[Federal Register Volume 59, Number 194 (Friday, October 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24323]


[[Page Unknown]]

[Federal Register: October 7, 1994]


_______________________________________________________________________

Part II

Department of the Treasury
Office of the Comptroller



12 CFR Part 25

Federal Reserve System



12 CFR Part 228

Federal Deposit Insurance Corporation



12 CFR Part 345

Department of the Treasury
Office of Thrift Supervision



12 CFR Part 563e




Community Reinvestment Act Regulations; Proposed Rule

Federal Reserve System



12 CFR Part 203



Home Mortgage Disclosure; Proposed Rule
DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 25

[Docket No. 94-15]
RIN 1557-AB32

FEDERAL RESERVE SYSTEM

12 CFR Part 228

[Regulation BB; Docket No. R-0822]

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 345

RIN 3064-AB27

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 563e

[Docket No. 94-213]
RIN 1550-AA69

 
Community Reinvestment Act Regulations

AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC); 
Board of Governors of the Federal Reserve System (Board); Federal 
Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, 
Treasury (OTS).

ACTION: Joint notice of proposed rulemaking.

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SUMMARY: The Office of the Comptroller of the Currency, the Board of 
Governors of the Federal Reserve System, the Federal Deposit Insurance 
Corporation, and the Office of Thrift Supervision, (collectively, the 
Federal financial supervisory agencies or agencies) propose to revise 
their regulations concerning the Community Reinvestment Act (CRA). The 
agencies published a joint notice of proposed rulemaking on this issue 
on December 21, 1993 (December proposal). The revised proposal 
published today reflects comments received on the December proposal and 
the agencies' further internal considerations.
    The purpose of the CRA regulations is to implement the continuing 
and affirmative obligation of regulated financial institutions to help 
meet the credit needs of their communities, including low- and 
moderate-income neighborhoods, consistent with safe and sound 
operations and to provide guidance on how the agencies assess the 
performance of institutions in meeting that obligation.
    The revised proposal would provide guidance to financial 
institutions on the nature and extent of their CRA obligation and the 
methods by which the obligation will be assessed and enforced. The 
proposed procedures seek to emphasize performance rather than process, 
promote consistency in assessments, permit more effective enforcement 
against institutions with poor performance, and reduce unnecessary 
compliance burden while stimulating improved performance. As compared 
to the December proposal, the revised proposal broadens the examination 
of performance, more explicitly considers community development 
activities, and makes other modifications and clarifications.

DATES: Comments must be received by November 21, 1994.

ADDRESSES:

OCC: Comments should be directed to: Communications Division, Office of 
the Comptroller of the Currency, 250 E Street, SW., Washington, DC 
20219, Attention: Docket No. 94-15. Comments will be available for 
public inspection and photocopying at the same location.
BOARD: Comments should be directed to: William W. Wiles, Secretary, 
Board of Governors of the Federal Reserve System, Docket No. R-0822, 
20th Street and Constitution Avenue, NW., Washington, DC 20551. 
Comments addressed to Mr. Wiles may also be delivered to Room B-2222 of 
the Eccles Building between 8:45 a.m. and 5:15 p.m. weekdays, or to the 
guard station in the Eccles Building courtyard on 20th Street, NW. 
(between Constitution Avenue and C Street) at any time. Comments may be 
inspected in Room MP-500 of the Martin Building between 9 a.m. and 5 
p.m. weekdays, except as provided in 12 CFR 261.8 of the Board's rules 
regarding the availability of information.
FDIC: Comments should be directed to: Robert E. Feldman, Acting 
Executive Secretary, FDIC, 550 17th Street, NW., Washington, DC 20429. 
They may be hand delivered to Room 402, 1776 F Street, NW., Washington, 
DC between 8:30 a.m. and 4:30 p.m. on business days. They may be sent 
by facsimile transmission to (202) 898-3838. Comments will be available 
for public inspection at the FDIC Reading Room #7118 at 550 17th 
Street, NW., Washington, DC between 9 a.m. and 4:30 p.m. on business 
days.
OTS: Comments should be directed to: Director, Information Services 
Division, Public Affairs, Office of Thrift Supervision, 1700 G Street, 
NW., Washington, DC 20552, Attention: Docket No. 94-213. These 
submissions may be hand delivered to 1700 G Street, NW. from 9 a.m. to 
5 p.m. on business days; they may be sent by facsimile transmission to 
FAX number (202) 906-7755. Submissions must be received by 5 p.m. on 
the day they are due in order to be considered by the OTS. Comments 
will be available for public inspection at 1700 G Street, NW., from 1 
p.m. until 4 p.m. on business days. Visitors will be escorted to and 
from the Public Reading Room at established intervals.

FOR FURTHER INFORMATION CONTACT:

OCC: Stephen M. Cross, Deputy Comptroller for Compliance, (202) 874- 
5216; and Matthew Roberts, Director, Community and Consumer Law 
Division, (202) 874-5200.
BOARD: Glenn E. Loney, Associate Director, Division of Consumer and 
Community Affairs, (202) 452-3585; Scott G. Alvarez, Associate General 
Counsel, Legal Division, (202) 452-3583; Robert deV. Frierson, 
Assistant General Counsel, Legal Division, (202) 452-3711; and Leonard 
N. Chanin, Managing Counsel, Division of Consumer and Community 
Affairs, (202) 452-3667.
FDIC: Ken A. Quincy, Acting Assistant Director, Division of Compliance 
and Consumer Affairs, (202) 898-6753; Bobbie Jean Norris, Chief, Fair 
Lending Section, Division of Compliance and Consumer Affairs, (202) 
898-6760; Robert Mooney, Fair Lending Specialist, Division of 
Compliance and Consumer Affairs, (202) 898-3540; Ann Hume Loikow, 
Counsel, Regulation and Legislation Section, Legal Division, (202) 898-
3796; and Sandy Comenetz, Counsel, Regulation and Legislation Section, 
Legal Division, (202) 898-3582.
OTS: Timothy R. Burniston, Deputy Assistant Director for Policy, (202) 
906-5629; Theresa A. Stark, Program Analyst, Specialized Programs, 
(202) 906-7054; and Lewis A. Segall, Senior Attorney, Regulations and 
Legislation Division, Chief Counsel's Office, (202) 906-6648.

SUPPLEMENTARY INFORMATION:

Introduction

    The Federal financial supervisory agencies are jointly proposing to 
revise their regulations implementing the CRA (12 U.S.C. 2901 et seq.). 
The proposed regulations would replace the existing regulations in 
their entirety.
    The CRA is designed to promote affirmative and ongoing efforts by 
regulated financial institutions to help meet the credit needs of their 
entire communities, including low- and moderate-income neighborhoods, 
consistent with safe and sound operations. Despite the CRA's notable 
successes, bank and thrift industry, community, consumer and other 
groups maintain that its full potential has not been realized, in large 
part, because compliance efforts have focused on process rather than 
performance.
    In accordance with a request by the President, the Federal 
financial supervisory agencies have undertaken a comprehensive effort 
to reform their evaluation standards and examination procedures. The 
proposed regulations would implement one part of this reform effort by 
substituting a new system that would rate institutions based on their 
actual performance in helping to meet community credit needs.
    In addition to this rulemaking, the agencies will work together to 
improve examiner training and to increase interagency coordination 
regarding application of standards, performance of examinations, 
assignment of ratings, and use of enforcement procedures. These efforts 
should produce a CRA assessment process that is less burdensome for 
many institutions yet yields better results for the local communities 
the law is intended to benefit.

Background

    In 1977, the Congress enacted the CRA to encourage banks and 
thrifts to help meet the credit needs of low- and moderate-income 
communities, consistent with safe and sound lending practices. In the 
CRA, the Congress found that regulated financial institutions are 
required to demonstrate that their deposit facilities serve the 
convenience and needs of the communities in which they are chartered to 
do business, and that the convenience and needs of communities include 
the need for credit as well as deposit services. The CRA has come to 
play an increasingly important role in improving access to credit among 
under-served communities--both rural and urban--across the country. 
Under the impetus of the CRA, many banks and thrifts opened new 
branches, provided expanded services, and made substantial commitments 
to increase lending to all segments of society.
    Despite these successes, the CRA examination and enforcement system 
has been criticized. Financial institutions have complained that policy 
guidance from the supervisory agencies on the CRA is unclear and that 
examination standards are applied inconsistently. Financial 
institutions have also complained that the CRA examination process 
encourages them to generate excessive paperwork at the expense of 
providing loans, services, and investments.
    Community, consumer, and other groups have agreed with the industry 
that there are inconsistencies in CRA evaluations and current 
examinations overemphasize process and underemphasize performance. 
Community and consumer groups also have criticized the regulatory 
agencies for failing to aggressively penalize banks and thrifts for 
poor performance.
    Believing that the CRA examination and enforcement process can be 
improved, the President requested in July 1993 that the Federal 
financial supervisory agencies reform the CRA examination and 
enforcement system. The President asked the agencies to consult with 
the banking and thrift industries, Congressional leaders, and leaders 
of community-based organizations across the country to develop new CRA 
regulations and examination procedures that ``replace paperwork and 
uncertainty with greater performance, clarity, and objectivity.''
    Specifically, the President asked the agencies to refocus the CRA 
examination system on more objective, performance-based assessment 
standards that minimize compliance burden while stimulating improved 
performance. He also asked the agencies to develop a well-trained corps 
of examiners who would specialize in CRA examinations. In undertaking 
this effort, the President requested that the agencies promote 
consistency and even-handedness, improve CRA performance evaluations, 
and institute more effective sanctions against institutions with 
consistently poor performance.
    To implement the President's initiative, the four agencies held a 
series of seven public hearings across the country in 1993. At those 
hearings, the agencies heard from over 250 witnesses. Nearly 50 others 
submitted written statements. The preamble to the December proposal 
reviewed the results of those hearings.

The December Proposal

    The December proposal (58 FR 67466) would have eliminated the 
twelve assessment factors in the present CRA regulation and substituted 
a performance-based evaluation system. Under the December proposal, a 
financial institution would not have been assessed on its efforts to 
meet community credit needs, nor on its methods for determining the 
credit needs of its community. Rather, the agencies would have 
evaluated institutions based on their actual lending, service, and 
investment performance.
    Generally, independent institutions with at least $250 million in 
assets and affiliates of holding companies with at least $250 million 
in bank and thrift assets would have been evaluated based on some 
combination of lending, service, and investment tests. Institutions 
would have had to report to the agencies and make available to the 
public data on the geographic distribution of their loan applications, 
denials, originations and purchases. Small banks and thrifts could have 
elected to be evaluated under a streamlined method that would not have 
required them to report this data. Every institution would have had the 
option to have its performance evaluated based on a pre-approved 
strategic plan that had been subjected to review and comment by 
community-based organizations and the rest of the public. However, the 
strategic plan option would not have relieved an institution of its 
data reporting obligations.
    There would have been five ratings--``outstanding,'' ``high 
satisfactory,'' ``low satisfactory,'' ``needs to improve,'' and 
``substantial noncompliance''--under each of the lending, investment, 
and service tests so as to measure with more refinement the variations 
in performance among institutions. The agencies proposed to have only 
four overall ratings, however, as required by statute--``outstanding,'' 
``satisfactory,'' ``needs to improve,'' and ``substantial 
noncompliance.''
    The December proposal was originally published with a 60-day 
comment period. This period was extended for 30 additional days in view 
of the magnitude of the proposed changes, the complexity of the issues, 
the level of interest in the subject, and delays resulting from the 
holiday season (59 FR 5138). After considering the thousands of 
comments received, the agencies produced the revised regulations 
proposed today, which respond to suggestions in the comments while 
preserving the December proposal's goal of emphasizing performance over 
process.

Overview of Comments on the December Proposal

    Collectively, the agencies received over 6700 comment letters on 
the December proposal. The agencies received comment letters from 
representatives of banks and thrifts, consumer and community groups, 
Congress, state and local governments, and others as shown in the 
following table: 

                                           Table of Comments Received                                           
----------------------------------------------------------------------------------------------------------------
                                             Letters from                                                       
                                            banks, thrifts   Letters from    Letters from    Letters            
                  Agency                       and their     consumer and     government       from      Total  
                                                 trade         community       entities      others             
                                             associations       groups                                          
----------------------------------------------------------------------------------------------------------------
OCC.......................................            1329             253              78        153       1813
Board.....................................            1236             209              54        181       1680
FDIC......................................            2002             219              71         82       2374
OTS.......................................             486             240              62         55        843
----------------------------------------------------------------------------------------------------------------

    The agencies reviewed and considered all of the above-described 
comments concerning the December proposal. Comments are discussed in 
greater detail in the section-by-section analysis of the revised 
proposal. As a general matter, the vast majority of commenters 
expressed support for the agencies' goal of developing more objective, 
performance-based assessment standards that minimize burden while 
stimulating improved performance. Many commenters believed that, under 
the existing CRA regulations, the agencies focus too closely on 
documentation of CRA performance and too little on actual performance. 
These commenters felt the present documentation requirements are overly 
burdensome. Many commenters also supported the agencies' goal of 
ensuring consistency and evenhandedness among the agencies in CRA 
evaluations. Commenters supported enhanced CRA examiner training to 
increase consistency. While most commenters generally supported the 
agencies' goals in amending their CRA regulations, many expressed 
concern over some aspects of the December proposal.

The Revised Proposal

In General

    The revised proposal retains, to a significant extent, the 
principles and structure underlying the December proposal but makes 
significant changes to the details in order to respond to many of the 
concerns raised in the comments. Like the December proposal, the 
revised proposal would eliminate the existing regulation's twelve 
assessment factors and substitute a performance-based evaluation 
system.
    In order to take into account community characteristics and needs, 
the revised proposal would make explicit the assessment context against 
which the tests and standards set out in the proposed regulation would 
be applied. This assessment context would include consideration of: (1) 
Demographic data about the community; (2) information about community 
characteristics and needs; (3) information about the institution's 
capacity and constraints; (4) information about the institution's 
product offerings and business strategy; (5) data on the prior 
performance of the institution; and (6) data on the performance of 
similarly-situated lenders. The agencies, rather than the institution, 
would develop the assessment context for each institution. The agencies 
will neither require nor request an institution to provide data for 
this assessment context, although any data offered by an institution 
would be considered.
    As in the December proposal, the agencies would give particular 
attention to the institution's record of helping to meet credit needs 
in low- and moderate-income geographies. However, the revised proposal 
would further emphasize the institution's performance with respect to 
low- and moderate- income individuals, and other individuals and areas 
where appropriate, given community characteristics and needs. The 
agencies also have modified the definitions of low- and moderate-income 
geographies in response to concerns that the definitions in the 
December proposal were too low for high cost areas. Under the revised 
proposal, the qualifying income levels would be adjusted to reflect 
prevailing housing construction costs or significant anomalies in 
family income levels. The agencies would make available annually a list 
of qualifying income levels by geographic area.
    The lending, service and investment tests would continue to 
constitute the primary method by which the agencies would assess the 
CRA performance of independent retail institutions with at least $250 
million in assets and affiliates of holding companies with at least 
$250 million in bank and thrift assets. However, the revised proposal 
changes how an institution's ratings on the three tests would be 
combined to produce the institution's overall composite rating. The 
revised proposal would give primacy to lending performance by requiring 
an institution to receive a ``satisfactory'' or better rating on the 
lending test in order to receive a ``satisfactory'', or better, overall 
rating. At the same time, the rating system would increase the 
importance of the service and investment tests, because the effect of 
those tests on the overall rating would no longer be limited to 
situations in which an institution had extraordinarily strong or weak 
performance on one of the tests.
    The agencies also have made modifications to the details of the 
lending, service and investment tests in order to broaden their scope. 
Rather than rely presumptively on a few quantitative measures that 
could then be adjusted or rebutted by other considerations, the tests 
would be based from the outset on a broader range of quantitative and 
qualitative criteria that would include both those criteria that formed 
the basis for the presumptive ratings in the December proposal and 
those additional considerations contained in the adjustment and 
rebuttal sections of the December proposal. The revised proposal 
therefore would not use rebuttable presumptions and adjustments.
    These revisions to the lending, investment and service tests would 
increase, rather than reduce, the number of judgments that examiners 
would be required to make in the examination process. The agencies 
believe that a CRA evaluation system eliminating all examiner judgment 
would not be desirable, even if it were achievable. Preservation of 
examiner judgment to take into account the characteristics and needs of 
an institution's community and the capacity and constraints of the 
institution is critical.
    At the same time, the agencies believe that consistency in 
evaluations, reduction in compliance burden, and focus on performance 
are fully consistent with the necessary degree of examiner judgment. 
The agencies believe that the revised proposal, which entails a series 
of examiner decisions in reliance on detailed data concerning an 
institution's actual lending, service and investment performance, would 
provide the proper balance between objective analysis and subjective 
judgment. In order to minimize unnecessary subjectivity, the agencies 
have attempted to provide more guidance in the revised proposal as to 
the standards that examiners would apply to make the required 
judgments.
    In addition to identifying the data that would form the basis for 
their performance analysis, the information that would provide the 
background assessment context, and the criteria that would guide the 
assessments, the agencies have proposed detailed performance rating 
profiles for each rating level of the lending, service, and investment 
tests. An institution's performance need not fit every performance 
aspect of the typical profile in order to receive a certain rating. 
Exceptionally strong performance on some aspects can compensate for 
weak performance on others. However, the institution would receive a 
rating which is generally consistent with the institution's overall 
performance on the various aspects of the profile.
    The December proposal based its presumptive ratings on comparative 
terms, for example whether an institution's qualified investments were 
significant as compared to its capital, or whether an insignificant 
percentage of an institution's branches were located in or readily 
accessible to low- and moderate-income geographies in the institution's 
service area. While many comments stated that these terms should be 
further defined, few commenters, despite a specific request in the 
December proposal, actually suggested what these definitions should be.
    The ratings profiles in the current proposal continue to use 
comparative terms, such as excellent, significant, and poor, without 
further specification. Many comments agreed that the mechanical 
application of numerical ratios would not foster fair and appropriate 
CRA assessments. The agencies continue to believe, given the wide 
diversity of institutions and communities, that it is inadvisable to 
provide such specific numerical ranges or ratios. The agencies expect 
the current proposal to increase the consistency and clarity of the 
examination process. By identifying a set of performance-based 
assessment criteria, and expanding the objective performance data 
available to examinations, institutions and the public will be better 
able to evaluate the basis on which examiner judgments are made. In 
addition, by providing more detailed profiles that involve several 
criteria, assessment under the current proposal will not turn on the 
evaluation of a single factor.
    The revised proposal also modifies the lending and service tests 
for retail institutions to emphasize the importance of community 
development activities in the assessments of performance under those 
tests. In addition, the revised proposal replaces the investment test 
with a community development test for wholesale or limited purpose 
institutions. The proposal incorporates into this community development 
test both community development lending and community development 
services in addition to qualified investments. Therefore, under the 
revised proposal, wholesale or limited purpose institutions would be 
subject only to the community development test.
    The revised proposal would reduce data reporting burdens by 
streamlining reporting requirements to coincide more closely with 
existing requirements and eliminating unnecessary reporting. The one 
significant new data reporting requirement would be that small business 
and small farm loan data reported to the agencies would include 
information on the race and gender of small business and farm borrowers 
to respond to concerns that the December proposal did not give enough 
weight to the fair lending aspect of an institution's CRA performance. 
This concern is also reflected in the revision of the provisions 
regarding consideration of illegal discrimination to conform them more 
closely to existing regulatory language.
    Smaller banks and thrifts would continue to be evaluated under a 
streamlined assessment method that would not require reporting of 
additional lending data. However, the streamlined method would be the 
presumptive method for evaluating small institutions and would be 
applied to every qualifying institution unless the institution 
affirmatively requests an alternative assessment method. The agencies 
have also altered the description of the streamlined assessment method 
in order to make clear that this assessment is not intended to operate 
as an exemption from the CRA rules.
    The streamlined assessment method would continue to focus on the 
institution's loan-to-deposit ratio, degree of local lending, record of 
lending to borrowers and geographies of different income levels, and 
record of responding to complaints. The institution's fair lending 
record would still be taken into account in assigning a final rating. 
In response to comments, the agencies have eliminated the provision in 
the December proposal that made a loan-to-deposit ratio of 60% or more 
presumptively satisfactory. The revised proposal would consider an 
institution's size, financial condition, and credit needs of its 
service area in evaluating whether its loan-to-deposit ratio is 
reasonable. The evaluation would further consider, as appropriate, 
other lending-related activities, such as originations for sale on the 
secondary market and community development lending and investment.
    Every institution would continue to have the option to be evaluated 
pursuant to a pre-approved strategic plan. The strategic plan option 
would not relieve an institution from any reporting obligations that it 
otherwise would have. The revised proposal clarifies, however, that 
small institutions would not subject themselves to any data reporting 
responsibilities by electing the strategic plan option. The agencies 
also have provided more detail as to how the proposed strategic plan 
option would operate in practice.
    The revised proposal has eliminated provisions that some comments 
interpreted as ``safe harbors'' from examination or enforcement action. 
The revised proposal would not make substantive modifications to the 
December provisions governing what types of institutions are subject to 
the proposed regulations, although the agencies have clarified that 
bankers banks would not be covered. The revised proposal continues to 
provide that uninsured branches of foreign banks would not be covered 
by the proposed regulations. However, the agencies are aware that the 
Interstate Banking Efficiency Act would address the CRA coverage of 
certain uninsured branches of foreign banks. Should this Act be signed 
into law, the agencies would modify the revised proposal to reflect the 
new legal requirements.
    The December proposal would have made an institution with an 
assigned rating of ``substantial noncompliance'' subject to an 
enforcement action under 12 U.S.C. 1818. A number of commenters 
questioned the legal authority of the agencies under the CRA to use 
assigned ratings as the basis for an enforcement action. Other 
commenters endorsed taking enforcement action against institutions with 
poor CRA ratings.
    The revised proposal includes the enforcement provisions from the 
December proposal while the agencies continue to analyze the issues 
raised by the comments. The agencies invite further comment on these 
issues before issuing a final rule.

The Lending Test

    The lending test in the December proposal would have evaluated--on 
the basis of its performance in relation to other lenders subject to 
CRA and on an independent basis--the extent to which a retail 
institution was making loans in the low- and moderate-income portions 
of its service area. The test would have evaluated an institution's 
lending performance relative to other lenders by comparing the 
institution's market share of housing, small business, small farm, and 
consumer loans in the low- and moderate-income geographies of its 
service area with its share of such loans in the other parts of its 
service area. The test would have evaluated performance on an 
independent basis by examining the ratio of reported loans made (both 
number and amount) by the institution in the low- and moderate-income 
geographies of its service area to the reported loans made throughout 
its entire service area and the geographic distribution of its reported 
loans across the low- and moderate-income geographies of its service 
area.
    At the election of the institution, the agencies would have 
considered indirect loans under the lending test. Indirect loans were 
defined to include loans made by third parties, such as lending 
consortia, subsidiaries of the institution, non-chartered affiliates 
funded by the institution, and other lenders that lent to low- and 
moderate-income individuals or geographies and in which the institution 
had made lawful investments. The agencies would have attributed 
indirect loans to an institution in proportion to the size of the 
institution's investment in or funding of the third party lender or 
participation in the third party's loans, provided the institution 
reported the indirect loans.
    The December proposal would have made a distinction between the 
ability of an institution to claim credit under the lending test for 
indirect loans by its subsidiaries and funded non-chartered affiliates 
and its ability to claim credit for indirect loans made by other 
lenders. An institution would have been able to claim credit for 
lending by its subsidiaries or non-chartered affiliates if the 
institution either invested in the entity or made a loan to it. For 
third party lenders, however, the institution would have been required 
to make an investment in the entity (as opposed to making a loan to the 
entity) in order to claim credit under the lending test for the third 
party loans. The purpose of this distinction was to recognize the 
unique relationship between an institution and its subsidiaries and 
affiliates, and to give institutions and their parent corporations 
greater flexibility to structure their lending as they saw fit.
    While the foregoing factors would have served as the basis for a 
rating under the lending test, the December proposal would have allowed 
the agencies to adjust an institution's assessment upward, and, in 
exceptional cases, downward. Upward adjustment might have been 
warranted if the institution made, for example, a substantial amount of 
loans requiring innovative underwriting or loans for which there was 
special need, such as loans for multifamily housing construction and 
rehabilitation, loans for start-up or very small businesses, loans to 
community development organizations or facilities, or loans to very 
low-income individuals and geographies. An institution's assessment 
also could have been increased if it operated a ``second look'' program 
to reevaluate loan applications that, based on an initial review, the 
institution had planned to deny. On the other hand, a downward 
adjustment could have been warranted if, for example, the quantitative 
measures inaccurately portrayed the institution's actual lending to 
low- or moderate-income geographies or individuals.
    Commenters from both the banking industry and the public believed 
the lending test contained in the December proposal was too narrow in 
its focus. In particular, some believed the test gave insufficient 
emphasis to community development lending and innovative underwriting. 
Other commenters noted that the proposed lending test placed undue 
emphasis on the location of the borrower rather than on the borrower's 
individual characteristics (e.g., income). Some commenters believed the 
December proposal would have given institutions a greater incentive to 
make loans to high-income borrowers located in low-income geographies 
than to make loans to low-income borrowers located in high-income 
geographies.
    In response to commenters who believed the December proposal 
underemphasized the importance of community development lending, the 
revised proposal would treat such lending as a principal component of 
an institution's lending performance, not merely an adjustment factor. 
The revised proposal also defines community development loans. Such 
loans are loans (including lines of credit, commitments and letters of 
credit) that address affordable housing or other community economic 
development needs not being met by the private market, provided such 
loans (1) Principally benefit low- or moderate-income individuals, 
businesses or small farms with annual revenues less than or equal to $1 
million, or businesses or farms that qualify as small businesses under 
a Small Business Administration program; (2) have not been reported or 
collected by the bank or one of its affiliates as home mortgage loans, 
small business loans, small farm loans, or consumer loans for CRA 
purposes, unless the loans are for multifamily dwellings (as defined in 
the Home Mortgage Disclosure Act (HMDA) (12 U.S.C. 2801 et seq.) 
regulations); and (3) except in the case of a wholesale or limited 
purpose bank, benefit the bank's service area(s) or a broader statewide 
or regional area that includes the bank's service area(s). This 
definition clarifies that community development loans deserving of 
favorable consideration are those that fill a void left by the ordinary 
operation of the private market. In addition, it is designed to prevent 
double-counting of all loans except for multifamily housing loans, 
which the agencies believe should be considered both in the 
distribution analyses of an institution's home mortgage lending and for 
evaluation of its community development lending in order to properly 
evaluate the value of the loans for CRA purposes. Finally, the 
definition also provides that an institution will get favorable 
consideration for a community development loan if it is in the 
institution's service area or is in a broader region that includes the 
institution's service area. This broader geographic scope would 
recognize the nature of some lending programs and consortia that 
produce these loans. An institution would be evaluated based on the 
number, amount, complexity, and innovativeness of its community 
development loans.\1\
---------------------------------------------------------------------------

    \1\Examples of community development loans identified by the 
agencies include, but are not limited to, loans to: borrowers in 
support of affordable housing rehabilitation and contruction, 
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 economic development needs; borrowers in support of 
community facilities in low- and moderate-income areas or that 
primarily benefit low- and moderate-income individuals; and 
financial intermediaries including, but not limited to, Community 
Development Financial Institutions (CDFIs), Community Development 
Corporations (CDCs), minority- and women-owned financial 
institutions, and low-income or community development credit unions 
that primarily lend or facilitate lending in low- and moderate-
income areas or to low- and moderate-income individuals in order to 
promote affordable housing and/or community economic development.
---------------------------------------------------------------------------

    The agencies also have revised the lending test in response to 
comments that the December proposal placed undue emphasis on the 
geography of the borrower rather than on the borrower's individual 
characteristics. Under the revised proposal, while the agencies would 
continue to place a heavy emphasis on the geographic distribution of an 
institution's lending, they also would consider favorably loans made to 
low- and moderate-income individuals regardless of where the borrowers 
reside. The agencies would evaluate the number and amount of home 
mortgage loans to low-, moderate-, middle-, and upper-income 
individuals; the number and amount of loans to small business and small 
farms with annual revenues less than or equal to $1 million; the number 
and amount of loans to small businesses and small farms by size of 
loan; and, at the institution's option, the number and amount of 
consumer loans to low-, moderate-, middle-, and upper-income 
individuals. The revised proposal provides that distribution of 
borrower characteristics would be examined with particular reference to 
the institution's service area, but need not be limited to the 
institution's service area. Institutions would receive favorable 
consideration for lending to low- and moderate-income individuals and 
small businesses and farms outside of their service area, so long as 
they have not neglected these borrowers inside their service area. The 
agencies have also created an assessment criterion regarding an 
institution's use of innovative and flexible lending practices to 
recognize those programs and products that might have been cause for 
upward adjustments in the December proposal.
    The agencies received numerous comments on the market share 
component of the lending test. Many banks and thrifts felt the market 
share test was misleading in that, among other things, it overlooked 
loans by institutions that do not have any reporting obligations under 
HMDA or CRA. Further, institutions could have had service areas that 
overlapped partially, but not completely, in ways that would distort 
the measurement of their lending performance under the test. Many also 
were concerned that if one bank increased its market share, another 
necessarily would lose market share; hence, the commenters suggested 
that the market share test could promote a price war among institutions 
trying to make loans in low- and moderate-income areas, potentially 
leading to unsafe and unsound banking practices. Banks and thrifts 
frequently stated that the lending test in the December proposal was a 
form of credit allocation. On the other hand, many community groups and 
government officials liked the market share test because it provided an 
objective and quantitative standard for measuring an institution's CRA 
performance. At the same time, a number of community groups expressed 
concern that the formula did not take into account qualitative 
differences among loans.
    In light of these comments, the lending test has been modified. The 
lending test would continue to give significant weight to the 
geographic distribution of an institution's lending; and, as part of 
the assessment context, examiners would consider, among other 
considerations described earlier in this preamble, the performance of 
other similarly-situated lenders where appropriate. In this regard, 
examiners would use market share and other analyses to assist in 
evaluating the geographic distribution of an institution's lending 
where such analyses would provide accurate insight. However, the 
proposed regulation does not require examiners to use any single type 
of analysis, and would not link a particular market share ratio, or any 
ratio, with a particular lending test rating.
    In considering the geographic distribution of an institution's 
loans, the agencies, under the revised proposal, would evaluate the 
number and amount of an institution's loans in the low-, moderate-, 
middle-, and upper-income geographies of the institution's service 
area. They also would assess the dispersion of the institution's 
lending throughout its service area. In response to concerns expressed 
by some commenters that an institution might limit the size of its 
service area to obtain a better performance rating, the revised 
proposal would penalize an institution if too little of its lending 
were made inside its service area.
    While agreeing with the concept of including affiliate and third-
party lending at the institution's option, many industry commenters 
criticized the December proposal--which would not have considered 
lending by chartered or non-funded affiliates--as unduly restrictive 
and inconsistent with the corporate funding practices of certain 
institutions. Also, some community and consumer groups expressed 
concern that institutions could use third-party lending to avoid their 
direct lending obligations and, in effect, ``buy out'' of their CRA 
obligations.
    Like the December proposal, the revised proposal would allow 
institutions, at their option, to include affiliate and third-party 
lending in their lending record but would make certain changes to the 
December proposal in this regard. First, the revised proposal would 
consider indirect lending by any of an institution's affiliates--
regardless of whether the affiliate is chartered or how it is funded. 
The revised proposal would not impose restrictions on the corporate 
structures of institutions and their affiliates.
    Second, the rules regarding the allocation of loans among 
affiliates have been simplified. The revised proposal would also 
include several new provisions designed to prevent an institution from 
selectively including (or excluding) its affiliate lending. Under the 
revised proposal, the agencies would evaluate an institution's 
affiliate lending when assessing the institution's overall lending 
performance, provided the institution (or its affiliate) chooses to 
collect and report the data pertaining to such lending. If an 
institution chooses to report some of its affiliate loans in a service 
area for a particular lending category, such as home mortgages, or 
small business loans, it would be required to report all of its 
affiliate loans of that category for that specific service area. An 
agency would be able to consider the lending of an institution's 
affiliate, notwithstanding whether the institution wants the agency to 
consider its affiliate lending, if the agency were to determine that 
such lending is integral to the institution's business. An affiliate's 
lending would be integral to an institution's business if the 
institution's operations closely involve or support the marketing, 
management, or other operation of the affiliate's lending. Lending 
would not be considered integral to an institution's business merely 
because the institution had a financial interest in the affiliate.
    Third, the revised proposal would no longer allow an institution to 
include third party loans with its direct and affiliate loans for 
purposes of assessing the geographic distribution of the institution's 
lending or the distribution of its lending across borrower 
characteristics. Under the revised proposal, third party loans could be 
attributed to an institution only if they meet the definition of 
community development loans. This change responds to comments from 
community and consumer groups who expressed concern that institutions 
could use third-party lending to avoid their direct lending obligations 
and, in effect, ``buy out'' of their CRA obligations. The revised 
proposal also would operate to relieve third party lenders of the 
burden of reporting the geographic location of their loans that could 
have been placed on them by the December proposal.

The Investment Test

    In the December proposal, retail institutions as well as wholesale 
or limited purpose institutions would have been evaluated under the 
investment test based on the amount of assets they had devoted to 
``qualified investments'' in comparison to their risk-based capital. 
The focus of the investment test would have been on the ultimate impact 
of an institution's investment rather than the investment per se. 
Therefore, qualified investments would not have been credited under the 
test unless they had a demonstrable impact, e.g., in providing loans or 
community development projects that benefit low- and moderate-income 
individuals and geographies.
    Qualified investments would have included lawful investments that 
benefit low- and moderate-income geographies or individuals in an 
institution's service area. Examples of such investments would have 
included those: (1) in support of local affordable housing and 
community, economic, or small business development; (2) in community 
development financial institutions, community development corporations, 
community development projects, small business investment companies 
(including specialized small business investment companies), and 
minority- and women-owned financial institutions and other community 
development financial intermediaries; (3) in consortia or other 
entities serving low- and moderate-income individuals and areas; and 
(4) in state and local government agency housing bonds or state and 
local government revenue bonds specifically aimed at helping low- and 
moderate-income areas and individuals. Eligible grants and the donation 
or sale on favorable terms of branches to minority- or women-owned 
financial institutions also would have counted as qualifying 
investments.
    The agencies could have adjusted an institution's rating upward 
under the investment test to take into account whether the 
institution's investments were particularly innovative or met a special 
need or whether the institution's activities in connection with the 
investments were particularly complex or intensive. The agencies also 
would have been able to adjust an institution's rating upward if the 
institution had made a large amount of investments that would have been 
qualified investments except that they failed to benefit the 
institution's service area. Downward adjustments would have been 
justified only in exceptional cases.
    Commenters criticized several aspects of the proposal. Most 
notably, many banking industry commenters expressed dissatisfaction 
with the test's focus on the amount of qualified investments relative 
to an institution's risk-based capital. They felt reliance on any such 
investment-to-capital ratio would unfairly penalize well-capitalized 
institutions. Community groups commented on various aspects of how the 
term ``qualified investments'' was defined and the banking industry 
criticized the restriction that qualified investments must benefit the 
institution's service area.
    The investment test in the revised proposal has been modified to 
address the principal concerns raised in the comments. The reliance on 
the ratio of qualified investments to risk-based capital has been 
eliminated. Rather, under the revised proposal, the agencies would 
focus on the dollar amount of the institution's qualified investments 
(independent of the institution's capital), the innovativeness and 
complexity of the qualified investments and their connection to credit 
needs, and the institution's responsiveness to credit and community 
economic development needs.
    Further, the revised proposal clarifies the definition of 
``qualified investments.''\2\ Qualified investments are lawful 
investments, deposits, membership shares in a credit union, and grants 
that primarily benefit low- or moderate-income individuals or 
businesses or farms with under $1 million in annual revenues or that 
qualify as small businesses under SBA regulations; and that address 
affordable housing (including multifamily rental housing) or other 
community economic development needs that are not being met in the 
normal course of business by the private market. The agencies intend 
the limitation regarding needs not being met by the private market to 
exclude untargeted municipal bonds and standard mortgage-backed 
securities. The revised proposal also would clarify that grants, 
membership shares in a credit union, and other non-loan financial 
support can qualify as qualified investments. Under the definition, a 
qualified investment would not otherwise be disqualified because an 
institution receives favorable treatment (for example as a tax 
deduction or credit) for them under the Internal Revenue Code. In 
addition, under the revised proposal, qualified investments no longer 
would need to benefit an institution's service area, provided the 
investments benefit a broader statewide or regional geographic area 
that includes the institution's service area. This change would conform 
with the broader geographic scope permitted for community development 
loans discussed previously.
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    \2\Examples of qualified investments identified by the agencies 
include, but are not limited to, investments and grants: in or to 
financial intermediaries (including, but not limited to CDFIs, CDCs, 
minority- and women-owned financial institutions, and low-income or 
community development credit unions) that primarily lend or 
facilitate lending in low- and moderate-income areas or to low- and 
moderate-income individuals in order to promote affordable housing 
and/or community economic development; in support of organizations 
engaged in affordable housing rehabilitation and construction, 
including multifamily rental housing; in support of organizations 
promoting small businesses, including Small Business Investment 
Companies (SBICs), and specialized SBICs; in and to not-for-profit 
organizations serving low- and moderate-income housing needs and/or 
other community economic development needs; to support or develop 
facilities that promote community economic development in low- and 
moderate-income areas or for low- and moderate-income individuals, 
such as day care facilities, in projects eligible for low-income 
housing tax credits; in state and municipal obligations that 
specifically support affordable housing or other community economic 
development to benefit low- and moderate-income individuals or 
areas; to not-for-profit organizations serving low- and moderate-
income housing and/or other community economic development needs, 
such as home-ownership counseling, home maintenance counseling, 
credit counseling, and other financial services education; and in or 
to organizations supporting activities essential to the capacity of 
low- and moderate-income individuals or geographies to utilize 
credit or to sustain economic development.
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    The revised proposal deletes the definition of small business from 
the December proposal that some commenters criticized as too 
complicated. Instead, the qualified investment and community 
development loan definitions refer to investments and loans that 
benefit businesses with annual revenues under $1 million or that would 
qualify as small businesses under a Small Business Administration 
program. The $1 million figure was chosen because it is used in 
Regulation B to differentiate among borrowers for requirements 
concerning adverse action notices and application retention. The new 
proposed definitions also maintain a treatment of small business that 
conforms to the SBA definitions, as required by law for federal 
agencies.
    As described more fully later in this preamble, under the revised 
proposal, wholesale or limited purpose banks would be subject to 
evaluation under the new community development test rather than under 
the investment test.

The Service Test

    The December proposal would have evaluated an institution's CRA 
service performance primarily on the basis of the percentage of its 
branches located in or readily accessible to low- and moderate-income 
geographies. The percentage of branches that an institution would have 
been expected to have in or readily accessible to low-and moderate-
income geographies in each service area would have depended, in part, 
on the number of such geographies in the service area. Under the 
December proposal, institutions would not have been required to expand 
the size of their branching network or to operate branches at a loss.
    The agencies would have been able to adjust an institution's 
service record upward or downward to reflect more accurately its branch 
service to lowor moderate-income geographies or individuals, but 
downward adjustments would have been made only in exceptional cases. In 
determining the appropriateness and degree of any adjustment, the 
agencies would have considered: (1) the institution's record of opening 
and closing branches; (2) whether branches--wherever located--were 
actually serving low- and moderate-income individuals; (3) any 
significant differences in the quality, quantity or types of services 
offered to low- or moderate-income individuals or geographies; and (4) 
similar factors. The agencies also could have adjusted an institution's 
rating upward to reflect a strong record of providing or supporting 
other services that promote credit availability for low- and moderate-
income individuals or geographies. Particular weight would have been 
given to credit and home-ownership counseling, small and minority-owned 
business counseling, low-cost check-cashing, and low-cost deposit 
services.
    The service test contained in the revised proposal would change the 
service test contained in the December proposal in response to comments 
received by the agencies. In crafting the December proposal, the 
agencies were guided by a belief that ready access to branches is a 
critical factor in the availability of credit and deposit services in a 
community. However, many banking industry representatives commented 
that the service test placed too much emphasis on ``brick and mortar'' 
branches (i.e., permanent staffed banking facilities). The commenters 
noted that although branches are still valuable, present technology has 
made the need for branches less imperative to the provision of banking 
services. On the other hand, many consumer groups stressed that, 
despite changes in technology, brick and mortar branches continue to 
have symbolic and practical relevance to credit availability. A number 
of commenters emphasized, however, that evaluations based on the mere 
presence of brick and mortar facilities is not sufficient. Rather, the 
agencies must consider the actual services that are provided.
    In light of these comments, the agencies have decided to modify the 
service test so that ``brick and mortar'' branches no longer would 
serve as the overwhelming factor in assessing an institution's service 
performance, although they still would receive prominent consideration. 
Under the revised proposal, equal weight would be given to the actual 
services provided to low- and moderate-income geographies.
    Under the revised proposal, the agencies would evaluate an 
institution's systems for delivering retail banking services (where the 
term ``systems'' includes, among other things, branches, automated 
teller machines (ATMs), loan production offices, banking by telephone 
or computer, mobile branches, and bank-at-work or by-mail programs) by: 
(1) assessing the distribution of the institution's branches and ATMs 
among low-, moderate-, middle-, and upper-income geographies; (2) 
reviewing the institution's record of opening and closing branches and 
ATMs; (3) assessing the range of services provided in low-, moderate-, 
middle-, and upper-income geographies; and (4) evaluating the 
availability of alternative systems for delivering retail banking 
services.
    In addition, the agencies would evaluate the extent to which an 
institution provides community development services and the 
innovativeness and responsiveness of such services, given the needs of 
the institution's community and the capacity and constraints of the 
institution. The revised proposal defines community development 
services as services that primarily benefit low- and moderate-income 
individuals, businesses or farms with annual revenues less than or 
equal to $1 million, or businesses or farms that qualify as small 
businesses under a Small Business Administration program and that 
address affordable housing (including multifamily rental housing) or 
other community economic development needs that are not being met by 
the private market.\3\
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    \3\Examples of community development services would include, 
among other things: providing technical expertise for not-for-profit 
organizations serving low- and moderate-income housing needs and/or 
economic growth and development, lending executives to organizations 
facilitating affordable housing construction and rehabilitation and/
or development of affordable housing; providing credit counseling, 
home buyers counseling, home maintenance counseling, and/or 
financial planning to promote community economic development and 
affordable housing, school savings programs, and other financial 
services education; and offering lifeline deposit services, low-cost 
or free government check cashing, or participating in an electronic 
benefit transfer network.
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The Community Development Test for Wholesale or Limited Purpose 
Institutions

    Under the December proposal, wholesale or limited purpose 
institutions were defined as insured depository institutions that are 
in the business of extending credit to the public but do not make a 
significant amount of reportable loans (i.e., home mortgage, consumer, 
small farm and small business loans). These would have included 
institutions that make primarily large commercial loans, as well as 
credit card banks, and similar institutions. The December proposal 
would have required an evaluation of the CRA performance of these 
institutions primarily under the proposed investment test.
    Performance under that test would have been measured based on the 
amount of an institution's assets devoted to qualified investments as 
compared to its risk-based capital. Qualified investments would have 
consisted of lawful investments that benefited low- and moderate-income 
geographies or individuals in an institution's service area, including 
investments that supported local affordable housing and community, 
economic, or small business development. Eligible grants and loans that 
would have constituted a qualified investment also would have been 
included within the investment test. In assigning the overall rating 
for wholesale or limited purpose institutions, the institution's 
investment test rating could have been increased one level for 
outstanding performance and decreased one level for a ``substantial 
noncompliance'' rating on the service test.
    In light of the comments received, the revised proposal would 
replace the investment test with the community development test as the 
primary test for wholesale or limited purpose institutions. A number of 
commenters considered the investment test too narrowly focused to use 
as a tool for assessing the CRA performance of wholesale or limited 
purpose institutions and suggested replacing the test with a test that 
focused on community development activities more generally.
    The community development test in the revised proposal would focus 
on a wholesale or limited purpose institution's record in helping to 
meet the credit needs of its service area through qualified 
investments, community development lending, and community development 
services. In general, these community development-related activities 
would be similar to the community development aspects of the lending 
and service tests, and would adopt the definition of qualified 
investments used in the investment test in the revised proposal. The 
community development test also would consider small business and small 
farm loans as well as loans to low- and moderate-income individuals and 
geographies as community development loans, whether or not reported or 
collected under the data collection requirements of the revised 
proposal.
    Several commenters believed the December proposal's definitions of 
wholesale or limited purpose institutions did not clearly distinguish 
between these types of institutions and retail institutions. Some 
commenters also suggested that these institutions be permitted to 
conduct a certain amount of incidental retail lending without losing 
their wholesale or limited purpose institution status. Several comments 
suggested that an institution should have the opportunity to confirm 
its status as a wholesale or limited purpose institution with the 
agencies in advance of being examined.
    In response to these comments, the revised proposal would clarify 
which institutions would be considered wholesale or limited purpose 
institutions for purposes of CRA. The definition for institutions 
eligible for wholesale or limited purpose designation would be as 
follows: (1) wholesale institutions are institutions that are not in 
the business of extending home mortgage, small business, small farm, or 
consumer loans to retail customers; and (2) limited purpose 
institutions are institutions that offer only a narrow product line 
(such as credit cards or automobile loans) to a national or regional 
market. An institution would not be considered in the business of 
extending loans to retail customers if it does not hold itself out to 
the retail public as providing such loans and the institution's 
revenues from extending such loans are insignificant when compared to 
its overall lending operations. An institution could conduct some 
incidental retail lending if the retail activity would not cause the 
institution to exceed these limitations. However, a so-called ``niche 
institution'' (an institution that is in the business of lending to the 
public but which specializes in certain types of retail loans or 
extending credit to a class of borrowers with, for example, certain 
financial or professional characteristics) would not generally qualify 
as a wholesale or limited purpose institution.
    The revised proposal also would require an institution that elects 
to be evaluated as a wholesale or limited purpose institution to file a 
written request with the appropriate agency and receive confirmation of 
its status before the commencement of the examination. The agencies 
will issue guidelines regarding how long in advance of a scheduled 
examination an institution must file its request, and under what 
circumstances an institution will have to reapply to retain wholesale 
or limited purpose status. An institution whose request for wholesale 
or limited purpose status has been denied by the appropriate agency 
would be evaluated under the tests applicable to retail institutions, 
small institutions, or an institution with approved strategic plans, as 
appropriate.
    The OTS did not include provisions for wholesale or limited purpose 
thrifts in its version of the December proposal. In response to 
comments, the OTS's revised proposal includes provisions that would 
allow thrifts the opportunity to request designation as a wholesale or 
limited purpose institution.

Small Institution Assessment Option

    The December proposal would have offered small banks and thrifts 
the option of choosing to be evaluated under a streamlined assessment 
method. The regulations would not have imposed upon small institutions 
the data collection requirements imposed on other institutions. The 
agencies stressed in the preamble to the December proposal that, 
notwithstanding the different assessment methods, examinations of small 
banks and thrifts would have been meaningful examinations and would not 
have been implemented as de facto exemptions.
    Small banks and thrifts were defined in the December proposal as 
independent institutions with assets of less than $250 million or 
members of holding companies the total banking and thrift assets of 
which are less than $250 million. A small institution's CRA rating 
under the December proposal would have been based primarily on its 
lending record. An institution would have been presumed to receive a 
``satisfactory'' rating if it had a reasonable loan-to-deposit ratio, 
made the majority of its loans locally, had a good loan mix (i.e., made 
a variety of loans to the extent permitted by law and regulation and 
lent across economic levels), had no legitimate, bona-fide complaints 
from community members, had not committed an isolated act of illegal 
discrimination of which it had knowledge that it had not corrected 
fully or was not in the process of correcting fully, and had not 
engaged in a pattern or practice of illegal discrimination that it had 
not corrected fully. If an institution was required to report loans 
under the HMDA, the institution also would have been required to have a 
reasonable geographic distribution of reported loans.
    A small institution that met each of the standards for a 
``satisfactory'' rating and exceeded some or all of those standards 
could have received an overall rating of ``outstanding'' depending on 
the degree to which it exceeded the criteria for a ``satisfactory'' 
rating and, at its option, its record of making qualified investments 
and its record of providing services. If a small institution failed to 
meet or exceed all of the standards for a ``satisfactory'' rating, the 
relevant agency would have conducted a more extensive examination of 
the institution, including, at the option of the institution, an 
examination of its investment and service performance. Also, if a small 
institution operated in more than one service area, the relevant agency 
would have evaluated the institution's performance in all of those 
service areas.
    Many community and consumer group commenters asked the agencies to 
eliminate the small institution assessment method because they believed 
that it would operate as an exemption for qualifying institutions. 
However, many banks and thrifts, as well as the weight of Congressional 
comments, supported the streamlined approach. The agencies have 
retained the streamlined assessment method as modified in the revised 
proposal. The agencies also have retained the December proposal's 
exemption of small institutions from the new data collection and 
reporting requirements for small business, small farm and community 
development loans, although the agencies have clarified that small 
institutions would not be subjected to those requirements because they 
request to be evaluated under the strategic plan assessment option.
    The agencies reiterate, however, that they do not intend by the 
proposal to exempt small institutions from the CRA or subject them to a 
less demanding standard of performance. The revised proposal has been 
redrafted so that the format of the small institution approach is more 
straightforward. The revised proposal first states the criteria that 
the agencies would use to assess the performance of a small 
institution, and then describes the performance levels that correspond 
to satisfactory performance. As under the tests for large retail 
institutions, the agencies have eliminated the structure of rebuttable 
presumptions and have proposed a rating profile. A small institution's 
performance need not fit every aspect of the rating profile describing 
``satisfactory'' performance for it to receive that rating. 
Exceptionally strong performance on some aspects can compensate for 
weak performance on others provided the institution's overall 
performance is consistent with the rating profile. Small institutions 
that do not meet the standards for a ``satisfactory'' record would be 
given the appropriate rating without the necessity of a ``closer 
review.''
    Some commenters expressed concern that under the December proposal 
an institution would be required to affirmatively elect to be examined 
under the streamlined assessment method and suggested that the 
streamlined method be the default examination procedure unless a 
qualifying institution elects another assessment method. The agencies 
agree and have drafted the revised proposal accordingly.
    Commenters representing holding companies and small institutions 
that are affiliates of holding companies with total banking and thrift 
assets over $250 million urged that the $250 million asset limit take 
into consideration only the assets of the subject bank or thrift and 
not the aggregate amount of bank and thrift assets held by the holding 
company or, alternatively, that the asset limit be raised. Many 
community and governmental groups, on the other hand, believed that the 
asset limit should be lowered. After considering all of the comments, 
the agencies have decided to retain the definition of small institution 
set forth in the December proposal. No compelling evidence was 
presented to support a change of the asset limit. Further, the revised 
proposal reflects the notion that the CRA performance of a small 
independent institution or small affiliate institution of a small 
holding company should be measured against different standards than a 
small institution affiliate of a larger holding company. The 
consideration of assessment context added in the revised proposal will 
permit the agencies to make this differentiation. The larger holding 
company could be expected to provide support and assistance to a degree 
not available to a small independent institution or to an affiliate 
institution of a small holding company.
    Many commenters from small institutions criticized the presumption 
in the December proposal that a 60% loan-to-deposit ratio was 
reasonable. These commenters pointed out that economic conditions, 
institutional capacity and other constraints may result in loan-to-
deposit ratios significantly below this figure. Although the agencies 
did not intend the December proposal to suggest that a loan-to-deposit 
ratio below 60% would have been presumed less than reasonable, the 
agencies have eliminated the use of any fixed percentage. Instead, the 
revised proposal would require that an institution's loan to deposit 
ratio, adjusted for seasonal variation and, as appropriate, other 
lending related activities, must be reasonable given the institution's 
size, financial condition, and the credit needs of its service area. 
The adjustment for lending related activities, such as secondary market 
sales and community development lending and investment, is new in the 
revised proposal. This provision responds to concerns that institutions 
that package and sell their loans would be disadvantaged, compared to 
portfolio lenders, by a strict loan-to-deposit ratio test. The proposed 
adjustment also addresses concerns raised by commenters that the small 
institution assessment method in the December proposal would have 
ignored the community development lending performance of small 
institutions.
    Many industry commenters also criticized the requirement in the 
December proposal that, to be presumed to be performing satisfactorily, 
an institution would have needed a good loan mix, which would have 
included offering, to the extent permitted by law, a variety of loans 
to customers across economic levels. These commenters were concerned 
that an institution would have been required to offer all permissible 
loan products to all customers. The agencies agree that the focus on 
the types of products offered was inconsistent with the tenor of the 
proposed regulation as a whole and have altered the criterion in the 
revised proposal to eliminate any requirement concerning the types of 
products that an institution offers. The revised proposal would retain 
the aspect of the criterion focussing on lending to customers across 
economic levels.
    In a related change, the revised proposal would broaden the 
criterion in the December proposal concerning the distribution of loans 
by institutions required to report loan data under HMDA. The revised 
proposal would explicitly provide that the agencies would consider the 
geographic distribution of loans of all small institutions, not just 
these subject to HMDA. The agencies believe this consideration was 
implicit in the December proposal, which required lending across 
economic levels. In any event, the agencies do not intend this change 
to result in any increased documentation burden on small institutions. 
The geographic analysis would be performed by the agencies' examiners 
and would not be required of the institutions.
    The agencies also received comments questioning the meaning of the 
criterion in the December proposal focussing on the complaint record of 
small institutions. Because of concerns by commenters that a 
``legitimate, bona- fide complaint'' was not adequately defined, the 
agencies have now proposed a criterion that would focus on the 
institution's record of taking appropriate action, as warranted, in 
response to written complaints about its CRA performance.
    Many commenters expressed concern that the December proposal was 
unclear regarding the circumstances under which a small institution 
could have earned an ``outstanding'' or less than ``satisfactory'' 
rating. The changes in the revised proposal clarify and conform the 
treatment of small banks to the requirement proposed for large retail 
institutions--that lending performance must be ``satisfactory'' for an 
institution to receive an overall satisfactory rating. Under the 
revised proposal, the agencies would consider a small institution's 
investment and service performance in order to determine whether it is 
eligible for an ``outstanding'' rating. Strong investment or service 
performance could help boost a small institution's rating to the 
``outstanding'' level. Poor investment or service performance would not 
lower a small institution's rating below ``satisfactory'' but could 
prevent the institution from receiving an ``outstanding'' rating. The 
agencies would not consider investment and service performance to 
offset less than ``satisfactory'' performance by a small institution on 
the basic assessment criteria.
    The revised proposal also reflects minor changes to clarify the 
treatment of small institutions. The agencies have eliminated the 
criterion in the December proposal relating to discrimination because 
the issue is addressed in the section on the assignment of overall 
ratings. In addition, consistent with the changes in the proposal for 
large institutions, the discussion of the examination procedures for 
small institutions with multiple service areas has been eliminated.

Strategic Plan Assessment

    The December proposal would have provided that, as an alternative 
to being rated under the lending, service, and investment tests, or the 
small institution assessment standards, an institution could submit to 
its supervisory agency for approval a strategic plan detailing how the 
institution proposed to meet its CRA obligation. The December proposal 
would have required that the plan be submitted three months in advance 
of its effective date, and that the institution solicit public comment 
on the plan at the time the plan is submitted to the agency. No plan 
would have been approved unless it provided measurable goals for 
proposed performance and those goals constituted at least satisfactory 
performance under the standards of the regulation. No plan could have 
had a term beyond two years, and the institution could have petitioned 
the agency to amend the plan on the grounds that a material change of 
circumstances made the plan no longer appropriate. The agency would 
have assessed the CRA performance of the institution under the plan. If 
the institution failed to meet or exceed the preponderance of its 
goals, its performance would have been evaluated against the lending, 
service and investment tests or the small institution assessment 
method, as applicable. The preamble to the December proposal stated 
that an institution operating under an approved strategic plan would 
not be relieved of its obligation to report data under the regulation.
    The concerns regarding the strategic plan option most consistently 
raised by the comments were the December proposal's lack of details 
concerning important aspects of how the plan option would operate and 
the nature of public input into the process. The revised proposal would 
provide substantially more detail about the operation of the plan 
option than the December proposal, and would modify the December 
proposal in other respects as well. In the revised proposal, the 
agencies have attempted to provide a real alternative to the standard 
lending, investment, and service tests through the strategic plan 
option, while assuring that those operating under a plan are subject to 
a CRA assessment that is no less stringent and performance-based than 
the proposed standard tests.
    The revised proposal would substantially revise the provisions in 
the December proposal regarding public participation in the plan 
process. An institution would be required to informally seek 
suggestions from the public while developing the plan. Once the 
institution had developed the plan, the institution would be required 
to formally solicit public comment on the plan for at least 30 days. 
The agencies have decided not to extend the minimum comment period to 
avoid unduly lengthening the plan process. After the comment period, 
the institution would submit the plan to its regulator, along with any 
comments received, and, if the plan was revised in light of the 
comments received, the plan in the form released for public comment. 
Under the revised proposal, a submitted plan would be approved if the 
agency fails to act on the plan within 60 days after submission, unless 
the agency extended the review period for good cause. Until a plan was 
approved, an institution would be subject to the standard performance 
tests.
    These changes would increase the opportunity for productive 
community input in the plan process. By requiring an institution to 
seek informal suggestions in formulating a plan, and then to solicit 
formal comment before submitting a plan to the agency, this process 
will encourage consultation between an institution and its community, 
including local government, community leaders, and the public. There 
would not be a further comment period after the institution submits its 
proposed plan to the agency because such a comment period could 
undermine the direct communication and consultation between an 
institution and its community that is most beneficial to the process. 
The revised proposal would provide that, in evaluating a plan, the 
agency would consider the public's involvement in formulating the plan 
and any response by the institution to public comment on the plan.
    Several comments appeared to misunderstand why the strategic plan 
would provide for input from the public. The plan option would provide 
institutions an opportunity to tailor their CRA objectives to the needs 
of their community and their capacity and expertise. Few comments 
suggested that an institution would be able to determine the needs of 
its community without consulting in some fashion with those in the 
community. Several industry comments were concerned that under the 
strategic plan option, community organizations would play an 
inappropriate role in an institution's operations. However, the purpose 
of the consultation would be for the institution to develop information 
about the needs of its community and how they might be met so that it 
can make better judgments when formulating its plan objectives. The 
decision regarding how the institution is to meet those needs would 
remain with the institution. In reviewing the public participation, the 
agencies would not consider whether community organizations unanimously 
supported the plan, but whether the institution made an appropriate 
investigation to determine the needs of its community, and whether, 
considering the information about community credit needs that the 
institution received in the comments, the plan goals are appropriate. 
The agencies would evaluate strategic plans and their proposed 
measurable goals in the assessment context against which the tests and 
standards of the proposed regulation would be applied.
    The revised proposal also would provide significantly more guidance 
regarding the standards for approval of a plan. Commenters on the 
December proposal were divided over the standards for approval. Some 
commenters thought the regulation should state that the standards for 
approval of a plan are the same as the standards on the lending, 
service, and investment tests, or that the plan should require no less 
lending than the lending test. In contrast, some industry commenters 
thought that the plan would not provide a real alternative unless it 
permitted an institution to depart from the standard tests in 
responding to local needs. Under the revised proposal, a plan would 
have to specify measurable goals for helping to meet the credit needs 
of the institution's service area, particularly the needs of low- and 
moderate-income geographies and low- and moderate-income individuals. 
These goals would have to reflect the institution's capacity and 
constraints, product offerings, and business strategy.
    The revised proposal would require that the plan specify measurable 
goals in lending, investment, and the provision of services, as 
appropriate to the circumstances. The proposal would specify the broad 
criteria in lending, investment, and services that should be the 
framework for the plan goals. At the same time, however, the proposal 
would make clear that an institution has great flexibility to fashion 
its program within those parameters. An institution would not be 
required to set levels of performance in all three categories. In order 
to maintain the focus on lending for retail institutions operating 
under a plan, a retail institution's goals would have to emphasize 
lending and lending-related activities, unless a different emphasis 
were appropriate given the credit needs of the service area, public 
comment, and the institution's capacity and constraints.
    The agencies intend through these provisions to provide guidance to 
the industry and the community regarding the standards for plan 
approval, while preserving substantial flexibility for institutions to 
tailor their CRA programs. The purpose of the plan is not to provide 
institutions operating under a plan with a different or lesser 
obligation to help meet the needs of their community; it is to provide 
more certainty and flexibility for those institutions that wish to meet 
their obligation in a fashion that they believe may not be 
appropriately assessed by the standard performance tests.
    The revised proposal would require that each plan specify 
measurable goals, the satisfaction of which, the institution believes, 
would warrant a ``satisfactory'' rating. An institution also would have 
the option of identifying a separate set of goals that, if met, would 
warrant an ``outstanding'' rating. An institution would not be 
considered for a rating of outstanding unless its plan contained 
outstanding goals that had been approved by the relevant agency.
    The revised proposal also would clarify how performance would be 
assessed under the plan. The agencies believe that the standard of 
performance in the December proposal should be strengthened, and the 
revised proposal would require an institution to substantially achieve 
its plan goals to receive that rating. This would apply to the 
satisfactory rating and, if the plan contained such approved goals, to 
the outstanding rating.
    Some commenters believed that the possibility of being considered 
under the standard tests, as contemplated by the December proposal, 
made the plan a less attractive alternative to the standard tests. The 
revised proposal would, unless the institution chose otherwise, rate an 
institution's performance under an approved plan solely in relation to 
its plan goals. An institution would have the option, however, to elect 
in its plan to be subject to the standard tests should its performance 
under the plan goals be less than satisfactory. The agencies intend 
that an institution operating under an approved plan would, during the 
period of the plan, never be subject to assessment under the standard 
tests, unless the institution so chose.
    In response to industry comments that said the two year plan term 
in the December proposal was too short to warrant the expense of 
preparing a plan and to permit institutions to initiate activities with 
a longer view, the agencies have lengthened the possible plan term to 5 
years, but would require the plan to have annual interim measurable 
goals. The agencies agree that it is beneficial to provide institutions 
the opportunity for long-range planning, and the interim goals should 
enable effective examinations during the plan period. The proposal also 
would permit an institution to develop a single plan for one or more or 
all of its service areas and allow affiliated institutions to prepare 
joint plans.
    A number of industry commenters indicated that the possibility of 
public disclosure of confidential information presented a major 
disincentive to their use of the strategic plan alternative. The 
revised proposal would allow institutions to submit additional 
information to the relevant agency on a confidential basis. However, 
the publicly available information would have to be sufficiently 
specific to enable the public and the agency to judge fairly the merits 
of the plan's goals.
    The revised proposal also would provide more detail regarding plan 
amendment. An institution would be able to petition for an amendment on 
the grounds that a material change in circumstances had made the plan 
no longer appropriate. In order to preserve the integrity of the public 
participation in the plan process, any proposed amendment would have to 
go through the public consultation and comment process described 
earlier in this preamble.
    Despite industry comments to the contrary, the revised proposal 
continues to provide that approval of a plan would not affect an 
institution's data collection responsibilities. The data are useful to 
the agencies in assessing overall lending in communities, and would 
also be of value to the public. Since the institution's plan would be 
in its public file, the public would have the appropriate context in 
which to evaluate the lending data.
    The revised proposal also clarifies that evidence of discrimination 
would affect an institution's rating based on plan performance in the 
same manner as such evidence would affect an institution's rating 
calculated pursuant to the standard tests.

Assigned Ratings

    Under the December proposal, institutions would have been assigned 
one of four overall, or composite, ratings, as required by the statute: 
``outstanding'', ``satisfactory'', ``needs to improve'', and 
``substantial noncompliance''. In the December proposal, ratings on the 
lending, investment, and service test were combined into a composite 
rating. For a retail institution, the institution's rating under the 
lending test would have served as the base rating. This base rating 
would then have been increased by two levels in the case of outstanding 
investment performance or by one level in the case of high satisfactory 
investment performance. For a wholesale or limited-purpose institution, 
the institution's rating under the investment test would have served as 
the basis for the overall rating. For any institution, the rating would 
have been increased by one level in the case of an ``outstanding'' 
rating for service and decreased by one level in the case of a 
``substantial non-compliance'' rating for service.
    Because the lending, service and investment tests had five rating 
levels rather than four, the rating would then have been converted to 
the statutorily-required four level rating system, with ``high 
satisfactory'' and ``low satisfactory'' both scored as 
``satisfactory''. An institution that would otherwise have received a 
``needs to improve'' rating would have been rated in ``substantial 
noncompliance'' if the institution received no better than a ``needs to 
improve'' rating on each of its two previous examinations. Finally, the 
rating would have been adjusted to take into account any illegal 
lending discrimination by the institution to arrive at a final 
composite rating.
    Many commenters, particularly community and consumer groups, were 
concerned that the rating system proposed in December permitted a 
retail institution with poor lending performance to achieve a 
satisfactory or outstanding overall rating through outstanding 
performance on the investment and service tests. These commenters asked 
that no retail institution be permitted to achieve a satisfactory 
overall rating unless it received a satisfactory rating on the lending 
test. The revised proposal would ensure that lending performance 
receives sufficient weight by weighing a retail institution's rating on 
the lending test so as to count for at least 50 percent of its overall 
rating. Furthermore, a retail institution would be required to achieve 
a rating of satisfactory on the lending test in order to receive an 
overall rating of satisfactory.
    Some commenters were concerned that investment and service 
performance only affected an institution's overall rating at the 
margins--if investment or service performance was extraordinarily 
strong or weak. The revised proposal would allow investment and service 
performance to boost an institution's rating provided the institution 
had achieved a rating of satisfactory on the lending test. Poor 
performance on either the investment or service test could negatively 
affect an institution's overall performance.
    These principles would be implemented through the process described 
in paragraph (b) of Appendix A for assigning a rating for retail 
institutions assessed under the lending, service and investment tests. 
Points would be assigned to an institution's performance on each of the 
underlying tests. The total number of points would determine the 
composite rating, unless the total exceeds twice the number of points 
attributable to the institution's performance under the lending test. 
In that case, the composite rating would be determined using twice the 
number of points attributable to the institution's lending performance 
to ensure that lending performance accounts for at least 50 percent of 
the overall rating.
    Small institutions, wholesale or limited purpose institutions, or 
institutions with an approved strategic plan would be rated as 
described in paragraphs (c) through (e) of Appendix A.
    As in the December proposal, the revised proposal would require the 
agencies to adjust ratings for all institutions, regardless of the 
method of CRA evaluation, to take evidence of discrimination or other 
illegal credit practices into consideration. In addition, the revised 
proposal, as in December's proposal, provides that an institution that 
otherwise would receive a needs to improve rating would be rated in 
substantial noncompliance if it received no better than a needs to 
improve rating on each of its two previous examinations.

Lending Discrimination

    Under the December proposal, an institution would presumptively 
have received a final CRA rating of less than satisfactory if the 
institution (1) committed an isolated act of illegal discrimination of 
which it had knowledge that it had not corrected fully or was not in 
the process of correcting fully or (2) engaged in a pattern or practice 
of illegal discrimination that it had not corrected fully. The 
presumption could have been rebutted in the case of technical or de 
minimis violations, for example, if an institution violated the Equal 
Credit Opportunity Act by offering a preferential credit program for 
individuals over age 55 (rather than limiting the program to 
individuals over age 62 as the law requires).
    Many community and consumer groups criticized this proposal as a 
retreat from current practice. They pointed out that the existing 
regulation provides that the agencies will consider any evidence of 
discriminatory or other illegal credit practices. Although the agencies 
did not intend in the December proposal to reduce the weight given 
evidence of illegal discrimination in the CRA evaluation process, they 
believe that the commenters' concerns should be addressed. The revised 
proposal conforms with the language of the existing regulation. Also, 
the discrimination provisions in the revised proposal would avoid the 
use of a rebuttable presumption consistent with the elimination of 
presumptions throughout the proposal.
    Under the revised proposal, any evidence of discriminatory or other 
illegal credit practices would adversely affect the agencies' 
evaluation of an institution's CRA rating. In determining the effect on 
an institution's rating, the agencies would consider the nature and 
extent of the evidence, the policies and procedures that the 
institution has in place to prevent discriminatory or other illegal 
credit practices, any corrective action that the institution has taken 
or has committed to take, particularly voluntary corrective action 
resulting from self-assessment, and other relevant information, such as 
the institution's past fair lending performance.
    There was also some confusion regarding whether the December 
proposal intended that illegal discrimination would have the same 
effect for all institutions regardless of the assessment method that 
they chose. The revised proposal makes clear that evidence of 
discrimination would be considered in assigning a rating to all banks 
and thrifts, regardless of whether they were evaluated under the 
lending, service, and investment tests, the community development test 
for wholesale or limited purpose banks, the small institution 
assessment method, or the strategic plan option.

Multiple Service Areas

    The preamble to the December proposal stated that an institution's 
CRA rating should reflect its performance in all the local communities 
in which it does business. However, the proposed regulatory language 
provided that the agencies would conduct full lending, service, and 
investment tests (or the other appropriate assessments) in a sample of 
the service areas in which the institution operated. The agencies would 
then assign separate composite ratings for each area. The institution's 
overall rating would reflect the performance of the institution in all 
service areas studied.
    Some commenters urged the agencies to conduct assessments in every 
one of an institution's service areas, because every institution has an 
obligation to help meet the credit needs of all of its service areas. 
These commenters and others also expressed concern that the regulation 
did not provide clear rules as to how performance in each of the 
service areas assessed would be combined to arrive at an overall rating 
for the institution.
    An institution is obligated to help meet the credit needs of its 
entire community, including all of the institution's service areas. 
However, ensuring that institutions fulfill this responsibility does 
not necessarily require that an institution's performance in each of 
its service areas must be examined. Questions of how many service areas 
should be examined during an examination and how performance in 
different service areas should be weighed are more appropriately 
handled through examination procedures than through regulatory 
language. The agencies have therefore omitted from the revised proposal 
all discussion of examination treatment of multiple service areas.
    The agencies note that the Interstate Banking Efficiency Act would 
establish requirements for the examination of multi-state and other 
institutions. This proposal and examination procedures will be modified 
as necessary to comply with that Act if it becomes law.

Effect of Ratings on Applications

    The CRA requires the agencies to consider an institution's CRA 
performance record when considering an application by the institution 
to establish a deposit facility (e.g., branch). The December proposal 
specified how CRA ratings would be considered in applications. For 
example, an application from an institution with a ``substantial 
noncompliance'' CRA rating would have generally been denied, whereas an 
application from an institution with an ``outstanding'' rating would 
have been given extra weight. A ``satisfactory'' rating generally would 
have been consistent with approval of an application and a ``needs to 
improve'' rating, absent other evidence, generally would have resulted 
in a denial or conditional approval of an application. The agencies 
emphasized, however, that the CRA examination rating is not conclusive 
and recognized that other information related to CRA performance and 
the convenience and needs of communities, including information 
collected through public comment and reports, is also relevant and 
would be considered.
    Although not intended as such, a number of the commenters believed 
these provisions would have provided institutions with a ``safe 
harbor'' from challenges to their performance record in the 
applications process if they achieved an ``outstanding'' CRA 
examination rating. Those commenters were concerned that they could be 
prevented from effectively commenting on the CRA performance aspects 
relevant to applications and urged that those provisions be dropped.
    The discussion of the effect of particular ratings on applications 
in the December proposal was not intended to alter the agencies' policy 
of considering examination ratings and public comment during the 
applications process and has been deleted. As stated in the December 
proposal, the agencies have consistently recognized that materials 
relating to CRA performance received during the applications process 
from public comments and other sources, can and do provide relevant and 
valuable information. The revised proposal explicitly states that 
interested parties would have the opportunity to comment on 
applications and that the agencies would take their views into account 
in considering the CRA performance of an institution in the 
applications process. The agencies continue to believe, as provided in 
the Interagency Policy Statement Regarding the Community Reinvestment 
Act, that information from an examination is a particularly important 
consideration in the applications process because it represents the on-
site evaluation of an institution's CRA performance by its primary 
federal regulator. The revised proposal also would specify that an 
institution's record of CRA performance would be considered in an 
institution's expansion proposals (as defined in the CRA) and may be 
the basis for approving, denying, or conditioning approval of an 
application.

Definition of Service Area

    The December proposal would have replaced the concept of 
``delineated community'' in the existing regulation with the concept of 
service area. The December proposal would have defined service area as 
the area around each institution's office or group of offices where the 
preponderance of direct reportable loans made through those offices are 
located. A service area would have been presumed acceptable if it was 
broad enough to include low- and moderate-income geographies and did 
not arbitrarily exclude such geographies. An institution had the 
opportunity to show there were no low- and moderate-income geographies 
within a reasonable distance given its size and financial condition, 
and the supervisory agency could reject an otherwise acceptable service 
area if the service area did not account for the true effective lending 
territory of the institution or if it reflected past redlining or 
illegal discrimination. The proposal would have required an institution 
to delineate multiple service areas if the geographies it served 
extended substantially across state boundaries or the boundaries of a 
Metropolitan Statistical Area (MSA). An institution serving military 
customers would have been permitted to delineate a ``military 
community'' consisting of those customers. Each institution would also 
have been required to compile and maintain a list of all the 
geographies within its service area or areas and a map of each service 
area. The December proposal would not have required wholesale or 
limited purpose institutions to delineate a service area, but would 
have treated all low- and moderate-income geographies in the country as 
the service area for wholesale or limited purpose institutions.
    As a result of numerous comments received on this issue, the 
revised proposal makes several changes to the definition. Several 
commenters suggested that the proposed regulation adopt concepts from 
the existing regulation, including the equidistance provision that 
requires an institution to include those areas around its offices where 
it makes a substantial portion of its loans and all other areas 
equidistant from its offices as those areas. The revised proposal would 
adopt the equidistance principle from the current regulation in 
slightly modified form. The equidistance requirement is an effective 
tool to assure that the delineation of a service area is consistent 
with the purposes of the statute and that institutions do not draw 
their service areas too narrowly. This modification clarifies the 
service area requirement and builds on concepts with which the industry 
and community already have experience. This change does not 
significantly modify the substance of the December proposal, since the 
December proposal preamble stated that a service area conforming to the 
equidistance concept would generally have been acceptable.
    The revised proposal also incorporates the concept of ``local 
area'' from the current regulation. This responds to comments 
expressing concern that loans made a substantial distance from a branch 
might inappropriately expand the scope of a service area.
    The revised proposal would delete the requirement that a service 
area be broad enough to include low- and moderate-income areas. The 
necessity for this requirement was unclear, given the provision 
preventing institutions from arbitrarily excluding low- and moderate-
income geographies. The proposal would clarify that the requirement 
that low- or moderate-income geographies not be arbitrarily excluded 
would take into account the institution's size, financial condition, 
and the extent of its branching network. An institution's performance 
evaluation would include an account of how many low- and moderate-
income geographies are included in the institution's service area(s).
    The revised proposal would clarify that an institution's service 
area is derived from its direct lending in relation to its branches and 
proprietary deposit-taking ATMs, rather than its other non-deposit-
taking offices. This appropriately links an institution's CRA 
obligations to where it takes deposits, while enabling the agencies to 
review whether the institution is serving the needs of its entire 
community in the manner in which it extends credit.
    Industry commenters were particularly concerned that the December 
proposal meant that lending conducted by non-branch offices, such as 
loan production offices, would expand an institution's service area. 
The revised proposal would not require an institution to include 
geographies where an institution has made loans through a loan 
production office, unless those geographies are in the local area 
around a deposit-taking branch or ATM. However, an institution would be 
free to include such geographies if it wishes, and the regulation would 
provide some incentive to do so. Under the revised proposal, if an 
agency determined that lending by an institution's affiliate(s) was 
integral to the business of the institution, then it would include the 
lending by that affiliate in its assessment of the institution's 
lending performance, even if the institution had not requested the 
agency to do so. In addition, by limiting the size of its service area, 
an institution would increase the likelihood that it would perform 
poorly on the criterion of the lending test that considers the 
proportion of the institution's total lending in its service area(s).
    Rather than requiring the service area to include those geographies 
accounting for a ``preponderance'' of the institution's loans, as in 
the December proposal, or the areas accounting for a ``substantial 
portion'' of the institution's loans, as in the existing regulation, 
the revised proposal would require the service area to include those 
geographies in which the institution has made ``a significant number 
and amount of loans.'' The agencies intend the meaning of 
``significant'' to be broad, and to include all geographies around its 
branches and proprietary deposit-taking ATMs where an institution has 
made more than a handful of loans. Because of this change in the 
proposal, the criterion in the small institution assessment method that 
requires a majority of an institution's loans to be in its service 
area(s) for a satisfactory rating would not be redundant as it might 
have been in the December proposal.
    Under the revised proposal, as in the December proposal, the 
agencies would consider whether the delineation reflects illegal 
discrimination, and thus would, as some commenters suggested, consider 
the racial composition of geographies in reviewing an institution's 
delineation. The agencies have eliminated the term ``redlining'' 
because the agencies believe that term is included in the term 
``illegal discrimination.'' In this regard, illegal discrimination 
includes the practice of refusing to lend to an area or neighborhood on 
the basis of race or other prohibited bases.
    Some commenters thought that the agencies should require 
institutions to justify the methodology for delineations, and that the 
regulation expressly provide for community input into the delineation. 
Under the revised proposal, examiners would review whether the service 
area meets the requirements of the regulation, but the agencies would 
not prescribe or review the method by which an institution defines its 
service area. Rather than having the agencies determine whether a 
delineation is ``reasonable,'' it is simpler and more effective in 
meeting the purposes of the statute to focus on the lending patterns of 
the institution, whether low- and moderate income areas are excluded, 
and whether the service area reflects illegal discrimination. 
Furthermore, the revised proposal would not expressly provide for 
community input into the delineation. As part of the assessment 
context, agency staff would review comments from the community with 
regard to the performance of an institution, including its delineation 
of its service area(s).
    The revised proposal would retain the requirement from the December 
proposal that institutions delineate multiple service areas, with 
clarifying modifications. The revised proposal would not require 
institutions to delineate an MSA or other political boundary. The 
requirements that would govern under the revised proposal should 
prevent institutions from inappropriately limiting their service 
area(s) in order to exclude certain geographies.
    Some commenters suggested requiring the service area to include 
full census tracts and block numbering areas to facilitate data 
collection and reporting. The agencies agree, and the revised proposal 
would contain such a requirement.
    While comments generally supported the separate treatment of 
wholesale or limited purpose institutions, many commenters questioned 
whether wholesale or limited purpose institutions should have 
nationwide service areas and suggested that more consideration should 
be given to qualified investments in the institution's local area. Some 
commenters claimed that permitting wholesale banks to define a 
``national community'' violated the ``local community'' orientation of 
the statute. The revised proposal would eliminate a mandatory 
nationwide service area for wholesale or limited purpose institutions. 
Such institutions have chosen to locate in particular communities, and 
it is appropriate that their CRA performance reflect their location. 
The revised proposal would therefore require that a wholesale or 
limited purpose institution designate as its service area the area or 
areas around its offices, or a broader statewide or regional area that 
includes such areas. The institution would have a broad scope in 
preparing this designation, so long as the area meets the purposes of 
the CRA and does not arbitrarily exclude low and moderate income 
geographies. Performance under the community development test would 
focus on qualified investments, community development loans outstanding 
and community development services that benefit the areas within the 
institution's service area. Qualifying activities that benefit areas 
outside the institution's service area would be considered up to an 
amount equal to the amount of qualifying activities within the 
institution's service area. However, if the institution could 
demonstrate only a limited need or opportunity to provide qualifying 
activities within its service area, the appropriate agency could modify 
or eliminate this limitation.

Data Collection and Reporting

    The December proposal would have required institutions that were 
not eligible for the small institution streamlined assessment method to 
collect and report to the agencies data showing the geographic 
distribution of written applications, application denials, originations 
and purchases for home mortgage, small business and small farm, and 
consumer loans. Home mortgage loans would have included all mortgage 
loans reportable under HMDA and its implementing regulations. The 
proposal would have required institutions to report separately 
information covering loans for home purchase, home improvement, 
multifamily dwellings, and refinancings. Small business loans would 
have included all loans to private, for-profit organizations that in 
the fiscal year preceding the making of the loan had gross receipts of 
less than $10 million (for a firm providing services), or up to 500 
employees (for a manufacturing firm). As proposed, institutions would 
have had to separate such loans into in four categories based on the 
sales volume of the business. Small farm loans would have been defined 
to include all loans to private organizations engaged in farming 
operations with gross receipts of less than $500,000 in the fiscal year 
preceding the making of the loan. Consumer loans would have been 
defined to include all closed-end loans, secured and unsecured, 
extended to a natural person primarily for personal, family, or 
household purposes, except for credit card loans and motorized vehicle 
loans and those loans included in the definition of home mortgage 
loans.
    The December proposal would also have required institutions to 
report data in summary form by geography for each of the three major 
loan categories--mortgages, small businesses and small farms, and 
consumer--by January 31 of each calendar year. The data would have 
covered the related lending activity that took place in the preceding 
calendar year.
    Some commenters raised general concerns regarding the data 
collection requirements in the December proposal. As discussed later in 
this preamble, the agencies have streamlined requirements to reduce 
burden. In addition, the agencies plan to make software available to 
institutions to facilitate compliance with the proposed requirements. 
The agencies have proposed the data collection and reporting 
requirements in this revised proposal as a means for permitting the 
agencies to fulfill their responsibilities under the CRA of assessing 
each institution's record of helping to meet the credit needs of the 
community. This proposal has also been made to permit the agencies to 
discuss the facts supporting the agencies' conclusions regarding the 
institution's record of lending.
    The comments on the proposed data collection raised five principal 
concerns, all of which have been addressed in the revised proposal. 
First, many commenters indicated that the proposed rules would be 
overly burdensome and, in the case of home mortgage loans, would have 
required duplicative tracking of data. Under the revised proposal, the 
agencies would base their analysis of mortgage lending on the data 
already reported pursuant to HMDA. To acquire more geographic detail on 
home mortgage lending, the agencies propose to amend the HMDA 
regulation to require that institutions other than small banks and 
thrifts report the geography of applications, approvals, and denials 
for loans secured by properties outside the institution's MSA, data 
that is already reported on a voluntary basis.
    Second, some commenters questioned whether the need for consumer 
loan data justified the burden of mandatory reporting. However, many of 
the same commenters suggested that if consumer loan data were to be 
required, the data should include all consumer loans, including credit 
card loans and motor vehicle loans, which were not included in the 
collection and reporting requirements of the December proposal. Some 
institutions indicated that consumer lending was an important aspect of 
their CRA performance that should be considered by the agencies. The 
revised proposal would offer institutions the option of collecting data 
on the amount outstanding, the location of the borrower, and the income 
of the borrower for each open-end and closed-end consumer loan 
outstanding as of the end of the calendar year. Such data is typically 
required by all institutions as an integral part of their loan 
underwriting procedures. If an institution selected this option, the 
foregoing data would be reviewed during the institution's CRA 
examination but would not be reported to the agencies.
    Third, many lenders criticized the December proposal's inclusion of 
information on small business applications and application denials. 
Those commenters indicated that reporting should be limited to loan 
outstandings or loan originations. The revised proposal would simplify 
the definition of small business and small farm loans, by adopting the 
definition of those terms now used by institutions for purposes of 
completing, in the case of banks, their Reports of Condition and Income 
(Call Reports), and in the case of thrifts, the Thrift Financial Report 
(TFR). Under the revised proposal, institutions would collect and 
report data on a loan-by-loan basis for all loans included in the 
aggregate small business and small farm loan figures on the 
institution's Call Report or TFR, which includes business loans with 
original amounts under $1 million and farm loans with original amounts 
under $500,000. These data would include the outstanding balance as of 
December 31 of each year, the location of the business or farm or the 
location where the loan proceeds would be applied (as indicated by the 
borrower), an indication of whether the borrower has annual revenues of 
less than or equal to $1 million, and an indication of whether the 
borrower (if not publicly traded) is more than 50 percent owned by one 
or more minority individuals or by one or more women. The loan register 
information would be required to be submitted at the same time and in 
accordance with the provisions for submitting HMDA data as provided in 
12 CFR Part 203 (Regulation C). In addition, the revised proposal would 
change the date on which Call Report or TFR data on small business and 
small farms loans would be required to be submitted from June 30 to 
December 31 of each year to coincide with the calendar year reporting 
requirements of HMDA.
    Fourth, many commenters criticized the failure of the December 
proposal to require the collection of data on the race and gender of 
borrowers except to the extent such data was required by current law. 
These commenters were particularly interested in the reporting of race 
and gender data for small business loans in order to support the fair 
lending component of the CRA assessment. In response to these comments, 
the revised proposal would require institutions to collect certain race 
and gender data in connection with their small business and small farm 
lending. Each institution would be required to request, either in 
connection with a written application or, if the institution did not 
use written applications, at an appropriate point in the lending 
process, that an applicant or borrower indicate the percentage of the 
business or farm owned by men and by women as well as the percentages 
owned by members of different racial and ethnic categories. If the 
institution neither takes a written application nor originates the 
loan, the institution would not be required to request the information. 
To protect the privacy of individual borrowers, this detailed 
information would not be included on loan registers, which, as noted 
earlier in this preamble, would only indicate whether an individual 
loan was to a business or farm that was more than 50 percent women-
owned or more than 50 percent minority-owned. The institution would 
also retain but not report or disclose the information on applicants 
who did not receive a loan. To further safeguard privacy, the loan 
registers would not be disclosed to the public but the institutions 
would include aggregate information about the loans in their public CRA 
files.
    Finally, some commenters were concerned that because community 
development loans were not required to be reported, examiners would not 
give them sufficient weight in evaluating an institution's lending 
performance. The revised proposal would require institutions to report 
on their Call Reports and TFRs the aggregate number and dollar amount 
of community development loans outstanding as of December 31 of each 
year.

Public File and Disclosure

    The December proposal would have required institutions to make 
available for public inspection: (1) a file containing all the signed, 
written comments that it had received from the public for the past two 
years; (2) its performance data for that period; (3) maps of its 
service areas (with lists of the census tracts or block numbering areas 
that make up each service area); and (4) a copy of the public section 
of its most recent CRA Performance Evaluation. If an institution 
elected to be assessed under the strategic plan option, it would have 
been required to include a copy of its plan in the public file. The 
December proposal would have required the institution to maintain the 
public file at its main office and to make available copies of the file 
at cost to members of the public. Materials relating to a given service 
area would have been maintained at each branch in that service area, 
and every institution would have been required to post in the public 
lobby of each branch a notice of its CRA obligation and the public's 
opportunity to comment on and review data concerning that performance.
    Commenters generally favored the public disclosure of an 
institution's CRA-related activities, and the revised proposal retains 
all the relevant public disclosure provisions of the December proposal. 
The revised proposal modifies the required contents of the public file 
to reflect proposed changes in the various assessment tests and the 
proposed data collection requirements for small business and small farm 
loans. For example, consistent with the proposed service test, the 
revised proposal would require an institution to maintain a list of its 
branches and ATMs along with their locations and the services generally 
available at such facilities.
    To protect the privacy of borrowers and the competitive information 
of institutions, the revised proposal would not require an institution 
to include the small business or small farm loan registers containing 
information on individual applicants in its public file. Instead, the 
revised proposal would require the public disclosure of aggregated 
information on small business and small farm loans for the past two 
calendar years by every institution (other than a small institution). 
Loan registers would be available to agency examiners to confirm the 
accuracy of the aggregated data but the agencies do not intend to make 
unaggregated information publicly available.
    Under the revised proposal, the following aggregated loan data for 
small business and small farm loans would be placed in the public file: 
(1) the number and amount of loans in low-,
moderate-, middle-, and upper-income geographies; (2) a list of the 
geographies in which an institution made at least one loan; (3) the 
number and amount of loans inside and outside the institution's service 
area; (4) the number and amount of loans to minority- and women-owned 
businesses; and (5) the number and amount of loans to businesses and 
farms with annual revenues equal to or less than $1 million. 
Institutions would also be required to disclose the number and amount 
of community development loans outstanding. Institutions may elect to 
disclose publicly the number and amount of consumer loans to 
individuals and geographies by various income levels, and the number 
and amount of these loans made within and outside its service area(s). 
However, to protect the privacy interests of borrowers, an institution 
may not place in its public file any loan information described above 
for a particular year if special circumstances, such as a small number 
of loans or a limited number of geographies in the designated 
categories, could reasonably be expected to disclose the borrower's 
identity.
    A small institution would be required to include its loan-to-
deposit ratio computed at the end of the most recent calendar year. The 
institution could include other data on its loan-to-deposit ratio if it 
believed the data would give a more accurate picture of its lending and 
lending-related activities. If a small institution elects to be rated 
under the lending, investment, and service tests applicable to larger 
institutions, it would be required to include in its public file all of 
the lending information described earlier in this preamble. An 
institution electing to be assessed under an approved plan would 
continue to provide a copy of its plan in the public file but would not 
have to disclose information submitted to the agencies on a 
confidential basis.
    In response to comments, the agencies have modified the provisions 
regarding the location of the public file. The complete public file 
would be required to be maintained at the institution's main office. In 
addition, at least one branch in each service area would be required to 
have copies of the bank's HMDA Disclosure Statements and all materials 
in the public file relating to the service area in which the branch is 
located. If a member of the public requested to review a bank's public 
file at a branch that did not have a copy, the bank would have to make 
a complete copy of the file for that service area available for review 
at the branch within 5 business days at no cost.

Public Notice

    The December proposal would have required that institutions provide 
the Community Reinvestment Act Notice ``in the public lobby of its head 
office and each branch,'' and it would have set forth the Notice. The 
revised proposal makes minor changes to the Notice requirements. The 
term ``head office'' is changed to ``main office'' for clarity. Within 
the Notice, the statement of what is included in the CRA performance 
file would be expanded to describe more accurately the contents of the 
file. In addition, the revised proposal would require that the file 
include a map identifying the institution's service area, a list of its 
branches and ATMs in its service area, and a list of services the 
institution provides at each of the foregoing locations.

Publication of Examination Schedule

    The December proposal would have required that each agency publish 
a list of the banks scheduled for CRA exams in each calendar quarter at 
least 30 days before the beginning of the quarter, and permitted 
members of the public to submit comments about a bank's CRA 
performance. The revised proposal would leave intact the provision 
concerning timing of publication, but delete as redundant the provision 
concerning public comment.

Transition

    The December proposal would have established a transition period 
from July 1, 1994, to April 1, 1996. Institutions subject to data 
collection and reporting requirements would have been required to begin 
collecting home mortgage, small business, and consumer loan data on 
July 1, 1994. The data would have been reported to the agencies no 
later than January 31, 1995, and annually thereafter. Evaluations under 
the proposed standards would have begun April 1, 1995. However, any 
institution could have elected to be evaluated under the existing 
twelve assessment factors rather than the proposed standards until July 
1, 1995, and any institution showing cause could have requested 
evaluation under the existing standards up to April 1, 1996. The 
agencies would have accepted strategic plans for approval at any time 
after the publication of the final rule.
    The December proposal, in addition, would have insulated some 
institutions from supervisory sanctions until they had been subject to 
at least two examinations under the proposed standards. Specifically, 
the agencies would not have disapproved corporate applications or taken 
any enforcement action against an institution whose initial CRA rating 
under the proposed standards dropped by more than one level, if the 
agencies determined that the drop in ratings occurred despite a good 
faith effort to achieve at least a satisfactory level of performance.
    Many of the commenters criticized the transition period in the 
December proposal for being too short. Those commenters were 
particularly critical of the proposal to begin collection of data on 
July 1, 1994. Several commenters suggested that the proposed data 
collection be delayed as much as 12 months after the publication of a 
final rule. Some also criticized the proposal to begin conducting 
examinations in 1995 using a partial year's data from the second half 
of 1994.
    Other commenters criticized the proposal to insulate certain 
institutions from supervisory actions until they had gained more 
experience with the proposed standards. Those commenters were generally 
concerned that the proposal would have protected institutions whose 
performance ratings would have suffered as a result of more objective, 
performance-based assessments.
    In developing the revised proposal, the agencies sought to address 
these concerns in two principal ways. First, despite substantial 
simplification in data collection compared to the December proposal, 
the revised proposal would provide institutions additional time before 
the data collection would begin. Under the revised proposal, collection 
of new data elements would not be required until July 1, 1995.
    Second, compared to the December proposal, the revised proposal 
eliminates the grace period and instead would provide institutions with 
additional time before assessments under the proposed standards would 
become mandatory.
    The revised proposal would also provide institutions with 
assessment options prior to full implementation of the rule. Even 
though assessments under the proposed standards would not be mandatory 
until July 1, 1996, small institutions would have the opportunity to be 
examined, at their option, under the small bank assessment method 
anytime after July 1, 1995. Anytime on or after July 1, 1995, an 
institution could also elect to submit for approval a strategic plan to 
achieve satisfactory or better CRA performance. Examinations under 
approved strategic plans could begin July 1, 1996.
    Under the proposed transition schedule, the current regulation 
would be repealed in its entirety on July 1, 1996.

Review

    The agencies recognize that the revised proposal, like the December 
proposal, represents a significant change in existing practices and 
that cautious administration is therefore required. Consultation by 
financial institutions with the agencies on compliance with the new 
standards and procedures will be encouraged, as will liberal use of 
agency appeals processes. The supervisory agencies will engage in an 
internal review of the effectiveness of the new regulations. The 
agencies contemplate reconsideration of the regulations to improve 
their effectiveness within the next several years. The agencies intend 
for the proposed regulations to require demonstrated performance but to 
impose as little unnecessary compliance burden as possible, and the 
agencies will review the regulations to determine whether they are 
advancing these goals.

Other Efforts

    In addition to this rulemaking, the agencies will work together to 
improve examiner training and to increase interagency coordination 
regarding application of standards, performance of examinations, 
assignment of ratings, and use of enforcement tools. The agencies will 
work together to make examinations as short in duration as possible, to 
minimize unnecessary compliance burden, and to ensure consistency and 
reliability in the rating process.

Benefit and Burden of Administrative Compliance Requirements

    With respect to the reporting, disclosure, and other administrative 
compliance requirements in the proposal, the agencies invite comment on 
(1) any administrative burdens that these requirements in the revised 
proposal would place on depository institutions, including small 
depository institutions and customers of depository institutions; and 
(2) the benefits of these requirements in the revised proposal for 
depository institutions, their customers, and their communities.

Paperwork Reduction Act

    OCC: The collections of information contained in this notice of 
proposed rulemaking have been submitted to the Office of Management and 
Budget for review in accordance with the Paperwork Reduction Act of 
1980 (44 U.S.C. 3502(h)). Comments on the collections of information 
should be sent to the Comptroller of the Currency, Legislative, 
Regulatory, and International Activities, Attention: 1557-0160, 250 E. 
Street, SW., Washington, DC 20219, with a copy to the Office of 
Management and Budget, Paperwork Reduction Project (1557-0160), 
Washington, DC 20503.
    The collections of information in this proposed regulation are in 
12 CFR 25.25, 25.27, 25.29, 25.42 and 25.43. This information is 
required to evidence national bank efforts in satisfying their 
continuing and affirmative obligation to help meet the credit needs of 
their communities, including low- and moderate-income areas.
    This information will be used to assess national bank performance 
in satisfying the credit needs of their communities and in evaluating 
certain corporate applications. The likely respondents/recordkeepers 
are for profit institutions, including small businesses.
    The estimated annual burden per respondent/recordkeeper varies from 
three to 200 hours, depending on individual circumstances, with an 
estimated average of 37 hours. There will be an estimated 857 
respondents averaging 132 hours and 2,460 recordkeepers averaging 3.4 
hours.
    Board: In accordance with section 3507 of the Paperwork Reduction 
Act of 1980 (44 U.S.C 3504(h)), the proposed information collection 
will be reviewed by the Board under the authority delegated to the 
Board by the Office of Management and Budget after consideration of the 
comments received during the public comment period. Comments on the 
collections of information should be sent to William W. Wiles, 
Secretary of the Board, Board of Governors of the Federal Reserve 
System, 20th Street and Constitution Avenue, NW., Washington, DC 20551.
    The collections of information in this proposed regulation are in 
12 CFR 228.25, 228.27, 228.42, 228.43 and 228.44. This information is 
required to evidence the efforts of banks in satisfying their 
continuing and affirmative obligation to help meet the credit needs of 
their communities, including low- and moderate-income areas. This 
information will be used to assess bank performance in satisfying the 
credit needs of their communities and in evaluating certain 
applications.
    The estimated annual burden per respondent/recordkeeper varies from 
eight to 280 hours, depending on individual circumstances, with an 
estimated average of 36 hours. There will be an estimated 297 
respondents, averaging 133 hours, and 972 recordkeepers, averaging five 
hours.
    FDIC: The collections of information contained in this notice of 
proposed rulemaking have been submitted to the Office of Management and 
Budget for review in accordance with the Paperwork Reduction Act of 
1980 (44 U.S.C. 3502(h)). Comments on the collections of information 
should be sent to the Office of Management and Budget, Paperwork 
Reduction Project (3604-0092), Washington, DC 20503, with copies of 
such comments to be sent to Steven F. Hanft, Office of the Executive 
Secretary, room F-453, Federal Deposit Insurance Corporation, 550 17th 
Street, NW., Washington, DC 20429.
    The collection of information requirements in this proposed 
regulation are found in 12 CFR 345.25, 345.27, 345.29, 345.42 and 
345.43. This information is required to evidence efforts of financial 
institutions in satisfying their continuing and affirmative obligation 
to help meet the credit needs of their communities, including low- and 
moderate-income areas. It will be used to assess an institution's 
performance in satisfying the credit needs of its communities and in 
evaluating certain corporate applications.
    The likely respondents/recordkeepers are for-profit financial 
institutions, including small businesses.
    The estimated annual burden per respondent/recordkeeper varies from 
two to 250 hours, depending on individual circumstances, with an 
estimated average of 17 hours. There will be an estimated 730 
respondents averaging 136 hours and 7,128 recordkeepers averaging three 
hours.
    OTS: The collections of information contained in this notice of 
proposed rulemaking have been submitted to the Office of Management and 
Budget for review in accordance with the Paperwork Reduction Act of 
1980 (44 U.S.C. 3502(h)). Comments on the collections of information 
should be sent to the Office of Management and Budget, Paperwork 
Reduction Project (1550-0012), Washington, DC 20503, with copies to the 
Office of Thrift Supervision, 1700 G. Street, NW., Washington, DC 
20552.
    The collections of information in this proposed regulation are in 
12 CFR 563e.25, 563e.27, 563e.29, 563e.42 and 563e.43. This information 
is required to evidence savings association efforts in satisfying their 
continuing and affirmative obligation to help meet the credit needs of 
their communities, including low- and moderate-income areas.
    This information will be used to assess savings association 
performance in satisfying the credit needs of their communities and in 
evaluating certain corporate applications.
    The likely respondents/recordkeepers are for-profit savings 
associations, including small businesses.
    The estimated annual burden per respondent/recordkeeper varies from 
two to 300 hours, depending on individual circumstances, with an 
estimated average of 38 hours. There will be an estimated 450 
respondents averaging 136.3 hours and 1,600 recordkeepers averaging 
four hours.

Regulatory Flexibility Act

    OCC: It is hereby certified that this proposed rule, if adopted as 
a final rule, will not have a significant economic impact on a 
substantial number of small banks. Accordingly, a regulatory 
flexibility analysis is not required. This proposal would enable most 
small banks to avoid the data collection requirements in 12 CFR Part 25 
and will encourage greater small business lending by banks of all 
sizes.
    Board: For all the reasons discussed in the joint preamble, it is 
hereby certified that this proposed rule, if adopted as a final rule, 
will not have a significant economic impact on a substantial number of 
small banks. This proposal would enable most small banks to avoid the 
data collection requirements in 12 CFR Part 228 and will encourage 
greater small business lending by financial institutions of all sizes. 
Accordingly, a regulatory flexibility analysis is not required. The 
Board invites comment on this matter.
    FDIC: It is hereby certified that this proposed rule, if adopted as 
a final rule, will not have a significant economic impact on a 
substantial number of small banks. This proposal would enable most 
small banks to avoid the data collection requirements in 12 CFR Part 
345 and will encourage greater small business lending by financial 
institutions of all sizes. Accordingly, a regulatory flexibility 
analysis is not required.
    OTS: It is hereby certified that this proposed rule, if adopted as 
a final rule, will not have a significant economic impact on a 
substantial number of small savings associations. This proposal 
provides an alternative means of evaluating a small savings 
association's CRA requirements that would enable most such savings 
associations to avoid the data collection requirements in 12 CFR Part 
563e and will encourage greater small business lending by savings 
associations of all sizes.

Executive Order 12866

    OCC: It has been determined that this document is a significant 
regulatory action. The proposal would clarify existing requirements and 
would exempt small banks from many of the requirements in 12 CFR Part 
25. Further, the proposal will encourage greater small business lending 
by banks of all sizes.
    OTS: It has been determined that this document is a significant 
regulatory action. The proposal sets forth a more focused and 
streamlined method of evaluating savings associations' compliance with 
existing statutory requirements; moreover it would exempt small savings 
associations from many of the requirements in 12 CFR Part 563e. 
Further, the proposal will encourage greater small business lending by 
savings associations of all sizes.

List of Subjects

12 CFR Part 25

    Community development, Credit, Investments, National banks, 
Reporting and recordkeeping requirements.

12 CFR Part 228
    Banks, Banking, Community development, Credit, Federal Reserve 
System, Investments, Reporting and recordkeeping requirements.
12 CFR Part 345
    Banks, Banking, Community development, Credit, Investments, 
Reporting and recordkeeping requirements.
12 CFR Part 563e
    Community development, Credit, Investments, Reporting and 
recordkeeping requirements, Savings associations.

Authority and Issuance

OFFICE OF THE COMPTROLLER OF THE CURRENCY

12 CFR CHAPTER I

    For the reasons outlined in the joint preamble, the Office of the 
Comptroller of the Currency proposes to amend 12 CFR chapter I as set 
forth below:

PART 25--COMMUNITY REINVESTMENT ACT REGULATIONS

    1. The authority citation for part 25 is revised to read as 
follows:

    Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36, 93a, 161, 215, 
215a, 481, 1814, 1816, 1818, 1828(c), and 2901 through 2907.


Sec. 25.101   [Redesignated as Sec. 25.9]

    2. Existing Sec. 25.101 is redesignated as Sec. 25.9 and 
transferred with its undesignated center heading immediately following 
Sec. 25.8.
    3. Part 25 is amended by adding Subparts A through E and Appendices 
A through C following Sec. 25.9 to read as follows:

Subpart A--General

Sec.
25.11  Authority, community reinvestment obligation, purposes and 
scope.
25.12  Definitions.

Subpart B--Standards for Assessing Performance

25.21  Assessment tests and ratings, in general.
25.22  Lending test.
25.23  Investment test.
25.24  Service test.
25.25  Community development test for wholesale or limited purpose 
banks.
25.26  Small bank assessment standards.
25.27  Strategic plan assessment.
25.28  Assigned ratings.
25.29  Effect of ratings on applications.

Subpart C--Records, Reporting and Disclosure Requirements

25.41  Service area delineation.
25.42   Data collection and reporting.
25.43  Public file and disclosure by banks.
25.44  Public notice by banks.
25.45  Publication of planned examination schedule.

Subpart D--Transition Rules

25.51  Transition rules.

Subpart E--Interpretations

25.101  Applicability of the Community Reinvestment Act to certain 
special purpose banks.
Appendix A to Part 25--Ratings
Appendix B to Part 25--CRA Notice
Appendix C to Part 25--CRA Loan Data Format

Subpart A--General


Sec. 25.11   Authority, community reinvestment obligation, purposes and 
scope.

    (a) Authority and OMB control number--(1) Authority. The authority 
for this part is 12 U.S.C. 21, 22, 26, 27, 30, 36, 93a, 161, 215, 215a, 
481, 1814, 1816, 1818, 1828(c), and 2901 through 2907.
    (2) OMB control number. The information collection requirements 
contained in this part have been assigned OMB control number 1557-0160.
    (b) Community reinvestment obligation. National banks have a 
continuing and affirmative obligation to help meet the credit needs of 
their communities, including low- and moderate-income areas, consistent 
with safe and sound operations.
    (c) Purposes. The purposes of this part are to implement the 
community reinvestment obligation of national banks; to explain how the 
Office of the Comptroller of the Currency (OCC) assesses the 
performance of national banks in satisfying the community reinvestment 
obligation; and to describe how that performance is taken into account 
in certain applications.
    (d) Scope--(1) General. This part applies to all national banks 
that are in the business of extending credit to the public, including 
wholesale or limited purpose banks, as defined in Sec. 25.12 of this 
part.
    (2) Certain special purpose banks. This part does not apply to a 
bankers bank that engages exclusively in providing services for other 
depository institutions and for their officers, directors and 
employees, or to other special purpose banks described in Sec. 25.101 
of this part.
    (3) Federal branches and agencies. This part applies to insured 
Federal branches. References in this part to ``main office'' mean, in 
the case of insured Federal branches of foreign banks, the principal 
branch within the United States. The ``service area'' of an insured 
Federal branch refers to the community or communities located within 
the United States served by the branch as described in Sec. 25.41 of 
this part. The term ``branches'' refers to insured branches located 
within the United States. As provided in Sec. 28.102 of this chapter, 
this part does not apply to Federal agencies, limited Federal branches, 
and uninsured Federal branches.


Sec. 25.12   Definitions.

    For purposes of this part, the following definitions apply:
    (a) Affiliate means any company that controls, is controlled by, or 
is under common control with another company. For purposes of this 
part, the term ``control'' has the meaning given to that term in 12 
U.S.C. 1841(a)(2), and a company is under common control with another 
company if both companies are directly or indirectly controlled by the 
same company.
    (b) Area median income means the median family income for the MSA 
in which a person or geography is located or, in the case of a person 
or geography located outside an MSA, the higher of the county median 
family income or the statewide nonmetropolitan median family income.
    (c) Automated teller machine (ATM) means an automated, unstaffed 
banking facility with a fixed site owned or operated by or operated 
exclusively for the bank at which deposits are received, cash 
dispersed, or money lent.
    (d) Bank means a national bank.
    (e) Branch means a staffed banking facility (shared or unshared) 
licensed as a branch with a fixed site at which deposits are received, 
checks paid, or money lent, including a mini-branch in a grocery store 
or a branch operated in conjunction with any other local business or 
nonprofit organization.
    (f) Community development loan means a loan (including a line of 
credit, commitment, or letter of credit) that addresses affordable 
housing (including multifamily rental housing) or other community 
economic development needs not being met by the private market; 
provided the loan:
    (1) Primarily benefits low- or moderate-income individuals, 
businesses or farms with gross annual revenues less than or equal to $1 
million, or businesses or farms that qualify as small businesses under 
a Small Business Administration program;
    (2) Has not been reported or collected by the bank or one of its 
affiliates as a home mortgage loan, small business loan, small farm 
loan, or a consumer loan pursuant to Sec. 25.42 of this part, unless it 
is a multifamily dwelling loan (as described in Appendix A to 12 CFR 
Part 203); and
    (3) Except in the case of a wholesale or limited purpose bank, 
benefits the bank's service area(s) or a broader statewide or regional 
area that includes the bank's service area(s).
    (g) Consumer loan means a loan extended to one or more individuals 
for household, family, or other personal expenditures; provided the 
loan is not secured by real estate and is not used for the purpose of 
purchasing or carrying securities.
    (h) Geography means a census tract delineated by the United States 
Bureau of the Census in the most recent decennial census, or a block 
numbering area delineating a small statistical subdivision where a 
census tract has not been established.
    (i) HMDA means the Home Mortgage Disclosure Act (12 U.S.C. 2801 et 
seq.).
    (j) Home mortgage loan means a mortgage loan as defined in section 
303(1) of HMDA (12 U.S.C. 2802(1)) and implementing regulations.
    (k) Income level--(1) Low-income means, in the case of a person, an 
individual income, or in the case of a geography, a median family 
income, that is less than 50 percent of the adjusted area median 
income, with adjustments to take into account family size and the 
prevailing levels of residential housing construction costs or 
unusually high or low family incomes.
    (2) Moderate-income means, in the case of a person, an individual 
income, or in the case of a geography, a median family income, that is 
at least 50 percent and less than 80 percent of the adjusted area 
median income, with adjustments to take into account family size and 
the prevailing levels of residential housing construction costs or 
unusually high or low family incomes.
    (3) Middle-income means, in the case of a person, an individual 
income, or in the case of a geography, a median family income, that is 
at least 80 percent and less than 120 percent of the adjusted area 
median income, with adjustments to take into account family size and 
the prevailing levels of residential housing construction costs or 
unusually high or low family incomes.
    (4) Upper-income means, in the case of a person, an individual 
income or, in the case of a geography, a median family income, that is 
120 percent or more of the adjusted area median income, with 
adjustments to take into account family size and the prevailing levels 
of residential housing construction costs or unusually high or low 
family incomes.
    (l) Limited purpose bank means a bank that offers only a narrow 
product line (such as credit cards or automobile loans) to a national 
or regional market and has, pursuant to a written request, been 
designated by the OCC as a limited purpose bank, as provided in 
Sec. 25.25 of this part.
    (m) Loan location. A loan is located in a geography as follows:
    (1) A consumer loan is located where the borrower resides;
    (2) A home mortgage loan is located where the property to which the 
loan relates is located;
    (3) A small business or small farm loan is located where the main 
business facility or farm is located or where the loan proceeds 
otherwise will be applied, as indicated by the borrower.
    (n) Loan production office means a staffed banking facility that is 
accessible to the public, and provides lending-related services such as 
loan information and applications, but is not a branch.
    (o) MSA means metropolitan statistical area or primary metropolitan 
statistical area as defined by the Director of the Office of Management 
and Budget.
    (p) Minority means an individual who is an American Indian or 
Alaskan Native, an Asian or Pacific Islander, a Black, or of Hispanic 
origin as provided in the Office of Management and Budget's Statistical 
Policy Directive No. 15, Race and Ethnic Standards for Federal 
Statistics and Administrative Reporting.
     (q) Minority-owned business means a business, including a farm, 
that is more than 50 percent owned by one or more minority individuals, 
and that has not issued any securities registered under Section 12(g) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) and has 
100 or fewer shareholders.
    (r) Service area means a geographical area delineated in accordance 
with Sec. 25.41 of this part.
    (s) Small bank means a bank with total assets of less than $250 
million that is:
    (1) Independent; or
    (2) An affiliate of a holding company with total banking and thrift 
assets of less than $250 million.
    (t) Small business loan means a loan with an original amount of $1 
million or less that is either a commercial or industrial loan or a 
loan secured by nonfarm, nonresidential property.
    (u) Small farm loan means a loan with an original amount of 
$500,000 or less that is a loan secured by farmland (including a loan 
to finance a farm residence or other improvements), a loan to finance 
agricultural production, or any other loan to a farmer.
    (v) Women-owned business means a business, including a farm, that 
is more than 50 percent owned by one or more women, and that has not 
issued any securities registered under Section 12(g) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.) and has 100 or fewer 
shareholders.
    (w) Wholesale bank means a bank that is not in the business of 
extending home mortgage, small business, small farm, or consumer loans 
to retail customers, and has, pursuant to a written request, been 
designated by the OCC as a wholesale bank, as provided in Sec. 25.25 of 
this part.

Subpart B--Standards for Assessing Performance


Sec. 25.21  Assessment tests and ratings, in general.

    (a) Assessment tests and standards. In connection with an 
examination of a bank, the OCC shall assess the Community Reinvestment 
Act (CRA) performance of the bank as follows:
     (1) Lending, investment, and service tests. The OCC shall apply 
these three tests, as described in Secs. 25.22 through 25.24 of this 
part, in evaluating the performance of banks, except as provided in 
paragraphs (a)(2), (3) and (4) of this section.
    (2) Community development test for wholesale or limited purpose 
banks. In evaluating the performance of wholesale or limited purpose 
banks (as defined in Sec. 25.12 of this part), the OCC shall apply the 
community development test, as provided in Sec. 25.25 of this part, 
except as provided in paragraph (a)(4) of this section.
    (3) Assessment standards for small banks. In evaluating the 
performance of small banks (as defined in Sec. 25.12 of this part), the 
OCC shall apply the assessment standards for small banks as provided in 
Sec. 25.26 of this part. However, a small bank may elect instead to be 
assessed as provided in paragraphs (a)(2) and (4) of this section, or 
it may elect to be evaluated under paragraph (a)(1) of this section if 
it has collected and reported the data required for other banks under 
Sec. 25.42(a)(1) of this part.
    (4) Strategic plan. Any bank may elect not to be assessed by any 
tests described in paragraphs (a)(1), (2) and (3) of this section by 
submitting to the OCC and receiving approval of a strategic plan as 
described in Sec. 25.27 of this part.
    (b) Assessment context. The OCC shall apply the tests and standards 
in paragraph (a) of this section in the context of the following 
information:
    (1) Demographic data on median income levels, distribution of 
household income, nature of housing stock, housing costs, and other 
relevant data pertaining to a bank's service area(s);
    (2) Examiner-developed information regarding the credit needs of 
the bank's service area(s) obtained from community-based organizations, 
state and local governments, economic development agencies, and from 
any information the bank may choose to provide;
    (3) The bank's product offerings and business strategy as 
determined from data provided by the bank;
    (4) Institutional capacity and constraints, including the size and 
financial condition of the institution, the economic climate (national, 
regional and local), safety and soundness limitations, and any other 
factors that significantly affect the bank's ability to lend to the 
different parts of its service area(s);
    (5) The bank's past performance and the performance of similarly-
situated lenders;
    (6) The bank's public file, as described in Sec. 25.43 of this 
part, and any signed, written comments about the bank's CRA performance 
submitted to the bank or the OCC; and
    (7) Any other information deemed relevant by the OCC.
    (c) Assigned ratings. The OCC shall assign to each bank one of the 
following four ratings as set out in Sec. 25.28 of this part and 
Appendix A of this part: ``outstanding''; ``satisfactory''; ``needs to 
improve''; or ``substantial noncompliance'' based on:
    (1) The results of the applicable assessment test(s) or standards 
or performance under an approved strategic plan; and
    (2) Any evidence of discriminatory or other illegal credit 
practices.
    (d) Safe and sound operations. This part and the CRA do not require 
any bank to make loans or investments, or to provide services that are 
inconsistent with safe and sound operations. Banks are permitted and 
encouraged to develop and apply flexible underwriting standards, 
consistent with safe and sound operations, for loans that benefit low- 
or moderate-income geographies or individuals.
    (e) Compliance with community reinvestment obligation. The assigned 
ratings reflect the extent of compliance or noncompliance with the 
community reinvestment obligation described in Sec. 25.11(b) of this 
part. A bank that receives an assigned rating of ``substantial 
noncompliance'' shall be subject to enforcement actions pursuant to 12 
U.S.C. 1818.


Sec. 25.22  Lending test.

    (a) Scope of test. (1) The lending test evaluates a bank's 
performance in helping to meet the credit needs of its service area(s) 
through its lending activities, as measured by home mortgage 
originations and purchases, small business and small farm loans 
outstanding, and community development loans outstanding. At the bank's 
option, the lending test will also evaluate the bank's consumer loans 
outstanding and any other loan distribution data the bank may choose to 
provide, such as data on extensions of lines of credit, commitments, 
and letters of credit.
    (2) When evaluating a bank's overall lending performance, the OCC 
shall weigh its assessments of the bank's home mortgage lending, small 
business and small farm lending, and (at the bank's option) consumer 
lending to reflect the relative importance of each category of lending 
to the bank's overall business.
    (3) The OCC shall weigh the bank's community development lending 
according to the characteristics and needs of the bank's service 
area(s), the capacity and constraints of the bank, and the 
opportunities available to the bank for this lending.
    (b) Assessment criteria. The OCC shall evaluate a bank's lending 
performance pursuant to the following criteria:
    (1) Geographic distribution. The geographic distribution of the 
bank's lending (based on the location of the loan as provided in 
Sec. 25.12 of this part), including:
    (i) The proportion of total lending in the bank's service area(s);
    (ii) The dispersion of lending throughout the bank's service 
area(s); and
    (iii) The number and amount of loans in low-, moderate-, middle-, 
and upper-income geographies in the bank's service area(s);
    (2) Borrower characteristics. The distribution, particularly in the 
bank's service area, of the bank's lending (based on borrower 
characteristics), including:
    (i) The number and amount of home mortgage loans to low-, moderate-
, middle-, and upper-income individuals;
    (ii) The number and amount of small business and small farm loans 
to businesses and farms with gross annual revenues less than or equal 
to $1 million;
    (iii) The number and amount of small business and small farm loans 
by size of loan; and
    (iv) At the bank's option, the number and amount of consumer loans 
to
low-, moderate-, middle-, and upper-income individuals;
    (3) Community development lending. The bank's community development 
lending, including the number and amount of community development loans 
outstanding, their complexity and innovativeness, and the number and 
amount of lines of credit, commitments, and letters of credit for 
community development purposes; and
    (4) Innovative or flexible lending practices. The bank's use of 
innovative or flexible lending practices to address the credit needs of 
low- or moderate- income individuals or geographies.
    (c) Affiliate lending. (1) The OCC shall, if the bank elects, 
consider in its assessment of a bank's lending performance under this 
section lending by an affiliate of the bank, if the bank, or its 
affiliate, reports or collects the lending data pursuant to Sec. 25.42 
of this part.
    (2) The OCC may consider in its assessment lending by a bank's 
affiliate even if the bank has chosen not to have the affiliate's 
lending considered if the OCC determines that this lending is integral 
to the business of the bank.
    (3) Consideration of affiliate lending shall be subject to the 
following constraints:
    (i) No affiliate may claim the same loan as another institution; 
and
    (ii) If the OCC considers loans within a particular lending 
category (e.g., home mortgage, small business, small farm, consumer or 
community development lending) made by one or more of the bank's 
affiliates in a particular service area, the OCC shall consider all the 
loans within that lending category made by all of the bank's affiliates 
in that particular service area.
    (d) Consortia and third-party lending. Community development loans 
made through consortia in which the bank participates or through third 
parties in which the bank has invested:
    (1) Shall be considered under the lending test, if the bank elects, 
provided the data pertaining to these loans are reported by the bank 
under the applicable provisions of Sec. 25.42 of this part; and
    (2) May be allocated among participants or investors as they choose 
for purposes of the lending test, provided that no participant or 
investor claims the same loan or part of a loan as another participant 
or investor, or claims in the aggregate greater than its percentage 
share (based on the level of its participation or investment) of the 
total loans made by the consortium or third party.
    (e) Lending performance rating. The OCC shall rate a bank's lending 
performance as provided in Appendix A of this part.


Sec. 25.23  Investment test.

    (a) Scope of test. The investment test evaluates the degree to 
which a bank is helping to meet the credit needs of its service area(s) 
through qualified investments. To be considered under this test, the 
qualified investments of a bank must benefit its service area(s) or a 
broader statewide or regional geographic area that includes the bank's 
service area(s).
    (b) Qualified investments. (1) Qualified investments are lawful 
investments, deposits, membership shares in a credit union, or grants 
that:
    (i) Primarily benefit low- or moderate-income individuals, 
businesses or farms with gross annual revenues less than or equal to $1 
million, or businesses or farms that qualify as small businesses under 
a Small Business Administration program; and
    (ii) Address affordable housing (including multifamily rental 
housing) or other community economic development needs that are not 
being met by the private market.
    (2) Donating, selling on favorable terms, or making available on a 
rent-free basis any branch of the bank that is located in any 
predominantly minority neighborhood to any minority depository 
institution or women's depository institution (as defined in 12 U.S.C. 
2907(b)) shall be considered under the investment test.
    (3) Activities considered under the lending or service tests may 
not be considered under the investment test.
    (4) At a bank's option, the OCC shall consider in its assessment of 
a bank's investment performance a qualified investment made by an 
affiliate of the bank, provided that the qualified investment is not 
claimed by any other institution.
    (c) Assessment criteria. The OCC shall evaluate the investment 
performance of a bank pursuant to the following criteria:
    (1) The dollar amount of qualified investments that directly 
address credit needs;
    (2) The use of innovative or complex qualified investments to 
support community development initiatives; and
    (3) The degree of responsiveness to credit and community economic 
development needs.
    (d) Investment performance rating. The OCC shall rate a bank's 
investment performance as provided in Appendix A of this part.


Sec. 25.24  Service test.

    (a) Scope of test. The service test evaluates a bank's record of 
helping to meet the credit needs of the bank's service area(s) by 
analyzing both the availability and responsiveness of a bank's systems 
for delivering retail banking services and the extent and 
innovativeness of its community development services.
    (b) Assessment criteria--retail banking services. The OCC shall 
evaluate the availability and responsiveness of a bank's systems for 
delivering retail banking services, pursuant to the following criteria:
    (1) The current distribution of the bank's branches and ATMs among
low-, moderate-, middle-, and upper-income geographies;
    (2) In the context of its current distribution of the bank's 
branches and ATMs, the bank's record of opening and closing branches 
and ATMs, particularly branches and ATMs located in low- or moderate-
income geographies or primarily serving low- or moderate-income 
individuals;
    (3) The availability of alternative systems for delivering retail 
banking services (e.g., banking by telephone or computer, mobile 
branches and ATMs, ATMs not owned or operated by or operated 
exclusively for the bank, loan production offices, and bank-at-work or 
by-mail programs) in low- and moderate-income geographies and to low- 
and moderate-income individuals; and
    (4) The range of services provided in low-, moderate-, middle-, and 
upper- income geographies and the degree to which the services are 
tailored to meet the needs of those geographies.
    (c) Assessment criteria--community development services. (1) 
Community development services are services that:
    (i) Primarily benefit low- or moderate-income individuals, 
businesses or farms with gross annual revenues less than or equal to $1 
million, or businesses or farms that qualify as small businesses under 
a Small Business Administration program; and
    (ii) Address affordable housing (including multifamily rental 
housing) or other community economic development needs that are not 
being met by the private market.
    (2) The OCC shall evaluate community development services pursuant 
to the following criteria:
    (i) The extent to which the bank provides community development 
services; and
    (ii) The innovativeness and responsiveness of community development 
services.
    (3) When evaluating a bank's overall service performance, the OCC 
shall weigh the bank's community development services according to the 
characteristics and needs of the bank's service area(s), the capacity 
and constraints of the bank, and the opportunities available to the 
bank to provide community development services.
    (4) At a bank's option, the OCC shall consider in its assessment of 
a bank's service performance a community development service provided 
by an affiliate of the bank, provided that the community development 
service is not claimed by any other institution.
    (d) Service performance rating. The OCC shall rate a bank's service 
performance as provided in Appendix A of this part.


Sec. 25.25  Community development test for wholesale or limited-purpose 
banks.

    (a) Scope of test. (1) The OCC shall assess the degree to which a 
wholesale or limited purpose bank (as defined in Sec. 25.12 of this 
part) is helping to meet the credit needs of its service area(s) under 
the community development test only if the bank's written request to be 
designated as a wholesale or limited purpose bank has been approved by 
the OCC before the commencement of its CRA examination, and the 
designation has not been revoked either at the request of the bank or 
at the OCC's own initiative.
    (2) The community development test evaluates the record of a 
wholesale or limited purpose bank in helping to meet the credit needs 
of its service area(s) through qualified investments, community 
development lending, or community development services.
    (3) For purposes of the community development test only, community 
development loans include small business and small farm loans and loans 
to low- and moderate-income individuals and geographies, whether or not 
reported or collected by the bank or one of its affiliates as home 
mortgage loans, small business loans, small farm loans, or consumer 
loans, pursuant to Sec. 25.42 of this part.
    (b) Assessment criteria. The OCC shall evaluate the community 
development performance of a wholesale or limited purpose bank pursuant 
to the following criteria:
    (1) The number and amount of community development loans 
outstanding, qualified investments (as defined in Sec. 25.23 of this 
part), or community development services (as defined in Sec. 25.24 of 
this part);
    (2) The use of innovative or complex qualified investments, 
community development loans outstanding, or community development 
services and their connection to credit needs; and
    (3) The degree of responsiveness to credit and community economic 
development needs.
    (c) Indirect activities. The OCC shall, if the wholesale or limited 
purpose bank elects, consider in its community development performance 
assessment:
    (1) Qualified investments or community development services 
provided by an affiliate of the bank, provided the investment or 
services are not claimed by any other institution; and
    (2) Community development lending by affiliates, consortia and 
third parties, subject to the requirements and limitations in 
Sec. 25.22(c)(3) and (d) of this part.
    (d) Benefit to service area(s)--(1) Benefit inside service area(s). 
For purposes of assessing a wholesale or limited purpose bank's 
community development performance under this section, the OCC shall 
consider all qualified investments, community development loans 
outstanding, and community development services that benefit areas 
within the bank's service area(s).
    (2) Benefit outside service area(s). The OCC shall consider the 
qualified investments, community development loans outstanding, and 
community development services provided by a wholesale or limited 
purpose bank that benefit areas outside the bank's service area(s) only 
up to an amount equivalent to the amount of investments, loans, and 
services considered under paragraph (d)(1) of this section. If a bank 
demonstrates a limited need or opportunity for these investments, 
lending, and services, in its service area(s), the OCC may exempt the 
bank from all or part of this limitation.
    (e) Community development performance rating. The OCC shall rate a 
bank's community development performance as provided in Appendix A of 
this part.


Sec. 25.26  Small bank assessment standards.

    (a) Scope of assessment. The OCC shall assess the degree to which a 
small bank is helping to meet the credit needs of its service area(s) 
under the assessment standards described in this section.
    (b) Assessment criteria. The OCC shall evaluate a small bank's CRA 
performance pursuant to the following criteria:
    (1) The bank's loan-to-deposit ratio, adjusted for seasonal 
variation and, as appropriate, other lending-related activities, such 
as loan originations for sale to the secondary markets or community 
development lending or investment;
    (2) The percentage of loans and, as appropriate, other lending-
related activities located in the bank's service area(s);
    (3) The bank's record of lending to and, as appropriate, engaging 
in other lending-related activities for borrowers of different income 
levels and businesses and farms of different sizes;
    (4) The geographic distribution of the bank's loans given its 
service area(s); and
    (5) The bank's record of taking action, if warranted, in response 
to written complaints about its performance in meeting the credit needs 
of its service area(s).
    (c) Small bank performance rating. The OCC shall rate a small 
bank's performance as provided in Appendix A of this part.


25.27  Strategic plan assessment.

    (a) Alternative election. A bank may request to be rated under a 
strategic plan rather than under the lending, service, and investment 
tests (Secs. 25.22 through 25.24 of this part), the community 
development test (Sec. 25.25 of this part), or the small bank 
assessment standards (Sec. 25.26 of this part), by submitting to the 
OCC a strategic plan as provided for in this section. A bank's request 
to be rated under a strategic plan is not approved until the OCC 
approves the plan. The OCC's approval of a strategic plan does not 
affect the bank's obligation, if any, to report data as required by 
Sec. 25.42 of this part.
    (b) Strategic plans in general. (1) A plan may have a term of no 
more than five years, and any multi-year plan shall include annual 
interim measurable goals according to which the OCC shall evaluate the 
bank's performance.
    (2) A bank with more than one service area may prepare a single 
plan for all of its service areas or a plan for one or more but not all 
of its service areas.
    (3) Affiliated institutions may prepare joint plans if the plans 
provide measurable goals for each institution.
    (c) Public participation in strategic plan development. Before 
submitting a plan to the OCC for approval, the bank shall:
    (1) Informally seek suggestions from the public in its service 
area(s) while developing the plan;
    (2) Once the bank has developed a plan, formally solicit public 
comment on the plan for at least 30 days by publishing notice in a 
newspaper of general circulation in each of its service areas; and
    (3) During the period of formal public comment, make copies of the 
plan available for review at all offices of the bank in any service 
area covered by the plan.
    (d) Submission of plan. The bank shall submit its plan to the OCC 
at least three months prior to the proposed effective date of the plan. 
The bank shall also submit with its plan any public comments received, 
and, if the plan was revised in light of the comments received, the 
initial plan as released for public comment.
    (e) Plan content--(1)Measurable goals. (i) A bank shall specify in 
its plan measurable goals for helping to meet the credit needs of each 
of its service area(s) covered by the plan, particularly the needs of 
low- and moderate-income geographies and low- and moderate-income 
individuals, through lending, investment, and the provision of 
services, as appropriate.
    (ii) A bank shall address all three performance categories and, 
unless the bank has been designated as a wholesale or limited purpose 
bank, shall emphasize lending and lending-related activities. 
Nevertheless, a different emphasis, including a focus on one or more 
performance categories, may be appropriate if responsive to the 
characteristics and credit needs of its service area, considering 
public comment and the bank's capacity and constraints, product 
offerings, and business strategy.
    (2) Confidential information. The bank may submit additional 
information to the OCC on a confidential basis, but the goals stated in 
the plan shall be sufficiently specific to enable the public and the 
OCC to judge fairly the merits of the plan.
    (3) Satisfactory and outstanding goals. A bank shall specify in its 
plan measurable goals that constitute ``satisfactory'' performance. A 
plan may specify measurable goals that constitute ``outstanding'' 
performance. In order to be considered for an ``outstanding'' 
performance rating, the bank shall submit both ``satisfactory'' and 
``outstanding'' performance goals.
    (f) Plan approval--(1)Timing. The OCC shall act upon a plan within 
60 days after the complete plan and required accompanying material are 
submitted. If the OCC fails to act within this time period, the plan 
shall be deemed approved unless the OCC extends the review period for 
good cause.
    (2) Public participation. In evaluating the plan's goals, the OCC 
shall consider the public's involvement in formulating the plan, public 
comment on the plan, and any response by the bank to public comment on 
the plan.
    (3) Criteria for evaluating plan. The OCC shall evaluate a plan's 
measurable goals using the following criteria, as appropriate:
    (i) The extent and breadth of lending or lending-related 
activities, including, as appropriate, the distribution of loans among 
different geographies, businesses and farms of different sizes, and 
individuals of different income levels, the extent of community 
development lending, and the use of innovative or flexible lending 
practices to address credit needs;
    (ii) The amount and innovativeness, complexity, and responsiveness 
of the bank's qualified investments, as defined in Sec. 25.23 of this 
part; and
    (iii) The extent and availability of the bank's services, 
including, as appropriate, the accessibility of retail delivery systems 
and the extent and innovativeness of community development services, as 
defined in Sec. 25.24 of this part.
    (g) Plan amendment. During the term of a plan, the bank may 
petition the OCC to approve an amendment to the plan on grounds that a 
material change in circumstances has made the plan no longer 
appropriate. Any amendment proposed shall be developed in accordance 
with the public participation requirements of paragraph (c) of this 
section.
    (h) Strategic plan assessment. The OCC shall approve the goals and 
assess performance under a strategic plan as provided for in Appendix A 
of this part.


Sec. 25.28  Assigned ratings.

    (a) Ratings in general. Subject to paragraphs (b), (c), and (d) of 
this section, the OCC shall assign to a bank a rating of 
``outstanding,'' ``satisfactory,'' ``needs to improve,'' or 
``substantial noncompliance'' based on the bank's performance under the 
lending, investment and service tests, the community development test, 
the small bank assessment standards, or an approved strategic plan, as 
applicable.
    (b) Lending, investment, and service tests. The OCC shall assign a 
rating for a bank assessed under the lending, investment, and service 
tests in accordance with the procedures provided in Appendix A of this 
part and the following principles:
    (1) A bank's rating on the lending test shall be weighed so as to 
count for at least 50 percent of its assigned rating;
    (2) A bank that receives an ``outstanding'' rating on the lending 
test shall receive an assigned rating of at least ``satisfactory'';
    (3) A bank that receives an ``outstanding'' rating on the lending 
test and an ``outstanding'' rating on either the service test or the 
investment test shall receive an assigned rating of ``outstanding'';
    (4) A bank that receives an ``outstanding'' rating on both the 
service test and the investment test and a rating of at least ``high 
satisfactory'' on the lending test shall receive an assigned rating of 
``outstanding''; and
    (5) No bank may receive an assigned rating of ``satisfactory'' 
unless it receives a rating of at least ``low satisfactory'' on the 
lending test.
    (c) Effect of evidence of discriminatory or other illegal credit 
practices. Evidence of discriminatory or other illegal credit practices 
shall adversely affect the OCC's evaluation of a bank's performance. In 
determining the effect on the bank's assigned rating, the OCC shall 
consider the nature and extent of the evidence, the policies and 
procedures that the bank has in place to prevent discriminatory or 
other illegal credit practices, any corrective action that the bank has 
taken or has committed to take, particularly voluntary corrective 
action resulting from self-assessment, and other relevant information, 
such as the bank's past fair lending performance.
    (d) Effect of successive ``needs to improve'' ratings. A bank that 
would otherwise receive an assigned rating of ``needs to improve'' 
shall receive an assigned rating of ``substantial noncompliance'' if 
the bank received no better than a ``needs to improve'' rating on each 
of its two previous examinations.


Sec. 25.29  Effect of ratings on applications.

    (a) CRA performance. Among other factors, the OCC shall take into 
account the record of performance under the CRA of each applicant bank 
in considering any application:
    (1) By a bank for the establishment of a domestic branch or other 
facility that would be authorized to take deposits;
    (2) By a bank for the relocation of the main office, a branch 
office or ATM;
    (3) For the merger or consolidation with or the acquisition of 
assets or assumption of liabilities of a federally insured depository 
institution; and
    (4) For the conversion of a federally insured depository 
institution to a national bank charter.
    (b) Charter application. An applicant (other than a federally 
insured depository institution) for a national bank charter shall 
submit a description of how it will meet its CRA objectives when the 
application is made. In considering the application, the OCC shall take 
the description into account and may deny or condition approval on that 
basis.
    (c) Interested parties. In considering CRA performance in an 
application described in paragraph (a) of this section, the OCC shall 
take into account any views expressed by interested parties which are 
submitted in accordance with the OCC's procedures set forth in part 5 
of this chapter.
    (d) Denial or conditional approval of application. A bank's record 
of performance may be the basis for denying or conditioning approval of 
an application described in paragraph (a) of this section.

 Subpart C--Records, Reporting and Disclosure Requirements


Sec. 25.41  Service area delineation.

    (a) In general. Subject to paragraphs (b) and (c) of this section, 
each bank may delineate its service area(s) using any method it chooses 
provided that the service area(s):
    (1) Do(es) not reflect illegal discrimination;
    (2) Do(es) not arbitrarily exclude low- and moderate-income 
geographies, taking into account the bank's size and financial 
condition and the extent of its branching network, as appropriate; and
    (3) Consist(s) only of whole census tracts or block numbering 
areas.
    (b) Banks that are not wholesale or limited purpose banks. The 
service area(s) for a bank that is not a wholesale or limited purpose 
bank (as defined in Sec. 25.12 of this part):
    (1) Shall include those geographies in the local areas around a 
bank's branches and deposit-taking ATMs in which the bank has 
originated or had outstanding, during the previous calendar year, a 
significant number and amount of home mortgage, small business and 
small farm, and (if the bank chooses to have them considered in its CRA 
evaluation) consumer loans and any other geographies equidistant from 
its branches and deposit-taking ATMs, taking into account political 
boundaries or significant geographic barriers; and
     (2) Shall not extend substantially across MSA boundaries or state 
boundaries unless the service area is located in a multistate MSA. If 
the bank serves areas that extend substantially across state boundaries 
or extend substantially across boundaries of an MSA, the bank shall 
delineate separate service areas for the areas in each state and for 
the areas inside and outside the MSA.
    (c) Wholesale or limited purpose banks. The service area for a 
wholesale or limited purpose bank (as defined in Sec. 25.12 of this 
part) shall be delineated as an area or areas around its offices 
(including its main office and branches) or a broader statewide or 
regional area that includes the area or areas.
    (d) Banks serving military personnel. Notwithstanding paragraphs 
(a), (b), and (c) of this section, a bank whose business predominantly 
consists of serving the needs of military personnel or their dependents 
who are not located within a defined geographic area may delineate its 
entire deposit customer base as its service area.
    (e) Maintaining list and map. Each bank shall compile and maintain 
a list of all the geographies within its service area or areas and a 
map of each service area showing the geographies contained therein.


Sec. 25.42  Data collection and reporting.

    (a) Mandatory data collection and reporting-- (1) Loan data. Each 
bank, except small banks, shall collect and report to the OCC the 
following data pertaining to its home mortgage, small business, small 
farm, and community development loans:
    (i) Home mortgage loans. If the bank is subject to reporting under 
HMDA, the location of each home mortgage loan located outside the MSAs 
in which the bank has a home or branch office (or outside any MSA) in 
accordance with Regulation C, Home Mortgage Disclosure (12 CFR Part 
203);
    (ii) Small business and small farm loan data. All small business 
and small farm loan data required to be collected and reported on the 
OCC's Small Business and Small Farm Loan Register (CC-________-
________), set forth in appendix C of this part, in accordance with the 
instructions in appendix C of this part; and
    (iii) Community development loan data. All community development 
loan data required to be collected and reported on the OCC's Community 
Development Report Form (CC-________-________), set forth in appendix C 
of this part, in accordance with the instructions in appendix C of this 
part.
    (2) Service area data. Each bank shall collect and report to the 
OCC by April 1 of each year a list of the areas the bank considers to 
be its service area(s), a list of the geographies it considers to be 
within its service area(s), and a map of each service area showing the 
geographies contained therein.
    (b) Optional data collection. (1) If a bank elects to have its 
consumer lending considered under the lending test (as described in 
Sec. 25.22 of this part), the bank shall collect the consumer loan data 
requested on the OCC's Consumer Loan Register (CC-________-________), 
set forth in appendix C of this part, in accordance with the 
instructions in appendix C of this part.
    (2) At its option, a bank may:
    (i) Provide information concerning outstanding small business, 
small farm, or consumer loans throughout the year to account for 
seasonal variations in lending for use in the evaluation of the bank 
under the lending test described in Sec. 25.22 of this part; and
    (ii) Provide any other information concerning its lending 
performance, including additional loan distribution data.
    (c) Data on affiliate lending. A bank that wishes to have the OCC 
consider lending by its affiliates for purposes of the lending test 
shall be prepared to identify the particular home mortgage loans 
reported under HMDA which it wishes the OCC to consider, and shall 
collect or report, pursuant to the provisions of paragraphs (a) and (b) 
of this section, the requisite data concerning the small business, 
small farm, or consumer loans made by its affiliates that it wishes OCC 
to consider.
    (d) Data on consortia and third-party lending. A bank that wishes 
to have the OCC consider community development lending through 
consortia in which the bank participates or through third parties in 
which the bank has invested shall report, pursuant to paragraph 
(a)(1)(iii) of this section, the requisite data concerning the 
community development loans made through consortia and third parties 
that it wishes the OCC to consider.


Sec. 25.43  Public file and disclosure by banks.

    (a) Public availability. Each bank shall maintain a file that is 
readily available for public inspection containing the information 
required by this section.
    (b) Current information. Each bank shall include in its public file 
the following information:
    (1) All signed, written comments received from the public for the 
current year and each of the prior two calendar years that specifically 
relate to the bank's performance in helping to meet the credit needs of 
its community or communities, and any response to the comments by the 
bank;
    (2) A copy of the public section of the bank's most recent CRA 
Performance Evaluation prepared by the OCC. The bank shall place this 
copy in the public file within 30 business days after its receipt from 
the OCC;
    (3) A list of the areas the bank considers to be its service 
area(s), a list of the geographies it considers to be within its 
service area(s), and a map of each service area showing the geographies 
contained therein;
    (4) A list of the bank's branches and ATMs, their street addresses, 
and geographies;
    (5) A list of branches and ATMs opened or closed by the bank during 
the current and each of the prior two calendar years, their street 
addresses, and geographies; and
    (6) A list of services (including hours of operation, available 
loan and deposit products, and transaction fees) generally offered at 
the bank's branches and ATMs and descriptions of material deviations in 
the availability or cost of services at particular branches and ATMs, 
if any. At its option, a bank may include information regarding the 
availability of alternative systems for delivering retail banking 
services (e.g., banking by telephone or computer, mobile branches and 
ATMs, ATMs not owned or operated by or operated exclusively for the 
bank, loan production offices, and bank-at-work or by-mail programs).
    (c) Information for prior years. Each bank that is not a small bank 
shall include in its public file the following information for each of 
the prior two calendar years derived from the data collected or 
reported pursuant to Sec. 25.42 of this part:
    (1) The number and amount of small business loans and small farm 
loans located in low-, moderate-, middle-, and upper-income 
geographies;
    (2) A list of the geographies where the bank had outstanding at 
least one small business loan or small farm loan;
    (3) The number and amount of small business and small farm loans 
located inside the bank's service area(s) and outside the bank's 
service area(s);
    (4) The number and amount of small business and small farm loans to 
minority-owned businesses;
    (5) The number and amount of small business and small farm loans to 
women-owned businesses;
    (6) The number and amount of small business and small farm loans to 
businesses and farms with gross annual revenues less than or equal to 
$1 million;
    (7) The number and amount of community development loans 
outstanding; and
    (8) If the bank has elected to have its consumer loans considered 
under the lending test (as described in Sec. 25.22 of this part), the 
number and amount of consumer loans to low-, moderate-, middle-, and 
upper-income individuals, the number and amount of consumer loans 
located in low-, moderate-, middle-, and upper-income geographies, and 
the number and amount of consumer loans located inside the bank's 
service area(s) and outside the bank's service area(s).
    (d) Exception. A bank shall not place in its public file any 
information required under paragraph (c) of this section for a 
particular year if, given special circumstances such as a small number 
of loans made within a small number of designated income geographies or 
to a small number of designated borrowers, the information could 
reasonably be expected to disclose the identity of the borrower.
    (e) HMDA statement. Each bank required to report home mortgage loan 
data pursuant to the HMDA shall include in its public file a copy of 
its HMDA Disclosure Statement provided by the Federal Financial 
Institutions Examination Council for each of the prior two calendar 
years. The statement shall be placed in the main office public file 
within three business days and in the branch office public files within 
10 business days of the bank's receipt of the statement.
    (f) Small bank file. (1) A small bank shall include in its public 
file the bank's loan-to-deposit ratio computed at the end of the most 
recent calendar year. A bank may include additional data on its loan-
to-deposit ratio at its option.
    (2) A small bank that elects to be evaluated under the lending, 
investment and service tests (as described in Secs. 25.22 through 25.24 
of this part) shall include in its public file the information 
specified in paragraph (c) of this section.
    (g) Strategic plan. Each bank that has been approved to be assessed 
under a strategic plan as described in Sec. 25.27 of this part shall 
include in its public file a copy of that plan. Information submitted 
to the OCC on a confidential basis in conjunction with the plan does 
not have to be included in the public file.
    (h) Less than satisfactory rating. Each bank that received a less 
than satisfactory rating during its most recent examination shall 
include in its public file a description of its current efforts to 
improve its performance in helping to meet the credit needs of its 
entire community. This description shall be updated quarterly.
    (i) Location of public file. Each bank shall maintain its public 
file as follows:
    (1) The main office shall have a copy of the complete public file;
    (2) At least one branch in each service area shall have a copy of 
the bank's HMDA Disclosure Statements and all materials in the public 
file relating to the service area in which the branch is located; and
    (3) If a member of the public requests to review a bank's public 
file at a branch that does not have a copy, the bank shall make a 
complete copy of the file for that service area available for review at 
the branch within 5 business days at no cost.
    (j) Copies. Each bank shall provide copies of the information in 
its public file to members of the public upon request. A bank may 
charge a reasonable fee not to exceed the cost of reproduction and 
mailing (if applicable).


Sec. 25.44  Public notice by banks.

    (a) CRA notice for banks. Each bank shall provide in the public 
lobby of its main office and each of its branches the public notice set 
forth in Appendix B of this part. Bracketed material shall be used only 
by banks having more than one service area.
    (b) Additional notice for affiliate banks. The last two sentences 
shall be included only if the bank is an affiliate of a holding company 
and the last sentence only if the company is not prevented by statute 
from acquiring additional banks.


Sec. 25.45  Publication of planned examination schedule.

    The OCC shall publish at least 30 days in advance of the beginning 
of each calendar quarter a list of the banks that are scheduled for CRA 
examinations in that quarter.

Subpart D--Transition Rules


Sec. 25.51  Transition rules.

    (a) Effective date. Sections of this part 25 become effective over 
a period of time in accordance with the schedule set forth in paragraph 
(c) of this section. The provisions of part 25 become fully effective 
on July 1, 1996.
    (b) Data collection and reporting; strategic plan; small bank 
assessment standards; and performance tests--(1) Data collection and 
reporting. On July 1, 1995, the data collection and reporting 
requirements set forth in Sec. 25.42 of this part become effective.
    (2) Strategic plan. Beginning July 1, 1995, a bank that elects to 
be evaluated under an approved strategic plan pursuant to Sec. 25.27 of 
this part may submit its strategic plan to the OCC for approval.
    (3) Small bank assessment standards. Beginning July 1, 1995, a bank 
that qualifies as a small bank pursuant to Sec. 25.12 of this part may 
elect to be evaluated under the small bank assessment standards set 
forth in Sec. 25.26 of this part. Beginning July 1, 1996, the OCC shall 
evaluate each small bank under the small bank assessment standards, 
unless the bank elects to be evaluated pursuant to the performance 
tests set forth in Secs. 25.22 through 25.25 of this part or under an 
approved strategic plan.
    (4) Performance tests. On July 1, 1996, the lending, investment, 
service, and community development tests set forth in Secs. 25.22 
through 25.25 of this part become effective. Thereafter, the OCC shall 
evaluate all banks pursuant to these test(s), except small banks 
evaluated under the small bank assessment standards and banks that 
elect to be evaluated under an approved strategic plan.
    (c) Schedule. On January 1, 1995, Secs. 25.11, 25.12, 25.29, 25.51, 
and 25.101 become effective, and Secs. 25.1, 25.2, 25.8, and 25.9 will 
expire. On July 1, 1995, Secs. 25.26, 25.27, 25.42 and 25.45 become 
effective, and Secs. 25.28 and 25.41 become effective for banks that 
are evaluated under Secs. 25.26 or 25.27. On July 1, 1996, Secs. 25.21 
through 25.25, 25.28, 25.41, 25.43, and 25.44 become effective, and 
Secs. 25.3 through 25.7 will expire.

Subpart E--Interpretations


Sec. 25.101  Applicability of the Community Reinvestment Act to certain 
special purpose banks.

    In response to its July 1978 proposed regulation, 12 CFR Part 25, 
to implement the CRA, the OCC received several inquiries from 
institutions that, although they are chartered as national banks, do 
not perform commercial or retail banking services. These institutions 
serve solely as correspondent banks, or as trust companies, or as 
clearing agents, and they do not extend credit to the public for their 
own account. The OCC concludes that the CRA is not intended to cover 
these institutions. It is the purpose of the CRA to require the OCC to 
encourage banks to meet the credit needs of their local communities. To 
this end, the OCC must assess banks' records of performance and take 
those records into account in acting on certain applications affecting 
the banks. The OCC believes that these provisions were intended to 
cover all banks that are in the business of extending credit to the 
public, including both wholesale and retail banks. The lending 
activities of these banks affect the economic health of the communities 
in which they are chartered. However, the OCC believes it would be 
pointless to encourage or to assess the credit granting record of 
institutions that are not organized to grant credit to the public in 
the ordinary course of business, other than as an incident to their 
specialized operations. Accordingly, the term national bank as used in 
this part does not include banks that engage solely in correspondent 
banking business, trust company business, or acting as a clearing 
agent.

Appendix A to Part 25--Ratings

    (a) Ratings in general. (1) In assigning a rating, the OCC shall 
evaluate a bank's performance under the applicable assessment 
criteria in this part, subject to Sec. 25.28 of this part, which 
provides for adjustments on the basis of evidence of discriminatory 
or other illegal credit practices and prior ``needs to improve'' 
ratings.
    (2) A bank's performance need not fit each aspect of a 
particular rating profile in order to receive that rating, and 
exceptionally strong performance with respect to some aspects may 
compensate for weak performance in others. The bank's overall 
performance, however, should generally be consistent with the 
appropriate profile stated below.
    (b) Banks that are not wholesale or limited purpose banks or 
small banks.
    (1) Lending performance rating. The OCC shall assign each bank's 
lending performance one of the five ratings described below.
    (i) Outstanding. The OCC shall rate a bank's lending performance 
``outstanding'' if, in general, it demonstrates:
    (A) Excellent responsiveness to credit needs in its service 
area(s);
    (B) A substantial majority of its loans are made in its service 
area(s);
    (C) An excellent geographic distribution of loans throughout its 
service area(s);
    (D) An excellent distribution, particularly in its service 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different size given the product 
lines offered by the bank;
    (E) An excellent record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Extensive use of innovative or flexible lending practices to 
address the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It is a leader in making community development loans.
    (ii) High satisfactory. The OCC shall rate a bank's lending 
performance ``high satisfactory'' if, in general, it demonstrates:
    (A) Good responsiveness to credit needs in its service area(s);
    (B) A high percentage of its loans are made in its service 
area(s);
    (C) A good geographic distribution of loans throughout its 
service area(s);
    (D) A good distribution, particularly in its service area(s), of 
loans among individuals of different income levels and businesses 
(including farms) of different size given the product lines offered 
by the bank;
    (E) A good record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Use of innovative or flexible lending practices to address 
the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It has made a relatively high level of community development 
loans.
    (iii) Low satisfactory. The OCC shall rate a bank's lending 
performance ``low satisfactory'' if, in general, it demonstrates:
    (A) Adequate responsiveness to credit needs in its service 
area(s);
    (B) An adequate percentage of its loans are made in its service 
area(s);
    (C) An adequate geographic distribution of loans throughout its 
service area(s);
    (D) An adequate distribution, particularly in its service 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different size given the product 
lines offered by the bank;
    (E) An adequate record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Limited use of innovative or flexible lending practices) to 
address the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It has made an adequate level of community development 
loans.
    (iv) Needs to improve. The OCC shall rate a bank's lending 
performance ``needs to improve'' if, in general, it demonstrates:
    (A) Poor responsiveness to credit needs in its service area(s);
    (B) A small percentage of its loans are made in its service 
area(s);
    (C) A poor geographic distribution of loans throughout its 
service area(s), particularly to low- or moderate-income geographies 
in the service area(s);
    (D) A poor distribution, particularly in its service area(s), of 
loans among individuals of different income levels and businesses 
(including farms) of different size given the product lines offered 
by the bank;
    (E) A poor record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Little use of innovative or flexible lending practices to 
address the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It has made a limited number of community development loans.
    (v) Substantial noncompliance. The OCC shall rate a bank's 
lending performance as being in ``substantial noncompliance'' if, in 
general, it demonstrates:
    (A) A very poor responsiveness to credit needs in its service 
area(s);
    (B) A very small percentage of its loans are made in its service 
area(s);
    (C) A very poor geographic distribution of loans throughout its 
service area(s), particularly to low- or moderate-income geographies 
in the service area(s);
    (D) A very poor distribution, particularly in its service 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different size given the product 
lines offered by the bank;
    (E) A very poor record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) No use of innovative or flexible lending practices to 
address the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It has made few, if any, community development loans.
    (2) Investment performance rating. The OCC shall assign each 
bank's investment performance one of the five ratings described 
below.
    (i) Outstanding. The OCC shall rate a bank's investment 
performance ``outstanding'' if, in general, it demonstrates:
    (A) An excellent level of qualified investments, often in a 
leadership position, particularly those that directly address credit 
needs;
    (B) Extensive use of innovative or complex qualified investments 
to support community development initiatives; and
    (C) Excellent responsiveness to credit and community economic 
development needs.
    (ii) High satisfactory. The OCC shall rate a bank's investment 
performance ``high satisfactory'' if, in general, it demonstrates:
    (A) A significant level of qualified investments, occasionally 
in a leadership position, particularly those that directly address 
credit needs;
    (B) Significant use of innovative or complex qualified 
investments to support community development initiatives; and
    (C) Good responsiveness to credit and community economic 
development needs.
    (iii) Low satisfactory. The OCC shall rate a bank's investment 
performance ``low satisfactory'' if, in general, it demonstrates:
    (A) An adequate level of qualified investments, although rarely 
in a leadership position, particularly those that directly address 
credit needs;
    (B) Occasional use of innovative or complex qualified 
investments to support community development initiatives; and
    (C) Adequate responsiveness to credit and community economic 
development needs.
    (iv) Needs to improve. The OCC shall rate a bank's investment 
performance ``needs to improve'' if, in general, it demonstrates:
    (A) A poor level of qualified investments, particularly those 
that directly address credit needs;
    (B) Rare use of innovative or complex qualified investments to 
support community development initiatives; and
    (C) Poor responsiveness to credit and community economic 
development needs.
    (v) Substantial noncompliance. The OCC shall rate a bank's 
investment performance as being in ``substantial noncompliance'' if, 
in general, it demonstrates:
    (A) Few, if any, qualified investments, particularly those that 
directly address credit needs;
    (B) No use of innovative or complex qualified investments to 
support community development initiatives; and
    (C) Very poor responsiveness to credit and community economic 
development needs.
    (3) Service performance rating. The OCC shall assign each bank's 
service performance one of the five ratings described below.
    (i) Outstanding. The OCC shall rate a bank's service performance 
``outstanding'' if, in general, the bank demonstrates:
    (A) Its service delivery systems are readily accessible to 
essentially all portions of its service area(s);
    (B) To the extent changes have been made, the bank's record of 
opening and closing branches and ATMs has improved the accessibility 
of its delivery systems, particularly in low- or moderate-income 
geographies or to low- or moderate-income individuals;
    (C) Services (including, where appropriate, business hours) are 
tailored to the convenience and needs of its service area(s), 
particularly low- or moderate- income geographies or low- or 
moderate-income individuals; and
    (D) It is a leader in providing community development services.
    (ii) High satisfactory. The OCC shall rate a bank's service 
performance ``high satisfactory'' if, in general, the bank 
demonstrates:
    (A) Its service delivery systems are accessible to essentially 
all portions of its service area(s);
    (B) To the extent changes have been made, the bank's record of 
opening and closing branches and ATMs has not adversely affected the 
accessibility of its delivery systems, particularly in low- and 
moderate-income geographies and to low- and moderate-income 
individuals;
    (C) Services (including, where appropriate, business hours) do 
not vary in a way that inconveniences certain portions of its 
service area(s), particularly low- and moderate-income geographies 
and low- and moderate-income individuals; and
    (D) It provides a relatively high level of community development 
services.
    (iii) Low satisfactory. The OCC shall rate a bank's service 
performance ``low satisfactory'' if, in general, the bank 
demonstrates:
    (A) Its service delivery systems are reasonably accessible to 
essentially all portions of its service area(s);
    (B) To the extent changes have been made, the bank's record of 
opening and closing branches and ATMs has generally not adversely 
affected the accessibility of its delivery systems, particularly in 
low- and moderate-income geographies and to low- and moderate-income 
individuals;
    (C) Services (including, where appropriate, business hours) do 
not vary in a way that inconveniences portions of its service 
area(s), particularly low- and moderate-income geographies and low- 
and moderate-income individuals; and
    (D) It provides an adequate level of community development 
services.
    (iv) Needs to improve. The OCC shall rate a bank's service 
performance ``needs to improve'' if, in general, the bank 
demonstrates:
    (A) Its service delivery systems are accessible to limited 
portions of its service area(s);
    (B) To the extent changes have been made, the bank's record of 
opening and closing branches and ATMs has adversely affected the 
accessibility of its delivery systems, particularly in low- or 
moderate-income geographies or to low- or moderate-income 
individuals;
    (C) Services (including, where appropriate, business hours) vary 
in a way that inconveniences certain portions of its service 
area(s), particularly low- or moderate-income geographies or low- or 
moderate-income individuals; and
    (D) It provides a limited level of community development 
services.
    (v) Substantial noncompliance. The OCC shall rate a bank's 
service performance as being in ``substantial noncompliance'' if, in 
general, the bank demonstrates:
    (A) Its service delivery systems are inaccessible to significant 
portions of its service area(s), particularly low- and moderate-
income geographies or low- and moderate-income individuals;
     (B) To the extent changes have been made, the bank's record of 
opening and closing branches and ATMs has significantly adversely 
affected the accessibility of its delivery systems, particularly in 
low- or moderate-income geographies or to low- or moderate-income 
individuals;
     (C) Services (including, where appropriate, business hours) 
vary in a way that significantly inconveniences many portions of its 
service area(s), particularly low- or moderate-income geographies or 
low- or moderate-income individuals; and
    (D) It provides few, if any, community development services.
    (4) Assigned rating. The OCC shall use the following procedures 
for assigning a rating:
    (i) Assign points corresponding to the bank's performance on 
each of the component tests as follows: 

----------------------------------------------------------------------------------------------------------------
            Component test ratings                    Lending               Service              Investment     
----------------------------------------------------------------------------------------------------------------
Outstanding...................................  12 points...........  6 points............  6 points.           
High Satisfactory.............................  9 points............  4 points............  4 points.           
Low Satisfactory..............................  6 points............  3 points............  3 points.           
Needs to Improve..............................  3 points............  1 points............  1 points.           
Substantial Noncompliance.....................  0 points............  0 points............  0 points.           
----------------------------------------------------------------------------------------------------------------

    (ii) Total the points for the three tests, and use that total to 
determine the composite rating according to the chart below. 
However, if the total exceeds twice the number of points 
attributable to the bank's lending test performance (as provided in 
paragraph (b)(4)(i) of this appendix), determine the composite 
rating using twice the number of points attributable to the bank's 
lending test performance. 

------------------------------------------------------------------------
               Points                         Composite rating          
------------------------------------------------------------------------
18 or over.........................  Outstanding.                       
9 through 17.......................  Satisfactory.                      
5 through 8........................  Needs to Improve.                  
0 through 4........................  Substantial Noncompliance.         
------------------------------------------------------------------------

    (c) Community development test for wholesale or limited purpose 
banks. The OCC shall assign each wholesale or limited purpose bank's 
community development performance one of the four ratings described 
below.
    (1) Outstanding. The OCC shall rate a wholesale or limited 
purpose bank's community development performance ``outstanding'' if, 
in general, it demonstrates:
    (i) A high level of qualified investments, community development 
loans outstanding, or community development services, particularly 
those that directly address credit needs;
    (ii) Extensive use of innovative or complex qualified 
investments, community development loans, or community development 
services, to support community development initiatives; and
    (iii) Excellent responsiveness to credit and community economic 
development needs in its service area(s).
    (2) Satisfactory. The OCC shall rate a wholesale or limited 
purpose bank's community development performance ``satisfactory'' 
if, in general, it demonstrates:
    (i) An adequate level of qualified investments, community 
development loans outstanding, or community development services, 
particularly those that directly address credit needs;
    (ii) Occasional use of innovative or complex qualified 
investments, community development loans, or community development 
services, to support community development initiatives; and
     (iii) Adequate responsiveness to credit and community economic 
development needs in its service area(s).
    (3) Needs to improve. The OCC shall rate a wholesale or limited 
purpose bank's community development performance as ``needs to 
improve'' if, in general, it demonstrates:
    (i) A poor level of qualified investments, community development 
loans outstanding, or community development services, particularly 
those that directly address credit needs;
    (ii) Rare use of innovative or complex qualified investments, 
community development loans, or community development services, to 
support community development initiatives; and
    (iii) Poor responsiveness to credit and community economic 
development needs in its service area(s).
    (4) Substantial noncompliance. The OCC shall rate a wholesale or 
limited purpose bank's community development performance in 
``substantial noncompliance'' if, in general, it demonstrates:
    (i) Few, if any, qualified investments, community development 
loans outstanding, or community development services, particularly 
those that directly address credit needs;
    (ii) No use of innovative or complex qualified investments, 
community development loans, or community development services, to 
support community development initiatives; and
    (iii) Very poor responsiveness to credit and community economic 
development needs in its service area(s).
    (d) Assessment standards for small banks. The OCC shall rate 
each small bank's performance as described below.
    (1) Eligibility for a satisfactory rating. The OCC shall rate a 
bank's performance ``satisfactory'' if, in general, the bank 
demonstrates:
    (i) A reasonable loan-to-deposit ratio (considering seasonal 
variations) given the bank's size, financial condition, the credit 
needs of its service area(s), and taking into account, as 
appropriate, lending-related activities such as loan originations 
for sale to the secondary markets and community development lending 
and investment;
    (ii) A majority of its loans and, as appropriate, other lending-
related activities are in its service area(s);
    (iii) A distribution of loans to and, as appropriate, other 
lending related-activities for individuals of different income 
levels (including low- and moderate-income individuals) and 
businesses and farms of different sizes that is reasonable given the 
demographics of the bank's service area(s);
    (iv) A record of taking appropriate action, as warranted, in 
response to written complaints, if any, about the bank's performance 
in meeting the credit needs of its service area(s); and
    (v) A reasonable geographic distribution of loans given its 
service area(s).
    (2) Eligibility for an outstanding rating. A small bank that 
meets each of the standards for a ``satisfactory'' rating under this 
paragraph and exceeds some or all of those standards may warrant 
consideration for an overall rating of ``outstanding''. In assessing 
whether a small bank's performance is ``outstanding'', the OCC shall 
consider the extent to which the bank exceeds each of the assessment 
standards for a ``satisfactory'' rating and its performance in 
making qualified investments (as defined in Sec. 25.23 of this part) 
and its performance in providing branches, ATMs or other services 
and delivery systems that enhance credit availability in its service 
area(s).
    (3) Needs to improve or substantial noncompliance ratings. A 
small bank also may receive a rating of ``needs to improve'' or 
``substantial noncompliance'' depending on the degree to which its 
performance has failed to meet the standards for a ``satisfactory'' 
rating.
    (e) Strategic plan assessment and rating. (1) Satisfactory 
goals. The OCC shall approve as ``satisfactory'' measurable goals 
that adequately help meet the credit needs of each of a bank's 
service area(s).
    (2) Outstanding goals. If the plan identifies a separate group 
of measurable goals that substantially exceed the levels approved as 
``satisfactory,'' the OCC shall approve those goals as 
``outstanding.''
    (3) Rating. The OCC shall assess the performance of a bank 
operating under an approved plan to determine if the bank has met 
its plan goals:
    (i) If the bank substantially achieves its plan goals for a 
satisfactory rating, the OCC shall rate the bank's performance under 
the plan as ``satisfactory.''
    (ii) If the bank exceeds its plan goals for a satisfactory 
rating and substantially achieves its plan goals for an outstanding 
rating, the OCC shall rate the bank's performance under the plan as 
``outstanding''.
    (iii) If the bank fails to substantially meet its plan goals for 
a satisfactory rating, it shall be rated as either ``needs to 
improve'' or ``substantial noncompliance,'' depending on the extent 
to which it falls short of its plan goals, or if the bank so elected 
at the time it first submitted its plan, it shall be rated under the 
lending, investment and service tests (as described in Secs. 25.22 
through 25.24 of this part), the community development test (as 
described in Sec. 25.25 of this part), or the small bank assessment 
standards (as described in Sec. 25.26 of this part), as appropriate.

Appendix B to Part 25--CRA Notice

Community Reinvestment Act Notice

    Under the Federal Community Reinvestment Act (CRA), the 
Comptroller of the Currency evaluates and enforces our compliance 
with our obligation to help meet the credit needs of this community 
consistent with safe and sound operations. The Comptroller also 
takes our CRA performance into account when the Comptroller decides 
on certain applications submitted by us. Your involvement is 
encouraged. You should know that:
    You may look at and obtain in this office information on our 
performance in this community. This information includes a file that 
includes: copies of all signed, written comments received by us, and 
any responses we have made to those comments; a map showing our 
service area; a list of our branches and ATMs in our service area; a 
list of services we provide at those locations; evaluations by the 
Comptroller of our CRA performance; and data on the loans we have 
made in this community during the last two years. [Current CRA 
information on our performance in other communities served by us is 
available at our main office, located at ________________.
    You may send signed, written comments about our CRA performance 
in helping to meet community credit needs to (title and address of 
State member bank official) and to Deputy Comptroller (address). 
Your letter, together with any response by us, will be considered by 
the Comptroller in evaluating our CRA performance and may be made 
public.
    You may ask to look at any comments received by the Deputy 
Comptroller. You may also request from the Deputy Comptroller an 
announcement of our applications covered by the CRA filed with the 
Comptroller. We are an affiliate of (name of holding company), a 
bank holding company. You may request from the Federal Reserve Bank 
of ________________ (address) an announcement of applications 
covered by the CRA filed by bank holding companies.

Appendix C to Part 25--CRA Loan Data Format

Instructions for the Small Business and Small Farm Loan Register

    This form contains the instructions for completion of the Loan 
Register for Small Business and Small Farm Loans. This register is 
used in conjunction with the reporting of this information as part 
of the CRA data collection process. The register and these 
instructions are to be used to provide the format in which the data 
should be reported. The actual data are to be submitted in machine-
readable form in accordance with the instructions for submission of 
data pursuant to 12 CFR Part 203 (Regulation C).

I. Who Must File a Register

    All independent insured banks and thrifts with $250 million or 
more in total assets and all insured banks and thrifts that are 
members of holding companies with $250 million or more in bank and 
thrift assets must report this information for small business and 
small farm loans outstanding beginning December 31, 1995. Banks and 
thrifts with fewer assets that wish to be evaluated under 12 CFR 
Secs. 25.22 through 25.24 must also report this information. Only 
provide information on business or farm location and borrower 
information for loans for which applications were submitted after 
July 1, 1995. For loans for which applications were submitted before 
that date, enter ``N/A'' for all information relating to location or 
borrower.

II. Types of Loans to be Reported

    The loan register should contain individual loan data on each 
small business or small farm loan as defined on schedule RC-C of the 
December 31 Report of Condition and Income. Include data on 
individual small business loans with original loan amounts of $1 
million or less and individual small farm loans with original loan 
amounts of $500,000 or less that had an outstanding balance as of 
December 31.

III. Submission of Data

    The data must be submitted in machine-readable form consistent 
with requirements for submission of data pursuant to 12 CFR Part 203 
(Regulation C). The format must conform exactly to the form, 
including the order of columns, column headings, etc. Contact your 
federal supervisory agency for information regarding procedures and 
technical specifications for automated data submission.
    Your institution should decide on the procedure it wants to 
follow for collection of the data consistent with the Supplemental 
Instructions For Collection Of Data In Connection with Small 
Business and Small Farm Loans. Keep in mind that data reported on 
the register are outstandings as of December 31 and not originations 
as are reported for some other regulatory purposes. Your institution 
may collect the data on separate registers at different branches or 
on separate registers for different loan types (small business or 
small farm), but make sure each loan number is unique. Entries need 
not be grouped on your registers by MSA, or chronologically, or by 
census tract, or in any other particular order.

IV. Instructions for Completion of Register

Loan Information

    1. Loan Number--Enter an identifying number that can be used to 
retrieve the loan file. It can be any number (not exceeding 25 
characters). Use letters, numerals, or a combination of both. Make 
sure that all numbers are unique within the institution. If 
registers contains data for branch offices, for example, use a 
letter or a numerical code to identify the loans of different 
branches or assign a certain series of numbers to particular 
branches to avoid duplicate numbers. The use of the borrower's tax-
payer identification number or social security number is strongly 
discouraged for privacy reasons.
    2. Outstanding Loan Amount--Enter the outstanding loan amount 
(balance) as of December 31. Show the amount in thousands rounding 
to the nearest thousand. Do not report loans with balances below 
$500. For example, a loan with a balance of $500 would be rounded to 
$1,000; a loan balance of $50,300 would be rounded to $50,000; and a 
balance of $15,700 would be rounded to $16,000.

Business or Farm Location

    For each loan, identify the location of the business or farm. 
Location is determined by the following:
    (1) Small business loans are located in the census tract or 
block numbering area where the main business facilities or other 
property to which the loan proceeds will be applied (as indicated by 
borrower) are located;
    (2) Small farm loans are located in the census tract or block 
numbering area where the farm or other property to which the loan 
proceeds will be applied (as indicated by borrower) is located.
    1. MSA--For each loan in a MSA, indicate the location of the 
loan by the four digit MSA number. Enter only the MSA number, not 
the MSA name. Use MSA boundaries that were in effect on January 1 of 
the calendar year for which you are reporting. A listing of MSAs is 
available from your regional supervisory agency. (In these 
instructions, the term MSA refers to metropolitan statistical area 
or primary metropolitan statistical area.) For loans outside MSAs, 
enter ``N/A''.
    2. State & County--Use the Federal Information Processing 
Standard (FIPS) two-digit numerical code for the state and the 
three-digit numerical code for the county. These codes are available 
from your regional supervisory agency. Do not use the letter 
abbreviations used by the United States Postal Service.
    3. Census Tract/Block Numbering Area--Enter the census tract 
number or block numbering area from the U.S. Census Bureau's Census 
Tract/Street Index for the most recent census reporting period. For 
addresses not listed in the index, consult the Census Bureau's 
census tract outline maps.

Borrower Information

    1. Minority-Owned Code--Use the following codes to indicate 
small business or small farm loans with more than 50 percent 
ownership by one or more minority individuals (as indicated by 
borrower) pursuant to data collected as described in the 
Supplemental Instructions For Collection of Data In Connection With 
Small Business and Small Farm Loans.

1--Yes
2--No
3--Publicly traded business or farm (i.e. has securities registered 
under Section 12(g) of the Securities Exchange Act of 1934 or has 
more than 100 shareholders)
4--Information not provided by borrower

    2. Women-Owned Code--Use the following codes to indicate small 
business or small farm loans with more than 50 percent ownership by 
women (as indicated by borrower) pursuant to data collected as 
described in the Supplemental Instructions For Collection of Data In 
Connection With Small Business and Small Farm Loans.

1--Yes
2--No
3--Publicly traded business or farm (i.e. has securities registered 
under Section 12(g) of the Securities Exchange Act of 1934 or has 
more than 100 shareholders)
 4--Information not provided by borrower

    3. Gross Annual Revenues  $1MM CODE--Use the 
following codes to indicate whether the gross annual revenues of the 
small business or farm are less than or equal to $1 million. This 
information should be determined based upon the revenues upon which 
your institution relied in making its credit decision.

1--Yes
2--No

Supplemental Instructions for Collection of Data in Connection With 
Small Business and Small Farm Loans

A. Format

    Beginning July 1, 1995, financial institutions required to 
report small business and small farm loan registers are to collect 
information on the racial, ethnic, and gender make-up of applicants 
or borrowers in connection with small business and small farm loans. 
If you take a written application, you should list questions 
regarding the percent of minority and gender ownership on your loan 
application form or on a separate form completed by the applicant in 
conjunction with an application. If you do not take a written 
application, you should request the information at an appropriate 
time during the application or origination process; you must request 
the information for each loan you originate even if you did not take 
a written application. If you neither take a written application nor 
originate the loan, you do not have to request the information. See 
the sample form for recommended format and language. This 
information is to be maintained in the institution's in-house loan 
files. This information is not to be reported to the agency, but is 
to be used to complete the small business and small farm loan 
register.

B. Procedures

    1. You must ask for this information, but cannot require the 
applicant or borrower to provide it. You may not consider whether or 
not an applicant or borrower has provided this information in making 
your decision whether to extend credit or in setting the terms of 
credit.
    2. If the applicant or borrower chooses not to provide the 
information, note this fact on the form.
    3. Inform the applicant or borrower that the Federal government 
is requesting this information in order to monitor compliance with 
Federal statutes that prohibit lenders from discriminating on these 
bases.

BILLING CODES: OCC 4810-33-P (25%); Board 6210-01-P (25%); FDIC 6714-
01-P (25%); OTS 6720-01-P (25%)

TP07OC94.000


TP07OC94.001


BILLING CODES: OCC 4810-33-C (25%); Board 6210-01-C (25%); FDIC 6714-
01-C (25%); OTS 6720-01-C (25%)

Instructions for Completion of the Open- and Closed-End Consumer Loan 
Registers

    This form contains the instructions for completion of the Loan 
Registers for Open-End Consumer Loans and Closed-End Consumer Loans. 
These registers are used in conjunction with the collection of this 
information as part of the CRA data collection process. The 
registers and these instructions are to be used to provide the 
format in which the data should be maintained. The data must be 
maintained in machine-readable form. If you wish to maintain the 
data in an alternative format, you must obtain approval from your 
primary supervisory agency.

I. Who May Maintain a Register

    Any insured bank or thrift may, at the institution's option, 
collect and maintain this information for loans outstanding 
beginning December 31, 1995. You need only provide information on 
borrower location and gross annual income for loans for which 
applications were submitted after July 1, 1995. For loans for which 
applications were submitted before that date, you may enter ``N/A'' 
for borrower location and gross annual income.

II. Types of Loans To Be Recorded

    If you collect and maintain information on your consumer loans 
for consideration in your CRA evaluation, you must provide data on 
all consumer loans outstanding included in the aggregate consumer 
loan figure on your December 31 Report of Condition and Income.
    Your institution should decide on the procedure it wants to 
follow for collection of the data. Keep in mind that data recorded 
on the registers are outstandings as of December 31 and not 
originations as are reported for some other regulatory purposes. 
Your institution may collect the data on separate registers at 
different branches, but is required to maintain the data on separate 
registers for each of the different consumer loan types (open-end 
and closed-end). Make sure the loan numbers are unique.

III. Instructions for Completion of Register

Loan Information

    1. LOAN NUMBER--Enter an identifying number that can be used to 
retrieve the loan file. It can be any number (not exceeding 25 
characters). Use letters, numerals, or a combination of both. Make 
sure that all numbers are unique within the institution. If 
registers contains data for branch offices, for example, use a 
letter or a numerical code to identify the loans of different 
branches or assign a certain series of numbers to particular 
branches to avoid duplicate numbers. The use of the borrower's tax-
payer identification number or social security number is strongly 
discouraged for privacy reasons.
    2. OUTSTANDING LOAN AMOUNT--Enter the outstanding loan amount 
(balance) as of December 31. Show the amount in thousands rounding 
to the nearest thousand. Do not report loans with balances below 
$500. For example, a loan with a balance of $500 would be rounded to 
$1,000; a loan balance of $50,300 would be rounded to $50,000; and a 
balance of $15,700 would be rounded to $16,000.

Borrower Information

    For each loan, identify the location of the borrower. Consumer 
loans are located in the census tract or block numbering area where 
the borrower resides.
    1. MSA--For each loan in a MSA, indicate the location of the 
loan by the four digit MSA number. Enter only the MSA number, not 
the MSA name. Use MSA boundaries that were in effect on January 1 of 
the calendar year for which you are reporting. A listing of MSAs is 
available from your regional supervisory agency. (In these 
instructions, the term MSA refers to metropolitan statistical area 
or primary metropolitan statistical area.) For loans outside MSAs, 
enter ``N/A''.
    2. STATE & COUNTY--Use the Federal Information Processing Standard 
(FIPS) two-digit numerical code for the state and the three-digit 
numerical code for the county. These codes are available from your 
regional supervisory agency. Do not use the letter abbreviations used 
by the United States Postal Service.
    3. CENSUS TRACT/BLOCK NUMBERING AREA--Enter the census tract 
number or block numbering area from the U.S. Census Bureau's Census 
Tract/Street Index for the most recent census reporting period. For 
addresses not listed in the index, consult the Census Bureau's 
census tract outline maps.
    4. GROSS ANNUAL INCOME--Enter the gross annual income upon which 
your institution relied in making the credit decision. Round all 
dollar amounts to the nearest thousand.

BILLING CODES: OCC 4810-33-P (25%); Board 6210-01-P (25%); FDIC 6714-
01-P (25%); OTS 6720-01-P (25%)

TP07OC94.002


TP07OC94.003


TP07OC94.004


BILLING CODES: OCC 4810-33-C (25%); Board 6210-01-C (25%); FDIC 6714-
01-C (25%); OTS 6720-01-C (25%)
    Dated: September 26, 1994.
Eugene A. Ludwig,
Comptroller of the Currency.

FEDERAL RESERVE SYSTEM

12 CFR CHAPTER II

    For the reasons outlined in the joint preamble, the Board of 
Governors of the Federal Reserve System proposes to amend 12 CFR 
chapter II as set forth below:

PART 228--COMMUNITY REINVESTMENT (REGULATION BB)

    1. The authority citation for part 228 is revised to read as 
follows:

    Authority: 12 U.S.C. 321, 325, 1828, 1842, 1844, and 2901 et 
seq.


Sec. 228.1001  [Redesignated as Sec. 228.9]

    2. Existing Sec. 228.100 is redesignated as Sec. 228.9 and 
transferred immediately following Sec. 228.8.
    3. Part 228 is amended by adding Subparts A through E and 
Appendices A through C following Sec. 228.9 to read as follows:

Subpart A--General

Sec.
228.11  Authority, community reinvestment obligation, purposes and 
scope.
228.12  Definitions.

Subpart B--Standards for Assessing Performance

228.21  Assessment tests and ratings, in general.
228.22  Lending test.
228.23  Investment test.
228.24  Service test.
228.25  Community development test for wholesale or limited purpose 
banks.
228.26  Small bank assessment standards.
228.27  Strategic plan assessment.
228.28  Assigned ratings.
228.29  Effect of ratings on applications.

Subpart C--Records, Reporting and Disclosure Requirements

228.41  Service area delineation.
228.42  Data collection and reporting.
228.43  Public file and disclosure by banks.
228.44  Public notice by banks.
228.45  Publication of planned examination schedule.

Subpart D--Transition Rules

228.51  Transition rules.

Subpart E--Interpretations

228.100  Applicability of the Community Reinvestment Act to certain 
special purpose banks.

Appendix A to Part 228--Ratings

Appendix B to Part 228--CRA Notice

Appendix C to Part 228--CRA Loan Data Format

Subpart A--General


Sec. 228.11  Authority, community reinvestment obligation, purposes and 
scope.

    (a) Authority. The Board of Governors of the Federal Reserve System 
(the Board) issues this part to implement the Community Reinvestment 
Act (12 U.S.C. 2901 et seq.) (CRA). The regulations in this part are 
issued under the authority of the CRA and under the provisions of the 
United States Code authorizing the Board:
    (1) To conduct examinations of State-chartered banks that are 
members of the Federal Reserve System (12 U.S.C. 325);
    (2) To conduct examinations of bank holding companies and their 
subsidiaries (12 U.S.C. 1844); and
    (3) To consider applications for:
    (i) Domestic branches by state member banks (12 U.S.C. 321);
    (ii) Merger in which the resulting bank would be a state member 
bank (12 U.S.C. 1828); and
    (iii) Formation of, acquisition of banks by, and mergers of, bank 
holding companies (12 U.S.C. 1842).
    (b) Community reinvestment obligation. State member banks have a 
continuing and affirmative obligation to help meet the credit needs of 
their communities, including low- and moderate-income areas, consistent 
with safe and sound operations.
    (c) Purposes. The purposes of this part are to implement the 
community reinvestment obligation of State member banks; to explain how 
the Board assesses the performance of State member banks in satisfying 
the community reinvestment obligation; and to describe how that 
performance is taken into account in certain applications.
    (d) Scope--(1) General. This part applies to all state member banks 
that are in the business of extending credit to the public, including 
wholesale or limited purpose banks, as defined in Sec. 228.12 of this 
part.
    (2) Certain special purpose banks. This part does not apply to a 
bankers bank that engages exclusively in providing services for other 
depository institutions and for their officers, directors and 
employees, or to other special purpose banks described in Sec. 228.100 
of this part.


Sec. 228.12  Definitions.

    For purposes of this part, the following definitions apply:
    (a) Affiliate means any company that controls, is controlled by, or 
is under common control with another company. For purposes of this 
part, the term ``control'' has the meaning given to that term in 12 
U.S.C. 1841(a)(2), and a company is under common control with another 
company if both companies are directly or indirectly controlled by the 
same company.
    (b) Area median income means the median family income for the MSA 
in which a person or geography is located or, in the case of a person 
or geography located outside an MSA, the higher of the county median 
family income or the statewide nonmetropolitan median family income.
    (c) Automated teller machine (ATM) means an automated, unstaffed 
banking facility with a fixed site owned or operated by or operated 
exclusively for the bank at which deposits are received, cash 
dispersed, or money lent.
    (d) Bank means a state chartered bank that is a member of the 
Federal Reserve System.
    (e) Branch means a staffed banking facility (shared or unshared) 
licensed as a branch with a fixed site at which deposits are received, 
checks paid, or money lent, including a mini-branch in a grocery store 
or a branch operated in conjunction with any other local business or 
nonprofit organization.
    (f) Community development loan means a loan (including a line of 
credit, commitment, or letter of credit) that addresses affordable 
housing (including multifamily rental housing) or other community 
economic development needs not being met by the private market; 
provided the loan:
    (1) Primarily benefits low- or moderate-income individuals, 
businesses or farms with gross annual revenues less than or equal to $1 
million, or businesses or farms that qualify as small businesses under 
a Small Business Administration program;
    (2) Has not been reported or collected by the bank or one of its 
affiliates as a home mortgage loan, small business loan, small farm 
loan, or a consumer loan pursuant to Sec. 228.42 of this part, unless 
it is a multifamily dwelling loan (as described in Appendix A to 12 CFR 
Part 203); and
    (3) Except in the case of a wholesale or limited purpose bank, 
benefits the bank's service area(s) or a broader statewide or regional 
area that includes the bank's service area(s).
    (g) Consumer loan means a loan extended to one or more individuals 
for household, family, or other personal expenditures; provided the 
loan is not secured by real estate and is not used for the purpose of 
purchasing or carrying securities.
    (h) Geography means a census tract delineated by the United States 
Bureau of the Census in the most recent decennial census, or a block 
numbering area delineating a small statistical subdivision where a 
census tract has not been established.
    (i) HMDA means the Home Mortgage Disclosure Act (12 U.S.C. 2801 et 
seq.).
    (j) Home mortgage loan means a mortgage loan as defined in section 
303(1) of HMDA (12 U.S.C. 2802(1)) and implementing regulations.
    (k) Income level--(1) Low-income means, in the case of a person, an 
individual income, or in the case of a geography, a median family 
income, that is less than 50 percent of the adjusted area median 
income, with adjustments to take into account family size and the 
prevailing levels of residential housing construction costs or 
unusually high or low family incomes.
    (2) Moderate-income means, in the case of a person, an individual 
income, or in the case of a geography, a median family income, that is 
at least 50 percent and less than 80 percent of the adjusted area 
median income, with adjustments to take into account family size and 
the prevailing levels of residential housing construction costs or 
unusually high or low family incomes.
    (3) Middle-income means, in the case of a person, an individual 
income, or in the case of a geography, a median family income, that is 
at least 80 percent and less than 120 percent of the adjusted area 
median income, with adjustments to take into account family size and 
the prevailing levels of residential housing construction costs or 
unusually high or low family incomes.
    (4) Upper-income means, in the case of a person, an individual 
income or, in the case of a geography, a median family income, that is 
120 percent or more of the adjusted area median income, with 
adjustments to take into account family size and the prevailing levels 
of residential housing construction costs or unusually high or low 
family incomes.
    (l) Limited purpose bank means a bank that offers only a narrow 
product line (such as credit cards or automobile loans) to a national 
or regional market and has, pursuant to a written request, been 
designated by the Board as a limited purpose bank, as provided in 
Sec. 228.25 of this part.
    (m) Loan location. A loan is located in a geography as follows:
    (1) A consumer loan is located where the borrower resides;
    (2) A home mortgage loan is located where the property to which the 
loan relates is located;
    (3) A small business or small farm loan is located where the main 
business facility or farm is located or where the loan proceeds 
otherwise will be applied, as indicated by the borrower.
    (n) Loan production office means a staffed banking facility that is 
accessible to the public, and provides lending-related services such as 
loan information and applications, but is not a branch.
    (o) MSA means metropolitan statistical area or primary metropolitan 
statistical area, as defined by the Director of the Office of 
Management and Budget.
    (p) Minority means an individual who is an American Indian or 
Alaskan Native, an Asian or Pacific Islander, a Black, or of Hispanic 
origin as provided in the Office of Management and Budget's Statistical 
Policy Directive No. 15, Race and Ethnic Standards for Federal 
Statistics and Administrative Reporting.
    (q) Minority-owned business means a business, including a farm, 
that is more than 50 percent owned by one or more minority individuals, 
and that has not issued any securities registered under Section 12(g) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) and has 
100 or fewer shareholders.
    (r) Service area means a geographical area delineated in accordance 
with Sec. 228.41 of this part.
    (s) Small bank means a bank with total assets of less than $250 
million that is:
    (1) Independent; or
    (2) An affiliate of a holding company with total banking and thrift 
assets of less than $250 million.
    (t) Small business loan means a loan with an original amount of $1 
million or less that is either a commercial or industrial loan or a 
loan secured by nonfarm, nonresidential property.
    (u) Small farm loan means a loan with an original amount of 
$500,000 or less that is a loan secured by farmland (including a loan 
to finance a farm residence or other improvements), a loan to finance 
agricultural production, or any other loan to a farmer.
    (v) Women-owned business means a business, including a farm, that 
is more than 50 percent owned by one or more women, and that has not 
issued any securities registered under Section 12(g) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.) and has 100 or fewer 
shareholders.
    (w) Wholesale bank means a bank that is not in the business of 
extending home mortgage, small business, small farm, or consumer loans 
to retail customers, and has, pursuant to a written request, been 
designated by the Board as a wholesale bank, as provided in Sec. 228.25 
of this part.

Subpart B--Standards for Assessing Performance


Sec. 228.21  Assessment tests and ratings, in general.

    (a) Assessment tests and standards. In connection with an 
examination of a bank, the Board shall assess the CRA performance of 
the bank as follows:
    (1) Lending, investment, and service tests. The Board shall apply 
these three tests, as described in Secs. 228.22 through 228.24 of this 
part, in evaluating the performance of banks, except as provided in 
paragraphs (a)(2), (3) and (4) of this section.
    (2) Community development test for wholesale or limited purpose 
banks. In evaluating the performance of wholesale or limited purpose 
banks (as defined in Sec. 228.12 of this part), the Board shall apply 
the community development test, as provided in Sec. 228.25 of this 
part, except as provided in paragraph (a)(4) of this section.
    (3) Assessment standards for small banks. In evaluating the 
performance of small banks (as defined in Sec. 228.12 of this part), 
the Board shall apply the assessment standards for small banks as 
provided in Sec. 228.26 of this part. However, a small bank may elect 
instead to be assessed as provided in paragraphs (a) (2) and (4) of 
this section, or it may elect to be evaluated under paragraph (a)(1) of 
this section if it has collected and reported the data required for 
other banks under Sec. 228.42(a)(1) of this part.
    (4) Strategic plan. Any bank may elect not to be assessed by any 
tests described in paragraphs (a)(1), (2) and (3) of this section by 
submitting to the Board and receiving approval of a strategic plan as 
described in Sec. 228.27 of this part.
    (b) Assessment context. The Board shall apply the tests and 
standards in paragraph (a) of this section in the context of the 
following information:
    (1) Demographic data on median income levels, distribution of 
household income, nature of housing stock, housing costs, and other 
relevant data pertaining to a bank's service area(s);
    (2) Examiner-developed information regarding the credit needs of 
the bank's service area(s) obtained from community-based organizations, 
state and local governments, economic development agencies, and from 
any information the bank may choose to provide;
    (3) The bank's product offerings and business strategy as 
determined from data provided by the bank;
    (4) Institutional capacity and constraints, including the size and 
financial condition of the institution, the economic climate (national, 
regional and local), safety and soundness limitations, and any other 
factors that significantly affect the bank's ability to lend to the 
different parts of its service area(s);
    (5) The bank's past performance and the performance of similarly-
situated lenders;
    (6) The bank's public file, as described in Sec. 228.43 of this 
part, and any signed, written comments about the bank's CRA performance 
submitted to the bank or the Board; and
    (7) Any other information deemed relevant by the Board.
    (c) Assigned ratings. The Board shall assign to each bank one of 
the following four ratings as set out in Sec. 228.28 of this part and 
Appendix A of this part: ``outstanding''; ``satisfactory''; ``needs to 
improve''; or ``substantial noncompliance'' based on:
    (1) The results of the applicable assessment test(s) or standards 
or performance under an approved strategic plan; and
    (2) Any evidence of discriminatory or other illegal credit 
practices.
    (d) Safe and sound operations. This part and the CRA do not require 
any bank to make loans or investments, or to provide services that are 
inconsistent with safe and sound operations. Banks are permitted and 
encouraged to develop and apply flexible underwriting standards, 
consistent with safe and sound operations, for loans that benefit low- 
or moderate-income geographies or individuals.
    (e) Compliance with community reinvestment obligation. The assigned 
ratings reflect the extent of compliance or noncompliance with the 
community reinvestment obligation described in Sec. 228.11(b) of this 
part. A bank that receives an assigned rating of ``substantial 
noncompliance'' shall be subject to enforcement actions pursuant to 12 
U.S.C. 1818.


Sec. 228.22  Lending test.

     (a) Scope of test. (1) The lending test evaluates a bank's 
performance in helping to meet the credit needs of its service area(s) 
through its lending activities, as measured by home mortgage 
originations and purchases, small business and small farm loans 
outstanding, and community development loans outstanding. At the bank's 
option, the lending test will also evaluate the bank's consumer loans 
outstanding and any other loan distribution data the bank may choose to 
provide, such as data on extensions of lines of credit, commitments, 
and letters of credit.
     (2) When evaluating a bank's overall lending performance, the 
Board shall weigh its assessments of the bank's home mortgage lending, 
small business and small farm lending, and (at the bank's option) 
consumer lending to reflect the relative importance of each category of 
lending to the bank's overall business.
     (3) The Board shall weigh the bank's community development lending 
according to the characteristics and needs of the bank's service 
area(s), the capacity and constraints of the bank, and the 
opportunities available to the bank for this lending.
    (b) Assessment criteria. The Board shall evaluate a bank's lending 
performance pursuant to the following criteria:
     (1) Geographic distribution. The geographic distribution of the 
bank's lending (based on the location of the loan as provided in 
Sec. 228.12 of this part), including:
    (i) The proportion of total lending in the bank's service area(s);
    (ii) The dispersion of lending throughout the bank's service 
area(s); and
    (iii) The number and amount of loans in low-, moderate-, middle-, 
and upper-income geographies in the bank's service area(s);
     (2) Borrower characteristics. The distribution, particularly in 
the bank's service area, of the bank's lending (based on borrower 
characteristics), including:
     (i) The number and amount of home mortgage loans to low-, 
moderate-, middle-, and upper-income individuals;
    (ii) The number and amount of small business and small farm loans 
to businesses and farms with gross annual revenues less than or equal 
to $1 million;
    (iii) The number and amount of small business and small farm loans 
by size of loan; and
    (iv) At the bank's option, the number and amount of consumer loans 
to
low-, moderate-, middle-, and upper-income individuals;
    (3) Community development lending. The bank's community development 
lending, including the number and amount of community development loans 
outstanding, their complexity and innovativeness, and the number and 
amount of lines of credit, commitments, and letters of credit for 
community development purposes; and
    (4) Innovative or flexible lending practices. The bank's use of 
innovative or flexible lending practices to address the credit needs of 
low- or moderate-income individuals or geographies.
     (c) Affiliate lending. (1) The Board shall, if the bank elects, 
consider in its assessment of a bank's lending performance under this 
section lending by an affiliate of the bank, if the bank, or its 
affiliate, reports or collects the lending data pursuant to Sec. 228.42 
of this part.
    (2) The Board may consider in its assessment lending by a bank's 
affiliate even if the bank has chosen not to have the affiliate's 
lending considered if the Board determines that this lending is 
integral to the business of the bank.
    (3) Consideration of affiliate lending shall be subject to the 
following constraints:
    (i) No affiliate may claim the same loan as another institution; 
and
    (ii) If the Board considers loans within a particular lending 
category (e.g., home mortgage, small business, small farm, consumer or 
community development lending) made by one or more of the bank's 
affiliates in a particular service area, the Board shall consider all 
the loans within that lending category made by all of the bank's 
affiliates in that particular service area.
    (d) Consortia and third-party lending. Community development loans 
made through consortia in which the bank participates or through third 
parties in which the bank has invested:
    (1) Shall be considered under the lending test, if the bank elects, 
provided the data pertaining to these loans are reported by the bank 
under the applicable provisions of Sec. 228.42 of this part; and
    (2) May be allocated among participants or investors as they choose 
for purposes of the lending test, provided that no participant or 
investor claims the same loan or part of a loan as another participant 
or investor, or claims in the aggregate greater than its percentage 
share (based on the level of its participation or investment) of the 
total loans made by the consortium or third party.
    (e) Lending performance rating. The Board shall rate a bank's 
lending performance as provided in Appendix A of this part.


Sec. 228.23  Investment test.

     (a) Scope of test. The investment test evaluates the degree to 
which a bank is helping to meet the credit needs of its service area(s) 
through qualified investments. To be considered under this test, the 
qualified investments of a bank must benefit its service area(s) or a 
broader statewide or regional geographic area that includes the bank's 
service area(s).
     (b) Qualified investments. (1) Qualified investments are lawful 
investments, deposits, membership shares in a credit union, or grants 
that: (i) Primarily benefit low- or moderate-income individuals, 
businesses or farms with gross annual revenues less than or equal to $1 
million, or businesses or farms that qualify as small businesses under 
a Small Business Administration program; and
    (ii) Address affordable housing (including multifamily rental 
housing) or other community economic development needs that are not 
being met by the private market.
    (2) Donating, selling on favorable terms, or making available on a 
rent-free basis any branch of the bank that is located in any 
predominantly minority neighborhood to any minority depository 
institution or women's depository institution (as defined in 12 U.S.C. 
2907(b)) shall be considered under the investment test.
    (3) Activities considered under the lending or service tests may 
not be considered under the investment test.
    (4) At a bank's option, the Board shall consider in its assessment 
of a bank's investment performance a qualified investment made by an 
affiliate of the bank, provided that the qualified investment is not 
claimed by any other institution.
     (c) Assessment criteria. The Board shall evaluate the investment 
performance of a bank pursuant to the following criteria:
    (1) The dollar amount of qualified investments that directly 
address credit needs;
    (2) The use of innovative or complex qualified investments to 
support community development initiatives; and
    (3) The degree of responsiveness to credit and community economic 
development needs.
    (d) Investment performance rating. The Board shall rate a bank's 
investment performance as provided in Appendix A of this part.


Sec. 228.24  Service test.

    (a) Scope of test. The service test evaluates a bank's record of 
helping to meet the credit needs of the bank's service area(s) by 
analyzing both the availability and responsiveness of a bank's systems 
for delivering retail banking services and the extent and 
innovativeness of its community development services.
     (b) Assessment criteria--retail banking services. The Board shall 
evaluate the availability and responsiveness of a bank's systems for 
delivering retail banking services, pursuant to the following criteria:
    (1) The current distribution of the bank's branches and ATMs among
low-, moderate-, middle-, and upper-income geographies;
    (2) In the context of its current distribution of the bank's 
branches and ATMs, the bank's record of opening and closing branches 
and ATMs, particularly branches and ATMs located in low- or moderate-
income geographies or primarily serving low- or moderate-income 
individuals;
     (3) The availability of alternative systems for delivering retail 
banking services (e.g., banking by telephone or computer, mobile 
branches and ATMs, ATMs not owned or operated by or operated 
exclusively for the bank, loan production offices, and bank-at-work or 
by-mail programs) in low- and moderate-income geographies and to low- 
and moderate-income individuals; and
    (4) The range of services provided in low-, moderate-, middle-, and 
upper-income geographies and the degree to which the services are 
tailored to meet the needs of those geographies.
     (c) Assessment criteria--community development services.(1) 
Community development services are services that:
     (i) Primarily benefit low- or moderate-income individuals, 
businesses or farms with gross annual revenues less than or equal to $1 
million, or businesses or farms that qualify as small businesses under 
a Small Business Administration program; and
    (ii) Address affordable housing (including multifamily rental 
housing) or other community economic development needs that are not 
being met by the private market.
    (2) The Board shall evaluate community development services 
pursuant to the following criteria:
    (i) The extent to which the bank provides community development 
services; and
    (ii) The innovativeness and responsiveness of community development 
services.
    (3) When evaluating a bank's overall service performance, the Board 
shall weigh the bank's community development services according to the 
characteristics and needs of the bank's service area(s), the capacity 
and constraints of the bank, and the opportunities available to the 
bank to provide community development services.
     (4) At a bank's option, the Board shall consider in its assessment 
of a bank's service performance a community development service 
provided by an affiliate of the bank, provided that the community 
development service is not claimed by any other institution.
    (d) Service performance rating. The Board shall rate a bank's 
service performance as provided in Appendix A of this part.


Sec. 228.25  Community development test for wholesale or limited 
purpose banks.

    (a) Scope of test. (1) The Board shall assess the degree to which a 
wholesale or limited purpose bank (as defined in Sec. 228.12 of this 
part) is helping to meet the credit needs of its service area(s) under 
the community development test only if the bank's written request to be 
designated as a wholesale or limited purpose bank has been approved by 
the Board before the commencement of its CRA examination, and the 
designation has not been revoked either at the request of the bank or 
at the Board's own initiative.
    (2) The community development test evaluates the record of a 
wholesale or limited purpose bank in helping to meet the credit needs 
of its service area(s) through qualified investments, community 
development lending, or community development services.
     (3) For purposes of the community development test only, community 
development loans include small business and small farm loans and loans 
to low- and moderate-income individuals and geographies, whether or not 
reported or collected by the bank or one of its affiliates as home 
mortgage loans, small business loans, small farm loans, or consumer 
loans, pursuant to Sec. 228.42 of this part.
     (b) Assessment criteria. The Board shall evaluate the community 
development performance of a wholesale or limited purpose bank pursuant 
to the following criteria:
     (1) The number and amount of community development loans 
outstanding, qualified investments (as defined in Sec. 228.23 of this 
part), or community development services (as defined in Sec. 228.24 of 
this part);
     (2) The use of innovative or complex qualified investments, 
community development loans outstanding, or community development 
services and their connection to credit needs; and
     (3) The degree of responsiveness to credit and community economic 
development needs.
     (c) Indirect activities. The Board shall, if the wholesale or 
limited purpose bank elects, consider in its community development 
performance assessment:
     (1) Qualified investments or community development services 
provided by an affiliate of the bank, provided the investment or 
services are not claimed by any other institution; and
     (2) Community development lending by affiliates, consortia and 
third parties, subject to the requirements and limitations in 
Sec. 228.22(c)(3) and (d) of this part.
     (d) Benefit to service area(s)--. (1) Benefit inside service 
area(s). For purposes of assessing a wholesale or limited purpose 
bank's community development performance under this section, the Board 
shall consider all qualified investments, community development loans 
outstanding, and community development services that benefit areas 
within the bank's service area(s).
     (2) Benefit outside service area(s). The Board shall consider the 
qualified investments, community development loans outstanding, and 
community development services provided by a wholesale or limited 
purpose bank that benefit areas outside the bank's service area(s) only 
up to an amount equivalent to the amount of investments, loans, and 
services considered under paragraph (d)(1) of this section. If a bank 
demonstrates a limited need or opportunity for these investments, 
lending, and services, in its service area(s), the Board may exempt the 
bank from all or part of this limitation.
    (e) Community development performance rating. The Board shall rate 
a bank's community development performance as provided in Appendix A of 
this part.


Sec. 228.26  Small bank assessment standards.

    (a) Scope of assessment. The Board shall assess the degree to which 
a small bank is helping to meet the credit needs of its service area(s) 
under the assessment standards described in this section.
    (b) Assessment criteria. The Board shall evaluate a small bank's 
CRA performance pursuant to the following criteria:
    (1) The bank's loan-to-deposit ratio, adjusted for seasonal 
variation and, as appropriate, other lending-related activities, such 
as loan originations for sale to the secondary markets or community 
development lending or investment;
    (2) The percentage of loans and, as appropriate, other lending-
related activities located in the bank's service area(s);
    (3) The bank's record of lending to and, as appropriate, engaging 
in other lending-related activities for borrowers of different income 
levels and businesses and farms of different sizes;
    (4) The geographic distribution of the bank's loans given its 
service area(s); and
    (5) The bank's record of taking action, if warranted, in response 
to written complaints about its performance in meeting the credit needs 
of its service area(s).
    (c) Small bank performance rating. The Board shall rate a small 
bank's performance as provided in Appendix A of this part.


228.27  Strategic plan assessment.

    (a) Alternative election. A bank may request to be rated under a 
strategic plan rather than under the lending, service, and investment 
tests (Secs. 228.22 through 228.24 of this part), the community 
development test (Sec. 228.25 of this part), or the small bank 
assessment standards (Sec. 228.26 of this part), by submitting to the 
Board a strategic plan as provided for in this section. A bank's 
request to be rated under a strategic plan is not approved until the 
Board approves the plan. The Board's approval of a strategic plan does 
not affect the bank's obligation, if any, to report data as required by 
Sec. 228.42 of this part.
    (b) Strategic plans in general. (1) A plan may have a term of no 
more than five years, and any multi-year plan shall include annual 
interim measurable goals according to which the Board shall evaluate 
the bank's performance.
    (2) A bank with more than one service area may prepare a single 
plan for all of its service areas or a plan for one or more but not all 
of its service areas.
    (3) Affiliated institutions may prepare joint plans if the plans 
provide measurable goals for each institution.
    (c) Public participation in strategic plan development. Before 
submitting a plan to the Board for approval, the bank shall:
    (1) Informally seek suggestions from the public in its service 
area(s) while developing the plan;
    (2) Once the bank has developed a plan, formally solicit public 
comment on the plan for at least 30 days by publishing notice in a 
newspaper of general circulation in each of its service areas; and
    (3) During the period of formal public comment, make copies of the 
plan available for review at all offices of the bank in any service 
area covered by the plan.
    (d) Submission of plan. The bank shall submit its plan to the Board 
at least three months prior to the proposed effective date of the plan. 
The bank shall also submit with its plan any public comments received, 
and, if the plan was revised in light of the comments received, the 
initial plan as released for public comment.
    (e) Plan content--(1) Measurable goals. (i) A bank shall specify in 
its plan measurable goals for helping to meet the credit needs of each 
of its service area(s) covered by the plan, particularly the needs of 
low- and moderate-income geographies and low- and moderate-income 
individuals, through lending, investment, and the provision of 
services, as appropriate.
    (ii) A bank shall address all three performance categories and, 
unless the bank has been designated as a wholesale or limited purpose 
bank, shall emphasize lending and lending-related activities. 
Nevertheless, a different emphasis, including a focus on one or more 
performance categories, may be appropriate if responsive to the 
characteristics and credit needs of its service area, considering 
public comment and the bank's capacity and constraints, product 
offerings, and business strategy.
    (2) Confidential information. The bank may submit additional 
information to the Board on a confidential basis, but the goals stated 
in the plan shall be sufficiently specific to enable the public and the 
Board to judge fairly the merits of the plan.
    (3) Satisfactory and outstanding goals. A bank shall specify in its 
plan measurable goals that constitute ``satisfactory'' performance. A 
plan may specify measurable goals that constitute ``outstanding'' 
performance. In order to be considered for an ``outstanding'' 
performance rating, the bank shall submit both ``satisfactory'' and 
``outstanding'' performance goals.
    (f) Plan approval. (1) Timing. The Board shall act upon a plan 
within 60 days after the complete plan and required accompanying 
material are submitted. If the Board fails to act within this time 
period, the plan shall be deemed approved unless the Board extends the 
review period for good cause.
    (2) Public participation. In evaluating the plan's goals, the Board 
shall consider the public's involvement in formulating the plan, public 
comment on the plan, and any response by the bank to public comment on 
the plan.
    (3) Criteria for evaluating plan. The Board shall evaluate a plan's 
measurable goals using the following criteria, as appropriate:
    (i) The extent and breadth of lending or lending-related 
activities, including, as appropriate, the distribution of loans among 
different geographies, businesses and farms of different sizes, and 
individuals of different income levels, the extent of community 
development lending, and the use of innovative or flexible lending 
practices to address credit needs;
    (ii) The amount and innovativeness, complexity, and responsiveness 
of the bank's qualified investments, as defined in Sec. 228.23 of this 
part; and
    (iii) The extent and availability of the bank's services, 
including, as appropriate, the accessibility of retail delivery systems 
and the extent and innovativeness of community development services, as 
defined in Sec. 228.24 of this part.
    (g) Plan amendment. During the term of a plan, the bank may 
petition the Board to approve an amendment to the plan on grounds that 
a material change in circumstances has made the plan no longer 
appropriate. Any amendment proposed shall be developed in accordance 
with the public participation requirements of paragraph (c) of this 
section.
    (h) Strategic plan assessment. The Board shall approve the goals 
and assess performance under a strategic plan as provided for in 
Appendix A of this part.


Sec. 228.28  Assigned ratings.

    (a) Ratings in general. Subject to paragraphs (b), (c), and (d) of 
this section, the Board shall assign to a bank a rating of 
``outstanding,'' ``satisfactory,'' ``needs to improve,'' or 
``substantial noncompliance'' based on the bank's performance under the 
lending, investment and service tests, the community development test, 
the small bank assessment standards, or an approved strategic plan, as 
applicable.
    (b) Lending, investment, and service tests. The Board shall assign 
a rating for a bank assessed under the lending, investment, and service 
tests in accordance with the procedures provided in Appendix A of this 
part and the following principles:
    (1) A bank's rating on the lending test shall be weighed so as to 
count for at least 50 percent of its assigned rating;
    (2) A bank that receives an ``outstanding'' rating on the lending 
test shall receive an assigned rating of at least ``satisfactory'';
    (3) A bank that receives an ``outstanding'' rating on the lending 
test and an ``outstanding'' rating on either the service test or the 
investment test shall receive an assigned rating of ``outstanding'';
    (4) A bank that receives an ``outstanding'' rating on both the 
service test and the investment test and a rating of at least ``high 
satisfactory'' on the lending test shall receive an assigned rating of 
``outstanding''; and
    (5) No bank may receive an assigned rating of ``satisfactory'' 
unless it receives a rating of at least ``low satisfactory'' on the 
lending test.
     (c) Effect of evidence of discriminatory or other illegal credit 
practices. Evidence of discriminatory or other illegal credit practices 
shall adversely affect the Board's evaluation of a bank's performance. 
In determining the effect on the bank's assigned rating, the Board 
shall consider the nature and extent of the evidence, the policies and 
procedures that the bank has in place to prevent discriminatory or 
other illegal credit practices, any corrective action that the bank has 
taken or has committed to take, particularly voluntary corrective 
action resulting from self-assessment, and other relevant information, 
such as the bank's past fair lending performance.
    (d) Effect of successive ``needs to improve'' ratings. A bank that 
would otherwise receive an assigned rating of ``needs to improve'' 
shall receive an assigned rating of ``substantial noncompliance'' if 
the bank received no better than a ``needs to improve'' rating on each 
of its two previous examinations.


Sec. 228.29  Effect of ratings on applications.

     (a) CRA performance. Among other factors, the Board shall take 
into account the record of performance under the CRA of each applicant 
bank, and, for applications under section 3 of the Bank Holding Company 
Act, of each subsidiary bank of an applicant bank holding company, and 
of each proposed subsidiary bank, in considering any application:
    (1) By a state member bank for the establishment of a domestic 
branch or other facility that would be authorized to take deposits;
    (2) For merger, consolidation, acquisition of assets, or assumption 
of liabilities if the acquiring, assuming, or resulting bank is to be a 
state member bank;
    (3) To become a bank holding company; and
    (4) By a bank holding company to acquire ownership or control of 
shares or assets of a bank, or to merge or consolidate with any other 
bank holding company.
    (b) Interested parties. In considering CRA performance in an 
application described in paragraph (a) of this section, the Board shall 
take into account any views expressed by interested parties which are 
submitted in accordance with the Board's Rules of Procedure set forth 
in part 262 of this chapter.
    (c) Denial or conditional approval of application. A bank's record 
of performance may be the basis for denying or conditioning approval of 
an application described in paragraph (a) of this section.
    (d) Definition of bank. For purposes of this section, the term 
``bank'' has the meaning given to this term in 12 U.S.C. 1841(c).

Subpart C--Records, Reporting and Disclosure Requirements


Sec. 228.41  Service area delineation.

    (a) In general. Subject to paragraphs (b) and (c) of this section, 
each bank may delineate its service area(s) using any method it chooses 
provided that the service area(s):
    (1) Do(es) not reflect illegal discrimination;
    (2) Do(es) not arbitrarily exclude low- and moderate-income 
geographies, taking into account the bank's size and financial 
condition and the extent of its branching network, as appropriate; and
    (3) Consist(s) only of whole census tracts or block numbering 
areas.
    (b) Banks that are not wholesale or limited purpose banks. The 
service area(s) for a bank that is not a wholesale or limited purpose 
bank (as defined in Sec. 228.12 of this part):
    (1) Shall include those geographies in the local areas around a 
bank's branches and deposit-taking ATMs in which the bank has 
originated or had outstanding, during the previous calendar year, a 
significant number and amount of home mortgage, small business and 
small farm, and (if the bank chooses to have them considered in its CRA 
evaluation) consumer loans and any other geographies equidistant from 
its branches and deposit-taking ATMs, taking into account political 
boundaries or significant geographic barriers; and
    (2) Shall not extend substantially across MSA boundaries or state 
boundaries unless the service area is located in a multistate MSA. If 
the bank serves areas that extend substantially across state boundaries 
or extend substantially across boundaries of an MSA, the bank shall 
delineate separate service areas for the areas in each state and for 
the areas inside and outside the MSA.
    (c) Wholesale or limited purpose banks. The service area for a 
wholesale or limited purpose bank (as defined in Sec. 228.12 of this 
part) shall be delineated as an area or areas around its offices 
(including its main office and branches) or a broader statewide or 
regional area that includes the area or areas.
    (d) Banks serving military personnel. Notwithstanding paragraphs 
(a), (b), and (c) of this section, a bank whose business predominantly 
consists of serving the needs of military personnel or their dependents 
who are not located within a defined geographic area may delineate its 
entire deposit customer base as its service area.
    (e) Maintaining list and map. Each bank shall compile and maintain 
a list of all the geographies within its service area or areas and a 
map of each service area showing the geographies contained therein.


Sec. 228.42  Data collection and reporting.

    (a) Mandatory data collection and reporting--(1) Loan data. Each 
bank, except small banks, shall collect and report to the Board the 
following data pertaining to its home mortgage, small business, small 
farm, and community development loans:
    (i) Home mortgage loans. If the bank is subject to reporting under 
HMDA, the location of each home mortgage loan located outside the MSAs 
in which the bank has a home or branch office (or outside any MSA) in 
accordance with Regulation C, Home Mortgage Disclosure (12 CFR Part 
203);
    (ii) Small business and small farm loan data. All small business 
and small farm loan data required to be collected and reported on the 
Board's Small Business and Small Farm Loan Register (CC-______-______), 
set forth in Appendix C of this part, in accordance with the 
instructions in Appendix C of this part; and
    (iii) Community development loan data. All community development 
loan data required to be collected and reported on the Board's 
Community Development Report Form (CC-______-______), set forth in 
Appendix C of this part, in accordance with the instructions in 
Appendix C of this part.
    (2) Service area data. Each bank shall collect and report to the 
Board by April 1 of each year a list of the areas the bank considers to 
be its service area(s), a list of the geographies it considers to be 
within its service area(s), and a map of each service area showing the 
geographies contained therein.
    (b) Optional data collection. (1) If a bank elects to have its 
consumer lending considered under the lending test (as described in 
Sec. 228.22 of this part), the bank shall collect the consumer loan 
data requested on the Board's Consumer Loan Register (CC-______-
______), set forth in Appendix C of this part, in accordance with the 
instructions in Appendix C of this part.
    (2) At its option, a bank may:
    (i) Provide information concerning outstanding small business, 
small farm, or consumer loans throughout the year to account for 
seasonal variations in lending for use in the evaluation of the bank 
under the lending test described in Sec. 228.22 of this part; and
    (ii) Provide any other information concerning its lending 
performance, including additional loan distribution data.
    (c) Data on affiliate lending. A bank that wishes to have the Board 
consider lending by its affiliates for purposes of the lending test 
shall be prepared to identify the particular home mortgage loans 
reported under HMDA which it wishes the Board to consider, and shall 
collect or report, pursuant to the provisions of paragraphs (a) and (b) 
of this section, the requisite data concerning the small business, 
small farm, or consumer loans made by its affiliates that it wishes 
Board to consider.
    (d) Data on consortia and third-party lending. A bank that wishes 
to have the Board consider community development lending through 
consortia in which the bank participates or through third parties in 
which the bank has invested shall report, pursuant to paragraph 
(a)(1)(iii) of this section, the requisite data concerning the 
community development loans made through consortia and third parties 
that it wishes the Board to consider.


Sec. 228.43  Public file and disclosure by banks.

    (a) Public availability. Each bank shall maintain a file that is 
readily available for public inspection containing the information 
required by this section.
    (b) Current information. Each bank shall include in its public file 
the following information:
    (1) All signed, written comments received from the public for the 
current year and each of the prior two calendar years that specifically 
relate to the bank's performance in helping to meet the credit needs of 
its community or communities, and any response to the comments by the 
bank;
    (2) A copy of the public section of the bank's most recent CRA 
Performance Evaluation prepared by the Board. The bank shall place this 
copy in the public file within 30 business days after its receipt from 
the Board;
    (3) A list of the areas the bank considers to be its service 
area(s), a list of the geographies it considers to be within its 
service area(s), and a map of each service area showing the geographies 
contained therein;
    (4) A list of the bank's branches and ATMs , their street 
addresses, and geographies;
    (5) A list of branches and ATMs opened or closed by the bank during 
the current and each of the prior two calendar years, their street 
addresses, and geographies; and
    (6) A list of services (including hours of operation, available 
loan and deposit products, and transaction fees) generally offered at 
the bank's branches and ATMs and descriptions of material deviations in 
the availability or cost of services at particular branches and ATMs, 
if any. At its option, a bank may include information regarding the 
availability of alternative systems for delivering retail banking 
services (e.g., banking by telephone or computer, mobile branches and 
ATMs, ATMs not owned or operated by or operated exclusively for the 
bank, loan production offices, and bank-at-work or by-mail programs).
    (c) Information for prior years. Each bank that is not a small bank 
shall include in its public file the following information for each of 
the prior two calendar years derived from the data collected or 
reported pursuant to Sec. 228.42 of this part:
    (1) The number and amount of small business loans and small farm 
loans located in low-, moderate-, middle-, and upper-income 
geographies;
    (2) A list of the geographies where the bank had outstanding at 
least one small business loan or small farm loan;
    (3) The number and amount of small business and small farm loans 
located inside the bank's service area(s) and outside the bank's 
service area(s);
    (4) The number and amount of small business and small farm loans to 
minority-owned businesses;
    (5) The number and amount of small business and small farm loans to 
women-owned businesses;
    (6) The number and amount of small business and small farm loans to 
businesses and farms with gross annual revenues less than or equal to 
$1 million;
    (7) The number and amount of community development loans 
outstanding; and
    (8) If the bank has elected to have its consumer loans considered 
under the lending test (as described in Sec. 228.22 of this part), the 
number and amount of consumer loans to low-, moderate-, middle-, and 
upper-income individuals, the number and amount of consumer loans 
located in low-, moderate-, middle-, and upper-income geographies, and 
the number and amount of consumer loans located inside the bank's 
service area(s) and outside the bank's service area(s).
    (d) Exception. A bank shall not place in its public file any 
information required under paragraph (c) of this section for a 
particular year if, given special circumstances such as a small number 
of loans made within a small number of designated income geographies or 
to a small number of designated borrowers, the information could 
reasonably be expected to disclose the identity of the borrower.
    (e) HMDA statement. Each bank required to report home mortgage loan 
data pursuant to the HMDA shall include in its public file a copy of 
its HMDA Disclosure Statement provided by the Federal Financial 
Institutions Examination Council for each of the prior two calendar 
years. The statement shall be placed in the main office public file 
within three business days and in the branch office public files within 
10 business days of the bank's receipt of the statement.
    (f) Small bank file. (1) A small bank shall include in its public 
file the bank's loan-to-deposit ratio computed at the end of the most 
recent calendar year. A bank may include additional data on its loan-
to-deposit ratio at its option.
    (2) A small bank that elects to be evaluated under the lending, 
investment and service tests (as described in Secs. 228.22 through 
228.24 of this part) shall include in its public file the information 
specified in paragraph (c) of this section.
    (g) Strategic plan. Each bank that has been approved to be assessed 
under a strategic plan as described in Sec. 228.27 of this part shall 
include in its public file a copy of that plan. Information submitted 
to the Board on a confidential basis in conjunction with the plan does 
not have to be included in the public file.
    (h) Less than satisfactory rating. Each bank that received a less 
than satisfactory rating during its most recent examination shall 
include in its public file a description of its current efforts to 
improve its performance in helping to meet the credit needs of its 
entire community. This description shall be updated quarterly.
    (i) Location of public file. Each bank shall maintain its public 
file as follows:
    (1) The main office shall have a copy of the complete public file;
    (2) At least one branch in each service area shall have a copy of 
the bank's HMDA Disclosure Statements and all materials in the public 
file relating to the service area in which the branch is located; and
    (3) If a member of the public requests to review a bank's public 
file at a branch that does not have a copy, the bank shall make a 
complete copy of the file for that service area available for review at 
the branch within 5 business days at no cost.
    (j) Copies. Each bank shall provide copies of the information in 
its public file to members of the public upon request. A bank may 
charge a reasonable fee not to exceed the cost of reproduction and 
mailing (if applicable).


Sec. 228.44  Public notice by banks.

    (a) CRA notice for banks. Each bank shall provide in the public 
lobby of its main office and each of its branches the public notice set 
forth in Appendix B of this part. Bracketed material shall be used only 
by banks having more than one service area.
    (b) Additional notice for affiliate banks. The last two sentences 
shall be included only if the bank is an affiliate of a holding company 
and the last sentence only if the company is not prevented by statute 
from acquiring additional banks.


Sec. 228.45  Publication of planned examination schedule.

    The Board shall publish at least 30 days in advance of the 
beginning of each calendar quarter a list of the banks that are 
scheduled for CRA examinations in that quarter.

Subpart D--Transition Rules


Sec. 228.51  Transition rules.

    (a) Effective date. Sections of this part 228 become effective over 
a period of time in accordance with the schedule set forth in paragraph 
(c) of this section. The provisions of part 228 become fully effective 
on July 1, 1996.
    (b) Data collection and reporting; strategic plan; small bank 
assessment standards; and performance tests--(1) Data collection and 
reporting. On July 1, 1995, the data collection and reporting 
requirements set forth in Sec. 228.42 of this part become effective.
    (2) Strategic plan. Beginning July 1, 1995, a bank that elects to 
be evaluated under an approved strategic plan pursuant to Sec. 228.27 
of this part may submit its strategic plan to the Board for approval.
    (3) Small bank assessment standards. Beginning July 1, 1995, a bank 
that qualifies as a small bank pursuant to Sec. 228.12 of this part may 
elect to be evaluated under the small bank assessment standards set 
forth in Sec. 228.26 of this part. Beginning July 1, 1996, the Board 
shall evaluate each small bank under the small bank assessment 
standards, unless the bank elects to be evaluated pursuant to the 
performance tests set forth in Secs. 228.22 through 228.25 of this part 
or under an approved strategic plan.
    (4) Performance tests. On July 1, 1996, the lending, investment, 
service, and community development tests set forth in Secs. 228.22 
through 228.25 of this part become effective. Thereafter, the Board 
shall evaluate all banks pursuant to these test(s), except small banks 
evaluated under the small bank assessment standards and banks that 
elect to be evaluated under an approved strategic plan.
    (c) Schedule. On January 1, 1995, Secs. 228.11, 228.12, 228.29, 
228.51 and 228.100 become effective, and Secs. 228.1, 228.2, 228.8, and 
228.9 will expire. On July 1, 1995, Secs. 228.26, 228.27, 228.42, and 
228.45 become effective, and Secs. 228.28 and 228.41 become effective 
for banks that are evaluated under Secs. 228.26 or 228.27. On July 1, 
1996, Secs. 228.21 through 228.25, 228.28, 228.41, 228.43, and 228.44 
become effective, and Secs. 228.3 through 228.7 will expire.

Subpart E--Interpretations


Sec. 228.100  Applicability of the Community Reinvestment Act to 
certain special purpose banks.

    In response to its July 1978 proposed regulation, 12 CFR Part 228, 
to implement the CRA, the Board received several inquiries from 
institutions that, although they are chartered as banks, do not perform 
commercial or retail banking services. These institutions serve solely 
as correspondent banks, or as trust companies, or as clearing agents, 
and they do not extend credit to the public for their own account. The 
Board concludes that the CRA is not intended to cover these 
institutions. It is the purpose of the CRA to require the Board to 
encourage banks to meet the credit needs of their local communities. To 
this end, the Board must assess banks' records of performance and take 
those records into account in acting on certain applications affecting 
the banks. The Board believes that these provisions were intended to 
cover all banks that are in the business of extending credit to the 
public, including both wholesale and retail banks. The lending 
activities of these banks affect the economic health of the communities 
in which they are chartered. However, the Board believes it would be 
pointless to encourage or to assess the credit-granting record of 
institutions that are not organized to grant credit to the public in 
the ordinary course of business, other than as an incident to their 
specialized operations. Accordingly, the term State member bank as used 
in this part does not include banks that engage solely in correspondent 
banking business, trust company business, or acting as a clearing 
agent.

Appendix A to Part 228--Ratings

    (a) Ratings in general. (1) In assigning a rating, the Board 
shall evaluate a bank's performance under the applicable assessment 
criteria in this part, subject to Sec. 228.28 of this part, which 
provides for adjustments on the basis of evidence of discriminatory 
or other illegal credit practices and prior ``needs to improve'' 
ratings.
    (2) A bank's performance need not fit each aspect of a 
particular rating profile in order to receive that rating, and 
exceptionally strong performance with respect to some aspects may 
compensate for weak performance in others. The bank's overall 
performance, however, should generally be consistent with the 
appropriate profile stated below.
    (b) Banks that are not wholesale or limited purpose banks or 
small banks. (1) Lending performance rating. The Board shall assign 
each bank's lending performance one of the five ratings described 
below.
    (i) Outstanding. The Board shall rate a bank's lending 
performance ``outstanding'' if, in general, it demonstrates:
    (A) Excellent responsiveness to credit needs in its service 
area(s);
    (B) A substantial majority of its loans are made in its service 
area(s);
    (C) An excellent geographic distribution of loans throughout its 
service area(s);
    (D) An excellent distribution, particularly in its service 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different size given the product 
lines offered by the bank;
    (E) An excellent record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Extensive use of innovative or flexible lending practices to 
address the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It is a leader in making community development loans.
    (ii) High satisfactory. The Board shall rate a bank's lending 
performance ``high satisfactory'' if, in general, it demonstrates:
    (A) Good responsiveness to credit needs in its service area(s);
    (B) A high percentage of its loans are made in its service 
area(s);
    (C) A good geographic distribution of loans throughout its 
service area(s);
    (D) A good distribution, particularly in its service area(s), of 
loans among individuals of different income levels and businesses 
(including farms) of different size given the product lines offered 
by the bank;
    (E) A good record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Use of innovative or flexible lending practices to address 
the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It has made a relatively high level of community development 
loans.
    (iii) Low satisfactory. The Board shall rate a bank's lending 
performance ``low satisfactory'' if, in general, it demonstrates:
    (A) Adequate responsiveness to credit needs in its service 
area(s);
    (B) An adequate percentage of its loans are made in its service 
area(s);
    (C) An adequate geographic distribution of loans throughout its 
service area(s);
    (D) An adequate distribution, particularly in its service 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different size given the product 
lines offered by the bank;
    (E) An adequate record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Limited use of innovative or flexible lending practices to 
address the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It has made an adequate level of community development 
loans.
    (iv) Needs to improve. The Board shall rate a bank's lending 
performance ``needs to improve'' if, in general, it demonstrates:
    (A) Poor responsiveness to credit needs in its service area(s);
    (B) A small percentage of its loans are made in its service 
area(s);
    (C) A poor geographic distribution of loans throughout its 
service area(s), particularly to low- or moderate-income geographies 
in the service area(s);
    (D) A poor distribution, particularly in its service area(s), of 
loans among individuals of different income levels and businesses 
(including farms) of different size given the product lines offered 
by the bank;
    (E) A poor record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Little use of innovative or flexible lending practices to 
address the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It has made a limited number of community development loans.
    (v) Substantial noncompliance. The Board shall rate a bank's 
lending performance as being in ``substantial noncompliance'' if, in 
general, it demonstrates:
    (A) A very poor responsiveness to credit needs in its service 
area(s);
    (B) A very small percentage of its loans are made in its service 
area(s);
    (C) A very poor geographic distribution of loans throughout its 
service area(s), particularly to low- or moderate-income geographies 
in the service area(s);
    (D) A very poor distribution, particularly in its service 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different size given the product 
lines offered by the bank;
    (E) A very poor record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) No use of innovative or flexible lending practices to 
address the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It has made few, if any, community development loans.
    (2) Investment performance rating. The Board shall assign each 
bank's investment performance one of the five ratings described 
below.
    (i) Outstanding. The Board shall rate a bank's investment 
performance ``outstanding'' if, in general, it demonstrates:
    (A) An excellent level of qualified investments, often in a 
leadership position, particularly those that directly address credit 
needs;
    (B) Extensive use of innovative or complex qualified investments 
to support community development initiatives; and
    (C) Excellent responsiveness to credit and community economic 
development needs.
    (ii) High satisfactory. The Board shall rate a bank's investment 
performance ``high satisfactory'' if, in general, it demonstrates:
    (A) A significant level of qualified investments, occasionally 
in a leadership position, particularly those that directly address 
credit needs;
    (B) Significant use of innovative or complex qualified 
investments to support community development initiatives; and
    (C) Good responsiveness to credit and community economic 
development needs.
    (iii) Low satisfactory. The Board shall rate a bank's investment 
performance ``low satisfactory'' if, in general, it demonstrates:
    (A) An adequate level of qualified investments, although rarely 
in a leadership position, particularly those that directly address 
credit needs;
    (B) Occasional use of innovative or complex qualified 
investments to support community development initiatives; and
    (C) Adequate responsiveness to credit and community economic 
development needs.
    (iv) Needs to improve. The Board shall rate a bank's investment 
performance ``needs to improve'' if, in general, it demonstrates:
    (A) A poor level of qualified investments, particularly those 
that directly address credit needs;
    (B) Rare use of innovative or complex qualified investments to 
support community development initiatives; and
    (C) Poor responsiveness to credit and community economic 
development needs.
    (v) Substantial noncompliance. The Board shall rate a bank's 
investment performance as being in ``substantial noncompliance'' if, 
in general, it demonstrates:
    (A) Few, if any, qualified investments, particularly those that 
directly address credit needs;
    (B) No use of innovative or complex qualified investments to 
support community development initiatives; and
    (C) Very poor responsiveness to credit and community economic 
development needs.
    (3) Service performance rating. The Board shall assign each 
bank's service performance one of the five ratings described below.
    (i) Outstanding. The Board shall rate a bank's service 
performance ``outstanding'' if, in general, the bank demonstrates:
    (A) Its service delivery systems are readily accessible to 
essentially all portions of its service area(s);
    (B) To the extent changes have been made, the bank's record of 
opening and closing branches and ATMs has improved the accessibility 
of its delivery systems, particularly in low- or moderate-income 
geographies or to low- or moderate-income individuals;
    (C) Services (including, where appropriate, business hours) are 
tailored to the convenience and needs of its service area(s), 
particularly low- or moderate-income geographies or low- or 
moderate-income individuals; and
    (D) It is a leader in providing community development services.
    (ii) High satisfactory. The Board shall rate a bank's service 
performance ``high satisfactory'' if, in general, the bank 
demonstrates:
    (A) Its service delivery systems are accessible to essentially 
all portions of its service area(s);
    (B) To the extent changes have been made, the bank's record of 
opening and closing branches and ATMs has not adversely affected the 
accessibility of its delivery systems, particularly in low- and 
moderate-income geographies and to low- and moderate-income 
individuals;
    (C) Services (including, where appropriate, business hours) do 
not vary in a way that inconveniences certain portions of its 
service area(s), particularly low- and moderate-income geographies 
and low- and moderate- income individuals; and
    (D) It provides a relatively high level of community development 
services.
    (iii) Low satisfactory. The Board shall rate a bank's service 
performance ``low satisfactory'' if, in general, the bank 
demonstrates:
    (A) Its service delivery systems are reasonably accessible to 
essentially all portions of its service area(s);
    (B) To the extent changes have been made, the bank's record of 
opening and closing branches and ATMs has generally not adversely 
affected the accessibility of its delivery systems, particularly in 
low- and moderate-income geographies and to low- and moderate-income 
individuals;
    (C) Services (including, where appropriate, business hours) do 
not vary in a way that inconveniences portions of its service 
area(s), particularly low- and moderate-income geographies and low- 
and moderate-income individuals; and
    (D) It provides an adequate level of community development 
services.
    (iv) Needs to improve. The Board shall rate a bank's service 
performance ``needs to improve'' if, in general, the bank 
demonstrates:
    (A) Its service delivery systems are accessible to limited 
portions of its service area(s);
    (B) To the extent changes have been made, the bank's record of 
opening and closing branches and ATMs has adversely affected the 
accessibility its delivery systems, particularly in low- or 
moderate-income geographies or to low- or moderate-income 
individuals;
    (C) Services (including, where appropriate, business hours) vary 
in a way that inconveniences certain portions of its service 
area(s), particularly low- or moderate-income geographies or low- or 
moderate-income individuals; and
    (D) It provides a limited level of community development 
services.
    (v) Substantial noncompliance. The Board shall rate a bank's 
service performance as being in ``substantial noncompliance'' if, in 
general, the bank demonstrates:
    (A) Its service delivery systems are inaccessible to significant 
portions of its service area(s), particularly low- and moderate-
income geographies or low- and moderate-income individuals;
    (B) To the extent changes have been made, the bank's record of 
opening and closing branches and ATMs has significantly adversely 
affected the accessibility of its delivery systems, particularly in 
low- or moderate-income geographies or to low- or moderate-income 
individuals;
    (C) Services (including, where appropriate, business hours) vary 
in a way that significantly inconveniences many portions of its 
service area(s), particularly low- or moderate-income geographies or 
low- or moderate-income individuals; and
    (D) It provides few, if any, community development services.
    (4) Assigned rating. The Board shall use the following 
procedures for assigning a rating:
    (i) Assign points corresponding to the bank's performance on 
each of the component tests as follows: 

------------------------------------------------------------------------
    Component test ratings        Lending      Service      Investment  
------------------------------------------------------------------------
Outstanding...................           12            6               6
High satisfactory.............            9            4               4
Low satisfactory..............            6            3               3
Needs to improve..............            3            1               1
Substantial noncompliance.....            0            0              0 
------------------------------------------------------------------------

    (ii) Total the points for the three tests, and use that total to 
determine the composite rating according to the chart below. 
However, if the total exceeds twice the number of points 
attributable to the bank's lending test performance (as provided in 
paragraph (b)(4)(i) of this appendix), determine the composite 
rating using twice the number of points attributable to the bank's 
lending test performance. 

------------------------------------------------------------------------
              Points                          Composite rating          
------------------------------------------------------------------------
18 or over.........................  Outstanding.                       
9 through 17.......................  Satisfactory.                      
5 through 8........................  Needs to improve.                  
0 through 4........................  Substantial noncompliance.         
------------------------------------------------------------------------

    (c) Community development test for wholesale or limited purpose 
banks. The Board shall assign each wholesale or limited purpose 
bank's community development performance one of the four ratings 
described below.
    (1) Outstanding. The Board shall rate a wholesale or limited 
purpose bank's community development performance ``outstanding'' if, 
in general, it demonstrates:
    (i) A high level of qualified investments, community development 
loans outstanding, or community development services, particularly 
those that directly address credit needs;
    (ii) Extensive use of innovative or complex qualified 
investments, community development loans, or community development 
services, to support community development initiatives; and
    (iii) Excellent responsiveness to credit and community economic 
development needs in its service area(s).
    (2) Satisfactory. The Board shall rate a wholesale or limited 
purpose bank's community development performance ``satisfactory'' 
if, in general, it demonstrates:
    (i) An adequate level of qualified investments, community 
development loans outstanding, or community development services, 
particularly those that directly address credit needs;
    (ii) Occasional use of innovative or complex qualified 
investments, community development loans, or community development 
services, to support community development initiatives; and
    (iii) Adequate responsiveness to credit and community economic 
development needs in its service area(s).
    (3) Needs to improve. The Board shall rate a wholesale or 
limited purpose bank's community development performance as ``needs 
to improve'' if, in general, it demonstrates:
    (i) A poor level of qualified investments, community development 
loans outstanding, or community development services, particularly 
those that directly address credit needs;
    (ii) Rare use of innovative or complex qualified investments, 
community development loans, or community development services, to 
support community development initiatives; and
    (iii) Poor responsiveness to credit and community economic 
development needs in its service area(s).
    (4) Substantial noncompliance. The Board shall rate a wholesale 
or limited purpose bank's community development performance in 
``substantial noncompliance'' if, in general, it demonstrates:
    (i) Few, if any, qualified investments, community development 
loans outstanding, or community development services, particularly 
those that directly address credit needs;
    (ii) No use of innovative or complex qualified investments, 
community development loans, or community development services, to 
support community development initiatives; and
    (iii) Very poor responsiveness to credit and community economic 
development needs in its service area(s).
    (d) Assessment standards for small banks. The Board shall rate 
each small bank's performance as described below.
    (1) Eligibility for a satisfactory rating. The Board shall rate 
a bank's performance ``satisfactory'' if, in general, the bank 
demonstrates:
    (i) A reasonable loan-to-deposit ratio (considering seasonal 
variations) given the bank's size, financial condition, the credit 
needs of its service area(s), and taking into account, as 
appropriate, lending-related activities such as loan originations 
for sale to the secondary markets and community development lending 
and investment;
    (ii) A majority of its loans and, as appropriate, other lending-
related activities are in its service area(s);
    (iii) A distribution of loans to and, as appropriate, other 
lending related-activities for individuals of different income 
levels (including low- and moderate-income individuals) and 
businesses and farms of different sizes that is reasonable given the 
demographics of the bank's service area(s);
    (iv) A record of taking appropriate action, as warranted, in 
response to written complaints, if any, about the bank's performance 
in meeting the credit needs of its service area(s); and
    (v) A reasonable geographic distribution of loans given its 
service area(s).
    (2) Eligibility for an outstanding rating. A small bank that 
meets each of the standards for a ``satisfactory'' rating under this 
paragraph and exceeds some or all of those standards may warrant 
consideration for an overall rating of ``outstanding''. In assessing 
whether a small bank's performance is ``outstanding'', the Board 
shall consider the extent to which the bank exceeds each of the 
assessment standards for a ``satisfactory'' rating and its 
performance in making qualified investments (as defined in 
Sec. 228.23 of this part) and its performance in providing branches, 
ATMs or other services and delivery systems that enhance credit 
availability in its service area(s).
    (3) Needs to improve or substantial noncompliance ratings. A 
small bank also may receive a rating of ``needs to improve'' or 
``substantial noncompliance'' depending on the degree to which its 
performance has failed to meet the standards for a ``satisfactory'' 
rating.
    (e) Strategic plan assessment and rating.
    (1) Satisfactory goals. The Board shall approve as 
``satisfactory'' measurable goals that adequately help meet the 
credit needs of each of a bank's service area(s).
    (2) Outstanding goals. If the plan identifies a separate group 
of measurable goals that substantially exceed the levels approved as 
``satisfactory,'' the Board shall approve those goals as 
``outstanding.''
    (3) Rating. The Board shall assess the performance of a bank 
operating under an approved plan to determine if the bank has met 
its plan goals:
    (i) If the bank substantially achieves its plan goals for a 
satisfactory rating, the Board shall rate the bank's performance 
under the plan as ``satisfactory.''
    (ii) If the bank exceeds its plan goals for a satisfactory 
rating and substantially achieves its plan goals for an outstanding 
rating, the Board shall rate the bank's performance under the plan 
as ``outstanding''.
    (iii) If the bank fails to substantially meet its plan goals for 
a satisfactory rating, it shall be rated as either ``needs to 
improve'' or ``substantial noncompliance,'' depending on the extent 
to which it falls short of its plan goals, or if the bank so elected 
at the time it first submitted its plan, it shall be rated under the 
lending, investment and service tests (as described in Secs. 228.22 
through 228.24 of this part), the community development test (as 
described in Sec. 228.25 of this part), or the small bank assessment 
standards (as described in Sec. 228.26 of this part), as 
appropriate.

Appendix B to Part 228--CRA Notice

Community Reinvestment Act Notice

    Under the Federal Community Reinvestment Act (CRA), the Federal 
Reserve Board (Board) evaluates and enforces our compliance with our 
obligation to help meet the credit needs of this community 
consistent with safe and sound operations. The Board also takes our 
CRA performance into account when the Board decides on certain 
applications submitted by us. Your involvement is encouraged. You 
should know that:
    You may look at and obtain in this office information on our 
performance in this community. This information includes a file that 
includes: copies of all signed, written comments received by us, and 
any responses we have made to those comments; a map showing our 
service area; a list of our branches and ATMs in our service area; a 
list of services we provide at those locations; evaluations by the 
Federal Reserve System of our CRA performance; and data on the loans 
we have made in this community during the last two years. [Current 
CRA information on our performance in other communities served by us 
is available at our main office, located at ____________.]
    You may send signed, written comments about our CRA performance 
in helping to meet community credit needs to (title and address of 
State member bank official) and to Community Reinvestment Officer, 
Federal Reserve Bank of ____________ (address). Your letter, 
together with any response by us, will be considered by the Federal 
Reserve System in evaluating our CRA performance and may be made 
public.
    You may ask to look at any comments received by the Federal 
Reserve Bank of ____________. You may also request from the Federal 
Reserve Bank of ____________ an announcement of our applications 
covered by the CRA filed with the Federal Reserve System. We are an 
affiliate of (name of holding company), a bank holding company. You 
may request from the Federal Reserve Bank of ____________ (address) 
an announcement of applications covered by the CRA filed by bank 
holding companies.

Appendix C to Part 228--CRA Loan Data Format

Instructions for the Small Business and Small Farm Loan Register

    This form contains the instructions for completion of the Loan 
Register for Small Business and Small Farm Loans. This register is 
used in conjunction with the reporting of this information as part 
of the CRA data collection process. The register and these 
instructions are to be used to provide the format in which the data 
should be reported. The actual data are to be submitted in machine-
readable form in accordance with the instructions for submission of 
data pursuant to 12 CFR Part 203 (Regulation C).

I. Who Must File a Register

    All independent insured banks and thrifts with $250 million or 
more in total assets and all insured banks and thrifts that are 
members of holding companies with $250 million or more in bank and 
thrift assets must report this information for small business and 
small farm loans outstanding beginning December 31, 1995. Banks and 
thrifts with fewer assets that wish to be evaluated under 12 CFR 
228.22 through 228.24 must also report this information. Only 
provide information on business or farm location and borrower 
information for loans for which applications were submitted after 
July 1, 1995. For loans for which applications were submitted before 
that date, enter ``N/A'' for all information relating to location or 
borrower.

II. Types of Loans To Be Reported

    The loan register should contain individual loan data on each 
small business or small farm loan as defined on schedule RC-C of the 
December 31 Report of Condition and Income. Include data on 
individual small business loans with original loan amounts of $1 
million or less and individual small farm loans with original loan 
amounts of $500,000 or less that had an outstanding balance as of 
December 31.

III. Submission of Data

    The data must be submitted in machine-readable form consistent 
with requirements for submission of data pursuant to 12 CFR Part 203 
(Regulation C). The format must conform exactly to the form, 
including the order of columns, column headings, etc. Contact your 
federal supervisory agency for information regarding procedures and 
technical specifications for automated data submission.
    Your institution should decide on the procedure it wants to 
follow for collection of the data consistent with the Supplemental 
Instructions For Collection Of Data In Connection with Small 
Business and Small Farm Loans. Keep in mind that data reported on 
the register are outstanding as of December 31 and not originations 
as are reported for some other regulatory purposes. Your institution 
may collect the data on separate registers at different branches or 
on separate registers for different loan types (small business or 
small farm), but make sure each loan number is unique. Entries need 
not be grouped on your registers by MSA, or chronologically, or by 
census tract, or in any other particular order.

IV. Instructions for Completion of Register

Loan Information

    1. LOAN NUMBER--Enter an identifying number that can be used to 
retrieve the loan file. It can be any number (not exceeding 25 
characters). Use letters, numerals, or a combination of both. Make 
sure that all numbers are unique within the institution. If 
registers contain data for branch offices, for example, use a letter 
or a numerical code to identify the loans of different branches or 
assign a certain series of numbers to particular branches to avoid 
duplicate numbers. The use of the borrower's tax-payer 
identification number or social security number is strongly 
discouraged for privacy reasons.
    2. OUTSTANDING LOAN AMOUNT--Enter the outstanding loan amount 
(balance) as of December 31. Show the amount in thousands rounding 
to the nearest thousand. Do not report loans with balances below 
$500. For example, a loan with a balance of $500 would be rounded to 
$1,000; a loan balance of $50,300 would be rounded to $50,000; and a 
balance of $15,700 would be rounded to $16,000.
Business or Farm Location
    For each loan, identify the location of the business or farm. 
Location is determined by the following:
    (1) Small business loans are located in the census tract or 
block numbering area where the main business facilities or other 
property to which the loan proceeds will be applied (as indicated by 
borrower) are located;
    (2) Small farm loans are located in the census tract or block 
numbering area where the farm or other property to which the loan 
proceeds will be applied (as indicated by borrower) is located.
    1. MSA--For each loan in a MSA, indicate the location of the 
loan by the four digit MSA number. Enter only the MSA number, not 
the MSA name. Use MSA boundaries that were in effect on January 1 of 
the calendar year for which you are reporting. A listing of MSAs is 
available from your regional supervisory agency. (In these 
instructions, the term MSA refers to metropolitan statistical area 
or primary metropolitan statistical area.) For loans outside MSAs, 
enter ``N/A''.
    2. STATE & COUNTY--Use the Federal Information Processing 
Standard (FIPS) two-digit numerical code for the state and the 
three-digit numerical code for the county. These codes are available 
from your regional supervisory agency. Do not use the letter 
abbreviations used by the United States Postal Service.
    3. CENSUS TRACT/BLOCK NUMBERING AREA--Enter the census tract 
number or block numbering area from the U.S. Census Bureau's Census 
Tract/Street Index for the most recent census reporting period. For 
addresses not listed in the index, consult the Census Bureau's 
census tract outline maps.

Borrower Information

    1. MINORITY-OWNED CODE--Use the following codes to indicate 
small business or small farm loans with more than 50 percent 
ownership by one or more minority individuals (as indicated by 
borrower) pursuant to data collected as described in the 
Supplemental Instructions For Collection of Data In Connection With 
Small Business and Small Farm Loans.

1--Yes
2--No
3--Publicly traded business or farm (i.e. has securities registered 
under Section 12(g) of the Securities Exchange Act of 1934 or has 
more than 100 shareholders)
4--Information not provided by borrower

    2. WOMEN-OWNED CODE--Use the following codes to indicate small 
business or small farm loans with more than 50 percent ownership by 
women (as indicated by borrower) pursuant to data collected as 
described in the Supplemental Instructions For Collection of Data In 
Connection With Small Business and Small Farm Loans.

1--Yes
2--No
3--Publicly traded business or farm (i.e. has securities registered 
under Section 12(g) of the Securities Exchange Act of 1934 or has 
more than 100 shareholders)
4--Information not provided by borrower

    3. GROSS ANNUAL REVENUES  $1MM CODE--Use the 
following codes to indicate whether the gross annual revenues of the 
small business or farm are less than or equal to $1 million. This 
information should be determined based upon the revenues upon which 
your institution relied in making its credit decision.

1--Yes
2--No

Supplemental instructions for collection of data in connection with 
small business and small farm loans

A. Format

    Beginning July 1, 1995, financial institutions required to 
report small business and small farm loan registers are to collect 
information on the racial, ethnic, and gender make-up of applicants 
or borrowers in connection with small business and small farm loans. 
If you take a written application, you should list questions 
regarding the percent of minority and gender ownership on your loan 
application form or on a separate form completed by the applicant in 
conjunction with an application. If you do not take a written 
application, you should request the information at an appropriate 
time during the application or origination process; you must request 
the information for each loan you originate even if you did not take 
a written application. If you neither take a written application nor 
originate the loan, you do not have to request the information. See 
the sample form for recommended format and language. This 
information is to be maintained in the institution's in-house loan 
files. This information is not to be reported to the agency, but is 
to be used to complete the small business and small farm loan 
register.

B. Procedures

    1. You must ask for this information, but cannot require the 
applicant or borrower to provide it. You may not consider whether or 
not an applicant or borrower has provided this information in making 
your decision whether to extend credit or in setting the terms of 
credit.
    2. If the applicant or borrower chooses not to provide the 
information, note this fact on the form.
    3. Inform the applicant or borrower that the Federal government 
is requesting this information in order to monitor compliance with 
Federal statutes that prohibit lenders from discriminating on these 
bases.

BILLING CODES: OCC 4810-33-P (25%); Board 6210-01-P (25%); FDIC 6714-
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TP07OC94.005


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BILLING CODES: OCC 4810-33-C (25%); Board 6210-01-C (25%); FDIC 6714-
01-C (25%); OTS 6720-01-C (25%)

Instructions for completion of the open- and closed-end consumer loan 
registers

    This form contains the instructions for completion of the Loan 
Registers for Open-End Consumer Loans and Closed-End Consumer Loans. 
These registers are used in conjunction with the collection of this 
information as part of the CRA data collection process. The 
registers and these instructions are to be used to provide the 
format in which the data should be maintained. The data must be 
maintained in machine-readable form. If you wish to maintain the 
data in an alternative format, you must obtain approval from your 
primary supervisory agency.

I. Who May Maintain a Register

    Any insured bank or thrift may, at the institution's option, 
collect and maintain this information for loans outstanding 
beginning December 31, 1995. You need only provide information on 
borrower location and gross annual income for loans for which 
applications were submitted after July 1, 1995. For loans for which 
applications were submitted before that date, you may enter ``N/A'' 
for borrower location and gross annual income.

II. Types of Loans to be Recorded

    If you collect and maintain information on your consumer loans 
for consideration in your CRA evaluation, you must provide data on 
all consumer loans outstanding included in the aggregate consumer 
loan figure on your December 31 Report of Condition and Income.
    Your institution should decide on the procedure it wants to 
follow for collection of the data. Keep in mind that data recorded 
on the registers are outstandings as of December 31 and not 
originations as are reported for some other regulatory purposes. 
Your institution may collect the data on separate registers at 
different branches, but is required to maintain the data on separate 
registers for each of the different consumer loan types (open-end 
and closed-end). Make sure the loan numbers are unique.

III. Instructions for Completion of Register

Loan Information

    1. LOAN NUMBER--Enter an identifying number that can be used to 
retrieve the loan file. It can be any number (not exceeding 25 
characters). Use letters, numerals, or a combination of both. Make 
sure that all numbers are unique within the institution. If 
registers contains data for branch offices, for example, use a 
letter or a numerical code to identify the loans of different 
branches or assign a certain series of numbers to particular 
branches to avoid duplicate numbers. The use of the borrower's tax-
payer identification number or social security number is strongly 
discouraged for privacy reasons.
    2. OUTSTANDING LOAN AMOUNT--Enter the outstanding loan amount 
(balance) as of December 31. Show the amount in thousands rounding 
to the nearest thousand. Do not report loans with balances below 
$500. For example, a loan with a balance of $500 would be rounded to 
$1,000; a loan balance of $50,300 would be rounded to $50,000; and a 
balance of $15,700 would be rounded to $16,000.

Borrower Information

    For each loan, identify the location of the borrower. Consumer 
loans are located in the census tract or block numbering area where 
the borrower resides.
    1. MSA--For each loan in a MSA, indicate the location of the 
loan by the four digit MSA number. Enter only the MSA number, not 
the MSA name. Use MSA boundaries that were in effect on January 1 of 
the calendar year for which you are reporting. A listing of MSAs is 
available from your regional supervisory agency. (In these 
instructions, the term MSA refers to metropolitan statistical area 
or primary metropolitan statistical area.) For loans outside MSAs, 
enter ``N/A''.
    2. STATE & COUNTY--Use the Federal Information Processing 
Standard (FIPS) two-digit numerical code for the state and the 
three-digit numerical code for the county. These codes are available 
from your regional supervisory agency. Do not use the letter 
abbreviations used by the United States Postal Service.
    3. CENSUS TRACT/BLOCK NUMBERING AREA--Enter the census tract 
number or block numbering area from the U.S. Census Bureau's Census 
Tract/Street Index for the most recent census reporting period. For 
addresses not listed in the index, consult the Census Bureau's 
census tract outline maps.
    4. GROSS ANNUAL INCOME--Enter the gross annual income upon which 
your institution relied in making the credit decision. Round all 
dollar amounts to the nearest thousand.

BILLING CODES: OCC 4810-33-P (25%); Board 6210-01-P (25%); FDIC 6714-
01-P (25%); OTS 6720-01-P (25%)

TP07OC94.007


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TP07OC94.009

BILLING CODES: OCC 4810-33-C (25%); Board 6210-01-C (25%); FDIC 6714-
01-C (25%); OTS 6720-01-C (25%)
    By order of the Board of Governors of the Federal Reserve 
System, September 27, 1994.
William W. Wiles,
Secretary of the Board.
FEDERAL DEPOSIT INSURANCE CORPORATION 
12 CFR CHAPTER III 
    For the reasons outlined in the joint preamble, the Board of 
Directors of the Federal Deposit Insurance Corporation proposes to 
amend 12 CFR chapter III as set forth below: 
PART 345--COMMUNITY REINVESTMENT 
    1. The authority citation for part 345 is revised to read as 
follows:

    Authority: 12 U.S.C. 1815-1820, 1828, 2901-2907, and 3104.


Secs. 345.101, 345,102  [Redesignated as Secs. 345.9, 345.10]

    2. Existing Sec. 345.101 and Sec. 345.102 are redesignated as 
Sec. 345.9 and Sec. 345.10, respectively, and transferred with their 
undesignated center heading immediately following Sec. 345.8.
    3. Part 345 is amended by adding Subparts A through E and 
Appendices A through C following Sec. 345.10 to read as follows:

Subpart A--General

Sec.
345.11  Authority, community reinvestment obligation, purposes and 
scope.
345.12  Definitions.

Subpart B--Standards for Assessing Performance

345.21  Assessment tests and ratings, in general.
345.22  Lending test.
345.23  Investment test.
345.24  Service test.
345.25  Community development test for wholesale or limited purpose 
banks.
345.26  Small bank assessment standards.
345.27  Strategic plan assessment.
345.28  Assigned ratings.
345.29  Effect of ratings on applications.

Subpart C--Records, Reporting and Disclosure Requirements

345.41  Service area delineation.
345.42  Data collection and reporting.
345.43  Public file and disclosure by banks.
345.44  Public notice by banks.
345.45  Publication of planned examination schedule.

Subpart D--Transition Rules

345.51  Transition rules.

Subpart E--Interpretations

345.100  Applicability of the Community Reinvestment Act to certain 
special purpose banks.

Appendix A to Part 345--Ratings

Appendix B to Part 345--CRA Notice

Appendix C to Part 345--CRA Loan Data Format

Subpart A--General


Sec. 345.11  Authority, community reinvestment obligation, purposes and 
scope.

    (a) Authority. This part 345 implements the Community Reinvestment 
Act of 1977 (12 U.S.C. 2901 et seq.) (CRA). It is issued by the Federal 
Deposit Insurance Corporation (FDIC) pursuant to its authority under 
the CRA and 12 U.S.C. 1815-1820, 1828, and 3104.
    (b) Community reinvestment obligation. Insured state nonmember 
banks have a continuing and affirmative obligation to help meet the 
credit needs of their communities, including low- and moderate-income 
areas, consistent with safe and sound operations.
    (c) Purposes. The purposes of this part are to implement the 
community reinvestment obligation of insured state nonmember banks; to 
explain how the FDIC assesses the performance of state nonmember banks 
in satisfying the community reinvestment obligation; and to describe 
how that performance is taken into account in certain applications.
    (d) Scope--(1) General. This part applies to all insured state 
nonmember banks that are in the business of extending credit to the 
public, including wholesale or limited purpose banks, as defined in 
Sec. 345.12 of this part.
    (2) Certain special purpose banks. This part does not apply to a 
bankers bank that engages exclusively in providing services for other 
depository institutions and for their officers, directors and 
employees, or to other special purpose banks described in Sec. 345.100 
of this part.
    (3) Insured State branches. This part applies to ``insured State 
branches,'' which are branches of a foreign bank established and 
operating under the laws of any State, the deposits of which are 
insured in accordance with the provisions of the Federal Deposit 
Insurance Act. References in this part to ``main office'' mean, in the 
case of insured state branches, the principal branch within the United 
States. The term ``branch'' or ``branches'' refers to any insured State 
branch or branches located within the United States. The ``service 
area'' of an insured State branch refers to the community or 
communities located within the United States served by the branch as 
described in Sec. 345.41 of this part.


Sec. 345.12  Definitions.

    For purposes of this part, the following definitions apply:
    (a) Affiliate means any company that controls, is controlled by, or 
is under common control with another company. For purposes of this 
part, the term ``control'' has the meaning given to that term in 12 
U.S.C. 1841(a)(2), and a company is under common control with another 
company if both companies are directly or indirectly controlled by the 
same company.
    (b) Area median income means the median family income for the MSA 
in which a person or geography is located or, in the case of a person 
or geography located outside an MSA, the higher of the county median 
family income or the statewide nonmetropolitan median family income.
    (c) Remote Service Facility (RSF) means an automated, unstaffed 
banking facility with a fixed site owned or operated by or operated 
exclusively for the bank, such as an automated teller machine, cash 
dispensing machine, point-of-sale terminal, or other remote electronic 
facility where deposits are received, checks paid, or money lent.
    (d) Bank means a state nonmember bank as that term is defined in 
section 3(e)(2) of the Federal Deposit Insurance Act, as amended (FDIA) 
(12 U.S.C. 1813(e)(2)).
    (e) Branch means a staffed banking facility (shared or unshared) 
licensed as a branch with a fixed site at which deposits are received, 
checks paid, or money lent, including a mini-branch in a grocery store 
or a branch operated in conjunction with any other local business or 
nonprofit organization. The term ``branch'' only includes a ``domestic 
branch'' as that term is defined in section 3(o) of the FDIA (12 U.S.C. 
1813(o)).
    (f) Community development loan means a loan (including a line of 
credit, commitment, or letter of credit) that addresses affordable 
housing (including multifamily rental housing) or other community 
economic development needs not being met by the private market; 
provided the loan:
    (1) Primarily benefits low- or moderate-income individuals, 
businesses or farms with gross annual revenues less than or equal to $1 
million, or businesses or farms that qualify as small businesses under 
a Small Business Administration program;
    (2) Has not been reported or collected by the bank or one of its 
affiliates as a home mortgage loan, small business loan, small farm 
loan, or a consumer loan pursuant to Sec. 345.42 of this part, unless 
it is a multifamily dwelling loan (as described in Appendix A to 12 CFR 
Part 203); and
    (3) Except in the case of a wholesale or limited purpose bank, 
benefits the bank's service area(s) or a broader statewide or regional 
area that includes the bank's service area(s).
    (g) Consumer loan means a loan extended to one or more individuals 
for household, family, or other personal expenditures; provided the 
loan is not secured by real estate and is not used for the purpose of 
purchasing or carrying securities.
    (h) Geography means a census tract delineated by the United States 
Bureau of the Census in the most recent decennial census, or a block 
numbering area delineating a small statistical subdivision where a 
census tract has not been established.
    (i) HMDA means the Home Mortgage Disclosure Act (12 U.S.C. 2801 et 
seq.).
    (j) Home mortgage loan means a mortgage loan as defined in section 
303(1) of HMDA (12 U.S.C. 2802(1)) and implementing regulations.
    (k) Income level--(1) Low-income means, in the case of a person, an 
individual income, or in the case of a geography, a median family 
income, that is less than 50 percent of the adjusted area median 
income, with adjustments to take into account family size and the 
prevailing levels of residential housing construction costs or 
unusually high or low family incomes.
    (2) Moderate-income means, in the case of a person, an individual 
income, or in the case of a geography, a median family income, that is 
at least 50 percent and less than 80 percent of the adjusted area 
median income, with adjustments to take into account family size and 
the prevailing levels of residential housing construction costs or 
unusually high or low family incomes.
    (3) Middle-income means, in the case of a person, an individual 
income, or in the case of a geography, a median family income, that is 
at least 80 percent and less than 120 percent of the adjusted area 
median income, with adjustments to take into account family size and 
the prevailing levels of residential housing construction costs or 
unusually high or low family incomes.
    (4) Upper-income means, in the case of a person, an individual 
income or, in the case of a geography, a median family income, that is 
120 percent or more of the adjusted area median income, with 
adjustments to take into account family size and the prevailing levels 
of residential housing construction costs or unusually high or low 
family incomes.
    (l) Limited purpose bank means a bank that offers only a narrow 
product line (such as credit cards or automobile loans) to a national 
or regional market and has, pursuant to a written request, been 
designated by the FDIC as a limited purpose bank, as provided in 
Sec. 345.25 of this part.
    (m) Loan location. A loan is located in a geography as follows:
    (1) A consumer loan is located where the borrower resides;
    (2) A home mortgage loan is located where the property to which the 
loan relates is located;
    (3) A small business or small farm loan is located where the main 
business facility or farm is located or where the loan proceeds 
otherwise will be applied, as indicated by the borrower.
    (n) Loan production office means a staffed banking facility that is 
accessible to the public, and provides lending-related services such as 
loan information and applications, but is not a branch.
    (o) MSA means metropolitan statistical area or primary metropolitan 
statistical area, as defined by the Director of the Office of 
Management and Budget.
    (p) Minority means an individual who is an American Indian or 
Alaskan Native, an Asian or Pacific Islander, a Black, or of Hispanic 
origin as provided in the Office of Management and Budget's Statistical 
Policy Directive No. 15, Race and Ethnic Standards for Federal 
Statistics and Administrative Reporting.
    (q) Minority-owned business means a business, including a farm, 
that is more than 50 percent owned by one or more minority individuals, 
and that has not issued any securities registered under section 12(g) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) and has 
100 or fewer shareholders.
    (r) Service area means a geographical area delineated in accordance 
with Sec. 345.41 of this part.
    (s) Small bank means a bank with total assets of less than $250 
million that is:
    (1) Independent; or
    (2) An affiliate of a holding company with total banking and thrift 
assets of less than $250 million.
    (t) Small business loan means a loan with an original amount of $1 
million or less that is either a commercial or industrial loan or a 
loan secured by nonfarm, nonresidential property.
    (u) Small farm loan means a loan with an original amount of 
$500,000 or less that is a loan secured by farmland (including a loan 
to finance a farm residence or other improvements), a loan to finance 
agricultural production, or any other loan to a farmer.
    (v) Women-owned business means a business, including a farm, that 
is more than 50 percent owned by one or more women, and that has not 
issued any securities registered under section 12(g) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.) and has 100 or fewer 
shareholders.
    (w) Wholesale bank means a bank that is not in the business of 
extending home mortgage, small business, small farm, or consumer loans 
to retail customers, and has, pursuant to a written request, been 
designated by the FDIC as a wholesale bank, as provided in Sec. 345.25 
of this part.

Subpart B--Standards for Assessing Performance


Sec. 345.21   Assessment tests and ratings, in general.

    (a) Assessment tests and standards. In connection with an 
examination of a bank, the FDIC shall assess the CRA performance of the 
bank as follows:
    (1) Lending, investment, and service tests. The FDIC shall apply 
these three tests, as described in Secs. 345.22 through 345.24 of this 
part, in evaluating the performance of banks, except as provided in 
paragraphs (a)(2), (3) and (4) of this section.
    (2) Community development test for wholesale or limited purpose 
banks. In evaluating the performance of wholesale or limited purpose 
banks (as defined in Sec. 345.12 of this part), the FDIC shall apply 
the community development test, as provided in Sec. 345.25 of this 
part, except as provided in paragraph (a)(4) of this section.
    (3) Assessment standards for small banks. In evaluating the 
performance of small banks (as defined in Sec. 345.12 of this part), 
the FDIC shall apply the assessment standards for small banks as 
provided in Sec. 345.26 of this part. However, a small bank may elect 
instead to be assessed as provided in paragraphs (a)(2) and (4) of this 
section, or it may elect to be evaluated under paragraph (a)(1) of this 
section if it has collected and reported the data required for other 
banks under Sec. 345.42(a)(1) of this part.
    (4) Strategic plan. Any bank may elect not to be assessed by any 
tests described in paragraphs (a)(1), (2) and (3) of this section by 
submitting to the FDIC and receiving approval of a strategic plan as 
described in Sec. 345.27 of this part.
    (b) Assessment context. The FDIC shall apply the tests and 
standards in paragraph (a) of this section in the context of the 
following information:
    (1) Demographic data on median income levels, distribution of 
household income, nature of housing stock, housing costs, and other 
relevant data pertaining to a bank's service area(s);
    (2) Examiner-developed information regarding the credit needs of 
the bank's service area(s) obtained from community-based organizations, 
state and local governments, economic development agencies, and from 
any information the bank may choose to provide;
    (3) The bank's product offerings and business strategy as 
determined from data provided by the bank;
    (4) Institutional capacity and constraints, including the size and 
financial condition of the institution, the economic climate (national, 
regional and local), safety and soundness limitations, and any other 
factors that significantly affect the bank's ability to lend to the 
different parts of its service area(s);
    (5) The bank's past performance and the performance of similarly-
situated lenders;
    (6) The bank's public file, as described in Sec. 345.43 of this 
part, and any signed, written comments about the bank's CRA performance 
submitted to the bank or the FDIC; and
    (7) Any other information deemed relevant by the FDIC.
    (c) Assigned ratings. The FDIC shall assign to each bank one of the 
following four ratings as set out in Sec. 345.28 of this part and 
Appendix A of this part: ``outstanding''; ``satisfactory''; ``needs to 
improve''; or ``substantial noncompliance'' based on:
    (1) The results of the applicable assessment test(s) or standards 
or performance under an approved strategic plan; and
    (2) Any evidence of discriminatory or other illegal credit 
practices.
    (d) Safe and sound operations. This part and the CRA do not require 
any bank to make loans or investments, or to provide services that are 
inconsistent with safe and sound operations. Banks are permitted and 
encouraged to develop and apply flexible underwriting standards, 
consistent with safe and sound operations, for loans that benefit low- 
or moderate-income geographies or individuals.
    (e) Compliance with community reinvestment obligation. The assigned 
ratings reflect the extent of compliance or noncompliance with the 
community reinvestment obligation described in Sec. 345.11(b) of this 
part. A bank that receives an assigned rating of ``substantial 
noncompliance'' shall be subject to enforcement actions pursuant to 12 
U.S.C. 1818.


Sec. 345.22   Lending test.

    (a) Scope of test. (1) The lending test evaluates a bank's 
performance in helping to meet the credit needs of its service area(s) 
through its lending activities, as measured by home mortgage 
originations and purchases, small business and small farm loans 
outstanding, and community development loans outstanding. At the bank's 
option, the lending test will also evaluate the bank's consumer loans 
outstanding and any other loan distribution data the bank may choose to 
provide, such as data on extensions of lines of credit, commitments, 
and letters of credit.
    (2) When evaluating a bank's overall lending performance, the FDIC 
shall weigh its assessments of the bank's home mortgage lending, small 
business and small farm lending, and (at the bank's option) consumer 
lending to reflect the relative importance of each category of lending 
to the bank's overall business.
    (3) The FDIC shall weigh the bank's community development lending 
according to the characteristics and needs of the bank's service 
area(s), the capacity and constraints of the bank, and the 
opportunities available to the bank for this lending.
    (b) Assessment criteria. The FDIC shall evaluate a bank's lending 
performance pursuant to the following criteria:
    (1) Geographic distribution. The geographic distribution of the 
bank's lending (based on the location of the loan as provided in 
Sec. 345.12 of this part), including:
    (i) The proportion of total lending in the bank's service area(s);
    (ii) The dispersion of lending throughout the bank's service 
area(s); and
    (iii) The number and amount of loans in low-, moderate-, middle-, 
and upper-income geographies in the bank's service area(s);
    (2) Borrower characteristics. The distribution, particularly in the 
bank's service area, of the bank's lending (based on borrower 
characteristics), including:
    (i) The number and amount of home mortgage loans to low-, moderate-
, middle-, and upper-income individuals;
    (ii) The number and amount of small business and small farm loans 
to businesses and farms with gross annual revenues less than or equal 
to $1 million;
    (iii) The number and amount of small business and small farm loans 
by size of loan; and
    (iv) At the bank's option, the number and amount of consumer loans 
to
low-, moderate-, middle-, and upper-income individuals;
    (3) Community development lending. The bank's community development 
lending, including the number and amount of community development loans 
outstanding, their complexity and innovativeness, and the number and 
amount of lines of credit, commitments, and letters of credit for 
community development purposes; and
    (4) Innovative or flexible lending practices. The bank's use of 
innovative or flexible lending practices to address the credit needs of 
low- or moderate-income individuals or geographies.
    (c) Affiliate lending. (1) The FDIC shall, if the bank elects, 
consider in its assessment of a bank's lending performance under this 
section lending by an affiliate of the bank, if the bank, or its 
affiliate, reports or collects the lending data pursuant to Sec. 345.42 
of this part.
    (2) The FDIC may consider in its assessment lending by a bank's 
affiliate even if the bank has chosen not to have the affiliate's 
lending considered if the FDIC determines that this lending is integral 
to the business of the bank.
    (3) Consideration of affiliate lending shall be subject to the 
following constraints:
    (i) No affiliate may claim the same loan as another institution; 
and
    (ii) If the FDIC considers loans within a particular lending 
category (e.g., home mortgage, small business, small farm, consumer or 
community development lending) made by one or more of the bank's 
affiliates in a particular service area, the FDIC shall consider all 
the loans within that lending category made by all of the bank's 
affiliates in that particular service area.
    (d) Consortia and third-party lending. Community development loans 
made through consortia in which the bank participates or through third 
parties in which the bank has invested:
    (1) Shall be considered under the lending test, if the bank elects, 
provided the data pertaining to these loans are reported by the bank 
under the applicable provisions of Sec. 345.42 of this part; and
    (2) May be allocated among participants or investors as they choose 
for purposes of the lending test, provided that no participant or 
investor claims the same loan or part of a loan as another participant 
or investor, or claims in the aggregate greater than its percentage 
share (based on the level of its participation or investment) of the 
total loans made by the consortium or third party.
    (e) Lending performance rating. The FDIC shall rate a bank's 
lending performance as provided in Appendix A to this part.


Sec. 345.23  Investment test.

    (a) Scope of test. The investment test evaluates the degree to 
which a bank is helping to meet the credit needs of its service area(s) 
through qualified investments. To be considered under this test, the 
qualified investments of a bank must benefit its service area(s) or a 
broader statewide or regional geographic area that includes the bank's 
service area(s).
    (b) Qualified investments. (1) Qualified investments are lawful 
investments, deposits, membership shares in a credit union, or grants 
that:
    (i) Primarily benefit low- or moderate-income individuals, 
businesses or farms with gross annual revenues less than or equal to $1 
million, or businesses or farms that qualify as small businesses under 
a Small Business Administration program; and
    (ii) Address affordable housing (including multifamily rental 
housing) or other community economic development needs that are not 
being met by the private market.
    (2) Donating, selling on favorable terms, or making available on a 
rent-free basis any branch of the bank that is located in any 
predominantly minority neighborhood to any minority depository 
institution or women's depository institution (as defined in 12 U.S.C. 
2907(b)) shall be considered under the investment test.
    (3) Activities considered under the lending or service tests may 
not be considered under the investment test.
    (4) At a bank's option, the FDIC shall consider in its assessment 
of a bank's investment performance a qualified investment made by an 
affiliate of the bank, provided that the qualified investment is not 
claimed by any other institution.
    (c) Assessment criteria. The FDIC shall evaluate the investment 
performance of a bank pursuant to the following criteria:
    (1) The dollar amount of qualified investments that directly 
address credit needs;
    (2) The use of innovative or complex qualified investments to 
support community development initiatives; and
    (3) The degree of responsiveness to credit and community economic 
development needs.
    (d) Investment performance rating. The FDIC shall rate a bank's 
investment performance as provided in Appendix A of this part.


Sec. 345.24  Service test.

    (a) Scope of test. The service test evaluates a bank's record of 
helping to meet the credit needs of the bank's service area(s) by 
analyzing both the availability and responsiveness of a bank's systems 
for delivering retail banking services and the extent and 
innovativeness of its community development services.
    (b) Assessment criteria--retail banking services. The FDIC shall 
evaluate the availability and responsiveness of a bank's systems for 
delivering retail banking services, pursuant to the following criteria:
    (1) The current distribution of the bank's branches and RSFs among
low-, moderate-, middle-, and upper-income geographies;
    (2) In the context of its current distribution of the bank's 
branches and RSFs, the bank's record of opening and closing branches 
and RSFs, particularly branches and RSFs located in low- or moderate-
income geographies or primarily serving low- or moderate-income 
individuals;
    (3) The availability of alternative systems for delivering retail 
banking services (e.g., banking by telephone or computer, mobile 
branches and RSFs, RSFs not owned or operated by or operated 
exclusively for the bank, loan production offices, and bank-at-work or 
by-mail programs) in low- and moderate-income geographies and to low- 
and moderate-income individuals; and
    (4) The range of services provided in low-, moderate-, middle-, and 
upper-income geographies and the degree to which the services are 
tailored to meet the needs of those geographies.
    (c) Assessment criteria--community development services. (1) 
Community development services are services that:
    (i) Primarily benefit low- or moderate-income individuals, 
businesses or farms with gross annual revenues less than or equal to $1 
million, or businesses or farms that qualify as small businesses under 
a Small Business Administration program; and
    (ii) Address affordable housing (including multifamily rental 
housing) or other community economic development needs that are not 
being met by the private market.
    (2) The FDIC shall evaluate community development services pursuant 
to the following criteria:
    (i) The extent to which the bank provides community development 
services; and
    (ii) The innovativeness and responsiveness of community development 
services.
    (3) When evaluating a bank's overall service performance, the FDIC 
shall weigh the bank's community development services according to the 
characteristics and needs of the bank's service area(s), the capacity 
and constraints of the bank, and the opportunities available to the 
bank to provide community development services.
    (4) At a bank's option, the FDIC shall consider in its assessment 
of a bank's service performance a community development service 
provided by an affiliate of the bank, provided that the community 
development service is not claimed by any other institution.
    (d) Service performance rating. The FDIC shall rate a bank's 
service performance as provided in Appendix A of this part.


Sec. 345.25  Community development test for wholesale or limited 
purpose banks.

    (a) Scope of test. (1) The FDIC shall assess the degree to which a 
wholesale or limited purpose bank (as defined in Sec. 345.12 of this 
part) is helping to meet the credit needs of its service area(s) under 
the community development test only if the bank's written request to be 
designated as a wholesale or limited purpose bank has been approved by 
the FDIC before the commencement of its CRA examination, and the 
designation has not been revoked either at the request of the bank or 
at the FDIC's own initiative.
    (2) The community development test evaluates the record of a 
wholesale or limited purpose bank in helping to meet the credit needs 
of its service area(s) through qualified investments, community 
development lending, or community development services.
    (3) For purposes of the community development test only, community 
development loans include small business and small farm loans and loans 
to low- and moderate-income individuals and geographies, whether or not 
reported or collected by the bank or one of its affiliates as home 
mortgage loans, small business loans, small farm loans, or consumer 
loans, pursuant to Sec. 345.42 of this part.
    (b) Assessment criteria. The FDIC shall evaluate the community 
development performance of a wholesale or limited purpose bank pursuant 
to the following criteria:
    (1) The number and amount of community development loans 
outstanding, qualified investments (as defined in Sec. 345.23 of this 
part), or community development services (as defined in Sec. 345.24 of 
this part);
    (2) The use of innovative or complex qualified investments, 
community development loans outstanding, or community development 
services and their connection to credit needs; and
    (3) The degree of responsiveness to credit and community economic 
development needs.
    (c) Indirect activities. The FDIC shall, if the wholesale or 
limited purpose bank elects, consider in its community development 
performance assessment:
    (1) Qualified investments or community development services 
provided by an affiliate of the bank, provided the investment or 
services are not claimed by any other institution; and
    (2) Community development lending by affiliates, consortia and 
third parties, subject to the requirements and limitations in 
Sec. 345.22 (c)(3) and (d) of this part.
    (d) Benefit to service area(s).--(1) Benefit inside service 
area(s). For purposes of assessing a wholesale or limited purpose 
bank's community development performance under this section, the FDIC 
shall consider all qualified investments, community development loans 
outstanding, and community development services that benefit areas 
within the bank's service area(s).
    (2) Benefit outside service area(s). The FDIC shall consider the 
qualified investments, community development loans outstanding, and 
community development services provided by a wholesale or limited 
purpose bank that benefit areas outside the bank's service area(s) only 
up to an amount equivalent to the amount of investments, loans, and 
services considered under paragraph (d)(1) of this section. If a bank 
demonstrates a limited need or opportunity for these investments, 
lending, and services, in its service area(s), the FDIC may exempt the 
bank from all or part of this limitation.
    (e) Community development performance rating. The FDIC shall rate a 
bank's community development performance as provided in Appendix A of 
this part.


Sec. 345.26  Small bank assessment standards.

    (a) Scope of assessment. The FDIC shall assess the degree to which 
a small bank is helping to meet the credit needs of its service area(s) 
under the assessment standards described in this section.
    (b) Assessment criteria. The FDIC shall evaluate a small bank's CRA 
performance pursuant to the following criteria:
    (1) The bank's loan-to-deposit ratio, adjusted for seasonal 
variation and, as appropriate, other lending-related activities, such 
as loan originations for sale to the secondary markets or community 
development lending or investment;
    (2) The percentage of loans and, as appropriate, other lending-
related activities located in the bank's service area(s);
    (3) The bank's record of lending to and, as appropriate, engaging 
in other lending-related activities for borrowers of different income 
levels and businesses and farms of different sizes;
    (4) The geographic distribution of the bank's loans given its 
service area(s); and
    (5) The bank's record of taking action, if warranted, in response 
to written complaints about its performance in meeting the credit needs 
of its service area(s).
    (c) Small bank performance rating. The FDIC shall rate a small 
bank's performance as provided in Appendix A of this part.


Sec. 345.27  Strategic plan assessment.

    (a) Alternative election. A bank may request to be rated under a 
strategic plan rather than under the lending, service, and investment 
tests (Secs. 345.22 through 345.24 of this part), the community 
development test (Sec. 345.25 of this part), or the small bank 
assessment standards (Sec. 345.26 of this part), by submitting to the 
FDIC a strategic plan as provided for in this section. A bank's request 
to be rated under a strategic plan is not approved until the FDIC 
approves the plan. The FDIC's approval of a strategic plan does not 
affect the bank's obligation, if any, to report data as required by 
Sec. 345.42 of this part.
    (b) Strategic plans in general. (1) A plan may have a term of no 
more than five years, and any multi-year plan shall include annual 
interim measurable goals according to which the FDIC shall evaluate the 
bank's performance.
    (2) A bank with more than one service area may prepare a single 
plan for all of its service areas or a plan for one or more but not all 
of its service areas.
    (3) Affiliated institutions may prepare joint plans if the plans 
provide measurable goals for each institution.
    (c) Public participation in strategic plan development. Before 
submitting a plan to the FDIC for approval, the bank shall:
    (1) Informally seek suggestions from the public in its service 
area(s) while developing the plan;
    (2) Once the bank has developed a plan, formally solicit public 
comment on the plan for at least 30 days by publishing notice in a 
newspaper of general circulation in each of its service areas; and
    (3) During the period of formal public comment, make copies of the 
plan available for review at all offices of the bank in any service 
area covered by the plan.
    (d) Submission of plan.--The bank shall submit its plan to the FDIC 
at least three months prior to the proposed effective date of the plan. 
The bank shall also submit with its plan any public comments received, 
and, if the plan was revised in light of the comments received, the 
initial plan as released for public comment.
    (e) Plan content.--(1) Measurable goals. (i) A bank shall specify 
in its plan measurable goals for helping to meet the credit needs of 
each of its service area(s) covered by the plan, particularly the needs 
of low- and moderate-income geographies and low- and moderate-income 
individuals, through lending, investment, and the provision of 
services, as appropriate.
    (ii) A bank shall address all three performance categories and, 
unless the bank has been designated as a wholesale or limited purpose 
bank, shall emphasize lending and lending-related activities. 
Nevertheless, a different emphasis, including a focus on one or more 
performance categories, may be appropriate if responsive to the 
characteristics and credit needs of its service area, considering 
public comment and the bank's capacity and constraints, product 
offerings, and business strategy.
    (2) Confidential information. The bank may submit additional 
information to the FDIC on a confidential basis, but the goals stated 
in the plan shall be sufficiently specific to enable the public and the 
FDIC to judge fairly the merits of the plan.
    (3) Satisfactory and outstanding goals. A bank shall specify in its 
plan measurable goals that constitute ``satisfactory'' performance. A 
plan may specify measurable goals that constitute ``outstanding'' 
performance. In order to be considered for an ``outstanding'' 
performance rating, the bank shall submit both ``satisfactory'' and 
``outstanding'' performance goals.
    (f) Plan approval.--(1) Timing. The FDIC shall act upon a plan 
within 60 days after the complete plan and required accompanying 
material are submitted. If the FDIC fails to act within this time 
period, the plan shall be deemed approved unless the FDIC extends the 
review period for good cause.
    (2) Public participation. In evaluating the plan's goals, the FDIC 
shall consider the public's involvement in formulating the plan, public 
comment on the plan, and any response by the bank to public comment on 
the plan.
    (3) Criteria for evaluating plan. The FDIC shall evaluate a plan's 
measurable goals using the following criteria, as appropriate:
    (i) The extent and breadth of lending or lending-related 
activities, including, as appropriate, the distribution of loans among 
different geographies, businesses and farms of different sizes, and 
individuals of different income levels, the extent of community 
development lending, and the use of innovative or flexible lending 
practices to address credit needs;
    (ii) The amount and innovativeness, complexity, and responsiveness 
of the bank's qualified investments, as defined in Sec. 345.23 of this 
part; and
    (iii) The extent and availability of the bank's services, 
including, as appropriate, the accessibility of retail delivery systems 
and the extent and innovativeness of community development services, as 
defined in Sec. 345.24 of this part.
    (g) Plan amendment.--During the term of a plan, the bank may 
petition the FDIC to approve an amendment to the plan on grounds that a 
material change in circumstances has made the plan no longer 
appropriate. Any amendment proposed shall be developed in accordance 
with the public participation requirements of paragraph (c) of this 
section.
    (h) Strategic plan assessment.--The FDIC shall approve the goals 
and assess performance under a strategic plan as provided for in 
Appendix A of this part.


Sec. 345.28  Assigned ratings.

    (a) Ratings in general. Subject to paragraphs (b), (c), and (d) of 
this section, the FDIC shall assign to a bank a rating of 
``outstanding,'' ``satisfactory,'' ``needs to improve,'' or 
``substantial noncompliance'' based on the bank's performance under the 
lending, investment and service tests, the community development test, 
the small bank assessment standards, or an approved strategic plan, as 
applicable.
    (b) Lending, investment, and service tests. The FDIC shall assign a 
rating for a bank assessed under the lending, investment, and service 
tests in accordance with the procedures provided in Appendix A of this 
part and the following principles:
    (1) A bank's rating on the lending test shall be weighed so as to 
count for at least 50 percent of its assigned rating;
    (2) A bank that receives an ``outstanding'' rating on the lending 
test shall receive an assigned rating of at least ``satisfactory'';
    (3) A bank that receives an ``outstanding'' rating on the lending 
test and an ``outstanding'' rating on either the service test or the 
investment test shall receive an assigned rating of ``outstanding'';
    (4) A bank that receives an ``outstanding'' rating on both the 
service test and the investment test and a rating of at least ``high 
satisfactory'' on the lending test shall receive an assigned rating of 
``outstanding''; and
    (5) No bank may receive an assigned rating of ``satisfactory'' 
unless it receives a rating of at least ``low satisfactory'' on the 
lending test.
    (c) Effect of evidence of discriminatory or other illegal credit 
practices. Evidence of discriminatory or other illegal credit practices 
shall adversely affect the FDIC's evaluation of a bank's performance. 
In determining the effect on the bank's assigned rating, the FDIC shall 
consider the nature and extent of the evidence, the policies and 
procedures that the bank has in place to prevent discriminatory or 
other illegal credit practices, any corrective action that the bank has 
taken or has committed to take, particularly voluntary corrective 
action resulting from self-assessment, and other relevant information, 
such as the bank's past fair lending performance.
    (d) Effect of successive ``needs to improve'' ratings. A bank that 
would otherwise receive an assigned rating of ``needs to improve'' 
shall receive an assigned rating of ``substantial noncompliance'' if 
the bank received no better than a ``needs to improve'' rating on each 
of its two previous examinations.


Sec. 345.29  Effect of ratings on applications.

    (a) CRA performance. Among other factors, the FDIC shall take into 
account a bank's record of performance under the CRA in considering 
applications for approval of:
    (1) The establishment of a branch or other facility with the 
ability to accept deposits;
    (2) The relocation of a bank's main office, a branch office or 
other facility with the ability to accept deposits;
    (3) The merger, consolidation, acquisition of assets, or assumption 
of liabilities; and
    (4) Deposit insurance for an operating non-insured financial 
institution.
    (b) New banks. A newly chartered bank shall submit a description of 
its proposed CRA performance when an application for deposit insurance 
is made. In considering the application, the FDIC shall take into 
account the bank's proposed CRA performance.
    (c) Interested parties. In considering CRA performance in an 
application described in paragraph (a) of this section, the FDIC shall 
take into account any views expressed by interested parties which are 
submitted in accordance with the FDIC's procedures and rules of 
practice set forth in Part 303 of this chapter.
    (d) Denial or conditional approval of application. A bank's record 
of performance may be the basis for denying or conditioning approval of 
an application described in paragraph (a) of this section.

Subpart C--Records, Reporting and Disclosure Requirements


Sec. 345.41  Service area delineation.

    (a) In general. Subject to paragraphs (b) and (c) of this section, 
each bank may delineate its service area(s) using any method it chooses 
provided that the service area(s):
    (1) Do(es) not reflect illegal discrimination;
    (2) Do(es) not arbitrarily exclude low- and moderate-income 
geographies, taking into account the bank's size and financial 
condition and the extent of its branching network, as appropriate; and
    (3) Consist(s) only of whole census tracts or block numbering 
areas.
    (b) Banks that are not wholesale or limited purpose banks. The 
service area(s) for a bank that is not a wholesale or limited purpose 
bank (as defined in Sec. 345.12 of this part):
    (1) Shall include those geographies in the local areas around a 
bank's branches and deposit-taking RSFs in which the bank has 
originated or had outstanding, during the previous calendar year, a 
significant number and amount of home mortgage, small business and 
small farm, and (if the bank chooses to have them considered in its CRA 
evaluation) consumer loans and any other geographies equidistant from 
its branches and deposit-taking RSFs, taking into account political 
boundaries or significant geographic barriers; and
    (2) Shall not extend substantially across MSA boundaries or state 
boundaries unless the service area is located in a multistate MSA. If 
the bank serves areas that extend substantially across state boundaries 
or extend substantially across boundaries of an MSA, the bank shall 
delineate separate service areas for the areas in each state and for 
the areas inside and outside the MSA.
    (c) Wholesale or limited purpose banks. The service area for a 
wholesale or limited purpose bank (as defined in Sec. 345.12 of this 
part) shall be delineated as an area or areas around its offices 
(including its main office and branches) or a broader statewide or 
regional area that includes the area or areas.
    (d) Banks serving military personnel. Notwithstanding paragraphs 
(a), (b), and (c) of this section, a bank whose business predominantly 
consists of serving the needs of military personnel or their dependents 
who are not located within a defined geographic area may delineate its 
entire deposit customer base as its service area.
    (e) Maintaining list and map. Each bank shall compile and maintain 
a list of all the geographies within its service area or areas and a 
map of each service area showing the geographies contained therein.


Sec. 345.42  Data collection and reporting.

    (a) Mandatory data collection and reporting--(1) Loan data. Each 
bank, except small banks, shall collect and report to the FDIC the 
following data pertaining to its home mortgage, small business, small 
farm, and community development loans:
    (i) Home mortgage loans. If the bank is subject to reporting under 
HMDA, the location of each home mortgage loan located outside the MSAs 
in which the bank has a home or branch office (or outside any MSA) in 
accordance with Regulation C, Home Mortgage Disclosure (12 CFR Part 
203);
    (ii) Small business and small farm loan data. All small business 
and small farm loan data required to be collected and reported on the 
FDIC's Small Business and Small Farm Loan Register (CC-______-______), 
set forth in appendix C of this part, in accordance with the 
instructions in appendix C of this part; and
    (iii) Community development loan data. All community development 
loan data required to be collected and reported on the FDIC's Community 
Development Report Form (CC-______-______), set forth in appendix C of 
this part, in accordance with the instructions in appendix C of this 
part.
    (2) Service area data. Each bank shall collect and report to the 
FDIC by April 1 of each year a list of the areas the bank considers to 
be its service area(s), a list of the geographies it considers to be 
within its service area(s), and a map of each service area showing the 
geographies contained therein.
    (b) Optional data collection. (1) If a bank elects to have its 
consumer lending considered under the lending test (as described in 
Sec. 345.22 of this part), the bank shall collect the consumer loan 
data requested on the FDIC's Consumer Loan Register (CC-______-______), 
set forth in appendix C of this part, in accordance with the 
instructions in appendix C of this part.
    (2) At its option, a bank may:
    (i) Provide information concerning outstanding small business, 
small farm, or consumer loans throughout the year to account for 
seasonal variations in lending for use in the evaluation of the bank 
under the lending test described in Sec. 345.22 of this part; and
    (ii) Provide any other information concerning its lending 
performance, including additional loan distribution data.
    (c) Data on affiliate lending. A bank that wishes to have the FDIC 
consider lending by its affiliates for purposes of the lending test 
shall be prepared to identify the particular home mortgage loans 
reported under HMDA which it wishes the FDIC to consider, and shall 
collect or report, pursuant to the provisions of paragraphs (a) and (b) 
of this section, the requisite data concerning the small business, 
small farm, or consumer loans made by its affiliates that it wishes 
FDIC to consider.
    (d) Data on consortia and third-party lending. A bank that wishes 
to have the FDIC consider community development lending through 
consortia in which the bank participates or through third parties in 
which the bank has invested shall report, pursuant to paragraph 
(a)(1)(iii) of this section, the requisite data concerning the 
community development loans made through consortia and third parties 
that it wishes the FDIC to consider.


Sec. 345.43  Public file and disclosure by banks.

    (a) Public availability. Each bank shall maintain a file that is 
readily available for public inspection containing the information 
required by this section.
    (b) Current information. Each bank shall include in its public file 
the following information:
    (1) All signed, written comments received from the public for the 
current year and each of the prior two calendar years that specifically 
relate to the bank's performance in helping to meet the credit needs of 
its community or communities, and any response to the comments by the 
bank;
    (2) A copy of the public section of the bank's most recent CRA 
Performance Evaluation prepared by the FDIC. The bank shall place this 
copy in the public file within 30 business days after its receipt from 
the FDIC;
    (3) A list of the areas the bank considers to be its service 
area(s), a list of the geographies it considers to be within its 
service area(s), and a map of each service area showing the geographies 
contained therein;
    (4) A list of the bank's branches and RSFs, their street addresses, 
and geographies;
    (5) A list of branches and RSFs opened or closed by the bank during 
the current and each of the prior two calendar years, their street 
addresses, and geographies; and
    (6) A list of services (including hours of operation, available 
loan and deposit products, and transaction fees) generally offered at 
the bank's branches and RSFs and descriptions of material deviations in 
the availability or cost of services at particular branches and RSFs, 
if any. At its option, a bank may include information regarding the 
availability of alternative systems for delivering retail banking 
services (e.g., banking by telephone or computer, mobile branches and 
RSFs, RSFs not owned or operated by or operated exclusively for the 
bank, loan production offices, and bank-at-work or by-mail programs).
    (c) Information for prior years. Each bank that is not a small bank 
shall include in its public file the following information for each of 
the prior two calendar years derived from the data collected or 
reported pursuant to Sec. 345.42 of this part:
    (1) The number and amount of small business loans and small farm 
loans located in low-, moderate-, middle-, and upper-income 
geographies;
    (2) A list of the geographies where the bank had outstanding at 
least one small business loan or small farm loan;
    (3) The number and amount of small business and small farm loans 
located inside the bank's service area(s) and outside the bank's 
service area(s);
    (4) The number and amount of small business and small farm loans to 
minority-owned businesses;
    (5) The number and amount of small business and small farm loans to 
women-owned businesses;
    (6) The number and amount of small business and small farm loans to 
businesses and farms with gross annual revenues less than or equal to 
$1 million;
    (7) The number and amount of community development loans 
outstanding; and
    (8) If the bank has elected to have its consumer loans considered 
under the lending test (as described in Sec. 345.22 of this part), the 
number and amount of consumer loans to low-, moderate-, middle-, and 
upper-income individuals, the number and amount of consumer loans 
located in low-, moderate-, middle-, and upper-income geographies, and 
the number and amount of consumer loans located inside the bank's 
service area(s) and outside the bank's service area(s).
    (d) Exception. A bank shall not place in its public file any 
information required under paragraph (c) of this section for a 
particular year if, given special circumstances such as a small number 
of loans made within a small number of designated income geographies or 
to a small number of designated borrowers, the information could 
reasonably be expected to disclose the identity of the borrower.
    (e) HMDA statement. Each bank required to report home mortgage loan 
data pursuant to the HMDA shall include in its public file a copy of 
its HMDA Disclosure Statement provided by the Federal Financial 
Institutions Examination Council for each of the prior two calendar 
years. The statement shall be placed in the main office public file 
within three business days and in the branch office public files within 
10 business days of the bank's receipt of the statement.
    (f) Small bank file. (1) A small bank shall include in its public 
file the bank's loan-to-deposit ratio computed at the end of the most 
recent calendar year. A bank may include additional data on its loan-
to-deposit ratio at its option.
    (2) A small bank that elects to be evaluated under the lending, 
investment and service tests (as described in Secs. 345.22 through 
345.24 of this part) shall include in its public file the information 
specified in paragraph (c) of this section.
    (g) Strategic plan. Each bank that has been approved to be assessed 
under a strategic plan as described in Sec. 345.27 of this part shall 
include in its public file a copy of that plan. Information submitted 
to the FDIC on a confidential basis in conjunction with the plan does 
not have to be included in the public file.
    (h) Less than satisfactory rating. Each bank that received a less 
than satisfactory rating during its most recent examination shall 
include in its public file a description of its current efforts to 
improve its performance in helping to meet the credit needs of its 
entire community. This description shall be updated quarterly.
    (i) Location of public file. Each bank shall maintain its public 
file as follows:
    (1) The main office shall have a copy of the complete public file;
    (2) At least one branch in each service area shall have a copy of 
the bank's HMDA Disclosure Statements and all materials in the public 
file relating to the service area in which the branch is located; and
    (3) If a member of the public requests to review a bank's public 
file at a branch that does not have a copy, the bank shall make a 
complete copy of the file for that service area available for review at 
the branch within 5 business days at no cost.
    (j) Copies. Each bank shall provide copies of the information in 
its public file to members of the public upon request. A bank may 
charge a reasonable fee not to exceed the cost of reproduction and 
mailing (if applicable).


Sec. 345.44  Public notice by banks.

    (a) CRA notice for banks. Each bank shall provide in the public 
lobby of its main office and each of its branches the public notice set 
forth in Appendix B to this part. Bracketed material shall be used only 
by banks having more than one service area.
    (b) Additional notice for affiliate banks. The last two sentences 
shall be included only if the bank is an affiliate of a holding company 
and the last sentence only if the company is not prevented by statute 
from acquiring additional banks.


Sec. 345.45  Publication of planned examination schedule.

    The FDIC shall publish at least 30 days in advance of the beginning 
of each calendar quarter a list of the banks that are scheduled for CRA 
examinations in that quarter.

Subpart D--Transition Rules


Sec. 345.51  Transition rules.

    (a) Effective date. Sections of this part 345 become effective over 
a period of time in accordance with the schedule set forth in paragraph 
(c) of this section. The provisions of part 345 become fully effective 
on July 1, 1996.
    (b) Data collection and reporting; strategic plan; small bank 
assessment standards; and performance tests--(1) Data collection and 
reporting. On July 1, 1995, the data collection and reporting 
requirements set forth in Sec. 345.42 of this part become effective.
    (2) Strategic plan. Beginning July 1, 1995, a bank that elects to 
be evaluated under an approved strategic plan pursuant to Sec. 345.27 
of this part may submit its strategic plan to the FDIC for approval.
    (3) Small bank assessment standards. Beginning July 1, 1995, a bank 
that qualifies as a small bank pursuant to Sec. 345.12 of this part may 
elect to be evaluated under the small bank assessment standards set 
forth in Sec. 345.26 of this part. Beginning July 1, 1996, the FDIC 
shall evaluate each small bank under the small bank assessment 
standards, unless the bank elects to be evaluated pursuant to the 
performance tests set forth in Secs. 345.22 through 345.25 of this part 
or under an approved strategic plan.
    (4) Performance tests. On July 1, 1996, the lending, investment, 
service, and community development tests set forth in Secs. 345.22 
through 345.25 of this part become effective. Thereafter, the FDIC 
shall evaluate all banks pursuant to these test(s), except small banks 
evaluated under the small bank assessment standards and banks that 
elect to be evaluated under an approved strategic plan.
    (c) Schedule. On January 1, 1995, Secs. 345.11, 345.12, 345.29, 
345.51 and 345.100 become effective, and Secs. 345.1, 345.2, 345.8, 
345.9, and 345.10 will expire. On July 1, 1995, Secs. 345.26, 345.27, 
345.42, and 345.45 become effective, and Secs. 345.21, 345.28 and 
345.41 become effective for banks that are evaluated under Secs. 345.26 
or 345.27. On July 1, 1996, Secs. 345.21 through 345.25, 345.28, 
345.41, 345.43, and 345.44 become effective, and Secs. 345.3 through 
345.7 will expire.

Subpart E--Interpretations


Sec. 345.100  Applicability of the Community Reinvestment Act to 
certain special purpose banks.

    In response to its July 1978 proposed regulation, 12 CFR Part 345, 
to implement the CRA, the FDIC received several inquiries from 
institutions that, although they were chartered as banks, did not 
perform commercial or retail banking services. These institutions 
served solely as correspondent banks, or as trust companies, or as 
clearing agents, and they did not extend credit to the public for their 
own account. The FDIC concludes that the CRA is not intended to cover 
these institutions. It is the purpose of the CRA to require the FDIC to 
encourage banks to meet the credit needs of their local communities. To 
this end the FDIC must assess banks' records of performance and take 
those records into account in acting on certain applications affecting 
the banks. The FDIC believes that these provisions were intended to 
cover all banks that are in the business of extending credit to the 
public including both wholesale and retail banks. The lending 
activities of these banks affect the economic health of the communities 
in which they are chartered. However, the FDIC believes it would be 
pointless to encourage or to assess the credit granting record of 
institutions that are not organized to grant credit to the public in 
the ordinary course of business, other than as an incident to their 
specialized operations. Accordingly the term bank as used in the FDIC's 
regulation, part 345 (12 CFR part 345), does not include banks that 
engage solely in correspondent banking business, trust company 
business, or acting as a clearing agent.

Appendix A to Part 345--Ratings

    (a) Ratings in general. (1) In assigning a rating, the FDIC 
shall evaluate a bank's performance under the applicable assessment 
criteria in this part, subject to Sec. 345.28 of this part, which 
provides for adjustments on the basis of evidence of discriminatory 
or other illegal credit practices and prior ``needs to improve'' 
ratings.
    (2) A bank's performance need not fit each aspect of a 
particular rating profile in order to receive that rating, and 
exceptionally strong performance with respect to some aspects may 
compensate for weak performance in others. The bank's overall 
performance, however, should generally be consistent with the 
appropriate profile stated below.
    (b) Banks that are not wholesale or limited purpose banks or 
small banks.
    (1) Lending performance rating. The FDIC shall assign each 
bank's lending performance one of the five ratings described below.
    (i) Outstanding. The FDIC shall rate a bank's lending 
performance ``outstanding'' if, in general, it demonstrates:
    (A) Excellent responsiveness to credit needs in its service 
area(s);
    (B) A substantial majority of its loans are made in its service 
area(s);
    (C) An excellent geographic distribution of loans throughout its 
service area(s);
    (D) An excellent distribution, particularly in its service 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different size given the product 
lines offered by the bank;
    (E) An excellent record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Extensive use of innovative or flexible lending practices to 
address the credit needs of low-or moderate-income individuals or 
geographies; and
    (G) It is a leader in making community development loans.
    (ii) High satisfactory. The FDIC shall rate a bank's lending 
performance ``high satisfactory'' if, in general, it demonstrates:
    (A) Good responsiveness to credit needs in its service area(s);
    (B) A high percentage of its loans are made in its service 
area(s);
    (C) A good geographic distribution of loans throughout its 
service area(s);
    (D) A good distribution, particularly in its service area(s), of 
loans among individuals of different income levels and businesses 
(including farms) of different size given the product lines offered 
by the bank;
    (E) A good record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Use of innovative or flexible lending practices to address 
the credit needs of low-or moderate-income individuals or 
geographies; and
    (G) It has made a relatively high level of community development 
loans.
    (iii) Low satisfactory. The FDIC shall rate a bank's lending 
performance ``low satisfactory'' if, in general, it demonstrates:
    (A) Adequate responsiveness to credit needs in its service 
area(s);
    (B) An adequate percentage of its loans are made in its service 
area(s);
    (C) An adequate geographic distribution of loans throughout its 
service area(s);
    (D) An adequate distribution, particularly in its service 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different size given the product 
lines offered by the bank;
    (E) An adequate record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Limited use of innovative or flexible lending practices) to 
address the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It has made an adequate level of community development 
loans.
    (iv) Needs to improve. The FDIC shall rate a bank's lending 
performance ``needs to improve'' if, in general, it demonstrates:
    (A) Poor responsiveness to credit needs in its service area(s);
    (B) A small percentage of its loans are made in its service 
area(s);
    (C) A poor geographic distribution of loans throughout its 
service area(s), particularly to low- or moderate-income geographies 
in the service area(s);
    (D) A poor distribution, particularly in its service area(s), of 
loans among individuals of different income levels and businesses 
(including farms) of different size given the product lines offered 
by the bank;
    (E) A poor record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Little use of innovative or flexible lending practices to 
address the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It has made a limited number of community development loans.
    (v) Substantial noncompliance. The FDIC shall rate a bank's 
lending performance as being in ``substantial noncompliance'' if, in 
general, it demonstrates:
    (A) A very poor responsiveness to credit needs in its service 
area(s);
    (B) A very small percentage of its loans are made in its service 
area(s);
    (C) A very poor geographic distribution of loans throughout its 
service area(s), particularly to low- or moderate-income geographies 
in the service area(s);
    (D) A very poor distribution, particularly in its service 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different size given the product 
lines offered by the bank;
    (E) A very poor record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) No use of innovative or flexible lending practices to 
address the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It has made few, if any, community development loans.
    (2) Investment performance rating. The FDIC shall assign each 
bank's investment performance one of the five ratings described 
below.
    (i) Outstanding. The FDIC shall rate a bank's investment 
performance ``outstanding'' if, in general, it demonstrates:
    (A) An excellent level of qualified investments, often in a 
leadership position, particularly those that directly address credit 
needs;
    (B) Extensive use of innovative or complex qualified investments 
to support community development initiatives; and
    (C) Excellent responsiveness to credit and community economic 
development needs.
    (ii) High satisfactory. The FDIC shall rate a bank's investment 
performance ``high satisfactory'' if, in general, it demonstrates:
    (A) A significant level of qualified investments, occasionally 
in a leadership position, particularly those that directly address 
credit needs;
    (B) Significant use of innovative or complex qualified 
investments to support community development initiatives; and
    (C) Good responsiveness to credit and community economic 
development needs.
    (iii) Low satisfactory. The FDIC shall rate a bank's investment 
performance ``low satisfactory'' if, in general, it demonstrates:
    (A) An adequate level of qualified investments, although rarely 
in a leadership position, particularly those that directly address 
credit needs;
    (B) Occasional use of innovative or complex qualified 
investments to support community development initiatives; and
    (C) Adequate responsiveness to credit and community economic 
development needs.
    (iv) Needs to improve. The FDIC shall rate a bank's investment 
performance ``needs to improve'' if, in general, it demonstrates:
    (A) A poor level of qualified investments, particularly those 
that directly address credit needs;
    (B) Rare use of innovative or complex qualified investments to 
support community development initiatives; and
    (C) Poor responsiveness to credit and community economic 
development needs.
    (v) Substantial noncompliance. The FDIC shall rate a bank's 
investment performance as being in ``substantial noncompliance'' if, 
in general, it demonstrates:
    (A) Few, if any, qualified investments, particularly those that 
directly address credit needs;
    (B) No use of innovative or complex qualified investments to 
support community development initiatives; and
    (C) Very poor responsiveness to credit and community economic 
development needs.
    (3) Service performance rating. The FDIC shall assign each 
bank's service performance one of the five ratings described below.
    (i) Outstanding. The FDIC shall rate a bank's service 
performance ``outstanding'' if, in general, the bank demonstrates:
    (A) Its service delivery systems are readily accessible to 
essentially all portions of its service area(s);
    (B) To the extent changes have been made, the bank's record of 
opening and closing branches and RSFs has improved the accessibility 
of its delivery systems, particularly in low- or moderate-income 
geographies or to low- or moderate-income individuals;
    (C) Services (including, where appropriate, business hours) are 
tailored to the convenience and needs of its service area(s), 
particularly low- or moderate-income geographies or low- or 
moderate-income individuals; and
    (D) It is a leader in providing community development services.
    (ii) High satisfactory. The FDIC shall rate a bank's service 
performance ``high satisfactory'' if, in general, the bank 
demonstrates:
    (A) Its service delivery systems are accessible to essentially 
all portions of its service area(s);
    (B) To the extent changes have been made, the bank's record of 
opening and closing branches and RSFs has not adversely affected the 
accessibility of its delivery systems, particularly in low- and 
moderate-income geographies and to low- and moderate-income 
individuals;
    (C) Services (including, where appropriate, business hours) do 
not vary in a way that inconveniences certain portions of its 
service area(s), particularly low- and moderate-income geographies 
and low- and moderate- income individuals; and
    (D) It provides a relatively high level of community development 
services.
    (iii) Low satisfactory. The FDIC shall rate a bank's service 
performance ``low satisfactory'' if, in general, the bank 
demonstrates:
    (A) Its service delivery systems are reasonably accessible to 
essentially all portions of its service area(s);
    (B) To the extent changes have been made, the bank's record of 
opening and closing branches and RSFs has generally not adversely 
affected the accessibility of its delivery systems, particularly in 
low- and moderate-income geographies and to low- and moderate-income 
individuals;
    (C) Services (including, where appropriate, business hours) do 
not vary in a way that inconveniences portions of its service 
area(s), particularly low- and moderate-income geographies and low- 
and moderate-income individuals; and
    (D) It provides an adequate level of community development 
services.
    (iv) Needs to improve. The FDIC shall rate a bank's service 
performance ``needs to improve'' if, in general, the bank 
demonstrates:
    (A) Its service delivery systems are accessible to limited 
portions of its service area(s);
    (B) To the extent changes have been made, the bank's record of 
opening and closing branches and RSFs has adversely affected the 
accessibility its delivery systems, particularly in low- or 
moderate-income geographies or to lowor moderate-income individuals;
    (C) Services (including, where appropriate, business hours) vary 
in a way that inconveniences certain portions of its service 
area(s), particularly lowor moderate-income geographies or low- or 
moderate-income individuals; and
    (D) It provides a limited level of community development 
services.
    (v) Substantial noncompliance. The FDIC shall rate a bank's 
service performance as being in ``substantial noncompliance'' if, in 
general, the bank demonstrates:
    (A) Its service delivery systems are inaccessible to significant 
portions of its service area(s), particularly low- and moderate-
income geographies or low- and moderate-income individuals;
    (B) To the extent changes have been made, the bank's record of 
opening and closing branches and RSFs has significantly adversely 
affected the accessibility of its delivery systems, particularly in 
low- or moderate-income geographies or to low- or moderate-income 
individuals;
    (C) Services (including, where appropriate, business hours) vary 
in a way that significantly inconveniences many portions of its 
service area(s), particularly low- or moderate-income geographies or 
low- or moderate-income individuals; and
    (D) It provides few, if any, community development services.
    (4) Assigned rating. The FDIC shall use the following procedures 
for assigning a rating:
    (i) Assign points corresponding to the bank's performance on 
each of the component tests as follows: 

------------------------------------------------------------------------
    Component test ratings        Lending      Service      Investment  
------------------------------------------------------------------------
Outstanding...................           12            6               6
High Satisfactory.............            9            4               4
Low Satisfactory..............            6            3               3
Needs to Improve..............            3            1               1
Substantial Noncompliance.....            0            0              0 
------------------------------------------------------------------------

    (ii) Total the points for the three tests, and use that total to 
determine the composite rating according to the chart below. 
However, if the total exceeds twice the number of points 
attributable to the bank's lending test performance (as provided in 
paragraph (b)(4)(i) of this appendix), determine the composite 
rating using twice the number of points attributable to the bank's 
lending test performance. 

------------------------------------------------------------------------
              Points                           Composite rating         
------------------------------------------------------------------------
18 or over.........................  Outstanding                        
9 through 17.......................  Satisfactory                       
5 through 8........................  Needs to Improve                   
0 through 4........................  Substantial Noncompliance.         
------------------------------------------------------------------------

    (c) Community development test for wholesale or limited purpose 
banks. The FDIC shall assign each wholesale or limited purpose 
bank's community development performance one of the four ratings 
described below.
    (1) Outstanding. The FDIC shall rate a wholesale or limited 
purpose bank's community development performance ``outstanding'' if, 
in general, it demonstrates:
    (i) A high level of qualified investments, community development 
loans outstanding, or community development services, particularly 
those that directly address credit needs;
    (ii) Extensive use of innovative or complex qualified 
investments, community development loans, or community development 
services, to support community development initiatives; and
    (iii) Excellent responsiveness to credit and community economic 
development needs in its service area(s).
    (2) Satisfactory. The FDIC shall rate a wholesale or limited 
purpose bank's community development performance ``satisfactory'' 
if, in general, it demonstrates:
    (i) An adequate level of qualified investments, community 
development loans outstanding, or community development services, 
particularly those that directly address credit needs;
    (ii) Occasional use of innovative or complex qualified 
investments, community development loans, or community development 
services, to support community development initiatives; and
    (iii) Adequate responsiveness to credit and community economic 
development needs in its service area(s).
    (3) Needs to improve. The FDIC shall rate a wholesale or limited 
purpose bank's community development performance as ``needs to 
improve'' if, in general, it demonstrates:
    (i) A poor level of qualified investments, community development 
loans outstanding, or community development services, particularly 
those that directly address credit needs;
    (ii) Rare use of innovative or complex qualified investments, 
community development loans, or community development services, to 
support community development initiatives; and
    (iii) Poor responsiveness to credit and community economic 
development needs in its service area(s).
    (4) Substantial noncompliance. The FDIC shall rate a wholesale 
or limited purpose bank's community development performance in 
``substantial noncompliance'' if, in general, it demonstrates:
    (i) Few, if any, qualified investments, community development 
loans outstanding, or community development services, particularly 
those that directly address credit needs;
    (ii) No use of innovative or complex qualified investments, 
community development loans, or community development services, to 
support community development initiatives; and
    (iii) Very poor responsiveness to credit and community economic 
development needs in its service area(s).
    (d) Assessment standards for small banks. The FDIC shall rate 
each small bank's performance as described below.
    (1) Eligibility for a satisfactory rating. The FDIC shall rate a 
bank's performance ``satisfactory'' if, in general, the bank 
demonstrates:
    (i) A reasonable loan-to-deposit ratio (considering seasonal 
variations) given the bank's size, financial condition, the credit 
needs of its service area(s), and taking into account, as 
appropriate, lending-related activities such as loan originations 
for sale to the secondary markets and community development lending 
and investment;
    (ii) A majority of its loans and, as appropriate, other lending- 
related activities are in its service area(s);
    (iii) A distribution of loans to and, as appropriate, other 
lending related-activities for individuals of different income 
levels (including low- and moderate-income individuals) and 
businesses and farms of different sizes that is reasonable given the 
demographics of the bank's service area(s);
    (iv) A record of taking appropriate action, as warranted, in 
response to written complaints, if any, about the bank's performance 
in meeting the credit needs of its service area(s); and
    (v) A reasonable geographic distribution of loans given its 
service area(s).
    (2) Eligibility for an outstanding rating. A small bank that 
meets each of the standards for a ``satisfactory'' rating under this 
paragraph and exceeds some or all of those standards may warrant 
consideration for an overall rating of ``outstanding''. In assessing 
whether a small bank's performance is ``outstanding'', the FDIC 
shall consider the extent to which the bank exceeds each of the 
assessment standards for a ``satisfactory'' rating and its 
performance in making qualified investments (as defined in 
Sec. 345.23 of this part) and its performance in providing branches, 
RSFs or other services and delivery systems that enhance credit 
availability in its service area(s).
    (3) Needs to improve or substantial noncompliance ratings. A 
small bank also may receive a rating of ``needs to improve'' or 
``substantial noncompliance'' depending on the degree to which its 
performance has failed to meet the standards for a ``satisfactory'' 
rating.
    (e) Strategic plan assessment and rating. (1) Satisfactory 
goals. The FDIC shall approve as ``satisfactory'' measurable goals 
that adequately help meet the credit needs of each of a bank's 
service area(s).
    (2) Outstanding goals. If the plan identifies a separate group 
of measurable goals that substantially exceed the levels approved as 
``satisfactory,'' the FDIC shall approve those goals as 
``outstanding.''
    (3) Rating. The FDIC shall assess the performance of a bank 
operating under an approved plan to determine if the bank has met 
its plan goals:
    (i) If the bank substantially achieves its plan goals for a 
satisfactory rating, the FDIC shall rate the bank's performance 
under the plan as ``satisfactory.''
    (ii) If the bank exceeds its plan goals for a satisfactory 
rating and substantially achieves its plan goals for an outstanding 
rating, the FDIC shall rate the bank's performance under the plan as 
``outstanding''.
    (iii) If the bank fails to substantially meet its plan goals for 
a satisfactory rating, it shall be rated as either ``needs to 
improve'' or ``substantial noncompliance,'' depending on the extent 
to which it falls short of its plan goals, or if the bank so elected 
at the time it first submitted its plan, it shall be rated under the 
lending, investment and service tests (as described in Secs. 345.22 
through 345.24 of this part), the community development test (as 
described in Sec. 345.25 of this part), or the small bank assessment 
standards (as described in Sec. 345.26 of this part), as 
appropriate.

Appendix B to Part 345--CRA Notice

Community Reinvestment Act Notice

    Under the Federal Community Reinvestment Act (CRA), the Federal 
Deposit Insurance Corporation (FDIC) evaluates and enforces our 
compliance with our obligation to help meet the credit needs of this 
community consistent with safe and sound operations. The FDIC also 
takes our CRA performance into account when the FDIC decides on 
certain applications submitted by us. Your involvement is 
encouraged. You should know that:
    You may look at and obtain in this office information on our 
performance in this community. This information includes a file that 
includes: copies of all signed, written comments received by us, and 
any responses we have made to those comments; a map showing our 
service area; a list of our branches and remote service facilities, 
such as ATMS, in our service area; a list of services we provide at 
those locations; evaluations by the FDIC of our CRA performance; and 
data on the loans we have made in this community during the last two 
years. [Current CRA information on our performance in other 
communities served by us is available at our main office, located at 
________________.]
    You may send signed, written comments about our CRA performance 
in helping to meet community credit needs to (title and address of 
bank official) and to the FDIC Regional Manager, Division of 
Compliance and Consumer Affairs (address). Your letter, together 
with any response by us, will be considered by the FDIC in 
evaluating our CRA performance and may be made public.
    You may ask the FDIC to look at any comments received by the 
Regional Manager. You may also request from the FDIC, 550 17th 
Street, N.W., Washington, DC 20429, an announcement of our 
applications covered by the CRA filed with the FDIC. We are an 
affiliate of (name of holding company), a bank holding company. You 
may request from the Federal Reserve Bank of (city, address), an 
announcement of applications covered by the CRA filed by bank 
holding companies.

Appendix C to Part 345--CRA Loan Data Format

Instructions for the Small Business and Small Farm Loan Register

    This form contains the instructions for completion of the Loan 
Register for Small Business and Small Farm Loans. This register is 
used in conjunction with the reporting of this information as part 
of the CRA data collection process. The register and these 
instructions are to be used to provide the format in which the data 
should be reported. The actual data are to be submitted in machine-
readable form in accordance with the instructions for submission of 
data pursuant to 12 CFR Part 203 (Regulation C).

I. Who Must File a Register

    All independent insured banks and thrifts with $250 million or 
more in total assets and all insured banks and thrifts that are 
members of holding companies with $250 million or more in bank and 
thrift assets must report this information for small business and 
small farm loans outstanding beginning December 31, 1995. Banks and 
thrifts with fewer assets that wish to be evaluated under 12 CFR 
Secs. 345.22 through 345.24 must also report this information. Only 
provide information on business or farm location and borrower 
information for loans for which applications were submitted after 
July 1, 1995. For loans for which applications were submitted before 
that date, enter ``N/A'' for all information relating to location or 
borrower.

II. Types of Loans to be Reported

    The loan register should contain individual loan data on each 
small business or small farm loan as defined on schedule RC-C of the 
December 31 Report of Condition and Income. Include data on 
individual small business loans with original loan amounts of $1 
million or less and individual small farm loans with original loan 
amounts of $500,000 or less that had an outstanding balance as of 
December 31.

III. Submission of Data

    The data must be submitted in machine-readable form consistent 
with requirements for submission of data pursuant to 12 CFR Part 203 
(Regulation C). The format must conform exactly to the form, 
including the order of columns, column headings, etc. Contact your 
federal supervisory agency for information regarding procedures and 
technical specifications for automated data submission.
    Your institution should decide on the procedure it wants to 
follow for collection of the data consistent with the Supplemental 
Instructions For Collection Of Data In Connection with Small 
Business and Small Farm Loans. Keep in mind that data reported on 
the register are outstandings as of December 31 and not originations 
as are reported for some other regulatory purposes. Your institution 
may collect the data on separate registers at different branches or 
on separate registers for different loan types (small business or 
small farm), but make sure each loan number is unique. Entries need 
not be grouped on your registers by MSA, or chronologically, or by 
census tract, or in any other particular order.

IV. Instructions for Completion of Register

Loan Information

    1. Loan Number--Enter an identifying number that can be used to 
retrieve the loan file. It can be any number (not exceeding 25 
characters). Use letters, numerals, or a combination of both. Make 
sure that all numbers are unique within the institution. If 
registers contains data for branch offices, for example, use a 
letter or a numerical code to identify the loans of different 
branches or assign a certain series of numbers to particular 
branches to avoid duplicate numbers. The use of the borrower's tax-
payer identification number or social security number is strongly 
discouraged for privacy reasons.
    2. Outstanding Loan Amount--Enter the outstanding loan amount 
(balance) as of December 31. Show the amount in thousands rounding 
to the nearest thousand. Do not report loans with balances below 
$500. For example, a loan with a balance of $500 would be rounded to 
$1,000; a loan balance of $50,300 would be rounded to $50,000; and a 
balance of $15,700 would be rounded to $16,000.

Business or Farm Location

    For each loan, identify the location of the business or farm. 
Location is determined by the following:
    (1) Small business loans are located in the census tract or 
block numbering area where the main business facilities or other 
property to which the loan proceeds will be applied (as indicated by 
borrower) are located;
    (2) Small farm loans are located in the census tract or block 
numbering area where the farm or other property to which the loan 
proceeds will be applied (as indicated by borrower) is located.
    1. MSA--For each loan in a MSA, indicate the location of the 
loan by the four digit MSA number. Enter only the MSA number, not 
the MSA name. Use MSA boundaries that were in effect on January 1 of 
the calendar year for which you are reporting. A listing of MSAs is 
available from your regional supervisory agency. (In these 
instructions, the term MSA refers to metropolitan statistical area 
or primary metropolitan statistical area.) For loans outside MSAs, 
enter ``N/A''.
    2. State & County--Use the Federal Information Processing 
Standard (FIPS) two-digit numerical code for the state and the 
three-digit numerical code for the county. These codes are available 
from your regional supervisory agency. Do not use the letter 
abbreviations used by the United States Postal Service.
    3. Census Tract/Block Numbering Area--Enter the census tract 
number or block numbering area from the U.S. Census Bureau's Census 
Tract/Street Index for the most recent census reporting period. For 
addresses not listed in the index, consult the Census Bureau's 
census tract outline maps.

Borrower Information

    1. Minority-Owned Code--Use the following codes to indicate 
small business or small farm loans with more than 50 percent 
ownership by one or more minority individuals (as indicated by 
borrower) pursuant to data collected as described in the 
Supplemental Instructions For Collection of Data In Connection With 
Small Business and Small Farm Loans.

1--Yes
2--No
3--Publicly traded business or farm (i.e. has securities registered 
under Section 12(g) of the Securities Exchange Act of 1934 or has 
more than 100 shareholders)
4--Information not provided by borrower

    2. Women-Owned Code--Use the following codes to indicate small 
business or small farm loans with more than 50 percent ownership by 
women (as indicated by borrower) pursuant to data collected as 
described in the Supplemental Instructions For Collection of Data In 
Connection With Small Business and Small Farm Loans.

1--Yes
2--No
3--Publicly traded business or farm (i.e. has securities registered 
under Section 12(g) of the Securities Exchange Act of 1934 or has 
more than 100 shareholders)
4--Information not provided by borrower

    3. Gross Annual Revenues $1MM Code--Use the following 
codes to indicate whether the gross annual revenues of the small 
business or farm are less than or equal to $1 million. This 
information should be determined based upon the revenues upon which 
your institution relied in making its credit decision.

1--Yes
2--No

Supplemental Instructions for Collection of Data in Connection With 
Small Business and Small Farm Loans

A. Format

    Beginning July 1, 1995, financial institutions required to 
report small business and small farm loan registers are to collect 
information on the racial, ethnic, and gender make-up of applicants 
or borrowers in connection with small business and small farm loans. 
If you take a written application, you should list questions 
regarding the percent of minority and gender ownership on your loan 
application form or on a separate form completed by the applicant in 
conjunction with an application. If you do not take a written 
application, you should request the information at an appropriate 
time during the application or origination process; you must request 
the information for each loan you originate even if you did not take 
a written application. If you neither take a written application nor 
originate the loan, you do not have to request the information. See 
the sample form for recommended format and language. This 
information is to be maintained in the institution's in-house loan 
files. This information is not to be reported to the agency, but is 
to be used to complete the small business and small farm loan 
register.

B. Procedures

    1. You must ask for this information, but cannot require the 
applicant or borrower to provide it. You may not consider whether or 
not an applicant or borrower has provided this information in making 
your decision whether to extend credit or in setting the terms of 
credit.
    2. If the applicant or borrower chooses not to provide the 
information, note this fact on the form.
    3. Inform the applicant or borrower that the Federal government 
is requesting this information in order to monitor compliance with 
Federal statutes that prohibit lenders from discriminating on these 
bases.

BILLING CODES: OCC 4810-33-P (25%); Board 6210-01-P (25%); FDIC 6714-
01-P (25%); OTS 6720-01-P (25%)

TP07OC94.010


TP07OC94.011


BILLING CODES: OCC 4810-33-C (25%); Board 6210-01-C (25%); FDIC 6714-
01-C (25%); OTS 6720-01-C (25%)

Instructions for Completion of the Open- and Closed-end Consumer Loan 
Registers

    This form contains the instructions for completion of the Loan 
Registers for Open-End Consumer Loans and Closed-End Consumer Loans. 
These registers are used in conjunction with the collection of this 
information as part of the CRA data collection process. The 
registers and these instructions are to be used to provide the 
format in which the data should be maintained. The data must be 
maintained in machine-readable form. If you wish to maintain the 
data in an alternative format, you must obtain approval from your 
primary supervisory agency.

I. Who May Maintain a Register

    Any insured bank or thrift may, at the institution's option, 
collect and maintain this information for loans outstanding 
beginning December 31, 1995. You need only provide information on 
borrower location and gross annual income for loans for which 
applications were submitted after July 1, 1995. For loans for which 
applications were submitted before that date, you may enter ``N/A'' 
for borrower location and gross annual income.

II. Types of Loans to be Recorded

    If you collect and maintain information on your consumer loans 
for consideration in your CRA evaluation, you must provide data on 
all consumer loans outstanding included in the aggregate consumer 
loan figure on your December 31 Report of Condition and Income.
    Your institution should decide on the procedure it wants to 
follow for collection of the data. Keep in mind that data recorded 
on the registers are outstandings as of December 31 and not 
originations as are reported for some other regulatory purposes. 
Your institution may collect the data on separate registers at 
different branches, but is required to maintain the data on separate 
registers for each of the different consumer loan types (open-end 
and closed-end). Make sure the loan numbers are unique.

III. Instructions for Completion of Register

Loan Information

    1. Loan Number--Enter an identifying number that can be used to 
retrieve the loan file. It can be any number (not exceeding 25 
characters). Use letters, numerals, or a combination of both. Make 
sure that all numbers are unique within the institution. If 
registers contains data for branch offices, for example, use a 
letter or a numerical code to identify the loans of different 
branches or assign a certain series of numbers to particular 
branches to avoid duplicate numbers. The use of the borrower's tax-
payer identification number or social security number is strongly 
discouraged for privacy reasons.
    2. Outstanding Loan Amount--Enter the outstanding loan amount 
(balance) as of December 31. Show the amount in thousands rounding 
to the nearest thousand. Do not report loans with balances below 
$500. For example, a loan with a balance of $500 would be rounded to 
$1,000; a loan balance of $50,300 would be rounded to $50,000; and a 
balance of $15,700 would be rounded to $16,000.

Borrower Information

    For each loan, identify the location of the borrower. Consumer 
loans are located in the census tract or block numbering area where 
the borrower resides.
    1. MSA--For each loan in a MSA, indicate the location of the 
loan by the four digit MSA number. Enter only the MSA number, not 
the MSA name. Use MSA boundaries that were in effect on January 1 of 
the calendar year for which you are reporting. A listing of MSAs is 
available from your regional supervisory agency. (In these 
instructions, the term MSA refers to metropolitan statistical area 
or primary metropolitan statistical area.) For loans outside MSAs, 
enter ``N/A''.
    2. State & County--Use the Federal Information Processing 
Standard (FIPS) two-digit numerical code for the state and the 
three-digit numerical code for the county. These codes are available 
from your regional supervisory agency. Do not use the letter 
abbreviations used by the United States Postal Service.
    3. Census Tract/Block Numbering Area--Enter the census tract 
number or block numbering area from the U.S. Census Bureau's Census 
Tract/Street Index for the most recent census reporting period. For 
addresses not listed in the index, consult the Census Bureau's 
census tract outline maps.
    4. Gross Annual Income--Enter the gross annual income upon which 
your institution relied in making the credit decision. Round all 
dollar amounts to the nearest thousand.

BILLING CODES: OCC 4810-33-P (25%); Board 6210-01-P (25%); FDIC 6714-
01-P; OTS 6720-01-P (25%)

TP07OC94.012


TP07OC94.013


TP07OC94.014

BILLING CODES: OCC 4810-33-P (25%); Board 6210-01-P (25%); FDIC 6714-
01-P (25%); OTS 6720-01-P (25%)
    By order of the Board of Directors of the Federal Deposit 
Insurance Corporation.

    Dated: September 26, 1994.
Robert E. Feldman,
Acting Executive Secretary.

OFFICE OF THRIFT SUPERVISION

12 CFR CHAPTER V

    For the reasons outlined in the joint preamble, the Office of 
Thrift Supervision hereby proposes to amend 12 CFR chapter V as set 
forth below:

PART 563e--COMMUNITY REINVESTMENT

     1. The authority citation for part 563e is revised to read as 
follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1814, 1816, 1818, 
1828(c), and 2901 through 2907.

    2. Part 563e is amended by adding subparts A through D and 
appendices A through C following Sec. 563e.8 to read as follows:

Subpart A--General

Sec.
563e.11  Authority, community reinvestment obligation, purposes and 
scope.
563e.12  Definitions.

Subpart B--Standards for Assessing Performance

563e.21  Assessment tests and ratings, in general.
563e.22  Lending test.

563e.23  Investment test.
563e.24  Service test.
563e.25  Community development test for wholesale or limited purpose 
savings associations.
563e.26  Small savings association assessment standards.
563e.27  Strategic plan assessment.
563e.28  Assigned ratings.
563e.29  Effect of ratings on applications.

Subpart C--Records, Reporting and Disclosure Requirements

563e.41  Service area delineation.
563e.42  Data collection and reporting.
563e.43  Public file and disclosure.
563e.44  Public notice by savings associations.
563e.45  Publication of planned examination schedule.

Subpart D--Transition Rules

563e.51  Transition rules.

Appendix A to Part 563e--Ratings

Appendix B to Part 563e--CRA Notice

Appendix C to Part 563e--CRA Loan Data Format

Subpart A--General


Sec. 563e.11  Authority, community reinvestment obligation, purposes 
and scope.

     (a) Authority. The provisions of this part are issued under the 
Community Reinvestment Act of 1977 (CRA), as amended (12 U.S.C. 2901 et 
seq.); section 5, as amended, and sections 3, 4, and 10, as added, of 
the Home Owners' Loan Act of 1933 (12 U.S.C. 1462a, 1463, 1464, and 
1467a); and sections 4, 6, 8, and 18(c), as amended of the Federal 
Deposit Insurance Act (12 U.S.C. 1814, 1816, 1818, 1828(c)).
     (b) Community reinvestment obligation. Savings associations have a 
continuing and affirmative obligation to help meet the credit needs of 
their communities, including low- and moderate-income areas, consistent 
with safe and sound operations.
     (c) Purposes. The purposes of this part are to implement the 
community reinvestment obligation of savings associations; to explain 
how the Office of Thrift Supervision (OTS) assesses the performance of 
savings associations in satisfying the community reinvestment 
obligation; and to describe how that performance is taken into account 
in certain applications.
     (d) Scope. This part applies to all savings associations as 
defined in 561.43 of this subchapter.


Sec. 563e.12  Definitions.

     For purposes of this part, the following definitions apply:
    (a) Affiliate means any company that controls, is controlled by, or 
is under common control with another company. For purposes of this 
part, the term ``control'' has the meaning given to that term in 12 
U.S.C. 1841(a)(2), and a company is under common control with another 
company if both companies are directly or indirectly controlled by the 
same company.
    (b) Area median income means the median family income for the MSA 
in which a person or geography is located or, in the case of a person 
or geography located outside an MSA, the higher of the county median 
family income or the statewide nonmetropolitan median family income.
    (c) Automated teller machine (ATM) means an automated, unstaffed 
banking facility with a fixed site owned or operated by or operated 
exclusively for the savings association at which deposits are received, 
cash dispersed, or money lent.
    (d) Branch means a staffed banking facility (shared or unshared) 
licensed as a branch with a fixed site at which deposits are received, 
checks paid, or money lent, including a mini-branch in a grocery store 
or a branch operated in conjunction with any other local business or 
nonprofit organization.
    (e) Community development loan means a loan (including a line of 
credit, commitment, or letter of credit) that addresses affordable 
housing (including multifamily rental housing) or other community 
economic development needs not being met by the private market; 
provided the loan:
    (1) Primarily benefits low- or moderate-income individuals, 
businesses or farms with gross annual revenues less than or equal to $1 
million, or businesses or farms that qualify as small businesses under 
a Small Business Administration program;
    (2) Has not been reported or collected by the savings association 
or one of its affiliates as a home mortgage loan, small business loan, 
small farm loan, or a consumer loan pursuant to Sec. 563e.42 of this 
part, unless it is a multifamily dwelling loan (as described in 
Appendix A to 12 CFR Part 203); and
    (3) Except in the case of a wholesale or limited purpose savings 
association, benefits the savings association's service area(s) or a 
broader statewide or regional area that includes the savings 
association's service area(s).
    (f) Consumer loan means a loan extended to one or more individuals 
for household, family, or other personal expenditures; provided the 
loan is not secured by real estate and is not used for the purpose of 
purchasing or carrying securities.
    (g) Geography means a census tract delineated by the United States 
Bureau of the Census in the most recent decennial census, or a block 
numbering area delineating a small statistical subdivision where a 
census tract has not been established.
    (h) HMDA means the Home Mortgage Disclosure Act (12 U.S.C. 2801 et 
seq.).
    (i) Home mortgage loan means a mortgage loan as defined in section 
303(1) of HMDA (12 U.S.C. 2802(1)) and implementing regulations.
    (j) Income level--(1) Low-income means, in the case of a person, an 
individual income, or in the case of a geography, a median family 
income, that is less than 50 percent of the adjusted area median 
income, with adjustments to take into account family size and the 
prevailing levels of residential housing construction costs or 
unusually high or low family incomes.
    (2) Moderate-income means, in the case of a person, an individual 
income, or in the case of a geography, a median family income, that is 
at least 50 percent and less than 80 percent of the adjusted area 
median income, with adjustments to take into account family size and 
the prevailing levels of residential housing construction costs or 
unusually high or low family incomes.
    (3) Middle-income means, in the case of a person, an individual 
income, or in the case of a geography, a median family income, that is 
at least 80 percent and less than 120 percent of the adjusted area 
median income, with adjustments to take into account family size and 
the prevailing levels of residential housing construction costs or 
unusually high or low family incomes.
    (4) Upper-income means, in the case of a person, an individual 
income or, in the case of a geography, a median family income, that is 
120 percent or more of the adjusted area median income, with 
adjustments to take into account family size and the prevailing levels 
of residential housing construction costs or unusually high or low 
family incomes.
    (k) Limited purpose savings association means a savings association 
that offers only a narrow product line (such as credit cards or 
automobile loans) to a national or regional market and has, pursuant to 
a written request, been designated by the OTS as a limited purpose 
savings association, as provided in Sec. 563e.25 of this part.
    (l) Loan location. A loan is located in a geography as follows:
    (1) A consumer loan is located where the borrower resides;
    (2) A home mortgage loan is located where the property to which the 
loan relates is located;
    (3) A small business or small farm loan is located where the main 
business facility or farm is located or where the loan proceeds 
otherwise will be applied, as indicated by the borrower.
    (m) Loan production office means a staffed banking facility that is 
accessible to the public, and provides lending-related services such as 
loan information and applications, but is not a branch.
    (n) MSA means metropolitan statistical area or primary metropolitan 
statistical area, as defined by the Director of the Office of 
Management and Budget.
    (o) Minority means an individual who is an American Indian or 
Alaskan Native, an Asian or Pacific Islander, a Black, or of Hispanic 
origin as provided in the Office of Management and Budget's Statistical 
Policy Directive No. 15, Race and Ethnic Standards for Federal 
Statistics and Administrative Reporting.
    (p) Minority-owned business means a business, including a farm, 
that is more than 50 percent owned by one or more minority individuals, 
and that has not issued any securities registered under Section 12(g) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) and has 
100 or fewer shareholders.
    (q) Service area means a geographical area delineated in accordance 
with Sec. 563e.41 of this part.
    (r) Small savings association means a savings association with 
total assets of less than $250 million that is:
    (1) Independent; or
    (2) An affiliate of a holding company with total banking and thrift 
assets of less than $250 million.
    (s) Small business loan means a loan with an original amount of $1 
million or less that is either a commercial or industrial loan or a 
loan secured by nonfarm, nonresidential property.
    (t) Small farm loan means a loan with an original amount of 
$500,000 or less that is a loan secured by farmland (including a loan 
to finance a farm residence or other improvements), a loan to finance 
agricultural production, or any other loan to a farmer.
    (u) Women-owned business means a business, including a farm, that 
is more than 50 percent owned by one or more women, and that has not 
issued any securities registered under Section 12(g) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.) and has 100 or fewer 
shareholders.
    (v) Wholesale savings association means a savings association that 
is not in the business of extending home mortgage, small business, 
small farm, or consumer loans to retail customers, and has, pursuant to 
a written request, been designated by the OTS as a wholesale savings 
association, as provided in Sec. 563e.25 of this part.

Subpart B--Standards for Assessing Performance


Sec. 563e.21  Assessment tests and ratings, in general.

    (a) Assessment tests and standards. In connection with an 
examination of a savings association, the OTS shall assess the CRA 
performance of the savings association as follows:
    (1) Lending, investment, and service tests. The OTS shall apply 
these three tests, as described in Secs. 563e.22 through 563e.24 of 
this part, in evaluating the performance of savings associations, 
except as provided in paragraphs (a)(2), (3) and (4) of this section.
    (2) Community development test for wholesale or limited purpose 
savings associations. In evaluating the performance of wholesale or 
limited purpose savings associations (as defined in Sec. 563e.12 of 
this part), the OTS shall apply the community development test, as 
provided in Sec. 563e.25 of this part, except as provided in paragraph 
(a)(4) of this section.
    (3) Assessment standards for small savings associations. In 
evaluating the performance of small savings associations (as defined in 
Sec. 563e.12 of this part), the OTS shall apply the assessment 
standards for small savings associations as provided in Sec. 563e.26 of 
this part. However, a small savings association may elect instead to be 
assessed as provided in paragraphs (a)(2) and (4) of this section, or 
it may elect to be evaluated under paragraph (a)(1) of this section if 
it has collected and reported the data required for other savings 
associations under Sec. 563e.42(a)(1) of this part.
    (4) Strategic plan. Any savings association may elect not to be 
assessed by any tests described in paragraphs (a)(1), (2) and (3) of 
this section by submitting to the OTS and receiving approval of a 
strategic plan as described in Sec. 563e.27 of this part.
    (b) Assessment context. The OTS shall apply the tests and standards 
in paragraph (a) of this section in the context of the following 
information:
    (1) Demographic data on median income levels, distribution of 
household income, nature of housing stock, housing costs, and other 
relevant data pertaining to a savings association's service area(s);
    (2) Examiner-developed information regarding the credit needs of 
the savings association's service area(s) obtained from community-based 
organizations, state and local governments, economic development 
agencies, and from any information the savings association may choose 
to provide;
    (3) The savings association's product offerings and business 
strategy as determined from data provided by the savings association;
    (4) Institutional capacity and constraints, including the size and 
financial condition of the institution, the economic climate (national, 
regional and local), safety and soundness limitations, and any other 
factors that significantly affect the savings association's ability to 
lend to the different parts of its service area(s);
    (5) The savings association's past performance and the performance 
of similarly-situated lenders;
    (6) The savings association's public file, as described in 
Sec. 563e.43 of this part, and any signed, written comments about the 
savings association's CRA performance submitted to the savings 
association or the OTS; and
    (7) Any other information deemed relevant by the OTS.
    (c) Assigned ratings. The OTS shall assign to each savings 
association one of the following four ratings as set out in 
Sec. 563e.28 of this part and Appendix A of this part: ``outstanding''; 
``satisfactory''; ``needs to improve''; or ``substantial 
noncompliance'' based on:
    (1) The results of the applicable assessment test(s) or standards 
or performance under an approved strategic plan; and
    (2) Any evidence of discriminatory or other illegal credit 
practices.
    (d) Safe and sound operations. This part and the CRA do not require 
any savings association to make loans or investments, or to provide 
services that are inconsistent with safe and sound banking operations. 
Savings associations are permitted and encouraged to develop and apply 
flexible underwriting standards, consistent with safe and sound banking 
operations, for loans that benefit low- or moderate-income geographies 
or individuals.
    (e) Compliance with community reinvestment obligation. The assigned 
ratings reflect the extent of compliance or noncompliance with the 
community reinvestment obligation described in Sec. 563e.11(b) of this 
part. A savings association that receives an assigned rating of 
``substantial noncompliance'' shall be subject to enforcement actions 
pursuant to 12 U.S.C. 1818.


Sec. 563e.22  Lending test.

    (a) Scope of test. (1) The lending test evaluates a savings 
association's performance in helping to meet the credit needs of its 
service area(s) through its lending activities, as measured by home 
mortgage originations and purchases, small business and small farm 
loans outstanding, and community development loans outstanding. At the 
savings association's option, the lending test will also evaluate the 
savings association's consumer loans outstanding and any other loan 
distribution data the savings association may choose to provide, such 
as data on extensions of lines of credit, commitments, and letters of 
credit.
    (2) When evaluating a savings association's overall lending 
performance, the OTS shall weigh its assessments of the savings 
association's home mortgage lending, small business and small farm 
lending, and (at the savings association's option) consumer lending to 
reflect the relative importance of each category of lending to the 
savings association's overall business.
    (3) The OTS shall weigh the savings association's community 
development lending according to the characteristics and needs of the 
savings association's service area(s), the capacity and constraints of 
the savings association, and the opportunities available to the savings 
association for this lending.
    (b) Assessment criteria. The OTS shall evaluate a savings 
association's lending performance pursuant to the following criteria:
    (1) Geographic distribution. The geographic distribution of the 
savings association's lending (based on the location of the loan as 
provided in Sec. 563e.12 of this part), including:
    (i) The proportion of total lending in the savings association's 
service area(s);
    (ii) The dispersion of lending throughout the savings association's 
service area(s); and
    (iii) The number and amount of loans in low-, moderate-, middle-, 
and upper-income geographies in the savings association's service 
area(s);
    (2) Borrower characteristics. The distribution, particularly in the 
savings association's service area, of the savings association's 
lending (based on borrower characteristics), including:
    (i) The number and amount of home mortgage loans to low-, moderate-
, middle-, and upper-income individuals;
    (ii) The number and amount of small business and small farm loans 
to businesses and farms with gross annual revenues less than or equal 
to $1 million;
    (iii) The number and amount of small business and small farm loans 
by size of loan; and
    (iv) At the savings association's option, the number and amount of 
consumer loans to low-, moderate-, middle-, and upper-income 
individuals;
    (3) Community development lending. The savings association's 
community development lending, including the number and amount of 
community development loans outstanding, their complexity and 
innovativeness, and the number and amount of lines of credit, 
commitments, and letters of credit for community development purposes; 
and
    (4) Innovative or flexible lending practices. The savings 
association's use of innovative or flexible lending practices to 
address the credit needs of low- or moderate-income individuals or 
geographies.
    (c) Affiliate lending. (1) The OTS shall, if the savings 
association elects, consider in its assessment of a savings 
association's lending performance under this section lending by an 
affiliate of the savings association, if the savings association, or 
its affiliate, reports or collects the lending data pursuant to 
Sec. 563e.42 of this part.
    (2) The OTS may consider in its assessment lending by a savings 
association's affiliate even if the savings association has chosen not 
to have the affiliate's lending considered if the OTS determines that 
this lending is integral to the business of the savings association.
    (3) Consideration of affiliate lending shall be subject to the 
following constraints:
    (i) No affiliate may claim the same loan as another institution; 
and
    (ii) If the OTS considers loans within a particular lending 
category (e.g., home mortgage, small business, small farm, consumer or 
community development lending) made by one or more of the savings 
association's affiliates in a particular service area, the OTS shall 
consider all the loans within that lending category made by all of the 
savings association's affiliates in that particular service area.
    (d) Consortia and third-party lending. Community development loans 
made through consortia in which the savings association participates or 
through third parties in which the savings association has invested:
    (1) Shall be considered under the lending test, if the savings 
association elects, provided the data pertaining to these loans are 
reported by the savings association under the applicable provisions of 
Sec. 563e.42 of this part; and
    (2) May be allocated among participants or investors as they choose 
for purposes of the lending test, provided that no participant or 
investor claims the same loan or part of a loan as another participant 
or investor, or claims in the aggregate greater than its percentage 
share (based on the level of its participation or investment) of the 
total loans made by the consortium or third party.
    (e) Lending performance rating. The OTS shall rate a savings 
association's lending performance as provided in Appendix A of this 
part.


Sec. 563e.23  Investment test.

    (a) Scope of test. The investment test evaluates the degree to 
which a savings association is helping to meet the credit needs of its 
service area(s) through qualified investments. To be considered under 
this test, the qualified investments of a savings association must 
benefit its service area(s) or a broader statewide or regional 
geographic area that includes the savings association's service 
area(s).
    (b) Qualified investments. (1) Qualified investments are lawful 
investments, deposits, membership shares in a credit union, or grants 
that:
    (i) Primarily benefit low- or moderate-income individuals, 
businesses or farms with gross annual revenues less than or equal to $1 
million, or businesses or farms that qualify as small businesses under 
a Small Business Administration program; and
    (ii) Address affordable housing (including multifamily rental 
housing) or other community economic development needs that are not 
being met by the private market.
    (2) Donating, selling on favorable terms, or making available on a 
rent- free basis any branch of the savings association that is located 
in any predominantly minority neighborhood to any minority depository 
institution or women's depository institution (as defined in 12 U.S.C. 
2907(b)) shall be considered under the investment test.
    (3) Activities considered under the lending or service tests may 
not be considered under the investment test.
    (4) At a savings association's option, the OTS shall consider in 
its assessment of a savings association's investment performance a 
qualified investment made by an affiliate of the savings association, 
provided that the qualified investment is not claimed by any other 
institution.
    (c) Assessment criteria. The OTS shall evaluate the investment 
performance of a savings association pursuant to the following 
criteria:
    (1) The dollar amount of qualified investments that directly 
address credit needs;
    (2) The use of innovative or complex qualified investments to 
support community development initiatives; and
    (3) The degree of responsiveness to credit and community economic 
development needs.
    (d) Investment performance rating. The OTS shall rate a savings 
association's investment performance as provided in Appendix A of this 
part.


Sec. 563e.24  Service test.

    (a) Scope of test. The service test evaluates a savings 
association's record of helping to meet the credit needs of the savings 
association's service area(s) by analyzing both the availability and 
responsiveness of a savings association's systems for delivering retail 
banking services and the extent and innovativeness of its community 
development services.
    (b) Assessment criteria--retail banking services. The OTS shall 
evaluate the availability and responsiveness of a savings association's 
systems for delivering retail banking services, pursuant to the 
following criteria:
    (1) The current distribution of the savings association's branches 
and ATMs among low-, moderate-,
middle-, and upper-income geographies;
    (2) In the context of its current distribution of the savings 
association's branches and ATMs, the savings association's record of 
opening and closing branches and ATMs, particularly branches and ATMs 
located in low- or moderate-income geographies or primarily serving 
low- or moderate-income individuals;
    (3) The availability of alternative systems for delivering retail 
banking services (e.g., banking by telephone or computer, mobile 
branches and ATMs, ATMs not owned or operated by or operated 
exclusively for the savings association, loan production offices, and 
bank-at-work or by-mail programs) in low- and moderate-income 
geographies and to low- and moderate-income individuals; and
    (4) The range of services provided in low-, moderate-, middle-, and 
upper-income geographies and the degree to which the services are 
tailored to meet the needs of those geographies.
    (c) Assessment criteria--community development services.
    (1) Community development services are services that:
    (i) Primarily benefit low- or moderate-income individuals, 
businesses or farms with gross annual revenues less than or equal to $1 
million, or businesses or farms that qualify as small businesses under 
a Small Business Administration program; and
    (ii) Address affordable housing (including multifamily rental 
housing) or other community economic development needs that are not 
being met by the private market.
    (2) The OTS shall evaluate community development services pursuant 
to the following criteria:
    (i) The extent to which the savings association provides community 
development services; and
    (ii) The innovativeness and responsiveness of community development 
services.
    (3) When evaluating a savings association's overall service 
performance, the OTS shall weigh the savings association's community 
development services according to the characteristics and needs of the 
savings association's service area(s), the capacity and constraints of 
the savings association, and the opportunities available to the savings 
association to provide community development services.
    (4) At a savings association's option, the OTS shall consider in 
its assessment of a savings association's service performance a 
community development service provided by an affiliate of the savings 
association, provided that the community development service is not 
claimed by any other institution.
    (d) Service performance rating. The OTS shall rate a savings 
association's service performance as provided in Appendix A of this 
part.


Sec. 563e.25  Community development test for wholesale or limited 
purpose savings associations.

    (a) Scope of test. (1) The OTS shall assess the degree to which a 
wholesale or limited purpose savings association (as defined in 
Sec. 563e.12 of this part) is helping to meet the credit needs of its 
service area(s) under the community development test only if the 
savings association's written request to be designated as a wholesale 
or limited purpose savings association has been approved by the OTS 
before the commencement of its CRA examination, and the designation has 
not been revoked either at the request of the savings association or at 
the OTS's own initiative.
    (2) The community development test evaluates the record of a 
wholesale or limited purpose savings association in helping to meet the 
credit needs of its service area(s) through qualified investments, 
community development lending, or community development services.
    (3) For purposes of the community development test only, community 
development loans include small business and small farm loans and loans 
to low- and moderate-income individuals and geographies, whether or not 
reported or collected by the savings association or one of its 
affiliates as home mortgage loans, small business loans, small farm 
loans, or consumer loans, pursuant to Sec. 563e.42 of this part.
    (b) Assessment criteria. The OTS shall evaluate the community 
development performance of a wholesale or limited purpose savings 
association pursuant to the following criteria:
    (1) The number and amount of community development loans 
outstanding, qualified investments (as defined in Sec. 563e.23 of this 
part), or community development services (as defined in Sec. 563e.24 of 
this part);
    (2) The use of innovative or complex qualified investments, 
community development loans outstanding, or community development 
services and their connection to credit needs; and
    (3) The degree of responsiveness to credit and community economic 
development needs.
    (c) Indirect activities. The OTS shall, if the wholesale or limited 
purpose savings association elects, consider in its community 
development performance assessment:
    (1) Qualified investments or community development services 
provided by an affiliate of the savings association, provided the 
investment or services are not claimed by any other institution; and
    (2) Community development lending by affiliates, consortia and 
third parties, subject to the requirements and limitations in 
Sec. 563e.22(c)(3) and (d) of this part.
    (d) Benefit to service area(s)--(1) Benefit inside service area(s). 
For purposes of assessing a wholesale or limited purpose savings 
association's community development performance under this section, the 
OTS shall consider all qualified investments, community development 
loans outstanding, and community development services that benefit 
areas within the savings association's service area(s).
    (2) Benefit outside service area(s). The OTS shall consider the 
qualified investments, community development loans outstanding, and 
community development services provided by a wholesale or limited 
purpose savings association that benefit areas outside the savings 
association's service area(s) only up to an amount equivalent to the 
amount of investments, loans, and services considered under paragraph 
(d)(1) of this section. If a savings association demonstrates a limited 
need or opportunity for these investments, lending, and services, in 
its service area(s), the OTS may exempt the savings association from 
all or part of this limitation.
    (e) Community development performance rating. The OTS shall rate a 
savings association's community development performance as provided in 
Appendix A of this part.


Sec. 563e.26  Small savings association assessment standards.

    (a) Scope of assessment. The OTS shall assess the degree to which a 
small savings association is helping to meet the credit needs of its 
service area(s) under the assessment standards described in this 
section.
    (b) Assessment criteria. The OTS shall evaluate a small savings 
association's CRA performance pursuant to the following criteria:
    (1) The savings association's loan-to-deposit ratio, adjusted for 
seasonal variation and, as appropriate, other lending-related 
activities, such as loan originations for sale to the secondary markets 
or community development lending or investment;
    (2) The percentage of loans and, as appropriate, other lending-
related activities located in the savings association's service 
area(s);
    (3) The savings association's record of lending to and, as 
appropriate, engaging in other lending-related activities for, 
borrowers of different income levels and businesses and farms of 
different sizes;
    (4) The geographic distribution of the savings association's loans 
given its service area(s); and
    (5) The savings association's record of taking action, if 
warranted, in response to written complaints about its performance in 
meeting the credit needs of its service area(s).
    (c) Small savings association performance rating. The OTS shall 
rate a small savings association's performance as provided in Appendix 
A of this part.


Sec. 563e.27  Strategic plan assessment.

    (a) Alternative election. A savings association may request to be 
rated under a strategic plan rather than under the lending, service, 
and investment tests (Secs. 563e.22 through 563e.24 of this part), the 
community development test (Sec. 563e.25 of this part), or the small 
savings association assessment standards (Sec. 563e.26 of this part), 
by submitting to the OTS a strategic plan as provided for in this 
section. A savings association's request to be rated under a strategic 
plan is not approved until the OTS approves the plan. The OTS's 
approval of a strategic plan does not affect the savings association's 
obligation, if any, to report data as required by Sec. Part 563e.42 of 
this part.
    (b) Strategic plans in general. (1) A plan may have a term of no 
more than five years, and any multi-year plan shall include annual 
interim measurable goals according to which the OTS shall evaluate the 
savings association's performance.
    (2) A savings association with more than one service area may 
prepare a single plan for all of its service areas or a plan for one or 
more but not all of its service areas.
    (3) Affiliated institutions may prepare joint plans if the plans 
provide measurable goals for each institution.
    (c) Public participation in strategic plan development. Before 
submitting a plan to the OTS for approval, the savings association 
shall:
    (1) Informally seek suggestions from the public in its service 
area(s) while developing the plan;
    (2) Once the savings association has developed a plan, formally 
solicit public comment on the plan for at least 30 days by publishing 
notice in a newspaper of general circulation in each of its service 
areas; and
    (3) During the period of formal public comment, make copies of the 
plan available for review at all offices of the savings association in 
any service area covered by the plan.
    (d) Submission of plan. The savings association shall submit its 
plan to the OTS at least three months prior to the proposed effective 
date of the plan. The savings association shall also submit with its 
plan any public comments received, and, if the plan was revised in 
light of the comments received, the initial plan as released for public 
comment.
    (e) Plan content--(1) Measurable goals. (i) A savings association 
shall specify in its plan measurable goals for helping to meet the 
credit needs of each of its service area(s) covered by the plan, 
particularly the needs of low- and moderate-income geographies and low- 
and moderate-income individuals, through lending, investment, and the 
provision of services, as appropriate.
    (ii) A savings association shall address all three performance 
categories and, unless the savings association has been designated as a 
wholesale or limited purpose savings association, shall emphasize 
lending and lending-related activities. Nevertheless, a different 
emphasis, including a focus on one or more performance categories, may 
be appropriate if responsive to the characteristics and credit needs of 
its service area, considering public comment and the savings 
association's capacity and constraints, product offerings, and business 
strategy.
    (2) Confidential information. The savings association may submit 
additional information to the OTS on a confidential basis, but the 
goals stated in the plan shall be sufficiently specific to enable the 
public and the OTS to judge fairly the merits of the plan.
    (3) Satisfactory and outstanding goals. A savings association shall 
specify in its plan measurable goals that constitute ``satisfactory'' 
performance. A plan may specify measurable goals that constitute 
``outstanding'' performance. In order to be considered for an 
``outstanding'' performance rating, the savings association shall 
submit both ``satisfactory'' and ``outstanding'' performance goals.
    (f) Plan approval--(1) Timing. The OTS shall act upon a plan within 
60 days after the complete plan and required accompanying material are 
submitted. If the OTS fails to act within this time period, the plan 
shall be deemed approved unless the OTS extends the review period for 
good cause.
    (2) Public participation. In evaluating the plan's goals, the OTS 
shall consider the public's involvement in formulating the plan, public 
comment on the plan, and any response by the savings association to 
public comment on the plan.
    (3) Criteria for evaluating plan. The OTS shall evaluate a plan's 
measurable goals using the following criteria, as appropriate:
    (i) The extent and breadth of lending or lending-related 
activities, including, as appropriate, the distribution of loans among 
different geographies, businesses and farms of different sizes, and 
individuals of different income levels, the extent of community 
development lending, and the use of innovative or flexible lending 
practices to address credit needs;
    (ii) The amount and innovativeness, complexity, and responsiveness 
of the savings association's qualified investments, as defined in 
Sec. 563e.23 of this part; and
    (iii) The extent and availability of the savings association's 
services, including, as appropriate, the accessibility of retail 
delivery systems and the extent and innovativeness of community 
development services, as defined in Sec. 563e.24 of this part.
    (g) Plan amendment. During the term of a plan, the savings 
association may petition the OTS to approve an amendment to the plan on 
grounds that a material change in circumstances has made the plan no 
longer appropriate. Any amendment proposed shall be developed in 
accordance with the public participation requirements of paragraph (c) 
of this section.
    (h) Strategic plan assessment. The OTS shall approve the goals and 
assess performance under a strategic plan as provided for in Appendix A 
of this part.


Sec. 563e.28  Assigned ratings.

    (a) Ratings in general. Subject to paragraphs (b), (c), and (d) of 
this section, the OTS shall assign to a savings association a rating of 
``outstanding,'' ``satisfactory,'' ``needs to improve,'' or 
``substantial noncompliance'' based on the savings association's 
performance under the lending, investment and service tests, the 
community development test, the small savings association assessment 
standards, or an approved strategic plan, as applicable.
    (b) Lending, investment, and service tests. The OTS shall assign a 
rating for a savings association assessed under the lending, 
investment, and service tests in accordance with the procedures 
provided in Appendix A of this part and the following principles:
    (1) A savings association's rating on the lending test shall be 
weighed so as to count for at least 50 percent of its assigned rating;
    (2) A savings association that receives an ``outstanding'' rating 
on the lending test shall receive an assigned rating of at least 
``satisfactory'';
    (3) A savings association that receives an ``outstanding'' rating 
on the lending test and an ``outstanding'' rating on either the service 
test or the investment test shall receive an assigned rating of 
``outstanding'';
    (4) A savings association that receives an ``outstanding'' rating 
on both the service test and the investment test and a rating of at 
least ``high satisfactory'' on the lending test shall receive an 
assigned rating of ``outstanding''; and
    (5) No savings association may receive an assigned rating of 
``satisfactory'' unless it receives a rating of at least ``low 
satisfactory'' on the lending test.
    (c) Effect of evidence of discriminatory or other illegal credit 
practices. Evidence of discriminatory or other illegal credit practices 
shall adversely affect the OTS's evaluation of a savings association's 
performance. In determining the effect on the savings association's 
assigned rating, the OTS shall consider the nature and extent of the 
evidence, the policies and procedures that the savings association has 
in place to prevent discriminatory or other illegal credit practices, 
any corrective action that the savings association has taken or has 
committed to take, particularly voluntary corrective action resulting 
from self-assessment, and other relevant information, such as the 
savings association's past fair lending performance.
    (d) Effect of successive ``needs to improve'' ratings. A savings 
association that would otherwise receive an assigned rating of ``needs 
to improve'' shall receive an assigned rating of ``substantial 
noncompliance'' if the savings association received no better than a 
``needs to improve'' rating on each of its two previous examinations.


Sec. 563e.29  Effect of ratings on applications.

    (a) CRA performance. Among other factors, the OTS shall take into 
account the record of performance under the CRA of each applicant 
savings association, and for applications under section 10(e) of the 
Home Owners' Loan Act, of each subsidiary of an applicant, and of each 
proposed subsidiary savings association, in considering any 
application:
    (1) For establishment of a domestic branch or other facility that 
would be authorized to take deposits;
    (2) For relocation of the home office or a branch office;
    (3) For merger or consolidation with or the acquisition of assets 
or assumption of liabilities of a depository institution;
    (4) For a Federal thrift charter; and
    (5) For acquisitions subject to section 10(e) of the Home Owners' 
Loan Act.
    (b) Charter application. An applicant for a Federal thrift charter 
shall submit a description of how it will meet its CRA objectives when 
the application is made. In considering the application, the OTS shall 
take the description into account and may deny or condition approval on 
that basis.
    (c) Interested parties. In considering CRA performance in an 
application described in paragraph (a) of this section, the OTS shall 
take into account any views expressed by State or other Federal 
financial supervisory agencies or other interested parties which are 
submitted in accordance with the applicable public comment procedures.
    (d) Denial or conditional approval of application. An applicant's 
record of performance may be the basis for denying or conditioning 
approval of an application described in paragraph (a) of this section.

 Subpart C--Records, Reporting and Disclosure Requirements


Sec. 563e.41  Service area delineation.

    (a) In general. Subject to paragraphs (b) and (c) of this section, 
each savings association may delineate its service area(s) using any 
method it chooses provided that the service area(s):
    (1) Do(es) not reflect illegal discrimination;
    (2) Do(es) not arbitrarily exclude low- and moderate-income 
geographies, taking into account the savings association's size and 
financial condition and the extent of its branching network, as 
appropriate; and
    (3) Consist(s) only of whole census tracts or block numbering 
areas.
    (b) Savings associations that are not wholesale or limited purpose 
savings associations. The service area(s) for a savings association 
that is not a wholesale or limited purpose savings association (as 
defined in Sec. 563e.12 of this part):
    (1) Shall include those geographies in the local areas around a 
savings association's branches and deposit-taking ATMs in which the 
savings association has originated or had outstanding, during the 
previous calendar year, a significant number and amount of home 
mortgage, small business and small farm, and (if the savings 
association chooses to have them considered in its CRA evaluation) 
consumer loans and any other geographies equidistant from its branches 
and deposit-taking ATMs, taking into account political boundaries or 
significant geographic barriers; and
    (2) Shall not extend substantially across MSA boundaries or state 
boundaries unless the service area is located in a multistate MSA. If 
the savings association serves areas that extend substantially across 
state boundaries or extend substantially across boundaries of an MSA, 
the savings association shall delineate separate service areas for the 
areas in each state and for the areas inside and outside the MSA.
    (c) Wholesale or limited purpose savings associations. The service 
area for a wholesale or limited purpose savings association (as defined 
in Sec. 563e.12 of this part) shall be delineated as an area or areas 
around its offices (including its home office and branches) or a 
broader statewide or regional area that includes the area or areas.
    (d) Savings associations serving military personnel. 
Notwithstanding paragraphs (a), (b), and (c) of this section, a savings 
association whose business predominantly consists of serving the needs 
of military personnel or their dependents who are not located within a 
defined geographic area may delineate its entire deposit customer base 
as its service area.
    (e) Maintaining list and map. Each savings association shall 
compile and maintain a list of all the geographies within its service 
area or areas and a map of each service area showing the geographies 
contained therein.


Sec. 563e.42  Data collection and reporting.

    (a) Mandatory data collection and reporting--(1) Loan data. Each 
savings association, except small savings association, shall collect 
and report to the OTS the following data pertaining to its home 
mortgage, small business, small farm, and community development loans:
    (i) Home mortgage loans. If the savings association is subject to 
reporting under HMDA, the location of each home mortgage loan located 
outside the MSAs in which the savings association has a home or branch 
office (or outside any MSA) in accordance with Regulation C, Home 
Mortgage Disclosure (12 CFR Part 203);
    (ii) Small business and small farm loan data. All small business 
and small farm loan data required to be collected and reported on the 
OTS's Small Business and Small Farm Loan Register (OTS-________-
________), set forth in Appendix C of this part, in accordance with the 
instructions in Appendix C of this part; and
    (iii) Community development loan data. All community development 
loan data required to be collected and reported on the OTS's Community 
Development Report Form (OTS-________-________), set forth in Appendix 
C of this part, in accordance with the instructions in Appendix C of 
this part.
    (2) Service area data. Each savings association shall collect and 
report to the OTS by April 1 of each year a list of the areas the 
savings association considers to be its service area(s), a list of the 
geographies it considers to be within its service area(s), and a map of 
each service area showing the geographies contained therein.
    (b) Optional data collection and reporting. (1) If a savings 
association elects to have its consumer lending considered under the 
lending test (as described in Sec. 563e.22 of this part), the savings 
association shall collect the consumer loan data requested on the OTS's 
Consumer Loan Register (OTS-________-________), set forth in Appendix C 
of this part, in accordance with the instructions in Appendix C of this 
part.
    (2) At its option, a savings association may:
    (i) Provide information concerning outstanding small business, 
small farm, or consumer loans throughout the year to account for 
seasonal variations in lending for use in the evaluation of the savings 
association under the lending test described in Sec. 563e.22 of this 
part; and
    (ii) Provide any other information concerning its lending 
performance, including additional loan distribution data.
    (c) Data on affiliate lending. A savings association that wishes to 
have the OTS consider lending by its affiliates for purposes of the 
lending test shall be prepared to identify the particular home mortgage 
loans reported under HMDA which it wishes the OTS to consider, and 
shall collect or report, pursuant to the provisions of paragraphs (a) 
and (b) of this section, the requisite data concerning the small 
business, small farm, or consumer loans made by its affiliates that it 
wishes OTS to consider.
    (d) Data on consortia and third-party lending. A savings 
association that wishes to have the OTS consider community development 
lending through consortia in which the savings association participates 
or through third parties in which the savings association has invested 
shall report, pursuant to paragraph (a)(1)(iii) of this section, the 
requisite data concerning the community development loans made through 
consortia and third parties that it wishes the OTS to consider.


Sec. 563e.43  Public file and disclosure by savings associations.

    (a) Public availability. Each savings association shall maintain a 
file that is readily available for public inspection containing the 
information required by this section.
    (b) Current information. Each savings association shall include in 
its public file the following information:
    (1) All signed, written comments received from the public for the 
current year and each of the prior two calendar years that specifically 
relate to the savings association's performance in helping to meet the 
credit needs of its community or communities, and any response to the 
comments by the savings association;
    (2) A copy of the public section of the savings association's most 
recent CRA Performance Evaluation prepared by the OTS. The savings 
association shall place this copy in the public file within 30 business 
days after its receipt from the OTS;
    (3) A list of the areas the savings association considers to be its 
service area(s), a list of the geographies it considers to be within 
its service area(s), and a map of each service area showing the 
geographies contained therein;
    (4) A list of the savings association's branches and ATMs, their 
street addresses, and geographies;
    (5) A list of branches and ATMs opened or closed by the savings 
association during the current and each of the prior two calendar 
years, their street addresses, and geographies; and
    (6) A list of services (including hours of operation, available 
loan and deposit products, and transaction fees) generally offered at 
the savings association's branches and ATMs and descriptions of 
material deviations in the availability or cost of services at 
particular branches and ATMs, if any. At its option, a savings 
association may include information regarding the availability of 
alternative systems for delivering retail banking services (e.g., 
banking by telephone or computer, mobile branches and ATMs, ATMs not 
owned or operated by or operated exclusively for the savings 
association, loan production offices, and bank-at-work or by-mail 
programs).
    (c) Information for prior years. Each savings association that is 
not a small savings association shall include in its public file the 
following information for each of the prior two calendar years derived 
from the data collected or reported pursuant to Sec. 563e.42 of this 
part:
    (1) The number and amount of small business loans and small farm 
loans located in low-, moderate-, middle-, and upper-income 
geographies;
    (2) A list of the geographies where the savings association had 
outstanding at least one small business loan or small farm loan;
    (3) The number and amount of small business and small farm loans 
located inside the savings association's service area(s) and outside 
the savings association's service area(s);
    (4) The number and amount of small business and small farm loans to 
minority-owned businesses;
    (5) The number and amount of small business and small farm loans to 
women-owned businesses;
    (6) The number and amount of small business and small farm loans to 
businesses and farms with gross annual revenues less than or equal to 
$1 million;
    (7) The number and amount of community development loans 
outstanding; and
    (8) If the savings association has elected to have its consumer 
loans considered under the lending test (as described in Sec. 563e.22 
of this part), the number and amount of consumer loans to low-, 
moderate-, middle-, and upper- income individuals, the number and 
amount of consumer loans located in low-, moderate-, middle-, and 
upper-income geographies, and the number and amount of consumer loans 
located inside the savings association's service area(s) and outside 
the savings association's service area(s).
    (d) Exception. A savings association shall not place in its public 
file any information required under paragraph (c) of this section for a 
particular year if, given special circumstances such as a small number 
of loans made within a small number of designated income geographies or 
to a small number of designated borrowers, the information could 
reasonably be expected to disclose the identity of the borrower.
    (e) HMDA statement. Every savings association required to report 
home mortgage loan data pursuant to the HMDA shall include in its 
public file a copy of its HMDA Disclosure Statement provided by the 
Federal Financial Institutions Examination Council for each of the 
prior two calendar years. The statement shall be placed in the home 
office public file within three business days and in the branch office 
public files within 10 business days of the savings association's 
receipt of the statement.
    (f) Small savings association file. (1) A small savings association 
shall include in its public file the savings association's loan-to-
deposit ratio computed at the end of the most recent calendar year. A 
savings association may include additional data on its loan-to-deposit 
ratio at its option.
    (2) A small savings association that elects to be evaluated under 
the lending, investment and service tests (as described in 
Secs. 563e.22 through 563e.24 of this part) shall include in its public 
file the information specified in paragraph (c) of this section.
    (g) Strategic plan. Each savings association that has been approved 
to be assessed under a strategic plan as described in Sec. 563e.27 of 
this part shall include in its public file a copy of that plan. 
Information submitted to the OTS on a confidential basis in conjunction 
with the plan does not have to be included in the public file.
    (h) Less than satisfactory rating. Each savings association that 
received a less than satisfactory rating during its most recent 
examination shall include in its public file a description of its 
current efforts to improve its performance in helping to meet the 
credit needs of its entire community. This description shall be updated 
quarterly.
    (i) Location of public file. Each savings association shall 
maintain its public file as follows:
    (1) The home office shall have a copy of the complete public file;
    (2) At least one branch in each service area shall have a copy of 
the savings association's HMDA Disclosure Statements and all materials 
in the public file relating to the service area in which the branch is 
located; and
    (3) If a member of the public requests to review a savings 
association's public file at a branch that does not have a copy, the 
savings association shall make a complete copy of the file for that 
service area available for review at the branch within 5 business days 
at no cost.
    (j) Copies. Each savings association shall provide copies of the 
information in its public file to members of the public upon request. A 
savings association may charge a reasonable fee not to exceed the cost 
of reproduction and mailing (if applicable).


Sec. 563e.44  Public notice by savings associations.

    (a) CRA notice for savings associations. Each savings association 
shall provide in the public lobby of its home office and each of its 
branches the public notice set forth in Appendix B of this part. 
Bracketed material shall be used only by savings associations having 
more than one service area.
    (b) Additional notice for affiliate savings associations. The last 
two sentences shall be included only if the savings association is an 
affiliate of a holding company.


Sec. 563e.45  Publication of planned examination schedule.

    The OTS shall publish at least 30 days in advance of the beginning 
of each calendar quarter a list of the savings associations that are 
scheduled for CRA examinations in that quarter.

Subpart D--Transition Rules


Sec. 563e.51  Transition rules.

    (a) Effective date. Sections of this part 563e become effective 
over a period of time in accordance with the schedule set forth in 
paragraph (c) of this section. The provisions of part 563e become fully 
effective on July 1, 1996.
    (b) Data collection and reporting; strategic plan; small savings 
association assessment standards; and performance tests.--(1) Data 
collection and reporting. On July 1, 1995, the data collection and 
reporting requirements set forth in Sec. 563e.42 of this part become 
effective.
    (2) Strategic plan. Beginning July 1, 1995, a savings association 
that elects to be evaluated under an approved strategic plan pursuant 
to Sec. 563e.27 of this part may submit its strategic plan to the OTS 
for approval.
    (3) Small savings association assessment standards. Beginning July 
1, 1995, a savings association that qualifies as a small savings 
association pursuant to Sec. 563e.12 of this part may elect to be 
evaluated under the small savings association assessment standards set 
forth in Sec. 563e.26 of this part. Beginning July 1, 1996, the OTS 
shall evaluate each small savings association under the small savings 
association assessment standards, unless the savings association elects 
to be evaluated pursuant to the performance tests set forth in 
Secs. 563e.22 through 563e.25 of this part or under an approved 
strategic plan.
    (4) Performance tests. On July 1, 1996, the lending, investment, 
service, and community development tests set forth in Secs. 563e.22 
through 563e.25 of this part become effective. Thereafter, the OTS 
shall evaluate all savings associations pursuant to these test(s), 
except small savings associations evaluated under the small savings 
association assessment standards and savings associations that elect to 
be evaluated under an approved strategic plan.
    (c) Schedule. On January 1, 1995, Secs. 563e.11, 563e.12, 563e.29, 
and 563e.51 become effective, and Secs. 563e.1, 563e.2, and 563e.8 
expire. On July 1, 1995, Secs. 563e.26, 563e.27, 563e.42, and 563e.45 
become effective, and Secs. 563e.28 and 563e.41 become effective for 
savings associations that are evaluated under Secs. 563e.26 or 563e.27. 
On July 1, 1996, Secs. 563e.21 through 563e.25, 563e.28, 563e.41, 
563e.43, and 563e.44 become effective, and Secs. 563e.3 through 563e.7 
expire.

Appendix A to Part 563e--Ratings

    (a) Ratings in general. (1) In assigning a rating, the OTS shall 
evaluate a savings association's performance under the applicable 
assessment criteria in this part, subject to Sec. 563e.28 of this 
part, which provides for adjustments on the basis of evidence of 
discriminatory or other illegal credit practices and prior ``needs 
to improve'' ratings.
    (2) A savings association's performance need not fit each aspect 
of a particular rating profile in order to receive that rating, and 
exceptionally strong performance with respect to some aspects may 
compensate for weak performance in others. The savings association's 
overall performance, however, should generally be consistent with 
the appropriate profile stated below.
    (b) Savings associations that are not wholesale or limited 
purpose savings associations or small savings associations. (1) 
Lending performance rating. The OTS shall assign each savings 
association's lending performance one of the five ratings described 
below.
    (i) Outstanding. The OTS shall rate a savings association's 
lending performance ``outstanding'' if, in general, it demonstrates:
    (A) Excellent responsiveness to credit needs in its service 
area(s);
    (B) A substantial majority of its loans are made in its service 
area(s);
    (C) An excellent geographic distribution of loans throughout its 
service area(s);
    (D) An excellent distribution, particularly in its service 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different size given the product 
lines offered by the savings association;
    (E) An excellent record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Extensive use of innovative or flexible lending practices to 
address the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It is a leader in making community development loans.
    (ii) High satisfactory. The OTS shall rate a savings 
association's lending performance ``high satisfactory'' if, in 
general, it demonstrates:
    (A) Good responsiveness to credit needs in its service area(s);
    (B) A high percentage of its loans are made in its service 
area(s);
    (C) A good geographic distribution of loans throughout its 
service area(s);
    (D) A good distribution, particularly in its service area(s), of 
loans among individuals of different income levels and businesses 
(including farms) of different size given the product lines offered 
by the savings association;
    (E) A good record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Use of innovative or flexible lending practices to address 
the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It has made a relatively high level of community development 
loans.
    (iii) Low satisfactory. The OTS shall rate a savings 
association's lending performance ``low satisfactory'' if, in 
general, it demonstrates:
    (A) Adequate responsiveness to credit needs in its service 
area(s);
    (B) An adequate percentage of its loans are made in its service 
area(s);
    (C) An adequate geographic distribution of loans throughout its 
service area(s);
    (D) An adequate distribution, particularly in its service 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different size given the product 
lines offered by the savings association;
    (E) An adequate record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Limited use of innovative or flexible lending practices to 
address the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It has made an adequate level of community development 
loans.
    (iv) Needs to improve. The OTS shall rate a savings 
association's lending performance ``needs to improve'' if, in 
general, it demonstrates:
    (A) Poor responsiveness to credit needs in its service area(s);
    (B) A small percentage of its loans are made in its service 
area(s);
    (C) A poor geographic distribution of loans throughout its 
service area(s), particularly to low- or moderate-income geographies 
in the service area(s);
    (D) A poor distribution, particularly in its service area(s), of 
loans among individuals of different income levels and businesses 
(including farms) of different size given the product lines offered 
by the savings association;
    (E) A poor record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) Little use of innovative or flexible lending practices to 
address the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It has made a limited number of community development loans.
    (v) Substantial noncompliance. The OTS shall rate a savings 
association's lending performance as being in ``substantial 
noncompliance'' if, in general, it demonstrates:
    (A) A very poor responsiveness to credit needs in its service 
area(s);
    (B) A very small percentage of its loans are made in its service 
area(s);
    (C) A very poor geographic distribution of loans throughout its 
service area(s), particularly to low- or moderate-income geographies 
in the service area(s);
    (D) A very poor distribution, particularly in its service 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different size given the product 
lines offered by the savings association;
    (E) A very poor record of serving the credit needs of the most 
economically disadvantaged areas of its service area(s), low-income 
individuals, or businesses (including farms) with gross annual 
revenues less than or equal to $1 million, consistent with safe and 
sound operations;
    (F) No use of innovative or flexible lending practices to 
address the credit needs of low- or moderate-income individuals or 
geographies; and
    (G) It has made few, if any, community development loans.
    (2) Investment performance rating. The OTS shall assign each 
savings association's investment performance one of the five ratings 
described below.
    (i) Outstanding. The OTS shall rate a savings association's 
investment performance ``outstanding'' if, in general, it 
demonstrates:
    (A) An excellent level of qualified investments, often in a 
leadership position, particularly those that directly address credit 
needs;
    (B) Extensive use of innovative or complex qualified investments 
to support community development initiatives; and
    (C) Excellent responsiveness to credit and community economic 
development needs.
    (ii) High satisfactory. The OTS shall rate a savings 
association's investment performance ``high satisfactory'' if, in 
general, it demonstrates:
    (A) A significant level of qualified investments, occasionally 
in a leadership position, particularly those that directly address 
credit needs;
    (B) Significant use of innovative or complex qualified 
investments to support community development initiatives; and
     (C) Good responsiveness to credit and community economic 
development needs.
     (iii) Low satisfactory. The OTS shall rate a savings 
association's investment performance ``low satisfactory'' if, in 
general, it demonstrates:
     (A) An adequate level of qualified investments, although rarely 
in a leadership position, particularly those that directly address 
credit needs;
     (B) Occasional use of innovative or complex qualified 
investments to support community development initiatives; and
     (C) Adequate responsiveness to credit and community economic 
development needs.
     (iv) Needs to improve. The OTS shall rate a savings 
association's investment performance ``needs to improve'' if, in 
general, it demonstrates:
     (A) A poor level of qualified investments, particularly those 
that directly address credit needs;
     (B) Rare use of innovative or complex qualified investments to 
support community development initiatives; and
     (C) Poor responsiveness to credit and community economic 
development needs.
     (v) Substantial noncompliance. The OTS shall rate a savings 
association's investment performance as being in ``substantial 
noncompliance'' if, in general, it demonstrates:
     (A) Few, if any, qualified investments, particularly those that 
directly address credit needs;
     (B) No use of innovative or complex qualified investments to 
support community development initiatives; and
     (C) Very poor responsiveness to credit and community economic 
development needs.
     (3) Service performance rating. The OTS shall assign each 
savings association's service performance one of the five ratings 
described below.
     (i) Outstanding. The OTS shall rate a savings association's 
service performance ``outstanding'' if, in general, the savings 
association demonstrates:
     (A) Its service delivery systems are readily accessible to 
essentially all portions of its service area(s);
     (B) To the extent changes have been made, the savings 
association's record of opening and closing branches and ATMs has 
improved the accessibility of its delivery systems, particularly in 
low- or moderate-income geographies or to low- or moderate-income 
individuals;
     (C) Services (including, where appropriate, business hours) are 
tailored to the convenience and needs of its service area(s), 
particularly low- or moderate- income geographies or low- or 
moderate-income individuals; and
     (D) It is a leader in providing community development services.
     (ii) High satisfactory. The OTS shall rate a savings 
association's service performance ``high satisfactory'' if, in 
general, the savings association demonstrates:
     (A) Its service delivery systems are accessible to essentially 
all portions of its service area(s);
     (B) To the extent changes have been made, the savings 
association's record of opening and closing branches and ATMs has 
not adversely affected the accessibility of its delivery systems, 
particularly in low- and moderate- income geographies and to low- 
and moderate-income individuals;
     (C) Services (including, where appropriate, business hours) do 
not vary in a way that inconveniences certain portions of its 
service area(s), particularly lowand moderate-income geographies and 
low- and moderate-income individuals; and
     (D) It provides a relatively high level of community 
development services.
    (iii) Low satisfactory. The OTS shall rate a savings 
association's service performance ``low satisfactory'' if, in 
general, the savings association demonstrates:
    (A) Its service delivery systems are reasonably accessible to 
essentially all portions of its service area(s);
    (B) To the extent changes have been made, the savings 
association's record of opening and closing branches and ATMs has 
generally not adversely affected the accessibility of its delivery 
systems, particularly in low- and moderate-income geographies and to 
low- and moderate-income individuals;
    (C) Services (including, where appropriate, business hours) do 
not vary in a way that inconveniences portions of its service 
area(s), particularly low- and moderate-income geographies and low- 
and moderate-income individuals; and
    (D) It provides an adequate level of community development 
services.
    (iv) Needs to improve. The OTS shall rate a savings 
association's service performance ``needs to improve'' if, in 
general, the savings association demonstrates:
    (A) Its service delivery systems are accessible to limited 
portions of its service area(s);
    (B) To the extent changes have been made, the savings 
association's record of opening and closing branches and ATMs has 
adversely affected the accessibility its delivery systems, 
particularly in low- or moderate-income geographies or to low- or 
moderate-income individuals;
    (C) Services (including, where appropriate, business hours) vary 
in a way that inconveniences certain portions of its service 
area(s), particularly low- or moderate-income geographies or low- or 
moderate-income individuals; and
    (D) It provides a limited level of community development 
services.
    (v) Substantial noncompliance. The OTS shall rate a savings 
association's service performance as being in ``substantial 
noncompliance'' if, in general, the savings association 
demonstrates:
    (A) Its service delivery systems are inaccessible to significant 
portions of its service area(s), particularly low- and moderate-
income geographies or low- and moderate-income individuals;
    (B) To the extent changes have been made, the savings 
association's record of opening and closing branches and ATMs has 
significantly adversely affected the accessibility of its delivery 
systems, particularly in low- or moderate-income geographies or to 
low- or moderate-income individuals;
    (C) Services (including, where appropriate, business hours) vary 
in a way that significantly inconveniences many portions of its 
service area(s), particularly low- or moderate-income geographies or 
low- or moderate-income individuals; and
    (D) It provides few, if any, community development services.
    (4) Assigned rating. The OTS shall use the following procedures 
for assigning a rating:
    (i) Assign points corresponding to the savings association's 
performance on each of the component tests as follows: 

------------------------------------------------------------------------
    Component test ratings        Lending      Service      Investment  
------------------------------------------------------------------------
Outstanding...................           12            6               6
High Satisfactory.............            9            4               4
Low Satisfactory..............            6            3               3
Needs to Improve..............            3            1               1
Substantial Noncompliance.....            0            0              0 
------------------------------------------------------------------------

    (ii) Total the points for the three tests, and use that total to 
determine the composite rating according to the chart below. 
However, if the total exceeds twice the number of points 
attributable to the savings association's lending test performance 
(as provided in paragraph (b)(4)(i) of this appendix), determine the 
composite rating using twice the number of points attributable to 
the savings association's lending test performance. 

------------------------------------------------------------------------
              Points                           Composite rating         
------------------------------------------------------------------------
18 or over.........................  Outstanding.                       
9 through 17.......................  Satisfactory.                      
5 through 8........................  Needs to Improve.                  
0 through 4........................  Substantial Noncompliance.         
------------------------------------------------------------------------

    (c) Community development test for wholesale or limited purpose 
savings associations. The OTS shall assign each wholesale or limited 
purpose savings association's community development performance one 
of the four ratings described below.
    (1) Outstanding. The OTS shall rate a wholesale or limited 
purpose savings association's community development performance 
``outstanding'' if, in general, it demonstrates:
    (i) A high level of qualified investments, community development 
loans outstanding, or community development services, particularly 
those that directly address credit needs;
    (ii) Extensive use of innovative or complex qualified 
investments, community development loans, or community development 
services, to support community development initiatives; and
    (iii) Excellent responsiveness to credit and community economic 
development needs in its service area(s).
    (2) Satisfactory. The OTS shall rate a wholesale or limited 
purpose savings association's community development performance 
``satisfactory'' if, in general, it demonstrates:
    (i) An adequate level of qualified investments, community 
development loans outstanding, or community development services, 
particularly those that directly address credit needs;
    (ii) Occasional use of innovative or complex qualified 
investments, community development loans, or community development 
services, to support community development initiatives; and
    (iii) Adequate responsiveness to credit and community economic 
development needs in its service area(s).
    (3) Needs to improve. The OTS shall rate a wholesale or limited 
purpose savings association's community development performance as 
``needs to improve'' if, in general, it demonstrates:
    (i) A poor level of qualified investments, community development 
loans outstanding, or community development services, particularly 
those that directly address credit needs;
    (ii) Rare use of innovative or complex qualified investments, 
community development loans, or community development services, to 
support community development initiatives; and
    (iii) Poor responsiveness to credit and community economic 
development needs in its service area(s).
    (4) Substantial noncompliance. The OTS shall rate a wholesale or 
limited purpose savings association's community development 
performance in ``substantial noncompliance'' if, in general, it 
demonstrates:
    (i) Few, if any, qualified investments, community development 
loans outstanding, or community development services, particularly 
those that directly address credit needs;
    (ii) No use of innovative or complex qualified investments, 
community development loans, or community development services, to 
support community development initiatives; and
    (iii) Very poor responsiveness to credit and community economic 
development needs in its service area(s).
    (d) Assessment standards for small savings associations. The OTS 
shall rate each small savings association's performance as described 
below.
    (1) Eligibility for a satisfactory rating. The OTS shall rate a 
savings association's performance ``satisfactory'' if, in general, 
the savings association demonstrates:
    (i) A reasonable loan-to-deposit ratio (considering seasonal 
variations) given the savings association's size, financial 
condition, the credit needs of its service area(s), and taking into 
account, as appropriate, lending-related activities such as loan 
originations for sale to the secondary markets and community 
development lending and investment;
    (ii) A majority of its loans and, as appropriate, other lending-
related activities are in its service area(s);
    (iii) A distribution of loans to and, as appropriate, other 
lending related-activities for individuals of different income 
levels (including low- and moderate-income individuals) and 
businesses and farms of different sizes that is reasonable given the 
demographics of the savings association's service area(s);
    (iv) A record of taking appropriate action, as warranted, in 
response to written complaints, if any, about the savings 
association's performance in meeting the credit needs of its service 
area(s); and
    (v) A reasonable geographic distribution of loans given its 
service area(s).
    (2) Eligibility for an outstanding rating. A small savings 
association that meets each of the standards for a ``satisfactory'' 
rating under this paragraph and exceeds some or all of those 
standards may warrant consideration for an overall rating of 
``outstanding''. In assessing whether a small savings association's 
performance is ``outstanding'', the OTS shall consider the extent to 
which the savings association exceeds each of the assessment 
standards for a ``satisfactory'' rating and its performance in 
making qualified investments (as defined in Sec. 563e.23 of this 
part) and its performance in providing branches, ATMs or other 
services and delivery systems that enhance credit availability in 
its service area(s).
    (3) Needs to improve or substantial noncompliance ratings. A 
small savings association also may receive a rating of ``needs to 
improve'' or ``substantial noncompliance'' depending on the degree 
to which its performance has failed to meet the standards for a 
``satisfactory'' rating.
    (e) Strategic plan assessment and rating. (1) Satisfactory 
goals. The OTS shall approve as ``satisfactory'' measurable goals 
that adequately help meet the credit needs of each of a savings 
association's service area(s).
    (2) Outstanding goals. If the plan identifies a separate group 
of measurable goals that substantially exceed the levels approved as 
``satisfactory,'' the OTS shall approve those goals as 
``outstanding.''
    (3) Rating. The OTS shall assess the performance of a savings 
association operating under an approved plan to determine if the 
savings association has met its plan goals:
    (i) If the savings association substantially achieves its plan 
goals for a satisfactory rating, the OTS shall rate the savings 
association's performance under the plan as ``satisfactory.''
    (ii) If the savings association exceeds its plan goals for a 
satisfactory rating and substantially achieves its plan goals for an 
outstanding rating, the OTS shall rate the savings association's 
performance under the plan as ``outstanding''.
    (iii) If the savings association fails to substantially meet its 
plan goals for a satisfactory rating, it shall be rated as either 
``needs to improve'' or ``substantial noncompliance,'' depending on 
the extent to which it falls short of its plan goals, or if the 
savings association so elected at the time it first submitted its 
plan, it shall be rated under the lending, investment and service 
tests (as described in Secs. 563e.22 through 563e.24 of this part), 
the community development test (as described in Sec. 563e.25 of this 
part), or the small savings association assessment standards (as 
described in Sec. 563e.26 of this part), as appropriate.

Appendix B to Part 563e--CRA Notice

Community Reinvestment Act Notice

    Under the Federal Community Reinvestment Act (CRA), the Office 
of Thrift Supervision (OTS) evaluates and enforces our compliance 
with our obligation to help meet the credit needs of this community 
consistent with safe and sound operations. The OTS also takes our 
CRA performance into account when deciding on certain applications 
submitted by us. Your involvement is encouraged. You should know 
that:
    You may look at and obtain in this office information on our 
performance in this community. This information includes a file of 
all signed, written comments received by us, any responses we have 
made to the comments, evaluations by the OTS of our CRA performance, 
and data on the loans we have made in this community during the past 
two years. [Current CRA information on our performance in other 
communities served by us is available at our home office, located at 
________________.]
    You may send signed, written comments about our CRA performance 
in helping to meet community credit needs to (title and address of 
savings association official) and to the Regional Director 
(address). Your letter, together with any response by us, will be 
considered by the OTS in evaluating our CRA performance and may be 
made public.
    You may ask the Director of the OTS to look at any comments 
received by the Regional Director. You also may request from the 
Regional Director an announcement of our applications covered by the 
CRA filed with the OTS. We are a subsidiary of (name of holding 
company), a savings and loan holding company. You may request from 
the Regional Director (address) an announcement of applications 
covered by the CRA filed by savings and loan holding companies.

Appendix C to Part 563e--CRA Loan Data Format

Instruction for the Small Business and Small Farm Loan Register

    This form contains the instructions for completion of the Loan 
Register for Small Business and Small Farm Loans. This register is 
used in conjunction with the reporting of this information as part 
of the CRA data collection process. The register and these 
instructions are to be used to provide the format in which the data 
should be reported. The actual data are to be submitted in machine-
readable form in accordance with the instructions for submission of 
data pursuant to 12 CFR Part 203 (Regulation C).

I. Who Must File a Register

    All independent insured banks and thrifts with $250 million or 
more in total assets and all insured banks and thrifts that are 
members of holding companies with $250 million or more in bank and 
thrift assets must report this information for small business and 
small farm loans outstanding beginning December 31, 1995. Banks and 
thrifts with fewer assets that wish to be evaluated under 12 CFR 
563e.22 through 563e.24 must also report this information. Only 
provide information on business or farm location and borrower 
information for loans for which applications were submitted after 
July 1, 1995. For loans for which applications were submitted before 
that date, enter ``N/A'' for all information relating to location or 
borrower.

II. Types of Loans to be Reported

    The loan register should contain individual loan data on each 
small business or small farm loan as defined on schedule SB of the 
December 31 Thrift Financial Report. Include data on individual 
small business loans with original loan amounts of $1 million or 
less and individual small farm loans with original loan amounts of 
$500,000 or less that had an outstanding balance as of December 31.

III. Submission of Data

    The data must be submitted in machine-readable form consistent 
with requirements for submission of data pursuant to 12 CFR Part 203 
(Regulation C). The format must conform exactly to the form, 
including the order of columns, column headings, etc. Contact your 
federal supervisory agency for information regarding procedures and 
technical specifications for automated data submission.
    Your institution should decide on the procedure it wants to 
follow for collection of the data consistent with the Supplemental 
Instructions For Collection Of Data In Connection with Small 
Business and Small Farm Loans. Keep in mind that data reported on 
the register are outstandings as of December 31 and not originations 
as are reported for some other regulatory purposes. Your institution 
may collect the data on separate registers at different branches or 
on separate registers for different loan types (small business or 
small farm), but make sure each loan number is unique. Entries need 
not be grouped on your registers by MSA, or chronologically, or by 
census tract, or in any other particular order.

IV. Instructions for Completion of Register

Loan Information

    1. Loan Number--Enter an identifying number that can be used to 
retrieve the loan file. It can be any number (not exceeding 25 
characters). Use letters, numerals, or a combination of both. Make 
sure that all numbers are unique within the institution. If 
registers contains data for branch offices, for example, use a 
letter or a numerical code to identify the loans of different 
branches or assign a certain series of numbers to particular 
branches to avoid duplicate numbers. The use of the borrower's tax-
payer identification number or social security number is strongly 
discouraged for privacy reasons.
    2. Outstanding Loan Amount--Enter the outstanding loan amount 
(balance) as of December 31. Show the amount in thousands rounding 
to the nearest thousand. Do not report loans with balances below 
$500. For example, a loan with a balance of $500 would be rounded to 
$1,000; a loan balance of $50,300 would be rounded to $50,000; and a 
balance of $15,700 would be rounded to $16,000.

Business or Farm Location

    For each loan, identify the location of the business or farm. 
Location is determined by the following:
    (1) Small business loans are located in the census tract or 
block numbering area where the main business facilities or other 
property to which the loan proceeds will be applied (as indicated by 
borrower) are located;
    (2) Small farm loans are located in the census tract or block 
numbering area where the farm or other property to which the loan 
proceeds will be applied (as indicated by borrower) is located.
    1. MSA--For each loan in a MSA, indicate the location of the 
loan by the four digit MSA number. Enter only the MSA number, not 
the MSA name. Use MSA boundaries that were in effect on January 1 of 
the calendar year for which you are reporting. A listing of MSAs is 
available from your regional supervisory agency. (In these 
instructions, the term MSA refers to metropolitan statistical area 
or primary metropolitan statistical area.) For loans outside MSAs, 
enter ``N/A''.
    2. State and County--Use the Federal Information Processing 
Standard (FIPS) two-digit numerical code for the state and the 
three-digit numerical code for the county. These codes are available 
from your regional supervisory agency. Do not use the letter 
abbreviations used by the United States Postal Service.
    3. Census Tract/Block Numbering Area--Enter the census tract 
number or block numbering area from the U.S. Census Bureau's Census 
Tract/Street Index for the most recent census reporting period. For 
addresses not listed in the index, consult the Census Bureau's 
census tract outline maps.

Borrower Information

    1. Minority-Owned Code--Use the following codes to indicate 
small business or small farm loans with more than 50 percent 
ownership by one or more minority individuals (as indicated by 
borrower) pursuant to data collected as described in the
1--Yes
2--No
3--Publicly traded business or farm (i.e. has securities registered 
under Section 12(g) of the Securities Exchange Act of 1934 or has 
more than 100 shareholders)
4--Information not provided by borrower

    2. Women-Owned Code--Use the following codes to incidate small 
businesses to small farm loans with more than 50 percent ownship by 
women (as indicated by borrowers) pursuant to data collected as 
described in the Supplemental Instructions For Collection of Data In 
connection With Small Business sand Small Farm Loans.

1--Yes
2--No
3--Publicly traded business or farm (i.e. has securities registered 
under Section 12(g) of the Securities Exchange Act of 1934 or has 
more than 100 shareholders)
4--Information not provided by borrower

    3. Gross Annual Revenues$1MM Code--Use the following 
codes to indicate whether the gross annual revenues of the small 
business or farm are less than or equal to $1 million. This 
information should be determined based upon the revenues upon which 
your institution relied in making its credit decision.

1--Yes
2--No

Supplemental Instructions for Collection of Data In Connection With 
Small Business and Small Farm Loans

A. Format

    Beginning July 1, 1995, financial institutions required to 
report small business and small farm loan registers are to collect 
information on the racial, ethnic, and gender make-up of applicants 
or borrowers in connection with small business and small farm loans. 
If you take a written application, you should list questions 
regarding the percent of minority and gender ownership on your loan 
application form or on a separate form completed by the applicant in 
conjunction with an application. If you do not take a written 
application, you should request the information at an appropriate 
time during the application or origination process; you must request 
the information for each loan you originate even if you did not take 
a written application. If you neither take a written application nor 
originate the loan, you do not have to request the information. See 
the sample form for recommended format and language. This 
information is to be maintained in the institution's in-house loan 
files. This information is not to be reported to the agency, but is 
to be used to complete the small business and small farm loan 
register.

B. Procedures

    1. You must ask for this information, but cannot require the 
applicant or borrower to provide it. You may not consider whether or 
not an applicant or borrower has provided this information in making 
your decision whether to extend credit or in setting the terms of 
credit.
    2. If the applicant or borrower chooses not to provide the 
information, note this fact on the form.
    3. Inform the applicant or borrower that the Federal government 
is requesting this information in order to monitor compliance with 
Federal statutes that prohibit lenders from discriminating on these 
bases.

BILLING CODES: OCC 4810-33-P (25%); Board 6210-01-P (25%); FDIC 6714--
01-P (25%); OTS 6720-01-P (25%)

TP07OC94.015


TP07OC94.016

BILLING CODES: OCC 4810-33-C (25%); Board 6210-01-C (25%); FDIC 6714--
01-C (25%); OTS 6720-01-C (25%)

Instructions for Completion of the Open- and Closed-End Consumer Loan 
Registers

    This form contains the instructions for completion of the Loan 
Registers for Open-End Consumer Loans and Closed-End Consumer Loans. 
These registers are used in conjunction with the collection of this 
information as part of the CRA data collection process. The 
registers and these instructions are to be used to provide the 
format in which the data should be maintained. The data must be 
maintained in machine-readable form. If you wish to maintain the 
data in an alternative format, you must obtain approval from your 
primary supervisory agency.

I. Who May Maintain A Register

    Any insured bank or thrift may, at the institution's option, 
collect and maintain this information for loans outstanding 
beginning December 31, 1995. You need only provide information on 
borrower location and gross annual income for loans for which 
applications were submitted after July 1, 1995. For loans for which 
applications were submitted before that date, you may enter ``N/A'' 
for borrower location and gross annual income.

II. Types of Loans To Be Recorded

    If you collect and maintain information on your consumer loans 
for consideration in your CRA evaluation, you must provide data on 
all consumer loans outstanding included in the aggregate consumer 
loan figure on your December 31 Thrift Financial Report.
    Your institution should decide on the procedure it wants to 
follow for collection of the data. Keep in mind that data recorded 
on the registers are outstandings as of December 31 and not 
originations as are reported for some other regulatory purposes. 
Your institution may collect the data on separate registers at 
different branches, but is required to maintain the data on separate 
registers for each of the different consumer loan types (open-end 
and closed-end). Make sure the loan numbers are unique.

III. Instructions for Completion of Register

Loan Information

    1. Loan Number--Enter an identifying number that can be used to 
retrieve the loan file. It can be any number (not exceeding 25 
characters). Use letters, numerals, or a combination of both. Make 
sure that all numbers are unique within the institution. If 
registers contains data for branch offices, for example, use a 
letter or a numerical code to identify the loans of different 
branches or assign a certain series of numbers to particular 
branches to avoid duplicate numbers. The use of the borrower's tax-
payer identification number or social security number is strongly 
discouraged for privacy reasons.
    2. Outstanding Loan Amount--Enter the outstanding loan amount 
(balance) as of December 31. Show the amount in thousands rounding 
to the nearest thousand. Do not report loans with balances below 
$500. For example, a loan with a balance of $500 would be rounded to 
$1,000; a loan balance of $50,300 would be rounded to $50,000; and a 
balance of $15,700 would be rounded to $16,000.

Borrower Information

    For each loan, identify the location of the borrower. Consumer 
loans are located in the census tract or block numbering area where 
the borrower resides.
    1. MSA--For each loan in a MSA, indicate the location of the 
loan by the four digit MSA number. Enter only the MSA number, not 
the MSA name. Use MSA boundaries that were in effect on January 1 of 
the calendar year for which you are reporting. A listing of MSAs is 
available from your regional supervisory agency. (In these 
instructions, the term MSA refers to metropolitan statistical area 
or primary metropolitan statistical area.) For loans outside MSAs, 
enter ``N/A''.
    2. State & County--Use the Federal Information Processing 
Standard (FIPS) two-digit numerical code for the state and the 
three-digit numerical code for the county. These codes are available 
from your regional supervisory agency. Do not use the letter 
abbreviations used by the United States Postal Service.
    3. Census Tract/Block Numbering Area--Enter the census tract 
number or block numbering area from the U.S. Census Bureau's Census 
Tract/Street Index for the most recent census reporting period. For 
addresses not listed in the index, consult the Census Bureau's 
census tract outline maps.
    4. Gross Annual Income--Enter the gross annual income upon which 
your institution relied in making the credit decision. Round all 
dollar amounts to the nearest thousand.

BILLING CODES: OCC 4810-33-P (25%); Board 6210-01-P (25%); FDIC 6714-
01-P (25%); OTS 6720-01-P (25%)

TP07OC94.017


TP07OC94.018


TP07OC94.019


BILLING CODES: OCC 4810-33-C (25%); Board 6210-01-C (25%); FDIC 6714-
01-C (25%); OTS 6720-01-C (25%)
    Dated: September 26, 1994.

    By the Office of Thrift Supervision.
Jonathan L. Fiechter,
Acting Director.
[FR Doc. 94-24323 Filed 10-6-94; 8:45am]
BILLING CODES: OCC 4810-33-P (25%); Board 6210-01-P (25%); FDIC 6714-
01-P (25%); OTS 6720-01-P (25%)