[Federal Register Volume 85, Number 109 (Friday, June 5, 2020)]
[Rules and Regulations]
[Pages 34734-34834]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11220]



[[Page 34733]]

Vol. 85

Friday,

No. 109

June 5, 2020

Part II





Department of the Treasury





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Office of the Comptroller of the Currency





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12 CFR Parts 25 and 195





Community Reinvestment Act Regulations; Rule

  Federal Register / Vol. 85, No. 109 / Friday, June 5, 2020 / Rules 
and Regulations  

[[Page 34734]]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Parts 25 and 195

[Docket ID OCC-2018-0008]
RIN 1557-AE34


Community Reinvestment Act Regulations

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Final rule; temporary final rule.

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SUMMARY: The Office of the Comptroller of the Currency (OCC) is 
adopting a final rule to strengthen and modernize the Community 
Reinvestment Act (CRA) by clarifying and expanding the activities that 
qualify for CRA credit; updating where activities count for CRA credit; 
creating a more consistent and objective method for evaluating CRA 
performance; and providing for more timely and transparent CRA-related 
data collection, recordkeeping, and reporting.

DATES: This rule is effective on October 1, 2020. Banks must comply 
with the final amendments by October 1, 2020, January 1, 2023, or 
January 1, 2024, as applicable, except that appendix C to part 25 
expires January 1, 2024. See SUPPLEMENTARY INFORMATION for compliance 
details.

FOR FURTHER INFORMATION CONTACT: Vonda Eanes, Director for CRA and Fair 
Lending Policy, Bobbie K. Kennedy, Technical Expert for CRA and Fair 
Lending, or Karen Bellesi, Director for Community Development, Bank 
Supervision Policy, (202) 649-5470; or Karen McSweeney, Special 
Counsel, Allison Hester-Haddad, Counsel, Emily R. Boyes, Counsel, or 
Elizabeth Small, Senior Attorney, Chief Counsel's Office, (202) 649-
5490, Office of the Comptroller of the Currency, 400 7th Street SW, 
Washington, DC 20219. For persons who are deaf or hearing impaired, TTY 
users may contact (202) 649-5597.

SUPPLEMENTARY INFORMATION: 

I. Introduction

    The Office of the Comptroller of the Currency (OCC or agency) \1\ 
is adopting a final rule \2\ to strengthen and modernize implementation 
of the Community Reinvestment Act (CRA).\3\ The OCC believes that the 
CRA regulatory framework must be strengthened and modernized. The goals 
of this reform are to make the framework more objective, transparent, 
consistent in application, and reflective of changes in banking. 
Accomplishing these goals would make the CRA framework a better tool to 
encourage national banks and savings associations (banks) \4\ to engage 
in more activities to serve the needs of their communities, 
particularly in low- and moderate-income (LMI) communities and other 
communities that have been underserved under previous versions of the 
CRA regulatory framework. Together, the OCC-regulated banks covered by 
this final rule conduct a majority of all CRA activity in the United 
States.
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    \1\ The OCC is the primary regulator for national banks and 
federal savings associations.
    \2\ The Federal Deposit Insurance Corporation (FDIC) has elected 
not to join this final rule. To reflect this, the final rule 
includes conforming and technical changes from the Notice of 
Proposed Rulemaking published on Jan. 9, 2020 (85 FR 1204).
    \3\ Public Law 95-128, 91 Stat. 1147 (1977), codified at 12 
U.S.C. 2901 et seq. The CRA was enacted to promote access to credit 
by encouraging banks to serve their entire communities. During this 
time period, in the 1960s and 1970s, Congress also enacted fair 
lending laws to address fairness and access to housing and credit. 
In 1968, Congress passed the Fair Housing Act, 42 U.S.C. 3601 et 
seq., to prohibit discrimination in renting or buying a home. In 
1974, Congress passed the Equal Credit Opportunity Act, 15 U.S.C. 
1691 et seq. (amended in 1976), to prohibit creditors from 
discriminating against an applicant on the basis of race, color, 
religion, national origin, sex, marital status, or age. These fair 
lending laws provide a legal basis for prohibiting discriminatory 
lending practices, such as redlining. Interagency Fair Lending 
Examination Procedures, p. iv (Aug. 2009), available at https://www.ffiec.gov/PDF/fairlend.pdf.
    \4\ The rulemaking authority of the Office of Thrift Supervision 
(OTS) and the Director of the OTS, respectively, relating to savings 
associations was transferred to the OCC in Title III of the Dodd-
Frank Wall Street Reform and Consumer Protection Act, Public Law 
111-203, 124 Stat. 1376, 1522 (2010). As a result, the OCC has CRA 
rulewriting authority for both federal and state savings 
associations, in addition to national banks. In addition, as used 
throughout this rulemaking, the term bank or banks also includes 
uninsured federal branches that result from an acquisition described 
in section 5(a)(8) of the International Banking Act of 1978 (12 
U.S.C. 3103(a)(8)).
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    The OCC has engaged stakeholders and sought public input on CRA 
reform over the past three years. Stakeholders generally agree with the 
need for reform and with the goals of increasing the amount of CRA 
activity, expanding the geographic scope of where CRA activities are 
measured, and improving the ability of regulators and the public to 
measure CRA activity levels. Disagreements about reform focus almost 
entirely on the details of how to achieve these goals under a 
modernized CRA regulatory framework, not whether to modernize the 
framework. Stakeholders' perspectives on the specific details of 
reform, including those expressed in the more than 1,500 comments on 
the OCC's Advance Notice of Proposed Rulemaking (ANPR) \5\ and the more 
than 7,500 comments on the Notice of Proposed Rulemaking (NPR or 
proposal),\6\ have been constructive and informative. The OCC's final 
rule adopts many important changes suggested by or made in response to 
stakeholders and, as a result, better achieves the goals of reform.
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    \5\ 83 FR 45053 (Sept. 5, 2018).
    \6\ 85 FR 1204 (Jan. 9, 2020).
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II. Overview of Final Rule

    The final rule makes changes in four areas of the CRA framework. 
Specifically, the final rule: (1) Clarifies and expands the bank 
lending, investment, and services (collectively, qualifying activities 
or CRA activities) that qualify for positive CRA consideration; (2) 
updates how banks delineate the assessment areas in which they are 
evaluated; (3) provides additional methods for evaluating CRA 
performance in a consistent and objective manner; and (4) requires 
reporting that is timely and transparent.
    The new framework incentivizes banks to achieve specific 
performance goals; this is in contrast to the previous rule, under 
which banks received ratings based primarily on a curve compared to 
their peers' performance. Timely and transparent CRA data, including 
CRA performance evaluations (CRA PEs), will provide meaningful 
information to all stakeholders, rather than to relatively few experts.
    This final rule augments and makes changes to aspects of the 
current framework that have unintentionally inhibited banks' CRA 
activity by creating uncertainty about which activities qualify and how 
much those activities contribute to a bank's CRA rating. As a result, 
many banks engage only in CRA activities for which they previously 
received CRA consideration and commit capital and credit only in 
amounts they are confident will receive positive consideration--at the 
cost of innovation and responsiveness. In addition to disincentivizing 
all but the most clear-cut CRA activities by banks, the current 
framework's lack of consistent and objective evaluations and timely and 
transparent reporting inhibits the public's ability to understand how 
and to what extent banks are meeting community credit needs.
    Moreover, the predominantly subjective nature of the current 
framework means that an individual bank's CRA rating is not a reliable 
indicator of the actual volume of that bank's CRA activity. In the 
OCC's analysis of historical CRA ratings

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distributions, the agency found that it is extremely rare for banks to 
receive ratings in the two lowest ratings--needs to improve and 
substantial noncompliance. Less than three percent of banks received 
such ratings, while nearly 74 percent of the banks were rated 
satisfactory and almost 24 percent were rated outstanding.\7\ Using the 
Home Mortgage Disclosure Act (HMDA) and CRA small business loan and 
small farm loan data, the agency found only a weak positive 
relationship between a bank's CRA rating and its CRA activities. While 
incorporating community development (CD) lending and investments helped 
explain some of the variation in CRA ratings, a significant amount of 
the variation remained unexplained.\8\
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    \7\ Distribution of ratings is based on the OCC's analysis of 
the Federal Financial Institutions Examination Council (FFIEC) CRA 
data and covers over 1,500 CRA PEs published between 2006 and 2018, 
pertaining to banks with assets over the small bank asset size that 
are regulated by the OCC, FDIC, or Board of Governors of the Federal 
Reserve System (Board).
    \8\ Findings on the relationship between ratings and CRA 
qualifying lending activities are based on several analyses using 
different data sources: FFIEC CRA data for over 1,500 CRA PEs 
published between 2006 and 2018, pertaining to banks with assets 
over the small bank asset size that are regulated by the OCC, Board, 
or FDIC; a sample of over 200 CRA PEs completed between 2011 and 
2018, pertaining to over 150 OCC-regulated banks with assets over 
the small bank asset size; and data compiled by the Board from 
nearly 1,900 CRA PEs completed between 2005 and 2017, pertaining to 
over 1,200 banks.
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    By moving from a system that is primarily subjective to one that is 
primarily objective and that increases clarity for all banks, CRA 
ratings will be more reliable, reproducible, and comparable overtime. 
Under the agency's final rule, the same facts and circumstances will be 
evaluated in a similar manner regardless of the particular region or 
particular examiner. CRA activities will be treated in a consistent 
manner from bank to bank.
    Qualifying Activities. Since 1977, banks, regulators, community 
groups, and others have evaluated CRA activities in the absence of 
comprehensive criteria for what qualified for CRA consideration or a 
list of activities that have previously received credit. As a result, 
the activities given CRA consideration have varied from examiner to 
examiner, bank to bank, region to region, and time period over time 
period. The modernized framework in the final rule eliminates these 
variations in treatment.
    The modernized framework sets forth criteria for qualifying 
activities that capture the activities that currently receive CRA 
consideration and are widely recognized by stakeholders as supporting 
community reinvestment and development. In addition, the qualifying 
activities criteria capture activities that are consistent with the 
statutory purpose of the CRA but that generally may not receive credit, 
such as: (1) Certain activities in identified areas of need beyond LMI 
areas (i.e., underserved areas, distressed areas, disaster areas, 
Indian country and other tribal and native lands); \9\ and (2) a 
limited set of activities that benefit a whole community, while 
maintaining an appropriate focus on LMI neighborhoods. Where 
appropriate, the criteria exclude activities that may have qualified 
for CRA consideration in the past, like loans to middle- and upper-
income borrowers in LMI census tracts, in order to emphasize activities 
that support LMI populations and areas and other communities of need.
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    \9\ As discussed below, in response to comments, the agency 
changed the definition of Indian country and added a new definition 
for other tribal and native lands in the final rule.
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    Assessment areas. The purpose of the CRA is to encourage banks to 
engage in CRA qualifying activities in those areas where they collect 
deposits. Over forty years ago (when the CRA was enacted) and through 
1995 (when the last major revisions to the CRA regulatory framework 
were made), bank branches were the primary means by which banks 
gathered deposits and, in turn, delivered financial products and 
services to their customers. During this period, the number and 
placement of branches closely reflected the distribution of the areas 
where banks received deposits. In this historical context, the focus in 
the current regulations solely on branch locations for determining 
where bank CRA activities are considered made sense; it ensured that 
banks reinvest capital and credit in the communities from which they 
draw deposits due to their branch presence and addressed certain issues 
that would arise if banks took deposits from one community and lent 
that capital in another, perhaps more profitable or affluent, 
community.
    Over the past 25 years, however, an increasingly large number of 
banks have, in whole or in part, adopted new business models in which 
they collect significant deposits from areas far outside of their 
physical branch footprint. The current regulatory framework's reliance 
on branch footprint as the sole basis for delineating a bank's CRA 
assessment areas thus no longer aligns adequately with where a given 
bank does business. As this misalignment grows, the gap has grown 
between the purpose of the CRA--to assess a bank's CRA activity where 
it gathers deposits--and the current framework. To close the gap, under 
the final rule, banks that collect deposits above a threshold 
percentage of their total retail domestic deposits from outside of 
their physical branch footprint must delineate additional assessment 
areas in those areas where they draw more than a certain percentage of 
deposits. The final rule sets the threshold percentage for requiring a 
bank to delineate these deposit-based assessments areas at a level that 
will not affect the vast majority of traditional banks but that will 
generally capture other banks whose business models are significantly 
different than the models used when the CRA regulations were last 
reformed, such as internet banks and banks with large amounts of 
deposits sourced outside of the area where its main office is located.
    The final rule recognizes, however, the continuing significance of 
branches. The final rule retains the requirement that banks delineate 
assessment areas around their physical deposit-taking locations, in 
recognition of the importance of branches to the CRA. Branches continue 
to play a large and important role in meeting certain communities' 
needs and serving certain populations. By preserving facility-based 
assessment areas in the final rule, the agency continues to encourage 
banks to maintain their branches.
    In creating a framework that equalizes treatment between 
traditional branch-based banks and banks that gather deposits through 
the internet and other non-branch-based channels, the agency has relied 
on its supervisory experience and judgment, as well as an understanding 
of the banking industry. The agency chose to leverage its experience 
and judgment in part because the currently available deposit data is 
incomplete and does not provide the depositors' locations.
    Measurements. Because the CRA regulatory framework historically has 
not provided a consistent and objective means to measure a bank's CRA 
activity, examiners have been left to apply their best subjective 
judgment to assess a bank's performance and to assign ratings. To do 
this, examiners considered two primary aspects of a bank's CRA 
activity: (1) The distribution of the number of its retail lending 
activities (i.e., home mortgage loans, small loans to businesses, small 
loans to farms, and consumer loans); and (2) and the impact of the 
dollar value of CD activities. When measuring the distribution of 
retail lending, examiners evaluated the geographic and borrower 
distribution of this activity. When

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measuring the dollar impact of CRA activities, examiners generally 
measured the dollar amount of retail lending and CD activities, as well 
as the hours of CD services engaged in by a bank. Examiners also 
considered qualitative factors that are more difficult to quantify, 
such as responsiveness, innovativeness, and complexity. The final rule 
builds on these existing methods of assessing CRA performance by 
spelling out the distribution and impact analysis in new performance 
standards upon which examiners can base their judgments in determining 
ratings. At a later date, the agency will set the objective thresholds 
and benchmarks for the level of performance necessary to achieve each 
rating category; these thresholds and benchmarks will be applied as of 
the compliance date applicable to each bank.
    To provide a more objective and consistent means of evaluating 
these activities, the final rule establishes an evaluation method that 
assesses a bank's retail lending and CD activities by considering: (1) 
The distribution of retail lending activities relative to LMI 
populations and LMI census tracts in a bank's assessment areas; and (2) 
the impact of all CRA activity, measured in dollars. Quantifying these 
activities will help provide a more complete picture of the impact of a 
bank's CRA activity. The final rule also provides quantitative credit 
for branches in, or that serve, LMI census tracts or other identified 
areas of need. Furthermore, the final rule provides for consideration 
of the qualitative aspects of CRA activities by including an assessment 
of a bank's performance context. To promote more consistent 
consideration of these qualitative aspects, the final rule contains 
performance context factors that are based on the factors in the 
current regulation and on input from examiners. As discussed below, the 
agency will issue guidance to help further standardize how examiners 
apply performance context in CRA evaluations.
    Reporting. Under the current CRA regulatory framework, banks' CRA 
PEs can be extremely lengthy and in excess of 1,000 pages. CRA PEs can 
also be years in the making, in which case they provide an outdated and 
stale assessment of bank performance. They can be difficult to use, and 
it can be hard to draw comparisons from bank-to-bank or from one bank's 
evaluation to the next. As a result of the changes in the final rule, 
examiners will be able to produce more consistent, useful, and timely 
CRA PEs that will enable banks, regulators, and others to have a better 
understanding of the CRA activities of individual banks and of cross-
sections of the industry. Over time, better data will allow the agency 
to adjust periodically the thresholds in the new framework (e.g., for 
delineating deposit assessment areas and for the level of performance 
necessary to achieve each rating category). Objective measures, 
reported in a transparent manner, will allow interested parties to 
assess performance and progress for themselves. This information will 
improve and accelerate decision making by the agency and ensure that 
ratings are more accurate reflections of the level of CRA activity 
being conducted.

III. Background

    The agency's current efforts to strengthen and modernize the CRA 
regulatory framework began in 2018 but attempts at reform have spanned 
the past decade. The agency, along with the Board and the FDIC, worked 
together on an ANPR, which the OCC issued in August 2018 and, as noted 
above, received more than 1,500 comments.\10\ During that same period, 
the OCC, FDIC, and Board engaged with stakeholders, including civil 
rights organizations, community groups, members of Congress, academics, 
and banks, to obtain their perspectives and feedback on all aspects of 
the CRA and potential improvements that could be made to the CRA 
regulatory framework. While the feedback confirmed that the CRA has 
historically been an important tool for promoting lending, investment, 
and services for community revitalization in neighborhoods across the 
country, many stakeholders stated that the current CRA regulatory 
framework lacks objectivity, transparency, and fairness; is applied 
inconsistently; and is hard to understand. Stakeholders observed that 
evaluation under the current regulatory framework of banks' CRA 
activities--including what type of activities count, where they count, 
and how they count--is inconsistent, opaque, and complex.\11\
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    \10\ Supra note 5.
    \11\ 85 FR 1204, 1206 (Jan. 9, 2020).
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    In December 2019, the OCC and FDIC (agencies) jointly released the 
proposal \12\ noted above, which was designed to strengthen and 
modernize the regulations that implement the CRA. The proposed changes 
were designed to make the CRA regulations more objective and 
transparent to enable consistent application of the rule, thereby 
providing regulatory certainty for covered institutions.\13\ Achieving 
these objectives would, over time, encourage insured depository 
institutions \14\ to better meet the credit, investment, and other 
financial services needs of their entire communities, including LMI 
areas, by conducting more CRA activity and serving more of their 
communities, including identified areas of need. The proposal applied 
to insured depository institutions regulated by both the OCC and FDIC, 
which include national banks, federal and state savings associations, 
and state banks that are not members of the Federal Reserve System.
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    \12\ See, e.g., OCC News Release 2019-147 (Dec. 12, 2019), 
available at https://occ.gov/news-issuances/news-releases/2019/nr-ia-2019-147.html; FDIC FIL-81-2019 (Dec. 13, 2019), available at 
https://www.fdic.gov/news/news/financial/2019/fil19081.html. The NPR 
was published in the Federal Register on Jan. 9, 2020. See supra 6.
    \13\ Some commenters on the ANPR stated that: (1) CRA PEs and 
ratings are subjective and inconsistent and (2) the current 
framework is applied inconsistently and hard to understand.
    \14\ 12 U.S.C. 1813(c)(2).
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    To achieve the purpose of encouraging banks to conduct more CRA 
activities in the communities they serve, including LMI areas, the 
proposal introduced changes to modernize the CRA rule to reflect 
changes in banking over the past 25 years. The improvements embodied in 
the proposed changes fell into four general categories. First, the 
proposal sought to clarify what bank activities qualify for positive 
CRA consideration. Second, the proposal sought to update how banks 
delineate the assessment areas in which they are evaluated. Third, the 
proposal sought to evaluate bank CRA performance more objectively. And 
fourth, the proposal sought to provide more transparent and timely 
reporting.
    The proposal clarified which activities would have been qualifying 
by including detailed qualifying activities criteria and requiring the 
periodic publication of a non-exhaustive, illustrative list of examples 
of qualifying activities. The proposal also established a process for 
banks to seek agency confirmation that an activity is a qualifying 
activity.\15\
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    \15\ As discussed below, the final rule retains for certain 
banks the small bank performance standards in the current 
regulations and the community development test for wholesale and 
limited purpose banks, which is renamed the wholesale and limited 
purpose performance standards. See 12 CFR 25.25; 25.26; 195.25; 
195.26. The agency intends for these standards to be applied 
consistent with the current regulations except as expressly provided 
for in this final rulemaking.
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    The proposal expanded where CRA activity counts by requiring banks 
to delineate deposit-based assessment areas where they have significant 
concentrations of retail domestic deposits. The proposal provided an 
objective method to measure CRA

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activity by establishing new general performance standards to evaluate 
CRA activities. The proposal also required banks to collect, maintain, 
and report certain data related to their qualifying activities, certain 
non-qualifying activities, retail domestic deposits, performance 
context, and assessment areas. As with other regulatory initiatives, 
the OCC would have provided guidance and assistance to help ensure 
compliance.\16\
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    \16\ As the agency has done in other circumstances, such as the 
current expected credit loss accounting standard that was issued in 
June 2016, the agency plans to develop webinars and other guidance 
and resources to help ensure compliance with the final rule. See 
Current Expected Credit Losses (CECL) Methodology, available at 
https://www.occ.gov/topics/supervision-and-examination/bank-operations/accounting/current-expected-credit-losses/index-current-expected-credit-losses.html.
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    These proposed changes were designed to promote greater regulatory 
certainty and consistency, which the agency believes will encourage 
banks to engage in more activities. Increased objectivity coupled with 
more comprehensive data collection and reporting would allow observers 
to know the extent of CRA activity banks are conducting, what sorts of 
CRA activities are being conducted, and where that activity is 
occurring. This additional transparency would promote greater 
accountability through more objective ratings and improved ability to 
compare a bank's performance against the industry and its peers over 
time.

IV. Comments Received on the NPR

    The OCC received more than 7,500 comments on the proposal, 
representing a wide range of viewpoints.\17\ These comments came from a 
variety of stakeholders and interested parties, including the banking 
industry, community and other advocacy groups, Congress, state and 
local governments, academia, and the general public.
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    \17\ The NPR's comment period was initially set to end on Mar. 
9, 2020. In response to requests from stakeholders and to ensure 
that members of the public had ample time to review and comment on 
the proposal, the comment period was extended until Apr. 8, 2020. 
See 85 FR 10996 (Feb. 26, 2020).
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    Commenters endorsed the clarifications regarding qualifying 
activities, the establishment of a qualifying activities list, and the 
creation of a confirmation process. Some supported providing CRA credit 
for all activities that formerly qualified as economic development, and 
others supported credit for all legally-binding commitments to lend. 
Some industry commenters and community groups supported credit for all 
loans to non-LMI individuals in LMI areas. Other industry commenters 
also supported multipliers for donations, volunteer service, and 
qualifying activities in CRA deserts.
    In contrast, many commenters expressed concern that the expanded 
qualifying activities criteria could divert activity from LMI 
individuals and communities, as well as from businesses and farms most 
in need of credit. Other commenters recommended that any list of 
examples of qualifying activities be published for public comment 
before inclusion in a final rule, or they simply recommended against a 
list. Others asserted that a list would be confusing, could discourage 
activities that are not listed, and would raise legal issues because of 
alleged procedural deficiencies with the proposed qualifying activities 
list confirmation process.
    Some industry commenters also criticized aspects of the proposal, 
including that the proposal undervalued retail loans originated and 
sold within 90 days.
    With respect to the proposal's treatment of where qualifying 
activities count, many commenters supported the proposed approach. Some 
industry commenters and community groups expressed concern, however, 
about the data on which the deposit-based assessment area concept was 
based, and some also questioned whether this concept would address CRA 
hot spots and credit deserts. Commenters from industry that discussed 
the deposit-based assessment area framework opposed the establishment 
of deposit-based assessment areas because of potential costs to collect 
additional data, concerns about the safety and soundness of lending in 
areas where banks have no physical presence, and the belief that these 
new assessment areas would exacerbate CRA hot spots and deserts. Some 
of these commenters generally supported retaining the facility-based 
assessment areas and either making changes to the proposed thresholds 
for deposit-based assessment areas or to the treatment of out-of-
assessment area qualifying activities. Some commenters supported the 
ability of banks to tailor their assessment areas to geographic areas 
smaller than a county to reflect only the areas where banks can be 
reasonably expected to serve, as is possible under the current 
regulations.
    Some community groups criticized the proposed deposit-based 
assessment area thresholds on the grounds that they were not adequately 
supported and said the proposal would either do little to alleviate or 
would exacerbate CRA deserts, particularly in small and rural 
communities. Those groups recommended: (1) Changing the proposed 
requirement that a bank delineate deposit-based assessment areas only 
if it receives 50 percent or more of its deposits from areas outside 
its assessment areas to a lower percentage; and (2) delineating 
deposit-based assessment areas based on a bank's deposit market share 
in given geographic markets, instead of the percentage of the 
particular bank's deposits, as proposed. They also expressed concern 
that the proposal's approach to providing banks credit for activities 
outside of their assessment areas was underdeveloped and would 
encourage banks to engage in activities that are larger in dollar value 
and easier to do.
    The agency also received comments on the performance standards set 
out in the proposal. Some of these commenters supported tailored 
benchmarks for the CRA evaluation measure.\18\ They stated that the 
pass/fail nature of the retail lending distribution tests,\19\ CD 
minimums, and significant portion threshold did not provide the 
appropriate flexibility for the diversity of banking business models 
and local community conditions. Instead, they supported gradations in 
performance levels for these standards. Some commenters questioned 
whether retail domestic deposits, as defined in the proposal, is the 
appropriate denominator for the CRA evaluation measure.
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    \18\ Other commenters supported the proposed use of multipliers 
for certain activities. Additionally, commenters suggested that 
benchmarks be established for each major type of qualifying 
activity.
    \19\ Under the proposal, the retail lending distribution tests 
are used to evaluate a bank's retail lending activities, which 
include home mortgage loans, small loans to businesses, small loans 
to farms, and consumer loans.
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    Several industry commenters asserted that the data analysis and 
rationale behind the proposed performance standards were not adequately 
set forth in the NPR or were unclear. Some commenters requested that 
the agency make publicly available the relevant data and analysis upon 
which it relied. These commenters advocated for further data gathering 
and testing of the performance standards prior to the issuance of the 
final rule.
    Community groups and other commenters expressed concern that the 
proposed performance standards could lead to a focus on large 
transactions at the expense of smaller activities, which they believe 
would be more responsive to community needs. They also opposed allowing 
a bank to receive a satisfactory overall rating automatically if it 
received a satisfactory rating in a

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significant portion of its assessment areas and in those assessment 
areas where it receives a significant amount of deposits. These 
commenters supported a more complex and subjective approach that would 
retain the existing tests and maintain qualitative considerations while 
adding quantitative guidelines, as well as additional gradations to the 
retail lending distribution tests.
    Some industry commenters and others advocated for the small bank 
exemption threshold to be higher than the proposed $500 million, 
recommending that, at a minimum, the exemption cover banks that are 
intermediate small banks \20\ under the current regulations. In 
contrast, community groups and other commenters opposed the small bank 
exemption or any increase in the thresholds because the small bank 
performance standards do not evaluate CD activity. In addition, some 
industry commenters voiced concerns with the NPR's treatment of banks 
that are designated as wholesale and limited purpose banks under the 
current regulations.
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    \20\ 12 CFR 25.12(u); 195.12(u).
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    The OCC also received numerous comments on proposed data 
collection, recordkeeping, and reporting requirements. Commenters 
expressed concern that the costs associated with the data requirements 
would outweigh the benefits associated with the changes. These 
commenters highlighted the ongoing nature of the costs and the 
potential need for several additional personnel with specialized 
skills. These commenters also explained that most banks cannot rely on 
or modify their current systems to produce or maintain the data; if the 
requested data are available, the data are frequently stored in 
different systems. In some cases, the required data simply do not 
exist, especially for consumer loans. Commenters also emphasized the 
costs of geocoding deposit accounts, particularly for small banks, 
which may require manual research and input for a non-negligible amount 
of data. These commenters also explained the painstaking steps and 
documentation associated with validating and verifying the accuracy of 
the new data collection.
    Other commenters suggested additional, more granular data 
reporting, and many community groups and individuals suggested making 
information collected under the final regulations publicly available. 
Some commenters recommended that the agency take steps to minimize data 
collection, recordkeeping, and reporting burdens by relying on existing 
datasets and data collection processes and by offering webinars and 
seminars to assist banks.
    After carefully reviewing and considering all of the comments 
received, the OCC is adopting this final rule. Although commenters 
disagreed with the approach outlined in the proposal, the agency 
ultimately agreed with the minority of commenters who expressed support 
for the proposed framework. The lodestar for this new CRA framework is 
increased transparency, objectivity, and consistency in application, 
which will help the OCC achieve the objective of the CRA--to encourage 
banks to meet the credit needs of their entire communities, including 
LMI individuals and areas. The agency is also cognizant that not every 
aspect of every CRA activity can be quantified and, for those items, it 
has sought to qualitatively capture the subjective elements. This new 
framework will strengthen and modernize the CRA regulations and 
encourage banks to more effectively help meet the credit needs of their 
entire communities, including LMI individuals and communities, by 
conducting more CRA activities and serving more of their communities. 
In the OCC's view, these outcomes better align with, and thus are a 
better way to implement the CRA statute than, the current framework. 
Moreover, in response to comments, the final rule takes a more 
incremental approach to reform that appropriately accounts for the 
differences among the categories of institutions that are subject to 
the CRA.

V. Section-by-Section Discussion

A. Qualifying Activities

    Overview. Since 1977, community stakeholders, banks, and regulators 
have evaluated banks' CRA performance without an approved illustrative 
list of qualifying CRA activities. Without an illustrative list or 
detailed qualifying activities criteria, the activities that have 
received credit have varied from bank to bank, region to region, and 
time period over time period.\21\ Thus, to avoid the uncertainty 
created by the lack of clarity regarding which activities will receive 
CRA credit, banks currently tend to gravitate to a few types of 
activities that have received consideration in the past because they 
are more confident those activities will receive credit in the 
future.\22\
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    \21\ Under this approach, banks often are uncertain about 
whether an activity will qualify for CRA consideration until their 
supervisory agency makes a determination in a CRA evaluation, which 
often happens years after the bank engaged in the activity in 
question.
    \22\ For example, while stakeholders expressed support for banks 
engaging in activities outside of their assessment areas, banks are 
inhibited from doing so today due to the limitations on where 
qualifying activities can count outside of assessment areas and the 
uncertainty of not knowing if they have done enough in their 
assessment areas for their outside activities to count in 
circumstances where banks may count qualifying activities outside of 
their assessment areas. Commenters to the CRA ANPR stated that the 
ambiguity over what types of activities qualify for CRA 
consideration under the current framework discourages certain types 
of CRA activity in LMI census tracts and other identified areas of 
need. See 85 FR 1204, 1207 (Jan. 9, 2020).
---------------------------------------------------------------------------

    The proposal included detailed qualifying activities criteria that 
clarified what type of activities would count for CRA credit and 
expanded the activities that would count to include additional 
activities that were consistent with the stated purpose of the CRA. The 
proposal also provided a process for confirming whether an activity is 
qualifying before commencement of the activity and included a publicly 
available non-exhaustive, illustrative list of examples of qualifying 
activities that meet or do not meet the criteria in the rule (CRA 
illustrative list).
    These proposed changes addressed current impediments to engaging in 
CRA activities and would have provided banks with greater certainty and 
predictability regarding whether certain activities would qualify for 
CRA credit. The OCC received many comments on the proposed qualifying 
activities; the OCC's responses are set forth below.
    Qualifying activities criteria and scope. In the proposal, the 
agency clarified the activities that would qualify for CRA credit by 
defining a qualifying activity as an activity that helps meet the 
credit needs of a bank's entire community, including LMI individuals 
and communities and setting forth clearly defined qualifying activities 
criteria, which identified the types of activities that would meet the 
credit needs of banks' communities. The proposed criteria included 
activities that currently qualify for CRA consideration. In this 
regard, the agency incorporated some of the guidance on activities that 
currently receive credit under the Interagency Questions and Answers 
Regarding Community Reinvestment (Interagency Q&As),\23\ such as 
affordable housing for middle-income individuals and families in high-
cost areas, into the qualifying activities criteria. The proposed 
criteria also expanded the activities that would count as qualifying 
activities to include other activities that meet the credit needs of 
economically disadvantaged

[[Page 34739]]

individuals and entities, LMI census tracts, and other identified areas 
of need in banks' communities. This expansion recognized that there are 
additional activities that meet the credit needs of these populations 
and areas that are consistent with the statutory purpose of the CRA but 
that do not currently qualify for CRA credit. The proposed changes 
generally expanded, not reduced, the type of activities that would have 
qualified for CRA credit but remained consistent with the statutory 
purpose of encouraging banks to serve their entire communities, 
including LMI neighborhoods.
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    \23\ See 81 FR 48505 (July 25, 2016).
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    The OCC received a variety of comments on the proposed qualifying 
activities criteria and related definitions. Some commenters supported 
the expansion and clarification of the activities that would qualify 
for CRA credit. Others argued that the proposal contravened the text 
and purpose of the CRA by not focusing appropriately on LMI communities 
and individuals, and they expressed concern that, if adopted, the 
proposal would negatively impact, and reduce investment in or benefits 
to, these areas and populations. Commenters expressed their opinion 
that the proposal would incentivize banks to focus on higher dollar 
projects rather than smaller, more targeted loans, investments, and 
grants. Some community group and industry commenters suggested that 
banks should continue to receive credit for more general areas of 
economic development, workforce development, and job creation 
activities. At least a few community group and industry commenters 
noted that the exclusion of economic development activities would 
directly harm financing intermediaries. A few commenters expressed 
concern that the proposal would negatively impact funds such as the 
University Growth Fund. The agency carefully considered these comments 
and concluded that some changes should be made to the proposed 
qualifying activities criteria to emphasize LMI activities in 
appropriate circumstances and to correct the inadvertent exclusion of 
certain activities that qualify under the current framework. The OCC's 
responses to commenters' concerns and revisions to the qualifying 
activities criteria and related definitions are discussed below.
    CD investments. The proposal replaced the term qualified investment 
\24\ in the current regulation with the term CD investment.\25\ A few 
industry commenters sought clarification as to whether the proposal 
intended to expand the range of investments eligible for CRA credit to 
encompass investments that would not be considered public welfare 
investments under the OCC's regulations, 12 CFR part 24 (part 24).\26\ 
Commenters also asked whether part 24 would be amended by replacing the 
current cross-reference to qualified investment with a reference to CD 
investment. The agency is clarifying that the purpose of the proposed 
change from qualified investment to CD investment was to use consistent 
terminology for loans, investments, and services with a CD purpose. In 
this regard, the agency is also clarifying that activities that 
currently receive CRA consideration as qualified investments would 
receive CRA consideration as CD investments. The OCC, as part of its 
ongoing regulatory activities, strives to ensure that nomenclature is 
up-to-date and consistent across its regulations. The OCC anticipates 
that it will consider and make any needed adjustments to part 24. The 
OCC is adopting the CD investment definition with minor clarifying 
changes to make clear that monetary donations and in-kind donations are 
two separate types of investments and is separately defining monetary 
donation and in-kind donation.
---------------------------------------------------------------------------

    \24\ The current CRA regulations define a qualified investment 
as a lawful investment, deposit, membership share, or grant that has 
as its primary purpose community development. 12 CFR 25.12(t); 
195.12(t).
    \25\ The NPR defined a CD investment as a lawful investment, 
membership share, deposit, legally-binding commitment to invest that 
is reported on the Call Report, Schedule RC-L, or monetary or in-
kind donation that meets the community development qualifying 
activities criteria.
    \26\ Under current 12 CFR 24.3, a public welfare investment is 
one that (1) primarily benefits LMI individuals, LMI areas, or other 
areas targeted by a governmental entity for redevelopment or (2) 
would receive consideration under the CRA regulations as a qualified 
investment.
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    The agency is also clarifying that, as proposed, the criteria for 
qualifying activities encompasses activities that currently receive CRA 
consideration, as well as additional activities that meet the credit 
needs of economically disadvantaged individuals and entities and LMI 
census tracts and other identified areas of need in banks' communities, 
while maintaining an appropriate focus on LMI neighborhoods. Under the 
final rule, CD investments will include activities that meet the new 
qualifying activities criteria.
    A commenter noted that the proposal was silent on the treatment of 
equity equivalent investments and requested that these investments be 
included in the qualifying activities criteria. The commenter noted 
that these types of investments are described in the Interagency Q&As, 
which explain how they are considered under the lending test, 
investment test, or both.\27\ Equity equivalent investments that meet 
the definition of CD investment and one of the qualifying activities 
criteria will receive credit under the final rule. Moreover, all CD 
investments are eligible for a multiplier. Thus, even though the final 
rule does not provide the same formula for determining the 
consideration provided for equity equivalent investments as described 
in the Interagency Q&As, the final rule nonetheless recognizes the 
value that these activities contribute to communities.
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    \27\ See Interagency Q&As Sec. Sec.  __.22(d)--1 and __.23(b)--
1, 81 FR at 48540.
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    Consumer loans. The NPR would have defined consumer loans with 
reference to the Call Report,\28\ and these loans would have been 
included in all CRA evaluations as retail loans. Specifically, the 
proposal defined consumer loan as a loan reported on the Call Report, 
Schedule RC-C, Loans and Lease Financing Receivables, Part 1, Item 6, 
Loans to individuals for household, family, and other personal 
expenditures.\29\
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    \28\ Call Report means the Consolidated Reports of Condition and 
Income as filed under 12 U.S.C. 161.
    \29\ As defined in the proposal, consumer loans would have 
included: (1) Credit card, which is an extension of credit to an 
individual for household, family, and other personal expenditures 
arising from credit cards; (2) other revolving credit plan, which is 
an extension of credit to an individual for household, family, and 
other personal expenditures arising from prearranged overdraft plans 
and other revolving credit plans not accessed by credit cards; (3) 
automobile loan, which is a consumer loan extended for the purpose 
of purchasing new and used passenger cars and other vehicles, such 
as minivans, vans, sport-utility vehicles, pickup trucks, and 
similar light trucks for personal use; and (4) other consumer loan, 
which is any other loan to an individual for household, family, and 
other personal expenditures (other than those that meet the 
definition of a loan secured by real estate and other than those for 
purchasing or carrying securities), including low-cost education 
loans, which is any private education loan, as defined in Sec.  
140(a)(8) of the Truth in Lending Act (15 U.S.C. 1650(a)(8)) 
(including a loan under a state or local education loan program), 
originated by the bank for a student at an institution of higher 
education, as that term is generally defined in sections 101 and 102 
of the Higher Education Act of 1965 (20 U.S.C. 1001 and 1002) and 
the implementing regulations published by the U.S. Department of 
Education, with interest rates and fees no greater than those of 
comparable education loans offered directly by the U.S. Department 
of Education. Such rates and fees are specified in Sec.  455 of the 
Higher Education Act of 1965 (20 U.S.C. 1087e).
---------------------------------------------------------------------------

    The agency received several comments on the definition of consumer 
loans and their inclusion in CRA evaluations. Many of these commenters 
expressed concern with the inclusion of consumer lending activities 
because of the burden associated with collecting

[[Page 34740]]

data for consumer lending, particularly for activities that are 
currently on a bank's balance sheet. Other commenters expressed concern 
that the high dollar volume of certain consumer lending, such as credit 
card lending, may mean that banks engaged in those activities have 
little incentive to engage in other types of CRA activities.
    A few community groups and individuals expressed concern about 
including consumer lending in CRA evaluations because of the potential 
negative impact on borrowers if those products were not offered with 
affordable rates and terms. These commenters offered a variety of 
suggestions for addressing their concerns, including limiting CRA 
credit for consumer loans to those that are safe and sound and offered 
at reasonable rates and with terms that are not detrimental to LMI 
individuals. Commenters suggested several ways the agency could limit 
the type of consumer loans that receive CRA credit under both the CRA 
evaluation measure and the retail lending distribution tests. A few 
industry commenters suggested that consideration of consumer lending 
should be optional unless it involves a substantial majority of the 
bank's lending, as under the current framework.\30\
---------------------------------------------------------------------------

    \30\ A commenter also stated that the agency should define 
substantial majority in the current framework.
---------------------------------------------------------------------------

    In contrast, several commenters supported providing credit for 
consumer loans. For example, community groups noted that smaller-dollar 
lending at low rates is scarce and highly needed. Two industry 
commenters recommended that all consumer lending in LMI census tracts 
receive CRA credit.
    The agency generally agrees that consumer lending should be a 
component of CRA evaluations because consumer loan products can be an 
important means for LMI individuals to gain access to credit. Further, 
many banks are exiting the home mortgage lending market and instead 
engaging in other types of lending activity, including consumer 
lending. The agency, however, is cognizant of the challenges to 
capturing the information needed to evaluate credit card lending and 
believes that, given the nature of the lending and the impact it has on 
LMI individuals and communities, it may not be appropriate for the CRA 
to be used to incentivize banks' credit card lending. The agency also 
recognizes that certain lending activities that meet the proposed 
definition of consumer loan may not provide adequate benefit to LMI 
individuals, such as certain overdraft products. The agency emphasizes 
that its expectation is that all CRA activities, including consumer 
lending, will be conducted in a safe and sound manner and consistent 
with the OCC's relevant guidance.\31\
---------------------------------------------------------------------------

    \31\ See e.g., OCC Bulletin 2018-14, Installment Lending: Core 
Lending Principles for Short-Term, Small-Dollar Installment Lending 
(May 23, 2018).
---------------------------------------------------------------------------

    Considering these factors, the final rule includes consumer loans 
provided to LMI individuals and in Indian country or other tribal or 
native lands in the qualifying activities criteria but removes credit 
cards and overdraft products from the definition of consumer loan to 
reduce the burden associated with information gathering and to ensure 
that banks have an incentive to engage in a variety of CRA activities 
that benefit LMI individuals. The agency did not further restrict the 
categories of consumer loans to ensure that CRA credit will be given 
for providing consumers with access to a variety of consumer lending 
products and is otherwise adopting the consumer loan definition as 
proposed. The agency expects that, as part of its ongoing 
administration of the regulation, it will provide guidance needed on 
various aspects of the rule, including on the documentation needed to 
demonstrate that a consumer loan qualifies for CRA credit. Further, as 
discussed below, the agency will consider the qualitative aspects of 
qualifying activities through performance context, as well as evidence 
of discriminatory or other illegal credit practices.
    Home mortgage loans. The agency's objective in reforming CRA is to 
increase transparency and objectivity in all aspects of the CRA to 
incentivize banks to provide more CRA activities to those populations 
and communities that banks serve, including to LMI individuals or 
families and areas. To achieve these objectives, the proposal defined 
home mortgage loans with reference to the Call Report \32\ but 
generally limited CRA credit to home mortgage loans made to LMI 
individuals and families to give proper emphasis to LMI lending 
activities. Specifically, the proposed qualifying activities criteria 
included home mortgage loans to LMI individuals and families and those 
provided in Indian country.\33\
---------------------------------------------------------------------------

    \32\ The final rule continues to define home mortgage loans by 
reference to the Call Report. In response to a commenter's concern, 
the agency is clarifying that construction loans for 1-4 family 
residential properties to builders and consumers are home mortgage 
loans for CRA purposes if they are reported on Item 1.a.(1) of 
Schedule RC-C of the Call Report.
    \33\ To focus on LMI home mortgage lending, the proposal did not 
apply the retail lending geographic distribution test to home 
mortgage loans.
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    Some commenters expressed concern that the proposal would eliminate 
home mortgage lending to middle- and upper-income individuals and 
families in LMI census tracts as a qualifying retail activity.\34\ 
Commenters also stated that the issue of gentrification associated with 
giving CRA consideration for home mortgage loans to middle- and upper-
income individuals and families is mostly confined to large coastal 
metropolitan areas, and the proposal would prolong economic distress in 
LMI communities in these areas.
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    \34\ These commenters argued that the change would: (1) Thwart 
the CRA objective of economic integration; (2) ignore research on 
the educational and other benefits to LMI individuals and families 
of living and working in integrated communities; (3) hasten 
displacement by making it more difficult for LMI borrowers to 
receive loans in gentrifying areas; (4) cause banks to focus on 
loans to LMI households in non-LMI tracts; and (5) be inconsistent 
with the CRA statute's mandate for banks to serve their entire 
community.
---------------------------------------------------------------------------

    At least a few community groups and individual commenters stated 
that excluding CRA credit for certain home lending in LMI census tracts 
would create negative externalities because of the limited information 
about borrowers and neighborhoods, and depressed housing markets in LMI 
tracts would make small business lending more difficult. Although the 
OCC is adopting the qualifying criteria related to home mortgage loans 
as proposed, as discussed below, the agency agrees that it is important 
that banks lend in LMI census tracts and have added a geographic 
distribution test for home mortgage loans.
    Small loans to businesses and small loans to farms retail lending. 
In the NPR, the agencies proposed increasing the small loan to a 
business and the small loan to a farm loan size thresholds to loans of 
$2 million or less. The agencies also proposed increasing the business 
and farm revenue size thresholds that receive positive consideration 
under CRA to businesses and farms with gross annual revenues of $2 
million or less.\35\ These proposed increases were based generally on 
inflation since the thresholds were instituted 25 years ago, rounded up 
to the next million. The agencies also proposed the same loan size 
thresholds related to small loans to farms and small

[[Page 34741]]

loans to businesses to provide consistency in treatment.
---------------------------------------------------------------------------

    \35\ The proposal defined businesses and farms that meet the 
revenue thresholds as small businesses and small farms. For the 
reasons described below, these terms were replaced in the final rule 
with the terms CRA-eligible business and CRA-eligible farm.
---------------------------------------------------------------------------

    The agency received conflicting comments from community groups, 
industry, and government stakeholders on the increases to the loan size 
and revenue size thresholds. Certain commenters supported the 
increases, with some arguing that the thresholds should be increased 
even further and indexed to inflation going forward. In contrast, other 
commenters opposed the increases, with several industry, community, and 
individual commenters stating that it was unclear why the agencies had 
selected $2 million for the thresholds. The commenters generally 
expressed the concern that increases to these thresholds could 
incentivize banks to make larger loans to larger businesses. Certain 
commenters argued that the existing loan size and revenue thresholds 
were too large. A community group also asserted that the proposed 
increases to the loan size and revenue thresholds may diminish the 
prospects for black-owned businesses to access capital in comparison to 
white-owned businesses.
    In response to the proposed loan size thresholds, some commenters 
supported the proposal and stated that increasing loan sizes would 
divert less financing from the smallest businesses and farms than 
increasing the revenue thresholds and noted that higher loan amounts 
may be needed in more expensive areas. Commenters suggested that the 
current small loan to a business threshold of $1 million could be 
updated to $1.6 million to account for inflation according to the U.S. 
Government Accountability Office. However, commenters stated that 
increases beyond that amount are not supported by data because neither 
the overall average nor the average for the highest quartile of loans 
to businesses with revenues over $1 million approached the $1 million 
loan limit. To address the concerns about disincentivizing smaller 
loans, one commenter suggested that banks should receive double credit 
for the smallest small business loans.
    After considering these comments, the final rule includes a smaller 
increase to the loan size thresholds of $1.6 million instead of the 
proposed $2 million, which more closely reflects the increase resulting 
from inflation. Based on the agency's analysis, this threshold accounts 
for inflation since the $1 million small loan to a business size 
threshold was introduced in 1995, rounded up to the next $100,000 
increment instead of the next million as was proposed. This loan size 
threshold also standardizes the threshold applicable to small loans to 
businesses and small loans to farms.
    In response to the proposed increase to the revenue thresholds for 
the size of a small business or small farm, some commenters expressed 
concern that the increased thresholds would divert lending away from 
the smallest businesses with the greatest credit needs, which they 
stated are the primary engines of economic growth and job creation.\36\ 
Another commenter, who asserted the existing thresholds were too 
expansive, suggested a two-prong test: $1 million or less in gross 
annual revenues and loans must be targeted to small businesses owned by 
underserved borrowers or small businesses that operate primarily in 
underserved communities. Similarly, a community group stated that loans 
to large corporate agricultural operations should be excluded and 
asserted that more information is necessary to understand the impact of 
the increased revenue size thresholds. As opposed to a revenue limit, a 
community group recommended that the OCC consider the profile of the 
business borrowing the funds to incentivize banks to serve business 
owners from groups that have been, and continue to be, excluded from 
access to credit from banks.
---------------------------------------------------------------------------

    \36\ For example, commenters argued that the change is 
unsupported by research and noted that 76 percent of firms have 
receipts under $100,000, and another 19 percent have receipts 
between $100,000 and $999,999.
---------------------------------------------------------------------------

    Other commenters supported increasing the revenue size thresholds. 
The U.S. Small Business Administration (SBA) stated that qualifying 
retail loans under the CRA should not be limited to businesses with $2 
million or less in annual revenue and in amounts of $2 million or less. 
Specifically, the SBA stated that the agency could not define small 
business in a way that differed from the SBA's standards without 
obtaining its approval. An industry commenter supported using the SBA 
standards for the definition of small business and small farm. Another 
industry commenter suggested that, in addition to a $2 million revenue 
threshold, there should be a 20-employee limit.
    After considering these comments, the agency is adopting a smaller 
increase to the revenue thresholds of $1.6 million instead of the 
proposed $2 million, which reflects the increase resulting from 
inflation rounded to the next hundred thousand. These increased revenue 
size thresholds are intended to encourage economic development and job 
creation and recognize that the thresholds have not been increased to 
account for inflation since they were instituted in 1995.
    In response to the comments, the agency is also revising the terms 
used to define the type of businesses and farms banks can receive CRA 
credit for financing. As such, the final rule replaces the terms small 
business and small farm with the terms CRA-eligible business and CRA-
eligible farm.
    The NPR also proposed annual adjustments to the loan size and 
revenue size thresholds. Some commenters expressed concern that annual 
adjustments would be too frequent and may increase the risk of error. 
Some industry commenters suggested that the adjustments should be made 
every 5 or 10 years. In contrast, several industry commenters expressed 
support for adjustments to the loan size and revenue size thresholds, 
including one that supported annual adjustments. Regarding the form of 
adjustments, commenters suggested simple incremental adjustments, not 
percentage adjustments, to reduce the burden with regard to data 
collection and data integrity requirements. The final rule requires 
that the $1.6 million thresholds be adjusted for inflation once every 
five years to balance concerns regarding the burden associated with 
changes to the thresholds with the OCC's interest in ensuring that the 
thresholds keep pace with inflation.
    The OCC also received comments on other aspects of the small loan 
to a business definition. Community groups recommended that credit 
cards and subprime products not qualify for CRA credit under the retail 
lending distribution test applicable to small loans to businesses. The 
final rule defines small loans to businesses by reference to the Call 
Report to reduce complexity and to be consistent with the current 
regulation. However, the agency will consider qualitative aspects of 
qualifying activities, such as the ones referenced by commenters, as 
part of performance context.
    At least a few industry commenters also urged the agencies to 
include loans to businesses secured by real estate in the definition of 
a small loan to a business. Under the current framework these loans are 
treated as home mortgage loans. In the OCC's view, this remains an 
appropriate treatment of these loans because it is consistent with how 
these loans are categorized on the Call Report,\37\ and the agency is 
not revising the treatment of these loans as

[[Page 34742]]

part of the final rulemaking. Some of these commenters also requested 
that the agencies clarify whether and when banks could classify small 
loans to businesses and small loans to farms as CD loans, because how 
these loans are classified would affect banks' ability to meet the CD 
minimum and the retail lending distribution tests, discussed below. The 
agency is clarifying that loans that meet the criteria for both: (1) CD 
loans; and (2) small loans to businesses or small loans to farms could 
receive credit in the bank's CRA evaluation measure or assessment-area 
CRA evaluation measures as either: (1) CD loans; or (2) retail small 
loans to businesses or farms--but not both (i.e., the dollar value of 
these loans can only be counted once). If a bank elects, the quantified 
value of these loans could count towards satisfying the CD minimum. 
Even if a bank elects to consider a small loan to a business or small 
loan to a farm as a CD loan for purposes of the CRA evaluation measures 
and CD minimums, the bank must include all loans that meet the retail 
loan criteria in the retail lending distribution tests. Further, under 
the final rule, commenters' concerns with the more qualitative aspects 
of CRA-eligible business and CRA-eligible farm-related activities, such 
as what type of businesses benefit and whether banks are making smaller 
loans, will be addressed through the application of performance context 
and, in certain circumstances, through the use of multipliers, 
discussed below.
---------------------------------------------------------------------------

    \37\ Consistent with the proposal, home mortgage loans, small 
loans to businesses, small loans to farms, and consumer loans (i.e., 
retail loans) are defined with reference to the Call Report.
---------------------------------------------------------------------------

    Other than the changes described above, the agency is adopting the 
CRA-eligible business, CRA-eligible farm, small loan to a farm, and 
small loan to a business definition as proposed. The agency has 
implemented conforming edits throughout the rule to reflect the changes 
discussed above in this section.
    Commitments to lend. The NPR defined a CD loan as a loan, line of 
credit, or contingent commitment to lend that meets the CD qualifying 
activities criteria.\38\ The proposal defined contingent commitments to 
lend as legally binding commitments to extend credit in instances where 
another bank initially funded, or committed to fund, a project but 
cannot, for financial or legal reasons, advance unanticipated 
additional funds necessary to complete the project.
---------------------------------------------------------------------------

    \38\ A line of credit also meets the definition of retail loan.
---------------------------------------------------------------------------

    The agency received comments asserting that, under the proposal, 
banks would not receive sufficient CRA credit for certain legally 
binding commitments to lend, such as revolving credit lines and standby 
letters of credit due to how these types of commitments to lend would 
be quantified. These commenters stated that banks should receive credit 
for the value of standby letters of credit and other legally binding 
commitments to lend because: (1) Banks are legally bound to the 
commitments; (2) the value of the line of credit reflects the 
consumer's access to credit; (3) banks must hold capital against 
noncancelable lines; and (4) some projects mandate having such letters 
of credit.
    The agency agrees that certain legally binding commitments to lend, 
such as standby letters of credit, are important to facilitating 
beneficial CRA projects across the United States. In particular, 
legally binding commitments to lend that provide credit enhancements 
are necessary to get many affordable housing projects off the ground. 
However, general lines of credit that are not drawn, in the OCC's view, 
do not provide the same value as legally binding commitments to lend, 
such as standby letters of credit. To address the commenters' concern, 
the final rule provides that legally binding commitments to lend, such 
as standby letters of credit that can provide needed credit 
enhancements for qualifying activities to commence or continue, are 
quantified based on the dollar value of the commitment. Other general 
commitments to lend are quantified, as proposed, based on the on-
balance-sheet funded portion of the credit line because that value most 
accurately reflects the bank's CRA commitment. The agency has revised 
the quantification section to reflect this policy decision. The final 
rule also redefines the type of commitments to lend that qualify as CD 
activities to focus on the legally binding commitments to lend 
described above.
    Affordable housing. The proposal would have provided credit for 
activities that finance or support affordable housing that partially or 
primarily benefit middle-income individuals or families in high-cost 
areas as demonstrated by: (1) A governmental set-aside requirement; or 
(2) being undertaken in conjunction with a government affordable 
housing program for middle-income individuals or families in high-cost 
areas. Some commenters supported these components of the affordable 
housing criterion, but others opposed them, arguing that LMI 
individuals and families face the greatest housing burdens, and the 
criteria could divert resources from them. Commenters suggested 
expanding the middle-income criteria to include owner-occupied as well 
as rental housing.
    Upon consideration of all the comments on this topic, the agency 
agrees with commenters that suggested that providing CRA credit for 
affordable housing should be focused on LMI individuals and families. 
Therefore, the final rule does not include the proposed middle-income 
rental housing in high-cost areas components of the affordable housing 
criterion or the definition of high-cost area.
    The proposal also clarified that affordable housing encompasses 
naturally occurring affordable housing (e.g., unsubsidized rental 
housing with rents that are affordable to LMI individuals and 
families). To qualify under this aspect of the affordable housing 
criterion, the housing must be likely to partially or primarily benefit 
individuals or families as demonstrated by median rents that do not and 
are not projected at the time of the transaction to exceed 30 percent 
of 80 percent of the area median income. Several commenters expressed 
concern that the criterion did not require that the housing be occupied 
by LMI individuals or families and suggested that the criterion be 
revised to include that requirement.
    While the agency understands commenters' desire to ensure that LMI 
individuals or families occupy the affordable units that banks receive 
credit for under the CRA, in the OCC's view, the proposed criterion is 
appropriate given the importance of maintaining the nation's affordable 
housing stock.\39\ Adding a requirement that banks ensure that LMI 
individuals or families are actually occupying the unsubsidized 
affordable rental units would be too burdensome for banks, if not 
infeasible, particularly for units with long-term tenants. Such a 
requirement would create a competitive disadvantage that would further 
push banks out of LMI housing finance. Specifically, if banks require 
borrowers to ascertain the income level of current and prospective 
tenants before financing the maintenance, rehabilitation, or 
construction of unsubsidized affordable housing at the outset or on an 
on-going basis, borrowers may choose to forgo bank financing and seek 
non-bank financing to avoid the increased burdens. Further, banks may 
decide that the additional burdens do not justify providing loans to 
borrowers for unsubsidized affordable housing. Thus,

[[Page 34743]]

the requirements suggested by commenters, while well intentioned, could 
have the long-term consequence of diminishing affordable housing 
options for LMI individuals and families. This would be contrary to the 
objective of the agency's reform efforts regarding the CRA. Therefore, 
the agency is adopting this component of the affordable housing 
criterion as proposed with a clarifying revision.\40\
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    \39\ See Preserving Affordable Rental Housing: A Snapshot of 
Growing Needs, Current Threats, and Innovative Solutions, Office of 
Policy Development & Research, U.S. Department of Housing and Urban 
Development (Summer 2013), available at https://www.huduser.gov/portal/periodicals/em/summer13/highlight1.html.
    \40\ In addition to the changes described above, the OCC made 
two clarifying changes to the affordable housing criterion: (1) The 
OCC replaced the term ``benefit'' with the more specific phrase 
``inhabited by'' in the affordable housing criterion to clarify that 
affordable housing must be likely to or be inhabited by LMI 
individuals or families and made other technical conforming 
revisions; and (2) the OCC clarified that affordable housing 
activities include owner-occupied housing purchased, refinanced, or 
improved by or on behalf of LMI individuals or families, except for 
home mortgage loans provided directly to individuals or families.
---------------------------------------------------------------------------

    Community groups recommended that only acquisitions or re-
financings by non-profits and local governments that commit to improve 
or maintain the housing stock at a level consistent with the local 
housing code should be CRA eligible. As noted below, the agency will 
consider qualitative aspects of a bank's qualifying activities through 
performance context, including whether activities that finance 
affordable housing are consistent with local housing codes. Two 
commenters expressed their belief that examiners have applied the 
phrase express, bona fide intent, purpose, or mandate inconsistently 
under the current framework, resulting in costly and burdensome 
ownership structures for affordable housing. As discussed below, the 
final rule includes an illustrative list of qualifying activities and a 
process for confirming that a particular activity meets the qualifying 
activities criteria, which will help to improve consistent treatment of 
qualifying activities under the final rule.
    Community support services. The proposal defined community support 
services as activities, such as child care, education, health services, 
and housing services, that partially or primarily serve or assist LMI 
individuals or families. A few community groups and industry commenters 
noted the importance of workforce development activities for LMI 
individuals and stated that such activities should receive CRA credit. 
It was the OCC's purpose that the proposed qualifying activities 
criteria would include workforce development and job training programs 
for LMI individuals. Although the examples provided in the community 
support services definition were, and are, not exhaustive, the final 
rule revises the definition of community support services to expressly 
include workforce development and job training programs to make clear 
that banks will receive credit for financing or supporting those types 
of programs for LMI individuals. Otherwise, the agency adopts the 
community support services definition as proposed.
    Economic development. Under the current regulatory framework, CD 
activities include those that promote economic development by financing 
businesses or farms that meet the size eligibility standards of the 
Small Business Development Center (SBDC) \41\ or Small Business 
Investment Company (SBIC) programs or have gross annual revenues of $1 
million or less. The Interagency Q&As explain what type of activities 
are considered to promote economic development.\42\ Certain aspects of 
this guidance are not well understood, particularly job creation, 
retention, and improvement, providing little incentive for banks to 
engage in activities that could help their communities. The proposal 
did not retain the term economic development and instead sought to 
identify activities that would qualify under the current framework as 
economic development activities through more detailed and objective 
qualifying activities criteria. For example, one of the criteria in the 
proposal that was designed to capture economic development activities 
was the criterion regarding technical assistance and supportive 
services, such as shared space, technology, or administrative 
assistance for businesses or farms that meet the size eligibility 
standards of SBDC and SBIC programs.
---------------------------------------------------------------------------

    \41\ The preambles to the proposed and final rules abbreviate 
SBA Certified Development Companies as SBDCs. One commenter 
suggested that the references to these entities in the rule and in 
the Interagency Q&As should use the abbreviation CDC for Certified 
Development Companies instead. The agency notes that, in the CRA 
context, CDC typically refers to community development corporation 
and the use of SBDC is intended to avoid confusion.
    \42\ See Interagency Q&As Sec.  __.12(g)(3)--1, 81 FR at 48526.
---------------------------------------------------------------------------

    Commenters expressed concern that certain activities that qualify 
under the current framework would no longer have qualified under the 
proposal. Commenters suggested that to ensure these activities receive 
CRA credit the agency should eliminate the reference to technical 
assistance and supportive services in the qualifying activities 
criteria or revise the reference so these activities are examples of, 
not required, uses of loan funds. Commenters also requested 
clarification on what activities satisfy the technical assistance and 
supportive services criteria. Community group commenters stated that 
loans and investments that support projects, programs, or organizations 
with a mission of community or economic development or those defined as 
community/economic development by federal, state, local, or tribal 
governments should be presumed to qualify for CRA credit. One industry 
commenter suggested that, by granting CRA credit for investing in SBICs 
and other programs administered by government agencies--but not in 
privately funded programs--the agencies are allowing the SBA and other 
agencies to be the exclusive gatekeepers of CRA credit.
    Eliminating CRA credit for activities that currently qualify as 
economic development was not the OCC's purpose. To address commenters' 
concerns, the final rule revises the qualifying activities criteria by 
adding an economic development criterion. This new criterion is a 
consolidation of three proposed criteria with two additional components 
that capture activities permitted under the current framework but 
inadvertently excluded in the proposal, including activities that 
promote job creation or retention for LMI individuals.\43\ Under the 
final rule, CD activities include those that finance or support 
economic development, which means activities that provide financing for 
or support: (1) Federal, state, local, or tribal government programs, 
projects, or initiatives that partially or primarily serve small 
businesses or small farms as those terms are defined in the programs, 
projects, or initiatives; (2) job creation or job retention partially 
or primarily for LMI individuals; (3) retaining existing, or attracting 
new, businesses, farms, or residents to LMI census tracts, underserved 
areas, distressed areas, designated disaster areas consistent with a 
disaster recovery plan, or Indian country and other tribal and native 
lands; (4) a Small Business Administration Certified Development 
Company, as that term is defined in 13 CFR 120.10, a SBIC, as described 
in 13 CFR part 107, a New Markets Venture Capital company, as described 
in 13 CFR part 108, a qualified Community Development Entity, as 
defined in 26 CFR 45D(c), or a U.S. Department of Agriculture (USDA) 
Rural Business Investment Company, as defined in 7

[[Page 34744]]

CFR 4290.50; or (5) technical assistance and supportive services, such 
as shared space, technology, or administrative assistance for 
businesses or farms that meet the size-eligibility standards of the 
SBIC, as described in 13 CFR part 107.
---------------------------------------------------------------------------

    \43\ A few commenters offered suggestions on how to track job 
creation. Suggestions included using Participant Individual Record 
Layout data collected by the U.S. Departments of Labor and Education 
and using job creation statistics from the Bureau of Labor 
Statistics. The OCC plans to consider these comments as it develops 
guidance for implementing the qualifying activities criteria.
---------------------------------------------------------------------------

    Additionally, as discussed above, the criteria in the proposal 
related to technical assistance and supportive services incorporated 
the size eligibility standards for the SBDC and SBIC programs. This 
standard was one of two size standards provided in the Interagency Q&As 
related to economic development.\44\ The proposal did not include the 
other size standard in the Interagency Q&As--businesses or farms with 
gross annual revenues of $1 million or less. Some commenters 
recommended that the OCC revise the criterion to include the size 
standard of gross annual revenues of $1 million or less in place of the 
one in the proposal. The OCC reviewed the SBA regulations and 
determined that the SBIC program size standards encompass both 
businesses and farms with gross annual revenues of $1 million or less 
and those that meet the size-eligibility standards of the SBDC program. 
Therefore, the agency is not implementing the commenters' suggestions. 
Businesses and farms that meet commenters' suggested size eligibility 
standards also meet the size eligibility standards of the SBIC 
program.\45\ The agency is also revising the proposed size standard in 
the technical assistance and supportive services economic development 
criterion component by removing the reference to the SBDC program to 
eliminate that additional redundancy.
---------------------------------------------------------------------------

    \44\ See Interagency Q&As Sec.  __.12(g)(3)--1, 81 FR at 48526.
    \45\ The $1 million or less gross annual revenue size standard 
suggested by commenters would also mean that certain activities that 
finance businesses with revenues in excess of $1 million but that 
meet the SBIC size eligibility standards would no longer meet the 
qualifying activities criteria.
---------------------------------------------------------------------------

    A few industry commenters expressed concern about overlapping and 
inconsistent definitions and qualifications for activities involving 
businesses and farms in the retail lending and CD criteria in the 
proposal. The OCC acknowledges that loans to businesses or farms of 
varying sizes receive credit under different qualifying activities 
criteria. These varying business and farm size thresholds were included 
in the proposal to ensure that certain activities that already 
qualified for CRA credit continue to qualify under the revised 
regulations. The agency will work to ensure that qualifying activities 
criteria and related definitions are consistent to the maximum extent 
possible in its administration of the regulation going forward.
    Essential community facilities. The NPR included a criterion for 
essential community facilities that partially or primarily benefit LMI 
individuals or families, LMI census tracts, or other identified areas 
of need. At least a few community groups and one industry commenter 
suggested that essential community facilities must benefit or serve LMI 
communities. A few community group commenters argued that certain 
facilities that do not actually serve LMI communities would meet this 
definition. Commenters asserted that it was unclear whether CRA credit 
would be provided for facilities that only tangentially benefit LMI 
individuals or families, LMI census tracts, and other identified 
communities of need. These commenters also noted their belief that 
banks are likely to finance these activities without a CRA incentive. 
One industry commenter argued that healthcare facilities should receive 
CRA credit for the entire investment regardless of who benefits.
    The comments provided on the proposed essential community 
facilities criterion and definition appear to reflect a 
misunderstanding of the proposal. As proposed, essential community 
facilities projects would only have received CRA credit if they 
partially or primarily benefit or serve LMI individuals or families, 
LMI census tracts, or other identified areas of need.\46\ The proposal 
provided that banks would receive full credit for activities that 
primarily benefit or serve these communities and pro-rata credit for 
activities that partially benefit or serve these communities. As 
discussed below, the agency will accept reasonable methods for 
calculating the benefit to LMI populations and other identified 
communities of need. Otherwise, the OCC is adopting the essential 
community facilities definition and criterion as proposed.
---------------------------------------------------------------------------

    \46\ For the sake of clarity, the agency removed the word 
benefit from the criterion to focus on these facilities serving 
their communities.
---------------------------------------------------------------------------

    Essential infrastructure. The agency proposed including a CD 
criterion for essential infrastructure. The proposal did not limit CRA 
credit for essential infrastructure projects to those that partially or 
primarily benefitted or served LMI individuals or families, LMI areas, 
or other identified areas of need, provided these populations and 
communities received some benefit from the projects. Several community 
groups expressed concern that the essential infrastructure criterion 
was too broad and would divert resources away from other projects that 
benefit LMI communities that are most in need of resources and may even 
harm these communities.\47\ At least a few community groups and one 
industry commenter suggested that essential infrastructure projects 
should only receive CRA credit if the bank documents that the 
infrastructure benefits LMI communities. A few community group 
commenters recommended that CRA credit should only be provided if the 
project primarily serves LMI individuals and communities, unless the 
activity is in a rural area. A few community groups also suggested 
restricting credit for essential infrastructure projects to 
circumstances where access to funding is limited. Another community 
group suggested that there should be protections for LMI communities 
that face displacement due to redevelopment projects.
---------------------------------------------------------------------------

    \47\ The agencies also received comments from community groups 
and industry commenters on the method of financing essential 
infrastructure, in particular, municipal bonds and tax increment 
financing bonds (TIFs). A number of commenters suggested that 
municipal bonds, or municipal bonds that only partially benefit LMI 
individuals, should not be included as qualifying activities, while 
other commenters supported fully valuing municipal bonds. A few 
community group commenters suggested that the financing of TIFs 
should not receive CRA credit or only receive credit to the extent 
TIF expenditures directly serve LMI households and census tracts, 
while one industry commenter suggested that TIFs used by 
municipalities should qualify for CRA credit. Because municipal 
bonds and TIFs are common methods for financing essential 
infrastructure, the OCC is not making any changes in the final rule 
in response to these comments but does note that, as in the 
proposal, municipal bonds are excluded from the final rule's 
multiplier provisions.
---------------------------------------------------------------------------

    The agency agrees that CRA activity should focus on LMI individuals 
and census tracts and other identified areas of need. In response to 
these comments, the OCC revised this criterion to require that 
essential infrastructure activities must partially or primarily serve: 
(1) LMI individuals or families; or (2) LMI census tracts, distressed 
areas, underserved areas, disaster areas consistent with a disaster 
recovery plan, or Indian country or other tribal and native lands. This 
revision acknowledges the importance of these types of projects to 
communities in helping to attract new or retain existing businesses and 
residents. As discussed below, the agency will accept reasonable 
methods for calculating the portion of an activity that benefits or 
serves LMI individuals, small businesses, small farms, LMI census 
tracts, or the identified communities of need. As noted elsewhere, the 
agency will consider qualitative aspects of a bank's CRA activities as 
part of

[[Page 34745]]

performance context, including how responsive the essential 
infrastructure projects are to the communities they serve.
    The OCC also received comments on the definition of essential 
infrastructure. Suggestions for revisions to the definition included: 
(1) Adding renewable energy production and distribution; (2) adding 
abatement of certain environmental hazards; (3) adding activities that 
promote climate resilience; and (4) clarifying whether any public 
infrastructure project receives credit. The agency does not believe 
changing the definition of essential infrastructure is necessary 
because, depending on the facts and circumstances, the suggested types 
of projects may already receive credit under the proposed qualifying 
activities criteria. As explained in the preamble to the proposal, 
depending on the facts and circumstances, activities that finance or 
support affordable housing, essential community facilities, or 
essential infrastructure may include: (1) Renewable energy, energy-
efficiency, or water conservation equipment or projects associated with 
affordable housing, essential community facilities, or essential 
infrastructure; or (2) the abatement or remediation of, or other 
actions to correct, environmental hazards, such as lead-based paint, 
lead pipes (such as those used in antiquated water supply systems), 
asbestos, mold, or radon that is present in the housing, facilities, or 
site where the housing or facilities are located. In addition, as with 
essential community facilities, the agency is clarifying that all 
infrastructure projects that meet the definition and the criterion are 
essential infrastructure for purposes of the CRA. As such, the agency 
is adopting the essential infrastructure definition as proposed.
    Family farms. As proposed, family farm was defined using the 
definition from the Farm Service Agency of the USDA.\48\ Some 
commenters supported the inclusion of family-farm related activities in 
the proposal. Many commenters stated, however, that the proposal used a 
revenue threshold of $10 million for family farms which, they argued, 
is unsupported by research or analysis. These comments appear to be 
based on a misunderstanding. In providing an example of an activity on 
the CRA illustrative list, the agency used a family farm with gross 
annual revenues of $10 million. This was only an example; the Farm 
Service Agency of the USDA's definition of family farm is not based on 
a revenue threshold.
---------------------------------------------------------------------------

    \48\ See 7 CFR 761.2(b).
---------------------------------------------------------------------------

    An individual commenter also recommended an alternative definition 
for family farm based on the definition of farm in the Agriculture 
Improvement Act of 2018.\49\ Two industry commenters also requested 
clarification on the types of farming entities that are considered 
family farms.\50\ The final rule continues to rely on the expertise of 
the USDA in defining family farms and retains the cross-reference to 
the Farm Service Agency of the USDA's definition of family farm. Under 
the final rule, banks and interested parties may request confirmation 
that activities involving specific farms meet the family farm 
definition and qualifying activities criterion.
---------------------------------------------------------------------------

    \49\ Public Law 115-334, 132 Stat. 4490 (2018).
    \50\ A commenter also noted concerns with the biased nature of 
farm lending and alleged racial discrimination against African-
American-owned farms. Lending disparities correlated with race or 
ethnicity are of concern to the agency, and the agency addresses 
lending discrimination-related concerns through the federal fair 
lending laws.
---------------------------------------------------------------------------

    The proposal provided credit for CD activities that provide 
financing for or support a family farm's: (1) Purchase or lease of farm 
land, equipment, and other farm-related inputs; (2) receipt of 
technical assistance and supportive services, such as shared space, 
technology, or administrative assistance through an intermediary; or 
(3) sale and trade of family farm products.\51\ The agency intended for 
the family farm qualifying activities criterion to provide CRA credit 
for activities that finance or support family farm production and the 
sale and trade of a family farm's own products. The proposal could also 
have provided CRA credit for activities that finance or support 
activities other than production, such as a family farm with capacity 
for buying and warehousing crops produced by others and subsequently 
selling and trading them on the open market. While these are beneficial 
activities and should be encouraged, they go beyond the needs of the 
family farm to finance its own production and, in the OCC's judgment, 
do not fit within the scope of the CRA. To clarify that these 
activities will not qualify, the final rule limits the qualifying 
criteria to activities that finance or support a family farm's own 
production, including the sale and trade, of its own products. 
Otherwise, the agency is adopting the family farm definition and 
criterion as proposed.
---------------------------------------------------------------------------

    \51\ One industry commenter recommended that the OCC include 
operating loans, such as crop and livestock loans, in the qualifying 
activities criteria. The proposal would have provided credit for 
these loans because they provide financing for farm-related inputs. 
These activities also will qualify under the final rule.
---------------------------------------------------------------------------

    Federal, state, local, or tribal government programs, projects, and 
initiatives. The proposed qualifying activities criteria included a CD 
criterion for activities that finance or otherwise support federal, 
state, local, or tribal programs, projects, or initiatives that benefit 
or serve LMI individuals or families, small businesses or small farms, 
or LMI census tracts or other identified areas of need. Commenters 
suggested that the agencies should clarify and more clearly define what 
is included in government programs, projects, or initiatives, including 
by clarifying whether the criteria are inclusive of local, state, and 
federal revitalization undertaken via the establishment of specified 
geographies (e.g., Enterprise Zones, Historic Underutilized Business 
Zones). They also suggested the criteria be more precise due to the 
potential for contentious projects. Industry commenters suggested that 
the criterion should be adjusted to allow for programs to benefit areas 
of identified need so that state and local governments can determine 
which activities should qualify.
    The agency carefully considered the commenters' concerns. The 
agency continues to believe that, in many circumstances, communities 
are in the best position to identify their needs and design projects, 
programs, and initiatives that help to address those needs. This 
criterion is meant to provide the flexibility to encompass a variety of 
programs, projects, and initiatives that serve LMI individuals and 
families, LMI census tracts, and other identified areas of need. 
Nonetheless, the agency appreciates the need for clarity. Banks and 
interested parties that have questions about activities should 
reference the CRA illustrative list or utilize the qualifying activity 
confirmation process in the final rule. As such, other than 
consolidating the component of this criteria that involves financing or 
supporting small businesses or small farms with the other related 
activities under the new economic development criterion, the OCC is 
adopting these criteria as proposed, with a minor clarifying edit.\52\
---------------------------------------------------------------------------

    \52\ As with other criterion, the final rule uses more specific 
terminology and removes the term benefit to clarify that these 
programs, projects, and initiatives must serve LMI individuals or 
families, LMI census tracts, or other identified areas of need.
---------------------------------------------------------------------------

    Financial literacy. The NPR would have provided credit for all 
financial literacy and education or homebuyer counseling activities, 
regardless of the income level of the beneficiary of the

[[Page 34746]]

activity.\53\ Some commenters argued that these activities should only 
receive credit if they are targeted to LMI individuals or families for 
the framework to be consistent with the statutory purpose of the CRA. 
The agency disagrees with these comments, which are premised on the 
incorrect assumption that the CRA statute and regulations are intended 
to exclusively benefit LMI individuals and communities. The language in 
the CRA statute expressly contemplates that banks should be encouraged 
to meet the credit needs of their entire communities, including their 
LMI neighborhoods. Thus, while LMI-focused activities are important, 
the existing regulations give CRA consideration for farm and business 
lending, which these commenters have not challenged. Moreover, since 
2005, the CRA regulations have provided consideration for activities 
that revitalize or stabilize distressed or underserved nonmetropolitan 
middle-income areas.\54\
---------------------------------------------------------------------------

    \53\ Two community groups stated that, for several reasons, non-
profits are better suited to deliver financial education services. 
They suggested that CRA credit be awarded for banks' support of and 
investment in non-profits' financial literacy and education programs 
rather than encouraging banks to provide the services directly. 
Under the proposal and the final rule, banks may receive CRA credit 
for financial literacy activities conducted by the bank or financed 
by a bank and provided by a non-profit. Two commenters recommended 
that the OCC provide CRA credit for digital literacy training to LMI 
individuals focused on using internet banking services as a type of 
financial literacy program. If the digital literacy training meets a 
CD criterion, the agency will award CRA credit. Banks that intend to 
offer these programs may discuss them with their examiners or use 
the qualifying list confirmation process to ensure that the services 
they provide will qualify.
    \54\ See 70 FR 44256 (Aug. 2, 2005).
---------------------------------------------------------------------------

    Where appropriate, the OCC has placed particular emphasis on 
incentivizing increased activities targeted to LMI individuals, 
families, and census tracts. This includes limiting CRA consideration 
in the CRA evaluation measure to mortgages made to LMI individuals and 
families. The agency has, however, also sought to give credit for 
activities that do not exclusively benefit LMI individuals, families, 
and census tracts in circumstances where the OCC has determined that it 
is appropriate to ensure banks are serving their entire communities and 
where such activities are much needed (i.e., other identified areas of 
need). The agency believes that providing financial literacy and 
education or homebuyer counseling to a broad audience, including but 
not limited to LMI communities, is consistent with both the language 
and the spirit of the CRA. The need for, and benefit of, financial 
literacy extends well beyond LMI individuals, families, and census 
tracts. Given these considerations, the agency is adopting the 
financial literacy criterion as proposed.
    Indian country. The proposal would have defined Indian country by 
reference to 18 U.S.C. 1151 and provided credit for certain activities 
in Indian country. A few industry and community groups said that the 
statutory definition of Indian country was too narrow and would exclude 
lands that are typically thought of as Indian country. These commenters 
provided options for expanding the definition, such as including 
various Census Bureau statistical areas or by adding areas that would 
be covered by the Inspiring Nationally Vibrant Economies Sustaining 
Tribes Act of 2020 bill, which has been proposed and referred to the 
Senate Committee on Finance.\55\ At least one community group requested 
that Hawaiian Home Lands, which are held in trust by the state of 
Hawaii, and State Designated Tribal Statistical Areas be considered but 
remain distinct from federal designations of Indian country. One 
commenter suggested that activities in census tracts adjacent to a 
reservation or within a number of miles from a reservation border 
qualify for CRA credit.
---------------------------------------------------------------------------

    \55\ S. 3181, 116th Cong. (2019-2020).
---------------------------------------------------------------------------

    The agency agrees that the proposed definition should be expanded 
to cover additional areas typically thought of as Indian country or 
other tribal and native lands. As noted above, the final rule continues 
to define Indian country by reference to the definition in 18 U.S.C. 
1151 but adds Census Bureau-designated Tribal Census Tracts, Oklahoma 
Tribal Statistical Areas, Tribal Designated Statistical Areas, American 
Indian Joint-Use Areas, and Alaska Native Village Statistical Areas. 
The final rule also includes other tribal and native lands as a new 
defined term, which includes Hawaiian Home Lands and State Designated 
Tribal Statistical Areas. Activities that qualify in Indian country 
will also qualify in other tribal and native lands. In the final rule, 
the OCC made conforming revisions to the qualifying activities criteria 
and the measure of a bank's branch distribution in the CRA evaluation 
measure.
    Commenters also sought clarity on whether Indian country would 
include lands not in a reservation and no longer in a state of original 
allotment or include lands that were once within the boundaries of 
native nations even if they were not technically reservations or 
allotments. Areas that are not covered by the final rule's changes to 
the proposal are only part of Indian country if they meet the statutory 
definition of 18 U.S.C. 1151, which includes reservations, dependent 
Indian communities, and allotments. The agency notes that case law has 
interpreted the statute to cover informal reservations,\56\ and the 
term dependent Indian communities specifically to cover ``a limited 
category of Indian lands that are neither reservations nor allotments, 
and that satisfy two requirements--first, they must have been set aside 
by the [f]ederal [g]overnment for the use of the Indians as Indian 
land; second, they must be under federal superintendence.'' \57\
---------------------------------------------------------------------------

    \56\ Oklahoma Tax Comm'n v. Sac & Fox Nation, 508 U.S. 114, 123 
(1993).
    \57\ Alaska v. Native Vill. of Venetie Tribal Gov't, 522 U.S. 
520, 527 (1998).
---------------------------------------------------------------------------

    One community group recommended that the agency provide credit for 
activities funded by the government or receiving tribal authorization 
or support. All retail loans in Indian country and other tribal and 
native lands qualify for CRA credit under the final rule. The CD 
criteria also include certain tribal government programs, projects, or 
initiatives and other activities related to Indian country and other 
tribal and native lands. As noted below, activities need not be in 
Indian country or other tribal and native lands to be a qualifying 
activity if they benefit or serve those areas. For activities whose 
qualifying status is ambiguous, the OCC encourages interested parties 
to seek confirmation as provided in the final rule. Another commenter 
suggested that government agency and tribal leaders be consulted 
regarding any expansion or inclusion of the CRA in their communities. 
The agency engaged in significant outreach prior to issuing the NPR and 
received feedback from many stakeholders that informed the proposal and 
the final rule, including those that would be affected by the inclusion 
of activities in Indian country and other tribal and native lands.
    Opportunity zones. The proposal would have given credit for 
qualified opportunity funds that benefit LMI qualified opportunity 
zones. A few industry commenters expressed support for providing credit 
to investments in opportunity zones. Some community groups relayed 
concerns about such provision of credit because these investments could 
finance projects that do not benefit LMI individuals or communities. 
These commenters provided examples of such projects, including luxury 
condominiums. A few

[[Page 34747]]

commenters also expressed the view that investments in qualified 
opportunity funds already receive enough support and should not receive 
a multiplier. Commenters criticized the basis for designating 
opportunity zones because they are based on 2010 data and may not 
actually benefit areas currently identified as LMI. Commenters that 
supported providing credit for investments in qualified opportunity 
funds proposed a safe harbor or presumption in which certain activities 
would be presumed to benefit LMI communities.
    The OCC's purpose in adding a criterion for qualified opportunity 
funds that benefit qualified opportunity zones in LMI census tracts was 
to incentivize banks to help meet the needs of LMI individuals and 
communities located in opportunity zones, which are areas the federal 
government has identified as needing economic development and job 
creation. The OCC is clarifying that to qualify under the opportunity 
zone criterion, activities that finance or support qualified 
opportunity funds must benefit LMI qualified opportunity zones.\58\ 
Whether an activity benefits an LMI qualified opportunity zone will 
depend on the facts and circumstances of the activity, including 
whether it is responsive to the needs of LMI individuals, families, and 
communities in the opportunity zone. The OCC made no changes to this 
criterion and has adopted it as proposed. Although the agency is not 
revising the criterion to provide specific safe harbors or presumptions 
for certain investments in qualified opportunity funds, as with all 
activities, a bank may request confirmation that a particular qualified 
opportunity fund meets the qualifying activities criteria using the 
process contained in the final rule.
---------------------------------------------------------------------------

    \58\ One community group suggested that it is unclear whether 
qualified opportunity funds can make investments through a lower-
tier entity, noting that many investors have established two-tier 
structures in which investments are made through the subsidiary. To 
the extent that commenters have questions about the requirements or 
structure of qualified opportunity funds, those questions should be 
directed to the Internal Revenue Service.
---------------------------------------------------------------------------

    Sports stadiums. The proposal included as an example on the CRA 
illustrative list an investment in a qualified opportunity fund 
established to finance improvements to an athletic stadium in an 
opportunity zone that is also an LMI census tract. The OCC received 
numerous comments expressing concern with this example. There is a 
misperception that the proposal would have created a new incentive by 
giving banks CRA credit for financing athletic facilities. To the 
contrary, banks have received CRA credit for decades for loans and 
other financing involving athletic facilities that increase 
opportunities for economically disadvantaged individuals and areas. A 
review of publicly accessible CRA PEs provides many examples of this 
credit, dating back to at least 1993. Many of the examples involve 
repairs to local high school and municipal facilities that serve local 
communities. Some involve creative projects involving multiuse 
facilities and school facilities, and some involve professional sports 
stadiums.
    In response to comments received on the proposal, the agency has 
replaced the stadium example with an example that better reflects the 
type of athletic facilities that have been approved historically. In 
addition, the agency is clarifying that under the final rule the agency 
will continue to review and give CRA credit for loans and other 
financing involving athletic facilities that increase opportunities for 
economically disadvantaged individuals and areas. Under the final rule, 
the agency will consider the facts and circumstances of specific 
projects involving athletic facilities, either in the context of a CRA 
evaluation or pursuant to a request for confirmation that an activity 
is a qualifying activity.
    Ventures undertaken in cooperation with minority depository 
institutions, women's depository institutions, Community Development 
Financial Institutions (CDFI), or low-income credit unions. The 
proposal included ``ventures undertaken, including capital investments 
and loan participations, by a bank in cooperation with a minority 
depository institution, women's depository institution, [CDFI], or low-
income credit union'' as qualifying activities if the ventures help 
meet the credit needs of the communities in which these institutions 
are chartered, including by promoting the sustainability and 
profitability of those institutions themselves. Commenters largely 
supported the clarification regarding activities with minority 
depository institution, women's depository institution, or low-income 
credit union and CDFIs and suggested additional examples of activities 
that should be included in the final rule.
    The agency agrees that additional activities undertaken with these 
institutions should qualify for CRA credit. The agency notes that the 
examples following the term ventures in the proposal--capital 
investments and loan participations--are illustrative and not 
exhaustive. The agency intends the term ventures to broadly encompass, 
for example, deposits, loans, and other financial and nonfinancial 
support. The agency has adopted these provisions as proposed, with 
minor changes to clarify that activities and ventures, other than those 
expressly included in the proposal, may qualify for CRA credit.
    Underserved areas, distressed areas, and CRA deserts. The proposal 
would have revised the definitions of distressed nonmetropolitan 
middle-income area and underserved nonmetropolitan middle-income area 
to include additional census tracts where there are unmet financial 
needs and to simplify the terms used to describe these areas. 
Specifically, proposal removed the requirement that a distressed area 
be a nonmetropolitan area in recognition that there may be middle-
income census tracts in metropolitan statistical areas (MSA) that 
experience high rates of poverty, unemployment, or population loss and, 
therefore, need financial resources. Similarly, the proposal would also 
have revised the definition of underserved area to remove the 
requirement that these census tracts be nonmetropolitan areas to 
address urban banking deserts that lack access to financial services.
    Commenters suggested that the agency proposed these definitions 
without sufficient research. The agency disagrees with this contention. 
The agency decided how to modify the existing definitions to capture 
areas with unmet financial needs based on publicly available census 
tract demographic information, such as population density, poverty 
rates, unemployment, population loss, and availability of bank 
branches.
    Commenters also argued that because the agency did not provide 
information about the census tracts that would be affected, the public 
was unable to provide meaningful comment.\59\ To the contrary, the 
proposal included clear definitions based on publicly available 
information for distressed areas and underserved areas, enabling 
commenters to provide meaningful comment. Furthermore, at least one 
commenter was in fact able to use publicly available information to 
review which census tracts would likely be affected by the proposal, as 
commenters did for the proposed definition of high-cost areas.\60\ It 
is clear from the comments received that commenters were able to look 
at the definitions included in the proposal and to use public data 
related to those definitions

[[Page 34748]]

to analyze and comment on the proposal.
---------------------------------------------------------------------------

    \59\ See, e.g., Comment Letter: National Community Reinvestment 
Coalition (NCRC), from J. Van Tol and J. Taylor, at 28 (Apr. 8, 
2020).
    \60\ Id.
---------------------------------------------------------------------------

    Many commenters, citing research showing continuing racial 
disparities in lending, expressed the view that communities of color 
should be included in the definition of underserved areas. Congress 
enacted the CRA with the purpose of encouraging sound lending to a 
bank's entire community, and CRA requires the OCC to assess banks' 
records of meeting the credit needs of their entire community, 
including LMI neighborhoods. Although the CRA statutory language does 
not explicitly address communities of color, of course a bank's entire 
community includes communities of color. Adjustments to the current 
framework, including those made to the definitions of distressed area 
and underserved area, will help ensure that banks do more, not less, in 
LMI census tracts and other identified areas of need, including areas 
that may have historically been affected by redlining or other forms of 
unlawful discrimination. The OCC believes the reforms contained in the 
final rule will have the positive result of benefiting minority 
populations by increasing activities in areas that often have a high 
minority population. Further, a bank's CRA performance will be 
adversely affected by evidence of discrimination or other illegal 
credit practices.''
    The agency notes that MSAs that experience high rates of poverty, 
unemployment, or population loss are often correlated with high 
populations of racial minorities. Accordingly, the proposed definitions 
of distressed area and underserved area would have the positive result 
of incentivizing CRA activities in certain areas with high populations 
of racial minorities. Thus, the agency's proposal achieves the benefit 
urged by the commenters who support explicitly addressing communities 
of color in the CRA regulations. Therefore, the agency is not 
implementing the proposed reforms.\61\
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    \61\ A commenter also noted that the agency failed to consider 
its statutory duty to affirmatively further fair housing under the 
Fair Housing Act, 42 U.S.C. 3608(d), because the proposed rule would 
have the effect of making affordable housing unavailable. See 42 
U.S.C. 3604(a). Lending disparities correlated with race, ethnicity, 
or other protected status are of concern to the agency. As discussed 
in this preamble, the agency supervises banks' compliance with the 
federal fair lending laws and regulations through its examination 
and enforcement functions. Further, the final rule does not, on its 
face or through implementation, make any housing unavailable in 
violation of the Fair Housing Act. Moreover, the final rule 
increases incentives for financing housing affordable to LMI 
individuals and families.
---------------------------------------------------------------------------

    Commenters suggested several alternative methods of defining 
distressed or underserved census tracts, including by looking at tracts 
with low levels of retail lending after considering the demographics of 
an area or areas where there are transportation barriers. The agency 
agrees that it is important to encourage CRA activities in areas that 
experience lower than expected levels of lending and investments, often 
known as CRA deserts, and believes that many of these areas would 
likely be encompassed within distressed and underserved areas due to 
the demographic makeup of these communities. In the agency's judgment, 
the proposed definitions of distressed area and underserved area 
accurately identify the majority of economically distressed areas and 
other areas with limited access to financial services. The agency 
adopts these definitions as proposed.
    To encourage banks to engage in qualifying activities in CRA 
deserts, in response to comments received on this issue, the final rule 
adopts a definition of CRA desert and provides multipliers for 
qualifying activities in these areas. The final rule defines CRA desert 
as an area that has been confirmed by the agency to be a CRA desert 
because it has significant unmet CD or retail lending needs and where: 
(1) Few banks have branches or non-branch deposit-taking facilities; 
(2) there is less retail or CD lending than would be expected based on 
demographic or other factors; or (3) the area lacks community 
development organizations or infrastructure. The final rule also 
provides that the agency will maintain an illustrative list of CRA 
deserts and includes a process for banks to obtain confirmation that an 
area meets the definition of a CRA desert. Because geographies that 
meet the definition of CRA desert are subject to change based on 
increases in the level of CRA activities directed to the area, each 
bank that seeks to use a multiplier for an activity in a CRA desert 
must obtain confirmation from the agency that the geography is or 
continues to be a CRA desert.
    Federal Housing Administration (FHA) loan products. Commenters 
stated that the proposal did not address certain single-family FHA loan 
products provided to LMI individuals. These comments reflect a 
misunderstanding of the proposal. The proposed qualifying activities 
criteria do not include any reference to single-family FHA loan 
products; however, the CRA illustrative list included in the proposal 
did include some examples of qualifying activities involving FHA loan 
products. As noted below, the CRA illustrative list provided along with 
the proposal is a non-exhaustive, illustrative list of examples of 
qualifying activities. If a loan originated through an FHA loan program 
is provided to an LMI individual or family, it will receive credit 
because it meets the qualifying activities criteria even if it is not 
included on the illustrative list. However, in response to comments, 
the OCC has revised the examples to clarify that FHA-guaranteed loans 
to LMI individuals or families qualify for CRA consideration.
    Persons with disabilities. Some commenters recommended that the 
proposal be revised to address the needs of LMI persons with 
disabilities and provided several specific suggestions. They also 
suggested that the agency discuss the applicability of the Americans 
with Disabilities Act (ADA). The agency notes that activities that 
benefit or serve LMI individuals with disabilities would meet several 
of the qualifying activities criteria in the final rule. In addition, 
the initial CRA illustrative list includes examples of activities that 
support persons with disabilities. Under the final rule, banks and 
interested parties can request confirmation that additional activities 
meet the qualifying activities criteria.
    Affiliate activities. In the proposal, qualifying activities 
included activities in which banks substantively engaged and for which 
they provided the economic resources, but which were done in the name 
of another party, such as an affiliate. The agency received comments on 
the treatment of qualified activities undertaken by bank affiliates. 
Some community group commenters stated that giving banks a choice of 
whether to include an affiliate's activities opens up the framework to 
abuse. They argued that affiliate activities should always be included 
because the distinction between affiliates' activities and those of a 
bank is often unclear. Alternatively, commenters suggested that the OCC 
adjust a bank's CRA ratings if its affiliate's activities varied widely 
from the bank's activities with respect to abusive practices and the 
populations served. A few members of the public and some community 
groups stated that if banks receive credit for affiliate activities, 
the agency must consider evidence of discriminatory or other illegal 
credit practices of those affiliates. In contrast, several commenters 
representing industry trade groups supported retaining the optionality. 
One industry commenter specifically recommended that activities 
conducted by an affiliated foundation, under common control of the 
bank's shareholders, be counted as qualifying activities of the bank. 
Two industry commenters recommended that the

[[Page 34749]]

agency permit banks to exclude affiliate activities from the retail 
lending distribution tests.
    The agency has carefully considered the comments received. In the 
final rule, the agency decided to limit consideration of CRA activities 
to those conducted directly by a bank to be more consistent with the 
CRA statute. The agency has made clarifying edits throughout the rule 
to reflect this policy decision. The CRA statute grants the agency the 
authority to evaluate the CRA performance of insured depository 
institutions. The agency notes, however, that it considers qualifying 
activities to be conducted by a bank if the bank finances or otherwise 
supports a qualifying activity, even if the transaction involves an 
intermediary. The final rule will not require or provide the option for 
banks to consider affiliates' activities.
    CRA illustrative list. The proposal provided that the agency would 
maintain a publicly available, non-exhaustive, illustrative list of 
examples of qualifying activities that meet the rule's qualifying 
activities criteria, as well as examples of activities that the agency 
has determined, in response to specific inquiries, do not qualify. The 
proposal also established a process for a bank or interested party to 
submit a form through the OCC's website to seek agency confirmation 
that an activity is a qualifying activity and stated that the CRA 
illustrative list would be updated each time an activity is confirmed 
to be or determined not to be a qualifying activity. In addition, the 
proposal provided that the list would also be published in the Federal 
Register at least every three years, at which time the agency would 
seek public comment on the list. Following this, the agency could add 
activities to the list that meet the qualifying activities criteria or 
remove activities that no longer meet the criteria.\62\
---------------------------------------------------------------------------

    \62\ The initial proposed illustrative list was available for 
review on the agency's website at the time the proposal was 
published, as well as in section V of the proposal.
---------------------------------------------------------------------------

    The agency received a number of comments on the proposed CRA 
illustrative list of qualifying activities and the processes for 
updating the list. Several commenters expressed concern that the list 
would be viewed as a complete list of permissible activities, as 
opposed to an illustrative list of examples. Others stated that a list 
would serve to discourage banks from engaging in activities that are 
not on the list, thereby limiting innovation. Some community group 
commenters stated that the CRA illustrative list included examples of 
activities that would not provide community members with financial 
inclusion and economic opportunity, with one commenter referencing the 
examples involving in-kind donations of computer equipment and 
provision of homebuyer education to buyers of single-family housing. 
One community group commenter suggested that the housing tax credit 
example on the illustrative list should be clarified so that only 60% 
of the units meet the 30% of 80% of the area median income requirement. 
Certain community group commenters opposed the list but supported the 
confirmation process. A few commenters also suggested that a best 
practice guide, informed by community and consumer-serving 
organizations and public input, would be better than a list.
    In response, the agency reiterates that the list is illustrative 
only. It is not a complete list of activities that meet the regulatory 
criteria; no such list exists, nor will it exist under the final rule. 
Banks will receive CRA credit for any activity that satisfies the 
qualifying activities criteria, regardless of whether it is on the CRA 
illustrative list. Moreover, the OCC encourages banks to engage in 
innovative activities that are responsive to the needs of their 
communities and, where there is uncertainty, to confirm with the agency 
that an activity not on the CRA illustrative list is qualifying.\63\
---------------------------------------------------------------------------

    \63\ In this regard, the agency notes that the final rule 
encourages innovativeness and responsiveness through multipliers to 
the quantified dollar value of the activities and through 
consideration of these qualitative aspects of CRA activities as part 
of performance context.
---------------------------------------------------------------------------

    Commenters also addressed the process in the proposal for banks to 
seek agency confirmation that an activity is a qualifying activity. 
Commenters noted that limiting this process to banks would deprive 
interested persons of the opportunity to gain important clarity and 
participate in the CRA process. Two community groups recommended that 
local input should inform the confirmation process, and one industry 
commenter suggested that a joint group consider confirmation requests, 
including representatives from the originating district or regional 
office. The agency agrees that public input and active stakeholder 
engagement is important to achieve the goals of the CRA, and the final 
rule allows any interested party to request confirmation that an 
activity is a qualifying activity. Because the question of whether an 
activity meets the qualifying criteria is a matter of agency 
interpretation, the agency will make these decisions based upon all 
available information.\64\
---------------------------------------------------------------------------

    \64\ Commenters also addressed the statement in the proposal's 
preamble that the agencies would collaborate on the CRA illustrative 
list, stating that the manner in which this collaboration would 
occur was unclear. One industry commenter recommended that the 
agencies respond jointly to confirmation requests. One community 
group recommended that the CRA illustrative list reflect consensus 
among the OCC, FDIC, and the Board. A state regulator recommended 
that state regulators have input as well. State regulators may 
provide input on the illustrative list using the confirmation or 
notice and comment process described in the final rule. The FDIC and 
the Board are not joining this rulemaking, and therefore presumably 
will not be maintaining illustrative lists comparable to the OCC's 
list. However, the OCC notes that it coordinates with these agencies 
on a routine and ongoing basis regarding areas of common interest.
---------------------------------------------------------------------------

    After considering the specific suggestions the agency received, the 
OCC will endeavor to publish the CRA illustrative list on its website 
in a searchable format. The final rule provides that the agency will 
respond directly to requests for confirmation and post those responses 
to its website. The OCC will do so consistent with its internal 
processes, policies, and procedures. Banks can reference those 
responses as interpretive guidance to determine whether particular 
activities meet the qualifying activities criteria. The agency plans to 
update the CRA illustrative list on an annual basis with the activities 
that were determined to meet and not to meet the qualifying activities 
criteria during that year.
    Other commenters requested that the CRA illustrative list identify 
CD lending, CD investment, and CD services separately. Because any CD 
loan, investment, or service qualifies under the rule if it satisfies 
one or more CD criteria, the agency does not plan to further segregate 
the list by type of CD activity unless it is necessary based on the 
facts and circumstances (e.g., the activity can only be a CD 
investment). Another commenter requested that the list include guidance 
on the necessary documentation for each activity. As noted above, the 
agency plans to provide guidance on the application of the final rule.
    One industry commenter recommended expanding the confirmation 
process to include confirmation of whether a branch would be included 
in the numerator of the branch distribution component of the CRA 
evaluation measure, discussed below. Branches in LMI census tracts and 
other identified areas of need are not qualifying activities. As such, 
the qualifying activities confirmation process does not include these 
branches. Under the final rule, as discussed below, if a branch is not

[[Page 34750]]

located in an LMI census tract or other identified area of need, a bank 
must demonstrate that it serves one of those areas to be included in 
the numerator of the branch distribution component of the CRA 
evaluation measure.
    A few community groups argued that the periodic updates to the CRA 
illustrative list each time an activity is confirmed to be or 
determined not to be a qualifying activity should be subject to notice 
and comment under the Administrative Procedure Act (APA). The agency 
disagrees. The CRA illustrative list is a non-exclusive compilation of 
activities that the agency has determined do or do not meet the 
qualifying activities criteria. The list itself does not set forth the 
regulatory qualifying activities criteria, nor do changes to the list 
in any way alter or otherwise affect these criteria. Under the final 
rule, the periodic updates of the list will reflect the agency's 
opinions on whether specific scenarios presented by banks or interested 
parties meet the qualifying activities criteria. These opinions on the 
applicability of the rule are interpretive rules, which are commonly 
issued by a government agency in response to requests for guidance from 
the public on how statutes and regulations apply in specific 
situations.\65\ These interpretations provide stakeholders and other 
interested parties with timely information and foster a more nimble and 
responsive government. Under the APA, an interpretive rule is exempt 
from notice and comment.\66\
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    \65\ The critical feature of interpretive rules is that they are 
issued by an agency to advise the public of an agency's construction 
of the statutes and rules that it administers. Attorney General's 
Manual on the Administrative Procedure Act 30 n.3 (1947); accord 
Perez v. Mortgage Bankers Association, 575 U.S. 92 (2015) (citations 
omitted). While interpretive rules do not require notice and 
comment, and therefore may be issued more expeditiously than 
legislative rules, interpretive rules may not set legal expectations 
that extend beyond the underlying statute or regulation. Id. (noting 
that interpretive rules do not have the force and effect of law).
    \66\ 5 U.S.C. 553(b)(A). See also Shalala v. Guernsey Memorial 
Hospital, 514 U.S. 87, 99-100 (1995) (noting that an APA rulemaking 
is not required for an interpretive rule that does not effect a 
change in agency regulations); cf. American Mining Congress v. Mine 
Safety & Health Administration, 995 F.2d 1106, 1112 (D.C. Cir. 1993) 
(noting that one indicia of an interpretive rule is whether, absent 
the interpretive rule, the agency would have a legal basis for 
taking an enforcement action or other action to confer benefits or 
ensure the performance of duties).
---------------------------------------------------------------------------

    With respect to the periodic publication of the CRA illustrative 
list in the Federal Register every three years, some commenters stated 
that this should take place no more often than every five years because 
a more frequent review could impede banks' ability to rely on the CRA 
illustrative list. Moreover, the commenter argued, frequent revisions 
could make the list susceptible to changes based on political pressure, 
rather than public policy rationales. The commenter also suggested that 
activities removed from the list should qualify for credit for two 
additional years to further enable reliance on the list and allow banks 
to better modulate product development and political headwinds. The 
agency agrees with the commenter that a five-year review would increase 
the ability of banks to rely on the list and provide them with 
certainty, particularly in light of how long some activities take to 
start up and wind down, and the agency has made this change in the 
final rule. With respect to the two-year grace period, the agency does 
not believe such change is necessary because a bank that received 
credit for an activity that is subsequently removed from the list 
(because it no longer meets the regulatory criteria) will continue to 
receive CRA credit while the activity remains on the bank's balance 
sheet.
    In response to suggestions that the CRA illustrative list be 
updated more frequently, the agency notes that it plans to update it on 
an annual basis in response to requests from any bank or interested 
party for confirmation that an activity qualifies. For the reasons 
described above, the agency is not adopting a more frequent public 
notice and comment update process.
    Certain community groups recommended that banks only receive credit 
for activities on the CRA illustrative list if they benefit LMI 
individuals. The agency is not adopting this recommendation because the 
final rule, like the current regulations, provides CRA credit for some 
activities with benefits that extend beyond LMI individuals and 
families.
    The agency received numerous comments requesting that the approval 
time for a request for consideration of a new activity should be 
shorter than the six months that was proposed. Other commenters 
recommended a conditional review and approval process, potentially with 
a prompter conditional determination. The agency does not think that a 
conditional approval process is warranted because it could create 
uncertainty. The agency does agree, however, that to be useful, the 
approval process should be shortened, and the final rule provides for a 
60-day approval process, with the option of a 30-day extension. To 
manage the agency's resources effectively, the agency expects to 
prioritize those requests relating to activities with definite terms 
and parameters and in which banks are ready to engage. The proposal 
also established a process for a bank to submit a form through the 
agency's website to seek agency confirmation that an activity is a 
qualifying activity.\67\ The final rule adopts this process.
---------------------------------------------------------------------------

    \67\ Under the final rule, an activity is confirmed as a 
qualifying activity if the requestor is not informed of an objection 
within the time allotted for confirmation.
---------------------------------------------------------------------------

    The CRA illustrative list issued on the OCC's website in 
conjunction with this final rule includes additional or modified 
examples conforming to changes in the regulatory text, along with 
technical and clarifying changes. Additionally, the OCC added several 
examples to provide further guidance or to address input from 
commenters, including examples addressing activities that respond to 
the current pandemic and the technology and health services needs of 
LMI individuals.
    Other than the changes discussed above, the final rule adopts the 
CRA illustrative list and confirmation process provisions as proposed.
    Qualitative aspects of qualifying activities. At least a few 
community groups and individual commenters stated that the proposal's 
failure to consider qualitative criteria for CRA activities could 
result in products receiving credit even though they do not support 
pathways for LMI individuals to move to lower-cost products. Other 
commenters suggested that qualitative performance context 
considerations should only supplement a bank's presumptive rating. As 
previously noted, the general policy direction of the agency's reform 
is to increase the level of transparency, objectivity, and consistency 
of application throughout the CRA regulation. The need for 
transparency, objectivity, and consistency is a point of general 
agreement among commenters throughout the reform process, in which the 
agency has engaged over the past several years. Increasing 
transparency, objectivity, and consistency will increase business 
certainty and in turn, incentivize a greater amount of qualifying 
activities. The qualifying activities criteria and CRA evaluation 
measure, for example, provide this increase in transparency, 
objectivity, and consistency. At the same time, as discussed in the 
performance context section below, the agency recognizes that not every 
aspect of CRA can be quantified and made objective. Moreover, the 
agency believes that qualitative considerations are an important 
component of CRA

[[Page 34751]]

evaluations and, therefore, will consider qualitative aspects of banks' 
CRA performance through the application of performance context, 
including whether the bank is being responsive to community needs. As 
discussed below, the performance context factors contained in the 
proposed and final rules and the standardized application of those 
factors will help ensure greater transparency and consistency in 
application of even the qualitative components of the CRA review.
    Retail banking services and CD services. The proposal did not 
include a service test, which under the current framework is used to 
evaluate banks' retail banking services and delivery systems \68\ and 
CD services. The proposal instead sought comment on how retail banking 
services and delivery systems, other than branch distribution, could be 
quantified or whether they should be considered as part of performance 
context. The proposal included in the CRA evaluation measure a 
component that accounted for the distribution of branches in LMI areas 
and other identified areas of need.
---------------------------------------------------------------------------

    \68\ Under the current framework, the service test is used to 
evaluate a bank's distribution of branches, record of opening and 
closing branches, the availability and effectiveness of the bank's 
alternative systems for delivering retail banking services to LMI 
individuals and in LMI census tracts, and the range of services 
provided in low-, moderate-, middle-, and upper-income census tracts 
and the degree to which they are tailored to meet the needs of those 
census tracts.
---------------------------------------------------------------------------

    The proposal also sought comment on the proposed method of 
quantifying CD services (i.e., bank employee time spent volunteering as 
a representative of the bank on qualifying activities or supporting 
qualifying activities of another bank or that are cooperative ventures 
with a minority depository institution, women's depository institution, 
or low-income credit union or CDFI).\69\ The NPR quantified the dollar 
value of CD services based on the hourly salary as estimated by the 
Bureau of Labor Statistics (BLS) for the job category of the service 
provided for the number of hours provided. The proposal solicited 
feedback on other methods of quantifying CD services, including using a 
standard figure such as the median hourly compensation value for the 
banking industry, which was approximately $36 when calculated based on 
prior Call Report data.\70\ A few industry and community group 
commenters objected to the method used to quantify CD services in the 
proposal, suggesting that it would provide varying amounts of credit 
for CD services, would not adequately reflect the positive impact that 
CD services have on communities, and would be unduly burdensome to 
track given the credit provided for CD services. A few commenters 
offered suggestions on other ways to quantify or value service hours, 
including the suggestion that a standard figure be used for all 
volunteer hours.
---------------------------------------------------------------------------

    \69\ A few industry commenters supported the proposal to no 
longer limit CD services to the provision of professional services 
or financial literacy. In contrast, four commenters suggested that 
CRA credit for volunteer services should be limited to activities 
that are unique to skillsets relevant to banking and financial 
expertise. A few community group commenters and two government 
commenters suggested limiting CRA credit for volunteer services, 
including to supporting organizations with a primary CD purpose or 
to the extent the activity benefits LMI individuals. The final rule, 
like the proposal, no longer requires that CD services be related to 
the provision of financial services (i.e., banks would receive 
credit for all volunteer hours, including manual labor, provided to 
a CD project). As explained in the proposal, this expansion 
recognizes that support for a CD project may take many forms, all of 
which are required for the project to meet the needs of a community, 
and that all these forms of support should qualify for CRA credit, 
consistent with the goals of CRA.
    \70\ The proposal stated that the $36 per hour figure was based 
on BLS data. In fact, the figure was calculated using data from the 
Call Report.
---------------------------------------------------------------------------

    The agency also received comments regarding the elimination of the 
service test. While certain commenters acknowledged that performance 
under the service test can be confusing and does not rely on 
quantifiable criteria, many community groups, individuals, and 
government commenters asserted that the service test remains important. 
Commenters further argued that minimizing consideration of bank 
accounts and other services and branches that serve LMI individuals and 
communities would result in LMI communities becoming more dependent on 
check cashing and other high-cost services. These commenters argued 
that the service test should be retained and improved in the final rule 
to provide banks greater incentive to provide affordable deposit 
accounts and other banking services to LMI individuals and communities. 
Some industry, community group, government, and public commenters 
indicated support for including the provision of retail banking 
services to LMI communities in the CRA evaluation measure. Other 
commenters made recommendations on various products and services that 
should be considered or suggested that banks be incentivized to offer 
retail products and services to particular communities such as LMI, 
minority, or immigrant communities.
    The agency carefully considered commenters' concerns and believes 
that the proposal accounted for services appropriately and was 
consistent with the agency's actual examination experience. 
Specifically, in the agency's experience, evaluations have focused on 
three aspects of banks' service-related activities: (1) Branch 
distribution; (2) product offerings that are tailored to meet the needs 
of LMI individuals; and (3) CD services. The final rule does not retain 
the service test as it appears in the current framework. Under the 
final rule, retail banking services and delivery systems and CD 
services will be accounted for both quantitatively and qualitatively.
    The agency will account for retail banking services and delivery 
systems qualitatively as part of performance context. The agency 
considered options for quantifying retail bank services and delivery 
systems but determined that these aspects of a bank's business do not 
lend themselves to quantification and are best evaluated using 
qualitative criteria. As discussed below, the final rule also retains 
the branch distribution component of the CRA evaluation measure and 
enhances the amount of credit that a bank may receive for branches in 
LMI census tracts and other identified areas of need.
    With regard to CD services, the agency revised the treatment of CD 
services in the final rule. To reduce the burden associated with 
tracking the compensation rates associated with the different job 
categories in the BLS data, the final rule quantifies CD services based 
on the standard figure for the median hourly compensation value for the 
banking industry calculated using Call Report data, which is $38 based 
on 2019 Call Report data. In addition, as discussed below, the 
quantified dollar value of CD services will be adjusted by multipliers, 
as applicable.
    In administering the CRA regulations, the agency will take 
appropriate steps--such as providing examination tools and guidance--to 
ensure consistent application of performance context. The agency will 
incorporate consideration of a bank's retail banking services targeted 
to LMI individuals, record of opening and closing branches, and 
availability and effectiveness of its alternative systems for 
delivering retail banking services in LMI census tracts and to LMI 
individuals, the qualitative aspects of its branch distribution, and 
the qualitative aspects of CD services in the standardized application 
of performance context. In the agency's view, these are important 
aspects of a bank's CRA performance that are best considered 
qualitatively, not quantitatively.
    Commenters also requested clarity on whether activities conducted 
in a middle-income census tract which is surrounded by LMI tracts will 
qualify as a CD service. Under the final rule and

[[Page 34752]]

consistent with the guidance in the current Interagency Q&As,\71\ if a 
bank can demonstrate that an activity meets the qualifying activities 
criteria it will receive CRA credit. Stated another way, qualifying 
activities do not need to occur in LMI census tracts or other 
identified areas of need to benefit or serve those areas.
---------------------------------------------------------------------------

    \71\ See Interagency Q&As, Sec.  __.12(g)--2, 81 FR at 48525.
---------------------------------------------------------------------------

    Purchases of qualifying activities. The proposal provided that 
qualifying activities are retail loans and CD activities that help meet 
the credit needs of a bank's entire community, including LMI 
communities, if they meet the qualifying activities criteria at the 
time the activity is originated, made, or conducted. The proposal 
further stated that if an activity is subsequently purchased by another 
bank, it is a qualifying activity if it meets the criteria in this 
section at the time of purchase.
    The agency received comments indicating that it was unclear whether 
banks were required to requalify purchased loans and investments by 
collecting data on the activity at the time of purchase or whether the 
purchasing bank could rely on the information provided at the time the 
loan was originated or the investment was made. The final rule includes 
clarifying edits to the qualifying activities criteria section 
regarding the subsequent purchase of activities. In particular, the 
agency clarified how a bank determines whether an activity that is 
subsequently purchased by another bank is considered a qualifying 
activity. The final rule clarifies that if a bank purchases a loan or 
investment that was a qualifying activity, it remains so unless the 
agency determines prior to the sale that the activity is no longer a 
qualifying activity. Essentially, if a bank purchases a loan or 
investment that met the qualifying activities criteria when it was 
originated or made, and based on the facts provided at that time it 
still meets the qualifying activities criteria, it remains a qualifying 
activity (i.e., banks do not have to requalify purchased activities 
based on the facts at the time of purchase by, for example, obtaining 
the current income of a borrower who was LMI when the loan was 
originated). Rather, whether activities qualify is based on the facts 
at the time originated or made). In contrast, if a loan or investment 
no longer meets the qualifying activities criteria at the time of 
purchase based on the information provided when it was originated or 
made then it will not be a qualifying activity for the purchasing bank. 
The OCC also made several technical and conforming edits related to 
these changes throughout the final rule.
    Other suggested qualifying activities. Some commenters suggested 
the agencies identify additional activities that would qualify for CRA 
consideration, including for example, CD corporations; CD venture 
capital organizations; work done to enhance digital literacy and/or 
broadband and digital access; disaster relief efforts; programs and 
products focused on general education; and environmental initiatives. 
Commenters also suggested miscellaneous housing activities should be 
considered, including housing counseling, foreclosure prevention 
efforts, loss mitigation efforts, and activities of state housing 
finance agencies. Other commenters suggested qualifying activities 
should include investments, lending, and services involving legal 
assistance for LMI individuals or supporting interest on lawyer trust 
accounts; efforts to remove language barriers; hours of bank operation; 
equity investments in minority depository institutions, women's 
depository institutions, or low-income credit unions and loan 
participations sold to and from minority depository institutions, 
women's depository institutions, or low-income credit unions, including 
investments made by those institution in other such institutions, loans 
to non-profits and other support of social and racial justice advocacy 
non-profit organizations; activities related to rural development; SBA 
504 loans and 7(a) loans; microloan intermediaries (as defined in 13 
CFR 120.701); financing or support for SBICs regardless of the location 
of the SBIC or its investments; activities that support communities of 
color; tax credits and other community reinvestment grants; and lending 
that helps reduce the combined cost of housing and transportation, 
including vehicle loans that support transportation to and from 
employment.
    Other commenters suggested qualifying activities should include 
activities such as payday loan alternatives, including small dollar 
loans benefitting LMI; activities related to child-care; activities 
related to revitalization efforts; financing in support of projects 
under a local government's Community Development Block Grant; creative 
placemaking projects; activities that provide borrowers access to asset 
building products; activities that increase credit scores; investments 
in account opening partnerships that measurably improve financial 
inclusion; investments into the Puerto Rico Housing and Human 
Development Trust Fund; products and services of military banks; 
national or regional funds; documented, verified collaboration with 
community partners, such as investments in workforce development 
programs, financial education partnerships, and microlending or small-
dollar loan programs; and membership in and all activity in their 
region's Federal Home Loan Bank.
    Regarding revitalization and stabilization efforts, some community 
group, industry, and government commenters stated their opposition to 
the removal of the revitalization and stabilization criteria from the 
definition of CD or stated that the criteria should be added back into 
the regulation. Regarding the consideration of various activities, a 
few commenters offered suggestions on possible criteria to consider 
activities. A few commenters discussed whether LMI individuals should 
be the focus of qualifying activities. Community group commenters 
stated that no new CD financing should count as qualifying if those 
investments decrease a bank's investments in core CRA activities, which 
include lending to LMI individuals. Community group commenters stated 
that all investments should be analyzed for their impact on 
historically redlined communities. Other commenters offered suggestions 
on qualifying activities criteria that could be used to consider 
activities, including that the agency could require banks to secure 
endorsements of activities from local community leaders; consider 
community wealth building models; and incentivize prime products rather 
than high-cost products.
    The final rule addresses these suggestions by providing clear, yet 
flexible, criteria describing what activities will count as CRA 
qualifying activities. Many of the suggestions made by commenters are 
likely to meet the qualifying activities criteria and some are included 
in the CRA illustrative list. In addition, the agency will consider 
additions to the CRA illustrative list on a case-by-case basis and 
periodically seek public comment and update the list.
    Quantifying a bank's qualifying activities, general. Except for 
retail loans sold within 90 days of origination and activities that are 
not held on a bank's balance sheet, the proposal would have generally 
quantified qualifying activities based on their average month-end on-
balance-sheet value.\72\ The proposal

[[Page 34753]]

included separate provisions for quantifying activities that are not 
held on a bank's balance sheet. The proposal quantified most activities 
based on their on-balance-sheet value to recognize the value of stable 
commitments to communities and disincentivize churning of activities. 
However, the agency also recognizes that providing initial credit to 
borrowers or organizations is enormously valuable. To account for this 
value, the proposal quantified retail loans that were sold within 90 
days of origination at 25 percent of the dollar value at origination.
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    \72\ One industry commenter suggested that there was a conflict 
between: (1) The proposed regulatory text's description of the value 
of an activity as the average of the dollar value as of the close of 
business on the last day of the month for each month the activity 
remained on-balance sheet; and (2) the preamble's description of the 
value of a mortgage backed security (MBS) purchased and sold over a 
one-month period. The agency recognizes the ambiguity created by the 
text of the proposed regulation and has removed the phrase for each 
month the loan or investment is on-balance sheet from the final 
rule. The agency also made a technical change in the final rule by 
adding the word quantified before the phrase dollar value.
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    At least a few community groups expressed the view that the 
proposal's approach to retail loans sold within 90 days of origination 
may result in fewer retail loan originations and penalize banks that 
originate loans to sell in the secondary market. At least a few 
industry commenters voiced similar concerns that the proposal 
undervalued originations for retail loans that are sold and disfavored 
the originate-to-sell business model.\73\ Both community group and 
industry commenters focused on this issue as it pertained to mortgage 
loans.
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    \73\ These commenters gave several reasons for their position, 
including: (1) Originating mortgage loans is costly because banks 
have to create and maintain consumer compliance infrastructure, 
ensure adherence to the underwriting guidelines of the Government 
Sponsored Entities (GSE) and other secondary market participants, 
and conduct marketing and outreach; (2) selling to the secondary 
market helps banks manage interest rate risk and expands a bank's 
ability to finance mortgages; (3) product offerings that are 
retained on balance sheet (such as balloon or adjustable rate 
mortgages) are not as affordable to LMI individuals; (4) holding 
loans on book to avoid the 75 percent haircut would not be an 
efficient use of capital; (5) limiting CRA credit would drive banks 
from residential mortgage lending and cede this territory to non-
banks; (6) this undervaluation would drive banks to sell fewer 
mortgages on the secondary market and cause the CRA and GSE 
Affordable Housing Goals to not be aligned; and (7) incentivizing 
the retention of LMI loans in portfolio could threaten safety and 
soundness.
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    The agency understands the concerns that these commenters have 
raised and agrees that retail loan originations are an important type 
of credit for populations and communities of need. Further, the 
agency's intent is not to favor one business model over another. To 
examine the impact of various weighting schemes, the agency used the 
2018 HMDA data \74\ to estimate: (1) How many banks have originate-to-
sell business models and how many are portfolio lenders; \75\ (2) what 
percentage of the LMI home mortgage origination market those banks 
represent; and (3) how assigning different weights would impact the CRA 
evaluation measures of portfolio lenders and banks with originate-to-
sell business models. The agency's analysis revealed that originating 
and selling retail loans accounts for a non-trivial portion of the LMI 
home mortgage market and a weight equivalent to three months of holding 
the loan on the bank's balance sheet may not sufficiently reflect the 
magnitude of the origination dollar volume for banks that originate to 
sell vis-[agrave]-vis banks that hold the loans in portfolio. Thus, the 
agency has revised the rule so that retail loan originations sold at 
any time within 365 days will receive credit for 100 percent of the 
origination value. Specifically, under the final rule, retail loans 
originated and sold within a year are quantified based on their full 
origination value. This method increases the valuation of these loans 
as compared to how they would have been valued based on an on-balance-
sheet quantification. For example, a $100,000 mortgage loan that was 
originated in month one and was on a bank's balance sheet as of the 
last day of the month for months one, two, and three, before being sold 
in month four would receive a value of $100,000 for that twelve-month 
period. If that loan was valued based on its on-balance-sheet value, 
assuming the on-balance-sheet value remained constant, it would have 
received a value of $25,000 toward that year's on-balance-sheet value. 
By providing that additional credit to retail loans originated and sold 
within one year, the agency recognizes the importance of originations 
and also ensures that banks with an originate-to-sell business model 
are not disadvantaged. The agency believes the change to the rule 
addresses any concerns about an inconsistency between the proposed 
regulatory text and preamble regarding the treatment of loans 
originated and sold within 90 days. The agency also is clarifying that 
this treatment applies only to retail loans.
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    \74\ Only banks with assets of $2.5 billion or greater were 
included in the analysis. Also excluded were: (1) Institutions 
regulated by the National Credit Union Administration and HUD; (2) 
institutions for which the agencies did not have deposit or asset 
size information; (3) institutions reporting no home mortgage loan 
balances on the Call Report; and (4) loans where the values of 
income, area median family income, or loan amount were missing.
    \75\ For the purposes of this analysis, to determine how many 
loans were sold by a bank, the agency used the purchaser code in the 
HMDA data that identifies whether the loan was sold within the HMDA 
calendar year. This may underestimate the number of loans an 
institution sells, particularly loans originated near the end of the 
2018 that were sold in 2019. Subject to these assumptions, the 
agency assumed a bank was a portfolio bank if the proportion of LMI 
loans originated in 2018 that were sold in 2018 was less than 25 
percent. Conversely, the agency assumed a bank was an originate-to-
sell bank if the proportion of LMI loans originated in 2018 and sold 
in 2018 was at least 75 percent.
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    The agency received comments from community groups, individuals, 
and government commenters suggesting consideration of originations and 
investments instead of or in addition to balance sheet activity. These 
commenters suggested that considering only balance sheets, and not 
originations, could result in banks meeting targets based on their 
current balance sheets and engaging in less CRA activities. 
Additionally, community group and industry commenters suggested that 
the agencies should factor into ratings whether banks have decreased 
originations of equity investments or affordable housing loans relative 
to the prior assessment period. One government commenter suggested that 
there should be a minimum level of affordable housing investment 
required and community group commenters and a government commenter 
suggested there should be minimum holding periods for CRA qualifying 
activities. Industry and community group commenters discussed potential 
harm caused to the bank by using the balance sheet approach, which 
included increasing safety and soundness risks and penalizing banks 
with limited portfolio capacity. One industry commenter suggested the 
treatment is inconsistent with the Basel III capital rules, which 
recognize that ownership of servicing assets entails an ongoing 
financial commitment even when the loan is sold.
    With regard to CD loans, the agency believes that the on-balance-
sheet value of these activities best reflects the value to the 
community.\76\ Further, considering the on-balance-sheet value 
encourages banks to provide the credit and investment terms that best 
fit the needs of the beneficiary. Therefore, the agency is not changing 
the general treatment of CD loans and CD investment.\77\
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    \76\ The final rule also quantifies CD investments that are held 
on a bank's balance sheet based on their on-balance-sheet value.
    \77\ As discussed below, the agency revised the quantification 
method for commitments to lend and LIHTC and NMTC syndications.
---------------------------------------------------------------------------

    A few community groups, some government commenters, and one 
individual commenter argued that the

[[Page 34754]]

proposal undervalues Low Income Housing Tax Credit (LIHTC) and New 
Markets Tax Credit (NMTC) syndications or sponsorship activities, thus 
discouraging banks from supporting activities such as affordable 
housing. These commenters observed that syndication activities are 
largely not reflected on banks' balance sheets. If syndicators or 
sponsors were not willing to take on this role, these commenters 
expressed concern that other banks that make investments in funds 
supporting these projects (community banks in particular) might not be 
able to participate in these activities. Several industry commenters 
suggested that the agency provide substantial CRA credit for these 
activities. Some commenters suggested credit for a percentage, such as 
50 percent, of the total value of the syndication for the term of the 
investment.
    After careful consideration of these comments and the agency's 
experience, the agency agrees that appropriate consideration should be 
given to the activities of syndicators and sponsors.\78\ To this end, 
the final rule provides credit for these activities as follows: Banks 
serving as syndicators or sponsors of funds supporting LIHTC or NMTC 
projects will receive credit for the total dollar value of the fund in 
the year it was originated, without the application of a multiplier, to 
provide CRA credit for the bank's role in syndicating or sponsoring the 
LIHTC or NMTC investment. The syndicating or sponsoring bank will also 
receive additional credit for the LIHTC or NMTC investment after the 
transaction is complete. If the bank holds a portion of the syndication 
on its balance sheet, it will be quantified in the same manner as other 
CD investments. Specifically, the syndicating or sponsoring bank will 
receive credit for the portion of the investment that it retains on its 
balance sheet based on the average on-balance-sheet value of the 
investment, as adjusted for applicable multipliers. The syndicating or 
sponsoring bank will also receive credit for the portion of the 
syndication that is sold. For the syndicating or sponsoring bank, the 
portion of the investment that is sold is quantified as 50 percent of 
the dollar value of the portion of the syndication sold in the year it 
is sold without the application of multipliers. In addition to the 
credit provided to the syndicating or sponsoring bank, a bank that 
purchases an interest in a LIHTC or NMTC syndication and holds the 
investment on its balance sheet will also receive credit for the 
quantified dollar value of the investment, adjusted for applicable 
multipliers. In the agency's view, the final rule's treatment of 
syndication or sponsorship activities supporting LIHTC and NMTC funds 
will give appropriate credit to these activities without overvaluing 
them in comparison to other qualifying activities.
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    \78\ See GAO-17-285R, Low Income Housing Tax Credits: The Role 
of Syndicators at 7 (Feb. 16, 2017) (describing multiple roles of 
syndicators in developing and monitoring LIHTC projects) available 
at https://www.gao.gov/products/GAO-17-285R .
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    Quantifying a bank's qualifying activities, pro-rata credit. The 
proposal also expanded the circumstances in which banks receive pro-
rata credit for qualifying activities beyond those activities that 
receive credit under the current framework. Under the current 
framework, only activities involving mixed-income housing that includes 
a set-aside required by federal, state, or local government for 
affordable housing for LMI individuals receive pro-rata credit. Under 
the proposal, in quantifying the value of CD activities, certain CD 
activities that provide some benefit to, but do not primarily benefit, 
specified populations, entities, or areas would receive pro-rata credit 
equal to the partial benefit provided.
    Some commenters, including members of Congress, government, 
community groups, and industry, opposed the proposal to provide pro-
rata credit for activities that only partially benefit LMI communities. 
Certain community groups expressed concern regarding the provision for 
pro-rata credit for certain qualifying activities and stated that such 
credit should be given only if the benefit to LMI individuals or 
communities can be reliably estimated and verified. Some industry 
commenters expressed support for the provision of pro-rata credit but 
asked for clarity on how to assign such credit to qualifying 
activities. The agency believes that pro-rata credit is appropriate and 
that such credit should be given only where the bank can provide a 
reasonable estimate of the benefit to LMI individuals or families, CRA-
eligible businesses or farms, or LMI census tracts or other identified 
areas of need. The burden is on the bank to demonstrate the impact of 
its investment, including providing support for the pro-rata share of 
credit used to quantify its qualifying activities. Given the variety of 
CRA activities and the array of facts and circumstances that may be 
involved, however, the agency does not believe that a one-size-fits-all 
approach for calculating the proportion of benefit is feasible or 
appropriate. The agency will accept reasonable methods for calculating 
the pro-rata share of a qualifying activity. An example of a reasonable 
method of calculating the pro-rata share that the agency would accept 
was illustrated in the comments from one community group: The 
construction of a new rail line that goes through 10 census tracts and 
serves four LMI tracts with multiple stations would clearly benefit LMI 
tracts.\79\ In this scenario, the pro-rata credit could reasonably be 
40 percent of the dollar amount of a bank's construction loan for the 
project because four of the 10 census tracts are LMI. Similar 
calculations based on the facts and circumstances of a given qualifying 
activity would likewise be reasonable. Other examples of a reasonable 
basis for the calculation of pro-rata LMI benefit of a qualifying 
activity would include, as applicable, the percentage of: (1) Students 
at a school that are eligible for free or reduced-price meals under the 
USDA's National School Lunch Program; (2) individuals who receive or 
are eligible for Medicaid; and (3) recipients of government assistance 
programs that have income qualifications equivalent to, or stricter 
than, the definitions of LMI as defined by the CRA regulations.\80\ In 
the agency's judgment, the process for determining and supporting the 
use of pro-rata credit is sufficiently robust and involved that banks 
are unlikely to spend resources piecing together small prorated amounts 
of CRA activities to meet their CRA evaluation measures.\81\ Other than 
the changes described above, the agency is adopting the quantification 
provisions as proposed.
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    \79\ See, e.g., Comment letter, National Community Reinvestment 
Coalition (NCRC), from J. Van Tol and J. Taylor, at 25 (Apr. 8, 
2020).
    \80\ These examples are reasonable proxies derived from the 
Interagency Q&As. See Interagency Q&As Sec.  __.12(g)(2)--1, 81 FR 
at 48526.
    \81\ The agency also made a clarifying change related to the 
calculation of the partial benefit and primary benefit associated 
with certain qualifying activities. Specifically, the final rule 
defines the terms partially and primarily as opposed to partially 
benefit and primarily benefit.
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    Qualifying activities value, general. Under the proposal, banks 
evaluated under the general performance standards would have determined 
their bank presumptive ratings and assessment area presumptive ratings 
by first calculating their qualifying activities values, which are the 
sum of the quantified dollar value of qualifying activities that 
receive credit after being adjusted by multipliers. The final rule 
makes several changes to the quantification of the qualifying 
activities included in banks' qualifying activities value and 
assessment area qualifying activities values. The final rule also 
clarifies that a bank's

[[Page 34755]]

qualifying activities value and assessment area qualifying activities 
values include the quantified dollar value of all qualifying activities 
originated, made, performed, or on the bank's balance sheet during the 
year and removes language related to the consideration of affiliate 
activities. Aside from these revisions and the changes described below 
with regard to multipliers, the agency is adopting the qualifying 
activities value provisions as proposed.
    Qualifying activities value, multipliers. Under the proposal, banks 
would have calculated their qualifying activities value and assessment 
area qualifying activities values (i.e., the numerator in the CRA 
evaluation measure) using the quantified dollar value of their 
qualifying activities, as adjusted for applicable multipliers. In the 
proposal, multipliers would have applied to several different types of 
qualifying activities including: (1) All CD loans, CD investments, and 
CD services undertaken in conjunction with CDFIs, except activities 
related to mortgage-backed securities; (2) all other CD investments, 
except for CD investments in mortgage-backed securities and municipal 
bonds; and (3) all other affordable housing-related CD loans. The 
purpose and design of the multipliers was to incentivize banks to 
engage in activities that were particularly valuable and important from 
a CRA perspective by giving banks additional value towards their CRA 
evaluation measures for these activities.
    The agency received comments that both opposed and supported the 
use of multipliers. Some community groups stated that the use of 
multipliers and the proposal's reliance on banks conducting their own 
analyses would lead to a decrease in CRA activity. Community groups 
also expressed their belief that multipliers would reduce the 
transparency regarding whether the dollar values used in CRA 
evaluations reflected the raw dollar amount or multiplied dollars, 
frustrating the purpose of the CRA and making it more challenging to 
determine whether banks were meeting community needs. These commenters 
suggested that the agency should apply less weight to activities that 
are less responsive, similar to how current evaluations weigh retail 
lending by volume. In the alternative, these commenters recommended 
that if multipliers are used, the agency should disallow them for banks 
that reduced the dollar amount of CD activity conducted in the current 
evaluation period compared to what the bank conducted in the prior 
evaluation period. These commenters also asserted that the agency would 
have to update and refine the multipliers frequently to respond to new 
circumstances and questions. Community group, industry, and public 
commenters also suggested a range of additional restrictions for use of 
a multiplier.\82\
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    \82\ Commenters also suggested recalibration of multipliers 
including a regular public feedback process.
---------------------------------------------------------------------------

    In contrast, certain industry commenters supported the concept of 
multipliers and stated that the agency should provide larger 
multipliers.\83\ Commenters also recommended providing multipliers for 
additional qualifying activities.\84\ Additionally, two industry 
commenters recommended counting the value of a donation or grant for at 
least one full evaluation period.
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    \83\ Recommendations included increasing multipliers for (1) 
capital investments in CDFIs and minority depository institutions, 
women's depository institutions, or low-income credit unions; (2) 
donations and grants; (3) CD services; and (4) other activities that 
support CDFIs and affordable-housing related CD loans.
    \84\ Commenters suggested adding additional multipliers for (1) 
small dollar loan programs; (2) mortgage loans to LMI borrowers; (3) 
other housing-related activities, such as first-time homebuyer 
loans; and (4) activities involving housing finance agencies.
---------------------------------------------------------------------------

    The agency agrees that certain activities are particularly valuable 
to LMI communities and other identified areas of need. Further, the 
dollar value of certain activities may not accurately reflect the 
positive impact that the activities provide to these communities. 
However, the agency also recognizes the potential for multipliers to 
result in banks to achieving certain levels of performance while 
conducting less dollar volume of CD activities, which could have a 
negative effect on those same communities.
    After considering the comments received in opposition and in 
support of the use of multipliers for certain qualifying activities, 
the OCC made several revisions to the treatment of multipliers in the 
final rule. First, to ensure that the use of multipliers does not 
reduce the level of CD activities that banks conduct, a bank is not 
eligible for multipliers until the quantified dollar values of its 
current period CD activities are approximately equal to the quantified 
dollar values of CD activities considered in its prior evaluation 
period. Second, in response to comments that branches in LMI census 
tracts and CD services were not appropriately valued in the proposal, 
the final rule adds retail loans generated by branches in LMI census 
tracts and CD services to the list of activities eligible for a two 
times multiplier. Third, to recognize the importance of minority 
depository institutions, women's depository institutions, or low-income 
credit unions to the communities they serve, the final rule includes a 
two times multiplier for qualifying activities involving those 
institutions. Fourth, the final rule includes an additional two times 
multiplier for qualifying activities in CRA deserts. The CRA desert 
multiplier applies to all qualifying activities conducted in a CRA 
desert and would be in addition to the multipliers that apply based on 
the type of qualifying activity or whether it was generated by a branch 
in an LMI census tract. A bank must request that the OCC confirm that 
an area is a CRA desert before receiving the CRA desert multiplier. The 
final rule includes a process for confirming that a geographic area is 
a CRA desert where multipliers would apply to banks' qualifying 
activities. Lastly, under the final rule, the agency may determine that 
because of the responsiveness, innovativeness, or complexity of certain 
qualifying activities eligible for a multiplier, the activities should 
receive an increased multiplier of up to four times their quantified 
dollar value. A bank may request a determination that an activity is 
eligible for an increased multiplier as part of the qualifying activity 
confirmation process or during a CRA evaluation. In addition to 
multipliers that may apply to these activities, the impact of these 
activities to the LMI community and other identified areas of need will 
be considered as part of performance context.
    One industry commenter expressed concern that, in their view, 
purchases of mortgage-backed securities (MBS) are effectively 
disfavored under the proposal because they do not receive the benefit 
of a multiplier. The commenter noted that MBS provide a significant 
source of liquidity to the mortgage market by enabling banks to make 
additional loans and that MBS are a tool used by state housing finance 
agencies to provide opportunities for LMI borrowers to purchase first 
homes. The agency agrees with the commenter--MBS play an important role 
in the mortgage market, particularly with respect to liquidity in the 
financial marketplace. The absence of a multiplier for MBS should not 
be interpreted as an expression of disfavor. However, in the context of 
CRA, the agency believes that other activities are more impactful to a 
bank's community and it is these activities that the agency sought to 
encourage by applying a multiplier. The final rule continues to balance 
these considerations by

[[Page 34756]]

including MBS as a qualifying activity but excluding them from the 
multiplier provisions. Other than the changes described above, the 
agency is adopting the multipliers as proposed.
    Qualifying activities value, calculation. Under the final rule, a 
bank would calculate its qualifying activities value and assessment 
area qualifying activities values by taking the sum of the quantified 
dollar value of all qualifying activities, adjusted by any applicable 
multiplier, as follows:
[GRAPHIC] [TIFF OMITTED] TR05JN20.000

    Conforming, clarifying, and technical changes. Other than the 
changes explained above, the agency also made conforming, clarifying, 
and technical changes throughout the final rule to reflect the changes 
to the qualifying activities-related definitions, qualifying activities 
criteria, CRA illustrative list and confirmation process, qualifying 
activities quantification, and qualifying activities value and to 
clarify these provisions.

B. Assessment Areas

    Overview. The CRA directs the agency to encourage banks to engage 
in CRA activities in areas where they draw resources by collecting 
deposits. When the regulations were last significantly revised in 1995, 
bank branches closely reflected the distribution of a bank's deposits 
and were the primary means of delivering products and services to bank 
customers. By focusing assessment areas on branches where deposits are 
collected, the current regulation helped to ensure that banks 
reinvested capital and credit in the communities from which they drew 
resources and avoided the primary policy concern of banks taking 
deposits from one community and lending that capital in another, 
perhaps more profitable or affluent, community.
    Further, the existing means of delineating assessment areas works 
well for most traditional banks that operate and collect deposits 
through their physical deposit-taking locations. The current system 
does not, however, account for the advent of internet banks and other 
banks that collect significant portions of their deposits outside of 
their current assessment areas. As a result, there is a gap between the 
way assessment areas are delineated under the current framework and 
where some banks receive the majority of their deposits.
    To close the gap, the proposal would have required banks that 
collect a large portion of their deposits outside their assessment 
areas to delineate additional, non-overlapping deposit-based assessment 
areas where they draw large amounts of deposits. The proposal also 
retained the current regulation's requirement that banks delineate 
assessment areas that include their physical deposit-taking locations 
(i.e., facility-based assessment areas), thus preserving the importance 
of branches. The inclusion of both facility-based and deposit-based 
assessment areas in the proposal reflected the agency's policy 
determination that banks should be required to meet the needs of their 
communities where they have branches, where they receive deposits, and 
where their customers are located.
    The agency grounded this policy decision on its understanding and 
observations of the industry and supervisory experience. The OCC relied 
primarily on its regulatory understanding and observations of the 
industry, and supervisory experience to inform its regulatory judgment 
because deposit data today is incomplete and not reported in a manner 
that provides depositors' locations. The current data limitations make 
it impossible to ascertain the volume of deposits from depositors' 
geographic locations. The agency's proposal with respect to assessment 
areas received many comments. The OCC's responses to these comments are 
set forth in the sections below.
    Facility-based assessment areas, delineation. The proposal would 
have required banks to delineate a facility-based assessment area 
anywhere it had its main office, a branch, or a non-branch deposit-
taking facility, as well as the surrounding areas where the bank had 
originated or purchased a substantial portion of its qualifying retail 
loans. These facility-based assessment areas would have ensured that 
CRA activity continued to have a local community focus where banks 
maintained a physical presence and conducted a substantial portion of 
their lending activity.
    Several industry and community group commenters stated that 
branches, particularly full-service ones, are important and should not 
be devalued in delineating assessment areas. Some industry commenters 
stated that the proposal's requirement that banks delineate a facility-
based assessment area around deposit-taking automated teller machines 
(ATM) is outdated because customers can now use their smartphones and 
other technologies to make deposits. Some of these commenters suggested 
that banks should instead have the option of delineating an assessment 
area around deposit-taking ATMs, but not be required to do so. 
Similarly, one advocacy group suggested that a bank should not be 
required to create a facility-based assessment area in an area with 
only deposit-taking ATMs and no branches if the deposits in that area 
are 2.5 percent or less of the bank's total retail domestic deposits.
    The OCC recognizes the importance of branches and believes that the 
proposal appropriately accounted for them in the assessment area 
context. In the final rule, the OCC retains the requirement to 
delineate facility-based assessment areas around banks' physical 
deposit-taking locations, including full-service branches. However, the 
agency agrees with concerns expressed by commenters about the 
delineation of assessment areas around deposit-taking ATMS. In the 
agency's examination experience, deposit-taking ATMs are often in the 
same area as a branch that would also require the delineation of an 
assessment area. If a deposit-taking ATM is the only means by which the 
bank is drawing deposits, it is likely to be a very minor amount of 
retail domestic deposits. This would make the assessment area 
delineation costly, with limited utility, because the CRA framework 
generally incentivizes banks to engage in CRA activities commensurate 
with deposits. Therefore, in the final rule, banks may, but are not 
required to, delineate assessment areas around deposit-taking ATMs.\85\
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    \85\ The agency acknowledges that the statute requires it to 
produce written evaluations that will continue to state the agency's 
CRA conclusions and contain facts and data supporting those 
conclusions for each metropolitan area and nonmetropolitan area of a 
state containing a deposit-taking facility, including deposit-taking 
ATMs, consistent with the CRA statute. 12 U.S.C. 2906(b)(1)(B), 
(d)(3)(A), (e)(1). The data collection and recordkeeping 
requirements of the final rule, as well as CRA evaluations, will 
provide examiners with enough facts and data upon which to draw a 
conclusion in the metropolitan areas containing a deposit-taking 
ATM, even if a bank chooses not to delineate an assessment area 
there.

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[[Page 34757]]

    Some industry commenters asked for clarity on how substantial 
portion of lending activity is defined. The final rule requires that 
banks' facility-based assessment areas include locations surrounding 
the deposit-taking facilities where they originate or purchase a 
substantial portion of their qualifying retail loans. This is based on 
the current framework's assessment area delineation requirements, and 
the agency intends to interpret this concept consistent with its 
current treatment. Further, the final rule retains the statement that a 
bank's assessment areas must not reflect illegal discrimination or 
arbitrarily exclude LMI census tracts, taking into account the bank's 
size and financial condition.
    Deposit-based assessment area, delineation. The proposal also would 
have required that banks that received more than 50 percent of their 
retail domestic deposits from outside of their facility-based 
assessment areas (50 percent threshold) delineate separate deposit-
based assessment areas in the smallest geographic area from which they 
received five percent or more of their retail domestic deposits (five 
percent threshold). These deposit-based assessment areas were intended 
to ensure the CRA regulation keeps pace with the evolution of modern 
banking (including the emergence of internet banks and other banks 
whose business models generate deposits from areas not tied to their 
physical location), consistent with the CRA's purpose to ensure that 
banks help meet credit needs where they collect deposits.
    Some industry commenters suggested that using a bank's 
concentration of deposits to determine where it delineated additional 
assessment areas would lead banks to engage in unsafe or unsound 
activities by requiring them to lend and invest in areas where they 
have no physical presence. Similarly, some expressed their view that 
banks may be at a disadvantage serving deposit-based assessment areas 
as compared to banks with physical locations in those areas because of 
a lack of knowledge of community needs and opportunities and that banks 
would not be able to serve their deposit-based assessment areas as well 
as their facility-based assessment areas. Industry commenters also 
stated that it would be burdensome to gain knowledge of deposit-based 
assessment areas' community needs and opportunities. Other industry 
commenters expressed their belief that banks may struggle to achieve 
the level of CD lending and investment needed to receive an outstanding 
or satisfactory in their deposit-based assessment areas, especially 
because the proposal required a bank to delineate deposit-based 
assessment areas at the smallest geographical areas from which it 
received five percent of its deposits.
    The agency carefully considered these comments and believes that 
the proposal's use of deposit-based assessment areas will not lead to 
unsafe or unsound activities for several reasons. First, as 
specifically stated in the proposal, the regulation would not require 
banks to engage in any activities that are inconsistent with safe and 
sound operations. To the contrary, the OCC anticipates that banks can 
meet the standards in the proposal with safe and sound loans, 
investments, and services on which the banks expect to make a profit. 
Second, once a deposit relationship is established, banks usually build 
upon the relationship to establish other customer relationships and 
offer other products to the depositors. The proposal's five percent 
threshold was high enough to ensure that a bank would only be required 
to delineate an assessment area if it received a significant amount of 
retail domestic deposits from that area, which would indicate that the 
bank had familiarity with the market because of relationships the bank 
is building with these depositors.
    However, the agency acknowledges that the lack of a physical 
presence in a bank's deposit-based assessment areas may present some 
difficulties, especially with respect to engaging in the level of CD 
activity required to receive a satisfactory or outstanding rating. To 
provide banks with additional flexibility, the final rule allows a bank 
to delineate its deposit-based assessment areas at any geographical 
level up to the state level, including at the metropolitan divisions, 
MSA, or non-MSA level, instead of requiring it to delineate at the 
smallest geographical area where it has a five percent concentration of 
its retail domestic deposits, provided the deposit-based assessment 
areas do not overlap facility-based assessment areas. This change will 
provide banks with additional flexibility to engage in safe and sound 
activities in a broader geographic area that includes the area from 
which the bank is receiving the five percent concentration of retail 
domestic deposits. Moreover, it will allow banks to receive assessment 
area credit for qualifying activities in more rural or underserved 
areas where banks generally do not gather deposits in a significant 
enough amount to warrant delineating additional deposit-based 
assessment areas, thereby providing additional incentives to engage in 
activities that benefit these areas.
    However, commenters suggested a variety of different methods for 
delineating assessment areas beyond physical bank locations based on 
their favored policy outcomes. Some commenters proposed lending-based 
assessment areas, while others proposed assessment areas determined by 
a combination of lending activity and the location of deposits. Other 
commenters argued that the proposal's assessment area framework should 
require a bank to delineate assessment areas where it engages in a 
significant amount of lending or where it receives a substantial 
portion of its deposits, even if more than 50 percent of its deposits 
come from inside its assessment areas. Commenters also suggested that 
assessment areas should capture the great majority of a bank's 
business, including lending activity, by potentially looking to the 
bank's marketing and advertising.
    In addition to proposing that the assessment area delineation 
requirements incorporate lending, commenters suggested that banks 
should delineate deposit-based assessment areas based on banks' market 
share of deposits in an area or the number of deposit accounts, instead 
of on the distribution of the volume of banks' own deposits. Others 
suggested that assessment areas should focus on where community credit 
needs are greatest.
    While some commenters asked for the assessment area reforms to 
apply to all banks, other commenters advocated for the method of 
delineating additional assessment areas to be tailored to the type of 
bank. Some industry commenters asked for the option of new assessment 
areas around banks' affiliates.
    This addition of deposit-based assessment areas was intended to 
further the purposes of the CRA statute and ensure that the CRA 
regulations keep pace with the changes the agency has observed in the 
banking industry in recent years. The OCC has observed an increase in 
the number of internet banks and the use of internet platforms for 
collecting deposits, making deposit-based assessment areas increasingly 
relevant. Additionally, by allowing banks to receive credit for 
qualifying activities outside of a bank's assessment areas and using a 
CRA evaluation measure based on a bank's total retail domestic deposits 
(not just the amount of retail domestic deposits in an assessment 
area), the proposal would

[[Page 34758]]

have incentivized banks to conduct CRA qualifying activities outside of 
their assessment areas.
    Further, instead of seeking to define non-traditional business 
models or to exempt or tailor deposit-based assessment area delineation 
requirements for different bank business models, the agency used a 
percentage of retail domestic deposits received from areas outside of a 
bank's facility-based assessment areas as a trigger for delineating 
deposit-based assessment areas. Specifically, the 50 percent threshold 
is designed to ensure that the regulation addresses those banks that 
receive a significant volume of retail domestic deposits from areas 
outside of their branch network. The 50 percent threshold provides 
flexibility to address the banking industry as it evolves (e.g., 
traditional banks may increase their reliance on technology to generate 
deposits in areas outside of their traditional branch footprint). In 
addition to being flexible enough to capture the evolving nature of 
banking, the proposed deposit-based assessment area delineation 
requirements also are adaptable to different business models.
    Finally, commenters voiced some concerns about the potential for 
negative incentives under a deposit-based assessment area framework. 
For example, commenters stated that the framework would have 
incentivized banks to chase large-dollar depositors. The OCC disagrees 
with this assertion. The agency's goal in adding deposit-based 
assessment areas was to incentivize banks to meet the needs of their 
customers that are located outside of their facility-based assessment 
areas.
    Some commenters suggested that the proposal's deposit-based 
assessment areas would exacerbate credit deserts. Commenters also 
stated that the deposit-based assessment area concept would focus CRA 
activities in population centers that are typically already well-served 
by banks, thereby reinforcing--not reducing--the CRA hot spot problem. 
Some of these commenters voiced concerns that deposit-based assessment 
areas (and therefore CRA hotspots) would be created in affluent areas 
instead of in LMI communities, rural areas, Indian country, and other 
underserved areas because of the concentration of deposits. Two 
industry commenters specifically noted the inclusion of custody banks 
and corporate deposits as reasons for the potential exacerbation of CRA 
hot spots. However, one community group stated that deposit-based 
assessment areas would mitigate CRA hot spots.\86\ Industry commenters 
also criticized the proposal's deposit-based assessment area framework 
as inflexible and suggested it would prevent banks from offering 
services to communities. They stated that the proposal would not result 
in additional banking services in rural areas, distressed areas, Indian 
country, and other CRA deserts because these areas would be highly 
unlikely to be deposit-based assessment areas as defined by the 
proposal.
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    \86\ See Enterprise Community Partners, Inc., from P. Almodovar, 
at XX (Apr. 20, 2020). (``The proposed rule offers greater 
flexibility to banks to designate state-wide non-metropolitan 
[assessment areas]. This could be particularly beneficial for rural 
areas and may mitigate some of the problems of CRA deserts.''
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    The agency agrees that it is important to encourage activities in 
credit deserts and minimize artificial CRA hot spots.\87\ But contrary 
to what commenters have stated, the agency believes that the framework 
of the proposal, including deposit-based assessment areas, would have 
incentivized bank activity in LMI census tracts and other identified 
areas of need, especially in response to the COVID-19 pandemic. The 
proposal would have mitigated artificial hot spots and direct CRA 
activity to areas from which banks receive deposits in three ways. 
First, the proposal would have given banks CRA credit for activities 
conducted in underserved and distressed areas, disaster areas, and 
Indian country anywhere in the country. Second, the agency notes that 
many commenters appear to have misunderstood the purpose of assessment 
areas and how the proposal would have worked. The proposal's assessment 
area framework, including deposit-based assessment areas, would have 
been a mechanism of ensuring banks are serving the communities in which 
they and their customers are located and not a device to limit where 
banks would have been able to receive CRA credit. Because the proposal 
required a bank that met the 50 percent threshold to delineate deposit-
based assessment areas, those banks would be evaluated on whether they 
conducted activities in other areas of the country outside of their 
facility-based assessment areas, where their depositors actually 
reside.\88\
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    \87\ The current CRA regulations allow artificial CRA hot spots 
to develop by only allowing banks to delineate assessment areas 
around their physical deposit-taking locations. Since banks 
generally only get CRA credit for activities around their physical 
deposit-taking locations, including their main office, and banks may 
locate their main office in certain geographies for reasons 
unrelated to their concentration of depositors in those geographies, 
artificial CRA hot spots are created.
    \88\ This is particularly the case for internet banks, which 
under the current framework only receive credit for CRA activities 
conducted around their main offices.
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    Third, because a bank's CRA evaluation measure in any given 
assessment area would have been a portion of the volume of retail 
domestic deposits a bank received from that area, artificial CRA hot 
spots would have been reduced. To the extent that the proposed 
framework focused banks' CRA obligations on areas where they receive a 
larger volume of deposits, this is consistent with CRA's statutory 
purpose to ensure banks meet the credit needs of the communities where 
they collect deposits. However, to further mitigate the concern that 
deposit-based assessment areas would create new CRA hot spots, the 
agency is amending the proposal to add flexibility. The final rule 
allows a bank to delineate its deposit-based assessment areas at any 
geographical area up to the state level.
    The agency recognizes that the proposal's method of delineating 
assessment areas did not, by itself, address the problem of CRA 
deserts. However, the agency does not believe further revisions to the 
proposed assessment area provisions are appropriate; instead, the 
agency agrees with commenters who suggested that additional incentives, 
such as multipliers, would encourage lending and investment in CRA 
deserts and have made this change in the final rule. Additionally, the 
agency notes that the proposal would have allowed banks to receive CRA 
credit in the bank's CRA evaluation measure for loans to LMI borrowers, 
regardless of location, and for CD activities conducted in distressed 
and underserved areas, regardless of whether those areas are in a 
bank's assessment area. Under the proposal, because a bank's CRA 
evaluation measure is based on its total retail domestic deposits, and 
not just its retail domestic deposits in its assessment areas, banks 
would be incentivized to conduct qualifying activities in areas outside 
of their assessment area, including in underserved and rural areas. The 
OCC does not believe the comments necessitated changes to the proposed 
assessment area provisions. Although the agency carefully considered 
commenters' concerns and suggestions, the final rule retains the 
deposit-based assessment area framework because it aligns more closely 
with the statutory purpose of the CRA.

[[Page 34759]]

    Thresholds for deposit-based assessment areas. The proposal 
included two thresholds for delineating deposit-based assessment areas: 
(1) The five percent threshold; and (2) the 50 percent threshold. Some 
community group and industry commenters argued that the proposal's 
deposit-based assessment areas framework was not based on data and, 
therefore, analysis of it was impossible. These commenters noted that 
it was difficult to assess whether the five and 50 percent thresholds 
are appropriate, given the limited nature of existing data. Commenters 
encouraged the agency to conduct further testing and to further 
consider potential consequences before calibrating the thresholds.
    With regard to the 50 percent threshold, some community group 
commenters remarked that the 50 percent threshold was too high and 
recommended eliminating it and simply delineating assessment areas 
where banks have five percent or more of deposits in a geographic area, 
such as an MSA. Other commenters suggested that the 50 percent 
threshold would have excluded areas where banks have only a small 
portion of their total retail domestic deposits but a large market 
share, such as rural counties and smaller cities. To ensure that more 
large banks have assessment areas in underserved communities, these 
commenters suggested lowering the thresholds for all banks or for large 
banks or using a market share threshold of five percent. Alternatively, 
other industry commenters thought that the 50 percent threshold was too 
low and should be higher to capture only true internet banks.
    Regarding the five percent threshold, commenters had a variety of 
opinions. Some industry commenters thought that the five percent 
threshold was too low and suggested it be increased, possibly to 15 
percent, to ensure that banks are only required to delineate deposit-
based assessment areas where they engage in a meaningful volume of 
activity. In contrast, some community group commenters believed that 
the threshold was too high and expressed the concern that few, if any 
MSAs, would meet the five percent threshold.
    The OCC acknowledges that there are limited data on deposits 
because the current reporting framework attributes deposits to a branch 
location,\89\ rather than the account holder's address, and uses a 
definition of deposits different than the proposed definition of 
deposits. Additionally, not all banks geocode deposits by customer 
address. Accordingly, the OCC was unable to estimate the number of 
deposit-based assessment areas that banks would be required to 
delineate under the proposed framework. However, despite these 
limitations, given the importance of the CRA and the agency's policy of 
ensuring that banks engage in CRA activities in communities where they 
receive deposits, consistent with the CRA statute, the OCC believes it 
is appropriate to rely on its experience, knowledge of the banking 
system, and supervisory judgment to establish initial thresholds. The 
thresholds in the final rule reflect the agency's supervisory 
experience. Specifically, the thresholds were set high enough to ensure 
that internet banks would have an obligation to engage in CRA 
activities in those communities where these banks would be familiar 
enough with the area, based on the banks' concentration of deposits, to 
engage in lending, investment, and other activities in a safe and sound 
manner.\90\ In the OCC's expert judgment, these thresholds are set at 
levels that would address the current use of technology in the banking 
industry and anticipate a future in which banks may increasingly 
leverage technology to generate deposits outside of their primary 
markets without overburdening banks with numerous small assessment 
areas. Furthermore, the proposed thresholds are sufficiently high to 
give the OCC confidence that, based on its supervisory experience and 
knowledge of the banking industry, traditional branch-based banks are 
unlikely to be required to designate additional deposit-based 
assessment areas in the near or medium term. Therefore, the final rule 
adopts the 50 percent and five percent thresholds as proposed.
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    \89\ The current framework relies on FDIC Summary of Deposits 
(SOD) data, which instruct banks to assign deposits to each office 
in a manner consistent with their existing internal record-keeping 
practices. FDIC SOD Instructions, June 30, 2019, retrieved Apr. 30, 
2020, available at https://www.fdic.gov/regulations/resources/call/sod-reporting-instructions.pdf.
    \90\ Some commenters stated that the deposit-based assessment 
areas would require banks to engage in activities in areas that they 
may be unfamiliar with and that this could create safety and 
soundness problems. A core component of the OCC's mission is to 
ensure that national banks and federal savings associations operate 
in a safe and sound manner. In the OCC's expert judgment, deposit-
based assessment areas will not result in unsafe or unsound 
activities. To receive a satisfactory or an outstanding CRA rating 
in a deposit-based assessment area under the final rule, banks are 
required to engage in qualifying activities that are commensurate 
with the volume of deposits they receive from that assessment area. 
This level of activity will not result in an outsized risk to 
capital. Moreover, given both the five and 50 percent thresholds, 
any deposit-based assessment area would include a sizeable portion 
of a bank's retail domestic deposits gathered from depositors 
located outside of the bank's facility-based assessment areas with 
whom the bank has preexisting relationships. These relationships 
will give the bank insight into the lending needs of the area.
---------------------------------------------------------------------------

    Some industry commenters voiced concern that the frequency of 
changes in deposit levels that may cause banks to be over the threshold 
one quarter and below the next, particularly with quarterly reporting, 
and requested clarity about how to handle shifting deposit levels. On a 
similar note, some community groups voiced that deposit-based 
assessment areas were not transparent because they would not know 
banks' delineated assessment areas until after CRA examinations are 
complete due to the changing nature of depositors' locations. One 
solution that was suggested by industry commenters was to require 
delineation only after deposit levels in an area remain above the 
thresholds for one or two years. For the reasons discussed above, the 
OCC concludes that the five percent threshold is appropriate, but it 
acknowledges that deposit levels fluctuate. Although the agency does 
not believe that quarterly fluctuations in retail domestic deposits 
should obviate a bank's obligations to a community, the agency believes 
it is appropriate to allow banks to change their assessment area 
delineations if their level of retail domestic deposits falls below 
five percent for a longer period of time. For this reason and others 
discussed below, the final rule will permit banks to change their 
assessment area delineations once a year.
    Outside of assessment area qualifying activities. The proposal 
included all qualifying activities conducted by a bank in the 
calculation of the bank's CRA evaluation measure. The proposal would 
not, however, have permitted a bank to receive a satisfactory or 
outstanding bank presumptive CRA rating unless the bank received a 
satisfactory or outstanding rating in a significant portion of its 
assessment areas that accounted for a significant amount of the bank's 
retail domestic deposits.
    Many community group and industry commenters expressed support for 
banks conducting qualifying activities outside of their assessment 
areas. However, one commenter questioned whether providing CRA credit 
for activities outside of assessment areas was contrary to legislative 
intent. Some commenters advocated for providing more weight or credit 
for activities conducted within a bank's assessment areas than 
activities outside of assessment areas. Others recommended requiring 
banks to first meet a level of performance or make reasonable efforts

[[Page 34760]]

to meet needs inside assessment areas before receiving credit for 
activities outside assessment areas. Some community group commenters 
proposed that instead of using deposit-based assessment areas, the OCC 
should consider allowing deposits received via the internet to be 
considered as being received from a cyber community rather than a 
geography and to allow the obligations based on these cyber deposits to 
be fulfilled by qualifying activities conducted elsewhere.
    The OCC recognizes the concerns associated with providing credit 
for outside-of-assessment area activities and believes that the 
proposal appropriately addresses these concerns. The CRA evaluation 
measure takes into account all of a bank's qualifying activities, 
including activities outside of a bank's assessment areas, while the 
assessment area CRA evaluation measure ensures that adequate qualifying 
activities are conducted within banks' assessment areas to satisfy 
local needs. By accounting for qualifying activities wherever they are 
conducted, the CRA evaluation measure functions similar to the 
suggestion for a cyber community. Further, while in many instances, 
assessment areas capture most of a bank's community, the bank may 
collect deposits from areas outside of assessment areas (both facility- 
and deposit-based). Thus, providing credit for activities outside of 
assessment areas allows banks to serve their entire community, 
resulting in the fulfillment--not the contravention--of the statutory 
purpose of the CRA. Accordingly, the OCC did not adopt any of the 
commenters' suggestions in the final rule.
    Changes to assessment area delineations. The proposal generally 
allowed a bank to change its assessment area delineations once during 
each evaluation period but specified that banks must not change their 
assessment area delineations within the annual period used to determine 
an assessment area CRA evaluation measure. Some commenters stated that 
the relative infrequency with which banks may update their assessment 
area delineations under the proposal had the effect of limiting growth 
and expansion. The OCC notes that the proposal accounted for expansion 
by also allowing banks to change their assessment area delineations 
pursuant to an approved application for a merger or consolidation. 
Nevertheless, to allow banks additional flexibility to account for 
other changes in branching strategies or depositor concentrations, the 
final rule permits a bank the option to change its assessment area 
delineations once a year.
    Size of assessment area delineations. The proposal would have 
required that banks' assessment areas be at least a whole county or 
county equivalent, unlike the current framework which provides that 
banks may include only the portion of a political subdivision, such as 
a county, that it reasonably can be expected to serve. Some commenters 
expressed concern that, under the proposal, assessment areas could be 
no smaller than a county or county equivalent because some counties are 
quite large and represent geographic areas that may be unreasonable for 
some banks to serve. Other commenters asked the OCC to clarify that, 
even with county-level assessment areas, banks would not be penalized 
for lending, investing, and conducting services in only a portion of a 
county as long as the banks' activities did not reflect illegal 
discrimination or the exclusion of LMI areas. Some commenters expressed 
concerns about the burden of collecting data at the census tract level 
and asked that assessment areas be defined at the county level.
    The OCC acknowledges commenters' concerns regarding the minimum 
size of assessment areas. The proposal set the county or county 
equivalent level as the minimum size of an assessment area to improve 
transparency and improve the ability to compare CRA performance across 
banks. Further, based upon the OCC's observations and experience, 
permitting banks to delineate assessment areas below the county level 
has produced some anomalous results where banks delineate just a few 
relatively small census tracts as their branches as an assessment area 
when their lending activity indicates that they can and do serve larger 
geographic areas. The agency's intent was not to impose restrictions on 
the size of assessment areas that would negatively impact banks. If a 
bank delineated its assessment area at the county level but was unable 
to effectively serve the entire county the agency would consider the 
bank's presence in the market and its competitive position as part of 
performance context in determining the bank's assigned rating. After 
considering the benefits of limiting assessment area delineations to 
the county or county equivalent level and the ability to account for 
commenters' concerns through performance context, the agency is 
adopting the assessment area size limitation as proposed.
    Other commenters remarked that by abandoning the concept of the 
broader statewide or regional area that serves a bank's assessment area 
as set forth in the current regulation, a bank could no longer obtain 
assessment area-level CRA credit for CD projects in that broader area. 
The OCC appreciated this concern when drafting the proposal and 
provided a method for determining activity location that allows a bank 
to allocate credit for CD activities that serve a larger area to 
assessment areas within the larger area served by the activity. 
Specifically, the final rule allows banks to allocate credit for CD 
activities: (1) To an assessment area within a broader area served by 
an activity if the bank can document that the services or funding it 
provided was allocated to a particular project that is in or that 
serves the assessment area; or (2) across all of the areas served by 
the activity, including any assessment areas if that cannot be 
documented.\91\ The OCC also recognized that, for deposit-based 
assessment areas, banks should have additional flexibility to receive 
credit for retail and CD activities that serve a larger area than the 
smallest geographic area where the bank gathers at least five percent 
of its retail domestic deposits. Accordingly, the final rule will 
provide banks with the option of delineating deposit-based assessment 
areas at the state level. For these reasons, the OCC concludes that it 
is not necessary to retain credit for qualifying activities in the 
broader statewide or regional area that contains a bank's assessment 
area.
---------------------------------------------------------------------------

    \91\ As part of its ongoing administration of the rule, the OCC 
plans to issue guidance, as needed, to explain or clarify the method 
for the allocation process described in the final rule.
---------------------------------------------------------------------------

    Non-branch deposit-taking facility. The proposal defined non-branch 
deposit-taking facility as a banking facility other than a branch owned 
or operated by, or operated exclusively for, the bank that is 
authorized to take deposits that is located in any state or territory 
of the United States of America. Some industry commenters requested 
that the OCC clarify what constitutes a non-branch deposit-taking 
facility. These commenters proposed a variety of potential definitions 
for the term. Some advocated limiting the term to cover facilities that 
are authorized to take consumer deposits, rather than all deposits 
generally. Others requested eliminating the requirement that the 
facility be automated and unstaffed because that requirement creates 
confusion as to whether a piece of equipment, such as a banker's mobile 
phone or a computer tablet used by a customer to make a deposit online, 
would be construed as creating a non-branch deposit-taking facility.

[[Page 34761]]

    Following consideration of these comments, the OCC revised the 
definition of non-branch deposit-taking facility in the final rule to 
clarify that these facilities must be available to the general public. 
As such, facilities that are for personal use or are located in an area 
that is not available to the general public do not meet the definition 
of non-branch deposit-taking facility. The definition of non-branch 
deposit-taking facility is otherwise adopted as proposed. The agency is 
also clarifying that the definition of non-branch deposit-taking 
facility as proposed and in the final rule does not include the terms 
automated or unstaffed.\92\
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    \92\ In the final rule, the term ATM also does not include a 
requirement that the facility be unstaffed.
---------------------------------------------------------------------------

    Finally, one community group commenter requested that the OCC 
clarify that the term maintains means that the bank has a permanent or 
semi-permanent branch or non-branch deposit-taking facility at the 
physical location. The OCC will address questions of this sort, about 
the particular application of the rule to a specific set of factual 
circumstances, through interpretation and guidance as part of the 
agency's ongoing administration of the rule, as is done today. Other 
than the changes described above, the OCC is adopting the definition of 
non-branch deposit-taking facility as proposed.
    Retail domestic deposits. The proposal would have defined retail 
domestic deposits used for purposes of delineating assessment areas and 
in the general performance standards as the total domestic deposits of 
individuals, partnerships, and corporations, as reported on Schedule 
RC-E, item 1, of the Call Report, excluding brokered deposits.\93\ This 
Call Report item excludes municipal deposits and deposits from foreign 
governments or entities.
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    \93\ In response to a comment requesting clarification, the OCC 
notes that the final rule's exclusion of brokered deposits from the 
definition of retail domestic deposits does not reflect a value 
judgment regarding brokered deposits. As stated in the proposed 
rule, brokered deposits were excluded from the definition of retail 
domestic deposits because they are not associated with any 
individual or community.
---------------------------------------------------------------------------

    Commenters suggested several changes to the proposed definition of 
retail domestic deposits. Community group commenters argued that retail 
domestic deposits should not exclude municipal deposits because they 
are a form of community wealth (derived from taxes and fees on 
residents) and reflect the resources of actual and potential bank 
customers.
    Industry commenters suggested that retail domestic deposits should 
be defined as deposits intended primarily for personal, household, or 
family use rather than as proposed, which would have included deposits 
of individuals, partnerships, and corporations. Industry commenters 
argued that their suggested definition would more accurately represent 
a bank's capacity to engage in qualifying activities for the benefit of 
individuals, small businesses, and small farms.\94\ Other industry 
commenters suggested that, in addition to brokered deposits, other 
types of deposits should be excluded from the rules' definition of 
retail domestic deposits including corporate deposits,\95\ sweep 
deposits,\96\ non-brokered reciprocal deposits,\97\ health savings 
accounts (HSAs),\98\ listed deposits,\99\ and prepaid card 
funding.\100\
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    \94\ These commenters noted that their suggested definition, 
which is captured on Call Report Schedule RC-E, items 6a, 6b, 7a(1), 
and 7b(1), is currently not required to be reported for banks with 
$1 billion or less in assets. As a result, these commenters suggest 
that if their definition is adopted, the rule should exempt banks 
with $1 billion or less in assets from the general performance 
standards and the delineation of deposit-based assessment areas.
    \95\ Commenters argued that these deposits should be excluded 
because they fluctuate greatly and unpredictably.
    \96\ Commenters urged the exclusion of sweep deposits (that are 
not considered brokered) from the definition of retail domestic 
deposits because they are not associated with particular 
communities. Commenters noted that sweep deposits are from 
transactions that move cash overnight from a brokerage account at a 
broker-dealer into an FDIC insured deposit account.
    \97\ Commenters suggested the exclusion of non-brokered 
reciprocal deposits because the bank receiving these deposits does 
not know the identity or location of the underlying beneficial 
owners and banks that receive non-brokered reciprocal deposits 
ordinarily have no relationship with the individual or community 
from which a reciprocal deposit originates. Commenters also noted 
that community banks are ill-equipped to bear such long-distance 
compliance burdens and that these deposits may trigger the creation 
of additional assessment areas for minority depository institution 
and CDFIs in high income geographies that are in less need of CRA 
activity.
    \98\ Commenters argued that HSA account deposits should be 
excluded because banks do not have control over the geographic 
distribution of HSA deposits. HSAs are owned by account holders, and 
banks do not necessarily maintain a direct relationship with these 
account holders.
    \99\ Commenters suggested excluding listed deposits because the 
associated depositors are not necessarily tied to the community in 
which the bank maintains a market footprint. These depositors tend 
to use listing services to find the best rate available for a given 
deposit type and, in the case of a certificate of deposit, term.
    \100\ Commenters urged the exclusion of prepaid card funding 
because prepaid cards do not have an address associated with the 
purchaser or end user.
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    The OCC has carefully considered the comments received and adopted 
a few suggested changes. The agency determined that using deposits 
intended primarily for personal, household, or family use (RC-E, items 
6a, 6b, 7a(1), 7b(1)) would be too narrow and underrepresents a bank's 
capacity to engage in qualifying activities. Further, there are no 
unique features of listed deposits that justify their exclusion from 
the definition of retail domestic deposits.\101\ Similarly, the OCC 
concludes that permitting a full exclusion of non-brokered reciprocal 
deposits, as suggested by commenters, would not be adequately tailored 
to address the concerns raised.\102\ Instead, the final rule requires 
that any deposit amount that is sent to another institution through a 
reciprocal arrangement must be included in the sending bank's measure 
of retail domestic deposits and assigned to the appropriate assessment 
area. Reciprocal deposits received from another bank do not need to be 
included in the calculation of a bank's retail domestic deposits. This 
treatment addresses commenters' concerns and avoids any double counting 
of deposits.
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    \101\ Listing services are, in effect, a form of advertising, 
just as a depositor might find information on a bank's own website 
or a website that makes a bank's deposit rates available to the 
public without the bank's authorization. Many factors distinguish 
deposits received via a listing service from brokered deposits 
including: (1) The listing service does not place the deposits with 
a bank; (2) the listing service is compensated solely by 
subscription fees, which are paid either by the subscriber or by the 
banks whose rates are being listed; (3) if the fees are paid by the 
bank, the fee is not a function of the estimated dollar amount of 
the deposits raised from the listing; and (4) the listing service 
may not steer funds to a specific institution. Given these 
differences from brokered deposits, listed deposits that are 
included in Call Report Schedule RC-E, line 1 are included in the 
definition of retail domestic deposits.
    \102\ In a reciprocal deposit network, banks act as agents 
placing deposits at other banks in the network. The amounts sent out 
by a bank exactly match the amounts received from the bank. Within 
the network, each bank that directly accepts a deposit from a 
depositor can obtain the address of the depositor whose deposit is 
parceled out to other banks. The bank that receives deposits 
directly from depositors also knows the total amount of those 
deposits (i.e., the portion retained by the bank, and the portion 
that the other receiving banks have received). In contrast, the 
banks that receive the deposits from another bank in a network have 
no ongoing relationship with the depositor (or the community where 
that depositor lives).
---------------------------------------------------------------------------

    Consistent with the proposal, the final rule defines retail 
domestic deposits as the deposits of individuals, partnerships, and 
corporations reported in the Call Report as RC-E, item 1. In addition, 
the final rule clarifies that retail domestic deposits include sent, 
but not received, non-brokered reciprocal deposits, listed deposits, 
and municipal deposits. The final rule states that banks may exclude 
prepaid card funding, HSA deposits, sweep deposits, and brokered 
deposits from their retail domestic deposits. In the OCC's view, the 
modified definition of retail domestic deposits better reflects the

[[Page 34762]]

capacity of a bank and the resources it could appropriately use to 
engage in CRA activities. The agency adopts the proposed definition of 
retail domestic deposits with the changes described herein.
    Finally, two industry commenters asked how the FDIC's brokered 
deposit rulemaking could impact the proposed definition of retail 
domestic deposits for CRA purposes. Because the FDIC has not yet 
finalized its rulemaking on brokered deposits,\103\ the OCC determines 
that it is not appropriate to make changes to the final rule based on 
potential future changes. The agency will continue to monitor and 
consider any impacts the FDIC's changes may have on the CRA regulations 
and provide additional guidance or propose changes to its rules, as 
needed.
---------------------------------------------------------------------------

    \103\ See Unsafe and Unsound Banking Practices: Brokered 
Deposits Restrictions, 85 FR 7453 (Feb. 10, 2020).
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    Other issues raised. Commenters raised questions about specific 
issues, such as how geographic units should be clustered to receive 
credit for the deposit-based assessment area thresholds, how brokered 
deposits should be calculated, and what measures the agency will put in 
place to ensure accurate reporting of deposit-based assessment area 
delineations. The OCC plans to issue guidance to address these more 
specific issues relating to the application of the rule, as 
appropriate.
    Conforming changes. The agency made conforming changes throughout 
the final rule to reflect the changes related to the assessment area 
provisions and related definitions but is otherwise adopting these 
provisions as proposed.
C. Objective Method To Measure CRA Performance
    Overview. As described above, the current CRA regulatory framework 
provides a framework for examiners to use their judgment in assessing 
performance criteria and assigning ratings. Under the current 
framework, ratings may not always correlate with the amount or value of 
CRA activity that banks conduct and may vary from bank to bank, even if 
those banks engaged in a similar volume of comparable activities.
    Without a clear method to quantify their observations, examiners 
have developed a variety of more objective approaches that they use to 
assess performance and assign ratings. While these processes vary, they 
all consider two attributes of a bank's CRA activity--the distribution 
and the impact of CRA activity. When measuring distributions today, 
examiners evaluate the geographic and borrower distribution of a bank's 
retail lending activity using retail lending distribution tests. When 
measuring impact today, examiners measure and assess the dollar value 
of a bank's CD lending and investment and the level of retail lending 
activities. Examiners also consider qualitative factors that are more 
difficult to quantify such as retail banking services and CD services 
and the responsiveness, innovativeness, and complexity of a bank's 
activities.
    The proposal built upon current practices to provide more objective 
and consistent means of evaluating the distribution of the number of 
qualifying activities (e.g., units) and the impact (e.g., dollar value) 
of the activities. The proposal did so in three ways. First, the 
proposal would have included almost the same tests used for evaluating 
retail loan distribution under the current framework but would have 
added clarity by describing the tests and including objective 
thresholds. Second, the proposal would have assessed the impact of all 
of a bank's CRA's activities, as opposed to focusing on CD loans and 
investments, as is done under the current framework. Assessing all 
activities would give a more complete picture of the impact or dollar 
value of a bank's CRA activity. Finally, the proposal would have 
provided a mechanism for consistent consideration of the more 
qualitative attributes of CRA activity by including a set of regulatory 
factors for evaluating performance context.
    Performance standards in general. The proposal set out general 
performance standards to provide a more objective method of assessing 
CRA performance. These general performance standards would have 
evaluated banks' CRA activities in an assessment area by assessing: (1) 
The distribution of the number of qualifying retail loans to LMI 
individuals, CRA-eligible farms, CRA-eligible businesses, and LMI 
geographies in a community as measured through the retail lending 
distribution tests; \104\ (2) whether the quantified dollar value of a 
bank's qualifying activities met specific ratings thresholds; \105\ and 
(3) whether the bank engaged in a specified minimum level of CD lending 
and investments. The bank performance standards would have evaluated 
banks' CRA activities throughout the country by assessing: (1) The 
rating a bank received in a significant portion of its assessment areas 
and in assessment areas representing a significant portion of its 
deposits; (2) the impact of a bank's qualifying activities; and (3) 
whether the bank engaged in a minimum level of CD lending and 
investments.
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    \104\ The distribution component would have been the same method 
the agency uses to assess retail lending today. The only change in 
the proposal was based on ideas shared with the agencies by the 
Board. These ideas provide a quantifiable method for determining if 
a bank's portion of major retail lending activities targeted to LMI 
individuals or in LMI areas is sufficient to achieve a rating of 
satisfactory or outstanding. Specifically, the proposal would have 
established thresholds for the demographic and peer comparators 
based on a review of historical CRA PEs.
    \105\ The impact component responds to stakeholder comments 
about the need for more lending, investment, and services in banks' 
assessment areas and in other identified areas of need. It would 
have provided a transparent means of evaluating the impact of a 
bank's qualifying activities by establishing empirical benchmarks 
for assessing the dollar value of qualifying activities that, if set 
high enough, could incentivize more CRA activities. These benchmarks 
would have been tied to a bank's level of retail domestic deposits, 
consistent with the CRA statute's purpose of encouraging banks to 
engage in activities in areas where they draw resources by taking 
deposits.
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    The proposal also would have retained the qualitative 
considerations that apply under the current framework for important 
factors that are difficult to quantify, such as responsiveness, 
complexity, and innovativeness. The proposal would have introduced 
standards for the consideration of performance context to enable the 
OCC to recognize and account for specific facts and circumstances 
relating to a bank's CRA capacity and opportunities in a transparent 
manner.
    The proposal allowed small banks to opt into the general 
performance standards; those small banks that chose not to opt in would 
be evaluated under small bank performance standards consistent with the 
current regulations.\106\ The proposal also continued to give all banks 
the option to be evaluated under a strategic plan. Unlike the current 
framework, the proposal did not include separate performance standards 
for intermediate small banks or for wholesale or limited purpose banks.
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    \106\ As proposed, a small bank was a bank with assets of $500 
million or less in each of the previous four calendar quarters. Like 
the current asset-size thresholds, the $500 million threshold would 
have been adjusted annually based on changes in the Consumer Price 
Index for Urban Wage Earners and Clerical Workers. See CPI For Urban 
Wage Earners And Clerical Workers, Social Security Administration, 
available at https://www.ssa.gov/OACT/STATS/cpiw.html.
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    Although many commenters agreed that the current CRA framework 
should be reformed, they disagreed with specific elements of the 
proposal or had alternative suggestions for specific reforms. These 
differences simply reflect different policy preferences. For

[[Page 34763]]

example, arguing that the CRA evaluation measure lacked empirical 
support and would cause a decrease in CRA activities, some commenters 
recommended taking an approach that would retain the subjective 
approach of the current framework.\107\ These commenters do not object 
to measuring the dollar value of activities per se; in fact, they 
support retaining the current framework, which measures the dollar 
value of CD activities.\108\ In essence, the commenters disagree with 
the agency that the dollar value of retail lending activities should be 
measured.
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    \107\ See Comment letter, NCRC, from J. Van Tol and J. Taylor, 
at 9 (Apr. 8, 2020) (``NCRC supports reform, but NCRC believes that 
incremental reforms building on the existing regulations would more 
effectively and transparently clarify what counts, achieve 
assessment area reform (where activity counts) and establish how 
those activities count in determining bank CRA ratings.'')
    \108\ Id., at 80 (Apr. 8, 2020) (``Instead of using a ratio 
measure as the presumptive rating, a ratio such as CD financing 
divided by deposits (or assets or Tier 1 capital) could continue to 
be used on a [CD] test as one measure on that test, not the 
determinative measure.''). The recommendation of retaining the 
current assessment of CD activities, which measure the dollar value 
of these activities, shows commenters do not object to measuring the 
dollar value of activities.
---------------------------------------------------------------------------

    After a careful review of these comments, the OCC has determined 
that the proposal's objective approach is more effective in achieving 
the purposes of the CRA statute: Incenting more CRA dollars into LMI 
communities and other identified areas of need. Commenters generally 
seek to retain as much subjectivity in the CRA regulations as possible 
on the premise that assessing CRA performance should largely involve 
judging difficult qualitative factors related to a bank's activities. 
The OCC disagrees with this policy course. While subjectivity may be 
viewed by some as an effective mechanism for enabling advocacy, a more 
subjective and qualitative framework is limited in its ability to 
encourage banks to invest more money into communities, which is 
ultimately the goal of the CRA.
    Moreover, the commenters' assertions incorrectly suggest that the 
CRA evaluation measure is the proposal's only method of evaluating 
banks' CRA performance and, therefore, misunderstands how the proposal 
operates. As the agencies noted in the preamble to the proposal, like 
the current framework, the proposal includes multiple measures that 
operate together to assess both qualitative and quantitative aspects of 
a bank's performance. Other facets of the proposed framework--such as 
multipliers, CD minimums, and the quantification of LMI branches--
operate in conjunction with the CRA evaluation measure to ensure that 
the framework continues to incentivize important (and at times smaller 
dollar value) activities that are presently accounted for and 
incentivized through qualitative evaluations. Further, the agency 
believes that providing credit in the CRA evaluation measure for CD 
services and branch distributions, while evaluating other retail 
banking services and alternative delivery systems through the 
application of performance context, obviates the need for a separate 
test for services in the final rule.
    With respect to commenters' assertions that the proposed general 
performance standards would decrease the level of CRA spending, the 
agency notes that one analysis provided to support some of these 
assertions was flawed.\109\ As noted in the preamble to the proposal, 
the CRA evaluation measure and associated benchmarks were based on the 
agencies' analysis of the available data about banks' on-balance-sheet 
qualifying activities. The preamble to the NPR explained the data used 
for this analysis, the method of analysis, and the limitations of 
existing data. It also explained that over time the data collection, 
recordkeeping, and reporting requirements in the proposal would remedy 
limits in the current data collection and allow the agencies to fine-
tune the CRA evaluation measure benchmarks, if appropriate. The 
benchmarks were set to provide clarity and objectivity about the 
minimum level of activities that would result in a rating of 
satisfactory. The OCC believes that its method of estimating the CRA 
evaluation measure benchmarks for corresponding rating categories was 
economically sound and resulted in reasonable estimations of the 
benchmarks. In addition to these benchmarks, the proposal included 
other design features to incentivize banks to engage in a higher volume 
and variety of activities, and in more areas, to benefit the 
communities they serve.
---------------------------------------------------------------------------

    \109\ One commenter's assertion that the proposal will cause a 
loss of lending activity is based on an analysis developed more than 
a year in advance of the issuance of the NPR and is based on a 
misperception. Specifically, the analysis was based on a Federal 
Reserve Bank of Philadelphia study published in June 2017, which 
described what could happen in Philadelphia if activities in certain 
areas became ineligible for CRA credit. The proposal, however, does 
not eliminate eligibility for activities in any geographic areas. In 
contrast, the proposal would require certain banks to create 
additional assessment areas, expanding the geographic areas where 
the agencies would evaluate banks' CRA performance.
---------------------------------------------------------------------------

    In addition to general policy differences about the direction of 
reform and critiques about data, some commenters disagreed with 
specific details. For example, some commenters expressed support for 
keeping both the current small bank and intermediate small bank size 
categories in the final rule and allowing both categories of banks to 
be evaluated using the current performance standards.\110\ Some of 
these commenters disagreed with the proposed small bank definition. 
Some industry commenters advocated for raising the asset size for small 
banks.\111\ Commenters noted that when the small and intermediate small 
bank thresholds were established in 2005, 70.8 percent of banks 
qualified for the small bank test and 21.8 percent qualified for the 
intermediate small bank test. Applying those same percentages to the 
distribution of bank asset sizes today, these commenters suggested that 
eligibility for the small bank test should be capped at approximately 
$500 million, and eligibility for the intermediate small bank test 
should be capped at approximately $2.5 billion.\112\ Another community 
group argued that small banks should be required rather than permitted 
to opt in to the proposal's general performance standards.\113\
---------------------------------------------------------------------------

    \110\ One community group advocated for applying the small bank 
exemption to mission-focused banks, including CDFIs, regardless of 
asset size.
    \111\ Specifically, some commenters recommended raising the 
proposal's small bank threshold to the current small bank threshold 
applicable to intermediate small banks of $1.305 billion; other 
commenters suggested other thresholds, both higher and lower than 
$500 million. These commenters generally felt that, given the extent 
of the regulatory changes applicable to banks evaluated under the 
general performance standards, the $500 million threshold provided 
an insufficient accommodation for community banks, many of which 
have more than $500 million in assets.
    \112\ Other commenters suggested keeping the intermediate small 
bank category and raising the intermediate small bank threshold to 
various levels including $5 billion or $10 billion.
    \113\ The commenter argued that the $500 million small bank 
threshold would result in classifying some banks that are currently 
intermediate small banks as small banks and, because the small bank 
performance standards do not have a CD test, those banks would no 
longer be required to engage in CD activities. The agency notes that 
although the commenter argued against the proposal's objective 
approach and for the subjective evaluation methods of the current 
framework, community group commenters also argued that that if the 
agencies adopted the proposed objective approach, all banks should 
be subject to the approach. This all-or-nothing approach to reform 
would conflict with the community group's stated opinions about the 
superiority of the current subjective framework and the need for an 
incremental approach to reform. Another commenter recommended that 
the OCC apply the general performance standard to small banks if 
small banks perform as well as larger banks.
---------------------------------------------------------------------------

    The OCC agrees with commenters who stated that the current small 
bank asset size threshold does not reflect the current state of the 
banking industry and with the commenters who recommended retaining the 
current

[[Page 34764]]

intermediate small category. As a result, the final rule preserves the 
current categorization of banks: Small, intermediate small, and large 
banks, while making some adjustments to the current thresholds and 
terminology. The final rule includes a $600 million threshold for small 
banks, which is consistent with other government standards for small 
financial institutions.\114\ Although some small banks previously 
classified as intermediate small banks will no longer have express CD 
requirements in the final rule, CD lending activities conducted by any 
small bank will continue to be evaluated as a part of that bank's CRA 
evaluation.\115\ The final rule retains the intermediate small 
category, renaming it intermediate banks, and adopts the commenters' 
proposed ceiling of up to $2.5 billion, based on commenters' analysis 
of where the intermediate small bank threshold would have to be set to 
capture the same portion of the industry as it captured in 2005. In the 
final rule, banks with greater than $2.5 billion in assets are subject 
to the general performance standards and banks with less than $2.5 
billion in assets can opt in to the general performance standards.\116\
---------------------------------------------------------------------------

    \114\ For example, the SBA defines a small bank one with less 
than $600 million in assets.
    \115\ The OCC has clarified this by adding retail and community 
development to describe the type of CRA activities that the agency 
will evaluate.
    \116\ The OCC also made several other changes to the definition 
of small banks and to the opt in process in the final rule. 
Specifically, one commenter recommended that the agencies use an 
eight-quarter lookback to determine if a bank is a small bank. The 
OCC recognizes the importance of certainty regarding the bank size 
category and applicable CRA requirements but does not believe that 
allowing banks to be above the next highest size threshold for two 
years before becoming subject to the applicable requirements is 
appropriate. Therefore, the final rule classifies banks as small 
banks or intermediate banks if their assets are within the 
applicable threshold for four of the previous five quarters. The 
final rule does, however, provide an intermediate, wholesale, or 
limited purpose bank that ceases to meet the definition of an 
intermediate, wholesale, or limited purpose bank two years to comply 
with the general performance standards-related provisions of the 
final rule.
    Commenters supported limiting the number of times a small bank 
that opts in to the general performance standards can opt out again 
or even eliminating the one-time opt out option. The agency is 
retaining the one-time opt out option as proposed in order to 
preserve some flexibility for community banks. Some commenters 
stated that agencies should not require that small banks opt in or 
opt out of the general performance standard six months prior to the 
start of its next evaluation period as provided in the proposal. 
Moreover, the agency agrees that the requirement to opt-in or opt-
out at least six months before the start of its next evaluation 
cycle is not needed and has removed it from the final rule.
---------------------------------------------------------------------------

    Both small banks and intermediate banks will also be subject to the 
final rule's clarified qualifying activities criteria and the 
assessment area provisions, including the requirement to delineate a 
deposit-based assessment area if a bank receives more than 50 percent 
of its deposits from areas outside of its facility-based assessment 
areas.\117\ In this way, the final rule's approach will provide 
additional flexibility to smaller institutions without sacrificing the 
OCC's goal of achieving transformational CRA reform that provides 
clarity and encourages banks to conduct more CRA qualifying activities. 
In particular, because larger banks engage in a larger share of the CRA 
activities today and hold much of the nation's deposits, allowing the 
opt-in for smaller institutions and requiring larger banks to meet the 
new requirements will ensure that, on the whole, the banking industry 
is incentivized to engage in more qualifying activities. The OCC also 
no longer uses the term ``bank-level'' to refer to bank ratings or 
components of bank performance under the performance standards and make 
other conforming changes throughout the final rule.
---------------------------------------------------------------------------

    \117\ Small and intermediate banks would be subject to the same 
performance standards as they are subject to today, including the 
same retail lending distribution tests.
---------------------------------------------------------------------------

    Some industry commenters recommended that the agencies retain the 
separate performance standards for wholesale and limited purpose banks 
that are in the current regulation because those banks engage in no or 
limited retail activity. Some of these commenters noted that some 
elements of the general performance standards, such as the retail 
lending distribution tests and the branch distribution measure, would 
disadvantage wholesale and limited purpose banks and recommended 
retaining the current treatment of these banks. Under the proposal, 
these banks would have been evaluated under the general performance 
standards or a strategic plan. The OCC agrees with these commenters and 
believes that the current performance standards applicable to wholesale 
and limited purpose banks are well suited to evaluating those banks. 
Therefore, in the final rule, wholesale or limited purpose banks have 
the same definition and are subject to the same CD test as under the 
current regulations.\118\
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    \118\ Other community group and industry commenters suggested a 
number of alternative performance standards and frameworks 
including, for instance, suggestions that the general performance 
standards could be optional for all banks or could apply initially 
to only a small number of large banks. Industry commenters suggested 
that the agencies add tailored standards for certain banks, such as 
CDFIs and military banks as well as specific requirements associated 
with lending outside of a bank's assessment areas. The agency 
considered these comments and, as explained in the preamble to the 
proposal, have considered various alternatives to evaluating CRA 
performance for banks other than small banks. The agency is making 
various revisions to the proposed rule, including adding 
intermediate banks and making various changes to the performance 
standards as explained below. The agency believes the performance 
standards set out in the final rule will provide greater regulatory 
consistency and certainty in evaluating banks' CRA performance.
---------------------------------------------------------------------------

    The agency is also clarifying that the proposal did not eliminate 
consideration of services accounted for under the current framework's 
service test. Instead, the final rule continues to give qualitative 
consideration to services as commenters suggested through the use of 
performance context, and the final rule quantifies those service 
activities that are readily quantifiable.\119\ Compared to the current 
service test, the proposed approach, which is adopted in the final 
rules, better achieves the OCC's goals of increasing objectivity while 
also giving due consideration to the qualitative nature of service 
activities.
---------------------------------------------------------------------------

    \119\ Commenters that urged retention of the current method of 
evaluating services argued that services should be considered 
qualitatively and that quantifying the value of services would 
minimize consideration given to services, which they believe would 
result in LMI communities being more dependent on fringe non-bank 
services. For example, these commenters oppose quantifying and 
adding the value of retail services to the CRA evaluation measure 
because they argue that such an objective approach would not give 
enough consideration to LMI deposit accounts, which are usually 
small. These commenters suggested a number of methods for continuing 
to evaluate services qualitatively, but more consistently. For 
example, these commenters suggested the use of standardized tables 
to present information such as service hours, giving qualitative 
factors 20 percent to 30 percent of the service test score, and 
providing guidelines for comparing pricing for LMI and non-LMI 
customers within and across banks.
---------------------------------------------------------------------------

    General performance standards. Under the proposal, a bank evaluated 
under the general performance standards would have received a 
presumptive assessment area rating based on: (1) Its performance on the 
geographic and borrower lending distribution tests for each of its 
major retail lending product lines with at least 20 loans in that 
assessment area; (2) the average of its annual assessment area CRA 
evaluation measures; and (3) the quantified value of its CD loans and 
investments in that assessment area. A bank evaluated under the general 
performance standards would be assigned a bank rating based on: (1) Its 
rating in a significant portion of its assessment areas and in 
assessment areas that represent a significant portion of its deposits; 
(2) the average of its annual CRA evaluation measures; and

[[Page 34765]]

(3) the quantified value of its total CD loans and investments.
i. Assessing a Bank's Distribution of the Number of Retail Loans
    As proposed, a major retail lending product line would have been 
defined as any retail lending product line that composed at least 15 
percent of a bank's overall dollar volume of retail loan originations 
during the evaluation period. Such product lines would have been 
evaluated under the retail lending distribution tests in each 
assessment area in which the bank originated 20 loans in that product 
line during the evaluation period. The retail lending distribution 
tests contained in the proposal are analogous to the retail lending 
distribution tests applied under the current CRA framework, however, 
the proposal made minimal alterations to add clear, objective standards 
that are consistently applied across all banks.
    Under the proposal, a bank could have passed the geographic 
distribution test or the borrower distribution test by meeting or 
exceeding a threshold associated with the demographic comparator (which 
would be based on the demographics of the given assessment area) or a 
threshold associated with the peer comparator (which would be based on 
peers' performance in the given assessment area). Assessment under the 
peer comparator would be based on the loans originated by all banks 
subject to the general performance standards.
    Community groups and industry commenters opposed the proposed pass/
fail nature of the proposal's retail lending distribution tests and 
supported establishing gradations for the retail lending distribution 
test. Industry commenters noted that a bank would have failed the 
retail lending distribution test for an assessment area if it failed 
the test for a single product line. They further noted that this would 
have disadvantaged banks with fewer assessment areas because it would 
have been more difficult for them to achieve a satisfactory rating in a 
significant portion of their assessment areas.
    Community group commenters recommended assigning ratings and 
numerical scores, which could be used to average scores across 
assessment areas, based on performance relative to the comparators. 
Some community group commenters also opposed allowing banks to pass the 
retail lending distribution tests by meeting or exceeding either the 
demographic or peer comparator thresholds, rather than requiring banks 
to meet or exceed both. Noting that it was unclear why the agencies 
proposed this approach, these commenters stated that a bank could pass 
the proposed distribution test with the peer comparator even if it 
reduces lending to LMI borrowers and communities and failed the test 
with the demographic comparator. Further, many community group and 
other commenters contrasted the approach in the proposal with the 
current framework, expressing the view that retail lending distribution 
currently counts for much more of the overall rating.\120\
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    \120\ Additionally, some commenters urged the agencies to 
reformulate the retail lending distribution tests. These commenters 
suggested a variety of options, including evaluating distribution 
only at the bank level rather than at the assessment area level, 
excluding assessment areas where the bank has a small market share, 
or providing a single borrower and geographic distribution test for 
each assessment area applicable to all major retail lending product 
lines. Further, a few commenters addressed application of the test 
to deposit based assessment areas, urging that these assessment 
areas should be excluded from the test, subject to a modified test, 
or subject to the test at the bank's option. As discussed in this 
section, the OCC believes that requiring banks to pass all 
applicable retail lending distribution tests in all assessments is 
appropriate because the tests assess the bank's significant product 
lines in areas where the bank has a significant relationship with 
the community, as demonstrated through its physical presence or 
concentration of deposits. This is especially true in light of the 
final rule's changes to the assessment loan threshold and the 
definition of major retail lending product line.
---------------------------------------------------------------------------

    The OCC considered several options to provide additional 
flexibility to the application of the retail lending distribution 
tests, including allowing banks to still receive a rating of 
satisfactory or outstanding, even if they failed one or more retail 
lending distribution tests. The OCC also considered assigning numerical 
scores which could be averaged across assessment areas. The OCC 
believes that the retail lending distribution tests are a very 
important method of evaluating a bank's CRA performance. Further, with 
respect to assigning a numerical score to each assessment area, the OCC 
determined that this overly complex approach did not provide additional 
benefit.
    The OCC believes the proposed approach was sufficiently flexible to 
account for anomalies in assessment area performance and differences 
among banks but rigorous enough to incentivize banks to engage in 
originations to LMI borrowers, CRA-eligible businesses, CRA-eligible 
farms, and in LMI areas. As noted above, the proposed retail 
distribution tests are similar to the retail lending distribution tests 
applied under the current CRA framework, which many commenters support. 
Allowing banks to pass the geographic distribution tests using either 
the demographic or peer comparators allows the tests to be sensitive to 
market fluctuations and accounts for variance in demand tied to local 
demographic and economic conditions--something many commenters 
supported. Further, the proposed retail lending distribution tests 
would have only evaluated a bank's major retail lending product lines, 
a definition, which as described above, has been further refined in the 
final rule, and only would have assessed the distribution of those 
loans in assessment areas where a bank engaged in a non-trivial volume 
of originations. If a bank does not receive a presumptive rating of 
satisfactory or outstanding solely because it narrowly failed one 
retail lending distribution test, examiners may consider that factor 
when applying performance context to determine a final rating.\121\
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    \121\ The agency notes that, with respect to banks with 
specialized business models, the final rule will provide banks with 
the option of receiving a wholesale or limited purpose designation 
and being evaluated under separate performance standards. Small and 
intermediate banks will have the option of being evaluated under the 
general performance standards, including the retail lending 
distribution tests, or separate standards. Further, banks may also 
request approval of a strategic plan. Accordingly, the final rule 
provides ample flexibility to accommodate banks of different sizes 
and with different business models.
---------------------------------------------------------------------------

    In the agency's view, requiring a bank to pass all applicable 
retail lending distribution tests with respect to its most important 
retail lending product lines in an assessment area is consistent with 
the purpose of the retail lending distribution tests. Accordingly, the 
retail lending distribution tests in the final rule are pass/fail as 
proposed and banks must pass all applicable retail lending distribution 
tests in a given area to be eligible to receive a presumptive rating of 
satisfactory or outstanding.\122\
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    \122\ Although some commenters stated that this framework did 
not provide an appropriate weight to the retail lending distribution 
tests, in reality, under the proposal and the final rule, a bank's 
performance on its retail lending distribution tests is just as 
important as its performance on the CRA evaluation measure or the CD 
minimums.
---------------------------------------------------------------------------

    The agencies received conflicting comments on the proposed 
definition of major retail product line. A few community group 
commenters said that the retail lending distribution tests should be 
performed on all retail lending product lines with at least 20 
originations during the evaluation period because a bank could be a 
major lender in an area even if the product line does not account for 
15 percent of its overall retail lending portfolio. Those commenters 
stated that this method would avoid excluding lending in rural and 
underserved areas and would be consistent with the statutory mandate,

[[Page 34766]]

which they argue includes the obligation to evaluate banks' 
responsiveness.
    In the OCC's judgment, eliminating the definition of major retail 
lending product lines would be problematic. As a preliminary matter, 
the OCC notes that the definition in the proposal did not introduce a 
new concept; instead, it articulated in regulation the varying 
unwritten processes that examiners use under the current framework to 
determine which retail lending products are significant enough to 
subject to retail lending distribution tests. The OCC continues to 
believe that CRA evaluations should account for banks' business models 
and strategies by applying the retail lending distribution tests to 
major retail lending product lines. Applying the retail lending 
distribution test to product lines where a bank only conducts a nominal 
amount of lending could disincentivize a bank from serving the unique 
needs of its community. However, a retail product that represents at 
least 15 percent of the bank's retail loan originations is a 
significant enough part of the bank's business strategy that the retail 
lending distribution tests should apply. As explained elsewhere in this 
rulemaking, the OCC believes that the other components of the general 
performance standards will sufficiently motivate banks to engage in 
qualifying activities in rural and underserved areas.
    Commenters from industry and trade groups sought clarification on 
the meaning and application of various elements of the proposed retail 
lending distribution tests. Specifically, these commenters sought 
clarity on the meaning of the phrase bank-level dollar volume of total 
retail loan originations in the proposed definition of major retail 
lending product line. To provide additional clarity, the OCC revised 
the phrase the bank-level dollar volume of total retail lending 
originations to the bank's dollar volume of total retail loan 
originations. A bank's dollar volume of total retail loan originations 
is the sum of the origination value of all of the bank's qualifying and 
non-qualifying retail loans. These commenters also asked detailed 
questions about specific situations such as: Whether the current 
balance or the available amount for credit cards and lines of credit 
would constitute a major product line; whether credit line increases 
would constitute originations and how renewals, extensions, and other 
modifications would be treated under the new framework; and whether 
direct and indirect auto lending would be evaluated separately. In the 
agency's view, these detailed questions regarding the application of 
the rule are better addressed as part of the agency's ongoing 
administration of the CRA framework, including through examiner and 
other interpretive guidance.
    Additionally, community group, industry, and trade group commenters 
suggested changes to the definition of major retail lending product 
line. These commenters suggested: (1) Raising the threshold for major 
retail lending product lines to 30 percent; (2) lowering the threshold 
for major retail lending product lines; (3) using a market share 
threshold; (4) using a range of 15 to 30 percent to define major retail 
lending product lines; (5) a number of methods for determining whether 
a product line is a major retail lending product line, including 
relying on a lookback period and only considering a product line if it 
remains within a specified range for three to five years; and (6) not 
applying the retail lending distribution tests to product lines that 
cross the 15 percent threshold during an evaluation period.\123\
---------------------------------------------------------------------------

    \123\ Other commenters opposed allowing consumer lending product 
lines to be major retail lending product lines or suggested they 
should only be major retail lending product lines at the bank's 
option or if consumer lending constituted a substantial majority of 
a bank's lending. These commenters expressed a number of concerns, 
for example, that evaluating consumer lending could lead to 
expanding risky or harmful lending to LMI individuals and burdensome 
information collection. The OCC considered these comments and 
concerns, but as discussed in this preamble, the definition of major 
retail lending product line has been modified in the final rule to 
ensure it only captures significant product lines. The agency feels 
it is appropriate to assess whether the bank's most significant 
retail lending product lines serves LMI individuals and geographies. 
Any evidence of discriminatory or other illegal credit practices 
associated with these products will be considered prior to assigning 
a final rating, as discussed below.
---------------------------------------------------------------------------

    The agency carefully considered commenters and have made a number 
of changes in the final rule. The final rule includes minor changes to 
clarify that, although the 15 percent threshold for major retail 
lending product line remains unchanged, each of the three consumer 
lending product lines will be treated as a separate product line for 
purposes of reaching that threshold. Additionally, the final rule 
provides that a bank will only be required to have at most two major 
retail lending product lines. If more than two retail lending product 
lines compose more than 15 percent of a bank's retail lending, the two 
largest retail lending product lines will be considered major retail 
lending product lines.
    In addition, the OCC agrees with commenters that basing the 
definition of major retail lending product lines on the origination 
volume during the evaluation period would not provide banks with enough 
clarity and notice. Therefore, the final rule provides that a major 
retail lending product line will be based on the bank's originations in 
the two years preceding the beginning of its evaluation period and will 
not change during the evaluation period. The OCC acknowledges that 
using this definition means that if a bank makes a meaningful shift in 
its business strategy during its evaluation period, the bank's major 
retail lending product lines may not accurately reflect the bank's 
business strategy. In the OCC's experience, major shifts in business 
models generally take time to be realized, and, thus, the benefits of 
providing additional certainty by defining major retail lending product 
lines prior to an evaluation period outweigh any drawbacks to this 
approach. However, the final rule also allows banks to select more than 
two retail lending product lines, at their option.
    Some industry commenters said the 20-loan threshold for applying a 
retail lending distribution test in an assessment area: (1) Was too low 
to be statistically valid; (2) could affect banks' willingness to 
conduct accommodation lending; and (3) did not account for the length 
of an evaluation period. These commenters suggested various 
alternatives including that: (1) The 20-loan threshold be increased to 
a threshold ranging from 30- to 100-loans on an annual or evaluation-
period basis; (2) that the final rule adopt a threshold of either 15 
percent of originations or 20 loans, whichever is lower; or (2) the 
threshold be higher for smaller loans. The OCC agrees that the 20-loan 
threshold is too low for an entire evaluation period and may lead to 
banks being evaluated for loans in areas where they engage in a very 
low volume of lending or where one additional (or one fewer) qualifying 
origination would likely affect the outcome of a retail lending 
distribution test. To address this, the final rule adopts a 20-loan per 
year threshold.
    Industry commenters noted that the proposed retail lending 
distribution tests did not evaluate purchases in addition to 
originations, thereby deviating from the retail lending distribution 
tests performed as a part of the current CRA lending test. According to 
these commenters, many retail loans, such as CRA-eligible business 
loans, home mortgage loans, and various credit card products, can span 
multiple evaluation periods. In order to encourage banks to originate 
these loans on a consistent basis and across a wide array of assessment 
areas, these commenters asserted that it is crucial that: (1) There be 
a market where banks

[[Page 34767]]

can sell these loans to other banks with CRA responsibilities; and (2) 
banks continue to have both purchased loans and originated loans 
evaluated in all retail lending distribution tests.\124\
---------------------------------------------------------------------------

    \124\ In addition, at least two commenters suggested that MBS be 
considered within the retail lending distribution tests rather than 
as a CD activity.
---------------------------------------------------------------------------

    The OCC appreciates these commenters' concerns but notes that, 
unlike the current framework, the proposal would have also evaluated a 
bank's CRA performance based on the on-balance-sheet value of its 
qualifying activities, including purchased qualifying retail loans. The 
purpose of the retail lending distribution tests is to evaluate whether 
a bank's retail loan originations are serving the needs of LMI 
individuals and communities when compared to the bank's total retail 
loan originations. Because purchases of qualifying retail loans are 
sufficiently accounted for in the CRA evaluation measure, the OCC is 
not making any changes to the final rule in response to these concerns.
    The agencies did not apply a geographic lending distribution test 
to the home mortgage loan product line or the consumer loan product 
line in the proposal. The preamble to the proposal explained that the 
geographic distribution tests for home mortgage and consumer loans was 
not included because the agencies did not want to give positive 
consideration to loans that could have been provided to middle- or 
high-income borrowers in LMI areas. Industry and community group 
commenters recommended applying a geographic distribution test to the 
home mortgage loan product line under the general performance 
standards. These commenters emphasized the importance of encouraging 
banks to engage in mortgage lending in LMI areas. They argued that such 
lending, even if it results in mixed-income neighborhoods, has a 
stabilizing effect on LMI areas. These commenters suggested that 
evaluating all of a bank's home mortgage lending in LMI areas would 
help LMI people and areas.\125\
---------------------------------------------------------------------------

    \125\ However, a few commenters that expressed concern about 
displacement of LMI individuals in LMI census tracts suggested other 
alternatives, including limiting consideration of home mortgage 
lending in LMI geographies to middle income households, high-cost 
geographies, or based on property values.
---------------------------------------------------------------------------

    Upon careful consideration of the comments received, the OCC agrees 
that encouraging mortgage and consumer lending in LMI communities can 
help the economic development of these communities.\126\ This goal is 
consistent with the agency's objective of encouraging banks to lend to 
areas of need and can be accomplished concomitantly with the goal of 
encouraging mortgage lending to LMI individuals by continuing to limit 
consideration in the CRA evaluation measures to mortgages made to LMI 
individuals.\127\ Accordingly, in the final rule, a geographic 
distribution test applies to the home mortgage loan product line for 
all banks, consistent with the current framework.
---------------------------------------------------------------------------

    \126\ Many studies have shown the importance of encouraging 
mixed-income housing. See Diane K. Levy, Zach McDade, Kassie 
Bertumen, Urban Institute, Mixed-Income Living: Anticipated and 
Realized Benefits for Low-Income Households, Cityscape: A Journal of 
Policy Development and Research, Jul. 2013), at 15; Diane K. Levy, 
Zach McDade, Kassie Dumlao, Urban Institute, Effects from Living in 
Mixed-Income Communities for Low-Income Families: A Review of the 
Literature (Nov. 2010). This research found that mixed-income 
communities provide benefits to low-income families. However, it 
also noted that not all expected benefits have materialized.
    \127\ Although the OCC remains concerned about avoiding 
displacement, the agency believes that looking at lending in LMI 
census tracts for the retail lending distribution tests, while only 
allowing home mortgages to LMI individuals to count in a bank's CRA 
evaluation measure, will mitigate any displacement concerns while 
encouraging banks to lend in LMI areas that may need additional 
access to credit.
---------------------------------------------------------------------------

    Industry commenters opposed the proposed peer comparator for 
several reasons. They cautioned that it was both underinclusive and 
overinclusive because it did not include banks not subject to the 
general performance standards (e.g., Board-regulated banks), but 
included all banks subject to the general performance standards without 
accounting for size, capacity or specialization. Instead, commenters 
suggested that the agencies consider using multiple peer comparators 
based on bank asset size. Industry commenters also stated that peer 
consumer lending data was limited, and that peer data generally could 
be stale by the time of its release. Further, one industry commenter 
asked for clarification regarding the demographic comparator for 
consumer loans, noting that the FFIEC demographic database does not 
contain such an income demographic.\128\
---------------------------------------------------------------------------

    \128\ Several other commenters argued that using peer 
comparators sets up a race to the bottom. The OCC believes that the 
final rule's evaluation framework, including the specific CRA 
evaluation measure benchmarks that will be established, will 
encourage banks to engage in more qualifying activities. 
Additionally, the agency will be able to review the performance 
standards, including the thresholds associated with the retail 
lending distribution test peer comparators on an ongoing basis to 
ensure the framework is achieving the agency's goals.
---------------------------------------------------------------------------

    In the agency's view, comparing all banks subject to the general 
performance standards is appropriate and the data would be sufficient 
for its purpose: To determine whether a bank's distribution of retail 
lending to LMI individuals or CRA-eligible businesses or in LMI areas 
is significantly lower than expected in a given market based on the 
performance of other market participants subject to the general 
performance standards. Accordingly, the OCC is not making any changes 
to how the peer comparators are defined, but the final rule does 
clarify the description of the peer comparators by more clearly 
describing the components of what is being compared. Additionally, the 
final rule corrects the inadvertent error in the proposal by revising 
the consumer loan demographic comparator to low- and moderate-income 
households.
    Under the proposal, the agencies would have collected and provided 
public data that would have allowed banks to apply the borrower 
distribution tests for home mortgage and consumer loans, small loans to 
businesses, and small loans to farms, and the geographic distribution 
test for small loans to farms and small loans to businesses. However, 
the agencies recognized that, even if the proposal were implemented, 
banks would have needed to rely on private datasets for the small loans 
to businesses and small loans to farms borrower distribution tests. The 
agencies invited comment on options for tailoring this requirement, 
which may have required banks to purchase datasets, by, for example, 
allowing banks below a certain asset size to use publicly available 
data as a proxy.
    Industry commenters asserted that the requirement that banks 
perform their own retail lending distribution tests would increase 
compliance costs, particularly for community banks, by shifting 
distribution calculations from examiners to banks. They noted that this 
would likely necessitate additional employee training and hiring. 
Several commenters recommended that the agencies prohibit the use of 
private datasets and instead provide datasets to banks. Commenters 
suggested that, even if the agencies provided a dataset that banks 
could use at their option, large banks would be able to shop around for 
the dataset that provided the best available comparators. Some 
commenters recommended exemptions from the retail lending distribution 
tests when the agencies' data is insufficient.
    The OCC understands and agrees with the concerns about the use of 
proprietary data and is revising the final rule to require examiners, 
not banks, to calculate the retail lending distribution tests, 
consistent with the current framework. Banks will not be required to 
purchase any data. The OCC believes that it has access to datasets, 
including

[[Page 34768]]

the datasets used today, that are sufficient to establish the 
demographic comparators for the small loans to business and small loans 
to farms retail lending distribution tests.
ii. Assessing the Impact of a Bank's Qualifying Activities
    To provide clarity and consistency to the CRA evaluation process, 
the proposal included a uniform method of measuring the impact of a 
bank's qualifying activities and specified clear benchmarks required to 
achieve specific ratings categories. Under the current framework, 
examiners measure the impact of banks' CRA activities in a number of 
ways and examiners make their own varying judgments about how much 
activity is enough to receive a rating of satisfactory or outstanding. 
In the proposal, the impact of a bank's qualifying activities would 
have been assessed through the calculation of its CRA evaluation 
measure and banks would have known the benchmarks for the level of 
qualifying activity necessary to achieve any particular rating 
category.
    In the proposal, a bank would have calculated its bank CRA 
evaluation measure and assessment area CRA evaluation measure annually 
by taking the sum of: (1) A bank's qualifying activities value divided 
by the average of its quarterly retail domestic deposits; and (2) a 
calculation that accounts for a bank's branch distribution. The CRA 
evaluation measure would have been calculated as follows:
[GRAPHIC] [TIFF OMITTED] TR05JN20.001

    The agencies received many comments opposing the proposal's one 
ratio approach for measuring CRA performance. These comments 
misapprehend what was proposed; the proposal did not contain one ratio. 
The proposal's performance standards that the agencies would have used 
to assess banks' CRA performance would involve tens, if not hundreds, 
of measures for most banks. Furthermore, the proposal would have 
retained the concept of performance context, which would have provided 
a mechanism for qualitatively evaluating a bank's capacity and 
opportunity to engage in qualifying activities and its responsiveness 
to community needs. While some elements of the general performance 
standards would have looked at a bank's qualifying activities compared 
to its deposits, a bank's ratings under the proposal would also have 
been based on the bank's performance on the retail lending distribution 
tests and performance context information. Therefore, the term one 
ratio, which was used in many comments, is simply a misapprehension or 
a mischaracterization of the OCC's approach.
    One community group commenter stated that using a ratio-based 
framework to assess past performance by measuring loans-to-deposits in 
a primary service area is contrary to the CRA statute because this type 
of model was proposed in the first version of the 1977 bill, was 
criticized in congressional hearings about the bill, and ultimately was 
not enacted.\129\ The OCC disagrees. The hearing witness testimony 
cited by the commenters was not aimed at a methodology to assess past 
performance. Instead, the testimony criticized a proposed provision 
that would have required banks to predict what future ``proportion of 
consumer deposits . . . will be reinvested by a lender in [an] area.'' 
\130\ The witness made no similar criticism of using a ratio-based 
framework for assessing past performance. Rather, the same witness 
stated ``the past record of the ratio of aggregate loans made to 
deposits received for a submarket area can be useful. . . . Presumably, 
the regulatory agencies would obtain such data'' in order to evaluate 
whether a bank is meeting the credit needs of areas it is already 
chartered to do business.\131\
---------------------------------------------------------------------------

    \129\ This commenter also stated that a single loan-to-deposit 
ratio was rejected during the 1995 regulatory revisions in favor of 
multiple metrics. Like the current regulations, the proposal 
contained multiple metrics.
    \130\ Hearings Before the S. Comm. on Banking, Housing, and 
Urban Affairs, U.S. Senate 95-1 (Mar. 23, 24, and 25, 1977) at 151 
(testimony of Henry Schechter, Director of Department of Urban 
Affairs, AFL-CIO) (``[t]here is almost no way of knowing how large a 
demand for various types of credit will emanate from residents and 
business people of the local community, and how much of such a 
volume of credit could be granted consistent with the safe and sound 
operation of such institutions'').
    \131\ Id.
---------------------------------------------------------------------------

    These commenters also observed that witnesses and senators 
participating in the 1977 hearings claimed that encouraging banks to 
meet the credit needs of the areas from which they receive deposits was 
an attempt at credit allocation that would lead to market 
inefficiency.\132\ The OCC disagrees with the commenters' 
interpretation of these statements. These statements in the hearings 
more broadly opposed any governmental pressure through the CRA to 
reinvest deposits in depositors' communities and are not conclusive for 
understanding congressional intent regarding any ratio-based approach 
for measuring bank performance. CRA was passed despite this opposition 
and, rather than detailing in the statute how performance would be 
measured, Congress has authorized the agencies to determine through 
regulation the appropriate approach for evaluating and examining banks' 
performance.\133\ Consistent with that authority, the OCC's approach to 
measuring CRA performance advances the purpose of the statute.\134\
---------------------------------------------------------------------------

    \132\ See, e.g., id. at 153; 315-16; 324; 335; 368; 428. Sen. 
William Proxmire, Chairman, S. Comm. on Banking, Housing, and Urban 
Affairs refuted these concerns. Id. at 2 (``To criticize 
reinvestment incentives as a form of credit allocation is 
disingenuous . . . . I think that debate in the context of the 
reinvestment bill as a red herring.'').
    \133\ 12 U.S.C. 2905, 2906.
    \134\ See, e.g., 123 Cong. Rec. 17630 (1977) (statement of Sen. 
Proxmire) (describing CRA's purpose as follows: ``I am talking about 
the fact that banks . . . will take their deposits from a community 
and instead of reinvesting them in that community . . . they will 
actually or figuratively draw a red line on a map around the areas 
of their city, sometimes in the inner city, sometimes in the older 
neighborhoods, sometimes ethnic and sometimes black, but often 
encompassing a great area of their neighborhood. The agency also 
knows that small town banks sometimes ship their funds to the major 
money markets in search of higher interest rates, to the detriment 
of local housing, to the detriment of small business, and farm 
credit needs . . . Therefore, the committee included [CRA] to 
reaffirm that banks and thrift institutions are indeed chartered to 
serve the convenience and needs of their communities, and as the 
bill makes clear, convenience and needs does not just mean drive-in 
teller windows and Christmas Club accounts. It means loans.'').
---------------------------------------------------------------------------

    Advocating for a more subjective approach to CRA, a community group 
commenter expressed concern that the CRA evaluation measure may not be 
consistent with the CRA statutory requirement that a bank must help to 
meet the credit needs of its entire community in a safe and sound 
manner. To the contrary, the OCC expects that all bank activities are 
conducted in a safe and sound manner. The OCC will use performance 
context as necessary to address factors such as financial condition, 
loan product demand, or relevant demographic conditions that may affect 
a bank's ability to engage in

[[Page 34769]]

CRA activities in a safe and sound manner. Once the empirical 
benchmarks are set, as discussed below, the OCC also anticipates 
adjusting the empirical benchmarks periodically based on available 
data.
    Some community group commenters voiced concerns that the proposed 
CRA evaluation measure would have been more complex and rigid than the 
current system and the measures and benchmarks would not be tailored to 
local credit needs. Some industry commenters expressed similar concerns 
that the CRA evaluation measure and associated benchmarks would not 
have taken into consideration the diversity of bank business models, 
community needs and opportunities, and local economic conditions. They 
recommended that the final rule implement more tailored measures or 
benchmarks.
    Although the OCC considered explicitly tailoring the CRA evaluation 
measure to account for local community conditions, it did not believe 
the incremental benefits of such an approach were worth the added 
complexity. Further, the agency believes that the proposed CRA 
evaluation measure was already sufficiently flexible and adequately 
tailored to local needs. The proposed CRA evaluation measure and 
benchmarks provided an objective standard for assessing a bank's 
reinvestment in the communities from which it receives deposits and 
would have scaled the bank's obligation to reflect its presence in the 
market, as measured by the dollar volume of retail domestic deposits it 
receives from an area. Furthermore, prior to assigning assessment area 
and bank ratings, the OCC would have assessed performance context 
factors, which would have accounted for the specific facts and 
circumstances that affect a bank's CRA capacity and opportunities. 
Because the proposed CRA evaluation measure, and the entire general 
performance standards framework, is sufficiently flexible to account 
for the variance in bank business models, community needs and 
opportunities, and local economic conditions, the OCC did not adopt any 
changes to the CRA evaluation or its calculation to address these 
concerns.\135\
---------------------------------------------------------------------------

    \135\ Because the agency acknowledges the limitations of the 
existing data, the final rule does not include specific CRA 
evaluation measure benchmarks associated with each rating category.
---------------------------------------------------------------------------

    Some industry commenters stated that the CRA evaluation measure 
disproportionately advantages large banks because these banks have 
greater opportunity to participate in large development projects, which 
will boost their qualifying activities values more than smaller-dollar 
loans and investments. The OCC does not believe this concern will be 
realized because the denominator of the CRA evaluation measure in the 
proposal would have depended on a bank's market presence, as measured 
by its retail domestic deposits. Small banks have fewer deposits and 
thus would have had smaller CRA obligations than large banks. 
Accordingly, even though large banks may be better able to engage in 
large projects, that would not disadvantage smaller banks. The OCC 
believes that the CRA evaluation measure adequately accounts for bank 
size by using retail domestic deposits in the denominator and did not 
make any changes in response to this concern in the final rule.
    The first component of the CRA evaluation measure would have 
measured the value of qualifying activities as a proportion of total 
retail domestic deposits. The proposal would have valued most 
qualifying loans and investments based on their average on-balance 
sheet value during the evaluation period. Community groups and some 
industry commenters opposed the on-balance sheet approach of the first 
component of the CRA evaluation measure. Community groups described the 
CRA evaluation measure as a simplistic, narrow measure that would: (1) 
Reduce reinvestment; (2) encourage large, long-term, and easy deals 
that banks finance in the ordinary course of business; \136\ (3) be 
inconsistent with the statutory written evaluation requirement; and (4) 
solely determine a bank's rating at the expense of other factors, 
including qualitative ones.\137\ Community group and government 
commenters suggested that the measure was too simplistic because it 
aggregated all types of activities and failed to distinguish between 
types of activities, like CD activities and retail activities, and 
product categories that may be more or less useful for LMI 
borrowers.\138\ Community group and industry commenters also cautioned 
that the balance sheet-based approach would not provide enough credit 
for smaller-dollar activities, such as LMI mortgage lending and CRA-
eligible business lending, thereby disincentivizing them. Other 
commenters were concerned that the CRA evaluation measure would de-
emphasize mortgage lending or other specific activities like bank 
investments in CDFIs. Community groups commented that disincentivizing 
lower dollar loans would particularly disadvantage rural areas, 
underserved areas, and persistent poverty counties, which receive a 
higher proportion of small-dollar mortgage loans. At least one industry 
commenter disagreed with these commenters, stating that banks would 
need to engage in smaller-dollar activities because there were too few 
large dollar activities available. Several community group commenters 
stated that using the CRA evaluation measure and CD minimums to 
determine a bank's presumptive rating could allow a bank to determine 
it has met its presumptive rating goal before the end of its evaluation 
period. Then a bank would be able to cease or slow CD activities for 
the remainder of its evaluation period which could disrupt local CD 
efforts. Other commenters thought banks would not be incentivized to 
partner with community organizations after they met the minimums 
because responsiveness will no longer be evaluated.
---------------------------------------------------------------------------

    \136\ Alternatively, one commenter suggested that the approach 
could overvalue LMI home mortgage lending and recommended an 
alternative that would include the lesser of originations or the 
amount on the balance sheet.
    \137\ Some commenters stated the framework would effectively 
short-change CD activities in comparison to other CRA activities. 
Some commenters also suggested that qualitative criteria account for 
20 percent to 30 percent of a component test score.
    \138\ Some commenters also argued that aggregating different 
types of activities would reduce transparency about how the bank is 
serving its community's needs. The OCC notes that although the final 
rule aggregates activities for the purposes of the CRA evaluation 
measure, stakeholders will still have information about a bank's 
performance with respect to different types of qualifying activities 
by observing its performance on the retail lending distribution 
tests and CD minimums, its data reporting, and through the 
information included in its CRA PE.
---------------------------------------------------------------------------

    To address these concerns, commenters offered a number of potential 
solutions. Community groups recommended the inclusion of a single 
transaction limit and evaluating the number of retail loan originations 
and purchases, as is done under the current framework, rather than 
their on-balance sheet dollar value, to encourage originations and 
purchases of loans. Some industry and community group commenters 
recommended that the proposal focus on the number of loans more 
broadly, not just with respect to retail lending. Other industry 
commenters recommended giving banks a percentage goal for the number of 
each type of retail loan category that should be qualifying loans. One 
commenter even recommended adding a floor for different types of 
activities. Community groups also recommended retention of the separate 
lending, investment, and service tests from the current framework

[[Page 34770]]

to provide a more holistic approach.\139\ Other commenters suggested 
measuring large dollar loans and investments separately from other 
activities.
---------------------------------------------------------------------------

    \139\ A number of community group commenters specifically 
opposed elimination of the investment test. They expressed concerns 
that doing so would decrease investment in affordable housing 
projects, make it more difficult for CDFIs to raise equity, and 
decrease the availability of grants. The OCC believes that the 
retention of a separate investment test is not necessary to 
encourage these types of activities. As discussed above, the final 
rule provides a number of incentives for banks to engage in CD 
investments and activities with CDFIs, including by providing a 
multiplier for those activities.
---------------------------------------------------------------------------

    Prior to the issuance of the proposal, the agencies heard many 
complaints from stakeholders that the current framework's focus on new 
activity inappropriately incentivized short-term over long-term 
activities and investments.\140\ Commenters indicated this was 
problematic because many businesses, individuals, and CD programs and 
projects need stable, long-term funding. As discussed in the preamble 
to the proposal, evaluating the outstanding dollar value of on-balance 
sheet CRA activities would have solved this issue by assessing a bank's 
ongoing commitment to its communities and encouraging stable sources of 
funding. The CRA evaluation measure's focus on the value of on-balance 
sheet loans and investments would also have disincentivized churning of 
activities that provide banks CRA credit without providing new value or 
long-term stability to the communities that banks serve. Further, the 
proposal would continue to apply performance context factors that would 
evaluate a bank's responsiveness to communities' needs throughout its 
evaluation period.
---------------------------------------------------------------------------

    \140\ Many ANPR commenters mentioned this problem. See National 
Association of Affordable Housing Lenders at 12, https://www.regulations.gov/document?D=OCC-2018-0008-0981 (``Currently, only 
investments (but not loans) made in prior exam periods continue to 
generate CRA credit. This system perversely gives banks more credit 
for making and then renewing a short-term loan than for making a 
long-term loan in the first place. We also observe that examiners do 
not consistently recognize the value of investments made in prior 
exam periods.''); American Bankers Association at 25, https://www.regulations.gov/document?D=OCC-2018-0008-0583; Opportunity 
Finance Network at 5, https://www.regulations.gov/document?D=OCC-2018-0008-0525.
---------------------------------------------------------------------------

    The CRA evaluation measure will encourage banks to engage in more 
qualifying activities by providing them the flexibility to engage in 
qualifying activities that best fit and complement their business 
models and the needs of their communities. By aggregating different 
types of qualifying activities, the proposal does not dictate a bank's 
business model or strategy, but rather evaluates the impact of the full 
scope of a bank's qualifying activities. The OCC disagrees with 
commenters who suggest that the proposed CRA evaluation measure would 
have reduced reinvestment because the agencies would have had the 
ability to set the CRA evaluation measure benchmark at levels high 
enough to increase banks' reinvestment into the communities from which 
they receive deposits. Additionally, by comparing the quantified dollar 
value of a bank's CRA activity to a bank's retail lending deposits the 
CRA evaluation measure would have helped the agencies fulfill the 
statutory purpose of CRA, which is to encourage banks to reinvest 
deposits into the communities from which they receive them, without 
requiring a specific business model. Furthermore, by providing 
multipliers for activities conducted in CRA deserts and using 
performance context factors to examine the responsiveness of 
activities, the final rule will encourage smaller dollar activities and 
activities in CRA deserts.
    The agencies recognized that the CRA evaluation measure alone is 
not adequate to assess a bank's CRA performance. For this reason, the 
proposal included other quantitative and qualitative assessments of a 
bank's CRA performance. For example, at the assessment area level, the 
proposal also would have included the retail lending distribution 
tests, which would have evaluated the distribution of a bank's number 
of originations and a measure of a bank's CD activities as compared 
with its retail domestic deposits. A bank's presumptive rating would 
have been based on its rating in a significant portion of its 
assessment areas, its CRA evaluation measure, and a measure of its CD 
activities. Performance context factors would have been used to assess 
many qualitative factors for the bank, including in each assessment 
area. A bank's assigned rating would have been based on its presumptive 
rating. The assigned rating and the explanation for the rating, along 
with the facts and data supporting the rating and conclusions would 
have been included in a bank's PE. This robust framework, with its many 
methods of evaluation, makes the retention of the separate tests used 
today superfluous.
    The OCC considered including a single transaction limit in the 
proposal, but as stated in the preamble to the proposal, because the 
proposal would have assessed the performance of banks that are subject 
to the general performance standards by considering the distribution of 
retail lending activities and the dollar value of qualifying 
activities, the OCC does not believe that a single transaction limit is 
necessary. Moreover, a single transaction limit could discourage 
activities like affordable housing and infrastructure projects that 
have a large dollar value, but help meet the needs of LMI communities 
and other underserved communities.\141\ Moreover, the other elements of 
the final rule would address commenters' concerns, including the retail 
lending distribution tests, some modifications that have been made to 
the quantification of certain types of retail loan originations in the 
rule,\142\ and the addition of some multipliers for retail lending 
activities.\143\ For these reasons, the OCC is not adding a single 
transaction limit in the final rule.
---------------------------------------------------------------------------

    \141\ Infrastructure projects are critical for underserved 
communities. See Kolby Kickingwoman, Infrastructure in Indian 
Country needs to be `fair and equitable,' July 12, 2019, available 
at https://indiancountrytoday.com/news/infrastructure-in-indian-country-needs-to-be-fair-and-equitable-6gL-b6cvqUuWkVx91Z64fg 
(discussing the need to improve infrastructure in Indian country); 
Donna Kimura, Developers Reveal the Costs of Doing Business, July 1, 
2017, available at https://www.housingfinance.com/news/developers-reveal-the-costs-of-doingbusiness_o (discussing the cost associated 
with building affordable housing).
    \142\ The OCC recognizes the importance of encouraging retail 
loan originations and, in response to commenters who suggested that 
the proposed CRA evaluation measure does not adequately value 
originations that are sold within one year, the final rule will 
provide additional credit for those loans.
    \143\ The OCC has added multipliers for retail lending 
activities in CRA deserts and generated from LMI branches.
---------------------------------------------------------------------------

    Some industry commenters stated that assets or Tier 1 capital 
should be the denominator for the CRA evaluation measure instead of 
retail domestic deposits because assets better reflect a bank's 
capacity to engage in qualifying activities. These commenters noted 
that using deposits would result in larger obligations for community 
banks because of their business models than if the CRA evaluation 
measure used assets. These commenters also suggested that using Tier 1 
capital or assets would be easier for banks to implement than requiring 
banks to geocode deposits. The OCC believes that the introduction of 
the intermediate bank category and intermediate bank performance 
standards in the final rule will address most of these commenters' 
concerns. Furthermore, the OCC believes that for most banks, retail 
domestic deposits adequately reflect a bank's capacity to engage in 
qualifying activities. To the extent a bank is subject to unique 
constraints, examiners will consider those constraints when applying 
performance context factors or a bank may submit a strategic plan.

[[Page 34771]]

    In the second component of the CRA evaluation measure, the number 
of the bank's branches located in LMI census tracts, Indian country, 
underserved areas, and distressed areas during the same annual period 
used to calculate the qualifying activities value would have been 
divided by the bank's total number of branches in that annual period 
and multiplied by .01. This calculation would have quantified a bank's 
distribution of branches and increased a bank's CRA evaluation measure 
by up to one percentage point based on the proportion of a bank's 
branches in those specified areas.
    Community group commenters opposed the CRA evaluation measure's 
method for quantifying branches on the grounds that it would reduce 
consideration of branches.\144\ They stated that branches were likely 
to account for a small portion of the CRA evaluation measure when 
compared with the current 25 percent weighting for the service test, 
which they recommended be retained. They also noted research suggesting 
that the current service test has prevented branch closures in LMI 
communities and warned that the CRA evaluation measure would likely 
lead to branch loss by reducing the weight given to branches. A number 
of industry commenters also recommended that the agencies increase the 
credit provided for the measure of a bank's distribution of branches.
---------------------------------------------------------------------------

    \144\ Additionally, some community group and other commenters 
expressed concern that the proposal would not incentivize branches 
in LMI communities. Other commenters noted that the proposal would 
not consider branch openings and closings and would treat a bank 
with one branch in an LMI area more favorably than a bank with a 
large number of branches (but not 100 percent) in LMI areas. 
Commenters offered a number of suggestions for giving additional 
credit to branches, such as deducting CRA value for branch closures 
in underserved neighborhoods, increasing the multiplier to .025, or 
more or giving credit for maintaining unprofitable branches.
---------------------------------------------------------------------------

    The agencies sought to give a bank's branch distribution 
appropriate weight. Under the current CRA regulations, for a bank 
evaluated under the service test, a bank's branch distribution 
generally accounts for 50 percent of the service test, which is 25 
percent of a bank's CRA rating. This means that branch distributions 
today technically account for approximately 12.5 percent of a bank's 
CRA rating. However, because branch distributions are not quantified 
and there are no objective targets, it is not clear how much credit a 
bank will receive for a given branch distribution. In the proposal, a 
bank could have received up to one percent credit for its branch 
distribution, which would be one sixth, or 16.7 percent, of the six 
percent CRA evaluation measure that would have been required to satisfy 
the CRA evaluation measure prong of the general performance standards 
for a satisfactory rating. However, a bank would have only received the 
one percentage point of CRA evaluation measure credit if 100 percent of 
its branches were in an LMI, distressed, underserved, or Indian 
Country. The OCC used branch information from the FDIC's Summary of 
Deposit (SOD) \145\ data and demographic information from various 
sources to identify the bank branches in distressed, underserved, and 
LMI census tracts and in Indian country and other tribal and native 
lands census tracts.\146\ The OCC used that information to analyze the 
proportion of branches in distressed, underserved, LMI, and Indian 
country and other tribal and native lands census tracts by bank and 
calculate the median proportion of branches in distressed, underserved, 
LMI and Indian country and other tribal and native lands for branches 
with assets of $2.5 billion or more. The analysis showed that, for 
banks subject to the general performance standards, the median 
percentage of a bank's branches in those areas in 2019 was 
approximately 28 percent. To ensure that banks are still receiving 
appropriate credit for their branch distribution, the final rule 
provides that a bank's branch distribution will be multiplied by .02, 
meaning that a bank with a branch distribution close to the median will 
receive .56 percent of credit as part of its CRA evaluation measure. 
However, banks will not be able to receive more than one percent credit 
for their branch distribution as a part of its CRA evaluation 
measure.\147\
---------------------------------------------------------------------------

    \145\ See Deposit Market Share Reports--Summary of Deposits, 
FDIC, available at https://www7.fdic.gov/sod/. Only branch types 11, 
12, and 23 were included in this analysis.
    \146\ The OCC used the FDIC SOD data to obtain the address of 
branches with branch codes 11 and 12. The agency identified 
distressed middle-income census tracts using the definitions in the 
proposal, along with FFIEC census data files, BLS County 
Unemployment data, American Community Survey data, and the Census 
2000 and Census 2010. Consistent with the proposal and the final 
rule, the OCC identified underserved middle-income census tracts 
relying on the most recently available data maintained by the 
Economic Research Service of the U.S. Department of Agriculture as 
well as tract centroid coordinates from a mapping software 
application to identify census tracts where there were no branches 
in the census tract and no branches within a specified distance to 
the tract centroid. LMI census tracts were identified based on FFIEC 
census data files. Indian country was identified by using the most 
Census Bureau's American Indian Alaska Native and Native Hawaiian 
(AIANNH) TIGER geography file. The OCC included Indian other tribal 
and native lands census tracts in this calculation based on the 
changes made to the final rule.
    \147\ The OCC considered alternative ways to provide credit for 
branches, including the myriad of ways suggested by commenters. 
However, the OCC believes that the incremental benefits that these 
approaches would provide in some unique circumstances do not warrant 
the additional complication. By giving banks credit for their branch 
distribution directly through the CRA evaluation measure, the final 
rule provides a simple and clear mechanism of providing banks a 
predictable amount of credit for their branch distribution. The 
final rule also gives examiners the flexibility to consider other 
elements of a bank's delivery systems and branching strategy while 
applying performance context factors.
---------------------------------------------------------------------------

    Industry commenters noted that the CRA evaluation measure does not 
account for branches that serve LMI neighborhoods, Indian country, 
underserved areas, and distressed areas but are not in those areas, 
such as those in an adjacent or nearby census tract. The OCC agrees 
that branches that are in adjacent or nearby census tracts can still 
serve those areas. The final rule includes in the numerator of the 
branch distribution measure both: (1) The number of branches in LMI 
census tracts, Indian country and other tribal and native lands census 
tracts, underserved areas, and distressed areas; and (2) the branches 
that serve those areas, divided by the total number of branches in that 
assessment area. However, banks will need to demonstrate that the 
branch serves a sizable portion of individuals from those communities 
for the branch to be included in the numerator of the branch 
distribution measure. The agency does not expect to give credit to 
branches not located in LMI tracts and that serve only a small or 
nominal amount of the nearby LMI community.
    Three industry commenters requested clarification as to how the CRA 
evaluation measure would be calculated for banks following a merger or 
acquisition, noting that it is common for merging institutions to 
operate different systems for a period of time after the transaction 
closes. The OCC intends to evaluate the surviving bank under the terms 
of the final rule when a merger occurs during an evaluation cycle, 
similar to how evaluations are conducted in these circumstances under 
the current framework. For banks subject to the general performance 
standards, investments that remain outstanding after the merger will 
included in the calculation of the CRA evaluation measure, and the 
surviving bank will be subject to the data collection, recordkeeping, 
and reporting obligations of the rule.

[[Page 34772]]

iii. Ensuring Banks Are Responsive to Local Needs
    As proposed, to receive a bank presumptive rating of satisfactory 
or outstanding, a bank had to receive at least a satisfactory or 
outstanding, respectively, in those assessment areas: (1) That 
represent a significant portion of its assessment areas; and (2) where 
it receives a significant portion of its retail domestic deposits. The 
proposal did not define significant portion but asked commenters for 
suggestions for how this phrase should be defined.
    Many negative comments on this provision were based on the 
misapprehension that the agencies had defined significant portion as 50 
percent. Some community group commenters expressed concern that 
requiring a bank to achieve a satisfactory or outstanding in a 
significant portion of its assessment areas to receive those bank 
ratings could result in the bank disregarding some assessment areas, 
which could exacerbate the problem of CRA deserts, and would be 
inconsistent with the statutory mandate to evaluate banks' efforts to 
serve their entire communities. These commenters advocated for a CRA 
rating system that takes into consideration performance in all 
assessment areas and has gradations of performance (not just pass/fail 
thresholds). One commenter suggested a 100-point scoring system or an 
averaging of assessment area scores in all aspects of the rating 
system, not just the CRA evaluation measure. However, at least one of 
these commenters stated that if the term significant portion had to be 
defined, they supported an 80 percent threshold over a 50 percent 
threshold. Other commenters, representing community groups and 
industry, suggested thresholds that ranged from 40 percent to 100 
percent. Other industry commenters said that the pass-fail thresholds 
in the proposed rating system did not account for nuances inherent in 
banks' CRA activity in communities with varying needs. Although these 
commenters also advocated for gradations, they stated that if 
gradations were not adopted, then the agencies should adopt a 
significant portion threshold that is no more than 50 percent. One 
community group commenter recommended that the agencies distinguish 
between the percentage required for a satisfactory rating and an 
outstanding rating, which they suggested should be 65 percent and 75 
percent, respectively.
    The OCC reviewed the suggestions of commenters, used its 
supervisory judgment and experience and conducted data analysis to 
determine how to establish a numerical threshold to define significant 
portion in the final rule. Some commenters recommended a threshold of 
80 percent, but some were concerned that an 80 percent threshold would 
effectively apply a higher standard to small banks, which typically 
have fewer assessment areas. The OCC recognizes that, for banks with 
fewer assessment areas, defining significant portion as 80 percent 
would effectively require these banks to achieve satisfactory or 
outstanding in 100 percent of their assessment areas, imposing a higher 
requirement on them. Using the FDIC's SOD data as a proxy for the 
number of assessment areas,\148\ the OCC was able to estimate the 
number of assessment areas for banks in different asset size categories 
and the distribution of those assessment area counts. For banks with 
assets between $2.5 billion and $10 billion, the median estimated 
number of assessment areas is five. After considering this analysis, 
along with commenters' suggestions and the OCC's supervisory judgment, 
the final rule does not use the term significant portion. Instead, the 
final rule provides that for a bank with more than five assessment 
areas to receive a presumptive rating of satisfactory or outstanding, 
the bank must receive at least the corresponding rating in: (1) 80 
percent of its assessment areas, and (2) in assessment areas from which 
the bank receives at least 80 percent of the retail domestic deposits 
it receives from its assessment areas. For a bank with five or fewer 
assessment areas, the final rule provides additional flexibility and 
states that, to receive a presumptive rating of satisfactory or 
outstanding, a bank must receive at least the corresponding rating in: 
(1) 50 percent of its assessment areas, and (2) in the assessment areas 
from which it receives at least 80 percent of its retail domestic 
deposits received from its assessment areas.
---------------------------------------------------------------------------

    \148\ For branches in MSAs, each MSA with at least one branch 
was counted as an assessment area for the bank. Branches in non-MSA 
areas, the number of non-MSA counties in which the bank has at least 
one branch, was divided by two to obtain an estimate of the bank's 
count of assessment areas for branches in non-MSA areas.
---------------------------------------------------------------------------

iv. Ensuring Banks Engage in a Minimum Level of CD Activities
    The general performance standards in the proposal established 
minimums for a bank's quantified dollar value of CD lending and 
investment as compared to retail domestic deposits to achieve a 
satisfactory or an outstanding rating. To achieve a presumptive rating 
of satisfactory or outstanding, the sum of the quantified dollar value 
of CD loans and CD investments, divided by the average of the bank's 
retail domestic deposits would have needed to meet or exceed two 
percent. The CD minimums would have applied for both the bank 
presumptive rating and the assessment area presumptive rating.
    Some industry commenters said that the CD minimums would have been 
too rigid because they did not account for local community conditions. 
Some of these commenters recommended that the CD minimums, on their 
own, account for community needs and local conditions and that there 
was no need for a separate application of performance context 
factors.\149\ A few other commenters criticized the pass or fail nature 
of the CD minimums and suggested various alternatives. A few commenters 
suggested that the minimum apply only at the bank level, or that a 
lower minimum apply at the assessment area level than at the bank 
level.\150\
---------------------------------------------------------------------------

    \149\ A few industry and community group commenters criticized 
the proposed CD minimum, stating that it would favor larger 
transactions over small ones. A few community group and other 
commenters suggested further refinements such as applying minimums 
to both lending and investment activity or weighting favored 
activities more heavily. As discussed in this preamble, the agency 
believes that other elements of this framework, including 
performance context factors and multipliers, will ensure that 
smaller-dollar transactions and other responsive activities are 
appropriately incentivized.
    \150\ Community groups raised concerns that the minimums would 
have been reached easily because of CD multipliers and the expanded 
qualifying criteria. Additionally, some commenters, including 
community groups, expressed concern that banks could meet the CD 
minimum through lending alone, which might decrease investments. As 
noted below, the final rule does not adopt a specified minimum level 
of CD activities. The OCC will gather additional data and conduct 
additional analysis to ensure that the CD minimums are set at an 
appropriate level for the framework in the final rule, which also 
adopts some changes that restrict the applicability of CD 
multipliers and the qualifying activities criteria, including the 
adoption of a CD floor that must be met before any multipliers 
apply.
---------------------------------------------------------------------------

    The OCC believes that accounting for local community attributes is 
important. The proposed CD minimums would have been only one of three 
performance standards and were meant to reflect the minimum amount of 
CD activity that the agencies expect all banks to engage in. The CD 
minimums would have automatically accounted for local conditions 
because they would have been based on the level of retail domestic 
deposits a bank receives from a given area. The agencies would have 
further assessed local community conditions and needs through the 
application of performance context factors. The performance context 
factors

[[Page 34773]]

in the proposal provided consideration of a bank's ability to engage in 
the volume of CD lending and investment required to meet the CD 
minimums, as well as local needs, opportunities, and economic 
conditions. Such information would have been considered by examiners as 
they assessed whether a bank's presumptive rating should be adjusted.
    Some industry commenters stated that by only providing credit for 
CD activities that occur outside of banks' assessment areas in the bank 
CRA evaluation measure, the proposal would have made it harder for 
banks to meet the assessment area CD minimums.\151\ The OCC does not 
agree with this assertion. Under the proposal, banks subject to the 
general performance standards are required to engage in a minimum level 
of CD activities in each of their assessment areas based on their 
retail domestic deposits received from the assessment area. These banks 
would also have to engage in a minimum level of CD activities across 
the country based on their total retail domestic deposits. Providing 
banks credit for engaging in qualifying activities outside of their 
assessment areas was designed to incent activities in underserved 
communities that are often not a part of any bank's assessment area and 
to provide banks with flexibility to achieve their overall CD 
obligations.
---------------------------------------------------------------------------

    \151\ The agency notes that, actually, under the proposal, 
activities that serve a broader geographic region that includes one 
or more assessment areas would still have received some credit in 
those assessment areas, as described in the activity location 
section of the final rule.
---------------------------------------------------------------------------

    One community group noted that if the final rule does not 
distinguish between prior period and new CD investments for the 
purposes of the CD minimums, then banks will not have an incentive to 
engage in new activity. Others were concerned that the CD minimums 
aggregated both CD loans and investments into one category. Some 
commenters suggested separate thresholds for CD loans and CD 
investments.\152\ The OCC recognizes the importance of incentivizing 
new CD activities and, accordingly, has revised the final rule to 
provide that a bank cannot receive a multiplier for any activities 
conducted unless the quantified dollar value of its current period CD 
activities approximately equals the quantified dollar value of its 
prior period CD activities. Additionally, although the final rule does 
not provide a separate minimum for investments, the rule provides a 
multiplier for most CD investments to ensure banks are incentivized to 
conduct investments.
---------------------------------------------------------------------------

    \152\ In particular, many commenters were concerned that banks 
would gravitate toward debt instead of providing investments, unless 
a separate CD investment minimum is established.
---------------------------------------------------------------------------

    The OCC believes that the CD minimums as proposed provide a 
meaningful assessment of whether a bank has engaged in a sufficient 
level of CD activities, as a proportion of the retail domestic 
deposits, to be eligible to receive a satisfactory or outstanding. 
Consistent with the statute, the final rule creates an obligation for 
banks to serve their assessment areas and their entire community, 
including by requiring banks to provide a minimum amount of CD 
activities to be eligible to receive a rating of satisfactory or 
outstanding. However, as discussed below, the final rule does not set 
out a specific level of activity for the CD minimum.
v. Presumptive Ratings Benchmarks, Thresholds, and Minimums
    The proposal would have established the empirical benchmarks for 
the average CRA evaluation measure \153\ associated with each rating 
category, thresholds for passing the retail lending distribution tests, 
and a two percent minimum for CD activities as a percentage of retail 
domestic deposits.\154\ The proposal set 11 percent as the initial CRA 
evaluation measures benchmark for outstanding, six percent as the 
initial benchmark for satisfactory, and three percent as the initial 
benchmark for needs to improve. An average CRA evaluation measure of 
less than three percent would have been associated with the substantial 
noncompliance rating category. The proposal set the benchmark for 
passing the retail lending distribution tests at 55 percent of the 
relevant demographic comparator and at 65 percent of the relevant peer 
comparator.
---------------------------------------------------------------------------

    \153\ The average CRA evaluation measure refers to the average 
of a bank's annual CRA evaluation measures for an evaluation period 
or the average of the bank's annual assessment area CRA evaluation 
measure for an evaluation period.
    \154\ The agencies used the FFIEC's CD lending data and CD 
investment data from a sample of over 200 CRA PEs from OCC-regulated 
banks completed between 2011 and 2018 to estimate the on-balance 
sheet value of all banks' CD activities as a proportion of retail 
domestic deposits in the sample of banks analyzed in 2017. This data 
set did not include estimates of qualifying municipal bonds or 
mortgage-backed securities. This analysis showed that the estimated 
median on-balance sheet value of CD loans and investments divided by 
retail domestic deposits in 2017 was 1.9 percent for banks with 
assets of $2.5 billion or more. The OCC also reviewed the publicly 
available Board data, which is based on a sample of CRA PEs. While 
it does not include all CD loans and investments or all retail 
domestic deposits because the data does not include information on 
all assessment areas, the OCC's analysis of the Board's data shows 
that the estimated median on-balance sheet value of CD loans and 
investment divided by retail domestic deposits was about 2.3 percent 
for banks with assets of at least $2.5 billion within a bank's 
evaluation period.
---------------------------------------------------------------------------

    Commenters described the rationale for the proposed CRA evaluation 
measure benchmarks, CD minimum, and retail lending distribution tests 
thresholds as unclear and inadequate. Commenters expressed differing 
views on whether these benchmarks, minimums and thresholds would be 
difficult or easy to satisfy or whether they should be increased or 
decreased.\155\ They argued that the agencies did not sufficiently 
describe the data, rationale, or methodology for the establishment of 
these thresholds, making it difficult to assess and comment on 
them.\156\ Both community group and industry commenters recommended 
that the agencies disclose the data used to determine the benchmarks, 
thresholds, and minimums and recommended alternative numbers based on 
their own analyses. Community group commenters also recommended more 
gradations to encourage more CRA activity, address the high share of 
banks receiving satisfactory ratings, and develop more rigorous 
grading. Some industry commenters stated that the agencies were limited 
in their ability to leverage existing data to test the proposed 
performance standards and thus should not finalize the proposal at this 
time. Other commenters suggested the agencies issue a new proposal.
---------------------------------------------------------------------------

    \155\ For example, some industry and other commenters expressed 
concern that the CD minimum was set too high and may be difficult to 
achieve in some assessment areas, such as those where there is 
intense competition for CD activities, or for certain banks.
    \156\ Some commenters complained that the OCC relied on 
historical data without explaining why that was appropriate.
---------------------------------------------------------------------------

    The proposed performance standards were based on analyses of 
currently available historical data, using some assumptions to estimate 
how banks would have performed from 2011 through 2017 under the 
proposal's framework. The historical data used was the best available 
data and included CRA PEs, Call Report data, FFIEC CRA data, HMDA data, 
and credit bureau data. The proposal clearly explained the sources used 
and the analysis methods and also acknowledged that data limitations 
existed for the purposes of determining the appropriate benchmarks. 
Commenters had sufficient access to the data utilized by the agencies 
in formulating the proposed benchmarks to enable meaningful comment on 
the proposed benchmarks. As discussed in the preamble to the proposal, 
the agencies were able to rely

[[Page 34774]]

on this data to propose potential benchmarks and thresholds based on a 
reasonable range of potential benchmarks and thresholds and solicit 
comment. Over time, the data collection, recordkeeping, and reporting 
requirements in the proposal would have remedied the existing data 
limitations.
    Although the OCC was not limited in its ability to leverage the 
existing data, the agency agrees that the existing data was limited, 
rendering the agencies' and commenters' choice of thresholds uncertain. 
While the proposed thresholds for each of the three components of the 
objective evaluation framework were reasonable, the agency believes it 
would be appropriate to gather more information and further calibrate 
the benchmarks, thresholds, and minimums. In addition, although the OCC 
issued a Request for Information (RFI) to gather additional information 
to assist in revising the thresholds and benchmarks in the proposal as 
appropriate,\157\ the data that the OCC gathered in response was too 
limited to reliably calibrate these measures for all banks subject to 
the general performance standards. Accordingly, the final rule does not 
contain benchmarks for the CRA evaluation measure, a specific CD 
minimum, or thresholds for the retail lending distribution tests. The 
OCC has concluded it is appropriate to finalize each component of the 
objective evaluation framework contained in the proposal (with 
revisions as described above) and to separately gather more data and 
conduct further analysis to calibrate the benchmarks, thresholds, and 
minimums associated with each of the three components of the framework. 
The framework in the final rule is the product of the careful 
application of the OCC's supervisory experience and policy judgments, 
analyses of available data, and consideration of public comments. 
Finalizing the framework achieves the agency's goal of producing a more 
objective, transparent, and consistent way to evaluate CRA performance. 
The OCC will issue another Notice of Proposed Rulemaking shortly that 
will explain the process the agency will engage in to calibrate more 
precisely the requirements for each of the three components of the 
objective evaluation framework. After receipt and consideration of 
comments to another Notice of Proposed Rulemaking and additional data 
collection and analysis, the OCC will set specific benchmarks, 
thresholds, and minimums. The OCC still expects to periodically review 
and adjust these benchmarks.
---------------------------------------------------------------------------

    \157\ See 85 FR 1285 (Jan. 10, 2020).
---------------------------------------------------------------------------

    Community groups criticized the proposal's lack of explanation for 
the statement in the preamble that the agencies expect to review the 
CRA evaluation measure benchmarks every three years and questioned how 
the agencies would adjust for economic cycles. Similarly, industry 
commenters expressed concern that the benchmarks would lag the economic 
cycle, as well as subject banks to political volatility. One industry 
commenter suggested a three-fold approach: (1) Providing banks the 
option to use benchmarks set shortly after their evaluation periods 
ended; (2) establishing dynamic thresholds that do not lag the market 
but are adjusted as infrequently as possible; and (3) using general 
downward adjustments during evaluation periods in the case of a market-
altering event. A few industry comments included additional 
suggestions, such as providing banks with at least one full evaluation 
cycle of notice before applying higher benchmarks.
    Although the OCC considered ways to adjust the CRA evaluation 
measures automatically to account for changing economic conditions, it 
did not adopt any such measures in the final rule because, depending on 
the nature of the circumstances affecting the banking industry, 
different adjustments might be necessary. Additionally, implementing 
dynamic adjustments to the CRA evaluation measures would sacrifice the 
certainty provided by establishing measures at the beginning of a 
bank's evaluation period. Further, all sources of data the OCC could 
use to make such adjustments would likely also be lagging indicators. 
Instead, the final rule would allow examiners to consider various 
external factors affecting a bank or all banks' ability to meet their 
CRA evaluation measures, including unanticipated market factors or 
economic disruptions, through the application of performance context 
factors prior to assigning a final rating. Banks would be subject to 
the performance standards in place at the beginning of their evaluation 
period, which the OCC believes provides banks with ample notice.
    Small and intermediate bank performance standards. Under the 
proposal, small banks would not have been evaluated pursuant to the 
general performance standards that consider a bank's CRA evaluation 
measure and the retail lending distribution tests. Instead, small banks 
would have continued to be evaluated according to the small bank 
performance standards applicable to small banks that are not 
intermediate small banks in the current CRA regulations, including the 
currently retail lending distribution tests, unless they were evaluated 
under an approved strategic plan or elected to opt into the general 
performance standards. Performance context factors and discriminatory 
and other illegal credit practices would have continued to be 
considered in evaluating a small bank's performance. The proposal's 
definitions of qualifying loans and CD services also would have applied 
to small banks. Small banks that engaged in qualifying activities as 
described in the proposal would have received consideration for those 
activities to the extent that they were consistent with the small bank 
performance standards and Appendix A. Small banks also would have been 
subject to the proposal's changes to the assessment area delineation 
requirements and would have been required to delineate deposit-based 
assessment areas to the same extent as other banks. In addition, under 
the proposed framework, small banks would have continued to refer to 
relevant guidance in the Interagency Q&As and existing policies and 
procedures, including with respect to state and multistate metropolitan 
statistical area (MMSA) ratings.
    Some commenters were concerned that by raising the small bank 
threshold to include banks that are currently intermediate small banks 
the agencies would not encourage those banks to engage in CD 
activities. That is not the case. Although the proposed small bank 
performance standards did not include a separate CD test, banks subject 
to the small bank performance standards would have been able to engage 
in such activities. Under the current small bank performance standards 
that the proposal carried forward, as explained in Interagency Q&As, if 
a small bank performs any CD lending or CD lending-related investment 
activities, those activities are considered during the evaluation of 
the bank's performance. As stated in Appendix A of Part 25, all CD 
investments, even those that are not lending related, are considered in 
assessing whether a bank's performance is outstanding. The proposal 
would not have changed the current approach to evaluating small bank 
performance. However, to clarify that to the extent that small banks 
can and do conduct CD lending and CD lending-related activities, such 
activities will be looked upon favorably in CRA evaluations, the OCC 
revised the final rule to change lending-related activities to retail 
and community development lending-related activities. Other than this

[[Page 34775]]

change, the OCC finalized the small bank performance standards as 
proposed. The OCC finalized Appendix A as proposed because it 
specifically mentions that all CD investments are considered in 
assessing whether a bank's performance is outstanding.
    The final rule also reintroduced the intermediate small bank 
performance standards used in the current framework, with one change. 
Intermediate small banks are now called intermediate banks to achieve 
better clarity in terminology; however, they will be evaluated in the 
same manner as intermediate small banks are currently. In addition, 
both intermediate and small banks can continue to refer to relevant 
guidance in the Interagency Q&As and existing policies and procedures, 
including with respect to state and MMSA ratings.
    Other than the changes explained above and technical and conforming 
edits, the small bank provisions are adopted as proposed. In relation 
to the addition of the intermediate bank provisions and changes to the 
small bank provisions, the agency has made conforming changes 
throughout the final rule.
    Wholesale and limited purpose banks. The proposal did not carry 
forward the separate performance standards for wholesale and limited 
purpose banks that are in the current rule. Commenters objected to this 
approach and stated that wholesale and limited purpose banks have been 
appropriately granted distinct CRA treatment in the past 25 years 
because their business models can differ markedly from most other 
banks. These commenters noted that designation as a wholesale bank 
means that the bank cannot be in the business of extending home 
mortgage, CRA-eligible business, CRA-eligible farm, or consumer loans 
to retail customers, but these wholesale banks may engage in limited 
retail lending on an accommodation basis. For designation as a limited 
purpose bank, an institution must offer only a narrow product line 
(such as credit card or motor vehicle loans) to a regional or broader 
market. The commenters asserted that it is inappropriate to apply the 
general performance standards to these banks and that the agencies 
should continue to apply the wholesale and limited purpose performance 
standards in the current rule because those standards appropriately 
assess the CRA performance of these banks.\158\
---------------------------------------------------------------------------

    \158\ One commenter additionally noted that the strategic plan 
option is a poor fit for banks that currently are designated as 
wholesale banks.
---------------------------------------------------------------------------

    Although the proposal adopted a more streamlined approach to CRA 
that the OCC believed was flexible enough to accommodate all types of 
banks, the agency acknowledges commenters' concerns about wholesale and 
limited purpose banks. The OCC agrees that the current wholesale and 
limited purpose performance standards provide an effective framework to 
evaluate the CRA performance of those banks. The final rule exempts 
these banks from the general performance standards and carries forward 
the performance standards for wholesale and limited purpose banks that 
are in the current rule.\159\
---------------------------------------------------------------------------

    \159\ Based on the agency's determination that the final rule 
will only consider activities conducted by a bank, the final rule 
does not carry forward the provision on affiliate activities in the 
current framework's community development test for wholesale and 
limited purpose banks.
---------------------------------------------------------------------------

    In relation to the addition of the wholesale and limited purpose 
bank provisions, the agency has made conforming changes throughout the 
final rule.
    Performance context. The proposal set forth performance context 
factors that the agencies would have considered in determining a bank's 
assigned rating and assessment area assigned ratings. Banks subject to 
the general performance standards would have submitted performance 
context information in a standardized format using a form on the 
agencies' websites to address the performance context factors. In 
addition, the agencies would have established evaluation procedures to 
help ensure that examiners applied performance context factors 
consistently. The performance context factors would have focused on the 
capacity of the bank to engage in qualifying activities, as well as 
both the demand for and the opportunity to engage in qualifying 
activities in the communities that the bank serves.
    Some community group commenters voiced concerns that public 
comments would be considered in a constrained manner under the 
proposal. These commenters stated that the proposal did not expressly 
provide that the public could comment on banks' CRA performance. These 
commenters also observed that the agencies did not discuss whether they 
would facilitate public comments.
    The final rule ensures that the OCC will be able to gather and 
assess valuable written public comments about local needs and 
opportunities submitted to a bank or the evaluating agency as a part of 
applying performance context factors. As these comments are considered 
prior to the issuance of CRA ratings, the rule does not diminish the 
impact of public comments on CRA performance ratings. With respect to 
submissions of these comments, the OCC will continue to explore 
technological and other methods to facilitate these submissions.
    Some community groups stated that performance context factors 
should identify community needs through analysis of economic and 
demographic data, as well as community comments.\160\ The OCC agrees 
and notes that the proposal provided for this type of identification of 
community needs both directly and indirectly through several 
performance context factors. Because of the diversity of the banking 
industry, however, a one-size-fits-all approach to community engagement 
does not exist. There are currently many methods of assessing the local 
demand for qualifying activities and the available opportunities to 
satisfy this demand by engaging with their communities. For instance, 
banks may sponsor events, forums, and other activities where community 
organizations, such as religious organizations, CDFIs, CD 
practitioners, and housing-related non-profits, can attend and provide 
feedback on local needs and opportunities. Banks may also respond to 
written comments from community stakeholders on different qualifying 
activity opportunities that arise or conduct demographic and economic 
research on finance needs in their community. Finally, banks may look 
to reliable sources that articulate local needs and opportunities based 
on interactions with the community and other types of research.
---------------------------------------------------------------------------

    \160\ Community group commenters also advocated for requiring 
banks to meet with community groups or other stakeholders and 
specifically suggested recognizing community benefits agreements for 
identifying community needs.
---------------------------------------------------------------------------

    Two examples of such reliable sources include the Federal Home Loan 
Banks' Targeted Community Lending Plans (FHLB TCLPs) and local or state 
Consolidated Plans submitted to HUD for community planning and 
development programs.\161\ FHLB TCLPs, which were referenced in the 
proposed regulation text, evaluate community lending and affordable 
housing needs, reflect market research conducted in and localized to a 
FHLB's district, and are developed in consultation with the FHLB's 
Advisory Council, members, housing associates, and public and private 
economic development organizations in the FHLB's district.\162\ Each 
FHLB Advisory Council has 7 to 15 persons drawn from community and non-
profit organizations actively involved in providing or promoting LMI

[[Page 34776]]

housing in the district.\163\ HUD Consolidated Plans, which the agency 
has added as an example in the regulation text as a source that 
identifies local needs and opportunities, provide information on the 
local or state jurisdiction's estimated affordable housing and CD needs 
and market conditions based on U.S. Census data, local studies, 
consultation with social service agencies, and other public input.\164\ 
The final rule was revised to refer to both the FHLB TCLPs and HUD 
Consolidated Plans and to clarify that these plans are only examples of 
two reliable sources that articulate local needs and opportunities.
---------------------------------------------------------------------------

    \161\ 12 CFR 1290.6(a)(5); 24 CFR part 91.
    \162\ 12 CFR 1290.6(a)(5).
    \163\ 12 U.S.C. 1430(j)(11).
    \164\ 24 CFR 91.205, 91.305.
---------------------------------------------------------------------------

    The OCC recognizes the value of banks' engagement with their 
communities. Community engagement enables banks to better determine and 
understand local needs and the availability of local opportunities to 
address these needs. The agency encourages banks to actively engage 
their communities in a manner commensurate with the banks' size, scope 
of activities, capacity, and resources. The final rule evaluates the 
effectiveness of a bank's engagement with its community, regardless of 
its method of engagement, as a part of the application of performance 
context factors. The agency will assess the responsiveness of a bank's 
qualifying activities to local needs, as well as the innovativeness, 
complexity, and flexibility of these activities; the availability of 
market opportunities to meet the local needs; and written comments 
about local needs and opportunities submitted to the bank or the OCC.
    Some community groups and a few members of the public recommended 
lowering ratings if banks finance activities that cause displacement or 
other harm. The OCC agrees that it is important to consider both 
positive and negative qualitative aspects of a bank's CRA performance. 
Accordingly, certain qualifying activities criteria require that a bank 
demonstrate that its activities benefit or serve a targeted population, 
entity, or areas. Further, the rule considers the responsiveness of a 
bank's qualifying activities to local needs as part of the application 
of performance context factors. Lastly, as discussed below, the rule 
retains consideration of discriminatory and other illegal credit 
practices, which also can result in downward adjustments to ratings.
    Many commenters expressed concern that the proposed CRA evaluation 
measure would not appropriately capture qualitative factors, such as 
the responsiveness of an activity to certain local needs. Although the 
proposed framework did not assign an explicit value to qualitative 
factors, such as the responsiveness of an activity, it would have 
evaluated these factors through the application of performance context 
factors. Although the OCC continues to believe that the application of 
performance context factors is the appropriate place to evaluate these 
and other qualitative factors, as discussed above, the final rule also 
adds a multiplier of up to four times an activities' quantified dollar 
value based on the OCC's determination of the activity's 
responsiveness, innovativeness, or complexity.\165\ Although the 
proposed framework was designed to bring clarity and consistency to the 
agency's evaluation of a bank's CRA performance, it also sought to 
provide flexibility for a bank to engage in the CRA activities most 
appropriate for its unique context. The OCC and commenters agree about 
the importance of assessing qualitative factors. The OCC believes that 
framework in the final rule that allows multipliers for some 
qualitative factor along with providing for some qualitative 
application of examiner judgment in a more systematic manner is the 
best approach. Accordingly, the final rule will continue to assess 
qualitative factors, like responsiveness, through the application of 
performance context factors and allows for the application of 
multipliers for qualitative factors in some cases.
---------------------------------------------------------------------------

    \165\ At least one community group commenter thought that the 
range of retail banking services should not be evaluated in 
performance context because it asserted that the application of 
performance context factors is largely bank driven. As described in 
the preamble to the proposal, the agency plans to issue additional 
guidance for examiners on how to evaluate the performance context 
factors in the final rule, including how to evaluate the range of 
retail banking services.
---------------------------------------------------------------------------

    Some industry commenters asked for the agency to clarify how 
performance context factors would be factored into the proposed CRA 
benchmarks and associated ratings and how banks can provide the 
information on the relevant factors. Other industry commenters 
suggested that the performance context factors should only be additive 
to a bank's overall CRA score, as a downgrade would defeat the purpose 
of a quantitative system or should not be required if a bank was 
satisfied with its presumptive rating. Community group commenters 
expressed concern that the proposal did not sufficiently value 
performance context factors. Some community group commenters stated 
that the proposal's discussion of performance context factors suggests 
that it would be used mainly to excuse banks' failure to hit the 
targets.\166\
---------------------------------------------------------------------------

    \166\ Industry and community group commenters also suggested 
different elements that could be considered as part of performance 
context, such as (1) a bank's free retail banking services; (2) a 
bank's affordable housing activities; (3) a bank's available loan 
terms and conditions; (4) the unique issues related to military-base 
banks; (5) a standard for measuring diversity and inclusion; and (6) 
specified CD activities. The OCC notes that most of these elements 
are covered by the performance context factors in the proposal and 
the final rule.
---------------------------------------------------------------------------

    As proposed, no element of performance context factors would have 
had a predetermined weight and consideration of performance context 
factors could have resulted in examiners adjusting a bank's rating 
upwards or downwards. To provide clarity, the proposal set forth the 
criteria the agencies believed generally affect a bank's ability and 
opportunity to engage in qualifying activities. The agencies would have 
also considered the responsiveness, innovativeness, and complexity of a 
bank's qualifying activities. Due to the wide variety of factors and 
circumstances that may affect bank performance or opportunities, the 
OCC continues to believe that it is important to allow examiners to 
assess these specific qualitative factors by applying performance 
context factors for the bank and in each assessment area. Accordingly, 
other than the changes described above, OCC has adopted the performance 
context section as proposed. However, the OCC plans to issue guidance 
to examiners to promote consistent application of the performance 
context factors.
    Discriminatory or other illegal credit practices. As proposed, the 
agencies' evaluation of a bank's CRA performance would have been 
adversely affected by evidence of discriminatory or other illegal 
credit practices. Specifically, in assigning a CRA rating, an agency 
would have first evaluated a bank's performance for the applicable time 
period and then made any adjustments to the presumptive rating that 
would have been warranted based on the application of the performance 
context factors, as described above, and any evidence of discriminatory 
or other illegal credit practices, consistent with the agency's 
policies and procedures.
    Commenters expressed differing views on the appropriate effect of 
discriminatory or other illegal credit practices on banks' ratings. 
Some commenters requested additional information on the effect of 
evidence of discriminatory or other illegal credit practices on bank 
ratings. Such

[[Page 34777]]

evidence, whether within or outside an assessment area, affects bank 
ratings under the final rule. An assessment area rating only considers 
evidence of discriminatory other illegal credit practices that occur 
within the assessment area. This rule does not change the OCC's policy 
for determining the effect of evidence of discriminatory or other 
illegal credit practices on the CRA rating of a bank. Several 
commenters suggested that the agencies apply additional scrutiny and 
bolster reviews for evidence of discriminatory, abusive, predatory, or 
otherwise illegal credit practices in connection with evaluations of 
banks' CRA performance, such as by including quantitative analysis of 
lending to communities of color and more detailed descriptions of 
banks' compliance with anti-discrimination and consumer protection 
laws. One commenter suggested that CRA evaluations should ensure that 
communities of color have fair access to the banking system. Two 
community groups recommended that the agencies retroactively downgrade 
CRA ratings when fair lending examinations find violations that 
occurred during a prior period and that the agencies wait to issue CRA 
ratings and approve licensing applications until the completion of 
ongoing fair lending examinations.
    The OCC assesses and examines banks for compliance with consumer 
protection laws and regulations as part of its ongoing supervisory 
activities and takes such action as may be appropriate under the 
applicable laws and regulations to address any deficiencies or 
violations.\167\ As in the past, the OCC will continue to take evidence 
of discriminatory or other illegal credit practices into account in 
evaluating CRA performance. Depending on the circumstances, a bank's 
assigned rating may be lower than its presumptive rating due to such 
evidence. After considering the comments, the agency is finalizing the 
discriminatory and other illegal credit practices section as proposed. 
The OCC will apply its current policies and procedures regarding the 
consideration of discriminatory and other illegal credit practices.
---------------------------------------------------------------------------

    \167\ In some instances, regulatory agencies other than the OCC 
may have supervisory and/or enforcement authority with respect to 
the law or regulation at issue. For example, the Consumer Financial 
Protection Bureau has supervisory and primary enforcement authority 
under Equal Credit Opportunity Act for insured depository 
institutions with more than $10 billion in total assets. 12 U.S.C. 
5481(12)(D), 5481(14), and 5515(a)(1).
---------------------------------------------------------------------------

    Strategic plans. Under the proposal, a bank would have had the 
option to develop a strategic plan for addressing its CRA 
responsibilities and to be evaluated based on its performance under the 
plan. Under the proposal, a bank's strategic plan would have been 
developed with public participation and would have included measurable 
goals for helping to meet the credit needs--particularly the needs of 
LMI census tracts and individuals--of its assessment area(s) and entire 
community through qualifying activities.
    Some industry commenters stated that the proposal's strategic plan 
option appeared to be limited to larger or non-traditional banks and 
recommended that the agencies make this option more accessible to all 
banks. The OCC believes that these commenters may have misunderstood 
the availability of the strategic plan option. This option is open to 
all banks, not just larger or non-traditional banks. However, as 
performance context factors will be applied for all banks under the 
general performance standards, and the final rule includes separate 
performance standards for small, intermediate, wholesale, and limited-
purpose banks, there may be only limited circumstances where strategic 
plans will be beneficial to banks.
    Some commenters also recommended exempting strategic plan banks 
from the assessment area requirements of the general performance 
standards. Allowing banks to propose the areas where they are evaluated 
without any constraints would cause great uncertainty in CRA 
evaluations. Banks evaluated under the strategic plan option are 
subject to the same statutory provisions that require the OCC to 
evaluate performance in certain geographic areas. For these reasons, 
the OCC has decided to not exempt strategic plan banks from the 
assessment area requirements. However, the rule does not otherwise tie 
the evaluation of a strategic plan to evaluation under the general 
performance standards. The strategic plan option provides flexibility 
but does not result in lower expectations for bank performance.
    Some industry commenters requested guidance on how to draft 
strategic plans.\168\ Since there is more than one appropriate way to 
draft a strategic plan, the OCC plans to provide general guidance for 
banks on this issue. However, the OCC notes that each strategic plan 
should be tailored to the unique characteristics and needs of the bank.
---------------------------------------------------------------------------

    \168\ One industry commenter suggested incorporating existing 
strategic plan guidelines. The OCC expects to leverage existing 
guidance to the extent practicable.
---------------------------------------------------------------------------

    Some industry commenters expressed concern that the nine-month 
timeframe for regulatory approval of a strategic plan is too long. 
These commenters recommended that the timeframe should be revised to 90 
days with a potential 30-day extension for good cause. They also stated 
that amendments to strategic plans should be approved within 90 days 
and that absent a change in business model, strategic plans up for 
renewal should always be approved. The OCC notes that the timeframe for 
regulatory approval of a strategic plan in the proposal was six months. 
The agency agrees that the timeframe for approval of a strategic plan 
can and should be shorter. The final rule states that the OCC will 
determine whether to approve strategic plans within 90 days with an 
option for one 30-day extension for good cause. Further, absent a 
change in business model or other material circumstances, the agency 
expects that applications for renewals of strategic plans that have 
previously been approved under this final rule will be approved.
    In light of the reintroduction of the wholesale and limited purpose 
performance standards, the final rule also eliminates the requirement 
that small banks that do not engage in retail lending submit a 
strategic plan, as these banks can now receive a wholesale bank 
designation. Other than these changes and other technical edits, the 
OCC has finalized the strategic plan section as proposed.
    Assigned ratings. The OCC largely adopts the assigned rating 
sections as proposed, with clarifying edits to accommodate the addition 
of the intermediate size category and the inclusion of separate 
performance standards for wholesale and limited purpose banks. The 
final rule also rectifies an inadvertent omission in the proposal by 
clarifying that the agency will consider any evidence of discriminatory 
or other illegal credit practices when assigning ratings for banks 
evaluated under a strategic plan. The final rule also clarifies that 
state or MMSA ratings will be assigned based on the ratings assigned to 
the assessment areas within that state or MMSA. The OCC plans to 
provide additional guidance to examiners about how to assign those 
ratings.
    Conforming, clarifying, and technical changes. Other than the 
changes explained above and technical, clarifying, and conforming 
edits, the agency is the performance standards as proposed.

[[Page 34778]]

D. Data Collection, Recordkeeping, and Reporting

    Today's CRA regulatory framework results in CRA PEs that can be in 
excess of 1,000 pages. Current CRA PEs are difficult to read and use 
and make it challenging to draw comparisons from bank to bank or from 
one bank evaluation period to the next. By defining qualifying 
activities consistently and making CRA evaluations more objective, the 
proposal would have enabled examiners to produce more standardized CRA 
PEs in less time than the current framework. More systematic and 
standardized information would enable the OCC to assess the level of 
qualifying activities being conducted by banks. More complete and 
accessible information will improve and accelerate decision making for 
regulators and stakeholders.
    Greater transparency through more comparable and timely data and 
information will increase accountability by ensuring that ratings are 
more accurate reflections of the level of CRA activities that banks 
conduct. Common definitions and better data over time will allow the 
OCC to adjust the thresholds and benchmarks for delineating deposit-
based assessment areas and the levels of performance necessary to 
achieve certain rating categories. Objective measures, reported in a 
transparent manner, will allow banks to assess performance and 
progress.
    Consequently, the final rule includes enhanced data collection, 
recordkeeping, and reporting requirements to support the new CRA 
regulatory framework. Like the proposal, the final rule includes data 
collection and reporting requirements for banks evaluated under the 
general performance standards or a strategic plan and separate 
requirements for banks evaluated under the small bank performance 
standards. The final rule also adds separate requirements for the 
reintroduced categories of intermediate, wholesale, and limited purpose 
banks.
    Data collection for banks evaluated under the general performance 
standards or a strategic plan. As set forth in the proposal, a bank 
evaluated under the general performance standards or a strategic plan 
would be required to collect and maintain a variety of data about its 
qualifying activities and where each activity took place. Some industry 
commenters and community groups expressed concerns that these proposed 
requirements would necessitate the development and implementation of 
costly new data systems for information that banks may not currently 
collect or have direct access to, with industry commenters noting that 
costs associated with information collection would outweigh benefits.
    The OCC recognizes that there are costs associated with the final 
rule's data requirements--both the upfront costs of developing and 
implementing new systems and the costs of ongoing data collection and 
maintenance. The clarity and certainty provided to banks by the final 
rule will offset these costs and the added benefit to the banks and 
stakeholders warrants such additional costs. Third-party service 
providers may also be able to help banks meet these new data-related 
requirements in a cost-effective manner due to their economies of 
scale. Furthermore, certain changes to the proposed qualifying 
activities, assessment areas, and performance standards adopted in the 
final rule will likely reduce the costs of the new framework's data 
requirements. The data that banks will collect under the final rule may 
also provide them with non-CRA-related benefits, for example, by 
providing them with new information about, and insights into, the 
communities they serve as well as the activities of peers and the 
broader industry.
    A few commenters expressed concern regarding how the OCC will 
address data integrity issues and made certain requests and 
recommendations, including that the agency provide safe harbors, 
clarifying accuracy expectations, and not use data inaccuracies as a 
basis for rating a bank less than satisfactory. One commenter 
recommended that the agency provide a means for offsetting the costs 
associated with data retention and provide a work-through period in 
data retention to avoid overly burdensome immediate impacts. The OCC 
believes that the long-term benefits will outweigh the costs.
    A few industry commenters also expressed concerns about the cost of 
collecting data on consumer loans because banks may not have the 
physical addresses associated with the loans. The OCC recognizes that 
consumer loans present unique data challenges. To address these 
concerns, under the final rule, credit cards are no longer included in 
a bank's CRA evaluation. Having removed credit cards from the 
definition of consumer loan, the OCC determined that it was appropriate 
to simplify the compliance dates, as discussed below.
    Industry commenters sought clarity on the frequency of the 
proposal's deposit data collections. The commenters stated that the 
proposed requirement that banks collect and maintain information on the 
value of each retail domestic deposit account at the end of the quarter 
and the physical address of each depositor would require that this data 
be captured, validated, retained, and not modified during the entire 
evaluation period. To do this, banks would likely have to move the data 
out of one system and into another, which commenters noted was not 
something that most banks currently do and would be costly to 
implement. Some commenters also voiced concerns that capturing 
depositors' physical address every time they move would be costly.\169\ 
Other commenters remarked that the proposal's requirement to geocode at 
the census tract level would require the manual coding of some 
accounts. These commenters suggested that even a revision enabling 
banks to geocode deposit accounts to the county level would difficult, 
especially for small banks. A few commenters provided suggestions for 
reducing the burden associated with geocoding, including: (1) Using 
system reports based on zip codes to identify retail domestic deposits 
within and outside assessment areas; (2) providing a developed process 
to enable banks to make this determination; (3) allowing banks to use 
the address provided at account opening or the address on file, even if 
that address is a P.O box; (4) correlating deposit account addresses to 
counties or assessment areas; (5) geocoding retail domestic deposits 
only on an as-needed or annual basis, or in response to a triggering 
event; or (6) providing exemptions in certain circumstances for 
maintaining geocoded retail domestic deposit data.\170\
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    \169\ Although the USA PATRIOT Act requires that a bank collect 
the physical address for a new depositor, accounts opened prior to 
2001 without this information were grandfathered. Public Law 107-56, 
115 Stat. 272 (2001). Some of these accounts may still be missing 
this information.
    \170\ Two industry commenters requested confirmation that banks 
could rely on the physical address provided by the depositor without 
additional verification. The OCC confirms that banks may rely on the 
physical address provided by the depositor. Another commenter sought 
clarity on the frequency of retail deposit data collection and 
reporting. The final rule requires quarterly collection of the value 
and the physical address and associated Federal Information 
Processing Standards (FIPS) code for each retail domestic deposit 
account. Banks will have to report their average quarterly retail 
domestic deposits annually.
---------------------------------------------------------------------------

    The agency appreciates these concerns. However, to implement the 
performance standards adopted in this final rule, which will enable the 
agency to better assess banks' CRA performance to serve their entire 
communities, the OCC needs to know, as of the end of each quarter, the 
value of a bank's retail

[[Page 34779]]

deposit account and the physical address of each depositor. 
Furthermore, the agency does not believe that the new data collection 
requirements will be as burdensome as industry commenters suggest 
because banks are generally already collecting much of this data in the 
ordinary course of business, although it may not be contained on the 
same systems. For these reasons, the final rule adopts these provisions 
generally as proposed, but clarifies that retail domestic deposit 
accounts need to be geocoded to the county level, not the census tract 
level, because the county is the smallest permissible assessment area 
under the final rule. As provided in the final rule, the OCC will 
prescribe the machine-readable form for collecting and maintaining CRA 
data, and the OCC plans to provide further detail on the data that 
banks must collect and maintain.
    With respect to the proposed requirement that banks collect and 
maintain certain balance sheet information, industry commenters were 
generally opposed to this provision, although some expressed a 
willingness to collect and maintain this information on CD activities. 
The agency notes, however, that the on-balance sheet values required to 
be collected and maintained in the final rule will provide the OCC with 
an important measure of a bank's qualifying activities. Because the 
performance standards in the final rule include consideration of this 
data, the final rule also retains the requirement for banks to collect 
and maintain this information.
    As proposed, banks subject to the general performance standard 
would have to collect, maintain, and report their presumptive ratings 
and the results of their CRA evaluation measure calculations and retail 
lending distribution tests. The proposal did not require that banks 
collect, maintain, or report the results of their CD minimums 
calculations, which were also a component of the general performance 
standards. Commenters suggested that the final rule should include data 
collection, recordkeeping, and reporting requirements for the CD 
minimums. The final rule includes data collection and recordkeeping 
requirements for banks' CD minimum calculations and the supporting 
documentation associated with these calculations.
    Certain industry commenters noted that the proposal is unclear 
about how to treat a bank's existing book of business. Commenters 
further noted that much of the information required by the proposal, 
such as addresses or income information, may not have been gathered for 
loans that are already on banks' balance sheets or may have been 
gathered at too remote a time to be relevant. Accordingly, the 
retroactive application of requirements to measure a bank's current 
portfolio would be challenging. In response to these concerns, the 
agency is grandfathering activities that would have received positive 
consideration in a CRA evaluation under the current framework and are 
on a bank's balance sheet on the effective date of the final rule, 
other than home mortgage loans and consumer loans provided to middle- 
and upper-income individuals in LMI census tracts. Grandfathered 
activities will be considered qualifying activities for purposes of 
calculating the bank's CRA evaluation measure but will be subject to 
more limited data collection, recordkeeping, and reporting 
requirements, discussed below.
    Regarding retail lending data, industry commenters and community 
groups recommended that the OCC use existing datasets and reporting 
structures, such as those related to HMDA data, rather than create a 
new framework. HMDA data would not provide the OCC with the information 
it needs for purposes of evaluating CRA performance. First, many banks 
subject to CRA are not HMDA reporters. Second, HMDA data only includes 
information about the origination value of home mortgages and does not 
contain the on-balance sheet value of these loans needed under the 
final rule's performance standard framework. The OCC needs banks to 
collect and maintain this on-balance sheet information to implement the 
framework in the final rule.
    A community group noted that if qualifying activities data includes 
multipliers, stakeholders will be unable to assess whether CRA activity 
is increasing and the needs of local communities are being met. 
Consistent with the proposal, the final rule requires banks to collect 
and maintain the quantified dollar value of activities before applying 
multipliers. The final rule also adds a requirement that banks collect 
and maintain an indicator of whether a multiplier applies. Therefore, 
the final rule will provide all stakeholders with more transparency 
regarding banks' CRA activities than exists today. In addition, 
multipliers will not apply to CD activities unless a bank maintains 
approximately the same level of CD activities as in the prior period.
    One industry commenter noted that increasing the size of small 
loans to businesses and farms will result in the corresponding Call 
Report codes no longer capturing all loans that qualify for CRA credit 
and suggested that the OCC develop a new method to obtain information 
about these loans. The OCC recognizes that the new framework will not 
align with other existing data reporting requirements and processes but 
the benefits of clarity and transparency regarding CRA activities 
provided by the final rule outweighs the costs of maintaining and 
reporting data. Additionally, as discussed above, the framework in the 
final rule provides banks the flexibility to treat qualifying small 
loans to farm or qualifying small loans to businesses that also qualify 
under a CD criterion as CD loans for purpose of meeting the CD 
minimums.
    A few industry commenters argued that the proposal's requirement 
that banks collect non-qualifying home mortgage and consumer loan 
origination data, should be removed in the final rule.\171\ The final 
rule retains this provision, however, because the agency needs this 
information to conduct a bank's retail lending distribution test and to 
determine the appropriate peer comparators for those tests. 
Furthermore, although the proposal would not have required banks to 
collect data on non-qualifying small loans to businesses and small 
loans to farms, the final rule extends the data collection requirements 
to include these loans because this data is needed to evaluate bank 
performance, conduct a bank's retail lending distribution test, and 
determine the appropriate peer comparators for those tests.
---------------------------------------------------------------------------

    \171\ Another commenter expressed concern that the proposal 
would require banks to collect and maintain information on denied 
consumer loan applications. The OCC notes that the final rule does 
not require banks to collect information on denied consumer loan 
applications.
---------------------------------------------------------------------------

    The final rule includes other revisions to the data collection 
provisions. Specifically, to ensure that the OCC can validate banks' 
retail lending distribution tests, CRA evaluation measures, and 
presumptive ratings, banks must collect and maintain supporting 
documentation related to these calculations. The final rule also 
requires that banks collect, maintain and report information on the 
number of home mortgage loans originated in LMI census tracts. In 
addition, the final rule reduces the length of time that banks must 
maintain data by providing that data must be maintained until the 
completion of the relevant CRA evaluation.
    A few industry commenters expressed concerns regarding the proposed 
requirements to collect, maintain, and report data on CD services, 
citing concerns that the costs of doing so

[[Page 34780]]

would outweigh any CRA benefit.\172\ The final rule's CD-related data 
collection, recordkeeping, and reporting requirements are necessary to 
assess and validate banks' CRA performance under the revised framework. 
Nonetheless, the OCC acknowledges the burden issues raised by 
commenters. The final rule revises the treatment of CD services as 
suggested by commenters to use a standard for the median hourly 
compensation value for the banking industry based on Call Report data 
for (1) median salaries and employee benefits from Schedule RI, Item 
7.a; and (2) the median number of full-time equivalent employees from 
Schedule RI Memorandum Item 5.
---------------------------------------------------------------------------

    \172\ Other commenters suggested that the tracking of CD service 
hours be optional.
---------------------------------------------------------------------------

    Other commenters suggested that the agencies increase data 
collection related to retail banking services, in part to determine 
whether products and services are affordable. The agency is not 
including additional data collection related to retail banking services 
in the final rule, but it notes that banks are required to report 
performance context information.
    One industry commenter noted that the frequency of the data 
collection, recordkeeping, and reporting requirements did not match the 
six-month review period for the qualifying activities list confirmation 
process, which is reduced to 60 days in the final rule. The data 
requirements and the qualifying activities confirmation process serve 
different purposes and the applicable periods would not necessarily 
begin at the same time, making alignment unnecessary.
    One industry commenter requested that the OCC clarify that the 
banks can use the address of the account holder of record as the 
address for an omnibus or intermediate deposit account. Another 
industry commenter requested clarify the information and documentation 
needed for CD loans. The final rule requires banks to collect and 
maintain supporting documentation. The agency notes that banks bear the 
burden of establishing that qualifying activities are eligible for CRA 
credit and the information they collect will permit the OCC to confirm 
the activities' eligibility. The OCC will provide additional guidance 
on the final rule's data collection requirements related to the general 
performance standards and the other performance standards discussed 
below.
    In addition to the changes discussed above, the final rule includes 
conforming and technical changes throughout the data collection 
section, but this section is otherwise adopted as proposed.
    Evaluation under the wholesale and limited purpose bank performance 
standards. The final rule maintains the wholesale and limited purpose 
bank performance standards from the current framework, while making the 
expanded qualifying activities criteria in the new qualifying 
activities section applicable to those banks. The final rule requires 
banks evaluated under the wholesale and limited purpose performance 
standards to collect and maintain information about CD activities, 
including an indication of which new qualifying activity criteria these 
activities satisfy. These banks will also be required to collect and 
maintain information on retail domestic deposits, including the 
physical address of the depositor, and their assessment areas. This 
data collection is necessary to ensure that the OCC has the information 
required to evaluate banks' CRA performance.
    Evaluation under the small and intermediate bank performance 
standards. As proposed, banks evaluated under the small bank 
performance standards were generally exempt from the data collection, 
recordkeeping, and reporting requirements except they would have been 
required to collect and maintain information on retail domestic 
deposits, including the physical address of the depositor. These 
requirements were included in the proposal to determine whether a bank 
was required to delineate deposit-based assessment areas and allow the 
agencies to validate those determinations. The proposal sought comments 
on whether there were other ways to limit the recordkeeping burden on 
small banks.
    In response, some industry commenters stated that small banks 
should be exempt from the retail domestic deposit data collection and 
recordkeeping provisions in the proposal because of the burdens 
associated with this provision. Some community groups opposed allowing 
small banks to opt out of the deposit-related data collection and 
record-keeping requirements. The OCC believes that the proposed data 
collection and recordkeeping requirements for small banks evaluated 
under the small bank performance standards are appropriate, and the 
final rule adopts them as proposed and applies them to intermediate 
banks. Reporting small or intermediate bank retail domestic deposit 
data is not necessary because the OCC will validate assessment area 
delineations during evaluations. Therefore, the final rule does not 
impose any reporting requirements on banks evaluated under the small 
bank performance standards.
    Data collection for grandfathered activities. Some industry 
commenters requested additional clarity on the treatment of a bank's 
existing book of business under the proposal. These commenters noted 
that the data required to be collected under the proposal may not have 
been gathered at origination for these loans, or that it may have been 
gathered at too remote a time to be relevant. The agency recognizes 
that identifying qualifying on-balance sheet activities may be 
burdensome. The final rule provides for grandfathering of existing on-
balance sheet activities that either qualified in previous CRA 
evaluations or would have qualified under the current CRA framework. 
For grandfathered qualifying activities, the final rule includes only 
the data collection requirements necessary to determine the quantified 
dollar value of those activities. The agency expects that banks will 
identify on-balance sheet activities that would not qualify under the 
current CRA framework but qualify under this final rule based on the 
information that was or would have been gathered at the time of 
origination. Although there may be some data collection burden 
associated with the look back process for activities that now qualify 
for CRA credit, the agency anticipates that this look back will not be 
overly burdensome because full compliance with the new regulations will 
not be required until January 1, 2023, and the number of these now 
qualifying activities will likely be very small.
    Activity Location. The proposal set forth provisions explaining how 
banks would determine the location of an activity for purposes of the 
data collection requirements. Industry commenters suggested 
alternatives for determining the location of certain activities with a 
broad geographic focus. The final rule does not revise the treatment of 
activity location. The agency believes that banks should get credit in 
their assessment areas for activities that serve or benefit their 
assessment areas because this is most consistent with the statutory 
purpose of CRA. For purposes of determining activity location, 
qualifying activities that are not conducted within assessment areas 
will receive credit in a bank's qualifying activities value and not in 
any bank assessment area qualifying activities value. Qualifying 
activities that are partially allocated to an assessment area will 
receive CRA credit in the bank's qualifying activities

[[Page 34781]]

for the amount of the activity that is not allocated to another 
assessment area.
    One industry commenter suggested that banks use the FFIEC website 
for geocoding and that banks should not be expected to conduct further 
research. The final rule's performance standards require banks to 
identify the location of their loans and other activities but do not 
specify the method of geocoding. If a bank cannot identify the location 
of its qualifying activities it will receive credit for those 
activities in its bank CRA evaluation measure.
    One industry commenter requested clarification as to whether the 
rule requires aggregate or separate collection and reporting of LMI 
categories. The OCC confirms that data collected for LMI census tracts 
may be aggregated because the rule does not separately evaluate low-
income and moderate-income tracts for performance standards purposes.
    The agency is adopting these provisions as proposed, with a minor 
change to clarify that banks are expected to record the location of a 
consumer loan at the time of origination.\173\ As explained above, 
under the final rule, a bank would not be expected to track, over time, 
the borrower's income or other qualifying criteria or re-classify 
qualifying activities as non-qualifying if income or other qualifying 
criteria change.
---------------------------------------------------------------------------

    \173\ The agency believes the proposal was clear about the time 
at which the bank should record the location of the activity for 
other types of activities and, therefore, no other clarification is 
needed.
---------------------------------------------------------------------------

    Finally, some industry commenters recommended that the agency 
clarify the data collection requirements for CD activities that serve 
multiple locations. The agency will provide guidance to further clarify 
these requirements.
    Recordkeeping. As with the proposal, the final rule will require 
banks to collect and maintain all necessary data in machine readable 
form. To facilitate compliance with the data collection and record-
keeping requirements, the OCC will provide additional guidance on the 
specific data points that a bank will need to collect and maintain and 
the format in which the data will need to be recorded. One industry 
commenter requested confirmation that CRA data may be maintained in any 
system and provided in any machine-readable format. The final rule 
requires banks to maintain the data in machine readable format, as 
prescribed by the OCC, to ensure the validity and integrity of the 
data. The agency made conforming revisions in the final rule to apply 
the recordkeeping requirements to intermediate, wholesale, and limited 
purpose banks. The final rule otherwise adopts the recordkeeping 
section as proposed.
    Data reporting. The proposal required banks evaluated under the 
general performance standards to report to the OCC some, but not all, 
of the CRA-related data that these banks are required to collect and 
maintain. Community groups recommended, instead, that all CRA-related 
data that banks collect and maintain should be reported and made 
public. Several commenters recommended county-level, or ideally census 
tract-level, reporting of CD activities, retail lending, and deposit 
data. These commenters were concerned that the limited public data in 
the proposal would not provide the public with enough information about 
banks' CRA performance. With respect to concerns that the final rule 
will not make enough CRA-related information available to the public, 
the agency notes that all facts and data supporting the agency's 
conclusions and ratings will continue to be available in banks' 
publicly available CRA PEs. The OCC is committed to improving 
transparency under the CRA and, as it accumulates data over time, will 
work to develop aggregate reporting of activities by various 
geographies, while ensuring that confidential supervisory information, 
confidential commercial information, and personally identifiable 
information are appropriately protected. At this time, however, the 
final rule does not adjust the scope of the public data reporting. As 
with any other rule, the agency will issue guidance as part of the 
administration of the rule to provide clarity on when banks will have 
to report data to the agency.
    One industry commenter recommended that the agency make reporting 
of presumptive ratings optional, rather than mandatory. The agency 
notes that the purposes of the new framework include enhanced 
transparency and tracking of CRA activity. Therefore, the final rule 
continues to require reporting of presumptive ratings, which will be 
validated by the OCC examiners.
    One industry commenter stated that the reporting requirements for 
contingent commitments to lend were unclear and recommended reporting 
the commitment rather than the outstanding amount. The final rule, like 
the proposal, requires reporting of the quantified dollar value of 
qualifying loans and CD investments. As described above, the quantified 
dollar value of certain commitments to lend and legally binding 
commitments to invest is the full amount of the commitment. Other 
commitments to lend are quantified based on any on-balance sheet amount 
plus the allowance for credit losses related to the commitment itself.
    After considering these and other comments, the agency is adopting 
the reporting requirements as proposed, with a few changes. The final 
rule requires banks to report the results of their retail lending 
distribution tests and their presumptive ratings at the end of the 
evaluation period, not annually as proposed, in recognition of the fact 
that banks cannot determine the test results and presumptive ratings 
until the end of the evaluation period. The final rule also clarifies 
that banks will only have to report performance context information 
prior to their CRA evaluations.
    A few industry commenters made recommendations related to the 
method of reporting information including suggesting that the agency 
create portals or spreadsheets to assist banks with these requirements. 
The OCC will provide banks with a reporting form to assist them in 
meeting these requirements.
    Several industry commenters stated that it was unclear whether 
over- or underreporting would result in penalties, and one commenter 
suggested that the agency incorporate aspects of the current framework 
that do not contemplate penalties regarding CRA data. The OCC notes 
that the CRA is designed to encourage banks to engage in activities. 
The agency will work with banks to ensure accuracy of reported data 
but, as with the current framework, the agency does not contemplate 
penalties regarding CRA data, especially since the CRA statute does not 
provide a basis for OCC enforcement actions.\174\
---------------------------------------------------------------------------

    \174\ Auth. of the Fed. Fin. Supervisory Agencies Under the 
Cmty. Reinvestment Act, 18 U.S. Op. Off. Legal Counsel 249 (1994).
---------------------------------------------------------------------------

    One industry commenter argued that any reporting or disclosure 
requirements that do not serve a specific purpose under the new 
framework, such as activities that do not count toward the CRA 
evaluation measure, would violate the Paperwork Reduction Act. The 
agency notes that all the information required by the data collection, 
recordkeeping, and reporting requirements is needed to determine and 
validate bank performance.
    Industry commenters also sought clarification regarding aspects of 
the reporting requirements. The agency confirms that banks must report 
qualifying donations, which are included in the quantified dollar value 
of their CD investments. The agency also notes that more detailed 
reporting of originated loans is required for the

[[Page 34782]]

purposes of the retail lending distribution test. However, banks must 
also report the quantified dollar value of all qualifying CD and retail 
loans, whether originated or purchased.
    The final rule also includes reporting requirements for wholesale 
and limited purpose banks. The agency included reporting requirements 
for these banks to be consistent with the proposal and the current 
framework. Specifically, under the proposal, banks that meet the 
definition of wholesale or limited purpose bank in the final rule would 
have been evaluated under the general performance standards, unless 
they had assets of $500 million or less. Further, wholesale and limited 
purpose banks have reporting requirements under the current framework. 
The final rule requires that wholesale and limited purpose banks report 
information on their CD loans and CD investments, assessment areas, and 
performance context. The final rule also includes conforming edits 
related to the reporting requirements for wholesale and limited purpose 
banks.
    In addition to the revisions described above, the final rule 
includes the following clarifying and conforming revisions: (1) Adds 
the words as applicable to the performance standards reporting 
requirements to clarify that not all banks that must report data will 
have information to report; (2) removes the data collection 
certification requirement given that the final rule does not permit 
banks to include affiliate activities; (3) changes the term quantified 
value to the term quantified dollar value to be consistent throughout 
the final rule; and (4) makes other technical and conforming revisions 
related to the changes discussed above.
    Certain industry commenters suggested that banks operating under 
strategic plans should be exempt from data collection, recordkeeping, 
and reporting requirements that are not measured in the bank's 
strategic plan. One commenter noted that the data could be misleading 
to those who are unaware that a bank is operating under a strategic 
plan. Like the proposal, the final rule generally subjects banks 
operating under a strategic plan to the same data collection, 
recordkeeping, and reporting obligations as banks operating under the 
general performance standards, unless determined otherwise in writing 
by the OCC. The agency will consider appropriate exemptions from 
specific data collection, recordkeeping, and reporting requirements 
based on individual facts and circumstances.
    Several industry commenters suggested that the agency allow CDFI 
reporting requirements to satisfy a bank's CRA data collection, 
recordkeeping, and reporting requirements. Similarly, one community 
group suggested that the agency recognize bank data reported under 
certain federal programs and that regulators develop protocols and 
procedures to share data while protecting proprietary information. 
Because the data collection, recordkeeping, and reporting requirements 
in the final rule are necessary to assess and validate CRA performance, 
the agency is not adopting these recommendations. The agency cannot 
ensure that these alternative reporting requirements will provide the 
information needed for CRA purposes. Other than the changes discussed 
above, the agency is finalizing the reporting section as proposed.
    Public disclosures. Under the proposal, the agency would have made 
certain information that banks provide publicly available through 
individual and aggregate CRA Disclosure Statements, allowing 
stakeholders to observe trends and monitor and compare banks' CRA 
activities. In addition, the agency would have published each bank's 
ratings and a list of banks rated outstanding. Banks that received a 
bank assigned rating of outstanding would have received a certificate 
or seal of achievement to display on their websites and in their main 
office and branches. One industry commenter suggested that the agency 
also publish a list of banks rated satisfactory. Because each bank's 
rating will be published in its CRA PE and the list is intended to 
identify and encourage outstanding CRA performance, the final rule 
adopts the public disclosure provisions as proposed, except for a minor 
change replacing quantified value with quantified dollar value to use 
consistent terminology throughout the rule. Banks that are rated 
satisfactory are encouraged to inform their customers and communities 
of such a rating.
    One industry commenter requested that the agency take steps to 
protect banks' financial information and their customers' information 
in the CRA Disclosure Statements. The agency recognizes the importance 
of protecting this information and will, consistent with applicable 
law, appropriately protect confidential supervisory information, 
confidential commercial information, and personally identifiable 
information from disclosure in the CRA Disclosure Statements issued 
under the final rule.\175\
---------------------------------------------------------------------------

    \175\ The OCC has treated and will continue to treat 
confidential commercial information submitted to the agency in 
accordance with 12 CFR 4.16, consistent with Food Marketing 
Institute v. Argus Leader Media, 139 S. Ct. 2356, 2363 (2019), and 
the Step-by-Step Guide for Determining if Commercial or Financial 
Information Obtained from a Person is Confidential Under Exemption 4 
of the FOIA (U.S. Department of Justice, Oct. 7, 2019), available at 
https://www.justice.gov/oip/step-step-guide-determining-if-commercial-or-financial-information-obtained-person-confidential.
---------------------------------------------------------------------------

    One industry commenter recommended that performance standards data 
not be disclosed to the public because they would not represent 
performance over the entire evaluation period. The agency agrees and 
notes that the final rule requires reporting of presumptive ratings and 
retail distribution tests only at the end of an evaluation period.
    A few community groups and industry commenters recommended that 
data on the geographic location of deposits be made publicly available 
if deposit-based assessment areas are adopted. As described above, the 
agency will make public aggregate data based on the information 
reported by banks. However, the final rule does not include public 
disclosure of deposit data consistent with the current CRA framework. 
The information about a bank's deposit-based assessment areas will be 
included in banks' CRA PEs. The agency does not think additional 
information is necessary, especially in light of the additional 
reporting burden that disclosure would require.
    The proposal would also have retained many of the current 
regulation's provisions related to the public file,\176\ planned 
evaluation schedules,\177\ public notice by banks,\178\ and the CRA 
notice.\179\ Banks still would have needed to provide public notice to 
the communities they serve. Banks would also have needed to provide 
CRA-related information to community members upon request. CRA-related 
information would have included information about banks' branches, 
locations, and services, comments received from the public related to 
assessment area needs and opportunities, and responses to those 
comments. Other than technical and conforming edits, the agency is 
adopting these provisions as proposed.
---------------------------------------------------------------------------

    \176\ 12 CFR 25.43, 195.43.
    \177\ 12 CFR 25.45, 195.45.
    \178\ 12 CFR 25.44, 195.44.
    \179\ 12 CFR part 25 Appendix B.
---------------------------------------------------------------------------

    Under the proposal, banks would not have had to provide data 
reported through HMDA in the public file. Some community groups opposed 
removing

[[Page 34783]]

HMDA data from banks' public files and suggested adding supplemental 
requirements if HMDA data is insufficient. They also opposed replacing 
HMDA data with Call Report data because the latter does not include 
borrower income information. Because the final rule does not rely on 
HMDA data, the agency is not requiring that the public file include 
HMDA data in the final rule. HMDA data will remain publicly available 
on the Consumer Financial Protection Bureau's website.\180\
---------------------------------------------------------------------------

    \180\ HMDA data can be accessed here: https://www.consumerfinance.gov/data-research/hmda/historic-data/.
---------------------------------------------------------------------------

    Additionally, under the proposal, banks would no longer have been 
limited to providing public notice or the public file through physical 
means. Instead, banks would have had the option to provide public 
notice or the public file on their websites. The preamble to the 
proposal indicated that if a community member who requested CRA-related 
information did not have access to the internet, banks could offer to 
print out the information at that person's expense, instead of copying 
the information from the physical file.
    One community group opposed the proposal of allowing banks to 
charge a fee for physical copies of the public file, which is permitted 
by the current rule.\181\ The final rule, like the proposal, allows 
banks to make the public file available to the public through any 
means. The agency encourages banks to make the public file as 
accessible as possible and consider not charging fees for physical 
copies.
---------------------------------------------------------------------------

    \181\ 12 CFR 25.43(d), 195.43(d).
---------------------------------------------------------------------------

    Evaluation periods and issuance of CRA PEs. The proposal did not 
specify the length of CRA evaluation periods. However, the proposal 
stated that banks that received an outstanding CRA assigned rating 
would have been subject to a five-year CRA evaluation period, unless 
the data reported indicates that an earlier evaluation is warranted. 
Some commenters suggested that the final rule specify the length of 
evaluation periods. The agency believes that the current regulatory 
framework, in which the regulation does not specify the length of an 
evaluation period, continues to be appropriate and the agency will 
continue its current practice of publishing evaluation schedules to 
provide sufficient clarity and flexibility. Although the agency is 
finalizing the rule without specifying the length of an evaluation 
period, the agency expects that, in general, evaluation periods will be 
between three years and five years in length.
    Some community groups expressed concern about the five-year 
evaluation cycle for banks rated outstanding, including that it would 
not sufficiently incentivize banks to consistently help to meet the 
credit needs of their communities and that data considered in merger 
transactions could be stale. In contrast, an industry commenter 
recommended that the evaluation period for a bank rated satisfactory be 
four years. The agency notes that the concern about inconsistent 
performance is mitigated by the fact that the final rule incentivizes 
banks to consistently meet the needs of their communities by using the 
average on-balance sheet value of many qualifying loans and 
investments. The agency also emphasizes that, while it is maintaining 
the expectation of a general five-year evaluation cycle for banks rated 
outstanding, the final rule requires banks to report data annually, 
including banks with outstanding ratings that would be evaluated every 
five years. In addition, the agency will continue to make available all 
banks' annual CRA Disclosure Statements, which include information 
about the aggregate quantified dollar value of the bank's qualifying 
activities by category and the number of retail loans in each county, 
by type. The annually-reported information will allow the agency and 
interested stakeholders to track and monitor bank performance. The 
agency does not plan to implement the commenters' recommendation that 
banks with satisfactory performance have four-year evaluation periods 
because it expects all banks should strive to achieve satisfactory 
performance and the five-year evaluation cycle was meant to recognize 
exceptional performance.
    One industry commenter recommended that the final rule define the 
term evaluation period. The agency believes that the preamble to the 
proposal and this final rule make clear that the term refers to the 
multiyear period over which a bank's CRA performance is evaluated and 
assigned a rating. The final rule does not include it as a defined 
term.
    Two community groups and two industry commenters recommended that 
the agency issue CRA PEs within a pre-determined amount of time from 
the end of the CRA evaluation. The agency intends to issue CRA PEs in 
as timely a manner as possible. Because a variety of factors can cause 
some CRA PEs to require more time to complete than expected, including 
the consideration of discriminatory and other illegal credit practices, 
the agency is not adopting a time limit in the final rule. The agency 
notes, however, with improved data and more objective evaluations, the 
agency expects that evaluations will be published quickly and more 
consistently after the close of an evaluation.
    Conforming, clarifying, and technical changes. Other than the 
changes explained above and conforming, clarifying, and technical 
revisions, the OCC is adopting the data collection, recordkeeping, and 
reporting requirements as proposed.

E. Other Issues

    Effective date, compliance dates, and transition. The agencies 
proposed an effective date of the first day of the first calendar 
quarter that would have begun at least 60 days after the issuance of 
the final rule. The proposal also included a transition period, 
implemented through varying compliance dates following the effective 
date, to allow banks to revise their systems for collecting, 
maintaining, and reporting data and to establish processes for 
calculating their qualifying activities values and CRA evaluation 
measures and determining their presumptive ratings. Specifically, the 
proposal provided a bank other than a small bank with: (1) One year 
after the rule's effective date to comply with the rule's assessment 
area, data collection, and recordkeeping requirements; and (2) two 
years after the rule's effective date to comply with the rule's 
reporting requirements. The proposal provided small banks with one year 
after the rule's effective date to comply with the rule's assessment 
area and applicable data collection and recordkeeping requirements. No 
bank had to comply with the remaining requirements of the rule--and 
thus be evaluated under the new framework--until it completed its 
evaluation period that concluded immediately after the reporting 
requirements compliance date in the proposal, including any extensions 
approved by its relevant agencies.
    The proposal provided small banks that opted into the general 
performance standards, as of the final rule's effective date, and those 
banks that no longer meet the definition of a small bank with: (1) Two 
years to comply with the rule's assessment area, data collection, and 
recordkeeping requirements, after the rule's effective date or after 
the bank no longer met the definition of a small bank; and (2) three 
years to comply with the rule's reporting requirements, after the 
rule's effective date or after the bank no longer met the definition of 
a small bank. However, small banks that chose to opt into the general 
performance standards after the effective date would have received: (1) 
One year after the

[[Page 34784]]

bank opted in to comply with the rule's assessment area, data 
collection, and recordkeeping requirements; and (2) two years after the 
bank opts in to comply with the rule's reporting requirements.
    Several industry commenters suggested that the implementation 
period for the new regulatory framework would have been too short, 
specifically with respect to the data collection, recordkeeping, and 
reporting provisions. They offered a variety of reasons to support this 
view, including the COVID-19 pandemic. One industry commenter also 
suggested providing additional time to comply for banks that are 
required to delineate new deposit-based assessment areas. Another 
industry commenter recommended that the agencies implement a ratings 
floor to protect against downgrades during the transition to the new 
framework. Many other commenters asked for additional clarification on 
how the phased in compliance dates would work.
    The agency has carefully considered these comments and understands 
that the cost and time frame associated with complying with the final 
rule will vary from institution to institution. However, considering 
that the final rule increased the small bank size threshold and 
reintroduced the performance standards applicable to intermediate banks 
and wholesale and limited purpose banks, the final rule includes more 
streamlined compliance dates based on the applicable performance 
standards. The final rule also includes a provision addressing the 
transition from the current framework to the framework in the final 
rule.
    Specifically, the final rule's effective date of October 1, 2020 is 
the first day of the first calendar quarter that begins at least 60 
days after the issuance of the final rule. The streamlined compliance 
dates in the final rule allow banks \182\ to determine individually 
when to implement the various systems changes required to comply with 
this rule by the compliance dates in the final rule. Accordingly:
---------------------------------------------------------------------------

    \182\ The streamlined compliance dates also apply to banks that 
elect to opt in to the general performance standards and banks that 
cease to meet the definition of a small, intermediate, wholesale, or 
limited purpose bank.
---------------------------------------------------------------------------

     Banks subject to the general performance standards must 
comply with the following sections of the final rule by January 1, 
2023: (1) Qualifying activities quantification; (2) qualifying 
activities value; (3) assessment area; (4) performance standards, in 
general; (5) CRA evaluation measure; (6) retail lending distribution 
tests; (7) general performance standards and ratings; (8) data 
collection; (9) recordkeeping; and (10) reporting.
     Banks subject to the wholesale or limited purpose bank 
performance standards must comply with the following sections by 
January 1, 2023: (1) Assessment area; (2) wholesale or limited purpose 
bank performance standards; (3) data collection for wholesale and 
limited purpose banks evaluated under the wholesale or limited purpose 
bank performance standards; (4) recordkeeping; and (5) reporting for 
banks evaluated under the general performance standards, the wholesale 
or limited purpose bank performance standards, or a strategic plan.
     Banks subject to the small and intermediate bank 
performance standards must comply with the following sections by 
January 1, 2024: (1) Assessment area; (2) small and intermediate bank 
performance standards; (3) retail domestic deposit data collection for 
small and intermediate banks evaluated under the small and intermediate 
bank performance standards; and (4) recordkeeping.
    The final rule also clarifies that during the period between 
October 1, 2020 and the compliance dates in the final rule applicable 
to the different types of banks, the provisions of the current 
regulation will remain in effect as an alternative compliance option 
\183\ to provide flexibility for banks that have a CRA evaluation 
during this period. The OCC retains the authority to ensure an orderly 
transition between the two frameworks and will work with banks that are 
impacted by the transition during this time. Accordingly, the OCC may 
permit banks to rely on: (1) The applicable performance standards and 
tests, procedures, processes, definitions, or another element of the 
current framework; or (2) the new framework in the final rule. The 
final rule also provides that the alternative compliance provisions 
containing the current framework will expire on January 1, 2024, at 
which point all banks must be in compliance with all provisions of the 
final rule.
---------------------------------------------------------------------------

    \183\ The final rule includes a new Appendix C for the 
alternative compliance provisions that sets forth parts 25 and 195 
in effect on the date prior to October 1, 2020.
---------------------------------------------------------------------------

    With respect to the possible effect of COVID-19 on a bank's ability 
to meet the compliance dates, the OCC notes that the economic 
challenges experienced in LMI communities as a result of the COVID-19 
pandemic make it critical that implementation of this rule not be 
delayed so that the benefits of the new rule can reach these 
communities as soon as possible.
    Industry commenters specifically discussed the compliance dates in 
the context of the burden of the proposal's mandatory inclusion of 
consumer lending, including the applicable data collection, 
recordkeeping, and reporting requirements. According to these 
commenters, consumer loan data is typically stored in multiple data 
systems and the costs required for compliance would discourage banks 
from offering these products. One industry commenter suggested removing 
all loans for which reporting processes are not currently in place from 
the qualifying activities component of the CRA evaluation measure 
numerator to hasten compliance.
    The OCC recognizes the specific data collection challenges 
presented by consumer loans, particularly with respect to credit cards. 
Since the final rule includes a more limited definition of consumer 
loans that does not include credit cards, the final rule does not 
provide extended compliance dates for consumer lending.
    Commenters also requested that the agencies provide examples of how 
the transition periods will apply to banks evaluated under the 
different performance tests and standards. The chart below provides 
examples:

                                                Compliance Dates
----------------------------------------------------------------------------------------------------------------
                                      Qualifying
                                      activities
                                    quantification,
                                      qualifying       Assessment area,
                                   activities value,   data collection,        Reporting           All other
            Bank type                   general        and recordkeeping     requirements        requirements
                                      performance      requirements, as
                                    standards, and        applicable
                                      presumptive
                                        ratings
----------------------------------------------------------------------------------------------------------------
Banks other than small,           January 1, 2023...  January 1, 2023...  January 1, 2023...  October 1, 2020.
 intermediate, wholesale, and
 limited purpose banks.
Wholesale and limited purpose     Not Applicable....  January 1, 2023...  January 1, 2023...  October 1, 2020.
 banks.

[[Page 34785]]

 
Small and intermediate banks....  Not Applicable....  January 1, 2024...  Not Applicable....  October 1, 2020.
----------------------------------------------------------------------------------------------------------------

    Special purpose banks. One commenter requested confirmation that 
banks currently designated as special purpose banks would be exempt 
under the final rule. Though the proposal did not include the term 
special purpose banks, its scope did not include certain exempt banks, 
which covers the same banks exempted as special purpose banks under of 
the current rule.\184\ The final rule maintains this exemption.
---------------------------------------------------------------------------

    \184\ See 12 CFR 25.11(c)(3); 195.11(c)(2).
---------------------------------------------------------------------------

    Effect of CRA performance on applications. The proposal included a 
section on the effect of CRA performance on applications that was based 
on the current regulatory framework. The agency received several 
comments on the use and effect of CRA ratings.
    A few commenters asked about the effect of presumptive ratings on a 
covered application. The agency intends to use assigned, not 
presumptive, ratings when evaluating an application for which CRA 
performance is considered and notes that presumptive ratings may be 
subject to upward or downward adjustments after considering performance 
context factors and evidence of discriminatory or other illegal credit 
practices. The agency will, however, evaluate all the facts and 
circumstances of each application and use all available information to 
inform its judgement and decision on the statutory factors.
    Commenters also offered suggestions on the impact of CRA ratings 
including not allowing negative community group comments to delay 
mergers or acquisitions of a bank rated satisfactory or outstanding on 
its most recent CRA evaluation. The agency intends to follow its 
applicable guidance on the impact of CRA ratings on licensing 
applications.\185\ Accordingly, the agency is adopting these provisions 
as proposed.
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    \185\ See e.g., OCC Bulletin 2017-51, Community Reinvestment 
Act: Impact of CRA Ratings on Licensing Applications, (Nov. 8, 
2017), available at https://el.occ/news-issuances/bulletins/2017/bulletin-2017-51.html.
---------------------------------------------------------------------------

    Minority depository institutions, women's depository institutions, 
or low-income credit unions, CDFIs, and other mission-focused banks. A 
few commenters recommended exemptions or tailoring of requirements for 
minority depository institutions, women's depository institutions, or 
low-income credit unions, CDFIs, and other mission-focused banks. The 
OCC has a statutory obligation to assess bank performance. Although the 
mission of these banks increases the likelihood that banks are helping 
to meet the credit needs of their communities, the agency must still 
evaluate and rate their performance.
    One industry commenter recommended defining minority depository 
institutions and women's depository institutions to include banks where 
a majority of the directors and a majority, or a significant 
percentage, of senior officers are minorities or women. Because these 
terms are defined in the CRA statute, the OCC is not altering the 
definitions in the final rule.
    Military banks. One industry commenter supported the proposal's 
inclusion of a definition of military bank but recommended that it be 
modified to include on-base branches of banks or to allow assessment 
areas to consist only of the base on which a branch is located. The 
commenter also recommended a separate performance standards section for 
military banks. The OCC believes that the general performance standards 
are sufficiently flexible so that separate performance standards for 
military banks are not necessary. They will be evaluated like other 
banks with similar levels of retail domestic deposits, but, as 
indicated in the proposal and the final rule, their assessment areas 
will consist of the entire United States. They will only be evaluated 
under the bank performance standards, not the assessment area 
performance standards. Thus, the agency adopts the provisions related 
to military banks as proposed.
    Financings and renewals. One commenter indicated that it was 
unclear whether the term financing includes renewals as customarily 
defined in commercial lending as opposed to the current CRA 
regulation's definition. The commenter recommended using the Call 
Report definition of financing and recommended an expanded definition 
of renewals to align with common banking usage. The final rule defines 
financing as permissible equity or debt facilities, such as loans, 
lines of credit, bonds, private funds, securities, or other permissible 
investments. As described below, the numerator of the CRA evaluation 
measure considers the on-balance sheet value of qualifying activities. 
If a financing is on-balance sheet as of the close of business of the 
last day of the month, it will count toward the bank's CRA evaluation 
measure whether it is a new loan or a renewal.
    Severability. The agency intends for each section or provision of 
this final rule to be severable from the remainder of the rule. In 
addition, although the agency has addressed four categories of CRA-
related issues in this rulemaking: (1) Qualifying activities; (2) 
assessment areas; (3) measurement of CRA performance; and (4) data 
collection, recordkeeping, and reporting, it could have finalized any 
one or any combination of the four categories on its own because each 
section and provision within each section can stand and operate alone. 
The final rule includes language providing that if any section or any 
provision of any section of the final rule is held to be invalid or 
stayed for any reason, it is the OCC's intention that the remaining 
sections and provisions of the final rule shall continue in effect.
    Conforming, clarifying, and technical changes. Other than the 
changes discussed in this section and the sections above and 
conforming, clarifying, and technical changes, the (1) authority, 
purposes, and scope provisions; (2) the effect of CRA performance on 
applications; and (3) the definitions in are adopted as proposed.

F. Miscellaneous

    Prohibition against the use of interstate branches primarily for 
deposit production. The agency is adopting the provisions on the 
prohibition against use of interstate branches primarily for deposit 
production (Subpart F) as proposed with conforming changes.
    Integration of Parts 25 and 195. As proposed, this final rule also 
consolidates the OCC's national bank and federal savings association 
CRA rules by applying Part 25 to savings associations and removing the 
current OCC's CRA rule for savings associations, 12 CFR 195. The OCC 
received no comments on this consolidation.

[[Page 34786]]

    Mapping tools. One industry commenter and one community group 
suggested that the agencies develop mapping tools, such as a CRA map of 
the United States to identify potential CRA gaps or a map to identify 
gaps in assessment areas. The agency will consider developing these 
tools over time but is not adopting them as part of the final rule.
    Release of RFI data. On January 10, 2020, the agency published an 
RFI seeking four types of bank-specific data or information to assist 
in drafting a final rule.\186\ Commenters argued that the OCC was 
required to release the data and information the agency received in 
response to the RFI to provide the public with a meaningful opportunity 
to comment on the NPR. However, the RFI included an express statement 
that the agency would treat any confidential commercial information 
submitted in response to the RFI in accordance with relevant rules, 
guidance, and case law.\187\
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    \186\ See 85 FR 1285 (Jan. 10, 2020). Specifically, the RFI 
sought data or information on: (1) Retail domestic deposit 
activities; (2) qualifying activities; (3) retail loans originated 
and sold within 90 days; and (4) other retail loan.
    \187\ See, e.g., 12 CFR 4.16; Food Marketing Institute v. Argus 
Leader Media, 139 S. Ct. 2356, 2363 (2019); and Step-by-Step Guide 
for Determining if Commercial or Financial Information Obtained from 
a Person is Confidential Under Exemption 4 of the FOIA (U.S. 
Department of Justice, Oct. 7, 2019), available at https://www.justice.gov/oip/step-step-guide-determining-if-commercial-or-financial-information-obtained-person-confidential.
---------------------------------------------------------------------------

    The OCC received a total of 67 comments on the RFI. Of these, 61 
comments were not responsive to the information request and were posted 
to the RFI public docket. Because the remaining six comments, which 
were responsive, contained confidential commercial information, the OCC 
is not making them public. Because of the limited number of responses 
to the RFI, the agency did not rely on any RFI data in formulating the 
final rule. As noted above, the agency will be issuing another 
rulemaking to set the benchmarks for the objective evaluation measures.
    CRA sunshine requirements. In addition to the proposed data 
collection, recordkeeping, and reporting provisions contained in this 
proposal, the agencies noted that Congress required the agencies to 
issue rules implementing the CRA Sunshine Requirements as part of the 
Gramm-Leach-Bliley Act of 1999.\188\ The agency's Disclosure and 
Reporting of CRA-Related Agreements regulations define and address 
written agreements between financial institutions and nongovernmental 
entities or persons that are made in fulfillment of the CRA, and 
require that those agreements be made available to the public and the 
appropriate federal banking agency.\189\ Further, the regulations 
require parties to a covered agreement to file reports with the 
appropriate federal banking agency for the duration of the agreement. 
The agency emphasizes again the continued importance of complying with 
the Disclosure and Reporting of CRA-Related Agreement regulations to 
ensure public awareness of the terms and conditions of covered 
agreements.
---------------------------------------------------------------------------

    \188\ See 12 U.S.C. 1831y; 12 CFR parts 35, 207, 346.
    \189\ See 12 CFR part 35.
---------------------------------------------------------------------------

VI. Regulatory Analysis

Paperwork Reduction Act of 1995

    Certain provisions of the final rule contain ``collection of 
information'' requirements within the meaning of the Paperwork 
Reduction Act (PRA) of 1995.\190\ In accordance with the requirements 
of the PRA, the OCC may not conduct or sponsor, and a respondent is not 
required to respond to, an information collection unless it displays a 
currently valid Office of Management and Budget (OMB) control number. 
The OCC reviewed the final rule and determined that it revises certain 
information collection requirements previously cleared by OMB under OMB 
Control No. 1557-0160. The OCC has submitted the revised information 
collection to OMB for review under section 3507(d) of the PRA (44 
U.S.C. 3507(d)) and section 1320.11 of the OMB's implementing 
regulations (5 CFR 1320). OMB filed a comment in response to the OCC's 
submission requesting that the OCC resubmit it at the final rule stage.
---------------------------------------------------------------------------

    \190\ 44 U.S.C. 3501-3521.
---------------------------------------------------------------------------

Current Actions
    Under the final rule:
     Interested parties may request that the OCC confirm that 
an activity is a qualifying activity by submitting a complete 
Qualifying Activity Confirmation Request Form. 12 CFR 25.05(c)(1).
     Banks must request that the OCC confirm that an area is a 
CRA credit desert before receiving the CRA credit desert multiplier in 
an evaluation period. 12 CFR 25.06(b), (c)(1).
     A bank must delineate one or more assessment areas within 
which the OCC evaluates the bank's record of helping to meet the credit 
needs of its community. 12 CFR 25.09.
     To receive a designation as a wholesale or limited purpose 
bank, a bank must file a request, in writing, with the OCC, at least 
three months prior to the proposed effective date of the designation. 
12 CFR 25.15(b).
     Banks that are not small banks must submit certain 
information for each assessment area and for the bank level on the 
Performance Context Form. 12 CFR 25.16(c).
     A bank must submit a strategic plan if the bank: (1) Would 
otherwise be evaluated under Sec.  25.13 and does not maintain retail 
domestic deposits on-balance sheet or (2) a bank not covered under 
paragraph (b)(1) of this section may submit a strategic plan for 
approval. 12 CFR 25.18.
     A bank evaluated under the general performance standards 
in Sec.  25.13 and a bank evaluated under a strategic plan under Sec.  
25.18, unless otherwise determined in writing by the OCC, must collect 
and maintain the information required by 12 CFR 25.21 until completion 
of the relevant CRA evaluation. 12 CFR 25.21.
     A small or intermediate bank evaluated under the small and 
intermediate bank performance standards under Sec.  25.14 must collect 
and maintain data on the value of each retail domestic deposit account 
and the physical address of each depositor. 12 CFR 25.22.
     A wholesale or limited purpose bank evaluated under the 
wholesale and limited purpose performance standards in Sec.  25.15 must 
collect and maintain qualifying community development loan, community 
development investment, and community development service and retail 
domestic deposit data until the completion of the relevant CRA 
evaluation. 12 CFR 25.23.
     Banks must keep the data collected under Sec.  25.21 
through Sec.  25.23 in machine readable form (as prescribed by the OCC) 
until the completion of their next CRA evaluation. 12 CFR 25.25.
     Banks evaluated under the general performance standards in 
Sec.  25.13 and banks evaluated under a strategic plan under Sec.  
25.18, unless otherwise determined in writing by the OCC, must report 
the information required by 12 CFR 25.26. 12 CFR 25.26.
     Banks must maintain a public file that includes all 
written comments and responses; a copy of the public section of the 
bank's most recent CRA performance evaluation; a list of the bank's 
branches, their street addresses, and census tracts; a list of the 
branches opened or closed, their street addresses, and geographies; a 
list of services offered; a map of each assessment area; and any other 
information the bank chooses. Banks with strategic plans must include a 
copy of the plan. Banks with less than satisfactory ratings must

[[Page 34787]]

include a description of their current efforts to improve their 
performance in helping to meet the credit needs of their entire 
community. The banks must update the description quarterly. Banks must 
make all of this information available to the public. This information 
must be current as of April 1 of each year. 12 CFR 25.28.
    OCC Title of Information Collection: Community Reinvestment Act.
    Frequency: On occasion.
    Affected Public: Businesses or other for-profit.
    Estimated number of respondents: 285.
    Total estimated annual burden: 603,260 hours.
    Comments continue to be invited on:
    a. Whether the collections of information are necessary for the 
proper performance of the OCC's functions, including whether the 
information has practical utility;
    b. The accuracy or the estimate of the burden of the information 
collections, including the validity of the methodology and assumptions 
used;
    c. Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    d. Ways to minimize the burden of the information collections on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    e. Estimates of capital or startup costs and costs of operation, 
maintenance, and purchase of services to provide information.

Regulatory Flexibility Act

    Section 3(a) of the Regulatory Flexibility Act (RFA), 5 U.S.C. 601 
et seq, requires an agency to provide an initial regulatory flexibility 
analysis (IRFA) with a proposed rule and a final regulatory flexibility 
analysis (FRFA) with a final rule if the agency cannot certify that the 
proposed or final rule will not have a significant economic impact on a 
substantial number of small entities.\191\ In accordance with the RFA, 
the OCC published an IRFA with the CRA proposed rule. The OCC is now 
publishing a FRFA for the final rule.\192\
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    \191\ Small Business Administration (SBA) regulations currently 
define small entities to include banks and savings associations with 
total assets of $600 million or less, and trust banks with total 
assets of $41.5 million or less. 13 CFR 121.201.
    \192\ Further OCC analysis of the final rule under the RFA is 
available at: http://www.regulations.gov, Docket ID OCC-2018-0008.
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A. Statement of the Need for and Objectives of the Final Rule
    As discussed in the SUPPLEMENTARY INFORMATION section above, the 
OCC is issuing this final rule to strengthen and modernize 
implementation of the CRA. During the past 25 years, technology and the 
expansion of interstate banking have transformed the financial services 
industry, how banks deliver their services, and how customers choose to 
bank. These changes affect banks of all sizes and are most evident in 
banks that have a limited physical presence or rely heavily on 
technology to deliver their products and services. As banking has 
evolved, banks' communities have evolved beyond those that are solely 
identifiable by the delineated areas surrounding banks' physical 
locations. At the same time, communities' needs for community 
development (CD) lending and investment have evolved, and the OCC has 
gained a greater understanding of those needs. The current CRA 
regulatory framework has not kept pace with the transformation of 
banking and has had the unintended consequence of incentivizing banks 
to limit some of their CD loans and investments.
    Furthermore, the current CRA rules have created uncertainty for 
banks about which activities qualify for CRA credit and how much those 
activities contribute to a bank's CRA rating. The current framework 
lacks consistent and objective evaluations and timely and transparent 
reporting for certain activities, which inhibits stakeholders' ability 
to understand how and to what extent banks are meeting community credit 
needs.
    The goals of this final rule are to make the CRA framework more 
objective, transparent, consistent in application, and reflective of 
changes in banking. Accomplishing these goals would make the CRA 
framework a better tool to encourage banks to engage in more activities 
to serve the needs of their communities, particularly in low- and 
moderate-income communities and other communities that have been 
underserved under previous versions of the CRA regulatory framework.
    Specifically, this final rule: (1) Clarifies and expands the bank 
lending, investment, and services (collectively, qualifying activities 
or CRA activities) of national banks, Federal branches of a foreign 
bank, Federal savings associations, and State savings associations that 
qualify for positive CRA consideration; (2) updates how banks delineate 
the assessment areas in which they are evaluated; (3) provides 
additional methods for evaluating bank CRA performance in a consistent 
and objective manner; and (4) requires reporting that is timely and 
transparent. Together, these changes will provide greater regulatory 
consistency and certainty in evaluating banks' CRA performance, which 
are essential for banks to achieve the intent and purpose of the 
statute: To help meet the credit needs of their communities, consistent 
with their safe and sound operations.
B. Significant Issues Raised by Public Comments on IRFA
    The OCC received comments from the Office of Advocacy of the U.S. 
Small Business Administration (Advocacy) specifically addressing the 
OCC's IRFA included in the proposed rule pursuant.
    Advocacy asserted that there may be less burdensome alternatives 
that the OCC should consider under its obligation to comply with the 
RFA. Advocacy further stated that requiring a small bank to incur the 
same regulatory burden as a much larger bank is inconsistent with the 
RFA. The OCC notes that the final rule imposes different requirements 
on small and intermediate banks than on larger banks. Specifically, the 
final rule provides that small banks, defined as having assets of $600 
million or less, and intermediate banks, defined as having more assets 
than a small bank but less than $2.5 billion in assets, may operate 
under the current CRA small bank and intermediate small bank 
performance standards, instead of the final rule's more complex general 
performance standards. These standards are more tailored to the size of 
small and intermediate banks and their lending practices. This approach 
differs from the proposed rule, which only would have exempted banks 
with $500 million or less in assets from the general performance 
standards. In addition, small and intermediate banks are generally 
exempt from the enhanced data collection, recordkeeping, and reporting 
requirements contained in the final rule, with certain exceptions. The 
small and intermediate bank exemptions from the general performance 
standards and the data collection, recordkeeping, and reporting 
requirements will reduce regulatory burden for small and intermediate 
banks. Therefore, small and intermediate banks as defined in the final 
rule will not be subject to the same regulatory burden under the final 
rule as larger banks.
    Advocacy also noted that the OCC may have misstated the economic 
impact on OCC-regulated small banks. However, after reviewing the IRFA 
we have determined that the numbers presented in the IRFA accurately 
reflect the OCC's estimates. The IRFA focused on where the impact was 
economically significant. Specifically, the OCC stated that 782 small 
entities would be

[[Page 34788]]

impacted, but only 72 small entities would have a significant economic 
impact totaling $36 million, or $500,000 per bank or small entity. We 
believe the Advocacy mistakenly concluded that the $36 million cost 
estimate was for all 782 small entities.
C. OCC Response to Chief Counsel for Advocacy of the Small Business 
Administration
    The OCC received comments on the final rule from Advocacy in 
addition to those on the OCC's IRFA as described above. Advocacy 
generally supported efforts to update and clarify the OCC's CRA 
regulations but noted that the proposed rule would be unduly burdensome 
for small banks. Advocacy's specific comments and recommendations on 
the proposed rule and the OCC's response to these comments follows 
below.
    Advocacy stated that the proposed definition of ``small bank'' 
($500 million in assets) is problematic and that unless authorized by 
statute, a Federal agency must use the U.S. Small Business 
Administration's (SBA) size standard unless a different standard is 
approved by the SBA Administrator and published for notice and comment. 
The OCC agrees that the definition should be changed and adopts $600 
million threshold for small banks in the final rule. This threshold is 
now consistent with the threshold for small banks included in the SBA's 
size standards defining small business concerns.\193\
---------------------------------------------------------------------------

    \193\ 13 CFR 121.201.
---------------------------------------------------------------------------

    Under the proposal, a small bank could elect to opt in to the 
general performance standards six months prior to the start of its next 
evaluation period. However, it could elect no more than once to opt out 
of the general performance standards. Advocacy suggested that there 
should not be a limit on the number of times that a small bank can opt 
in and out of the general standard. The OCC believes that providing a 
small bank with the opportunity to opt in or out of the general 
performance standards one time provides a small bank with adequate 
flexibility to select the CRA framework that best meets its needs.
    Advocacy noted that the proposed rule provides that a bank will 
only receive credit for 25 percent of the origination value for loans 
sold within 90 days of origination. If a loan is held for greater than 
90 days, the bank receives 100 percent credit. If the loan is held for 
less than 90 days, the bank only receives 25 percent credit. Advocacy 
noted that this policy may be unfair to small banks because small banks 
should not be punished because their business plan requires them to 
sell loans in less than 90 days. Advocacy stated that allowing small 
banks to receive 100 percent credit regardless of the length of time 
they hold a loan may incentivize them to provide additional service to 
their communities. The OCC agrees that retail loan originations are an 
important type of credit for certain populations and communities of 
need. Further, the OCC also did not intend to favor one business model 
over another. In response to this and similar comments, the final rule 
provides that retail loan originations sold at any time within 365 days 
of origination will receive credit for 100 percent of the origination 
value.
    Advocacy recommended that the OCC exempt small banks from the 
requirement to collect and maintain information on depositors necessary 
for the designation of deposit-based assessment areas. The OCC 
disagrees with this recommendation. This collection requirement serves 
an important role in the CRA framework in that it will enable the OCC 
to identify the bank's assessment areas and therefore to better assess 
a bank's CRA performance. The final rule does, however, clarify that 
retail domestic deposits need to be geocoded to the county level, not 
the census tract level.
    Advocacy also stated that the proposed compliance dates are 
confusing and that small banks should be allowed a consistent three 
years to comply. To minimize this confusion, the final rule adopts a 
more streamlined transition period for most requirements and generally 
increases the transition period for all banks. Specifically, small 
banks that do not opt-in to the general performance standards must 
comply with the rule's assessment areas, data collection, and 
recordkeeping requirements, as applicable, by January 1, 2024, which 
generally increases the transition time for these requirements by more 
than two years as compared to the proposal. Further, the final rule 
clarifies that the new qualifying activities criteria section, 
qualifying activities confirmation process, and CRA desert confirmation 
process will be effective as of the effective date of the final rule. 
As a result, small and intermediate banks will be able to immediately 
take advantage of the clarity provided by these elements.
    Advocacy also provided several comments addressing the OCC's 
initial regulatory flexibility analysis. These comments are discussed 
in section B., above.
D. Small Entities Affected by the Final Rule
    Small Business Administration regulations define ``small entities'' 
for banking purposes, as entities with total assets of $600 million or 
less.\194\ The OCC currently supervises approximately 745 small 
entities. The final rule would affect approximately 708 of those 
entities.\195\
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    \194\ See 13 CFR 121.201 (Sector 52, Subsector 522).
    \195\ The OCC bases its estimate of the number of small entities 
on the SBA's size thresholds for commercial banks and savings 
institutions, and trust companies, which are $600 million and $41.5 
million, respectively. Consistent with the General Principles of 
Affiliation 13 CFR 121.103(a), we count the assets of affiliated 
financial institutions when determining if we should classify an 
OCC-supervised institution as a small entity. The OCC uses December 
31, 2019, to determine size because a ``financial institution's 
assets are determined by averaging the assets reported on its four 
quarterly financial statements for the preceding year.'' See 
footnote 8 of the U.S. Small Business Administration's Table of Size 
Standards.
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E. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements of Final Rule
    As described above, the final rule sets forth new qualifying 
activities criteria; assessment area delineation requirements; general 
performance standards; and data collection, recordkeeping, and 
reporting requirements. The final rule generally applies to national 
banks, Federal branches of a foreign bank, Federal savings 
associations, and State savings associations. However, the final rule 
exempts small banks, defined as having assets of $600 million or less, 
and intermediate banks, defined as having more assets than a small bank 
but less than $2.5 billion in assets, from the new general performance 
standards and the related data collection, recordkeeping, and reporting 
requirements, with the exception of the retail domestic deposit data 
requirements. Instead, small banks may operate under the current CRA 
small bank and intermediate small bank performance standards. These 
banks also may opt in to the new performance standards, in which case 
they would be subject the data collection, recordkeeping, and reporting 
requirements of the final rule or may choose to be evaluated under an 
approved strategic plan. A summary of the new requirements contained in 
the final rule is set forth below.
    Assessment area delineation requirements. Generally, a bank must 
delineate one or more assessment areas within which the OCC evaluates 
the bank's record of helping to meet the credit needs of its community. 
The final rule requires that a bank delineate

[[Page 34789]]

``facility-based'' assessment areas encompassing each location where 
the bank maintains a main office, a branch, or a non-branch deposit-
taking facility that is not an ATM as well as the surrounding locations 
in which the bank has originated or purchased a substantial portion of 
its qualifying retail loans. The geographic levels for delineation of 
facility-based assessment areas could be any of the following: One MSA; 
the whole nonmetropolitan area of a state; one or more whole, 
contiguous MDs in a single MSA; or one or more whole, contiguous 
counties or county-equivalents in one MSA or nonmetropolitan area. A 
facility-based assessment area may not extend beyond an MSA or state 
boundary unless the assessment area is located in a multistate MSA. If 
a bank serves a geographic area that extends beyond a state boundary, 
the bank must delineate separate assessment areas for the areas in each 
state. If a bank serves a geographic area that extends beyond an MSA 
boundary, the bank must delineate separate assessment areas for the 
areas inside and outside the MSA. The final rule also provides that 
banks may, but are not required to, delineate facilities-based 
assessment areas around deposit-taking ATMs.
    In addition to requiring the delineation of facility-based 
assessment areas, the final rule also mandates that if a bank receives 
50 percent or more of its total retail domestic deposits from areas 
outside of its facility-based assessment areas, the bank must delineate 
separate, non-overlapping ``deposit-based'' assessment areas. These 
deposit-based assessment areas can be delineated at any geographical 
level where the bank receives five percent or more of its retail 
domestic deposits, including a state; an MSA; the whole nonmetropolitan 
area of a state; one or more whole, contiguous MDs in a single MSA; the 
remaining geographic area of a state, MSA, nonmetropolitan area, or MD 
other than where it has a facility-based assessment area; or one or 
more whole, contiguous counties or county-equivalents in one MSA or 
nonmetropolitan area. With limited exceptions, an assessment area 
delineation can only change once per year and must not change within 
the annual period used to determine an assessment area CRA evaluation 
measure.
    Small banks, intermediate banks, wholesale banks, and limited 
purpose banks would follow the same proposed rules on assessment area 
delineation as other banks, but military banks would have the entire 
United States and its territories as their assessment area.
    For banks choosing the option of a strategic plan, the plan must 
include a delineation of the bank's assessment areas(s) that meets the 
requirements of Sec.  25.09(a)-(d). In addition, the plan may include 
assessment area delineations that reflect its target geographic market 
as defined by the bank in its strategic plan. For a de novo bank, the 
assessment area delineations should include the projected location of 
its facilities, retail domestic deposit base, and lending activities.
    Data collection, recordkeeping, and reporting requirements. For a 
bank evaluated under the general performance standards or a strategic 
plan, the final rule requires that the bank must collect and maintain, 
along with supporting documentation, certain performance standards 
data, including the bank's retail lending distribution test ratios, the 
bank's CRA evaluation measure and each assessment-area CRA evaluation 
measure, the bank's CD minimum and each assessment-area level CD 
minimum, and the bank's presumptive ratings. Banks are required to 
report the distribution test ratios and presumptive ratings at the end 
of the evaluation period, whereas, banks must report the CRA evaluation 
measure on an annual basis. For all qualifying retail and CD loans, CD 
investments, and CD services, banks will be required to collect and 
maintain data including, but not limited to: The location of the loan, 
investment, or service; an indicator of whether a multiplier applies to 
the loan, investment or service; and the qualifying activities criteria 
that the loan, investment, or service satisfies. On an annual basis, 
these banks must report the quantified dollar value of qualifying 
retail loans, CD loans, CD investments, and CD services. The final rule 
also requires these banks to collect and maintain data for originations 
of non-qualifying home mortgage loans, small loans to businesses, small 
loans to farms, and consumer loans made by the bank. Banks must 
annually report, among other things, the total number of retail loans 
(home mortgage loans, small loans to a business, small loans to a farm, 
or consumer loan) that are originated during the annual period; the 
number of these loans that are originated in low- and moderate-income 
census tracts at the county or county equivalent level; the number of 
home mortgage and consumer loans originated to low- and moderate-income 
borrowers; and the number of small loans to businesses and small loans 
to farms originated to CRA-eligible businesses and farms, respectively.
    For grandfathered qualifying activities, banks evaluated under the 
general performance standards or a strategic plan are required to 
maintain and collect data on, among other things, a description of the 
activity and a statement certifying that the activity would have 
received positive CRA consideration on the day prior to the effective 
date of the final rule and is on a bank's balance sheet on the 
effective date of the final rule. These banks are also required to 
collect and maintain a list of their assessment areas and within each 
assessment area, each county or county-equivalent, MD, nonmetropolitan 
area, MSA, or state. This assessment area information must be reported 
annually. These banks must also collect and maintain information on 
deposit-taking facilities.
    For wholesale and limited purpose banks, the final rule requires 
that these banks collect and maintain information about qualifying CD 
loans, investments, and services, including, but not limited to, the 
qualifying activity criteria that the loan, investment, or service 
satisfies. These banks must also collect and maintain data regarding 
assessment areas and deposit-taking facilities. Wholesale and limited 
purpose banks must also provide the certification described above for 
grandfathered qualifying activities. They also must report on an annual 
basis the value of CD loans and investments as well as their assessment 
area data, among other things.
    Under the final rule, all banks must collect and maintain the value 
of each retail domestic deposit account and the physical address of 
each depositor. Moreover, banks evaluated under the general performance 
standards or a strategic plan must annually report their average 
quarterly retail domestic deposits as of the close of business on the 
last day of each quarter. These banks as well as wholesale and limited 
purpose banks must also report performance context information before 
the beginning of their CRA performance evaluation.
    All banks must keep the data they are required to collect in a 
machine-readable form as prescribed by the OCC. As in the current rule, 
banks also must maintain a public file that includes, among other 
things, written comments related to assessment area needs, a copy of 
the public section of the bank's most recent performance evaluation, 
and for banks approved to be assessed under a strategic plan, a copy of 
that plan. Finally, as in the current rule, banks must make available 
to the public a notice explaining to customers that they are entitled 
to certain information.

[[Page 34790]]

F. Description of Steps Taken To Minimize the Significant Economic 
Impact on Small Entities and Alternatives Considered
    As discussed below and in the SUPPPLEMENTAL INFORMATION section, 
the OCC has sought to incorporate flexibility into the final rule and 
lessen burden and complexity for smaller banking entities wherever 
possible, consistent with the goals of the CRA, safety and soundness, 
and other applicable law.
    Community Bank Exemption for Certain Requirements. The OCC 
recognizes that, in general, community banks operate under different 
business plans and with more limited resources and staffing levels than 
larger banks. Therefore, the final rule allows small and intermediate 
size banks to operate under the current CRA small bank and intermediate 
small bank performance standards, which are more tailored to their size 
and lending practices, instead of the final rule's more complex general 
performance standards. However, community banks can take advantage of 
the qualifying activities criteria and the qualifying activities list 
in the final rule, which provide greater regulatory certainty, 
objectivity, transparency, and consistency for what qualifies for CRA. 
Small banks also follow the final rule's new assessment area 
delineation requirements, which update the existing requirements to 
reflect the modern banking environment. The OCC notes that these new 
assessment area delineation requirements may not increase the 
compliance burden as banks may be able to demonstrate that more than 50 
percent of their retail domestic deposits fall within their facility-
based assessment area(s). The OCC believes that this approach in the 
final rule will provide additional flexibility for smaller banks 
without sacrificing the OCC's goal of achieving transformational CRA 
reform that provides clarity and encourages banks to conduct more CRA 
qualifying activities.
    The OCC notes that some commenters opposed the small bank 
exemption, arguing that the small bank performance standards do not 
adequately evaluate CD activity. These commenters instead asked the OCC 
to evaluate all banks, including small banks, under the general 
performance standards. The OCC disagrees with these commenters and has 
rejected this alternative approach because of the cost and regulatory 
burden imposing the general performance standards would have on 
community banks, as discussed above. Banks subject to the small bank 
and intermediate bank performance standards will still be able to 
engage in CD activities and these activities will be examined by the 
OCC in CRA examinations. The final rule's approach provides additional 
flexibility to, and minimizes regulatory burden on, smaller 
institutions while at the same time encourages small banks to conduct 
more CRA qualifying activities.
    The final rule also allows small and intermediate banks to opt into 
the general performance standards or choose to be evaluated under an 
approved strategic plan. These options allow small and intermediate 
banks to choose the performance standards that best fit their needs and 
objectives. Some commenters supported limiting the number of times a 
small bank that opts in to the general performance standards can opt 
out again or even eliminating the one-time opt out option. One 
commenter suggested that the OCC should not limit the number of times 
that a small bank can opt in and out of the general standard. After 
considering these alternatives, OCC is retaining the one-time opt out 
option as proposed in order to preserve some flexibility for community 
banks. Some commenters stated that agencies should not require that 
small banks opt in or opt out of the general performance standard six 
months prior to the start of its next evaluation period as provided in 
the proposal. The agency agrees that the requirement to opt-in or opt-
out at least six months before the start of its next exam cycle is not 
needed and has removed it from the final rule.
    Intermediate banks. The proposed rule did not carryover the concept 
of intermediate small banks. The current rule's threshold for small 
banks is $1.305 billion. Banks with assets of between $326 million and 
$1.305 billion are defined as intermediate small banks. Under the 
current rule, small banks with assets of under $326 million are 
evaluated under a streamlined assessment method focusing on retail 
lending. Intermediate small banks are evaluated under the same lending 
performance criteria as the small institutions, but also are evaluated 
on their community development activities. The proposed rule defined 
``small bank'' as a bank with $500 million or less in assets and did 
not include intermediate small banks. The OCC has reevaluated the 
proposed rule's regulatory framework and agrees with commenters that 
banks that are considered intermediate small banks under the current 
rule should not be required to comply with the final rule's general 
performance standards and that it would be especially burdensome for 
intermediate small banks to transition to a new framework. The final 
rule therefore reintroduces the concept of intermediate small bank 
(renamed ``intermediate bank''), defined as a bank with assets of 
greater than a small bank but $2.5 billion or under, and applies the 
current intermediate small bank performance standards to these 
intermediate banks. As a result, the OCC finds that 188 additional 
banks will be evaluated under the less complicated performance 
standards of the current rule.\196\ Further, this approach will 
eliminate the transition cost and burden that would have been imposed 
on these intermediate banks that would have been subject to the general 
performance standards under the proposed rule.
---------------------------------------------------------------------------

    \196\ This number is based on data accessed from the OCC's 
Financial Institution Data Retrieval System (FINDRS) on May 14, 
2020.
---------------------------------------------------------------------------

    Definition of ``small bank'' and ``intermediate bank.'' As 
indicated above, the current rule's definition of ``small bank'' is a 
bank with assets of less than $1.305 billion and of ``intermediate 
small bank'' is a bank with assets of between $326 million and $1.305 
billion, and both small banks and intermediate small banks comply with 
performance standards more tailored to their size. The proposed rule 
defined ``small bank'' as a bank with $500 million or less in assets 
and did not include intermediate small banks. Some commenters 
recommended raising the proposal's small bank threshold to the current 
small bank threshold of $1.305 billion. Other commenters opposed any 
increase in the small bank threshold so that more banks would be 
governed by the general performance standard, which they found to be a 
better evaluation of CD activity. Still other commenters suggested 
various different thresholds, both higher and lower than $500 million. 
The OCC considered these various threshold alternatives and has 
increased the asset threshold for small banks in the final rule to $600 
million or less, to be adjusted annually for inflation. This threshold 
better reflects the current state of the industry and is now consistent 
with the threshold for small banks included in the SBA's size standards 
defining small business concerns.\197\
---------------------------------------------------------------------------

    \197\ 13 CFR 121.201.
---------------------------------------------------------------------------

    Some commenters advocated including an intermediate small bank 
threshold in the final rule and raising it to a higher level, including 
$5 billion or $10 billion. As indicated above, the OCC agrees that the 
final rule should include an exception for more smaller banks. 
Therefore, the OCC has included in the final rule a definition for

[[Page 34791]]

intermediate bank, based on the current rule's definition of 
intermediate small bank, and has increased the asset size threshold for 
these banks from $1.305 million in the current CRA rule to $2.5 
billion. This $2.5 billion threshold is intended to capture the same 
portion of the industry as captured by the intermediate small bank 
threshold when it was adopted in 2005.
    As a result of these increases in asset size for small and 
intermediate banks, only banks with greater than $2.5 billion in assets 
are subject to the more complex general performance standards, unless a 
small or intermediate bank elects to opt into the general performance 
standards. These threshold changes therefore increase the number of 
banks that are exempt from the general performance standards and the 
data, reporting, and most of the recordkeeping requirements.
    The final rule provides that to meet the small bank and 
intermediate bank threshold, the banks must have $600 million or $2.5 
billion, respectively, or less in assets in four of the previous five 
calendar quarters. The OCC disagreed with a request by a commenter to 
use an eight-quarter lookback instead, which the commenter stated would 
provide adequate lead time to comply with the general performance 
standards. The OCC recognizes the importance of certainty regarding 
bank size category and applicable CRA requirements but does not believe 
that allowing banks to be above the next highest size threshold for two 
years before becoming subject to the applicable requirements is 
necessary. The final rule does, however, provide an intermediate bank 
that ceases to meet the definition of an intermediate bank two years to 
comply with the general performance standards-related provisions of the 
final rule. The OCC believe this two-year period provides an adequate 
transition period for intermediate banks to implement the general 
performance standards.
    Data Collection, Recordkeeping and Reporting. Under the final rule, 
small banks and intermediate banks that are evaluated under the small 
bank and intermediate bank performance standards, respectively, are 
generally exempt from the enhanced data collection, recordkeeping, and 
reporting requirements contained in the final rule, with the exception 
of the requirement to collect and maintain information on retail 
domestic deposits, including the physical address of the depositor. The 
OCC declined to exempt small banks from this collection requirement. 
Depositor information will enable the OCC to identify the bank's 
assessment areas and therefore to better assess a bank's CRA 
performance. However, the final rule clarifies that retail domestic 
deposits need to be geocoded to the county level, not the census tract 
level.
    The OCC does not think that reporting of small bank and 
intermediate retail domestic deposit data is necessary because the OCC 
will validate assessment area delineations during examinations. 
Therefore, the final rule does not impose any reporting requirements on 
banks evaluated under the small bank performance standards.
    Compliance dates. The final rule clarifies that the new qualifying 
activities criteria section, the qualifying activities confirmation 
process, and the CRA desert conformation process will be effective as 
of the effective date of the final rule. As a result, small banks will 
be able to immediately take advantage of the clarity provided by these 
elements. To minimize confusion with respect to other applicable 
requirements, the final rule adopts a more streamlined compliance 
period that increases the transition time available. In general, banks 
subject to the general performance standards (banks over $2.5 billion 
in assets) must comply with all sections of this rule, except those 
related to the new qualifying activities criteria or confirmation 
processes, by January 1, 2023, which generally increases the compliance 
time for the assessment area, data collection, and recordkeeping 
requirements by more than one year as compared to the proposal. Small 
and intermediate banks must comply with the rule's assessment areas, 
data collection, and recordkeeping requirements, as applicable, by 
January 1, 2024, which generally increases the compliance time for 
these requirements by more than two. The final rule also provides 
flexibility for banks to comply with the new provisions prior to these 
compliance dates. The OCC believes that these transition periods will 
provide small and intermediate banks with adequate time to comply with 
the rule without delaying the improvements the rule makes to CRA 
implementation.

Unfunded Mandates Reform Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded 
Mandates Act) (2 U.S.C. 1532) requires that the OCC prepare a budgetary 
impact statement before promulgating a rule that includes any Federal 
mandate that may result in the expenditure by State, local, and Tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more (adjusted annually for inflation, currently $154 
million) in any one year. If a budgetary impact statement is required, 
section 205 of the Unfunded Mandates Act also requires the OCC to 
identify and consider a reasonable number of regulatory alternatives 
before promulgating a rule.
    The OCC has determined that the final rule is likely to result in 
the expenditure by the private sector of $154 million or more. 
Therefore, the OCC has prepared a budgetary impact analysis and 
identified and considered alternative approaches. The full text of the 
OCC's analyses under the Unfunded Mandates Act is available at: http://www.regulations.gov, Docket ID OCC-2018-0008.

Congressional Review Act

    For purposes of the Congressional Review Act, the Office of 
Management and Budget (OMB) makes a determination as to whether a final 
rule constitutes a ``major rule.'' \198\ If a rule is deemed a ``major 
rule'' by OMB, the Congressional Review Act generally provides that the 
rule may not take effect until at least 60 days following its 
publication.\199\
---------------------------------------------------------------------------

    \198\ 5 U.S.C. 801 et seq.
    \199\ 5 U.S.C. 801(a)(3).
---------------------------------------------------------------------------

    The Congressional Review Act defines a ``major rule'' as any rule 
that the Administrator of the Office of Information and Regulatory 
Affairs of the OMB finds has resulted in or is likely to result in: (1) 
An annual effect on the economy of $100,000,000 or more; (2) a major 
increase in costs or prices for consumers, individual industries, 
Federal, State, or local government agencies, or geographic regions; or 
(3) significant adverse effects on competition, employment, investment, 
productivity, innovation, or on the ability of United States-based 
enterprises to compete with foreign-based enterprises in domestic and 
export markets.\200\
---------------------------------------------------------------------------

    \200\ 5 U.S.C. 804(2).
---------------------------------------------------------------------------

    As required by the Congressional Review Act, the OCC will submit 
the final rule and other appropriate reports to Congress and the 
Government Accountability Office for review.

Riegle Community Development and Regulatory Improvement Act of 1994

    Section 302(a) of the Riegle Community Development and Regulatory 
Improvement Act of 1994 requires that the OCC, in determining the 
effective date and administrative compliance requirements for new 
regulations that impose additional reporting, disclosure, or other 
requirements on insured depository institutions, considers, consistent 
with principles of safety and soundness and

[[Page 34792]]

the public interest, any administrative burdens that such regulations 
would place on depository institutions, including small depository 
institutions, and customers of depository institutions, as well as the 
benefits of such regulations.\201\ The OCC has considered the changes 
made by this final rule and believe that the effective date of October 
1, 2020, along with the transition periods included in the final rule 
and described above, will provide national banks, State banks, Federal 
branches of a foreign bank, Federal savings associations, and State 
savings associations with adequate time to comply with the rule's 
requirements.
---------------------------------------------------------------------------

    \201\ 12 U.S.C. 4802(a).
---------------------------------------------------------------------------

    The OCC also has considered the administrative burden of the final 
rule's administrative compliance requirements and addressed them by 
exempting small banks, defined as having assets of $600 million or 
less, and intermediate banks, defined as having more assets than a 
small bank but less than $2.5 billion in assets, from the new general 
performance standards and the data collection, recordkeeping, and 
recording requirements, with a few exceptions. In addition, as 
discussed above, the OCC has addressed the administrative burdens in 
the final rule by including transition periods for compliance with the 
rule of between more than two to four years, depending on the size of 
the bank, among other things. Further discussion of the consideration 
by the OCC of these administrative compliance requirements is found in 
other sections of the final rule's SUPPLEMENTARY INFORMATION section.

Effective Date

    The APA \202\ requires that a substantive rule must be published 
not less than 30 days before its effective date, unless, among other 
things, the rule grants or recognizes an exemption or relieves a 
restriction.\203\ Section 302(b) of the Riegle Community Development 
and Regulatory Improvement Act of 1994 (RCDRIA) requires that 
regulations issued by a Federal banking agency \204\ imposing 
additional reporting, disclosure, or other requirements on insured 
depository institutions take effect on the first day of a calendar 
quarter that begins on or after the date of publication of the final 
rule, unless, among other things, the agency determines for good cause 
that the regulations should become effective before such time.\205\ The 
October 1, 2020, effective date of this final rule meets both the APA 
and RCDRIA effective date requirements, as it will take effect at least 
30 days after its publication date of June 5, 2020 and on the first day 
of a calendar quarter following publication, October 1, 2020.
---------------------------------------------------------------------------

    \202\ Codified at 5 U.S.C. 551 et seq.
    \203\ 5 U.S.C. 553(d).
    \204\ For purposes of RCDRIA, ``Federal banking agency'' means 
the OCC, FDIC, and Board. See 12 U.S.C. 4801.
    \205\ 12 U.S.C. 4802(b).
---------------------------------------------------------------------------

List of Subjects

12 CFR Part 25

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

12 CFR Part 195

    Banks, Banking, Community development, Credit, Investments, 
Reporting and recordkeeping requirements.

    For the reasons discussed in the preamble, and under the authority 
of 12 U.S.C. 93a, the Office of the Comptroller of the Currency amends 
12 CFR part 25 and removes part 195 as follows:

PART 25--COMMUNITY REINVESTMENT ACT AND INTERSTATE DEPOSIT 
PRODUCTION REGULATIONS

0
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, 1462a, 1463, 1464, 1814, 1816, 1828(c), 1835a, 2901 
through 2908, 3101 through 3111, and 5412(b)(2)(B).


0
2. Revise subparts A through E and add subpart D to read as follows:
Subpart A--General
Sec.
25.01 Authority, purposes, scope, and severability.
25.02 Effect of CRA performance on applications.
25.03 Definitions.
Subpart B--Qualifying Activities
25.04 Qualifying activities criteria.
25.05 Qualifying activities confirmation and illustrative list.
25.06 CRA desert confirmation.
25.07 Qualifying activities quantification.
25.08 Qualifying activities value.
Subpart C--Assessment Area
25.09 Assessment area.
Subpart D--Performance Evaluations
25.10 Performance standards and ratings, in general.
25.11 CRA evaluation measure.
25.12 Retail lending distribution tests.
25.13 General performance standards and presumptive rating.
25.14 Small and intermediate bank performance standards.
25.15 Wholesale and limited purpose bank performance standards.
25.16 Consideration of performance context.
25.17 Discriminatory and other illegal credit practices.
25.18 Strategic plan.
25.19 Assigned ratings.
25.20 State/multistate metropolitan statistical area assigned 
rating.
Subpart E--Data Collection, Recordkeeping, and Reporting
25.21 Data collection for banks evaluated under the general 
performance standards in Sec.  25.13 or a strategic plan under Sec.  
25.18.
25.22 Retail domestic deposit data collection for small and 
intermediate banks evaluated under the small and intermediate bank 
performance standards in Sec.  25.14.
25.23 Data collection for wholesale and limited purpose banks 
evaluated under the wholesale and limited purpose bank performance 
standards in Sec.  25.15.
25.24 Activity location.
25.25 Recordkeeping.
25.26 Reporting for banks evaluated under the general performance 
standards in Sec.  25.13, the wholesale and limited purpose bank 
performance standards in Sec.  25.15, or a strategic plan under 
Sec.  25.18.
25.27 Public disclosures.
25.28 Content and availability of public file.
25.29 Availability of planned evaluation schedule.
25.30 Public notice by banks.

Subpart A--General


Sec.  25.01  Authority, purposes, scope, and severability.

    (a) Authority. The authority for this part is 12 U.S.C. 21, 22, 26, 
27, 30, 36, 93a, 161, 215, 215a, 481, 1462a, 1463, 1464, 1814, 1816, 
1828(c), 1835a, 2901 through 2907, and 3101 through 3111.
    (b) Purposes. In enacting the Community Reinvestment Act (CRA), 
Congress required each appropriate Federal financial supervisory agency 
to assess an institution's record of meeting the credit needs of its 
entire community, including low- and moderate-income communities, 
consistent with the safe and sound operation of such institution, and 
take that record into account in its evaluation of an application for a 
deposit facility by such institution. This part is intended to carry 
out the purposes of the CRA by:
    (1) Establishing the framework and criteria by which the Office of 
the Comptroller of the Currency (OCC) assesses a bank's record of 
helping to meet the credit needs of its entire community, including 
low- and moderate-income communities, consistent with the safe and 
sound operation of the bank; and

[[Page 34793]]

    (2) Providing that the OCC takes that record into account in 
considering certain applications.
    (c) Scope--(1) General. This part applies to all banks as defined 
in Sec.  25.03 except as provided in paragraphs (c)(2) and (c)(3) of 
this section.
    (2) Federal branches and agencies--(i) This part applies to all 
insured Federal branches and to any Federal branch that is uninsured 
that results from an acquisition described in section 5(a)(8) of the 
International Banking Act of 1978 (12 U.S.C. 3103(a)(8)).
    (ii) Except as provided in paragraph (c)(2)(i) of this section, 
this part does not apply to Federal branches that are uninsured, 
limited Federal branches, or Federal agencies, as those terms are 
defined in part 28 of this chapter.
    (3) Certain exempt banks. This part does not apply to banks that do 
not perform commercial or retail banking services by granting credit or 
offering credit-related products or services to the public in the 
ordinary course of business, other than as incident to their 
specialized operations and done on an accommodation basis. These banks 
include banker's banks, as defined in 12 U.S.C. 24 (Seventh), and banks 
that engage only in one or more of the following activities: Providing 
cash management-controlled disbursement services or serving as 
correspondent banks, trust companies, or clearing agents.
    (4) Compliance dates--(i) Banks other than small, intermediate, 
wholesale, and limited purpose banks must comply with Sec. Sec.  
25.07--25.13, 25.21, 25.25, and 25.26 by January 1, 2023.
    (ii) Wholesale and limited purposes banks must comply with 
Sec. Sec.  25.09, 25.23, 25.25, and 25.26 by January 1, 2023.
    (iii) Small and intermediate banks must comply with Sec. Sec.  
25.09, 25.22, and 25.25, as applicable, by January 1, 2024.
    (5) Transition provision. To provide for an orderly transition, for 
any CRA performance evaluation conducted on or after October 1, 2020. 
and before the compliance date of this part that is applicable to the 
bank being evaluated, the OCC may permit a bank to rely on the 
applicable performance standards and tests, procedures, processes, 
definitions or other element of:
    (i) Parts 25 or 195 of this chapter, as applicable, in effect on 
the date prior to October 1, 2020 (as set forth in appendix C of this 
part); or
    (ii) Part 25 set forth in this final rule.
    (6) Expiration date. Parts 25 and 195 of this chapter that are in 
effect on the date prior to October 1, 2020 (as set forth in appendix C 
of this part) expire on January 1, 2024.
    (d) Severability. Each section of this part is severable from the 
other sections of this Part. If any section or any provision of any 
section is held to be invalid or stayed for any reason, it is the OCC's 
intention that the remaining sections and provisions of this part shall 
continue in effect.


Sec.  25.02  Effect of CRA performance on applications.

    (a) CRA performance. Among other factors, the OCC takes into 
account the record of performance under the CRA of each applicant bank 
in considering an application for:
    (1) The establishment of a domestic branch or non-branch deposit-
taking facility;
    (2) The relocation of the main office or a domestic branch;
    (3) Under the Bank Merger Act (12 U.S.C. 1828(c)), the merger or 
consolidation with or the acquisition of assets or assumption of 
liabilities of an insured depository institution;
    (4) The conversion of an insured depository institution to a 
national bank charter;
    (5) A savings association charter; and
    (6) Acquisitions subject to section 10(e) of the Home Owners' Loan 
Act (12 U.S.C. 1467a(e)).
    (b) Charter application. An applicant (other than an insured 
depository institution) for a national bank or a Federal savings 
association charter must submit with its application a description of 
how it will meet its CRA objectives, if applicable. The OCC takes the 
description into account in considering the application and may deny or 
condition approval on that basis.
    (c) Interested parties. The OCC takes into account any views 
expressed by interested parties that are submitted in accordance with 
the OCC's procedures set forth in part 5 of this chapter in considering 
CRA performance in an application listed in paragraphs (a) and (b) of 
this section.
    (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 listed in paragraph (a) of this section.
    (e) Insured depository institution. For purposes of this section, 
the term ``insured depository institution'' has the same meaning as 
this term is given in 12 U.S.C. 1813.


Sec.  25.03  Definitions.

    For purposes of this part, the following definitions apply:
    Activity means a loan, investment, or service by a bank.
    Affiliate has the meaning this term is given in Regulation W, 12 
CFR 223.2(a) and (b), as of October 1, 2020 and includes non-member 
banks.
    Area median income means:
    (1) The median family income for the metropolitan statistical area, 
if a person or census tract is located in a metropolitan statistical 
area, or for the metropolitan division, if a person or census tract is 
located in a metropolitan statistical area that has been subdivided 
into metropolitan divisions; or
    (2) The statewide nonmetropolitan median family income, if a person 
or census tract is located outside a metropolitan statistical area.
    Assessment area means a geographic area delineated in accordance 
with Sec.  25.09.
    Automated teller machine (ATM) means an automated banking facility 
owned or operated by, or operated exclusively for, the bank at which 
deposits are received, cash dispersed, or money lent.
    Average means the statistical mean.
    Bank means a national bank (including a Federal branch as defined 
in part 28 of this chapter) or a savings association, the deposits of 
which are insured by the FDIC pursuant to Chapter 16 of Title 12, as 
described in 12 U.S.C. 1813(c)(2), except as provided in Sec.  
25.01(c).
    Branch means a staffed banking facility authorized as a branch, 
whether shared or unshared, including, for example, a mini-branch in a 
grocery store or a branch operated in conjunction with any other local 
business or non-profit organization. The term ``branch'' only includes 
a ``domestic branch'' as that term is defined in section 3(o) of the 
Federal Deposit Insurance Act (FDIA) (12 U.S.C. 1813(o)).
    Call Report means Consolidated Reports of Condition and Income as 
filed under 12 U.S.C. 161.
    Commitment to lend means a legally binding commitment to extend 
credit, such as a standby letter of credit.
    Community Development Financial Institution has the same meaning as 
this term is given in 12 U.S.C. 4702(5).
    Community development investment means a lawful investment, 
membership share, deposit, legally binding commitment to invest that is 
reported on the Call Report, Schedule RC-L, or monetary or in-kind 
donation that meets the criteria of Sec.  25.04(c).
    Community development loan means a loan, line of credit, or 
commitment to lend that meets the criteria of Sec.  25.04(c).
    Community development services means bank employee time spent 
volunteering as a representative of the

[[Page 34794]]

bank on activities that meet the criteria of Sec.  25.04(c) or 
supporting activities that meet the criteria of Sec.  25.04(c)(2), 
(11). A bank employee may receive expense reimbursement for volunteer 
time related to the community development activity.
    Compensation means the median hourly compensation value (i.e., 
total salaries and benefits divided by full-time equivalent employees) 
for the banking industry based on aggregate Call Report data for median 
salaries and employee benefits from Schedule RI, Item 7.a and the 
median number of full-time equivalent employees from Schedule RI 
Memorandum Item 5.
    Consumer loan means a loan reported on the Call Report, Schedule 
RC-C, Loans and Lease Financing Receivables, Part 1, Item 6, Loans to 
individuals for household, family, and other personal expenditures 
other than overdraft plans that is a:
    (1) Other revolving credit plan, which is an extension of credit to 
an individual for household, family, and other personal expenditures 
arising from revolving credit plans not accessed by credit cards;
    (2) Automobile loan, which is a consumer loan extended for the 
purpose of purchasing new and used passenger cars and other vehicles 
such as minivans, vans, sport-utility vehicles, pickup trucks, and 
similar light trucks for personal use; and
    (3) Other consumer loan, which is any other loan to an individual 
for household, family, and other personal expenditures (other than 
those that meet the definition of a ``loan secured by real estate'' and 
other than those for purchasing or carrying securities), including low-
cost education loans, which is any private education loan, as defined 
in section 140(a)(8) of the Truth in Lending Act (15 U.S.C. 1650(a)(8)) 
(including a loan under a state or local education loan program), 
originated by the bank for a student at an ``institution of higher 
education,'' as that term is generally defined in sections 101 and 102 
of the Higher Education Act of 1965 (20 U.S.C. 1001 and 1002) and the 
implementing regulations published by the U.S. Department of Education, 
with interest rates and fees no greater than those of comparable 
education loans offered directly by the U.S. Department of Education. 
Such rates and fees are specified in section 455 of the Higher 
Education Act of 1965 (20 U.S.C. 1087e).
    CRA desert means an area that the OCC has confirmed to be a CRA 
desert under Sec.  25.06 because it has significant unmet community 
development or retail lending needs and where:
    (1) Few banks have branches or non-branch deposit-taking 
facilities;
    (2) There is less retail or community development lending than 
would be expected based on demographic or other factors; or
    (3) The area lacks community development organizations or 
infrastructure.
    CRA-eligible business means a business that has gross annual 
revenues of no greater than $1.6 million. The OCC will adjust the $1.6 
million threshold for inflation every five years, and the adjustment to 
the threshold will be made publicly available.
    CRA-eligible farm means a farm with gross annual revenues of no 
greater than $1.6 million. The OCC will adjust the $1.6 million 
threshold for inflation every five years, and the adjustment to the 
threshold will be made publicly available.
    Distressed area means a middle-income census tract identified by 
the OCC that meets one or more of the following conditions:
    (1) An unemployment rate of at least 1.5 times the national 
average;
    (2) A poverty rate of 20 percent or more; or
    (3) A population loss of 10 percent or more between the previous 
and most recent decennial census or a net migration loss of five 
percent or more over the five-year period preceding the most recent 
census.
    Essential community facility means a public facility, including, 
but not limited to, a school, library, park, hospital or health care 
facility, and public safety facility.
    Essential infrastructure means:
    (1) Public infrastructure, including, but not limited to, public 
roads, bridges, tunnels; and
    (2) Essential telecommunications infrastructure, mass transit, 
water supply and distribution, utilities supply and distribution, 
sewage treatment and collection, and industrial parks.
    Family farm has the same meaning as the term is given by the Farm 
Service Agency of the U.S. Department of Agriculture in 7 CFR 761.2(b) 
as of the effective date of this rule.
    Financing means permissible equity or debt facilities, such as 
loans, lines of credit, bonds, private funds, securities, or other 
permissible investments.
    Home mortgage loan means a loan reported on the Call Report, 
Schedule RC-C, Loans and Lease Financing Receivables, Part I, 
specifically:
    (1) Item 1.a.(1) 1-4 family residential construction loans;
    (2) Item 1.c Loans secured by 1-4 family residential properties 
(includes closed-end and open-end loans); or
    (3) Item 1.d Loans secured by multifamily (5 or more) residential 
properties.
    Income levels are:
    (1) Low-income, which means an individual income that is less than 
50 percent of the area median income or a median family income that is 
less than 50 percent in a census tract.
    (2) Moderate-income, which means an individual income that is at 
least 50 percent and less than 80 percent of the area median income, or 
a median family income that is at least 50 percent and less than 80 
percent in a census tract.
    (3) Middle-income, which means an individual income that is at 
least 80 percent and less than 120 percent of the area median income, 
or a median family income that is at least 80 percent and less than 120 
percent in a census tract.
    (4) Upper-income, which means an individual income that is 120 
percent or more of the area median income, or a median family income 
that is 120 percent or more in a census tract.
    Indian country means an area that is
    (1) Covered by 18 U.S.C. 1151; or
    (2) A Tribal Census Tract, an Oklahoma Tribal Statistical Area, a 
Tribal Designated Statistical Area, an Alaskan Native Village 
Statistical Area, or an American Indian Joint-Use Area, as those terms 
are defined by the Census Bureau.
    In-kind donation means a contribution of goods, commodities, or 
other non-monetary resources.
    Intermediate bank means a bank with assets that exceed the small 
bank asset size threshold provided in the small bank definition, as 
adjusted, and that had assets of $2.5 billion or less in four of the 
previous five calendar quarters; the dollar figures in this definition 
shall be adjusted annually and published by the OCC, based on the year-
to-year change in the average of the Consumer Price Index for Urban 
Wage Earners and Clerical Workers, not seasonally adjusted, for each 
twelve-month period ending in November, with rounding to the nearest 
$100,000.
    Limited purpose bank means a bank that offers only a narrow product 
line (such as automobile loans) to a regional or broader market and for 
which a designation as a limited purpose bank is in effect, in 
accordance with Sec.  25.15(b).
    Major retail lending product line means a bank's retail lending 
product line that for the two years prior to the beginning of the 
evaluation period:
    (1) Composed at least 15 percent of the bank's dollar volume of 
total retail loan originations and was the first or second largest 
retail lending product line by dollar volume; and

[[Page 34795]]

    (2) At the bank's option, composed at least 15 percent of the 
bank's dollar volume of total retail loan originations.
    Low-income credit union has the same meaning as this term is given 
in 12 CFR 701.34.
    Metropolitan division has the same meaning as published in the 
Office of Management and Budget's Standards for Delineating 
Metropolitan and Micropolitan Statistical Areas or successor 
publication thereof.
    Metropolitan statistical area has the same meaning as published in 
the Office of Management and Budget's Standards for Delineating 
Metropolitan and Micropolitan Statistical Areas or successor 
publication thereof.
    Military bank means a bank whose business predominately consists of 
serving the needs of military personnel who serve or have served in the 
armed forces (including the U.S. Army, Navy, Marine Corp., Air Force, 
and Coast Guard) or dependents of military personnel. A bank whose 
business predominantly consists of serving the needs of military 
personnel or their dependents means a bank whose most important 
customer group is military personnel or their dependents.
    Minority depository institution means a depository institution as 
defined in 12 U.S.C. 2907(b)(1).
    Monetary donation means a grant, monetary contribution, or monetary 
donation.
    Non-branch deposit-taking facility means a non-branch banking 
facility owned or operated by or operated exclusively for the bank and 
available to the general public, which is authorized to take deposits 
and is located in any state or territory of the United States of 
America.
    Nonmetropolitan area means any area that is not located in a 
metropolitan statistical area.
    Other tribal and native lands means State Designated Tribal 
Statistical Areas, as defined by the Census Bureau, and Hawaiian Home 
Lands.
    Partially means 50 percent or less of the dollar value of the 
activity or of the individuals or census tracts served by the activity.
    Primarily means:
    (1) Greater than 50 percent of the dollar value of the activity or 
of the individuals or census tracts served by the activity; or
    (2) The express, bona fide intent, purpose, or mandate of the 
activity as stated, for example in a prospectus, loan proposal, or 
community action plan.
    Qualifying activity means an activity that helps to meet the credit 
needs of a bank's entire community, including low- and moderate-income 
individuals and communities, in accordance with Sec.  25.04.
    Qualifying loan means a retail loan that meets the criteria in 
Sec.  25.04(b) or a community development loan that meets the criteria 
in Sec.  25.04(c).
    Retail domestic deposit means a ``deposit'' as defined in section 
3(l) of the FDIA (12 U.S.C. 1813(l)) and held in the United States that 
is:
    (1) Reported on Schedule RC-E of the Call Report, as item 1 or item 
3; or
    (2) A non-brokered ``reciprocal deposit'' as defined in 12 U.S.C. 
1831(f)(i)(2)(E) for the institution sending the non-brokered 
``reciprocal deposit'' but retail domestic deposit does not mean:
    (i) A deposit;
    (A) Obtained, directly or indirectly, from or through the mediation 
or assistance of a ``deposit broker'' as defined in section 29 of the 
FDIA (12 U.S.C. 1831f(g));
    (B) Originated from an affiliated or non-affiliated broker-dealer 
sweep transaction;
    (C) Held in a Health Savings Account established in accordance with 
26 U.S.C. 223;
    (D) Held in a prepaid card account established in accordance with 
12 CFR 1005.1 et seq.; or
    (ii) A non-brokered reciprocal deposit as defined in 12 U.S.C. 
1831(f)(i)(2)(E) for the institution receiving a non-brokered 
``reciprocal deposit.''
    Retail lending product line means:
    (1) The home mortgage loan product line, which includes all home 
mortgage loans;
    (2) The small loan to a business product line, which includes all 
small loans to businesses;
    (3) The small loan to a farm product line, which includes all small 
loans to farms;
    (4) The other revolving credit plan product line, which includes 
all consumer other revolving credit plans;
    (5) An automobile loan product line, which includes all automobile 
loans; or
    (6) The other consumer loan product line, which includes all other 
consumer loans.
    Retail loan means a home mortgage loan, small loan to a business, 
small loan to a farm, or consumer loan.
    Small bank means a bank that had assets of $600 million or less in 
four of the previous five calendar quarters; the dollar figures in this 
definition shall be adjusted annually and published by the OCC, based 
on the year-to-year change in the average of the Consumer Price Index 
for Urban Wage Earners and Clerical Workers, not seasonally adjusted, 
for each twelve-month period ending in November, with rounding to the 
nearest $100,000.
    Small loan to a business means a loan reported on the Call Report, 
Schedule RC-C, Loans and Lease Financing Receivables, Part 1, Item 1.e, 
Secured by nonfarm nonresidential properties, or Item 4, Commercial and 
industrial loans, and of no greater than $1.6 million. The OCC will 
adjust the $1.6 million threshold for inflation every five years, and 
the adjustment to the threshold will be made publicly available.
    Small loan to a farm means a loan reported on the Call Report, 
Schedule RC-C, Loans and Lease Financing Receivables, Part 1, Item 1.b, 
Secured by farmland, or Item 3, Loans to finance agricultural 
production and other loans to farmers, and of no greater than $1.6 
million. The OCC will adjust the $1.6 million threshold for inflation 
every five years, and the adjustment to the threshold will be made 
publicly available.
    Underserved area means a middle-income census tract:
    (1) Identified by the OCC as meeting the criteria for population 
size, density, and dispersion that indicate the area's population is 
sufficiently small, thin, and distant from a population center that the 
census tract is likely to have difficulty financing the fixed costs of 
meeting essential community needs. The OCC will use as the basis for 
these designations the ``urban influence codes,'' numbered ``7,'' 
``10,'' ``11,'' and ``12,'' maintained by the Economic Research Service 
of the U.S. Department of Agriculture; or
    (2) Identified by the OCC as:
    (i) Not having a branch of any bank within:
    (A) 2 miles from the center of the census tract if it is an urban 
census tract, as defined by the Federal Financial Institutions 
Examination Council Census data;
    (B) 5 miles from the center of the census tract if it is a mixed 
census tract, as defined by the Federal Financial Institutions 
Examination Council Census data;
    (C) 10 miles from the center of the census tract if it is a rural 
census tract, as defined by the Federal Financial Institutions 
Examination Council Census data; or
    (D) 5 miles from the center of the census tract if the census tract 
is an island area, as defined by the Federal Financial Institutions 
Examination Council Census data; and
    (ii) Not having any branch within the census tract.
    Wholesale bank means a bank that is not in the business of 
extending home mortgage, small loans to businesses, small loans to 
farms, or consumer loans

[[Page 34796]]

to retail customers, and for which a designation is in effect, in 
accordance with Sec.  25.15(b).
    Women's depository institution means a depository institution as 
defined in 12 U.S.C. 2907(b)(2).

Subpart B--Qualifying Activities


Sec.  25.04  Qualifying activities criteria.

    (a) General--(1) A retail loan, a community development loan, a 
community development investment, or a community development service 
that helps to meet the credit needs of a bank's entire community, 
including low- and moderate-income communities, is a qualifying 
activity if it meets the criteria in this section at the time the 
activity is originated, made, or conducted.
    (2) Notwithstanding paragraph (a)(1) of this section, a loan or 
investment that was a qualifying activity and is subsequently sold 
remains a qualifying activity unless the OCC determined prior to the 
sale that the activity is no longer a qualifying activity.
    (3) Notwithstanding paragraphs (a)(1) and (a)(2) of this section, 
other than home mortgage loans or consumer loans provided to middle- or 
upper-income individuals in low- or moderate-income census tracts, an 
activity that would have received positive consideration in a CRA 
performance evaluation on the date prior to October 1, 2020 and is on a 
bank's balance sheet on the effective date of this rule is a qualifying 
activity.
    (b) Retail loans. A home mortgage loan, small loan to a business, 
small loan to a farm, or consumer loan is a qualifying activity if it 
is:
    (1) Provided to a:
    (i) Low- or moderate-income individual or family;
    (ii) CRA-eligible business; or
    (iii) CRA-eligible farm;
    (2) Located in Indian country or other tribal and native lands;
    (3) A small loan to a business located in a low- or moderate-income 
census tract; or
    (4) A small loan to a farm located in a low- or moderate-income 
census tract.
    (c) Community development loans, community development investments, 
and community development services. A community development loan, 
community development investment, or community development service is a 
qualifying activity if it provides financing for or supports:
    (1) Affordable housing, which means:
    (i) Rental housing:
    (A) That is likely to be partially or primarily inhabited by low- 
or moderate-income individuals or families as demonstrated by median 
rents that do not and are not projected at the time of the transaction 
to exceed 30 percent of 80 percent of the area median income;
    (B) That is partially or primarily inhabited by low- or moderate-
income individuals or families as demonstrated by an affordable housing 
set-aside required by a federal, state, local, or tribal government; or
    (C) That is undertaken in conjunction with an explicit federal, 
state, local, or tribal government affordable housing program for low- 
or moderate-income individuals or families; or
    (ii) Owner-occupied housing purchased, refinanced, or improved by 
or on behalf of low- or moderate-income individuals or families, except 
for home mortgage loans provided directly to individuals or families;
    (2) Another bank's community development loan, community 
development investment, or community development service;
    (3) Community support services which means activities, such as 
child care, education, workforce development and job training programs, 
health services, and housing services, that partially or primarily 
serve or assist low- or moderate-income individuals or families;
    (4) Economic development, which means activities that provide 
financing for or support businesses or farms, including:
    (i) Activities that promote job creation or job retention partially 
or primarily for low- or moderate-income individuals;
    (ii) Federal, state, local, or tribal government programs, 
projects, or initiatives that partially or primarily serve small 
businesses or small farms as those terms are defined in the programs, 
projects, or initiatives;
    (iii) Retaining existing, or attracting new, businesses, farms, or 
residents to low- or moderate-income census tracts, underserved areas, 
distressed areas, designated disaster areas consistent with a disaster 
recovery plan, or Indian country or other tribal and native lands;
    (iv) A Small Business Administration Certified Development Company, 
as that term is defined in 13 CFR 120.10, a Small Business Investment 
Company, as described in 13 CFR part 107, a New Markets Venture Capital 
company, as described in 13 CFR part 108, a qualified Community 
Development Entity, as defined in 26 CFR 45D(c), or a U.S. Department 
of Agriculture Rural Business Investment Company, as defined in 7 CFR 
4290.50; or
    (v) Technical assistance and supportive services, such as shared 
space, technology, or administrative assistance for businesses or farms 
that meet the size eligibility standards of the Small Business 
Investment Company program, as described in 13 CFR part 107;
    (5) Essential community facilities that partially or primarily 
serve:
    (i) Low- or moderate-income individuals or families; or
    (ii) Low- or moderate-income census tracts, distressed areas, 
underserved areas, disaster areas consistent with a disaster recovery 
plan, or Indian country or other tribal and native lands;
    (6) Essential infrastructure that partially or primarily serves:
    (i) Low- or moderate-income individuals or families; or
    (ii) Low- or moderate-income census tracts, distressed areas, 
underserved areas, disaster areas consistent with a disaster recovery 
plan, or Indian country or other tribal and native lands;
    (7) A family farm's:
    (i) Purchase or lease of farm land, equipment, and other farm-
related inputs for the family farm's use in operating the farm;
    (ii) Receipt of technical assistance and supportive services for 
the family farm's own production, such as shared space, technology, or 
administrative assistance through an intermediary; or
    (iii) Sale and trade of family farm products grown or produced by 
the family farm;
    (8) Federal, state, local, or tribal government programs, projects, 
or initiatives that:
    (i) Partially or primarily serve low- or moderate-income 
individuals or families; or
    (ii) Are consistent with a bona fide government revitalization, 
stabilization, or recovery plan for a low- or moderate-income census 
tract; a distressed area; an underserved area; a disaster area; or 
Indian country or other tribal and native lands;
    (9) Financial literacy programs or education or homebuyer 
counseling;
    (10) Owner-occupied and rental housing development, construction, 
rehabilitation, improvement, or maintenance in Indian country or other 
tribal and native lands;
    (11) Qualified opportunity funds, as defined in 26 U.S.C. 1400Z-
2(d)(1), that benefit low- or moderate-income qualified opportunity 
zones, as defined in 26 U.S.C. 1400Z-1(a); or
    (12) Other activities and ventures undertaken, including capital 
investments and loan participations, by a bank in cooperation with a 
minority depository institution, women's depository institution, 
Community Development Financial Institution, or low-income credit 
union, if the activity helps to meet the credit needs of local

[[Page 34797]]

communities in which these institutions are chartered, including 
activities that indirectly help to meet community credit needs by 
promoting the sustainability and profitability of those institutions 
and credit unions.


Sec.  25.05  Qualifying activities confirmation and illustrative list.

    (a) Qualifying activities list. The OCC maintains a publicly 
available illustrative list at www.occ.gov of non-exhaustive examples 
of qualifying activities that meet, and may include activities that do 
not meet, the criteria in Sec.  25.04.
    (b) Confirmation of a qualifying activity. An interested party may 
request that the OCC confirm that an activity meets the criteria in 
Sec.  25.04 and is a qualifying activity in accordance with paragraph 
(c) of this section.
    (1) When the OCC confirms that an activity is consistent with the 
criteria in Sec.  25.04, the OCC will notify the requestor, publish its 
decision, and may add the activity to the list of activities that meet 
the qualifying activities criteria described in paragraph (a) of this 
section, incorporating any conditions imposed, if applicable.
    (2) When the OCC determines that an activity is not consistent with 
the criteria in Sec.  25.04, the OCC will notify the requestor, publish 
its decision, and may add this activity to the list of activities that 
do not meet the qualifying activities criteria described in Sec.  
25.04.
    (c) Process--(1) An interested party may request that the OCC 
confirm that an activity is a qualifying activity by submitting a 
complete Qualifying Activity Confirmation Request Form available on 
www.occ.gov.
    (2) In responding to a confirmation request that an activity is 
consistent with the criteria in Sec.  25.04, the OCC will consider:
    (i) The information on the Qualifying Activity Confirmation Request 
Form;
    (ii) Whether the activity is consistent with the safe and sound 
operation of the bank; and
    (iii) Any other information the OCC deems relevant.
    (3) The OCC may impose conditions on its confirmation to ensure 
that an activity is consistent with the criteria in Sec.  25.04.
    (4) Unless notified by the OCC that it is extending the 
confirmation period to 90 days, an activity is confirmed as a 
qualifying activity if the requestor is not informed of an OCC 
objection within 60 days of submission of a complete Qualifying 
Activity Confirmation Request Form.
    (d) Modifying the qualifying activities list. In addition to 
updating the list in paragraph (a) of this section on a periodic basis 
in response to requests for confirmation described in paragraph (b) of 
this section, the OCC will publish the qualifying activities list no 
less frequently than every five years for notice and comment to 
determine whether the list should change. If the OCC determines that a 
qualifying loan or community development investment no longer meets the 
criteria in Sec.  25.04, that loan or community development investment 
will not be considered a qualifying activity for any subsequent 
purchasers.


Sec.  25.06  CRA desert confirmation.

    (a) CRA desert list. The OCC maintains a publicly available 
illustrative list at www.occ.gov of areas that were consistent with the 
definition in Sec.  25.03 at the time a bank requested confirmation of 
a CRA desert.
    (b) Confirmation of a CRA desert. A bank must request that the OCC 
confirm that an area is a CRA desert in accordance with paragraph (c) 
of this section before receiving the CRA desert multiplier in Sec.  
25.08(b) in an evaluation period, even if that area is on the CRA 
desert list in paragraph (a) of this section.
    (1) When the OCC confirms that an area is consistent with the 
definition of CRA desert in Sec.  25.03, the OCC will notify the 
requestor and may add this area to the list of CRA deserts as described 
in paragraph (a) of this section.
    (2) When the OCC determines that an area is not consistent with the 
definition of CRA desert in Sec.  25.03, the OCC will notify the 
requestor.
    (c) Process--(1) A bank may request that the OCC confirm that an 
area is a CRA desert by submitting a request to the OCC detailing why 
the area is consistent with the definition of CRA desert in Sec.  
25.03.
    (2) In responding to a confirmation request that an activity is 
consistent with the definition of CRA desert in Sec.  25.03, the OCC 
will consider:
    (i) The information provided by the bank; and
    (ii) Any other information the OCC deems relevant.


Sec.  25.07  Qualifying activities quantification.

    (a) Community development service quantification. The quantified 
dollar value of a community development service is the compensation 
multiplied by the total number of hours one or more the employees spent 
performing the service, as adjusted by paragraph (e) of this section.
    (b) In-kind donation quantification. The quantified dollar value of 
an in-kind donation is the fair market value of the donation, as 
adjusted by paragraph (e) of this section.
    (c) Monetary donation quantification. The quantified dollar value 
of a monetary donation is the actual dollar value of the donation, as 
adjusted by paragraph (e) of this section.
    (d) Qualifying loan and other community development investment 
quantification. The quantified dollar value of a qualifying loan or a 
community development investment not included in paragraph (b) or (c) 
of this section, is:
    (1) Except for qualifying loans in paragraph (d)(2), the average of 
the dollar value, as of the close of business on the last day of the 
month, of:
    (i) The outstanding balance of a loan or investment, as adjusted by 
paragraph (e) of this section;
    (ii) Any legally binding commitment to invest, to the extent not 
reflected in paragraph (d)(1)(i) of this section and as adjusted by 
paragraph (e) of this section; and
    (iii) Any commitment to lend, to the extent not reflected in 
paragraph (d)(1)(ii) of this section and as adjusted in paragraph (e) 
of this section; or
    (2) For qualifying retail loans sold within 365 days of 
origination, the dollar value of the loan at origination.
    (3) For community development investment funds that are syndicated 
or sponsored by the bank for the purpose of obtaining financing from 
other investors and support one or more projects that are eligible for 
low-income housing tax credits or new markets tax credits:
    (i) The total dollar value of the fund in the year of origination; 
and
    (ii) One half of the total dollar value of the portion of the fund 
that is sold in the year that it is sold.
    (e) Portion of partially qualifying activities. The quantified 
dollar value of a partially qualifying activity is calculated by 
multiplying the percentage of the activity that is qualifying by the 
full dollar value of the qualifying activity quantified under 
paragraphs (a)--(d) of this section.


Sec.  25.08  Qualifying activities value.

    (a) Bank's qualifying activities value. A bank evaluated under 
Sec.  25.13 calculates its qualifying activities value annually based 
on the quantified dollar value of all qualifying activities originated, 
made, performed, or on the bank's balance sheet during the year. The 
qualifying activities value equals the sum, during a given annual 
period, of:
    (1) The quantified dollar value of qualifying loans and community

[[Page 34798]]

development investments originated, made, or performed by the bank 
during the year or on the bank's balance sheet during the year, as 
adjusted in paragraph (b) of this section; and
    (2) The aggregate:
    (i) Quantified dollar value of community development services 
conducted during the year, as adjusted in paragraph (b) of this 
section;
    (ii) Quantified dollar value of in-kind donations made during the 
year, as adjusted in paragraph (b) of this section; and
    (iii) Quantified dollar value of monetary donations made during the 
year, as adjusted in paragraph (b) of this section.
    (b) Multipliers--(1) To be eligible for the multipliers in 
paragraphs (b)(2) and (b)(3) of this section, the quantified dollar 
value of a bank's current evaluation period community development 
loans, community development investments, and community development 
services must be approximately equal to the quantified dollar value of 
these activities considered in the bank's prior evaluation period. The 
quantified dollar value of qualifying activities originated, made, 
conducted or purchased by a bank during the evaluation period after 
this requirement is met will be adjusted using the multipliers in 
paragraphs (b)(2)-(b)(3) of this section, as applicable.
    (2) When calculating the bank's qualifying activity value or an 
assessment area qualifying activities value, the quantified dollar 
value of the following qualifying activities, except for activities 
quantified under Sec.  25.07(d)(3), will be adjusted by multiplying the 
quantified dollar value by 2.
    (i) Activities provided to or that support minority depository 
institutions, women's depository institutions, Community Development 
Financial Institutions, and low-income credit unions, except activities 
related to mortgage-backed securities;
    (ii) Other community development investments, except community 
development investments in mortgage-backed securities and municipal 
bonds;
    (iii) Other community development services;
    (iv) Other affordable housing-related community development loans; 
and
    (v) Retail loans generated by branches in low- and moderate-income 
census tracts.
    (3) In addition to any multiplier under paragraph (b)(2) of this 
section, when calculating the bank's qualifying activities value or an 
assessment area qualifying activities value, the quantified dollar 
value of the qualifying activities in CRA deserts, except for 
activities quantified under Sec.  25.07(d)(3), will be adjusted by 
multiplying the quantified dollar value by 2.
    (4) Qualifying activities that receive a multiplier under 
paragraphs (b)(2) and (b)(3) of this section may be eligible for a 
multiplier of up to 4 times their quantified dollar value based on the 
OCC's determination of the activity's responsiveness, innovativeness, 
or complexity.
    (c) Assessment area qualifying activities value. A bank evaluated 
under Sec.  25.13 calculates its assessment area qualifying activities 
value for each assessment area by using the process described in 
paragraph (a) of this section for qualifying activities located in the 
assessment area and originated, made, or performed by the bank during 
the year or were on the bank's balance sheet during the year.

Subpart C--Assessment Area


Sec.  25.09  Assessment area.

    (a) General. A bank must delineate one or more assessment areas 
within which the OCC evaluates the bank's record of helping to meet the 
credit needs of its community. The OCC reviews the delineation for 
compliance with the requirements of this section. Unless pursuant to an 
approved application covered under Sec.  25.02(a)(3) for a merger or 
consolidation with an insured depository institution, an assessment 
area delineation can only change once a year and must not change within 
the annual period used to determine an assessment area CRA evaluation 
measure under Sec.  25.11(c).
    (b) Facility-based assessment area(s)--(1) A bank must delineate an 
assessment area encompassing each location where the bank maintains a 
main office, a branch, or a non-branch deposit-taking facility that is 
not an ATM as well as the surrounding locations in which the bank has 
originated or purchased a substantial portion of its qualifying retail 
loans. Assessment areas delineated under this paragraph may contain one 
or more of these facilities and may also contain one or more deposit-
taking ATMs.
    (2) A bank may delineate an assessment area encompassing locations 
where it maintains a deposit-taking ATM as well as the surrounding 
locations in which the bank has originated or purchased a substantial 
portion of its qualifying retail loans. Assessment areas delineated 
under this paragraph may contain one or more of these facilities and 
may also contain one or more of the facilities in paragraph (b)(1) of 
this section.
    (3) A facility-based assessment area must be delineated to consist 
of:
    (i) One whole metropolitan statistical area (using the metropolitan 
statistical area boundaries that were in effect as of January 1 of the 
calendar year in which the delineation is made);
    (ii) The whole nonmetropolitan area of a state;
    (iii) One or more whole, contiguous metropolitan divisions in a 
single metropolitan statistical area (using the metropolitan division 
boundaries that were in effect as of January 1 of the calendar year in 
which the delineation is made); or
    (iv) One or more whole, contiguous counties or county equivalents 
in a single metropolitan statistical area or nonmetropolitan area.
    (4) A bank may delineate its facility-based assessment area(s) in 
the smallest geographic area where it maintains a main office, branch, 
or non-branch deposit-taking facility or may delineate a larger 
assessment area that includes these locations, as provided in paragraph 
(b)(3) of this section.
    (5) A facility-based assessment area may not extend beyond a 
metropolitan statistical area or state boundary unless the assessment 
area is located in a multistate metropolitan statistical area. If a 
bank serves a geographic area that extends beyond a state boundary, the 
bank must delineate separate assessment areas for the areas in each 
state. If a bank serves a geographic area that extends beyond a 
metropolitan statistical area boundary, the bank must delineate 
separate assessment areas for the areas inside and outside the 
metropolitan statistical area.
    (c) Deposit-based assessment area(s)--(1) A bank that receives 50 
percent or more of its retail domestic deposits from geographic areas 
outside of its facility-based assessment areas must delineate separate, 
non-overlapping assessment areas where it receives 5 percent or more of 
its retail domestic deposits.
    (2) A deposit-based assessment area must be delineated to consist 
of:
    (i) One whole state;
    (ii) One whole metropolitan statistical area (using the 
metropolitan statistical area boundaries that were in effect as of 
January 1 of the calendar year in which the delineation is made);
    (iii) The whole nonmetropolitan area of a state;
    (iv) One or more whole, contiguous metropolitan divisions in a 
single metropolitan statistical area (using the metropolitan division 
boundaries that were in effect as of January 1 of the

[[Page 34799]]

calendar year in which the delineation is made);
    (v) The remaining geographic area of a state, metropolitan 
statistical area, nonmetropolitan area, or metropolitan division other 
than where it has a facility-based assessment area; or
    (vi) One or more whole, contiguous counties or county equivalents 
in a single metropolitan statistical area or nonmetropolitan area.
    (3) A bank may delineate its deposit-based assessment area(s) in 
the smallest geographic area where it receives 5 percent or more of its 
retail domestic deposits or may delineate a larger assessment area that 
includes these geographic areas, as provided in paragraph (b)(2) of 
this section.
    (d) Limitations on delineation of assessment areas. A bank's 
assessment areas must not:
    (1) Reflect illegal discrimination; or
    (2) Arbitrarily exclude low- or moderate-income census tracts, 
taking into account the bank's size and financial condition.
    (e) Military banks. Notwithstanding the requirements of this 
section, a military bank's assessment area will consist of the entire 
United States of America and its territories. A military bank will only 
be evaluated under Sec.  25.13(c).
    (f) Banks evaluated under strategic plans. A bank evaluated under a 
strategic plan will delineate its assessment area(s) in accordance with 
the requirements of Sec.  25.18(g)(2).
    (g) Use of assessment area(s). The OCC uses the assessment area(s) 
delineated by a bank in its evaluation of the bank's CRA performance 
unless the OCC determines that the assessment area(s) do not comply 
with the requirements of this section.

Subpart D--Performance Evaluations


Sec.  25.10  Performance standards and ratings, in general.

    (a) Performance standards. The OCC assesses the CRA performance of 
a bank in an examination as follows:
    (1) General performance standards--(i) The OCC assesses the CRA 
performance of a bank other than banks described in paragraphs (a)(2), 
(a)(3), and (a)(4) of this section based on the bank's application of 
the general performance standards and determination of its presumptive 
ratings under Sec.  25.13.
    (ii) The OCC determines the assigned ratings for a bank evaluated 
under Sec.  25.13 as provided in Sec.  25.19.
    (iii) The OCC determines the state or multistate metropolitan 
statistical area ratings for a bank evaluated under Sec.  25.13 as 
provided in Sec.  25.20.
    (2) Small bank and intermediate bank performance standards--(i) The 
OCC applies the small bank and intermediate bank performance standards, 
as provided in Sec.  25.14, in evaluating the performance of a small 
bank or intermediate bank, unless the bank is evaluated under an 
approved strategic plan as described under paragraph (a)(4) of this 
section or elects to opt in to the general performance standards under 
paragraph (b) of this section.
    (ii) The OCC assigns a small bank evaluated under the small bank 
and intermediate bank performance standards in Sec.  25.14 lending test 
and bank ratings as provided for in Appendix A of this part.
    (iii) The OCC assigns an intermediate bank evaluated under the 
small bank and intermediate bank performance standards in Sec.  25.14 
lending test, community development test, and bank ratings as provided 
in Appendix A of this part.
    (3) Wholesale and limited purpose bank performance standards--(i) 
The OCC applies the wholesale and limited purpose bank performance 
standards, as provided in Sec.  25.15, in evaluating the performance of 
a wholesale or limited purpose bank, unless the bank is evaluated under 
an approved strategic plan as described under paragraph (a)(4) of this 
section or elects to opt in to the general performance standards under 
paragraph (b) of this section.
    (ii) The OCC assigns a wholesale or limited purpose bank evaluated 
under the wholesale and limited purpose bank performance standards in 
Sec.  25.15 community development test and bank ratings as provided for 
in Appendix A of this part.
    (4) Strategic plan. The OCC evaluates the performance of a bank 
under a strategic plan if the bank submits, and the OCC approves, a 
strategic plan as provided in Sec.  25.18.
    (b) General performance standards opt in. A small, intermediate, 
wholesale, or limited purpose bank may elect to opt in to be evaluated 
under the general performance standards described in paragraph (a)(1) 
of this section. A small, intermediate, wholesale, or limited purpose 
bank that elects to be evaluated under the general performance 
standards must collect, maintain, and report the data required for 
other banks under Sec. Sec.  25.21, 25.25, and 25.26. Once a small, 
intermediate, wholesale, or limited purpose bank elects to opt in, it 
must complete at least one evaluation period under the general 
performance standards and may elect no more than once to opt out of the 
general performance standards. A small, intermediate, wholesale, or 
limited purpose bank that opts out from the general performance 
standards will revert to being evaluated according to the corresponding 
performance standards described in paragraphs (a)(2) and (a)(3) of this 
section, unless the bank is evaluated under an approved strategic plan 
as described under (a)(4) of this section.
    (c) Safe and sound operations. This part and the CRA do not require 
a bank to make loans or investments or to provide services that are 
inconsistent with safe and sound operations. To the contrary, the OCC 
anticipates that banks can meet the standards of this part with safe 
and sound loans, investments, and services on which the banks expect to 
make a profit. Banks are permitted and encouraged to develop and apply 
flexible underwriting standards for loans that benefit low- or 
moderate-income census tracts or individuals, only if consistent with 
safe and sound operations.


Sec.  25.11  CRA evaluation measure.

    (a) CRA evaluation measure. A bank evaluated as described in Sec.  
25.13 will determine its bank and assessment area CRA evaluation 
measures annually as part of its CRA performance evaluation.
    (b) Determination of the bank's CRA evaluation measure. A bank's 
CRA evaluation measure is the sum of:
    (1) The bank's annual qualifying activities values calculated under 
Sec.  25.08(a) divided by the average quarterly value of the bank's 
retail domestic deposits as of the close of business on the last day of 
each quarter for the same period used to calculate the annual 
qualifying activities value; and
    (2) The number of the bank's branches located in or that serve low- 
or moderate-income census tracts, distressed areas, underserved areas, 
and Indian country or other tribal and native lands divided by its 
total number of branches as of the close of business on the last day of 
the same period used to calculate the annual qualifying activities 
value multiplied by .02.
    (3) If the value calculated in paragraph (b)(2) of this section 
exceeds .01, then the bank's CRA evaluation measure is the sum of the 
value calculated in paragraph (b)(1) of this section and .01.
    (c) Determination of the assessment area CRA evaluation measure. A 
bank's assessment area CRA evaluation measure is determined in each 
assessment area and is the sum of:
    (1) The bank's annual assessment area qualifying activities value 
calculated under Sec.  25.08(c); divided by the average quarterly value 
of the bank's assessment area retail domestic deposits as of the

[[Page 34800]]

close of business on the last day of each quarter for the same period 
used to calculate the annual assessment area qualifying activities 
value; and
    (2) The number of the bank's branches located in or that serve low- 
or moderate-income census tracts, distressed areas, underserved areas, 
and Indian country or other tribal and native lands in the assessment 
area divided by its total number of branches in the assessment area as 
of the close of business on the last day of the same period used to 
calculate the annual assessment area qualifying activities value 
multiplied by .02.
    (3) If the value calculated in paragraph (c)(2) of this section 
exceeds .01, then the bank's assessment area CRA evaluation measure is 
the sum of the value calculated in paragraph (c)(1) of this section and 
.01.
    (d) Average annual CRA evaluation measures. For each evaluation 
period, a bank will calculate the average of its:
    (1) Annual CRA evaluation measures for each year in the evaluation 
period; and
    (2) Annual assessment area CRA evaluation measures for each year in 
the evaluation period, separately for each assessment area.


Sec.  25.12  Retail lending distribution tests.

    (a) General. In each assessment area, for a bank evaluated as 
described in Sec.  25.13 the OCC will apply a:
    (1) Geographic distribution test for its home mortgage product 
line, small loan to a business product line, or small loan to a farm 
product line if those product lines are major retail lending product 
lines with 20 or more originations per year in the assessment area 
during the evaluation period; and
    (2) Borrower distribution test for each major retail lending 
product line with 20 or more originations per year in the assessment 
area during the evaluation period.
    (b) Geographic distribution test--(1) Home mortgage product line. 
The OCC determines whether a bank passes the geographic distribution 
test for the home mortgage product line by comparing the bank's home 
mortgage loans originated in low- and moderate-income tracts in the 
assessment area as a percentage of the bank's home mortgage loans 
originated in the assessment area to either the associated geographic 
demographic comparator or the associated geographic peer comparator.
    (i) Geographic demographic comparator. The geographic demographic 
comparator is the percentage of owner-occupied housing units in the 
assessment area that are in low- and moderate-income census tracts.
    (ii) Geographic peer comparator. The geographic peer comparator is 
all peer home mortgage loans originated in low- and moderate-income 
areas in the assessment area as a percentage of all peer home mortgage 
loans in the assessment area, where peers are all banks evaluated under 
the general performance standards in Sec.  25.13.
    (2) Small loan to a business product line. The OCC determines 
whether a bank passes the geographic distribution test for the small 
loan to a business product line by comparing the bank's small loans to 
businesses originated in low- or moderate-income census tracts in the 
assessment area as a percentage of the bank's small loans to businesses 
originated in the assessment area to either the associated geographic 
demographic comparator or the associated geographic peer comparator.
    (i) Geographic demographic comparator. The geographic demographic 
comparator is the percentage of businesses in the assessment area that 
are in low- and moderate-income census tracts.
    (ii) Geographic peer comparator. The geographic peer comparator is 
all peer small loans to businesses originated in low- and moderate-
income census tracts in the assessment area as a percentage of all peer 
small loans to businesses originated in the assessment area, where 
peers are all banks evaluated under the general performance standards 
in Sec.  25.13.
    (3) Small loan to a farm product line. The OCC determines whether a 
bank passes the geographic distribution test for the small loan to a 
farm product line by comparing the bank's small loans to farms 
originated in low- or moderate-income census tracts in the assessment 
area as a percentage of the bank's small loans to farms originated in 
the assessment area to the associated geographic demographic comparator 
or the associated geographic peer comparator.
    (i) Geographic demographic comparator. The geographic demographic 
comparator is the percentage of farms in the assessment area that are 
in low- and moderate-income census tracts.
    (ii) Geographic peer comparator. The geographic peer comparator is 
all peer small loans to farms originated in low- and moderate-income 
census tracts in the assessment area as a percentage of all peer small 
loans to farms originated in the assessment area, where peers are all 
banks evaluated under the general performance standards in Sec.  25.13.
    (c) Borrower distribution test--(1) Home mortgage lending product 
line. The OCC determines whether a bank passes the borrower 
distribution test for a home mortgage lending product line by comparing 
the bank's home mortgage loans originated to low- and moderate-income 
families in the assessment area as a percentage of the bank's home 
mortgage loans originated in the assessment area to either the 
associated borrower demographic comparator or the associated borrower 
peer comparator.
    (i) Borrower demographic comparator. The borrower demographic 
comparator is the percentage of low- and moderate-income families in 
the assessment area.
    (ii) Borrower peer comparator. The borrower peer comparator is all 
peer home mortgage loans originated to low- or moderate-income families 
in the assessment area as a percentage of all peer home mortgage loans 
originated in the assessment area, where peers are all banks evaluated 
under the general performance standards in Sec.  25.13.
    (2) Automobile lending product line, other revolving credit plan 
product line, or other consumer loan product line. The OCC determines 
whether a bank passes the borrower distribution test for the automobile 
lending product line, other revolving credit plan product line, or 
other consumer loan product line by comparing the bank's product line 
loans to low- and moderate-income households in the assessment area as 
a percentage of the bank's product line loans originated in the 
assessment area to either the associated demographic borrower 
comparator or the associated peer comparator.
    (i) Borrower demographic comparator. The borrower demographic 
comparator is the percentage of low- and moderate-income households in 
the assessment area.
    (ii) Borrower peer comparator. The borrower peer comparator is all 
peer product line loans originated to low- or moderate-income 
households as a percentage of all peer product line loans originated in 
the assessment area, where peers are all banks evaluated under the 
general performance standards in Sec.  25.13.
    (3) Small loan to a business product line. The OCC determines 
whether a bank passes the borrower distribution test for the small loan 
to a business product line by comparing the bank's small loans to 
businesses originated to CRA-eligible businesses in the assessment area 
as a percentage of the bank's small loans to businesses originated in 
the assessment area to either the associated demographic

[[Page 34801]]

borrower comparator or the associated peer comparator.
    (i) Borrower demographic comparator. The borrower demographic 
comparator is the percentage of CRA-eligible businesses in the 
assessment area.
    (ii) Borrower peer comparator. The borrower peer comparator is all 
peer small loans to businesses to CRA-eligible businesses originated in 
the assessment area as a percentage of all small loans to businesses 
originated in the assessment area, where peers are all banks evaluated 
under the general performance standards in Sec.  25.13.
    (4) Small loan to a farm product line. The OCC determines whether a 
bank passes the borrower distribution test for the small loan to a farm 
product line by comparing the bank's small loans to farms originated to 
CRA-eligible farms in the assessment area as a percentage of the bank's 
small loans to farms originated in the assessment area to either the 
associated demographic borrower comparator or the associated peer 
comparator.
    (i) Borrower demographic comparator. The borrower demographic 
comparator is the percentage of CRA-eligible farms in the assessment 
area.
    (ii) Borrower peer comparator. The borrower peer comparator is all 
peer small loans to farms to CRA-eligible farms originated in the 
assessment area as a percentage of all peer small loans to farms, where 
peers are all banks that are evaluated under the general performance 
standards in Sec.  25.13.


Sec.  25.13  General performance standards and presumptive rating.

    (a) General. The bank's presumptive rating and its assessment area 
presumptive rating(s) for banks assessed under this section are 
determined by evaluating whether a bank has met all the performance 
standards associated with a given rating category. A bank will use the 
performance standards in effect on the first day of its evaluation 
period for the duration of its evaluation period, unless the bank 
elects to use performance standards published later during the 
evaluation period. If the bank elects to use a later-published 
performance standard, that performance standard will apply during the 
entire evaluation period.
    (b) Performance standards adjustments. The OCC will periodically 
adjust the performance standards.
    (1) Factors considered. When adjusting the performance standards, 
the OCC will consider factors such as the level of qualifying 
activities conducted by all banks, market conditions, and unmet needs 
and opportunities.
    (2) Public notice and comment. The OCC will provide for a public 
notice and comment period on any proposed adjustments to the 
performance standards prior to finalizing the adjustments.
    (c) Bank performance standards--(1) Outstanding. The outstanding 
performance standards are:
    (i) CRA evaluation measure. The bank's average annual CRA 
evaluation measure during the evaluation period is outstanding;
    (ii) Assessment area ratings--(A) Except as provided in paragraph 
(c)(1)(ii)(B) of this section, the bank received an assigned rating of 
outstanding in--
    (1) 80 percent of its assessment areas; and
    (2) Assessment areas from which it receives 80 percent of its 
retail domestic deposits that it receives from its assessment areas; 
and
    (B) For a bank with five or fewer assessment areas, the bank 
received an assigned rating of outstanding in
    (1) 50 percent of its assessment areas; and
    (2) Assessment areas from which it receives 80 percent of its 
retail domestic deposits that it receives from its assessment areas.
    (iii) Community development minimum. The total quantified dollar 
value of community development loans and community development 
investments conducted during the evaluation period, including any 
applicable multipliers from Sec.  25.08(b), divided by the average 
quarterly value of the bank's total retail domestic deposits as of the 
close of business on the last day of each quarter of the evaluation 
period is outstanding.
    (2) Satisfactory. The satisfactory performance standards are:
    (i) CRA evaluation measure. The bank's average annual CRA 
evaluation measure during the evaluation period is satisfactory.
    (ii) Assessment area ratings--(A) Except as provided in paragraph 
(c)(2)(ii)(B) of this section, the bank received an assigned rating of 
at least satisfactory in
    (1) 80 percent of its assessment areas; and
    (2) Assessment areas from which the bank receives at least 80 
percent of its retail domestic deposits that it receives from its 
assessment areas; and
    (B) For a bank with five or fewer assessment areas the bank 
received an assigned rating of at least satisfactory in
    (1) 50 percent of its assessment areas; and
    (2) Assessment areas from which the bank receives 80 percent of its 
retail domestic deposits that it receives from its assessment areas.
    (iii) Community development minimum. The total quantified dollar 
value of community development loans and community development 
investments conducted during the evaluation period, including any 
applicable multipliers from Sec.  25.08(b), divided by the average 
quarterly value of the bank's total retail domestic deposits as of the 
close of business on the last day of each quarter of the evaluation 
period is satisfactory.
    (3) Needs to improve. The needs to improve performance standard is 
an average annual CRA evaluation measure during the evaluation period 
that needs to improve.
    (4) Substantial noncompliance. The substantial noncompliance 
standard is an average annual CRA evaluation measure during the 
evaluation period that is substantially noncompliant.
    (d) Assessment area performance standards--(1) Outstanding. The 
assessment area outstanding performance standards are:
    (i) Retail lending distribution tests. The bank must pass both the 
geographic and borrower distribution tests for the major retail lending 
product lines evaluated in Sec.  25.12;
    (ii) CRA evaluation measure. The bank's average annual assessment 
area CRA evaluation measures during the evaluation period is 
outstanding; and
    (iii) Community development minimum. The quantified dollar value of 
community development loans and community development investments 
conduct in the assessment area during the evaluation period, including 
any applicable multipliers from Sec.  25.08(b), divided by the average 
quarterly value of the bank's retail domestic deposits received from 
the assessment area as of the close of business on the last day of each 
quarter of the evaluation period is outstanding.
    (2) Satisfactory. The assessment area satisfactory performance 
standards are:
    (i) Retail lending distribution tests. The bank must pass both the 
geographic and borrower distribution tests for the major retail lending 
product lines evaluated in Sec.  25.12;
    (ii) CRA evaluation measure. The bank's average assessment area CRA 
evaluation measure during the evaluation period is satisfactory; and
    (iii) Community development minimum. The quantified dollar value of 
community development loans and community development investments 
conducted in the assessment area during the evaluation period, 
including any applicable multipliers from Sec.  25.08(b), divided by 
the average quarterly value of

[[Page 34802]]

the bank's retail domestic deposits received from the assessment area 
as of the close of business on the last day of each quarter of the 
evaluation period is satisfactory.
    (3) Needs to improve. The assessment area needs to improve 
performance standard is an average assessment area CRA evaluation 
measure during the evaluation period that needs to improve.
    (4) Substantial noncompliance. The assessment area substantial 
noncompliance performance standard is an average assessment area CRA 
evaluation measure during the evaluation period that is substantially 
noncompliant.


Sec.  25.14  Small and intermediate bank performance standards.

    (a) Performance criteria--(1) Small banks. The OCC evaluates the 
record of a small bank of helping to meet the credit needs of its 
assessment area(s) pursuant to the criteria in paragraph (b) of this 
section.
    (2) Intermediate banks. The OCC evaluates the record of an 
intermediate bank of helping to meet the credit needs of its assessment 
area(s) pursuant to the criteria set forth in paragraphs (b) and (c) of 
this section.
    (b) Lending test. A small bank's or intermediate bank's lending 
performance is evaluated pursuant to the following criteria:
    (1) The bank's loan-to-deposit ratio, adjusted for seasonal 
variation, and, as appropriate, other retail and community development 
lending-related activities, such as loan originations for sale to the 
secondary markets, community development loans, or community 
development investments;
    (2) The percentage of loans and, as appropriate, other retail and 
community development lending-related activities located in the bank's 
assessment area(s);
    (3) The bank's record of lending to and, as appropriate, engaging 
in other retail and community development 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; and
    (5) The bank's record of taking action, if warranted, in response 
to written complaints about its performance in helping to meet credit 
needs in its assessment area(s).
    (c) Community development test. An intermediate bank's community 
development performance also is evaluated pursuant to the following 
criteria:
    (1) The number and amount of community development loans;
    (2) The number and amount of community development investments;
    (3) The extent to which the bank provides community development 
services; and
    (4) The bank's responsiveness through such activities to community 
development lending, community development investment, and community 
development service needs.
    (d) Small bank and intermediate bank performance ratings. The OCC 
rates the performance of a small bank or intermediate bank evaluated 
under this section as provided in appendix A of this part.


Sec.  25.15  Wholesale and limited purpose bank performance standards.

    (a) Scope. The OCC assesses a wholesale or limited purpose bank's 
record of helping to meet the credit needs of its assessment area(s) 
through its community development lending, community development 
investments, or community development services.
    (b) Designation as a wholesale or limited purpose bank. In order to 
receive a designation as a wholesale or limited purpose bank, a bank 
shall file a written request with the OCC, at least three months prior 
to the proposed effective date of the designation. If the OCC approves 
the designation, it remains in effect until the bank requests 
revocation of the designation or until one year after the OCC notifies 
the bank that the OCC has revoked the designation on its own 
initiative.
    (c) Performance criteria. The OCC evaluates 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 (including 
originations and purchases of loans and other community development 
loan data provided by the bank, such as data on loans outstanding, 
commitments, and letters of credit), community development investments, 
or community development services;
    (2) The use of innovative or complex community development 
investments, community development loans, or community development 
services and the extent to which the investments are not routinely 
provided by private investors; and
    (3) The bank's responsiveness to credit and community development 
needs.
    (d) Benefits to assessment area(s)--(1) Benefits inside assessment 
area(s). The OCC considers all community development investments, 
community development loans, and community development services that 
benefit areas within the bank's assessment area(s) or a broader 
statewide or regional area that includes the bank's assessment area(s).
    (2) Benefits outside assessment area(s). The OCC considers the 
community development investments, community development loans, and 
community development services that benefit areas outside the bank's 
assessment area(s), if the bank has adequately addressed the needs of 
its assessment area(s).
    (e) Community development performance rating. The OCC rates a 
bank's community development performance as provided in appendix A of 
this part.


Sec.  25.16  Consideration of performance context.

    (a) General. Performance context is used to assess how the factors 
in paragraph (b) of this section affect a bank's capacity and 
opportunity to meet the performance standards described in Sec. Sec.  
25.13, 25.14, 25.15 or 25.18. Based on that assessment, the OCC may 
adjust:
    (1) The assessment area and bank presumptive ratings in Sec.  
25.13; or
    (2) The small, intermediate, wholesale, and limited purpose bank 
ratings, as described in appendix A.
    (b) Performance context factors. In assessing performance context, 
the OCC considers and documents the effect of the following factors 
when determining the assigned rating:
    (1) The bank's explanation of how its capacity to meet the 
performance standards described in Sec. Sec.  25.13, 25.14, 25.15 or 
25.18 was affected by:
    (i) The bank's product offerings and business strategy;
    (ii) The bank's unique constraints, such as its financial 
condition, safety and soundness limitations, or other factors;
    (iii) The innovativeness, complexity, and flexibility of the bank's 
qualifying activities;
    (iv) The bank's development of business infrastructure and staffing 
to support the purpose of this part; and
    (v) The responsiveness of the bank's qualifying activities to the 
needs of the community;
    (2) The bank's explanation of how its opportunity to engage in 
qualifying activities was affected by:
    (i) The demand for qualifying activities, including, for example, 
credit needs and market opportunities identified in a Federal Home Loan 
Bank Targeted Community Lending Plan as provided for in 12 CFR 
1290.6(a)(5) or a U.S. Department of Housing & Urban Development 
Consolidated Plan as provided for in 24 CFR part 91, as applicable;

[[Page 34803]]

    (ii) The demand for retail loans in low- or moderate-income census 
tracts; and
    (iii) Demographic factors (e.g., housing costs, unemployment rates 
variation);
    (3) The bank's competitive environment, as demonstrated by peer 
performance.
    (4) Any written comments about assessment area needs and 
opportunities submitted to the bank or the OCC; and
    (5) Any other information deemed relevant by the OCC.
    (c) Form. Banks, other than small and intermediate banks, must 
submit the information in paragraph (b) of this section on the 
performance context form available on www.occ.gov, including for each 
assessment area.


Sec.  25.17  Discriminatory and other illegal credit practices.

    (a) Evidence of discriminatory or other illegal credit practices. A 
bank's CRA performance is adversely affected by evidence of 
discriminatory or other illegal credit practices. In assessing a bank's 
CRA performance, the OCC's evaluation will consider evidence of 
discriminatory or other illegal credit practices including but not 
limited to:
    (1) Discrimination against applicants on a prohibited basis in 
violation, for example, of the Equal Credit Opportunity Act or the Fair 
Housing Act;
    (2) Violations of the Home Ownership and Equity Protection Act;
    (3) Violations of section 5 of the Federal Trade Commission Act;
    (4) Violations of section 8 of the Real Estate Settlement 
Procedures Act;
    (5) Violations of the Truth in Lending Act provisions regarding a 
consumer's right of rescission;
    (6) Violations of the Military Lending Act; and
    (7) Violations of the Servicemembers Civil Relief Act.
    (b) Effect of evidence of discriminatory or other illegal credit 
practices. In determining the effect of evidence of practices described 
in paragraph (a) of this section on the bank's assigned rating, the OCC 
considers the nature, extent, and strength of the evidence of the 
practices; the policies and procedures that the bank has in place to 
prevent the practices; any corrective action that the bank has taken or 
has committed to take, including voluntary corrective action resulting 
from self-assessment; and any other relevant information.


Sec.  25.18  Strategic plan.

    (a) General. The OCC assesses a bank's record of helping to meet 
the credit needs of its assessment area(s) under a strategic plan if:
    (1) The bank has submitted the plan to the OCC as provided for in 
this section;
    (2) The OCC has approved the plan;
    (3) The plan is in effect; and
    (4) The bank has been operating under an approved plan for at least 
one year.
    (b) Plan submission--(1) Required submission. A bank must submit a 
strategic plan that meets the requirements of this section if the bank 
would otherwise be evaluated under Sec.  25.13 and does not maintain 
retail domestic deposits on-balance sheet; or
    (2) Optional submission. A bank not covered under paragraph (b)(1) 
of this section may submit a strategic plan to the OCC for approval.
    (c) Data reporting. The OCC's approval of a plan does not affect 
the bank's data collection, recordkeeping, and reporting obligations, 
if any, in Sec. Sec.  25.21, 25.22, 25.25, and 25.26, unless otherwise 
determined in writing by the OCC. The OCC may require additional bank-
specific data collection, recordkeeping, and reporting under a 
strategic plan, as appropriate.
    (d) Plans in general--(1) Term. A plan may have a term of no more 
than five years, and any multi-year plan must include annual interim 
measurable goals under which the OCC evaluates the bank's performance.
    (2) Multiple assessment areas. A bank with more than one assessment 
area may prepare a single plan for all of its assessment areas or 
separate plans for one or more of its assessment areas.
    (e) Public participation in plan development. Before submitting a 
plan to the OCC for approval, a bank must:
    (1) Solicit public comment on the plan for at least 30 days by 
submitting the plan for publication on the OCC's website and by 
publishing notice in at least one newspaper of general circulation in 
each assessment area covered by the plan; and
    (2) During the public comment period, make copies of the plan 
available for review by the public and provide copies of the plan upon 
request for a reasonable fee to cover copying, printing, or mailing, if 
applicable.
    (f) Submission of plan. The bank must submit its complete plan to 
the OCC at least six months prior to the proposed effective date of the 
plan. The bank must also submit with its plan a description of any 
written public comments received, including how the plan was revised in 
light of the comments received. If the OCC determines the plan is not 
complete, the OCC will notify the bank specifying the information 
needed, designating a reasonable period of time for the bank to provide 
the information, and informing the bank that failure to provide the 
information requested will result in no further consideration being 
given to the plan.
    (g) Plan content--(1) Performance standards--(i) A plan must 
specify measurable goals for helping to meet the credit needs of the 
bank's community and in each of its assessment areas, particularly the 
needs of low- and moderate-income census tracts and low- and moderate-
income individuals and families, through qualifying activities.
    (ii) A plan must address the types and volume of qualifying 
activities the bank will conduct. A plan may focus on one or more types 
of qualifying activities considering the bank's capacity and 
constraints, product offerings, and business strategy.
    (2) Assessment area delineation. A plan must include a delineation 
of the bank's assessment areas(s) that meets the requirements of Sec.  
25.09(a) through (d). In addition, the plan may include assessment area 
delineations that reflect its target geographic market as defined by 
the bank in its strategic plan. For a de novo bank, the assessment area 
delineations should include the projected location of its deposit-
taking facilities, retail domestic deposit base, and lending 
activities.
    (3) Confidential information. A bank may submit additional 
information to the OCC on a confidential basis, to the extent permitted 
by law, but the goals stated in the plan must be sufficiently specific 
to enable the public and the OCC to judge the merits of the plan.
    (4) Satisfactory and outstanding performance standards. A plan must 
specify measurable goals that constitute satisfactory performance. A 
plan may specify measurable goals that constitute outstanding 
performance. If a bank submits, and the OCC approves, both satisfactory 
and outstanding performance goals, the OCC considers the bank eligible 
for an outstanding performance rating.
    (h) Plan approval--(1) Timing. The OCC will act upon a plan within 
90 days after the OCC receives the complete plan and other material 
required under paragraph (g) of this section. If the OCC does not act 
within this time period, the plan will be deemed approved unless the 
OCC extends the review period for good cause for no more than 30 days.
    (2) Public participation. In evaluating the plan's goals, the OCC 
considers any written public comment on the plan and any response by 
the bank to any written public comment on the plan.

[[Page 34804]]

    (3) Criteria for evaluating a plan. The OCC evaluates a plan's 
goals by considering the extent and breadth of the qualifying 
activities including:
    (i) Community development loans, community development investments, 
and community development services; and
    (ii) The use of innovative, flexible, or complex qualifying 
activities.
    (i) Plan amendment. During the term of a plan, a bank may request 
the OCC to approve an amendment to the plan on grounds that there has 
been a material change in circumstances. The OCC reserves the right to 
require a bank that requests an amendment to a plan to comply with the 
public participation process described in paragraph (e) of this 
section.


Sec.  25.19  Assigned ratings.

    (a) General performance standards--(1) Bank's assigned rating. The 
OCC determines the assigned rating for a bank evaluated under Sec.  
25.13 based on its presumptive rating under Sec.  25.13, adjusted for 
performance context under Sec.  25.16, and consideration of 
discriminatory or other illegal credit practices under Sec.  25.17.
    (2) Assessment area assigned rating. The OCC determines the 
assessment area assigned ratings for a bank evaluated under Sec.  25.13 
based on its assessment area presumptive rating under Sec.  25.13, 
adjusted for performance context under Sec.  25.16 and consideration of 
discriminatory or other illegal credit practices under Sec.  25.17.
    (b) Strategic plans assigned rating. A bank operating under a 
strategic plan will receive, as applicable, an assigned rating, 
assessment area assigned ratings, and state-level and multistate 
metropolitan statistical area assigned ratings of satisfactory or 
outstanding if it has met the measurable goals in the plan that 
correspond to those ratings after considering performance context under 
Sec.  25.16 and discriminatory or other illegal credit practices under 
Sec.  25.17.


Sec.  25.20  State/multistate metropolitan statistical area assigned 
rating.

    For a bank evaluated under Sec.  25.13 with interstate branches, 
the OCC will assign a rating for each state where the bank has a 
facility-based assessment area and each multistate metropolitan 
statistical area where the bank has a main office, branch, or non-
branch deposit-taking facility in two or more states in the multistate 
metropolitan statistical area. The state or multistate metropolitan 
statistical area assigned rating for that state or multistate 
metropolitan statistical area is based on the ratings assigned to its 
assessment areas within that state or multistate metropolitan 
statistical area.

Subpart E [Redesignated as Subpart F]

0
3. Redesignate subpart E as subpart F and redesignate Sec. Sec.  25.61 
through 25.65 as Sec. Sec.  25.31 through 25.35, respectively.

0
4. Add new subpart E to read as follows:

Subpart E--Data Collection, Recordkeeping, and Reporting

Sec.
25.21 Data collection for banks evaluated under the general 
performance standards in Sec.  25.13 or a strategic plan under Sec.  
25.18.
25.22 Retail domestic deposit data collection for small banks 
evaluated under the small bank performance standards in Sec.  25.14.
25.23 Data collection for wholesale and limited purpose banks 
evaluation under the wholesale and limited purpose performance 
standards in Sec.  25.15.
25.24 Activity location.
25.25 Recordkeeping.
25.26 Reporting for banks evaluated under the general performance 
standards in Sec.  25.13, the wholesale and limited purpose bank 
performance standards in 25.15, or a strategic plan under Sec.  
25.18.
25.27 Public disclosures.
25.28 Content and availability of public file.
25.29 Availability of planned evaluation schedule.
25.30 Public notice by banks.


Sec.  25.21  Data collection for banks evaluated under the general 
performance standards in Sec.  25.13 or a strategic plan under Sec.  
25.18.

    (a) General. A bank evaluated under the general performance 
standards in Sec.  25.13 and a bank evaluated under a strategic plan 
under Sec.  25.18, unless otherwise determined in writing by the OCC, 
must collect and maintain the information required by this section 
until the completion of the relevant CRA evaluation.
    (b) Performance standards data. A bank must collect and maintain, 
along with supporting documentation, its:
    (1) Retail lending distribution test ratios calculated under Sec.  
25.12 for the borrower distribution and geographic distribution tests 
for each major retail lending product line evaluated in the assessment 
area;
    (2) CRA evaluation measure and each assessment-area CRA evaluation 
measure calculated under Sec.  25.11;
    (3) Community development minimum and each assessment-area level 
community development minimum calculated under Sec.  25.13; and
    (4) Presumptive ratings under Sec.  25.13.
    (c) Qualifying activities and retail domestic deposit data required 
to be collected and maintained. A bank subject to this section must 
collect and maintain the following data and supporting documentation 
for all qualifying activities and certain non-qualifying activities 
conducted by the bank:
    (1) Qualifying loan data. Except as provided in paragraph (c)(8) of 
this section, for each qualifying loan:
    (i) A unique number or alpha-numeric symbol to identify the 
relevant loan file;
    (ii) An indicator of whether the loan is a retail loan or a 
community development loan;
    (iii) Date of:
    (A) Origination for loans originated by the bank, if applicable;
    (B) Purchase for loans not originated by the bank, if applicable; 
and
    (C) Sale if the loan is a retail loan and sold by the bank within 
365 days of origination;
    (iv) An indicator of whether the loan was originated or purchased 
by the bank;
    (v) The loan amount at origination or purchase;
    (vi) The outstanding dollar amount of the loan, as of the close of 
business on the last day of the month, for each month that the loan is 
on-balance sheet;
    (vii) The loan location and the associated Federal Information 
Processing Standards code for the metropolitan statistical area, state, 
county or county equivalent, and census tract;
    (viii) Portion of the community development loan that is partially 
qualifying, if applicable;
    (ix) An indicator of whether a multiplier applies;
    (x) The income or gross annual revenue of the borrower; and
    (xi) The criteria in Sec.  25.04 that the loan satisfies or that it 
is on the illustrative list referenced in Sec.  25.05 and whether it 
serves a particular assessment area, if applicable.
    (2) Other loan data. A bank must collect and maintain the following 
data and supporting documentation for originations of non-qualifying 
home mortgage loans, small loans to businesses, small loans to farms, 
and consumer loans by the bank:
    (i) A unique number or alpha-numeric symbol to identify the 
relevant loan file;
    (ii) The date of origination;
    (iii) The loan amount at origination;
    (iv) The loan location and the associated Federal Information 
Processing Standards code for the metropolitan statistical area, state, 
county or county equivalent, and census tract; and
    (v) The income or gross annual revenue of the borrower.

[[Page 34805]]

    (3) Number of home mortgage. For the home mortgage product line, 
for each county or county equivalent:
    (i) The number of loans originated;
    (ii) The number of loans originated in low- and moderate-income 
census tracts; and
    (iii) The number of loans originated to low- and moderate-income 
borrowers.
    (4) Number of small loans to businesses. For the small loan to a 
business product line, for each county or county equivalent:
    (i) The number of loans originated;
    (ii) The number of loans originated in low- and moderate-income 
census tracts; and
    (iii) The number of loans originated to CRA-eligible businesses.
    (5) Number of small loans to farms. For the small loan to a farm 
product line for each county or county equivalent:
    (i) The number of loans originated;
    (ii) The number of loans originated in low- and moderate-income 
census tracts; and
    (iii) The number of loans originated to CRA-eligible farms.
    (6) Number of consumer loans. For each other consumer loan product 
line as defined in Sec.  25.03, for each county or county equivalent:
    (i) The number of loans originated; and
    (ii) The number of loans originated to low- and moderate-income 
borrowers.
    (7) Community development investment data. Except as provided in 
paragraph (c)(8) of this section, for each community development 
investment:
    (i) A unique number, alpha-numeric symbol, or another mechanism to 
identify the community development investment;
    (ii) Date of community development investment by the bank;
    (ii) The outstanding dollar value of the community development 
investment, as of the close of business on the last day of the month, 
for each month that the investment is on-balance sheet, if applicable;
    (iii) The quantified dollar value of the monetary donation, if 
applicable;
    (iv) The quantified dollar value of the in-kind donation, if 
applicable;
    (v) The community development investment location and the 
associated Federal Information Processing Standards code for the 
metropolitan statistical area, state, county or county equivalent, and 
census tract, if applicable;
    (vi) Portion of the community development investment that is 
partially qualifying, if applicable;
    (vii) An indicator of whether a multiplier applies; and
    (viii) The criteria in Sec.  25.04 that the community development 
investment satisfies or that it is on the illustrative list referenced 
in Sec.  25.05 and whether it serves a particular assessment area, if 
applicable.
    (8) Community development services data. For each community 
development service:
    (i) A unique number or alpha-numeric symbol identifying the 
community development service;
    (ii) The quantified dollar value of the community development 
service;
    (iii) A description of the community development service;
    (iv) The date the community development service was performed;
    (v) The community development service location and the associated 
Federal Information Processing Standards code for the metropolitan 
statistical area, state, county or county equivalent, and census tract, 
if applicable;
    (vi) Portion of the community development service that is partially 
qualifying, if applicable;
    (vii) An indicator of whether a multiplier applies; and
    (viii) The qualifying activity criteria in Sec.  25.04 that the 
community development service satisfies or that it is on the 
illustrative list referenced in Sec.  25.05.
    (9) Grandfathered qualifying activities. For each activity that 
qualifies under Sec.  25.04(a)(1)(3):
    (i) A unique number or alpha-numeric symbol identifying activity;
    (ii) The outstanding dollar value of the activity, as of the close 
of business on the last day of the month, for each month that the 
activity is on-balance sheet,
    (iii) A description of the activity, including whether it is a 
retail loan, community development loan, or community development 
investment;
    (iv) The activity location and the associated Federal Information 
Processing Standards code for the metropolitan statistical area, state, 
county or county equivalent, and census tract, if applicable;
    (v) Portion of the activity that is partially qualifying, if 
applicable;
    (vi) An indicator of whether a multiplier applies; and
    (vii) A statement certifying that the activity would have received 
positive consideration in a CRA performance evaluation on the date 
prior to October 1, 2020.
    (10) Retail domestic deposit data. The value of each retail 
domestic deposit account and the physical address and associated 
Federal Information Processing Standards code for the metropolitan 
statistical area, state, and county or county equivalent of each 
depositor as of the close of business on the last day of each quarter 
during the examination period.
    (d) Assessment areas. A bank must collect and maintain a list of 
its assessment area(s) showing within the assessment area(s) each:
    (1) County or county equivalent;
    (2) Metropolitan division;
    (3) Nonmetropolitan area;
    (4) Metropolitan statistical area; or
    (5) State.
    (e) Deposit-taking facilities. For each deposit-taking facility, a 
bank must collect and maintain
    (1) An indicator of whether it was a branch or a non-branch 
deposit-taking facility; and
    (2) The physical address and the associated Federal Information 
Processing Standards code for the metropolitan statistical area, state, 
county or county equivalent, and census tract.


Sec.  25.22   Retail domestic deposit data collection for small and 
intermediate banks evaluated under the small and intermediate bank 
performance standards in Sec.  25.14.

    A small or intermediate bank evaluated under the small and 
intermediate bank performance standards in Sec.  25.14 must collect and 
maintain data on the value of each retail domestic deposit account and 
the physical address of each depositor as of the close of business on 
the last day of each quarter during the examination period until the 
completion of its next CRA evaluation.


Sec.  25.23  Data collection for wholesale and limited purpose banks 
evaluated under the wholesale and limited purpose bank performance 
standards in Sec.  25.15.

    (a) General. A wholesale or limited purpose bank evaluated under 
the wholesale and limited purpose bank performance standards in Sec.  
25.15 must collect and maintain the information required by this 
section until the completion of the relevant CRA evaluation.
    (b) Qualifying community development loan, community development 
investment, and community development service required to be collected 
and maintained. A bank subject to this section must collect and 
maintain the following data and supporting documentation for all 
qualifying community development loans, community development 
investments, and community development services conducted by the bank:
    (1) Qualifying community development loan data. Except as provided 
in paragraph (b)(4) of this section for each qualifying loan:

[[Page 34806]]

    (i) A unique number or alpha-numeric symbol to identify the 
relevant loan file;
    (ii) Date of:
    (A) Origination for loans originated by the bank, if applicable; 
and
    (B) Purchase for loans not originated by the bank, if applicable;
    (iii) An indicator of whether the loan was originated or purchased 
by the bank;
    (iv) The loan amount at origination or purchase;
    (v) The loan location and the associated Federal Information 
Processing Standards code for the metropolitan statistical area, state, 
county or county equivalent, and census tract; and
    (vi) The criteria in Sec.  25.04 that the loan satisfies or that it 
is on the illustrative list referenced in Sec.  25.05 and whether it 
serves a particular assessment area, if applicable.
    (2) Community development investment data. Except as provided in 
paragraph (b)(4) of this section, for each community development 
investment:
    (i) A unique number, alpha-numeric symbol, or another mechanism to 
identify the community development investment;
    (ii) Date of community development investment by the bank;
    (iii) The value of the community development investment;
    (iv) The community development investment location and the 
associated Federal Information Processing Standards code for the 
metropolitan statistical area, state, county or county equivalent, and 
census tract, if applicable; and
    (v) The criteria in Sec.  25.04 that the community development 
investment satisfies or that it is on the illustrative list referenced 
in Sec.  25.05 and whether it serves a particular assessment area, if 
applicable.
    (3) Community development services data. For each community 
development service:
    (i) A unique number or alpha-numeric symbol identifying the 
community development service;
    (ii) A description of the community development service;
    (iii) The date the community development service was performed;
    (iv) The community development service location and the associated 
Federal Information Processing Standards code for the metropolitan 
statistical area, state, county or county equivalent, and census tract, 
if applicable; and
    (v) The qualifying activity criteria in Sec.  25.04 that the 
community development service satisfies or that it is on the 
illustrative list referenced in Sec.  25.05.
    (4) Grandfathered qualifying activities. For each activity that 
qualifies under Sec.  25.04(d):
    (i) A unique number or alpha-numeric symbol identifying the 
activity;
    (ii) The origination value of the community development loan or the 
community development investment;
    (iii) A description of the activity, including whether it is a 
community development loan or community development investment;
    (iv) The activity location and the associated Federal Information 
Processing Standards code for the metropolitan statistical area, state, 
county or county equivalent, and census tract, if applicable; and
    (v) A statement certifying that the activity that would have 
received positive consideration in a CRA performance evaluation on the 
date prior to October 1, 2020.
    (c) Retail domestic deposit data. The value of each retail domestic 
deposit account and the physical address and associated Federal 
Information Processing Standards code for the metropolitan statistical 
area, state, and county or county equivalent of each depositor as of 
the close of business on the last day of each quarter during the 
examination period.
    (d) Assessment areas. A bank must collect and maintain a list of 
its assessment area(s) showing within the assessment area(s) each:
    (1) County or county equivalent;
    (2) Metropolitan division;
    (3) Nonmetropolitan area;
    (4) Metropolitan statistical area; or
    (5) State.
    (e) Deposit-taking facilities. For each deposit-taking facility, a 
bank must collect and maintain
    (1) An indicator of whether it was a branch or a non-branch 
deposit-taking facility; and
    (2) The physical address and the associated Federal Information 
Processing Standards code for the metropolitan statistical area, state, 
county or county equivalent, and census tract.


Sec.  25.24  Activity location.

    (a) For the purpose of this part:
    (1) A consumer loan is located at the borrower's physical address 
on file with the bank at the time of origination;
    (2) A home mortgage loan is located at the address of the property 
to which the loan relates; and
    (3) A business or farm loan is located at the physical address of 
the main business facility or farm or the physical address where the 
loan proceeds will be applied, as indicated by the borrower; and
    (b) For the purpose of this part, the location of a community 
development loan, a community development investment, or a community 
development service is:
    (1) The address of a particular project to the extent a bank can 
document that the services or funding it provided was allocated to that 
particular project; or
    (2) Determined by allocating the activity across all of a bank's 
assessment areas and other metropolitan statistical areas or non-
metropolitan statistical areas served by the activity according to the 
share of the bank's deposits in those areas, treating the bank's 
deposits in the region served by the activity as if they were all of 
the bank's deposits, to the extent the bank cannot document that the 
services or funding it provided was allocated to a particular project.


Sec.  25.25  Recordkeeping.

    Banks must keep the data collected under Sec.  25.21, Sec.  25.22, 
and Sec.  25.23 in machine readable form (as prescribed by the OCC) 
until the completion of their next CRA evaluation.


Sec.  25.26  Reporting for banks evaluated under the general 
performance standards in Sec.  25.13, the wholesale and limited purpose 
bank performance standards in Sec.  25.15, or a strategic plan under 
Sec.  25.18.

    (a) General. Banks evaluated under the general performance 
standards in Sec.  25.13, the wholesale and limited purpose bank 
performance standards in Sec.  25.15, or a strategic plan under Sec.  
25.18, unless otherwise determined in writing by the OCC, must report 
the information required by this section.
    (b) Performance standards, qualifying activities, and retail 
domestic deposits data reporting--(1) Banks evaluated under the general 
performance standards or a strategic plan--(i) A bank evaluated under 
the general performance standards or under a strategic plan must report 
to the OCC:
    (A) On an annual basis, the information required by Sec.  
25.21(b)(2), as applicable; and
    (B) At the end of the evaluation period, the information required 
by Sec.  25.21(b)(1) and (b)(4), as applicable.
    (ii) On an annual basis, a bank subject to this section must report 
to the OCC the following data for all qualifying activities conducted 
during the annual period:
    (A) The quantified dollar value of qualifying retail loans;
    (B) The quantified dollar value of community development loans;
    (C) The quantified dollar value of community development 
investments; and
    (D) The quantified dollar value of community development services.

[[Page 34807]]

    (iii) A bank subject to this section must annually report to the 
OCC the information required by Sec.  25.21(c)(3)-(6) for loans 
originated during the annual period.
    (iv) A bank subject to this section must annually report its 
average quarterly retail domestic deposits as of the close of business 
on the last day of each quarter.
    (2) Banks evaluated under the wholesale and limited purpose bank 
performance standards. On an annual basis, a bank evaluated under the 
wholesale and limited purpose bank performance standards must report 
following data for all qualifying activities conducted during the 
annual period:
    (i) The value of community development loans; and
    (ii) The value of community development investments.
    (c) Assessment area data. For each assessment area, a bank subject 
to this section must annually report to the OCC the information 
required by Sec.  25.21(e).
    (d) Performance context information. A bank subject to this section 
must report performance context information on the form required by 
Sec.  25.16(c) before the beginning of its CRA performance evaluation.
    (e) Form. A bank subject to this section must use the CRA data 
reporting form available at www.occ.gov to meet the reporting 
requirements in this section.


Sec.  25.27  Public disclosures.

    (a) Individual CRA Disclosure Statement. The OCC prepares annually 
a CRA Disclosure Statement for each bank evaluated under Sec.  25.13 
that contains the bank's:
    (1) Quantified dollar value of qualifying retail loans;
    (2) Quantified dollar value of community development loans;
    (3) Quantified dollar value of community development investments; 
and
    (4) Quantified dollar value of community development services.
    (b) Aggregate CRA Disclosure Statement. The OCC prepares annually, 
for each county, an aggregate CRA Disclosure Statement of home 
mortgage, consumer, small loans to businesses, and small loans to farms 
lending by all banks subject to reporting under this part. This 
disclosure statement includes the following information, at the county 
level, from all banks evaluated under Sec.  25.13, except that the OCC 
may adjust the form of the disclosure if necessary, because of special 
circumstances, to protect the privacy of a borrower or bank:
    (1) The number of home mortgage loan originations;
    (2) The number of home mortgage loan originations to low- or 
moderate- income individuals and families;
    (3) The number of originations for each consumer loan product line;
    (4) The number of originations to low- or moderate- income 
individuals and families for each consumer loan product line;
    (5) The number of small loans to businesses;
    (6) The number of small loans to businesses in low- and moderate-
income census tracts;
    (7) The number of small loans to businesses provided to CRA-
eligible businesses;
    (8) The number of small loans to farms;
    (9) The number of small loans to farms in low- and moderate-income 
census tracts; and
    (10) The number of small loans to farms provided to CRA-eligible 
farms;
    (c) Availability of CRA disclosure statements. The OCC will 
annually make publicly available the aggregate and individual CRA 
Disclosure Statements, described in paragraphs (a) and (b) of this 
section.
    (d) Availability of ratings. The OCC will make available the 
ratings of all OCC-regulated banks and a list of all banks that achieve 
an assigned rating of outstanding. A bank that achieves an outstanding 
assigned rating will receive a certificate or seal of achievement that 
may be displayed on its website and in its main office, branches, and 
non-branch deposit-taking facilities.


Sec.  25.28  Content and availability of public file.

    (a) Information available to the public. A bank must maintain a 
public file that includes the following information:
    (1) All written comments received from the public for the current 
year and each of the prior two calendar years that specifically relate 
to assessment area needs and opportunities, and any response to the 
comments by the bank, if neither the comments nor the responses contain 
statements that reflect adversely on the good name or reputation of any 
persons other than the bank or publication of which would violate 
specific provisions of law;
    (2) A copy of the public section of the bank's most recent CRA 
Performance Evaluation prepared by the OCC. The bank must place this 
copy in the public file within 30 business days after its receipt from 
the OCC;
    (3) A list of the bank's branches, their street addresses, and 
census tracts;
    (4) A list of branches opened or closed by the bank during the 
current year and each of the prior two calendar years, their street 
addresses, and census tracts;
    (5) A list of services (including hours of operation, available 
loan and deposit products, and transaction fees) generally offered at 
the bank's branches and descriptions of material differences in the 
availability or cost of services at particular branches, if any. At its 
option, a bank may include information regarding the availability of 
alternative systems for delivering retail banking services (e.g., ATMs, 
ATMs not owned or operated by or exclusively for the bank, banking by 
telephone or computer, loan production offices, and bank-at-work or 
bank-by-mail programs);
    (6) A map of each assessment area showing the boundaries of the 
area and identifying the counties or county equivalents contained 
within the area, either on the map or in a separate list; and
    (7) Any other information the bank chooses.
    (b) Additional information available to the public--(1) Banks with 
strategic plans. A bank that has been approved to be assessed under a 
strategic plan must include in its public file a copy of that plan. A 
bank need not include information submitted to the OCC on a 
confidential basis in conjunction with the plan.
    (2) Banks with less than satisfactory ratings. A bank that received 
a less than satisfactory rating during its most recent examination must 
include in its public file a description of its current efforts to 
improve its performance in helping to meet the credit needs of its 
entire community. The bank must update the description quarterly.
    (c) Availability of public information. A bank must make available 
to the public the information required in this section.
    (d) Updating. Except as otherwise provided in this section, a bank 
must ensure that the information required by this section is current as 
of April 1 of each year.


Sec.  25.29  Availability of planned evaluation schedule.

    The OCC will make available at least 30 days in advance of the 
beginning of each calendar quarter a list of banks scheduled for CRA 
evaluations in that quarter.


Sec.  25.30  Public notice by banks.

    A bank must make available to the public the notice set forth in 
Appendix B of this part. Parenthetical text must be adjusted by each 
bank as appropriate.

[[Page 34808]]

Bracketed text must be included if applicable.

0
5. Revise paragraph (a) of newly designated Sec.  25.32 to read as 
follows:


Sec.  25.32  Definitions.

* * * * *
    (a) Bank means, unless the context indicates otherwise, a national 
bank and a foreign bank as that term is defined in 12 U.S.C. 3101(7) 
and 12 CFR 28.11(i).
* * * * *


Sec.  25.33   [Amended]

0
6. In newly designated Sec.  25.33 amend paragraph (b)(2) by removing 
``Sec.  25.64'' and adding ``Sec.  25.34'' in its place.

0
7. Revise Appendix A to part 25 to read as follows:

Appendix A to Part 25--Small Bank, Intermediate Bank, Wholesale Bank, 
and Limited Purpose Bank Ratings

    (a) Ratings in general--(1) In assigning a rating, the OCC 
evaluates a small bank's, intermediate bank's, wholesale bank's, or 
limited purpose bank's performance under the applicable performance 
criteria in Sec.  25.14 and Sec.  25.15, adjusting for performance 
context in Sec.  25.16 and consideration of any evidence of 
discriminatory and illegal credit practices as described in Sec.  
25.17. This includes consideration of low-cost education loans 
provided to low-income borrowers and activities in cooperation with 
minority depository institutions, women's depository institutions, 
and low-income credit unions.
    (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, must be consistent with safe and sound banking 
practices and generally with the appropriate rating profile as 
follows.
    (b) Banks evaluated under the small bank and intermediate bank 
performance standards--(1) Lending test ratings--(i) Eligibility for 
a satisfactory lending test rating. The OCC rates a small bank's or 
intermediate bank's lending performance ``satisfactory'' if, in 
general, the bank demonstrates:
    (A) A reasonable loan-to-deposit ratio (considering seasonal 
variations) given the bank's size, financial condition, the credit 
needs of its assessment area(s), and taking into account, as 
appropriate, other retail and community development lending-related 
activities such as loan originations for sale to the secondary 
markets and community development loans and community development 
investments;
    (B) A majority of its loans and, as appropriate, other retail 
and community development lending-related activities, are in its 
assessment area;
    (C) A distribution of loans to and, as appropriate, other retail 
and community development 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 assessment area(s);
    (D) A record of taking appropriate action, when warranted, in 
response to written complaints, if any, about the bank's performance 
in helping to meet the credit needs of its assessment area(s); and
    (E) A reasonable geographic distribution of loans given the 
bank's assessment area(s).
    (ii) Eligibility for an ``outstanding'' lending test rating. A 
small bank or intermediate 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 a lending test 
rating of ``outstanding.''
    (iii) Needs to improve or substantial noncompliance ratings. A 
small bank or intermediate bank may also receive a lending test 
rating of ``needs to improve'' or ``substantial noncompliance'' 
depending on the degree to which its performance has failed to meet 
the standard for a ``satisfactory'' rating.
    (2) Community development test ratings for intermediate banks--
(i) Eligibility for a satisfactory community development test 
rating. The OCC rates an intermediate bank's community development 
performance ``satisfactory'' if the bank demonstrates adequate 
responsiveness to the community development needs of its assessment 
area(s) through community development loans, community development 
investments, and community development services. The adequacy of the 
bank's response will depend on its capacity for such community 
development activities, its assessment area's need for such 
community development activities, and the availability of such 
opportunities for community development in the bank's assessment 
area(s).
    (ii) Eligibility for an outstanding community development test 
rating. The OCC rates an intermediate bank's community development 
performance ``outstanding'' if the bank demonstrates excellent 
responsiveness to community development needs in its assessment 
area(s) through community development loans, community development 
investments, and community development services, as appropriate, 
considering the bank's capacity and the need and availability of 
such opportunities for community development in the bank's 
assessment area(s).
    (iii) Needs to improve or substantial noncompliance ratings. An 
intermediate bank may also receive a community development test 
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.
    (3) Bank rating--(i) Eligibility for a satisfactory rating. No 
intermediate bank may receive an assigned rating of ``satisfactory'' 
unless it receives a rating of at least ``satisfactory'' on both the 
lending test and the community development test.
    (ii) Eligibility for an outstanding rating--(A) An intermediate 
bank that receives an ``outstanding'' rating on one test and at 
least a ``satisfactory'' on the other test may receive rating of 
``outstanding.''
    (B) A small bank that meets each of the standards for a 
``satisfactory'' rating under the lending test and exceeds some or 
all of those standards may warrant consideration for an assigned 
rating of ``outstanding.'' In assessing whether a bank's performance 
is ``outstanding,'' the OCC considers the extent to which the bank 
exceeds each of the performance standards for a ``satisfactory'' 
rating and its performance in making community development 
investments and its performance in providing branches and other 
services and delivery systems that enhance credit availability in 
its assessment area(s).
    (iii) Needs to improve or substantial noncompliance overall 
ratings. A small bank or intermediate bank may also receive a rating 
of ``needs to improve'' or ``substantial noncompliance'' assigned 
rating depending on the degree to which its performance has failed 
to meet the standards for a ``satisfactory'' rating.
    (c) Banks evaluated under the wholesale and limited purpose bank 
performance standards. The OCC assigns each wholesale or limited 
purpose bank's performance one of the four following ratings.
    (1) Outstanding. The OCC rates a wholesale or limited purpose 
bank's performance ``outstanding'' if, in general, it demonstrates:
    (i) A high level of community development loans, community 
development services, or community development investments, 
particularly investments that are not routinely provided by private 
investors;
    (ii) Extensive use of innovative or complex community 
development loans, community development investments, or community 
development services; and
    (iii) Excellent responsiveness to credit and community 
development needs in its assessment area(s).
    (2) Satisfactory. The OCC rates a wholesale or limited purpose 
bank's performance ``satisfactory'' if, in general, it demonstrates:
    (i) An adequate level of community development loans, community 
development services, or community development investments, 
particularly investments that are not routinely provided by private 
investors;
    (ii) Occasional use of innovative or complex community 
development loans, community development investments, or community 
development services; and
    (iii) Adequate responsiveness to credit and community 
development needs in its assessment area(s).
    (3) Needs to improve. The OCC rates a wholesale or limited 
purpose bank's performance as ``needs to improve'' if, in general, 
it demonstrates:
    (i) A poor level of community development loans, community 
development services, or community development investments, 
particularly investments that are not routinely provided by private 
investors;
    (ii) Rare use of innovative or complex community development 
loans, community development investments, or community development 
services; and
    (iii) Poor responsiveness to credit and community development 
needs in its assessment area(s).

[[Page 34809]]

    (4) Substantial noncompliance. The OCC rates a wholesale or 
limited purpose bank's performance in ``substantial noncompliance'' 
if, in general, it demonstrates:
    (i) Few, if any, community development loans, community 
development services, or community development investments, 
particularly investments that are not routinely provided by private 
investors;
    (ii) No use of innovative or complex qualified community 
development loans, community development investments, or community 
development services; and
    (iii) Very poor responsiveness to credit and community 
development needs in its assessment area(s).

0
8. Revise Appendix B to read as follows:

Appendix B to Part 25--Community Reinvestment Act Notice

    Under the Federal Community Reinvestment Act (CRA), the 
Comptroller of the Currency (OCC) evaluates our record of helping to 
meet the credit needs of this community, consistent with safe and 
sound operations. The OCC also takes this record into account when 
deciding on certain applications submitted by us.
    Your involvement is encouraged.
    You are entitled to certain information about our operations and 
our performance under the CRA, including, for example, information 
about our branches, such as their location and services provided at 
them; the public section of our most recent CRA Performance 
Evaluation, prepared by the OCC; and comments received from the 
public relating to assessment area needs and opportunities, as well 
as our responses to those comments. You may review this information 
today by reviewing the public file which is available at (web 
address and/or physical address at which the public file can be 
reviewed and copied).
    You may also have access to the following additional 
information, which we will make available to you after you make a 
request to us: (1) A map showing the assessment area containing a 
select branch, which is the area in which the OCC evaluates our CRA 
performance for that particular community; (2) branch addresses and 
associated branch facilities and hours in any assessment area; (3) a 
list of services we provide at those locations; (4) our most recent 
rating in the assessment area; and (5) copies of all written 
comments received by us that specifically relate to the needs and 
opportunities of a given assessment area, and any responses we have 
made to those comments. If we are operating under an approved 
strategic plan, you may also have access to a copy of the plan.
    At least 30 days before the beginning of each quarter, the OCC 
publishes a nationwide list of the (entity type) that are scheduled 
for CRA examination in that quarter. This list is available from the 
Deputy Comptroller (address). You may send written comments 
regarding the needs and opportunities of any of the (entity type)'s 
assessment area(s) to (name, address, and email address of official 
at bank) and Deputy Comptroller (address and email address). Your 
comments, 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 
(entity type) holding company. You may request from the (title of 
responsible official), Federal Reserve Bank of _________ (address) 
an announcement of applications covered by the CRA filed by (entity 
type) holding companies.)

0
Effective October 1, 2020 to January 1, 2024, add Appendix C to part 25 
to read as follows:

Appendix C to Part 25--Community Reinvestment Act Regulations 
(Alternative Compliance)

    Note: The content of this appendix reproduces parts 25 and 195 
implementing the Community Reinvestment Act as of the date prior to 
October 1, 2020.

PART 25--COMMUNITY REINVESTMENT ACT AND INTERSTATE DEPOSIT 
PRODUCTION REGULATIONS

Subpart A--General


Sec.  25.11  Authority, purposes, and scope.

    (a) Authority and OMB control number--(1) Authority. The authority 
for subparts A, B, C, D, and E is 12 U.S.C. 21, 22, 26, 27, 30, 36, 
93a, 161, 215, 215a, 481, 1814, 1816, 1828(c), 1835a, 2901 through 
2907, and 3101 through 3111.
    (2) OMB control number. The information collection requirements 
contained in this part were approved by the Office of Management and 
Budget under the provisions of 44 U.S.C. 3501 et seq. and have been 
assigned OMB control number 1557-0160.
    (b) Purposes. In enacting the Community Reinvestment Act (CRA), the 
Congress required each appropriate Federal financial supervisory agency 
to assess an institution's record of helping to meet the credit needs 
of the local communities in which the institution is chartered, 
consistent with the safe and sound operation of the institution, and to 
take this record into account in the agency's evaluation of an 
application for a deposit facility by the institution. This part is 
intended to carry out the purposes of the CRA by:
    (1) Establishing the framework and criteria by which the Office of 
the Comptroller of the Currency (OCC) assesses a bank's record of 
helping to meet the credit needs of its entire community, including 
low- and moderate-income neighborhoods, consistent with the safe and 
sound operation of the bank; and
    (2) Providing that the OCC takes that record into account in 
considering certain applications.
    (c) Scope--(1) General. This part applies to all banks except as 
provided in paragraphs (c)(2) and (c)(3) of this section.
    (2) Federal branches and agencies. (i) This part applies to all 
insured Federal branches and to any Federal branch that is uninsured 
that results from an acquisition described in section 5(a)(8) of the 
International Banking Act of 1978 (12 U.S.C. 3103(a)(8)).
    (ii) Except as provided in paragraph (c)(2)(i) of this section, 
this part does not apply to Federal branches that are uninsured, 
limited Federal branches, or Federal agencies, as those terms are 
defined in part 28 of this chapter.
    (3) Certain special purpose banks. This part does not apply to 
special purpose banks that do not perform commercial or retail banking 
services by granting credit to the public in the ordinary course of 
business, other than as incident to their specialized operations. These 
banks include banker's banks, as defined in 12 U.S.C. 24 (Seventh), and 
banks that engage only in one or more of the following activities: 
providing cash management controlled disbursement services or serving 
as correspondent banks, trust companies, or clearing agents.


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. The term ``control'' has 
the meaning given to that term in 12 U.S.C. 1841(a)(2), and a company 
is under common control with another company if both companies are 
directly or indirectly controlled by the same company.
    (b) Area median income means:
    (1) The median family income for the MSA, if a person or geography 
is located in an MSA, or for the metropolitan division, if a person or 
geography is located in an MSA that has been subdivided into 
metropolitan divisions; or
    (2) The statewide nonmetropolitan median family income, if a person 
or geography is located outside an MSA.
    (c) Assessment area means a geographic area delineated in 
accordance with Sec.  25.41.
    (d) Automated teller machine (ATM) means an automated, unstaffed 
banking

[[Page 34810]]

facility owned or operated by, or operated exclusively for, the bank at 
which deposits are received, cash dispersed, or money lent.
    (e) Bank means a national bank (including a Federal branch as 
defined in part 28 of this chapter) with Federally insured deposits, 
except as provided in Sec.  25.11(c).
    (f) Branch means a staffed banking facility authorized as a branch, 
whether shared or unshared, including, for example, a mini-branch in a 
grocery store or a branch operated in conjunction with any other local 
business or nonprofit organization.
    (g) Community development means:
    (1) Affordable housing (including multifamily rental housing) for 
low- or moderate-income individuals;
    (2) Community services targeted to low- or moderate-income 
individuals;
    (3) Activities that promote economic development by financing 
businesses or farms that meet the size eligibility standards of the 
Small Business Administration's Development Company or Small Business 
Investment Company programs (13 CFR 121.301) or have gross annual 
revenues of $1 million or less; or
    (4) Activities that revitalize or stabilize--
    (i) Low- or moderate-income geographies;
    (ii) Designated disaster areas; or
    (iii) Distressed or underserved nonmetropolitan middle-income 
geographies designated by the Board of Governors of the Federal Reserve 
System, Federal Deposit Insurance Corporation, and OCC, based on--
    (A) Rates of poverty, unemployment, and population loss; or
    (B) Population size, density, and dispersion. Activities revitalize 
and stabilize geographies designated based on population size, density, 
and dispersion if they help to meet essential community needs, 
including needs of low- and moderate-income individuals.
    (h) Community development loan means a loan that:
    (1) Has as its primary purpose community development; and
    (2) Except in the case of a wholesale or limited purpose bank:
    (i) Has not been reported or collected by the bank or an affiliate 
for consideration in the bank's assessment as a home mortgage, small 
business, small farm, or consumer loan, unless the loan is for a 
multifamily dwelling (as defined in Sec.  1003.2(n) of this title); and
    (ii) Benefits the bank's assessment area(s) or a broader statewide 
or regional area that includes the bank's assessment area(s).
    (i) Community development service means a service that:
    (1) Has as its primary purpose community development;
    (2) Is related to the provision of financial services; and
    (3) Has not been considered in the evaluation of the bank's retail 
banking services under Sec.  25.24(d).
    (j) Consumer loan means a loan to one or more individuals for 
household, family, or other personal expenditures. A consumer loan does 
not include a home mortgage, small business, or small farm loan. 
Consumer loans include the following categories of loans:
    (1) Motor vehicle loan, which is a consumer loan extended for the 
purchase of and secured by a motor vehicle;
    (2) Credit card loan, which is a line of credit for household, 
family, or other personal expenditures that is accessed by a borrower's 
use of a ``credit card,'' as this term is defined in Sec.  1026.2 of 
this title;
    (3) Other secured consumer loan, which is a secured consumer loan 
that is not included in one of the other categories of consumer loans; 
and
    (4) Other unsecured consumer loan, which is an unsecured consumer 
loan that is not included in one of the other categories of consumer 
loans.
    (k) Geography means a census tract delineated by the United States 
Bureau of the Census in the most recent decennial census.
    (l) Home mortgage loan means a closed-end mortgage loan or an open-
end line of credit as these terms are defined under Sec.  1003.2 of 
this title, and that is not an excluded transaction under Sec.  
1003.3(c)(1) through (10) and (13) of this title.
    (m) Income level includes:
    (1) Low-income, which means an individual income that is less than 
50 percent of the area median income, or a median family income that is 
less than 50 percent, in the case of a geography.
    (2) Moderate-income, which means an individual income that is at 
least 50 percent and less than 80 percent of the area median income, or 
a median family income that is at least 50 and less than 80 percent, in 
the case of a geography.
    (3) Middle-income, which means an individual income that is at 
least 80 percent and less than 120 percent of the area median income, 
or a median family income that is at least 80 and less than 120 
percent, in the case of a geography.
    (4) Upper-income, which means an individual income that is 120 
percent or more of the area median income, or a median family income 
that is 120 percent or more, in the case of a geography.
    (n) Limited purpose bank means a bank that offers only a narrow 
product line (such as credit card or motor vehicle loans) to a regional 
or broader market and for which a designation as a limited purpose bank 
is in effect, in accordance with Sec.  25.25(b).
    (o) Loan location. A loan is located as follows:
    (1) A consumer loan is located in the geography where the borrower 
resides;
    (2) A home mortgage loan is located in the geography where the 
property to which the loan relates is located; and
    (3) A small business or small farm loan is located in the geography 
where the main business facility or farm is located or where the loan 
proceeds otherwise will be applied, as indicated by the borrower.
    (p) Loan production office means a staffed facility, other than a 
branch, that is open to the public and that provides lending-related 
services, such as loan information and applications.
    (q) Metropolitan division means a metropolitan division as defined 
by the Director of the Office of Management and Budget.
    (r) MSA means a metropolitan statistical area as defined by the 
Director of the Office of Management and Budget.
    (s) Nonmetropolitan area means any area that is not located in an 
MSA.
    (t) Qualified investment means a lawful investment, deposit, 
membership share, or grant that has as its primary purpose community 
development.
    (u) Small bank--(1) Definition. Small bank means a bank that, as of 
December 31 of either of the prior two calendar years, had assets of 
less than $1.305 billion. Intermediate small bank means a small bank 
with assets of at least $326 million as of December 31 of both of the 
prior two calendar years and less than $1.305 billion as of December 31 
of either of the prior two calendar years.
    (2) Adjustment. The dollar figures in paragraph (u)(1) of this 
section shall be adjusted annually and published by the OCC, based on 
the year-to-year change in the average of the Consumer Price Index for 
Urban Wage Earners and Clerical Workers, not seasonally adjusted, for 
each twelve-month period ending in November, with rounding to the 
nearest million.
    (v) Small business loan means a loan included in ``loans to small 
businesses'' as defined in the instructions for preparation of the 
Consolidated Report of Condition and Income.
    (w) Small farm loan means a loan included in ``loans to small 
farms'' as defined in the instructions for preparation of the 
Consolidated Report of Condition and Income.
    (x) Wholesale bank means a bank that is not in the business of 
extending home

[[Page 34811]]

mortgage, small business, small farm, or consumer loans to retail 
customers, and for which a designation as a wholesale bank is in 
effect, in accordance with Sec.  25.25(b).

Subpart B--Standards for Assessing Performance


Sec.  25.21   Performance tests, standards, and ratings, in general.

    (a) Performance tests and standards. The OCC assesses the CRA 
performance of a bank in an examination as follows:
    (1) Lending, investment, and service tests. The OCC applies the 
lending, investment, and service tests, as provided in Sec. Sec.  25.22 
through 25.24, in evaluating the performance of a bank, except as 
provided in paragraphs (a)(2), (a)(3), and (a)(4) of this section.
    (2) Community development test for wholesale or limited purpose 
banks. The OCC applies the community development test for a wholesale 
or limited purpose bank, as provided in Sec.  25.25, except as provided 
in paragraph (a)(4) of this section.
    (3) Small bank performance standards. The OCC applies the small 
bank performance standards as provided in Sec.  25.26 in evaluating the 
performance of a small bank or a bank that was a small bank during the 
prior calendar year, unless the bank elects to be assessed as provided 
in paragraphs (a)(1), (a)(2), or (a)(4) of this section. The bank may 
elect to be assessed as provided in paragraph (a)(1) of this section 
only if it collects and reports the data required for other banks under 
Sec.  25.42.
    (4) Strategic plan. The OCC evaluates the performance of a bank 
under a strategic plan if the bank submits, and the OCC approves, a 
strategic plan as provided in Sec.  25.27.
    (b) Performance context. The OCC applies the tests and standards in 
paragraph (a) of this section and also considers whether to approve a 
proposed strategic plan in the context of:
    (1) Demographic data on median income levels, distribution of 
household income, nature of housing stock, housing costs, and other 
relevant data pertaining to a bank's assessment area(s);
    (2) Any information about lending, investment, and service 
opportunities in the bank's assessment area(s) maintained by the bank 
or obtained from community organizations, state, local, and tribal 
governments, economic development agencies, or other sources;
    (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 bank, the economic climate (national, 
regional, and local), safety and soundness limitations, and any other 
factors that significantly affect the bank's ability to provide 
lending, investments, or services in its assessment 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, and any 
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 assigns to a bank one of the 
following four ratings pursuant to Sec.  25.28 and appendix A of this 
part: ``outstanding''; ``satisfactory''; ``needs to improve''; or 
``substantial noncompliance'' as provided in 12 U.S.C. 2906(b)(2). The 
rating assigned by the OCC reflects the bank's record of helping to 
meet the credit needs of its entire community, including low- and 
moderate-income neighborhoods, consistent with the safe and sound 
operation of the bank.
    (d) Safe and sound operations. This part and the CRA do not require 
a bank to make loans or investments or to provide services that are 
inconsistent with safe and sound operations. To the contrary, the OCC 
anticipates banks can meet the standards of this part with safe and 
sound loans, investments, and services on which the banks expect to 
make a profit. Banks are permitted and encouraged to develop and apply 
flexible underwriting standards for loans that benefit low- or 
moderate-income geographies or individuals, only if consistent with 
safe and sound operations.
    (e) Low-cost education loans provided to low-income borrowers. In 
assessing and taking into account the record of a bank under this part, 
the OCC considers, as a factor, low-cost education loans originated by 
the bank to borrowers, particularly in its assessment area(s), who have 
an individual income that is less than 50 percent of the area median 
income. For purposes of this paragraph, ``low-cost education loans'' 
means any education loan, as defined in section 140(a)(7) of the Truth 
in Lending Act (15 U.S.C. 1650(a)(7)) (including a loan under a state 
or local education loan program), originated by the bank for a student 
at an ``institution of higher education,'' as that term is generally 
defined in sections 101 and 102 of the Higher Education Act of 1965 (20 
U.S.C. 1001 and 1002) and the implementing regulations published by the 
U.S. Department of Education, with interest rates and fees no greater 
than those of comparable education loans offered directly by the U.S. 
Department of Education. Such rates and fees are specified in section 
455 of the Higher Education Act of 1965 (20 U.S.C. 1087e).
    (f) Activities in cooperation with minority- or women-owned 
financial institutions and low-income credit unions. In assessing and 
taking into account the record of a nonminority-owned and nonwomen-
owned bank under this part, the OCC considers as a factor capital 
investment, loan participation, and other ventures undertaken by the 
bank in cooperation with minority- and women-owned financial 
institutions and low-income credit unions. Such activities must help 
meet the credit needs of local communities in which the minority- and 
women-owned financial institutions and low-income credit unions are 
chartered. To be considered, such activities need not also benefit the 
bank's assessment area(s) or the broader statewide or regional area 
that includes the bank's assessment area(s).


Sec.  25.22  Lending test.

    (a) Scope of test. (1) The lending test evaluates a bank's record 
of helping to meet the credit needs of its assessment area(s) through 
its lending activities by considering a bank's home mortgage, small 
business, small farm, and community development lending. If consumer 
lending constitutes a substantial majority of a bank's business, the 
OCC will evaluate the bank's consumer lending in one or more of the 
following categories: motor vehicle, credit card, other secured, and 
other unsecured loans. In addition, at a bank's option, the OCC will 
evaluate one or more categories of consumer lending, if the bank has 
collected and maintained, as required in Sec.  25.42(c)(1), the data 
for each category that the bank elects to have the OCC evaluate.
    (2) The OCC considers originations and purchases of loans. The OCC 
will also consider any other loan data the bank may choose to provide, 
including data on loans outstanding, commitments and letters of credit.
    (3) A bank may ask the OCC to consider loans originated or 
purchased by consortia in which the bank participates or by third 
parties in which the bank has invested only if the loans meet the 
definition of community development loans and only in accordance with 
paragraph (d) of this section. The OCC will not consider these loans 
under any criterion of the

[[Page 34812]]

lending test except the community development lending criterion.
    (b) Performance criteria. The OCC evaluates a bank's lending 
performance pursuant to the following criteria:
    (1) Lending activity. The number and amount of the bank's home 
mortgage, small business, small farm, and consumer loans, if 
applicable, in the bank's assessment area(s);
    (2) Geographic distribution. The geographic distribution of the 
bank's home mortgage, small business, small farm, and consumer loans, 
if applicable, based on the loan location, including:
    (i) The proportion of the bank's lending in the bank's assessment 
area(s);
    (ii) The dispersion of lending in the bank's assessment area(s); 
and
    (iii) The number and amount of loans in low-, moderate-, middle-, 
and upper-income geographies in the bank's assessment area(s);
    (3) Borrower characteristics. The distribution, particularly in the 
bank's assessment area(s), of the bank's home mortgage, small business, 
small farm, and consumer loans, if applicable, based on borrower 
characteristics, including the number and amount of:
    (i) Home mortgage loans to low-, moderate-, middle-, and upper-
income individuals;
    (ii) Small business and small farm loans to businesses and farms 
with gross annual revenues of $1 million or less;
    (iii) Small business and small farm loans by loan amount at 
origination; and
    (iv) Consumer loans, if applicable, to low-, moderate-, middle-, 
and upper-income individuals;
    (4) Community development lending. The bank's community development 
lending, including the number and amount of community development 
loans, and their complexity and innovativeness; and
    (5) Innovative or flexible lending practices. The bank's use of 
innovative or flexible lending practices in a safe and sound manner to 
address the credit needs of low- or moderate-income individuals or 
geographies.
    (c) Affiliate lending. (1) At a bank's option, the OCC will 
consider loans by an affiliate of the bank, if the bank provides data 
on the affiliate's loans pursuant to Sec.  25.42.
    (2) The OCC considers affiliate lending subject to the following 
constraints:
    (i) No affiliate may claim a loan origination or loan purchase if 
another institution claims the same loan origination or purchase; and
    (ii) If a bank elects to have the OCC consider loans within a 
particular lending category made by one or more of the bank's 
affiliates in a particular assessment area, the bank shall elect to 
have the OCC consider, in accordance with paragraph (c)(1) of this 
section, all the loans within that lending category in that particular 
assessment area made by all of the bank's affiliates.
    (3) The OCC does not consider affiliate lending in assessing a 
bank's performance under paragraph (b)(2)(i) of this section.
    (d) Lending by a consortium or a third party. Community development 
loans originated or purchased by a consortium in which the bank 
participates or by a third party in which the bank has invested:
    (1) Will be considered, at the bank's option, if the bank reports 
the data pertaining to these loans under Sec.  25.42(b)(2); and
    (2) May be allocated among participants or investors, as they 
choose, for purposes of the lending test, except that no participant or 
investor:
    (i) May claim a loan origination or loan purchase if another 
participant or investor claims the same loan origination or purchase; 
or
    (ii) May claim loans accounting for more than its percentage share 
(based on the level of its participation or investment) of the total 
loans originated by the consortium or third party.
    (e) Lending performance rating. The OCC rates 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 a bank's record of 
helping to meet the credit needs of its assessment area(s) through 
qualified investments that benefit its assessment area(s) or a broader 
statewide or regional area that includes the bank's assessment area(s).
    (b) Exclusion. Activities considered under the lending or service 
tests may not be considered under the investment test.
    (c) Affiliate investment. At a bank's option, the OCC will 
consider, in its assessment of a bank's investment performance, a 
qualified investment made by an affiliate of the bank, if the qualified 
investment is not claimed by any other institution.
    (d) Disposition of branch premises. Donating, selling on favorable 
terms, or making available on a rent-free basis a branch of the bank 
that is located in a predominantly minority neighborhood to a minority 
depository institution or women's depository institution (as these 
terms are defined in 12 U.S.C. 2907(b)) will be considered as a 
qualified investment.
    (e) Performance criteria. The OCC evaluates the investment 
performance of a bank pursuant to the following criteria:
    (1) The dollar amount of qualified investments;
    (2) The innovativeness or complexity of qualified investments;
    (3) The responsiveness of qualified investments to credit and 
community development needs; and
    (4) The degree to which the qualified investments are not routinely 
provided by private investors.
    (f) Investment performance rating. The OCC rates 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 its assessment area(s) by analyzing 
both the availability and effectiveness of a bank's systems for 
delivering retail banking services and the extent and innovativeness of 
its community development services.
    (b) Area(s) benefitted. Community development services must benefit 
a bank's assessment area(s) or a broader statewide or regional area 
that includes the bank's assessment area(s).
    (c) Affiliate service. At a bank's option, the OCC will consider, 
in its assessment of a bank's service performance, a community 
development service provided by an affiliate of the bank, if the 
community development service is not claimed by any other institution.
    (d) Performance criteria--retail banking services. The OCC 
evaluates the availability and effectiveness of a bank's systems for 
delivering retail banking services, pursuant to the following criteria:
    (1) The current distribution of the bank's branches among low-, 
moderate-, middle-, and upper-income geographies;
    (2) In the context of its current distribution of the bank's 
branches, the bank's record of opening and closing branches, 
particularly branches located in low- or moderate-income geographies or 
primarily serving low- or moderate-income individuals;
    (3) The availability and effectiveness of alternative systems for 
delivering retail banking services (e.g., ATMs, ATMs not owned or 
operated by or exclusively for the bank, banking by telephone or 
computer, loan production offices, and bank-at-work or bank-by-mail 
programs) in low- and moderate-income geographies and to low- and 
moderate-income individuals; and
    (4) The range of services provided in low-, moderate-, middle-, and 
upper-income geographies and the degree to which the services are 
tailored to meet the needs of those geographies.

[[Page 34813]]

    (e) Performance criteria--community development services. The OCC 
evaluates community development services pursuant to the following 
criteria:
    (1) The extent to which the bank provides community development 
services; and
    (2) The innovativeness and responsiveness of community development 
services.
    (f) Service performance rating. The OCC rates 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. The OCC assesses a wholesale or limited purpose 
bank's record of helping to meet the credit needs of its assessment 
area(s) under the community development test through its community 
development lending, qualified investments, or community development 
services.
    (b) Designation as a wholesale or limited purpose bank. In order to 
receive a designation as a wholesale or limited purpose bank, a bank 
shall file a request, in writing, with the OCC, at least three months 
prior to the proposed effective date of the designation. If the OCC 
approves the designation, it remains in effect until the bank requests 
revocation of the designation or until one year after the OCC notifies 
the bank that the OCC has revoked the designation on its own 
initiative.
    (c) Performance criteria. The OCC evaluates 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 (including 
originations and purchases of loans and other community development 
loan data provided by the bank, such as data on loans outstanding, 
commitments, and letters of credit), qualified investments, or 
community development services;
    (2) The use of innovative or complex qualified investments, 
community development loans, or community development services and the 
extent to which the investments are not routinely provided by private 
investors; and
    (3) The bank's responsiveness to credit and community development 
needs.
    (d) Indirect activities. At a bank's option, the OCC will consider 
in its community development performance assessment:
    (1) Qualified investments or community development services 
provided by an affiliate of the bank, if the investments or services 
are not claimed by any other institution; and
    (2) Community development lending by affiliates, consortia and 
third parties, subject to the requirements and limitations in Sec.  
25.22(c) and (d).
    (e) Benefit to assessment area(s)--(1) Benefit inside assessment 
area(s). The OCC considers all qualified investments, community 
development loans, and community development services that benefit 
areas within the bank's assessment area(s) or a broader statewide or 
regional area that includes the bank's assessment area(s).
    (2) Benefit outside assessment area(s). The OCC considers the 
qualified investments, community development loans, and community 
development services that benefit areas outside the bank's assessment 
area(s), if the bank has adequately addressed the needs of its 
assessment area(s).
    (f) Community development performance rating. The OCC rates a 
bank's community development performance as provided in appendix A of 
this part.


Sec.  25.26  Small bank performance standards.

    (a) Performance criteria--(1) Small banks that are not intermediate 
small banks. The OCC evaluates the record of a small bank that is not, 
or that was not during the prior calendar year, an intermediate small 
bank, of helping to meet the credit needs of its assessment area(s) 
pursuant to the criteria set forth in paragraph (b) of this section.
    (2) Intermediate small banks. The OCC evaluates the record of a 
small bank that is, or that was during the prior calendar year, an 
intermediate small bank, of helping to meet the credit needs of its 
assessment area(s) pursuant to the criteria set forth in paragraphs (b) 
and (c) of this section.
    (b) Lending test. A small bank's lending performance is evaluated 
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, community 
development loans, or qualified investments;
    (2) The percentage of loans and, as appropriate, other lending-
related activities located in the bank's assessment 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; and
    (5) The bank's record of taking action, if warranted, in response 
to written complaints about its performance in helping to meet credit 
needs in its assessment area(s).
    (c) Community development test. An intermediate small bank's 
community development performance also is evaluated pursuant to the 
following criteria:
    (1) The number and amount of community development loans;
    (2) The number and amount of qualified investments;
    (3) The extent to which the bank provides community development 
services; and
    (4) The bank's responsiveness through such activities to community 
development lending, investment, and services needs.
    (d) Small bank performance rating. The OCC rates the performance of 
a bank evaluated under this section as provided in appendix A of this 
part.


Sec.  25.27  Strategic plan.

    (a) Alternative election. The OCC will assess a bank's record of 
helping to meet the credit needs of its assessment area(s) under a 
strategic plan if:
    (1) The bank has submitted the plan to the OCC as provided for in 
this section;
    (2) The OCC has approved the plan;
    (3) The plan is in effect; and
    (4) The bank has been operating under an approved plan for at least 
one year.
    (b) Data reporting. The OCC's approval of a plan does not affect 
the bank's obligation, if any, to report data as required by Sec.  
25.42.
    (c) Plans in general--(1) Term. A plan may have a term of no more 
than five years, and any multi-year plan must include annual interim 
measurable goals under which the OCC will evaluate the bank's 
performance.
    (2) Multiple assessment areas. A bank with more than one assessment 
area may prepare a single plan for all of its assessment areas or one 
or more plans for one or more of its assessment areas.
    (3) Treatment of affiliates. Affiliated institutions may prepare a 
joint plan if the plan provides measurable goals for each institution. 
Activities may be allocated among institutions at the institutions' 
option, provided that the same activities are not considered for more 
than one institution.
    (d) Public participation in plan development. Before submitting a 
plan to the OCC for approval, a bank shall:
    (1) Informally seek suggestions from members of the public in its 
assessment area(s) covered by the plan while developing the plan;
    (2) Once the bank has developed a plan, formally solicit public 
comment

[[Page 34814]]

on the plan for at least 30 days by publishing notice in at least one 
newspaper of general circulation in each assessment area covered by the 
plan; and
    (3) During the period of formal public comment, make copies of the 
plan available for review by the public at no cost at all offices of 
the bank in any assessment area covered by the plan and provide copies 
of the plan upon request for a reasonable fee to cover copying and 
mailing, if applicable.
    (e) Submission of plan. The bank 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 a description of its informal 
efforts to seek suggestions from members of the public, any written 
public comment received, and, if the plan was revised in light of the 
comment received, the initial plan as released for public comment.
    (f) Plan content--(1) Measurable goals. (i) A bank shall specify in 
its plan measurable goals for helping to meet the credit needs of each 
assessment area covered by the plan, particularly the needs of low- and 
moderate-income geographies and low- and moderate-income individuals, 
through lending, investment, and services, as appropriate.
    (ii) A bank shall address in its plan 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 assessment area(s), 
considering public comment and the bank's capacity and constraints, 
product offerings, and business strategy.
    (2) Confidential information. A bank may submit additional 
information to the OCC on a confidential basis, but the goals stated in 
the plan must be sufficiently specific to enable the public and the OCC 
to judge 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. If a bank submits, and the OCC approves, both 
``satisfactory'' and ``outstanding'' performance goals, the OCC will 
consider the bank eligible for an ``outstanding'' performance rating.
    (4) Election if satisfactory goals not substantially met. A bank 
may elect in its plan that, if the bank fails to meet substantially its 
plan goals for a satisfactory rating, the OCC will evaluate the bank's 
performance under the lending, investment, and service tests, the 
community development test, or the small bank performance standards, as 
appropriate.
    (g) Plan approval--(1) Timing. The OCC will act upon a plan within 
60 calendar days after the OCC receives the complete plan and other 
material required under paragraph (e) of this section. 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 
considers the public's involvement in formulating the plan, written 
public comment on the plan, and any response by the bank to public 
comment on the plan.
    (3) Criteria for evaluating plan. The OCC evaluates a plan's 
measurable goals using the following criteria, as appropriate:
    (i) The extent and breadth of lending or lending-related 
activities, including, as appropriate, the distribution of loans among 
different geographies, businesses and farms of different sizes, and 
individuals of different income levels, the extent of community 
development lending, and the use of innovative or flexible lending 
practices to address credit needs;
    (ii) The amount and innovativeness, complexity, and responsiveness 
of the bank's qualified investments; and
    (iii) The availability and effectiveness of the bank's systems for 
delivering retail banking services and the extent and innovativeness of 
the bank's community development services.
    (h) Plan amendment. During the term of a plan, a bank may request 
the OCC to approve an amendment to the plan on grounds that there has 
been a material change in circumstances. The bank shall develop an 
amendment to a previously approved plan in accordance with the public 
participation requirements of paragraph (d) of this section.
    (i) Plan assessment. The OCC approves the goals and assesses 
performance under a plan as provided for in appendix A of this part.


Sec.  25.28  Assigned ratings.

    (a) Ratings in general. Subject to paragraphs (b) and (c) of this 
section, the OCC assigns 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 performance standards, or an approved strategic plan, as 
applicable.
    (b) Lending, investment, and service tests. The OCC assigns a 
rating for a bank assessed under the lending, investment, and service 
tests in accordance with the following principles:
    (1) A bank that receives an ``outstanding'' rating on the lending 
test receives an assigned rating of at least ``satisfactory'';
    (2) 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 receives an assigned rating of 
``outstanding''; and
    (3) No bank may receive an assigned rating of ``satisfactory'' or 
higher unless it receives a rating of at least ``low satisfactory'' on 
the lending test.
    (c) Effect of evidence of discriminatory or other illegal credit 
practices. (1) The OCC's evaluation of a bank's CRA performance is 
adversely affected by evidence of discriminatory or other illegal 
credit practices in any geography by the bank or in any assessment area 
by any affiliate whose loans have been considered as part of the bank's 
lending performance. In connection with any type of lending activity 
described in Sec.  25.22(a), evidence of discriminatory or other credit 
practices that violate an applicable law, rule, or regulation includes, 
but is not limited to:
    (i) Discrimination against applicants on a prohibited basis in 
violation, for example, of the Equal Credit Opportunity Act or the Fair 
Housing Act;
    (ii) Violations of the Home Ownership and Equity Protection Act;
    (iii) Violations of section 5 of the Federal Trade Commission Act;
    (iv) Violations of section 8 of the Real Estate Settlement 
Procedures Act; and
    (v) Violations of the Truth in Lending Act provisions regarding a 
consumer's right of rescission.
    (2) In determining the effect of evidence of practices described in 
paragraph (c)(1) of this section on the bank's assigned rating, the OCC 
considers the nature, extent, and strength of the evidence of the 
practices; the policies and procedures that the bank (or affiliate, as 
applicable) has in place to prevent the practices; any corrective 
action that the bank (or affiliate, as applicable) has taken or has 
committed to take, including voluntary corrective action resulting from 
self-assessment; and any other relevant information.

[[Page 34815]]

Sec.  25.29  Effect of CRA performance on applications.

    (a) CRA performance. Among other factors, the OCC takes into 
account the record of performance under the CRA of each applicant bank 
in considering an application for:
    (1) The establishment of a domestic branch;
    (2) The relocation of the main office or a branch;
    (3) Under the Bank Merger Act (12 U.S.C. 1828(c)), the merger or 
consolidation with or the acquisition of assets or assumption of 
liabilities of an insured depository institution; and
    (4) The conversion of an insured depository institution to a 
national bank charter.
    (b) Charter application. An applicant (other than an insured 
depository institution) for a national bank charter shall submit with 
its application a description of how it will meet its CRA objectives. 
The OCC takes the description into account in considering the 
application and may deny or condition approval on that basis.
    (c) Interested parties. The OCC takes into account any views 
expressed by interested parties that are submitted in accordance with 
the OCC's procedures set forth in part 5 of this chapter in considering 
CRA performance in an application listed in paragraphs (a) and (b) of 
this section.
    (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 listed in paragraph (a) of this section.
    (e) Insured depository institution. For purposes of this section, 
the term ``insured depository institution'' has the meaning given to 
that term in 12 U.S.C. 1813.

Subpart C--Records, Reporting, and Disclosure Requirements


Sec.  25.41  Assessment area delineation.

    (a) In general. A bank shall delineate one or more assessment areas 
within which the OCC evaluates the bank's record of helping to meet the 
credit needs of its community. The OCC does not evaluate the bank's 
delineation of its assessment area(s) as a separate performance 
criterion, but the OCC reviews the delineation for compliance with the 
requirements of this section.
    (b) Geographic area(s) for wholesale or limited purpose banks. The 
assessment area(s) for a wholesale or limited purpose bank must consist 
generally of one or more MSAs or metropolitan divisions (using the MSA 
or metropolitan division boundaries that were in effect as of January 1 
of the calendar year in which the delineation is made) or one or more 
contiguous political subdivisions, such as counties, cities, or towns, 
in which the bank has its main office, branches, and deposit-taking 
ATMs.
    (c) Geographic area(s) for other banks. The assessment area(s) for 
a bank other than a wholesale or limited purpose bank must:
    (1) Consist generally of one or more MSAs or metropolitan divisions 
(using the MSA or metropolitan division boundaries that were in effect 
as of January 1 of the calendar year in which the delineation is made) 
or one or more contiguous political subdivisions, such as counties, 
cities, or towns; and
    (2) Include the geographies in which the bank has its main office, 
its branches, and its deposit-taking ATMs, as well as the surrounding 
geographies in which the bank has originated or purchased a substantial 
portion of its loans (including home mortgage loans, small business and 
small farm loans, and any other loans the bank chooses, such as those 
consumer loans on which the bank elects to have its performance 
assessed).
    (d) Adjustments to geographic area(s). A bank may adjust the 
boundaries of its assessment area(s) to include only the portion of a 
political subdivision that it reasonably can be expected to serve. An 
adjustment is particularly appropriate in the case of an assessment 
area that otherwise would be extremely large, of unusual configuration, 
or divided by significant geographic barriers.
    (e) Limitations on the delineation of an assessment area. Each 
bank's assessment area(s):
    (1) Must consist only of whole geographies;
    (2) May not reflect illegal discrimination;
    (3) May not arbitrarily exclude low- or moderate-income 
geographies, taking into account the bank's size and financial 
condition; and
    (4) May not extend substantially beyond an MSA boundary or beyond a 
state boundary unless the assessment area is located in a multistate 
MSA. If a bank serves a geographic area that extends substantially 
beyond a state boundary, the bank shall delineate separate assessment 
areas for the areas in each state. If a bank serves a geographic area 
that extends substantially beyond an MSA boundary, the bank shall 
delineate separate assessment areas for the areas inside and outside 
the MSA.
    (f) Banks serving military personnel. Notwithstanding the 
requirements 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 assessment area.
    (g) Use of assessment area(s). The OCC uses the assessment area(s) 
delineated by a bank in its evaluation of the bank's CRA performance 
unless the OCC determines that the assessment area(s) do not comply 
with the requirements of this section.


Sec.  25.42  Data collection, reporting, and disclosure.

    (a) Loan information required to be collected and maintained. A 
bank, except a small bank, shall collect, and maintain in machine 
readable form (as prescribed by the OCC) until the completion of its 
next CRA examination, the following data for each small business or 
small farm loan originated or purchased by the bank:
    (1) A unique number or alpha-numeric symbol that can be used to 
identify the relevant loan file;
    (2) The loan amount at origination;
    (3) The loan location; and
    (4) An indicator whether the loan was to a business or farm with 
gross annual revenues of $1 million or less.
    (b) Loan information required to be reported. A bank, except a 
small bank or a bank that was a small bank during the prior calendar 
year, shall report annually by March 1 to the OCC in machine readable 
form (as prescribed by the OCC) the following data for the prior 
calendar year:
    (1) Small business and small farm loan data. For each geography in 
which the bank originated or purchased a small business or small farm 
loan, the aggregate number and amount of loans:
    (i) With an amount at origination of $100,000 or less;
    (ii) With amount at origination of more than $100,000 but less than 
or equal to $250,000;
    (iii) With an amount at origination of more than $250,000; and
    (iv) To businesses and farms with gross annual revenues of $1 
million or less (using the revenues that the bank considered in making 
its credit decision);
    (2) Community development loan data. The aggregate number and 
aggregate amount of community development loans originated or 
purchased; and
    (3) Home mortgage loans. If the bank is subject to reporting under 
part 1003 of this title, the location of each home mortgage loan 
application, origination, or purchase outside the MSAs in which the 
bank has a home or branch office (or

[[Page 34816]]

outside any MSA) in accordance with the requirements of part 1003 of 
this title.
    (c) Optional data collection and maintenance--(1) Consumer loans. A 
bank may collect and maintain in machine readable form (as prescribed 
by the OCC) data for consumer loans originated or purchased by the bank 
for consideration under the lending test. A bank may maintain data for 
one or more of the following categories of consumer loans: Motor 
vehicle, credit card, other secured, and other unsecured. If the bank 
maintains data for loans in a certain category, it shall maintain data 
for all loans originated or purchased within that category. The bank 
shall maintain data separately for each category, including for each 
loan:
    (i) A unique number or alpha-numeric symbol that can be used to 
identify the relevant loan file;
    (ii) The loan amount at origination or purchase;
    (iii) The loan location; and
    (iv) The gross annual income of the borrower that the bank 
considered in making its credit decision.
    (2) Other loan data. At its option, a bank may provide other 
information concerning its lending performance, including additional 
loan distribution data.
    (d) Data on affiliate lending. A bank that elects to have the OCC 
consider loans by an affiliate, for purposes of the lending or 
community development test or an approved strategic plan, shall 
collect, maintain, and report for those loans the data that the bank 
would have collected, maintained, and reported pursuant to paragraphs 
(a), (b), and (c) of this section had the loans been originated or 
purchased by the bank. For home mortgage loans, the bank shall also be 
prepared to identify the home mortgage loans reported under part 1003 
of this title by the affiliate.
    (e) Data on lending by a consortium or a third party. A bank that 
elects to have the OCC consider community development loans by a 
consortium or third party, for purposes of the lending or community 
development tests or an approved strategic plan, shall report for those 
loans the data that the bank would have reported under paragraph (b)(2) 
of this section had the loans been originated or purchased by the bank.
    (f) Small banks electing evaluation under the lending, investment, 
and service tests. A bank that qualifies for evaluation under the small 
bank performance standards but elects evaluation under the lending, 
investment, and service tests shall collect, maintain, and report the 
data required for other banks pursuant to paragraphs (a) and (b) of 
this section.
    (g) Assessment area data. A bank, except a small bank or a bank 
that was a small bank during the prior calendar year, shall collect and 
report to the OCC by March 1 of each year a list for each assessment 
area showing the geographies within the area.
    (h) CRA Disclosure Statement. The OCC prepares annually for each 
bank that reports data pursuant to this section a CRA Disclosure 
Statement that contains, on a state-by-state basis:
    (1) For each county (and for each assessment area smaller than a 
county) with a population of 500,000 persons or fewer in which the bank 
reported a small business or small farm loan:
    (i) The number and amount of small business and small farm loans 
reported as originated or purchased located in low-, moderate-, middle-
, and upper-income geographies;
    (ii) A list grouping each geography according to whether the 
geography is low-, moderate-, middle-, or upper-income;
    (iii) A list showing each geography in which the bank reported a 
small business or small farm loan; and
    (iv) The number and amount of small business and small farm loans 
to businesses and farms with gross annual revenues of $1 million or 
less;
    (2) For each county (and for each assessment area smaller than a 
county) with a population in excess of 500,000 persons in which the 
bank reported a small business or small farm loan:
    (i) The number and amount of small business and small farm loans 
reported as originated or purchased located in geographies with median 
income relative to the area median income of less than 10 percent, 10 
or more but less than 20 percent, 20 or more but less than 30 percent, 
30 or more but less than 40 percent, 40 or more but less than 50 
percent, 50 or more but less than 60 percent, 60 or more but less than 
70 percent, 70 or more but less than 80 percent, 80 or more but less 
than 90 percent, 90 or more but less than 100 percent, 100 or more but 
less than 110 percent, 110 or more but less than 120 percent, and 120 
percent or more;
    (ii) A list grouping each geography in the county or assessment 
area according to whether the median income in the geography relative 
to the area median income is less than 10 percent, 10 or more but less 
than 20 percent, 20 or more but less than 30 percent, 30 or more but 
less than 40 percent, 40 or more but less than 50 percent, 50 or more 
but less than 60 percent, 60 or more but less than 70 percent, 70 or 
more but less than 80 percent, 80 or more but less than 90 percent, 90 
or more but less than 100 percent, 100 or more but less than 110 
percent, 110 or more but less than 120 percent, and 120 percent or 
more;
    (iii) A list showing each geography in which the bank reported a 
small business or small farm loan; and
    (iv) The number and amount of small business and small farm loans 
to businesses and farms with gross annual revenues of $1 million or 
less;
    (3) The number and amount of small business and small farm loans 
located inside each assessment area reported by the bank and the number 
and amount of small business and small farm loans located outside the 
assessment area(s) reported by the bank; and
    (4) The number and amount of community development loans reported 
as originated or purchased.
    (i) Aggregate disclosure statements. The OCC, in conjunction with 
the Board of Governors of the Federal Reserve System and the Federal 
Deposit Insurance Corporation, prepares annually, for each MSA or 
metropolitan division (including an MSA or metropolitan division that 
crosses a state boundary) and the nonmetropolitan portion of each 
state, an aggregate disclosure statement of small business and small 
farm lending by all institutions subject to reporting under this part 
or parts 195, 228, or 345 of this title. These disclosure statements 
indicate, for each geography, the number and amount of all small 
business and small farm loans originated or purchased by reporting 
institutions, except that the OCC may adjust the form of the disclosure 
if necessary, because of special circumstances, to protect the privacy 
of a borrower or the competitive position of an institution.
    (j) Central data depositories. The OCC makes the aggregate 
disclosure statements, described in paragraph (i) of this section, and 
the individual bank CRA Disclosure Statements, described in paragraph 
(h) of this section, available to the public at central data 
depositories. The OCC publishes a list of the depositories at which the 
statements are available.


Sec.  25.43  Content and availability of public file.

    (a) Information available to the public. A bank shall maintain a 
public file that includes the following information:
    (1) All written comments received from the public for the current 
year and each of the prior two calendar years that specifically relate 
to the bank's

[[Page 34817]]

performance in helping to meet community credit needs, and any response 
to the comments by the bank, if neither the comments nor the responses 
contain statements that reflect adversely on the good name or 
reputation of any persons other than the bank or publication of which 
would violate specific provisions of law;
    (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 bank's branches, their street addresses, and 
geographies;
    (4) A list of branches opened or closed by the bank during the 
current year and each of the prior two calendar years, their street 
addresses, and geographies;
    (5) A list of services (including hours of operation, available 
loan and deposit products, and transaction fees) generally offered at 
the bank's branches and descriptions of material differences in the 
availability or cost of services at particular branches, if any. At its 
option, a bank may include information regarding the availability of 
alternative systems for delivering retail banking services (e.g., ATMs, 
ATMs not owned or operated by or exclusively for the bank, banking by 
telephone or computer, loan production offices, and bank-at-work or 
bank-by-mail programs);
    (6) A map of each assessment area showing the boundaries of the 
area and identifying the geographies contained within the area, either 
on the map or in a separate list; and
    (7) Any other information the bank chooses.
    (b) Additional information available to the public--(1) Banks other 
than small banks. A bank, except a small bank or a bank that was a 
small bank during the prior calendar year, shall include in its public 
file the following information pertaining to the bank and its 
affiliates, if applicable, for each of the prior two calendar years:
    (i) If the bank has elected to have one or more categories of its 
consumer loans considered under the lending test, for each of these 
categories, the number and amount of loans:
    (A) To low-, moderate-, middle-, and upper-income individuals;
    (B) Located in low-, moderate-, middle-, and upper-income census 
tracts; and
    (C) Located inside the bank's assessment area(s) and outside the 
bank's assessment area(s); and
    (ii) The bank's CRA Disclosure Statement. The bank shall place the 
statement in the public file within three business days of its receipt 
from the OCC.
    (2) Banks required to report Home Mortgage Disclosure Act (HMDA) 
data. A bank required to report home mortgage loan data pursuant part 
1003 of this title shall include in its public file a written notice 
that the institution's HMDA Disclosure Statement may be obtained on the 
Consumer Financial Protection Bureau's (Bureau's) website at 
www.consumerfinance.gov/hmda. In addition, a bank that elected to have 
the OCC consider the mortgage lending of an affiliate shall include in 
its public file the name of the affiliate and a written notice that the 
affiliate's HMDA Disclosure Statement may be obtained at the Bureau's 
website. The bank shall place the written notice(s) in the public file 
within three business days after receiving notification from the 
Federal Financial Institutions Examination Council of the availability 
of the disclosure statement(s).
    (3) Small banks. A small bank or a bank that was a small bank 
during the prior calendar year shall include in its public file:
    (i) The bank's loan-to-deposit ratio for each quarter of the prior 
calendar year and, at its option, additional data on its loan-to-
deposit ratio; and
    (ii) The information required for other banks by paragraph (b)(1) 
of this section, if the bank has elected to be evaluated under the 
lending, investment, and service tests.
    (4) Banks with strategic plans. A bank that has been approved to be 
assessed under a strategic plan shall include in its public file a copy 
of that plan. A bank need not include information submitted to the OCC 
on a confidential basis in conjunction with the plan.
    (5) Banks with less than satisfactory ratings. A bank that received 
a less than satisfactory rating during its most recent examination 
shall include in its public file a description of its current efforts 
to improve its performance in helping to meet the credit needs of its 
entire community. The bank shall update the description quarterly.
    (c) Location of public information. A bank shall make available to 
the public for inspection upon request and at no cost the information 
required in this section as follows:
    (1) At the main office and, if an interstate bank, at one branch 
office in each state, all information in the public file; and
    (2) At each branch:
    (i) A copy of the public section of the bank's most recent CRA 
Performance Evaluation and a list of services provided by the branch; 
and
    (ii) Within five calendar days of the request, all the information 
in the public file relating to the assessment area in which the branch 
is located.
    (d) Copies. Upon request, a bank shall provide copies, either on 
paper or in another form acceptable to the person making the request, 
of the information in its public file. The bank may charge a reasonable 
fee not to exceed the cost of copying and mailing (if applicable).
    (e) Updating. Except as otherwise provided in this section, a bank 
shall ensure that the information required by this section is current 
as of April 1 of each year.


Sec.  25.44  Public notice by banks.

    A bank shall provide in the public lobby of its main office and 
each of its branches the appropriate public notice set forth in 
appendix B of this part. Only a branch of a bank having more than one 
assessment area shall include the bracketed material in the notice for 
branch offices. Only a bank that is an affiliate of a holding company 
shall include the next to the last sentence of the notices. A bank 
shall include the last sentence of the notices only if it is an 
affiliate of a holding company that is not prevented by statute from 
acquiring additional banks.


Sec.  25.45  Publication of planned examination schedule.

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

Subpart D [Reserved]

Subpart E--Prohibition Against Use of Interstate Branches Primarily 
for Deposit Production


Sec.  25.61  Purpose and scope.

    (a) Purpose. The purpose of this subpart is to implement section 
109 (12 U.S.C. 1835a) of the Riegle-Neal Interstate Banking and 
Branching Efficiency Act of 1994 (Interstate Act).
    (b) Scope. (1) This subpart applies to any national bank that has 
operated a covered interstate branch for a period of at least one year, 
and any foreign bank that has operated a covered interstate branch that 
is a Federal branch for a period of at least one year.
    (2) This subpart describes the requirements imposed under 12 U.S.C. 
1835a, which requires the appropriate Federal banking agencies (the 
OCC, the Board of Governors of the Federal Reserve System, and the 
Federal Deposit Insurance Corporation) to prescribe uniform rules that 
prohibit a bank from using any authority to engage in

[[Page 34818]]

interstate branching pursuant to the Interstate Act, or any amendment 
made by the Interstate Act to any other provision of law, primarily for 
the purpose of deposit production.


Sec.  25.62  Definitions.

    For purposes of this subpart, the following definitions apply:
    (a) Bank means, unless the context indicates otherwise:
    (1) A national bank; and
    (2) A foreign bank as that term is defined in 12 U.S.C. 3101(7) and 
12 CFR 28.11(j).
    (b) Covered interstate branch means:
    (1) Any branch of a national bank, and any Federal branch of a 
foreign bank, that:
    (i) Is established or acquired outside the bank's home State 
pursuant to the interstate branching authority granted by the 
Interstate Act or by any amendment made by the Interstate Act to any 
other provision of law; or
    (ii) Could not have been established or acquired outside of the 
bank's home State but for the establishment or acquisition of a branch 
described in paragraph (b)(1)(i) of this section; and
    (2) Any bank or branch of a bank controlled by an out-of-State bank 
holding company.
    (c) Federal branch means Federal branch as that term is defined in 
12 U.S.C. 3101(6) and 12 CFR 28.11(i).
    (d) Home State means:
    (1) With respect to a State bank, the State that chartered the 
bank;
    (2) With respect to a national bank, the State in which the main 
office of the bank is located;
    (3) With respect to a bank holding company, the State in which the 
total deposits of all banking subsidiaries of such company are the 
largest on the later of:
    (i) July 1, 1966; or
    (ii) The date on which the company becomes a bank holding company 
under the Bank Holding Company Act;
    (4) With respect to a foreign bank:
    (i) For purposes of determining whether a U.S. branch of a foreign 
bank is a covered interstate branch, the home State of the foreign bank 
as determined in accordance with 12 U.S.C. 3103(c) and 12 CFR 28.11(o); 
and
    (ii) For purposes of determining whether a branch of a U.S. bank 
controlled by a foreign bank is a covered interstate branch, the State 
in which the total deposits of all banking subsidiaries of such foreign 
bank are the largest on the later of:
    (A) July 1, 1966; or
    (B) The date on which the foreign bank becomes a bank holding 
company under the Bank Holding Company Act.
    (e) Host State means a State in which a covered interstate branch 
is established or acquired.
    (f) Host state loan-to-deposit ratio generally means, with respect 
to a particular host state, the ratio of total loans in the host state 
relative to total deposits from the host state for all banks (including 
institutions covered under the definition of ``bank'' in 12 U.S.C. 
1813(a)(1)) that have that state as their home state, as determined and 
updated periodically by the appropriate Federal banking agencies and 
made available to the public.
    (g) Out-of-State bank holding company means, with respect to any 
State, a bank holding company whose home State is another State.
    (h) State means state as that term is defined in 12 U.S.C. 
1813(a)(3).
    (i) Statewide loan-to-deposit ratio means, with respect to a bank, 
the ratio of the bank's loans to its deposits in a state in which the 
bank has one or more covered interstate branches, as determined by the 
OCC.


Sec.  25.63  Loan-to-deposit ratio screen.

    (a) Application of screen. Beginning no earlier than one year after 
a covered interstate branch is acquired or established, the OCC will 
consider whether the bank's statewide loan-to-deposit ratio is less 
than 50 percent of the relevant host State loan-to-deposit ratio.
    (b) Results of screen. (1) If the OCC determines that the bank's 
statewide loan-to-deposit ratio is 50 percent or more of the host state 
loan-to-deposit ratio, no further consideration under this subpart is 
required.
    (2) If the OCC determines that the bank's statewide loan-to-deposit 
ratio is less than 50 percent of the host state loan-to-deposit ratio, 
or if reasonably available data are insufficient to calculate the 
bank's statewide loan-to-deposit ratio, the OCC will make a credit 
needs determination for the bank as provided in Sec.  25.64.


Sec.  25.64  Credit needs determination.

    (a) In general. The OCC will review the loan portfolio of the bank 
and determine whether the bank is reasonably helping to meet the credit 
needs of the communities in the host state that are served by the bank.
    (b) Guidelines. The OCC will use the following considerations as 
guidelines when making the determination pursuant to paragraph (a) of 
this section:
    (1) Whether covered interstate branches were formerly part of a 
failed or failing depository institution;
    (2) Whether covered interstate branches were acquired under 
circumstances where there was a low loan-to-deposit ratio because of 
the nature of the acquired institution's business or loan portfolio;
    (3) Whether covered interstate branches have a high concentration 
of commercial or credit card lending, trust services, or other 
specialized activities, including the extent to which the covered 
interstate branches accept deposits in the host state;
    (4) The CRA ratings received by the bank, if any;
    (5) Economic conditions, including the level of loan demand, within 
the communities served by the covered interstate branches;
    (6) The safe and sound operation and condition of the bank; and
    (7) The OCC's CRA regulations (subparts A through D of this part) 
and interpretations of those regulations.


Sec.  25.65  Sanctions.

    (a) In general. If the OCC determines that a bank is not reasonably 
helping to meet the credit needs of the communities served by the bank 
in the host state, and that the bank's statewide loan-to-deposit ratio 
is less than 50 percent of the host state loan-to-deposit ratio, the 
OCC:
    (1) May order that a bank's covered interstate branch or branches 
be closed unless the bank provides reasonable assurances to the 
satisfaction of the OCC, after an opportunity for public comment, that 
the bank has an acceptable plan under which the bank will reasonably 
help to meet the credit needs of the communities served by the bank in 
the host state; and
    (2) Will not permit the bank to open a new branch in the host state 
that would be considered to be a covered interstate branch unless the 
bank provides reasonable assurances to the satisfaction of the OCC, 
after an opportunity for public comment, that the bank will reasonably 
help to meet the credit needs of the community that the new branch will 
serve.
    (b) Notice prior to closure of a covered interstate branch. Before 
exercising the OCC's authority to order the bank to close a covered 
interstate branch, the OCC will issue to the bank a notice of the OCC's 
intent to order the closure and will schedule a hearing within 60 days 
of issuing the notice.
    (c) Hearing. The OCC will conduct a hearing scheduled under 
paragraph (b) of this section in accordance with the provisions of 12 
U.S.C. 1818(h) and 12 CFR part 19.

Appendix A to Part 25--Ratings

    (a) Ratings in general. (1) In assigning a rating, the OCC 
evaluates a bank's

[[Page 34819]]

performance under the applicable performance criteria in this part, 
in accordance with Sec. Sec.  25.21 and 25.28. This includes 
consideration of low-cost education loans provided to low-income 
borrowers and activities in cooperation with minority- or women-
owned financial institutions and low-income credit unions, as well 
as adjustments on the basis of evidence of discriminatory or other 
illegal credit practices.
    (2) A bank's 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, must be consistent with safe and sound banking 
practices and generally with the appropriate rating profile as 
follows.
    (b) Banks evaluated under the lending, investment, and service 
tests--(1) Lending performance rating. The OCC assigns each bank's 
lending performance one of the five following ratings.
    (i) Outstanding. The OCC rates a bank's lending performance 
``outstanding'' if, in general, it demonstrates:
    (A) Excellent responsiveness to credit needs in its assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in 
its assessment area(s);
    (B) A substantial majority of its loans are made in its 
assessment area(s);
    (C) An excellent geographic distribution of loans in its 
assessment area(s);
    (D) An excellent distribution, particularly in its assessment 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different sizes, given the product 
lines offered by the bank;
    (E) An excellent record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross 
annual revenues of $1 million or less, consistent with safe and 
sound operations;
    (F) Extensive use of innovative or flexible lending practices in 
a safe and sound manner to address the credit needs of low- or 
moderate-income individuals or geographies; and
    (G) It is a leader in making community development loans.
    (ii) High satisfactory. The OCC rates a bank's lending 
performance ``high satisfactory'' if, in general, it demonstrates:
    (A) Good responsiveness to credit needs in its assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in 
its assessment area(s);
    (B) A high percentage of its loans are made in its assessment 
area(s);
    (C) A good geographic distribution of loans in its assessment 
area(s);
    (D) A good distribution, particularly in its assessment area(s), 
of loans among individuals of different income levels and businesses 
(including farms) of different sizes, given the product lines 
offered by the bank;
    (E) A good record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross 
annual revenues of $1 million or less, consistent with safe and 
sound operations;
    (F) Use of innovative or flexible lending practices in a safe 
and sound manner to address the credit needs of low- or moderate-
income individuals or geographies; and
    (G) It has made a relatively high level of community development 
loans.
    (iii) Low satisfactory. The OCC rates a bank's lending 
performance ``low satisfactory'' if, in general, it demonstrates:
    (A) Adequate responsiveness to credit needs in its assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in 
its assessment area(s);
    (B) An adequate percentage of its loans are made in its 
assessment area(s);
    (C) An adequate geographic distribution of loans in its 
assessment area(s);
    (D) An adequate distribution, particularly in its assessment 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different sizes, given the product 
lines offered by the bank;
    (E) An adequate record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross 
annual revenues of $1 million or less, consistent with safe and 
sound operations;
    (F) Limited use of innovative or flexible lending practices in a 
safe and sound manner to address the credit needs of low- or 
moderate-income individuals or geographies; and
    (G) It has made an adequate level of community development 
loans.
    (iv) Needs to improve. The OCC rates a bank's lending 
performance ``needs to improve'' if, in general, it demonstrates:
    (A) Poor responsiveness to credit needs in its assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in 
its assessment area(s);
    (B) A small percentage of its loans are made in its assessment 
area(s);
    (C) A poor geographic distribution of loans, particularly to 
low- or moderate-income geographies, in its assessment area(s);
    (D) A poor distribution, particularly in its assessment area(s), 
of loans among individuals of different income levels and businesses 
(including farms) of different sizes, given the product lines 
offered by the bank;
    (E) A poor record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross 
annual revenues of $1 million or less, consistent with safe and 
sound operations;
    (F) Little use of innovative or flexible lending practices in a 
safe and sound manner to address the credit needs of low- or 
moderate-income individuals or geographies; and
    (G) It has made a low level of community development loans.
    (v) Substantial noncompliance. The OCC rates 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 assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in 
its assessment area(s);
    (B) A very small percentage of its loans are made in its 
assessment area(s);
    (C) A very poor geographic distribution of loans, particularly 
to low- or moderate-income geographies, in its assessment area(s);
    (D) A very poor distribution, particularly in its assessment 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different sizes, given the product 
lines offered by the bank;
    (E) A very poor record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross 
annual revenues of $1 million or less, consistent with safe and 
sound operations;
    (F) No use of innovative or flexible lending practices in a safe 
and sound manner to address the credit needs of low- or moderate-
income individuals or geographies; and
    (G) It has made few, if any, community development loans.
    (2) Investment performance rating. The OCC assigns each bank's 
investment performance one of the five following ratings.
    (i) Outstanding. The OCC rates a bank's investment performance 
``outstanding'' if, in general, it demonstrates:
    (A) An excellent level of qualified investments, particularly 
those that are not routinely provided by private investors, often in 
a leadership position;
    (B) Extensive use of innovative or complex qualified 
investments; and
    (C) Excellent responsiveness to credit and community development 
needs.
    (ii) High satisfactory. The OCC rates a bank's investment 
performance ``high satisfactory'' if, in general, it demonstrates:
    (A) A significant level of qualified investments, particularly 
those that are not routinely provided by private investors, 
occasionally in a leadership position;
    (B) Significant use of innovative or complex qualified 
investments; and
    (C) Good responsiveness to credit and community development 
needs.
    (iii) Low satisfactory. The OCC rates a bank's investment 
performance ``low satisfactory'' if, in general, it demonstrates:
    (A) An adequate level of qualified investments, particularly 
those that are not routinely provided by private investors, although 
rarely in a leadership position;
    (B) Occasional use of innovative or complex qualified 
investments; and
    (C) Adequate responsiveness to credit and community development 
needs.
    (iv) Needs to improve. The OCC rates a bank's investment 
performance ``needs to improve'' if, in general, it demonstrates:

[[Page 34820]]

    (A) A poor level of qualified investments, particularly those 
that are not routinely provided by private investors;
    (B) Rare use of innovative or complex qualified investments; and
    (C) Poor responsiveness to credit and community development 
needs.
    (v) Substantial noncompliance. The OCC rates a bank's investment 
performance as being in ``substantial noncompliance'' if, in 
general, it demonstrates:
    (A) Few, if any, qualified investments, particularly those that 
are not routinely provided by private investors;
    (B) No use of innovative or complex qualified investments; and
    (C) Very poor responsiveness to credit and community development 
needs.
    (3) Service performance rating. The OCC assigns each bank's 
service performance one of the five following ratings.
    (i) Outstanding. The OCC rates a bank's service performance 
``outstanding'' if, in general, the bank demonstrates:
    (A) Its service delivery systems are readily accessible to 
geographies and individuals of different income levels in its 
assessment area(s);
    (B) To the extent changes have been made, its record of opening 
and closing branches has improved the accessibility of its delivery 
systems, particularly in low- or moderate-income geographies or to 
low- or moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) 
are tailored to the convenience and needs of its assessment 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 rates a bank's service 
performance ``high satisfactory'' if, in general, the bank 
demonstrates:
    (A) Its service delivery systems are accessible to geographies 
and individuals of different income levels in its assessment 
area(s);
    (B) To the extent changes have been made, its record of opening 
and closing branches has not adversely affected the accessibility of 
its delivery systems, particularly in low- and moderate-income 
geographies and to low- and moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) 
do not vary in a way that inconveniences its assessment 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 rates a bank's service 
performance ``low satisfactory'' if, in general, the bank 
demonstrates:
    (A) Its service delivery systems are reasonably accessible to 
geographies and individuals of different income levels in its 
assessment area(s);
    (B) To the extent changes have been made, its record of opening 
and closing branches has 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) Its services (including, where appropriate, business hours) 
do not vary in a way that inconveniences its assessment 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 rates a bank's service 
performance ``needs to improve'' if, in general, the bank 
demonstrates:
    (A) Its service delivery systems are unreasonably inaccessible 
to portions of its assessment area(s), particularly to low- or 
moderate-income geographies or to low- or moderate-income 
individuals;
    (B) To the extent changes have been made, its record of opening 
and closing branches has adversely affected the accessibility its 
delivery systems, particularly in low- or moderate-income 
geographies or to low- or moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) 
vary in a way that inconveniences its assessment 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 rates a bank's service 
performance as being in ``substantial noncompliance'' if, in 
general, the bank demonstrates:
    (A) Its service delivery systems are unreasonably inaccessible 
to significant portions of its assessment area(s), particularly to 
low- or moderate-income geographies or to low- or moderate-income 
individuals;
    (B) To the extent changes have been made, its record of opening 
and closing branches 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) Its services (including, where appropriate, business hours) 
vary in a way that significantly inconveniences its assessment 
area(s), particularly low- or moderate-income geographies or low- or 
moderate-income individuals; and
    (D) It provides few, if any, community development services.
    (c) Wholesale or limited purpose banks. The OCC assigns each 
wholesale or limited purpose bank's community development 
performance one of the four following ratings.
    (1) Outstanding. The OCC rates a wholesale or limited purpose 
bank's community development performance ``outstanding'' if, in 
general, it demonstrates:
    (i) A high level of community development loans, community 
development services, or qualified investments, particularly 
investments that are not routinely provided by private investors;
    (ii) Extensive use of innovative or complex qualified 
investments, community development loans, or community development 
services; and
    (iii) Excellent responsiveness to credit and community 
development needs in its assessment area(s).
    (2) Satisfactory. The OCC rates a wholesale or limited purpose 
bank's community development performance ``satisfactory'' if, in 
general, it demonstrates:
    (i) An adequate level of community development loans, community 
development services, or qualified investments, particularly 
investments that are not routinely provided by private investors;
    (ii) Occasional use of innovative or complex qualified 
investments, community development loans, or community development 
services; and
    (iii) Adequate responsiveness to credit and community 
development needs in its assessment area(s).
    (3) Needs to improve. The OCC rates a wholesale or limited 
purpose bank's community development performance as ``needs to 
improve'' if, in general, it demonstrates:
    (i) A poor level of community development loans, community 
development services, or qualified investments, particularly 
investments that are not routinely provided by private investors;
    (ii) Rare use of innovative or complex qualified investments, 
community development loans, or community development services; and
    (iii) Poor responsiveness to credit and community development 
needs in its assessment area(s).
    (4) Substantial noncompliance. The OCC rates a wholesale or 
limited purpose bank's community development performance in 
``substantial noncompliance'' if, in general, it demonstrates:
    (i) Few, if any, community development loans, community 
development services, or qualified investments, particularly 
investments that are not routinely provided by private investors;
    (ii) No use of innovative or complex qualified investments, 
community development loans, or community development services; and
    (iii) Very poor responsiveness to credit and community 
development needs in its assessment area(s).
    (d) Banks evaluated under the small bank performance standards--
(1) Lending test ratings. (i) Eligibility for a satisfactory lending 
test rating. The OCC rates a small bank's lending performance 
``satisfactory'' if, in general, the bank demonstrates:
    (A) A reasonable loan-to-deposit ratio (considering seasonal 
variations) given the bank's size, financial condition, the credit 
needs of its assessment area(s), and taking into account, as 
appropriate, other lending-related activities such as loan 
originations for sale to the secondary markets and community 
development loans and qualified investments;
    (B) A majority of its loans and, as appropriate, other lending-
related activities, are in its assessment area;
    (C) 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

[[Page 34821]]

different sizes that is reasonable given the demographics of the 
bank's assessment area(s);
    (D) A record of taking appropriate action, when warranted, in 
response to written complaints, if any, about the bank's performance 
in helping to meet the credit needs of its assessment area(s); and
    (E) A reasonable geographic distribution of loans given the 
bank's assessment area(s).
    (ii) Eligibility for an ``outstanding'' lending test 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 a lending test rating of 
``outstanding.''
    (iii) Needs to improve or substantial noncompliance ratings. A 
small bank may also receive a lending test rating of ``needs to 
improve'' or ``substantial noncompliance'' depending on the degree 
to which its performance has failed to meet the standard for a 
``satisfactory'' rating.
    (2) Community development test ratings for intermediate small 
banks--(i) Eligibility for a satisfactory community development test 
rating. The OCC rates an intermediate small bank's community 
development performance ``satisfactory'' if the bank demonstrates 
adequate responsiveness to the community development needs of its 
assessment area(s) through community development loans, qualified 
investments, and community development services. The adequacy of the 
bank's response will depend on its capacity for such community 
development activities, its assessment area's need for such 
community development activities, and the availability of such 
opportunities for community development in the bank's assessment 
area(s).
    (ii) Eligibility for an outstanding community development test 
rating. The OCC rates an intermediate small bank's community 
development performance ``outstanding'' if the bank demonstrates 
excellent responsiveness to community development needs in its 
assessment area(s) through community development loans, qualified 
investments, and community development services, as appropriate, 
considering the bank's capacity and the need and availability of 
such opportunities for community development in the bank's 
assessment area(s).
    (iii) Needs to improve or substantial noncompliance ratings. An 
intermediate small bank may also receive a community development 
test 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.
    (3) Overall rating--(i) Eligibility for a satisfactory overall 
rating. No intermediate small bank may receive an assigned overall 
rating of ``satisfactory'' unless it receives a rating of at least 
``satisfactory'' on both the lending test and the community 
development test.
    (ii) Eligibility for an outstanding overall rating. (A) An 
intermediate small bank that receives an ``outstanding'' rating on 
one test and at least ``satisfactory'' on the other test may receive 
an assigned overall rating of ``outstanding.''
    (B) A small bank that is not an intermediate small bank that 
meets each of the standards for a ``satisfactory'' rating under the 
lending test and exceeds some or all of those standards may warrant 
consideration for an overall rating of ``outstanding.'' In assessing 
whether a bank's performance is ``outstanding,'' the OCC considers 
the extent to which the bank exceeds each of the performance 
standards for a ``satisfactory'' rating and its performance in 
making qualified investments and its performance in providing 
branches and other services and delivery systems that enhance credit 
availability in its assessment area(s).
    (iii) Needs to improve or substantial noncompliance overall 
ratings. A small bank may also 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 approves as ``satisfactory'' measurable goals that 
adequately help to meet the credit needs of the bank's assessment 
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 will approve those goals as 
``outstanding.''
    (3) Rating. The OCC assesses 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 will 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 will rate the bank's performance under the plan as 
``outstanding.''
    (iii) If the bank fails to meet substantially its plan goals for 
a satisfactory rating, the OCC will rate the bank as either ``needs 
to improve'' or ``substantial noncompliance,'' depending on the 
extent to which it falls short of its plan goals, unless the bank 
elected in its plan to be rated otherwise, as provided in Sec.  
25.27(f)(4).

Appendix B to Part 25--CRA Notice

    (a) Notice for main offices and, if an interstate bank, one 
branch office in each state.

Community Reinvestment Act Notice

    Under the Federal Community Reinvestment Act (CRA), the 
Comptroller of the Currency evaluates our record of helping to meet 
the credit needs of this community consistent with safe and sound 
operations. The Comptroller also takes this record into account when 
deciding on certain applications submitted by us.
    Your involvement is encouraged.
    You are entitled to certain information about our operations and 
our performance under the CRA, including, for example, information 
about our branches, such as their location and services provided at 
them; the public section of our most recent CRA Performance 
Evaluation, prepared by the Comptroller; and comments received from 
the public relating to our performance in helping to meet community 
credit needs, as well as our responses to those comments. You may 
review this information today.
    At least 30 days before the beginning of each quarter, the 
Comptroller publishes a nationwide list of the banks that are 
scheduled for CRA examination in that quarter. This list is 
available from the Deputy Comptroller (address). You may send 
written comments about our performance in helping to meet community 
credit needs to (name and address of official at bank) and 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 (title of responsible 
official), Federal Reserve Bank of _________ (address) an 
announcement of applications covered by the CRA filed by bank 
holding companies.
    (b) Notice for branch offices.

Community Reinvestment Act Notice

    Under the Federal Community Reinvestment Act (CRA), the 
Comptroller of the Currency evaluates our record of helping to meet 
the credit needs of this community consistent with safe and sound 
operations. The Comptroller also takes this record into account when 
deciding on certain applications submitted by us.
    Your involvement is encouraged.
    You are entitled to certain information about our operations and 
our performance under the CRA. You may review today the public 
section of our most recent CRA evaluation, prepared by the 
Comptroller, and a list of services provided at this branch. You may 
also have access to the following additional information, which we 
will make available to you at this branch within five calendar days 
after you make a request to us: (1) A map showing the assessment 
area containing this branch, which is the area in which the 
Comptroller evaluates our CRA performance in this community; (2) 
information about our branches in this assessment area; (3) a list 
of services we provide at those locations; (4) data on our lending 
performance in this assessment area; and (5) copies of all written 
comments received by us that specifically relate to our CRA 
performance in this assessment area, and any responses we have made 
to those comments. If we are operating under an approved strategic 
plan, you may also have access to a copy of the plan.
    [If you would like to review information about our CRA 
performance in other communities served by us, the public file for 
our entire bank is available at (name of office located in state), 
located at (address).]
    At least 30 days before the beginning of each quarter, the 
Comptroller publishes a

[[Page 34822]]

nationwide list of the banks that are scheduled for CRA examination 
in that quarter. This list is available from the Deputy Comptroller 
(address). You may send written comments about our performance in 
helping to meet community credit needs to (name and address of 
official at bank) and 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 (title of responsible 
official), Federal Reserve Bank of _________ (address) an 
announcement of applications covered by the CRA filed by bank 
holding companies

PART 195--COMMUNITY REINVESTMENT

Subpart A--General


Sec.  195.11  Authority, purposes, and scope.

    (a) Authority. This part is 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, and 4, as added, of the Home Owners' Loan Act 
of 1933 (12 U.S.C. 1462a, 1463, and 1464); and sections 4, 6, and 
18(c), as amended of the Federal Deposit Insurance Act (12 U.S.C. 1814, 
1816, 1828(c)).
    (b) Purposes. In enacting the CRA, the Congress required each 
appropriate Federal financial supervisory agency to assess an 
institution's record of helping to meet the credit needs of the local 
communities in which the institution is chartered, consistent with the 
safe and sound operation of the institution, and to take this record 
into account in the agency's evaluation of an application for a deposit 
facility by the institution. This part is intended to carry out the 
purposes of the CRA by:
    (1) Establishing the framework and criteria by which the 
appropriate Federal banking agency assesses a savings association's 
record of helping to meet the credit needs of its entire community, 
including low- and moderate-income neighborhoods, consistent with the 
safe and sound operation of the savings association; and
    (2) Providing that the appropriate Federal banking agency takes 
that record into account in considering certain applications.
    (c) Scope--(1) General. This part applies to all savings 
associations except as provided in paragraph (c)(2) of this section.
    (2) Certain special purpose savings associations. This part does 
not apply to special purpose savings associations that do not perform 
commercial or retail banking services by granting credit to the public 
in the ordinary course of business, other than as incident to their 
specialized operations. These associations include banker's banks, as 
defined in 12 U.S.C. 24 (Seventh), and associations that engage only in 
one or more of the following activities: Providing cash management 
controlled disbursement services or serving as correspondent 
associations, trust companies, or clearing agents.


Sec.  195.12  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. The term ``control'' has 
the meaning given to that term in 12 U.S.C. 1841(a)(2), and a company 
is under common control with another company if both companies are 
directly or indirectly controlled by the same company.
    (b) Area median income means:
    (1) The median family income for the MSA, if a person or geography 
is located in an MSA, or for the metropolitan division, if a person or 
geography is located in an MSA that has been subdivided into 
metropolitan divisions; or
    (2) The statewide nonmetropolitan median family income, if a person 
or geography is located outside an MSA.
    (c) Assessment area means a geographic area delineated in 
accordance with Sec.  195.41.
    (d) Automated teller machine (ATM) means an automated, unstaffed 
banking facility owned or operated by, or operated exclusively for, the 
savings association at which deposits are received, cash dispersed, or 
money lent.
    (e) [Reserved]
    (f) Branch means a staffed banking facility authorized as a branch, 
whether shared or unshared, including, for example, a mini-branch in a 
grocery store or a branch operated in conjunction with any other local 
business or nonprofit organization.
    (g) Community development means:
    (1) Affordable housing (including multifamily rental housing) for 
low or moderate-income individuals;
    (2) Community services targeted to low- or moderate-income 
individuals;
    (3) Activities that promote economic development by financing 
businesses or farms that meet the size eligibility standards of the 
Small Business Administration's Development Company or Small Business 
Investment Company programs (13 CFR 121.301) or have gross annual 
revenues of $1 million or less; or
    (4) Activities that revitalize or stabilize--
    (i) Low- or moderate-income geographies;
    (ii) Designated disaster areas; or
    (iii) Distressed or underserved, nonmetropolitan middle-income 
geographies designated by the appropriate Federal banking agency based 
on--
    (A) Rates of poverty, unemployment, and population loss; or
    (B) Population size, density, and dispersion. Activities revitalize 
and stabilize geographies designated based on population size, density, 
and dispersion if they help to meet essential community needs, 
including needs of low- and moderate-income individuals.
    (h) Community development loan means a loan that:
    (1) Has as its primary purpose community development; and
    (2) Except in the case of a wholesale or limited purpose savings 
association:
    (i) Has not been reported or collected by the savings association 
or an affiliate for consideration in the savings association's 
assessment as a home mortgage, small business, small farm, or consumer 
loan, unless the loan is for a multifamily dwelling (as defined in 
Sec.  1003.2(n) of this title); and
    (ii) Benefits the savings association's assessment area(s) or a 
broader statewide or regional area that includes the savings 
association's assessment area(s).
    (i) Community development service means a service that:
    (1) Has as its primary purpose community development;
    (2) Is related to the provision of financial services; and
    (3) Has not been considered in the evaluation of the savings 
association's retail banking services under Sec.  195.24(d).
    (j) Consumer loan means a loan to one or more individuals for 
household, family, or other personal expenditures. A consumer loan does 
not include a home mortgage, small business, or small farm loan. 
Consumer loans include the following categories of loans:
    (1) Motor vehicle loan, which is a consumer loan extended for the 
purchase of and secured by a motor vehicle;
    (2) Credit card loan, which is a line of credit for household, 
family, or other personal expenditures that is accessed by a borrower's 
use of a ``credit card,'' as this term is defined in Sec.  1026.2 of 
this title;
    (3) Other secured consumer loan, which is a secured consumer loan 
that

[[Page 34823]]

is not included in one of the other categories of consumer loans; and
    (4) Other unsecured consumer loan, which is an unsecured consumer 
loan that is not included in one of the other categories of consumer 
loans.
    (k) Geography means a census tract delineated by the United States 
Bureau of the Census in the most recent decennial census.
    (l) Home mortgage loan means a closed-end mortgage loan or an open-
end line of credit as these terms are defined under Sec.  1003.2 of 
this title and that is not an excluded transaction under Sec.  
1003.3(c)(1) through (10) and (13) of this title.
    (m) Income level includes:
    (1) Low-income, which means an individual income that is less than 
50 percent of the area median income or a median family income that is 
less than 50 percent in the case of a geography.
    (2) Moderate-income, which means an individual income that is at 
least 50 percent and less than 80 percent of the area median income or 
a median family income that is at least 50 and less than 80 percent in 
the case of a geography.
    (3) Middle-income, which means an individual income that is at 
least 80 percent and less than 120 percent of the area median income or 
a median family income that is at least 80 and less than 120 percent in 
the case of a geography.
    (4) Upper-income, which means an individual income that is 120 
percent or more of the area median income or a median family income 
that is 120 percent or more in the case of a geography.
    (n) Limited purpose savings association means a savings association 
that offers only a narrow product line (such as credit card or motor 
vehicle loans) to a regional or broader market and for which a 
designation as a limited purpose savings association is in effect, in 
accordance with Sec.  195.25(b).
    (o) Loan location. A loan is located as follows:
    (1) A consumer loan is located in the geography where the borrower 
resides;
    (2) A home mortgage loan is located in the geography where the 
property to which the loan relates is located; and
    (3) A small business or small farm loan is located in the geography 
where the main business facility or farm is located or where the loan 
proceeds otherwise will be applied, as indicated by the borrower.
    (p) Loan production office means a staffed facility, other than a 
branch, that is open to the public and that provides lending-related 
services, such as loan information and applications.
    (q) Metropolitan division means a metropolitan division as defined 
by the Director of the Office of Management and Budget.
    (r) MSA means a metropolitan statistical area as defined by the 
Director of the Office of Management and Budget.
    (s) Nonmetropolitan area means any area that is not located in an 
MSA.
    (t) Qualified investment means a lawful investment, deposit, 
membership share, or grant that has as its primary purpose community 
development.
    (u) Small savings association--(1) Definition. Small savings 
association means a savings association that, as of December 31 of 
either of the prior two calendar years, had assets of less than $1.305 
billion. Intermediate small savings association means a small savings 
association with assets of at least $326 million as of December 31 of 
both of the prior two calendar years and less than $1.305 billion as of 
December 31 of either of the prior two calendar years.
    (2) Adjustment. The dollar figures in paragraph (u)(1) of this 
section shall be adjusted annually and published by the OCC based on 
the year-to-year change in the average of the Consumer Price Index for 
Urban Wage Earners and Clerical Workers, not seasonally adjusted, for 
each twelve-month period ending in November, with rounding to the 
nearest million.
    (v) Small business loan means a loan included in ``loans to small 
businesses'' as defined in the instructions for preparation of the 
Thrift Financial Report (TFR) or Consolidated Reports of Condition and 
Income (Call Report), as appropriate.
    (w) Small farm loan means a loan included in ``loans to small 
farms'' as defined in the instructions for preparation of the TFR or 
Call Report, as appropriate.
    (x) 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 for which a 
designation as a wholesale savings association is in effect, in 
accordance with Sec.  195.25(b).

Subpart B--Standards for Assessing Performance


Sec.  195.21  Performance tests, standards, and ratings, in general.

    (a) Performance tests and standards. The appropriate Federal 
banking agency assesses the CRA performance of a savings association in 
an examination as follows:
    (1) Lending, investment, and service tests. The appropriate Federal 
banking agency applies the lending, investment, and service tests, as 
provided in Sec. Sec.  195.22 through 195.24, in evaluating the 
performance of a savings association, except as provided in paragraphs 
(a)(2), (a)(3), and (a)(4) of this section.
    (2) Community development test for wholesale or limited purpose 
savings associations. The appropriate Federal banking agency applies 
the community development test for a wholesale or limited purpose 
savings association, as provided in Sec.  195.25, except as provided in 
paragraph (a)(4) of this section.
    (3) Small savings association performance standards. The 
appropriate Federal banking agency applies the small savings 
association performance standards as provided in Sec.  195.26 in 
evaluating the performance of a small savings association or a savings 
association that was a small savings association during the prior 
calendar year, unless the savings association elects to be assessed as 
provided in paragraphs (a)(1), (a)(2), or (a)(4) of this section. The 
savings association may elect to be assessed as provided in paragraph 
(a)(1) of this section only if it collects and reports the data 
required for other savings associations under Sec.  195.42.
    (4) Strategic plan. The appropriate Federal banking agency 
evaluates the performance of a savings association under a strategic 
plan if the savings association submits, and the appropriate Federal 
banking agency approves, a strategic plan as provided in Sec.  195.27.
    (b) Performance context. The appropriate Federal banking agency 
applies the tests and standards in paragraph (a) of this section and 
also considers whether to approve a proposed strategic plan in the 
context of:
    (1) Demographic data on median income levels, distribution of 
household income, nature of housing stock, housing costs, and other 
relevant data pertaining to a savings association's assessment area(s);
    (2) Any information about lending, investment, and service 
opportunities in the savings association's assessment area(s) 
maintained by the savings association or obtained from community 
organizations, state, local, and tribal governments, economic 
development agencies, or other sources;
    (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 savings association, the economic climate 
(national, regional, and local), safety

[[Page 34824]]

and soundness limitations, and any other factors that significantly 
affect the savings association's ability to provide lending, 
investments, or services in its assessment 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.  
195.43, and any written comments about the savings association's CRA 
performance submitted to the savings association or the appropriate 
Federal banking agency; and
    (7) Any other information deemed relevant by the appropriate 
Federal banking agency.
    (c) Assigned ratings. The appropriate Federal banking agency 
assigns to a savings association one of the following four ratings 
pursuant to Sec.  195.28 and appendix A of this part: ``outstanding''; 
``satisfactory''; ``needs to improve''; or ``substantial 
noncompliance,'' as provided in 12 U.S.C. 2906(b)(2). The rating 
assigned by the appropriate Federal banking agency reflects the savings 
association's record of helping to meet the credit needs of its entire 
community, including low- and moderate-income neighborhoods, consistent 
with the safe and sound operation of the savings association.
    (d) Safe and sound operations. This part and the CRA do not require 
a savings association to make loans or investments or to provide 
services that are inconsistent with safe and sound operations. To the 
contrary, the appropriate Federal banking agency anticipates savings 
associations can meet the standards of this part with safe and sound 
loans, investments, and services on which the savings associations 
expect to make a profit. Savings associations are permitted and 
encouraged to develop and apply flexible underwriting standards for 
loans that benefit low- or moderate-income geographies or individuals, 
only if consistent with safe and sound operations.
    (e) Low-cost education loans provided to low-income borrowers. In 
assessing and taking into account the record of a savings association 
under this part, the appropriate Federal banking agency considers, as a 
factor, low-cost education loans originated by the savings association 
to borrowers, particularly in its assessment area(s), who have an 
individual income that is less than 50 percent of the area median 
income. For purposes of this paragraph, ``low-cost education loans'' 
means any education loan, as defined in section 140(a)(7) of the Truth 
in Lending Act (15 U.S.C. 1650(a)(7)) (including a loan under a state 
or local education loan program), originated by the savings association 
for a student at an ``institution of higher education,'' as that term 
is generally defined in sections 101 and 102 of the Higher Education 
Act of 1965 (20 U.S.C. 1001 and 1002) and the implementing regulations 
published by the U.S. Department of Education, with interest rates and 
fees no greater than those of comparable education loans offered 
directly by the U.S. Department of Education. Such rates and fees are 
specified in section 455 of the Higher Education Act of 1965 (20 U.S.C. 
1087e).
    (f) Activities in cooperation with minority- or women-owned 
financial institutions and low-income credit unions. In assessing and 
taking into account the record of a nonminority-owned and nonwomen-
owned savings association under this part, the appropriate Federal 
banking agency considers as a factor capital investment, loan 
participation, and other ventures undertaken by the savings association 
in cooperation with minority- and women-owned financial institutions 
and low-income credit unions. Such activities must help meet the credit 
needs of local communities in which the minority- and women-owned 
financial institutions and low-income credit unions are chartered. To 
be considered, such activities need not also benefit the savings 
association's assessment area(s) or the broader statewide or regional 
area that includes the savings association's assessment area(s).


Sec.  195.22  Lending test.

    (a) Scope of test. (1) The lending test evaluates a savings 
association's record of helping to meet the credit needs of its 
assessment area(s) through its lending activities by considering a 
savings association's home mortgage, small business, small farm, and 
community development lending. If consumer lending constitutes a 
substantial majority of a savings association's business, the 
appropriate Federal banking agency will evaluate the savings 
association's consumer lending in one or more of the following 
categories: Motor vehicle, credit card, other secured, and other 
unsecured loans. In addition, at a savings association's option, the 
appropriate Federal banking agency will evaluate one or more categories 
of consumer lending, if the savings association has collected and 
maintained, as required in Sec.  195.42(c)(1), the data for each 
category that the savings association elects to have the appropriate 
Federal banking agency evaluate.
    (2) The appropriate Federal banking agency considers originations 
and purchases of loans. The appropriate Federal banking agency will 
also consider any other loan data the savings association may choose to 
provide, including data on loans outstanding, commitments and letters 
of credit.
    (3) A savings association may ask the appropriate Federal banking 
agency to consider loans originated or purchased by consortia in which 
the savings association participates or by third parties in which the 
savings association has invested only if the loans meet the definition 
of community development loans and only in accordance with paragraph 
(d) of this section. The appropriate Federal banking agency will not 
consider these loans under any criterion of the lending test except the 
community development lending criterion.
    (b) Performance criteria. The appropriate Federal banking agency 
evaluates a savings association's lending performance pursuant to the 
following criteria:
    (1) Lending activity. The number and amount of the savings 
association's home mortgage, small business, small farm, and consumer 
loans, if applicable, in the savings association's assessment area(s);
    (2) Geographic distribution. The geographic distribution of the 
savings association's home mortgage, small business, small farm, and 
consumer loans, if applicable, based on the loan location, including:
    (i) The proportion of the savings association's lending in the 
savings association's assessment area(s);
    (ii) The dispersion of lending in the savings association's 
assessment area(s); and
    (iii) The number and amount of loans in low-, moderate-, middle-, 
and upper-income geographies in the savings association's assessment 
area(s);
    (3) Borrower characteristics. The distribution, particularly in the 
savings association's assessment area(s), of the savings association's 
home mortgage, small business, small farm, and consumer loans, if 
applicable, based on borrower characteristics, including the number and 
amount of:
    (i) Home mortgage loans to low-, moderate-, middle-, and upper-
income individuals;
    (ii) Small business and small farm loans to businesses and farms 
with gross annual revenues of $1 million or less;
    (iii) Small business and small farm loans by loan amount at 
origination; and
    (iv) Consumer loans, if applicable, to low-, moderate-, middle-, 
and upper-income individuals;

[[Page 34825]]

    (4) Community development lending. The savings association's 
community development lending, including the number and amount of 
community development loans, and their complexity and innovativeness; 
and
    (5) Innovative or flexible lending practices. The savings 
association's use of innovative or flexible lending practices in a safe 
and sound manner to address the credit needs of low- or moderate-income 
individuals or geographies.
    (c) Affiliate lending. (1) At a savings association's option, the 
appropriate Federal banking agency will consider loans by an affiliate 
of the savings association, if the savings association provides data on 
the affiliate's loans pursuant to Sec.  195.42.
    (2) The appropriate Federal banking agency considers affiliate 
lending subject to the following constraints:
    (i) No affiliate may claim a loan origination or loan purchase if 
another institution claims the same loan origination or purchase; and
    (ii) If a savings association elects to have the appropriate 
Federal banking agency consider loans within a particular lending 
category made by one or more of the savings association's affiliates in 
a particular assessment area, the savings association shall elect to 
have the appropriate Federal banking agency consider, in accordance 
with paragraph (c)(1) of this section, all the loans within that 
lending category in that particular assessment area made by all of the 
savings association's affiliates.
    (3) The appropriate Federal banking agency does not consider 
affiliate lending in assessing a savings association's performance 
under paragraph (b)(2)(i) of this section.
    (d) Lending by a consortium or a third party. Community development 
loans originated or purchased by a consortium in which the savings 
association participates or by a third party in which the savings 
association has invested:
    (1) Will be considered, at the savings association's option, if the 
savings association reports the data pertaining to these loans under 
Sec.  195.42(b)(2); and
    (2) May be allocated among participants or investors, as they 
choose, for purposes of the lending test, except that no participant or 
investor:
    (i) May claim a loan origination or loan purchase if another 
participant or investor claims the same loan origination or purchase; 
or
    (ii) May claim loans accounting for more than its percentage share 
(based on the level of its participation or investment) of the total 
loans originated by the consortium or third party.
    (e) Lending performance rating. The appropriate Federal banking 
agency rates a savings association's lending performance as provided in 
appendix A of this part.


Sec.  195.23   Investment test.

    (a) Scope of test. The investment test evaluates a savings 
association's record of helping to meet the credit needs of its 
assessment area(s) through qualified investments that benefit its 
assessment area(s) or a broader statewide or regional area that 
includes the savings association's assessment area(s).
    (b) Exclusion. Activities considered under the lending or service 
tests may not be considered under the investment test.
    (c) Affiliate investment. At a savings association's option, the 
appropriate Federal banking agency will consider, in its assessment of 
a savings association's investment performance, a qualified investment 
made by an affiliate of the savings association, if the qualified 
investment is not claimed by any other institution.
    (d) Disposition of branch premises. Donating, selling on favorable 
terms, or making available on a rent-free basis a branch of the savings 
association that is located in a predominantly minority neighborhood to 
a minority depository institution or women's depository institution (as 
these terms are defined in 12 U.S.C. 2907(b)) will be considered as a 
qualified investment.
    (e) Performance criteria. The appropriate Federal banking agency 
evaluates the investment performance of a savings association pursuant 
to the following criteria:
    (1) The dollar amount of qualified investments;
    (2) The innovativeness or complexity of qualified investments;
    (3) The responsiveness of qualified investments to credit and 
community development needs; and
    (4) The degree to which the qualified investments are not routinely 
provided by private investors.
    (f) Investment performance rating. The appropriate Federal banking 
agency rates a savings association's investment performance as provided 
in appendix A of this part.


Sec.  195.24  Service test.

    (a) Scope of test. The service test evaluates a savings 
association's record of helping to meet the credit needs of its 
assessment area(s) by analyzing both the availability and effectiveness 
of a savings association's systems for delivering retail banking 
services and the extent and innovativeness of its community development 
services.
    (b) Area(s) benefitted. Community development services must benefit 
a savings association's assessment area(s) or a broader statewide or 
regional area that includes the savings association's assessment 
area(s).
    (c) Affiliate service. At a savings association's option, the 
appropriate Federal banking agency will consider, in its assessment of 
a savings association's service performance, a community development 
service provided by an affiliate of the savings association, if the 
community development service is not claimed by any other institution.
    (d) Performance criteria--retail banking services. The appropriate 
Federal banking agency evaluates the availability and effectiveness of 
a savings association's systems for delivering retail banking services, 
pursuant to the following criteria:
    (1) The current distribution of the savings association's branches 
among low-, moderate-, middle-, and upper-income geographies;
    (2) In the context of its current distribution of the savings 
association's branches, the savings association's record of opening and 
closing branches, particularly branches located in low- or moderate-
income geographies or primarily serving low- or moderate-income 
individuals;
    (3) The availability and effectiveness of alternative systems for 
delivering retail banking services (e.g., ATMs, ATMs not owned or 
operated by or exclusively for the savings association, banking by 
telephone or computer, loan production offices, and bank-at-work or 
bank-by-mail programs) in low- and moderate-income geographies and to 
low- and moderate-income individuals; and
    (4) The range of services provided in low-, moderate-, middle-, and 
upper-income geographies and the degree to which the services are 
tailored to meet the needs of those geographies.
    (e) Performance criteria--community development services. The 
appropriate Federal banking agency evaluates community development 
services pursuant to the following criteria:
    (1) The extent to which the savings association provides community 
development services; and
    (2) The innovativeness and responsiveness of community development 
services.
    (f) Service performance rating. The appropriate Federal banking 
agency rates a savings association's service performance as provided in 
appendix A of this part.

[[Page 34826]]

Sec.  195.25  Community development test for wholesale or limited 
purpose savings associations.

    (a) Scope of test. The appropriate Federal banking agency assesses 
a wholesale or limited purpose savings association's record of helping 
to meet the credit needs of its assessment area(s) under the community 
development test through its community development lending, qualified 
investments, or community development services.
    (b) Designation as a wholesale or limited purpose savings 
association. In order to receive a designation as a wholesale or 
limited purpose savings association, a savings association shall file a 
request, in writing, with the appropriate Federal banking agency, at 
least three months prior to the proposed effective date of the 
designation. If the appropriate Federal banking agency approves the 
designation, it remains in effect until the savings association 
requests revocation of the designation or until one year after the 
appropriate Federal banking agency notifies the savings association 
that the appropriate Federal banking agency has revoked the designation 
on its own initiative.
    (c) Performance criteria. The appropriate Federal banking agency 
evaluates the community development performance of a wholesale or 
limited purpose savings association pursuant to the following criteria:
    (1) The number and amount of community development loans (including 
originations and purchases of loans and other community development 
loan data provided by the savings association, such as data on loans 
outstanding, commitments, and letters of credit), qualified 
investments, or community development services;
    (2) The use of innovative or complex qualified investments, 
community development loans, or community development services and the 
extent to which the investments are not routinely provided by private 
investors; and
    (3) The savings association's responsiveness to credit and 
community development needs.
    (d) Indirect activities. At a savings association's option, the 
appropriate Federal banking agency will consider in its community 
development performance assessment:
    (1) Qualified investments or community development services 
provided by an affiliate of the savings association, if the investments 
or services are not claimed by any other institution; and
    (2) Community development lending by affiliates, consortia and 
third parties, subject to the requirements and limitations in Sec.  
195.22(c) and (d).
    (e) Benefit to assessment area(s)--(1) Benefit inside assessment 
area(s). The appropriate Federal banking agency considers all qualified 
investments, community development loans, and community development 
services that benefit areas within the savings association's assessment 
area(s) or a broader statewide or regional area that includes the 
savings association's assessment area(s).
    (2) Benefit outside assessment area(s). The appropriate Federal 
banking agency considers the qualified investments, community 
development loans, and community development services that benefit 
areas outside the savings association's assessment area(s), if the 
savings association has adequately addressed the needs of its 
assessment area(s).
    (f) Community development performance rating. The appropriate 
Federal banking agency rates a savings association's community 
development performance as provided in appendix A of this part.


Sec.  195.26   Small savings association performance standards.

    (a) Performance criteria--(1) Small savings associations that are 
not intermediate small savings associations. The appropriate Federal 
banking agency evaluates the record of a small savings association that 
is not, or that was not during the prior calendar year, an intermediate 
small savings association, of helping to meet the credit needs of its 
assessment area(s) pursuant to the criteria set forth in paragraph (b) 
of this section.
    (2) Intermediate small savings associations. The appropriate 
Federal banking agency evaluates the record of a small savings 
association that is, or that was during the prior calendar year, an 
intermediate small savings association, of helping to meet the credit 
needs of its assessment area(s) pursuant to the criteria set forth in 
paragraphs (b) and (c) of this section.
    (b) Lending test. A small savings association's lending performance 
is evaluated 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, community development loans, or qualified investments;
    (2) The percentage of loans and, as appropriate, other lending-
related activities located in the savings association's assessment 
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; 
and
    (5) The savings association's record of taking action, if 
warranted, in response to written complaints about its performance in 
helping to meet credit needs in its assessment area(s).
    (c) Community development test. An intermediate small savings 
association's community development performance also is evaluated 
pursuant to the following criteria:
    (1) The number and amount of community development loans;
    (2) The number and amount of qualified investments;
    (3) The extent to which the savings association provides community 
development services; and
    (4) The savings association's responsiveness through such 
activities to community development lending, investment, and services 
needs.
    (d) Small savings association performance rating. The appropriate 
Federal banking agency rates the performance of a savings association 
evaluated under this section as provided in appendix A of this part.


Sec.  195.27  Strategic plan.

    (a) Alternative election. The appropriate Federal banking agency 
will assess a savings association's record of helping to meet the 
credit needs of its assessment area(s) under a strategic plan if:
    (1) The savings association has submitted the plan to the 
appropriate Federal banking agency as provided for in this section;
    (2) The appropriate Federal banking agency has approved the plan;
    (3) The plan is in effect; and
    (4) The savings association has been operating under an approved 
plan for at least one year.
    (b) Data reporting. The appropriate Federal banking agency's 
approval of a plan does not affect the savings association's 
obligation, if any, to report data as required by Sec.  195.42.
    (c) Plans in general--(1) Term. A plan may have a term of no more 
than five years, and any multi-year plan must include annual interim 
measurable goals under which the appropriate Federal banking agency 
will evaluate the savings association's performance.
    (2) Multiple assessment areas. A savings association with more than 
one assessment area may prepare a single plan for all of its assessment 
areas or one or more plans for one or more of its assessment areas.
    (3) Treatment of affiliates. Affiliated institutions may prepare a 
joint plan if

[[Page 34827]]

the plan provides measurable goals for each institution. Activities may 
be allocated among institutions at the institutions' option, provided 
that the same activities are not considered for more than one 
institution.
    (d) Public participation in plan development. Before submitting a 
plan to the appropriate Federal banking agency for approval, a savings 
association shall:
    (1) Informally seek suggestions from members of the public in its 
assessment area(s) covered by the plan while developing the plan;
    (2) Once the savings association has developed a plan, formally 
solicit public comment on the plan for at least 30 days by publishing 
notice in at least one newspaper of general circulation in each 
assessment area covered by the plan; and
    (3) During the period of formal public comment, make copies of the 
plan available for review by the public at no cost at all offices of 
the savings association in any assessment area covered by the plan and 
provide copies of the plan upon request for a reasonable fee to cover 
copying and mailing, if applicable.
    (e) Submission of plan. The savings association shall submit its 
plan to the appropriate Federal banking agency at least three months 
prior to the proposed effective date of the plan. The savings 
association shall also submit with its plan a description of its 
informal efforts to seek suggestions from members of the public, any 
written public comment received, and, if the plan was revised in light 
of the comment received, the initial plan as released for public 
comment.
    (f) Plan content--(1) Measurable goals. (i) A savings association 
shall specify in its plan measurable goals for helping to meet the 
credit needs of each assessment area covered by the plan, particularly 
the needs of low- and moderate-income geographies and low- and 
moderate-income individuals, through lending, investment, and services, 
as appropriate.
    (ii) A savings association shall address in its plan 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 assessment area(s), considering public comment and 
the savings association's capacity and constraints, product offerings, 
and business strategy.
    (2) Confidential information. A savings association may submit 
additional information to the appropriate Federal banking agency on a 
confidential basis, but the goals stated in the plan must be 
sufficiently specific to enable the public and the appropriate Federal 
banking agency to judge the merits of the plan.
    (3) Satisfactory and outstanding goals. A savings association shall 
specify in its plan measurable goals that constitute ``satisfactory'' 
performance. A plan may specify measurable goals that constitute 
``outstanding'' performance. If a savings association submits, and the 
appropriate Federal banking agency approves, both ``satisfactory'' and 
``outstanding'' performance goals, the appropriate Federal banking 
agency will consider the savings association eligible for an 
``outstanding'' performance rating.
    (4) Election if satisfactory goals not substantially met. A savings 
association may elect in its plan that, if the savings association 
fails to meet substantially its plan goals for a satisfactory rating, 
the appropriate Federal banking agency will evaluate the savings 
association's performance under the lending, investment, and service 
tests, the community development test, or the small savings association 
performance standards, as appropriate.
    (g) Plan approval--(1) Timing. The appropriate Federal banking 
agency will act upon a plan within 60 calendar days after it receives 
the complete plan and other material required under paragraph (e) of 
this section. If the appropriate Federal banking agency fails to act 
within this time period, the plan shall be deemed approved unless the 
appropriate Federal banking agency extends the review period for good 
cause.
    (2) Public participation. In evaluating the plan's goals, the 
appropriate Federal banking agency considers the public's involvement 
in formulating the plan, written public comment on the plan, and any 
response by the savings association to public comment on the plan.
    (3) Criteria for evaluating plan. The appropriate Federal banking 
agency evaluates a plan's measurable goals using the following 
criteria, as appropriate:
    (i) The extent and breadth of lending or lending-related 
activities, including, as appropriate, the distribution of loans among 
different geographies, businesses and farms of different sizes, and 
individuals of different income levels, the extent of community 
development lending, and the use of innovative or flexible lending 
practices to address credit needs;
    (ii) The amount and innovativeness, complexity, and responsiveness 
of the savings association's qualified investments; and
    (iii) The availability and effectiveness of the savings 
association's systems for delivering retail banking services and the 
extent and innovativeness of the savings association's community 
development services.
    (h) Plan amendment. During the term of a plan, a savings 
association may request the appropriate Federal banking agency to 
approve an amendment to the plan on grounds that there has been a 
material change in circumstances. The savings association shall develop 
an amendment to a previously approved plan in accordance with the 
public participation requirements of paragraph (d) of this section.
    (i) Plan assessment. The appropriate Federal banking agency 
approves the goals and assesses performance under a plan as provided 
for in appendix A of this part.


Sec.  195.28   Assigned ratings.

    (a) Ratings in general. Subject to paragraphs (b) and (c) of this 
section, the appropriate Federal banking agency assigns 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 
performance standards, or an approved strategic plan, as applicable.
    (b) Lending, investment, and service tests. The appropriate Federal 
banking agency assigns a rating for a savings association assessed 
under the lending, investment, and service tests in accordance with the 
following principles:
    (1) A savings association that receives an ``outstanding'' rating 
on the lending test receives an assigned rating of at least 
``satisfactory'';
    (2) 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 receives an assigned 
rating of ``outstanding''; and
    (3) No savings association may receive an assigned rating of 
``satisfactory'' or higher unless it receives a rating of at least 
``low satisfactory'' on the lending test.
    (c) Effect of evidence of discriminatory or other illegal credit 
practices. (1) The appropriate Federal banking agency's evaluation of a 
savings

[[Page 34828]]

association's CRA performance is adversely affected by evidence of 
discriminatory or other illegal credit practices in any geography by 
the savings association or in any assessment area by any affiliate 
whose loans have been considered as part of the savings association's 
lending performance. In connection with any type of lending activity 
described in Sec.  195.22(a), evidence of discriminatory or other 
credit practices that violate an applicable law, rule, or regulation 
includes, but is not limited to:
    (i) Discrimination against applicants on a prohibited basis in 
violation, for example, of the Equal Credit Opportunity Act or the Fair 
Housing Act;
    (ii) Violations of the Home Ownership and Equity Protection Act;
    (iii) Violations of section 5 of the Federal Trade Commission Act;
    (iv) Violations of section 8 of the Real Estate Settlement 
Procedures Act; and
    (v) Violations of the Truth in Lending Act provisions regarding a 
consumer's right of rescission.
    (2) In determining the effect of evidence of practices described in 
paragraph (c)(1) of this section on the savings association's assigned 
rating, the appropriate Federal banking agency considers the nature, 
extent, and strength of the evidence of the practices; the policies and 
procedures that the savings association (or affiliate, as applicable) 
has in place to prevent the practices; any corrective action that the 
savings association (or affiliate, as applicable) has taken or has 
committed to take, including voluntary corrective action resulting from 
self-assessment; and any other relevant information.


Sec.  195.29  Effect of CRA performance on applications.

    (a) CRA performance. Among other factors, the appropriate Federal 
banking agency takes into account the record of performance under the 
CRA of each applicant savings association, and for applications under 
section 10(e) of the Home Owners' Loan Act (12 U.S.C. 1467a(e)), of 
each proposed subsidiary savings association, in considering an 
application for:
    (1) The establishment of a domestic branch or other facility that 
would be authorized to take deposits;
    (2) The relocation of the main office or a branch;
    (3) The merger or consolidation with or the acquisition of the 
assets or assumption of the liabilities of an insured depository 
institution requiring appropriate Federal banking agency approval under 
the Bank Merger Act (12 U.S.C. 1828(c));
    (4) A Federal thrift charter; and
    (5) Acquisitions subject to section 10(e) of the Home Owners' Loan 
Act (12 U.S.C. 1467a(e)).
    (b) Charter application. An applicant for a Federal thrift charter 
shall submit with its application a description of how it will meet its 
CRA objectives. The appropriate Federal banking agency takes the 
description into account in considering the application and may deny or 
condition approval on that basis.
    (c) Interested parties. The appropriate Federal banking agency 
takes into account any views expressed by interested parties that are 
submitted in accordance with the applicable comment procedures in 
considering CRA performance in an application listed in paragraphs (a) 
and (b) of this section.
    (d) Denial or conditional approval of application. A savings 
association's record of performance may be the basis for denying or 
conditioning approval of an application listed in paragraph (a) of this 
section.
    (e) Insured depository institution. For purposes of this section, 
the term ``insured depository institution'' has the meaning given to 
that term in 12 U.S.C. 1813.

Subpart C--Records, Reporting, and Disclosure Requirements


Sec.  195.41  Assessment area delineation.

    (a) In general. A savings association shall delineate one or more 
assessment areas within which the appropriate Federal banking agency 
evaluates the savings association's record of helping to meet the 
credit needs of its community. The appropriate Federal banking agency 
does not evaluate the savings association's delineation of its 
assessment area(s) as a separate performance criterion, but the 
appropriate Federal banking agency reviews the delineation for 
compliance with the requirements of this section.
    (b) Geographic area(s) for wholesale or limited purpose savings 
associations. The assessment area(s) for a wholesale or limited purpose 
savings association must consist generally of one or more MSAs or 
metropolitan divisions (using the MSA or metropolitan division 
boundaries that were in effect as of January 1 of the calendar year in 
which the delineation is made) or one or more contiguous political 
subdivisions, such as counties, cities, or towns, in which the savings 
association has its main office, branches, and deposit-taking ATMs.
    (c) Geographic area(s) for other savings associations. The 
assessment area(s) for a savings association other than a wholesale or 
limited purpose savings association must:
    (1) Consist generally of one or more MSAs or metropolitan divisions 
(using the MSA or metropolitan division boundaries that were in effect 
as of January 1 of the calendar year in which the delineation is made) 
or one or more contiguous political subdivisions, such as counties, 
cities, or towns; and
    (2) Include the geographies in which the savings association has 
its main office, its branches, and its deposit-taking ATMs, as well as 
the surrounding geographies in which the savings association has 
originated or purchased a substantial portion of its loans (including 
home mortgage loans, small business and small farm loans, and any other 
loans the savings association chooses, such as those consumer loans on 
which the savings association elects to have its performance assessed).
    (d) Adjustments to geographic area(s). A savings association may 
adjust the boundaries of its assessment area(s) to include only the 
portion of a political subdivision that it reasonably can be expected 
to serve. An adjustment is particularly appropriate in the case of an 
assessment area that otherwise would be extremely large, of unusual 
configuration, or divided by significant geographic barriers.
    (e) Limitations on the delineation of an assessment area. Each 
savings association's assessment area(s):
    (1) Must consist only of whole geographies;
    (2) May not reflect illegal discrimination;
    (3) May not arbitrarily exclude low- or moderate-income 
geographies, taking into account the savings association's size and 
financial condition; and
    (4) May not extend substantially beyond an MSA boundary or beyond a 
state boundary unless the assessment area is located in a multistate 
MSA. If a savings association serves a geographic area that extends 
substantially beyond a state boundary, the savings association shall 
delineate separate assessment areas for the areas in each state. If a 
savings association serves a geographic area that extends substantially 
beyond an MSA boundary, the savings association shall delineate 
separate assessment areas for the areas inside and outside the MSA.
    (f) Savings associations serving military personnel. 
Notwithstanding the requirements 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

[[Page 34829]]

its entire deposit customer base as its assessment area.
    (g) Use of assessment area(s). The appropriate Federal banking 
agency uses the assessment area(s) delineated by a savings association 
in its evaluation of the savings association's CRA performance unless 
the appropriate Federal banking agency determines that the assessment 
area(s) do not comply with the requirements of this section.


Sec.  195.42   Data collection, reporting, and disclosure.

    (a) Loan information required to be collected and maintained. A 
savings association, except a small savings association, shall collect, 
and maintain in machine readable form (as prescribed by the appropriate 
Federal banking agency) until the completion of its next CRA 
examination, the following data for each small business or small farm 
loan originated or purchased by the savings association:
    (1) A unique number or alpha-numeric symbol that can be used to 
identify the relevant loan file;
    (2) The loan amount at origination;
    (3) The loan location; and
    (4) An indicator whether the loan was to a business or farm with 
gross annual revenues of $1 million or less.
    (b) Loan information required to be reported. A savings 
association, except a small savings association or a savings 
association that was a small savings association during the prior 
calendar year, shall report annually by March 1 to the appropriate 
Federal banking agency in machine readable form (as prescribed by the 
agency) the following data for the prior calendar year:
    (1) Small business and small farm loan data. For each geography in 
which the savings association originated or purchased a small business 
or small farm loan, the aggregate number and amount of loans:
    (i) With an amount at origination of $100,000 or less;
    (ii) With amount at origination of more than $100,000 but less than 
or equal to $250,000;
    (iii) With an amount at origination of more than $250,000; and
    (iv) To businesses and farms with gross annual revenues of $1 
million or less (using the revenues that the savings association 
considered in making its credit decision);
    (2) Community development loan data. The aggregate number and 
aggregate amount of community development loans originated or 
purchased; and
    (3) Home mortgage loans. If the savings association is subject to 
reporting under part 1003 of this title, the location of each home 
mortgage loan application, origination, or purchase outside the MSAs in 
which the savings association has a home or branch office (or outside 
any MSA) in accordance with the requirements of part 1003 of this 
title.
    (c) Optional data collection and maintenance--(1) Consumer loans. A 
savings association may collect and maintain in machine readable form 
(as prescribed by the appropriate Federal banking agency) data for 
consumer loans originated or purchased by the savings association for 
consideration under the lending test. A savings association may 
maintain data for one or more of the following categories of consumer 
loans: Motor vehicle, credit card, other secured, and other unsecured. 
If the savings association maintains data for loans in a certain 
category, it shall maintain data for all loans originated or purchased 
within that category. The savings association shall maintain data 
separately for each category, including for each loan:
    (i) A unique number or alpha-numeric symbol that can be used to 
identify the relevant loan file;
    (ii) The loan amount at origination or purchase;
    (iii) The loan location; and
    (iv) The gross annual income of the borrower that the savings 
association considered in making its credit decision.
    (2) Other loan data. At its option, a savings association may 
provide other information concerning its lending performance, including 
additional loan distribution data.
    (d) Data on affiliate lending. A savings association that elects to 
have the appropriate Federal banking agency consider loans by an 
affiliate, for purposes of the lending or community development test or 
an approved strategic plan, shall collect, maintain, and report for 
those loans the data that the savings association would have collected, 
maintained, and reported pursuant to paragraphs (a), (b), and (c) of 
this section had the loans been originated or purchased by the savings 
association. For home mortgage loans, the savings association shall 
also be prepared to identify the home mortgage loans reported under 
part 1003 of this title by the affiliate.
    (e) Data on lending by a consortium or a third-party. A savings 
association that elects to have the appropriate Federal banking agency 
consider community development loans by a consortium or third party, 
for purposes of the lending or community development tests or an 
approved strategic plan, shall report for those loans the data that the 
savings association would have reported under paragraph (b)(2) of this 
section had the loans been originated or purchased by the savings 
association.
    (f) Small savings associations electing evaluation under the 
lending, investment, and service tests. A savings association that 
qualifies for evaluation under the small savings association 
performance standards but elects evaluation under the lending, 
investment, and service tests shall collect, maintain, and report the 
data required for other savings associations pursuant to paragraphs (a) 
and (b) of this section.
    (g) Assessment area data. A savings association, except a small 
savings association or a savings association that was a small savings 
association during the prior calendar year, shall collect and report to 
the appropriate Federal banking agency by March 1 of each year a list 
for each assessment area showing the geographies within the area.
    (h) CRA Disclosure Statement. The appropriate Federal banking 
agency prepares annually for each savings association that reports data 
pursuant to this section a CRA Disclosure Statement that contains, on a 
state-by-state basis:
    (1) For each county (and for each assessment area smaller than a 
county) with a population of 500,000 persons or fewer in which the 
savings association reported a small business or small farm loan:
    (i) The number and amount of small business and small farm loans 
reported as originated or purchased located in low-, moderate-, middle-
, and upper-income geographies;
    (ii) A list grouping each geography according to whether the 
geography is low-, moderate-, middle-, or upper-income;
    (iii) A list showing each geography in which the savings 
association reported a small business or small farm loan; and
    (iv) The number and amount of small business and small farm loans 
to businesses and farms with gross annual revenues of $1 million or 
less;
    (2) For each county (and for each assessment area smaller than a 
county) with a population in excess of 500,000 persons in which the 
savings association reported a small business or small farm loan:
    (i) The number and amount of small business and small farm loans 
reported as originated or purchased located in geographies with median 
income relative to the area median income of less than 10 percent, 10 
or more but less than 20 percent, 20 or more but less than 30 percent, 
30 or more but less than 40 percent, 40 or more but less

[[Page 34830]]

than 50 percent, 50 or more but less than 60 percent, 60 or more but 
less than 70 percent, 70 or more but less than 80 percent, 80 or more 
but less than 90 percent, 90 or more but less than 100 percent, 100 or 
more but less than 110 percent, 110 or more but less than 120 percent, 
and 120 percent or more;
    (ii) A list grouping each geography in the county or assessment 
area according to whether the median income in the geography relative 
to the area median income is less than 10 percent, 10 or more but less 
than 20 percent, 20 or more but less than 30 percent, 30 or more but 
less than 40 percent, 40 or more but less than 50 percent, 50 or more 
but less than 60 percent, 60 or more but less than 70 percent, 70 or 
more but less than 80 percent, 80 or more but less than 90 percent, 90 
or more but less than 100 percent, 100 or more but less than 110 
percent, 110 or more but less than 120 percent, and 120 percent or 
more;
    (iii) A list showing each geography in which the savings 
association reported a small business or small farm loan; and
    (iv) The number and amount of small business and small farm loans 
to businesses and farms with gross annual revenues of $1 million or 
less;
    (3) The number and amount of small business and small farm loans 
located inside each assessment area reported by the savings association 
and the number and amount of small business and small farm loans 
located outside the assessment area(s) reported by the savings 
association; and
    (4) The number and amount of community development loans reported 
as originated or purchased.
    (i) Aggregate disclosure statements. The appropriate Federal 
banking agency, in conjunction with the Board of Governors of the 
Federal Reserve System and the Federal Deposit Insurance Corporation or 
the OCC, as appropriate, prepares annually, for each MSA or 
metropolitan division (including an MSA or metropolitan division that 
crosses a state boundary) and the nonmetropolitan portion of each 
state, an aggregate disclosure statement of small business and small 
farm lending by all institutions subject to reporting under this part 
or parts 25, 228, or 345 of this title. These disclosure statements 
indicate, for each geography, the number and amount of all small 
business and small farm loans originated or purchased by reporting 
institutions, except that the appropriate Federal banking agency may 
adjust the form of the disclosure if necessary, because of special 
circumstances, to protect the privacy of a borrower or the competitive 
position of an institution.
    (j) Central data depositories. The appropriate Federal banking 
agency makes the aggregate disclosure statements, described in 
paragraph (i) of this section, and the individual savings association 
CRA Disclosure Statements, described in paragraph (h) of this section, 
available to the public at central data depositories. The appropriate 
Federal banking agency publishes a list of the depositories at which 
the statements are available.


Sec.  195.43  Content and availability of public file.

    (a) Information available to the public. A savings association 
shall maintain a public file that includes the following information:
    (1) All written comments received from the public for the current 
year and each of the prior two calendar years that specifically relate 
to the savings association's performance in helping to meet community 
credit needs, and any response to the comments by the savings 
association, if neither the comments nor the responses contain 
statements that reflect adversely on the good name or reputation of any 
persons other than the savings association or publication of which 
would violate specific provisions of law;
    (2) A copy of the public section of the savings association's most 
recent CRA Performance Evaluation prepared by the appropriate Federal 
banking agency. The savings association shall place this copy in the 
public file within 30 business days after its receipt from the 
appropriate Federal banking agency;
    (3) A list of the savings association's branches, their street 
addresses, and geographies;
    (4) A list of branches opened or closed by the savings association 
during the current year and each of the prior two calendar years, their 
street addresses, and geographies;
    (5) A list of services (including hours of operation, available 
loan and deposit products, and transaction fees) generally offered at 
the savings association's branches and descriptions of material 
differences in the availability or cost of services at particular 
branches, if any. At its option, a savings association may include 
information regarding the availability of alternative systems for 
delivering retail banking services (e.g., ATMs, ATMs not owned or 
operated by or exclusively for the savings association, banking by 
telephone or computer, loan production offices, and bank-at-work or 
bank-by-mail programs);
    (6) A map of each assessment area showing the boundaries of the 
area and identifying the geographies contained within the area, either 
on the map or in a separate list; and
    (7) Any other information the savings association chooses.
    (b) Additional information available to the public--(1) Savings 
associations other than small savings associations. A savings 
association, except a small savings association or a savings 
association that was a small savings association during the prior 
calendar year, shall include in its public file the following 
information pertaining to the savings association and its affiliates, 
if applicable, for each of the prior two calendar years:
    (i) If the savings association has elected to have one or more 
categories of its consumer loans considered under the lending test, for 
each of these categories, the number and amount of loans:
    (A) To low-, moderate-, middle-, and upper-income individuals;
    (B) Located in low-, moderate-, middle-, and upper-income census 
tracts; and
    (C) Located inside the savings association's assessment area(s) and 
outside the savings association's assessment area(s); and
    (ii) The savings association's CRA Disclosure Statement. The 
savings association shall place the statement in the public file within 
three business days of its receipt from the appropriate Federal banking 
agency.
    (2) Savings associations required to report Home Mortgage 
Disclosure Act (HMDA) data. A savings association required to report 
home mortgage loan data pursuant part 1003 of this title shall include 
in its public file a written notice that the institution's HMDA 
Disclosure Statement may be obtained on the Consumer Financial 
Protection Bureau's (Bureau's) website at www.consumerfinance.gov/hmda. 
In addition, a savings association that elected to have the appropriate 
Federal banking agency consider the mortgage lending of an affiliate 
shall include in its public file the name of the affiliate and a 
written notice that the affiliate's HMDA Disclosure Statement may be 
obtained at the Bureau's website. The savings association shall place 
the written notice(s) in the public file within three business days 
after receiving notification from the Federal Financial Institutions 
Examination Council of the availability of the disclosure statement(s).
    (3) Small savings associations. A small savings association or a 
savings association that was a small savings

[[Page 34831]]

association during the prior calendar year shall include in its public 
file:
    (i) The savings association's loan-to-deposit ratio for each 
quarter of the prior calendar year and, at its option, additional data 
on its loan-to-deposit ratio; and
    (ii) The information required for other savings associations by 
paragraph (b)(1) of this section, if the savings association has 
elected to be evaluated under the lending, investment, and service 
tests.
    (4) Savings associations with strategic plans. A savings 
association that has been approved to be assessed under a strategic 
plan shall include in its public file a copy of that plan. A savings 
association need not include information submitted to the appropriate 
Federal banking agency on a confidential basis in conjunction with the 
plan.
    (5) Savings associations with less than satisfactory ratings. A 
savings association that received a less than satisfactory rating 
during its most recent examination shall include in its public file a 
description of its current efforts to improve its performance in 
helping to meet the credit needs of its entire community. The savings 
association shall update the description quarterly.
    (c) Location of public information. A savings association shall 
make available to the public for inspection upon request and at no cost 
the information required in this section as follows:
    (1) At the main office and, if an interstate savings association, 
at one branch office in each state, all information in the public file; 
and
    (2) At each branch:
    (i) A copy of the public section of the savings association's most 
recent CRA Performance Evaluation and a list of services provided by 
the branch; and
    (ii) Within five calendar days of the request, all the information 
in the public file relating to the assessment area in which the branch 
is located.
    (d) Copies. Upon request, a savings association shall provide 
copies, either on paper or in another form acceptable to the person 
making the request, of the information in its public file. The savings 
association may charge a reasonable fee not to exceed the cost of 
copying and mailing (if applicable).
    (e) Updating. Except as otherwise provided in this section, a 
savings association shall ensure that the information required by this 
section is current as of April 1 of each year.


Sec.  195.44  Public notice by savings associations.

    A savings association shall provide in the public lobby of its main 
office and each of its branches the appropriate public notice set forth 
in appendix B of this part. Only a branch of a savings association 
having more than one assessment area shall include the bracketed 
material in the notice for branch offices. Only a savings association 
that is an affiliate of a holding company shall include the last two 
sentences of the notices.


Sec.  195.45  Publication of planned examination schedule.

    The appropriate Federal banking agency publishes at least 30 days 
in advance of the beginning of each calendar quarter a list of savings 
associations scheduled for CRA examinations in that quarter.

Appendix A to Part 195--Ratings

    (a) Ratings in general. (1) In assigning a rating, the 
appropriate Federal banking agency evaluates a savings association's 
performance under the applicable performance criteria in this part, 
in accordance with Sec. Sec.  195.21 and 195.28. This includes 
consideration of low-cost education loans provided to low-income 
borrowers and activities in cooperation with minority- or women-
owned financial institutions and low-income credit unions, as well 
as adjustments on the basis of evidence of discriminatory or other 
illegal credit practices.
    (2) A 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, must be consistent with safe and sound 
banking practices and generally with the appropriate rating profile 
as follows.
    (b) Savings associations evaluated under the lending, 
investment, and service tests--(1) Lending performance rating. The 
appropriate Federal banking agency assigns each savings 
association's lending performance one of the five following ratings.
    (i) Outstanding. The appropriate Federal banking agency rates a 
savings association's lending performance ``outstanding'' if, in 
general, it demonstrates:
    (A) Excellent responsiveness to credit needs in its assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in 
its assessment area(s);
    (B) A substantial majority of its loans are made in its 
assessment area(s);
    (C) An excellent geographic distribution of loans in its 
assessment area(s);
    (D) An excellent distribution, particularly in its assessment 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different sizes, given the product 
lines offered by the savings association;
    (E) An excellent record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross 
annual revenues of $1 million or less, consistent with safe and 
sound operations;
    (F) Extensive use of innovative or flexible lending practices in 
a safe and sound manner to address the credit needs of low- or 
moderate-income individuals or geographies; and
    (G) It is a leader in making community development loans.
    (ii) High satisfactory. The appropriate Federal banking agency 
rates a savings association's lending performance ``high 
satisfactory'' if, in general, it demonstrates:
    (A) Good responsiveness to credit needs in its assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in 
its assessment area(s);
    (B) A high percentage of its loans are made in its assessment 
area(s);
    (C) A good geographic distribution of loans in its assessment 
area(s);
    (D) A good distribution, particularly in its assessment area(s), 
of loans among individuals of different income levels and businesses 
(including farms) of different sizes, given the product lines 
offered by the savings association;
    (E) A good record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross 
annual revenues of $1 million or less, consistent with safe and 
sound operations;
    (F) Use of innovative or flexible lending practices in a safe 
and sound manner to address the credit needs of low- or moderate-
income individuals or geographies; and
    (G) It has made a relatively high level of community development 
loans.
    (iii) Low satisfactory. The appropriate Federal banking agency 
rates a savings association's lending performance ``low 
satisfactory'' if, in general, it demonstrates:
    (A) Adequate responsiveness to credit needs in its assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in 
its assessment area(s);
    (B) An adequate percentage of its loans are made in its 
assessment area(s);
    (C) An adequate geographic distribution of loans in its 
assessment area(s);
    (D) An adequate distribution, particularly in its assessment 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different sizes, given the product 
lines offered by the savings association;
    (E) An adequate record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross 
annual revenues of $1 million or less, consistent with safe and 
sound operations;
    (F) Limited use of innovative or flexible lending practices in a 
safe and sound manner to address the credit needs of low- or 
moderate-income individuals or geographies; and
    (G) It has made an adequate level of community development 
loans.

[[Page 34832]]

    (iv) Needs to improve. The appropriate Federal banking agency 
rates a savings association's lending performance ``needs to 
improve'' if, in general, it demonstrates:
    (A) Poor responsiveness to credit needs in its assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in 
its assessment area(s);
    (B) A small percentage of its loans are made in its assessment 
area(s);
    (C) A poor geographic distribution of loans, particularly to 
low- or moderate-income geographies, in its assessment area(s);
    (D) A poor distribution, particularly in its assessment area(s), 
of loans among individuals of different income levels and businesses 
(including farms) of different sizes, given the product lines 
offered by the savings association;
    (E) A poor record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross 
annual revenues of $1 million or less, consistent with safe and 
sound operations;
    (F) Little use of innovative or flexible lending practices in a 
safe and sound manner to address the credit needs of low- or 
moderate-income individuals or geographies; and
    (G) It has made a low level of community development loans.
    (v) Substantial noncompliance. The appropriate Federal banking 
agency rates a savings association's lending performance as being in 
``substantial noncompliance'' if, in general, it demonstrates:
    (A) A very poor responsiveness to credit needs in its assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in 
its assessment area(s);
    (B) A very small percentage of its loans are made in its 
assessment area(s);
    (C) A very poor geographic distribution of loans, particularly 
to low- or moderate-income geographies, in its assessment area(s);
    (D) A very poor distribution, particularly in its assessment 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different sizes, given the product 
lines offered by the savings association;
    (E) A very poor record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-
income individuals, or businesses (including farms) with gross 
annual revenues of $1 million or less, consistent with safe and 
sound operations;
    (F) No use of innovative or flexible lending practices in a safe 
and sound manner to address the credit needs of low- or moderate-
income individuals or geographies; and
    (G) It has made few, if any, community development loans.
    (2) Investment performance rating. The appropriate Federal 
banking agency assigns each savings association's investment 
performance one of the five following ratings.
    (i) Outstanding. The appropriate Federal banking agency rates a 
savings association's investment performance ``outstanding'' if, in 
general, it demonstrates:
    (A) An excellent level of qualified investments, particularly 
those that are not routinely provided by private investors, often in 
a leadership position;
    (B) Extensive use of innovative or complex qualified 
investments; and
    (C) Excellent responsiveness to credit and community development 
needs.
    (ii) High satisfactory. The appropriate Federal banking agency 
rates a savings association's investment performance ``high 
satisfactory'' if, in general, it demonstrates:
    (A) A significant level of qualified investments, particularly 
those that are not routinely provided by private investors, 
occasionally in a leadership position;
    (B) Significant use of innovative or complex qualified 
investments; and
    (C) Good responsiveness to credit and community development 
needs.
    (iii) Low satisfactory. The appropriate Federal banking agency 
rates a savings association's investment performance ``low 
satisfactory'' if, in general, it demonstrates:
    (A) An adequate level of qualified investments, particularly 
those that are not routinely provided by private investors, although 
rarely in a leadership position;
    (B) Occasional use of innovative or complex qualified 
investments; and
    (C) Adequate responsiveness to credit and community development 
needs.
    (iv) Needs to improve. The appropriate Federal banking agency 
rates a savings association's investment performance ``needs to 
improve'' if, in general, it demonstrates:
    (A) A poor level of qualified investments, particularly those 
that are not routinely provided by private investors;
    (B) Rare use of innovative or complex qualified investments; and
    (C) Poor responsiveness to credit and community development 
needs.
    (v) Substantial noncompliance. The appropriate Federal banking 
agency rates a savings association's investment performance as being 
in ``substantial noncompliance'' if, in general, it demonstrates:
    (A) Few, if any, qualified investments, particularly those that 
are not routinely provided by private investors;
    (B) No use of innovative or complex qualified investments; and
    (C) Very poor responsiveness to credit and community development 
needs.
    (3) Service performance rating. The appropriate Federal banking 
agency assigns each savings association's service performance one of 
the five following ratings.
    (i) Outstanding. The appropriate Federal banking agency rates a 
savings association's service performance ``outstanding'' if, in 
general, the savings association demonstrates:
    (A) Its service delivery systems are readily accessible to 
geographies and individuals of different income levels in its 
assessment area(s);
    (B) To the extent changes have been made, its record of opening 
and closing branches has improved the accessibility of its delivery 
systems, particularly in low- or moderate-income geographies or to 
low- or moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) 
are tailored to the convenience and needs of its assessment 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 appropriate Federal banking agency 
rates a savings association's service performance ``high 
satisfactory'' if, in general, the savings association demonstrates:
    (A) Its service delivery systems are accessible to geographies 
and individuals of different income levels in its assessment 
area(s);
    (B) To the extent changes have been made, its record of opening 
and closing branches has not adversely affected the accessibility of 
its delivery systems, particularly in low- and moderate-income 
geographies and to low- and moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) 
do not vary in a way that inconveniences its assessment 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 appropriate Federal banking agency 
rates a savings association's service performance ``low 
satisfactory'' if, in general, the savings association demonstrates:
    (A) Its service delivery systems are reasonably accessible to 
geographies and individuals of different income levels in its 
assessment area(s);
    (B) To the extent changes have been made, its record of opening 
and closing branches has 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) Its services (including, where appropriate, business hours) 
do not vary in a way that inconveniences its assessment 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 appropriate Federal banking agency 
rates a savings association's service performance ``needs to 
improve'' if, in general, the savings association demonstrates:
    (A) Its service delivery systems are unreasonably inaccessible 
to portions of its assessment area(s), particularly to low- or 
moderate-income geographies or to low- or moderate-income 
individuals;
    (B) To the extent changes have been made, its record of opening 
and closing branches has adversely affected the accessibility of its 
delivery systems, particularly in low- or moderate-income 
geographies or to low- or moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) 
vary in a way that inconveniences its assessment 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.

[[Page 34833]]

    (v) Substantial noncompliance. The appropriate Federal banking 
agency rates a savings association's service performance as being in 
``substantial noncompliance'' if, in general, the savings 
association demonstrates:
    (A) Its service delivery systems are unreasonably inaccessible 
to significant portions of its assessment area(s), particularly to 
low- or moderate-income geographies or to low- or moderate-income 
individuals;
    (B) To the extent changes have been made, its record of opening 
and closing branches 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) Its services (including, where appropriate, business hours) 
vary in a way that significantly inconveniences its assessment 
area(s), particularly low- or moderate-income geographies or low- or 
moderate-income individuals; and
    (D) It provides few, if any, community development services.
    (c) Wholesale or limited purpose savings associations. The 
appropriate Federal banking agency assigns each wholesale or limited 
purpose savings association's community development performance one 
of the four following ratings.
    (1) Outstanding. The appropriate Federal banking agency rates a 
wholesale or limited purpose savings association's community 
development performance ``outstanding'' if, in general, it 
demonstrates:
    (i) A high level of community development loans, community 
development services, or qualified investments, particularly 
investments that are not routinely provided by private investors;
    (ii) Extensive use of innovative or complex qualified 
investments, community development loans, or community development 
services; and
    (iii) Excellent responsiveness to credit and community 
development needs in its assessment area(s).
    (2) Satisfactory. The appropriate Federal banking agency rates a 
wholesale or limited purpose savings association's community 
development performance ``satisfactory'' if, in general, it 
demonstrates:
    (i) An adequate level of community development loans, community 
development services, or qualified investments, particularly 
investments that are not routinely provided by private investors;
    (ii) Occasional use of innovative or complex qualified 
investments, community development loans, or community development 
services; and
    (iii) Adequate responsiveness to credit and community 
development needs in its assessment area(s).
    (3) Needs to improve. The appropriate Federal banking agency 
rates 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 community development loans, community 
development services, or qualified investments, particularly 
investments that are not routinely provided by private investors;
    (ii) Rare use of innovative or complex qualified investments, 
community development loans, or community development services; and
    (iii) Poor responsiveness to credit and community development 
needs in its assessment area(s).
    (4) Substantial noncompliance. The appropriate Federal banking 
agency rates a wholesale or limited purpose savings association's 
community development performance in ``substantial noncompliance'' 
if, in general, it demonstrates:
    (i) Few, if any, community development loans, community 
development services, or qualified investments, particularly 
investments that are not routinely provided by private investors;
    (ii) No use of innovative or complex qualified investments, 
community development loans, or community development services; and
    (iii) Very poor responsiveness to credit and community 
development needs in its assessment area(s).
    (d) Savings associations evaluated under the small savings 
association performance standard--(1) Lending test ratings. (i) 
Eligibility for a satisfactory lending test rating. The appropriate 
Federal banking agency rates a small savings association's lending 
performance ``satisfactory'' if, in general, the savings association 
demonstrates:
    (A) A reasonable loan-to-deposit ratio (considering seasonal 
variations) given the savings association's size, financial 
condition, the credit needs of its assessment area(s), and taking 
into account, as appropriate, other lending-related activities such 
as loan originations for sale to the secondary markets and community 
development loans and qualified investments;
    (B) A majority of its loans and, as appropriate, other lending-
related activities, are in its assessment area;
    (C) 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 assessment area(s);
    (D) A record of taking appropriate action, when warranted, in 
response to written complaints, if any, about the savings 
association's performance in helping to meet the credit needs of its 
assessment area(s); and
    (E) A reasonable geographic distribution of loans given the 
savings association's assessment area(s).
    (ii) Eligibility for an ``outstanding'' lending test 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 a lending test 
rating of ``outstanding.''
    (iii) Needs to improve or substantial noncompliance ratings. A 
small savings association may also receive a lending test rating of 
``needs to improve'' or ``substantial noncompliance'' depending on 
the degree to which its performance has failed to meet the standard 
for a ``satisfactory'' rating.
    (2) Community development test ratings for intermediate small 
savings associations--(i) Eligibility for a satisfactory community 
development test rating. The appropriate Federal banking agency 
rates an intermediate small savings association's community 
development performance ``satisfactory'' if the savings association 
demonstrates adequate responsiveness to the community development 
needs of its assessment area(s) through community development loans, 
qualified investments, and community development services. The 
adequacy of the savings association's response will depend on its 
capacity for such community development activities, its assessment 
area's need for such community development activities, and the 
availability of such opportunities for community development in the 
savings association's assessment area(s).
    (ii) Eligibility for an outstanding community development test 
rating. The appropriate Federal banking agency rates an intermediate 
small savings association's community development performance 
``outstanding'' if the savings association demonstrates excellent 
responsiveness to community development needs in its assessment 
area(s) through community development loans, qualified investments, 
and community development services, as appropriate, considering the 
savings association's capacity and the need and availability of such 
opportunities for community development in the savings association's 
assessment area(s).
    (iii) Needs to improve or substantial noncompliance ratings. An 
intermediate small savings association may also receive a community 
development test 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.
    (3) Overall rating--(i) Eligibility for a satisfactory overall 
rating. No intermediate small savings association may receive an 
assigned overall rating of ``satisfactory'' unless it receives a 
rating of at least ``satisfactory'' on both the lending test and the 
community development test.
    (ii) Eligibility for an outstanding overall rating. (A) An 
intermediate small savings association that receives an 
``outstanding'' rating on one test and at least ``satisfactory'' on 
the other test may receive an assigned overall rating of 
``outstanding.''
    (B) A small savings association that is not an intermediate 
small savings association that meets each of the standards for a 
``satisfactory'' rating under the lending test and exceeds some or 
all of those standards may warrant consideration for an overall 
rating of ``outstanding.'' In assessing whether a savings 
association's performance is ``outstanding,'' the appropriate 
Federal banking agency considers the extent to which the savings 
association exceeds each of the performance standards for a 
``satisfactory'' rating and its performance in making qualified 
investments and its performance in providing branches and other 
services and delivery systems that enhance credit availability in 
its assessment area(s).
    (iii) Needs to improve or substantial noncompliance overall 
ratings. A small

[[Page 34834]]

savings association may also 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 appropriate Federal banking agency approves as 
``satisfactory'' measurable goals that adequately help to meet the 
credit needs of the savings association's assessment area(s).
    (2) Outstanding goals. If the plan identifies a separate group 
of measurable goals that substantially exceed the levels approved as 
``satisfactory,'' the appropriate Federal banking agency will 
approve those goals as ``outstanding.''
    (3) Rating. The appropriate Federal banking agency assesses 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 appropriate Federal banking 
agency will 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 appropriate Federal banking agency will rate 
the savings association's performance under the plan as 
``outstanding.''
    (iii) If the savings association fails to meet substantially its 
plan goals for a satisfactory rating, the appropriate Federal 
banking agency will rate the savings association as either ``needs 
to improve'' or ``substantial noncompliance,'' depending on the 
extent to which it falls short of its plan goals, unless the savings 
association elected in its plan to be rated otherwise, as provided 
in Sec.  195.27(f)(4).

Appendix B to Part 195--CRA Notice

    (a) Notice for main offices and, if an interstate savings 
association, one branch office in each state.

Community Reinvestment Act Notice

    Under the Federal Community Reinvestment Act (CRA), the [Office 
of the Comptroller of the Currency (OCC) or Federal Deposit 
Insurance Corporation (FDIC)] evaluates our record of helping to 
meet the credit needs of this community consistent with safe and 
sound operations. The [OCC or FDIC] also takes this record into 
account when deciding on certain applications submitted by us.
    Your involvement is encouraged.
    You are entitled to certain information about our operations and 
our performance under the CRA, including, for example, information 
about our branches, such as their location and services provided at 
them; the public section of our most recent CRA Performance 
Evaluation, prepared by the [OCC or FDIC]; and comments received 
from the public relating to our performance in helping to meet 
community credit needs, as well as our responses to those comments. 
You may review this information today.
    At least 30 days before the beginning of each quarter, the [OCC 
or FDIC] publishes a nationwide list of the savings associations 
that are scheduled for CRA examination in that quarter. This list is 
available from the [OCC Deputy Comptroller (address) or FDIC 
appropriate regional director (address)]. You may send written 
comments about our performance in helping to meet community credit 
needs to (name and address of official at savings association) and 
the [OCC Deputy Comptroller (address) or FDIC appropriate regional 
director (address)]. Your letter, together with any response by us, 
will be considered by the [OCC or FDIC] in evaluating our CRA 
performance and may be made public.
    You may ask to look at any comments received by the [OCC Deputy 
Comptroller or FDIC appropriate regional director]. You may also 
request from the [OCC Deputy Comptroller or FDIC appropriate 
regional director] an announcement of our applications covered by 
the CRA filed with the [OCC or FDIC]. We are an affiliate of (name 
of holding company), a savings and loan holding company. You may 
request from the (title of responsible official), Federal Reserve 
Bank of _________ (address) an announcement of applications covered 
by the CRA filed by savings and loan holding companies.
    (b) Notice for branch offices.

Community Reinvestment Act Notice

    Under the Federal Community Reinvestment Act (CRA), the [Office 
of the Comptroller of the Currency (OCC) or Federal Deposit 
Insurance Corporation (FDIC)] evaluates our record of helping to 
meet the credit needs of this community consistent with safe and 
sound operations. The [OCC or FDIC] also takes this record into 
account when deciding on certain applications submitted by us.
    Your involvement is encouraged.
    You are entitled to certain information about our operations and 
our performance under the CRA. You may review today the public 
section of our most recent CRA evaluation, prepared by the [OCC or 
FDIC] and a list of services provided at this branch. You may also 
have access to the following additional information, which we will 
make available to you at this branch within five calendar days after 
you make a request to us: (1) A map showing the assessment area 
containing this branch, which is the area in which the [OCC or FDIC] 
evaluates our CRA performance in this community; (2) information 
about our branches in this assessment area; (3) a list of services 
we provide at those locations; (4) data on our lending performance 
in this assessment area; and (5) copies of all written comments 
received by us that specifically relate to our CRA performance in 
this assessment area, and any responses we have made to those 
comments. If we are operating under an approved strategic plan, you 
may also have access to a copy of the plan.
    [If you would like to review information about our CRA 
performance in other communities served by us, the public file for 
our entire savings association is available at (name of office 
located in state), located at (address).]
    At least 30 days before the beginning of each quarter, the [OCC 
or FDIC] publishes a nationwide list of the savings associations 
that are scheduled for CRA examination in that quarter. This list is 
available from the [OCC Deputy Comptroller (address) or FDIC 
appropriate regional office (address)]. You may send written 
comments about our performance in helping to meet community credit 
needs to (name and address of official at savings association) and 
the [OCC or FDIC]. Your letter, together with any response by us, 
will be considered by the [OCC or FDIC] in evaluating our CRA 
performance and may be made public.
    You may ask to look at any comments received by the [OCC Deputy 
Comptroller or FDIC appropriate regional director]. You may also 
request an announcement of our applications covered by the CRA filed 
with the [OCC Deputy Comptroller or FDIC appropriate regional 
director]. We are an affiliate of (name of holding company), a 
savings and loan holding company. You may request from the (title of 
responsible official), Federal Reserve Bank of _________ (address) 
an announcement of applications covered by the CRA filed by savings 
and loan holding companies.

PART 195--[REMOVED]

0
9. Remove part 195.

Joseph M. Otting,
Comptroller of the Currency.
[FR Doc. 2020-11220 Filed 6-4-20; 8:45 am]
 BILLING CODE 4810-33-P