its boundary, the bank shall delineate (2) Community development loan assessment area(s) as a separate separate assessment areas for the areas data. The aggregate number and performance criterion, but the OCC in each state. If a bank serves a aggregate amount of community reviews the delineation for compliance geographic area that extends development loans originated or with the requirements of this section. substantially beyond a CMSA boundary, purchased; and (b) Geographic area(s) for wholesale the bank shall delineate separate (3) Home mortgage loans. If the bank or limited purpose banks. The assessment areas for the areas inside is subject to reporting under part 203 of assessment area(s) for a wholesale or and outside the CMSA. this title, the location of each home limited purpose bank must consist (f) Banks serving military personnel. mortgage loan application, origination, generally of one or more MSAs (using Notwithstanding the requirements of or purchase outside the MSAs in which the MSA boundaries that were in effect this section, a bank whose business the bank has a home or branch office (or as of January 1 of the calendar year in predominantly consists of serving the outside any MSA) in accordance with which the delineation is made) or one needs of military personnel or their the requirements of part 203 of this title. or more contiguous political dependents who are not located within (c) Optional data collection and subdivisions, such as counties, cities, or a defined geographic area may delineate maintenance.—(1) Consumer loans. A towns, in which the bank has its main its entire deposit customer base as its bank may collect and maintain in office, branches, and deposit-taking assessment area. machine readable form (as prescribed by ATMs. (g) Use of assessment area(s). The the OCC) data for consumer loans (c) Geographic area(s) for other banks. OCC uses the assessment area(s) originated or purchased by the bank for The assessment area(s) for a bank other delineated by a bank in its evaluation of consideration under the lending test. A than a wholesale or limited purpose the bank’s CRA performance unless the bank may maintain data for one or more bank must: OCC determines that the assessment of the following categories of consumer (1) Consist generally of one or more area(s) do not comply with the loans: motor vehicle, credit card, home MSAs (using the MSA boundaries that requirements of this section. equity, other secured, and other were in effect as of January 1 of the unsecured. If the bank maintains data § 25.42 Data collection, reporting, and for loans in a certain category, it shall calendar year in which the delineation disclosure. is made) or one or more contiguous maintain data for all loans originated or (a) Loan information required to be political subdivisions, such as counties, purchased within that category. The collected and maintained. A bank, cities, or towns; and bank shall maintain data separately for except a small bank, shall collect, and (2) Include the geographies in which each category, including for each loan: maintain in machine readable form (as (i) A unique number or alpha-numeric the bank has its main office, its prescribed by the OCC) until the symbol that can be used to identify the branches, and its deposit-taking ATMs, completion of its next CRA relevant loan file; as well as the surrounding geographies examination, the following data for each (ii) The loan amount at origination or in which the bank has originated or small business or small farm loan purchase; purchased a substantial portion of its originated or purchased by the bank: (iii) The loan location; and loans (including home mortgage loans, (1) A unique number or alpha- (iv) The gross annual income of the small business and small farm loans, numeric symbol that can be used to borrower that the bank considered in and any other loans the bank chooses, identify the relevant loan file; making its credit decision. such as those consumer loans on which (2) The loan amount at origination; (2) Other loan data. At its option, a the bank elects to have its performance (3) The loan location; and bank may provide other information assessed). (4) An indicator whether the loan was concerning its lending performance, (d) Adjustments to geographic area(s). to a business or farm with gross annual including additional loan distribution A bank may adjust the boundaries of its revenues of $1 million or less. data. assessment area(s) to include only the (b) Loan information required to be (d) Data on affiliate lending. A bank portion of a political subdivision that it reported. A bank, except a small bank or that elects to have the OCC consider reasonably can be expected to serve. An a bank that was a small bank during the loans by an affiliate, for purposes of the adjustment is particularly appropriate in prior calendar year, shall report lending or community development test the case of an assessment area that annually by March 1 to the OCC in or an approved strategic plan, shall otherwise would be extremely large, of machine readable form (as prescribed by collect, maintain, and report for those unusual configuration, or divided by the OCC) the following data for the prior loans the data that the bank would have significant geographic barriers. calendar year: collected, maintained, and reported (e) Limitations on the delineation of (1) Small business and small farm pursuant to paragraphs (a), (b), and (c) an assessment area. Each bank’s loan data. For each geography in which of this section had the loans been assessment area(s): the bank originated or purchased a originated or purchased by the bank. For (1) Must consist only of whole small business or small farm loan, the home mortgage loans, the bank shall geographies; aggregate number and amount of loans: also be prepared to identify the home Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22185 mortgage loans reported under part 203 than 40 percent, 40 or more but less (j) Central data depositories. The OCC of this title by the affiliate. than 50 percent, 50 or more but less makes the aggregate disclosure (e) Data on lending by a consortium than 60 percent, 60 or more but less statements, described in paragraph (i) of or a third party. A bank that elects to than 70 percent, 70 or more but less this section, and the individual bank have the OCC consider community than 80 percent, 80 or more but less CRA Disclosure Statements, described development loans by a consortium or than 90 percent, 90 or more but less in paragraph (h) of this section, third party, for purposes of the lending than 100 percent, 100 or more but less available to the public at central data or community development tests or an than 110 percent, 110 or more but less depositories. The OCC publishes a list approved strategic plan, shall report for than 120 percent, and 120 percent or of the depositories at which the those loans the data that the bank would more; statements are available. have reported under paragraph (b)(2) of (ii) A list grouping each geography in this section had the loans been § 25.43 Content and availability of public the county or assessment area according file. originated or purchased by the bank. to whether the median income in the (f) Small banks electing evaluation geography relative to the area median (a) Information available to the under the lending, investment, and income is less than 10 percent, 10 or public. A bank shall maintain a public service tests. A bank that qualifies for more but less than 20 percent, 20 or file that includes the following evaluation under the small bank more but less than 30 percent, 30 or information: (1) All written comments received performance standards but elects more but less than 40 percent, 40 or from the public for the current year and evaluation under the lending, more but less than 50 percent, 50 or each of the prior two calendar years that investment, and service tests shall more but less than 60 percent, 60 or specifically relate to the bank’s collect, maintain, and report the data more but less than 70 percent, 70 or performance in helping to meet required for other banks pursuant to more but less than 80 percent, 80 or community credit needs, and any paragraphs (a) and (b) of this section. more but less than 90 percent, 90 or response to the comments by the bank, (g) Assessment area data. A bank, more but less than 100 percent, 100 or if neither the comments nor the except a small bank or a bank that was more but less than 110 percent, 110 or responses contain statements that reflect a small bank during the prior calendar more but less than 120 percent, and 120 adversely on the good name or year, shall collect and report to the OCC percent or more; reputation of any persons other than the by March 1 of each year a list for each (iii) A list showing each geography in bank or publication of which would assessment area showing the which the bank reported a small geographies within the area. violate specific provisions of law; business or small farm loan; and (2) A copy of the public section of the (h) CRA Disclosure Statement. The (iv) The number and amount of small OCC prepares annually for each bank bank’s most recent CRA Performance business and small farm loans to Evaluation prepared by the OCC. The that reports data pursuant to this section businesses and farms with gross annual a CRA Disclosure Statement that bank shall place this copy in the public revenues of $1 million or less; file within 30 business days after its contains, on a state-by-state basis: (3) The number and amount of small (1) For each county (and for each receipt from the OCC; business and small farm loans located assessment area smaller than a county) (3) A list of the bank’s branches, their inside each assessment area reported by with a population of 500,000 persons or street addresses, and geographies; the bank and the number and amount of fewer in which the bank reported a (4) A list of branches opened or closed small business and small farm loans small business or small farm loan: by the bank during the current year and (i) The number and amount of small located outside the assessment area(s) each of the prior two calendar years, business and small farm loans reported reported by the bank; and their street addresses, and geographies; as originated or purchased located in (4) The number and amount of (5) A list of services (including hours low-, moderate-, middle-, and upper- community development loans reported of operation, available loan and deposit income geographies; as originated or purchased. products, and transaction fees) generally (ii) A list grouping each geography (i) Aggregate disclosure statements. offered at the bank’s branches and according to whether the geography is The OCC, in conjunction with the Board descriptions of material differences in low-, moderate-, middle-, or upper- of Governors of the Federal Reserve the availability or cost of services at income; System, the Federal Deposit Insurance particular branches, if any. At its option, (iii) A list showing each geography in Corporation, and the Office of Thrift a bank may include information which the bank reported a small Supervision, prepares annually, for each regarding the availability of alternative business or small farm loan; and MSA (including an MSA that crosses a systems for delivering retail banking (iv) The number and amount of small state boundary) and the non-MSA services (e.g., ATMs, ATMs not owned business and small farm loans to portion of each state, an aggregate or operated by or exclusively for the businesses and farms with gross annual disclosure statement of small business bank, banking by telephone or revenues of $1 million or less; and small farm lending by all computer, loan production offices, and (2) For each county (and for each institutions subject to reporting under bank-at-work or bank-by-mail assessment area smaller than a county) this part or parts 228, 345, or 563e of programs); with a population in excess of 500,000 this title. These disclosure statements (6) A map of each assessment area persons in which the bank reported a indicate, for each geography, the showing the boundaries of the area and small business or small farm loan: number and amount of all small identifying the geographies contained (i) The number and amount of small business and small farm loans within the area, either on the map or in business and small farm loans reported originated or purchased by reporting a separate list; and as originated or purchased located in institutions, except that the OCC may (7) Any other information the bank geographies with median income adjust the form of the disclosure if chooses. relative to the area median income of necessary, because of special (b) Additional information available less than 10 percent, 10 or more but less circumstances, to protect the privacy of to the public.—(1) Banks other than than 20 percent, 20 or more but less a borrower or the competitive position small banks. A bank, except a small than 30 percent, 30 or more but less of an institution. bank or a bank that was a small bank 22186 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations during the prior calendar year, shall community. The bank shall update the § 25.42 (except § 25.42 (b) and (g)) include in its public file the following description quarterly. become applicable. information pertaining to the bank and (c) Location of public information. A (ii) On January 1, 1997, the data its affiliates, if applicable, for each of bank shall make available to the public reporting requirements set forth in the prior two calendar years: for inspection upon request and at no § 25.42 (b) and (g) become applicable. (i) If the bank has elected to have one cost the information required in this (2) Small banks. Beginning January 1, or more categories of its consumer loans section as follows: 1996, the OCC evaluates banks that considered under the lending test, for (1) At the main office and, if an qualify for the small bank performance each of these categories, the number and interstate bank, at one branch office in standards described in § 25.26 under amount of loans: each state, all information in the public that section. (A) To low-, moderate-, middle-, and file; and (3) Strategic plan. Beginning January upper-income individuals; (2) At each branch: 1, 1996, a bank that elects to be (B) Located in low-, moderate-, (i) A copy of the public section of the evaluated under an approved strategic middle-, and upper-income census bank’s most recent CRA Performance plan pursuant to § 25.27 may submit its tracts; and Evaluation and a list of services strategic plan to the OCC for approval. (4) Other performance tests. (i) (C) Located inside the bank’s provided by the branch; and (ii) Within five calendar days of the Beginning January 1, 1996, a bank may assessment area(s) and outside the request, all the information in the public elect to be evaluated under the pertinent bank’s assessment area(s); and file relating to the assessment area in revised performance tests described in (ii) The bank’s CRA Disclosure which the branch is located. §§ 25.22, 25.23, 25.24, and 25.25, if the Statement. The bank shall place the (d) Copies. Upon request, a bank shall bank provides the necessary data to statement in the public file within three provide copies, either on paper or in permit evaluation. business days of its receipt from the another form acceptable to the person (ii) Beginning July 1, 1997, the OCC OCC. making the request, of the information evaluates all banks under the pertinent (2) Banks required to report Home in its public file. The bank may charge revised performance tests. Mortgage Disclosure Act (HMDA) data. a reasonable fee not to exceed the cost (c) Schedule. (1) On July 1, 1995, A bank required to report home of copying and mailing (if applicable). §§ 25.11, 25.12, 25.29, and 25.51 mortgage loan data pursuant part 203 of (e) Updating. Except as otherwise become applicable, and §§ 25.1, 25.2, this title shall include in its public file provided in this section, a bank shall 25.8 and 25.101 expire. a copy of the HMDA Disclosure ensure that the information required by (2) On January 1, 1996, § 25.41 and Statement provided by the Federal this section is current as of April 1 of the pertinent provisions of Subpart B of Financial Institutions Examination each year. this part will apply to banks that elect Council pertaining to the bank for each to be evaluated under §§ 25.22 through of the prior two calendar years. In § 25.44 Public notice by banks. 25.25, banks that submit for approval addition, a bank that elected to have the A bank shall provide in the public strategic plans under § 25.27, and banks OCC consider the mortgage lending of lobby of its main office and each of its that qualify for the small bank an affiliate for any of these years shall branches the appropriate public notice performance standards described in include in its public file the affiliate’s set forth in Appendix B of this part. § 25.26. HMDA Disclosure Statement for those Only a branch of a bank having more (3) On January 1, 1996, §§ 25.42 years. The bank shall place the than one assessment area shall include (except § 25.42 (b) and (g)) and 25.45 statement(s) in the public file within the bracketed material in the notice for become applicable. three business days after its receipt. branch offices. Only a bank that is an (4) On January 1, 1997, §§ 25.41 and (3) Small banks. A small bank or a affiliate of a holding company shall 25.42 (b) and (g) become applicable. bank that was a small bank during the include the next to the last sentence of (5) On July 1, 1997, §§ 25.21 through prior calendar year shall include in its the notices. A bank shall include the 25.28, 25.43, and 25.44 become public file: last sentence of the notices only if it is applicable, and §§ 25.3 through 25.7, (i) The bank’s loan-to-deposit ratio for an affiliate of a holding company that is and 25.51 expire. each quarter of the prior calendar year not prevented by statute from acquiring Appendix A to Part 25—Ratings and, at its option, additional data on its additional banks. loan-to-deposit ratio; and (a) Ratings in general. (1) In assigning a § 25.45 Publication of planned rating, the OCC evaluates a bank’s (ii) The information required for other examination schedule. performance under the applicable banks by paragraph (b)(1) of this section, performance criteria in this part, in if the bank has elected to be evaluated The OCC publishes at least 30 days in advance of the beginning of each accordance with § 25.21, and § 25.28, which under the lending, investment, and provides for adjustments on the basis of service tests. calendar quarter a list of banks evidence of discriminatory or other illegal (4) Banks with strategic plans. A bank scheduled for CRA examinations in that credit practices. that has been approved to be assessed quarter. (2) A bank’s performance need not fit each under a strategic plan shall include in aspect of a particular rating profile in order Subpart DÐTransition Rules to receive that rating, and exceptionally its public file a copy of that plan. A strong performance with respect to some bank need not include information § 25.51 Transition rules. aspects may compensate for weak submitted to the OCC on a confidential (a) Effective date. Sections of this part performance in others. The bank’s overall basis in conjunction with the plan. become applicable over a period of time performance, however, must be consistent (5) Banks with less than satisfactory in accordance with the schedule set with safe and sound banking practices and ratings. A bank that received a less than forth in paragraph (c) of this section. generally with the appropriate rating profile satisfactory rating during its most recent (b) Data collection and reporting; as follows. (b) Banks evaluated under the lending, examination shall include in its public strategic plan; performance tests and investment, and service tests. (1) Lending file a description of its current efforts to standards. (1) Data collection and performance rating. The OCC assigns each improve its performance in helping to reporting. (i) On January 1, 1996, the bank’s lending performance one of the five meet the credit needs of its entire data collection requirements set forth in following ratings. Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22187

(i) Outstanding. The OCC rates a bank’s (D) An adequate distribution, particularly areas in its assessment area(s), low-income lending performance ‘‘outstanding’’ if, in in its assessment area(s), of loans among individuals, or businesses (including farms) general, it demonstrates: individuals of different income levels and with gross annual revenues of $1 million or (A) Excellent responsiveness to credit businesses (including farms) of different less, consistent with safe and sound needs in its assessment area(s), taking into sizes, given the product lines offered by the operations; account the number and amount of home bank; (F) No use of innovative or flexible lending mortgage, small business, small farm, and (E) An adequate record of serving the credit practices in a safe and sound manner to consumer loans, if applicable, in its needs of highly economically disadvantaged address the credit needs of low- or moderate- assessment area(s); areas in its assessment area(s), low-income income individuals or geographies; and (B) A substantial majority of its loans are individuals, or businesses (including farms) (G) It has made few, if any, community made in its assessment area(s); with gross annual revenues of $1 million or development loans. (C) An excellent geographic distribution of less, consistent with safe and sound (2) Investment performance rating. The loans in its assessment area(s); operations; OCC assigns each bank’s investment (D) An excellent distribution, particularly (F) Limited use of innovative or flexible performance one of the five following ratings. in its assessment area(s), of loans among lending practices in a safe and sound manner (i) Outstanding. The OCC rates a bank’s individuals of different income levels and to address the credit needs of low- or investment performance ‘‘outstanding’’ if, in businesses (including farms) of different moderate-income individuals or geographies; general, it demonstrates: sizes, given the product lines offered by the and (A) An excellent level of qualified bank; (G) It has made an adequate level of investments, particularly those that are not (E) An excellent record of serving the community development loans. routinely provided by private investors, often credit needs of highly economically (iv) Needs to improve. The OCC rates a in a leadership position; disadvantaged areas in its assessment area(s), bank’s lending performance ‘‘needs to (B) Extensive use of innovative or complex low-income individuals, or businesses improve’’ if, in general, it demonstrates: qualified investments; and (including farms) with gross annual revenues (A) Poor responsiveness to credit needs in (C) Excellent responsiveness to credit and of $1 million or less, consistent with safe and its assessment area(s), taking into account the community development needs. sound operations; number and amount of home mortgage, small (ii) High satisfactory. The OCC rates a (F) Extensive use of innovative or flexible business, small farm, and consumer loans, if bank’s investment performance ‘‘high lending practices in a safe and sound manner applicable, in its assessment area(s); satisfactory’’ if, in general, it demonstrates: to address the credit needs of low- or (B) A small percentage of its loans are (A) A significant level of qualified moderate-income individuals or geographies; made in its assessment area(s); investments, particularly those that are not and (C) A poor geographic distribution of loans, routinely provided by private investors, (G) It is a leader in making community particularly to low- or moderate-income occasionally in a leadership position; development loans. geographies, in its assessment area(s); (B) Significant use of innovative or (ii) High satisfactory. The OCC rates a (D) A poor distribution, particularly in its complex qualified investments; and bank’s lending performance ‘‘high assessment area(s), of loans among (C) Good responsiveness to credit and satisfactory’’ if, in general, it demonstrates: (A) Good responsiveness to credit needs in individuals of different income levels and community development needs. its assessment area(s), taking into account the businesses (including farms) of different (iii) Low satisfactory. The OCC rates a number and amount of home mortgage, small sizes, given the product lines offered by the bank’s investment performance ‘‘low business, small farm, and consumer loans, if bank; satisfactory’’ if, in general, it demonstrates: applicable, in its assessment area(s); (E) A poor record of serving the credit (A) An adequate level of qualified (B) A high percentage of its loans are made needs of highly economically disadvantaged investments, particularly those that are not in its assessment area(s); areas in its assessment area(s), low-income routinely provided by private investors, (C) A good geographic distribution of loans individuals, or businesses (including farms) although rarely in a leadership position; in its assessment area(s); with gross annual revenues of $1 million or (B) Occasional use of innovative or (D) A good distribution, particularly in its less, consistent with safe and sound complex qualified investments; and assessment area(s), of loans among operations; (C) Adequate responsiveness to credit and individuals of different income levels and (F) Little use of innovative or flexible community development needs. businesses (including farms) of different lending practices in a safe and sound manner (iv) Needs to improve. The OCC rates a sizes, given the product lines offered by the to address the credit needs of low- or bank’s investment performance ‘‘needs to bank; moderate-income individuals or geographies; improve’’ if, in general, it demonstrates: (E) A good record of serving the credit and (A) A poor level of qualified investments, needs of highly economically disadvantaged (G) It has made a low level of community particularly those that are not routinely areas in its assessment area(s), low-income development loans. provided by private investors; individuals, or businesses (including farms) (v) Substantial noncompliance. The OCC (B) Rare use of innovative or complex with gross annual revenues of $1 million or rates a bank’s lending performance as being qualified investments; and less, consistent with safe and sound in ‘‘substantial noncompliance’’ if, in (C) Poor responsiveness to credit and operations; general, it demonstrates: community development needs. (F) Use of innovative or flexible lending (A) A very poor responsiveness to credit (v) Substantial noncompliance. The OCC practices in a safe and sound manner to needs in its assessment area(s), taking into rates a bank’s investment performance as address the credit needs of low- or moderate- account the number and amount of home being in ‘‘substantial noncompliance’’ if, in income individuals or geographies; and mortgage, small business, small farm, and general, it demonstrates: (G) It has made a relatively high level of consumer loans, if applicable, in its (A) Few, if any, qualified investments, community development loans. assessment area(s); particularly those that are not routinely (iii) Low satisfactory. The OCC rates a (B) A very small percentage of its loans are provided by private investors; bank’s lending performance ‘‘low made in its assessment area(s); (B) No use of innovative or complex satisfactory’’ if, in general, it demonstrates: (C) A very poor geographic distribution of qualified investments; and (A) Adequate responsiveness to credit loans, particularly to low- or moderate- (C) Very poor responsiveness to credit and needs in its assessment area(s), taking into income geographies, in its assessment area(s); community development needs. account the number and amount of home (D) A very poor distribution, particularly in (3) Service performance rating. The OCC mortgage, small business, small farm, and its assessment area(s), of loans among assigns each bank’s service performance one consumer loans, if applicable, in its individuals of different income levels and of the five following ratings. assessment area(s); businesses (including farms) of different (i) Outstanding. The OCC rates a bank’s (B) An adequate percentage of its loans are sizes, given the product lines offered by the service performance ‘‘outstanding’’ if, in made in its assessment area(s); bank; general, the bank demonstrates: (C) An adequate geographic distribution of (E) A very poor record of serving the credit (A) Its service delivery systems are readily loans in its assessment area(s); needs of highly economically disadvantaged accessible to geographies and individuals of 22188 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations different income levels in its assessment (C) Its services (including, where qualified investments, particularly area(s); appropriate, business hours) vary in a way investments that are not routinely provided (B) To the extent changes have been made, that inconveniences its assessment area(s), by private investors; its record of opening and closing branches particularly low- or moderate-income (ii) Rare use of innovative or complex has improved the accessibility of its delivery geographies or low- or moderate-income qualified investments, community systems, particularly in low- or moderate- individuals; and development loans, or community income geographies or to low- or moderate- (D) It provides a limited level of development services; and income individuals; community development services. (iii) Poor responsiveness to credit and (C) Its services (including, where (v) Substantial noncompliance. The OCC community development needs in its appropriate, business hours) are tailored to rates a bank’s service performance as being assessment area(s). the convenience and needs of its assessment in ‘‘substantial noncompliance’’ if, in (4) Substantial noncompliance. The OCC area(s), particularly low- or moderate-income general, the bank demonstrates: rates a wholesale or limited purpose bank’s geographies or low- or moderate-income (A) Its service delivery systems are community development performance in individuals; and unreasonably inaccessible to significant ‘‘substantial noncompliance’’ if, in general, it (D) It is a leader in providing community portions of its assessment area(s), particularly demonstrates: development services. to low- or moderate-income geographies or to (i) Few, if any, community development (ii) High satisfactory. The OCC rates a low- or moderate-income individuals; loans, community development services, or bank’s service performance ‘‘high (B) To the extent changes have been made, qualified investments, particularly satisfactory’’ if, in general, the bank its record of opening and closing branches investments that are not routinely provided demonstrates: has significantly adversely affected the by private investors; (A) Its service delivery systems are accessibility of its delivery systems, (ii) No use of innovative or complex accessible to geographies and individuals of particularly in low- or moderate-income qualified investments, community different income levels in its assessment geographies or to low- or moderate-income development loans, or community area(s); individuals; development services; and (B) To the extent changes have been made, (C) Its services (including, where (iii) Very poor responsiveness to credit and its record of opening and closing branches appropriate, business hours) vary in a way community development needs in its has not adversely affected the accessibility of that significantly inconveniences its assessment area(s). its delivery systems, particularly in low- and assessment area(s), particularly low- or (d) Banks evaluated under the small bank moderate-income geographies and to low- moderate-income geographies or low- or performance standards. The OCC rates the and moderate-income individuals; moderate-income individuals; and performance of each bank evaluated under (C) Its services (including, where (D) It provides few, if any, community the small bank performance standards as appropriate, business hours) do not vary in development services. follows: a way that inconveniences its assessment (c) Wholesale or limited purpose banks. (1) Eligibility for a satisfactory rating. The area(s), particularly low- and moderate- The OCC assigns each wholesale or limited OCC rates a bank’s performance income geographies and low- and moderate- purpose bank’s community development ‘‘satisfactory’’ if, in general, the bank income individuals; and performance one of the four following demonstrates: (D) It provides a relatively high level of ratings. (i) A reasonable loan-to-deposit ratio community development services. (1) Outstanding. The OCC rates a (considering seasonal variations) given the (iii) Low satisfactory. The OCC rates a wholesale or limited purpose bank’s bank’s size, financial condition, the credit bank’s service performance ‘‘low community development performance needs of its assessment area(s), and taking satisfactory’’ if, in general, the bank ‘‘outstanding’’ if, in general, it demonstrates: into account, as appropriate, lending-related demonstrates: (i) A high level of community development activities such as loan originations for sale to (A) Its service delivery systems are loans, community development services, or the secondary markets and community reasonably accessible to geographies and qualified investments, particularly development loans and qualified individuals of different income levels in its investments that are not routinely provided investments; assessment area(s); by private investors; (ii) A majority of its loans and, as (B) To the extent changes have been made, (ii) Extensive use of innovative or complex appropriate, other lending-related activities its record of opening and closing branches qualified investments, community are in its assessment area(s); has generally not adversely affected the development loans, or community (iii) A distribution of loans to and, as accessibility of its delivery systems, development services; and appropriate, other lending related-activities particularly in low- and moderate-income (iii) Excellent responsiveness to credit and for individuals of different income levels geographies and to low- and moderate- community development needs in its (including low- and moderate-income income individuals; assessment area(s). individuals) and businesses and farms of (C) Its services (including, where (2) Satisfactory. The OCC rates a wholesale different sizes that is reasonable given the appropriate, business hours) do not vary in or limited purpose bank’s community demographics of the bank’s assessment a way that inconveniences its assessment development performance ‘‘satisfactory’’ if, area(s); area(s), particularly low- and moderate- in general, it demonstrates: (iv) A record of taking appropriate action, income geographies and low- and moderate- (i) An adequate level of community as warranted, in response to written income individuals; and development loans, community development complaints, if any, about the bank’s (D) It provides an adequate level of services, or qualified investments, performance in helping to meet the credit community development services. particularly investments that are not needs of its assessment area(s); and (iv) Needs to improve. The OCC rates a routinely provided by private investors; (v) A reasonable geographic distribution of bank’s service performance ‘‘needs to (ii) Occasional use of innovative or loans given the bank’s assessment area(s). improve’’ if, in general, the bank complex qualified investments, community (2) Eligibility for an outstanding rating. A demonstrates: development loans, or community bank that meets each of the standards for a (A) Its service delivery systems are development services; and ‘‘satisfactory’’ rating under this paragraph unreasonably inaccessible to portions of its (iii) Adequate responsiveness to credit and and exceeds some or all of those standards assessment area(s), particularly to low- or community development needs in its may warrant consideration for an overall moderate-income geographies or to low- or assessment area(s). rating of ‘‘outstanding.’’ In assessing whether moderate-income individuals; (3) Needs to improve. The OCC rates a a bank’s performance is ‘‘outstanding,’’ the (B) To the extent changes have been made, wholesale or limited purpose bank’s OCC considers the extent to which the bank its record of opening and closing branches community development performance as exceeds each of the performance standards has adversely affected the accessibility its ‘‘needs to improve’’ if, in general, it for a ‘‘satisfactory’’ rating and its delivery systems, particularly in low- or demonstrates: performance in making qualified investments moderate-income geographies or to low- or (i) A poor level of community development and its performance in providing branches moderate-income individuals; loans, community development services, or and other services and delivery systems that Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22189 enhance credit availability in its assessment to meet community credit needs to (name Comptroller an announcement of our area(s). and address of official at bank) and Deputy applications covered by the CRA filed with (3) Needs to improve or substantial Comptroller (address). Your letter, together the Comptroller. We are an affiliate of (name noncompliance ratings. A bank also may with any response by us, will be considered of holding company), a bank holding receive a rating of ‘‘needs to improve’’ or by the Comptroller in evaluating our CRA company. You may request from the (title of ‘‘substantial noncompliance’’ depending on performance and may be made public. responsible official), Federal Reserve Bank of the degree to which its performance has You may ask to look at any comments llll (address) an announcement of failed to meet the standards for a received by the Deputy Comptroller. You applications covered by the CRA filed by ‘‘satisfactory’’ rating. may also request from the Deputy bank holding companies. (e) Strategic plan assessment and rating— Comptroller an announcement of our (1) Satisfactory goals. The OCC approves as applications covered by the CRA filed with §§ 25.1, 25.2, 25.8, and 25.101, and the ‘‘satisfactory’’ measurable goals that the Comptroller. We are an affiliate of (name undesignated center heading preceding adequately help to meet the credit needs of of holding company), a bank holding § 25.101 [Removed] the bank’s assessment area(s). company. You may request from the (title of 3. Sections 25.1, 25.2, 25.8 and 25.101 (2) Outstanding goals. If the plan identifies responsible official), Federal Reserve Bank of and the undesignated center heading a separate group of measurable goals that llll (address) an announcement of preceding § 25.101 are removed substantially exceed the levels approved as applications covered by the CRA filed by effective July 1, 1995. ‘‘satisfactory,’’ the OCC will approve those bank holding companies. goals as ‘‘outstanding.’’ (b) Notice for branch offices. §§ 25.3, 25.4, 25.5, 25.6, 25.7, and Subpart D (3) Rating. The OCC assesses the [Removed] Community Reinvestment Act Notice performance of a bank operating under an 4. Sections 25.3, 25.4, 25.5, 25.6, and approved plan to determine if the bank has Under the Federal Community met its plan goals: Reinvestment Act (CRA), the Comptroller of 25.7 and subpart D, consisting of (i) If the bank substantially achieves its the Currency evaluates our record of helping § 25.51, are removed effective July 1, plan goals for a satisfactory rating, the OCC to meet the credit needs of this community 1997. will rate the bank’s performance under the consistent with safe and sound operations. Dated: April 19, 1995. plan as ‘‘satisfactory.’’ The Comptroller also takes this record into Eugene A. Ludwig, (ii) If the bank exceeds its plan goals for account when deciding on certain a satisfactory rating and substantially applications submitted by us. Comptroller of the Currency. achieves its plan goals for an outstanding Your involvement is encouraged. Federal Reserve System rating, the OCC will rate the bank’s You are entitled to certain information performance under the plan as about our operations and our performance 12 CFR CHAPTER II ‘‘outstanding.’’ under the CRA. You may review today the For the reasons outlined in the joint (iii) If the bank fails to meet substantially public section of our most recent CRA preamble, the Board of Governors of the its plan goals for a satisfactory rating, the evaluation, prepared by the Comptroller, and Federal Reserve System amends 12 CFR OCC will rate the bank as either ‘‘needs to a list of services provided at this branch. You chapter II as set forth below: improve’’ or ‘‘substantial noncompliance,’’ may also have access to the following depending on the extent to which it falls additional information, which we will make PART 228ÐCOMMUNITY short of its plan goals, unless the bank available to you at this branch within five REINVESTMENT (REGULATION BB) elected in its plan to be rated otherwise, as calendar days after you make a request to us: provided in § 25.27(f)(4). (1) A map showing the assessment area 1. The authority citation for part 228 containing this branch, which is the area in is revised to read as follows: Appendix B to Part 25—CRA Notice which the Comptroller evaluates our CRA (a) Notice for main offices and, if an performance in this community; (2) Authority: 12 U.S.C. 321, 325, 1828(c), interstate bank, one branch office in each information about our branches in this 1842, 1843, 1844, and 2901 et seq. state. assessment area; (3) a list of services we 2. Part 228 is amended by adding provide at those locations; (4) data on our Community Reinvestment Act Notice Subparts A through D and Appendices lending performance in this assessment area; A and B to read as follows: Under the Federal Community and (5) copies of all written comments Reinvestment Act (CRA), the Comptroller of received by us that specifically relate to our Subpart AÐGeneral the Currency evaluates our record of helping CRA performance in this assessment area, Sec. to meet the credit needs of this community and any responses we have made to those 228.11 Authority, purposes, and scope. consistent with safe and sound operations. comments. If we are operating under an 228.12 Definitions. The Comptroller also takes this record into approved strategic plan, you may also have account when deciding on certain access to a copy of the plan. Subpart BÐStandards for Assessing applications submitted by us. [If you would like to review information Performance Your involvement is encouraged. about our CRA performance in other 228.21 Performance tests, standards, and You are entitled to certain information communities served by us, the public file for ratings, in general. about our operations and our performance our entire bank is available at (name of office 228.22 Lending test. under the CRA, including, for example, located in state), located at (address).] 228.23 Investment test. information about our branches, such as their At least 30 days before the beginning of 228.24 Service test. location and services provided at them; the each quarter, the Comptroller publishes a 228.25 Community development test for public section of our most recent CRA nationwide list of the banks that are wholesale or limited purpose banks. Performance Evaluation, prepared by the scheduled for CRA examination in that 228.26 Small bank performance standards. Comptroller; and comments received from quarter. This list is available from the Deputy 228.27 Strategic plan. the public relating to our performance in Comptroller (address). You may send written 228.28 Assigned ratings. helping to meet community credit needs, as comments about our performance in helping 228.29 Effect of CRA performance on well as our responses to those comments. to meet community credit needs to (name applications. You may review this information today. and address of official at bank) and Deputy At least 30 days before the beginning of Comptroller (address). Your letter, together Subpart CÐRecords, Reporting, and each quarter, the Comptroller publishes a with any response by us, will be considered Disclosure Requirements nationwide list of the banks that are by the Comptroller in evaluating our CRA 228.41 Assessment area delineation. scheduled for CRA examination in that performance and may be made public. 228.42 Data collection, reporting, and quarter. This list is available from the Deputy You may ask to look at any comments disclosure. Comptroller (address). You may send written received by the Deputy Comptroller. You 228.43 Content and availability of public comments about our performance in helping may also request from the Deputy file. 22190 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations

228.44 Public notice by banks. acquisition described in section 5(a)(8) (f) Branch means a staffed banking 228.45 Publication of planned examination of the International Banking Act of 1978 facility approved as a branch, whether schedule. (12 U.S.C. 3103(a)(8)). The terms ‘‘State shared or unshared, including, for Subpart DÐTransition Rules branch’’ and ‘‘foreign bank’’ have the example, a mini-branch in a grocery 228.51 Transition rules. same meanings as in section 1(b) of the store or a branch operated in International Banking Act of 1978 (12 conjunction with any other local Appendix A to Part 228—Ratings U.S.C. 3101 et seq.); the term business or nonprofit organization. Appendix B to Part 228—CRA Notice ‘‘uninsured State branch’’ means a State (g) CMSA means a consolidated branch the deposits of which are not metropolitan statistical area as defined Subpart AÐGeneral insured by the Federal Deposit by the Director of the Office of Insurance Corporation; the term Management and Budget. § 228.11 Authority, purposes, and scope. ‘‘limited branch’’ means a State branch (h) Community development means: (a) Authority. The Board of Governors that accepts only deposits that are (1) Affordable housing (including of the Federal Reserve System (the permissible for a corporation organized multifamily rental housing) for low- or Board) issues this part to implement the under section 25A of the Federal moderate-income individuals; Community Reinvestment Act (12 Reserve Act (12 U.S.C. 611 et seq.). (2) Community services targeted to U.S.C. 2901 et seq.) (CRA). The (3) Certain special purpose banks. low- or moderate-income individuals; (3) Activities that promote economic regulations comprising this part are This part does not apply to special development by financing businesses or issued under the authority of the CRA purpose banks that do not perform farms that meet the size eligibility and under the provisions of the United commercial or retail banking services by standards of 13 CFR 121.802(a)(2) or States Code authorizing the Board: granting credit to the public in the have gross annual revenues of $1 (1) To conduct examinations of State- ordinary course of business, other than chartered banks that are members of the million or less; or as incident to their specialized (4) Activities that revitalize or Federal Reserve System (12 U.S.C. 325); operations. These banks include (2) To conduct examinations of bank stabilize low- or moderate-income banker’s banks, as defined in 12 U.S.C. geographies. holding companies and their 24 (Seventh), and banks that engage subsidiaries (12 U.S.C. 1844); and (i) Community development loan only in one or more of the following means a loan that: (3) To consider applications for: activities: providing cash management (i) Domestic branches by State (1) Has as its primary purpose controlled disbursement services or community development; and member banks (12 U.S.C. 321); serving as correspondent banks, trust (ii) Mergers in which the resulting (2) Except in the case of a wholesale companies, or clearing agents. bank would be a State member bank (12 or limited purpose bank: (i) Has not been reported or collected U.S.C. 1828(c)); § 228.12 Definitions. by the bank or an affiliate for (iii) Formations of, acquisitions of For purposes of this part, the consideration in the bank’s assessment banks by, and mergers of, bank holding following definitions apply: as a home mortgage, small business, companies (12 U.S.C. 1842); and (a) Affiliate means any company that (iv) The acquisition of savings small farm, or consumer loan, unless it controls, is controlled by, or is under is a multifamily dwelling loan (as associations by bank holding companies common control with another company. described in Appendix A to Part 203 of (12 U.S.C. 1843). The term ‘‘control’’ has the meaning (b) Purposes. In enacting the CRA, the this chapter); and given to that term in 12 U.S.C. (ii) Benefits the bank’s assessment Congress required each appropriate 1841(a)(2), and a company is under area(s) or a broader statewide or regional Federal financial supervisory agency to common control with another company area that includes the bank’s assessment assess an institution’s record of helping if both companies are directly or area(s). to meet the credit needs of the local indirectly controlled by the same (j) Community development service communities in which the institution is company. means a service that: chartered, consistent with the safe and (b) Area median income means: (1) Has as its primary purpose sound operation of the institution, and (1) The median family income for the community development; to take this record into account in the MSA, if a person or geography is located (2) Is related to the provision of agency’s evaluation of an application for in an MSA; or financial services; and a deposit facility by the institution. This (2) The statewide nonmetropolitan (3) Has not been considered in the part is intended to carry out the median family income, if a person or evaluation of the bank’s retail banking purposes of the CRA by: geography is located outside an MSA. services under § 228.24(d). (1) Establishing the framework and (c) Assessment area means a (k) Consumer loan means a loan to criteria by which the Board assesses a geographic area delineated in one or more individuals for household, bank’s record of helping to meet the accordance with § 228.41. family, or other personal expenditures. credit needs of its entire community, (d) Automated teller machine (ATM) A consumer loan does not include a including low- and moderate-income means an automated, unstaffed banking home mortgage, small business, or small neighborhoods, consistent with the safe facility owned or operated by, or farm loan. Consumer loans include the and sound operation of the bank; and operated exclusively for, the bank at following categories of loans: (2) Providing that the Board takes that which deposits are received, cash (1) Motor vehicle loan, which is a record into account in considering dispersed, or money lent. consumer loan extended for the certain applications. (e) Bank means a State member bank purchase of and secured by a motor (c) Scope—(1) General. This part as that term is defined in section 3(d)(2) vehicle; applies to all banks except as provided of the Federal Deposit Insurance Act (12 (2) Credit card loan, which is a line in paragraph (c)(3) of this section. U.S.C. 1813(d)(2)), except as provided in of credit for household, family, or other (2) Foreign bank acquisitions. This § 228.11(c)(3), and includes an personal expenditures that is accessed part also applies to an uninsured State uninsured State branch (other than a by a borrower’s use of a ‘‘credit card,’’ branch (other than a limited branch) of limited branch) of a foreign bank as this term is defined in § 226.2 of this a foreign bank that results from an described in § 228.11(c)(2). chapter; Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22191

(3) Home equity loan, which is a metropolitan statistical area as defined data required for other banks under consumer loan secured by a residence of by the Director of the Office of § 228.42. the borrower; Management and Budget. (4) Strategic plan. The Board (4) Other secured consumer loan, (s) Qualified investment means a evaluates the performance of a bank which is a secured consumer loan that lawful investment, deposit, membership under a strategic plan if the bank is not included in one of the other share, or grant that has as its primary submits, and the Board approves, a categories of consumer loans; and purpose community development. strategic plan as provided in § 228.27. (5) Other unsecured consumer loan, (t) Small bank means a bank that, as (b) Performance context. The Board which is an unsecured consumer loan of December 31 of either of the prior two applies the tests and standards in that is not included in one of the other calendar years, had total assets of less paragraph (a) of this section and also categories of consumer loans. than $250 million and was independent considers whether to approve a (l) Geography means a census tract or or an affiliate of a holding company proposed strategic plan in the context a block numbering area delineated by that, as of December 31 of either of the of: the United States Bureau of the Census prior two calendar years, had total (1) Demographic data on median in the most recent decennial census. banking and thrift assets of less than $1 income levels, distribution of household (m) Home mortgage loan means a billion. income, nature of housing stock, ‘‘home improvement loan’’ or a ‘‘home (u) Small business loan means a loan housing costs, and other relevant data purchase loan’’ as defined in § 203.2 of included in ‘‘loans to small businesses’’ pertaining to a bank’s assessment this chapter. as defined in the instructions for area(s); (n) Income level includes: preparation of the Consolidated Report (2) Any information about lending, (1) Low-income, which means an of Condition and Income. investment, and service opportunities in individual income that is less than 50 (v) Small farm loan means a loan the bank’s assessment area(s) percent of the area median income, or included in ‘‘loans to small farms’’ as maintained by the bank or obtained a median family income that is less than defined in the instructions for from community organizations, state, 50 percent, in the case of a geography. preparation of the Consolidated Report local, and tribal governments, economic (2) Moderate-income, which means an development agencies, or other sources; individual income that is at least 50 of Condition and Income. (w) Wholesale bank means a bank that (3) The bank’s product offerings and percent and less than 80 percent of the business strategy as determined from area median income, or a median family is not in the business of extending home mortgage, small business, small farm, or data provided by the bank; income that is at least 50 and less than (4) Institutional capacity and 80 percent, in the case of a geography. consumer loans to retail customers, and for which a designation as a wholesale constraints, including the size and (3) Middle-income, which means an financial condition of the bank, the individual income that is at least 80 bank is in effect, in accordance with § 228.25(b). economic climate (national, regional, percent and less than 120 percent of the and local), safety and soundness area median income, or a median family Subpart BÐStandards for Assessing limitations, and any other factors that income that is at least 80 and less than Performance significantly affect the bank’s ability to 120 percent, in the case of a geography. provide lending, investments, or (4) Upper-income, which means an § 228.21 Performance tests, standards, individual income that is 120 percent or services in its assessment area(s); and ratings, in general. (5) The bank’s past performance and more of the area median income, or a (a) Performance tests and standards. the performance of similarly situated median family income that is 120 The Board assesses the CRA lenders; percent or more, in the case of a performance of a bank in an (6) The bank’s public file, as geography. examination as follows: described in § 228.43, and any written (o) Limited purpose bank means a (1) Lending, investment, and service comments about the bank’s CRA bank that offers only a narrow product tests. The Board applies the lending, performance submitted to the bank or line (such as credit card or motor investment, and service tests, as vehicle loans) to a regional or broader the Board; and provided in §§ 228.22 through 228.24, (7) Any other information deemed market and for which a designation as in evaluating the performance of a bank, relevant by the Board. a limited purpose bank is in effect, in except as provided in paragraphs (a)(2), (c) Assigned ratings. The Board accordance with § 228.25(b). (a)(3), and (a)(4) of this section. assigns to a bank one of the following (p) Loan location. A loan is located as (2) Community development test for four ratings pursuant to § 228.28 and follows: (1) A consumer loan is located in the wholesale or limited purpose banks. The Appendix A of this part: ‘‘outstanding’’; geography where the borrower resides; Board applies the community ‘‘satisfactory’’; ‘‘needs to improve’’; or (2) A home mortgage loan is located development test for a wholesale or ‘‘substantial noncompliance’’ as in the geography where the property to limited purpose bank, as provided in provided in 12 U.S.C. 2906(b)(2). The which the loan relates is located; and § 228.25, except as provided in rating assigned by the Board reflects the (3) A small business or small farm paragraph (a)(4) of this section. bank’s record of helping to meet the loan is located in the geography where (3) Small bank performance credit needs of its entire community, the main business facility or farm is standards. The Board applies the small including low- and moderate-income located or where the loan proceeds bank performance standards as provided neighborhoods, consistent with the safe otherwise will be applied, as indicated in § 228.26 in evaluating the and sound operation of the bank. by the borrower. performance of a small bank or a bank (d) Safe and sound operations. This (q) Loan production office means a that was a small bank during the prior part and the CRA do not require a bank staffed facility, other than a branch, that calendar year, unless the bank elects to to make loans or investments or to is open to the public and that provides be assessed as provided in paragraphs provide services that are inconsistent lending-related services, such as loan (a)(1), (a)(2), or (a)(4) of this section. The with safe and sound operations. To the information and applications. bank may elect to be assessed as contrary, the Board anticipates banks (r) MSA means a metropolitan provided in paragraph (a)(1) of this can meet the standards of this part with statistical area or a primary section only if it collects and reports the safe and sound loans, investments, and 22192 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations services on which the banks expect to income geographies in the bank’s (2) May be allocated among make a profit. Banks are permitted and assessment area(s); participants or investors, as they choose, encouraged to develop and apply (3) Borrower characteristics. The for purposes of the lending test, except flexible underwriting standards for distribution, particularly in the bank’s that no participant or investor: loans that benefit low- or moderate- assessment area(s), of the bank’s home (i) May claim a loan origination or income geographies or individuals, only mortgage, small business, small farm, loan purchase if another participant or if consistent with safe and sound and consumer loans, if applicable, based investor claims the same loan operations. on borrower characteristics, including origination or purchase; or the number and amount of: (ii) May claim loans accounting for § 228.22 Lending test. (i) Home mortgage loans to low-, more than its percentage share (based on (a) Scope of test. (1) The lending test moderate-, middle-, and upper-income the level of its participation or evaluates a bank’s record of helping to individuals; investment) of the total loans originated meet the credit needs of its assessment (ii) Small business and small farm by the consortium or third party. area(s) through its lending activities by loans to businesses and farms with gross (e) Lending performance rating. The considering a bank’s home mortgage, annual revenues of $1 million or less; Board rates a bank’s lending small business, small farm, and (iii) Small business and small farm performance as provided in Appendix A community development lending. If loans by loan amount at origination; and of this part. consumer lending constitutes a (iv) Consumer loans, if applicable, to § 228.23 Investment test. substantial majority of a bank’s low-, moderate-, middle-, and upper- business, the Board will evaluate the income individuals; (a) Scope of test. The investment test bank’s consumer lending in one or more (4) Community development lending. evaluates a bank’s record of helping to of the following categories: motor The bank’s community development meet the credit needs of its assessment vehicle, credit card, home equity, other lending, including the number and area(s) through qualified investments secured, and other unsecured loans. In amount of community development that benefit its assessment area(s) or a addition, at a bank’s option, the Board loans, and their complexity and broader statewide or regional area that will evaluate one or more categories of innovativeness; and includes the bank’s assessment area(s). (b) Exclusion. Activities considered consumer lending, if the bank has (5) Innovative or flexible lending under the lending or service tests may collected and maintained, as required in practices. The bank’s use of innovative not be considered under the investment § 228.42(c)(1), the data for each category or flexible lending practices in a safe test. that the bank elects to have the Board and sound manner to address the credit (c) Affiliate investment. At a bank’s evaluate. needs of low- or moderate-income option, the Board will consider, in its (2) The Board considers originations individuals or geographies. assessment of a bank’s investment and purchases of loans. The Board will (c) Affiliate lending. (1) At a bank’s performance, a qualified investment also consider any other loan data the option, the Board will consider loans by made by an affiliate of the bank, if the bank may choose to provide, including an affiliate of the bank, if the bank qualified investment is not claimed by data on loans outstanding, commitments provides data on the affiliate’s loans any other institution. and letters of credit. pursuant to § 228.42. (d) Disposition of branch premises. (3) A bank may ask the Board to (2) The Board considers affiliate consider loans originated or purchased Donating, selling on favorable terms, or lending subject to the following making available on a rent-free basis a by consortia in which the bank constraints: participates or by third parties in which branch of the bank that is located in a (i) No affiliate may claim a loan predominantly minority neighborhood the bank has invested only if the loans origination or loan purchase if another meet the definition of community to a minority depository institution or institution claims the same loan women’s depository institution (as these development loans and only in origination or purchase; and accordance with paragraph (d) of this terms are defined in 12 U.S.C. 2907(b)) (ii) If a bank elects to have the Board will be considered as a qualified section. The Board will not consider consider loans within a particular these loans under any criterion of the investment. lending category made by one or more (e) Performance criteria. The Board lending test except the community of the bank’s affiliates in a particular development lending criterion. evaluates the investment performance of assessment area, the bank shall elect to a bank pursuant to the following (b) Performance criteria. The Board have the Board consider, in accordance evaluates a bank’s lending performance criteria: with paragraph (c)(1) of this section, all (1) The dollar amount of qualified pursuant to the following criteria: the loans within that lending category in investments; (1) Lending activity. The number and that particular assessment area made by (2) The innovativeness or complexity amount of the bank’s home mortgage, all of the bank’s affiliates. of qualified investments; small business, small farm, and (3) The Board does not consider (3) The responsiveness of qualified consumer loans, if applicable, in the affiliate lending in assessing a bank’s investments to credit and community bank’s assessment area(s); performance under paragraph (b)(2)(i) of development needs; and (2) Geographic distribution. The this section. (4) The degree to which the qualified geographic distribution of the bank’s (d) Lending by a consortium or a third investments are not routinely provided home mortgage, small business, small party. Community development loans by private investors. farm, and consumer loans, if applicable, originated or purchased by a consortium (f) Investment performance rating. based on the loan location, including: in which the bank participates or by a The Board rates a bank’s investment (i) The proportion of the bank’s third party in which the bank has performance as provided in Appendix A lending in the bank’s assessment area(s); invested: of this part. (ii) The dispersion of lending in the (1) Will be considered, at the bank’s bank’s assessment area(s); and option, if the bank reports the data § 228.24 Service test. (iii) The number and amount of loans pertaining to these loans under (a) Scope of test. The service test in low-, moderate-, middle-, and upper- § 228.42(b)(2); and evaluates a bank’s record of helping to Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22193 meet the credit needs of its assessment § 228.25 Community development test for (2) Benefit outside assessment area(s). area(s) by analyzing both the availability wholesale or limited purpose banks. The Board considers the qualified and effectiveness of a bank’s systems for (a) Scope of test. The Board assesses investments, community development delivering retail banking services and a wholesale or limited purpose bank’s loans, and community development the extent and innovativeness of its record of helping to meet the credit services that benefit areas outside the community development services. needs of its assessment area(s) under the bank’s assessment area(s), if the bank (b) Area(s) benefitted. Community community development test through has adequately addressed the needs of development services must benefit a its community development lending, its assessment area(s). bank’s assessment area(s) or a broader qualified investments, or community (f) Community development statewide or regional area that includes development services. performance rating. The Board rates a the bank’s assessment area(s). (b) Designation as a wholesale or bank’s community development (c) Affiliate service. At a bank’s limited purpose bank. In order to performance as provided in Appendix A option, the Board will consider, in its receive a designation as a wholesale or of this part. limited purpose bank, a bank shall file assessment of a bank’s service § 228.26 Small bank performance performance, a community development a request, in writing, with the Board, at standards. least three months prior to the proposed service provided by an affiliate of the (a) Performance criteria. The Board bank, if the community development effective date of the designation. If the Board approves the designation, it evaluates the record of a small bank, or service is not claimed by any other a bank that was a small bank during the institution. remains in effect until the bank requests revocation of the designation or until prior calendar year, of helping to meet (d) Performance criteria—retail one year after the Board notifies the the credit needs of its assessment area(s) banking services. The Board evaluates bank that the Board has revoked the pursuant to the following criteria: the availability and effectiveness of a designation on its own initiative. (1) The bank’s loan-to-deposit ratio, bank’s systems for delivering retail (c) Performance criteria. The Board adjusted for seasonal variation and, as banking services, pursuant to the evaluates the community development appropriate, other lending-related following criteria: performance of a wholesale or limited activities, such as loan originations for (1) The current distribution of the purpose bank pursuant to the following sale to the secondary markets, bank’s branches among low-, criteria: community development loans, or moderate-, middle-, and upper-income (1) The number and amount of qualified investments; (2) The percentage of loans and, as geographies; community development loans appropriate, other lending-related (2) In the context of its current (including originations and purchases of activities located in the bank’s distribution of the bank’s branches, the loans and other community assessment area(s); bank’s record of opening and closing development loan data provided by the (3) The bank’s record of lending to branches, particularly branches located bank, such as data on loans outstanding, and, as appropriate, engaging in other in low- or moderate-income geographies commitments, and letters of credit), lending-related activities for borrowers or primarily serving low- or moderate- qualified investments, or community of different income levels and income individuals; development services; businesses and farms of different sizes; (2) The use of innovative or complex (3) The availability and effectiveness (4) The geographic distribution of the qualified investments, community of alternative systems for delivering bank’s loans; and development loans, or community retail banking services (e.g., ATMs, (5) The bank’s record of taking action, development services and the extent to ATMs not owned or operated by or if warranted, in response to written which the investments are not routinely exclusively for the bank, banking by complaints about its performance in provided by private investors; and telephone or computer, loan production helping to meet credit needs in its offices, and bank-at-work or bank-by- (3) The bank’s responsiveness to assessment area(s). mail programs) in low- and moderate- credit and community development (b) Small bank performance rating. income geographies and to low- and needs. The Board rates the performance of a moderate-income individuals; and (d) Indirect activities. At a bank’s bank evaluated under this section as (4) The range of services provided in option, the Board will consider in its provided in Appendix A of this part. low-, moderate-, middle-, and upper- community development performance income geographies and the degree to assessment: § 228.27 Strategic plan. which the services are tailored to meet (1) Qualified investments or (a) Alternative election. The Board the needs of those geographies. community development services will assess a bank’s record of helping to provided by an affiliate of the bank, if (e) Performance criteria—community meet the credit needs of its assessment the investments or services are not development services. The Board area(s) under a strategic plan if: claimed by any other institution; and evaluates community development (1) The bank has submitted the plan (2) Community development lending services pursuant to the following to the Board as provided for in this by affiliates, consortia and third parties, criteria: section; subject to the requirements and (2) The Board has approved the plan; (1) The extent to which the bank limitations in § 228.22(c) and (d). (3) The plan is in effect; and provides community development (e) Benefit to assessment area(s)—(1) (4) The bank has been operating under services; and Benefit inside assessment area(s). The an approved plan for at least one year. (2) The innovativeness and Board considers all qualified (b) Data reporting. The Board’s responsiveness of community investments, community development approval of a plan does not affect the development services. loans, and community development bank’s obligation, if any, to report data (f) Service performance rating. The services that benefit areas within the as required by § 228.42. Board rates a bank’s service bank’s assessment area(s) or a broader (c) Plans in general—(1) Term. A plan performance as provided in Appendix A statewide or regional area that includes may have a term of no more than five of this part. the bank’s assessment area(s). years, and any multi-year plan must 22194 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations include annual interim measurable assessment area(s), considering public and innovativeness of the bank’s goals under which the Board will comment and the bank’s capacity and community development services. evaluate the bank’s performance. constraints, product offerings, and (h) Plan amendment. During the term (2) Multiple assessment areas. A bank business strategy. of a plan, a bank may request the Board with more than one assessment area (2) Confidential information. A bank to approve an amendment to the plan on may prepare a single plan for all of its may submit additional information to grounds that there has been a material assessment areas or one or more plans the Board on a confidential basis, but change in circumstances. The bank shall for one or more of its assessment areas. the goals stated in the plan must be develop an amendment to a previously (3) Treatment of affiliates. Affiliated sufficiently specific to enable the public approved plan in accordance with the institutions may prepare a joint plan if and the Board to judge the merits of the public participation requirements of the plan provides measurable goals for plan. paragraph (c) of this section. each institution. Activities may be (3) Satisfactory and outstanding goals. (i) Plan assessment. The Board allocated among institutions at the A bank shall specify in its plan approves the goals and assesses institutions’ option, provided that the measurable goals that constitute performance under a plan as provided same activities are not considered for ‘‘satisfactory’’ performance. A plan may for in Appendix A of this part. more than one institution. specify measurable goals that constitute § 228.28 Assigned ratings. (d) Public participation in plan ‘‘outstanding’’ performance. If a bank development. Before submitting a plan submits, and the Board approves, both (a) Ratings in general. Subject to to the Board for approval, a bank shall: ‘‘satisfactory’’ and ‘‘outstanding’’ paragraphs (b) and (c) of this section, (1) Informally seek suggestions from performance goals, the Board will the Board assigns to a bank a rating of members of the public in its assessment consider the bank eligible for an ‘‘outstanding,’’ ‘‘satisfactory,’’ ‘‘needs to area(s) covered by the plan while ‘‘outstanding’’ performance rating. improve,’’ or ‘‘substantial developing the plan; noncompliance’’ based on the bank’s (2) Once the bank has developed a (4) Election if satisfactory goals not substantially met. A bank may elect in performance under the lending, plan, formally solicit public comment investment and service tests, the on the plan for at least 30 days by its plan that, if the bank fails to meet substantially its plan goals for a community development test, the small publishing notice in at least one bank performance standards, or an newspaper of general circulation in each satisfactory rating, the Board will evaluate the bank’s performance under approved strategic plan, as applicable. assessment area covered by the plan; (b) Lending, investment, and service and the lending, investment, and service tests, the community development test, tests. The Board assigns a rating for a (3) During the period of formal public bank assessed under the lending, comment, make copies of the plan or the small bank performance standards, as appropriate. investment, and service tests in available for review by the public at no accordance with the following cost at all offices of the bank in any (g) Plan approval—(1) Timing. The Board will act upon a plan within 60 principles: assessment area covered by the plan and (1) A bank that receives an calendar days after the Board receives provide copies of the plan upon request ‘‘outstanding’’ rating on the lending test the complete plan and other material for a reasonable fee to cover copying receives an assigned rating of at least required under paragraph (d) of this and mailing, if applicable. ‘‘satisfactory’’; section. If the Board fails to act within (e) Submission of plan. The bank shall (2) A bank that receives an this time period, the plan shall be submit its plan to the Board at least ‘‘outstanding’’ rating on both the service deemed approved unless the Board three months prior to the proposed test and the investment test and a rating extends the review period for good effective date of the plan. The bank shall of at least ‘‘high satisfactory’’ on the cause. also submit with its plan a description lending test receives an assigned rating (2) Public participation. In evaluating of its informal efforts to seek suggestions of ‘‘outstanding’’; and from members of the public, any written the plan’s goals, the Board considers the (3) No bank may receive an assigned public comment received, and, if the public’s involvement in formulating the rating of ‘‘satisfactory’’ or higher unless plan was revised in light of the plan, written public comment on the it receives a rating of at least ‘‘low comment received, the initial plan as plan, and any response by the bank to satisfactory’’ on the lending test. released for public comment. public comment on the plan. (c) Effect of evidence of (f) Plan content—(1) Measurable (3) Criteria for evaluating plan. The discriminatory or other illegal credit goals. (i) A bank shall specify in its plan Board evaluates a plan’s measurable practices. Evidence of discriminatory or measurable goals for helping to meet the goals using the following criteria, as other illegal credit practices adversely credit needs of each assessment area appropriate: affects the Board’s evaluation of a bank’s covered by the plan, particularly the (i) The extent and breadth of lending performance. In determining the effect needs of low- and moderate-income or lending-related activities, including, on the bank’s assigned rating, the Board geographies and low- and moderate- as appropriate, the distribution of loans considers the nature and extent of the income individuals, through lending, among different geographies, businesses evidence, the policies and procedures investment, and services, as and farms of different sizes, and that the bank has in place to prevent appropriate. individuals of different income levels, discriminatory or other illegal credit (ii) A bank shall address in its plan all the extent of community development practices, any corrective action that the three performance categories and, lending, and the use of innovative or bank has taken or has committed to unless the bank has been designated as flexible lending practices to address take, particularly voluntary corrective a wholesale or limited purpose bank, credit needs; action resulting from self-assessment, shall emphasize lending and lending- (ii) The amount and innovativeness, and other relevant information. related activities. Nevertheless, a complexity, and responsiveness of the different emphasis, including a focus on bank’s qualified investments; and § 228.29 Effect of CRA performance on one or more performance categories, (iii) The availability and effectiveness applications. may be appropriate if responsive to the of the bank’s systems for delivering (a) CRA performance. Among other characteristics and credit needs of its retail banking services and the extent factors, the Board takes into account the Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22195 record of performance under the CRA performance criterion, but the Board geographic area that extends of: reviews the delineation for compliance substantially beyond a CMSA boundary, (1) Each applicant bank for the: with the requirements of this section. the bank shall delineate separate (i) Establishment of a domestic branch (b) Geographic area(s) for wholesale assessment areas for the areas inside by a State member bank; and or limited purpose banks. The and outside the CMSA. (ii) Merger, consolidation, acquisition assessment area(s) for a wholesale or (f) Banks serving military personnel. of assets, or assumption of liabilities limited purpose bank must consist Notwithstanding the requirements of requiring approval under the Bank generally of one or more MSAs (using this section, a bank whose business Merger Act (12 U.S.C. 1828(c)) if the the MSA boundaries that were in effect predominantly consists of serving the acquiring, assuming, or resulting bank is as of January 1 of the calendar year in needs of military personnel or their to be a State member bank; and which the delineation is made) or one dependents who are not located within (2) Each insured depository or more contiguous political a defined geographic area may delineate institution (as defined in 12 U.S.C. subdivisions, such as counties, cities, or its entire deposit customer base as its 1813) controlled by an applicant and towns, in which the bank has its main assessment area. subsidiary bank or savings association office, branches, and deposit-taking (g) Use of assessment area(s). The proposed to be controlled by an ATMs. Board uses the assessment area(s) applicant: (c) Geographic area(s) for other banks. delineated by a bank in its evaluation of (i) To become a bank holding The assessment area(s) for a bank other the bank’s CRA performance unless the company in a transaction that requires than a wholesale or limited purpose Board determines that the assessment approval under section 3 of the Bank bank must: area(s) do not comply with the Holding Company Act (12 U.S.C. 1842); (1) Consist generally of one or more requirements of this section. (ii) To acquire ownership or control of MSAs (using the MSA boundaries that shares or all or substantially all of the were in effect as of January 1 of the § 228.42 Data collection, reporting, and assets of a bank, to cause a bank to calendar year in which the delineation disclosure. become a subsidiary of a bank holding is made) or one or more contiguous (a) Loan information required to be company, or to merge or consolidate a political subdivisions, such as counties, collected and maintained. A bank, bank holding company with any other cities, or towns; and except a small bank, shall collect, and bank holding company in a transaction (2) Include the geographies in which maintain in machine readable form (as that requires approval under section 3 of the bank has its main office, its prescribed by the Board) until the the Bank Holding Company Act (12 branches, and its deposit-taking ATMs, completion of its next CRA U.S.C. 1842); and as well as the surrounding geographies examination, the following data for each (iii) To own, control or operate a in which the bank has originated or small business or small farm loan savings association in a transaction that purchased a substantial portion of its originated or purchased by the bank: requires approval under section 4 of the loans (including home mortgage loans, (1) A unique number or alpha- Bank Holding Company Act (12 U.S.C. small business and small farm loans, numeric symbol that can be used to 1843). and any other loans the bank chooses, identify the relevant loan file; (b) Interested parties. In considering such as those consumer loans on which (2) The loan amount at origination; CRA performance in an application the bank elects to have its performance (3) The loan location; and described in paragraph (a) of this assessed). (4) An indicator whether the loan was section, the Board takes into account (d) Adjustments to geographic area(s). to a business or farm with gross annual any views expressed by interested A bank may adjust the boundaries of its revenues of $1 million or less. parties that are submitted in accordance assessment area(s) to include only the (b) Loan information required to be with the Board’s Rules of Procedure set portion of a political subdivision that it reported. A bank, except a small bank or forth in part 262 of this chapter. reasonably can be expected to serve. An a bank that was a small bank during the (c) Denial or conditional approval of adjustment is particularly appropriate in prior calendar year, shall report application. A bank’s record of the case of an assessment area that annually by March 1 to the Board in performance may be the basis for otherwise would be extremely large, of machine readable form (as prescribed by denying or conditioning approval of an unusual configuration, or divided by the Board) the following data for the application listed in paragraph (a) of significant geographic barriers. prior calendar year: this section. (e) Limitations on the delineation of (1) Small business and small farm (d) Definitions. For purposes of an assessment area. Each bank’s loan data. For each geography in which paragraph (a)(2) of this section, ‘‘bank,’’ assessment area(s): the bank originated or purchased a ‘‘bank holding company,’’ ‘‘subsidiary,’’ (1) Must consist only of whole small business or small farm loan, the and ‘‘savings association’’ have the geographies; aggregate number and amount of loans: meanings given to those terms in section (2) May not reflect illegal (i) With an amount at origination of 2 of the Bank Holding Company Act (12 discrimination; $100,000 or less; U.S.C. 1841). (3) May not arbitrarily exclude low- or (ii) With amount at origination of moderate-income geographies, taking more than $100,000 but less than or Subpart CÐRecords, Reporting, and into account the bank’s size and equal to $250,000; Disclosure Requirements financial condition; and (iii) With an amount at origination of (4) May not extend substantially more than $250,000; and § 228.41 Assessment area delineation. beyond a CMSA boundary or beyond a (iv) To businesses and farms with (a) In general. A bank shall delineate state boundary unless the assessment gross annual revenues of $1 million or one or more assessment areas within area is located in a multistate MSA. If less (using the revenues that the bank which the Board evaluates the bank’s a bank serves a geographic area that considered in making its credit record of helping to meet the credit extends substantially beyond a state decision); needs of its community. The Board does boundary, the bank shall delineate (2) Community development loan not evaluate the bank’s delineation of its separate assessment areas for the areas data. The aggregate number and assessment area(s) as a separate in each state. If a bank serves a aggregate amount of community 22196 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations development loans originated or (f) Small banks electing evaluation geography relative to the area median purchased; and under the lending, investment, and income is less than 10 percent, 10 or (3) Home mortgage loans. If the bank service tests. A bank that qualifies for more but less than 20 percent, 20 or is subject to reporting under part 203 of evaluation under the small bank more but less than 30 percent, 30 or this chapter, the location of each home performance standards but elects more but less than 40 percent, 40 or mortgage loan application, origination, evaluation under the lending, more but less than 50 percent, 50 or or purchase outside the MSAs in which investment, and service tests shall more but less than 60 percent, 60 or the bank has a home or branch office (or collect, maintain, and report the data more but less than 70 percent, 70 or outside any MSA) in accordance with required for other banks pursuant to more but less than 80 percent, 80 or the requirements of part 203 of this paragraphs (a) and (b) of this section. more but less than 90 percent, 90 or chapter. (g) Assessment area data. A bank, more but less than 100 percent, 100 or (c) Optional data collection and except a small bank or a bank that was more but less than 110 percent, 110 or maintenance—(1) Consumer loans. A a small bank during the prior calendar more but less than 120 percent, and 120 year, shall collect and report to the bank may collect and maintain in percent or more; machine readable form (as prescribed by Board by March 1 of each year a list for the Board) data for consumer loans each assessment area showing the (iii) A list showing each geography in originated or purchased by the bank for geographies within the area. which the bank reported a small consideration under the lending test. A (h) CRA Disclosure Statement. The business or small farm loan; and bank may maintain data for one or more Board prepares annually for each bank (iv) The number and amount of small of the following categories of consumer that reports data pursuant to this section business and small farm loans to loans: motor vehicle, credit card, home a CRA Disclosure Statement that businesses and farms with gross annual equity, other secured, and other contains, on a state-by-state basis: revenues of $1 million or less; unsecured. If the bank maintains data (1) For each county (and for each assessment area smaller than a county) (3) The number and amount of small for loans in a certain category, it shall business and small farm loans located maintain data for all loans originated or with a population of 500,000 persons or fewer in which the bank reported a inside each assessment area reported by purchased within that category. The the bank and the number and amount of bank shall maintain data separately for small business or small farm loan: small business and small farm loans each category, including for each loan: (i) The number and amount of small located outside the assessment area(s) (i) A unique number or alpha-numeric business and small farm loans reported reported by the bank; and symbol that can be used to identify the as originated or purchased located in relevant loan file; low-, moderate-, middle-, and upper- (4) The number and amount of (ii) The loan amount at origination or income geographies; community development loans reported (ii) A list grouping each geography purchase; as originated or purchased. according to whether the geography is (iii) The loan location; and low-, moderate-, middle-, or upper- (i) Aggregate disclosure statements. (iv) The gross annual income of the income; The Board, in conjunction with the borrower that the bank considered in (iii) A list showing each geography in Office of the Comptroller of the making its credit decision. which the bank reported a small Currency, the Federal Deposit Insurance (2) Other loan data. At its option, a business or small farm loan; and Corporation, and the Office of Thrift bank may provide other information (iv) The number and amount of small Supervision, prepares annually, for each concerning its lending performance, business and small farm loans to MSA (including an MSA that crosses a including additional loan distribution businesses and farms with gross annual state boundary) and the non-MSA data. revenues of $1 million or less; portion of each state, an aggregate (d) Data on affiliate lending. A bank (2) For each county (and for each disclosure statement of small business that elects to have the Board consider assessment area smaller than a county) and small farm lending by all loans by an affiliate, for purposes of the with a population in excess of 500,000 institutions subject to reporting under lending or community development test persons in which the bank reported a this part or parts 25, 345, or 563e of this or an approved strategic plan, shall small business or small farm loan: title. These disclosure statements collect, maintain, and report for those (i) The number and amount of small indicate, for each geography, the loans the data that the bank would have business and small farm loans reported number and amount of all small collected, maintained, and reported as originated or purchased located in business and small farm loans pursuant to paragraphs (a), (b), and (c) geographies with median income originated or purchased by reporting of this section had the loans been relative to the area median income of institutions, except that the Board may originated or purchased by the bank. For less than 10 percent, 10 or more but less adjust the form of the disclosure if home mortgage loans, the bank shall than 20 percent, 20 or more but less necessary, because of special also be prepared to identify the home than 30 percent, 30 or more but less circumstances, to protect the privacy of mortgage loans reported under part 203 than 40 percent, 40 or more but less a borrower or the competitive position of this chapter by the affiliate. than 50 percent, 50 or more but less of an institution. (e) Data on lending by a consortium than 60 percent, 60 or more but less or a third party. A bank that elects to than 70 percent, 70 or more but less (j) Central data depositories. The have the Board consider community than 80 percent, 80 or more but less Board makes the aggregate disclosure development loans by a consortium or than 90 percent, 90 or more but less statements, described in paragraph (i) of third party, for purposes of the lending than 100 percent, 100 or more but less this section, and the individual bank or community development tests or an than 110 percent, 110 or more but less CRA Disclosure Statements, described approved strategic plan, shall report for than 120 percent, and 120 percent or in paragraph (h) of this section, those loans the data that the bank would more; available to the public at central data have reported under paragraph (b)(2) of (ii) A list grouping each geography in depositories. The Board publishes a list this section had the loans been the county or assessment area according of the depositories at which the originated or purchased by the bank. to whether the median income in the statements are available. Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22197

§ 228.43 Content and availability of public (A) To low-, moderate-, middle-, and (2) At each branch: file. upper-income individuals; (i) A copy of the public section of the (a) Information available to the (B) Located in low-, moderate-, bank’s most recent CRA Performance public. A bank shall maintain a public middle-, and upper-income census Evaluation and a list of services file that includes the following tracts; and provided by the branch; and information: (C) Located inside the bank’s (ii) Within five calendar days of the (1) All written comments received assessment area(s) and outside the request, all the information in the public from the public for the current year and bank’s assessment area(s); and file relating to the assessment area in each of the prior two calendar years that (ii) The bank’s CRA Disclosure which the branch is located. specifically relate to the bank’s Statement. The bank shall place the (d) Copies. Upon request, a bank shall performance in helping to meet statement in the public file within three provide copies, either on paper or in community credit needs, and any business days of its receipt from the another form acceptable to the person response to the comments by the bank, Board. making the request, of the information if neither the comments nor the (2) Banks required to report Home in its public file. The bank may charge responses contain statements that reflect Mortgage Disclosure Act (HMDA) data. a reasonable fee not to exceed the cost adversely on the good name or A bank required to report home of copying and mailing (if applicable). reputation of any persons other than the mortgage loan data pursuant to part 203 (e) Updating. Except as otherwise bank or publication of which would of this chapter shall include in its provided in this section, a bank shall violate specific provisions of law; public file a copy of the HMDA ensure that the information required by (2) A copy of the public section of the Disclosure Statement provided by the this section is current as of April 1 of bank’s most recent CRA Performance Federal Financial Institutions each year. Examination Council pertaining to the Evaluation prepared by the Board. The § 228.44 Public notice by banks. bank shall place this copy in the public bank for each of the prior two calendar years. In addition, a bank that elected to A bank shall provide in the public file within 30 business days after its lobby of its main office and each of its receipt from the Board; have the Board consider the mortgage lending of an affiliate for any of these branches the appropriate public notice (3) A list of the bank’s branches, their set forth in Appendix B of this part. street addresses, and geographies; years shall include in its public file the affiliate’s HMDA Disclosure Statement Only a branch of a bank having more (4) A list of branches opened or closed than one assessment area shall include by the bank during the current year and for those years. The bank shall place the statement(s) in the public file within the bracketed material in the notice for each of the prior two calendar years, branch offices. Only a bank that is an their street addresses, and geographies; three business days after its receipt. (3) Small banks. A small bank or a affiliate of a holding company shall (5) A list of services (including hours bank that was a small bank during the include the next to the last sentence of of operation, available loan and deposit prior calendar year shall include in its the notices. A bank shall include the products, and transaction fees) generally public file: last sentence of the notices only if it is offered at the bank’s branches and (i) The bank’s loan-to-deposit ratio for an affiliate of a holding company that is descriptions of material differences in each quarter of the prior calendar year not prevented by statute from acquiring the availability or cost of services at and, at its option, additional data on its additional banks. particular branches, if any. At its option, loan-to-deposit ratio; and a bank may include information § 228.45 Publication of planned (ii) The information required for other examination schedule. regarding the availability of alternative banks by paragraph (b)(1) of this section, The Board publishes at least 30 days systems for delivering retail banking if the bank has elected to be evaluated in advance of the beginning of each services (e.g., ATMs, ATMs not owned under the lending, investment, and calendar quarter a list of banks or operated by or exclusively for the service tests. bank, banking by telephone or (4) Banks with strategic plans. A bank scheduled for CRA examinations in that computer, loan production offices, and that has been approved to be assessed quarter. bank-at-work or bank-by-mail under a strategic plan shall include in Subpart DÐTransition Rules programs); its public file a copy of that plan. A (6) A map of each assessment area bank need not include information § 228.51 Transition rules. showing the boundaries of the area and submitted to the Board on a confidential (a) Effective date. Sections of this part identifying the geographies contained basis in conjunction with the plan. become applicable over a period of time within the area, either on the map or in (5) Banks with less than satisfactory in accordance with the schedule set a separate list; and ratings. A bank that received a less than forth in paragraph (c) of this section. (7) Any other information the bank satisfactory rating during its most recent (b) Data collection and reporting; chooses. examination shall include in its public strategic plan; performance tests and (b) Additional information available file a description of its current efforts to standards. (i) On January 1, 1996, the to the public—(1) Banks other than improve its performance in helping to data collection requirements set forth in small banks. A bank, except a small meet the credit needs of its entire § 228.42 (except § 228.42(b) and (g)) bank or a bank that was a small bank community. The bank shall update the become applicable. during the prior calendar year, shall description quarterly. (ii) On January 1, 1997, the data include in its public file the following (c) Location of public information. A reporting requirements set forth in information pertaining to the bank and bank shall make available to the public § 228.42(b) and (g) become applicable. its affiliates, if applicable, for each of for inspection upon request and at no (2) Small banks. Beginning January 1, the prior two calendar years: cost the information required in this 1996, the Board evaluates banks that (i) If the bank has elected to have one section as follows: qualify for the small bank performance or more categories of its consumer loans (1) At the main office and, if an standards described in § 228.26 under considered under the lending test, for interstate bank, at one branch office in that section. each of these categories, the number and each state, all information in the public (3) Strategic plan. Beginning January amount of loans: file; and 1, 1996, a bank that elects to be 22198 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations evaluated under an approved strategic (C) An excellent geographic distribution of with gross annual revenues of $1 million or plan pursuant to § 228.27 may submit loans in its assessment area(s); less, consistent with safe and sound its strategic plan to the Board for (D) An excellent distribution, particularly operations; approval. in its assessment area(s), of loans among (F) Limited use of innovative or flexible individuals of different income levels and lending practices in a safe and sound manner (4) Other performance tests. (i) businesses (including farms) of different to address the credit needs of low- or Beginning January 1, 1996, a bank may sizes, given the product lines offered by the moderate-income individuals or geographies; elect to be evaluated under the pertinent bank; and revised performance tests described in (E) An excellent record of serving the (G) It has made an adequate level of §§ 228.22, 228.23, 228.24, and 228.25, if credit needs of highly economically community development loans. the bank provides the necessary data to disadvantaged areas in its assessment area(s), (iv) Needs to improve. The Board rates a permit evaluation. low-income individuals, or businesses bank’s lending performance ‘‘needs to (ii) Beginning July 1, 1997, the Board (including farms) with gross annual revenues improve’’ if, in general, it demonstrates: (A) Poor responsiveness to credit needs in evaluates all banks under the pertinent of $1 million or less, consistent with safe and sound operations; its assessment area(s), taking into account the revised performance tests. (F) Extensive use of innovative or flexible number and amount of home mortgage, small (c) Schedule. (1) On July 1, 1995, lending practices in a safe and sound manner business, small farm, and consumer loans, if §§ 228.11, 228.12, 228.29, and 228.51 to address the credit needs of low- or applicable, in its assessment area(s); become applicable, and §§ 228.1, 228.2, moderate-income individuals or geographies; (B) A small percentage of its loans are 228.8, and 228.100 expire. and made in its assessment area(s); (2) On January 1, 1996, § 228.41 and (G) It is a leader in making community (C) A poor geographic distribution of loans, the pertinent provisions of Subpart B of development loans. particularly to low- or moderate-income geographies, in its assessment area(s); this part will apply to banks that elect (ii) High satisfactory. The Board rates a bank’s lending performance ‘‘high (D) A poor distribution, particularly in its to be evaluated under §§ 228.22 through assessment area(s), of loans among 228.25, banks that submit for approval satisfactory’’ if, in general, it demonstrates: (A) Good responsiveness to credit needs in individuals of different income levels and strategic plans under § 228.27, and its assessment area(s), taking into account the businesses (including farms) of different banks that qualify for the small bank number and amount of home mortgage, small sizes, given the product lines offered by the performance standards described in business, small farm, and consumer loans, if bank; § 228.26. applicable, in its assessment area(s); (E) A poor record of serving the credit (3) On January 1, 1996, §§ 228.42 (B) A high percentage of its loans are made needs of highly economically disadvantaged areas in its assessment area(s), low-income in its assessment area(s); (except § 228.42(b) and (g)) and 228.45 individuals, or businesses (including farms) (C) A good geographic distribution of loans become applicable. with gross annual revenues of $1 million or in its assessment area(s); (4) On January 1, 1997, §§ 228.41 and less, consistent with safe and sound (D) A good distribution, particularly in its 228.42(b) and (g) become applicable. operations; assessment area(s), of loans among (5) On July 1, 1997, §§ 228.21 through (F) Little use of innovative or flexible individuals of different income levels and 228.28, 228.43, and 228.44 become lending practices in a safe and sound manner businesses (including farms) of different to address the credit needs of low- or applicable, and §§ 228.3 through 228.7, sizes, given the product lines offered by the and 228.51 expire. moderate-income individuals or geographies; bank; and Appendix A to Part 228—Ratings (E) A good record of serving the credit (G) It has made a low level of community needs of highly economically disadvantaged development loans. (a) Ratings in general. (1) In assigning a areas in its assessment area(s), low-income (v) Substantial noncompliance. The Board rating, the Board evaluates a bank’s individuals, or businesses (including farms) rates a bank’s lending performance as being performance under the applicable with gross annual revenues of $1 million or in ‘‘substantial noncompliance’’ if, in performance criteria in this part, in less, consistent with safe and sound general, it demonstrates: accordance with § 228.21, and § 228.28, operations; (A) A very poor responsiveness to credit which provides for adjustments on the basis (F) Use of innovative or flexible lending needs in its assessment area(s), taking into of evidence of discriminatory or other illegal practices in a safe and sound manner to account the number and amount of home credit practices. address the credit needs of low- or moderate- mortgage, small business, small farm, and (2) A bank’s performance need not fit each income individuals or geographies; and consumer loans, if applicable, in its aspect of a particular rating profile in order (G) It has made a relatively high level of assessment area(s); to receive that rating, and exceptionally community development loans. (B) A very small percentage of its loans are strong performance with respect to some (iii) Low satisfactory. The Board rates a made in its assessment area(s); aspects may compensate for weak bank’s lending performance ‘‘low (C) A very poor geographic distribution of performance in others. The bank’s overall satisfactory’’ if, in general, it demonstrates: loans, particularly to low- or moderate- performance, however, must be consistent (A) Adequate responsiveness to credit income geographies, in its assessment area(s); with safe and sound banking practices and needs in its assessment area(s), taking into (D) A very poor distribution, particularly in generally with the appropriate rating profile account the number and amount of home its assessment area(s), of loans among as follows. mortgage, small business, small farm, and individuals of different income levels and (b) Banks evaluated under the lending, consumer loans, if applicable, in its businesses (including farms) of different investment, and service tests—(1) Lending assessment area(s); sizes, given the product lines offered by the performance rating. The Board assigns each (B) An adequate percentage of its loans are bank; bank’s lending performance one of the five made in its assessment area(s); (E) A very poor record of serving the credit following ratings. (C) An adequate geographic distribution of needs of highly economically disadvantaged (i) Outstanding. The Board rates a bank’s loans in its assessment area(s); areas in its assessment area(s), low-income lending performance ‘‘outstanding’’ if, in (D) An adequate distribution, particularly individuals, or businesses (including farms) general, it demonstrates: in its assessment area(s), of loans among with gross annual revenues of $1 million or (A) Excellent responsiveness to credit individuals of different income levels and less, consistent with safe and sound needs in its assessment area(s), taking into businesses (including farms) of different operations; account the number and amount of home sizes, given the product lines offered by the (F) No use of innovative or flexible lending mortgage, small business, small farm, and bank; practices in a safe and sound manner to consumer loans, if applicable, in its (E) An adequate record of serving the credit address the credit needs of low- or moderate- assessment area(s); needs of highly economically disadvantaged income individuals or geographies; and (B) A substantial majority of its loans are areas in its assessment area(s), low-income (G) It has made few, if any, community made in its assessment area(s); individuals, or businesses (including farms) development loans. Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22199

(2) Investment performance rating. The area(s), particularly low- or moderate-income (A) Its service delivery systems are Board assigns each bank’s investment geographies or low- or moderate-income unreasonably inaccessible to significant performance one of the five following ratings. individuals; and portions of its assessment area(s), particularly (i) Outstanding. The Board rates a bank’s (D) It is a leader in providing community to low- or moderate-income geographies or to investment performance ‘‘outstanding’’ if, in development services. low- or moderate-income individuals; general, it demonstrates: (ii) High satisfactory. The Board rates a (B) To the extent changes have been made, (A) An excellent level of qualified bank’s service performance ‘‘high its record of opening and closing branches investments, particularly those that are not satisfactory’’ if, in general, the bank has significantly adversely affected the routinely provided by private investors, often demonstrates: accessibility of its delivery systems, in a leadership position; (A) Its service delivery systems are particularly in low- or moderate-income (B) Extensive use of innovative or complex accessible to geographies and individuals of geographies or to low- or moderate-income qualified investments; and different income levels in its assessment individuals; (C) Excellent responsiveness to credit and area(s); (C) Its services (including, where community development needs. (B) To the extent changes have been made, appropriate, business hours) vary in a way (ii) High satisfactory. The Board rates a its record of opening and closing branches that significantly inconveniences its bank’s investment performance ‘‘high has not adversely affected the accessibility of assessment area(s), particularly low- or satisfactory’’ if, in general, it demonstrates: its delivery systems, particularly in low- and moderate-income geographies or low- or (A) A significant level of qualified moderate-income geographies and to low- moderate-income individuals; and investments, particularly those that are not and moderate-income individuals; (D) It provides few, if any, community routinely provided by private investors, (C) Its services (including, where development services. occasionally in a leadership position; appropriate, business hours) do not vary in (c) Wholesale or limited purpose banks. (B) Significant use of innovative or a way that inconveniences its assessment The Board assigns each wholesale or limited complex qualified investments; and area(s), particularly low- and moderate- purpose bank’s community development (C) Good responsiveness to credit and income geographies and low- and moderate- performance one of the four following community development needs. income individuals; and ratings. (iii) Low satisfactory. The Board rates a (D) It provides a relatively high level of (1) Outstanding. The Board rates a bank’s investment performance ‘‘low community development services. wholesale or limited purpose bank’s satisfactory’’ if, in general, it demonstrates: (iii) Low satisfactory. The Board rates a community development performance (A) An adequate level of qualified bank’s service performance ‘‘low ‘‘outstanding’’ if, in general, it demonstrates: investments, particularly those that are not satisfactory’’ if, in general, the bank (i) A high level of community development demonstrates: routinely provided by private investors, loans, community development services, or (A) Its service delivery systems are although rarely in a leadership position; qualified investments, particularly reasonably accessible to geographies and (B) Occasional use of innovative or investments that are not routinely provided individuals of different income levels in its complex qualified investments; and by private investors; assessment area(s); (C) Adequate responsiveness to credit and (ii) Extensive use of innovative or complex (B) To the extent changes have been made, community development needs. its record of opening and closing branches qualified investments, community (iv) Needs to improve. The Board rates a has generally not adversely affected the development loans, or community bank’s investment performance ‘‘needs to accessibility of its delivery systems, development services; and improve’’ if, in general, it demonstrates: particularly in low- and moderate-income (iii) Excellent responsiveness to credit and (A) A poor level of qualified investments, geographies and to low- and moderate- community development needs in its particularly those that are not routinely income individuals; assessment area(s). provided by private investors; (C) Its services (including, where (2) Satisfactory. The Board rates a (B) Rare use of innovative or complex appropriate, business hours) do not vary in wholesale or limited purpose bank’s qualified investments; and a way that inconveniences its assessment community development performance (C) Poor responsiveness to credit and area(s), particularly low- and moderate- ‘‘satisfactory’’ if, in general, it demonstrates: community development needs. income geographies and low- and moderate- (i) An adequate level of community (v) Substantial noncompliance. The Board income individuals; and development loans, community development rates a bank’s investment performance as (D) It provides an adequate level of services, or qualified investments, being in ‘‘substantial noncompliance’’ if, in community development services. particularly investments that are not general, it demonstrates: (iv) Needs to improve. The Board rates a routinely provided by private investors; (A) Few, if any, qualified investments, bank’s service performance ‘‘needs to (ii) Occasional use of innovative or particularly those that are not routinely improve’’ if, in general, the bank complex qualified investments, community provided by private investors; demonstrates: development loans, or community (B) No use of innovative or complex (A) Its service delivery systems are development services; and qualified investments; and unreasonably inaccessible to portions of its (iii) Adequate responsiveness to credit and (C) Very poor responsiveness to credit and assessment area(s), particularly to low- or community development needs in its community development needs. moderate-income geographies or to low- or assessment area(s). (3) Service performance rating. The Board moderate-income individuals; (3) Needs to improve. The Board rates a assigns each bank’s service performance one (B) To the extent changes have been made, wholesale or limited purpose bank’s of the five following ratings. its record of opening and closing branches community development performance as (i) Outstanding. The Board rates a bank’s has adversely affected the accessibility its ‘‘needs to improve’’ if, in general, it service performance ‘‘outstanding’’ if, in delivery systems, particularly in low- or demonstrates: general, the bank demonstrates: moderate-income geographies or to low- or (i) A poor level of community development (A) Its service delivery systems are readily moderate-income individuals; loans, community development services, or accessible to geographies and individuals of (C) Its services (including, where qualified investments, particularly different income levels in its assessment appropriate, business hours) vary in a way investments that are not routinely provided area(s); that inconveniences its assessment area(s), by private investors; (B) To the extent changes have been made, particularly low- or moderate-income (ii) Rare use of innovative or complex its record of opening and closing branches geographies or low- or moderate-income qualified investments, community has improved the accessibility of its delivery individuals; and development loans, or community systems, particularly in low- or moderate- (D) It provides a limited level of development services; and income geographies or to low- or moderate- community development services. (iii) Poor responsiveness to credit and income individuals; (v) Substantial noncompliance. The Board community development needs in its (C) Its services (including, where rates a bank’s service performance as being assessment area(s). appropriate, business hours) are tailored to in ‘‘substantial noncompliance’’ if, in (4) Substantial noncompliance. The Board the convenience and needs of its assessment general, the bank demonstrates: rates a wholesale or limited purpose bank’s 22200 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations community development performance in adequately help to meet the credit needs of request from the Reserve Bank an ‘‘substantial noncompliance’’ if, in general, it the bank’s assessment area(s). announcement of our applications covered demonstrates: (2) Outstanding goals. If the plan identifies by the CRA filed with the Reserve Bank. We (i) Few, if any, community development a separate group of measurable goals that are an affiliate of (name of holding company), loans, community development services, or substantially exceed the levels approved as a bank holding company. You may request qualified investments, particularly ‘‘satisfactory,’’ the Board will approve those from (title of responsible official), Federal investments that are not routinely provided goals as ‘‘outstanding.’’ Reserve Bank of llll (address) an by private investors; (3) Rating. The Board assesses the announcement of applications covered by the (ii) No use of innovative or complex performance of a bank operating under an CRA filed by bank holding companies. qualified investments, community approved plan to determine if the bank has (b) Notice for branch offices. development loans, or community met its plan goals: development services; and (i) If the bank substantially achieves its Community Reinvestment Act Notice (iii) Very poor responsiveness to credit and plan goals for a satisfactory rating, the Board Under the Federal Community community development needs in its will rate the bank’s performance under the Reinvestment Act (CRA), the Federal Reserve assessment area(s). plan as ‘‘satisfactory.’’ Board (Board) evaluates our record of helping (d) Banks evaluated under the small bank (ii) If the bank exceeds its plan goals for to meet the credit needs of this community performance standards. The Board rates the a satisfactory rating and substantially consistent with safe and sound operations. performance of each bank evaluated under achieves its plan goals for an outstanding The Board also takes this record into account the small bank performance standards as rating, the Board will rate the bank’s when deciding on certain applications follows. performance under the plan as submitted by us. (1) Eligibility for a satisfactory rating. The ‘‘outstanding.’’ Your involvement is encouraged. Board rates a bank’s performance (iii) If the bank fails to meet substantially You are entitled to certain information ‘‘satisfactory’’ if, in general, the bank its plan goals for a satisfactory rating, the about our operations and our performance demonstrates: Board will rate the bank as either ‘‘needs to under the CRA. You may review today the (i) A reasonable loan-to-deposit ratio improve’’ or ‘‘substantial noncompliance,’’ public section of our most recent CRA (considering seasonal variations) given the depending on the extent to which it falls evaluation, prepared by the Federal Reserve bank’s size, financial condition, the credit short of its plan goals, unless the bank Bank of llll (address), and a list of needs of its assessment area(s), and taking elected in its plan to be rated otherwise, as services provided at this branch. You may into account, as appropriate, lending-related provided in § 228.27(f)(4). also have access to the following additional activities such as loan originations for sale to information, which we will make available to the secondary markets and community Appendix B to Part 228—CRA Notice you at this branch within five calendar days development loans and qualified (a) Notice for main offices and, if an after you make a request to us: (1) a map investments; interstate bank, one branch office in each showing the assessment area containing this (ii) A majority of its loans and, as state. branch, which is the area in which the Board appropriate, other lending-related activities evaluates our CRA performance in this are in its assessment area(s); Community Reinvestment Act Notice community; (2) information about our (iii) A distribution of loans to and, as Under the Federal Community branches in this assessment area; (3) a list of appropriate, other lending related-activities Reinvestment Act (CRA), the Federal Reserve services we provide at those locations; (4) for individuals of different income levels Board (Board) evaluates our record of helping data on our lending performance in this (including low- and moderate-income to meet the credit needs of this community assessment area; and (5) copies of all written individuals) and businesses and farms of consistent with safe and sound operations. comments received by us that specifically different sizes that is reasonable given the The Board also takes this record into account relate to our CRA performance in this demographics of the bank’s assessment when deciding on certain applications assessment area, and any responses we have area(s); submitted by us. made to those comments. If we are operating (iv) A record of taking appropriate action, Your involvement is encouraged. under an approved strategic plan, you may as warranted, in response to written You are entitled to certain information also have access to a copy of the plan. complaints, if any, about the bank’s about our operations and our performance [If you would like to review information performance in helping to meet the credit under the CRA, including, for example, about our CRA performance in other needs of its assessment area(s); and information about our branches, such as their communities served by us, the public file for (v) A reasonable geographic distribution of location and services provided at them; the our entire bank is available at (name of office loans given the bank’s assessment area(s). public section of our most recent CRA located in state), located at (address).] (2) Eligibility for an outstanding rating. A Performance Evaluation, prepared by the At least 30 days before the beginning of bank that meets each of the standards for a Federal Reserve Bank of llll (Reserve each quarter, the Federal Reserve System ‘‘satisfactory’’ rating under this paragraph Bank); and comments received from the publishes a list of the banks that are and exceeds some or all of those standards public relating to our performance in helping scheduled for CRA examination by the may warrant consideration for an overall to meet community credit needs, as well as Reserve Bank in that quarter. This list is rating of ‘‘outstanding.’’ In assessing whether our responses to those comments. You may available from (title of responsible official), a bank’s performance is ‘‘outstanding,’’ the review this information today. Federal Reserve Bank of llll (address). Board considers the extent to which the bank At least 30 days before the beginning of You may send written comments about our exceeds each of the performance standards each quarter, the Federal Reserve System performance in helping to meet community for a ‘‘satisfactory’’ rating and its publishes a list of the banks that are credit needs to (name and address of official performance in making qualified investments scheduled for CRA examination by the at bank) and (title of responsible official), and its performance in providing branches Reserve Bank in that quarter. This list is Federal Reserve Bank of llll (address). and other services and delivery systems that available from (title of responsible official), Your letter, together with any response by us, enhance credit availability in its assessment Federal Reserve Bank of llll (address). will be considered by the Federal Reserve area(s). You may send written comments about our System in evaluating our CRA performance (3) Needs to improve or substantial performance in helping to meet community and may be made public. noncompliance ratings. A bank also may credit needs to (name and address of official You may ask to look at any comments receive a rating of ‘‘needs to improve’’ or at bank) and (title of responsible official), received by the Reserve Bank. You may also ‘‘substantial noncompliance’’ depending on Federal Reserve Bank of llll (address). request from the Reserve Bank an the degree to which its performance has Your letter, together with any response by us, announcement of our applications covered failed to meet the standards for a will be considered by the Federal Reserve by the CRA filed with the Reserve Bank. We ‘‘satisfactory’’ rating. System in evaluating our CRA performance are an affiliate of (name of holding company), (e) Strategic plan assessment and rating— and may be made public. a bank holding company. You may request (1) Satisfactory goals. The Board approves as You may ask to look at any comments from (title of responsible official), Federal ‘‘satisfactory’’ measurable goals that received by the Reserve Bank. You may also Reserve Bank of llll (address) an Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22201 announcement of applications covered by the Subpart DÐTransition Rules located within the United States. The CRA filed by bank holding companies. 345.51 Transition rules. ‘‘assessment area’’ of an insured State branch is the community or §§ 228.1, 228.2, 228.8, and 228.100 Appendix A to Part 345—Ratings [Removed] communities located within the United Appendix B to Part 345—CRA Notice States served by the branch as described 3. Sections 228.1, 228.2, 228.8, and in § 345.41. 228.100 are removed effective July 1, Subpart AÐGeneral (3) Certain special purpose banks. 1995. § 345.11 Authority, purposes, and scope. This part does not apply to special purpose banks that do not perform §§ 228.3, 228.4, 228.5, 228.6, and 228.7, and (a) Authority and OMB control commercial or retail banking services by Subpart D [Removed] number—(1) Authority. The authority granting credit to the public in the for this part is 12 U.S.C. 1814–1817, 4. Sections 228.3, 228.4, 228.5, 228.6, ordinary course of business, other than 1819–1820, 1828, 1831u and 2901– and 228.7, and Subpart D, consisting of as incident to their specialized 2907, 3103–3104, and 3108(a). § 228.51 are removed effective July 1, operations. These banks include (2) OMB control number. The 1997. banker’s banks, as defined in 12 U.S.C. information collection requirements 24 (Seventh), and banks that engage By order of the Board of Governors of the contained in this part were approved by Federal Reserve System, April 24, 1995. only in one or more of the following the Office of Management and Budget activities: providing cash management Jennifer J. Johnson, under the provisions of 44 U.S.C. 3501 controlled disbursement services or Deputy Secretary of the Board. et seq. and have been assigned OMB serving as correspondent banks, trust control number 3064–0092. Federal Deposit Insurance Corporation (b) Purposes. In enacting the companies, or clearing agents. 12 CFR Chapter III Community Reinvestment Act (CRA), § 345.12 Definitions. the Congress required each appropriate For purposes of this part, the For the reasons outlined in the joint Federal financial supervisory agency to following definitions apply: preamble, the Board of Directors of the assess an institution’s record of helping (a) Affiliate means any company that Federal Deposit Insurance Corporation to meet the credit needs of the local controls, is controlled by, or is under amends 12 CFR chapter III as set forth communities in which the institution is common control with another company. below: chartered, consistent with the safe and The term ‘‘control’’ has the meaning sound operation of the institution, and given to that term in 12 U.S.C. PART 345ÐCOMMUNITY to take this record into account in the REINVESTMENT 1841(a)(2), and a company is under agency’s evaluation of an application for common control with another company a deposit facility by the institution. This 1. The authority citation for part 345 if both companies are directly or part is intended to carry out the is revised to read as follows: indirectly controlled by the same purposes of the CRA by: company. Authority: 12 U.S.C. 1814–1817, 1819– (1) Establishing the framework and (b) Area median income means: 1820, 1828, 1831u and 2901–2907, 3103– criteria by which the Federal Deposit (1) The median family income for the 3104, and 3108(a). Insurance Corporation (FDIC) assesses a MSA, if a person or geography is located 2. Part 345 is amended by adding bank’s record of helping to meet the in an MSA; or Subparts A through D and Appendices credit needs of its entire community, (2) The statewide nonmetropolitan A and B to read as follows: including low- and moderate-income median family income, if a person or neighborhoods, consistent with the safe geography is located outside an MSA. Subpart AÐGeneral and sound operation of the bank; and (c) Assessment area means a Sec. (2) Providing that the FDIC takes that geographic area delineated in 345.11 Authority, purposes, and scope. record into account in considering accordance with § 345.41. 345.12 Definitions. certain applications. (d) Remote Service Facility (RSF) Subpart BÐStandards for Assessing (c) Scope—(1) General. Except for means an automated, unstaffed banking Performance certain special purpose banks described facility owned or operated by, or 345.21 Performance tests, standards, and in paragraph (c)(3) of this section, this operated exclusively for, the bank, such ratings, in general. part applies to all insured State as an automated teller machine, cash 345.22 Lending test. nonmember banks, including insured dispensing machine, point-of-sale 345.23 Investment test. State branches as described in terminal, or other remote electronic 345.24 Service test. paragraph (c)(2) and any uninsured facility, at which deposits are received, 345.25 Community development test for State branch that results from an cash dispersed, or money lent. wholesale or limited purpose banks. acquisition described in section 5(a)(8) (e) Bank means a State nonmember 345.26 Small bank performance standards. of the International Banking Act of 1978 bank, as that term is defined in section 345.27 Strategic plan. 345.28 Assigned ratings. (12 U.S.C. 3103(a)(8)). 3(e)(2) of the Federal Deposit Insurance 345.29 Effect of CRA performance on (2) Insured State branches. Insured Act, as amended (FDIA) (12 U.S.C. applications. State branches are branches of a foreign 1813(e)(2)), with Federally insured bank established and operating under deposits, except as provided in Subpart CÐRecords, Reporting, and the laws of any State, the deposits of Disclosure Requirements § 345.11(c). The term bank also includes which are insured in accordance with an insured State branch as defined in 345.41 Assessment area delineation. the provisions of the Federal Deposit § 345.11(c). 345.42 Data collection, reporting, and Insurance Act. In the case of insured (f) Branch means a staffed banking disclosure. 345.43 Content and availability of public State branches, references in this part to facility authorized as a branch, whether file. ‘‘main office’’ mean the principal shared or unshared, including, for 345.44 Public notice by banks. branch within the United States and the example, a mini-branch in a grocery 345.45 Publication of planned examination term ‘‘branch’’ or ‘‘branches’’ refers to store or a branch operated in schedule. any insured State branch or branches conjunction with any other local 22202 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations business or nonprofit organization. The (3) Home equity loan, which is a metropolitan statistical area as defined term ‘‘branch’’ only includes a consumer loan secured by a residence of by the Director of the Office of ‘‘domestic branch’’ as that term is the borrower; Management and Budget. defined in section 3(o) of the FDIA (12 (4) Other secured consumer loan, (s) Qualified investment means a U.S.C. 1813(o)). which is a secured consumer loan that lawful investment, deposit, membership (g) CMSA means a consolidated is not included in one of the other share, or grant that has as its primary metropolitan statistical area as defined categories of consumer loans; and purpose community development. by the Director of the Office of (5) Other unsecured consumer loan, (t) Small bank means a bank that, as Management and Budget. which is an unsecured consumer loan of December 31 of either of the prior two (h) Community development means: that is not included in one of the other calendar years, had total assets of less (1) Affordable housing (including categories of consumer loans. than $250 million and was independent multifamily rental housing) for low- or (l) Geography means a census tract or or an affiliate of a holding company moderate-income individuals; a block numbering area delineated by that, as of December 31 of either of the (2) Community services targeted to the United States Bureau of the Census prior two calendar years, had total low- or moderate-income individuals; in the most recent decennial census. banking and thrift assets of less than $1 (m) Home mortgage loan means a (3) Activities that promote economic billion. ‘‘home improvement loan’’ or a ‘‘home development by financing businesses or (u) Small business loan means a loan purchase loan’’ as defined in § 203.2 of included in ‘‘loans to small businesses’’ farms that meet the size eligibility this title. as defined in the instructions for standards of 13 CFR 121.802(a)(2) or (n) Income level includes: preparation of the Consolidated Report have gross annual revenues of $1 (1) Low-income, which means an of Condition and Income. million or less; or individual income that is less than 50 (v) Small farm loan means a loan (4) Activities that revitalize or percent of the area median income or a included in ‘‘loans to small farms’’ as stabilize low- or moderate-income median family income that is less than defined in the instructions for geographies. 50 percent in the case of a geography. preparation of the Consolidated Report (i) Community development loan (2) Moderate-income, which means an of Condition and Income. means a loan that: individual income that is at least 50 (w) Wholesale bank means a bank that (1) Has as its primary purpose percent and less than 80 percent of the is not in the business of extending home community development; and area median income or a median family mortgage, small business, small farm, or (2) Except in the case of a wholesale income that is at least 50 and less than consumer loans to retail customers, and or limited purpose bank: 80 percent in the case of a geography. for which a designation as a wholesale (i) Has not been reported or collected (3) Middle-income, which means an bank is in effect, in accordance with by the bank or an affiliate for individual income that is at least 80 § 345.25(b). consideration in the bank’s assessment percent and less than 120 percent of the as a home mortgage, small business, area median income or a median family Subpart BÐStandards for Assessing small farm, or consumer loan, unless it income that is at least 80 and less than Performance is a multifamily dwelling loan (as 120 percent in the case of a geography. (4) Upper-income, which means an § 345.21 Performance tests, standards, described in Appendix A to Part 203 of and ratings, in general. this title); and individual income that is 120 percent or (ii) Benefits the bank’s assessment more of the area median income or a (a) Performance tests and standards. area(s) or a broader statewide or regional median family income that is 120 The FDIC assesses the CRA performance of a bank in an examination as follows: area that includes the bank’s assessment percent or more in the case of a (1) Lending, investment, and service area(s). geography. (o) Limited purpose bank means a tests. The FDIC applies the lending, (j) Community development service investment, and service tests, as means a service that: bank that offers only a narrow product line (such as credit card or motor provided in §§ 345.22 through 345.24, (1) Has as its primary purpose in evaluating the performance of a bank, community development; vehicle loans) to a regional or broader market and for which a designation as except as provided in paragraphs (a)(2), (2) Is related to the provision of (a)(3), and (a)(4) of this section. financial services; and a limited purpose bank is in effect, in accordance with § 345.25(b). (2) Community development test for (3) Has not been considered in the wholesale or limited purpose banks. The evaluation of the bank’s retail banking (p) Loan location. A loan is located as follows: FDIC applies the community services under § 345.24(d). (1) A consumer loan is located in the development test for a wholesale or (k) Consumer loan means a loan to geography where the borrower resides; limited purpose bank, as provided in one or more individuals for household, (2) A home mortgage loan is located § 345.25, except as provided in family, or other personal expenditures. in the geography where the property to paragraph (a)(4) of this section. A consumer loan does not include a which the loan relates is located; and (3) Small bank performance home mortgage, small business, or small (3) A small business or small farm standards. The FDIC applies the small farm loan. Consumer loans include the loan is located in the geography where bank performance standards as provided following categories of loans: the main business facility or farm is in § 345.26 in evaluating the (1) Motor vehicle loan, which is a located or where the loan proceeds performance of a small bank or a bank consumer loan extended for the otherwise will be applied, as indicated that was a small bank during the prior purchase of and secured by a motor by the borrower. calendar year, unless the bank elects to vehicle; (q) Loan production office means a be assessed as provided in paragraphs (2) Credit card loan, which is a line staffed facility, other than a branch, that (a)(1), (a)(2), or (a)(4) of this section. The of credit for household, family, or other is open to the public and that provides bank may elect to be assessed as personal expenditures that is accessed lending-related services, such as loan provided in paragraph (a)(1) of this by a borrower’s use of a ‘‘credit card,’’ information and applications. section only if it collects and reports the as this term is defined in § 226.2 of this (r) MSA means a metropolitan data required for other banks under title; statistical area or a primary § 345.42. Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22203

(4) Strategic plan. The FDIC evaluates encouraged to develop and apply (3) Borrower characteristics. The the performance of a bank under a flexible underwriting standards for distribution, particularly in the bank’s strategic plan if the bank submits, and loans that benefit low- or moderate- assessment area(s), of the bank’s home the FDIC approves, a strategic plan as income geographies or individuals, only mortgage, small business, small farm, provided in § 345.27. if consistent with safe and sound and consumer loans, if applicable, based (b) Performance context. The FDIC operations. on borrower characteristics, including applies the tests and standards in the number and amount of: paragraph (a) of this section and also § 345.22 Lending test. (i) Home mortgage loans to low-, considers whether to approve a (a) Scope of test. (1) The lending test moderate-, middle-, and upper-income proposed strategic plan in the context evaluates a bank’s record of helping to individuals; of: meet the credit needs of its assessment (ii) Small business and small farm (1) Demographic data on median area(s) through its lending activities by loans to businesses and farms with gross income levels, distribution of household considering a bank’s home mortgage, annual revenues of $1 million or less; income, nature of housing stock, small business, small farm, and (iii) Small business and small farm housing costs, and other relevant data community development lending. If loans by loan amount at origination; and pertaining to a bank’s assessment consumer lending constitutes a (iv) Consumer loans, if applicable, to area(s); substantial majority of a bank’s low-, moderate-, middle-, and upper- (2) Any information about lending, business, the FDIC will evaluate the income individuals; investment, and service opportunities in bank’s consumer lending in one or more (4) Community development lending. the bank’s assessment area(s) of the following categories: motor The bank’s community development maintained by the bank or obtained vehicle, credit card, home equity, other lending, including the number and from community organizations, state, secured, and other unsecured loans. In amount of community development local, and tribal governments, economic addition, at a bank’s option, the FDIC loans, and their complexity and development agencies, or other sources; will evaluate one or more categories of innovativeness; and (3) The bank’s product offerings and consumer lending, if the bank has (5) Innovative or flexible lending business strategy as determined from collected and maintained, as required in practices. The bank’s use of innovative data provided by the bank; § 345.42(c)(1), the data for each category or flexible lending practices in a safe (4) Institutional capacity and that the bank elects to have the FDIC and sound manner to address the credit constraints, including the size and evaluate. needs of low- or moderate-income financial condition of the bank, the (2) The FDIC considers originations individuals or geographies. economic climate (national, regional, and purchases of loans. The FDIC will (c) Affiliate lending. (1) At a bank’s and local), safety and soundness also consider any other loan data the option, the FDIC will consider loans by limitations, and any other factors that bank may choose to provide, including an affiliate of the bank, if the bank significantly affect the bank’s ability to data on loans outstanding, commitments provides data on the affiliate’s loans provide lending, investments, or and letters of credit. pursuant to § 345.42. services in its assessment area(s); (3) A bank may ask the FDIC to (2) The FDIC considers affiliate (5) The bank’s past performance and consider loans originated or purchased the performance of similarly situated lending subject to the following by consortia in which the bank constraints: lenders; participates or by third parties in which (6) The bank’s public file, as (i) No affiliate may claim a loan the bank has invested only if the loans described in § 345.43, and any written origination or loan purchase if another meet the definition of community comments about the bank’s CRA institution claims the same loan development loans and only in performance submitted to the bank or origination or purchase; and accordance with paragraph (d) of this the FDIC; and (ii) If a bank elects to have the FDIC (7) Any other information deemed section. The FDIC will not consider consider loans within a particular relevant by the FDIC. these loans under any criterion of the lending category made by one or more (c) Assigned ratings. The FDIC assigns lending test except the community of the bank’s affiliates in a particular to a bank one of the following four development lending criterion. assessment area, the bank shall elect to ratings pursuant to § 345.28 and (b) Performance criteria. The FDIC have the FDIC consider, in accordance Appendix A of this part: ‘‘outstanding’’; evaluates a bank’s lending performance with paragraph (c)(1) of this section, all ‘‘satisfactory’’; ‘‘needs to improve’’; or pursuant to the following criteria: the loans within that lending category in ‘‘substantial noncompliance’’ as (1) Lending activity. The number and that particular assessment area made by provided in 12 U.S.C. 2906(b)(2). The amount of the bank’s home mortgage, all of the bank’s affiliates. rating assigned by the FDIC reflects the small business, small farm, and (3) The FDIC does not consider bank’s record of helping to meet the consumer loans, if applicable, in the affiliate lending in assessing a bank’s credit needs of its entire community, bank’s assessment area(s); performance under paragraph (b)(2)(i) of including low- and moderate-income (2) Geographic distribution. The this section. neighborhoods, consistent with the safe geographic distribution of the bank’s (d) Lending by a consortium or a third and sound operation of the bank. home mortgage, small business, small party. Community development loans (d) Safe and sound operations. This farm, and consumer loans, if applicable, originated or purchased by a consortium part and the CRA do not require a bank based on the loan location, including: in which the bank participates or by a to make loans or investments or to (i) The proportion of the bank’s third party in which the bank has provide services that are inconsistent lending in the bank’s assessment area(s); invested: with safe and sound operations. To the (ii) The dispersion of lending in the (1) Will be considered, at the bank’s contrary, the FDIC anticipates banks can bank’s assessment area(s); and option, if the bank reports the data meet the standards of this part with safe (iii) The number and amount of loans pertaining to these loans under and sound loans, investments, and in low-, moderate-, middle-, and upper- § 345.42(b)(2); and services on which the banks expect to income geographies in the bank’s (2) May be allocated among make a profit. Banks are permitted and assessment area(s); participants or investors, as they choose, 22204 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations for purposes of the lending test, except delivering retail banking services and community development test through that no participant or investor: the extent and innovativeness of its its community development lending, (i) May claim a loan origination or community development services. qualified investments, or community loan purchase if another participant or (b) Area(s) benefited. Community development services. investor claims the same loan development services must benefit a (b) Designation as a wholesale or origination or purchase; or bank’s assessment area(s) or a broader limited purpose bank. In order to (ii) May claim loans accounting for statewide or regional area that includes receive a designation as a wholesale or more than its percentage share (based on the bank’s assessment area(s). limited purpose bank, a bank shall file the level of its participation or (c) Affiliate service. At a bank’s a request, in writing, with the FDIC, at investment) of the total loans originated option, the FDIC will consider, in its least three months prior to the proposed by the consortium or third party. assessment of a bank’s service effective date of the designation. If the (e) Lending performance rating. The performance, a community development FDIC approves the designation, it FDIC rates a bank’s lending performance service provided by an affiliate of the remains in effect until the bank requests as provided in Appendix A of this part. bank, if the community development revocation of the designation or until service is not claimed by any other one year after the FDIC notifies the bank § 345.23 Investment test. institution. that the FDIC has revoked the (a) Scope of test. The investment test (d) Performance criteria—retail designation on its own initiative. evaluates a bank’s record of helping to banking services. The FDIC evaluates (c) Performance criteria. The FDIC meet the credit needs of its assessment the availability and effectiveness of a evaluates the community development area(s) through qualified investments bank’s systems for delivering retail performance of a wholesale or limited that benefit its assessment area(s) or a banking services, pursuant to the purpose bank pursuant to the following broader statewide or regional area that following criteria: criteria: includes the bank’s assessment area(s). (1) The current distribution of the (1) The number and amount of (b) Exclusion. Activities considered bank’s branches among low-, community development loans under the lending or service tests may moderate-, middle-, and upper-income (including originations and purchases of not be considered under the investment geographies; loans and other community test. (2) In the context of its current development loan data provided by the (c) Affiliate investment. At a bank’s distribution of the bank’s branches, the bank, such as data on loans outstanding, option, the FDIC will consider, in its bank’s record of opening and closing commitments, and letters of credit), assessment of a bank’s investment branches, particularly branches located qualified investments, or community performance, a qualified investment in low- or moderate-income geographies development services; made by an affiliate of the bank, if the or primarily serving low- or moderate- (2) The use of innovative or complex qualified investment is not claimed by income individuals; qualified investments, community any other institution. (3) The availability and effectiveness development loans, or community (d) Disposition of branch premises. of alternative systems for delivering development services and the extent to Donating, selling on favorable terms, or retail banking services (e.g., RSFs, RSFs which the investments are not routinely making available on a rent-free basis a not owned or operated by or exclusively provided by private investors; and branch of the bank that is located in a for the bank, banking by telephone or (3) The bank’s responsiveness to predominantly minority neighborhood computer, loan production offices, and credit and community development to a minority depository institution or bank-at-work or bank-by-mail programs) needs. women’s depository institution (as these in low- and moderate-income (d) Indirect activities. At a bank’s terms are defined in 12 U.S.C. 2907(b)) geographies and to low- and moderate- option, the FDIC will consider in its will be considered as a qualified income individuals; and community development performance investment. (4) The range of services provided in assessment: (e) Performance criteria. The FDIC low-, moderate-, middle-, and upper- (1) Qualified investments or evaluates the investment performance of income geographies and the degree to community development services a bank pursuant to the following which the services are tailored to meet provided by an affiliate of the bank, if criteria: the needs of those geographies. the investments or services are not (1) The dollar amount of qualified (e) Performance criteria—community claimed by any other institution; and investments; development services. The FDIC (2) Community development lending (2) The innovativeness or complexity evaluates community development by affiliates, consortia and third parties, of qualified investments; services pursuant to the following subject to the requirements and (3) The responsiveness of qualified criteria: investments to credit and community (1) The extent to which the bank limitations in § 345.22 (c) and (d). development needs; and provides community development (e) Benefit to assessment area(s)—(1) (4) The degree to which the qualified services; and Benefit inside assessment area(s). The investments are not routinely provided (2) The innovativeness and FDIC considers all qualified by private investors. responsiveness of community investments, community development (f) Investment performance rating. development services. loans, and community development The FDIC rates a bank’s investment (f) Service performance rating. The services that benefit areas within the performance as provided in Appendix A FDIC rates a bank’s service performance bank’s assessment area(s) or a broader of this part. as provided in Appendix A of this part. statewide or regional area that includes the bank’s assessment area(s). § 345.24 Service test. § 345.25 Community development test for (2) Benefit outside assessment area(s). (a) Scope of test. The service test wholesale or limited purpose banks. The FDIC considers the qualified evaluates a bank’s record of helping to (a) Scope of test. The FDIC assesses a investments, community development meet the credit needs of its assessment wholesale or limited purpose bank’s loans, and community development area(s) by analyzing both the availability record of helping to meet the credit services that benefit areas outside the and effectiveness of a bank’s systems for needs of its assessment area(s) under the bank’s assessment area(s), if the bank Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22205 has adequately addressed the needs of assessment areas or one or more plans the FDIC on a confidential basis, but the its assessment area(s). for one or more of its assessment areas. goals stated in the plan must be (f) Community development (3) Treatment of affiliates. Affiliated sufficiently specific to enable the public performance rating. The FDIC rates a institutions may prepare a joint plan if and the FDIC to judge the merits of the bank’s community development the plan provides measurable goals for plan. performance as provided in Appendix A each institution. Activities may be (3) Satisfactory and outstanding goals. of this part. allocated among institutions at the A bank shall specify in its plan institutions’ option, provided that the measurable goals that constitute § 345.26 Small bank performance same activities are not considered for ‘‘satisfactory’’ performance. A plan may standards. more than one institution. specify measurable goals that constitute (a) Performance criteria. The FDIC (d) Public participation in plan ‘‘outstanding’’ performance. If a bank evaluates the record of a small bank, or development. Before submitting a plan submits, and the FDIC approves, both a bank that was a small bank during the to the FDIC for approval, a bank shall: ‘‘satisfactory’’ and ‘‘outstanding’’ prior calendar year, of helping to meet (1) Informally seek suggestions from performance goals, the FDIC will the credit needs of its assessment area(s) members of the public in its assessment consider the bank eligible for an pursuant to the following criteria: area(s) covered by the plan while ‘‘outstanding’’ performance rating. (1) The bank’s loan-to-deposit ratio, developing the plan; (4) Election if satisfactory goals not adjusted for seasonal variation and, as (2) Once the bank has developed a substantially met. A bank may elect in appropriate, other lending-related plan, formally solicit public comment its plan that, if the bank fails to meet activities, such as loan originations for on the plan for at least 30 days by substantially its plan goals for a sale to the secondary markets, publishing notice in at least one satisfactory rating, the FDIC will community development loans, or newspaper of general circulation in each evaluate the bank’s performance under qualified investments; assessment area covered by the plan; the lending, investment, and service (2) The percentage of loans and, as and tests, the community development test, appropriate, other lending-related (3) During the period of formal public or the small bank performance activities located in the bank’s comment, make copies of the plan standards, as appropriate. assessment area(s); available for review by the public at no (g) Plan approval—(1) Timing. The (3) The bank’s record of lending to cost at all offices of the bank in any FDIC will act upon a plan within 60 and, as appropriate, engaging in other assessment area covered by the plan and calendar days after the FDIC receives lending-related activities for borrowers provide copies of the plan upon request the complete plan and other material of different income levels and for a reasonable fee to cover copying required under paragraph (d) of this businesses and farms of different sizes; and mailing, if applicable. section. If the FDIC fails to act within (4) The geographic distribution of the (e) Submission of plan. The bank shall this time period, the plan shall be bank’s loans; and submit its plan to the FDIC at least three deemed approved unless the FDIC (5) The bank’s record of taking action, months prior to the proposed effective extends the review period for good if warranted, in response to written date of the plan. The bank shall also cause. complaints about its performance in submit with its plan a description of its (2) Public participation. In evaluating helping to meet credit needs in its informal efforts to seek suggestions from the plan’s goals, the FDIC considers the assessment area(s). members of the public, any written public’s involvement in formulating the (b) Small bank performance rating. public comment received, and, if the plan, written public comment on the The FDIC rates the performance of a plan was revised in light of the plan, and any response by the bank to bank evaluated under this section as comment received, the initial plan as public comment on the plan. provided in Appendix A of this part. released for public comment. (3) Criteria for evaluating plan. The (f) Plan content—(1) Measurable FDIC evaluates a plan’s measurable § 345.27 Strategic plan. goals. (i) A bank shall specify in its plan goals using the following criteria, as (a) Alternative election. The FDIC will measurable goals for helping to meet the appropriate: assess a bank’s record of helping to meet credit needs of each assessment area (i) The extent and breadth of lending the credit needs of its assessment area(s) covered by the plan, particularly the or lending-related activities, including, under a strategic plan if: needs of low- and moderate-income as appropriate, the distribution of loans (1) The bank has submitted the plan geographies and low- and moderate- among different geographies, businesses to the FDIC as provided for in this income individuals, through lending, and farms of different sizes, and section; investment, and services, as individuals of different income levels, (2) The FDIC has approved the plan; appropriate. the extent of community development (3) The plan is in effect; and (ii) A bank shall address in its plan all lending, and the use of innovative or (4) The bank has been operating under three performance categories and, flexible lending practices to address an approved plan for at least one year. unless the bank has been designated as credit needs; (b) Data reporting. The FDIC’s a wholesale or limited purpose bank, (ii) The amount and innovativeness, approval of a plan does not affect the shall emphasize lending and lending- complexity, and responsiveness of the bank’s obligation, if any, to report data related activities. Nevertheless, a bank’s qualified investments; and as required by § 345.42. different emphasis, including a focus on (iii) The availability and effectiveness (c) Plans in general—(1) Term. A plan one or more performance categories, of the bank’s systems for delivering may have a term of no more than five may be appropriate if responsive to the retail banking services and the extent years, and any multi-year plan must characteristics and credit needs of its and innovativeness of the bank’s include annual interim measurable assessment area(s), considering public community development services. goals under which the FDIC will comment and the bank’s capacity and (h) Plan amendment. During the term evaluate the bank’s performance. constraints, product offerings, and of a plan, a bank may request the FDIC (2) Multiple assessment areas. A bank business strategy. to approve an amendment to the plan on with more than one assessment area (2) Confidential information. A bank grounds that there has been a material may prepare a single plan for all of its may submit additional information to change in circumstances. The bank shall 22206 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations develop an amendment to a previously (3) The merger, consolidation, branches, and its deposit-taking RSFs, approved plan in accordance with the acquisition of assets, or assumption of as well as the surrounding geographies public participation requirements of liabilities; and in which the bank has originated or paragraph (c) of this section. (4) Deposit insurance for a newly purchased a substantial portion of its (i) Plan assessment. The FDIC chartered financial institution. loans (including home mortgage loans, approves the goals and assesses (b) New financial institutions. A small business and small farm loans, performance under a plan as provided newly chartered financial institution and any other loans the bank chooses, for in Appendix A of this part. shall submit with its application for such as those consumer loans on which deposit insurance a description of how § 345.28 Assigned ratings. the bank elects to have its performance it will meet its CRA objectives. The assessed). (a) Ratings in general. Subject to FDIC takes the description into account (d) Adjustments to geographic area(s). paragraphs (b) and (c) of this section, in considering the application and may A bank may adjust the boundaries of its the FDIC assigns to a bank a rating of deny or condition approval on that assessment area(s) to include only the ‘‘outstanding,’’ ‘‘satisfactory,’’ ‘‘needs to basis. portion of a political subdivision that it improve,’’ or ‘‘substantial (c) Interested parties. The FDIC takes reasonably can be expected to serve. An noncompliance’’ based on the bank’s into account any views expressed by adjustment is particularly appropriate in performance under the lending, interested parties that are submitted in the case of an assessment area that investment and service tests, the accordance with the FDIC’s procedures otherwise would be extremely large, of community development test, the small set forth in part 303 of this chapter in unusual configuration, or divided by bank performance standards, or an considering CRA performance in an significant geographic barriers. approved strategic plan, as applicable. application listed in paragraphs (a) and (e) Limitations on the delineation of (b) Lending, investment, and service (b) of this section. an assessment area. Each bank’s tests. The FDIC assigns a rating for a (d) Denial or conditional approval of assessment area(s): bank assessed under the lending, application. A bank’s record of (1) Must consist only of whole investment, and service tests in performance may be the basis for geographies; accordance with the following denying or conditioning approval of an (2) May not reflect illegal principles: application listed in paragraph (a) of discrimination; (1) A bank that receives an (3) May not arbitrarily exclude low- or ‘‘outstanding’’ rating on the lending test this section. moderate-income geographies, taking receives an assigned rating of at least Subpart CÐRecords, Reporting, and into account the bank’s size and ‘‘satisfactory’’; Disclosure Requirements (2) A bank that receives an financial condition; and (4) May not extend substantially ‘‘outstanding’’ rating on both the service § 345.41 Assessment area delineation. beyond a CMSA boundary or beyond a test and the investment test and a rating (a) In general. A bank shall delineate state boundary unless the assessment of at least ‘‘high satisfactory’’ on the one or more assessment areas within area is located in a multistate MSA. If lending test receives an assigned rating which the FDIC evaluates the bank’s a bank serves a geographic area that of ‘‘outstanding’’; and record of helping to meet the credit (3) No bank may receive an assigned extends substantially beyond a state needs of its community. The FDIC does boundary, the bank shall delineate rating of ‘‘satisfactory’’ or higher unless not evaluate the bank’s delineation of its it receives a rating of at least ‘‘low separate assessment areas for the areas assessment area(s) as a separate in each state. If a bank serves a satisfactory’’ on the lending test. performance criterion, but the FDIC (c) Effect of evidence of geographic area that extends reviews the delineation for compliance discriminatory or other illegal credit substantially beyond a CMSA boundary, with the requirements of this section. the bank shall delineate separate practices. Evidence of discriminatory or (b) Geographic area(s) for wholesale other illegal credit practices adversely assessment areas for the areas inside or limited purpose banks. The affects the FDIC’s evaluation of a bank’s and outside the CMSA. assessment area(s) for a wholesale or performance. In determining the effect (f) Banks serving military personnel. limited purpose bank must consist on the bank’s assigned rating, the FDIC Notwithstanding the requirements of generally of one or more MSAs (using considers the nature and extent of the this section, a bank whose business the MSA boundaries that were in effect evidence, the policies and procedures predominantly consists of serving the as of January 1 of the calendar year in that the bank has in place to prevent needs of military personnel or their which the delineation is made) or one discriminatory or other illegal credit dependents who are not located within or more contiguous political practices, any corrective action that the a defined geographic area may delineate subdivisions, such as counties, cities, or bank has taken or has committed to its entire deposit customer base as its towns, in which the bank has its main take, particularly voluntary corrective assessment area. action resulting from self-assessment, office, branches, and deposit-taking (g) Use of assessment area(s). The and other relevant information. RSFs. FDIC uses the assessment area(s) (c) Geographic area(s) for other banks. delineated by a bank in its evaluation of § 345.29 Effect of CRA performance on The assessment area(s) for a bank other the bank’s CRA performance unless the applications. than a wholesale or limited purpose FDIC determines that the assessment (a) CRA performance. Among other bank must: area(s) do not comply with the factors, the FDIC takes into account the (1) Consist generally of one or more requirements of this section. record of performance under the CRA of MSAs (using the MSA boundaries that each applicant bank in considering an were in effect as of January 1 of the § 345.42 Data collection, reporting, and application for approval of: calendar year in which the delineation disclosure. (1) The establishment of a domestic is made) or one or more contiguous (a) Loan information required to be branch or other facility with the ability political subdivisions, such as counties, collected and maintained. A bank, to accept deposits; cities, or towns; and except a small bank, shall collect, and (2) The relocation of the bank’s main (2) Include the geographies in which maintain in machine readable form (as office or a branch; the bank has its main office, its prescribed by the FDIC) until the Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22207 completion of its next CRA (i) A unique number or alpha-numeric as originated or purchased located in examination, the following data for each symbol that can be used to identify the low-, moderate-, middle-, and upper- small business or small farm loan relevant loan file; income geographies; originated or purchased by the bank: (ii) The loan amount at origination or (ii) A list grouping each geography (1) A unique number or alpha- purchase; according to whether the geography is numeric symbol that can be used to (iii) The loan location; and low-, moderate-, middle-, or upper- identify the relevant loan file; (iv) The gross annual income of the income; (2) The loan amount at origination; borrower that the bank considered in (iii) A list showing each geography in making its credit decision. (3) The loan location; and which the bank reported a small (2) Other loan data. At its option, a business or small farm loan; and (4) An indicator whether the loan was bank may provide other information to a business or farm with gross annual (iv) The number and amount of small concerning its lending performance, business and small farm loans to revenues of $1 million or less. including additional loan distribution (b) Loan information required to be businesses and farms with gross annual data. revenues of $1 million or less; reported. A bank, except a small bank or (d) Data on affiliate lending. A bank (2) For each county (and for each a bank that was a small bank during the that elects to have the FDIC consider assessment area smaller than a county) prior calendar year, shall report loans by an affiliate, for purposes of the with a population in excess of 500,000 annually by March 1 to the FDIC in lending or community development test persons in which the bank reported a machine readable form (as prescribed by or an approved strategic plan, shall small business or small farm loan: the FDIC) the following data for the collect, maintain, and report for those (i) The number and amount of small prior calendar year: loans the data that the bank would have business and small farm loans reported (1) Small business and small farm collected, maintained, and reported as originated or purchased located in loan data. For each geography in which pursuant to paragraphs (a), (b), and (c) geographies with median income the bank originated or purchased a of this section had the loans been relative to the area median income of small business or small farm loan, the originated or purchased by the bank. For less than 10 percent, 10 or more but less aggregate number and amount of loans: home mortgage loans, the bank shall than 20 percent, 20 or more but less (i) With an amount at origination of also be prepared to identify the home than 30 percent, 30 or more but less $100,000 or less; mortgage loans reported under part 203 than 40 percent, 40 or more but less of this title by the affiliate. (ii) With an amount at origination of than 50 percent, 50 or more but less more than $100,000 but less than or (e) Data on lending by a consortium or a third party. A bank that elects to than 60 percent, 60 or more but less equal to $250,000; than 70 percent, 70 or more but less (iii) With an amount at origination of have the FDIC consider community development loans by a consortium or than 80 percent, 80 or more but less more than $250,000; and than 90 percent, 90 or more but less (iv) To businesses and farms with third party, for purposes of the lending or community development tests or an than 100 percent, 100 or more but less gross annual revenues of $1 million or than 110 percent, 110 or more but less less (using the revenues that the bank approved strategic plan, shall report for those loans the data that the bank would than 120 percent, and 120 percent or considered in making its credit more; decision); have reported under paragraph (b)(2) of this section had the loans been (ii) A list grouping each geography in (2) Community development loan originated or purchased by the bank. the county or assessment area according data. The aggregate number and (f) Small banks electing evaluation to whether the median income in the aggregate amount of community under the lending, investment, and geography relative to the area median development loans originated or service tests. A bank that qualifies for income is less than 10 percent, 10 or purchased; and evaluation under the small bank more but less than 20 percent, 20 or (3) Home mortgage loans. If the bank performance standards but elects more but less than 30 percent, 30 or is subject to reporting under part 203 of evaluation under the lending, more but less than 40 percent, 40 or this title, the location of each home investment, and service tests shall more but less than 50 percent, 50 or mortgage loan application, origination, collect, maintain, and report the data more but less than 60 percent, 60 or or purchase outside the MSAs in which required for other banks pursuant to more but less than 70 percent, 70 or the bank has a home or branch office (or paragraphs (a) and (b) of this section. more but less than 80 percent, 80 or outside any MSA) in accordance with (g) Assessment area data. A bank, more but less than 90 percent, 90 or the requirements of part 203 of this title. except a small bank or a bank that was more but less than 100 percent, 100 or (c) Optional data collection and a small bank during the prior calendar more but less than 110 percent, 110 or maintenance.—(1) Consumer loans. A year, shall collect and report to the FDIC more but less than 120 percent, and 120 bank may collect and maintain in by March 1 of each year a list for each percent or more; machine readable form (as prescribed by assessment area showing the (iii) A list showing each geography in the FDIC) data for consumer loans geographies within the area. which the bank reported a small originated or purchased by the bank for (h) CRA Disclosure Statement. The business or small farm loan; and consideration under the lending test. A FDIC prepares annually for each bank (iv) The number and amount of small bank may maintain data for one or more that reports data pursuant to this section business and small farm loans to of the following categories of consumer a CRA Disclosure Statement that businesses and farms with gross annual loans: motor vehicle, credit card, home contains, on a state-by-state basis: revenues of $1 million or less; equity, other secured, and other (1) For each county (and for each (3) The number and amount of small unsecured. If the bank maintains data assessment area smaller than a county) business and small farm loans located for loans in a certain category, it shall with a population of 500,000 persons or inside each assessment area reported by maintain data for all loans originated or fewer in which the bank reported a the bank and the number and amount of purchased within that category. The small business or small farm loan: small business and small farm loans bank shall maintain data separately for (i) The number and amount of small located outside the assessment area(s) each category, including for each loan: business and small farm loans reported reported by the bank; and 22208 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations

(4) The number and amount of (5) A list of services (including hours prior calendar year shall include in its community development loans reported of operation, available loan and deposit public file: as originated or purchased. products, and transaction fees) generally (i) The bank’s loan-to-deposit ratio for (i) Aggregate disclosure statements. offered at the bank’s branches and each quarter of the prior calendar year The FDIC, in conjunction with the descriptions of material differences in and, at its option, additional data on its Board of Governors of the Federal the availability or cost of services at loan-to-deposit ratio; and Reserve System, the Office of the particular branches, if any. At its option, (ii) The information required for other Comptroller of the Currency, and the a bank may include information banks by paragraph (b)(1) of this section, Office of Thrift Supervision, prepares regarding the availability of alternative if the bank has elected to be evaluated annually, for each MSA (including an systems for delivering retail banking under the lending, investment, and MSA that crosses a state boundary) and services (e.g., RSFs, RSFs not owned or service tests. the non-MSA portion of each state, an operated by or exclusively for the bank, (4) Banks with strategic plans. A bank aggregate disclosure statement of small banking by telephone or computer, loan that has been approved to be assessed business and small farm lending by all production offices, and bank-at-work or under a strategic plan shall include in institutions subject to reporting under bank-by-mail programs); its public file a copy of that plan. A this part or parts 25, 228, or 563e of this (6) A map of each assessment area bank need not include information title. These disclosure statements showing the boundaries of the area and submitted to the FDIC on a confidential indicate, for each geography, the identifying the geographies contained basis in conjunction with the plan. number and amount of all small within the area, either on the map or in (5) Banks with less than satisfactory business and small farm loans a separate list; and ratings. A bank that received a less than originated or purchased by reporting (7) Any other information the bank satisfactory rating during its most recent institutions, except that the FDIC may chooses. examination shall include in its public adjust the form of the disclosure if (b) Additional information available file a description of its current efforts to necessary, because of special to the public—(1) Banks other than improve its performance in helping to circumstances, to protect the privacy of small banks. A bank, except a small meet the credit needs of its entire a borrower or the competitive position bank or a bank that was a small bank community. The bank shall update the of an institution. during the prior calendar year, shall description quarterly. (j) Central data depositories. The include in its public file the following (c) Location of public information. A FDIC makes the aggregate disclosure information pertaining to the bank and bank shall make available to the public statements, described in paragraph (i) of its affiliates, if applicable, for each of for inspection upon request and at no this section, and the individual bank the prior two calendar years: cost the information required in this CRA Disclosure Statements, described (i) If the bank has elected to have one section as follows: in paragraph (h) of this section, or more categories of its consumer loans (1) At the main office and, if an available to the public at central data considered under the lending test, for interstate bank, at one branch office in depositories. The FDIC publishes a list each of these categories, the number and each state, all information in the public of the depositories at which the amount of loans: file; and statements are available. (A) To low-, moderate-, middle-, and (2) At each branch: upper-income individuals; (i) A copy of the public section of the § 345.43 Content and availability of public (B) Located in low-, moderate-, bank’s most recent CRA Performance file. middle-, and upper-income census Evaluation and a list of services (a) Information available to the tracts; and provided by the branch; and public. A bank shall maintain a public (C) Located inside the bank’s (ii) Within five calendar days of the file that includes the following assessment area(s) and outside the request, all the information in the public information: bank’s assessment area(s); and file relating to the assessment area in (1) All written comments received (ii) The bank’s CRA Disclosure which the branch is located. from the public for the current year and Statement. The bank shall place the (d) Copies. Upon request, a bank shall each of the prior two calendar years that statement in the public file within three provide copies, either on paper or in specifically relate to the bank’s business days of its receipt from the another form acceptable to the person performance in helping to meet FDIC. making the request, of the information community credit needs, and any (2) Banks required to report Home in its public file. The bank may charge response to the comments by the bank, Mortgage Disclosure Act (HMDA) data. a reasonable fee not to exceed the cost if neither the comments nor the A bank required to report home of copying and mailing (if applicable). responses contain statements that reflect mortgage loan data pursuant part 203 of (e) Updating. Except as otherwise adversely on the good name or this title shall include in its public file provided in this section, a bank shall reputation of any persons other than the a copy of the HMDA Disclosure ensure that the information required by bank or publication of which would Statement provided by the Federal this section is current as of April 1 of violate specific provisions of law; Financial Institutions Examination each year. (2) A copy of the public section of the Council pertaining to the bank for each bank’s most recent CRA Performance of the prior two calendar years. In § 345.44 Public notice by banks. Evaluation prepared by the FDIC. The addition, a bank that elected to have the A bank shall provide in the public bank shall place this copy in the public FDIC consider the mortgage lending of lobby of its main office and each of its file within 30 business days after its an affiliate for any of these years shall branches the appropriate public notice receipt from the FDIC; include in its public file the affiliate’s set forth in Appendix B of this part. (3) A list of the bank’s branches, their HMDA Disclosure Statement for those Only a branch of a bank having more street addresses, and geographies; years. The bank shall place the than one assessment area shall include (4) A list of branches opened or closed statement(s) in the public file within the bracketed material in the notice for by the bank during the current year and three business days after receipt. branch offices. Only a bank that is an each of the prior two calendar years, (3) Small banks. A small bank or a affiliate of a holding company shall their street addresses, and geographies; bank that was a small bank during the include the next to the last sentence of Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22209 the notices. A bank shall include the (5) On July 1, 1997, §§ 345.21 through individuals of different income levels and last sentence of the notices only if it is 345.28, 345.43, and 345.44 become businesses (including farms) of different an affiliate of a holding company that is applicable, and §§ 345.3 through 345.7, sizes, given the product lines offered by the not prevented by statute from acquiring and 345.51 expire. bank; (E) A good record of serving the credit additional banks. Appendix A to Part 345—Ratings needs of highly economically disadvantaged areas in its assessment area(s), low-income § 345.45 Publication of planned (a) Ratings in general.—(1) In assigning a examination schedule. individuals, or businesses (including farms) rating, the FDIC evaluates a bank’s with gross annual revenues of $1 million or The FDIC publishes at least 30 days performance under the applicable less, consistent with safe and sound in advance of the beginning of each performance criteria in this part, in operations; calendar quarter a list of banks accordance with § 345.21, and § 345.28, (F) Use of innovative or flexible lending scheduled for CRA examinations in that which provides for adjustments on the basis practices in a safe and sound manner to quarter. of evidence of discriminatory or other illegal address the credit needs of low- or moderate- credit practices. income individuals or geographies; and Subpart DÐTransition Rules (2) A bank’s performance need not fit each (G) It has made a relatively high level of aspect of a particular rating profile in order community development loans. § 345.51 Transition rules. to receive that rating, and exceptionally (iii) Low satisfactory. The FDIC rates a (a) Effective date. Sections of this part strong performance with respect to some bank’s lending performance ‘‘low aspects may compensate for weak satisfactory’’ if, in general, it demonstrates: become applicable over a period of time performance in others. The bank’s overall in accordance with the schedule set (A) Adequate responsiveness to credit performance, however, must be consistent needs in its assessment area(s), taking into forth in paragraph (c) of this section. with safe and sound banking practices and (b) Data collection and reporting; account the number and amount of home generally with the appropriate rating profile mortgage, small business, small farm, and strategic plan; performance tests and as follows. consumer loans, if applicable, in its standards—(1) Data collection and (b) Banks evaluated under the lending, assessment area(s); investment, and service tests.—(1) Lending reporting. (i) On January 1, 1996, the (B) An adequate percentage of its loans are performance rating. The FDIC assigns each data collection requirements set forth in made in its assessment area(s); bank’s lending performance one of the five § 345.42 (except § 345.42(b) and (g)) (C) An adequate geographic distribution of following ratings. loans in its assessment area(s); become applicable. (i) Outstanding. The FDIC rates a bank’s (D) An adequate distribution, particularly (ii) On January 1, 1997, the data lending performance ‘‘outstanding’’ if, in in its assessment area(s), of loans among reporting requirements set forth in general, it demonstrates: individuals of different income levels and § 345.42(b) and (g) become applicable. (A) Excellent responsiveness to credit businesses (including farms) of different (2) Small banks. Beginning January 1, needs in its assessment area(s), taking into sizes, given the product lines offered by the 1996, the FDIC evaluates banks that account the number and amount of home mortgage, small business, small farm, and bank; qualify for the small bank performance (E) An adequate record of serving the credit standards described in § 345.26 under consumer loans, if applicable, in its assessment area(s); needs of highly economically disadvantaged that section. areas in its assessment area(s), low-income (3) Strategic plan. Beginning January (B) A substantial majority of its loans are made in its assessment area(s); individuals, or businesses (including farms) 1, 1996, a bank that elects to be (C) An excellent geographic distribution of with gross annual revenues of $1 million or evaluated under an approved strategic loans in its assessment area(s); less, consistent with safe and sound plan pursuant to § 345.27 may submit (D) An excellent distribution, particularly operations; its strategic plan to the FDIC for in its assessment area(s), of loans among (F) Limited use of innovative or flexible approval. individuals of different income levels and lending practices in a safe and sound manner (4) Other performance tests. (i) businesses (including farms) of different to address the credit needs of low- or moderate-income individuals or geographies; Beginning January 1, 1996, a bank may sizes, given the product lines offered by the bank; and elect to be evaluated under the pertinent (G) It has made an adequate level of revised performance tests described in (E) An excellent record of serving the credit needs of highly economically community development loans. §§ 345.22, 345.23, 345.24, and 345.25, if disadvantaged areas in its assessment area(s), (iv) Needs to improve. The FDIC rates a the bank provides the necessary data to low-income individuals, or businesses bank’s lending performance ‘‘needs to permit evaluation. (including farms) with gross annual revenues improve’’ if, in general, it demonstrates: (ii) Beginning July 1, 1997, the FDIC of $1 million or less, consistent with safe and (A) Poor responsiveness to credit needs in evaluates all banks under the pertinent sound operations; its assessment area(s), taking into account the revised performance tests. (F) Extensive use of innovative or flexible number and amount of home mortgage, small (c) Schedule. (1) On July 1, 1995, lending practices in a safe and sound manner business, small farm, and consumer loans, if §§ 345.11, 345.12, 345.29, and 345.51 to address the credit needs of low- or applicable, in its assessment area(s); (B) A small percentage of its loans are become applicable, and §§ 345.1, 345.2, moderate-income individuals or geographies; and made in its assessment area(s); 345.8, 345.101 and 345.102 expire. (G) It is a leader in making community (C) A poor geographic distribution of loans, (2) On January 1, 1996, § 345.41 and development loans. particularly to low- or moderate-income the pertinent provisions of Subpart B of (ii) High satisfactory. The FDIC rates a geographies, in its assessment area(s); this part will apply to banks that elect bank’s lending performance ‘‘high (D) A poor distribution, particularly in its to be evaluated under §§ 345.22 through satisfactory’’ if, in general, it demonstrates: assessment area(s), of loans among 345.25, banks that submit for approval (A) Good responsiveness to credit needs in individuals of different income levels and strategic plans under § 345.27, and its assessment area(s), taking into account the businesses (including farms) of different banks that qualify for the small bank number and amount of home mortgage, small sizes, given the product lines offered by the performance standards described in business, small farm, and consumer loans, if bank; applicable, in its assessment area(s); (E) A poor record of serving the credit § 345.26. (B) A high percentage of its loans are made needs of highly economically disadvantaged (3) On January 1, 1996, §§ 345.42 in its assessment area(s); areas in its assessment area(s), low-income (except § 345.42(b) and (g)) and 345.45 (C) A good geographic distribution of loans individuals, or businesses (including farms) become applicable. in its assessment area(s); with gross annual revenues of $1 million or (4) On January 1, 1997, §§ 345.41 and (D) A good distribution, particularly in its less, consistent with safe and sound 345.42(b) and (g) become applicable. assessment area(s), of loans among operations; 22210 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations

(F) Little use of innovative or flexible (iv) Needs to improve. The FDIC rates a has generally not adversely affected the lending practices in a safe and sound manner bank’s investment performance ‘‘needs to accessibility of its delivery systems, to address the credit needs of low- or improve’’ if, in general, it demonstrates: particularly in low- and moderate-income moderate-income individuals or geographies; (A) A poor level of qualified investments, geographies and to low- and moderate- and particularly those that are not routinely income individuals; (G) It has made a low level of community provided by private investors; (C) Its services (including, where development loans. (B) Rare use of innovative or complex appropriate, business hours) do not vary in (v) Substantial noncompliance. The FDIC qualified investments; and a way that inconveniences its assessment rates a bank’s lending performance as being (C) Poor responsiveness to credit and area(s), particularly low- and moderate- in ‘‘substantial noncompliance’’ if, in community development needs. income geographies and low- and moderate- general, it demonstrates: (v) Substantial noncompliance. The FDIC income individuals; and (A) A very poor responsiveness to credit rates a bank’s investment performance as (D) It provides an adequate level of needs in its assessment area(s), taking into being in ‘‘substantial noncompliance’’ if, in community development services. account the number and amount of home general, it demonstrates: (iv) Needs to improve. The FDIC rates a mortgage, small business, small farm, and (A) Few, if any, qualified investments, bank’s service performance ‘‘needs to consumer loans, if applicable, in its particularly those that are not routinely improve’’ if, in general, the bank assessment area(s); provided by private investors; demonstrates: (B) A very small percentage of its loans are (B) No use of innovative or complex (A) Its service delivery systems are made in its assessment area(s); qualified investments; and unreasonably inaccessible to portions of its (C) A very poor geographic distribution of (C) Very poor responsiveness to credit and assessment area(s), particularly to low- or loans, particularly to low- or moderate- community development needs. moderate-income geographies or to low- or income geographies, in its assessment area(s); (3) Service performance rating. The FDIC moderate-income individuals; (D) A very poor distribution, particularly in assigns each bank’s service performance one (B) To the extent changes have been made, its assessment area(s), of loans among of the five following ratings. its record of opening and closing branches individuals of different income levels and (i) Outstanding. The FDIC rates a bank’s has adversely affected the accessibility its businesses (including farms) of different service performance ‘‘outstanding’’ if, in delivery systems, particularly in low- or sizes, given the product lines offered by the general, the bank demonstrates: moderate-income geographies or to low- or bank; (A) Its service delivery systems are readily moderate-income individuals; (E) A very poor record of serving the credit accessible to geographies and individuals of (C) Its services (including, where needs of highly economically disadvantaged different income levels in its assessment appropriate, business hours) vary in a way areas in its assessment area(s), low-income area(s); that inconveniences its assessment area(s), individuals, or businesses (including farms) (B) To the extent changes have been made, particularly low- or moderate-income with gross annual revenues of $1 million or its record of opening and closing branches geographies or low- or moderate-income less, consistent with safe and sound has improved the accessibility of its delivery individuals; and operations; systems, particularly in low- or moderate- (D) It provides a limited level of (F) No use of innovative or flexible lending income geographies or to low- or moderate- practices in a safe and sound manner to income individuals; community development services. address the credit needs of low- or moderate- (C) Its services (including, where (v) Substantial noncompliance. The FDIC income individuals or geographies; and appropriate, business hours) are tailored to rates a bank’s service performance as being (G) It has made few, if any, community the convenience and needs of its assessment in ‘‘substantial noncompliance’’ if, in development loans. area(s), particularly low- or moderate-income general, the bank demonstrates: (2) Investment performance rating. The geographies or low- or moderate-income (A) Its service delivery systems are FDIC assigns each bank’s investment individuals; and unreasonably inaccessible to significant performance one of the five following ratings. (D) It is a leader in providing community portions of its assessment area(s), particularly (i) Outstanding. The FDIC rates a bank’s development services. to low- or moderate-income geographies or to investment performance ‘‘outstanding’’ if, in (ii) High satisfactory. The FDIC rates a low- or moderate-income individuals; general, it demonstrates: bank’s service performance ‘‘high (B) To the extent changes have been made, (A) An excellent level of qualified satisfactory’’ if, in general, the bank its record of opening and closing branches investments, particularly those that are not demonstrates: has significantly adversely affected the routinely provided by private investors, often (A) Its service delivery systems are accessibility of its delivery systems, in a leadership position; accessible to geographies and individuals of particularly in low- or moderate-income (B) Extensive use of innovative or complex different income levels in its assessment geographies or to low- or moderate-income qualified investments; and area(s); individuals; (C) Excellent responsiveness to credit and (B) To the extent changes have been made, (C) Its services (including, where community development needs. its record of opening and closing branches appropriate, business hours) vary in a way (ii) High satisfactory. The FDIC rates a has not adversely affected the accessibility of that significantly inconveniences its bank’s investment performance ‘‘high its delivery systems, particularly in low- and assessment area(s), particularly low- or satisfactory’’ if, in general, it demonstrates: moderate-income geographies and to low- moderate-income geographies or low- or (A) A significant level of qualified and moderate-income individuals; moderate-income individuals; and investments, particularly those that are not (C) Its services (including, where (D) It provides few, if any, community routinely provided by private investors, appropriate, business hours) do not vary in development services. occasionally in a leadership position; a way that inconveniences its assessment (c) Wholesale or limited purpose banks. (B) Significant use of innovative or area(s), particularly low- and moderate- The FDIC assigns each wholesale or limited complex qualified investments; and income geographies and low- and moderate- purpose bank’s community development (C) Good responsiveness to credit and income individuals; and performance one of the four following community development needs. (D) It provides a relatively high level of ratings. (iii) Low satisfactory. The FDIC rates a community development services. (1) Outstanding. The FDIC rates a bank’s investment performance ‘‘low (iii) Low satisfactory. The FDIC rates a wholesale or limited purpose bank’s satisfactory’’ if, in general, it demonstrates: bank’s service performance ‘‘low community development performance (A) An adequate level of qualified satisfactory’’ if, in general, the bank ‘‘outstanding’’ if, in general, it demonstrates: investments, particularly those that are not demonstrates: (i) A high level of community development routinely provided by private investors, (A) Its service delivery systems are loans, community development services, or although rarely in a leadership position; reasonably accessible to geographies and qualified investments, particularly (B) Occasional use of innovative or individuals of different income levels in its investments that are not routinely provided complex qualified investments; and assessment area(s); by private investors; (C) Adequate responsiveness to credit and (B) To the extent changes have been made, (ii) Extensive use of innovative or complex community development needs. its record of opening and closing branches qualified investments, community Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22211 development loans, or community (iii) A distribution of loans to and, as Under the Federal Community development services; and appropriate, other lending related-activities Reinvestment Act (CRA), the Federal Deposit (iii) Excellent responsiveness to credit and for individuals of different income levels Insurance Corporation (FDIC) evaluates our community development needs in its (including low- and moderate-income record of helping to meet the credit needs of assessment area(s). individuals) and businesses and farms of this community consistent with safe and (2) Satisfactory. The FDIC rates a wholesale different sizes that is reasonable given the sound operations. The FDIC also takes this or limited purpose bank’s community demographics of the bank’s assessment record into account when deciding on certain development performance ‘‘satisfactory’’ if, area(s); applications submitted by us. in general, it demonstrates: (iv) A record of taking appropriate action, Your involvement is encouraged. (i) An adequate level of community as warranted, in response to written You are entitled to certain information development loans, community development complaints, if any, about the bank’s about our operations and our performance services, or qualified investments, performance in helping to meet the credit under the CRA, including, for example, particularly investments that are not needs of its assessment area(s); and information about our branches, such as their routinely provided by private investors; (v) A reasonable geographic distribution of location and services provided at them; the (ii) Occasional use of innovative or loans given the bank’s assessment area(s). public section of our most recent CRA complex qualified investments, community (2) Eligibility for an outstanding rating. A Performance Evaluation, prepared by the development loans, or community bank that meets each of the standards for a FDIC; and comments received from the development services; and ‘‘satisfactory’’ rating under this paragraph public relating to our performance in helping (iii) Adequate responsiveness to credit and and exceeds some or all of those standards to meet community credit needs, as well as community development needs in its may warrant consideration for an overall our responses to those comments. You may assessment area(s). rating of ‘‘outstanding.’’ In assessing whether review this information today. (3) Needs to improve. The FDIC rates a a bank’s performance is ‘‘outstanding,’’ the At least 30 days before the beginning of wholesale or limited purpose bank’s FDIC considers the extent to which the bank each quarter, the FDIC publishes a community development performance as exceeds each of the performance standards nationwide list of the banks that are ‘‘needs to improve’’ if, in general, it for a ‘‘satisfactory’’ rating and its scheduled for CRA examination in that demonstrates: performance in making qualified investments quarter. This list is available from the (i) A poor level of community development and its performance in providing branches Regional Manager, Division of Compliance loans, community development services, or and other services and delivery systems that and Consumer Affairs, FDIC (address). You qualified investments, particularly enhance credit availability in its assessment may send written comments about our investments that are not routinely provided area(s). performance in helping to meet community by private investors; (3) Needs to improve or substantial credit needs to (name and address of official (ii) Rare use of innovative or complex noncompliance ratings. A bank also may at bank) and FDIC Regional Manager. Your qualified investments, community receive a rating of ‘‘needs to improve’’ or letter, together with any response by us, will development loans, or community ‘‘substantial noncompliance’’ depending on be considered by the FDIC in evaluating our development services; and the degree to which its performance has CRA performance and may be made public. (iii) Poor responsiveness to credit and failed to meet the standards for a You may ask to look at any comments community development needs in its ‘‘satisfactory’’ rating. received by the FDIC Regional Manager. You assessment area(s). (e) Strategic plan assessment and rating. may also request from the FDIC Regional (4) Substantial noncompliance. The FDIC (1) Satisfactory goals. The FDIC approves as Manager an announcement of our rates a wholesale or limited purpose bank’s ‘‘satisfactory’’ measurable goals that applications covered by the CRA filed with community development performance in adequately help to meet the credit needs of the FDIC. We are an affiliate of (name of ‘‘substantial noncompliance’’ if, in general, it the bank’s assessment area(s). holding company), a bank holding company. demonstrates: (2) Outstanding goals. If the plan identifies You may request from the (title of (i) Few, if any, community development a separate group of measurable goals that responsible official), Federal Reserve Bank of loans, community development services, or substantially exceed the levels approved as llllllllll (address) an qualified investments, particularly ‘‘satisfactory,’’ the FDIC will approve those announcement of applications covered by the investments that are not routinely provided goals as ‘‘outstanding.’’ CRA filed by bank holding companies. by private investors; (3) Rating. The FDIC assesses the (b) Notice for branch offices. (ii) No use of innovative or complex performance of a bank operating under an Community Reinvestment Act Notice qualified investments, community approved plan to determine if the bank has development loans, or community met its plan goals: Under the Federal Community development services; and (i) If the bank substantially achieves its Reinvestment Act (CRA), the Federal Deposit (iii) Very poor responsiveness to credit and plan goals for a satisfactory rating, the FDIC Insurance Corporation (FDIC) evaluates our community development needs in its will rate the bank’s performance under the record of helping to meet the credit needs of assessment area(s). plan as ‘‘satisfactory.’’ this community consistent with safe and (d) Banks evaluated under the small bank (ii) If the bank exceeds its plan goals for sound operations. The FDIC also takes this performance standards. The FDIC rates the a satisfactory rating and substantially record into account when deciding on certain performance of each bank evaluated under achieves its plan goals for an outstanding applications submitted by us. the small bank performance standards as rating, the FDIC will rate the bank’s Your involvement is encouraged. follows. performance under the plan as You are entitled to certain information (1) Eligibility for a satisfactory rating. The ‘‘outstanding.’’ about our operations and our performance FDIC rates a bank’s performance (iii) If the bank fails to meet substantially under the CRA. You may review today the ‘‘satisfactory’’ if, in general, the bank its plan goals for a satisfactory rating, the public section of our most recent CRA demonstrates: FDIC will rate the bank as either ‘‘needs to evaluation, prepared by the FDIC, and a list (i) A reasonable loan-to-deposit ratio improve’’ or ‘‘substantial noncompliance,’’ of services provided at this branch. You may (considering seasonal variations) given the depending on the extent to which it falls also have access to the following additional bank’s size, financial condition, the credit short of its plan goals, unless the bank information, which we will make available to needs of its assessment area(s), and taking elected in its plan to be rated otherwise, as you at this branch within five calendar days into account, as appropriate, lending-related provided in § 345.27(f)(4). after you make a request to us: (1) a map activities such as loan originations for sale to showing the assessment area containing this the secondary markets and community Appendix B to Part 345—CRA Notice branch, which is the area in which the FDIC development loans and qualified evaluates our CRA performance in this (a) Notice for main offices and, if an investments; community; (2) information about our interstate bank, one branch office in each (ii) A majority of its loans and, as branches in this assessment area; (3) a list of state. appropriate, other lending-related activities services we provide at those locations; (4) are in its assessment area(s); Community Reinvestment Act Notice data on our lending performance in this 22212 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations assessment area; and (5) copies of all written Authority: 12 U.S.C. 1462a, 1463, 1464, to meet the credit needs of the local comments received by us that specifically 1467a, 1814, 1816, 1828(c), and 2901 through communities in which the institution is relate to our CRA performance in this 2907. chartered, consistent with the safe and assessment area, and any responses we have 2. Part 563e is amended by adding sound operation of the institution, and made to those comments. If we are operating to take this record into account in the under an approved strategic plan, you may Subparts A through D and Appendices also have access to a copy of the plan. A and B to read as follows: agency’s evaluation of an application for a deposit facility by the institution. This [If you would like to review information Subpart AÐGeneral part is intended to carry out the about our CRA performance in other Sec. communities served by us, the public file for purposes of the CRA by: 563e.11 Authority, purposes, and scope. (1) Establishing the framework and our entire bank is available at (name of office 563e.12 Definitions. located in state), located at (address).] criteria by which the OTS assesses a At least 30 days before the beginning of Subpart BÐStandards for Assessing savings association’s record of helping each quarter, the FDIC publishes a Performance to meet the credit needs of its entire nationwide list of the banks that are 563e.21 Performance tests, standards, and community, including low- and scheduled for CRA examination in that ratings, in general. moderate-income neighborhoods, quarter. This list is available from the 563e.22 Lending test. consistent with the safe and sound Regional Manager, Division of Compliance 563e.23 Investment test. operation of the savings association; and and Consumer Affairs, FDIC (address). You 563e.24 Service test. (2) Providing that the OTS takes that may send written comments about our 563e.25 Community development test for record into account in considering performance in helping to meet community wholesale or limited purpose savings certain applications. credit needs to (name and address of official associations. (c) Scope. This part applies to all at bank) and the FDIC Regional Manager. 563e.26 Small savings association savings associations as defined in Your letter, together with any response by us, performance standards. will be considered by the FDIC in evaluating 563e.27 Strategic plan. § 561.43 of this subchapter. our CRA performance and may be made 563e.28 Assigned ratings. § 563e.12 Definitions. public. 563e.29 Effect of CRA performance on You may ask to look at any comments applications. For purposes of this part, the received by the FDIC Regional Manager. You following definitions apply: may also request from the FDIC Regional Subpart CÐRecords, Reporting, and (a) Affiliate means any company that Manager an announcement of our Disclosure Requirements controls, is controlled by, or is under applications covered by the CRA filed with 563e.41 Assessment area delineation. common control with another company. the FDIC. We are an affiliate of (name of 563e.42 Data collection, reporting, and The term ‘‘control’’ has the meaning holding company), a bank holding company. disclosure. given to that term in 12 U.S.C. You may request from the (title of 563e.43 Content and availability of public 1841(a)(2), and a company is under responsible official), Federal Reserve Bank of file. llllllllll common control with another company (address) an 563e.44 Public notice by savings if both companies are directly or announcement of applications covered by the associations. CRA filed by bank holding companies. 563e.45 Publication of planned indirectly controlled by the same examination schedule. company. §§ 345.1, 345.2, 345.8, 345.101, and 345.102, (b) Area median income means: and the undersigned center heading Subpart DÐTransition Rules (1) The median family income for the preceding § 345.101 [Removed] 563e.51 Transition rules. MSA, if a person or geography is located in an MSA; or 3. Sections 345.1, 345.2, 345.8, Appendix A to Part 563e—Ratings 345.101 and 345.102, and the (2) The statewide nonmetropolitan undersigned center heading preceding Appendix B to Part 563e—CRA Notice median family income, if a person or § 345.101 are removed effective July 1, geography is located outside an MSA. Subpart AÐGeneral (c) Assessment area means a 1995. § 563e.11 Authority, purposes, and scope. geographic area delineated in §§ 345.3, 345.4, 345.5, 345.6, 345.7, and accordance with § 563e.41. subpart D [Removed] (a) Authority and OMB control (d) Automated teller machine (ATM) number—(1) Authority. This part is 4. Sections 345.3, 345.4, 345.5, 345.6, means an automated, unstaffed banking issued under the Community facility owned or operated by, or 345.7, and 345.51 are removed effective Reinvestment Act of 1977 (CRA), as July 1, 1997. operated exclusively for, the savings amended (12 U.S.C. 2901 et seq.); association at which deposits are By order of the Board of Directors of the section 5, as amended, and sections 3, received, cash dispersed, or money lent. Federal Deposit Insurance Corporation: 4, and 10, as added, of the Home (e) Branch means a staffed banking Dated: April 24, 1995. Owners’ Loan Act of 1933 (12 U.S.C. facility authorized as a branch, whether Robert E. Feldman, 1462a, 1463, 1464, and 1467a); and shared or unshared, including, for Acting Executive Secretary. sections 4, 6, and 18(c), as amended of example, a mini-branch in a grocery the Federal Deposit Insurance Act (12 store or a branch operated in Office of Thrift Supervision U.S.C. 1814, 1816, 1828(c)). conjunction with any other local 12 CFR Chapter V (2) OMB control number. The business or nonprofit organization. information collection requirements For the reasons outlined in the joint (f) CMSA means a consolidated contained in this part were approved by preamble, the Office of Thrift metropolitan statistical area as defined the Office of Management and Budget Supervision amends 12 CFR chapter V by the Director of the Office of under the provisions of 44 U.S.C. 3501 as set forth below: Management and Budget. et seq. and have been assigned OMB (g) Community development means: PART 563eÐCOMMUNITY control number 1550–0012. (1) Affordable housing (including REINVESTMENT (b) Purposes. In enacting the CRA, the multifamily rental housing) for low or Congress required each appropriate moderate-income individuals; 1. The authority citation for part 563e Federal financial supervisory agency to (2) Community services targeted to is revised to read as follows: assess an institution’s record of helping low- or moderate-income individuals; Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22213

(3) Activities that promote economic the United States Bureau of the Census million and was independent or an development by financing businesses or in the most recent decennial census. affiliate of a holding company that, as of farms that meet the size eligibility (l) Home mortgage loan means a December 31 of either of the prior two standards of 13 CFR 121.802(a)(2) or ‘‘home improvement loan’’ or a ‘‘home calendar years, had total banking and have gross annual revenues of $1 purchase loan’’ as defined in § 203.2 of thrift assets of less than $1 billion. million or less; or this title. (t) Small business loan means a loan (4) Activities that revitalize or (m) Income level includes: included in ‘‘loans to small businesses’’ stabilize low- or moderate-income (1) Low-income, which means an as defined in the instructions for geographies. individual income that is less than 50 preparation of the Thrift Financial (h) Community development loan percent of the area median income or a Report. means a loan that: median family income that is less than (u) Small farm loan means a loan (1) Has as its primary purpose 50 percent in the case of a geography. included in ‘‘loans to small farms’’ as community development; and (2) Moderate-income, which means an defined in the instructions for (2) Except in the case of a wholesale individual income that is at least 50 preparation of the Thrift Financial or limited purpose savings association: percent and less than 80 percent of the Report. (i) Has not been reported or collected area median income or a median family (v) Wholesale savings association by the savings association or an affiliate income that is at least 50 and less than means a savings association that is not for consideration in the savings 80 percent in the case of a geography. in the business of extending home association’s assessment as a home (3) Middle-income, which means an mortgage, small business, small farm, or mortgage, small business, small farm, or individual income that is at least 80 consumer loans to retail customers, and consumer loan, unless it is a percent and less than 120 percent of the for which a designation as a wholesale multifamily dwelling loan (as described area median income or a median family savings association is in effect, in in Appendix A to Part 203 of this title); income that is at least 80 and less than accordance with § 563e.25(b). and 120 percent in the case of a geography. (ii) Benefits the savings association’s (4) Upper-income, which means an Subpart BÐStandards for Assessing assessment area(s) or a broader individual income that is 120 percent or Performance statewide or regional area that includes more of the area median income or a the savings association’s assessment median family income that is 120 § 563e.21 Performance tests, standards, and ratings, in general. area(s). percent or more in the case of a (i) Community development service geography. (a) Performance tests and standards. means a service that: (n) Limited purpose savings The OTS assesses the CRA performance (1) Has as its primary purpose association means a savings association of a savings association in an community development; that offers only a narrow product line examination as follows: (2) Is related to the provision of (such as credit card or motor vehicle (1) Lending, investment, and service financial services; and loans) to a regional or broader market tests. The OTS applies the lending, (3) Has not been considered in the and for which a designation as a limited investment, and service tests, as evaluation of the savings association’s purpose savings association is in effect, provided in §§ 563e.22 through 563e.24, retail banking services under in accordance with § 563e.25(b). in evaluating the performance of a § 563e.24(d). (o) Loan location. A loan is located as savings association, except as provided (j) Consumer loan means a loan to one follows: in paragraphs (a)(2), (a)(3), and (a)(4) of or more individuals for household, (1) A consumer loan is located in the this section. family, or other personal expenditures. geography where the borrower resides; (2) Community development test for A consumer loan does not include a (2) A home mortgage loan is located wholesale or limited purpose savings home mortgage, small business, or small in the geography where the property to associations. The OTS applies the farm loan. Consumer loans include the which the loan relates is located; and community development test for a following categories of loans: (3) A small business or small farm wholesale or limited purpose savings (1) Motor vehicle loan, which is a loan is located in the geography where association, as provided in § 563e.25, consumer loan extended for the the main business facility or farm is except as provided in paragraph (a)(4) of purchase of and secured by a motor located or where the loan proceeds this section. vehicle; otherwise will be applied, as indicated (3) Small savings association (2) Credit card loan, which is a line by the borrower. performance standards. The OTS of credit for household, family, or other (p) Loan production office means a applies the small savings association personal expenditures that is accessed staffed facility, other than a branch, that performance standards as provided in by a borrower’s use of a ‘‘credit card,’’ is open to the public and that provides § 563e.26 in evaluating the performance as this term is defined in § 226.2 of this lending-related services, such as loan of a small savings association or a title; information and applications. savings association that was a small (3) Home equity loan, which is a (q) MSA means a metropolitan savings association during the prior consumer loan secured by a residence of statistical area or a primary calendar year, unless the savings the borrower; metropolitan statistical area as defined association elects to be assessed as (4) Other secured consumer loan, by the Director of the Office of provided in paragraphs (a)(1), (a)(2), or which is a secured consumer loan that Management and Budget. (a)(4) of this section. The savings is not included in one of the other (r) Qualified investment means a association may elect to be assessed as categories of consumer loans; and lawful investment, deposit, membership provided in paragraph (a)(1) of this (5) Other unsecured consumer loan, share, or grant that has as its primary section only if it collects and reports the which is an unsecured consumer loan purpose community development. data required for other savings that is not included in one of the other (s) Small savings association means a associations under § 563e.42. categories of consumer loans. savings association that, as of December (4) Strategic plan. The OTS evaluates (k) Geography means a census tract or 31 of either of the prior two calendar the performance of a savings association a block numbering area delineated by years, had total assets of less than $250 under a strategic plan if the savings 22214 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations association submits, and the OTS anticipates savings associations can (2) Geographic distribution. The approves, a strategic plan as provided in meet the standards of this part with safe geographic distribution of the savings § 563e.27. and sound loans, investments, and association’s home mortgage, small (b) Performance context. The OTS services on which the savings business, small farm, and consumer applies the tests and standards in associations expect to make a profit. loans, if applicable, based on the loan paragraph (a) of this section and also Savings associations are permitted and location, including: considers whether to approve a encouraged to develop and apply (i) The proportion of the savings proposed strategic plan in the context flexible underwriting standards for association’s lending in the savings of: loans that benefit low- or moderate- association’s assessment area(s); (1) Demographic data on median income geographies or individuals, only (ii) The dispersion of lending in the income levels, distribution of household if consistent with safe and sound savings association’s assessment area(s); income, nature of housing stock, operations. and housing costs, and other relevant data (iii) The number and amount of loans pertaining to a savings association’s § 563e.22 Lending test. in low-, moderate-, middle-, and upper- assessment area(s); (a) Scope of test. (1) The lending test income geographies in the savings (2) Any information about lending, evaluates a savings association’s record association’s assessment area(s); investment, and service opportunities in of helping to meet the credit needs of its (3) Borrower characteristics. The the savings association’s assessment assessment area(s) through its lending distribution, particularly in the savings area(s) maintained by the savings activities by considering a savings association’s assessment area(s), of the association or obtained from community association’s home mortgage, small savings association’s home mortgage, organizations, state, local, and tribal business, small farm, and community small business, small farm, and governments, economic development development lending. If consumer consumer loans, if applicable, based on agencies, or other sources; lending constitutes a substantial borrower characteristics, including the (3) The savings association’s product majority of a savings association’s number and amount of: offerings and business strategy as business, the OTS will evaluate the (i) Home mortgage loans to low-, determined from data provided by the savings association’s consumer lending moderate-, middle-, and upper-income savings association; in one or more of the following individuals; (4) Institutional capacity and categories: motor vehicle, credit card, (ii) Small business and small farm constraints, including the size and home equity, other secured, and other loans to businesses and farms with gross financial condition of the savings unsecured loans. In addition, at a annual revenues of $1 million or less; association, the economic climate savings association’s option, the OTS (iii) Small business and small farm (national, regional, and local), safety will evaluate one or more categories of loans by loan amount at origination; and and soundness limitations, and any consumer lending, if the savings (iv) Consumer loans, if applicable, to other factors that significantly affect the association has collected and low-, moderate-, middle-, and upper- savings association’s ability to provide maintained, as required in income individuals; lending, investments, or services in its § 563e.42(c)(1), the data for each (4) Community development lending. assessment area(s); category that the savings association The savings association’s community (5) The savings association’s past elects to have the OTS evaluate. development lending, including the number and amount of community performance and the performance of (2) The OTS considers originations development loans, and their similarly situated lenders; and purchases of loans. The OTS will (6) The savings association’s public complexity and innovativeness; and also consider any other loan data the file, as described in § 563e.43, and any (5) Innovative or flexible lending savings association may choose to written comments about the savings practices. The savings association’s use provide, including data on loans association’s CRA performance of innovative or flexible lending outstanding, commitments and letters of submitted to the savings association or practices in a safe and sound manner to credit. the OTS; and address the credit needs of low- or (7) Any other information deemed (3) A savings association may ask the moderate-income individuals or relevant by the OTS. OTS to consider loans originated or geographies. (c) Assigned ratings. The OTS assigns purchased by consortia in which the (c) Affiliate lending. (1) At a savings to a savings association one of the savings association participates or by association’s option, the OTS will following four ratings pursuant to third parties in which the savings consider loans by an affiliate of the § 563e.28 and Appendix A of this part: association has invested only if the savings association, if the savings ‘‘outstanding’’; ‘‘satisfactory’’; ‘‘needs to loans meet the definition of community association provides data on the improve’’; or ‘‘substantial development loans and only in affiliate’s loans pursuant to § 563e.42. noncompliance,’’ as provided in 12 accordance with paragraph (d) of this (2) The OTS considers affiliate U.S.C. 2906(b)(2). The rating assigned section. The OTS will not consider lending subject to the following by the OTS reflects the savings these loans under any criterion of the constraints: association’s record of helping to meet lending test except the community (i) No affiliate may claim a loan the credit needs of its entire community, development lending criterion. origination or loan purchase if another including low- and moderate-income (b) Performance criteria. The OTS institution claims the same loan neighborhoods, consistent with the safe evaluates a savings association’s lending origination or purchase; and and sound operation of the savings performance pursuant to the following (ii) If a savings association elects to association. criteria: have the OTS consider loans within a (d) Safe and sound operations. This (1) Lending activity. The number and particular lending category made by one part and the CRA do not require a amount of the savings association’s or more of the savings association’s savings association to make loans or home mortgage, small business, small affiliates in a particular assessment area, investments or to provide services that farm, and consumer loans, if applicable, the savings association shall elect to are inconsistent with safe and sound in the savings association’s assessment have the OTS consider, in accordance operations. To the contrary, the OTS area(s); with paragraph (c)(1) of this section, all Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22215 the loans within that lending category in a savings association pursuant to the low- and moderate-income individuals; that particular assessment area made by following criteria: and all of the savings association’s affiliates. (1) The dollar amount of qualified (4) The range of services provided in (3) The OTS does not consider investments; low-, moderate-, middle-, and upper- affiliate lending in assessing a savings (2) The innovativeness or complexity income geographies and the degree to association’s performance under of qualified investments; which the services are tailored to meet paragraph (b)(2)(i) of this section. (3) The responsiveness of qualified the needs of those geographies. (d) Lending by a consortium or a third investments to credit and community (e) Performance criteria—community party. Community development loans development needs; and development services. The OTS originated or purchased by a consortium (4) The degree to which the qualified evaluates community development in which the savings association investments are not routinely provided services pursuant to the following participates or by a third party in which by private investors. criteria: the savings association has invested: (f) Investment performance rating. (1) The extent to which the savings (1) Will be considered, at the savings The OTS rates a savings association’s association provides community association’s option, if the savings investment performance as provided in development services; and Appendix A of this part. association reports the data pertaining (2) The innovativeness and to these loans under § 563e.42(b)(2); and § 563e.24 Service test. responsiveness of community (2) May be allocated among (a) Scope of test. The service test development services. participants or investors, as they choose, evaluates a savings association’s record (f) Service performance rating. The for purposes of the lending test, except of helping to meet the credit needs of its OTS rates a savings association’s service that no participant or investor: assessment area(s) by analyzing both the performance as provided in Appendix A (i) May claim a loan origination or availability and effectiveness of a of this part. loan purchase if another participant or savings association’s systems for § 563e.25 Community development test for investor claims the same loan delivering retail banking services and origination or purchase; or wholesale or limited purpose savings the extent and innovativeness of its associations. (ii) May claim loans accounting for community development services. (a) Scope of test. The OTS assesses a more than its percentage share (based on (b) Area(s) benefitted. Community wholesale or limited purpose savings the level of its participation or development services must benefit a association’s record of helping to meet investment) of the total loans originated savings association’s assessment area(s) the credit needs of its assessment area(s) by the consortium or third party. or a broader statewide or regional area under the community development test (e) Lending performance rating. The that includes the savings association’s through its community development OTS rates a savings association’s assessment area(s). lending performance as provided in (c) Affiliate service. At a savings lending, qualified investments, or Appendix A of this part. association’s option, the OTS will community development services. (b) Designation as a wholesale or § 563e.23 Investment test. consider, in its assessment of a savings association’s service performance, a limited purpose savings association. In (a) Scope of test. The investment test community development service order to receive a designation as a evaluates a savings association’s record provided by an affiliate of the savings wholesale or limited purpose savings of helping to meet the credit needs of its association, if the community association, a savings association shall assessment area(s) through qualified development service is not claimed by file a request, in writing, with the OTS, investments that benefit its assessment any other institution. at least three months prior to the area(s) or a broader statewide or regional (d) Performance criteria—retail proposed effective date of the area that includes the savings banking services. The OTS evaluates the designation. If the OTS approves the association’s assessment area(s). availability and effectiveness of a designation, it remains in effect until (b) Exclusion. Activities considered savings association’s systems for the savings association requests under the lending or service tests may delivering retail banking services, revocation of the designation or until not be considered under the investment pursuant to the following criteria: one year after the OTS notifies the test. (1) The current distribution of the savings association that the OTS has (c) Affiliate investment. At a savings savings association’s branches among revoked the designation on its own association’s option, the OTS will low-,moderate-, middle-, and upper- initiative. consider, in its assessment of a savings income geographies; (c) Performance criteria. The OTS association’s investment performance, a (2) In the context of its current evaluates the community development qualified investment made by an distribution of the savings association’s performance of a wholesale or limited affiliate of the savings association, if the branches, the savings association’s purpose savings association pursuant to qualified investment is not claimed by record of opening and closing branches, the following criteria: any other institution. particularly branches located in low- or (1) The number and amount of (d) Disposition of branch premises. moderate-income geographies or community development loans Donating, selling on favorable terms, or primarily serving low- or moderate- (including originations and purchases of making available on a rent-free basis a income individuals; loans and other community branch of the savings association that is (3) The availability and effectiveness development loan data provided by the located in a predominantly minority of alternative systems for delivering savings association, such as data on neighborhood to a minority depository retail banking services (e.g., ATMs, loans outstanding, commitments, and institution or women’s depository ATMs not owned or operated by or letters of credit), qualified investments, institution (as these terms are defined in exclusively for the savings association, or community development services; 12 U.S.C. 2907(b)) will be considered as banking by telephone or computer, loan (2) The use of innovative or complex a qualified investment. production offices, and bank-at-work or qualified investments, community (e) Performance criteria. The OTS bank-by-mail programs) in low- and development loans, or community evaluates the investment performance of moderate-income geographies and to development services and the extent to 22216 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations which the investments are not routinely borrowers of different income levels and (3) During the period of formal public provided by private investors; and businesses and farms of different sizes; comment, make copies of the plan (3) The savings association’s (4) The geographic distribution of the available for review by the public at no responsiveness to credit and community savings association’s loans; and cost at all offices of the savings development needs. (5) The savings association’s record of association in any assessment area (d) Indirect activities. At a savings taking action, if warranted, in response covered by the plan and provide copies association’s option, the OTS will to written complaints about its of the plan upon request for a consider in its community development performance in helping to meet credit reasonable fee to cover copying and performance assessment: needs in its assessment area(s). mailing, if applicable. (1) Qualified investments or (b) Small savings association (e) Submission of plan. The savings community development services performance rating. The OTS rates the association shall submit its plan to the provided by an affiliate of the savings performance of a savings association OTS at least three months prior to the association, if the investments or evaluated under this section as provided proposed effective date of the plan. The services are not claimed by any other in Appendix A of this part. savings association shall also submit with its plan a description of its institution; and § 563e.27 Strategic plan. (2) Community development lending informal efforts to seek suggestions from (a) Alternative election. The OTS will members of the public, any written by affiliates, consortia and third parties, assess a savings association’s record of subject to the requirements and public comment received, and, if the helping to meet the credit needs of its plan was revised in light of the limitations in § 563e.22 (c) and (d). assessment area(s) under a strategic plan comment received, the initial plan as (e) Benefit to assessment area(s).—(1) if: released for public comment. Benefit inside assessment area(s). The (1) The savings association has (f) Plan content—(1) Measurable OTS considers all qualified investments, submitted the plan to the OTS as goals. (i) A savings association shall community development loans, and provided for in this section; specify in its plan measurable goals for community development services that (2) The OTS has approved the plan; helping to meet the credit needs of each benefit areas within the savings (3) The plan is in effect; and assessment area covered by the plan, association’s assessment area(s) or a (4) The savings association has been particularly the needs of low- and broader statewide or regional area that operating under an approved plan for at moderate-income geographies and low- includes the savings association’s least one year. and moderate-income individuals, assessment area(s). (b) Data reporting. The OTS’s through lending, investment, and (2) Benefit outside assessment area(s). approval of a plan does not affect the services, as appropriate. The OTS considers the qualified savings association’s obligation, if any, (ii) A savings association shall investments, community development to report data as required by § 563e.42. address in its plan all three performance loans, and community development (c) Plans in general. (1) Term. A plan categories and, unless the savings services that benefit areas outside the may have a term of no more than five association has been designated as a savings association’s assessment area(s), years, and any multi-year plan must wholesale or limited purpose savings if the savings association has adequately include annual interim measurable association, shall emphasize lending addressed the needs of its assessment goals under which the OTS will and lending-related activities. area(s). evaluate the savings association’s Nevertheless, a different emphasis, (f) Community development performance. including a focus on one or more performance rating. The OTS rates a (2) Multiple assessment areas. A performance categories, may be savings association’s community savings association with more than one appropriate if responsive to the development performance as provided assessment area may prepare a single characteristics and credit needs of its in Appendix A of this part. plan for all of its assessment areas or assessment area(s), considering public one or more plans for one or more of its comment and the savings association’s § 563e.26 Small savings association assessment areas. performance standards. capacity and constraints, product (3) Treatment of affiliates. Affiliated offerings, and business strategy. (a) Performance criteria. The OTS institutions may prepare a joint plan if (2) Confidential information. A evaluates the record of a small savings the plan provides measurable goals for savings association may submit association, or a savings association that each institution. Activities may be additional information to the OTS on a was a small savings association during allocated among institutions at the confidential basis, but the goals stated the prior calendar year, of helping to institutions’ option, provided that the in the plan must be sufficiently specific meet the credit needs of its assessment same activities are not considered for to enable the public and the OTS to area(s) pursuant to the following more than one institution. judge the merits of the plan. criteria: (d) Public participation in plan (3) Satisfactory and outstanding goals. (1) The savings association’s loan-to- development. Before submitting a plan A savings association shall specify in its deposit ratio, adjusted for seasonal to the OTS for approval, a savings plan measurable goals that constitute variation and, as appropriate, other association shall: ‘‘satisfactory’’ performance. A plan may lending-related activities, such as loan (1) Informally seek suggestions from specify measurable goals that constitute originations for sale to the secondary members of the public in its assessment ‘‘outstanding’’ performance. If a savings markets, community development area(s) covered by the plan while association submits, and the OTS loans, or qualified investments; developing the plan; approves, both ‘‘satisfactory’’ and (2) The percentage of loans and, as (2) Once the savings association has ‘‘outstanding’’ performance goals, the appropriate, other lending-related developed a plan, formally solicit public OTS will consider the savings activities located in the savings comment on the plan for at least 30 days association eligible for an ‘‘outstanding’’ association’s assessment area(s); by publishing notice in at least one performance rating. (3) The savings association’s record of newspaper of general circulation in each (4) Election if satisfactory goals not lending to and, as appropriate, engaging assessment area covered by the plan; substantially met. A savings association in other lending-related activities for and may elect in its plan that, if the savings Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22217 association fails to meet substantially its a rating of ‘‘outstanding,’’ ‘‘satisfactory,’’ OTS approval under the Bank Merger plan goals for a satisfactory rating, the ‘‘needs to improve,’’ or ‘‘substantial Act (12 U.S.C. 1828(c)); OTS will evaluate the savings noncompliance’’ based on the savings (4) A Federal thrift charter; and association’s performance under the association’s performance under the (5) Acquisitions subject to section lending, investment, and service tests, lending, investment and service tests, 10(e) of the Home Owners’ Loan Act (12 the community development test, or the the community development test, the U.S.C. 1467a(e)). small savings association performance small savings association performance (b) Charter application. An applicant standards, as appropriate. standards, or an approved strategic plan, for a Federal thrift charter shall submit (g) Plan approval—(1) Timing. The as applicable. with its application a description of OTS will act upon a plan within 60 (b) Lending, investment, and service how it will meet its CRA objectives. The calendar days after the OTS receives the tests. The OTS assigns a rating for a OTS takes the description into account complete plan and other material savings association assessed under the in considering the application and may required under paragraph (d) of this lending, investment, and service tests in deny or condition approval on that section. If the OTS fails to act within accordance with the following basis. this time period, the plan shall be principles: (c) Interested parties. The OTS takes deemed approved unless the OTS (1) A savings association that receives into account any views expressed by extends the review period for good an ‘‘outstanding’’ rating on the lending interested parties that are submitted in cause. test receives an assigned rating of at accordance with the applicable (2) Public participation. In evaluating least ‘‘satisfactory’’; comment procedures in considering the plan’s goals, the OTS considers the (2) A savings association that receives CRA performance in an application public’s involvement in formulating the an ‘‘outstanding’’ rating on both the listed in paragraphs (a) and (b) of this plan, written public comment on the service test and the investment test and section. plan, and any response by the savings a rating of at least ‘‘high satisfactory’’ on (d) Denial or conditional approval of association to public comment on the the lending test receives an assigned application. A savings association’s plan. rating of ‘‘outstanding’’; and record of performance may be the basis (3) Criteria for evaluating plan. The (3) No savings association may receive for denying or conditioning approval of OTS evaluates a plan’s measurable goals an assigned rating of ‘‘satisfactory’’ or an application listed in paragraph (a) of using the following criteria, as higher unless it receives a rating of at this section. appropriate: least ‘‘low satisfactory’’ on the lending (e) Insured depository institution. For (i) The extent and breadth of lending test. purposes of this section, the term or lending-related activities, including, (c) Effect of evidence of ‘‘insured depository institution’’ has the as appropriate, the distribution of loans discriminatory or other illegal credit meaning given to that term in 12 U.S.C. among different geographies, businesses practices. Evidence of discriminatory or 1813. and farms of different sizes, and other illegal credit practices adversely individuals of different income levels, affects the OTS’s evaluation of a savings Subpart CÐRecords, Reporting, and the extent of community development association’s performance. In Disclosure Requirements lending, and the use of innovative or determining the effect on the savings § 563e.41 Assessment area delineation. flexible lending practices to address association’s assigned rating, the OTS credit needs; considers the nature and extent of the (a) In general. A savings association (ii) The amount and innovativeness, evidence, the policies and procedures shall delineate one or more assessment complexity, and responsiveness of the that the savings association has in place areas within which the OTS evaluates savings association’s qualified to prevent discriminatory or other the savings association’s record of investments; and illegal credit practices, any corrective helping to meet the credit needs of its (iii) The availability and effectiveness action that the savings association has community. The OTS does not evaluate of the savings association’s systems for taken or has committed to take, the savings association’s delineation of delivering retail banking services and particularly voluntary corrective action its assessment area(s) as a separate the extent and innovativeness of the resulting from self-assessment, and performance criterion, but the OTS savings association’s community other relevant information. reviews the delineation for compliance development services. with the requirements of this section. (h) Plan amendment. During the term § 563e.29 Effect of CRA performance on (b) Geographic area(s) for wholesale of a plan, a savings association may applications. or limited purpose savings associations. request the OTS to approve an (a) CRA performance. Among other The assessment area(s) for a wholesale amendment to the plan on grounds that factors, the OTS takes into account the or limited purpose savings association there has been a material change in record of performance under the CRA of must consist generally of one or more circumstances. The savings association each applicant savings association, and MSAs (using the MSA boundaries that shall develop an amendment to a for applications under section 10(e) of were in effect as of January 1 of the previously approved plan in accordance the Home Owners’ Loan Act (12 U.S.C. calendar year in which the delineation with the public participation 1467a(e)), of each proposed subsidiary is made) or one or more contiguous requirements of paragraph (c) of this savings association, in considering an political subdivisions, such as counties, section. application for: cities, or towns, in which the savings (i) Plan assessment. The OTS (1) The establishment of a domestic association has its main office, approves the goals and assesses branch or other facility that would be branches, and deposit-taking ATMs. performance under a plan as provided authorized to take deposits; (c) Geographic area(s) for other for in Appendix A of this part. (2) The relocation of the main office savings associations. The assessment or a branch; area(s) for a savings association other § 563e.28 Assigned ratings. (3) The merger or consolidation with than a wholesale or limited purpose (a) Ratings in general. Subject to or the acquisition of the assets or savings association must: paragraphs (b) and (c) of this section, assumption of the liabilities of an (1) Consist generally of one or more the OTS assigns to a savings association insured depository institution requiring MSAs (using the MSA boundaries that 22218 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations were in effect as of January 1 of the CRA performance unless the OTS savings association may collect and calendar year in which the delineation determines that the assessment area(s) maintain in machine readable form (as is made) or one or more contiguous do not comply with the requirements of prescribed by the OTS) data for political subdivisions, such as counties, this section. consumer loans originated or purchased cities, or towns; and by the savings association for (2) Include the geographies in which § 563e.42 Data collection, reporting, and consideration under the lending test. A disclosure. the savings association has its main savings association may maintain data office, its branches, and its deposit- (a) Loan information required to be for one or more of the following taking ATMs, as well as the surrounding collected and maintained. A savings categories of consumer loans: motor geographies in which the savings association, except a small savings vehicle, credit card, home equity, other association has originated or purchased association, shall collect, and maintain secured, and other unsecured. If the a substantial portion of its loans in machine readable form (as prescribed savings association maintains data for (including home mortgage loans, small by the OTS) until the completion of its loans in a certain category, it shall business and small farm loans, and any next CRA examination, the following maintain data for all loans originated or other loans the savings association data for each small business or small purchased within that category. The chooses, such as those consumer loans farm loan originated or purchased by savings association shall maintain data on which the savings association elects the savings association: separately for each category, including to have its performance assessed). (1) A unique number or alpha- for each loan: (d) Adjustments to geographic area(s). numeric symbol that can be used to (i) A unique number or alpha-numeric A savings association may adjust the identify the relevant loan file; symbol that can be used to identify the boundaries of its assessment area(s) to (2) The loan amount at origination; relevant loan file; include only the portion of a political (3) The loan location; and (ii) The loan amount at origination or subdivision that it reasonably can be (4) An indicator whether the loan was purchase; expected to serve. An adjustment is to a business or farm with gross annual (iii) The loan location; and particularly appropriate in the case of revenues of $1 million or less. (iv) The gross annual income of the an assessment area that otherwise (b) Loan information required to be borrower that the savings association would be extremely large, of unusual reported. A savings association, except considered in making its credit configuration, or divided by significant a small savings association or a savings decision. geographic barriers. association that was a small savings (2) Other loan data. At its option, a (e) Limitations on the delineation of association during the prior calendar savings association may provide other an assessment area. Each savings year, shall report annually by March 1 information concerning its lending association’s assessment area(s): to the OTS in machine readable form (as performance, including additional loan (1) Must consist only of whole prescribed by the OTS) the following distribution data. geographies; data for the prior calendar year: (d) Data on affiliate lending. A (2) May not reflect illegal (1) Small business and small farm savings association that elects to have discrimination; loan data. For each geography in which the OTS consider loans by an affiliate, (3) May not arbitrarily exclude low- or the savings association originated or for purposes of the lending or moderate-income geographies, taking purchased a small business or small community development test or an into account the savings association’s farm loan, the aggregate number and approved strategic plan, shall collect, size and financial condition; and amount of loans: maintain, and report for those loans the (4) May not extend substantially (i) With an amount at origination of data that the savings association would beyond a CMSA boundary or beyond a $100,000 or less; have collected, maintained, and state boundary unless the assessment (ii) With amount at origination of reported pursuant to paragraphs (a), (b), area is located in a multistate MSA. If more than $100,000 but less than or and (c) of this section had the loans a savings association serves a equal to $250,000; been originated or purchased by the geographic area that extends (iii) With an amount at origination of savings association. For home mortgage substantially beyond a state boundary, more than $250,000; and loans, the savings association shall also the savings association shall delineate (iv) To businesses and farms with be prepared to identify the home separate assessment areas for the areas gross annual revenues of $1 million or mortgage loans reported under part 203 in each state. If a savings association less (using the revenues that the savings of this title by the affiliate. serves a geographic area that extends association considered in making its (e) Data on lending by a consortium substantially beyond a CMSA boundary, credit decision); or a third-party. A savings association the savings association shall delineate (2) Community development loan that elects to have the OTS consider separate assessment areas for the areas data. The aggregate number and community development loans by a inside and outside the CMSA. aggregate amount of community consortium or third party, for purposes (f) Savings associations serving development loans originated or of the lending or community military personnel. Notwithstanding the purchased; and development tests or an approved requirements of this section, a savings (3) Home mortgage loans. If the strategic plan, shall report for those association whose business savings association is subject to loans the data that the savings predominantly consists of serving the reporting under part 203 of this title, the association would have reported under needs of military personnel or their location of each home mortgage loan paragraph (b)(2) of this section had the dependents who are not located within application, origination, or purchase loans been originated or purchased by a defined geographic area may delineate outside the MSAs in which the savings the savings association. its entire deposit customer base as its association has a home or branch office (f) Small savings associations electing assessment area. (or outside any MSA) in accordance evaluation under the lending, (g) Use of assessment area(s). The with the requirements of part 203 of this investment, and service tests. A savings OTS uses the assessment area(s) title. association that qualifies for evaluation delineated by a savings association in its (c) Optional data collection and under the small savings association evaluation of the savings association’s maintenance—(1) Consumer loans. A performance standards but elects Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22219 evaluation under the lending, geography relative to the area median § 563e.43 Content and availability of public investment, and service tests shall income is less than 10 percent, 10 or file. collect, maintain, and report the data more but less than 20 percent, 20 or (a) Information available to the required for other savings associations more but less than 30 percent, 30 or public. A savings association shall pursuant to paragraphs (a) and (b) of more but less than 40 percent, 40 or maintain a public file that includes the this section. more but less than 50 percent, 50 or following information: (g) Assessment area data. A savings more but less than 60 percent, 60 or (1) All written comments received association, except a small savings more but less than 70 percent, 70 or from the public for the current year and association or a savings association that more but less than 80 percent, 80 or each of the prior two calendar years that was a small savings association during more but less than 90 percent, 90 or specifically relate to the savings the prior calendar year, shall collect and more but less than 100 percent, 100 or association’s performance in helping to report to the OTS by March 1 of each more but less than 110 percent, 110 or meet community credit needs, and any year a list for each assessment area more but less than 120 percent, and 120 response to the comments by the showing the geographies within the percent or more; savings association, if neither the area. comments nor the responses contain (h) CRA Disclosure Statement. The (iii) A list showing each geography in statements that reflect adversely on the OTS prepares annually for each savings which the savings association reported good name or reputation of any persons association that reports data pursuant to a small business or small farm loan; and other than the savings association or this section a CRA Disclosure Statement (iv) The number and amount of small publication of which would violate that contains, on a state-by-state basis: business and small farm loans to specific provisions of law; (1) For each county (and for each businesses and farms with gross annual (2) A copy of the public section of the assessment area smaller than a county) revenues of $1 million or less; savings association’s most recent CRA Performance Evaluation prepared by the with a population of 500,000 persons or (3) The number and amount of small OTS. The savings association shall place fewer in which the savings association business and small farm loans located this copy in the public file within 30 reported a small business or small farm inside each assessment area reported by business days after its receipt from the loan: the savings association and the number (i) The number and amount of small OTS; and amount of small business and small business and small farm loans reported (3) A list of the savings association’s farm loans located outside the as originated or purchased located in branches, their street addresses, and assessment area(s) reported by the low-, moderate-, middle-, and upper- geographies; savings association; and income geographies; (4) A list of branches opened or closed (ii) A list grouping each geography (4) The number and amount of by the savings association during the according to whether the geography is community development loans reported current year and each of the prior two low-, moderate-, middle-, or upper- as originated or purchased. calendar years, their street addresses, income; (i) Aggregate disclosure statements. and geographies; (iii) A list showing each geography in The OTS, in conjunction with the Board (5) A list of services (including hours which the savings association reported of Governors of the Federal Reserve of operation, available loan and deposit a small business or small farm loan; and System, the Federal Deposit Insurance products, and transaction fees) generally (iv) The number and amount of small Corporation, and the Office of the offered at the savings association’s business and small farm loans to Comptroller of the Currency, prepares branches and descriptions of material businesses and farms with gross annual annually, for each MSA (including an differences in the availability or cost of revenues of $1 million or less; MSA that crosses a state boundary) and services at particular branches, if any. (2) For each county (and for each the non-MSA portion of each state, an At its option, a savings association may assessment area smaller than a county) aggregate disclosure statement of small include information regarding the with a population in excess of 500,000 business and small farm lending by all availability of alternative systems for persons in which the savings institutions subject to reporting under delivering retail banking services (e.g., association reported a small business or this part or parts 25, 228, or 345 of this ATMs, ATMs not owned or operated by small farm loan: title. These disclosure statements or exclusively for the savings (i) The number and amount of small association, banking by telephone or business and small farm loans reported indicate, for each geography, the number and amount of all small computer, loan production offices, and as originated or purchased located in bank-at-work or bank-by-mail geographies with median income business and small farm loans originated or purchased by reporting programs); relative to the area median income of (6) A map of each assessment area institutions, except that the OTS may less than 10 percent, 10 or more but less showing the boundaries of the area and adjust the form of the disclosure if than 20 percent, 20 or more but less identifying the geographies contained necessary, because of special than 30 percent, 30 or more but less within the area, either on the map or in circumstances, to protect the privacy of than 40 percent, 40 or more but less a separate list; and than 50 percent, 50 or more but less a borrower or the competitive position (7) Any other information the savings than 60 percent, 60 or more but less of an institution. association chooses. than 70 percent, 70 or more but less (j) Central data depositories. The OTS (b) Additional information available than 80 percent, 80 or more but less makes the aggregate disclosure to the public—(1) Savings associations than 90 percent, 90 or more but less statements, described in paragraph (i) of other than small savings associations. A than 100 percent, 100 or more but less this section, and the individual savings savings association, except a small than 110 percent, 110 or more but less association CRA Disclosure Statements, savings association or a savings than 120 percent, and 120 percent or described in paragraph (h) of this association that was a small savings more; section, available to the public at central association during the prior calendar (ii) A list grouping each geography in data depositories. The OTS publishes a year, shall include in its public file the the county or assessment area according list of the depositories at which the following information pertaining to the to whether the median income in the statements are available. savings association and its affiliates, if 22220 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations applicable, for each of the prior two satisfactory rating during its most recent (b) Data collection and reporting; calendar years: examination shall include in its public strategic plan; performance tests and (i) If the savings association has file a description of its current efforts to standards—(1) Data collection and elected to have one or more categories improve its performance in helping to reporting. (i) On January 1, 1996, the of its consumer loans considered under meet the credit needs of its entire data collection requirements set forth in the lending test, for each of these community. The savings association § 563e.42 (except § 563e.42(b) and (g)) categories, the number and amount of shall update the description quarterly. become applicable. loans: (c) Location of public information. A (ii) On January 1, 1997, the data (A) To low-, moderate-, middle-, and savings association shall make available reporting requirements set forth in upper-income individuals; to the public for inspection upon § 563e.42(b) and (g) become applicable. (B) Located in low-, moderate-, request and at no cost the information (2) Small savings associations. middle-, and upper-income census required in this section as follows: Beginning January 1, 1996, the OTS tracts; and (1) At the main office and, if an evaluates savings associations that (C) Located inside the savings interstate savings association, at one qualify for the small savings association association’s assessment area(s) and branch office in each state, all performance standards described in outside the savings association’s information in the public file; and § 563e.26 under that section. assessment area(s); and (2) At each branch: (3) Strategic plan. Beginning January (ii) The savings association’s CRA (i) A copy of the public section of the 1, 1996, a savings association that elects Disclosure Statement. The savings savings association’s most recent CRA to be evaluated under an approved association shall place the statement in Performance Evaluation and a list of strategic plan pursuant to § 563e.27 may the public file within three business services provided by the branch; and submit its strategic plan to the OTS for days of its receipt from the OTS. (ii) Within five calendar days of the approval. (2) Savings associations required to request, all the information in the public (4) Other performance tests. (i) report Home Mortgage Disclosure Act file relating to the assessment area in Beginning January 1, 1996, a savings (HMDA) data. A savings association which the branch is located. association may elect to be evaluated required to report home mortgage loan (d) Copies. Upon request, a savings under the pertinent revised performance data pursuant to part 203 of this title tests described in §§ 563e.22, 563e.23, shall include in its public file a copy of association shall provide copies, either on paper or in another form acceptable 563e.24, and 563e.25, if the savings the HMDA Disclosure Statement association provides the necessary data provided by the Federal Financial to the person making the request, of the information in its public file. The to permit evaluation. Institutions Examination Council (ii) Beginning July 1, 1997, the OTS savings association may charge a pertaining to the savings association for evaluates all savings associations under reasonable fee not to exceed the cost of each of the prior two calendar years. In the pertinent revised performance tests. copying and mailing (if applicable). addition, a savings association that (c) Schedule. (1) On July 1, 1995, elected to have the OTS consider the (e) Updating. Except as otherwise §§ 563e.11, 563e.12, 563e.29, and mortgage lending of an affiliate for any provided in this section, a savings 563e.51 become applicable, and of these years shall include in its public association shall ensure that the §§ 563e.1, 563e.2, and 563e.8 expire. file the affiliate’s HMDA Disclosure information required by this section is (2) On January 1, 1996, § 563e.41 and Statement for those years. The savings current as of April 1 of each year. the pertinent provisions of Subpart B of association shall place the statement(s) § 563e.44 Public notice by savings this part will apply to savings in the public file within three business associations. associations that elect to be evaluated days after its receipt. A savings association shall provide in under §§ 563e.22 through 563e.25, (3) Small savings associations. A the public lobby of its main office and savings associations that submit for small savings association or a savings each of its branches the appropriate approval strategic plans under association that was a small savings public notice set forth in Appendix B of § 563e.27, and savings associations that association during the prior calendar this part. Only a branch of a savings qualify for the small savings association year shall include in its public file: association having more than one performance standards described in (i) The savings association’s loan-to- assessment area shall include the § 563e.26. deposit ratio for each quarter of the bracketed material in the notice for (3) On January 1, 1996, §§ 563e.42 prior calendar year and, at its option, branch offices. Only a savings (except § 563e.42(b) and (g)) and additional data on its loan-to-deposit association that is an affiliate of a 563e.45 become applicable. ratio; and (4) On January 1, 1997, §§ 563e.41 and holding company shall include the last (ii) The information required for other 563e.42(b) and (g) become applicable. two sentences of the notices. savings associations by paragraph (b)(1) (5) On July 1, 1997, §§ 563e.21 of this section, if the savings association § 563e.45 Publication of planned through 563e.28, 563e.43, and 563e.44 has elected to be evaluated under the examination schedule. become applicable, and §§ 563e.3 lending, investment, and service tests. The OTS publishes at least 30 days in through 563e.7, and 563e.51 expire. (4) Savings associations with strategic advance of the beginning of each Appendix A to Part 563e—Ratings plans. A savings association that has calendar quarter a list of savings been approved to be assessed under a associations scheduled for CRA (a) Ratings in general. (1) In assigning a rating, the OTS evaluates a savings strategic plan shall include in its public examinations in that quarter. file a copy of that plan. A savings association’s performance under the association need not include Subpart DÐTransition Rules applicable performance criteria in this part, information submitted to the OTS on a in accordance with § 563e.21 and § 563e.28, § 563e.51 Transition rules. which provides for adjustments on the basis confidential basis in conjunction with of evidence of discriminatory or other illegal the plan. (a) Effective date. Sections of this part credit practices. (5) Savings associations with less than become applicable over a period of time (2) A savings association’s performance satisfactory ratings. A savings in accordance with the schedule set need not fit each aspect of a particular rating association that received a less than forth in paragraph (c) of this section. profile in order to receive that rating, and Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22221 exceptionally strong performance with (iii) Low satisfactory. The OTS rates a mortgage, small business, small farm, and respect to some aspects may compensate for savings association’s lending performance consumer loans, if applicable, in its weak performance in others. The savings ‘‘low satisfactory’’ if, in general, it assessment area(s); association’s overall performance, however, demonstrates: (B) A very small percentage of its loans are must be consistent with safe and sound (A) Adequate responsiveness to credit made in its assessment area(s); banking practices and generally with the needs in its assessment area(s), taking into (C) A very poor geographic distribution of appropriate rating profile as follows. account the number and amount of home loans, particularly to low- or moderate- (b) Savings associations evaluated under mortgage, small business, small farm, and income geographies, in its assessment area(s); the lending, investment, and service tests. (1) consumer loans, if applicable, in its (D) A very poor distribution, particularly in Lending performance rating. The OTS assigns assessment area(s); its assessment area(s), of loans among each savings association’s lending (B) An adequate percentage of its loans are individuals of different income levels and performance one of the five following ratings. made in its assessment area(s); businesses (including farms) of different (i) Outstanding. The OTS rates a savings (C) An adequate geographic distribution of sizes, given the product lines offered by the association’s lending performance loans in its assessment area(s); savings association; ‘‘outstanding’’ if, in general, it demonstrates: (D) An adequate distribution, particularly (E) A very poor record of serving the credit (A) Excellent responsiveness to credit in its assessment area(s), of loans among needs of highly economically disadvantaged needs in its assessment area(s), taking into individuals of different income levels and areas in its assessment area(s), low-income account the number and amount of home businesses (including farms) of different individuals, or businesses (including farms) mortgage, small business, small farm, and sizes, given the product lines offered by the with gross annual revenues of $1 million or consumer loans, if applicable, in its savings association; less, consistent with safe and sound assessment area(s); (E) An adequate record of serving the credit operations; (B) A substantial majority of its loans are needs of highly economically disadvantaged (F) No use of innovative or flexible lending made in its assessment area(s); areas in its assessment area(s), low-income practices in a safe and sound manner to (C) An excellent geographic distribution of individuals, or businesses (including farms) address the credit needs of low- or moderate- loans in its assessment area(s); with gross annual revenues of $1 million or income individuals or geographies; and (D) An excellent distribution, particularly less, consistent with safe and sound (G) It has made few, if any, community in its assessment area(s), of loans among operations; development loans. individuals of different income levels and (F) Limited use of innovative or flexible (2) Investment performance rating. The businesses (including farms) of different lending practices in a safe and sound manner OTS assigns each savings association’s sizes, given the product lines offered by the to address the credit needs of low- or investment performance one of the five savings association; moderate-income individuals or geographies; following ratings. (E) An excellent record of serving the (i) Outstanding. The OTS rates a savings and credit needs of highly economically association’s investment performance (G) It has made an adequate level of disadvantaged areas in its assessment area(s), ‘‘outstanding’’ if, in general, it demonstrates: community development loans. low-income individuals, or businesses (A) An excellent level of qualified (iv) Needs to improve. The OTS rates a (including farms) with gross annual revenues investments, particularly those that are not savings association’s lending performance of $1 million or less, consistent with safe and routinely provided by private investors, often sound operations; ‘‘needs to improve’’ if, in general, it in a leadership position; (F) Extensive use of innovative or flexible demonstrates: (B) Extensive use of innovative or complex lending practices in a safe and sound manner (A) Poor responsiveness to credit needs in qualified investments; and to address the credit needs of low- or its assessment area(s), taking into account the (C) Excellent responsiveness to credit and moderate-income individuals or geographies; number and amount of home mortgage, small community development needs. and business, small farm, and consumer loans, if (ii) High satisfactory. The OTS rates a (G) It is a leader in making community applicable, in its assessment area(s); savings association’s investment performance development loans. (B) A small percentage of its loans are ‘‘high satisfactory’’ if, in general, it (ii) High satisfactory. The OTS rates a made in its assessment area(s); demonstrates: savings association’s lending performance (C) A poor geographic distribution of loans, (A) A significant level of qualified ‘‘high satisfactory’’ if, in general, it particularly to low- or moderate-income investments, particularly those that are not demonstrates: geographies, in its assessment area(s); routinely provided by private investors, (A) Good responsiveness to credit needs in (D) A poor distribution, particularly in its occasionally in a leadership position; its assessment area(s), taking into account the assessment area(s), of loans among (B) Significant use of innovative or number and amount of home mortgage, small individuals of different income levels and complex qualified investments; and business, small farm, and consumer loans, if businesses (including farms) of different (C) Good responsiveness to credit and applicable, in its assessment area(s); sizes, given the product lines offered by the community development needs. (B) A high percentage of its loans are made savings association; (iii) Low satisfactory. The OTS rates a in its assessment area(s); (E) A poor record of serving the credit savings association’s investment performance (C) A good geographic distribution of loans needs of highly economically disadvantaged ‘‘low satisfactory’’ if, in general, it in its assessment area(s); areas in its assessment area(s), low-income demonstrates: (D) A good distribution, particularly in its individuals, or businesses (including farms) (A) An adequate level of qualified assessment area(s), of loans among with gross annual revenues of $1 million or investments, particularly those that are not individuals of different income levels and less, consistent with safe and sound routinely provided by private investors, businesses (including farms) of different operations; although rarely in a leadership position; sizes, given the product lines offered by the (F) Little use of innovative or flexible (B) Occasional use of innovative or savings association; lending practices in a safe and sound manner complex qualified investments; and (E) A good record of serving the credit to address the credit needs of low- or (C) Adequate responsiveness to credit and needs of highly economically disadvantaged moderate-income individuals or geographies; community development needs. areas in its assessment area(s), low-income and (iv) Needs to improve. The OTS rates a individuals, or businesses (including farms) (G) It has made a low level of community savings association’s investment performance with gross annual revenues of $1 million or development loans. ‘‘needs to improve’’ if, in general, it less, consistent with safe and sound (v) Substantial noncompliance. The OTS demonstrates: operations; rates a savings association’s lending (A) A poor level of qualified investments, (F) Use of innovative or flexible lending performance as being in ‘‘substantial particularly those that are not routinely practices in a safe and sound manner to noncompliance’’ if, in general, it provided by private investors; address the credit needs of low- or moderate- demonstrates: (B) Rare use of innovative or complex income individuals or geographies; and (A) A very poor responsiveness to credit qualified investments; and (G) It has made a relatively high level of needs in its assessment area(s), taking into (C) Poor responsiveness to credit and community development loans. account the number and amount of home community development needs. 22222 Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations

(v) Substantial noncompliance. The OTS a way that inconveniences its assessment (2) Satisfactory. The OTS rates a wholesale rates a savings association’s investment area(s), particularly low- and moderate- or limited purpose savings association’s performance as being in ‘‘substantial income geographies and low- and moderate- community development performance noncompliance’’ if, in general, it income individuals; and ‘‘satisfactory’’ if, in general, it demonstrates: demonstrates: (D) It provides an adequate level of (i) An adequate level of community (A) Few, if any, qualified investments, community development services. development loans, community development particularly those that are not routinely (iv) Needs to improve. The OTS rates a services, or qualified investments, provided by private investors; savings association’s service performance particularly investments that are not (B) No use of innovative or complex ‘‘needs to improve’’ if, in general, the savings routinely provided by private investors; qualified investments; and association demonstrates: (ii) Occasional use of innovative or (C) Very poor responsiveness to credit and (A) Its service delivery systems are complex qualified investments, community community development needs. unreasonably inaccessible to portions of its development loans, or community (3) Service performance rating. The OTS assessment area(s), particularly to low- or development services; and assigns each savings association’s service moderate-income geographies or to low- or (iii) Adequate responsiveness to credit and performance one of the five following ratings. moderate-income individuals; community development needs in its (i) Outstanding. The OTS rates a savings (B) To the extent changes have been made, assessment area(s). association’s service performance its record of opening and closing branches (3) Needs to improve. The OTS rates a ‘‘outstanding’’ if, in general, the savings has adversely affected the accessibility of its wholesale or limited purpose savings association demonstrates: delivery systems, particularly in low- or association’s community development (A) Its service delivery systems are readily moderate-income geographies or to low- or performance as ‘‘needs to improve’’ if, in accessible to geographies and individuals of moderate-income individuals; general, it demonstrates: different income levels in its assessment (C) Its services (including, where (i) A poor level of community development area(s); appropriate, business hours) vary in a way loans, community development services, or (B) To the extent changes have been made, that inconveniences its assessment area(s), qualified investments, particularly its record of opening and closing branches particularly low- or moderate-income investments that are not routinely provided has improved the accessibility of its delivery geographies or low- or moderate-income by private investors; systems, particularly in low- or moderate- individuals; and (ii) Rare use of innovative or complex income geographies or to low- or moderate- (D) It provides a limited level of qualified investments, community income individuals; community development services. development loans, or community (C) Its services (including, where (v) Substantial noncompliance. The OTS development services; and appropriate, business hours) are tailored to rates a savings association’s service (iii) Poor responsiveness to credit and the convenience and needs of its assessment performance as being in ‘‘substantial community development needs in its area(s), particularly low- or moderate-income noncompliance’’ if, in general, the savings assessment area(s). geographies or low- or moderate-income association demonstrates: (4) Substantial noncompliance. The OTS individuals; and (A) Its service delivery systems are rates a wholesale or limited purpose savings (D) It is a leader in providing community unreasonably inaccessible to significant association’s community development development services. portions of its assessment area(s), particularly performance in ‘‘substantial noncompliance’’ (ii) High satisfactory. The OTS rates a to low- or moderate-income geographies or to if, in general, it demonstrates: savings association’s service performance low- or moderate-income individuals; (i) Few, if any, community development ‘‘high satisfactory’’ if, in general, the savings (B) To the extent changes have been made, loans, community development services, or association demonstrates: its record of opening and closing branches qualified investments, particularly (A) Its service delivery systems are has significantly adversely affected the investments that are not routinely provided accessible to geographies and individuals of accessibility of its delivery systems, by private investors; different income levels in its assessment particularly in low- or moderate-income (ii) No use of innovative or complex area(s); geographies or to low- or moderate-income qualified investments, community (B) To the extent changes have been made, individuals; development loans, or community its record of opening and closing branches (C) Its services (including, where development services; and has not adversely affected the accessibility of appropriate, business hours) vary in a way (iii) Very poor responsiveness to credit and its delivery systems, particularly in low- and that significantly inconveniences its community development needs in its moderate-income geographies and to low- assessment area(s), particularly low- or assessment area(s). and moderate-income individuals; moderate-income geographies or low- or (d) Savings associations evaluated under (C) Its services (including, where moderate-income individuals; and the small savings association performance appropriate, business hours) do not vary in (D) It provides few, if any, community standards. The OTS rates the performance of a way that inconveniences its assessment development services. each savings association evaluated under the area(s), particularly low- and moderate- (c) Wholesale or limited purpose savings small savings association performance income geographies and low- and moderate- associations. The OTS assigns each standards as follows: income individuals; and wholesale or limited purpose savings (1) Eligibility for a satisfactory rating. The (D) It provides a relatively high level of association’s community development OTS rates a savings association’s community development services. performance one of the four following performance ‘‘satisfactory’’ if, in general, the (iii) Low satisfactory. The OTS rates a ratings. savings association demonstrates: savings association’s service performance (1) Outstanding. The OTS rates a wholesale (i) A reasonable loan-to-deposit ratio ‘‘low satisfactory’’ if, in general, the savings or limited purpose savings association’s (considering seasonal variations) given the association demonstrates: community development performance savings association’s size, financial (A) Its service delivery systems are ‘‘outstanding’’ if, in general, it demonstrates: condition, the credit needs of its assessment reasonably accessible to geographies and (i) A high level of community development area(s), and taking into account, as individuals of different income levels in its loans, community development services, or appropriate, lending-related activities such as assessment area(s); qualified investments, particularly loan originations for sale to the secondary (B) To the extent changes have been made, investments that are not routinely provided markets and community development loans its record of opening and closing branches by private investors; and qualified investments; has generally not adversely affected the (ii) Extensive use of innovative or complex (ii) A majority of its loans and, as accessibility of its delivery systems, qualified investments, community appropriate, other lending-related activities particularly in low- and moderate-income development loans, or community are in its assessment area(s); geographies and to low- and moderate- development services; and (iii) A distribution of loans to and, as income individuals; (iii) Excellent responsiveness to credit and appropriate, other lending related-activities (C) Its services (including, where community development needs in its for individuals of different income levels appropriate, business hours) do not vary in assessment area(s). (including low- and moderate-income Federal Register / Vol. 60, No. 86 / Thursday, May 4, 1995 / Rules and Regulations 22223 individuals) and businesses and farms of Community Reinvestment Act Notice comments received by us that specifically different sizes that is reasonable given the Under the Federal Community relate to our CRA performance in this demographics of the savings association’s Reinvestment Act (CRA), the Office of Thrift assessment area, and any responses we have assessment area(s); Supervision (OTS) evaluates our record of made to those comments. If we are operating (iv) A record of taking appropriate action, helping to meet the credit needs of this under an approved strategic plan, you may as warranted, in response to written community consistent with safe and sound also have access to a copy of the plan. complaints, if any, about the savings operations. The OTS also takes this record [If you would like to review information association’s performance in helping to meet into account when deciding on certain about our CRA performance in other the credit needs of its assessment area(s); and applications submitted by us. communities served by us, the public file for (v) A reasonable geographic distribution of Your involvement is encouraged. our entire savings association is available at loans given the savings association’s You are entitled to certain information (name of office located in state), located at assessment area(s). about our operations and our performance (address).] (2) Eligibility for an outstanding rating. A under the CRA, including, for example, At least 30 days before the beginning of savings association that meets each of the information about our branches, such as their each quarter, the OTS publishes a nationwide standards for a ‘‘satisfactory’’ rating under location and services provided at them; the list of the savings associations that are this paragraph and exceeds some or all of public section of our most recent CRA scheduled for CRA examination in that those standards may warrant consideration Performance Evaluation, prepared by the quarter. This list is available from the for an overall rating of ‘‘outstanding.’’ In OTS; and comments received from the public Regional Director (address). You may send assessing whether a savings association’s relating to our performance in helping to written comments about our performance in performance is ‘‘outstanding,’’ the OTS meet community credit needs, as well as our helping to meet community credit needs to considers the extent to which the savings responses to those comments. You may (name and address of official at savings association exceeds each of the performance review this information today. association) and the Regional Director standards for a ‘‘satisfactory’’ rating and its At least 30 days before the beginning of (address). Your letter, together with any performance in making qualified investments each quarter, the OTS publishes a nationwide response by us, will be considered by the and its performance in providing branches list of the savings associations that are OTS in evaluating our CRA performance and and other services and delivery systems that scheduled for CRA examination in that may be made public. enhance credit availability in its assessment quarter. This list is available from the You may ask to look at any comments area(s). Regional Director (address). You may send received by the Regional Director. You may (3) Needs to improve or substantial written comments about our performance in also request from the Regional Director an noncompliance ratings. A savings association helping to meet community credit needs to announcement of our applications covered (name and address of official at savings also may receive a rating of ‘‘needs to by the CRA filed with the OTS. We are an association) and OTS (address). Your letter, improve’’ or ‘‘substantial noncompliance’’ affiliate of (name of holding company), a together with any response by us, will be depending on the degree to which its savings and loan holding company. You may considered by the OTS in evaluating our CRA performance has failed to meet the standards request from the Regional Director an performance and may be made public. for a ‘‘satisfactory’’ rating. announcement of applications covered by the You may ask to look at any comments (e) Strategic plan assessment and rating. CRA filed by savings and loan holding received by the Regional Director. You may (1) Satisfactory goals. The OTS approves as companies. also request from the Regional Director an ‘‘satisfactory’’ measurable goals that announcement of our applications covered §§ 563e.1, 563e.2, and 563e.8 [Removed] adequately help to meet the credit needs of by the CRA filed with the OTS. We are an the savings association’s assessment area(s). 3. Sections 563e.1, 563e.2, and 563e.8 affiliate of (name of holding company), a are removed effective July 1, 1995. (2) Outstanding goals. If the plan identifies savings and loan holding company. You may a separate group of measurable goals that request from the Regional Director an §§ 563e.3, 563e.4, 563e.5, 563e.6, and 563e.7 substantially exceed the levels approved as announcement of applications covered by the and Subpart D [Removed] ‘‘satisfactory,’’ the OTS will approve those CRA filed by savings and loan holding 4. Sections 563e.3, 563e.4, 563e.5, goals as ‘‘outstanding.’’ companies. (3) Rating. The OTS assesses the (b) Notice for branch offices. 563e.6 and 563e.7, and subpart D, performance of a savings association consisting of 563e.51 are removed operating under an approved plan to Community Reinvestment Act Notice effective July 1, 1997. determine if the savings association has met Under the Federal Community Dated: April 19, 1995. its plan goals: Reinvestment Act (CRA), the Office of Thrift (i) If the savings association substantially Supervision (OTS) evaluates our record of By the Office of Thrift Supervision. achieves its plan goals for a satisfactory helping to meet the credit needs of this Jonathan L Fiechter, rating, the OTS will rate the savings community consistent with safe and sound Acting Director. association’s performance under the plan as operations. The OTS also takes this record [FR Doc. 95–10503 Filed 5–3–95; 8:45 am] ‘‘satisfactory.’’ into account when deciding on certain (ii) If the savings association exceeds its BILLING CODES 4810±33±P, 6210±01±P, 6714±01±P, applications submitted by us. 6720±01±P plan goals for a satisfactory rating and Your involvement is encouraged. substantially achieves its plan goals for an You are entitled to certain information outstanding rating, the OTS will rate the about our operations and our performance savings association’s performance under the under the CRA. You may review today the FEDERAL RESERVE SYSTEM plan as ‘‘outstanding.’’ public section of our most recent CRA (iii) If the savings association fails to meet evaluation, prepared by the OTS, and a list 12 CFR Part 203 substantially its plan goals for a satisfactory of services provided at this branch. You may [Regulation C; Docket No. R±0848] rating, the OTS will rate the savings also have access to the following additional association as either ‘‘needs to improve’’ or information, which we will make available to Home Mortgage Disclosure ‘‘substantial noncompliance,’’ depending on you at this branch within five calendar days the extent to which it falls short of its plan after you make a request to us: (1) A map AGENCY: Board of Governors of the goals, unless the savings association elected showing the assessment area containing this Federal Reserve System. in its plan to be rated otherwise, as provided branch, which is the area in which the OTS in § 25.27(f)(4). evaluates our CRA performance in this ACTION: Final rule. Appendix B to Part 563e—CRA Notice community; (2) information about our branches in this assessment area; (3) a list of SUMMARY: The Board is publishing a (a) Notice for main offices and, if an services we provide at those locations; (4) final rule to amend Regulation C (Home interstate savings association, one branch data on our lending performance in this Mortgage Disclosure) and the office in each state. assessment area; and (5) copies of all written instructions that financial institutions