[Federal Register Volume 90, Number 243 (Monday, December 22, 2025)]
[Proposed Rules]
[Pages 59744-59764]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-23547]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 90, No. 243 / Monday, December 22, 2025 /
Proposed Rules
[[Page 59744]]
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 25
[Docket ID OCC-2025-0669]
Community Reinvestment Act: Simplified Strategic Plan Process for
Community Banks
AGENCY: Office of the Comptroller of the Currency, Treasury.
ACTION: Proposed guidance and request for comment.
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SUMMARY: The Office of the Comptroller of the Currency (OCC or agency)
is proposing supplemental guidance on a simplified strategic plan
process for community banks interested in requesting that the OCC
evaluate their Community Reinvestment Act (CRA) performance under a
strategic plan. The proposed simplified strategic plan process is
designed to make the strategic plan option more accessible to and less
burdensome for community banks.
DATES: Comments must be received by February 20, 2026.
ADDRESSES: Commenters are encouraged to submit comments through the
Federal eRulemaking Portal. Please use the title ``Community
Reinvestment Act: Simplified Strategic Plan Process for Community
Banks'' to facilitate the organization and distribution of the
comments. You may submit comments by any of the following methods:
Federal eRulemaking Portal--Regulations.gov:
Go to https://regulations.gov. Enter Docket ID ``OCC-2025-0669'' in
the Search Box and click ``Search.'' Public comments can be submitted
via the ``Comment'' box below the displayed document information or by
clicking on the document title and then clicking the ``Comment'' box on
the top-left side of the screen. For help with submitting effective
comments, please click on ``Commenter's Checklist.'' For assistance
with the Regulations.gov site, please call 1-866-498-2945 (toll free)
Monday-Friday, 9 a.m.-5 p.m. EST, or email [email protected].
Mail: Chief Counsel's Office, Attention: Comment
Processing, Office of the Comptroller of the Currency, 400 7th Street
SW, Suite 3E-218, Washington, DC 20219.
Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218,
Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
Docket ID ``OCC-2025-0669'' in your comment. In general, the OCC will
enter all comments received into the docket and publish the comments on
the Regulations.gov website without change, including any business or
personal information provided such as name and address information,
email addresses, or phone numbers. Comments received, including
attachments and other supporting materials, are part of the public
record and subject to public disclosure. Do not include any information
in your comment or supporting materials that you consider confidential
or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this action by the following method:
Viewing Comments Electronically--Regulations.gov:
Go to https://regulations.gov/. Enter Docket ID ``OCC-2025-0669''
in the Search Box and click ``Search.'' Click on the ``Dockets'' tab
and then the document's title. After clicking the document's title,
click the ``Browse All Comments'' tab. Comments can be viewed and
filtered by clicking on the ``Sort By'' drop-down on the right side of
the screen or the ``Refine Comments Results'' options on the left side
of the screen. Supporting materials can be viewed by clicking on the
``Browse Documents'' tab. Click on the ``Sort By'' drop-down on the
right side of the screen or the ``Refine Results'' options on the left
side of the screen checking the ``Supporting & Related Material''
checkbox. For assistance with the Regulations.gov site, please call 1-
866-498-2945 (toll free) Monday-Friday, 9 a.m.-5 p.m. EST, or email
[email protected].
The docket may be viewed after the close of the comment period in
the same manner as during the comment period.
FOR FURTHER INFORMATION CONTACT: Emily Boyes, Counsel, Chief Counsel's
Office, 202-649-5490; Andrea Shearin, Policy Specialist, or Cassandra
Remmenga, Policy Specialist, Office of the Chief National Bank
Examiner, 202-649-5470. If you are deaf, hard of hearing, or have a
speech disability, please dial 7-1-1 to access telecommunications relay
services.
SUPPLEMENTARY INFORMATION:
I. Introduction
Congress enacted the CRA \1\ in 1977 based on its findings that:
``(1) regulated financial institutions are required by law to
demonstrate that their deposit facilities serve the convenience and
needs of the communities in which they are chartered to do business;
(2) the convenience and needs of communities include the need for
credit services as well as deposit services; and (3) regulated
financial institutions have continuing and affirmative obligation[s] to
help meet the credit needs of the local communities in which they are
chartered.'' \2\ Accordingly, the purpose of the CRA is to require the
OCC \3\ to encourage regulated financial institutions \4\ ``to help
meet the credit needs of the local communities in which they are
chartered consistent with the safe and sound operation of the
institutions.'' \5\ To achieve this purpose, the CRA requires the OCC
to ``assess [an] institution's record of meeting the credit needs of
its entire community, including low- and moderate-income neighborhoods,
consistent with the safe and sound operation of such institution.'' \6\
Upon completing this assessment, the statute requires the OCC to
``prepare a written evaluation of the institution's record of meeting
the credit needs of its entire community,
[[Page 59745]]
including low- and moderate-income neighborhoods.'' \7\ The statute
further provides that the OCC must ``take such record into account in
its evaluation of an application for a deposit facility by such
institution.'' \8\
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\1\ Public Law 95-128, 91 Stat. 1147 (1977) (codified at 12
U.S.C. 2901 et seq. (as amended)).
\2\ 12 U.S.C. 2901(a).
\3\ In addition to the OCC, the CRA applies to the Federal
Deposit Insurance Corporation (FDIC) and the Board of Governors of
the Federal Reserve System (Board). See e.g., 12 U.S.C. 2901(b),
2902(1), 2903(a), and 2905. This SUPPLEMENTARY INFORMATION discusses
guidance being proposed by the OCC, and, therefore, focuses the
discussion on the CRA and implementing regulations as they relate to
the OCC.
\4\ The CRA defines ``regulated financial institution'' to mean
an insured depository institution as defined in 12 U.S.C.
1813(c)(2). See 12 U.S.C. 2902(2).
\5\ 12 U.S.C. 2901(b).
\6\ 12 U.S.C. 2903(a)(1).
\7\ 12 U.S.C. 2906(a).
\8\ 12 U.S.C. 2903(a)(2).
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The CRA directs the OCC to publish regulations to carry out the
purposes of the CRA.\9\ In general, the OCC's CRA regulation, first
promulgated in 1978, establishes the standards under which the OCC
evaluates banks'\10\ CRA performance.\11\ The OCC's 1995 CRA
regulations \12\ significantly revised and clarified the 1978 CRA
regulations. Currently, the OCC evaluates banks' CRA performance
pursuant to the 1995 CRA regulation, as amended in the OCC's 2021 CRA
Final Rule (CRA regulation).\13\ During the OCC's 30 years of
experience examining banks under the CRA regulation, the agency has
developed an in-depth understanding of how banks of different sizes and
business models meet the credit needs of their communities. This
includes community banks, which under the OCC's current organizational
structure, are those with up to $30 billion in assets.\14\ The OCC also
has received extensive feedback on the benefits of, as well as
stakeholder concerns with, the CRA regulation.\15\
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\9\ 12 U.S.C. 2905. Pursuant to Title III of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, Public Law 111-203, 124
Stat. 1376, 1522 (2010), the Office of Thrift Supervision's (OTS)
CRA rulemaking authority for all savings associations transferred to
the OCC and the OTS's CRA supervisory authority for State savings
associations transferred to the FDIC. As a result, the OCC's CRA
regulation applies to both State and Federal savings associations,
in addition to national banks, and the FDIC enforces the OCC's CRA
regulation with respect to State savings associations.
\10\ For purposes of this SUPPLEMENTARY INFORMATION, the term
``bank'' includes insured national banks, Federal savings
associations, and certain Federal branches of foreign banks as
defined in 12 CFR 25.11 (Mar. 29, 2024).
\11\ 43 FR 47144 (Oct. 12, 1978).
\12\ The OCC originally issued separate regulations for national
banks and Federal savings associations in 12 CFR part 25 and part
195, respectively. The OCC integrated these CRA regulations in its
2021 CRA final rule into a single CRA regulation, 12 CFR part 25,
applicable to national banks and savings associations (2021 CRA
Regulation). See 86 FR 71328 (Dec. 15, 2021).
\13\ The simplified strategic plan process proposed in this
SUPPLEMENTARY INFORMATION would provide timely guidance on the OCC's
interpretation and application of the CRA regulation that the agency
is currently applying to its regulated institutions, often referred
to as the 1995/2021 CRA Regulations. The OCC, together with the FDIC
and the Board (collectively, the agencies), and the former OTS,
first adopted the 1995 CRA Regulations on May 4, 1995. 60 FR 22156
(May 4, 1995). The OCC reissued the 1995 CRA Regulation, as amended,
with non-substantive changes on December 15, 2021--the 2021 CRA
Regulation. See 86 FR 71328. For purposes of this SUPPLEMENTARY
INFORMATION, references to the CRA regulation are to the OCC's 2021
CRA Regulation as published in the Electronic Code of Federal
Regulations (eCFR) as of March 29, 2024, which is substantively
identical to the FDIC's and Board's 1995 CRA Regulations, as
amended.
On October 23, 2023, the agencies had jointly issued a CRA final
rule (2023 CRA Final Rule). The 2023 CRA Final Rule is currently
subject to a preliminary injunction by order of the U.S. District
Court for the Northern District of Texas. See Tex. Bankers Ass'n v.
Office of the Comptroller of the Currency, 728 F. Supp. 3d 412 (N.D.
Tex. 2024). On July 16, 2025, the agencies issued a notice of
proposed rulemaking (CRA Rescind and Replace NPR) to rescind the
2023 CRA Final Rule and replace it with the 1995/2021 CRA
Regulations, as amended. See 90 FR 34086 (July 18, 2025). The
comment period for the CRA Rescind and Replace NPR closed on August
18, 2025, and the agencies are considering the comments received on
that proposal. The OCC will continue to apply the 2021 CRA
Regulation as published in the Federal Register on March 29, 2024,
for as long as the preliminary injunction of the 2023 CRA Final Rule
remains in effect. Should the agencies finalize the CRA Rescind and
Replace NPR in the future, the OCC would continue to apply the 2021
CRA Regulation to banks indefinitely. In proposing the simplified
strategic plan process, the OCC considered that a strategic plan
provision was a component of the 1995/2021 CRA Regulations and the
2023 CRA Final Rule, and that timely guidance that reduces burden
for community banks is an important objective even if future
modifications to the guidance were to become necessary.
\14\ See OCC, ``OCC Announces Updates to Organizational
Structure'' (Sept. 18, 2025), https://www.occ.gov/news-issuances/news-releases/2025/nr-occ-2025-89.html.
\15\ See, e.g., 72 FR 62036 (Nov. 1, 2007) (Federal Financial
Institutions Examination Council (FFIEC) 2007 joint report to
Congress pursuant to the Economic Growth and Regulatory Paperwork
Reduction Act of 1996 (EGRPRA)); 82 FR 15900 (Mar. 30, 2017) (2017
EGRPRA Report); 85 FR 1204 (Jan. 9, 2020) (proposed CRA rule); 85 FR
34734 (June 5, 2020) (final CRA rule); 89 FR 6574 (Feb. 1, 2024)
(final CRA rule).
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A. The Strategic Plan Option
Under the CRA regulation, any bank may elect to have the OCC assess
its CRA performance under an approved strategic plan (strategic plan
option).\16\ A CRA strategic plan provides a bank with an alternative
to the OCC's examination of its CRA performance under the otherwise
applicable performance tests and standards.\17\ Specifically, the CRA
regulation includes performance tests and standards for banks of
different sizes and types. The OCC uses these performance tests and
standards to assess banks' performance under the CRA. Depending on a
community bank's size or business model, the OCC may examine the bank
pursuant to the (1) lending test,\18\ investment test,\19\ and service
test; \20\ (2) small bank performance standards,\21\ which include a
lending test \22\ and a community development (CD) \23\ test,\24\ as
applicable; or (3) CD test for wholesale or limited purpose banks.\25\
The OCC examines small banks \26\ using the lending test in the small
bank performance standards. In addition, intermediate small banks are
also evaluated pursuant to the CD test in the small bank performance
standards. The OCC evaluates banks that exceed the small bank asset-
size threshold--commonly referred to as large banks--using the lending
test, investment test, and service test. In addition, the OCC evaluates
a bank designated under the CRA regulation as a wholesale bank or a
limited purpose bank \27\ using the CD test for wholesale and limited
purpose banks.
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\16\ 12 CFR 25.27 (Mar. 29, 2024).
\17\ See 12 CFR 25.21 through 25.26 (Mar. 29, 2024).
\18\ 12 CFR 25.22 (Mar. 29, 2024).
\19\ 12 CFR 25.23 (Mar. 29, 2024).
\20\ 12 CFR 25.24 (Mar. 29, 2024).
\21\ 12 CFR 25.26 (Mar. 29, 2024).
\22\ 12 CFR 25.26(b) (Mar. 29, 2024).
\23\ Under the CRA regulation, ``community development'' means:
(1) affordable housing (including multifamily rental housing) for
low- or moderate-income (LMI) individuals; (2) community services
targeted to LMI 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) LMI
geographies; (ii) Designated disaster areas; or (iii) Distressed or
underserved nonmetropolitan middle-income geographies designated by
the Board, FDIC, and the OCC, based on--(A) rates of poverty,
unemployment, and population loss; or (B) population size, density,
and dispersion. See 12 CFR 25.12(g) (Mar. 29, 2024).
\24\ 12 CFR 25.26(c) (Mar. 29, 2024).
\25\ 12 CFR 25.25 (Mar. 29, 2024).
\26\ Under the CRA regulation, for calendar year 2025, a small
bank is defined as a bank that had assets of less than $1.609
billion as of December 31 of either of the prior two calendar years.
Within the definition of small bank, an ``intermediate small bank''
is defined as a bank with assets of at least $402 million as of
December 31 of both of the prior two calendar years and less than
$1.609 billion as of December 31 of either of the prior two calendar
years. The small bank asset-size threshold is adjusted annually
based on the year-to-year change in the average of the Consumer
Price Index for Urban Wage Earners and Clerical Workers (CPI-W), not
seasonally adjusted, for each 12-month period ending in November,
with rounding to the nearest million. See 12 CFR 25.12(u) (Mar. 29,
2024); see also OCC, ``Community Reinvestment Act: Revision of Small
and Intermediate Small Bank and Savings Association Asset
Thresholds'' (Dec. 23, 2024), https://www.occ.treas.gov/news-issuances/bulletins/2024/bulletin-2024-36.html.
\27\ See 12 CFR 25.12(n) (Mar. 29, 2024) (definition of limited
purpose bank); 12 CFR 25.12(x) (Mar. 29, 2024) (definition of
wholesale bank).
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The strategic plan option \28\ enables a bank to tailor its CRA
examination based on the needs of its community and its ability to help
address those needs based on its capacity and constraints, product
offerings, and business strategy. The CRA regulation requires a bank
seeking to elect the strategic plan option to develop a plan
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that details how it will meet its CRA obligations in consultation with
members of the public,\29\ publish the plan for public comment,\30\ and
include in the plan annual interim measurable goals.\31\ The strategic
plan provision provides (1) certain additional requirements that a bank
must comply with when electing the strategic plan option \32\ and (2)
the OCC's criteria for evaluating and approving a proposed strategic
plan.\33\
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\28\ See 12 CFR 25.27 (Mar. 29, 2024) (strategic plan
provision).
\29\ See 12 CFR 25.27(d) (Mar. 29, 2024).
\30\ See id.
\31\ See 12 CFR 25.27(f)(1) (Mar. 29, 2024).
\32\ See 12 CFR 25.27(a) through (c), (e), (f)(2) and (4), and
(h) (Mar. 29, 2024).
\33\ See 12 CFR 25.27(g) (Mar. 29, 2024).
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B. Overview of Feedback on CRA-Related Regulatory Burden and the
Strategic Plan Option
Over the years, certain stakeholders have expressed concern with
CRA-related regulatory burden, especially burden on smaller banks with
more limited resources. The OCC recognizes that concerns with CRA-
related regulatory burden stem, in part, from the qualitative
evaluation framework provided in the CRA regulation's otherwise
applicable performance tests and standards, which may make it difficult
for banks to understand the OCC's supervisory expectations. This lack
of transparency may also make it more challenging for banks to
effectively manage their CRA programs. Further, the OCC has observed
that the CRA regulation's otherwise applicable performance tests and
standards may not be well suited for evaluating certain banks' business
models, particularly in an evolving banking industry. For these banks,
the current CRA regulatory framework may not effectively encourage or
increase CRA-qualifying activity.
Considering this background, certain stakeholders have conveyed the
importance of the strategic plan option, commenting that strategic
plans should be available to all banks and could be useful for many
banks, particularly branchless banks and banks with unique business
models.\34\ Further, some stakeholders have suggested simplifying the
process for small banks to elect the strategic plan option.\35\
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\34\ See, e.g., 89 FR at 6775 and 7004 (discussing strategic
plan comments submitted for the 2023 CRA Final Rule); 85 FR at 34777
(discussing the same for the OCC's 2020 CRA final rule).
\35\ See, e.g., 82 FR at 15916(commenter suggestion in the 2017
EGRPRA Report that the strategic plan option process is too
cumbersome and should be streamlined for smaller institutions).
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Because of the certainty and flexibility that the strategic plan
option provides banks to tailor their CRA examinations, the OCC has
witnessed an increase in non-traditional banks' use of the strategic
plan option, including certain community banks.\36\ However, the OCC
understands from its interactions with banks that the current strategic
plan process can be complex and difficult to navigate. As a result,
overall election of the strategic plan option remains limited.\37\
Given the flexibility provided by the strategic plan option, the OCC
believes that it may be a useful tool for reducing CRA-related
regulatory burden for all community banks--from the smallest retail
community banks to larger, non-traditional community banks that offer
their products and services through the internet.
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\36\ As of April 23, 2025, the OCC had 14 banks with approved
strategic plans. Of these banks (1) 10 banks had their initial
strategic plan approved by the OCC in 2020 or later; (2) 10 banks
had assets of up to $30 billion; and (3) 12 banks were non-
traditional banks (i.e., banks with business models that generally
are not branch-based or do not focus on extending retail credit to
consumers, small business, or small farms).
\37\ See U.S. Department of the Treasury, ``Memorandum for the
Office of the Comptroller of the Currency, Board of Governors of the
Federal Reserve System, the Federal Deposit Insurance Corporation--
Community Reinvestment Act--Findings and Recommendations'' 13
(hereinafter Treasury CRA Memorandum) (Apr. 3, 2018), https://home.treasury.gov/system/files/136/4-3-18%20CRA%20memo.pdf. Between
1996, when the strategic plan option was introduced, and November
2025, 106 insured depository institutions have been evaluated
pursuant to a strategic plan. See FFIEC, ``Interagency CRA Rating
Search'' (last visited Nov. 2025), https://www.ffiec.gov/craratings/default.aspx (using the ``Strategic plan'' search query).
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Consistent with stakeholder feedback, the OCC has determined that
the strategic plan option could be a useful means for more community
banks to tailor their CRA examinations based on bank size and other
relevant factors. Further, the OCC has determined that providing a
simplified strategic plan process for community banks would facilitate
their ability to elect the strategic plan option. Evaluation under a
strategic plan would provide community banks with clear CRA supervisory
expectations and enable the banks to better focus their resources on
meeting community credit needs. Specifically, community banks may find
it challenging to determine what constitutes a ``Satisfactory'' or
``Outstanding'' level of performance under the otherwise applicable
performance tests and standards or for purposes of the strategic plan
option due to more limited in-house compliance and legal expertise and
less robust compliance management systems, as compared with larger
banks. While the strategic plan option is intended to provide banks
with more certainty in their CRA examinations, community banks may find
electing the strategic plan option difficult without help from outside
consultants. This is because the current strategic plan guidance lacks
clarity regarding the required components of a strategic plan,
including what would constitute reasonable measurable goals. Based on
feedback from banks, the OCC understands that these circumstances have
had a chilling effect on banks' use of the strategic plan option,
particularly community banks.
In addition to providing clarity, the proposed guidance would
simplify the process for community banks electing the strategic plan
option and help to potentially reduce their CRA-related regulatory
burden--making the strategic plan option a more viable alternative for
these banks.\38\ Electing the strategic plan option would facilitate a
community bank's ability to focus resources on engaging in CRA-
qualifying activities consistent with the measurable goals specified in
the bank's strategic plan. Reducing community banks' CRA-related
regulatory burden is also consistent with the purpose and underlying
policy of Executive Order 14192, Unleashing Prosperity Through
Deregulation--``reduc[ing] the private expenditures required to comply
with Federal regulations to secure America's economic prosperity and
national security and the highest possible quality of life for each
citizen.'' \39\
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\38\ The OCC determined that the current guidance is appropriate
and sufficient for larger, more complex banks because it allows
those banks to appropriately tailor the design, supporting
information, and content of their strategic plans. As the OCC gains
experience with the simplified strategic plan process for community
banks, the agency will consider whether its use should be expanded
to other banks.
\39\ 90 FR 9065, 9065 (Feb. 6, 2025).
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II. Simplified Strategic Plan Process for Community Banks
Despite the potential advantages, as discussed above, banks have
infrequently elected the strategic plan option.\40\ This has been
especially true for community banks, although recently the OCC has
experienced a relative increase in community bank strategic plans. The
proposed simplified strategic plan process would reduce burden for
community banks by (1) providing more detailed guidance on the
measurable goals and the other components of a strategic plan required
by the CRA regulation and (2) simplifying the method for drafting and
submitting a
[[Page 59747]]
proposed strategic plan to the OCC for approval.
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\40\ See infra note 37.
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To develop the proposed simplified strategic plan process, the OCC
reviewed current CRA guidance to identify opportunities to provide
clarity on, and increase the efficiency of, strategic plan development.
The OCC's current guidance for banks' electing the strategic plan
option is provided in OCC Bulletin 2019-39.\41\ This guidance provides
the OCC's process for submitting a proposed strategic plan to the
agency for approval but does not provide much clarification on how to
develop a proposed strategic plan.
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\41\ See OCC, ``Community Reinvestment Act: Guidelines for
Requesting Approval of a Strategic Plan'' (hereinafter OCC Bulletin
2019-39) (July 31, 2016), https://www.occ.gov/news-issuances/bulletins/2019/bulletin-2019-39.html.
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In addition, OCC Bulletin 2019-39 and the Interagency Questions and
Answers on Community Reinvestment (Q&As) explain that banks may consult
with and provide information to the OCC on a proposed strategic plan,
and the OCC will provide guidance on whether the level of detail in the
proposed plan would be sufficient to permit the OCC to evaluate the
plan.\42\ This guidance explains, however, that the OCC's advice on a
bank's proposed strategic plan does not include commenting on the
merits of the proposed strategic plan or the adequacy of the bank's
measurable goals. As discussed below, the OCC has found that the
consultation process described in the current guidance is often
insufficient, and, in practice, banks generally require more detailed
feedback during the strategic plan development process to help manage
the burden of drafting a strategic plan.\43\
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\42\ See Q&A Sec. __.27(c)--1, 81 FR 48506 (July 25, 2016).
\43\ The OCC will continue to engage in the more meaningful
strategic plan consultations that have become the agency's practice
under the existing process.
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The OCC believes that the limited guidance on the strategic plan
option has contributed to the burden associated with the current
strategic plan process. The OCC understands that many community banks
perceive the burden of developing a proposed strategic plan to outweigh
the benefit of being evaluated under a strategic plan.\44\ The OCC
believes that providing more clear and detailed guidance and a
simplified process for the development of a strategic plan would make
the strategic plan option a more viable alternative for a greater
number of community banks and facilitate burden reduction in connection
with the banks' CRA compliance.
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\44\ See Treasury CRA Memorandum, supra note 37, at 13-14.
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A. Measurable Goals, In General
The CRA regulation's strategic plan provision provides that a
bank's strategic plan must specify annual interim measurable goals that
constitute a ``Satisfactory'' level of performance for each assessment
area covered by the strategic plan.\45\ In addition to ``Satisfactory''
measurable goals, the CRA regulation provides that a bank's strategic
plan may specify measurable goals that constitute an ``Outstanding''
level of performance.\46\
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\45\ See 12 CFR 25.27(c)(1) and (f)(1) and (3) (Mar. 29, 2024).
\46\ See 12 CFR 25.27(f)(3) (Mar. 29, 2024).
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Generally, the CRA regulation provides that a bank's proposed
measurable goals must address all three performance categories (i.e.,
lending, investment, and services) and, unless the bank has been
designated as a wholesale or limited purpose bank, must emphasize
lending and lending-related activities.\47\ However, the CRA regulation
also states that a different emphasis, including a focus on one or more
performance categories, may be appropriate if responsive to the
characteristics and credit needs of a bank's assessment areas,
considering public comment and the bank's capacity and constraints,
product offerings, and business strategy.\48\ Notably, the CRA
regulation provides banks with flexibility in developing a proposed
strategic plan and does not require banks to specify measurable goals
in all three performance categories. A community bank should consider
its particular facts and circumstances and the credit needs of its
community to determine the appropriate performance categories to
include in its proposed strategic plan. The OCC's goal in developing
the simplified strategic plan process is to enhance the substantial
flexibility for community banks to tailor their CRA programs as
intended by the strategic plan provision.\49\
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\47\ See 12 CFR 25.27(f)(1) (Mar. 29, 2024).
\48\ See id.
\49\ This explanation of the strategic plan provision is
consistent with the explanation provided in the 1994 CRA proposal
preceding the 1995 CRA regulation, which is substantively similar in
relevant part to the strategic plan provision that was ultimately
included in the CRA regulation. See 59 FR 51232, 51242-51243 (Oct.
7, 1994); see also 12 CFR 25.27(f) (Mar. 29, 2024).
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i. Establishing Measurable Goals
Currently, the available guidance on what constitutes an
appropriate measurable goal is limited. The Q&As provide some
explanation regarding the meaning of ``measurable goals'' in the CRA
regulation, but the Q&As do not explain how a community bank would
determine the appropriate level of performance for those goals.
Specifically, the Q&As provide that annual interim measurable goals
(e.g., number of loans, dollar amount, geographic location of activity,
and benefit to LMI areas or individuals) must be stated with sufficient
specificity to permit the public and the OCC to quantify what
performance will be expected.\50\ However, banks are provided
flexibility in specifying measurable goals.\51\ The Q&A explains, for
example, that a bank may provide ranges of lending amounts in different
categories of loans or that measurable goals may be linked to funding
requirements of certain public programs or indexed to other external
factors as long as these mechanisms provide a quantifiable
standard.\52\ In the OCC's experience, the existing guidance is
insufficient to enable banks, especially community banks, to draft
proposed strategic plans without considerable support from the OCC or
external consultants. For larger, more sophisticated banks, however,
the current guidance provides appropriate flexibility to customize
their strategic plans to the banks' unique circumstances. In contrast,
community banks generally have less complex business strategies,
resulting in a disconnect between the regulatory burden associated with
developing a proposed strategic plan and the perceived benefits that
would result from evaluation under an approved strategic plan. As noted
above, this disconnect has chilled community banks' election of the
strategic plan option and supports developing a simplified strategic
plan process for community banks.
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\50\ See Q&A Sec. __.27(f)(1)--1.
\51\ See id.
\52\ See id.
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Under the proposed simplified strategic plan process for community
banks, the OCC would provide more specific guidance on the types of
measurable goals, including the performance measures (e.g., percentage,
number, dollar amount, or other quantifiable measure of a particular
type of lending, investment, or service) and performance levels (i.e.,
the specific value for a performance measure, such as a set percentage
of lending), that may be appropriate for community banks based on the
agency's supervisory experience. Specifically, the OCC would provide
examples of measurable goals that a community bank could adopt in its
proposed strategic plan (hereinafter,
[[Page 59748]]
elective goals), as appropriate. A community bank may also include as
measurable goals bank-specific, custom goals if it determines that the
elective goals are not suitable for the bank based on its performance
context,\53\ or the bank identifies unique goals that it would like to
include in its strategic plan.
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\53\ The CRA regulation provides that the OCC considers whether
to approve a proposed strategic plan based on a bank's performance
context, and the strategic plan provision references certain
performance context factors (i.e., capacity and constraints, product
offerings, and business strategy) that a bank should consider in
specifying measurable goals. See 12 CFR 25.21(b) and 25.27(f) (Mar.
29, 2024).
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The OCC developed the proposed elective goals by considering
measurable goals in approved strategic plans and the OCC's experience
in evaluating community banks' CRA performance under the otherwise
applicable performance tests and standards. A community bank could use
one or more of the elective goals in its proposed strategic plan if,
after considering its performance context, the bank determines those
goals are an appropriate means of measuring the bank's CRA performance.
As discussed in greater detail below, the proposed elective goals
reflect different levels of performance that the OCC would likely
consider ``Satisfactory'' or ``Outstanding'' for a community bank for
that performance category or activity individually or in combination
with other goals, depending on the circumstances. The elective goals,
however, are not safe harbors and their use would not guarantee
approval of a strategic plan. The OCC's approval of a strategic plan
would be provided only after a community bank were to undertake the
required public engagement and adjust its proposed strategic plan to
address public comments, as appropriate.\54\ In approving a proposed
strategic plan, the OCC would consider the criteria for evaluating a
strategic plan provided in the CRA regulation, as discussed below.
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\54\ See 12 CFR 25.27(d) and (g)(2) (Mar. 29, 2024).
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In drafting a proposed strategic plan, a community bank would
comply with the regulatory requirement to address all three performance
categories in its proposed strategic plan by specifying measurable
goals for one or more performance categories and including related
performance context. A community bank would also provide performance
context addressing any performance categories for which the bank did
not specify measurable goals.
The measurable goals a community bank specifies in its proposed
strategic plan, including the number of goals, combination of goals,
represented performance categories, and performance levels for those
goals must be appropriate and reasonable for the community bank based
on its circumstances. Specifically, in selecting elective goals or
developing custom goals, a community bank should consider the needs of
and opportunities in the assessment areas covered by its strategic plan
and its performance context, particularly the bank's capacity and
constraints, product offerings, and business strategy.\55\ A community
bank's historical CRA performance may also be a relevant consideration.
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\55\ The proposed elective goals were designed for use in the
simplified strategic plan process for community banks only. Because
the appropriateness of a particular elective goal for use in a
community bank's proposed strategic plan would be based on the
bank's circumstances and determined after the opportunity for public
comment, the elective goals should not be considered benchmarks for
``Satisfactory'' or ``Outstanding'' CRA performance outside the
simplified strategic plan process. Even in the context of the
simplified strategic plan process, a community bank would need to
consider performance context to determine whether to use any of the
elective goals in its proposed strategic plan.
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The OCC generally does not expect community banks' use of the
simplified strategic plan process to result in reductions in CRA-
qualifying activities as compared to the existing process. In addition,
the OCC plans to periodically assess and, if appropriate, update the
elective goals.\56\ For example, the OCC may revise or add to the
elective goals to account for changing economic conditions, public
comments received in connection with banks' strategic plans, or other
relevant information. Below is a discussion of considerations that
informed the proposed guidance on measurable goals included in the
simplified strategic plan process.
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\56\ The proposed elective goals would be incorporated into the
Simplified Strategic Plan Form, discussed infra.
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ii. Elective Goals
1. Performance Measures
In the OCC's experience, one of the reasons banks elect the
strategic plan option is to establish specific performance targets that
they can manage their CRA programs to achieve. The OCC has observed
that banks often express measurable goals in terms of dollar amounts to
maximize predictability. In some instances, however, banks have used
other performance measures to set measurable goals, including percent
of tier one (T1) capital \57\ or total assets.\58\ When using these
other performance measures, banks allocate capital or assets to each
assessment area. Typically, banks will use the percentage of deposits
assigned to a given assessment area as the basis for this allocation.
The proposed elective goals would rely on this allocation method for
specifying measurable goals in each assessment area covered by the
plan. For multi-year strategic plans, a bank would be required to
establish annual interim measurable goals for each year in the
strategic plan term. Generally, the OCC has expected a bank to annually
increase the dollar-denominated thresholds in its interim goals to
account for a bank's expected growth and the resultant increase in
capacity.
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\57\ T1 capital refers to the sum of common equity T1 capital
and additional T1 capital. See 12 CFR 3.2; see also 12 CFR 3.20(b)
and (c). With respect to CD lending and qualified investments, the
OCC has considered the dollar volume of a bank's lending in
comparison to its T1 capital as this measure provides context on the
bank's capacity to provide lending, investments, or services.
\58\ While the OCC has not typically considered CD lending and
qualified investments in comparison to total assets in the otherwise
applicable performance tests and standards, banks have used total
assets as a performance measure in approved strategic plans and the
OCC generally considers it to be a reasonable measure of bank
capacity.
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Considering this background, the OCC reviewed the measurable goals
in approved strategic plans and considered community banks' CRA
performance and the comparators used to assess that performance under
the otherwise applicable performance tests and standards.\59\ The OCC
relied on this historical information to help identify potential
elective goals that would generally reflect ``Satisfactory'' or
``Outstanding'' performance for community banks depending on the
circumstances, including the banks' performance context.
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\59\ Under the otherwise applicable performance tests and
standards, the OCC uses certain comparators to assess banks' CRA
performance including T1 capital, demographic comparators (e.g., LMI
population) or peer comparators (e.g., peer bank lending activity).
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2. Performance Levels
In the OCC's experience, the adequacy of a bank's level of
performance is informed by the sufficiency with which a bank has
addressed its obligation to meet community credit needs, accounting for
the bank's capacity to meet those needs. For example, the CRA requires
that the OCC consider a bank's record of performance in meeting
community credit needs consistent with the bank's safe or sound
operations and the OCC would not expect banks to engage in levels of
performance that would be unsafe or unsound. The OCC
[[Page 59749]]
has identified that additional performance context factors--such as
community needs and opportunities and business strategy--result in some
variation in the appropriate levels of performance amongst community
banks. Further, the appropriate performance level for a particular goal
included in a community bank's proposed strategic plan would be
influenced by whether the bank included other measurable goals in its
strategic plan and the nature of those goals. The OCC also relied on
its supervisory experience to identify additional factors that have
influenced banks' specification of measurable goals, including the
performance measures used in the goals. After considering this
information, and as explained further below, the OCC is proposing
elective goals that are consistent with the performance measures and
performance levels that the agency historically has expected of
community banks with ``Satisfactory'' or ``Outstanding'' ratings.
3. Specifying Measurable Goals
In specifying measurable goals, a community bank would determine
which performance categories to include in its goals, and the
performance measures and performance levels for the goals in those
categories. The OCC expects that a community bank would specify
measurable goals that are appropriate for the bank based on its
performance context; however, because the strategic plan option
provides community banks with significant flexibility to tailor their
CRA examinations, measurable goals may vary even when comparing two
similarly situated banks. Community banks may choose different
variations of goals with different performance measures and performance
levels to tailor their CRA examinations based on their individual
circumstances. For that reason, the elective goals include performance
measures with several options for performance levels. Further,
community banks would have the option to specify custom goals to use in
combination with or instead of the elective goals.
The standardized form that community banks would use in connection
with the simplified strategic plan process (hereinafter the Simplified
Strategic Plan Form), discussed below, would include guidance for when
a proposed elective goal may be appropriate for a community bank. For
example, if a community bank's strategic plan were to include
measurable goals focused on only one performance category, the OCC
would generally expect the bank to specify measurable goals with higher
performance levels than if the bank had included measurable goals in
multiple performance categories. This expectation is not categorically
applicable, however. In the OCC's view, it may be appropriate for
certain community banks to specify fewer measurable goals with lower
performance levels even if the bank does not include goals in all three
performance categories. For example, it may be appropriate for a
smaller community bank with a narrow product line to specify measurable
goals in a single performance category at a performance level that
would not be considered ``Satisfactory'' for a larger community bank
with more diverse product offerings and greater capacity. Therefore,
the guidance that would be included in the Simplified Strategic Plan
Form along with the proposed elective goals would provide general
guidelines for a community bank's use of the elective goals. In
addition to the guidance provided, a community bank should consider its
performance context to determine the elective goals that would be
appropriate based on the bank's circumstances.
The OCC considered different performance context factors and how
those factors may influence the appropriate performance measures and
performance levels that would be used to express a community bank's
proposed measurable goals. Specifically, performance context factors
such as competition, market share, and bank size, or other bank-
specific considerations may make total dollar amount alone an
inadequate measure of a bank's CRA performance. For example, the OCC
determined that goals that measure performance by both number and
dollar amount may be appropriate for a bank that focuses on a larger
number of small dollar, highly responsive activities. Further, goals
with lower assessment area performance levels may be appropriate when a
community bank's proposed strategic plan includes an elective goal with
performance measures for an assessment area coupled with performance
measures for the broader statewide or regional area that includes the
assessment area. The OCC also determined that there are instances where
it may not be reasonable, particularly without additional feedback, for
the OCC to state elective goals with fixed performance levels, such as
dollar-thresholds or percentage-based performance targets. In these
circumstances, the OCC believes that it can improve on the current
guidance by providing template-style elective goals that include a
variable that the community bank would populate.
Based on the information considered, the OCC determined that the
elective goals should include different performance levels within the
same performance categories, subcategories (e.g., retail lending goals
and CD lending goals), or combined categories (e.g., a CD lending and
qualified investment combined goal). In general, smaller, less complex
community banks would consider elective goals with lower performance
levels, while larger, more complex community banks would consider
specifying elective goals with higher performance levels. This guidance
aligns with the OCC's different performance expectations based on its
experience evaluating banks under the otherwise applicable performance
tests and standards and in reviewing and approving strategic plans.
Nonetheless, because performance context is unique to a bank, there may
be exceptions from these general principles.
The simplified strategic plan process would help reduce burden for
community banks by providing greater insight into the considerations
that have informed the OCC's approval of strategic plans. The proposed
guidance does not establish any new requirements for community banks.
Instead, as discussed above, the proposed guidance would provide
community banks with transparency into the types of measurable goals
that the OCC has generally found to reflect ``Satisfactory'' or
``Outstanding'' performance and otherwise clarify and simplify the
process for electing the strategic plan option. This transparency would
facilitate a community bank's consideration of its performance context
and determination of appropriate measurable goals as is currently
required for any bank electing the strategic plan option. As also noted
above, this proposed guidance would not establish safe harbors
guaranteeing approval of a proposed strategic plan; however, provided
that a community bank adequately supported the inclusion of particular
elective goals in its proposed strategic plan based on its
circumstances and complied with the other requirements of the strategic
plan provision, the OCC would be likely to approve the bank's proposed
strategic plan under the simplified strategic plan process.
Questions:
1. Does providing elective goals that a community bank may consider
using as measurable goals in a proposed strategic plan provide clarity
to community banks and make developing
[[Page 59750]]
a proposed strategic plan less burdensome?
2. Are there other factors that the OCC should consider in
determining appropriate elective goals?
3. For community banks that use the simplified strategic plan
process, instead of setting performance levels for the elective goals
based on the OCC's existing performance expectations, should the OCC
consider increasing or decreasing its expected level of performance? If
so, how and why should the OCC revise community bank performance
expectations in the elective goals?
iii. Custom Goals
As discussed above, the simplified strategic plan process would
also include the option for a community bank to develop bank-specific,
custom goals instead of, or in addition to, using the elective goals.
Under the current strategic plan process, all measurable goals are
custom goals because the OCC currently does not provide examples of
what may constitute reasonable measurable goals. The simplified
strategic plan process would include the option for community banks to
develop custom goals to maintain the flexibility intended by the
strategic plan option.
A community bank may choose to develop a custom goal due to unique
performance context factors or specific community needs that the bank
wishes to address. This may be particularly appropriate for the
performance categories with a more limited number of elective goals
that apply to a narrow set of circumstances, as discussed below.
Further, it may be appropriate for a bank to develop a custom goal that
is similar to an elective goal but changes it in a meaningful way. For
example, if an elective goal uses total assets as the performance
measure, a community bank with cyclical assets instead may choose to
specify a custom goal using average assets as its performance measure.
A community bank would specify a custom goal along with any relevant
performance context in its strategic plan.
Question:
4. Does providing guidance on custom goals appropriately simplify
the strategic plan development process for community banks? Does this
guidance appropriately balance the need for greater clarity on the
types of goals that the OCC would likely approve for community banks
with the flexibility intended by the strategic plan option to allow
banks to tailor their CRA examinations?
B. Performance Categories of Measurable Goals
A community bank may include different types of measurable goals
for the three performance categories (i.e., lending, investment, and
services) in its proposed strategic plan. As noted above, the OCC based
the proposed elective goals on the agency's supervisory experience and
other relevant information. Under the proposed simplified strategic
plan process, a community bank would determine whether certain goals
were appropriate for inclusion in the bank's proposed strategic plan
and when it may be appropriate to specify a custom goal. A community
bank would include measurable goals for each assessment area included
in its strategic plan. The number, combination, and represented
performance categories for the elective goals or custom goals included
in a community bank's proposed strategic plan may vary depending on
assessment area needs and opportunities. The proposed elective goals
for each of the performance categories discussed below are included in
Appendix A.
i. Lending Performance Category
1. CD Lending Goals
Historically, banks have commonly included CD lending goals in
their strategic plans.\60\ Banks often express CD lending goals in
terms of dollar amount; however, some banks have used other performance
measures as the basis for a CD lending goal, such as a percentage of T1
capital or total assets allocated by deposits to each assessment area.
The OCC understands that measurable goals expressed in terms of dollars
provide banks with greater certainty while those expressed in terms of
a percentage of T1 capital or total assets provide greater flexibility
to adjust to future fluctuations in bank or economic conditions.
Considering this background and the agency's supervisory experience,
the OCC identified the proposed elective goals based on percentages,
but the guidance also would provide options for convert those
percentages into dollar amounts of CD lending.
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\60\ Under the CRA regulation, a CD loan is defined as a loan
that: (1) has as its primary purpose CD; 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(s)
that includes the bank's assessment area(s). See 12 CFR 25.12(h)
(Mar. 29, 2024).
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Specifically, the OCC used a percentage of T1 capital or total
assets as a starting point for the proposed CD lending elective goals.
As noted above, use of these measures is consistent with approved
strategic plans and the OCC's overall experience in evaluating
community banks' CRA performance. In addition, use of these measures
would adjust a community bank's elective goals as the value of these
measures change over time, consistent with the regulatory requirement
that banks specify annual interim measurable goals in multi-year
strategic plans. However, an elective goal expressed as a percentage of
T1 capital or total assets may not provide the level of certainty and
predictability preferred by many community banks interested in the
strategic plan option. Community banks would therefore have the option
of converting the percentage-based elective goal into an annual dollar
figure. Elective goals expressed as an annual dollar figure would be
determined based on a target percentage of a bank's T1 capital or total
assets as of December 31 of the previous year for (1) each year in the
strategic plan term; (2) the first year of the strategic plan term and
increased by 5 percent year-over-year for each subsequent year in the
strategic plan term; or (3) the first year of the strategic plan term
and increased by the annual change in Gross Domestic Product (GDP) as
of December 31 of the previous year for each subsequent year in the
strategic plan term.
A community bank would consider its circumstances to determine
whether to convert a percentage-based CD lending goal into a dollar-
based CD lending goal and, if applicable, the method of conversion and
applicable growth rate. For example, a community bank that anticipates
having stable levels of T1 capital or total assets may determine that a
percentage-based CD lending goal offers sufficient certainty without
the potential to inadvertently increase the bank's annual goals more
than what is reasonable based on the bank's capacity and constraints.
If that community bank nonetheless prefers the certainty of dollar-
based goals, it could specify a dollar-based elective goal that would
convert the percent of T1 capital or total assets to a dollar amount
based on the value of the respective measure as of December 31 of the
prior calendar year for each year in the strategic plan term. In
contrast, a community bank that anticipates rapid asset growth may
elect to use a dollar-based elective goal with a five percent annual
growth rate, or a growth rate based on the annual change in GDP, as
described above.
[[Page 59751]]
Alternatively, a community bank could develop a custom goal that scales
the annual dollar-based goal based on an alternate methodology or uses
a different performance measure as the basis for the goal. For example,
a community bank that is uncertain of its potential future growth could
develop a custom goal requiring the bank to meet the lesser of a dollar
based goal based on percent of T1 capital as of December 31 of the
previous year for the first year in the strategic plan term and a five
percent annual growth rate or the actual percent of T1 capital as of
December 31 of the strategic plan year.
The OCC is also proposing CD lending elective goals with a range of
performance levels to account for the differences in community banks'
circumstances and the ways a community bank may incorporate CD lending
elective goals into proposed strategic plans. As noted above, under the
OCC's current organizational structure, community banks are those with
up to $30 billion in assets.\61\ Therefore, outside of the strategic
plan option, community banks would be evaluated under each of the
otherwise applicable performance tests and standards depending on their
size or type. For example, the OCC generally would evaluate a small
community bank based only on its retail lending activities. This
reflects community banks' varying circumstances, including that certain
community banks will have greater capacity, and therefore, generally
higher performance expectations than other community banks. Varying
performance expectations based on banks' circumstances is consistent
the OCC's experience with approved strategic plans and evaluation under
the otherwise applicable performance tests and standards. Some approved
strategic plans focus on CD lending, while others focus on different or
additional performance categories. For the reasons discussed above, the
OCC specified several performance levels for the CD lending elective
goals. A community bank would determine the performance level for its
elective goals based on its performance context and the number and
combination of measurable goals included in an assessment area and
overall.
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\61\ See supra note 14.
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The OCC also considered that certain community banks, particularly
banks that operate through online platforms with limited branch
networks, have elected the strategic plan option to address challenges
with being evaluated pursuant to the otherwise applicable performance
tests and standards. For some of these banks, limited opportunities and
high competition can make it difficult to identify a sufficient level
of CD activities that benefit or serve the bank's assessment area. To
address this issue, the proposed CD lending elective goals would
include goals with performance measures for an assessment area coupled
with performance measures for the broader statewide or regional area
that includes the assessment area.\62\ The assessment area performance
levels proposed for these CD lending elective goals would be lower than
for the assessment area-only CD lending elective goals.
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\62\ In meeting goals in the broader statewide or regional area
that includes a community bank's assessment area, the OCC would
consider CD activities consistent with the guidance in Q&As
Sec. Sec. __12(h)-6 and __.12(h)-7.
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Questions:
5. Are there additional elective goals for CD lending and qualified
investment that the OCC should consider including in the simplified
strategic plan process? For example, should the OCC consider developing
deposit-based goals?
6. Are the proposed CD lending elective goals appropriately
calibrated for community banks? Do they provide appropriate optionality
for community banks with different sizes and business models while
providing clarity and simplifying a community bank's strategic plan
development?
7. Should the OCC consider adding to the elective goals other
methods of scaling the goals on an annual basis, such as a bank's
average annual asset growth?
8. Is it appropriate to increase the performance expectations for
community banks' annual interim measurable goals over time? Are there
circumstances under which goals should not increase?
2. Retail Lending Goals
In the OCC's experience, in addition to CD lending goals, some
banks also include retail lending goals when addressing the lending
performance category in their strategic plans.\63\ The OCC considered
its supervisory experience and assessed options for providing retail
lending elective goals with identified measures similar to the
percentages of T1 capital and total assets identified for the proposed
CD lending goals. Based on these considerations, the OCC is proposing
to include three types of retail lending elective goals. These elective
goals would be a measure of a bank's loan portfolio comprised of
originations or purchases to LMI borrowers or located in LMI
geographies in a particular product line as compared to total
originations or purchases based on (1) a percentage; (2) an aggregate
dollar amount of loans; or (3) a specified number of loans. The OCC
determined, however, that there is significant variation in banks'
retail lending activities due to bank and community specific
performance context factors. This variation presents challenges for
identifying specific performance levels that are generally reflective
of ``Satisfactory'' or ``Outstanding'' performance for community banks
across assessment areas. Therefore, the proposed retail lending
elective goals would be template-style goals with a variable that the
community bank would populate. A community bank would determine whether
to include one of the template-style retail lending elective goals and
how to populate the variable included in the goal based on the bank's
performance context.
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\63\ Under the CRA regulation, a retail lending goal would be a
goal focused on home mortgage loans, small business loans, small
farm loans, or one or more types of consumer loans (i.e., motor
vehicle loans, credit card loans, other secured consumer loans, or
other unsecured consumer loans). See 12 CFR 25.22(a) (Mar. 29,
2024).
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In determining an appropriate performance level for a retail
lending elective goal, a community bank could consider how the OCC
assesses retail lending activities under the otherwise applicable
performance tests and standards. For example, the OCC generally
considers performance for the retail lending borrower and geographic
distributions ``Satisfactory'' when a bank's percentage of lending for
a particular product type is near to or below, but not well below, the
relevant comparator for the assessment area and ``Outstanding'' when
the percentage of lending equals or exceeds the demographic or peer
comparator. However, the OCC determined that it may be challenging for
a community bank to prospectively determine reasonable ``Satisfactory''
or ``Outstanding'' performance levels for retail lending performance
measures (i.e., percentage of an applicable retail loan portfolio,
dollar amount of retail lending, or number of retail loans for a
particular loan product) during the development of a strategic plan
because the OCC does not assess a bank's performance in relation to
relevant comparators until the OCC conducts its CRA examination. During
a CRA examination, the OCC's assessment of a bank's retail lending
activities using the relevant comparators would consider performance
context. In addition, some of the comparators that the OCC considers in
assessing retail lending performance, such as the peer
[[Page 59752]]
comparators, are lagging and a community bank would not know the
applicable comparator value during the development of a proposed
strategic plan. For these reasons, the OCC determined that it may be
challenging for a community bank to try to use the OCC's CRA
examination methods to determine reasonable values for the performance
level variable in a retail lending elective goal. Therefore, a
community bank could populate the performance level variable in a
retail lending elective goal based on the bank's prior retail lending
performance which would have considered the relevant comparators. For a
community bank that does not have a recent CRA examination that
considered retail lending activities, the bank could determine an
appropriate performance level based on the performance of peer banks.
Generally, banks have specified product-specific retail lending
goals. A community bank could choose to focus its retail lending goals
on a primary product line or could specify measurable goals for
multiple product lines. Therefore, the elective goals allow community
banks to specify the applicable retail lending product or products as
part of the performance measures.
In addition to the retail lending elective goals, a community bank
could specify one or more retail lending custom goals. A community bank
considering a retail lending custom goal could base the goal on the
performance criteria in the otherwise applicable performance tests and
standards, such as lending activity or loan-to-deposit ratio. In the
OCC's supervisory experience, however, if a community bank were to
specify a retail lending custom goal based on these performance
criteria that goal generally would be insufficient on its own. Instead,
this type of retail lending custom goal generally would be included to
support other measurable goals. For example, a small community bank
that develops a proposed strategic plan focused on retail lending may
choose to include a retail lending custom goal focused on lending
activity to demonstrate that it is lending commensurate with its
capacity and provide context for retail lending elective goals focused
on lending to LMI individuals or geographies in a particular product
line.
Custom goals could also be related to innovative, flexible, or
responsive lending products, such as a goal for new loan originations
in products tailored to meet the needs of LMI borrowers (e.g., X number
loans originated with down-payment assistance for first-time
homebuyers, with an annual increase using the current number of loan
originations as the starting point). Lastly, a custom retail lending
goal could be designed to address the unique needs of a bank's
assessment area, such as a retail lending goal targeting borrowers in
distressed or underserved non-metropolitan middle-income geographies in
an assessment area with no or few LMI census tracts or a goal targeting
middle-income borrowers in high-cost areas.
For smaller retail community banks, a proposed strategic plan
focused solely on one or more retail lending elective goals or custom
goals may be sufficient for evaluating the bank's CRA performance
(i.e., the community bank would not specify measurable goals in other
performance categories). Specifically, a strategic plan focused on
retail lending activities would be consistent with the small bank
performance standards. In this instance, the community bank would
include in this proposed strategic plan one or more retail lending
elective goals or custom goals for each assessment area covered by the
proposed strategic plan. In addition, the community bank would address
in its proposed strategic plan the performance categories not included
in the proposed strategic plan by explaining the performance context
that supports the narrower focus.
Larger community banks could consider including one or more retail
lending elective goals, or retail lending custom goals, along with
measurable goals in other performance categories, as appropriate, based
on the banks' circumstances. The OCC's supervisory experience indicates
that when larger community banks that offer mortgage, small business,
small farm, or consumer lending product lines specify retail lending
goals, they do so alongside goals focused on other types of CRA-
qualifying activities. Moreover, given the flexibility offered by the
strategic plan option, a community bank would not be required to
establish retail lending measurable goals if a different focus was more
appropriate based on the bank's performance context.
Questions:
9. Should borrower and geographic retail lending elective goals
include an undefined variable that a community bank would populate
based on its performance context, as proposed, or should the OCC
include the unadjusted near to/below percentage as a default starting
point that banks could adjust based on performance context?
10. Are there any other retail lending goals that the OCC should
include as elective goals?
ii. Investment Performance Category, Including Combined Measurable
Goals
In addition to the CD lending measurable goals discussed above, in
the OCC's experience, proposed strategic plans usually include
measurable goals for qualified investments. As with the lending
performance category, the OCC considered measurable goals for the
investment performance category included in approved strategic plans
and the otherwise applicable performance tests and standards to inform
its determination of the qualified investment elective goals in this
proposal. Based on this review, the OCC is proposing qualified
investment elective goals that use the same performance measures and
growth adjustment methods as the OCC used for the CD lending elective
goals. However, the OCC's review of approved strategic plans and its
experience in evaluating community banks' CRA performance resulted in
the OCC proposing performance levels for certain qualified investment
elective goals that are lower than the proposed CD lending elective
goals due, for example, to frequent challenges smaller community banks
experience competing for qualified investments.
During its review of approved strategic plans, the OCC also
recognized that banks often use the flexibility provided by the
strategic plan option to specify CD lending and qualified investment
combined goals. These combined goals help banks manage their CRA
programs by allowing the banks to determine what types of CRA-
qualifying activities to engage in based on opportunities available
during the strategic plan term. This flexibility may be particularly
useful for banks in assessment areas with high competition or limited
opportunities. As such, the elective goals include combined goals for
CD lending and qualified investments.
The OCC also recognized that due to business strategy or market
constraints, among other factors, certain community banks may want to
focus on highly impactful activities, even if those activities have a
lower relative dollar value. In evaluating banks' CRA performance, the
responsiveness of a bank's CD activities is an important
consideration.\64\ For that reason, the proposed elective goals also
include goals that would have lower overall performance levels provided
that 50 percent of the activity would be allocated to high impact
activities, such
[[Page 59753]]
as donations or complex or innovative investments.
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\64\ See Q&A Sec. __.21(a)-3.
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Question:
11. Should the OCC consider including an elective goal based on the
percentage of qualified investments that are highly impactful, such as
grants or donations?
12. Are the proposed qualified investment elective goals and
combined elective goals appropriately calibrated for community banks?
Do they provide appropriate optionality for community banks with
different sizes and business models while providing clarity and
simplifying a community bank's strategic plan development?
iii. Services Performance Category
The third performance category that banks may specify measurable
goals for in their strategic plans is services. The OCC considered the
types of services-related measurable goals included in approved
strategic plans and the criteria the OCC has used for evaluating retail
banking and CD services under the otherwise applicable performance
tests and standards, along with the guidance on CD service activities
in the Q&As.
Based on this information, the OCC determined that the number of CD
services hours per full-time employee per year is a common performance
measure used for assessing banks' CD services performance. As such, the
OCC included in the simplified strategic plan process a proposed
elective goal based on this performance measure. The OCC notes that
these proposed services elective goals are most appropriate for banks
operating in assessment areas using a branch-based model. If a
community bank's assessment area has a disproportionately large or
small number of full-time employees, these proposed elective goals may
not be appropriate for the bank. In those circumstances, a community
bank could consider developing a CD services custom goal. For example,
if a community bank has a large back-office facility in an assessment
area that employs a significant number of full-time employees
conducting functions that other banks may outsource, the community bank
may consider a custom CD services goal based on hours per management
employee. A CD services custom goal of this type would likely have a
higher performance level than per employee elective goals.
Alternatively, a bank with few employees may develop a CD services
custom goal based, for example, on the number of beneficiaries of its
CD services, as opposed to the hours per employee providing the
services.
In addition to goals for CD services measured by volunteer hours,
banks have included other services goals based on the number of new
accounts opened that are tailored to the needs of LMI individuals. A
bank could develop a services custom goal based on one of these
activities. For guidance on the types of service activities that a
community bank could use as the basis for a services custom goal, banks
could consider the services listed in Q&A Sec. __.26(c)(3)--1. These
include (l) low-cost deposit accounts; (2) electronic benefit transfer
accounts and point of sale terminal systems; (3) individual development
accounts; (4) free or low-cost government, payroll, or other check
cashing services; and (5) reasonably priced international remittance
services. A bank's custom goals for these types of activities could
account for demographic factors and the bank's current provision of the
service.\65\
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\65\ Depending on the size of the community bank, a services
custom goal focused on one of these types of activities may be
considered a CD services or retail services custom goal. See Q&A
Sec. __.26(c)(3)--1.
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Question:
13. Should the OCC include other elective goals for services based
on alternate measures in the simplified strategic plan process? If so,
how should the OCC identify ``Satisfactory'' or ``Outstanding''
performance for those goals?
C. Strategic Plan Assessment and Rating
The OCC assesses the performance of a bank operating under an
approved strategic plan to determine if it has met the measurable goals
in its strategic plan. The CRA regulation provides that the OCC will
rate a bank ``Satisfactory'' if it substantially achieves its plan
goals for a ``Satisfactory'' rating.\66\ The CRA regulation further
provides that the OCC will rate a bank ``Outstanding'' if it exceeds
its plan goals for a ``Satisfactory'' rating and substantially achieves
its plan goals for an ``Outstanding'' rating.\67\ A bank that does not
substantially meet its ``Satisfactory'' goals in an assessment area
would be rated ``Needs to Improve'' or ``Substantial Noncompliance,''
depending on the extent to which it falls short of its plan goals,
unless the bank elected to be evaluated under the otherwise applicable
performance tests and standards.\68\
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\66\ See 12 CFR part 25, Appendix A, paragraph (e) (Mar. 29,
2024).
\67\ See id.
\68\ See id.
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In general, a bank would be considered to have substantially met
its measurable goals if the bank meets most of the goals specified in
its strategic plan in most of its assessment areas, considering (1) the
extent to which the bank did not meet individual goals; (2) the
importance of those goals to the plan as a whole; and (3) any
performance context factors explaining why a particular goal was not
met. The OCC generally considers a ``Needs to Improve'' rating for a
bank that substantially meets some measurable goals in most assessment
areas. A community bank that more significantly underperforms its
measurable goals or fails to substantially meet its goals two
evaluation periods in a row may receive a rating of ``Substantial
Noncompliance.'' As provided in the CRA regulation, a community bank
could also elect evaluation under the otherwise applicable performance
tests and standards if its ``Satisfactory'' goals were not
substantially met.\69\ If this substitute election is not made in the
community bank's strategic plan, the OCC would evaluate the bank only
under the measurable goals provided in the strategic plan.
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\69\ See 12 CFR 25.27(f)(4) (Mar. 29, 2024).
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For community banks with multiple measurable goals or assessment
areas, the OCC is also considering including in the Simplified
Strategic Plan Form fields that would allow a community bank to specify
how its performance with respect to its measurable goals and in its
assessment areas would be weighted to determine if the bank has
substantially met or exceeded the ``Satisfactory'' goals in its
strategic plan. This weighting could be based, for example, on the
bank's deposit market share, lending market share, or a combination of
the two. Weighting could also account for assessment area needs and
opportunities. Providing this option would increase predictability for
community banks by establishing in the plan how the OCC would determine
if a bank substantially met is measurable goals. Further, it would be
consistent with certain previously approved strategic plans.
Question:
14. Should the OCC include the option for banks to specify a
methodology for weighting measurable goals included in the proposed
strategic plan? If so, should the Simplified Strategic Plan Form,
discussed below, provide options for weighting methodologies? What
methodologies should the OCC consider?
D. Simplified Strategic Plan Process
In addition to providing clearer guidance on the development of a
proposed strategic plan, the simplified
[[Page 59754]]
strategic plan process would provide community banks with a streamlined
process for drafting proposed strategic plans and submitting those
plans to the OCC for approval. This proposed simplified strategic plan
process would reduce the complexity involved in developing a proposed
strategic plan by improving transparency and leveraging tools and
technology, as appropriate.
First, the OCC would implement process improvements to the
strategic plan consultation process to formalize its existing practice
of engaging in more detailed strategic plan consultations. Next, the
OCC would provide community banks with the Simplified Strategic Plan
Form to clarify the information a community bank must include in its
proposed strategic plan to comply with the CRA regulation.\70\ As a
result, the simplified strategic plan process would help limit the
instances in which a community bank unnecessarily expends resources by
gathering and including information in a proposed strategic plan that
the OCC does not need for purposes of evaluating the merits of the
plan. The combination of improved written guidance, tools, and
procedures for developing and requesting approval of a proposed
strategic plan would result in a simplified process requiring fewer
bank resources during plan development, and a more predictable
evaluation framework once the OCC approves a community bank's proposed
strategic plan.
---------------------------------------------------------------------------
\70\ Appendix B includes an outline of the proposed components
of the Simplified Strategic Plan Form. in.
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i. Simplified Strategic Plan Process Consultation
As provided in the current guidance, including the Q&As, a
community bank may consult the OCC during the development of a proposed
strategic plan. The OCC has engaged in strategic plan consultations
since first introducing the strategic plan option in the 1995 CRA
Regulation; however, the current consultation process envisions a high-
level interaction where the OCC would only provide guidance on the
procedures and information necessary to ensure a complete
submission.\71\ The current guidance on strategic plan consultations
states that the OCC does not provide guidance on the adequacy of the
proposed strategic plan or the merits of the measurable goals.\72\
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\71\ See Q&A Sec. __.27(f)(1)--1; OCC Bulletin 2019-39, supra
note 43.
\72\ See id.
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As discussed above, the OCC has learned over time that the high-
level consultation process envisioned in the guidance does not provide
many banks with sufficient direction to develop a proposed strategic
plan that meets the requirements of the regulation without undue
burden. For this reason, and at banks' request, the OCC has in practice
reviewed draft strategic plans as part of this consultation, including
with respect to proposed measurable goals.
Although optional, in the OCC's experience, the consultation
process is one factor that has contributed significantly to the
protracted timeframe and burden associated with developing and
obtaining approval of a strategic plan, and to banks deciding not to
pursue the strategic plan option in the first instance. To address
these deficiencies, the OCC would improve the consultation process by
clarifying that the agency would provide a community bank with timely,
initial feedback on the adequacy of its proposed strategic plan and the
merits of the proposed measurable goals considering the bank's
performance context. This feedback would not constitute OCC approval of
a strategic plan. The OCC would approve a proposed strategic plan
submitted using the simplified strategic plan process after considering
the regulatory criteria for evaluating a proposed strategic plan that
has complied with the required public comment process.
Under the simplified strategic plan process, the OCC's consultation
process would include providing guidance to a community bank on the
measurable goals it intends to specify in its proposed strategic plan.
As discussed above, however, the elective goals are not safe harbors
and community banks would still need to consider the appropriate
number, combination, represented performance categories, and
appropriate performance levels of elective goals, and custom goals, for
each assessment area included in the strategic plan and based on the
bank's performance context. The purpose of the consultation would be to
help the community bank understand the requirements of the regulation,
what information is responsive to those regulatory requirements, how to
consider performance context in selecting and supporting elective goals
or developing custom goals, and how the OCC applies the regulation's
criteria for evaluating a strategic plan once a plan is submitted for
approval following the public comment process.
In the OCC's experience, the consultation process is an informal
opportunity for a community bank to engage with the OCC; the extent and
length of a consultation is dictated by the bank and is only necessary
if it benefits the bank. The OCC expects that the more detailed written
guidance provided as part of the proposed simplified strategic plan
process, including clarifications related to the required content of a
proposed strategic plan, along with a more streamlined process for
drafting and submitting the plan to the OCC, will focus and shorten
these strategic plan consultations. For example, a community bank that
primarily selects elective goals would likely engage in a relatively
short consultation process. However, a community bank that specifies
more custom goals may need a more extensive consultation to help
determine if the performance measures and performance levels in the
custom goals are appropriate and fully supported.
ii. Simplified Strategic Plan Form
The proposed simplified strategic plan process would further reduce
burden by introducing the Simplified Strategic Plan Form, which would
remove some of the subjectivity associated with the development of a
strategic plan. Under the current process, banks that wish to use the
strategic plan option need to draft fully custom strategic plans with
little guidance on the necessary content, reasonableness of measurable
goals, design, or level of detail necessary for a complete proposed
plan.
The OCC understands from comments provided in other contexts \73\
that the considerable resources currently required to develop a
proposed strategic plan have deterred banks from electing the strategic
plan option. The OCC anticipates that changing the method community
banks may use to submit proposed strategic plans to the OCC would
substantially improve the quality of proposed strategic plans while
diminishing the need to revise these plans to ensure completeness. In
particular, the Simplified Strategic Plan Form would contain fields for
all of the information required in a strategic plan under the CRA
regulation, including measurable goals, relevant performance context,
public participation documentation, proposed effective date, substitute
election of evaluation under the otherwise applicable performance tests
and standards, and assessment areas covered by the plan. Presuming a
bank completes all fields that address CRA regulatory requirements with
responsive information, the OCC would expect that submitted proposed
strategic plans would be complete. In limited
[[Page 59755]]
circumstances, the OCC may require a community bank to submit
additional information not required by the Simplified Strategic Plan
Form that the OCC deems necessary to make a determination on the
strategic plan.
---------------------------------------------------------------------------
\73\ See supra Section I.B. (Overview of Feedback on CRA-Related
Regulatory Burden and the Strategic Plan Option).
---------------------------------------------------------------------------
The OCC is also considering using technology, where possible, to
simplify the strategic plan approval request process. Specifically, the
OCC is considering options for community banks to submit a completed
Simplified Strategic Plan Form electronically via email or through
Banknet. If the OCC decides to utilize Banknet for submission of the
Simplified Strategic Plan Form, the OCC would provide community banks
that do not have Banknet with the opportunity to submit the form by
email using the subject line ``CRA Simplified Strategic Plan Form.''
The OCC is also considering different potential formats for
developing the Simplified Strategic Plan Form. The OCC is considering
the following options: (1) a fillable Portable Document Format (PDF)
and (2) an interactive web-based form. In considering the merits of
these options, the OCC is weighing the tradeoff between providing more
immediate but less sophisticated improvements through the PDF option
compared with the more sophisticated and dynamic web-based option,
which would require a longer implementation time horizon. While the OCC
could implement the less sophisticated PDF option quickly, converting
information in a fillable PDF form into a proposed strategic plan would
require a manual process on the part of the OCC or the community bank.
In contrast, the more sophisticated web-based option could leverage
technology to convert the contents of the form into a proposed
strategic plan. To balance these considerations, the OCC could take a
combined approach and implement the simplified strategic plan process
through the less sophisticated PDF option first and later replace it
with the more sophisticated and agile web-based option.
The OCC is also considering ways to streamline the development of
subsequent strategic plans once the term of a community bank's
strategic plan ends. One option would be to allow a bank that
previously received approval for a strategic plan using the simplified
strategic plan process to prepopulate the Simplified Strategic Plan
Form with the contents of its prior strategic plan and then modify the
prepopulated information, as appropriate. The viability of this option
would depend on the format used for implementing the Simplified
Strategic Plan Form.
Included in appendix B to this SUPPLEMENTARY INFORMATION is an
outline of the potential fields that would be included in the
Simplified Strategic Plan Form.
Questions:
15. Does the outline of the potential fields for the Simplified
Strategic Plan Form appropriately reflect the components of a proposed
strategic plan? Are any additions or modifications necessary?
16. Should the OCC prioritize providing more immediate or more
sophisticated implementation?
17. If the OCC implements the guidance using a fillable PDF form,
should the OCC also develop a template for converting the information
in the form into a strategic plan?
18. Would prepopulating the Simplified Strategic Plan Form with the
information contained in previously approved plans help to further
simplify the strategic plan process in the future?
iii. Proposed Strategic Plan Receipt and Acknowledgement
After completing both the Simplified Strategic Plan Form and the
required public engagement, a community bank would submit its proposed
strategic plan to the OCC for approval. Upon receipt of a Simplified
Strategic Plan Form, the OCC would review the plan, and if complete,
send an acknowledgment of receipt to the bank. The OCC would deem a
request complete if the bank has populated all required fields of the
Simplified Strategic Plan Form with responsive information, including
any necessary supporting documentation.\74\ For incomplete proposed
strategic plans, the OCC would request that the community bank complete
the necessary fields on the Simplified Strategic Plan Form and resubmit
the form to the OCC. A community bank should expeditiously communicate
material changes to information initially furnished in the Simplified
Strategic Plan Form to the OCC during the processing of a community
bank's request for approval. The OCC would determine whether to approve
a proposed strategic plan by considering the information provided by
the community bank in the Simplified Strategic Plan Form. This
evaluation would consider whether to approve the elective goals or
custom goals, as applicable, based on the criteria provided in the CRA
regulation. As necessary, the OCC may consider information regarding a
community bank's performance context that was not provided by the bank
in the Simplified Strategic Plan Form.
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\74\ Under the simplified strategic plan process, the OCC would
streamline the information that community banks provide to document
their compliance with the strategic plan provision where possible.
For example, a community bank using the simplified strategic plan
process would certify its compliance with the public participation
requirements of the strategic plan provision but would not be
required to submit the notices used for compliance. The OCC may
validate compliance with the newspaper publication requirements in
the course of reviewing a proposed strategic plan, as appropriate.
---------------------------------------------------------------------------
iv. Strategic Plan Regulatory Requirements and Case-Specific Waiver
Requests
As noted above, in addition to measurable goals, the strategic plan
option includes certain other regulatory requirements. These include
requirements related to: (1) the proposed effective date; (2) data
reporting; (3) public engagement; (4) substitute election of evaluation
under the otherwise applicable performance tests and standards; and (5)
plan amendment. The simplified strategic plan process would incorporate
these requirements and any other necessary information into the
Simplified Strategic Plan Form. As discussed above, the OCC is also
considering providing fields in the Simplified Strategic Plan Form that
would allow the bank to specify how performance would be weighted in
and across its assessment areas to determine if the bank has
substantially met or exceeded its ``Satisfactory'' or ``Outstanding''
goals, as applicable.
The simplified strategic plan process would provide guidance on the
regulatory requirements that is generally consistent with the existing
guidelines in OCC Bulletin 2019-39, with one notable difference.
Specifically, the simplified strategic plan process would modify the
information required to document a community bank's compliance with the
CRA regulation's public participation requirements to require a
certification of compliance rather than documentation of newspaper
publication. In addition, the OCC has recognized during its past review
and approval of strategic plans that there may be instances where it
would be reasonable to waive certain regulatory requirements on a case-
by-case basis.
1. Case-by-Case Waiver of Certain Regulatory Requirements
The OCC has determined that, in certain instances, it may be
appropriate to waive the strategic plan provision's proposed effective
date requirement or certain data requirements based on a community
bank's particular facts and circumstances. For the remaining
[[Page 59756]]
regulatory requirements, the OCC has determined that waiver generally
would not be inappropriate.
Under the simplified strategic plan process, on a case-by-case
basis, the OCC would consider waiving the requirement that a community
bank submit its proposed strategic plan to the OCC for approval at
least three months prior to the proposed effective date \75\ if a
strategic plan has been deemed complete and the OCC would have
sufficient time to review and opine on the plan. Based on the OCC's
experience, it may be appropriate to waive the proposed effective date
requirement if it would allow the bank to: (1) align the effective date
of its strategic plan with the beginning of a performance year (i.e., a
January 1st effective date); (2) avoid a gap between approved strategic
plan terms; or (3) address other circumstances deemed relevant by the
OCC. The OCC has also determined that it may be appropriate to waive
certain of the CRA regulation's data reporting requirements \76\ on a
case-by-case basis if those data are not necessary for evaluating the
measurable goals included in a community bank's proposed strategic
plan. For example, the OCC may consider waiving the small business and
small farm data collection and reporting requirements if a community
bank has not included a retail lending goal in its strategic plan. The
OCC notes, however, that it generally would be inappropriate for a
community bank to develop a strategic plan that does not include
measurable goals for lending products that are integral to the bank's
business strategy in order to seek waiver of the associated data
requirements.
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\75\ Under the CRA regulation, a bank is not evaluated under a
strategic plan until the bank has been operating under an approved
and effective strategic plan for at least one year. See 12 CFR
25.27(a) (Mar. 29, 2024).
\76\ The strategic plan provision provides that electing the
strategic plan option does not affect a bank's or savings
association's obligation, if any, to report data as required under
the CRA regulation.
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The OCC believes that waiver may be appropriate, on a case-by-case
basis, when: (1) a regulatory requirement is for the benefit of the OCC
(e.g., the three month lead time for the proposed effective date
provides time for the OCC to review a proposed strategic plan) and (2)
waiving the requirement would have minimal impact on the OCC's ability
to evaluate the bank pursuant to the strategic plan, if approved. For
example, a waiver would have minimal impact on the OCC's ability to
evaluate a bank pursuant to a proposed strategic plan if the data that
the bank was exempted from collecting and reporting would not be
considered in evaluating the bank's measurable goals or the bank's
performance under the otherwise applicable performance tests and
standards for a bank that chose the substitute election. If the OCC
were to decide to grant a waiver, the OCC would communicate that
decision to the community bank in writing. The OCC believes it is
appropriate to consider case-specific waivers to minimize the impact of
regulatory requirements that impose unnecessary burden on community
banks.
2. Compliance With Public Participation Requirements
Under the simplified strategic plan process, community banks would
continue to be required to comply with the public participation
requirements.\77\ In determining whether to approve a proposed
strategic plan, the OCC will consider any public comments and how the
community bank addressed those comments. Obtaining information from the
public when developing a strategic plan helps to provide a community
bank with information related to the lending, investment, and service
needs of its community and the opportunities available to meet those
needs.
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\77\ The strategic plan option includes two public participation
requirements. First, a bank must seek informal suggestions from
members of the public in its assessment areas covered by the plan
while developing the plan and describe its efforts to seek
suggestions in its proposed strategic plan. See 12 CFR 25.27(d)(1)
and (e) (Mar. 29, 2024). Second, a bank must: (1) 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 (2) submit with its proposed strategic
plan 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. See 12 CFR 25.27(d)(2) and (e) (Mar.
29, 2024).
---------------------------------------------------------------------------
Compliance with the strategic plan provision's public participation
requirements is important to the OCC's decision on a strategic plan. To
facilitate this public engagement, the Simplified Strategic Plan Form
would be completed in two stages. The first stage would generate a
draft plan for use in soliciting public comment in the required
newspapers of general circulation. At the end of the comment period,
the community bank would complete the second stage of the Simplified
Strategic Plan Form by revising the plan as appropriate and completing
the certification of compliance with the public comment process, which
would include providing a list of the newspapers that published the
plan for comment and the dates of publication. The community bank would
then submit the proposed strategic plan to the OCC for approval.
v. OCC Strategic Plan Review and Approval
In evaluating a community bank's proposed strategic plan, the OCC
would apply the evaluation criteria provided in the regulation.\78\ The
strategic plan provision requires the OCC to act on a plan within 60
days of receiving a complete plan or else the plan is deemed
approved.\79\ When possible, the OCC would aim to act within 45 days of
receiving a complete strategic plan, provided there are at least 45
days before the plan's proposed effective date.
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\78\ 12 CFR 25.27(g)(3) (Mar. 29, 2024).
\79\ 12 CFR 25.27(g)(1) (Mar. 29, 2024).
---------------------------------------------------------------------------
E. Existing Guidance
The guidance and process changes included in the simplified
strategic plan process would supplement the OCC's existing guidance on
the strategic plan process contained in OCC Bulletin 2019-39, as
applicable. Community banks may continue to develop strategic plans
using the guidance in OCC Bulletin 2019-39 or may elect to use the
proposed simplified strategic plan process.
III. Request for Comment
The OCC invites comment on all aspects of the proposed simplified
strategic plan process for community banks. In addition, the OCC
specifically request commenters' views on the questions included in
this SUPPLEMENTARY INFORMATION.
IV. Regulatory Analysis
Paperwork Reduction Act
This supplemental proposed guidance (proposed guidance) has been
reviewed for compliance with the Paperwork Reduction Act of 1995 (PRA)
(44 U.S.C. 3501 et seq.). In accordance with the PRA, the OCC may not
conduct or sponsor, and an organization is not required to respond to,
an information collection unless the information collection displays a
currently valid Office of Management and Budget (OMB) control number.
The OCC has reviewed the proposed guidance and has determined that
certain aspects of the proposed guidance constitute a collection of
information and is therefore revising its information collection titled
Community Reinvestment Act. The OMB control number for the information
collection is 1557-0357. The OCC is proposing to extend the information
collection for three years, with revision.
Description: Under the current CRA regulation, any bank may elect
to have
[[Page 59757]]
the OCC assess its CRA performance under an approved strategic plan.
The strategic plan provision requires a bank seeking to use the
strategic plan option to develop its plan in consultation with members
of the public, publish the plan for public comment, and include in the
plan annual interim measurable goals. The strategic plan provision
further provides the regulatory requirements that a bank must comply
with when electing the strategic plan option and the OCC's criteria for
evaluating a strategic plan.
The proposed guidance would make the strategic plan option more
accessible and less burdensome for community banks to implement and
does not impose any new requirements on community banks. The proposed
simplified strategic plan process would serve as an optional resource
for community banks that clarifies the requirements of the strategic
plan option and streamlines the development and submission of a
proposed strategic plan.
The reporting requirements in the proposed guidance are as follows:
Simplified Strategic Plan Form
Under the proposed guidance, the OCC would provide community banks
with a Simplified Strategic Plan Form to clarify the information that a
community bank must include in its proposed strategic plan in order to
comply with the CRA regulation. The Simplified Strategic Plan Form
would include fields for all information required for a strategic plan
under the CRA regulation, including measurable goals, relevant
performance context, public participation documentation, proposed
effective date, substitute election of evaluation under the otherwise
applicable performance tests and standards, and assessment areas
covered by the plan.
Presuming a bank completes all fields that address CRA regulatory
requirements with responsive information, the OCC expects that
submitted proposed strategic plans would be complete. In limited
circumstances, the OCC may require a community bank to submit
additional information not required by the Simplified Strategic Plan
Form to disposition the merits of the strategic plan.
Annual Interim Measurable Goals
The current CRA regulation provides that a bank's strategic plan
must specify annual interim measurable goals that constitute
``Satisfactory'' performance for each assessment area covered by the
plan. These goals must address all three performance categories and, if
a bank is not designated as a wholesale or limited purpose bank, must
emphasize lending and lending-related activities. The proposed guidance
provides that a community bank should include in its proposed strategic
plan lending, investment, and services measurable goals, as
appropriate. Under the proposed guidance a community bank would also
have the option to emphasize qualified investments or service
activities, if appropriate. To determine the appropriate performance
categories to specify measurable goals for and which to emphasize in
its proposed strategic plan, a community bank would consider the credit
needs of its community, public comments, and its performance context,
particularly the bank's capacity and constraints, business strategy,
and product offerings.
Community banks' proposed strategic plans would also need to
provide performance context addressing performance categories for which
the banks did not specify a measurable goal. Using the simplified
strategic plan process, a community bank would specify ``Satisfactory''
elective goals or custom goals for each performance category, as
appropriate, in its proposed strategic plan for each year and
assessment area included in the plan. In addition to ``Satisfactory''
measurable goals, a community bank's proposed strategic plan may also
specify measurable goals that constitute an ``Outstanding'' level of
performance. Community banks also have the option to specify
``Outstanding'' custom goals. The proposed guidance offers that a
community bank should consider community needs and its performance
context (e.g., its capacity and constraints, business strategy, and
product offerings) when specifying elective or custom goals in its
proposed strategic plan.
Plan Amendment
A bank may request approval of an amendment to an approved
strategic plan if there is a material change in circumstances (e.g., a
downturn in the economic environment, a shift in the bank's business
strategy, or entrance into or exit from one or more assessment areas).
Public participation is required in the development of an amendment to
a previously approved strategic plan. To request approval by the OCC of
a strategic plan amendment, a bank should submit the amendment portion
of the Simplified Strategic Plan Form.
Type of Review: Regular.
Affected Public: Businesses or other for-profit.
Respondents: National banks, Federal savings associations, Federal
branches and agencies.
Estimated Burden
----------------------------------------------------------------------------------------------------------------
Total
Estimated Frequency of Average estimated estimated
Source and type of burden Description number of response time per response annual
respondents burden
----------------------------------------------------------------------------------------------------------------
Reporting:
----------------------------------------------------------------------------------------------------------------
Sec. Sec. __.41 and Assessment area 173 1 2 346
__.42(g). delineation.
Sec. __.42(b)(1)........ Loan data: Small 173 1 8 1,384
business and
small farm.
Sec. __.42(b)(2)........ Loan data: 173 1 13 2,249
Community
development.
Sec. __.42(b)(3)........ Loan data: Home 173 1 253 43,769
mortgage loans.
----------------------------------------------------------------------------------------------------------------
Optional Reporting:
----------------------------------------------------------------------------------------------------------------
Sec. __.25(b)........... Request for 19 1 4 76
designation as
a wholesale
bank or a
limited purpose
bank.
[[Page 59758]]
Sec. __.27.............. Strategic plan:. 4 1 275 1,100
Banks other than
community banks
currently
operating under
an approved
strategic plan..
----------------------------------------------------------------------------------------------------------------
Simplified 50 1 100 5,000
strategic plan
form. (New).
Annual interim
measurable
goals--Provide
relevant
performance
context and
measurable
goals (elective
or custom)..
(New) Plan
amendment--subm
it the
amendment
portion of the
simplified
strategic plan
form. (New).
----------------------------------------------------------------------------------------------------------------
Sec. __.42(d)........... Data on 25 1 38 950
affiliate
lending.
Sec. __.42(e)........... Data on lending 16 1 17 272
by a consortium
or a third
party.
Sec. __.42(f)........... Small banks Covered by Burden in Sec. Sec. ...........
electing 25.42(a) & (b)
evaluation
under the
lending,
investment, and
service tests.
----------------------------------------------------------------------------------------------------------------
Recordkeeping:
----------------------------------------------------------------------------------------------------------------
Sec. __.42(a)........... Loan information 173 1 219 37,887
required to be
collected and
maintained--sma
ll business and
small farm loan
register.
----------------------------------------------------------------------------------------------------------------
Optional Recordkeeping:
----------------------------------------------------------------------------------------------------------------
Sec. __.42(c)(1)........ Optional data 22 1 326 7,172
collection and
maintenance-
Consumer loans
data.
Sec. __.42(c)(2)........ Optional data 25 1 25 625
collection and
maintenance-
Other loan data.
----------------------------------------------------------------------------------------------------------------
Disclosure:
----------------------------------------------------------------------------------------------------------------
Sec. Sec. __.43 and Content and 889 1 10 8,890
__.44. availability of
public file and
public notice.
---------------------------------------------------------------------------------
Total Estimated Annual ................ ............ .............. ................... 109,720
Burden.
----------------------------------------------------------------------------------------------------------------
Comments are invited on:
(a) Whether the collection of information is necessary for the
proper performance of the functions of the OCC, including whether the
information has practical utility;
(b) The accuracy of the OCC's estimate of the burden of the
collection of information;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(d) Ways to minimize the burden of the collection on respondents,
including through the use of automated collection techniques or other
forms of information technology; and
(e) Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to provide information.
V. Text of the Proposed Community Reinvestment Act Simplified Strategic
Plan Process for Community Banks
A. Summary
The Office of the Comptroller of the Currency (OCC) is issuing this
guidance to inform national banks, Federal savings associations, and
Federal branches of foreign banking organizations (collectively, banks)
about supplemental guidance applicable to community banks \80\ that are
interested in electing to have the OCC assess their Community
Reinvestment Act (CRA) performance under a strategic plan (strategic
plan option).\81\ Under the CRA regulation, any bank may elect to have
the OCC assess its CRA performance under an approved strategic plan.
The strategic plan option enables a bank to tailor its CRA examination
based on the needs of its community and its ability to help address
those needs based on its capacity and constraints, product offerings,
and business strategy. The CRA regulation's strategic plan provision
requires a bank seeking to use the strategic plan option to develop its
plan in consultation with members of the public, publish the plan for
public comment, and include in the plan annual interim measurable
goals. The strategic plan provision provides the: (1) regulatory
requirements that a bank must comply with when electing the strategic
plan option and (2) OCC's criteria for evaluating a strategic plan.
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\80\ OCC News Release 2025-89 identifies ``community banks'' as
banks with up to $30 billion in assets.
\81\ 12 CFR 25.27 (Mar. 29, 2024).
---------------------------------------------------------------------------
This guidance supplements the guidelines for requesting approval of
a strategic plan included in OCC Bulletin 2019-39, ``Community
Reinvestment
[[Page 59759]]
Act: Guidelines for Requesting Approval of a Strategic Plan.'' This
supplemental guidance helps clarify the OCC's implementation of the CRA
regulation's strategic plan provision for community banks by outlining
a simplified strategic plan process and providing additional guidance
on the development of a proposed strategic plan for those banks. This
supplemental guidance includes:
[ssquf] A Simplified Strategic Plan Form used to provide the OCC
with
[ssquf] Annual interim measurable goals for each assessment area
included in the proposed strategic plan; and
[ssquf] Other information related to the bank's proposed strategic
plan.
[ssquf] The OCC's simplified strategic plan process and additional
strategic plan guidance for community banks.
This supplemental guidance is designed to make the strategic plan
option more accessible to and less burdensome for community banks. This
guidance does not impose any new requirements on community banks. The
simplified strategic plan process is an optional resource for community
banks that clarifies the requirements of the strategic plan option and
streamlines the development and submission of a proposed strategic
plan. Any bank interested in the strategic plan option may continue to
follow the guidelines provided in OCC Bulletin 2019-39.
B. Simplified Strategic Plan Process--Plan Development
Measurable Goals
The CRA regulation provides that a bank's strategic plan must
specify annual interim measurable goals that constitute
``Satisfactory'' performance for each assessment area covered by the
plan.\82\ Generally, these goals must address all three performance
categories and, unless the bank has been designated as a wholesale or
limited purpose bank, must emphasize lending and lending-related
activities.\83\ However, the CRA regulation also states that a
different emphasis, including a focus on one or more performance
categories, may be appropriate if responsive to the characteristics and
credit needs of a bank's assessment areas, considering public comment
and the bank's capacity and constraints, product offerings, and
business strategy.\84\
---------------------------------------------------------------------------
\82\ See 12 CFR 25.27(f)(1) (Mar. 29, 2024).
\83\ See id.
\84\ See id.
---------------------------------------------------------------------------
Consistent with the CRA regulation, a community bank should include
in its proposed strategic plan lending, investment, and services
measurable goals, as appropriate. A bank has great flexibility to
fashion its proposed strategic plan within those parameters and would
not be required to specify measurable goals in all three performance
categories. Although the CRA regulation provides that a bank generally
should emphasize lending and lending-related activities, a community
bank would have the option to emphasize qualified investments or
service activities, if appropriate. A bank would consider the credit
needs of its community, public comments, and its performance context--
in particular the bank's capacity and constraints, business strategy,
and product offerings--to determine the appropriate performance
categories for which to specify measurable goals and emphasize in its
proposed strategic plan.\85\ The bank would also provide in its
proposed strategic plan performance context addressing performance
categories for which the bank did not specify a measurable goal.
---------------------------------------------------------------------------
\85\ This explanation of the CRA strategic plan provision is
consistent with the explanation provided in the 1994 CRA proposal
preceding the 1995 CRA regulation, which is substantively similar in
relevant part to the CRA strategic plan provision that was
ultimately included in the CRA regulation. See 59 FR 51232, 51242-
51243 (Oct. 7, 1994); see also 12 CFR 25.27(f) (Mar. 29, 2024).
---------------------------------------------------------------------------
The OCC has determined that the ``Satisfactory'' measurable goals
\86\ provided in the Simplified Strategic Plan Form (hereinafter,
elective goals) generally are consistent with the OCC's supervisory
expectations for what constitutes a ``Satisfactory'' performance level
for community banks, as discussed below. In addition to the elective
goals, community banks also may request approval for ``Satisfactory''
custom goals. In developing a proposed strategic plan using the
simplified strategic plan process, for each year and assessment area
included in the plan, a community bank would specify ``Satisfactory''
elective goals or custom goals for each performance category, as
appropriate.
---------------------------------------------------------------------------
\86\ The OCC will assess whether a community bank has met the
measurable goals in its strategic plan based on available data or
other data obtained during the examination as provided in the plan.
---------------------------------------------------------------------------
In addition to ``Satisfactory'' measurable goals, the CRA
regulation provides that a bank's strategic plan may specify measurable
goals that constitute an ``Outstanding'' level of performance.\87\ The
Simplified Strategic Plan Form also includes elective goals that
generally are consistent with the OCC's supervisory expectations for
what constitutes ``Outstanding'' performance for community banks, as
discussed below. In addition, community banks have the option to
specify ``Outstanding'' custom goals.
---------------------------------------------------------------------------
\87\ See 12 CFR 25.27(f)(3) (Mar. 29, 2024)
---------------------------------------------------------------------------
The OCC based the ``Satisfactory'' and ``Outstanding'' elective
goals on its supervisory experience. The elective goals reflect the
performance measures and related performance levels for a community
bank that the OCC determined may reflect ``Satisfactory'' or
``Outstanding'' performance individually or in combination with other
measurable goals, depending on the circumstances. The elective goals,
however, are not safe harbors and their use would not guarantee
approval of a strategic plan.\88\ In specifying elective goals or
custom goals in a proposed strategic plan, a community bank should
consider community needs and its performance context (e.g., its
capacity and constraints, business strategy, and product
offerings).\89\
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\88\ The OCC's approval of a strategic plan would be provided
only after the community bank were to undertake the required public
engagement and adjust the proposed strategic plan to address public
comments, as appropriate.
\89\ See 12 CFR 25.27(f)(1) (Mar. 29, 2024).
---------------------------------------------------------------------------
A community bank's performance context informs which measurable
goals are appropriate for the bank overall or for an assessment area,
including the number, combination, represented performance categories,
and appropriate performance levels for those goals. Because the
strategic plan option provides community banks with significant
flexibility to tailor their CRA examination, the measurable goals will
likely vary even when comparing two similarly situated banks. Based on
the OCC's supervisory experience, community banks may choose different
variations of goals with different performance levels to tailor their
CRA examinations based on the circumstances. Therefore, the elective
goals include performance measures with several options for performance
levels. Community banks also have the option to specify custom goals to
use in combination with, or instead of, the elective goals. The
appropriate performance levels for a community bank's measurable goals
would depend on the goals selected and the bank's performance context.
The Simplified Strategic Plan Form, discussed below, includes guidance
that provides examples of when an elective goal may be appropriate for
a community bank.
For example, a community bank operating in an assessment area with
extremely high competition for CD loans and qualified investments, may
select an elective goal with a lower ``Satisfactory'' performance level
for the assessment area, and a related ``Satisfactory'' performance
level for the
[[Page 59760]]
broader statewide or regional area that includes the assessment area.
However, in an assessment area with less competition, a bank may select
a higher ``Satisfactory'' elective goal and include consideration of
CRA-qualifying activities in the broader state-wide regional area in an
``Outstanding'' custom goal. In another example, a smaller community
bank that is unable to compete for large, complex investments may opt
for an elective goal focused on a lower volume of highly impactful
qualified investments, such as grants and donations. Further, it may be
appropriate for a small community bank that would otherwise be
evaluated solely based on the small bank lending test (i.e., the
community bank is a small bank that does not meet the definition of
intermediate small bank) to specify elective goals related only to
retail lending.
Public Participation Requirements
Under the simplified strategic plan process, community banks must
comply with the public participation requirements of the CRA strategic
plan provision.\90\ To comply with the public participation
requirements, a community bank would complete the Simplified Strategic
Plan Form in two stages. A bank would complete the first stage of the
form to develop a draft strategic plan for use in the public comment
process. Following the public comment process, the community bank would
complete the second stage of the Simplified Strategic Plan Form, which
includes fields for certifying compliance with public participation
requirements.
---------------------------------------------------------------------------
\90\ See 12 CFR 25.27(d) (Mar. 29, 2024). A bank may comply with
the requirement to make copies of its proposed strategic plan
available for review by the public at its offices during the period
of formal public comment by making a digital copy available for
review. Unless a bank receives a request for a hardcopy of its
proposed strategic plan, the bank may satisfy the requirement to
provide a copy of the plan upon request by providing a downloadable
digital version of its proposed strategic plan on its website.
---------------------------------------------------------------------------
Evaluating Performance
The OCC will rate a bank's CRA performance ``Satisfactory'' if the
bank substantially achieves its ``Satisfactory'' plan goals.\91\ In
general, a community bank would be considered to have substantially met
its ``Satisfactory'' goals if the bank meets most of its measurable
goals in most of its assessment areas, considering the importance of
those goals to the strategic plan as a whole, and performance context
factors explain the bank's failure to meet particular goals. The OCC
would rate a bank ``Outstanding'' if it exceeds its plan goals for a
``Satisfactory'' rating and substantially achieves its plan goals for
an ``Outstanding'' rating.\92\ A bank that does not substantially meet
its ``Satisfactory'' goals in an assessment area, would be assigned a
``Needs to Improve'' or ``Substantial Noncompliance'' rating, as
appropriate.\93\ The OCC generally considers a ``Needs to Improve''
rating for a bank that substantially meets some measurable goals in
most assessment areas. A community bank that under performs its
measurable goals to a greater extent or fails to substantially meet its
goals two evaluation periods in a row would generally receive a rating
of ``Substantial Noncompliance.'' A community bank may designate in the
Simplified Strategic Plan Form a weighting methodology that would
address how the OCC would determine if the bank had substantially met
its goals for a ``Satisfactory'' or ``Outstanding'' rating.
---------------------------------------------------------------------------
\91\ See 12 CFR part 25, appendix A, paragraph (e) (Mar. 29,
2024).
\92\ See id.
\93\ See id.
---------------------------------------------------------------------------
The Simplified Strategic Plan Form would also permit a community
bank to elect evaluation under the otherwise applicable performance
tests and standards if it fails to substantially meet its strategic
plan's measurable goals for a ``Satisfactory'' rating.\94\ If a
community bank does not make this election, the OCC will evaluate the
bank's CRA performance solely based on the measurable goals provided in
the strategic plan.
---------------------------------------------------------------------------
\94\ See 12 CFR 25.27(f)(4) (Mar. 29, 2024).
---------------------------------------------------------------------------
Preparation and Submission of a Strategic Plan
Before a community bank submits a proposed strategic plan to the
OCC for approval, bank management is encouraged to contact the bank's
supervisory office to request a consultation with OCC staff. The
supervisory office schedules a consultation that generally includes
staff from the supervisory office and other OCC offices. The purpose of
the consultation would be to help the bank understand the requirements
of the regulation, what information is responsive to those regulatory
requirements, how to think about performance context in selecting and
supporting elective goals or developing custom goals, and how the OCC
applies the CRA regulation's criteria for evaluating a strategic plan
once submitted to the OCC for approval following the public comment
process.
During this consultation, the OCC would provide a community bank
with preliminary feedback on the adequacy of its proposed strategic
plan and the merits of the proposed measurable goals considering the
bank's performance context. This feedback would not constitute OCC
approval of a strategic plan. The OCC would evaluate whether to approve
a proposed strategic plan by considering the regulatory criteria for
evaluating a strategic plan submitted to the agency for approval
following the public comment process.
Upon receipt of a complete Simplified Strategic Plan Form, the OCC
will send an acknowledgment of receipt to the community bank. The OCC
will deem a request for approval of a strategic plan complete if the
bank has provided responsive information for all the fields on the
Simplified Strategic Plan Form that provide information required by the
regulation and attached any necessary supporting documentation.\95\ If
the Simplified Strategic Plan Form is deemed incomplete, the OCC will
request the bank complete necessary fields on the Simplified Strategic
Plan Form and resubmit the form to the OCC. In limited circumstances,
the OCC may require the bank to submit additional information that the
OCC deems necessary to make a determination on the strategic plan. A
community bank should expeditiously communicate material changes to
information initially furnished in the Simplified Strategic Plan Form
to the OCC during the processing of a community bank's request for
approval. The OCC evaluates the information provided by the bank in the
Simplified Strategic Plan Form to determine whether to approve the
measurable goals in light of the public comments and relevant
performance context (e.g., the bank's capacity and constraints,
business strategy, and product offerings). The OCC considers, as
necessary, other information regarding the bank's performance context
in addition to the public comments and information submitted by the
bank.
---------------------------------------------------------------------------
\95\ Under the simplified strategic plan process, the OCC has
streamlined the information that banks provide to document their
compliance with the strategic plan provision where possible. For
example, banks using the simplified strategic plan process must
certify their compliance with the public participation requirements
of the strategic plan provision but are not required to submit the
notices or newspapers used for compliance.
---------------------------------------------------------------------------
Each request for approval of a strategic plan submitted to the OCC
must contain a proposed effective date.\96\ The proposed effective date
must be at least three months after the request is submitted to the
OCC. A community bank is not evaluated under a strategic
[[Page 59761]]
plan until the bank has been operating under an approved and effective
strategic plan for at least one year.\97\
---------------------------------------------------------------------------
\96\ See 12 CFR 25.27(e) (Mar. 29, 2024).
\97\ See 12 CFR 25.27(a) (Mar. 29, 2024).
---------------------------------------------------------------------------
Community banks should direct questions regarding the simplified
strategic plan process, completion of the Simplified Strategic Plan
Form, or a pending submission by sending an email to the OCC or
contacting their supervisory office.
Case-by-Case Waiver of Regulatory Requirements
The OCC has determined that, in certain instances, it may be
appropriate to waive the strategic plan provision's proposed effective
date requirement or certain CRA data requirements \98\ based on a
community bank's particular facts and circumstances. For the remaining
regulatory requirements, the OCC has determined that waiver generally
would not be appropriate.
---------------------------------------------------------------------------
\98\ 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 (Mar.
29, 2024). See 12 CFR 25.27(b).
---------------------------------------------------------------------------
Under the simplified strategic plan process, on a case-by-case
basis, the OCC would consider waiving the requirement that a community
bank submit its proposed strategic plan to the OCC for approval at
least three months prior to the proposed effective date if a strategic
plan has been deemed complete and the OCC would have sufficient time to
review and opine on the plan. Based on the OCC's experience, it may be
appropriate to waive the proposed effective date requirement if it
would allow the bank to: (1) align the effective date of its strategic
plan with the beginning of a performance year (i.e., a January 1st
effective date); (2) avoid a gap between approved strategic plan terms;
or (3) address other circumstances deemed relevant by the OCC. The OCC
has also determined that it may be appropriate to waive certain of the
CRA regulation's data reporting requirements \99\ on a case-by-case
basis if those data are not necessary for evaluating the measurable
goals included in a community bank's proposed strategic plan. For
example, the OCC may consider waiving the small business and small farm
data collection and reporting requirements if a community bank has not
included a retail lending goal in its strategic plan. The OCC notes,
however, that it generally would be inappropriate for a community bank
to develop a strategic plan that does not include measurable goals for
lending products that are integral to the bank's business strategy in
order to seek waiver of the associated data requirements.
---------------------------------------------------------------------------
\99\ The strategic plan provision provides that electing the
strategic plan option does not affect a bank's or savings
association's obligation, if any, to report data as required under
the CRA regulation.
---------------------------------------------------------------------------
The OCC believes that waiver may be appropriate, on a case-by-case
basis, when: (1) a regulatory requirement is for the benefit of the OCC
(e.g., the three month lead time for the proposed effective date
provides time for the OCC to review a proposed strategic plan) and (2)
waiving the requirement would have minimal impact on the OCC's ability
to evaluate the bank pursuant to the strategic plan if approved. For
example, a waiver would have minimal impact on the OCC's ability to
evaluate a bank pursuant to a proposed strategic plan if the data that
the bank was exempted from collecting and reporting would not be
considered in evaluating the bank's measurable goals or the bank's
performance under the otherwise applicable performance tests and
standards for a bank that were to choose the substitute election. If
the OCC were to decide to grant a waiver, the OCC would communicate
that decision to the community bank in writing. The OCC believes it is
appropriate to consider case-specific waivers to minimize the impact of
regulatory requirements that impose unnecessary burden on community
banks.
C. Decision Process and Other Information
Notification of Decision
The strategic plan provision requires the OCC to act on plan within
60 days of receiving a complete plan or else the plan is deemed
approved.\100\ When possible, the OCC would aim to act within 45 days
of receiving a complete strategic plan. The OCC may extend the review
period for good cause and would notify the community bank in writing of
any extension of the review period, the reason for the extension, and
the date by which the agency expects to act on the request. Provided a
bank submits a complete proposed strategic plan, the OCC expects that
it generally will not extend the review period unless the bank's
capacity and constraints, product offerings, or business strategy
materially change after submission of the plan. If the OCC fails to act
within the review period or timely extend the review period, the OCC
will deem the strategic plan to be approved.
---------------------------------------------------------------------------
\100\ See 12 CFR 25.27(g)(1) (Mar. 29, 2024).
---------------------------------------------------------------------------
Confidentiality
Under the provisions of the Freedom of Information Act (FOIA) (5
U.S.C. 552), a request for approval of a strategic plan submitted to
the OCC through the Simplified Strategic Plan Form is a public document
and is available to the public upon request. The OCC's decision
approving or denying a strategic plan may also be available to the
public under the FOIA. Under the CRA regulation, a community bank may
submit information along with its strategic plan to the OCC on a
confidential basis.\101\ The Simplified Strategic Plan Form contains a
confidential section that a bank requesting confidential treatment of
certain information would use to submit that information.
---------------------------------------------------------------------------
\101\ 12 CFR 25.27(f)(2) (Mar. 29, 2024).
---------------------------------------------------------------------------
A request for confidential treatment of commercial information
means the records arguably contain material exempt from release under
Exemption 4 of the FOIA. For example, if the requesting community bank
believes that disclosure of commercial or financial information
included with its request would likely result in substantial harm to
its competitive position or that of its affiliates, confidential
treatment of such information may be requested. This request for
confidential treatment would be included in the confidential section of
the Simplified Strategic Plan Form and must discuss in detail the
justification for confidential treatment. The bank's request for
confidential treatment should explain the harm that would result from
public release of the information. If a community bank requests
confidential treatment of supplemental information provided outside of
the confidential section of the Simplified Strategic Plan Form, the
community bank should: (1) segregate the information from any other
information that is submitted and (2) label the information as
``Confidential.''
The OCC determines whether information labeled ``Confidential''
warrants confidentiality and advises the requesting community bank of
any decision to make information labeled ``Confidential'' available to
the public. A community bank should follow the guidance in this section
when submitting confidential supervisory information, which includes
any information contained in, related to, or derived from reports of
examination, or confidential operating and condition reports.
Plan Amendment
During the term of an approved strategic plan, a bank may request
approval of an amendment to the strategic plan if there is a material
change in circumstances (e.g., a
[[Page 59762]]
downturn in the economic environment, a shift in the bank's business
strategy, or entrance into or exit from one or more assessment areas).
Public participation is required in the development of an amendment to
a previously approved strategic plan. To request approval by the OCC of
a strategic plan amendment under the simplified strategic plan process,
a community bank should submit the amendment portion of the Simplified
Strategic Plan Form.
Appendix A
Proposed Elective Goals: Below is a list of the proposed
elective goals developed based on the OCC's supervisory experience,
as discussed in this SUPPLEMENTARY INFORMATION. Each goal includes a
performance measure and corresponding performance level. The
proposed elective goals provide guidance on the general
circumstances under which a community bank would use an elective
goal. This guidance relies on the OCC's experience with respect to
the common performance context factors applicable to community banks
of different sizes and types. Under the proposed simplified
strategic plan process each community bank would determine the
elective goals to include in its proposed strategic plan, if any,
based on its specific performance context factors. A community
bank's performance context may support the use of goals in
circumstances other than those suggested in the list below.
Once finalized, the elective goals would be incorporated into
the Simplified Strategic Plan Form. The elective goals included in
the form would evolve over time as new goals are added.
Goal Growth and Conversion Methodologies
A community bank may opt to use one of the following
methodologies for converting percentage-based elective goals to
dollar-based elective goals and/or increasing the performance values
in the goals during the plan term. The starting point for these
conversions would be the percentage of T1 capital or total assets as
of December 31 of the year prior to the plan term. A community bank
could also increase dollar or number based elective goals using
these methodologies, as appropriate. The bank would allocate the
percent of T1 capital or total assets, or the converted dollar
value, based on these measures, to assessment areas based on the
percentage of deposits assigned to the assessment areas covered by
the plan.
T1 capital or total assets as of December 31 of the
previous year in the plan term
5 percent increase year-over-year for each subsequent
year in the strategic plan term
Annual change in GDP as of December 31 of the previous
year for each subsequent year in the strategic plan term
CD Lending
Satisfactory Goals
[cir] 1% of T1 Capital (would generally be appropriate for
smaller, less complex community banks)
[cir] 2% of T1 Capital (would generally be appropriate for
larger, more complex community banks that include a qualified
investment goal)
[cir] 3% of T1 Capital (would generally be appropriate for
larger, more complex community banks that do not include a qualified
investment goal)
[cir] 0.08% total assets per year (would generally be
appropriate for smaller, less complex community banks)
[cir] 0.16% total assets per year (would generally be
appropriate for larger, more complex community banks that include a
qualified investment goal)
[cir] 0.24% total assets per year (would generally be
appropriate for larger, more complex community banks that do not
include a qualified investment goal)
[cir] 0.5% of T1 Capital per year in the assessment area and
0.5% in the Broader Statewide or Regional Area (would generally be
appropriate for smaller, less complex community banks in assessment
areas with high competition)
[cir] 1% of T1 Capital per year in the assessment area and 1% in
the Broader Statewide or Regional Area (would generally be
appropriate for larger, more complex community banks that include a
qualified investment goal in assessment areas with high competition)
[cir] 1.5% of T1 Capital per year in the assessment area and
1.5% in the Broader Statewide or Regional Area (would generally be
appropriate for larger, more complex community banks that do not
include a qualified investment goal in assessment areas with high
competition)
[cir] 0.04% of total assets per year in the assessment area and
0.04% in the Broader Statewide or Regional Area (would generally be
appropriate for larger, more complex community banks that include a
qualified investment goal in assessment areas with high competition)
[cir] 0.08% of total assets per year in the assessment area and
0.08% in the Broader Statewide or Regional Area (would generally be
appropriate for larger, more complex community banks that include a
qualified investment goal in assessment areas with high competition)
[cir] 0.16% of total assets per year in the assessment area and
0.16% in the Broader Statewide or Regional Area (would generally be
appropriate for larger, more complex community banks that do not
include a qualified investment goal in assessment areas with high
competition)
Outstanding Goals
[cir] 2% of T1 Capital per year (would generally be appropriate
for smaller, less complex community banks)
[cir] 3% of T1 Capital per year (would generally be appropriate
for larger, more complex community banks that include a qualified
investment goal)
[cir] 5% of T1 Capital per year (would generally be appropriate
for larger, more complex community banks that do not include a
qualified investment goal)
[cir] 0.16% total assets per year (would generally be
appropriate for smaller, less complex community banks)
[cir] 0.24% total assets per year (would generally be
appropriate for larger, more complex community banks that include a
qualified investment goal)
[cir] 0.40% total assets per year (would generally be
appropriate for larger, more complex community banks that do not
include a qualified investment goal)
[cir] 1% of T1 Capital per year in the assessment area and 1% in
the Broader Statewide or Regional Area (would generally be
appropriate for smaller, less complex community banks in assessment
areas with high competition)
[cir] 1.5% of T1 Capital per year in the assessment area and
1.5% in the Broader Statewide or Regional Area (would generally be
appropriate for larger, more complex community banks that include a
qualified investment goal in assessment areas with high competition)
[cir] 2.5% of T1 Capital per year in the assessment area and
2.5% in the Broader Statewide or Regional Area (would generally be
appropriate for larger, more complex community banks that do not
include a qualified investment goal in assessment areas with high
competition)
[cir] 0.08% of total assets per year in the assessment area and
0.08% in the Broader Statewide or Regional Area (would generally be
appropriate for larger, more complex community banks that include a
qualified investment goal in assessment areas with high competition)
[cir] 0.12% of total assets per year in the assessment area and
0.12% in the Broader Statewide or Regional Area (would generally be
appropriate for larger, more complex community banks that include a
qualified investment goal in assessment areas with high competition)
[cir] 0.20% of total assets per year in the assessment area and
0.20% in the Broader Statewide or Regional Area (would generally be
appropriate for larger, more complex community banks that do not
include a qualified investment goal in assessment areas with high
competition)
Retail Lending--Home Mortgage/Small Business/Small Farm/Consumer
Loan Geographic or Borrower Distribution
--This goal may be appropriate as a primary goal for smaller
community banks, or as a goal included along with other measurable
goals for larger community banks.
Satisfactory Goal
[cir] X (bank defined variable) percent of portfolio to LMI
borrowers, small business, small farms or LMI areas.
[cir] X (bank defined variable) number of loans to LMI
borrowers, small business, small farms or LMI areas.
[cir] X (bank defined variable) dollar of loans to LMI
borrowers, small business, small farms or LMI areas.
Outstanding Goal
[cir] X+ (bank defined variable) percent of portfolio to LMI
borrowers, small business, small farms or LMI areas.
[cir] X+ (bank defined variable) number of loans to LMI
borrowers, small business, small farms or LMI areas.
[[Page 59763]]
[cir] X+ (bank defined variable) dollar of loans to LMI
borrowers, small business, small farms or LMI areas.
Qualified Investments
Satisfactory Goals
[cir] 0.5% of T1 Capital per year (would generally be
appropriate for smaller, less complex community banks)
[cir] 1% of T1 Capital per year (would generally be appropriate
for larger, more complex community banks that include a CD lending
goal)
[cir] 3% of T1 Capital (would generally be appropriate for
larger, more complex community banks that do not include a CD
lending goal)
[cir] 0.25% of T1 Capital per year (would generally be
appropriate for smaller, less complex community banks when at least
50% goes to high impact investments such as donations or complex/
innovative donations)
[cir] 0.5% of T1 Capital per year (would generally be
appropriate for larger, more complex community banks that include a
CD lending goal when at least 50% goes to high impact investments
such as donations or complex/innovative donations)
[cir] 2% of T1 Capital per year (would generally be appropriate
for larger, more complex community banks that do not include a CD
lending goal when at least 50% goes to high impact investments such
as donations or complex/innovative donations)
[cir] 0.04% total assets per year (would generally be
appropriate for smaller, less complex community banks)
[cir] 0.08% total assets per year (would generally be
appropriate for larger, more complex community banks that include a
CD lending goal)
[cir] 0.24% total assets per year (would generally be
appropriate for larger, more complex community banks that do not
include a CD lending goal)
[cir] 0.02% total assets per year (would generally be
appropriate for smaller, less complex community banks when at least
50% goes to high impact investments such as donations or complex/
innovative donations)
[cir] 0.04% total assets per year (would generally be
appropriate for larger, more complex community banks that include a
CD lending goal when at least 50% goes to high impact investments
such as donations or complex/innovative donations)
[cir] 0.16% total assets per year (would generally be
appropriate for larger, more complex community banks that do not
include a CD lending goal when at least 50% goes to high impact
investments such as donations or complex/innovative donations)
[cir] 0.5% of T1 Capital per year in the assessment area and
0.5% in the Broader Statewide or Regional Area (would generally be
appropriate for smaller, less complex community banks in assessment
areas with high competition)
[cir] 1% of T1 Capital per year in the assessment area and 1% in
the Broader Statewide or Regional Area (would generally be
appropriate for larger, more complex community banks that include a
CD lending goal in assessment areas with high competition)
[cir] 1.5% of T1 Capital per year in the assessment area and
1.5% in the Broader Statewide or Regional Area (would generally be
appropriate for larger, more complex community banks that do not
include a CD lending goal in assessment areas with high competition)
Outstanding Goals
[cir] 1.5% of T1 Capital per year (would generally be
appropriate for smaller, less complex community banks)
[cir] 2% of T1 Capital per year (would generally be appropriate
for larger, more complex community banks that include a CD lending
goal)
[cir] 5% of T1 Capital (would generally be appropriate for
larger, more complex community banks that do not include a CD
lending goal)
[cir] 0.75% of T1 Capital per year (would generally be
appropriate for smaller, less complex community banks when at least
50% goes to high impact investments such as donations or complex/
innovative donations)
[cir] 1% of T1 Capital per year (would generally be appropriate
for larger, more complex community banks that include a CD lending
goal when at least 50% goes to high impact investments such as
donations or complex/innovative donations)
[cir] 3% of T1 Capital per year (would generally be appropriate
for larger, more complex community banks that do not include a CD
lending goal when at least 50% goes to high impact investments such
as donations or complex/innovative donations)
[cir] 0.12% total assets per year (would generally be
appropriate for smaller, less complex community banks)
[cir] 0.16% total assets per year (would generally be
appropriate for larger, more complex community banks that include a
CD lending goal)
[cir] 0.40% total assets per year (would generally be
appropriate for larger, more complex community banks that do not
include a CD lending goal)
[cir] 0.06% total assets per year (would generally be
appropriate for smaller, less complex community banks when at least
50% goes to high impact investments such as donations or complex/
innovative donations)
[cir] 0.08% total assets per year (would generally be
appropriate for larger, more complex community banks that include a
CD lending goal when at least 50% goes to high impact investments
such as donations or complex/innovative donations)
[cir] 0.24% total assets per year (would generally be
appropriate for larger, more complex community banks that do not
include a CD lending goal when at least 50% goes to high impact
investments such as donations or complex/innovative donations)
[cir] 0.5% of T1 Capital per year in the assessment area and
0.5% in the Broader Statewide or Regional Area (would generally be
appropriate for smaller, less complex community banks in assessment
areas with high competition)
[cir] 1% of T1 Capital per year in the assessment area and 1% in
the Broader Statewide or Regional Area (would generally be
appropriate for smaller, less complex community banks in assessment
areas with high competition)
[cir] 1.5% of T1 Capital per year in the assessment area and
1.5% in the Broader Statewide or Regional Area (would generally be
appropriate for larger, more complex community banks that include a
CD lending goal in assessment areas with high competition)
[cir] 2.5% of T1 Capital per year in the assessment area and
2.5% in the Broader Statewide or Regional Area (would generally be
appropriate for larger, more complex community banks that do not
include a CD lending goal in assessment areas with high competition)
Combined CD Lending and Qualified Investments
Satisfactory Goals--
[cir] 1.5% of T1 Capital per year (would generally be
appropriate for smaller, less complex community banks)
[cir] 3% of T1 Capital per year (would generally be appropriate
for larger, more complex community banks)
[cir] 0.12% total assets per year (would generally be
appropriate for smaller, less complex community banks)
[cir] 0.24% total assets per year (would generally be
appropriate for larger, more complex community banks)
Outstanding Goals--
[cir] 2% of T1 Capital per year (would generally be appropriate
for smaller, less complex community banks)
[cir] 5% of T1 Capital per year (would generally be appropriate
for larger, more complex community banks)
[cir] 0.20% total assets per year (would generally be
appropriate for smaller, less complex community banks)
[cir] 0.40% total assets per year (would generally be
appropriate for larger, more complex community banks)
Services
Satisfactory Goals
[cir] 2 hours of CD services volunteer time per full-time
employee per year
[cir] X (bank defined variable) hours of CD services volunteer
time per manager per year
Outstanding Goals
[cir] 4 hours of CD services volunteer time per full-time
employee per year
[cir] X+ (bank defined variable) hours of CD services volunteer
time per manager per year
Appendix B
Simplified CRA Strategic Plan Form Outline
Stage 1
BANK PROFILE: The Bank Profile section would include fields for
the Bank to enter certain background information, as applicable. A
community bank would populate the fields necessary to support the
measurable goals included in the plan and to allow the OCC to
evaluate the merits of the plan. Performance context information
provided in this section would be bank-level information that
informs the plan.
Bank Name
Total Assets
Tier 1 Capital
Charter Number
Total Deposits
[[Page 59764]]
Performance Context \102\
---------------------------------------------------------------------------
\102\ Refer to 12 CFR 25.21(b)(1) (March 29, 2024) 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 or savings association's assessment area(s);
(2) Any information about lending, investment, and service
opportunities in the bank's or savings association's assessment
area(s) maintained by the bank or savings association or obtained
from community organizations, state, local, and tribal governments,
economic development agencies, or other sources; (3) The bank's or
savings association's product offerings and business strategy as
determined from data provided by the bank or savings association;
(4) Institutional capacity and constraints, including the size and
financial condition of the bank or savings association, the economic
climate (national, regional, and local), safety and soundness
limitations, and any other factors that significantly affect the
bank's or savings association's ability to provide lending,
investments, or services in its assessment area(s); (5) The bank's
or savings association's past performance and the performance of
similarly situated lenders; (6) The bank's or savings association's
public file, as described in Sec. 25.43 (March 29, 2024), and any
written comments about the bank's or savings association's CRA
performance submitted to the bank or savings association or the
appropriate Federal banking agency.
ASSESSMENT AREA(s): The Assessment Area section would include
fields for the Bank to list each assessment area covered by the plan
and any Broader Statewide or Regional Areas, if applicable.
PROPOSED EFFECTIVE DATE OF PLAN: The Proposed Effective Date
section would include a field for the Bank to select a proposed
effective date that is at least three months after the date of
submission.
PLAN TERM: The Plan Term section would include a field for the
Bank to select a plan term between one and five years.
INFORMAL PUBLIC PARTICIPATION IN PLAN DEVELOPMENT: The Informal
Public Participation section would include a field for the Bank to
enter a description of its informal efforts to seek suggestions from
members of the public.
ANNUAL INTERIM MEASURABLE GOALS AND RELATED PERFORMANCE CONTEXT
(per assessment area included in the plan): The Annual Interim
Measurable Goals section would include fields for the Bank to
specify its measurable goals for each assessment area and year in
the plan term, provide related performance context, and provide
performance context for performance categories for which the Bank
did not include measurable goals in the plan, as applicable.
In the appropriate fields in the form the Bank would:
Specify one or more elective goals or custom goals for
each of the three performance categories, as applicable, considering
public comment, capacity and constraints, product offerings, and
business strategy.
Specify elective goals or custom goals, as applicable,
that constitute ``Satisfactory'' performance.
Specify at its option elective goals or custom goals,
as applicable, that constitute ``Outstanding'' performance.
Specify any applicable growth rate methodology.
Provide performance context supporting the specified
measurable goals.
Provide performance context addressing any performance
categories not included in the plan.
Specify a weighting methodology for:
Measurable goals within an assessment area; or
Performance across assessment areas.
Stage 2
FORMAL PUBLIC PARTICIPATION: The Formal Public Participation
section would include fields for the Bank to certify compliance with
the public participation requirements.
The Bank would provide in the appropriate fields a:
Certification of its compliance with the requirement to
solicit public comments 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 a list of newspapers
and publication dates for the notices.
Description of any written public comment received and
the initial plan as released for public comment if the plan was
revised in light of the comment received.
CONFIDENTIAL INFORMATION: The Confidential Information section
would include fields for the Bank to submit information on a
confidential basis, as needed.
PLAN AMENDMENT: The Plan Amendment section would include fields
for the Bank to request approval of an amendment to its plan on the
grounds that there has been a material change in circumstances.
In the appropriate fields in the form the Bank would:
Specify the material change in circumstance.
Specify amended elective goals or custom goals, as
applicable, that constitute ``Satisfactory'' performance.
Specify at its option amended elective goals or custom
goals, as applicable, that constitute ``Outstanding'' performance.
Specify an amended growth rate methodology, if
applicable.
Provide performance context supporting the amended
measurable goals.
Specify a weighting methodology for the amended
measurable goals within an assessment area or for performance across
assessment areas, as applicable.
FORMAL PUBLIC PARTICIPATION: The Formal Public Participation
section would include fields for the Bank to certify compliance with
the public participation requirements.
The Bank would provide in the appropriate fields a
Certification of its compliance with the requirement to
solicit public comments on the amended 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 a list of newspapers
and publication dates for the notices.
Description of any written public comment received and
provide the initial plan as released for public comment if the plan
was revised in light of the comment received.
CONFIDENTIAL INFORMATION: The Confidential Information section
would include fields for the Bank to submit information on a
confidential basis, as needed.
Jonathan V. Gould,
Comptroller of the Currency.
[FR Doc. 2025-23547 Filed 12-19-25; 8:45 am]
BILLING CODE 4810-33-P