XI. Community Reinvestment Act —Interagency Questions and Answers

XI. Community Reinvestment Act — Interagency Questions and Answers

FDIC Consumer Compliance Examination Manual — July 2016 XI–12.1

Interagency Questions and Answers Regarding

Community Reinvestment

Background

The OCC, Board, and FDIC (Agencies) implement

the Community Reinvestment Act (CRA) (12 U.S.C. 2901

seq.) through their CRA regulations. See 12 CFR parts 25,

195, 228, and 345. The CRA is designed to encourage

regulated financial institutions to help meet the credit needs of

their entire communities. The CRA regulations establish the

framework and criteria by which the Agencies assess an

institution’s record of helping to meet the credit needs of its

community, including low- and moderate-income

neighborhoods, consistent with safe and sound operations.

The regulations provide different evaluation standards for

institutions of different asset sizes and types.

The Agencies publish the Questions and Answers

provide guidance on the interpretation and application of the

CRA regulations to agency personnel, financial institutions,

and the public. The Agencies first published the Questions

and Answers under the auspices of the Federal Financial

Institutions Examination Council (FFIEC) in 1996 (61 FR

54647). The Questions and Answers were most recently

updated in July 2016 (81 FR 48505).

The Questions and Answers are grouped by the

provision of the CRA regulations that they discuss, are

presented in the same order as the regulatory provisions, and

employ an abbreviated method of citing to the regulations.

For example, for thrifts, the small savings association

performance standards appear at 12 CFR 195.26; for national

banks, the small bank performance standards appear at 12

CFR 25.26; for Federal Reserve System member banks

supervised by the Board, they appear at 12 CFR 228.26; and

for state nonmember banks, they appear at 12 CFR 345.26.

Accordingly, the citation would be to 12 CFR __.26. Each

Q&A is numbered using a system that consists of the

regulatory citation and a number, connected by a dash. For

example, the first Q&A addressing 12 CFR __.26 would be

identified as § __.26 – 1.

Although a particular Q&A may provide guidance on one

regulatory provision, e.g., 12 CFR __.22, which relates to the

lending test applicable to large institutions, its content may

also be applicable to, for example, small institutions, which

are evaluated pursuant to small institution performance

standards found at 12 CFR __.26. Thus, readers with a

particular interest in small institution issues, for example,

Throughout this document, “Questions and Answers” refers to the

“Interagency Questions and Answers Regarding Community

Reinvestment” in its entirety; “Q&A” refers to an individual question and

answer within the Questions and Answers.

should review Q&As relevant to other financial institutions as

well.

Interagency Questions and Answers Regarding

Community Reinvestment

§ __.11--Authority, purposes, and scope

§ __.11(c) Scope

§§ __.11(c)(3) & 195.11(c)(2) Certain special purpose

institutions

§§ __.11(c)(3) & 195.11(c)(2) – 1:

Is the list of

special purpose institutions exclusive?

A1. No, there may be other examples of special

purpose institutions. These institutions engage in specialized

activities that do not involve granting credit to the public in the

ordinary course of business. Special purpose institutions

typically serve as correspondent banks, trust companies, or

clearing agents or engage only in specialized services, such as

cash management controlled disbursement services. A

financial institution, however, does not become a special

purpose institution merely by ceasing to make loans and,

instead, making investments and providing other retail

banking services.

§§ __.11(c)(3) & 195.11(c)(2) – 2:

To be a special

purpose institution, must an institution limit its activities in its

charter?

A2. No. A special purpose institution may, but is

not required to, limit the scope of its activities in its charter,

articles of association, or other corporate organizational

documents. An institution that does not have legal limitations

on its activities, but has voluntarily limited its activities,

however, would no longer be exempt from Community

Reinvestment Act (CRA) requirements if it subsequently

engaged in activities that involve granting credit to the public

in the ordinary course of business. An institution that believes

it is exempt from CRA as a special purpose institution should

seek confirmation of this status from its supervisory Agency.

§ __.12--Definitions

§ __.12(a) Affiliate

§ __.12(a) – 1:

Does the definition of “affiliate”

include subsidiaries of an institution?

A1. Yes, “affiliate” includes any company that

controls, is controlled by, or is under common control with

another company. An institution’s subsidiary is controlled by

the institution and is, therefore, an affiliate.

§ __.12(f) Branch

§ __.12(f) – 1:

Do the definitions of “branch,”

“automated teller machine (ATM),” and “remote service

facility (RSF)” include mobile branches, ATMs, and RSFs?

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XI–12.2 FDIC Consumer Compliance Examination Manual — July 2016

A1. Yes. Staffed mobile offices that are authorized

as branches are considered “branches,” and mobile ATMs and

RSFs are considered “ATMs” and “RSFs.”

§ __.12(f) – 2:

Are loan production offices (LPO)

branches for purposes of the CRA?

A2. LPOs and other offices are not “branches”

unless they are authorized as branches of the institution

through the regulatory approval process of the institution’s

supervisory Agency.

§ __.12(g) Community development

§ __.12(g) – 1:

Are community development

activities limited to those that promote economic

development?

A1. No. Although the definition of “community

development” includes activities that promote economic

development by financing small businesses or farms, the rule

does not limit community development loans and services and

qualified investments to those activities. Community

development also includes community- or tribal-based child

care, educational, health, social services, or workforce

development or job training programs targeted to low- or

moderate-income persons, affordable housing for low- or

moderate-income individuals, and activities that revitalize or

stabilize low- or moderate-income areas, designated disaster

areas, or underserved or distressed nonmetropolitan middle-

income geographies.

§ __.12(g) – 2:

Must a community development

activity occur inside a low- or moderate-income area,

designated disaster area, or underserved or distressed

nonmetropolitan middle-income area in order for an institution

to receive CRA consideration for the activity?

A2. No. Community development includes

activities, regardless of their location, that provide affordable

housing for, or community services targeted to, low- or

moderate-income individuals and activities that promote

economic development by financing small businesses and

farms. Activities that stabilize or revitalize particular low- or

moderate-income areas, designated disaster areas, or

underserved or distressed nonmetropolitan middle-income

areas (including by creating, retaining, or improving jobs for

low- or moderate-income persons) also qualify as community

development, even if the activities are not located in these

areas. One example is financing a supermarket that serves as

an anchor store in a small strip mall located at the edge of a

middle-income area, if the mall stabilizes the adjacent

low-income community by providing needed shopping

services that are not otherwise available in the low-income

community.

§ __.12(g) – 3:

Does the regulation provide

flexibility in considering performance in high-cost areas?

A3. Yes, the flexibility of the performance standards

allows examiners to account in their evaluations for conditions

in high-cost areas. Examiners consider lending and services to

individuals and geographies of all income levels and

businesses of all sizes and revenues. In addition, the

flexibility in the requirement that community development

loans, community development services, and qualified

investments have as their “primary” purpose community

development allows examiners to account for conditions in

high-cost areas. For example, examiners could take into

account the fact that activities address a credit shortage among

middle-income people or areas caused by the

disproportionately high cost of building, maintaining or

acquiring a house when determining whether an institution’s

loan to or investment in an organization that funds affordable

housing for middle-income people or areas, as well as low-

and moderate-income people or areas, has as its primary

purpose community development. See also Q&A § __.12(h) –

8 for more information on “primary purpose.”

§ ___.12(g) – 4:

Can examples of community

development activities discussed in a particular Q&A also

apply to other types of community development activities not

specifically discussed in that Q&A if they have a similar

community development purpose?

A4. Yes. The Interagency Questions and Answers

Regarding Community Reinvestment (Questions and

Answers) provide examples of particular activities that may

receive consideration as community development activities.

Because a particular Q&A often describes a single type of

community development activity, such as a community

development loan, the corresponding examples are of

community development loans. However, because community

development loans, qualified investments, and community

development services all must have a primary purpose of

community development, a qualified investment or community

development service that supports a community development

purpose similar to the activity described in the context of the

community development loan would likely receive

consideration under the applicable test. The same would be

true if the community development activity described in a

particular Q&A were a qualified investment or community

development service. For example, Q&A § __.12(h) – 1

provides an example of a community development loan to a

not-for-profit organization supporting primarily low- or

moderate-income housing needs. Similarly, a grant to the

same not-for-profit organization would be considered a

qualified investment or technical assistance, such as writing a

grant proposal for the not-for-profit organization, would be

considered as a community development service. Further if a

financial institution engaged in all of these activities, each

would be considered under the applicable test. See

Q&A

§ __.23(b) – 1.

Moreover, lists of examples included throughout the

Questions and Answers are not exhaustive. A Q&A may

include examples to demonstrate activities that may qualify

under that Q&A, but the examples are not the only activities

that might qualify. Financial institutions may submit

information about activities they believe meet the definition of

XI. Community Reinvestment Act — Interagency Questions and Answers

FDIC Consumer Compliance Examination Manual — July 2016 XI–12.3

community development loan, qualified investment, or

community development service to examiners for

consideration.

§ __.12(g)(1) Affordable housing (including multifamily rental

housing) for low- or moderate-income individuals

§ __.12(g)(1) – 1:

When determining whether a

project is “affordable housing for low- or moderate-income

individuals,” thereby meeting the definition of “community

development,” will it be sufficient to use a formula that relates

the cost of ownership, rental, or borrowing to the income

levels in the area as the only factor, regardless of whether the

users, likely users, or beneficiaries of that affordable housing

are low- or moderate-income individuals?

A1. The concept of “affordable housing” for low- or

moderate-income individuals does hinge on whether low- or

moderate-income individuals benefit, or are likely to benefit,

from the housing. It would be inappropriate to give

consideration to a project that exclusively or predominately

houses families that are not low- or moderate-income simply

because the rents or housing prices are set according to a

particular formula.

For projects that do not yet have occupants, and for

which the income of the potential occupants cannot be

determined in advance, or in other projects where the income

of occupants cannot be verified, examiners will review factors

such as demographic, economic, and market data to determine

the likelihood that the housing will “primarily” accommodate

low- or moderate-income individuals. For example, examiners

may look at median rents of the assessment area and the

project; the median home value of either the assessment area,

low- or moderate-income geographies or the project; the low-

or moderate-income population in the area of the project; or

the past performance record of the organization(s) undertaking

the project. Further, such a project could receive consideration

if its express, bona fide intent, as stated, for example, in a

prospectus, loan proposal, or community action plan, is

community development.

§ __.12(g)(2) Community services targeted to low- or

moderate-income individuals

§ __.12(g)(2) – 1:

Community development includes

community services targeted to low- or moderate-income

individuals. What are examples of ways that an institution

could determine that community services are offered to low-

or moderate-income individuals?

A1. Examples of ways in which an institution could

determine that community services are targeted to low- or

moderate-income persons include, but are not limited to:

• The community service is targeted to the clients of a non-

profit organization that has a defined mission of serving low-

and moderate-income persons, or, because of government

grants, for example, is limited to offering services only to low-

or moderate-income persons.

• The community service is offered by a nonprofit organi-

zation that is located in and serves a low- or moderate-income

geography.

• The community service is conducted in a low- or moder-

ate-income area and targeted to the residents of the area.

• The community service is a clearly defined program that

benefits primarily low- or moderate-income persons, even if it

is provided by an entity that offers other programs that serve

individuals of all income levels.

• The community service is offered at a workplace to work-

ers who are low- and moderate-income, based on readily

available data for the average wage for workers in that particu-

lar occupation or industry (see, e.g.

http://www.bls.gov/bls/blswage.htm (Bureau of Labor Statis-

tics)).

• The community service is provided to students or their

families from a school at which the majority of students quali-

fy for free or reduced-price meals under the U.S. Department

of Agriculture’s National School Lunch Program.

• The community service is targeted to individuals who

receive or are eligible to receive Medicaid.

• The community service is provided to recipients of gov-

ernment assistance programs that have income qualifications

equivalent to, or stricter than, the definitions of low- and mod-

erate-income as defined by the CRA Regulations. Examples

include U.S. Department of Housing and Urban Develop-

ment’s section 8, 202, 515, and 811 programs or U.S. Depart-

ment of Agriculture’s section 514, 516, and Supplemental

Nutrition Assistance programs.

§ __.12(g)(3) Activities that promote economic development

by financing businesses or farms that meet certain size

eligibility standards

§ __.12(g)(3) – 1: “

Community development”

includes activities that promote economic development by

financing businesses or farms that meet certain size eligibility

standards. Are all activities that finance businesses and farms

that meet the size eligibility standards considered to be

community development?

A1. No. The concept of ‘‘community

development’’ under 12 CFR __.12(g)(3) involves both a

‘‘size’’ test and a ‘‘purpose’’ test that clarify what economic

development activities are considered under CRA. An

institution’s loan, investment, or service meets the ‘‘size’’ test

if it finances, either directly, or through an intermediary,

businesses or farms that either meet the size eligibility

standards of the Small Business Administration’s

Development Company (SBDC) or Small Business Investment

Company (SBIC) programs, or have gross annual revenues of

$1 million or less. For consideration under the “size test,” the

term financing is considered broadly and includes technical

assistance that readies a business that meets the size eligibility

XI. Community Reinvestment Act — Interagency Questions and Answers

XI–12.4 FDIC Consumer Compliance Examination Manual — July 2016

standards to obtain financing. To meet the ‘‘purpose test,’’ the

institution’s loan, investment, or service must promote

economic development. These activities are considered to

promote economic development if they support

• permanent job creation, retention, and/or improvement

o for low- or moderate-income persons;

o in low- or moderate-income geographies;

o in areas targeted for redevelopment by Federal, state,

local, or tribal governments;

o by financing intermediaries that lend to, invest in, or

provide technical assistance to start-ups or recently

formed small businesses or small farms; or

o through technical assistance or supportive services

for small businesses or farms, such as shared space, tech-

nology, or administrative assistance; or

• Federal, state, local, or tribal economic development initi-

atives that include provisions for creating or improving access

by low- or moderate-income persons to jobs or to job training

or workforce development programs.

The agencies will presume that any loan or service to

or investment in a SBDC, SBIC, Rural Business Investment

Company, New Markets Venture Capital Company, New

Markets Tax Credit-eligible Community Development Entity,

or Community Development Financial Institution that finances

small businesses or small farms, promotes economic

development. (See also Q&As § __.42(b)(2) – 2, § __.12(h) –

2, and § __.12(h) – 3 for more information about which loans

may be considered community development loans.)

Examiners will employ appropriate flexibility in

reviewing any information provided by a financial institution

that reasonably demonstrates that the purpose, mandate, or

function of the activity meets the “purpose test.” Examiners

will also consider the qualitative aspects of performance. For

example, activities will be considered more responsive to

community needs if a majority of jobs created, retained, and/or

improved benefit low- or moderate-income individuals.

§ __.12(g)(4) Activities that revitalize or stabilize certain ge-

ographies

§ __.12(g)(4) – 1:

Is the definition of “community

development” applicable to all institutions?

A1. The definition of “community development” is

applicable to all institutions, regardless of a particular

institution’s size or the performance criteria under which it is

evaluated.

§ __.12(g)(4) – 2:

Will activities that provide housing

for middle-income and upper-income persons qualify for

favorable consideration as community development activities

when they help to revitalize or stabilize a distressed or

underserved nonmetropolitan middle-income geography or

designated disaster areas?

A2. An activity that provides housing for middle- or

upper-income individuals qualifies as an activity that

revitalizes or stabilizes a distressed

nonmetropolitan middle-

income geography or a designated disaster area if the housing

directly helps to revitalize or stabilize the community by

attracting new, or retaining existing, businesses or residents

and, in the case of a designated disaster area, is related to

disaster recovery. The Agencies generally will consider all

activities that revitalize or stabilize a

distressed

nonmetropolitan middle-income geography or designated

disaster area, but will give greater weight to those activities

that are most responsive to community needs, including needs

of low- or moderate-income individuals or neighborhoods.

Thus, for example, a loan solely to develop middle- or upper-

income housing in a community in need of low- and moderate-

income housing would be given very little weight if there is

only a short-term benefit to low- and moderate-income

individuals in the community through the creation of

temporary construction jobs. (Except in connection with

intermediate small institutions, a housing-related loan is not

evaluated as a “community development loan” if it has been

reported or collected by the institution or its affiliate as a home

mortgage loan, unless it is a multifamily dwelling loan.

See

12 CFR __.12(h)(2)(i) and Q&As § __.12(h) – 2 and

§ __.12(h) – 3.) An activity will be presumed to revitalize or

stabilize such a geography or area if the activity is consistent

with a bona fide government revitalization or stabilization plan

or disaster recovery plan.

See Q&As § __.12(g)(4)(i) – 1 and

§ __.12(h) – 5.

In underserved nonmetropolitan middle-income ge-

ographies, activities that provide housing for middle- and up-

per-income individuals may qualify as activities that revitalize

or stabilize such

underserved areas if the activities also pro-

vide housing for low- or moderate-income individuals. For

example, a loan to build a mixed-income housing development

that provides housing for middle- and upper-income individu-

als in an

underserved nonmetropolitan middle-income geogra-

phy would receive positive consideration if it also provides

housing for low- or moderate-income individuals.

§ __.12(g)(4)(i) Activities that revitalize or stabilize low- or

moderate-income geographies

§ __.12(g)(4)(i) – 1:

What activities are considered to

“revitalize or stabilize” a low- or moderate-income geography,

and how are those activities considered?

A1. Activities that revitalize or stabilize a low- or

moderate-income geography are activities that help to attract

new, or retain existing, businesses or residents. Examiners

will presume that an activity revitalizes or stabilizes a low- or

moderate-income geography if the activity has been approved

by the governing board of an Enterprise Community or

Empowerment Zone (designated pursuant to 26 U.S.C.

§ 1391) and is consistent with the board’s strategic plan. They

will make the same presumption if the activity has received

similar official designation as consistent with a Federal, state,

local, or tribal government plan for the revitalization or

stabilization of the low- or moderate-income geography. For

XI. Community Reinvestment Act — Interagency Questions and Answers

FDIC Consumer Compliance Examination Manual — July 2016 XI–12.5

example, foreclosure prevention programs with the objective

of providing affordable, sustainable, long-term loan

restructurings or modifications to homeowners in low- or

moderate-income geographies, consistent with safe and sound

banking practices, may help to revitalize or stabilize those

geographies.

To determine whether other activities revitalize or

stabilize a low- or moderate-income geography, examiners

will evaluate the activity’s actual impact on the geography, if

information about this is available. If not, examiners will

determine whether the activity is consistent with the

community’s formal or informal plans for the revitalization

and stabilization of the low- or moderate-income geography.

For more information on what activities revitalize or stabilize

a low- or moderate-income geography, see Q&As § __.12(g) –

2 and § __.12(h) – 5.

§ __.12(g)(4)(ii) Activities that revitalize or stabilize

designated disaster areas

§ __.12(g)(4)(ii) – 1:

What is a “designated disaster

area” and how long does it last?

A1. A “designated disaster area” is a major disaster

area designated by the Federal government. Such disaster

designations include, in particular, Major Disaster

Declarations administered by the Federal Emergency

Management Agency (FEMA) (http://www.fema.gov

), but

excludes counties designated to receive only FEMA Public

Assistance Emergency Work Category A (Debris Removal)

and/or Category B (Emergency Protective Measures).

Examiners will consider institution activities related

to disaster recovery that revitalize or stabilize a designated

disaster area for 36 months following the date of designation.

Where there is a demonstrable community need to extend the

period for recognizing revitalization or stabilization activities

in a particular disaster area to assist in long-term recovery

efforts, this time period may be extended.

§ __.12(g)(4)(ii) – 2:

What activities are considered

to “revitalize or stabilize” a designated disaster area, and how

are those activities considered?

A2. The Agencies generally will consider an activity

to revitalize or stabilize a designated disaster area if it helps to

attract new, or retain existing, businesses or residents and is

related to disaster recovery. An activity will be presumed to

revitalize or stabilize the area if the activity is consistent with a

bona fide government revitalization or stabilization plan or

disaster recovery plan. The Agencies generally will consider

all activities relating to disaster recovery that revitalize or

stabilize a designated disaster area, but will give greater

weight to those activities that are most responsive to

community needs, including the needs of low- or moderate-

income individuals or neighborhoods. Qualifying activities

may include, for example, providing financing to help retain

businesses in the area that employ local residents, including

low- and moderate-income individuals; providing financing to

attract a major new employer that will create long-term job

opportunities, including for low- and moderate-income

individuals; providing financing or other assistance for

essential community-wide infrastructure, community services,

and rebuilding needs; and activities that provide housing,

financial assistance, and services to individuals in designated

disaster areas and to individuals who have been displaced from

those areas, including low- and moderate-income individuals

(see, e.g.,

Q&As § __.12(i) – 3; § __.12(t) – 4; § __.22(b)(2) &

(3) – 4; § __.22(b)(2) & (3) – 5; and § __.24(d)(3) – 1).

§ __.12(g)(4)(iii) Activities that revitalize or stabilize

distressed or underserved nonmetropolitan middle-income

geographies

§ __.12(g)(4)(iii) – 1:

What criteria are used to

identify distressed or underserved nonmetropolitan, middle-

income geographies?

A1. Eligible nonmetropolitan middle-income

geographies are those designated by the Agencies as being in

distress or that could have difficulty meeting essential

community needs (underserved). A particular geography

could be designated as both distressed and underserved. As

defined in 12 CFR __.12(k), a geography is a census tract

delineated by the U.S. Bureau of the Census.

A nonmetropolitan middle-income geography will be

designated as distressed if it is in a county that meets one or

more of the following triggers: (1) an unemployment rate of at

least 1.5 times the national average, (2) a poverty rate of 20

percent or more, or (3) a population loss of 10 percent or more

between the previous and most recent decennial census or a

net migration loss of five percent or more over the five-year

period preceding the most recent census.

A nonmetropolitan middle-income geography will be

designated as underserved if it meets criteria for population

size, density, and dispersion that indicate the area’s population

is sufficiently small, thin, and distant from a population center

that the tract is likely to have difficulty financing the fixed

costs of meeting essential community needs. The Agencies

will use as the basis for these designations the “urban

influence codes,” numbered “7,” “10,” “11,” and “12,”

maintained by the Economic Research Service of the U.S.

Department of Agriculture.

The Agencies publish data source information along

with the list of eligible nonmetropolitan census tracts on the

Federal Financial Institutions Examination Council (FFIEC)

Web site (http://www.ffiec.gov

§ __.12(g)(4)(iii) – 2: How often will the Agencies

update the list of designated distressed and underserved

nonmetropolitan middle-income geographies?

A2. The Agencies will review and update the list

annually. The list is published on the FFIEC Web site

(http://www.ffiec.gov

To the extent that changes to the designated census

tracts occur, the Agencies have determined to adopt a one-year

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XI–12.6 FDIC Consumer Compliance Examination Manual — July 2016

“lag period.” This lag period will be in effect for the 12

months immediately following the date when a census tract

that was designated as distressed or underserved is removed

from the designated list. Revitalization or stabilization activi-

ties undertaken during the lag period will receive considera-

tion as community development activities if they would have

been considered to have a primary purpose of community de-

velopment if the census tract in which they were located were

still designated as distressed or underserved.

§ __.12(g)(4)(iii) – 3:

What activities are considered

to “revitalize or stabilize” a distressed nonmetropolitan mid-

dle-income geography, and how are those activities evaluated?

A3. An activity revitalizes or stabilizes a distressed

nonmetropolitan middle-income geography if it helps to attract

new, or retain existing, businesses or residents. An activity

will be presumed to revitalize or stabilize the area if the

activity is consistent with a bona fide government

revitalization or stabilization plan. The Agencies generally

will consider all activities that revitalize or stabilize a

distressed nonmetropolitan middle-income geography, but will

give greater weight to those activities that are most responsive

to community needs, including needs of low- or moderate-

income individuals or neighborhoods. Qualifying activities

may include, for example, providing financing to attract a

major new employer that will create long-term job

opportunities, including for low- and moderate-income

individuals, and activities that provide financing or other

assistance for essential infrastructure or facilities necessary to

attract or retain businesses or residents. See

Q&As

§ __.12(g)(4)(i) – 1 and § __.12(h) – 5.

§ __.12(g)(4)(iii) – 4: What activities are considered

to “revitalize or stabilize” an underserved nonmetropolitan

middle-income geography, and how are those activities

evaluated?

A4. The regulation provides that activities revitalize

or stabilize an underserved nonmetropolitan middle-income

geography if they help to meet essential community needs,

including needs of low- or moderate-income individuals.

Activities, such as financing for the construction, expansion,

improvement, maintenance, or operation of essential

infrastructure or facilities for health services, education, public

safety, public services, industrial parks, affordable housing, or

communication services, will be evaluated under these criteria

to determine if they qualify for revitalization or stabilization

consideration. Examples of the types of projects that qualify

as meeting essential community needs, including needs of

low- or moderate-income individuals, would be

• a new or expanded hospital that serves the entire county,

including low- and moderate-income residents;

• an industrial park for businesses whose employees in-

clude low- or moderate-income individuals;

• a new or rehabilitated sewer line that serves community

residents, including low- or moderate-income residents;

• a mixed-income housing development that includes af-

fordable housing for low- and moderate-income families;

• a renovated elementary school that serves children from

the community, including children from low- and moderate-

income families;

• a new or rehabilitated communications infrastructure,

such as broadband internet service, that serves the community,

including low- and moderate-income residents; or

• a new or rehabilitated flood control measure, such as a

levee or storm drain, that serves the community, including

low- and moderate-income residents.

Other activities in the area, such as financing a

project to build a sewer line spur that connects services to a

middle- or upper-income housing development while

bypassing a low- or moderate-income development that also

needs the sewer services, generally would not qualify for

revitalization or stabilization consideration in geographies

designated as underserved. If an underserved geography is

also designated as a distressed or a disaster area, additional

activities may be considered to revitalize or stabilize the

geography, as explained in Q&As § __.12(g)(4)(ii) – 2 and

§ __.12(g)(4)(iii) – 3.

§ __.12(h) Community development loan

§ __.12(h) – 1:

What are examples of community

development loans?

A1. Examples of community development loans

include, but are not limited to, loans to

• borrowers for affordable housing rehabilitation and con-

struction, including construction and permanent financing of

multifamily rental property serving low- and moderate-income

persons;

• not-for-profit organizations serving primarily low- and

moderate-income housing or other community development

needs;

• borrowers to construct or rehabilitate community facilities

that are located in low- and moderate-income areas or that

serve primarily low- and moderate-income individuals;

• financial intermediaries including Community Develop-

ment Financial Institutions (CDFI), New Markets Tax Credit-

eligible Community Development Entities, Community De-

velopment Corporations (CDC), minority- and women-owned

financial institutions, community loan funds or pools, and low-

income or community development credit unions that primari-

ly lend or facilitate lending to promote community develop-

ment;

• local, state, and tribal governments for community devel-

opment activities;

• borrowers to finance environmental clean-up or redevel-

opment of an industrial site as part of an effort to revitalize the

low- or moderate-income community in which the property is

located;

• businesses, in an amount greater than $1 million, when

made as part of the Small Business Administration’s 504 Cer-

tified Development Company program; and

• borrowers to finance renewable energy, energy-efficient,

XI. Community Reinvestment Act — Interagency Questions and Answers

FDIC Consumer Compliance Examination Manual — July 2016 XI–12.7

or water conservation equipment or projects that support the

development, rehabilitation, improvement, or maintenance of

affordable housing or community facilities, such as a health

clinic that provides services for low- or moderate-income in-

dividuals. For example, the benefit to low- or moderate-

income individuals may result in either a reduction in a ten-

ant’s utility cost or the cost of providing utilities to common

areas in an affordable housing development. Further, a renew-

able energy facility may be located on-site or off-site, so long

as the benefit from the energy generated is provided to an af-

fordable housing project or a community facility that has a

community development purpose.

The rehabilitation and construction of affordable

housing or community facilities, referred to above, may in-

clude the abatement or remediation of, or other actions to cor-

rect, environmental hazards, such as lead-based paint, asbes-

tos, mold, or radon that are present in the housing, facilities, or

site.

§ __.12(h) – 2:

If a retail institution that is not re-

quired to report under the Home Mortgage Disclosure Act

(HMDA) makes affordable home mortgage loans that would

be HMDA-reportable home mortgage loans if it were a report-

ing institution, or if a small institution that is not required to

collect and report loan data under the CRA makes small busi-

ness and small farm loans and consumer loans that would be

collected and/or reported if the institution were a large institu-

tion, may the institution have these loans considered as com-

munity development loans?

A2. No. Although small institutions are not required

to report or collect information on small business and small

farm loans and consumer loans, and some institutions are not

required to report information about their home mortgage

loans under HMDA, if these institutions are retail institutions,

the Agencies will consider in their CRA evaluations the

institutions’ originations and purchases of loans that would

have been collected or reported as small business, small farm,

consumer or home mortgage loans, had the institution been a

collecting and reporting institution under the CRA or the

HMDA. Therefore, these loans will not be considered as

community development loans, unless the small institution is

an intermediate small institution (see

Q&A § __.12(h) – 3).

Multifamily dwelling loans, however, may be considered as

community development loans as well as home mortgage

loans.

See also Q&A § __.22(a)(2) – 7.

§ __.12(v) – 4: Are credit cards issued to small

businesses considered “small business loans”?

A4. Credit cards issued to a small business or to

individuals to be used, with the institution’s knowledge, as

business accounts are small business loans if they meet the

definitional requirements in the Call Report instructions.

§ __.12(x) Wholesale institution

§ __.12(x) – 1:

What factors will the Agencies

consider in determining whether an institution is in the

business of extending home mortgage, small business, small

farm, or consumer loans to retail customers?

A1. The Agencies will consider whether

• the institution holds itself out to the retail public as

providing such loans.

• the institution’s revenues from extending such loans are

significant when compared to its overall operations, including

off-balance sheet activities.

A wholesale institution may make some retail loans

without losing its wholesale designation as described above in

Q&A § __.12(n) – 2.

§ __.21--Performance tests, standards, and ratings, in

general

§ __.21(a) Performance tests and standards

§ __.21(a) – 1:

How will examiners apply the

performance criteria?

A1. Examiners will apply the performance criteria

reasonably and fairly, in accord with the regulations, the

examination procedures, and this guidance. In doing so,

examiners will disregard efforts by an institution to manipulate

business operations or present information in an artificial light

that does not accurately reflect an institution’s overall record

of lending performance.

§ __.21(a) – 2:

Are all community development

activities weighted equally by examiners?

A2. No. Examiners will consider the responsiveness

to credit and community development needs, as well as the

innovativeness and complexity, if applicable, of an

institution’s community development lending, qualified

investments, and community development services. These

criteria include consideration of the degree to which they serve

as a catalyst for other community development activities. The

criteria are designed to add a qualitative element to the

evaluation of an institution’s performance. (“Innovativeness”

and “complexity” are not factors in the community

development test applicable to intermediate small institutions.)

§ __.21(a) – 3:

“Responsiveness” to credit and

community development needs is either a criterion or

otherwise a consideration in all of the performance tests. How

do examiners evaluate whether a financial institution has been

“responsive” to credit and community development needs?

A3. There are three important factors that examiners

consider when evaluating responsiveness: quantity, quality,

and performance context. Examiners evaluate the volume and

type of an institution’s activities, i.e., retail and community

development loans and services and qualified investments, as a

first step in evaluating the institution’s responsiveness to credit

and community development needs. In addition, an

assessment of “responsiveness” encompasses the qualitative

aspects of performance, including the effectiveness of the

activities. For example, some community development

activities require specialized expertise or effort on the part of

the institution or provide a benefit to the community that

would not otherwise be made available. In some cases, a

smaller loan may have more benefit to a community than a

larger loan. In other words, when evaluated qualitatively,

some activities are more responsive than others. Activities are

more responsive if they are successful in meeting identified

credit and community development needs. For example,

investing in a community development organization that

XI. Community Reinvestment Act — Interagency Questions and Answers

XI–12.14 FDIC Consumer Compliance Examination Manual — July 2016

specializes in originating home mortgage loans to low- or

moderate-income individuals would be considered more

responsive than an investment of the same amount in a single-

family mortgage-backed security in which the majority of the

loans are to low- or moderate-income borrowers. Although

both of these activities may receive consideration as a

qualified investment, the former example would be considered

to be more responsive than the latter.

Examiners evaluate the responsiveness of an

institution’s activities to credit and community development

needs in light of the institution’s performance context. That is,

examiners consider the institution’s capacity, its business

strategy, the needs of the community, and the opportunities for

lending, investments, and services in the community. To

inform their assessment, examiners may consider information

about credit and community development needs and

opportunities from many sources, including

• demographic and other information compiled by local,

state, and Federal government entities;

• public comments received by the Agency, for example, in

response to its publication of its planned examination

schedule;

• information from community leaders or organizations;

• studies and reports from academic institutions and other

research bodies;

• consumer complaint information; and

• any relevant information provided to examiners by the

financial institution that is maintained by the institution in its

ordinary course of business.

Responsiveness to community development needs

and opportunities in an institution’s assessment area(s) is also

a key consideration when an institution plans to engage in

community development activities that benefit areas outside of

its assessment area(s). Q&A § __.12(h) – 6 states that an

institution will receive consideration for activities that benefit

geographies or individuals located somewhere within a

broader statewide or regional area that includes the

institution’s assessment area(s) even if they will not benefit the

institution’s assessment area(s), as long as the institution has

been responsive to community development needs and

opportunities in its assessment area(s). When considering

whether an institution has been responsive to community

development needs and opportunities in its assessment area(s),

examiners will consider all of the institution’s community

development activities in its assessment area(s). Examiners

will also consider as responsive to assessment area needs

community development activities that support an

organization or activity that covers an area that is larger than,

but includes, the institution’s assessment area(s). This is true

if the purpose, mandate, or function of the organization or

activity includes serving geographies or individuals located

within the institution’s assessment area(s), even though the

institution’s assessment area(s) did not receive an immediate

or direct benefit from the institution’s participation in the

organization or activity. For example, suppose an institution

were to invest in a statewide community development fund

that was organized with the purpose of providing community

development loans throughout the state in which the institution

is located. Examiners would consider this investment when

evaluating the institution’s responsiveness to community

development needs and opportunities in its assessment area(s)

even if the fund had not provided a loan within the

institution’s assessment area(s).

§ __.21(a) – 4:

What is meant by “innovativeness”?

A4. “Innovativeness” is one of several qualitative

considerations under the lending, investment, and service tests.

The community development test for wholesale and limited

purpose institutions similarly considers “innovative” loans,

investments, and services in the evaluation of performance.

Under the CRA regulations, all innovative practices or

activities will be considered when an institution implements

meaningful improvements to products, services, or delivery

systems that respond more effectively to customer and

community needs, particularly those segments enumerated in

the definition of community development.

Institutions should not innovate simply to meet this

criterion of the applicable test, particularly if, for example,

existing products, services, or delivery systems effectively

address the needs of all segments of the community. See

Q&A § __.28 – 1. Innovative activities are especially

meaningful when they emphasize serving, for example, low-

or moderate-income consumers or distressed or underserved

nonmetropolitan middle-income geographies in new or more

effective ways. Innovativeness may also include products,

services, or delivery systems already present in the assessment

area by institutions that are not leaders in innovation—due, for

example, to the lack of available financial resources or

technological expertise—when they subsequently introduce

those products, services, or delivery systems to their low- or

moderate-income customers or segments of consumers or

markets not previously served. Practices that cease to be

innovative may still receive qualitative consideration for being

flexible, complex, or responsive.

§ __.21(b) Performance context

§ __.21(b) – 1:

What is the performance context?

A1. The performance context is a broad range of

economic, demographic, and institution- and community-

specific information that an examiner reviews to understand

the context in which an institution’s record of performance

should be evaluated. The Agencies will provide examiners

with some of this information. The performance context is not

a formal assessment of community credit needs.

§ __.21(b)(2) Information maintained by the institution or

obtained from community contacts

§ __.21(b)(2) – 1:

Will examiners consider

performance context information provided by institutions?

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FDIC Consumer Compliance Examination Manual — July 2016 XI–12.15

A1. Yes. An institution may provide examiners with

any information it deems relevant, including information on

the lending, investment, and service opportunities in its

assessment area(s). This information may include data on the

business opportunities addressed by lenders not subject to the

CRA. Institutions are not required, however, to prepare a

formal needs assessment. If an institution provides

information to examiners, the Agencies will not expect

information other than what the institution normally would

develop to prepare a business plan or to identify potential

markets and customers, including low- and moderate-income

persons and geographies in its assessment area(s). The

Agencies will not evaluate an institution’s efforts to ascertain

community credit needs or rate an institution on the quality of

any information it provides.

§ __.21(b)(2) – 2:

Will examiners conduct

community contact interviews as part of the examination

process?

A2. Yes. Examiners will consider information

obtained from interviews with local community, civic, and

government leaders. These interviews provide examiners with

knowledge regarding the local community, its economic base,

and community development initiatives. To ensure that

information from local leaders is considered – particularly in

areas where the number of potential contacts may be limited –

examiners may use information obtained through an interview

with a single community contact for examinations of more

than one institution in a given market. In addition, the

Agencies may consider information obtained from interviews

conducted by other Agency staff and by the other Agencies.

In order to augment contacts previously used by the Agencies

and foster a wider array of contacts, the Agencies may share

community contact information.

§ __.21(b)(4) Institutional capacity and constraints

§ __.21(b)(4) – 1:

Will examiners consider factors

outside of an institution’s control that prevent it from engaging

in certain activities?

A1. Yes. Examiners will take into account statutory

and supervisory limitations on an institution’s ability to

engage in any lending, investment, and service activities. For

example, a savings association that has made few or no

qualified investments due to its limited investment authority

may still receive a low satisfactory rating under the investment

test if it has a strong lending record.

§ __.21(b)(5) Institution’s past performance and the

performance of similarly situated lenders

§ __.21(b)(5) – 1:

Can an institution’s assigned rating

be adversely affected by poor past performance?

A1. Yes. The Agencies will consider an institution’s

past performance in its overall evaluation. For example, an

institution that received a rating of “needs to improve” in the

past may receive a rating of “substantial noncompliance” if its

performance has not improved.

§ __.21(b)(5) – 2:

How will examiners consider the

performance of similarly situated lenders?

A2. The performance context section of the

regulation permits the performance of similarly situated

lenders to be considered, for example, as one of a number of

considerations in evaluating the geographic distribution of an

institution’s loans to low-, moderate-, middle-, and upper-

income geographies. This analysis, as well as other analyses,

may be used, for example, where groups of contiguous

geographies within an institution’s assessment area(s) exhibit

abnormally low penetration. In this regard, the performance of

similarly situated lenders may be analyzed if such an analysis

would provide accurate insight into the institution’s lack of

performance in those areas. The regulation does not require

the use of a specific type of analysis under these

circumstances. Moreover, no ratio developed from any type of

analysis is linked to any lending test rating.

§ __.21(f) Activities in cooperation with minority- or women-

owned financial institutions and low-income credit unions

§ __.21(f) – 1:

The CRA provides that, in assessing

the CRA performance of nonminority- and non-women-owned

(majority-owned) financial institutions, examiners may

consider as a factor capital investments, loan participations,

and other ventures undertaken by the institutions in

cooperation with minority- or women-owned financial

institutions and low-income credit unions (MWLI), provided

that these activities help meet the credit needs of local

communities in which the MWLIs are chartered. Must such

activities also benefit the majority-owned financial

institution’s assessment area(s)?

A1. No. Although the regulations generally provide

that an institution’s CRA activities will be evaluated for the

extent to which they benefit the institution’s assessment

area(s) or a broader statewide or regional area that includes the

institution’s assessment area(s), the Agencies apply a broader

geographic criterion when evaluating capital investments, loan

participations, and other ventures undertaken by that

institution in cooperation with MWLIs, as provided by the

CRA. Thus, such activities will be favorably considered in the

CRA performance evaluation of the institution (as loans,

investments, or services, as appropriate), even if the MWLIs

are not located in, or such activities do not benefit, the

assessment area(s) of the majority-owned institution or the

broader statewide or regional area that includes its assessment

area(s). The activities must, however, help meet the credit

needs of the local communities in which the MWLIs are

chartered. The impact of a majority-owned institution’s

activities in cooperation with MWLIs on the majority-owned

institution’s CRA rating will be determined in conjunction

with its overall performance in its assessment area(s).

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Examples of activities undertaken by a majority-

owned financial institution in cooperation with MWLIs that

would receive CRA consideration may include

• making a deposit or capital investment;

• purchasing a participation in a loan;

• loaning an officer or providing other technical expertise

to assist an MWLI in improving its lending policies and prac-

tices;

• providing financial support to enable an MWLI to partner

with schools or universities to offer financial literacy educa-

tion to members of its local community; or

• providing free or discounted data processing systems, or

office facilities to aid an MWLI in serving its customers.

§ __.22--Lending test

§ __.22(a) Scope of test

§ __.22(a) – 1:

Are there any types of lending

activities that help meet the credit needs of an institution’s

assessment area(s) and that may warrant favorable

consideration as activities that are responsive to the needs of

the institution’s assessment area(s)?

A1. Credit needs vary from community to community.

However, there are some lending activities that are likely to be

responsive in helping to meet the credit needs of many

communities. These activities include

• providing loan programs that include a financial educa-

tion component about how to avoid lending activities that may

be abusive or otherwise unsuitable;

• establishing loan programs that provide small, unsecured

consumer loans in a safe and sound manner (i.e., based on the

borrower’s ability to repay) and with reasonable terms;

• offering lending programs, which feature reporting to

consumer reporting agencies, that transition borrowers from

loans with higher interest rates and fees (based on credit risk)

to lower-cost loans, consistent with safe and sound lending

practices. Reporting to consumer reporting agencies allows

borrowers accessing these programs the opportunity to im-

prove their credit histories and thereby improve their access to

competitive credit products; and

• establishing loan programs with the objective of provid-

ing affordable, sustainable, long-term relief, for example,

through loan refinancings, restructures, or modifications, to

homeowners who are facing foreclosure on their primary resi-

dences.

Examiners may consider favorably such lending

activities, which have features augmenting the success and

effectiveness of the small, intermediate small, or large

institution’s lending programs.

§ __.22(a)(1) Types of loans considered

§ __.22(a)(1) – 1:

If a large retail institution is not

required to collect and report home mortgage data under the

HMDA, will the Agencies still evaluate the institution’s home

mortgage lending performance?

A1. Yes. The Agencies will sample the institution’s

home mortgage loan files in order to assess its performance

under the lending test criteria.

§ __.22(a)(1) – 2:

When will examiners consider

consumer loans as part of an institution’s CRA evaluation?

A2. Consumer loans will be evaluated if the

institution so elects and has collected and maintained the data;

an institution that elects not to have its consumer loans

evaluated will not be viewed less favorably by examiners than

one that does. However, if consumer loans constitute a

substantial majority of the institution’s business, the Agencies

will evaluate them even if the institution does not so elect.

The Agencies interpret “substantial majority” to be so

significant a portion of the institution’s lending activity by

number and dollar volume of loans that the lending test

evaluation would not meaningfully reflect its lending

performance if consumer loans were excluded.

§ __.22(a)(2) Loan originations and purchases/other loan data

§ __.22(a)(2) – 1:

How are lending commitments

(such as letters of credit) evaluated under the regulation?

A1. The Agencies consider lending commitments

(such as letters of credit) only at the option of the institution,

regardless of examination type. Commitments must be legally

binding between an institution and a borrower in order to be

considered. Information about lending commitments will be

used by examiners to enhance their understanding of an

institution’s performance, but will be evaluated separately

from the loans.

§ __.22(a)(2) – 2:

Will examiners review application

data as part of the lending test?

A2. Application activity is not a performance

criterion of the lending test. However, examiners may

consider this information in the performance context analysis

because this information may give examiners insight on, for

example, the demand for loans.

§ __.22(a)(2) – 3:

May a financial institution receive

consideration under CRA for home mortgage loan

modification, extension, and consolidation agreements

(MECA), in which it obtains home mortgage loans from other

institutions without actually purchasing or refinancing the

home mortgage loans, as those terms have been interpreted

under CRA and HMDA, as implemented by 12 CFR part

1003?

A3. Yes. In some states, MECAs, which are not

considered loan refinancings because the existing loan

obligations are not satisfied and replaced, are common.

Although these transactions are not considered to be purchases

or refinancings, as those terms have been interpreted under

CRA, they do achieve the same results. A small, intermediate

small, or large institution may present information about its

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FDIC Consumer Compliance Examination Manual — July 2016 XI–12.17

MECA activities with respect to home mortgages to examiners

for consideration under the lending test as “other loan data.”

§ __.22(a)(2) – 4:

In addition to MECAs, what are

other examples of “other loan data”?

A4. Other loan data include, for example,

• loans funded for sale to the secondary markets that an

institution has not reported under HMDA;

• unfunded loan commitments and letters of credit;

• commercial and consumer leases;

• loans secured by nonfarm residential real estate, not taken

as an abundance of caution, that are used to finance small

businesses or small farms and that are not reported as small

business/small farm loans or reported under HMDA; and

• an increase to a small business or small farm line of credit

if the increase would cause the total line of credit to exceed $1

million, in the case of a small business line; or $500,000, in

the case of a small farm line.

§ __.22(a)(2) – 5:

Do institutions receive

consideration for originating or purchasing loans that are fully

guaranteed?

A5. Yes. For all examination types, examiners

evaluate an institution’s record of helping to meet the credit

needs of its assessment area(s) through the origination or

purchase of specified types of loans. Examiners do not take

into account whether or not such loans are guaranteed.

§ __.22(a)(2) – 6:

Do institutions receive

consideration for purchasing loan participations?

A6. Yes. Examiners will consider the amount of

loan participations purchased when evaluating an institution’s

record of helping to meet the credit needs of its assessment

area(s) through the origination or purchase of specified types

of loans, regardless of examination type. As with other loan

purchases, examiners will evaluate whether loan participations

purchased by an institution, which have been sold and

purchased a number of times, artificially inflate CRA

performance. See, e.g.,

Q&A § __.21(a) – 1.

§ __.22(a)(2) – 7: How are refinancings of small

business loans, which are secured by a one-to-four family

residence and that have been reported under HMDA as a

refinancing, evaluated under CRA?

A7. A loan of $1 million or less with a business

purpose that is secured by a one-to-four family residence is

considered a small business loan for CRA purposes only if the

security interest in the residential property was taken as an

abundance of caution and where the terms have not been made

more favorable than they would have been in the absence of

the lien. (See Call Report Glossary definition of “Loan

Secured by Real Estate.”) If this same loan is refinanced and

the new loan is also secured by a one-to-four family residence,

but only through an abundance of caution, this loan is reported

not only as a refinancing under HMDA, but also as a small

business loan under CRA. (Note that small farm loans are

similarly treated.)

It is not anticipated that “double-reported” loans will

be so numerous as to affect the typical institution’s CRA

rating. In the event that an institution reports a significant

number or amount of loans as both home mortgage and small

business loans, examiners will consider that overlap in

evaluating the institution’s performance and generally will

consider the “double-reported” loans as small business loans

for CRA consideration.

The origination of a small business or small farm

loan that is secured by a one-to-four family residence is not

reportable under HMDA, unless the purpose of the loan is

home purchase or home improvement. Nor is the loan

reported as a small business or small farm loan if the security

interest is not taken merely as an abundance of caution. Any

such loan may be provided to examiners as “other loan data”

(“Other Secured Lines/Loans for Purposes of Small Business”)

for consideration during a CRA evaluation. See

Q&A

§ __.12(v) – 3. The refinancings of such loans would be

reported under HMDA.

§ __.22(b) Performance criteria

§ __.22(b)(1) Lending activity

§ __.22(b)(1) – 1:

How will the Agencies apply the

lending activity criterion to discourage an institution from

originating loans that are viewed favorably under CRA in the

institution itself and referring other loans, which are not

viewed as favorably, for origination by an affiliate?

A1. Examiners will review closely institutions with

(1) a small number and amount of home mortgage loans with

an unusually good distribution among low- and moderate-

income areas and low- and moderate-income borrowers and

(2) a policy of referring most, but not all, of their home

mortgage loans to affiliated institutions. If an institution is

making loans mostly to low- and moderate-income individuals

and areas and referring the rest of the loan applicants to an

affiliate for the purpose of receiving a favorable CRA rating,

examiners may conclude that the institution’s lending activity

is not satisfactory because it has inappropriately attempted to

influence the rating. In evaluating an institution’s lending,

examiners will consider legitimate business reasons for the

allocation of the lending activity.

§ __.22(b)(2) & (3) Geographic distribution and borrower

characteristics

§ __.22(b)(2) & (3) – 1:

How do the geographic

distribution of loans and the distribution of lending by

borrower characteristics interact in the lending test applicable

to either large or small institutions?

A1. Examiners generally will consider both the

distribution of an institution’s loans among geographies of

different income levels, and among borrowers of different

income levels and businesses and farms of different sizes. The

importance of the borrower distribution criterion, particularly

in relation to the geographic distribution criterion, will depend

on the performance context. For example, distribution among

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borrowers with different income levels may be more important

in areas without identifiable geographies of different income

categories. On the other hand, geographic distribution may be

more important in areas with the full range of geographies of

different income categories.

§ __.22(b)(2) & (3) – 2:

Must an institution lend to

all portions of its assessment area?

A2. The term “assessment area” describes the

geographic area within which the agencies assess how well an

institution, regardless of examination type, has met the

specific performance tests and standards in the rule. The

Agencies do not expect that simply because a census tract is

within an institution’s assessment area(s), the institution must

lend to that census tract. Rather the Agencies will be

concerned with conspicuous gaps in loan distribution that are

not explained by the performance context. Similarly, if an

institution delineated the entire county in which it is located as

its assessment area, but could have delineated its assessment

area as only a portion of the county, it will not be penalized for

lending only in that portion of the county, so long as that

portion does not reflect illegal discrimination or arbitrarily

exclude low- or moderate-income geographies. The capacity

and constraints of an institution, its business decisions about

how it can best help to meet the needs of its assessment

area(s), including those of low- and moderate-income

neighborhoods, and other aspects of the performance context,

are all relevant to explain why the institution is serving or not

serving portions of its assessment area(s).

§ __.22(b)(2) & (3) – 3:

Will examiners take into

account loans made by affiliates when evaluating the

proportion of an institution’s lending in its assessment area(s)?

A3. Examiners will not take into account loans made

by affiliates when determining the proportion of an

institution’s lending in its assessment area(s), even if the

institution elects to have its affiliate lending considered in the

remainder of the lending test evaluation. However, examiners

may consider an institution’s business strategy of conducting

lending through an affiliate in order to determine whether a

low proportion of lending in the assessment area(s) should

adversely affect the institution’s lending test rating.

§ __.22(b)(2) & (3) – 4:

When will examiners

consider loans (other than community development loans)

made outside an institution’s assessment area(s)?

A4. Consideration will be given for loans to low-

and moderate-income persons and small business and farm

loans outside of an institution’s assessment area(s), provided

the institution has adequately addressed the needs of

borrowers within its assessment area(s). The Agencies will

apply this consideration not only to loans made by large retail

institutions being evaluated under the lending test, but also to

loans made by small and intermediate small institutions being

evaluated under their respective performance standards.

Loans to low- and moderate-income persons and small

businesses and farms outside of an institution’s assessment

area(s), however, will not compensate for poor lending

performance within the institution’s assessment area(s).

§ __.22(b)(2) & (3) – 5:

Under the lending test

applicable to small, intermediate small, or large institutions,

how will examiners evaluate home mortgage loans to middle-

or upper-income individuals in a low- or moderate-income

geography?

A5. Examiners will consider these home mortgage

loans under the performance criteria of the lending test, i.e., by

number and amount of home mortgage loans, whether they are

inside or outside the financial institution’s assessment area(s),

their geographic distribution, and the income levels of the

borrowers. Examiners will use information regarding the

financial institution’s performance context to determine how

to evaluate the loans under these performance criteria.

Depending on the performance context, examiners could view

home mortgage loans to middle-income individuals in a low-

income geography very differently. For example, if the loans

are for homes or multifamily housing located in an area for

which the local, state, tribal, or Federal government or a

community-based development organization has developed a

revitalization or stabilization plan (such as a Federal enterprise

community or empowerment zone) that includes attracting

mixed-income residents to establish a stabilized, economically

diverse neighborhood, examiners may give more consideration

to such loans, which may be viewed as serving the low- or

moderate-income community’s needs as well as serving those

of the middle- or upper-income borrowers. If, on the other

hand, no such plan exists and there is no other evidence of

governmental support for a revitalization or stabilization

project in the area and the loans to middle- or upper-income

borrowers significantly disadvantage or primarily have the

effect of displacing low- or moderate-income residents,

examiners may view these loans simply as home mortgage

loans to middle- or upper-income borrowers who happen to

reside in a low- or moderate-income geography and weigh

them accordingly in their evaluation of the institution.

§ __.22(b)(4) Community development lending

§ __.22(b)(4) – 1:

When evaluating an institution’s

record of community development lending under the lending

test applicable to large institutions, may an examiner

distinguish among community development loans on the basis

of the actual amount of the loan that advances the community

development purpose?

A1. Yes. When evaluating the institution’s record of

community development lending under 12 CFR __.22(b)(4), it

is appropriate to give greater weight to the amount of the loan

that is targeted to the intended community development

purpose. For example, consider two $10 million projects (with

a total of 100 units each) that have as their express primary

purpose affordable housing and are located in the same

community. One of these projects sets aside 40 percent of its

units for low-income residents and the other project allocates

XI. Community Reinvestment Act — Interagency Questions and Answers

FDIC Consumer Compliance Examination Manual — July 2016 XI–12.19

65 percent of its units for low-income residents. An institution

would report both loans as $10 million community

development loans under the 12 CFR __.42(b)(2) aggregate

reporting obligation. However, transaction complexity,

innovation and all other relevant considerations being equal,

an examiner should also take into account that the 65 percent

project provides more affordable housing for more people per

dollar expended.

Under 12 CFR __.22(b)(4), the extent of CRA

consideration an institution receives for its community

development loans should bear a direct relation to the benefits

received by the community and the innovation or complexity

of the loans required to accomplish the activity, not simply to

the dollar amount expended on a particular transaction. By

applying all lending test performance criteria, a community

development loan of a lower dollar amount could meet the

credit needs of the institution’s community to a greater extent

than a community development loan with a higher dollar

amount, but with less innovation, complexity, or impact on the

community.

§ __.22(b)(4) – 2:

How do examiners consider

community development loans in the evaluation of an

institution’s record of lending under the lending test applicable

to large institutions?

A2. An institution’s record of making community

development loans may have a positive, neutral, or negative

impact on the lending test rating. Community development

lending is one of five performance criteria in the lending test

criteria and, as such, it is considered at every examination. As

with all lending test criteria, examiners evaluate an

institution’s record of making community development loans

in the context of an institution’s business model, the needs of

its community, and the availability of community development

opportunities in its assessment area(s) or the broader statewide

or regional area(s) that includes the assessment area(s). For

example, in some cases community development lending

could have either a neutral or negative impact when the

volume and number of community development loans are not

adequate, depending on the performance context, while in

other cases, it would have a positive impact when the

institution is a leader in community development lending.

Additionally, strong performance in retail lending may

compensate for weak performance in community development

lending, and conversely, strong community development

lending may compensate for weak retail lending performance.

§ __.22(b)(5) Innovative or flexible lending practices

§ __.22(b)(5) – 1:

What do examiners consider in

evaluating the innovativeness or flexibility of an institution’s

lending under the lending test applicable to large institutions?

A1. In evaluating the innovativeness or flexibility of

an institution’s lending practices (and the complexity and

innovativeness of its community development lending),

examiners will not be limited to reviewing the overall variety

and specific terms and conditions of the credit product

themselves. Examiners also consider whether, and the extent

to which, innovative or flexible terms or products augment the

success and effectiveness of the institution’s community

development loan programs or, more generally, of its loan

programs that address the credit needs of low- or moderate-

income geographies or individuals. Historically, many

institutions have used innovative and flexible lending practices

to customize loans to their customers’ specific needs in a safe

and sound manner. However, an innovative or flexible

lending practice is not required in order to obtain a specific

CRA rating. See

Q&A § __.28 – 1. Examples of lending

practices that are considered innovative or flexible include:

• In connection with a community development loan

program, an institution may establish a technical assistance

program under which the institution, directly or through third

parties, provides affordable housing developers and other loan

recipients with financial consulting services. Such a technical

assistance program may, by itself, constitute a community

development service eligible for consideration under the

service test of the CRA regulations. In addition, the technical

assistance may be considered as an innovative or flexible

practice that augments the success and effectiveness of the

related community development loan program.

• In connection with a small business lending program in a

low- or moderate-income area and consistent with safe and

sound lending practices, an institution may implement a

program under which, in addition to providing financing, the

institution also contracts with the small business borrowers.

Such a contracting arrangement would not, itself, qualify for

CRA consideration. However, it may be considered as an

innovative or flexible practice that augments the loan

program’s success and effectiveness, and improves the

program’s ability to serve community development needs by

helping to promote economic development through support of

small business activities and revitalization or stabilization of

low- or moderate-income geographies.

• In connection with a small dollar loan program with

reasonable terms and offered in a safe and sound manner,

which includes evaluating an individual’s ability to repay, an

institution may establish outreach initiatives or financial

counseling targeted to low- or moderate-income individuals or

communities. The institution’s efforts to encourage the

availability, awareness, and use of the small dollar loan

program to meet the credit needs of low- and moderate-income

individuals, in lieu of higher-cost credit, should augment the

success and effectiveness of the lending program. Such loans

may be considered responsive under Q&A § __.22(a) – 1, and

the use of such outreach initiatives in conjunction with

financial literacy education or linked savings programs also

may be considered as an innovative or flexible practice to the

extent that they augment the success and effectiveness of the

related loan program. Such initiatives may receive

consideration under other performance criteria as well. For

example, an initiative to partner with a nonprofit organization

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XI–12.20 FDIC Consumer Compliance Examination Manual — July 2016

to provide financial counseling that encourages responsible

use of credit may, by itself, constitute a community

development service eligible for consideration under the

service test.

• In connection with a mortgage or consumer lending

program targeted to low- or moderate-income geographies or

individuals, consistent with safe and sound lending practices,

an institution may establish underwriting standards that utilize

alternative credit histories, such as utility or rent payments, in

an effort to evaluate low- or moderate-income individuals who

lack sufficient conventional credit histories and who would be

denied credit under the institution’s traditional underwriting

standards. The use of alternative credit histories in this

manner to demonstrate that consumers have a timely and

consistent record of paying their obligations may be

considered as an innovative or flexible practice that augments

the success and effectiveness of the lending program.

§ __.22(c) Affiliate lending

§ __.22(c)(1) In general

§ __.22(c)(1) – 1:

If an institution, regardless of

examination type, elects to have loans by its affiliate(s)

considered, may it elect to have only certain categories of

loans considered?

A1. Yes. An institution may elect to have only a

particular category of its affiliate’s lending considered. The

basic categories of loans are home mortgage loans, small

business loans, small farm loans, community development

loans, and the five categories of consumer loans (motor

vehicle loans, credit card loans, home equity loans, other

secured loans, and other unsecured loans).

§ __.22(c)(2) Constraints on affiliate lending

§ __.22(c)(2)(i) No affiliate may claim a loan origination or

loan purchase if another institution claims the same loan

origination or purchase

§ __.22(c)(2)(i) – 1:

Regardless of examination type,

how is this constraint on affiliate lending applied?

A1. This constraint prohibits one affiliate from

claiming a loan origination or purchase claimed by another

affiliate. However, an institution can count as a purchase a

loan originated by an affiliate that the institution subsequently

purchases, or count as an origination a loan later sold to an

affiliate, provided the same loans are not sold several times to

inflate their value for CRA purposes. For example, assume

that two institutions are affiliated. Institution A originates a

loan and claims it as a loan origination. Institution B later

purchases the loan. Institution B may count the loan as a

purchased loan.

The same institution may not count both the

origination and purchase. Thus, for example, if an institution

claims loans made by an affiliated mortgage company as loan

originations, the institution may not also count the loans as

purchased loans if it later purchases the loans from its

affiliate. See also

Q&As § __.22(c)(2)(ii) – 1 and

§ __.22(c)(2)(ii) – 2.

§ __.22(c)(2)(ii) If an institution elects to have its supervisory

Agency consider loans within a particular lending category

made by one or more of the institution’s affiliates in a

particular assessment area, the institution shall elect to have

the Agency consider all loans within that lending category in

that particular assessment area made by all of the institution’s

affiliates

§ __.22(c)(2)(ii) – 1:

Regardless of examination type,

how is this constraint on affiliate lending applied?

A1. This constraint prohibits “cherry-picking”

affiliate loans within any one category of loans. The

constraint requires an institution that elects to have a particular

category of affiliate lending in a particular assessment area

considered to include all loans of that type made by all of its

affiliates in that particular assessment area. For example,

assume that an institution has several affiliates, including a

mortgage company that makes loans in the institution’s

assessment area. If the institution elects to include the

mortgage company’s home mortgage loans, it must include all

of its affiliates’ home mortgage loans made in its assessment

area. In addition, the institution cannot elect to include only

those low- and moderate-income home mortgage loans made

by its affiliates and not home mortgage loans to middle- and

upper-income individuals or areas.

§ __.22(c)(2)(ii) – 2:

Regardless of examination type,

how is this constraint applied if an institution’s affiliates are

also insured depository institutions subject to the CRA?

A2. Strict application of this constraint against

“cherry-picking” to loans of an affiliate that is also an insured

depository institution covered by the CRA would produce the

anomalous result that the other institution would, without its

consent, not be able to count its own loans. Because the

Agencies did not intend to deprive an institution subject to the

CRA of receiving consideration for its own lending, the

Agencies read this constraint slightly differently in cases

involving a group of affiliated institutions, some of which are

subject to the CRA and share the same assessment area(s). In

those circumstances, an institution that elects to include all of

its mortgage affiliate’s home mortgage loans in its assessment

area would not automatically be required to include all home

mortgage loans in its assessment area of another affiliate

institution subject to the CRA. However, all loans of a

particular type made by any affiliate in the institution’s

assessment area(s) must either be counted by the lending

institution or by another affiliate institution that is subject to

the CRA. This reading reflects the fact that a holding

company may, for business reasons, choose to transact

different aspects of its business in different subsidiary

institutions. However, the method by which loans are

allocated among the institutions for CRA purposes must

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FDIC Consumer Compliance Examination Manual — July 2016 XI–12.21

reflect actual business decisions about the allocation of

banking activities among the institutions and should not be

designed solely to enhance their CRA evaluations.

§ __.22(d) Lending by a consortium or a third party

§ __.22(d) – 1:

Will equity and equity-type

investments in a third party receive consideration under the

lending test?

A1. If an institution has made an equity or equity-

type investment in a third party, community development

loans made by the third party may be considered under the

lending test. On the other hand, asset-backed and debt

securities that do not represent an equity-type interest in a

third party will not be considered under the lending test unless

the securities are booked by the purchasing institution as a

loan. For example, if an institution purchases stock in a CDC

that primarily lends in low- and moderate-income areas or to

low- and moderate-income individuals in order to promote

community development, the institution may claim a pro rata

share of the CDC’s loans as community development loans.

The institution’s pro rata share is based on its percentage of

equity ownership in the CDC. Q&A § __.23(b) – 1 provides

information concerning consideration of an equity or equity-

type investment under the investment test and both the lending

and investment tests. (Note that in connection with an

intermediate small institution’s CRA performance evaluation,

community development loans, including pro rata shares of

community development loans, are considered only in the

community development test.)

§ __.22(d) – 2:

Regardless of examination type, how

will examiners evaluate loans made by consortia or third

parties?

A2. Loans originated or purchased by consortia in

which an institution participates or by third parties in which an

institution invests will be considered only if they qualify as

community development loans and will be considered only

under the community development criterion. However, loans

originated directly on the books of an institution or purchased

by the institution are considered to have been made or

purchased directly by the institution, even if the institution

originated or purchased the loans as a result of its participation

in a loan consortium. These loans would be considered under

the lending test or community development test criteria

appropriate to them depending on the type of loan and type of

examination.

§ __.22(d) – 3:

In some circumstances, an institution

may invest in a third party, such as a community development

bank, that is also an insured depository institution and is thus

subject to CRA requirements. If the investing institution

requests its supervisory Agency to consider its pro rata share

of community development loans made by the third party, as

allowed under 12 CFR __.22(d), may the third party also

receive consideration for these loans?

A3. Yes, regardless of examination type, as long as

the financial institution and the third party are not affiliates.

The regulations state, at 12 CFR __.22(c)(2)(i), that two

affiliates may not both claim the same loan origination or loan

purchase. However, if the financial institution and the third

party are not affiliates, the third party may receive

consideration for the community development loans it

originates, and the financial institution that invested in the

third party may also receive consideration for its pro rata share

of the same community development loans under 12 CFR

__.22(d).

§ __.23--Investment test

§ __.23(a) Scope of test

§ __.23(a) – 1:

May an institution, regardless of

examination type, receive consideration under the CRA

regulations if it invests indirectly through a fund, the purpose

of which is community development, as that is defined in the

CRA regulations?

A1. Yes, the direct or indirect nature of the qualified

investment does not affect whether an institution will receive

consideration under the CRA regulations because the

regulations do not distinguish between “direct” and “indirect”

investments. Thus, an institution’s investment in an equity

fund that, in turn, invests in projects that, for example, provide

affordable housing to low- and moderate-income individuals,

would receive consideration as a qualified investment under

the CRA regulations, provided the investment benefits one or

more of the institution’s assessment area(s) or a broader

statewide or regional area(s) that includes one or more of the

institution’s assessment area(s). Similarly, an institution may

receive consideration for a direct qualified investment in a

nonprofit organization that, for example, supports affordable

housing for low- and moderate-income individuals in the

institution’s assessment area(s) or a broader statewide or

regional area(s) that includes the institution’s assessment

area(s).

§ __.23(a) – 2:

In order to receive CRA

consideration, what information may an institution provide

that would demonstrate that an investment in a nationwide

fund with a primary purpose of community development will

directly or indirectly benefit one or more of the institution’s

assessment area(s) or a broader statewide or regional area that

includes the institution’s assessment area(s)?

A2. There may be several ways to demonstrate that

the institution’s investment in a nationwide fund meets the

geographic requirements, and the Agencies will employ

appropriate flexibility in this regard in reviewing information

the institution provides that reasonably supports this

determination.

In making this determination, the Agencies will

consider any information provided by a financial institution

that reasonably demonstrates that the purpose, mandate, or

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XI–12.22 FDIC Consumer Compliance Examination Manual — July 2016

function of the fund includes serving geographies or

individuals located within the institution’s assessment area(s)

or a broader statewide or regional area that includes the

institution’s assessment area(s). Typically, information about

where a fund’s investments are expected to be made or

targeted will be found in the fund’s prospectus, or other

documents provided by the fund prior to or at the time of the

institution’s investment, and the institution, at its option, may

provide such documentation in connection with its CRA

evaluation.

Nationwide funds are important sources of

investments in low- and moderate-income and underserved

communities throughout the country and can be an efficient

vehicle for institutions in making qualified investments that

help meet community development needs. Nationwide funds

may be suitable investment opportunities, particularly for large

financial institutions with a nationwide branch footprint.

Other financial institutions, including those with a nationwide

business focus, may find such funds to be efficient investment

vehicles to help meet community development needs in their

assessment area(s) or the broader statewide or regional area

that includes their assessment area(s). Prior to investing in

such a fund, an institution should consider reviewing the

fund’s investment record to see if it is generally consistent

with the institution’s investment goals and the geographic

considerations in the regulations. Examiners will consider

investments in nationwide funds that benefit the institution’s

assessment area(s). Examiners will also consider investments

in nationwide funds that benefit the broader statewide or

regional area that includes the institution’s assessment area(s)

consistent with the treatment detailed in Q&A § __.12(h) – 6.

§ __.23(b) Exclusion

§ __.23(b) – 1:

Even though the regulations state that

an activity that is considered under the lending or service tests

cannot also be considered under the investment test, may parts

of an activity be considered under one test and other parts be

considered under another test?

A1. Yes, in some instances the nature of an activity

may make it eligible for consideration under more than one of

the performance tests. For example, certain investments and

related support provided by a large retail institution to a CDC

may be evaluated under the lending, investment, and service

tests. Under the service test, the institution may receive

consideration for any community development services that it

provides to the CDC, such as service by an executive of the

institution on the CDC’s board of directors. If the institution

makes an investment in the CDC that the CDC uses to make

community development loans, the institution may receive

consideration under the lending test for its pro rata share of

community development loans made by the CDC.

Alternatively, the institution’s investment may be considered

under the investment test, assuming it is a qualified

investment. In addition, an institution may elect to have a part

of its investment considered under the lending test and the

remaining part considered under the investment test. If the

investing institution opts to have a portion of its investment

evaluated under the lending test by claiming its pro rata share

of the CDC’s community development loans, the amount of

investment considered under the investment test will be offset

by that portion. Thus, the institution would receive

consideration under the investment test for only the amount of

its investment multiplied by the percentage of the CDC’s

assets that meet the definition of a qualified investment.

§ __.23(b) – 2:

If home mortgage loans to low- and

moderate-income borrowers have been considered under an

institution’s lending test, may the institution that originated or

purchased them also receive consideration under the

investment test if it subsequently purchases mortgage-backed

securities that are primarily or exclusively backed by such

loans?

A2. No. Because the institution received lending

test consideration for the loans that underlie the securities, the

institution may not also receive consideration under the

investment test for its purchase of the securities. Of course, an

institution may receive investment test consideration for

purchases of mortgage-backed securities that are backed by

loans to low- and moderate-income individuals as long as the

securities are not backed primarily or exclusively by loans that

the same institution originated or purchased.

§ __.23(e) Performance criteria

§ __.23(e) – 1:

When applying the four performance

criteria of 12 CFR __.23(e), may an examiner distinguish

among qualified investments based on how much of the

investment actually supports the underlying community

development purpose?

A1. Yes. By applying all the criteria, a qualified

investment of a lower dollar amount may be weighed more

heavily under the investment test than a qualified investment

with a higher dollar amount that has fewer qualitative

enhancements. The criteria permit an examiner to

qualitatively weight certain investments differently or to make

other appropriate distinctions when evaluating an institution’s

record of making qualified investments. For instance, an

examiner should take into account that a targeted mortgage-

backed security that qualifies as an affordable housing issue

that has only 60 percent of its face value supported by loans to

low- or moderate-income borrowers would not provide as

much affordable housing for low- and moderate-income

individuals as a targeted mortgage-backed security with 100

percent of its face value supported by affordable housing loans

to low- and moderate-income borrowers. The examiner

should describe any differential weighting (or other

adjustment), and its basis in the Performance Evaluation. See

also Q&A § __.12(t) – 8 for a discussion about the qualitative

consideration of prior-period investments.

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FDIC Consumer Compliance Examination Manual — July 2016 XI–12.23

§ __.23(e) – 2: How do examiners evaluate an

institution’s qualified investment in a fund, the primary

purpose of which is community development, as defined in the

CRA regulations?

A2. When evaluating qualified investments that

benefit an institution’s assessment area(s) or a broader

statewide or regional area that includes its assessment area(s),

examiners will look at the following four performance criteria:

(1) The dollar amount of qualified investments;

(2) The innovativeness or complexity of qualified investments;

(3) The responsiveness of qualified investments to credit and

community development needs; and

(4) The degree to which the qualified investments are not

routinely provided by private investors.

With respect to the first criterion, examiners will

determine the dollar amount of qualified investments by

relying on the figures recorded by the institution according to

generally accepted accounting principles (GAAP). Although

institutions may exercise a range of investment strategies,

including short-term investments, long-term investments,

investments that are immediately funded, and investments

with a binding, up-front commitment that are funded over a

period of time, institutions making the same dollar amount of

investments over the same number of years, all other

performance criteria being equal, would receive the same level

of consideration. Examiners will include both new and

outstanding investments in this determination. The dollar

amount of qualified investments also will include the dollar

amount of legally binding commitments recorded by the

institution according to GAAP.

The extent to which qualified investments receive

consideration, however, depends on how examiners evaluate

the investments under the remaining three performance criteria

-- innovativeness and complexity, responsiveness, and degree

to which the investment is not routinely provided by private

investors. Examiners also will consider factors relevant to the

institution’s CRA performance context, such as the effect of

outstanding long-term qualified investments, the pay-in

schedule, and the amount of any cash call, on the capacity of

the institution to make new investments.

§ __.24--Service test

§ __.24(a) Scope of test

§ __.24(a) – 1:

How do examiners evaluate retail

banking services and community development services under

the large institution service test?

A1. Retail banking services and community

development services are the two components of the service

test and are both important in evaluating a large institution’s

performance. In evaluating retail banking services, examiners

consider the availability and effectiveness of an institution’s

systems for delivering banking services, particularly in low-

and moderate-income geographies and to low- and moderate

income individuals; the range of services provided in low-,

moderate-, middle-, and upper-income geographies; and the

degree to which the services are tailored to meet the needs of

those geographies. Examples of retail banking services that

improve access to financial services, or decrease costs, for

low- or moderate-income individuals include

• low-cost deposit accounts;

• electronic benefit transfer accounts and point of sale

terminal systems;

• individual development accounts;

• free or low-cost government, payroll, or other check

cashing services; and

• reasonably priced international remittance services.

In evaluating community development services,

examiners consider the extent to which the institution provides

such services and their innovativeness and responsiveness to

community needs. Examples of community development

services are listed in Q&A § __.12(i) – 3. Examiners will

consider any information provided by the institution that

demonstrates community development services benefit low- or

moderate-income individuals or are responsive to community

development needs.

§ __.24(d) Performance criteria – retail banking services

§ __.24(d) – 1:

How do examiners evaluate the

availability and effectiveness of an institution’s systems for

delivering retail banking services?

A1. Convenient access to full service branches

within a community is an important factor in determining the

availability of credit and non-credit services. Therefore, the

service test performance standards place primary emphasis on

full service branches while still considering alternative

systems. The principal focus is on an institution’s current

distribution of branches and its record of opening and closing

branches, particularly branches located in low- or moderate-

income geographies or primarily serving low- or moderate-

income individuals. However, an institution is not required to

expand its branch network or operate unprofitable branches.

Under the service test, alternative systems for delivering retail

banking services are considered only to the extent that they are

effective alternatives in providing needed services to low- and

moderate-income areas and individuals.

§ __.24(d) – 2:

How do examiners evaluate an

institution’s activities in connection with Individual

Development Accounts (IDA)?

A2. Although there is no standard IDA program,

IDAs typically are deposit accounts targeted to low- and

moderate-income families that are designed to help them

accumulate savings for education or job-training, down-

payment and closing costs on a new home, or start-up capital

for a small business. Once participants have successfully

funded an IDA, their personal IDA savings are matched by a

public or private entity. Financial institution participation in

IDA programs comes in a variety of forms, including

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XI–12.24 FDIC Consumer Compliance Examination Manual — July 2016

providing retail banking services to IDA accountholders,

providing matching dollars or operating funds to an IDA

program, designing or implementing IDA programs, providing

consumer financial education to IDA accountholders or

prospective accountholders, or other means. The extent of

financial institutions’ involvement in IDAs and the products

and services they offer in connection with the accounts will

vary. Thus, subject to 12 CFR __.23(b), examiners evaluate

the actual services and products provided by an institution in

connection with IDA programs as one or more of the

following: community development services, retail banking

services, qualified investments, home mortgage loans, small

business loans, consumer loans, or community development

loans. See, e.g.,

Q&A § __.12(i) – 3.

Note that all types of institutions may participate in

IDA programs. Their IDA activities are evaluated under the

performance criteria of the type of examination applicable to

the particular institution.

§ __.24(d)(3) Availability and effectiveness of alternative

systems for delivering retail banking services

§ __.24(d)(3) – 1:

How do examiners evaluate

alternative systems for delivering retail banking services?

A1. There are a number of alternative systems used

by financial institutions to deliver retail banking services to

customers. Non-branch delivery systems, such as ATMs,

online and mobile banking, and other means by which

institutions provide services to their customers evolve over

time. No matter the means of delivery, examiners evaluate the

extent to which the alternative delivery systems are available

and effective in providing financial services to low- and

moderate-income geographies and individuals. For example, a

system may be determined to be effective based on the

accessibility of the system to low- and moderate-income

geographies and individuals. To determine whether a financial

institution’s alternative delivery system is an available and

effective means of delivering retail banking services in low-

and moderate-income geographies and to low- and moderate-

income individuals, examiners may consider a variety of

factors, including

• the ease of access, whether physical or virtual;

• the cost to consumers, as compared with the institution’s

other delivery systems;

• the range of services delivered;

• the ease of use;

• the rate of adoption and use; and

• the reliability of the system.

Examiners will consider any information an

institution maintains and provides to examiners demonstrating

that the institution’s alternative delivery systems are available

to, and used by, low- or moderate-income individuals, such as

data on customer usage or transactions.

§ __.24(d)(3) – 2:

Are debit cards considered under

the service test as an alternative delivery system?

A2. By themselves, no. However, if debit cards are

a part of a larger combination of products, such as a

comprehensive electronic banking service, that allows an

institution to deliver needed services to low- and moderate-

income areas and individuals in its community, the overall

delivery system that includes the debit card feature would be

considered an alternative delivery system.

§ __.24(d)(4) Range of services provided in geographies of

different incomes

§ __.24(d)(4) – 1:

How do examiners evaluate the

range of services provided in low-, moderate-, middle-, and

upper-income geographies and the degree to which those

services are tailored to meet the needs of those geographies?

A1. Examiners review both information from the

institution’s public file and other information provided related

to the range of services offered and how they are tailored to

meet the particular needs of low- and moderate-income

geographies. Examiners always review the information that

institutions must maintain in their public files: a list of services

generally offered at their branches, including their hours of

operation; available loan and deposit products; transaction

fees, as well as descriptions, where applicable, of material

differences in the availability or cost of services at particular

branches. See

12 CFR __.43(a)(5). The information provided

by the financial institution to identify the types of services

offered and any differences in services among its branches in

different geographies may indicate how its services (including,

where appropriate, business hours) are tailored to the

convenience and needs of its assessment area(s), particularly

low- or moderate-income geographies or low- or moderate-

income individuals.

See 12 CFR __ app. A(b)(3). Examiners

also review any other information provided by the institution,

such as data regarding the costs and features of loan and

deposit products, account usage and retention, geographic

location of accountholders, the availability of information in

languages other than English, and any other relevant

information demonstrating that its services are tailored to meet

the needs of its customers in the various geographies in its

assessment area(s). Any information that institutions may

maintain regarding services offered through alternative

delivery systems (

see Q&A § __.24(d)(3) –1) and through

collaborations with government, community, educational or

employer organizations to offer or expand the range of

services or access to services, particularly designed to meet the

needs of their assessment area(s), including low- and

moderate-income communities will also be considered.

Examiners will also review information provided by the public

through comments or community contacts.

§ __.24(e) Performance criteria – community development

services

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FDIC Consumer Compliance Examination Manual — July 2016 XI–12.25

§ __.24(e) – 1: Under what conditions may an

institution receive consideration for community development

services offered by affiliates or third parties?

A1. At an institution’s option, the Agencies will

consider services performed by an affiliate or by a third party

on the institution’s behalf under the service test if the services

provided enable the institution to help meet the credit needs of

its community. Indirect services that enhance an institution’s

ability to deliver credit products or deposit services within its

community and that can be quantified may be considered

under the service test, if those services have not been

considered already under the lending or investment test. See

Q&A § __.23(b) – 1. For example, an institution that

contracts with a community organization to provide home

ownership counseling to low- and moderate-income home

buyers as part of the institution’s mortgage program may

receive consideration for that indirect service under the service

test. In contrast, donations to a community organization that

offers financial services to low- or moderate-income

individuals may be considered under the investment test, but

would not also be eligible for consideration under the service

test. Services performed by an affiliate will be treated the

same as affiliate loans and investments made in the

institution’s assessment area and may be considered if the

service is not claimed by any other institution.

See 12 CFR

__.22(c) and __.23(c).

§ __.24(e) – 2: In evaluating community

development services, what quantitative and qualitative factors

do examiners review?

A2. The community development services criteria

are important factors in the evaluation of a large institution’s

service test performance. According to the regulation, the

Agencies evaluate the extent to which the financial institution

provides community development services as well as the

innovativeness and responsiveness of such services.

Examiners consider both quantitative and qualitative aspects

of community development services during the evaluation.

Examiners assess quantitative factors to determine the extent

to which community development services are offered and

used. The review is not limited to a single quantitative factor.

For example, quantitative factors may include the number of

• low- or moderate-income participants;

• organizations served;

• sessions sponsored; or

• financial institution staff hours devoted.

Examiners will also consider qualitative factors by

assessing the degree to which community development

services are innovative or responsive to community

needs. See

Q&As § __.21(a) – 4 and § __.21(a) – 3. These

performance criteria recognize that community development

services sometimes require special expertise and effort on the

part of the institution and provide benefit to the community

that would not otherwise be possible. Such an assessment will

depend on the impact of a particular activity on community

needs and the benefits received by a community.

See Q&A

§ __.28(b) – 1. For example, a financial institution

employee’s unique expertise and service on the board of a

community organization may demonstrate these qualitative

factors when the employee’s ongoing engagement

significantly improves the products, services or operations of

the community development organization.

Examiners will consider any relevant information

provided by the institution and from third parties that

documents the extent, innovativeness, and responsiveness of

community development services.

§ __.25 Community development test for wholesale or

limited purpose institutions

§ __.25(a) Scope of test

§ __.25(a) – 1:

How can certain credit card banks

help to meet the credit needs of their communities without

losing their exemption from the definition of “bank” in the

Bank Holding Company Act (BHCA), as amended by the

Competitive Equality Banking Act of 1987 (CEBA)?

A1. Although the BHCA restricts institutions known

as CEBA credit card banks to credit card operations, a CEBA

credit card bank can engage in community development

activities without losing its exemption under the BHCA. A

CEBA credit card bank could provide community

development services and investments without engaging in

operations other than credit card operations. For example, the

bank could provide credit card counseling, or the financial

expertise of its executives, free of charge, to community

development organizations. In addition, a CEBA credit card

bank could make qualified investments, as long as the

investments meet the guidelines for passive and noncontrolling

investments provided in the BHCA and the Board's Regulation

Y. Finally, although a CEBA credit card bank cannot make

any loans other than credit card loans, under 12 CFR

__.25(d)(2) (community development test – indirect

activities), the bank could elect to have part of its qualified

passive and noncontrolling investments in a third-party

lending consortium considered as community development

lending, provided that the consortium’s loans otherwise meet

the requirements for community development lending. When

assessing a CEBA credit card bank’s CRA performance under

the community development test, examiners will take into

account the bank’s performance context. In particular,

examiners will consider the legal constraints imposed by the

BHCA on the bank’s activities, as part of the bank’s

performance context in 12 CFR __.21(b)(4).

§ __.25(d) Indirect activities

§ __.25(d) – 1:

How are investments in third-party

community development organizations considered under the

community development test?

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XI–12.26 FDIC Consumer Compliance Examination Manual — July 2016

A1. Similar to the lending test for retail institutions,

investments in third-party community development

organizations may be considered as qualified investments or as

community development loans or both (provided there is no

double counting), at the institution’s option, as described

above in the discussion regarding 12 CFR __.22(d) and

__.23(b).

§ __.25(e) Benefit to assessment area(s)

§ __.25(e) – 1:

How do examiners evaluate a

wholesale or limited purpose institution’s qualified investment

in a fund that invests in projects nationwide and which has a

primary purpose of community development, as that is defined

in the regulations?

A1. If examiners find that a wholesale or limited

purpose institution has adequately addressed the needs of its

assessment area(s), they will give consideration to qualified

investments, as well as community development loans and

community development services, by that institution

nationwide. In determining whether an institution has

adequately addressed the needs of its assessment area(s),

examiners will consider qualified investments that benefit a

broader statewide or regional area that includes the

institution’s assessment area(s).

§ __.25(f) Community development performance rating

§ __.25(f) – 1:

Must a wholesale or limited purpose

institution engage in all three categories of community

development activities (lending, investment, and service) to

perform well under the community development test?

A1. No, a wholesale or limited purpose institution

may perform well under the community development test by

engaging in one or more of these activities.

§ __.26--Small institution performance standards

§ __.26 – 1:

When evaluating a small or intermediate

small institution’s performance, will examiners consider, at the

institution’s request, retail and community development loans

originated or purchased by affiliates, qualified investments

made by affiliates, or community development services pro-

vided by affiliates?

A1. Yes. However, a small institution that elects to

have examiners consider affiliate activities must maintain

sufficient information that the examiners may evaluate these

activities under the appropriate performance criteria and

ensure that the activities are not claimed by another institution.

The constraints applicable to affiliate activities claimed by

large institutions also apply to small and intermediate small

institutions. See

Q&As addressing 12 CFR __.22(c)(2) and

related guidance provided to large institutions regarding

affiliate activities. Examiners will not include affiliate lending

in calculating the percentage of loans and, as appropriate,

other lending-related activities located in an institution’s

assessment area(s).

§ __.26(a) Performance criteria

§ __.26(a)(2) Intermediate small institutions

§ __.26(a)(2) – 1:

When is an institution examined as

an intermediate small institution?

A1. When a small institution has met the

intermediate small institution asset threshold delineated in 12

CFR __.12(u)(1) for two consecutive calendar year-ends, the

institution may be examined under the intermediate small

institution examination procedures. The regulation does not

specify an additional lag period between becoming an

intermediate small institution and being examined as an

intermediate small institution, as it does for large institutions,

because an intermediate small institution is not subject to CRA

data collection and reporting requirements. Institutions should

contact their primary regulator for information on examination

schedules.

§ __.26(b) Lending test

§ __.26(b) – 1:

May examiners consider, under one

or more of the performance criteria of the small institution

performance standards, lending-related activities, such as

community development loans and lending-related qualified

investments, when evaluating a small institution?

A1. Yes. Examiners can consider “lending-related

activities,” including community development loans and

lending-related qualified investments, when evaluating the

first four performance criteria of the small institution

performance test. Although lending-related activities are

specifically mentioned in the regulation in connection with

only the first three criteria (i.e., loan-to-deposit ratio,

percentage of loans in the institution’s assessment area(s), and

lending to borrowers of different incomes and businesses of

different sizes), examiners can also consider these activities

when they evaluate the fourth criteria – geographic

distribution of the institution’s loans.

Although lending-related community development

activities are evaluated under the community development test

applicable to intermediate small institutions, these activities

may also augment the loan-to-deposit ratio analysis (12 CFR

__.26(b)(1)) and the percentage of loans in the intermediate

small institution’s assessment area(s) analysis (12 CFR

__.26(b)(2)), if appropriate.

§ __.26(b) – 2:

What is meant by “as appropriate”

when referring to the fact that lending-related activities will be

considered, “as appropriate,” under the various small

institution performance criteria?

A2. “As appropriate” means that lending-related

activities will be considered when it is necessary to determine

whether an institution meets or exceeds the standards for a

satisfactory rating. Examiners will also consider other

XI. Community Reinvestment Act — Interagency Questions and Answers

FDIC Consumer Compliance Examination Manual — July 2016 XI–12.27

lending-related activities at an institution’s request, provided

they have not also been considered under the community

development test applicable to intermediate small institutions.

§ __.26(b) – 3:

When evaluating a small institution’s

lending performance, will examiners consider, at the

institution’s request, community development loans originated

or purchased by a consortium in which the institution

participates or by a third party in which the institution has

invested?

A3. Yes. However, a small institution that elects to

have examiners consider community development loans

originated or purchased by a consortium or third party must

maintain sufficient information on its share of the community

development loans so that the examiners may evaluate these

loans under the small institution performance criteria.

§ __.26(b) – 4:

Under the small institution lending

test performance standards, will examiners consider both loan

originations and purchases?

A4. Yes, consistent with the other assessment

methods in the regulation, examiners will consider both loans

originated and purchased by the institution. Likewise,

examiners may consider any other loan data the small

institution chooses to provide, including data on loans

outstanding, commitments, and letters of credit.

§ __.26(b) – 5:

Under the small institution lending

test performance standards, how will qualified investments be

considered for purposes of determining whether a small

institution receives a satisfactory CRA rating?

A5. The small institution lending test performance

standards focus on lending and other lending-related activities.

Therefore, examiners will consider only lending-related

qualified investments for the purpose of determining whether a

small institution that is not an intermediate small institution

receives a satisfactory CRA rating.

§ __.26(b)(1) Loan-to-deposit ratio

§ __.26(b)(1) – 1:

How is the loan-to-deposit ratio

calculated?

A1. A small institution’s loan-to-deposit ratio is

calculated in the same manner that the Uniform Bank

Performance Report (UBPR) determines the ratio. It is

calculated by dividing the institution’s net loans and leases by

its total deposits. The ratio is found in the Liquidity and

Investment Portfolio section of the UBPR. Examiners will use

this ratio to calculate an average since the last examination by

adding the quarterly loan-to-deposit ratios and dividing the

total by the number of quarters.

§ __.26(b)(1) – 2:

How is the “reasonableness” of a

loan-to-deposit ratio evaluated?

A2. No specific ratio is reasonable in every

circumstance, and each small institution’s ratio is evaluated in

light of information from the performance context, including

the institution’s capacity to lend, demographic and economic

factors present in the assessment area(s), and the lending

opportunities available in the assessment area(s). If a small

institution’s loan-to-deposit ratio appears unreasonable after

considering this information, lending performance may still be

satisfactory under this criterion taking into consideration the

number and the dollar volume of loans sold to the secondary

market or the number and amount and innovativeness or

complexity of community development loans and lending-

related qualified investments.

§ __.26(b)(1) – 3:

If an institution makes a large

number of loans off-shore, will examiners segregate the

domestic loan-to-deposit ratio from the foreign loan-to-deposit

ratio?

A3. No. Examiners will look at the institution’s net

loan-to-deposit ratio for the whole institution, without any

adjustments.

§ __.26(b)(2) Percentage of lending within assessment area(s)

§ __.26(b)(2) – 1:

Must a small institution have a

majority of its lending in its assessment area(s) to receive a

satisfactory performance rating?

A1. No. The percentage of loans and, as

appropriate, other lending-related activities located in the

institution’s assessment area(s) is but one of the performance

criteria upon which small institutions are evaluated. If the

percentage of loans and other lending-related activities in an

institution’s assessment area(s) is less than a majority, then the

institution does not meet the standards for satisfactory

performance only under this criterion. The effect on the

overall performance rating of the institution, however, is

considered in light of the performance context, including

information regarding economic conditions; loan demand; the

institution’s size, financial condition, business strategies, and

branching network; and other aspects of the institution’s

lending record.

§ __.26(b)(3) & (4) Distribution of lending within assessment

area(s) by borrower income and geographic location

§ __.26(b)(3) & (4) – 1:

How will a small

institution’s performance be assessed under these lending

distribution criteria?

A1. Distribution of loans, like other small institution

performance criteria, is considered in light of the performance

context. For example, a small institution is not required to

lend evenly throughout its assessment area(s) or in any

particular geography. However, in order to meet the standards

for satisfactory performance under this criterion, conspicuous

gaps in a small institution’s loan distribution must be

adequately explained by performance context factors such as

lending opportunities in the institution’s assessment area(s),

the institution’s product offerings and business strategy, and

institutional capacity and constraints. In addition, it may be

impracticable to review the geographic distribution of the

lending of an institution with very few demographically

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XI–12.28 FDIC Consumer Compliance Examination Manual — July 2016

distinct geographies within an assessment area. If sufficient

information on the income levels of individual borrowers or

the revenues or sizes of business borrowers is not available,

examiners may use loan size as a proxy for estimating

borrower characteristics, where appropriate.

§ __.26(c) Intermediate small institution community develop-

ment test

§ __.26(c) – 1:

How will the community develop-

ment test be applied flexibly for intermediate small institu-

tions?

A1. Generally, intermediate small institutions

engage in a combination of community development loans,

qualified investments, and community development services.

An institution may not simply ignore one or more of these

categories of community development, nor do the regulations

prescribe a required threshold for community development

loans, qualified investments, and community development

services. Instead, based on the institution’s assessment of

community development needs in its assessment area(s), it

may engage in different categories of community development

activities that are responsive to those needs and consistent with

the institution’s capacity.

An intermediate small institution has the flexibility to

allocate its resources among community development loans,

qualified investments, and community development services in

amounts that it reasonably determines are most responsive to

community development needs and opportunities. Appropri-

ate levels of each of these activities would depend on the ca-

pacity and business strategy of the institution, community

needs, and number and types of opportunities for community

development.

§ __.26(c)(3) Community development services

§ __.26(c)(3) – 1:

What will examiners consider

when evaluating the provision of community development

services by an intermediate small institution?

A1. In addition to the examples listed in Q&A

§ __.12(i) – 3, examiners will consider retail banking services

as community development services if they provide benefit to

low- or moderate-income individuals. Examples include:

• low-cost deposit accounts;

• electronic benefit transfer accounts and point of sale ter-

minal systems;

• individual development accounts;

• free or low-cost government, payroll, or other check cash-

ing services; and

• reasonably priced international remittance services.

In addition, providing services to low- and moderate-

income individuals through branches and other facilities locat-

ed in low- and moderate-income, designated disaster, or dis-

tressed or underserved nonmetropolitan middle-income areas

is considered. Generally, the presence of branches located in

low- and moderate-income geographies will help to demon-

strate the availability of banking services to low- and moder-

ate-income individuals.

§ __.26(c)(4) Responsiveness to community development

needs

§ __.26(c)(4) – 1:

When evaluating an intermediate

small institution’s community development record, what will

examiners consider when reviewing the responsiveness of

community development lending, qualified investments, and

community development services to the community develop-

ment needs of the area?

A1. When evaluating an intermediate small

institution’s community development record, examiners will

consider not only quantitative measures of performance, such

as the number and amount of community development loans,

qualified investments, and community development services,

but also qualitative aspects of performance. In particular,

examiners will evaluate the responsiveness of the institution’s

community development activities in light of the institution’s

capacity, business strategy, the needs of the community, and

the number and types of opportunities for each type of

community development activity (its performance context).

Examiners also will consider the results of any assessment by

the institution of community development needs, and how the

institution’s activities respond to those needs.

An evaluation of the degree of responsiveness con-

siders the following factors: the volume, mix, and qualitative

aspects of community development loans, qualified invest-

ments, and community development services. Consideration

of the qualitative aspects of performance recognizes that

community development activities sometimes require special

expertise or effort on the part of the institution or provide a

benefit to the community that would not otherwise be made

available. (However, “innovativeness” and “complexity” ‒

factors examiners consider when evaluating a large institution

under the lending, investment, and service tests ‒ are not crite-

ria in the intermediate small institutions’ community develop-

ment test.) In some cases, a smaller loan may have more qual-

itative benefit to a community than a larger loan. Activities

are considered particularly responsive to community develop-

ment needs if they benefit low- and moderate-income individ-

uals in low- or moderate-income geographies, designated dis-

aster areas, or distressed or underserved nonmetropolitan mid-

dle-income geographies. Activities are also considered partic-

ularly responsive to community development needs if they

benefit low- or moderate-income geographies.

§ __.26(d) Performance rating

§ __.26(d) −1:

How can a small institution that is not

an intermediate small institution achieve an “outstanding”

performance rating?

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FDIC Consumer Compliance Examination Manual — July 2016 XI–12.29

A1. A small institution that is not an intermediate

small institution that meets each of the standards in the lending

test for a “satisfactory” rating and exceeds some or all of those

standards may warrant an “outstanding” performance rating.

In assessing performance at the “outstanding” level, the

Agencies consider the extent to which the institution exceeds

each of the performance standards and, at the institution’s

option, its performance in making qualified investments and

providing services that enhance credit availability in its

assessment area(s). In some cases, a small institution may

qualify for an “outstanding” performance rating solely on the

basis of its lending activities, but only if its performance

materially exceeds the standards for a “satisfactory” rating,

particularly with respect to the penetration of borrowers at all

income levels and the dispersion of loans throughout the

geographies in its assessment area(s) that display income

variation. An institution with a high loan-to-deposit ratio and

a high percentage of loans in its assessment area(s), but with

only a reasonable penetration of borrowers at all income levels

or a reasonable dispersion of loans throughout geographies of

differing income levels in its assessment area(s), generally will

not be rated “outstanding” based only on its lending

performance. However, the institution’s performance in

making qualified investments and its performance in providing

branches and other services and delivery systems that enhance

credit availability in its assessment area(s) may augment the

institution’s satisfactory rating to the extent that it may be

rated “outstanding.”

§ __.26(d) – 2:

Will a small institution’s qualified

investments, community development loans, and community

development services be considered if they do not directly

benefit its assessment area(s)?

A2. Yes. These activities are eligible for

consideration if they benefit a broader statewide or regional

area that includes a small institution’s assessment area(s), as

discussed more fully in Q&As § __.12(h) – 6 and § __.12(h) –

§ __.27--Strategic plan

§ __.27(c) Plans in general

§ __.27(c) – 1:

To what extent will the Agencies

provide guidance to an institution during the development of

its strategic plan?

A1. An institution will have an opportunity to

consult with and provide information to the Agencies on a

proposed strategic plan. Through this process, an institution is

provided guidance on procedures and on the information

necessary to ensure a complete submission. For example, the

Agencies will provide guidance on whether the level of detail

as set out in the proposed plan would be sufficient to permit

Agency evaluation of the plan. However, the Agencies’

guidance during plan development and, particularly, prior to

the public comment period, will not include commenting on

the merits of a proposed strategic plan or on the adequacy of

measurable goals.

§ __.27(c) – 2:

How will a joint strategic plan be

reviewed if the affiliates have different primary Federal

supervisors?

A2. The Agencies will coordinate review of and

action on the joint plan. Each Agency will evaluate the

measurable goals for those affiliates for which it is the primary

regulator.

§ __.27(f) Plan content

§ __.27(f)(1) Measurable goals

§ __.27(f)(1) – 1:

How should annual measurable

goals be specified in a strategic plan?

A1. Annual measurable goals (e.g., number of loans,

dollar amount, geographic location of activity, and benefit to

low- and moderate-income areas or individuals) must be stated

with sufficient specificity to permit the public and the

Agencies to quantify what performance will be expected.

However, institutions are provided flexibility in specifying

goals. For example, an institution may provide ranges of

lending amounts in different categories of loans. Measurable

goals may also be linked to funding requirements of certain

public programs or indexed to other external factors as long as

these mechanisms provide a quantifiable standard.

§ __.27(g) Plan approval

§ __.27(g)(2) Public participation

§ __.27(g)(2) – 1:

How will the public receive notice

of a proposed strategic plan?

A1. An institution submitting a strategic plan for

approval by the Agencies is required to solicit public comment

on the plan for a period of 30 days after publishing notice of

the plan at least once in a newspaper of general circulation.

The notice should be sufficiently prominent to attract public

attention and should make clear that public comment is

desired. An institution may, in addition, provide notice to the

public in any other manner it chooses.

§ __.28--Assigned ratings

§ __.28 – 1:

Are innovative lending practices,

innovative or complex qualified investments, and innovative

community development services required for a “satisfactory”

or “outstanding” CRA rating?

A1. No. The performance criterion of

“innovativeness” applies only under the lending, investment,

and service tests applicable to large institutions and the

community development test applicable to wholesale and

limited purpose institutions. Moreover, even under these tests,

the lack of innovative lending practices, innovative or complex

qualified investments, or innovative community development

services alone will not result in a “needs to improve” CRA

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XI–12.30 FDIC Consumer Compliance Examination Manual — July 2016

rating. However, under these tests, the use of innovative

lending practices, innovative or complex qualified

investments, and innovative community development services

may augment the consideration given to an institution’s

performance under the quantitative criteria of the regulations,

resulting in a higher performance rating. See also Q&A

§ __.26(c)(4) – 1 for a discussion about responsiveness to

community development needs under the community

development test applicable to intermediate small institutions.

§ __.28(a) Ratings in general

§ __.28(a) – 1:

How are institutions with domestic

branches in more than one state assigned a rating?

A1. The evaluation of an institution that maintains

domestic branches in more than one state (“multistate

institution”) will include a written evaluation and rating of its

CRA record of performance as a whole and in each state in

which it has a domestic branch. The written evaluation will

contain a separate presentation on a multistate institution’s

performance for each MSA and the nonmetropolitan area

within each state, if it maintains one or more domestic branch

offices in these areas. This separate presentation will contain

conclusions, supported by facts and data, on performance

under the performance tests and standards in the regulation.

The evaluation of a multistate institution that maintains a

domestic branch in two or more states in a multistate

metropolitan area will include a written evaluation (containing

the same information described above) and rating of its CRA

record of performance in the multistate metropolitan area. In

such cases, the statewide evaluation and rating will be adjusted

to reflect performance in the portion of the state not within the

multistate MSA.

§ __.28(a) – 2:

How are institutions that operate

within only a single state assigned a rating?

A2. An institution that operates within only a single

state (“single-state institution”) will be assigned a rating of its

CRA record based on its performance within that state. In

assigning this rating, the Agencies will separately present a

single-state institution’s performance for each metropolitan

area in which the institution maintains one or more domestic

branch offices. This separate presentation will contain

conclusions, supported by facts and data, on the single-state

institution’s performance under the performance tests and

standards in the regulation.

§ __.28(a) – 3:

How do the Agencies weight

performance under the lending, investment, and service tests

for large retail institutions?

A3. A rating of “outstanding,” “high satisfactory,”

“low satisfactory,” “needs to improve,” or “substantial

noncompliance,” based on a judgment supported by facts and

data, will be assigned under each performance test. Points will

then be assigned to each rating as described in the first matrix

set forth below. A large retail institution’s overall rating under

the lending, investment and service tests will then be

calculated in accordance with the second matrix set forth

below, which incorporates the rating principles in the

regulation.

POINTS ASSIGNED FOR PERFORMANCE UNDER

LENDING, INVESTMENT AND SERVICE TESTS

Lending

Service

Investm

ent

Outstanding

High Satisfactory

Low Satisfactory

Needs to Improve

Substantial

Noncompliance

COMPOSITE RATING POINT REQUIREMENTS

(Add points from three tests)

Rating

Total Points

Outstanding

20 or over

Satisfactory

11 through 19

Needs to Improve

5 through 10

Substantial

Noncompliance

0 through 4

Note: There is one exception to the Composite Rating matrix.

An institution may not receive a rating of “satisfactory” unless

it receives at least “low satisfactory” on the lending test.

Therefore, the total points are capped at three times the

lending test score.

§ __.28(b) Lending, investment, and service test ratings

§ __.28(b) – 1:

How is performance under the

quantitative and qualitative performance criteria weighed

when examiners assign a CRA rating?

A1. The lending, investment, and service tests each

contain a number of performance criteria designed to measure

whether an institution is effectively helping to meet the credit

needs of its entire community, including low- and moderate-

income neighborhoods, in a safe and sound manner. Some of

these performance criteria are quantitative, such as number

and amount, and others, such as the use of innovative or

flexible lending practices, the innovativeness or complexity of

qualified investments, and the innovativeness and

responsiveness of community development services, are

qualitative. The performance criteria that deal with these

qualitative aspects of performance recognize that these loans,

qualified investments, and community development services

sometimes require special expertise and effort on the part of

the institution and provide a benefit to the community that

would not otherwise be possible. As such, the Agencies

consider the qualitative aspects of an institution’s activities

when measuring the benefits received by a community. An

XI. Community Reinvestment Act — Interagency Questions and Answers

FDIC Consumer Compliance Examination Manual — July 2016 XI–12.31

institution’s performance under these qualitative criteria may

augment the consideration given to an institution’s

performance under the quantitative criteria of the regulations,

resulting in a higher level of performance and rating.

§ __.28(c) Effect of evidence of discriminatory or other illegal

credit practices

§ __.28(c) – 1:

What is meant by “discriminatory or

other illegal credit practices”?

A1. An institution engages in discriminatory credit

practices if it discourages or discriminates against credit

applicants or borrowers on a prohibited basis, in violation, for

example, of the Fair Housing Act or the Equal Credit

Opportunity Act (as implemented by Regulation B).

Examples of other illegal credit practices inconsistent with

helping to meet community credit needs include violations of

•

the Truth in Lending Act regarding rescission of certain

mortgage transactions and regarding disclosures and certain

loan term restrictions in connection with credit transactions

that are subject to the Home Ownership and Equity Protection

Act;

•

the Real Estate Settlement Procedures Act regarding the

giving and accepting of referral fees, unearned fees, or kick-

backs in connection with certain mortgage transactions; and

•

the Federal Trade Commission Act regarding unfair or

deceptive acts or practices.

Examiners will determine the effect of evidence of illegal

credit practices as set forth in examination procedures and §

__.28(c) of the regulation.

Violations of other provisions of the consumer

protection laws generally will not adversely affect an

institution’s CRA rating, but may warrant the inclusion of

comments in an institution’s performance evaluation. These

comments may address the institution’s policies, procedures,

training programs, and internal assessment efforts.

§ __.29--Effect of CRA performance on applications

§ __.29(a) CRA performance

§ __.29(a) – 1:

What weight is given to an

institution’s CRA performance examination in reviewing an

application?

A1. In reviewing applications in which CRA

performance is a relevant factor, information from a CRA

examination of the institution is a particularly important

consideration. The examination is a detailed evaluation of the

institution’s CRA performance by its supervisory Agency. In

this light, an examination is an important, and often

controlling, factor in the consideration of an institution’s

record. In some cases, however, the examination may not be

recent, or a specific issue raised in the application process,

such as progress in addressing weaknesses noted by

examiners, progress in implementing commitments previously

made to the reviewing Agency, or a supported allegation from

a commenter, is relevant to CRA performance under the

regulation and was not addressed in the examination. In these

circumstances, the applicant should present sufficient

information to supplement its record of performance and to

respond to the substantive issues raised in the application

proceeding.

§ __.29(a) – 2:

What consideration is given to an

institution’s commitments for future action in reviewing an

application by those Agencies that consider such

commitments?

A2. Commitments for future action are not viewed

as part of the CRA record of performance. In general,

institutions cannot use commitments made in the applications

process to overcome a seriously deficient record of CRA

performance. However, commitments for improvements in an

institution’s performance may be appropriate to address

specific weaknesses in an otherwise satisfactory record or to

address CRA performance when a financially troubled

institution is being acquired.

§ __.29(b) Interested parties

§ __.29(b) – 1:

What consideration is given to

comments from interested parties in reviewing an application?

A1. Materials relating to CRA performance received

during the application process can provide valuable

information. Written comments, which may express either

support for or opposition to the application, are made a part of

the record in accordance with the Agencies’ procedures, and

are carefully considered in making the Agencies’ decisions.

Comments should be supported by facts about the applicant’s

performance and should be as specific as possible in

explaining the basis for supporting or opposing the

application. These comments must be submitted within the

time limits provided under the Agencies’ procedures.

§ __.29(b) – 2:

Is an institution required to enter into

agreements with private parties?

A2. No. Although communications between an

institution and members of its community may provide a

valuable method for the institution to assess how best to

address the credit needs of the community, the CRA does not

require an institution to enter into agreements with private

parties. The Agencies do not monitor compliance with nor

enforce these agreements.

§ __.41--Assessment area delineation

§ __.41(a) In general

§ __.41(a) – 1:

How do the Agencies evaluate

“assessment areas” under the CRA regulations?

A1. The rule focuses on the distribution and level of

an institution’s lending, investments, and services rather than

on how and why an institution delineated its assessment

XI. Community Reinvestment Act — Interagency Questions and Answers

XI–12.32 FDIC Consumer Compliance Examination Manual — July 2016

area(s) in a particular manner. Therefore, the Agencies will

not evaluate an institution’s delineation of its assessment

area(s) as a separate performance criterion. Rather, the

Agencies will only review whether the assessment area(s)

delineated by the institution complies with the limitations set

forth in the regulations at 12 CFR __.41(e).

§ __.41(a) – 2:

If an institution elects to have the

Agencies consider affiliate lending, will this decision affect

the institution’s assessment area(s)?

A2. If an institution elects to have the lending

activities of its affiliates considered in the evaluation of the

institution’s lending, the geographies in which the affiliate

lends do not affect the institution’s delineation of assessment

area(s).

§ __.41(a) – 3:

Can a financial institution identify a

specific racial or ethnic group rather than a geographic area as

its assessment area?

A3. No, assessment areas must be based on

geography. The only exception to the requirement to delineate

an assessment area based on geography is that an institution,

the business of which predominantly consists of serving the

needs of military personnel or their dependents who are not

located within a defined geographic area, may delineate its

entire deposit customer base as its assessment area.

§ __.41(c) Geographic area(s) for institutions other than

wholesale or limited purpose institutions

§ __.41(c)(1) Generally consist of one or more MSAs or

metropolitan divisions or one or more contiguous political

subdivisions

§ __.41(c)(1) – 1:

Besides cities, towns, and counties,

what other units of local government are political subdivisions

for CRA purposes?

A1. Townships and Indian reservations are political

subdivisions for CRA purposes. Institutions should be aware

that the boundaries of townships and Indian reservations may

not be consistent with the boundaries of the census tracts (i.e.,

geographies) in the area. In these cases, institutions must

ensure that their assessment area(s) consists only of whole

geographies by adding any portions of the geographies that lie

outside the political subdivision to the delineated assessment

area(s).

§ __.41(c)(1) – 2:

Are wards, school districts, voting

districts, and water districts political subdivisions for CRA

purposes?

A2. No. However, an institution that determines

that it predominantly serves an area that is smaller than a city,

town, or other political subdivision may delineate as its

assessment area the larger political subdivision and then, in

accordance with 12 CFR __.41(d), adjust the boundaries of the

assessment area to include only the portion of the political

subdivision that it reasonably can be expected to serve. The

smaller area that the institution delineates must consist of

entire geographies, may not reflect illegal discrimination, and

may not arbitrarily exclude low- or moderate-income

geographies.

§ __.41(d) Adjustments to geographic area(s)

§ __.41(d) – 1:

When may an institution adjust the

boundaries of an assessment area to include only a portion of a

political subdivision?

A1. Institutions must include whole geographies

(i.e., census tracts) in their assessment areas and generally

should include entire political subdivisions. Because census

tracts are the common geographic areas used consistently

nationwide for data collection, the Agencies require that

assessment areas be made up of whole geographies. If

including an entire political subdivision would create an area

that is larger than the area the institution can reasonably be

expected to serve, an institution may, but is not required to,

adjust the boundaries of its assessment area to include only

portions of the political subdivision. For example, this

adjustment is appropriate if the assessment area would

otherwise be extremely large, of unusual configuration, or

divided by significant geographic barriers (such as a river,

mountain, or major highway system). When adjusting the

boundaries of their assessment areas, institutions must not

arbitrarily exclude low- or moderate-income geographies or

set boundaries that reflect illegal discrimination.

§ __.41(e) Limitations on delineation of an assessment area

§ __.41(e)(3) May not arbitrarily exclude low- or moderate-

income geographies

§ __.41(e)(3) – 1:

How will examiners determine

whether an institution has arbitrarily excluded low- or

moderate-income geographies?

A1. Examiners will make this determination on a

case-by-case basis after considering the facts relevant to the

institution’s assessment area delineation. Information that

examiners will consider may include

• income levels in the institution’s assessment area(s) and

surrounding geographies;

• locations of branches and deposit-taking ATMs;

• loan distribution in the institution’s assessment area(s)

and surrounding geographies;

• the institution’s size;

• the institution’s financial condition; and

• the business strategy, corporate structure, and product

offerings of the institution.

§ __.41(e)(4) May not extend substantially beyond an MSA

boundary or beyond a state boundary unless located in a

multistate MSA

§ __.41(e)(4) – 1:

What are the maximum limits on

the size of an assessment area?

XI. Community Reinvestment Act — Interagency Questions and Answers

FDIC Consumer Compliance Examination Manual — July 2016 XI–12.33

A1. An institution may not delineate an assessment

area extending substantially across the boundaries of an MSA

unless the MSA is in a combined statistical area (CSA)).

Although more than one MSA in a CSA may be delineated as

a single assessment area, an institution’s CRA performance in

individual MSAs in those assessment areas will be evaluated

using separate median family incomes and other relevant

information at the MSA level rather than at the CSA level.

An assessment area also may not extend substantially

across state boundaries unless the assessment area is located in

a multistate MSA. An institution may not delineate a whole

state as its assessment area unless the entire state is contained

within an MSA. These limitations apply to wholesale and

limited purpose institutions as well as other institutions.

An institution must delineate separate assessment

areas for the areas inside and outside an MSA if the area

served by the institution’s branches outside the MSA extends

substantially beyond the MSA boundary. Similarly, the

institution must delineate separate assessment areas for the

areas inside and outside of a state if the institution’s branches

extend substantially beyond the boundary of one state (unless

the assessment area is located in a multistate MSA). In

addition, the institution should also delineate separate

assessment areas if it has branches in areas within the same

state that are widely separate and not at all contiguous. For

example, an institution that has its main office in New York

City and a branch in Buffalo, New York, and each office

serves only the immediate areas around it, should delineate

two separate assessment areas.

§ __.41(e)(4) – 2:

May an institution delineate one

assessment area that consists of an MSA and two large

counties that abut the MSA but are not adjacent to each other?

A2. As a general rule, an institution’s assessment

area should not extend substantially beyond the boundary of

an MSA. Therefore, the MSA would be a separate assessment

area, and because the two abutting counties are not adjacent to

each other and, in this example, extend substantially beyond

the boundary of the MSA, the institution would delineate each

county as a separate assessment area, assuming branches or

deposit-taking ATMs are located in each county and the MSA.

So, in this example, there would be three assessment areas.

However, if the MSA and the two counties were in the same

CSA, then the institution could delineate only one assessment

area including them all. But, the institution’s CRA

performance in the MSAs and the non-MSA counties in that

assessment area would be evaluated using separate median

family incomes and other relevant information at the MSA and

state, non-MSA level, rather than at the CSA level.

§ __.42--Data collection, reporting, and disclosure

§ __.42 – 1:

When must an institution collect and

report data under the CRA regulations?

A1. All institutions except small institutions are

subject to data collection and reporting requirements. (“Small

institution” is defined in the Agencies’ CRA regulations at 12

CFR __.12(u).) Examples describing the data collection

requirements of institutions, in particular those that have just

surpassed the asset-size threshold of a small institution, may

be found on the FFIEC Web site at http://www.ffiec.gov/cra

All institutions that are subject to the data collection and

reporting requirements must report the data for a calendar year

(CY) by March 1 of the subsequent year. For example, data

for CY 2015 would be reported by March 1, 2016.

The Board of Governors of the Federal Reserve

System processes the reports for all of the primary

regulators. Data may be submitted on diskette, CD-ROM

, or

via Internet e-mail.

CRA respondents are encouraged to use the free

FFIEC Data Entry Software to send their CRA data.

“Submission via Web” is the preferred option. CRA

respondents may also send a properly encrypted CRA file

(using the “Export to Federal Reserve Board via Internet e-

mail” option) to CRASUB@FRB.GOV

Please mail diskette or CD-ROM submissions to:

Federal Reserve Board

Attention: CRA Processing

20th & Constitution Avenue, NW

MS N402

Washington, DC 20551-0001.

For questions about submitting or resubmitting CRA

data, please contact the FFIEC at CRAHELP@FRB.GOV.

§ __.42 – 2:

Should an institution develop its own

program for data collection, or will the regulators require a

certain format?

A2. An institution may use the free software that is

provided by the FFIEC to reporting institutions for data

collection and reporting or develop its own program. Those

institutions that develop their own programs may create a data

submission using the File Specifications and Edit Validation

Rules that have been set forth to assist with electronic data

submissions. For information about specific electronic

formatting procedures, contact CRAHE[email protected].

§ __.42 – 3:

How should an institution report data on

lines of credit?

A3. Institutions must collect and report data on lines

of credit in the same way that they provide data on loan

originations. Lines of credit are considered originated at the

time the line is approved or increased; and an increase is

considered a new origination. Generally, the full amount of

the credit line is the amount that is considered originated. In

the case of an increase to an existing line, the amount of the

increase is the amount that is considered originated and that

amount should be reported. However, consistent with the Call

Report instructions, institutions would not report an increase to

a small business or small farm line of credit if the increase

would cause the total line of credit to exceed $1 million, in the

case of a small business line, or $500,000, in the case of a

small farm line. Of course, institutions may provide

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XI–12.34 FDIC Consumer Compliance Examination Manual — July 2016

information about such line increases to examiners as “other

loan data.”

§ __.42 – 4:

Should renewals of lines of credit be

collected and/or reported?

A4. Renewals of lines of credit for small business,

small farm, consumer, or community development purposes

should be collected and reported, if applicable, in the same

manner as renewals of small business or small farm loans. See

Q&A § __.42(a) – 5. Institutions that are HMDA reporters

continue to collect and report home equity lines of credit at

their option in accordance with the requirements of 12 CFR

part 1003.

§ __.42 – 5: When should merging institutions

collect data?

A5. Three scenarios of data collection

responsibilities for the calendar year of a merger and

subsequent data reporting responsibilities are described below.

• Two institutions are exempt from CRA collection and

reporting requirements because of asset size. The institutions

merge. No data collection is required for the year in which the

merger takes place, regardless of the resulting asset size. Data

collection would begin after two consecutive years in which

the combined institution had year-end assets at least equal to

the small institution asset-size threshold amount described in

12 CFR __.12(u)(1).

• Institution A, an institution required to collect and report

the data, and Institution B, an exempt institution, merge. Insti-

tution A is the surviving institution. For the year of the mer-

ger, data collection is required for Institution A’s transactions.

Data collection is optional for the transactions of the previous-

ly exempt institution. For the following year, all transactions

of the surviving institution must be collected and reported.

• Two institutions that each are required to collect and re-

port the data merge. Data collection is required for the entire

year of the merger and for subsequent years so long as the

surviving institution is not exempt. The surviving institution

may file either a consolidated submission or separate submis-

sions for the year of the merger but must file a consolidated

report for subsequent years.

§ __.42 – 6:

Can small institutions get a copy of the

data collection software even though they are not required to

collect or report data?

A6. Yes. Any institution that is interested in

receiving a copy of the software may download it from the

FFIEC Web site at http://www.ffiec.gov/cra. For assistance,

institutions may send an e-mail to [email protected].

§ __.42 – 7:

If a small institution is designated a

wholesale or limited purpose institution, must it collect data

that it would not otherwise be required to collect because it is

a small institution?

A7. No. However, small institutions that are

designated as wholesale or limited purpose institutions must

be prepared to identify those loans, investments, and services

to be evaluated under the community development test.

§ __.42(a) Loan information required to be collected and

maintained

§ __.42(a) – 1:

Must institutions collect and report

data on all commercial loans of $1 million or less at

origination?

A1. No. Institutions that are not exempt from data

collection and reporting are required to collect and report only

those commercial loans that they capture in Call Report

Schedule RC-C, Part II. Small business loans are defined as

those whose original amounts are $1 million or less and

that

were reported as either “Loans secured by nonfarm or

nonresidential real estate” or “Commercial and industrial

loans” in Call Report Schedule RC-C, Part I.

§ __.42(a) – 2: For loans defined as small business

loans, what information should be collected and maintained?

A2. Institutions that are not exempt from data

collection and reporting are required to collect and maintain,

in a standardized, machine-readable format, information on

each small business loan originated or purchased for each

calendar year:

• A unique number or alpha-numeric symbol that can be

used to identify the relevant loan file.

• The loan amount at origination.

• The loan location.

• An indicator whether the loan was to a business with

gross annual revenues of $1 million or less.

The location of the loan must be maintained by

census tract. In addition, supplemental information contained

in the file specifications includes a date associated with the

origination or purchase and whether a loan was originated or

purchased by an affiliate. The same requirements apply to

small farm loans.

§ __.42(a) – 3:

Will farm loans need to be segregated

from business loans?

A3. Yes.

§ __.42(a) – 4:

Should institutions collect and report

data on all agricultural loans of $500,000 or less at

origination?

A4. Institutions are to report those farm loans that

they capture in Call Report Schedule RC-C, Part II. Small

farm loans are defined as those whose original amounts are

$500,000 or less and

were reported as either “Loans to finance

agricultural production and other loans to farmers” or “Loans

secured by farmland” in Call Report Schedule RC-C, Part I.

§ __.42(a) – 5: Should institutions collect and report

data about small business and small farm loans that are

refinanced or renewed?

A5. An institution should collect information about

small business and small farm loans that it refinances or

renews as loan originations. (A refinancing

generally occurs

when the existing loan obligation or note is satisfied and a new

note is written, while a

renewal refers to an extension of the

term of a loan. However, for purposes of small business and

small farm CRA data collection and reporting, it is not

XI. Community Reinvestment Act — Interagency Questions and Answers

FDIC Consumer Compliance Examination Manual — July 2016 XI–12.35

necessary to distinguish between the two.) When reporting

small business and small farm data, however, an institution

may only report one origination (including a renewal or

refinancing treated as an origination) per loan per year, unless

an increase in the loan amount is granted. However, a demand

loan that is merely reviewed annually is not reported as a

renewal because the term of the loan has not been extended.

If an institution increases the amount of a small

business or small farm loan when it extends the term of the

loan, it should always report the amount of the increase as a

small business or small farm loan origination. The institution

should report only the amount of the increase if the original or

remaining amount of the loan has already been reported one

time that year. For example, a financial institution makes a

term loan for $25,000; principal payments have resulted in a

present outstanding balance of $15,000. In the next year, the

customer requests an additional $5,000, which is approved,

and a new note is written for $20,000. In this example, the

institution should report both the $5,000 increase and the

renewal or refinancing of the $15,000 as originations for that

year. These two originations may be reported together as a

single origination of $20,000.

§ __.42(a) – 6:

Does a loan to the “fishing industry”

come under the definition of a small farm loan?

A6. Yes. Instructions for Call Report Schedule RC-

C, Part I include loans “made for the purpose of financing

fisheries and forestries, including loans to commercial

fishermen” as a component of the definition for “Loans to

finance agricultural production and other loans to farmers.”

Call Report Schedule RC-C, Part II, which serves as the basis

of the definition for small business and small farm loans in the

regulation, captures both “Loans to finance agricultural

production and other loans to farmers” and “Loans secured by

farmland.”

§ __.42(a) – 7:

How should an institution report a

home equity line of credit, part of which is for home

improvement purposes and part of which is for small business

purposes?

A7. When an institution originates a home equity

line of credit that is for both home improvement and small

business purposes, the institution has the option of reporting

the portion of the home equity line that is for home

improvement purposes as a home improvement loan under

HMDA. Examiners would consider that portion of the line

when they evaluate the institution’s home mortgage lending.

When an institution refinances a home equity line of credit

into another home equity line of credit, HMDA reporting

continues to be optional. If the institution opts to report the

refinanced line, the entire amount of the line would be

reported as a refinancing and examiners will consider the

entire refinanced line when they evaluate the institution’s

home mortgage lending.

If an institution that has originated a home equity line

of credit for both home improvement and small business

purposes (or if an institution that has refinanced such a line

into another line) chooses not to report a home improvement

loan (or a refinancing) under HMDA, and if the line meets the

regulatory definition of a “community development loan,” the

institution should collect and report information on the entire

line as a community development loan. If the line does not

qualify as a community development loan, the institution has

the option of collecting and maintaining (but not reporting) the

entire line of credit as “Other Secured Lines/Loans for

Purposes of Small Business.”

§ __.42(a) – 8:

When collecting small business and

small farm data for CRA purposes, may an institution collect

and report information about loans to small businesses and

small farms located outside the United States?

A8. At an institution’s option, it may collect data

about small business and small farm loans located outside the

United States; however, it cannot report this data because the

CRA data collection software will not accept data concerning

loan locations outside the United States.

§ __.42(a) – 9:

Is an institution that has no small

farm or small business loans required to report under CRA?

A9. Each institution subject to data reporting

requirements must, at a minimum, submit a transmittal sheet,

definition of its assessment area(s), and a record of its

community development loans. If the institution does not

have community development loans to report, the record

should be sent with “0” in the community development loan

composite data fields. An institution that has not purchased or

originated any small business or small farm loans during the

reporting period would not submit the composite loan records

for small business or small farm loans.

§ __.42(a) – 10:

How should an institution collect

and report the location of a loan made to a small business or

farm if the borrower provides an address that consists of a post

office box number or a rural route and box number?

A10. Prudent banking practices and Bank Secrecy

Act regulations dictate that institutions know the location of

their customers and loan collateral. Further, Bank Secrecy Act

regulations specifically state that a post office box is not an

acceptable address. Therefore, institutions typically will know

the actual location of their borrowers or loan collateral beyond

an address consisting only of a post office box.

Many borrowers have street addresses in addition to

rural route and box numbers. Institutions should ask their

borrowers to provide the street address of the main business

facility or farm or the location where the loan proceeds

otherwise will be applied. Moreover, in many cases in which

the borrower’s address consists only of a rural route number,

the institution knows the location (i.e., the census tract) of the

borrower or loan collateral. Once the institution has this

information available, it should assign the census tract to that

location (geocode) and report that information as required

under the regulation.

However, if an institution cannot determine a rural

borrower’s street address, and does not know the census tract,

the institution should report the borrower’s state, county, MSA

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XI–12.36 FDIC Consumer Compliance Examination Manual — July 2016

or metropolitan division, if applicable, and “NA,” for “not

available,” in lieu of a census tract code.

§ __.42(a)(2) Loan amount at origination

§ __.42(a)(2) – 1:

When an institution purchases a

small business or small farm loan, in whole or in part, which

amount should the institution collect and report – the original

amount of the loan or the amount at purchase?

A1. When collecting and reporting information on

purchased small business and small farm loans, including loan

participations, an institution collects and reports the amount of

the loan at origination, not at the time of purchase. This is

consistent with the Call Report’s use of the “original amount

of the loan” to determine whether a loan should be reported as

a “loan to a small business” or a “loan to a small farm” and in

which loan size category a loan should be reported. When

assessing the volume of small business and small farm loan

purchases for purposes of evaluating lending test performance

under CRA, however, examiners will evaluate an institution’s

activity based on the amounts at purchase.

§ __.42(a)(2) – 2:

How should an institution collect

data about multiple loan originations to the same business?

A2. If an institution makes multiple originations to

the same business, the loans should be collected and reported

as separate originations rather than combined and reported as

they are on the Call Report, which reflects loans outstanding,

rather than originations. However, if institutions make

multiple originations to the same business solely to inflate

artificially the number or volume of loans evaluated for CRA

lending performance, the Agencies may combine these loans

for purposes of evaluation under the CRA.

§ __.42(a)(2) – 3:

How should an institution collect

data pertaining to credit cards issued to small businesses?

A3. If an institution agrees to issue credit cards to a

business’s employees, all of the credit card lines opened on a

particular date for that single business should be reported as

one small business loan origination rather than reporting each

individual credit card line, assuming the criteria in the “small

business loan” definition in the regulation are met. The credit

card program’s “amount at origination” is the sum of all of the

employee/business credit cards’ credit limits opened on a

particular date. If subsequently issued credit cards increase

the small business credit line, the added amount is reported as

a new origination.

§ __.42(a)(3) The loan location

§ __.42(a)(3) – 1:

Which location should an

institution record if a small business loan’s proceeds are used

in a variety of locations?

A1. The institution should record the loan location

by either the location of the small business borrower’s

headquarters or the location where the greatest portion of the

proceeds are applied, as indicated by the borrower.

§ __.42(a)(4) Indicator of gross annual revenue

§ __.42(a)(4) – 1:

When indicating whether a small

business borrower had gross annual revenues of $1 million or

less, upon what revenues should an institution rely?

A1. Generally, an institution should rely on the

revenues that it considered in making its credit decision. For

example, in the case of affiliated businesses, such as a parent

corporation and its subsidiary, if the institution considered the

revenues of the entity’s parent or a subsidiary corporation of

the parent as well, then the institution would aggregate the

revenues of both corporations to determine whether the

revenues are $1 million or less. Alternatively, if the institution

considered the revenues of only the entity to which the loan is

actually extended, the institution should rely solely upon

whether gross annual revenues are above or below $1 million

for that entity. However, if the institution considered and

relied on revenues or income of a cosigner or guarantor that is

not an affiliate of the borrower, such as a sole proprietor, the

institution should not adjust the borrower’s revenues for

reporting purposes.

§ __.42(a)(4) – 2:

If an institution that is not exempt

from data collection and reporting does not request or consider

revenue information to make the credit decision regarding a

small business or small farm loan, must the institution collect

revenue information in connection with that loan?

A2. No. In those instances, the institution should

enter the code indicating “revenues not known” on the

individual loan portion of the data collection software or on an

internally developed system. Loans for which the institution

did not collect revenue information may not be included in the

loans to businesses and farms with gross annual revenues of

$1 million or less when reporting this data.

§ __.42(a)(4) – 3:

What gross revenue should an

institution use in determining the gross annual revenue of a

start-up business?

A3. The institution should use the actual gross

annual revenue to date (including $0 if the new business has

had no revenue to date). Although a start-up business will

provide the institution with pro forma projected revenue

figures, these figures may not accurately reflect actual gross

revenue and, therefore, should not be used.

§ __.42(a)(4) – 4:

When indicating the gross annual

revenue of small business or small farm borrowers, do

institutions rely on the gross annual revenue or the adjusted

gross annual revenue of their borrowers?

A4. Institutions rely on the gross annual revenue,

rather than the adjusted gross annual revenue, of their small

business or small farm borrowers when indicating the revenue

of small business or small farm borrowers. The purpose of

this data collection is to enable examiners and the public to

judge whether the institution is lending to small businesses and

small farms or whether it is only making small loans to larger

businesses and farms.

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FDIC Consumer Compliance Examination Manual — July 2016 XI–12.37

The regulation does not require institutions to request

or consider revenue information when making a loan;

however, if institutions do gather this information from their

borrowers, the Agencies expect them to collect and rely upon

the borrowers’ gross annual revenue for purposes of CRA.

The CRA regulations similarly do not require institutions to

verify revenue amounts; thus, institutions may rely on the

gross annual revenue amount provided by borrowers in the

ordinary course of business. If an institution does not collect

gross annual revenue information for its small business and

small farm borrowers, the institution should enter the code

“revenues not known.” See

Q&A § __.42(a)(4) – 2.

§ __.42(b) Loan information required to be reported

§ __.42(b)(1) Small business and small farm loan data

§ __.42(b)(1) – 1:

For small business and small farm

loan information that is collected and maintained, what data

should be reported?

A1. Each institution that is not exempt from data

collection and reporting is required to report in machine-

readable form annually by March 1 the following information,

aggregated for each census tract in which the institution

originated or purchased at least one small business or small

farm loan during the prior year:

• The number and amount of loans originated or purchased

with original amounts of $100,000 or less.

• The number and amount of loans originated or purchased

with original amounts of more than $100,000 but less than or

equal to $250,000.

• The number and amount of loans originated or purchased

with original amounts of more than $250,000 but not more

than $1 million, as to small business loans, or $500,000, as to

small farm loans.

• To the extent that information is available, the number

and amount of loans to businesses and farms with gross annual

revenues of $1 million or less (using the revenues the institu-

tion considered in making its credit decision).

§ __.42(b)(2) Community development loan data

§ __.42(b)(2) – 1:

What information about

community development loans must institutions report?

A1. Institutions subject to data reporting

requirements must report the aggregate number and amount of

community development loans originated and purchased

during the prior calendar year.

§ __.42(b)(2) – 2:

If a loan meets the definition of a

home mortgage, small business, or small farm loan AND

qualifies as a community development loan, where should it

be reported? Can Federal Housing Administration, Veterans

Affairs, and Small Business Administration loans be reported

as community development loans?

A2. Except for multifamily affordable housing

loans, which may be reported by retail institutions both under

HMDA as home mortgage loans and as community

development loans, in order to avoid double counting, retail

institutions must report loans that meet the definition of “home

mortgage loan,” “small business loan,” or “small farm loan”

only in those respective categories even if they also meet the

definition of “community development loan.” As a practical

matter, this is not a disadvantage for institutions evaluated

under the lending, investment, and service tests because any

affordable housing mortgage, small business, small farm, or

consumer loan that would otherwise meet the definition of

“community development loan” will be considered elsewhere

in the lending test. Any of these types of loans that occur

outside the institution’s assessment area(s) can receive

consideration under the borrower characteristic criteria of the

lending test. See

Q&A § __.22(b)(2) & (3) – 4.

Limited purpose and wholesale institutions that meet

the size threshold for reporting purposes also must report loans

that meet the definitions of home mortgage, small business, or

small farm loans in those respective categories. However,

these institutions must also report any loans from those

categories that meet the regulatory definition of “community

development loan” as community development loans. There is

no double counting because wholesale and limited purpose

institutions are not subject to the lending test and, therefore,

are not evaluated on their level and distribution of home

mortgage, small business, small farm, and consumer loans.

§ __.42(b)(2) – 3:

When the primary purpose of a

loan is to finance an affordable housing project for low- or

moderate-income individuals, but, for example, only 40

percent of the units in question will actually be occupied by

individuals or families with low or moderate incomes, should

the entire loan amount be reported as a community

development loan?

A3. It depends. As long as the primary purpose of

the loan is a community development purpose as described in

Q&A § __.12(h) – 8, the full amount of the institution’s loan

should be included in its reporting of aggregate amounts of

community development lending. Even though the entire

amount of the loan is reported, as noted in Q&A § __.22(b)(4)

– 1, examiners may make qualitative distinctions among

community development loans on the basis of the extent to

which the loan advances the community development purpose.

In addition, if an institution that reports CRA data

elects to request consideration for loans that provide mixed-

income housing where only a portion of the loan has

community development as its primary purpose, such as in

connection with a development that has a mixed-income

housing component or an affordable housing set-aside required

by Federal, state, or local government, the institution must

report only the pro rata dollar amount of the portion of the

loan that provides affordable housing to low- or moderate-

income individuals. The pro rata dollar amount of the total

activity will be based on the percentage of units that are

affordable. See Q&A § __.12(h) – 8 for a discussion of

“primary purpose” of community development describing the

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XI–12.38 FDIC Consumer Compliance Examination Manual — July 2016

distinction between the types of loans that would be reported

in full and those for which only the pro rata amount would be

reported.

§ __.42(b)(2) – 4:

When an institution purchases a

participation in a community development loan, which amount

should the institution report – the entire amount of the credit

originated by the lead lender or the amount of the participation

purchased?

A4. The institution reports only the amount of the

participation purchased as a community development loan.

However, the institution uses the entire amount of the credit

originated by the lead lender to determine whether the original

credit meets the definition of a “loan to a small business,”

“loan to a small farm,” or “community development loan.”

For example, if an institution purchases a $400,000

participation in a business credit that has a community

development purpose, and the entire amount of the credit

originated by the lead lender is over $1 million, the institution

would report $400,000 as a community development loan.

§ __.42(b)(2) – 5:

Should institutions collect and

report data about community development loans that are

refinanced or renewed?

A5. Yes. Institutions should collect information

about community development loans that they refinance or

renew as loan originations. Community development loan

refinancings and renewals are subject to the reporting

limitations that apply to refinancings and renewals of small

business and small farm loans. See

Q&A § __.42(a) – 5.

§ __.42(b)(3) Home mortgage loans

§ __.42(b)(3) – 1:

Must institutions that are not

required to collect home mortgage loan data by the HMDA

collect home mortgage loan data for purposes of the CRA?

A1. No. If an institution is not required to collect

home mortgage loan data by the HMDA, the institution need

not collect home mortgage loan data under the CRA.

Examiners will sample these loans to evaluate the institution’s

home mortgage lending. If an institution wants to ensure that

examiners consider all of its home mortgage loans, the

institution may collect and maintain data on these loans.

§ __.42(c) Optional data collection and maintenance

§ __.42(c)(1) Consumer loans

§ __.42(c)(1) – 1:

What are the data requirements

regarding consumer loans?

A1. There are no data reporting requirements for

consumer loans. Institutions may, however, opt to collect and

maintain data on consumer loans. If an institution chooses to

collect information on consumer loans, it may collect data for

one or more of the following categories of consumer loans:

motor vehicle, credit card, home equity, other secured, and

other unsecured. If an institution collects data for loans in a

certain category, it must collect data for all loans originated or

purchased within that category. The institution must maintain

these data separately for each category for which it chooses to

collect data. The data collected and maintained should include

for each loan

• a unique number or alpha-numeric symbol that can be

used to identify the relevant loan file;

• the loan amount at origination or purchase;

• the loan location; and

• the gross annual income of the borrower that the institu-

tion considered in making its credit decision.

Generally, guidance given with respect to data

collection of small business and small farm loans, including,

for example, guidance regarding collecting loan location data,

and whether to collect data in connection with refinanced or

renewed loans, will also apply to consumer loans.

§ __.42(c)(1)(iv) Income of borrower

§ __.42(c)(1)(iv) – 1:

If an institution does not

consider income when making an underwriting decision in

connection with a consumer loan, must it collect income

information?

A1. No. Further, if the institution routinely collects,

but does not verify, a borrower’s income when making a credit

decision, it need not verify the income for purposes of data

maintenance.

§ __.42(c)(1)(iv) – 2:

May an institution list “0” in

the income field on consumer loans made to employees when

collecting data for CRA purposes as the institution would be

permitted to do under HMDA?

A2. Yes.

§ __.42(c)(1)(iv) – 3:

When collecting the gross

annual income of consumer borrowers, do institutions collect

the gross annual income or the adjusted gross annual income

of the borrowers?

A3. Institutions collect the gross annual income,

rather than the adjusted gross annual income, of consumer

borrowers. The purpose of income data collection in

connection with consumer loans is to enable examiners to

determine the distribution, particularly in the institution’s

assessment area(s), of the institution’s consumer loans, based

on borrower characteristics, including the number and amount

of consumer loans to low-, moderate-, middle-, and upper-

income borrowers, as determined on the basis of gross annual

income.

The regulation does not require institutions to request

or consider income information when making a loan; however,

if institutions do gather this information from their borrowers,

the Agencies expect them to collect the borrowers’ gross

annual income for purposes of CRA. The CRA regulations

similarly do not require institutions to verify income amounts;

thus, institutions may rely on the gross annual income amount

provided by borrowers in the ordinary course of business.

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FDIC Consumer Compliance Examination Manual — July 2016 XI–12.39

§ __.42(c)(1)(iv) – 4: Whose income does an

institution collect when a consumer loan is made to more than

one borrower?

A4. An institution that chooses to collect and main-

tain information on consumer loans collects the gross annual

income of all primary obligors for consumer loans, to the ex-

tent that the institution considered the income of the obligors

when making the decision to extend credit. Primary obligors

include co-applicants and co-borrowers, including co-signers.

An institution does not, however, collect the income of guar-

antors on consumer loans, because guarantors are only sec-

ondarily liable for the debt.

§ __.42(c)(2) Other loan data

§ __.42(c)(2) – 1: Call Report

Schedule RC-C, Part II

does not allow institutions to report loans for commercial and

industrial purposes that are secured by residential real estate,

unless the security interest in the nonfarm residential real

estate is taken only as an abundance of caution. (See Q&A

§ __.12(v) – 3.) Loans extended to small businesses with

gross annual revenues of $1 million or less may, however, be

secured by residential real estate. May an institution collect

this information to supplement its small business lending data

at the time of examination?

A1. Yes. If these loans promote community

development, as defined in the regulation, the institution

should collect and report information about the loans as

community development loans. Otherwise,

at the institution’s

option, it may collect and maintain data concerning loans,

purchases, and lines of credit extended to small businesses and

secured by nonfarm residential real estate for consideration in

the CRA evaluation of its small business lending. An

institution may collect this information as “Other Secured

Lines/Loans for Purposes of Small Business” in the individual

loan data. This information should be maintained at the

institution but should

not be submitted for central reporting

purposes.

§ __.42(c)(2) – 2: Must an institution collect data on

loan commitments and letters of credit?

A2. No. Institutions are not required to collect data

on loan commitments and letters of credit. Institutions may,

however, provide for examiner consideration information on

letters of credit and commitments.

§ __.42(c)(2) – 3:

Are commercial and consumer

leases considered loans for purposes of CRA data collection?

A3. Commercial and consumer leases are not

considered small business or small farm loans or consumer

loans for purposes of the data collection requirements in 12

CFR __.42(a) & (c)(1). However, if an institution wishes to

collect and maintain data about leases, the institution may

provide this data to examiners as “other loan data” under 12

CFR __.42(c)(2) for consideration under the lending test.

§ __.42(d) Data on affiliate lending

§ __.42(d) – 1:

If an institution elects to have an

affiliate’s home mortgage lending considered in its CRA

evaluation, what data must the institution make available to

examiners?

A1. If the affiliate is a HMDA reporter, the

institution must identify those loans reported by its affiliate

under 12 CFR part 1003 (Regulation C, implementing

HMDA). At its option, the institution may provide examiners

with either the affiliate’s entire HMDA Disclosure Statement

or just those portions covering the loans in its assessment

area(s) that it is electing to consider. If the affiliate is not

required by HMDA to report home mortgage loans, the

institution must provide sufficient data concerning the

affiliate’s home mortgage loans for the examiners to apply the

performance tests.

§ __.43--Content and availability of public file

§ __.43(a) Information available to the public

§ __.43(a)(1) Public comments related to an institution’s CRA

performance

§ __.43(a)(1) – 1:

What happens to comments

received by the Agencies?

A1. Comments received by an Agency will be on

file at the Agency for use by examiners. Those comments are

also available to the public unless they are exempt from

disclosure under the Freedom of Information Act.

§ __.43(a)(1) – 2:

Is an institution required to

respond to public comments?

A2. No. All institutions should review comments

and complaints carefully to determine whether any response or

other action is warranted. A small institution subject to the

small institution performance standards is specifically

evaluated on its record of taking action, if warranted, in

response to written complaints about its performance in

helping to meet the credit needs in its assessment area(s). See

12 CFR __.26(b)(5). For all institutions, responding to

comments may help to foster a dialogue with members of the

community or to present relevant information to an

institution’s supervisory Agency. If an institution responds in

writing to a letter in the public file, the response must also be

placed in that file, unless the response reflects adversely on

any person or placing it in the public file violates a law.

§ __.43(a)(2) CRA performance evaluation

§ __.43(a)(2) – 1:

May an institution include a

response to its CRA performance evaluation in its public file?

A1. Yes. However, the format and content of the

evaluation, as transmitted by the supervisory Agency, may not

be altered or abridged in any manner. In addition, an

institution that received a less than satisfactory rating during it

most recent examination must include in its public file a

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XI–12.40 FDIC Consumer Compliance Examination Manual — July 2016

description of its current efforts to improve its performance in

helping to meet the credit needs of its entire community. See

12 CFR __.43(b)(5). The institution must update the

description on a quarterly basis.

§ __.43(b) Additional information available to the public

§ __.43(b)(1) Institutions other than small institutions

§ __.43(b)(1) – 1:

Must an institution that elects to

have affiliate lending considered include data on this lending

in its public file?

A1. Yes. The lending data to be contained in an

institution’s public file covers the lending of the institution’s

affiliates, as well as of the institution itself, considered in the

assessment of the institution’s CRA performance. An

institution that has elected to have mortgage loans of an

affiliate considered must include either the affiliate’s HMDA

Disclosure Statements for the two prior years or the parts of

the Disclosure Statements that relate to the institution’s

assessment area(s), at the institution’s option.

§ __.43(b)(1) – 2:

May an institution retain its CRA

disclosure statement in electronic format in its public file,

rather than printing a hard copy of the CRA disclosure

statement for retention in its public file?

A2. Yes, if the institution can readily print out its

CRA disclosure statement from an electronic medium (e.g.,

CD, DVD, or Internet Web site) when a consumer requests the

public file. If the request is at a branch other than the main

office or the one designated branch in each state that holds the

complete public file, the institution should provide the CRA

disclosure statement in a paper copy, or in another format

acceptable to the requestor, within five calendar days, as

required by 12 CFR __.43(c)(2)(ii).

§ __.43(c) Location of public information

§ __.43(c) – 1:

What is an institution’s “main

office”?

A1. An institution’s main office is the main, home,

or principal office as designated in its charter.

§ __.43(c) – 2:

May an institution maintain a copy of

its public file on an intranet or the Internet?

A2. Yes, an institution may keep all or part of its

public file on an intranet or the Internet, provided that the in-

stitution maintains all of the information, either in paper or

electronic form, that is required in 12 CFR __.43. An institu-

tion that opts to keep part or all of its public file on an intranet

or the Internet must follow the rules in 12 CFR __.43(c)(1)

and (2) as to what information is required to be kept at a main

office and at a branch. The institution also must ensure that

the information required to be maintained at a main office and

branch, if kept electronically, can be readily downloaded and

printed for any member of the public who requests a hard copy

of the information.

§ __.44--Public notice by institutions

§ __.44 – 1:

Are there any placement or size

requirements for an institution’s public notice?

A1. The notice must be placed in the institution’s

public lobby, but the size and placement may vary. The notice

should be placed in a location and be of a sufficient size that

customers can easily see and read it.

§ __.45--Publication of planned examination schedule

§ __.45 – 1:

Where will the Agencies publish the

planned examination schedule for the upcoming calendar

quarter?

A1. The Agencies may use the Federal Register, a

press release, the Internet, or other existing Agency

publications for disseminating the list of the institutions

scheduled for CRA examinations during the upcoming

calendar quarter. Interested parties should contact the

appropriate Federal financial supervisory Agency for

information on how the Agency is publishing the planned

examination schedule.

§ __.45 – 2: Is inclusion on the list of institutions that

are scheduled to undergo CRA examinations in the next

calendar quarter determinative of whether an institution will

be examined in that quarter?

A2. No. The Agencies attempt to determine as

accurately as possible which institutions will be examined

during the upcoming calendar quarter. However, whether an

institution’s name appears on the published list does not

conclusively determine whether the institution will be

examined during that quarter. The Agencies may need to

defer a planned examination or conduct an unforeseen

examination because of scheduling difficulties or other

circumstances.

APPENDIX A to Part __ – Ratings

APPENDIX A to Part __ – 1:

Must an institution’s

performance fit each aspect of a particular rating profile in

order to receive that rating?

A1. No. Exceptionally strong performance in some

aspects of a particular rating profile may compensate for weak

performance in others. For example, a retail institution other

than an intermediate small institution that uses non-branch

delivery systems to obtain deposits and to deliver loans may

have almost all of its loans outside the institution’s assessment

area(s). Assume that an examiner, after consideration of

performance context and other applicable regulatory criteria,

concludes that the institution has weak performance under the

lending criteria applicable to lending activity, geographic

distribution, and borrower characteristics within the

assessment area(s). The institution may compensate for such

weak performance by exceptionally strong performance in

community development lending in its assessment area(s) or a

XI. Community Reinvestment Act — Interagency Questions and Answers

FDIC Consumer Compliance Examination Manual — July 2016 XI–12.41

broader statewide or regional area that includes its assessment

area(s).

APPENDIX B to Part __ – CRA Notice

APPENDIX B to Part __ – 1:

What agency

information should be added to the CRA notice form?

A1. The following information should be added to

the form:

OCC-supervised institutions only

: For all national

banks and Federal savings associations (collectively, banks),

in connection with the nationwide list of banks that are

scheduled for CRA evaluation in a particular quarter, you may

insert the following Web site along with the postal mailing

address of the deputy comptroller: http://www.occ.treas.gov.

In addition, in connection with the invitation for comments on

the bank’s performance in helping to meet community credit

needs, you may insert the following e-mail address along with

the postal mailing address of the deputy comptroller:

CRACOMMENTS@OCC.TREAS.GOV.

For community banks, insert in the appropriate blank

the postal mailing address of the deputy comptroller of the

district in which the institution is located. These addresses can

be found at http://www.occ.gov. For banks supervised under

the large bank program, insert in the appropriate blank the

following postal mailing address: “Large Bank Supervision,

400 7th Street, SW., Washington, DC 20219-0001.” For

banks supervised under the midsize/credit card bank program,

insert in the appropriate blank the following postal mailing

address: “Midsize and Credit Card Bank Supervision, 400 7th

Street, SW., Washington, DC 20219-0001.”

OCC-, FDIC-, and Board-supervised institutions

“Officer in Charge of Supervision” is the title of the

responsible official at the appropriate Federal Reserve Bank.