[Federal Register Volume 86, Number 13 (Friday, January 22, 2021)]
[Page 6650]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-01267]



[No. 2021-N-1]

Notice of Annual Adjustment of the Cap on Average Total Assets 
That Defines Community Financial Institutions

AGENCY: Federal Housing Finance Agency.

ACTION: Notice.


SUMMARY: The Federal Housing Finance Agency (FHFA) has adjusted the cap 
on average total assets that is used in determining whether a Federal 
Home Loan Bank (Bank) member qualifies as a ``community financial 
institution'' (CFI) to $1,239,000,000, based on the annual percentage 
increase in the Consumer Price Index for all urban consumers (CPI-U), 
as published by the Department of Labor (DOL). These changes took 
effect on January 1, 2021.

FOR FURTHER INFORMATION CONTACT: James Hedrick, Division of Federal 
Home Loan Bank Regulation, (202) 649-3319, [email protected]; or 
R. Winston Sale, Assistant General Counsel, (202) 649-3081, 
[email protected], (not toll-free numbers), Federal Housing Finance 
Agency, Constitution Center, 400 Seventh Street SW, Washington, DC 


I. Statutory and Regulatory Background

    The Federal Home Loan Bank Act (Bank Act) confers upon insured 
depository institutions that meet the statutory definition of a CFI 
certain advantages over non-CFI insured depository institutions in 
qualifying for Bank membership, and in the purposes for which they may 
receive long-term advances and the collateral they may pledge to secure 
advances.\1\ Section 2(10)(A) of the Bank Act and Sec.  1263.1 of 
FHFA's regulations define a CFI as any Bank member the deposits of 
which are insured by the Federal Deposit Insurance Corporation and that 
has average total assets below the statutory cap.\2\ The Bank Act was 
amended in 2008 to set the statutory cap at $1 billion and to require 
FHFA to adjust the cap annually to reflect the percentage increase in 
the CPI-U, as published by the DOL.\3\ For 2020, FHFA set the CFI asset 
cap at $1,224,000,000, which reflected a 2.1 percent increase over 
2019, based upon the increase in the CPI-U between 2019 and 2020.\4\

    \1\ See 12 U.S.C. 1424(a), 1430(a).
    \2\ See 12 U.S.C. 1422(10)(A); 12 CFR 1263.1.
    \3\ See 12 U.S.C. 1422(10)(B); 12 CFR 1263.1 (defining the term 
CFI asset cap).
    \4\ See 85 FR 3680 (Jan. 22, 2020).

II. The CFI Asset Cap for 2021

    As of January 1, 2021, FHFA has increased the CFI asset cap to 
$1,239,000,000, which reflects a 1.2 percent increase in the unadjusted 
CPI-U from November 2019 to November 2020. Consistent with the practice 
of other Federal agencies, FHFA bases the annual adjustment to the CFI 
asset cap on the percentage increase in the CPI-U from November of the 
year prior to the preceding calendar year to November of the preceding 
calendar year, because the November figures represent the most recent 
available data as of January 1st of the current calendar year. The new 
CFI asset cap was obtained by applying the percentage increase in the 
CPI-U to the unrounded amount for the preceding year and rounding to 
the nearest million, as has been FHFA's practice for all previous 
    In calculating the CFI asset cap, FHFA uses CPI-U data that have 
not been seasonally adjusted (i.e., the data have not been adjusted to 
remove the estimated effect of price changes that normally occur at the 
same time and in about the same magnitude every year). The DOL 
encourages use of unadjusted CPI-U data in applying ``escalation'' 
provisions such as that governing the CFI asset cap, because the 
factors that are used to seasonally adjust the data are amended 
annually, and seasonally adjusted data that are published earlier are 
subject to revision for up to five years following their original 
release. Unadjusted data are not routinely subject to revision, and 
previously published unadjusted data are only corrected when 
significant calculation errors are discovered.

Andre D. Galeano,
Deputy Director, Division of Federal Home Loan Bank Regulation, Federal 
Housing Finance Agency.
[FR Doc. 2021-01267 Filed 1-21-21; 8:45 am]