Community Reinvestment Act Regulations, 71328-71354 [2021-27171]
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Federal Register / Vol. 86, No. 238 / Wednesday, December 15, 2021 / Rules and Regulations
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 25
[Docket No. OCC–2021–0014]
RIN 1557–AF12
Community Reinvestment Act
Regulations
Office of the Comptroller of the
Currency, Treasury.
ACTION: Final rule.
AGENCY:
The Comptroller of the
Currency is adopting a final Community
Reinvestment Act (CRA) rule that is
based largely on the 1995 CRA rules, as
revised, that were issued by the Office
of the Comptroller of the Currency
(OCC), Board of Governors of the
Federal Reserve System (Board), and
Federal Deposit Insurance Corporation
(FDIC). This final rule applies to
national banks and savings associations.
This action rescinds the CRA final rule
published by the OCC on June 5, 2020,
and facilitates the OCC’s planned future
issuance of updated interagency CRA
rules with the Board and FDIC.
DATES: This final rule is effective on
January 1, 2022. The compliance date
for §§ 25.43 and 25.44 is April 1, 2022.
The compliance date for the remainder
of the rule is January 1, 2022.
FOR FURTHER INFORMATION CONTACT:
Emily Boyes, Counsel, Karen
McSweeney, Special Counsel, Heidi
Thomas, Special Counsel, or Kevin
Behne, Senior Attorney, Chief Counsel’s
Office, (202) 649–5490; or Vonda Eanes,
Director for CRA and Fair Lending
Policy, or Karen Bellesi, Director for
Community Development, Bank
Supervision Policy, (202) 649–5470,
Office of the Comptroller of the
Currency, 400 7th Street SW,
Washington, DC 20219.
SUPPLEMENTARY INFORMATION:
SUMMARY:
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I. Background
Congress enacted the Community
Reinvestment Act (CRA) 1 in 1977 to
encourage insured depository
institutions (IDI) 2 to help meet the
credit needs of their entire
communities, including low- and
moderate-income (LMI) neighborhoods,
consistent with the safe and sound
1 Public Law 95–128, 91 Stat. 1147 (1977)
(codified at 12 U.S.C. 2901 et seq. (as amended)).
2 The CRA uses the term ‘‘regulated financial
institution,’’ which it defines to mean an ‘‘insured
depository institution’’ as defined in 12 U.S.C.
1813(c)(2). See 12 U.S.C. 2902(2).
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operation of the IDIs.3 Specifically,
Congress found 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.’’ 4
The Office of the Comptroller of the
Currency (OCC or Agency),5 Board of
Governors of the Federal Reserve
System (Board), and Federal Deposit
Insurance Corporation (FDIC)
(collectively, Agencies),6 along with the
Federal Home Loan Bank Board, first
issued rules to implement the CRA in
1978.7 The Agencies, along with the
Office of Thrift Supervision (OTS),
significantly revised and clarified the
CRA rules in 1995 (1995 Rules).8 On
September 5, 2018, the OCC published
an Advance Notice of Proposed
Rulemaking (ANPR) as part of its
3 12 U.S.C. 2903(a)(1). Congress enacted the CRA
to promote access to credit by encouraging IDIs to
serve their entire communities. During this period,
Congress also enacted fair lending laws to address
fairness and access to housing and credit. For
example, in 1968, Congress passed a law that later
became known as the Fair Housing Act to prohibit
discrimination in renting or buying a home. See 42
U.S.C. 3601 et seq. (as amended). In 1974, Congress
passed the Equal Credit Opportunity Act to prohibit
creditors from discriminating against an applicant
on the basis of race, color, religion, national origin,
sex, marital status, or age. See 15 U.S.C. 1691 et seq.
(as amended). These fair lending laws provide a
legal basis for prohibiting discriminatory lending
practices, such as redlining. See Interagency Fair
Lending Examination Procedures, p. iv (Aug. 2009),
available at https://www.ffiec.gov/PDF/fairlend.pdf.
4 12 U.S.C. 2901(a).
5 The OCC is the primary regulator for national
banks and Federal savings associations.
6 In addition to the Agencies, Congress also
charged the Office of Thrift Supervision (OTS) and
its predecessor agency, the Federal Home Loan
Bank Board, with implementing the CRA. The OTS
had CRA rulemaking and examination authority for
all savings associations. The OTS’s rulemaking
authority for CRA transferred to the OCC in Title
III of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, Public Law 111–203, 124
Stat. 1376, 1522 (2010) (Dodd-Frank Act). See also
12 U.S.C. 2905. With respect to CRA examination
authority, the OCC examines Federal savings
associations, and the FDIC examines State savings
associations. See Sec. 312(b) of the Dodd-Frank Act.
7 43 FR 47144 (Oct. 12, 1978).
8 60 FR 22156 (May 4, 1995). As used herein, the
term ‘‘1995 Rules’’ refers to the regulatory
framework adopted by the Agencies and the OTS
in 1995 and any revisions the Agencies and OTS
made to that regulatory framework (e.g., 70 FR
44256 (Aug. 2, 2005) and 75 FR 61035 (Oct. 4,
2010)), except for the changes made by the OCC in
the June 2020 Rule. The 1995 Rules were codified
in 12 CFR parts 25, 563e (recodified as 195), 228,
and 345.
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renewed efforts to update the CRA
regulatory framework.9 On January 9,
2020, the OCC and FDIC published a
joint CRA Notice of Proposed
Rulemaking,10 and on June 5, 2020, the
OCC adopted the rule in final form (June
2020 Rule).11 The June 2020 Rule
applied to national banks, Federal
savings associations, and State savings
associations (collectively, banks).12
The June 2020 Rule took effect
October 1, 2020, although several of its
more material components had
compliance dates of either January 1,
2023, or January 1, 2024.13 To
implement certain provisions of the
June 2020 Rule with a compliance date
of January 1, 2023, the OCC published
a Notice of Proposed Rulemaking on
December 4, 2020, (December 2020
NPR), which proposed an approach to
determine the benchmarks, thresholds,
and minimums in the June 2020 Rule’s
performance standards.14 In connection
with the December 2020 NPR, the OCC
also published a CRA information
collection survey (Information
Collection) 15 to obtain the data
necessary to calibrate the June 2020
Rule’s performance standards.
On May 18, 2021, the OCC announced
that it was reconsidering the June 2020
Rule.16 At the same time, the OCC
announced that it did not plan to
finalize the December 2020 NPR and
was discontinuing the Information
Collection.17 Collectively, these actions
have enabled an orderly reconsideration
of the June 2020 Rule and provided
banks with the flexibility to deploy
resources in response to the COVID–19
pandemic.
Although the OCC issued the June
2020 Rule independently, the Agencies’
joint CRA regulatory reform efforts have
spanned the past decade.18 In 2018, the
9 The OCC worked with the Board and FDIC on
this ANPR. 83 FR 45053.
10 85 FR 1204.
11 85 FR 34734.
12 As used herein, the term ‘‘bank’’ or ‘‘banks’’
also includes uninsured Federal branches that
result from an acquisition described in section
5(a)(8) of the International Banking Act of 1978. 12
U.S.C. 3103(a)(8).
13 12 CFR 25.01(c)(4).
14 85 FR 78258.
15 85 FR 81270 (Dec. 15, 2020).
16 See OCC Bulletin 2021–24, Community
Reinvestment Act: Implementation of the June 2020
Final Rule, available at https://www.occ.gov/newsissuances/bulletins/2021/bulletin-2021-24.html.
17 Id.
18 For example, in 2014, pursuant to the
Economic Growth and Regulatory Paperwork
Reduction Act of 1996 (EGRPRA), the Agencies
began a decennial review of all of their rules, with
input from the public, to identify outdated,
unnecessary, or unduly burdensome rules and to
consider how to reduce regulatory burden on IDIs,
while at the same time ensuring the safety and
soundness of these institutions and the financial
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Agencies engaged with stakeholders,
including civil rights organizations,
community groups, members of
Congress, academics, and IDIs, to obtain
their perspectives and feedback on the
CRA and potential improvements to the
CRA regulatory framework. Separately,
the Board explored ways to modernize
the CRA regulatory framework to
address changes in the banking
industry, which culminated with the
Board’s publication of an ANPR on
October 19, 2020 (Board ANPR).19
Throughout all of the Agencies’ CRA
modernization efforts, stakeholders have
repeatedly stressed the importance of
the Agencies issuing a single set of CRA
rules applicable to all IDIs. On July 20,
2021, after considering (1) the
disproportionate impacts of the
pandemic on LMI communities, (2) the
comments provided on the Board
ANPR, and (3) the OCC’s experience
with implementation of the June 2020
Rule, the OCC announced it would
propose to rescind the June 2020 Rule.20
On the same day, the Agencies
announced that they are working
together to strengthen and modernize
the rules implementing the CRA.21 This
final rule is an important step in this
interagency process because it
reestablishes generally uniform rules
that apply to all IDIs. Thus, it better
positions the Agencies to identify joint
solutions to the common issues affecting
IDIs and the communities they serve.
II. Proposed Rule
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On September 8, 2021, the OCC
issued its proposal to rescind the June
2020 Rule and replace it with rules for
banks largely based on the 1995 Rules
(Proposal or Proposed Rule).22 The
Proposal would have aligned the OCC’s
CRA rules with the Board’s and FDIC’s
system. Public Law 104–208, 110 Stat. 3009 (1996)
(codified at 12 U.S.C. 3311). In 2017, the Agencies
issued a report to Congress that included a
summary of the public comments and
recommendations received during the EGRPRA
review, including those that addressed the CRA
regulatory framework. See Federal Financial
Institutions Examination Council, Joint Report to
Congress. Economic Growth and Regulatory
Paperwork Reduction Act, pp. 41–48 (Mar. 3, 2017),
available at https://www.ffiec.gov/pdf/2017_FFIEC_
EGRPRA_Joint-Report_to_Congress.pdf.
19 85 FR 66410.
20 NR 2021–76, OCC Statement on Rescinding its
2020 Community Reinvestment Act Rule, available
at https://www.occ.gov/news-issuances/newsreleases/2021/nr-occ-2021-76.html.
21 NR 2021–77, Interagency Statement on
Community Reinvestment Act Joint Agency Action,
available at https://www.occ.gov/news-issuances/
news-releases/2021/nr-ia-2021-77.html.
22 NR 2021–94, OCC Issues Proposal to Rescind
its 2020 Community Reinvestment Act Rule (Sept.
8, 2021), available at https://www.occ.gov/newsissuances/news-releases/2021/nr-occ-2021-94.html.
See also 86 FR 52026 (Sept. 17, 2021).
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CRA rules, thereby reinstituting the
regulatory uniformity for IDIs that
existed prior to the June 2020 Rule and
facilitating the ongoing interagency
work to modernize the CRA rules. The
OCC explained in the Proposal that any
future interagency CRA rules would
replace any final rule(s) the Agency
issues pursuant to the Proposal.23
The purpose of the Proposed Rule was
to (1) create consistent and transparent
CRA rules for banks; (2) limit CRArelated burden on banks, banks’
communities, and examiners; and (3)
ensure that the OCC continues to
encourage banks to help meet the credit
needs of their entire communities,
including LMI neighborhoods,
consistent with safe and sound
operations. A description of the
Proposal and the comments the OCC
received is set forth below.
A. Overview
The Proposed Rule would have
provided different performance tests
and standards for banks of different
sizes, structures, and operations.
Specifically, the Proposed Rule would
have provided an assessment method
for (1) small banks that would be
streamlined and would emphasize
lending performance; (2) intermediate
small banks (ISB) that would consider
lending and community development
(CD) activities (i.e., loans, investments,
and services); (3) large, retail banks that
would focus on lending, investment,
and service performance; and (4)
wholesale and limited purpose banks
that would be based on CD activities.
The Proposed Rule also would have
given any bank, regardless of its size or
business strategy, the option for the
appropriate Federal banking agency to
evaluate it under a strategic plan.24
Under the proposed performance tests
and standards, the appropriate Federal
banking agency would have considered
a bank’s performance context in
assessing its CRA performance.
Specifically, the Agency would have
reviewed (1) demographic and
economic data about the bank’s
assessment area(s) and information
about its local economic conditions; (2)
the bank’s major business products and
strategies; and (3) its financial
condition, including its capacity and
ability to lend or invest in its
community. The Agency also would
23 86
FR 52026, 52027.
noted previously, the OCC has CRA
examination authority for Federal savings
associations, and the FDIC has CRA examination
authority for State savings associations. See supra
note 6. References in this final rule to ‘‘appropriate
Federal banking agency’’ are intended to reflect this
distinction.
24 As
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have reviewed any information a bank
chose to provide about lending,
investment, and service opportunities in
its assessment area(s). Performance
context also would have included any
other information the appropriate
Federal banking agency deemed
relevant.
The Proposed Rule would have
required a bank to identify one or more
assessment area(s) where the
appropriate Federal banking agency
would evaluate its CRA performance. In
most cases, the Proposed Rule would
have required a bank to delineate as its
assessment area(s) the town, city,
county, or other political subdivision or
a metropolitan statistical area (MSA)
where (1) its main office, branch(es),
and deposit-taking automated teller
machines (ATMs) are located and (2) a
substantial portion of its loans are made.
A bank’s assessment area(s) would not
have needed to coincide with the
boundaries of one or more political
subdivisions or MSAs so long as the
assessment area(s) was one that (1) the
bank reasonably could have served; (2)
satisfied applicable regulatory
requirements; (3) did not reflect illegal
discrimination; and (4) did not
arbitrarily exclude LMI geographies (i.e.,
census tracts).
Under the Proposed Rule, large
banks 25 (and in some circumstances,
other banks) would have needed to
collect, maintain, and report certain
data related to the proposed
performance tests and standards. The
OCC would have made this data
available through individual and
aggregate disclosure statements. In
addition, banks would have made CRArelated information available in their
public files and posted CRA notices in
specified locations.
For a more detailed description of the
1995 Rules, on which the Proposed Rule
was largely based, see the SUPPLEMENTAL
INFORMATION sections of the Federal
Register documents in which the 1995
Rules were issued.26
B. Summary of Key Provisions
The following is a summary of key
provisions of the Proposed Rule.
1. Performance Tests and
Standards.27
25 The term ‘‘large banks’’ is used in CRA
guidance related to the 1995 Rules to describe
banks that exceed the ISB asset-size threshold.
26 See supra note 8.
27 The proposed performance tests and standards
applicable to a bank would have been based on the
bank’s asset size. The proposed asset-size
thresholds for determining whether a bank would
be a large bank, ISB, or small bank under the
Proposed Rule would have been adjusted annually
and aligned with the current asset-size thresholds
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Æ Small bank 28 performance
standards would have included a retail
lending test for assessing CRA
performance. The small bank lending
test could also have included
consideration of CD loans. Qualified
investments and CD services could have
been considered at the bank’s option for
an ‘‘outstanding’’ rating, but only if the
bank met or exceeded the lending test
criteria in the small bank performance
standards.
Æ The ISB 29 performance standards
would have included an assessment of
CRA performance under the small bank
retail lending test and a CD test. Under
the ISB CD test, the appropriate Federal
banking agency would have evaluated
all CD activities together.
Æ Large bank (i.e., banks that exceed
the ISB asset-size threshold) 30 lending
and service tests would have considered
both retail and CD activity, while the
large bank investment test would have
focused on qualified investments as
defined in the Proposed Rule.
Æ The appropriate Federal banking
agency would have evaluated wholesale
and limited purpose banks under a CD
test that considered activities (1) within
a bank’s broader statewide or regional
area(s) that includes a bank’s assessment
area(s) as activities that benefit the
bank’s assessment area(s) and (2)
outside of the bank’s broader statewide
or regional area that includes a bank’s
assessment area(s) if the bank had been
responsive to needs in its assessment
area(s).
Æ Any bank could have elected to be
evaluated under a strategic plan that set
out measurable goals for lending,
investment, and services, as applicable,
to achieve a ‘‘satisfactory’’ or
‘‘outstanding’’ rating. The bank would
have developed its strategic plan with
community input, and the appropriate
Federal banking agency would have
needed to approve the bank’s plan.
2. Discriminatory or Other Illegal
Credit Practices (DOICP). Under the
Proposal, the appropriate Federal
banking agency’s evaluation of a bank’s
CRA performance would have been
adversely affected by evidence of
DOICPs, including violations of the
in the Board’s and FDIC’s rules. See 12 CFR parts
228 and 345.
28 Under the Proposed Rule, ‘‘small bank’’ means
a bank that, as of December 31 of either of the prior
two calendar years, had assets of less than $1.322
billion. ‘‘ISB’’ means a small bank with assets of at
least $330 million as of December 31 of both of the
prior two calendar years and less than $1.322
billion as of December 31 of either of the prior two
calendar years. See 12 CFR 25.12(u), of the
Proposed Rule.
29 Id.
30 Id.
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Equal Credit Opportunity Act; 31 Fair
Housing Act; 32 Homeownership and
Equity Protection Act; 33 the prohibition
against unfair or deceptive acts or
practices in section 5 of the Federal
Trade Commission Act; 34 section 8 of
the Real Estate Settlement Procedures
Act; 35 and the Truth in Lending Act.36
The list of discriminatory or other
illegal credit practices in the Proposal
was not exhaustive, and the OCC also
would have considered credit-related
violations of the Military Lending Act
(MLA) and Servicemembers Civil Relief
Act (SCRA) 37 based on guidance that
predates the June 2020 Rule.38
3. Retail and CD Activities. The
appropriate Federal banking agency
would have evaluated banks’ CRA
performance based on (1) retail lending
(i.e., home mortgage loans, small
business loans, small farm loans, and
consumer loans, as applicable) and CD
loans; (2) qualified investments; and (3)
CD services, as each of these terms
would have been defined in the
Proposed Rule and considered in the
applicable performance tests and
standards.
4. Assessment Area(s).
Æ A bank would have delineated
assessment area(s) that generally—
D Included the geographies where the
bank has its main office, branch(es), and
deposit-taking ATMs (as applicable), as
well as any surrounding geographies
where the bank has originated or
purchased a substantial portion of its
loans; and
D Consisted of one or more MSAs,
metropolitan divisions, or political
subdivisions with a bank permitted to
adjust the boundaries of its assessment
area(s) to include only the portion of the
political subdivision that the bank could
reasonably be expected to serve.
Æ Assessment area(s) would have
been required to:
D Consist of whole geographies;
D Not reflect illegal discrimination;
D Not arbitrarily exclude LMI
geographies; and
D Not extend substantially beyond an
MSA or State boundary unless the
bank’s assessment area(s) was in a
multistate MSA.
31 15
U.S.C. 1691 et seq.
U.S.C. 3601 et seq.
33 Public Law 103–325, 108 Stat. 2190 (1994)
(codified at 15 U.S.C. 1601–02; 15 U.S.C. 1639–41).
34 15 U.S.C. 45.
35 12 U.S.C. 2607.
36 15 U.S.C. 1601–1667f (as amended).
37 See 10 U.S.C. 987 and 50 U.S.C. 3901 et seq.,
respectively.
38 See OCC PPM 5000–43, Impact of Evidence of
Discriminatory or Other Illegal Credit Practices on
Community Reinvestment Act Ratings (Aug. 15,
2018).
32 42
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5. Data Collection, Recordkeeping,
and Reporting.
Æ Banks, other than small banks,
would have collected, maintained, and
reported certain data related to small
business loans, small farm loans, CD
loans, and assessment areas. Banks,
other than small banks, that are subject
to the Home Mortgage Disclosure Act of
1975 (HMDA) reporting requirements 39
also would have reported certain
information related to home mortgage
lending outside of the MSA(s) where a
bank has a home or branch office (or
outside any MSA). The Proposed Rule
also would have included certain
optional data collection and reporting
provisions.
Æ The Proposed Rule would have
reinstated requirements regarding the
content and location of the public file
and public notices that were revised or
eliminated in the June 2020 Rule.
6. Ratings. The appropriate Federal
banking agency would have determined
a bank’s CRA rating as provided in
proposed appendix A.
7. Integration of National Bank and
Savings Association Rules. The
Proposed Rule would have reinstated
separate rules for national banks (at 12
CFR part 25, subparts A through E and
appendices A and B) and savings
associations (at 12 CFR part 195,
subparts A through C and appendices A
and B). The June 2020 Rule integrated
these rules in 12 CFR part 25.
8. Transition Period. The Proposed
Rule would have required banks to
comply with the final rule as of the
effective date with no option to follow
any provisions in the June 2020 Rule
during the period between when the
OCC would adopt the Proposed Rule in
final form and the Agencies would
adopt updated interagency CRA rules in
final form.40 The Proposal discussed
whether the OCC should address certain
transition considerations in the final
rule.
III. Comments on the Proposed Rule
The OCC received 62 comment letters
on the Proposed Rule, the majority of
which generally supported rescinding
the June 2020 Rule and the ongoing
interagency effort to issue updated CRA
rules. These comments addressed a
wide range of issues and came from a
variety of stakeholders and interested
parties, including the banking industry,
community and other advocacy groups,
State and local governments, and the
general public. The discussion below
39 12
U.S.C. 2801 et seq.
period of time between the effective date
of this final rule and the effective date of final
updated interagency CRA rules is referred to herein
as the ‘‘interim period.’’
40 The
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identifies the significant issues raised by
these commenters and explains how the
OCC addresses these issues in the final
rule. This final rule will provide
certainty to stakeholders, eliminate
burden associated with continuing to
transition to the June 2020 Rule, and
better position the OCC to engage in an
interagency rulemaking process to
update and modernize the CRA rules.
Transition Provisions. The OCC
proposed to replace the June 2020 Rule
with rules for banks based on the 1995
Rules. The Proposed Rule included a
description of several transition
considerations that the OCC was
contemplating to provide for a smooth
transition from the June 2020 Rule.
Although commenters generally
supported rescission of the June 2020
Rule, they expressed opposing views on
replacing the June 2020 Rule with rules
based on the 1995 Rules. Community
groups and other commenters generally
supported the Proposal for reasons
including (1) the OCC should not have
independently promulgated the June
2020 Rule; (2) there would be confusion
and inconsistent CRA evaluations if
there were different CRA regulatory
regimes applicable to different types of
IDIs; (3) the June 2020 Rule is not yet
fully effective, which lessens the impact
of its rescission; (4) uniformity of CRA
rules for all IDIs during the interim
period would facilitate the ongoing
interagency rulemaking process; and (5)
the June 2020 Rule both failed to ensure
that banks meet their local
communities’ banking needs and
disincentivized investment in LMI
communities and communities of color.
One commenter suggested that the final
rule should return banks to the 1995
Rules but include certain innovations
from the June 2020 Rule, including
deposit-based assessment areas and the
list of qualifying activities.
In contrast, industry and trade
associations generally opposed
transitioning back to the 1995 Rules.
Some of these commenters stated that
banks have already changed their CRA
programs to comply with the June 2020
Rule and another transition would be
burdensome. They requested that the
OCC balance the benefits of interagency
uniformity with the need to minimize
the disruption—for both banks and their
CRA reinvestment partners—that will
result if the OCC adopts the Proposed
Rule. Similarly, others asserted that
implementing the Proposed Rule would
be disruptive, wasteful, and confusing.
They recommended that the OCC
minimize the number of regulatory
transitions, the burden, and the
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confusion that would result from
multiple rule changes.41
Several of these commenters
requested that, during the interim
period, the OCC (1) retain the provisions
of the June 2020 Rule with a compliance
date of October 1, 2020, and (2) revert
to the 1995 Rules only for provisions of
the June 2020 Rule with a compliance
date of January 1, 2023, or January 1,
2024. Several commenters also
requested that the OCC provide banks
with flexibility to continue to utilize
aspects of the June 2020 Rule or the
1995 Rules during the interim period,
including by (1) providing consideration
for all activities that qualify under either
the June 2020 Rule or the 1995 Rules
and (2) allowing banks that were in the
process of transitioning to the June 2020
Rule to retain the CRA programs they
have in place as long as their programs
comply with either the 1995 Rules or
the June 2020 Rule.
After considering the comments on
transition issues, the OCC is adopting
the final rule largely without
modification from the Proposed Rule
and with a delayed compliance date for
two provisions: All banks will need to
comply with the rule by January 1,
2022, with the exception of the public
file and public notice provisions
(§§ 25.43 and 25.44 of the final rule). As
discussed below, banks will need to
comply with §§ 25.43 and 25.44 by
April 1, 2022. Notwithstanding
commenters’ concerns regarding the
burden for banks to transition back to a
rule based on the 1995 Rules, it is the
view of the OCC that this burden will
be limited because the June 2020 Rule
has only been partially implemented.
Further, the alternatives suggested by
the commenters would create confusion.
For example, allowing banks the
flexibility to elect to operate under
either the June 2020 Rule or the 1995
Rules would create confusion for
stakeholders regarding which regulatory
framework applied during banks’ CRA
evaluations. It also would undermine
the goal of a consistent set of rules for
all IDIs and could delay the issuance of
the Agencies’ updated interagency CRA
rule. For example, creating a hybrid
regulatory framework that leverages
aspects of both the June 2020 Rule and
the 1995 Rules could increase the
supervisory burden and draw OCC
resources away from the interagency
CRA rulemaking efforts.
41 One commenter also expressed concern that
reinstatement of the 1995 Rules could lead to
regressive financial policies in low-income
communities and suggested that the OCC consider
lessons from the financial crisis and solicit feedback
from the most affected communities.
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By finalizing this rule with an
effective date of January 1, 2022, and a
compliance date of April 1, 2022, for
§§ 25.43 and 25.44, all IDIs will be
subject to the same general regulatory
framework at the earliest reasonable
date, which will facilitate the Agencies’
issuance of updated interagency CRA
rules. To address concerns regarding the
burden associated with this decision,
the OCC will afford banks the
implementation flexibility permitted by
the transition provisions of the final rule
and the Interagency Questions and
Answers Regarding Community
Reinvestment (Q&As) for the 1995
Rules 42 and other CRA guidance,
including the application of
performance context. For example, in
evaluating a bank’s performance from
October 1, 2020, through the interim
period, the OCC will consider the
impact that regulatory changes had on
the bank’s ability to engage in qualifying
activities as part of its performance
context. In addition, the final rule’s
delayed compliance date of April 1,
2022, for the public file and public
notice provisions will ease burden
associated with this final rule.
Qualifying Activities. The Proposed
Rule would have replaced the qualifying
activities criteria in the June 2020 Rule
with the 1995 Rules’ home mortgage
loan, small business loan, small farm
loan, consumer loan, and CD
definitions. The Proposed Rule also
would have replaced the definitions
related to the qualifying activities
criteria in the June 2020 Rule with the
applicable definitions under the 1995
Rules. The Proposed Rule would have
eliminated June 2020 Rule definitions
that did not exist in the 1995 Rules.
The Proposal also explained that
banks would receive consideration in
their CRA examinations for activities
that met the qualifying activities criteria
or definitions in effect at the time that
the banks conducted the activities.43
Under the final rule, as was also the
case under the June 2020 Rule, a CRA
activity may include a legally binding
42 81
FR 48506 (July 25, 2016).
example, if a bank originated a loan or
entered into a legally binding commitment to lend
on December 20, 2021, to build a charter school in
which 40 percent of the students received free or
reduced price school lunch, that loan would receive
consideration in a bank’s CRA examination even if
the CRA examination took place after the effective
date of the final rule (January 1, 2022) because this
activity is a qualifying activity under the June 2020
Rule. See June 2020 Rule, 12 CFR 25.04(c)(5)(i).
However, if the bank made the same loan or entered
into the same legally binding commitment to lend
on January 20, 2022, that loan or commitment
would not qualify under the CD definitions in the
final rule, and, therefore, would not receive
consideration in a future CRA examination. See 12
CFR 25.12(g) and (h) of this final rule.
43 For
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commitment to lend or invest. A legally
binding commitment will be considered
to have been conducted on the date that
the commitment is legally binding on
the bank. This practice is consistent
with the OCC’s longstanding treatment
under the 1995 Rules of legally binding
commitments.44 Therefore, under the
final rule, a legally binding commitment
to lend or invest will be considered
under the CRA regulatory framework
that was in effect at the time the
commitment became legally binding on
the bank.
The OCC asked whether its proposal
to consider activities based on whether
they qualified at the time the bank (1)
conducted the activities or (2) entered
into a legally binding commitment to
conduct the activities was a reasonable
approach to address the proposed
changes to the activities that would
receive consideration in CRA
examinations.
Many commenters supported the
elimination of the June 2020 Rule’s
qualifying activities criteria in the final
rule and returning to the definitions in
the 1995 Rules.45 Other commenters
advocated retaining the June 2020
Rule’s qualifying activities criteria,
asserting that their elimination would
negatively affect banks’ communities.
For example, one commenter asserted
that the broader definition of qualifying
activities in the June 2020 Rule provides
an incentive for banks to engage in
activities that benefit communities,
including LMI and underserved
persons, and that this result is
consistent with the CRA’s intent.46
Another commenter suggested that
retaining the June 2020 Rule’s approach
for qualifying activities would minimize
disruptions in ongoing investment
decisions. Other commenters supported
retaining the current framework because
of the burdens associated with changing
regulatory regimes. One commenter
suggested that the OCC give CRA
consideration to any activity that
qualifies under either the 1995 Rules or
June 2020 Rule.
Many commenters expressed support
for the proposal to provide
44 See 12 CFR 25.21–27 of this final rule. See also
Q&A § ll.23(e); Q&A § ll.26(b)–4.
45 One commenter suggested that, if legally
permissible, the OCC should retroactively discount
the expanded activities under the June 2020 Rule,
particularly if done in the normal course of
business, and all expanded activities should be reevaluated to assess whether they benefitted the
intended beneficiaries of the CRA.
46 One of these commenters specifically objected
to reinstating the 1995 Rules’ CD services
definition, asserting that there are many CRA
volunteer services that provide tremendous benefits
to banks’ communities but do not focus on
providing financial services to these communities.
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consideration for activities based on
whether they qualified at the time the
activities were conducted or subject to
a legally binding commitment, with
some commenters describing this
approach as both reasonable and
appropriate. One community group
stated that it would be unfair to revoke
consideration for activities that
qualified at the time that the activities
were conducted.
After considering the comments, the
OCC is adopting the retail lending, CD,
and related definitions as proposed and
adopts the proposed treatment of
consideration for activities under the
CRA. This outcome ensures that, going
forward, (1) banks will receive
consideration for activities that the
Agencies have collectively recognized
help to meet community credit needs;
(2) consistent rules will apply to all
IDIs; (3) banks will receive credit for
dollars that are already legally
committed; and (4) the OCC is likely to
be able to more effectively work with
the Board and the FDIC to determine the
types of activities that should receive
consideration under an updated
interagency CRA rule. The final rule
includes a provision in subpart D that
explains when activities qualify for CRA
consideration in CRA examinations
based on the rule in effect at the time
that the activities were conducted.
Confirmation Process. The June 2020
Rule included a confirmation process
for qualifying activities that permits
banks and other interested parties to
request OCC confirmation that a loan,
investment, or service is consistent with
that rule’s qualifying activities criteria
prior to engaging in the activity. Under
the Proposed Rule, the OCC would have
removed the qualifying activities
confirmation process from the rule and
replaced it with OCC procedures that
would be operationally similar to the
June 2020 Rule’s confirmation process,
but the OCC would have adapted the
substance to conform to the 1995 Rules.
The OCC requested comment on this
approach.
Both industry and community group
commenters expressed support for
retaining a confirmation process. One
industry commenter noted that,
regardless of whether the process is
included in the final rule, retaining a
confirmation process would be the least
disruptive outcome for banks and
interested parties. A community
organization noted that any
confirmation process should be equally
accessible to community-based
organizations and banks. Another
community group stated that any OCC
delay in issuing guidance on the final
rule’s confirmation process should not
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affect banks’ responsibilities to comply
with the rule as of its effective date.
Given the broad support for a
confirmation process in general and the
clarity provided by the June 2020 Rule’s
confirmation process, the OCC is
adopting the proposed approach and
will provide guidance on the scope and
mechanics of this CD activity
confirmation process.47
Illustrative List. The June 2020 Rule
provided an illustrative list of examples
of CRA qualifying activities. The OCC
indicated in the Proposal that it would
maintain this list on its website to help
banks determine whether activities
conducted while the June 2020 Rule
was in effect are eligible for CRA
consideration. While the OCC received
few comments on this topic, all of those
who commented supported the
proposed approach of continuing to
maintain the list of examples.48 The
OCC believes that it may be useful to
banks and other interested parties to
continue to have access to the June 2020
Rule’s illustrative list; therefore, the
OCC will continue to make the list
available on the Agency’s website. After
January 1, 2022, banks that newly
engage in the activities on the
illustrative list will only receive CRA
consideration if the activities also meet
the retail or CD definitions in the final
rule.
Bank Asset-Size Thresholds. The June
2020 Rule increased the bank asset-size
thresholds for determining small,
intermediate, and general performance
standards banks from the thresholds for
determining small, ISB, and large banks
under the 1995 Rules.49 This increase
47 As of January 1, 2022, confirmation letters
issued under the June 2020 Rule for qualifying
activities that a bank has not yet engaged in, or
entered into a legally binding commitment for,
would no longer serve as OCC confirmation that an
activity qualifies for CRA consideration.
Nonetheless, the activity may still receive CRA
consideration if it meets the CD definitions and
other requirements of the final rule.
48 One commenter requested that the OCC
preserve the four illustrative examples of qualifying
activities that involve access to digital services as
part of any amended guidance on CRA qualifying
activities. These examples will remain on the
illustrative list; however, new activities consistent
with these examples that are conducted after
January 1, 2022 will only receive consideration to
the extent that they also are consistent with the
retail or CD definitions in the final rule.
49 Prior to the enactment of the June 2020 Rule,
(1) small banks were banks with less than $326
million in assets; (2) ISBs were banks with assets
between $326 million but less than $1.305 billion;
and (3) large banks were banks with assets of $1.305
billion and above. Under the June 2020 Rule, (1)
small banks are banks with assets up to $600
million; (2) intermediate banks are banks with
assets of greater than $600 million and up to $2.5
billion; and (3) general performance banks (referred
to as large banks under the 1995 Rules’ framework)
are banks with greater than $2.5 billion in assets.
As proposed, (1) small banks would have been
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changed some banks’ asset-size
categories (e.g., certain banks that were
ISBs under the 1995 Rules are small
banks under the 2020 Rule, and certain
banks that were large banks under the
1995 Rules became intermediate banks
under the June 2020 Rule). Under the
Proposed Rule, the OCC would have
reinstated the bank asset-size thresholds
of the 1995 Rules.50 For banks that
would have transitioned from small
banks to ISBs as a result of this, under
the Proposal, the OCC would have
considered this change in assessing the
bank’s performance context. Although
the proposed reinstatement of bank
asset-size thresholds would have
applied as of January 1, 2022, the
Proposal described a transition period
for the new data collection,
recordkeeping, and reporting
requirements for intermediate banks
that would return to being designated as
large banks or newly become designated
as large banks, which is addressed in
more detail below.
The OCC received several comments
on the proposed changes to the bank
asset-size thresholds. Generally,
industry commenters did not support
the proposed changes, noting that banks
recently adjusted their CRA programs to
satisfy the June 2020 Rule and that the
Proposed Rule would require another
set of adjustments and associated
burden (e.g., small banks that become
ISBs would be subject to a CD test;
intermediate banks that become large
banks would be subject to separate
lending, investment, and service tests
and to new or reinstated data collection,
recordkeeping, and reporting
requirements).
Commenters also noted that
reinstating the 1995 Rules’ bank assetsize thresholds and then revising them
again in a future interagency rulemaking
would both be wasteful and
banks of less than $330 million in assets; (2) ISBs
would have been banks with assets between $330
million and less than $1.322 billion; and (3) large
banks would have been banks with assets of $1.322
billion and above.
50 The bank asset-size thresholds in this final rule
reflect the adjusted thresholds issued by the Board
and FDIC on December 17, 2020, effective January
1, 2021. See, e.g., FDIC PR 140–2020, Agencies
Release Annual CRA Asset-Size Threshold
Adjustments for Small and Intermediate Small
Institutions, available at https://www.fdic.gov/news/
press-releases/2020/pr20140.html. The Agencies
make annual adjustments to the bank asset-size
thresholds based on the 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. The
adjusted thresholds are typically available mid- to
late-December and are effective January 1 of the
following year. Once the Agencies determine the
annual adjustment for calendar year 2022, the OCC
will publicize the updated bank asset-size
thresholds.
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burdensome, in part due to institutions’
limited staff. One commenter also
asserted that the asset-size thresholds
under the 1995 Rules were too low, do
not reflect the current banking industry,
and should not be reinstated. Another
commenter noted that the proposed
asset-size thresholds are problematic
because many banks now have inflated
balance sheets due to government
programs related to the COVID–19
pandemic.
Other commenters stated that an
immediate effective date for the
reinstated asset-size thresholds would
require banks to quickly modify their
current procedures and processes (e.g.,
purchasing CRA software; educating
specific lines of business about the new
requirements; updating job aids; and
implementing new requirements and
testing processes). Several commenters
suggested that banks that would have to
comply with new standards or tests
under a final rule (e.g., the ISB
performance standards or large bank
lending, investment, and services tests)
should be provided with additional time
to comply. One commenter supported a
transition period for banks that were
below the 1995 Rules’ large bank assetsize threshold prior to the June 2020
Rule’s effective date but now exceed the
proposed large bank asset-size
threshold. This commenter suggested a
one-year transition, a two-year
transition, or retaining the June 2020
Rule’s bank asset-size thresholds for the
duration of the interim period.
Community groups and other
commenters generally supported the
Proposal to revert to the 1995 Rules’
asset-size thresholds. These commenters
suggested that it should not be overly
burdensome for banks to transition back
to their former bank types because many
banks likely retained their reporting
infrastructure and software programs.
After considering these comments, the
OCC is adopting the Proposed Rule’s
bank asset-size thresholds without
modification. Therefore, any shift by
banks to a new bank type (i.e., small
bank, ISB, or large bank) will be based
on the final rule’s definitions and
effective January 1, 2022. Reinstating
the 1995 Rules’ asset-size thresholds is
one way that the final rule establishes
a consistent rule applicable to all IDIs,
which, as discussed elsewhere in this
preamble, will likely facilitate the
interagency CRA rulemaking process.
The final rule’s consideration of
performance context should provide
sufficient flexibility to address
commenters’ concerns about the burden
associated with being evaluated under
new tests and standards. For example,
the OCC will consider a bank’s need to
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71333
change its CRA procedures and
processes (e.g., reallocating staff and
other resources; initiating or increasing
its CD activities; or purchasing new
software) when evaluating the bank
under the final rule’s applicable
performance tests and standards.
Furthermore, as discussed below, the
OCC will provide banks that will be
large banks for the first time under the
final rule with additional time to
comply with the rule’s data
requirements.
Data Collection, Recordkeeping, and
Reporting Requirements for Banks
Transitioning from Intermediate Banks
to Large Banks. Under the June 2020
Rule, banks with assets between $1.305
billion and $2.5 billion changed bank
type from large bank (their classification
under the 1995 Rules) to intermediate
bank. As a result, these banks were no
longer subject to large bank data
collection and recordkeeping
requirements starting in 2021, and,
under the June 2020 Rule, they would
not have been subject to large bank data
reporting requirements in 2022.
Under the Proposed Rule, the OCC
would have (1) treated banks that
exceeded the ISB asset-size threshold 51
as large banks and (2) applied the large
bank data requirements to banks that
were designated as intermediate banks
under the June 2020 Rule beginning one
year from the final rule’s effective date
(one-year proposed grace period).52 This
treatment is consistent with the OCC’s
general practice under the 1995 Rules.
As discussed above, industry
commenters generally objected to the
proposed changes to the bank asset-size
thresholds largely because of the burden
associated with the data requirements
for the banks subject to new data
requirements (e.g., purchasing new
software to comply with the applicable
data requirements). Several commenters
recommended that the OCC retain the
June 2020 Rule’s bank asset-size
thresholds for the interim period. Others
requested additional transition time to
comply with the Proposed Rule’s data
requirements, or flexibility from the
OCC when assessing an affected bank’s
data integrity. For example, one
commenter suggested that the OCC
apply a ‘‘good faith’’ standard in
evaluating CRA performance during the
interim period, including by (1) not
issuing a ‘‘Needs to Improve’’ rating
based on inaccuracies or deficiencies in
51 See
supra note 28.
the June 2020 Rule, banks that exceeded
the intermediate bank threshold remained subject to
the 1995 Rules’ data collection, recordkeeping, and
reporting requirements, and, therefore, the
Proposed Rule would not have imposed new
requirements on these banks.
52 Under
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an affected bank’s data if the bank
demonstrates its program was
developed and administered in good
faith and (2) giving the bank a
reasonable period of time to correct
inaccuracies or deficiencies prior to
issuing the bank’s final performance
evaluation rating.
Conversely, community groups
generally supported the immediate
reinstatement of the 1995 Rules’ large
bank data requirements for all large
banks as of the effective date of the final
rule. One commenter noted that this
data is critical for assessing whether the
bank is meeting community needs, and
there should be no delay in providing it
to the public. The OCC also received a
comment suggesting different treatment
for those banks that were large banks
prior to the June 2020 Rule
(redesignated large banks) and those
banks that would, under the Proposal,
be large banks for the first time (newly
designated large banks).53
Because redesignated large banks
have prior experience with the data
requirements in the 1995 Rules, it does
not appear to be necessary to provide
them with a grace period for compliance
with the large bank data collection,
recordkeeping, and reporting
requirements. The OCC notes that,
although the final rule requires
redesignated large banks to report
calendar year 2022 data by March 1,
2023—a period of 14 months from the
final rule’s effective date—it contains no
specific date during 2022 by which
redesignated large banks must actually
commence the applicable data
collection and recordkeeping. Therefore,
a redesignated large bank does not need
to have its data collection and
recordkeeping systems in place by
January 1, 2022, to be in compliance
with the final rule.54
53 As of September 30, 2021, approximately 36
OCC-regulated redesignated large banks and 31
OCC-regulated newly designated large banks would
exceed the ISB threshold of the final rule and,
therefore, be considered large banks under the final
rule.
54 The OCC is not requiring data reporting for
calendar year 2021 for any redesignated or newly
designated large banks. OCC guidance provided that
intermediate banks under the June 2020 Rule that
were formerly large banks under the 1995 Rules
were exempt from data collection and recording
requirements for calendar year 2021 and reporting
requirements for calendar year 2022. See OCC
Bulletin 2020–99, Community Reinvestment Act:
Key Provisions of the June 2020 CRA Rule and
Frequently Asked Questions (Nov. 9, 2020),
available at https://www.occ.gov/news-issuances/
bulletins/2020/bulletin-2020-99.html. Therefore,
although one commenter expressed an interest in
having redesignated large banks report 2021 data,
it would be unreasonable for banks expressly
exempt from data collection and recordkeeping
requirements in calendar year 2021 to be expected
to report that data by March 1, 2022. This approach
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In addition, the OCC intends to work
with these redesignated large banks over
the next year to ensure they are on track
to report calendar year 2022 data by
March 1, 2023, and to provide them
with any necessary flexibility in terms
of missing information or other limited
error tolerances for calendar year 2022
data. However, the error tolerances
afforded these banks will only last one
year and the data collection,
recordkeeping, and reporting systems
and processes of redesignated large
banks must be fully functional by
January 1, 2023, including with respect
to data integrity. This approach should
provide a sufficient transition period to
appropriately balance the need for CRA
data from redesignated large banks
under the final rule with the practical
challenges these banks may encounter.
In contrast, the OCC has determined
it is appropriate to apply the proposed
grace period approach to newly
designated large banks. These banks do
not have the same prior experience with
the data collection, recordkeeping, and
reporting requirements under the 1995
Rules, and it is reasonable to provide
them with additional time to establish
the systems and processes necessary to
comply with the final rule’s data
requirements. Therefore, the OCC is
providing these banks with a one-year
grace period during which they will not
be subject to the final rule’s data
requirements. Specifically, the OCC will
require these banks to comply with the
large bank data collection and
recordkeeping requirements beginning
on January 1, 2023, and report calendar
year 2023 data consistent with the large
bank reporting requirements by March
1, 2024. Additionally, the OCC will
evaluate these banks under the final
rule’s ISB lending and CD tests until
they report the data necessary to
evaluate them under the rule’s large
bank lending, investment, and service
tests.
Affiliate Activities. The June 2020
Rule does not specifically address how
the CRA activities of bank affiliates are
treated but states that only activities
conducted by a bank qualify for CRA
consideration. In January 2021, the OCC
issued an interpretive letter that limited
the consideration of affiliate activities
(IL 1177).55 Under the Proposed Rule,
is consistent with the 1995 Rules, which did not
require banks that were small banks or ISBs in the
prior calendar year to report data.
55 The policy announced in that interpretive letter
was set to take effect April 1, 2022, and provided
that a bank would not have received CRA
consideration for affiliate activities (including
activities conducted by the nonbank parent and
sister companies of the bank) unless the bank could
demonstrate that it provided financing for or
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the OCC would have considered a
bank’s affiliate’s CRA activities
consistent with the affiliate treatment
provisions in the 1995 Rules, which
permitted banks to elect to include
affiliate activities in their CRA
evaluations, subject to certain
limitations.56 As explained in the
Proposal, the OCC also would have
rescinded IL 1177.
Commenters that addressed affiliate
activities generally supported the OCC’s
proposed treatment of these activities,
and the OCC adopts the Proposed Rule
as final on this issue. This decision
should be generally nondisruptive
relative to the alternatives because it (1)
enables banks to retain their existing
business models for engaging in CRA
activities; (2) ensures that banks receive
consideration for CRA-qualifying
activities; and (3) promotes banks’
continued efforts to serve their
communities. Consequently, as of
January 1, 2022, this final rule
supersedes IL 1177, and banks may
receive consideration for affiliate
activities as provided for in the final
rule.57
Strategic Plans. As explained in the
Proposal, the June 2020 Rule revised the
requirements for strategic plans by,
among other things, permitting banks to
include target market assessment areas
in their strategic plans. The OCC
proposed to allow banks to maintain
strategic plans that the Agency had
approved under the June 2020 Rule,
including plans that contained target
market assessment areas.58 Although
not addressed in the Proposal, the OCC
otherwise supported the qualifying activities of the
affiliates. See IL 1177, OCC Senior Deputy
Comptroller and Chief Counsel’s Interpretation:
Community Reinvestment Act Qualifying (CRA)
Activities Conducted by a National Bank’s or
Savings Association’s Subsidiaries and Affiliates,
Including Nonbank Parent and Sister Companies of
a National Bank or Savings Association Under
Certain Circumstances, Can Receive CRA Credit
Under the June 2020 CRA Final Rule (Jan. 4, 2021),
available at https://www.occ.gov/topics/chartersand-licensing/interpretations-and-actions/2021/
int1177.pdf.
56 See §§ 25.22(c), 25.23(c), 25.24(c), 25.25(d), and
25.27(c)(3) of the Proposed Rule. See also Q&A
§ ll.22(c)(2)(i)–1; Q&A § ll.22(c)(2)(ii)–1; Q&A
§ ll.22(c)(2)(ii)–2; Q&A § ll.24(e)–1; and Q&A
§ ll.26–1.
57 Consistent with this statement, the OCC will
officially rescind IL 1177 as of January 1, 2022.
58 The OCC stated in the Proposal that permitting
strategic plan banks to maintain their target market
assessment areas was not inconsistent with
proposed 12 CFR 25.41 and would cause the least
disruption during the transition from the OCC’s
June 2020 Rule to any future interagency final rules.
The OCC notes that there are currently no banks
with strategic plans, or strategic plans pending OCC
approval by December 31, 2021, that include goals
established for target market assessment areas. As
a result, the remaining discussion of strategic plan
transition issues focuses on issues other than target
market assessment areas.
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had provided in guidance regarding the
June 2020 Rule that banks could
establish goals for CRA-qualifying
activities conducted outside of their
assessment areas.59
Several commenters supported
maintaining strategic plans approved
under the June 2020 Rule with one
commenter generally advocating for
maintaining the status quo for portions
of the June 2020 Rule. One commenter
supported maintaining these plans but
only if the strategic plan period is
already in effect. A few commenters
expressed concern about how these
strategic plans would be affected if the
final rule rescinds the June 2020 Rule’s
qualifying activities criteria, with some
recommending that affected banks be
permitted to continue to rely on those
criteria while the plan is in effect.60 In
contrast, a community group commenter
suggested that the OCC work with banks
to modify strategic plans including
target market assessment areas. The
commenter noted that although this
would put additional burden on the
OCC and banks, it would not be
unreasonable considering the
circumstances and that it is not wholly
sensible that banks would utilize
strategic plans based on a rule that no
longer applies.
Under the final rule, strategic plans
approved under the June 2020 Rule may
remain in effect but these plans must
comply with the provisions of the final
rule, as applicable.61 This application of
the final rule to strategic plans would
put all banks—those with strategic plans
and those without—on a level playing
field. Because banks will be subject to
the applicable aspects of the final rule,
the guidance that permitted banks to
develop outside of assessment areas
goals is no longer applicable.62
Specifically, for strategic plans, the final
59 Pursuant to OCC Bulletin 2020–99, a bank
operating under an approved strategic plan could
receive consideration for qualifying activities
conducted outside of its assessment area(s) by
establishing a separate goal for those activities. The
OCC would judge the goal for outside qualifying
activities independently of the goals established for
delineated assessment area(s). These outside
activities could elevate bank performance from
satisfactory to outstanding but could not
compensate for less than satisfactory overall
performance inside a bank’s assessment area(s).
Poor performance in one area could not be offset
by performance that exceeds plan goals in another
area.
60 The challenges associated with meeting
strategic plan goals was one reason commenters
requested that, during the interim period, the OCC
retain either (1) the provisions of the June 2020
Rule with an October 1, 2020, compliance date or
(2) the qualifying activities criteria and related
definitions.
61 Approved strategic plans will remain in effect
for the duration of the term set out in the plan,
unless otherwise amended.
62 See supra note 59.
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rule provides that the OCC will consider
a bank’s record of helping to meet the
credit needs of its assessment area(s).
Therefore, provisions in strategic plans
that include goals for activities outside
a bank’s assessment area(s) will no
longer be applicable, and the OCC will
no longer evaluate these activities when
assessing the bank’s performance.
Because the final rule does not address
assessing performance outside of a
bank’s assessment area(s), the OCC will
not rate a bank ‘‘Needs to Improve’’ or
‘‘Substantial Noncompliance’’ solely for
failure to meet goals established under
the June 2020 Rule for any area(s)
outside of its assessment area(s).
In addition, the OCC is committed to
minimizing burden on banks
transitioning to the final rule by giving
them the appropriate flexibility
permitted under the final rule, Q&As
and other CRA guidance, and
longstanding OCC policy in evaluating
their performance relative to the goals
outlined in strategic plans approved
under the June 2020 Rule. Therefore, the
OCC will continue to consider a bank’s
activities in the broader statewide or
regional area(s) that include a bank’s
assessment area(s), consistent with the
guidance in the Q&As.63
Nonetheless, if a bank is concerned
that it will not be able to meet the
measurable goals specified in its
strategic plan due to the regulatory
changes in the final rule, the bank may
request to amend its strategic plan based
on the process outlined in § 25.27(h) of
the final rule. While the OCC will not
require any bank to amend its strategic
plan, the OCC will work expeditiously
with banks that request amendments.
This approach will enable the OCC to
balance its interest in reestablishing
consistency with respect to the CRA
rules with banks’ individual
circumstances.
CRA Activities Outside of a Bank’s
Assessment Area(s). The June 2020 Rule
provides for nationwide consideration
of qualifying activities for banks
evaluated under the general
performance standards. As explained in
guidance addressing implementation of
the June 2020 Rule, if certain conditions
are met during the period transitioning
from the 1995 Rules to the June 2020
Rule, an OCC-regulated bank could
receive consideration for qualifying
activities conducted outside of its
assessment area(s), even if those
activities do not directly or indirectly
serve its assessment area(s).64
Under the Proposed Rule, the OCC
would have considered a bank’s
§ ll.12(h)–6.
OCC Bulletin 2020–99.
63 Q&A
64 See
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activities outside of its assessment
area(s) in limited circumstances and
generally not on a nationwide basis,
consistent with the 1995 Rules and the
Q&As. The OCC requested comment,
however, on whether it should continue
to consider bank activities that do not
directly or indirectly serve either a
bank’s assessment area(s) or the broader
statewide or regional area(s) that
include the bank’s assessment area(s).
For commenters who supported
consideration for those activities, the
OCC also requested comment on what
conditions, if any, should apply.
Several community group
commenters supported limiting
consideration for activities that do not
directly or indirectly serve either a
bank’s assessment area(s) or the broader
statewide or regional area(s) that
include a bank’s assessment area(s). The
commenters noted that the Agencies
should have the same rules and apply
the same standards to activities
conducted outside of the assessment
areas of the IDIs they supervise. One
community group commenter also
stated that consideration of these
activities should end on the effective
date of the final rule. In contrast, some
industry commenters asserted that the
OCC should continue to consider
activities conducted outside of banks’
assessment areas.
The final rule does not provide for
consideration of activities that do not
directly or indirectly serve either a
bank’s assessment area(s) or the broader
statewide or regional area(s) that
include a bank’s assessment area(s).
This approach is more consistent with
the approach taken by the 1995 Rules
and likely will enable the OCC to work
more effectively with the Board and the
FDIC in the interagency rulemaking
process on a consistent approach for the
geographic consideration of CD
activities.65
Public File. The June 2020 Rule
included requirements for the content
and location of a bank’s public file that
differed from those in the 1995 Rules.
The Proposed Rule would have restored
the public file content and location
requirements in the 1995 Rules. As
such, the Proposed Rule would have
required banks to (1) include additional
information in their public files; (2)
make all the information in their public
file available at their main offices and,
if an interstate bank, at one branch
office in each State; and (3) make more
limited information available at each
65 Under the final rule, banks may receive
consideration for investments in nationwide funds
consistent with the guidance in Q&A
§ ll.23(a)–2.
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branch. Because the Proposed Rule
would have imposed these additional
public file content and location
requirements, the OCC requested
comment on whether banks would need
additional time to comply and, if so,
whether three months after the final
rule’s effective date would be sufficient
time.
Some industry commenters suggested
that, under the final rule, banks should
be given the flexibility to comply with
the public file requirements of either the
1995 Rules or June 2020 Rule. They
argued that this flexibility would reduce
the burden for banks that very recently
transitioned to the June 2020 Rule’s
public file requirements. One industry
commenter suggested that banks should
have four months to comply if the rules
are finalized as proposed. In contrast,
other commenters suggested that three
months was sufficient for banks to make
these changes, with some noting that the
proposed approach was to revert to a
well understood and established
process.
The final rule adopts the three-month
transition provision for compliance with
the final rule’s public file requirements
as proposed. Therefore, banks will be
required to comply with the final rule’s
public file requirements by April 1,
2022. This transition period should
strike an appropriate balance between
providing community groups and other
interested parties with access to the
information that banks will have to
provide in their public files under the
final rule and ensuring that banks have
adequate time to update their public
files in accordance with the
requirements of the final rule.
Public Notice. The June 2020 Rule’s
public notice requirements differed
from the 1995 Rules’ requirements.
Under the Proposed Rule, the 1995
Rules’ public notice content and
location requirements would have been
restored, requiring each bank to provide
the public notice content set out in
appendix B of the Proposed Rule and
place the notice in (1) the public lobby
of its main office and (2) each branch,
if any. Although the Proposed Rule
would not have provided a transition
period for complying with this
provision, the OCC requested comment
on this issue.
Some industry commenters suggested
that the OCC should permit banks to
comply with the public notice
requirements under either the 1995
Rules or June 2020 Rule because it
would be burdensome for banks that
already transitioned to the June 2020
Rule’s public notice requirement. One
commenter requested four months for
banks to make necessary changes, to the
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extent the OCC does not permit banks
to use either the June 2020 Rule’s or
1995 Rules’ requirements as requested.
In contrast, one commenter opposed any
transition period.
The OCC agrees that it would be
unduly burdensome to require banks to
comply with the public notice
requirements as of the January 1, 2022,
effective date. Therefore, banks will be
required to comply with the public
notice requirements three months after
the effective date of the final rule, April
1, 2022. The three-month delayed
compliance date for the final rule’s
public notice provisions will mitigate
burden associated with the revised
content and location requirements while
ensuring that interested parties are
appropriately provided with the
requisite notice.
DOICP. Prior to issuing the June 2020
Rule, OCC policy provided that the
Agency would consider a bank’s
violation of the MLA or SCRA in its
CRA examination of that bank.66 The
June 2020 Rule codified this policy by
including MLA and SCRA violations in
the non-exhaustive, enumerated list of
DOICPs included in the rule that the
OCC considers in evaluating a bank’s
CRA performance.
Under the Proposed Rule, the
codification of this policy would be
rescinded. The OCC did not intend,
however, for this change to have a
substantive effect. Because the list of
violations included in the Proposed
Rule is non-exhaustive, the OCC would
have continued to consider violations of
the MLA and SCRA consistent with its
longstanding policy.67
The OCC received only one comment
on this issue that opposed the change.
This commenter stated that MLA and
SCRA are designed to create a national
standard of conduct and CRA
evaluations should assess banks’
compliance with these laws. As noted
above, the OCC would have continued
to consider MLA and SCRA violations
under the Proposed Rule. Because one
of the OCC’s primary goals in issuing
the Proposed Rule was to re-establish
consistent rules for all IDIs, and because
it is not necessary to include MLA and
SCRA violations in the rule for the
appropriate Federal banking agency to
consider them in CRA examinations, the
OCC adopts the Proposed Rule as final
on this issue.
Publication of CRA Performance
Evaluations. One community group
commenter suggested that the OCC
should instruct banks to make CRA
exams more prominent on their
66 See
supra note 38.
68 See, e.g., 79 FR 28393 (May 16, 2014); 80 FR
43240 (July 21, 2015).
67 Id.
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websites and that all applications for
new charters or for a change in control
include publicly released CRA plans
available from the banks and the
regulatory agencies. The OCC has
elected not to make this change at this
time given the interest in reestablishing
consistent requirements for all IDIs.
Integration of National Bank and
Savings Association Rules. Under the
June 2020 Rule, there is currently a
single CRA rule that applies to both
national banks and savings associations,
located at 12 CFR part 25. The Proposed
Rule would have reverted back to
separate CRA rules for national banks
and savings associations, 12 CFR part 25
and 12 CFR part 195, respectively, as
was the case under the 1995 Rules.
These separate rules, originally issued
on an interagency basis, are materially
the same, with only a few differences,
described below.
The OCC sought input from
commenters on whether it should retain
the integrated rule or reinstate separate
rules. Commenters did not provide
significant input on this issue. One
industry commenter opposed
integration if it would prevent or deter
the Agency from implementing a final
rule that would allow OCC-regulated
banks to continue to operate under the
June 2020 Rule, and a member of the
public expressed general support for
separate rules. The OCC notes that
integrating the national bank and
savings association CRA rules will not
affect the timing of the final rule’s
implementation.
As a general matter, the OCC has
integrated many of its national bank and
savings association rules for a variety of
reasons, including to reduce regulatory
duplication and clarify when the same
substantive rule applies to both types of
entities.68 For these same reasons, the
final rule maintains the integration of
the national bank and savings
association CRA rules in a single CRA
rule. Furthermore, keeping an integrated
rule will cause less confusion for
stakeholders. The OCC also notes that
integrating the CRA rules in this final
rule will simplify the process of
amending the OCC’s CRA rule during
the interagency rulemaking process and
negate the need for OCC-specific
integration provisions in the updated
interagency rulemaking. Therefore, the
OCC is not adopting the proposed
separate rules for national banks and
savings associations but is instead
adopting an integrated CRA rule.
Specifically, the final rule sets out, in 12
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CFR part 25, subparts A through E 69
and appendices A and B, the CRA rule
applicable to both national banks and
savings associations. This integration
should not have a material impact on
any bank or any other person or entity.
Parts 25 and 195 under the 1995 Rules
contained two substantive differences
that were retained in the Proposed Rule.
First, the Proposed Rule contained a
small difference with respect to the
effect of a national bank’s CRA
performance on an application for a
deposit facility compared to a savings
association’s application. Under the
CRA statute, the Agencies must take
into account an institution’s CRA
performance record when evaluating an
‘‘application for a deposit facility.’’ 70
The statute defines an ‘‘application for
a deposit facility’’ to include the
‘‘establishment of a domestic branch or
other facility with the ability to accept
deposits.’’ 71 Consistent with the 1995
Rules, proposed § 25.29(a)(1) stated that
the OCC would take into account an
applicant bank’s CRA performance
record in considering an application to
establish a ‘‘domestic branch,’’ while
proposed § 195.29(a)(1) would have
permitted the appropriate Federal
banking agency to consider this record
in a savings association’s application to
establish a ‘‘domestic branch or other
facility that would be authorized to take
deposits.’’ Second, proposed § 25.29(b)
would have required an application for
a national bank charter filed by an
applicant other than an IDI to include a
description of the how the applicant
will meet its CRA objectives and the
OCC to take into account this
description in considering the
application. The Proposed Rule did not
include a similar requirement for an IDI
applicant for a national bank charter.
The Proposed Rule for savings
associations, § 195.29(b), differed from
the Proposed Rule for national banks by
including this requirement for every
applicant for a savings association
charter, not just non-IDI applicants. The
OCC is including in the final rule
separate provisions to reflect these
differences for national banks and
savings associations.
The final rule also includes a number
of non-substantive or technical changes
to proposed part 25 and its appendices
to reflect the integration of the national
bank and savings association rules. For
example, § 25.11(c)(1)(ii) of the final
rule explains that the OCC has the
69 Subpart E, Prohibition Against Use of Interstate
Branches Primarily for Deposit Production, only
applies to national banks.
70 12 U.S.C. 2903(a)(2).
71 12 U.S.C. 2902(3).
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authority to prescribe these rules for
national banks, Federal savings
associations, and State savings
associations and to enforce these rules
for national banks and Federal savings
associations. It further explains that the
FDIC has the authority to enforce these
rules for State savings associations.
Section 25.11(c)(1)(iii) of the final rule
explains that the phrase ‘‘appropriate
Federal banking agency’’ will mean the
OCC when the institution is a national
bank or Federal savings association and
the FDIC when the institution is a State
savings association. This allows a single
rule to apply to different institutions.
The final rule also revises the
proposed definition of ‘‘bank’’ in
§ 25.12(e) to include a definition of
‘‘banks or savings associations’’ and a
definition of ‘‘banks and savings
associations.’’ Revising the proposed
definition of the term ‘‘bank,’’ as
opposed to adding a separate definition
for ‘‘savings associations,’’ preserves in
the final rule the numbering convention
that is used in the Q&As. However,
because ‘‘bank’’ and ‘‘savings
association’’ are not separately defined,
the final rule also revises §§ 25.29 and
25.44 to use the terms ‘‘insured national
bank’’ and ‘‘savings association’’ in the
parts of those section that apply to only
one type of institution. Lastly, the final
rule does not include proposed 12 CFR
part 195.
Interagency Rulemaking. The OCC
received a number of comments on the
June 2020 Rule and recommendations
and ideas for the Agencies’ efforts to
develop updated interagency CRA rules.
Such comments are outside the scope of
the current rulemaking. The OCC will
share these comments with the Board
and FDIC, as they are more relevant to
the interagency rulemaking process.
Technical Changes. The OCC
proposed a technical correction to an
error in the 1995 Rules’ cross-reference
to the definition of ‘‘foreign bank’’ at 12
CFR 25.62(a)(2) by replacing ‘‘12 CFR
28.11(j)’’ with ‘‘12 CFR 28.11(i).’’ The
Agency received no comments on this
change and adopts the correction as
proposed.
The final rule also includes three
other technical corrections. First, the
final rule corrects the 1995 Rules’ crossreference to the definition of ‘‘Federal
branch’’ in 12 CFR 25.62(c) by replacing
‘‘12 CFR 28.11(i)’’ with ‘‘12 CFR
28.11(h).’’ Second, the final rule corrects
the 1995 Rules’ cross-reference to the
definition of the ‘‘home State of the
foreign bank’’ in 12 CFR 25.62(d)(4)(i)
by replacing ‘‘12 CFR 28.11(o)’’ with
‘‘12 CFR 28.11(n).’’ Third, in appendix
B, the final rule replaces (1) the
reference to ‘‘Comptroller of the
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71337
Currency’’ with ‘‘Office of the
Comptroller of the Currency (OCC)’’ and
(2) references to the ‘‘Comptroller’’ and
‘‘Deputy Comptroller’’ with ‘‘OCC.’’
IV. The Final Rule
For the reasons discussed above, the
OCC finalizes the rule as proposed,
except as discussed above.72
V. Regulatory Analyses
A. Paperwork Reduction Act
Certain provisions of the final rule
contain ‘‘collection of information’’
requirements within the meaning of the
Paperwork Reduction Act (PRA) of
1995.73 In accordance with the
requirements of the PRA, the OCC may
not conduct or sponsor, and a
respondent is not required to respond
to, an information collection unless it
displays a currently valid Office of
Management and Budget (OMB) control
number. The OCC submitted the
information collection requirements to
OMB in connection with the Proposed
Rule and received pre-approval under
OMB Control No. 1557–0160.
Under the final rule:
• 12 CFR 25.25(b)—Requests for
designation as a wholesale or limitedpurpose bank shall be made in writing
with the OCC at least three months prior
to the proposed effective date of the
designation.
• 12 CFR 25.27—Strategic plans shall
be submitted at least three months prior
to proposed effective dates. Plans shall
include measurable goals and address
all the performance categories. Plans
shall include a description of informal
efforts to solicit public suggestions, any
written public comments received, and
if revised pursuant to public comment,
a copy of the initial plan. Amendments
to plans shall be submitted in the case
of a change in material circumstances.
• 12 CFR 25.42(a)—Large banks shall
collect and maintain certain small
business and small farm loan data in a
machine-readable form and report it
annually pursuant to 12 CFR
25.42(b)(1).
• 12 CFR 25.42(b)(2)—Large banks
shall report annually in machine
readable form the aggregate number and
aggregate amount of community
development loans originated or
purchased.
• 12 CFR 25.42(b)(3)—A large bank, if
subject to reporting under HMDA, shall
report the location of each home
mortgage loan application, origination,
72 As referenced throughout this preamble, the
final rule incorporates the guidance in the Q&As
and any other applicable guidance related to the
1995 Rules.
73 44 U.S.C. 3501 et seq.
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or purchase outside the MSAs where the
bank has a home or branch office.
• 12 CFR 25.42(c)(1)—Each bank
shall collect and maintain in machine
readable form certain data for consumer
loans originated or purchased by the
bank for consideration under the
lending test. Under 12 CFR 25.42(c)(2)–
(4), other information shall be included
concerning a bank’s lending
performance, including additional loan
distribution data.
• 12 CFR 25.42(d)—A bank that elects
to have the OCC consider loans by an
affiliate, for purposes of the lending or
community development test or an
approved strategic plan, shall collect,
maintain, and report the data that the
bank would have collected, maintained,
and reported pursuant to 12 CFR
25.42(a)–(c), had the loans been
originated or purchased by the bank. For
home mortgage loans, the bank shall
also be prepared to identify the home
mortgage loans reported under HMDA
by the affiliate.
• 12 CFR 25.42(e)—A bank that elects
to have the OCC consider community
development loans by a consortium or
a third party, for purposes of the lending
or community development tests or an
approved strategic plan, shall report for
those loans the data that the bank would
have reported under 12 CFR 25.42(b)(2),
had the loans been originated or
purchased by the bank.
• 12 CFR 25.42(f)—Small banks that
qualify for evaluation under the small
bank performance standards but elect
evaluation under the lending,
investment, and service tests shall
collect, maintain, and report the data
required for other banks under 12 CFR
25.42(a) and 25.42(b).
• 12 CFR 25.42(g)—A bank, except a
bank that was a small bank during the
prior calendar year, shall collect and
report to the OCC by March 1 of each
year a list for each assessment area
showing the geographies within the
area.
• 12 CFR 25.43(a)—A bank shall
maintain a public file that contains
certain specified details: All written
comments and responses; a copy of the
public section of the bank’s most recent
CRA performance evaluation; a list of
the bank’s branches; a list of the
branches opened or closed; a list of
services offered; and a map of each
assessment area delineated by the bank.
• 12 CFR 25.43(b)—A large bank shall
include in its public files certain
information pertaining to the institution
and its affiliates, if applicable, for each
of the prior two calendar years. If the
bank has elected to have one or more
categories of its consumer loans
considered under the lending test, for
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each of these categories, it shall include
the number and amount of loans: To
low-, moderate-, middle-, and upperincome individuals; located in low-,
moderate-, middle-, and upper-income
census tracts; and located inside and
outside the bank’s assessment area(s);
and its CRA Disclosure Statement. A
bank required to report home mortgage
loan data pursuant to 12 CFR part 1003
shall include a written notice that the
institution’s HMDA Disclosure
Statement may be obtained on the
Consumer Financial Protection Bureau’s
(Bureau’s) website. A bank that elected
to have the OCC consider the mortgage
lending of an affiliate shall include the
name of the affiliate and a written notice
that the affiliate’s HMDA Disclosure
Statement may be obtained at the
Bureau’s website. A small bank or a
bank that was a small bank during the
prior calendar year shall include: Its
loan-to-deposit ratio for each quarter of
the prior calendar year and, at its
option, additional data on its loan-todeposit ratio; and the information
required for other banks by 12 CFR
24.43(b)(1), if it has elected to be
evaluated under the lending,
investment, and service tests. A bank
that has been approved to be assessed
under a strategic plan shall include in
its public file a copy of that plan. A
bank that received a less than
‘‘Satisfactory’’ rating during its most
recent examination shall include in its
public file a description of its current
efforts to improve its performance in
helping to meet the credit needs of its
entire community. The bank shall
update the description quarterly.
• 12 CFR 25.43(c)–(e)—A bank shall
make available to the public for
inspection upon request and at no cost
to the public the information required in
these provisions at the main office or
branch as specified. Upon request, a
bank shall provide copies, either on
paper or in another form acceptable to
the person making the request, of the
information in its public file. A bank
shall ensure that this information is
current as of April 1 of each year.
OCC Title of Information Collection:
Community Reinvestment Act.
Frequency: On Occasion.
Affected Public: Businesses or other
for-profit.
Total estimated annual burden:
113,351 hours.
Comments continue to be invited on:
a. Whether the collections of
information are necessary for the proper
performance of the OCC’s functions,
including whether the information has
practical utility;
b. The accuracy or the estimate of the
burden of the information collections,
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including the validity of the
methodology and assumptions used;
c. Ways to enhance the quality,
utility, and clarity of the information to
be collected;
d. Ways to minimize the burden of the
information collections on respondents,
including through the use of automated
collection techniques or other forms of
information technology; and
e. Estimates of capital or startup costs
and costs of operation, maintenance,
and purchase of services to provide
information.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act
(RFA) 74 requires an agency, in
connection with a final rule, to prepare
a Final Regulatory Flexibility Analysis
describing the impact of the rule on
small entities (defined by the Small
Business Administration for purposes of
the RFA to include commercial banks
and savings institutions with total assets
of $600 million or less and trust
companies with total assets of $41.5
million or less) or to certify that the rule
will not have a significant economic
impact on a substantial number of small
entities. The RFA does not required this
analysis, however, if the agency certifies
that the final rule will not have a
significant economic impact on a
substantial number of small entities and
publishes its certification and a short
explanatory statement in the Federal
Register, along with its rule.
The final rule will impact
approximately 669 small entities. The
OCC estimates the annual cost for small
entities to comply with the final rule
will be approximately $1,824 per bank
($114 per hour × 16 hours). In general,
the OCC classifies the economic impact
on an individual small entity as
significant if the total estimated impact
in one year is greater than 5 percent of
the small entity’s total annual salaries
and benefits or greater than 2.5 percent
of the small entity’s total non-interest
expense. Based on these thresholds, the
OCC estimates that, if implemented, the
final rule will have a significant
economic impact on zero small entities,
which is not a substantial number.
Therefore, the OCC certifies that the
final rule will not have a significant
economic impact on a substantial
number of small entities.
C. Unfunded Mandates Reform Act of
1995
Pursuant to the Unfunded Mandates
Reform Act of 1995,75 the OCC
considers whether a final rule includes
74 5
75 2
U.S.C. 601 et seq.
U.S.C. 1532.
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a Federal mandate that may result in the
expenditure by State, local, and tribal
governments, in the aggregate, or by the
private sector, of $100 million or more
in any one year (adjusted for inflation).
The OCC estimates that expenditures
associated with the mandates in the
final rule will be roughly $6.2 million
and, therefore, concludes the rule will
not result in an expenditure of $100
million or more annually (adjusted for
inflation) by State, local, and tribal
governments, or by the private sector.
D. Administrative Procedure Act
Pursuant to section 553(b)(3)(B) of the
Administrative Procedure Act (APA),76
general notice and the opportunity for
public comment are not required with
respect to a rulemaking when an
‘‘agency for good cause finds (and
incorporates the finding and a brief
statement of reasons therefor in the
rules issued) that notice and public
procedure thereon are impracticable,
unnecessary, or contrary to the public
interest.’’ 77 As described in the final
rule’s SUPPLEMENTARY INFORMATION
section, the final rule includes a few
technical amendments that the OCC did
not include in its Proposed Rule.
Because these amendments are not
substantive and merely correct crossreferences and a reference to the OCC,
the OCC believes that public notice of
these changes is unnecessary and,
therefore, that it has good cause to adopt
these changes without notice and
comment.
Under the APA, an agency is required
to provide a 30-day delayed effective
date when publishing a substantive rule,
with certain exceptions including for
good cause.78 The OCC believes it has
good cause to issue this final rule
without a 30-day delayed effective date
for several reasons.
First, the OCC’s CRA evaluations for
banks consider CRA activities in full
calendar year increments (i.e., January
1–December 31). A 30-day delayed
effective date would cause the final rule
to take effect after the start of the 2022
calendar year. This would cause a bank
to be subject to two different regulatory
regimes during any three-year
examination period that includes 2022,
including different approaches to the
activities that receive consideration in
CRA evaluations and different data
collection, recordkeeping, and reporting
requirements. As was the OCC’s
experience with the June 2020 Rule, this
would result in more complicated
written CRA performance evaluations,
76 5
U.S.C. 551 et seq.
U.S.C. 553(b)(3)(B).
78 5 U.S.C. 553(d).
77 5
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create confusion for banks and other
stakeholders reviewing CRA
performance evaluations, and make it
more difficult to compare CRA
performance across the banking
industry.79 Second, data collected on a
calendar-year basis is more useful to
stakeholders than data collected for a
partial year. Finally, banks currently are
required to comply with many of the
provisions in the 1995 Rules, which this
final rule reinstates, because the June
2020 Rule is only partially in effect.
Therefore, banks will not have to make
changes to adjust to these provisions of
the final rule.
For these reasons, the OCC finds that
there is good cause to publish this rule
without a 30-day delayed effective date.
E. Riegle Community Development and
Regulatory Improvement Act of 1994
Under the Riegle Community
Development and Regulatory
Improvement Act of 1994 (RCDRIA), in
determining the effective date and
administrative compliance requirements
for new rules that impose additional
reporting, disclosure, or other
requirements on IDIs, the OCC must
consider, consistent with principles of
safety and soundness and the public
interest, any administrative burdens that
such rules will place on depository
institutions, including small depository
institutions, and customers of
depository institutions, as well as the
benefits of such rules.80 In addition, the
RCDRIA requires new rules and
amendments to rules that impose
additional reporting, disclosure, or other
new requirements on IDIs generally to
take effect on the first day of a calendar
quarter that begins on or after the date
on which the rules are published in
final form.81 The OCC has determined
that this final rule will impose
additional reporting, disclosure, or other
new requirements on IDIs and
considered the rule’s burdens and
benefits in determining its effective date
and the administrative compliance
requirements. The final rule’s effective
date provisions are consistent with the
requirements of the RCDRIA.
F. Congressional Review Act
The Congressional Review Act
provides that if the OMB makes a
determination that a final rule
constitutes a ‘‘major rule,’’ the rule may
not take effect until at least 60 days
following its publication.82 The
79 The
June 2020 Rule had an effective date of
October 1, 2020, which resulted in two regulatory
regimes applying during calendar year 2020.
80 12 U.S.C. 4802(a).
81 12 U.S.C. 4802(b).
82 5 U.S.C. 801.
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Congressional Review Act defines
‘‘major rule’’ as any rule that the
Administrator of the Office of
Information and Regulatory Affairs of
the OMB finds has resulted in or is
likely to result in—(A) an annual effect
on the economy of $100,000,000 or
more; (B) a major increase in costs or
prices for consumers, individual
industries, Federal, State, or local
government agencies or geographic
regions; or (C) significant adverse effects
on competition, employment,
investment, productivity, innovation, or
on the ability of United States-based
enterprises to compete with foreign
based enterprises in domestic and
export markets.83 The OCC has
submitted the final rule to the OMB for
this major rule determination. As
required by the Congressional Review
Act, the OCC will also submit the final
rule and other appropriate reports to
Congress and the Government
Accountability Office for review.84
List of Subjects in 12 CFR Part 25
Community development, Credit,
Investments, National banks, Reporting
and recordkeeping requirements,
Savings associations.
Authority and Issuance
For the reasons discussed in the
preamble, and under the authority of 12
U.S.C. 93a, the Office of the Comptroller
of the Currency revises 12 CFR part 25
as follows:
■
PART 25—COMMUNITY
REINVESTMENT ACT AND
INTERSTATE DEPOSIT PRODUCTION
REGULATIONS
Subpart A—General
Sec.
25.11 Authority, purposes, and scope.
25.12 Definitions.
Subpart B—Standards for Assessing
Performance
25.21 Performance tests, standards, and
ratings, in general.
25.22 Lending test.
25.23 Investment test.
25.24 Service test.
25.25 Community development test for
wholesale or limited purpose banks and
savings associations.
25.26 Small bank and savings association
performance standards.
25.27 Strategic plan.
25.28 Assigned ratings.
25.29 Effect of CRA performance on
applications.
Subpart C—Records, Reporting, and
Disclosure Requirements
25.41 Assessment area delineation.
83 5
84 5
U.S.C. 804(2).
U.S.C. 801.
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25.42 Data collection, reporting, and
disclosure.
25.43 Content and availability of public file.
25.44 Public notice by banks and savings
associations.
25.45 Publication of planned examination
schedule.
Subpart D—Transition Provisions
25.51 Consideration of Bank Activities.
25.52 Strategic Plan Retention.
Subpart E—Prohibition Against Use of
Interstate Branches Primarily for Deposit
Production
25.61 Purpose and scope.
25.62 Definitions.
25.63 Loan-to-deposit ratio screen.
25.64 Credit needs determination.
25.65 Sanctions.
Appendix A to Part 25—Ratings
Appendix B to Part 25—CRA Notice
Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36,
93a, 161, 215, 215a, 481, 1462a, 1463, 1464,
1814, 1816, 1828(c), 1835a, 2901 through
2908, 3101 through 3111, and 5412(b)(2)(B).
Subpart A—General
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§ 25.11
Authority, purposes, and scope.
(a) Authority and OMB control
number—(1) Authority. The authority
for subparts A, B, C, D, and E is 12
U.S.C. 21, 22, 26, 27, 30, 36, 93a, 161,
215, 215a, 481, 1462a, 1463, 1464, 1814,
1816, 1828(c), 1835a, 2901 through
2908, 3101 through 3111, and
5412(b)(2)(B).
(2) OMB control number. The
information collection requirements
contained in this part were approved by
the Office of Management and Budget
under the provisions of 44 U.S.C. 3501
et seq. and have been assigned OMB
control number 1557–0160.
(b) Purposes. In enacting the
Community Reinvestment Act (CRA),
the Congress required each appropriate
Federal financial supervisory agency to
assess an institution’s record of helping
to meet the credit needs of the local
communities in which the institution is
chartered, consistent with the safe and
sound operation of the institution, and
to take this record into account in the
agency’s evaluation of an application for
a deposit facility by the institution. This
part is intended to carry out the
purposes of the CRA by:
(1) Establishing the framework and
criteria by which the Office of the
Comptroller of the Currency (OCC) or
the Federal deposit Insurance
Corporation (FDIC), as appropriate,
assesses a bank’s or savings
association’s record of helping to meet
the credit needs of its entire community,
including low- and moderate-income
neighborhoods, consistent with the safe
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and sound operation of the bank or
savings association; and
(2) Providing that the OCC takes that
record into account in considering
certain applications.
(c) Scope—(1) General. (i) Subparts A,
B, C, and D, and Appendices A and B,
apply to all banks and savings
associations except as provided in
paragraphs (c)(2) and (3) of this section.
Subpart E only applies to banks.
(ii) With respect to subparts A, B, C,
and D, and Appendices A and B—
(A) The OCC has the authority to
prescribe these regulations for national
banks, Federal savings associations, and
State savings associations and has the
authority to enforce these regulations for
national banks and Federal savings
associations.
(B) The FDIC has the authority to
enforce these regulations for State
savings associations.
(iii) With respect to subparts A, B, C,
and D, and appendix A, references to
appropriate Federal banking agency will
mean the OCC when the institution is a
national bank or Federal savings
association and the FDIC when the
institution is a State savings association.
(2) Federal branches and agencies. (i)
This part applies to all insured Federal
branches and to any Federal branch that
is uninsured that results from an
acquisition described in section 5(a)(8)
of the International Banking Act of 1978
(12 U.S.C. 3103(a)(8)).
(ii) Except as provided in paragraph
(c)(2)(i) of this section, this part does not
apply to Federal branches that are
uninsured, limited Federal branches, or
Federal agencies, as those terms are
defined in part 28 of this chapter.
(3) Certain special purpose banks and
savings associations. This part does not
apply to special purpose banks or
special purpose savings associations
that do not perform commercial or retail
banking services by granting credit to
the public in the ordinary course of
business, other than as incident to their
specialized operations. These banks or
savings associations include banker’s
banks, as defined in 12 U.S.C. 24
(Seventh), and banks or savings
associations that engage only in one or
more of the following activities:
Providing cash management controlled
disbursement services or serving as
correspondent banks or savings
associations, trust companies, or
clearing agents.
§ 25.12
Definitions.
For purposes of subparts A, B, C, and
D, and Appendices A and B, of this part,
the following definitions apply:
(a) Affiliate means any company that
controls, is controlled by, or is under
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common control with another company.
The term ‘‘control’’ has the meaning
given to that term in 12 U.S.C.
1841(a)(2), and a company is under
common control with another company
if both companies are directly or
indirectly controlled by the same
company.
(b) Area median income means:
(1) The median family income for the
MSA, if a person or geography is located
in an MSA, or for the metropolitan
division, if a person or geography is
located in an MSA that has been
subdivided into metropolitan divisions;
or
(2) The statewide nonmetropolitan
median family income, if a person or
geography is located outside an MSA.
(c) Assessment area means a
geographic area delineated in
accordance with § 25.41.
(d) Automated teller machine (ATM)
means an automated, unstaffed banking
facility owned or operated by, or
operated exclusively for, the bank or
savings association at which deposits
are received, cash dispersed, or money
lent.
(e)(1) Bank or savings association
means, except as provided in § 25.11(c),
a national bank (including a Federal
branch as defined in part 28 of this
chapter) with Federally insured deposits
or a savings association;
(2) Bank and savings association
means, except as provided in § 25.11(c),
a national bank (including a Federal
branch as defined in part 28 of this
chapter) with Federally insured deposits
and a savings association.
(f) Branch means a staffed banking
facility authorized as a branch, whether
shared or unshared, including, for
example, a mini-branch in a grocery
store or a branch operated in
conjunction with any other local
business or nonprofit organization.
(g) Community development means:
(1) Affordable housing (including
multifamily rental housing) for low- or
moderate-income individuals;
(2) Community services targeted to
low- or moderate-income individuals;
(3) Activities that promote economic
development by financing businesses or
farms that meet the size eligibility
standards of the Small Business
Administration’s Development
Company or Small Business Investment
Company programs (13 CFR 121.301) or
have gross annual revenues of $1
million or less; or
(4) Activities that revitalize or
stabilize—
(i) Low-or moderate-income
geographies;
(ii) Designated disaster areas; or
(iii) Distressed or underserved
nonmetropolitan middle-income
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geographies designated by the Board of
Governors of the Federal Reserve
System, FDIC, and the OCC, based on—
(A) Rates of poverty, unemployment,
and population loss; or
(B) Population size, density, and
dispersion. Activities revitalize and
stabilize geographies designated based
on population size, density, and
dispersion if they help to meet essential
community needs, including needs of
low- and moderate-income individuals.
(h) Community development loan
means a loan that:
(1) Has as its primary purpose
community development; and
(2) Except in the case of a wholesale
or limited purpose bank or savings
association:
(i) Has not been reported or collected
by the bank or savings association or an
affiliate for consideration in the bank’s
or savings association’s assessment as a
home mortgage, small business, small
farm, or consumer loan, unless the loan
is for a multifamily dwelling (as defined
in § 1003.2(n) of this title); and
(ii) Benefits the bank’s or savings
association’s assessment area(s) or a
broader statewide or regional area(s)
that includes the bank’s or savings
association’s assessment area(s).
(i) Community development service
means a service that:
(1) Has as its primary purpose
community development;
(2) Is related to the provision of
financial services; and
(3) Has not been considered in the
evaluation of the bank’s or savings
association’s retail banking services
under § 25.24(d).
(j) Consumer loan means a loan to one
or more individuals for household,
family, or other personal expenditures.
A consumer loan does not include a
home mortgage, small business, or small
farm loan. Consumer loans include the
following categories of loans:
(1) Motor vehicle loan, which is a
consumer loan extended for the
purchase of and secured by a motor
vehicle;
(2) Credit card loan, which is a line
of credit for household, family, or other
personal expenditures that is accessed
by a borrower’s use of a ‘‘credit card,’’
as this term is defined in § 1026.2 of this
title;
(3) Other secured consumer loan,
which is a secured consumer loan that
is not included in one of the other
categories of consumer loans; and
(4) Other unsecured consumer loan,
which is an unsecured consumer loan
that is not included in one of the other
categories of consumer loans.
(k) Geography means a census tract
delineated by the United States Bureau
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of the Census in the most recent
decennial census.
(l) Home mortgage loan means a
closed-end mortgage loan or an openend line of credit as these terms are
defined under § 1003.2 of this title, and
that is not an excluded transaction
under § 1003.3(c)(1) through (10) and
(13) of this title.
(m) Income level includes:
(1) Low-income, which means an
individual income that is less than 50
percent of the area median income, or
a median family income that is less than
50 percent, in the case of a geography.
(2) Moderate-income, which means an
individual income that is at least 50
percent and less than 80 percent of the
area median income, or a median family
income that is at least 50 and less than
80 percent, in the case of a geography.
(3) Middle-income, which means an
individual income that is at least 80
percent and less than 120 percent of the
area median income, or a median family
income that is at least 80 and less than
120 percent, in the case of a geography.
(4) Upper-income, which means an
individual income that is 120 percent or
more of the area median income, or a
median family income that is 120
percent or more, in the case of a
geography.
(n) Limited purpose bank or savings
association means a bank or savings
association that offers only a narrow
product line (such as credit card or
motor vehicle loans) to a regional or
broader market and for which a
designation as a limited purpose bank or
savings association is in effect, in
accordance with § 25.25(b).
(o) Loan location. A loan is located as
follows:
(1) A consumer loan is located in the
geography where the borrower resides;
(2) A home mortgage loan is located
in the geography where the property to
which the loan relates is located; and
(3) A small business or small farm
loan is located in the geography where
the main business facility or farm is
located or where the loan proceeds
otherwise will be applied, as indicated
by the borrower.
(p) Loan production office means a
staffed facility, other than a branch, that
is open to the public and that provides
lending-related services, such as loan
information and applications.
(q) Metropolitan division means a
metropolitan division as defined by the
Director of the Office of Management
and Budget.
(r) MSA means a metropolitan
statistical area as defined by the Director
of the Office of Management and
Budget.
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(s) Nonmetropolitan area means any
area that is not located in an MSA.
(t) Qualified investment means a
lawful investment, deposit, membership
share, or grant that has as its primary
purpose community development.
(u) Small bank or savings
association—(1) Definition. Small bank
or savings association means a bank or
savings association that, as of December
31 of either of the prior two calendar
years, had assets of less than $1.322
billion. Intermediate small bank or
savings association means a small bank
or savings association with assets of at
least $330 million as of December 31 of
both of the prior two calendar years and
less than $1.322 billion as of December
31 of either of the prior two calendar
years.
(2) Adjustment. The dollar figures in
paragraph (u)(1) of this section shall be
adjusted annually and published by the
appropriate Federal banking agency,
based on the year-to-year change in the
average of the Consumer Price Index for
Urban Wage Earners and Clerical
Workers, not seasonally adjusted, for
each twelve-month period ending in
November, with rounding to the nearest
million.
(v) Small business loan means a loan
included in ‘‘loans to small businesses’’
as defined in the instructions for
preparation of the Consolidated Report
of Condition and Income.
(w) Small farm loan means a loan
included in ‘‘loans to small farms’’ as
defined in the instructions for
preparation of the Consolidated Report
of Condition and Income.
(x) Wholesale bank or savings
association means a bank or savings
association that is not in the business of
extending home mortgage, small
business, small farm, or consumer loans
to retail customers, and for which a
designation as a wholesale bank or
savings association is in effect, in
accordance with § 25.25(b).
Subpart B—Standards for Assessing
Performance
§ 25.21 Performance tests, standards, and
ratings, in general.
(a) Performance tests and standards.
The appropriate Federal banking agency
assesses the CRA performance of a bank
or savings association in an examination
as follows:
(1) Lending, investment, and service
tests. The appropriate Federal banking
agency applies the lending, investment,
and service tests, as provided in
§§ 25.22 through 25.24, in evaluating
the performance of a bank or savings
association, except as provided in
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paragraphs (a)(2), (3), and (4) of this
section.
(2) Community development test for
wholesale or limited purpose banks and
savings associations. The appropriate
Federal banking agency applies the
community development test for a
wholesale or limited purpose bank or
savings association, as provided in
§ 25.25, except as provided in paragraph
(a)(4) of this section.
(3) Small bank and savings
association performance standards. The
appropriate Federal banking agency
applies the small bank or savings
association performance standards as
provided in § 25.26 in evaluating the
performance of a small bank or savings
association or a bank or savings
association that was a small bank or
savings association during the prior
calendar year, unless the bank or
savings association elects to be assessed
as provided in paragraphs (a)(1), (2), or
(4) of this section. The bank or savings
association may elect to be assessed as
provided in paragraph (a)(1) of this
section only if it collects and reports the
data required for other banks or savings
associations under § 25.42.
(4) Strategic plan. The appropriate
Federal banking agency evaluates the
performance of a bank or savings
association under a strategic plan if the
bank or savings association submits, and
the appropriate Federal banking agency
approves, a strategic plan as provided in
§ 25.27.
(b) Performance context. The
appropriate Federal banking agency
applies the tests and standards in
paragraph (a) of this section and also
considers whether to approve a
proposed strategic plan in the context
of:
(1) Demographic data on median
income levels, distribution of household
income, nature of housing stock,
housing costs, and other relevant data
pertaining to a 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
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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 § 25.43, 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; and
(7) Any other information deemed
relevant by the appropriate Federal
banking agency.
(c) Assigned ratings. The appropriate
Federal banking agency assigns to a
bank or savings association one of the
following four ratings pursuant to
§ 25.28 and appendix A of this part:
‘‘outstanding’’; ‘‘satisfactory’’; ‘‘needs to
improve’’; or ‘‘substantial
noncompliance’’ as provided in 12
U.S.C. 2906(b)(2). The rating assigned
by the appropriate Federal banking
agency reflects the bank’s or savings
association’s record of helping to meet
the credit needs of its entire community,
including low- and moderate-income
neighborhoods, consistent with the safe
and sound operation of the bank or
savings association.
(d) Safe and sound operations. This
part and the CRA do not require a bank
or savings association to make loans or
investments or to provide services that
are inconsistent with safe and sound
operations. To the contrary, the
appropriate Federal banking agency
anticipates banks and savings
associations can meet the standards of
this part with safe and sound loans,
investments, and services on which the
banks and savings associations expect to
make a profit. Banks and savings
associations are permitted and
encouraged to develop and apply
flexible underwriting standards for
loans that benefit low- or moderateincome geographies or individuals, only
if consistent with safe and sound
operations.
(e) Low-cost education loans provided
to low-income borrowers. In assessing
and taking into account the record of a
bank or savings association under this
part, the appropriate Federal banking
agency considers, as a factor, low-cost
education loans originated by the bank
or savings association to borrowers,
particularly in its assessment area(s),
who have an individual income that is
less than 50 percent of the area median
income. For purposes of this paragraph,
‘‘low-cost education loans’’ means any
education loan, as defined in section
140(a)(7) of the Truth in Lending Act
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(15 U.S.C. 1650(a)(7)) (including a loan
under a State or local education loan
program), originated by the bank or
savings association for a student at an
‘‘institution of higher education,’’ as
that term is generally defined in
sections 101 and 102 of the Higher
Education Act of 1965 (20 U.S.C. 1001
and 1002) and the implementing
regulations published by the U.S.
Department of Education, with interest
rates and fees no greater than those of
comparable education loans offered
directly by the U.S. Department of
Education. Such rates and fees are
specified in section 455 of the Higher
Education Act of 1965 (20 U.S.C.
1087e).
(f) Activities in cooperation with
minority- or women-owned financial
institutions and low-income credit
unions. In assessing and taking into
account the record of a nonminorityowned and nonwomen-owned bank or
savings association under this part, the
appropriate Federal banking agency
considers as a factor capital investment,
loan participation, and other ventures
undertaken by the bank or savings
association in cooperation with
minority- and women-owned financial
institutions and low-income credit
unions. Such activities must help meet
the credit needs of local communities in
which the minority- and women-owned
financial institutions and low-income
credit unions are chartered. To be
considered, such activities need not also
benefit the bank’s or savings
association’s assessment area(s) or the
broader statewide or regional area(s)
that includes the bank’s or savings
association’s assessment area(s).
§ 25.22
Lending test.
(a) Scope of test. (1) The lending test
evaluates a bank’s or savings
association’s record of helping to meet
the credit needs of its assessment area(s)
through its lending activities by
considering a bank’s or savings
association’s home mortgage, small
business, small farm, and community
development lending. If consumer
lending constitutes a substantial
majority of a bank’s or savings
association’s business, the appropriate
Federal banking agency will evaluate
the bank’s or savings association’s
consumer lending in one or more of the
following categories: motor vehicle,
credit card, other secured, and other
unsecured loans. In addition, at a bank’s
or savings association’s option, the
appropriate Federal banking agency will
evaluate one or more categories of
consumer lending, if the bank or savings
association has collected and
maintained, as required in § 25.42(c)(1),
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the data for each category that the bank
or savings association elects to have the
appropriate Federal banking agency
evaluate.
(2) The appropriate Federal banking
agency considers originations and
purchases of loans. The appropriate
Federal banking agency will also
consider any other loan data the bank or
savings association may choose to
provide, including data on loans
outstanding, commitments and letters of
credit.
(3) A bank or savings association may
ask the appropriate Federal banking
agency to consider loans originated or
purchased by consortia in which the
bank or savings association participates
or by third parties in which the bank or
savings association has invested only if
the loans meet the definition of
community development loans and only
in accordance with paragraph (d) of this
section. The appropriate Federal
banking agency will not consider these
loans under any criterion of the lending
test except the community development
lending criterion.
(b) Performance criteria. The
appropriate Federal banking agency
evaluates a bank’s or savings
association’s lending performance
pursuant to the following criteria:
(1) Lending activity. The number and
amount of the bank’s or savings
association’s home mortgage, small
business, small farm, and consumer
loans, if applicable, in the bank’s or
savings association’s assessment area(s);
(2) Geographic distribution. The
geographic distribution of the bank’s or
savings association’s home mortgage,
small business, small farm, and
consumer loans, if applicable, based on
the loan location, including:
(i) The proportion of the bank’s or
savings association’s lending in the
bank’s or savings association’s
assessment area(s);
(ii) The dispersion of lending in the
bank’s or savings association’s
assessment area(s); and
(iii) The number and amount of loans
in low-, moderate-, middle-, and upperincome geographies in the bank’s or
savings association’s assessment area(s);
(3) Borrower characteristics. The
distribution, particularly in the bank’s
or savings association’s assessment
area(s), of the bank’s or savings
association’s home mortgage, small
business, small farm, and consumer
loans, if applicable, based on borrower
characteristics, including the number
and amount of:
(i) Home mortgage loans to low-,
moderate-, middle-, and upper-income
individuals;
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(ii) Small business and small farm
loans to businesses and farms with gross
annual revenues of $1 million or less;
(iii) Small business and small farm
loans by loan amount at origination; and
(iv) Consumer loans, if applicable, to
low-, moderate-, middle-, and upperincome individuals;
(4) Community development lending.
The bank’s or savings association’s
community development lending,
including the number and amount of
community development loans, and
their complexity and innovativeness;
and
(5) Innovative or flexible lending
practices. The bank’s or savings
association’s use of innovative or
flexible lending practices in a safe and
sound manner to address the credit
needs of low- or moderate-income
individuals or geographies.
(c) Affiliate lending. (1) At a bank’s or
savings association’s option, the
appropriate Federal banking agency will
consider loans by an affiliate of the bank
or savings association, if the bank or
savings association provides data on the
affiliate’s loans pursuant to § 25.42.
(2) The appropriate Federal banking
agency considers affiliate lending
subject to the following constraints:
(i) No affiliate may claim a loan
origination or loan purchase if another
institution claims the same loan
origination or purchase; and
(ii) If a bank or savings association
elects to have the appropriate Federal
banking agency consider loans within a
particular lending category made by one
or more of the bank’s or savings
association’s affiliates in a particular
assessment area, the bank or savings
association shall elect to have the
appropriate Federal banking agency
consider, in accordance with paragraph
(c)(1) of this section, all the loans within
that lending category in that particular
assessment area made by all of the
bank’s or savings association’s affiliates.
(3) The appropriate Federal banking
agency does not consider affiliate
lending in assessing a bank’s or savings
association’s performance under
paragraph (b)(2)(i) of this section.
(d) Lending by a consortium or a third
party. Community development loans
originated or purchased by a consortium
in which the bank or savings association
participates or by a third party in which
the bank or savings association has
invested:
(1) Will be considered, at the bank’s
or savings association’s option, if the
bank or savings association reports the
data pertaining to these loans under
§ 25.42(b)(2); and
(2) May be allocated among
participants or investors, as they choose,
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for purposes of the lending test, except
that no participant or investor:
(i) May claim a loan origination or
loan purchase if another participant or
investor claims the same loan
origination or purchase; or
(ii) May claim loans accounting for
more than its percentage share (based on
the level of its participation or
investment) of the total loans originated
by the consortium or third party.
(e) Lending performance rating. The
appropriate Federal banking agency
rates a bank’s or savings association’s
lending performance as provided in
appendix A of this part.
§ 25.23
Investment test.
(a) Scope of test. The investment test
evaluates a bank’s or savings
association’s record of helping to meet
the credit needs of its assessment area(s)
through qualified investments that
benefit its assessment area(s) or a
broader statewide or regional area that
includes the bank’s or savings
association’s assessment area(s).
(b) Exclusion. Activities considered
under the lending or service tests may
not be considered under the investment
test.
(c) Affiliate investment. At a bank’s or
savings association’s option, the
appropriate Federal banking agency will
consider, in its assessment of a bank’s
or savings association’s investment
performance, a qualified investment
made by an affiliate of the bank or
savings association, if the qualified
investment is not claimed by any other
institution.
(d) Disposition of branch premises.
Donating, selling on favorable terms, or
making available on a rent-free basis a
branch of the bank or savings
association that is located in a
predominantly minority neighborhood
to a minority depository institution or
women’s depository institution (as these
terms are defined in 12 U.S.C. 2907(b))
will be considered as a qualified
investment.
(e) Performance criteria. The
appropriate Federal banking agency
evaluates the investment performance of
a bank or savings association pursuant
to the following criteria:
(1) The dollar amount of qualified
investments;
(2) The innovativeness or complexity
of qualified investments;
(3) The responsiveness of qualified
investments to credit and community
development needs; and
(4) The degree to which the qualified
investments are not routinely provided
by private investors.
(f) Investment performance rating.
The appropriate Federal banking agency
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rates a bank’s or savings association’s
investment performance as provided in
appendix A of this part.
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§ 25.24
Service test.
(a) Scope of test. The service test
evaluates a bank’s or savings
association’s record of helping to meet
the credit needs of its assessment area(s)
by analyzing both the availability and
effectiveness of a bank’s or savings
association’s systems for delivering
retail banking services and the extent
and innovativeness of its community
development services.
(b) Area(s) benefitted. Community
development services must benefit a
bank’s or savings association’s
assessment area(s) or a broader
statewide or regional area that includes
the bank’s or savings association’s
assessment area(s).
(c) Affiliate service. At a bank’s or
savings association’s option, the
appropriate Federal banking agency will
consider, in its assessment of a bank’s
or savings association’s service
performance, a community development
service provided by an affiliate of the
bank or savings association, if the
community development service is not
claimed by any other institution.
(d) Performance criteria—retail
banking services. The appropriate
Federal banking agency evaluates the
availability and effectiveness of a bank’s
or savings association’s systems for
delivering retail banking services,
pursuant to the following criteria:
(1) The current distribution of the
bank’s or savings association’s branches
among low-, moderate-, middle-, and
upper-income geographies;
(2) In the context of its current
distribution of the bank’s or savings
association’s branches, the bank’s or
savings association’s record of opening
and closing branches, particularly
branches located in low- or moderateincome geographies or primarily serving
low- or moderate-income individuals;
(3) The availability and effectiveness
of alternative systems for delivering
retail banking services (e.g., ATMs,
ATMs not owned or operated by or
exclusively for the bank or savings
association, banking by telephone or
computer, loan production offices, and
bank-at-work or bank-by-mail programs)
in low- and moderate-income
geographies and to low- and moderateincome individuals; and
(4) The range of services provided in
low-, moderate-, middle-, and upperincome geographies and the degree to
which the services are tailored to meet
the needs of those geographies.
(e) Performance criteria—community
development services. The appropriate
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Federal banking agency evaluates
community development services
pursuant to the following criteria:
(1) The extent to which the bank or
savings association provides community
development services; and
(2) The innovativeness and
responsiveness of community
development services.
(f) Service performance rating. The
appropriate Federal banking agency
rates a bank’s or savings association’s
service performance as provided in
appendix A of this part.
§ 25.25 Community development test for
wholesale or limited purpose banks and
savings associations.
(a) Scope of test. The appropriate
Federal banking agency assesses a
wholesale or limited purpose bank’s or
savings association’s record of helping
to meet the credit needs of its
assessment area(s) under the community
development test through its
community development lending,
qualified investments, or community
development services.
(b) Designation as a wholesale or
limited purpose bank or savings
association. In order to receive a
designation as a wholesale or limited
purpose bank or savings association, a
bank or savings association shall file a
request, in writing, with the appropriate
Federal banking agency, at least three
months prior to the proposed effective
date of the designation. If the
appropriate Federal banking agency
approves the designation, it remains in
effect until the bank or savings
association requests revocation of the
designation or until one year after the
appropriate Federal banking agency
notifies the bank or savings association
that the it has revoked the designation
on its own initiative.
(c) Performance criteria. The
appropriate Federal banking agency
evaluates the community development
performance of a wholesale or limited
purpose bank or savings association
pursuant to the following criteria:
(1) The number and amount of
community development loans
(including originations and purchases of
loans and other community
development loan data provided by the
bank or savings association, such as data
on loans outstanding, commitments,
and letters of credit), qualified
investments, or community
development services;
(2) The use of innovative or complex
qualified investments, community
development loans, or community
development services and the extent to
which the investments are not routinely
provided by private investors; and
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(3) The bank’s or savings association’s
responsiveness to credit and community
development needs.
(d) Indirect activities. At a bank’s or
savings association’s option, the
appropriate Federal banking agency will
consider in its community development
performance assessment:
(1) Qualified investments or
community development services
provided by an affiliate of the bank or
savings association, if the investments
or services are not claimed by any other
institution; and
(2) Community development lending
by affiliates, consortia and third parties,
subject to the requirements and
limitations in § 25.22(c) and (d).
(e) Benefit to assessment area(s)—(1)
Benefit inside assessment area(s). The
appropriate Federal banking agency
considers all qualified investments,
community development loans, and
community development services that
benefit areas within the bank’s or
savings association’s assessment area(s)
or a broader statewide or regional area
that includes the bank’s or savings
association’s assessment area(s).
(2) Benefit outside assessment area(s).
The appropriate Federal banking agency
considers the qualified investments,
community development loans, and
community development services that
benefit areas outside the bank’s or
savings association’s assessment area(s),
if the bank or savings association has
adequately addressed the needs of its
assessment area(s).
(f) Community development
performance rating. The appropriate
Federal banking agency rates a bank’s or
savings association’s community
development performance as provided
in appendix A of this part.
§ 25.26 Small bank and savings
association performance standards.
(a) Performance criteria—(1) Small
banks and savings associations that are
not intermediate small banks or savings
associations. The appropriate Federal
banking agency evaluates the record of
a small bank or savings association that
is not, or that was not during the prior
calendar year, an intermediate small
bank or savings association, of helping
to meet the credit needs of its
assessment area(s) pursuant to the
criteria set forth in paragraph (b) of this
section.
(2) Intermediate small banks and
savings associations. The appropriate
Federal banking agency evaluates the
record of a small bank or savings
association that is, or that was during
the prior calendar year, an intermediate
small bank or savings association, of
helping to meet the credit needs of its
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assessment area(s) pursuant to the
criteria set forth in paragraphs (b) and
(c) of this section.
(b) Lending test. A small bank’s or
savings association’s lending
performance is evaluated pursuant to
the following criteria:
(1) The bank’s or savings association’s
loan-to-deposit ratio, adjusted for
seasonal variation, and, as appropriate,
other lending-related activities, such as
loan originations for sale to the
secondary markets, community
development loans, or qualified
investments;
(2) The percentage of loans and, as
appropriate, other lending-related
activities located in the bank’s or
savings association’s assessment area(s);
(3) The bank’s or savings association’s
record of lending to and, as appropriate,
engaging in other lending-related
activities for borrowers of different
income levels and businesses and farms
of different sizes;
(4) The geographic distribution of the
bank’s or savings association’s loans;
and
(5) The bank’s or savings association’s
record of taking action, if warranted, in
response to written complaints about its
performance in helping to meet credit
needs in its assessment area(s).
(c) Community development test. An
intermediate small bank’s or savings
association’s community development
performance also is evaluated pursuant
to the following criteria:
(1) The number and amount of
community development loans;
(2) The number and amount of
qualified investments;
(3) The extent to which the bank or
savings association provides community
development services; and
(4) The bank’s or savings association’s
responsiveness through such activities
to community development lending,
investment, and services needs.
(d) Small bank or savings association
performance rating. The appropriate
Federal banking agency rates the
performance of a bank or savings
association evaluated under this section
as provided in appendix A of this part.
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§ 25.27
Strategic plan.
(a) Alternative election. The
appropriate Federal banking agency will
assess a bank’s or savings association’s
record of helping to meet the credit
needs of its assessment area(s) under a
strategic plan if:
(1) The bank or savings association
has submitted the plan to the
appropriate Federal banking agency as
provided for in this section;
(2) The appropriate Federal banking
agency has approved the plan;
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(3) The plan is in effect; and
(4) The bank or savings association
has been operating under an approved
plan for at least one year.
(b) Data reporting. The appropriate
Federal banking agency ’s approval of a
plan does not affect the bank’s or
savings association’s obligation, if any,
to report data as required by § 25.42.
(c) Plans in general—(1) Term. A plan
may have a term of no more than five
years, and any multi-year plan must
include annual interim measurable
goals under which the appropriate
Federal banking agency will evaluate
the bank’s or savings association’s
performance.
(2) Multiple assessment areas. A bank
or savings association with more than
one assessment area may prepare a
single plan for all of its assessment areas
or one or more plans for one or more of
its assessment areas.
(3) Treatment of affiliates. Affiliated
institutions may prepare a joint plan if
the plan provides measurable goals for
each institution. Activities may be
allocated among institutions at the
institutions’ option, provided that the
same activities are not considered for
more than one institution.
(d) Public participation in plan
development. Before submitting a plan
to the appropriate Federal banking
agency for approval, a bank or savings
association shall:
(1) Informally seek suggestions from
members of the public in its assessment
area(s) covered by the plan while
developing the plan;
(2) Once the bank or savings
association has developed a plan,
formally solicit public comment on the
plan for at least 30 days by publishing
notice in at least one newspaper of
general circulation in each assessment
area covered by the plan; and
(3) During the period of formal public
comment, make copies of the plan
available for review by the public at no
cost at all offices of the bank or savings
association in any assessment area
covered by the plan and provide copies
of the plan upon request for a
reasonable fee to cover copying and
mailing, if applicable.
(e) Submission of plan. The bank or
savings association shall submit its plan
to the appropriate Federal banking
agency at least three months prior to the
proposed effective date of the plan. The
bank or savings association shall also
submit with its plan a description of its
informal efforts to seek suggestions from
members of the public, any written
public comment received, and, if the
plan was revised in light of the
comment received, the initial plan as
released for public comment.
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(f) Plan content—(1) Measurable
goals. (i) A bank or savings association
shall specify in its plan measurable
goals for helping to meet the credit
needs of each assessment area covered
by the plan, particularly the needs of
low- and moderate-income geographies
and low- and moderate-income
individuals, through lending,
investment, and services, as
appropriate.
(ii) A bank or savings association shall
address in its plan all three performance
categories and, unless the bank or
savings association has been designated
as a wholesale or limited purpose bank
or savings association, shall emphasize
lending and lending-related activities.
Nevertheless, a different emphasis,
including a focus on one or more
performance categories, may be
appropriate if responsive to the
characteristics and credit needs of its
assessment area(s), considering public
comment and the bank’s or savings
association’s capacity and constraints,
product offerings, and business strategy.
(2) Confidential information. A bank
or savings association may submit
additional information to the
appropriate Federal banking agency on
a confidential basis, but the goals stated
in the plan must be sufficiently specific
to enable the public and the appropriate
Federal banking agency to judge the
merits of the plan.
(3) Satisfactory and outstanding goals.
A bank or savings association shall
specify in its plan measurable goals that
constitute ‘‘satisfactory’’ performance. A
plan may specify measurable goals that
constitute ‘‘outstanding’’ performance. If
a bank or savings association submits,
and the appropriate Federal banking
agency approves, both ‘‘satisfactory’’
and ‘‘outstanding’’ performance goals,
the appropriate Federal banking agency
will consider the bank or savings
association eligible for an ‘‘outstanding’’
performance rating.
(4) Election if satisfactory goals not
substantially met. A bank or savings
association may elect in its plan that, if
the bank or savings association fails to
meet substantially its plan goals for a
satisfactory rating, the appropriate
Federal banking agency will evaluate
the bank’s or savings association’s
performance under the lending,
investment, and service tests, the
community development test, or the
small bank or savings association
performance standards, as appropriate.
(g) Plan approval—(1) Timing. The
appropriate Federal banking agency will
act upon a plan within 60 calendar days
after the appropriate Federal banking
agency receives the complete plan and
other material required under paragraph
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(e) of this section. If the appropriate
Federal banking agency fails to act
within this time period, the plan shall
be deemed approved unless the
appropriate Federal banking agency
extends the review period for good
cause.
(2) Public participation. In evaluating
the plan’s goals, the appropriate Federal
banking agency considers the public’s
involvement in formulating the plan,
written public comment on the plan,
and any response by the bank or savings
association to public comment on the
plan.
(3) Criteria for evaluating plan. The
appropriate Federal banking agency
evaluates a plan’s measurable goals
using the following criteria, as
appropriate:
(i) The extent and breadth of lending
or lending-related activities, including,
as appropriate, the distribution of loans
among different geographies, businesses
and farms of different sizes, and
individuals of different income levels,
the extent of community development
lending, and the use of innovative or
flexible lending practices to address
credit needs;
(ii) The amount and innovativeness,
complexity, and responsiveness of the
bank’s or savings association’s qualified
investments; and
(iii) The availability and effectiveness
of the bank’s or savings association’s
systems for delivering retail banking
services and the extent and
innovativeness of the bank’s or savings
association’s community development
services.
(h) Plan amendment. During the term
of a plan, a bank or savings association
may request the appropriate Federal
banking agency to approve an
amendment to the plan on grounds that
there has been a material change in
circumstances. The bank or savings
association shall develop an amendment
to a previously approved plan in
accordance with the public
participation requirements of paragraph
(d) of this section.
(i) Plan assessment. The appropriate
Federal banking agency approves the
goals and assesses performance under a
plan as provided for in appendix A of
this part.
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§ 25.28
Assigned ratings.
(a) Ratings in general. Subject to
paragraphs (b) and (c) of this section,
the appropriate Federal banking agency
assigns to a bank or savings association
a rating of ‘‘outstanding,’’ ‘‘satisfactory,’’
‘‘needs to improve,’’ or ‘‘substantial
noncompliance’’ based on the bank’s or
savings association’s performance under
the lending, investment and service
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tests, the community development test,
the small bank or savings association
performance standards, or an approved
strategic plan, as applicable.
(b) Lending, investment, and service
tests. The appropriate Federal banking
agency assigns a rating for a bank or
savings association assessed under the
lending, investment, and service tests in
accordance with the following
principles:
(1) A bank or savings association that
receives an ‘‘outstanding’’ rating on the
lending test receives an assigned rating
of at least ‘‘satisfactory’’;
(2) A bank or savings association that
receives an ‘‘outstanding’’ rating on both
the service test and the investment test
and a rating of at least ‘‘high
satisfactory’’ on the lending test receives
an assigned rating of ‘‘outstanding’’; and
(3) No bank or savings association
may receive an assigned rating of
‘‘satisfactory’’ or higher unless it
receives a rating of at least ‘‘low
satisfactory’’ on the lending test.
(c) Effect of evidence of
discriminatory or other illegal credit
practices. (1) The appropriate Federal
banking agency ’s evaluation of a bank’s
or savings association’s CRA
performance is adversely affected by
evidence of discriminatory or other
illegal credit practices in any geography
by the bank or savings association or in
any assessment area by any affiliate
whose loans have been considered as
part of the bank’s or savings
association’s lending performance. In
connection with any type of lending
activity described in § 25.22(a),
evidence of discriminatory or other
credit practices that violate an
applicable law, rule, or regulation
includes, but is not limited to:
(i) Discrimination against applicants
on a prohibited basis in violation, for
example, of the Equal Credit
Opportunity Act or the Fair Housing
Act;
(ii) Violations of the Home Ownership
and Equity Protection Act;
(iii) Violations of section 5 of the
Federal Trade Commission Act;
(iv) Violations of section 8 of the Real
Estate Settlement Procedures Act; and
(v) Violations of the Truth in Lending
Act provisions regarding a consumer’s
right of rescission.
(2) In determining the effect of
evidence of practices described in
paragraph (c)(1) of this section on the
bank’s or savings association’s assigned
rating, the appropriate Federal banking
agency considers the nature, extent, and
strength of the evidence of the practices;
the policies and procedures that the
bank or savings association (or affiliate,
as applicable) has in place to prevent
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the practices; any corrective action that
the bank or savings association (or
affiliate, as applicable) has taken or has
committed to take, including voluntary
corrective action resulting from selfassessment; and any other relevant
information.
§ 25.29 Effect of CRA performance on
applications.
(a) CRA performance. Among other
factors, the appropriate Federal banking
agency takes into account the record of
performance under the CRA of each
applicant bank or savings association,
and for applications under 10(e) of the
Home Owners’ Loan Act (12 U.S.C.
1467a(e)), of each proposed subsidiary
savings association, in considering an
application for:
(1) The establishment of:
(i) A domestic branch for insured
national banks; or
(ii) A domestic branch or other facility
that would be authorized to take
deposits for savings associations;
(2) The relocation of the main office
or a branch;
(3) The merger or consolidation with
or the acquisition of assets or
assumption of liabilities of an insured
depository institution requiring
approval under the Bank Merger Act (12
U.S.C. 1828(c)); and
(4) The conversion of an insured
depository institution to a national bank
or Federal savings association charter;
and
(5) Acquisitions subject to section
10(e) of the Home Owners’ Loan Act (12
U.S.C. 1467a(e)).
(b) Charter application. (1) An
applicant (other than an insured
depository institution) for a national
bank charter shall submit with its
application a description of how it will
meet its CRA objectives. The OCC takes
the description into account in
considering the application and may
deny or condition approval on that
basis.
(2) An applicant for a Federal savings
association charter shall submit with its
application a description of how it will
meet its CRA objectives. The
appropriate Federal banking agency
takes the description into account in
considering the application and may
deny or condition approval on that
basis.
(c) Interested parties. The appropriate
Federal banking agency takes into
account any views expressed by
interested parties that are submitted in
accordance with the applicable
comment procedures in considering
CRA performance in an application
listed in paragraphs (a) and (b) of this
section.
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(d) Denial or conditional approval of
application. A bank’s or savings
association’s record of performance may
be the basis for denying or conditioning
approval of an application listed in
paragraph (a) of this section.
(e) Insured depository institution. For
purposes of this section, the term
‘‘insured depository institution’’ has the
meaning given to that term in 12 U.S.C.
1813.
Subpart C—Records, Reporting, and
Disclosure Requirements
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§ 25.41
Assessment area delineation.
(a) In general. A bank or savings
association shall delineate one or more
assessment areas within which the
appropriate Federal banking agency
evaluates the bank’s or savings
association’s record of helping to meet
the credit needs of its community. The
appropriate Federal banking agency
does not evaluate the bank’s or savings
association’s delineation of its
assessment area(s) as a separate
performance criterion, but the
appropriate Federal banking agency
reviews the delineation for compliance
with the requirements of this section.
(b) Geographic area(s) for wholesale
or limited purpose banks or savings
associations. The assessment area(s) for
a wholesale or limited purpose bank or
savings association must consist
generally of one or more MSAs or
metropolitan divisions (using the MSA
or metropolitan division boundaries that
were in effect as of January 1 of the
calendar year in which the delineation
is made) or one or more contiguous
political subdivisions, such as counties,
cities, or towns, in which the bank or
savings association has its main office,
branches, and deposit-taking ATMs.
(c) Geographic area(s) for other banks
and savings association. The assessment
area(s) for a bank or savings association
other than a wholesale or limited
purpose bank or savings association
must:
(1) Consist generally of one or more
MSAs or metropolitan divisions (using
the MSA or metropolitan division
boundaries that were in effect as of
January 1 of the calendar year in which
the delineation is made) or one or more
contiguous political subdivisions, such
as counties, cities, or towns; and
(2) Include the geographies in which
the bank or savings association has its
main office, its branches, and its
deposit-taking ATMs, as well as the
surrounding geographies in which the
bank or savings association has
originated or purchased a substantial
portion of its loans (including home
mortgage loans, small business and
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small farm loans, and any other loans
the bank or savings association chooses,
such as those consumer loans on which
the bank or savings association elects to
have its performance assessed).
(d) Adjustments to geographic area(s).
A bank or savings association may
adjust the boundaries of its assessment
area(s) to include only the portion of a
political subdivision that it reasonably
can be expected to serve. An adjustment
is particularly appropriate in the case of
an assessment area that otherwise
would be extremely large, of unusual
configuration, or divided by significant
geographic barriers.
(e) Limitations on the delineation of
an assessment area. Each bank’s or
savings associations assessment area(s):
(1) Must consist only of whole
geographies;
(2) May not reflect illegal
discrimination;
(3) May not arbitrarily exclude low- or
moderate-income geographies, taking
into account the bank’s or savings
association’s size and financial
condition; and
(4) May not extend substantially
beyond an MSA boundary or beyond a
state boundary unless the assessment
area is located in a multistate MSA. If
a bank or savings association serves a
geographic area that extends
substantially beyond a state boundary,
the bank or savings association shall
delineate separate assessment areas for
the areas in each state. If a bank or
savings association serves a geographic
area that extends substantially beyond
an MSA boundary, the bank or savings
association shall delineate separate
assessment areas for the areas inside
and outside the MSA.
(f) Banks and savings association
serving military personnel.
Notwithstanding the requirements of
this section, a bank or savings
association whose business
predominantly consists of serving the
needs of military personnel or their
dependents who are not located within
a defined geographic area may delineate
its entire deposit customer base as its
assessment area.
(g) Use of assessment area(s). The
appropriate Federal banking agency
uses the assessment area(s) delineated
by a bank or savings association in its
evaluation of the bank’s or savings
association’s CRA performance unless
the appropriate Federal banking agency
determines that the assessment area(s)
do not comply with the requirements of
this section.
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§ 25.42 Data collection, reporting, and
disclosure.
(a) Loan information required to be
collected and maintained. A bank or
savings association, except a small bank
or savings association, shall collect, and
maintain in machine readable form (as
prescribed by the appropriate Federal
banking agency) until the completion of
its next CRA examination, the following
data for each small business or small
farm loan originated or purchased by
the bank or savings association:
(1) A unique number or alphanumeric symbol that can be used to
identify the relevant loan file;
(2) The loan amount at origination;
(3) The loan location; and
(4) An indicator whether the loan was
to a business or farm with gross annual
revenues of $1 million or less.
(b) Loan information required to be
reported. A bank or savings association,
except a small bank or savings
association or a bank or savings
association that was a small bank or
savings association during the prior
calendar year, shall report annually by
March 1 to the appropriate Federal
banking agency in machine readable
form (as prescribed by the appropriate
Federal banking agency) the following
data for the prior calendar year:
(1) Small business and small farm
loan data. For each geography in which
the bank or savings association
originated or purchased a small
business or small farm loan, the
aggregate number and amount of loans:
(i) With an amount at origination of
$100,000 or less;
(ii) With amount at origination of
more than $100,000 but less than or
equal to $250,000;
(iii) With an amount at origination of
more than $250,000; and
(iv) To businesses and farms with
gross annual revenues of $1 million or
less (using the revenues that the bank or
savings association considered in
making its credit decision);
(2) Community development loan
data. The aggregate number and
aggregate amount of community
development loans originated or
purchased; and
(3) Home mortgage loans. If the bank
or savings association is subject to
reporting under part 1003 of this title,
the location of each home mortgage loan
application, origination, or purchase
outside the MSAs in which the bank or
savings association has a home or
branch office (or outside any MSA) in
accordance with the requirements of
part 1003 of this title.
(c) Optional data collection and
maintenance—(1) Consumer loans. A
bank or savings association may collect
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and maintain in machine readable form
(as prescribed by the appropriate
Federal banking agency) data for
consumer loans originated or purchased
by the bank or savings association for
consideration under the lending test. A
bank or savings association may
maintain data for one or more of the
following categories of consumer loans:
Motor vehicle, credit card, other
secured, and other unsecured. If the
bank or savings association maintains
data for loans in a certain category, it
shall maintain data for all loans
originated or purchased within that
category. The bank or savings
association shall maintain data
separately for each category, including
for each loan:
(i) A unique number or alpha-numeric
symbol that can be used to identify the
relevant loan file;
(ii) The loan amount at origination or
purchase;
(iii) The loan location; and
(iv) The gross annual income of the
borrower that the bank or savings
association considered in making its
credit decision.
(2) Other loan data. At its option, a
bank or savings association may provide
other information concerning its lending
performance, including additional loan
distribution data.
(d) Data on affiliate lending. A bank
or savings association that elects to have
the appropriate Federal banking agency
consider loans by an affiliate, for
purposes of the lending or community
development test or an approved
strategic plan, shall collect, maintain,
and report for those loans the data that
the bank or savings association would
have collected, maintained, and
reported pursuant to paragraphs (a), (b),
and (c) of this section had the loans
been originated or purchased by the
bank or savings association. For home
mortgage loans, the bank or savings
association shall also be prepared to
identify the home mortgage loans
reported under part 1003 of this title by
the affiliate.
(e) Data on lending by a consortium
or a third party. A bank or savings
association that elects to have the
appropriate Federal banking agency
consider community development loans
by a consortium or third party, for
purposes of the lending or community
development tests or an approved
strategic plan, shall report for those
loans the data that the bank or savings
association would have reported under
paragraph (b)(2) of this section had the
loans been originated or purchased by
the bank or savings association.
(f) Small banks and savings
associations electing evaluation under
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the lending, investment, and service
tests. A bank or savings association that
qualifies for evaluation under the small
bank or savings association performance
standards but elects evaluation under
the lending, investment, and service
tests shall collect, maintain, and report
the data required for other banks or
savings association pursuant to
paragraphs (a) and (b) of this section.
(g) Assessment area data. A bank or
savings association, except a small bank
or savings association or a bank or
savings association that was a small
bank or savings association during the
prior calendar year, shall collect and
report to the appropriate Federal
banking agency by March 1 of each year
a list for each assessment area showing
the geographies within the area.
(h) CRA Disclosure Statement. The
appropriate Federal banking agency
prepares annually for each bank or
savings association that reports data
pursuant to this section a CRA
Disclosure Statement that contains, on a
state-by-state basis:
(1) For each county (and for each
assessment area smaller than a county)
with a population of 500,000 persons or
fewer in which the bank or savings
association reported a small business or
small farm loan:
(i) The number and amount of small
business and small farm loans reported
as originated or purchased located in
low-, moderate-, middle-, and upperincome geographies;
(ii) A list grouping each geography
according to whether the geography is
low-, moderate-, middle-, or upperincome;
(iii) A list showing each geography in
which the bank or savings association
reported a small business or small farm
loan; and
(iv) The number and amount of small
business and small farm loans to
businesses and farms with gross annual
revenues of $1 million or less;
(2) For each county (and for each
assessment area smaller than a county)
with a population in excess of 500,000
persons in which the bank or savings
association reported a small business or
small farm loan:
(i) The number and amount of small
business and small farm loans reported
as originated or purchased located in
geographies with median income
relative to the area median income of
less than 10 percent, 10 or more but less
than 20 percent, 20 or more but less
than 30 percent, 30 or more but less
than 40 percent, 40 or more but less
than 50 percent, 50 or more but less
than 60 percent, 60 or more but less
than 70 percent, 70 or more but less
than 80 percent, 80 or more but less
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than 90 percent, 90 or more but less
than 100 percent, 100 or more but less
than 110 percent, 110 or more but less
than 120 percent, and 120 percent or
more;
(ii) A list grouping each geography in
the county or assessment area according
to whether the median income in the
geography relative to the area median
income is less than 10 percent, 10 or
more but less than 20 percent, 20 or
more but less than 30 percent, 30 or
more but less than 40 percent, 40 or
more but less than 50 percent, 50 or
more but less than 60 percent, 60 or
more but less than 70 percent, 70 or
more but less than 80 percent, 80 or
more but less than 90 percent, 90 or
more but less than 100 percent, 100 or
more but less than 110 percent, 110 or
more but less than 120 percent, and 120
percent or more;
(iii) A list showing each geography in
which the bank or savings association
reported a small business or small farm
loan; and
(iv) The number and amount of small
business and small farm loans to
businesses and farms with gross annual
revenues of $1 million or less;
(3) The number and amount of small
business and small farm loans located
inside each assessment area reported by
the bank or savings association and the
number and amount of small business
and small farm loans located outside the
assessment area(s) reported by the bank
or savings association; and
(4) The number and amount of
community development loans reported
as originated or purchased.
(i) Aggregate disclosure statements.
The OCC, in conjunction with the Board
of Governors of the Federal Reserve
System and the FDIC, prepares
annually, for each MSA or metropolitan
division (including an MSA or
metropolitan division that crosses a
state boundary) and the
nonmetropolitan portion of each state,
an aggregate disclosure statement of
small business and small farm lending
by all institutions subject to reporting
under this part or parts 228 or 345 of
this title. These disclosure statements
indicate, for each geography, the
number and amount of all small
business and small farm loans
originated or purchased by reporting
institutions, except that the appropriate
Federal banking agency may adjust the
form of the disclosure if necessary,
because of special circumstances, to
protect the privacy of a borrower or the
competitive position of an institution.
(j) Central data depositories. The
appropriate Federal banking agency
makes the aggregate disclosure
statements, described in paragraph (i) of
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this section, and the individual bank or
savings association CRA Disclosure
Statements, described in paragraph (h)
of this section, available to the public at
central data depositories. The
appropriate Federal banking agency
publishes a list of the depositories at
which the statements are available.
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§ 25.43
file.
Content and availability of public
(a) Information available to the
public. A bank or savings association
shall maintain a public file that includes
the following information:
(1) All written comments received
from the public for the current year and
each of the prior two calendar years that
specifically relate to the bank’s or
savings association’s performance in
helping to meet community credit
needs, and any response to the
comments by the bank or savings
association, if neither the comments nor
the responses contain statements that
reflect adversely on the good name or
reputation of any persons other than the
bank or savings association or
publication of which would violate
specific provisions of law;
(2) A copy of the public section of the
bank’s or savings association’s most
recent CRA Performance Evaluation
prepared by the appropriate Federal
banking agency. The bank or savings
association shall place this copy in the
public file within 30 business days after
its receipt from the appropriate Federal
banking agency;
(3) A list of the bank’s or savings
association’s branches, their street
addresses, and geographies;
(4) A list of branches opened or closed
by the bank or savings association
during the current year and each of the
prior two calendar years, their street
addresses, and geographies;
(5) A list of services (including hours
of operation, available loan and deposit
products, and transaction fees) generally
offered at the bank’s or savings
association’s branches and descriptions
of material differences in the availability
or cost of services at particular
branches, if any. At its option, a bank
or savings association may include
information regarding the availability of
alternative systems for delivering retail
banking services (e.g., ATMs, ATMs not
owned or operated by or exclusively for
the bank or savings association, banking
by telephone or computer, loan
production offices, and bank-at-work or
bank-by-mail programs);
(6) A map of each assessment area
showing the boundaries of the area and
identifying the geographies contained
within the area, either on the map or in
a separate list; and
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(7) Any other information the bank or
savings association chooses.
(b) Additional information available
to the public—(1) Banks and savings
associations other than small banks or
savings associations. A bank or savings
association, except a small bank or
savings association or a bank or savings
association that was a small bank or
savings association during the prior
calendar year, shall include in its public
file the following information pertaining
to the bank or savings association and
its affiliates, if applicable, for each of
the prior two calendar years:
(i) If the bank or savings association
has elected to have one or more
categories of its consumer loans
considered under the lending test, for
each of these categories, the number and
amount of loans:
(A) To low-, moderate-, middle-, and
upper-income individuals;
(B) Located in low-, moderate-,
middle-, and upper-income census
tracts; and
(C) Located inside the bank’s or
savings association’s assessment area(s)
and outside the bank’s or savings
association’s assessment area(s); and
(ii) The bank’s or savings association’s
CRA Disclosure Statement. The bank or
savings association shall place the
statement in the public file within three
business days of its receipt from the
appropriate Federal banking agency.
(2) Banks and savings associations
required to report Home Mortgage
Disclosure Act (HMDA) data. A bank or
savings association required to report
home mortgage loan data pursuant part
1003 of this title shall include in its
public file a written notice that the
institution’s HMDA Disclosure
Statement may be obtained on the
Consumer Financial Protection Bureau’s
(Bureau’s) website at
www.consumerfinance.gov/hmda. In
addition, a bank or savings association
that elected to have the appropriate
Federal banking agency consider the
mortgage lending of an affiliate shall
include in its public file the name of the
affiliate and a written notice that the
affiliate’s HMDA Disclosure Statement
may be obtained at the Bureau’s
website. The bank or savings association
shall place the written notice(s) in the
public file within three business days
after receiving notification from the
Federal Financial Institutions
Examination Council of the availability
of the disclosure statement(s).
(3) Small banks and savings
associations. A small bank or savings
association or a bank or savings
association that was a small bank or
savings association during the prior
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71349
calendar year shall include in its public
file:
(i) The bank’s or savings association’s
loan-to-deposit ratio for each quarter of
the prior calendar year and, at its
option, additional data on its loan-todeposit ratio; and
(ii) The information required for other
banks or savings associations by
paragraph (b)(1) of this section, if the
bank or savings association has elected
to be evaluated under the lending,
investment, and service tests.
(4) Banks and savings associations
with strategic plans. A bank or savings
association that has been approved to be
assessed under a strategic plan shall
include in its public file a copy of that
plan. A bank or savings association need
not include information submitted to
the appropriate Federal banking agency
on a confidential basis in conjunction
with the plan.
(5) Banks and savings associations
with less than satisfactory ratings. A
bank or savings association that
received a less than satisfactory rating
during its most recent examination shall
include in its public file a description
of its current efforts to improve its
performance in helping to meet the
credit needs of its entire community.
The bank or savings association shall
update the description quarterly.
(c) Location of public information. A
bank or savings association shall make
available to the public for inspection
upon request and at no cost the
information required in this section as
follows:
(1) At the main office and, if an
interstate bank or savings association, at
one branch office in each state, all
information in the public file; and
(2) At each branch:
(i) A copy of the public section of the
bank’s or savings association’s most
recent CRA Performance Evaluation and
a list of services provided by the branch;
and
(ii) Within five calendar days of the
request, all the information in the public
file relating to the assessment area in
which the branch is located.
(d) Copies. Upon request, a bank or
savings association shall provide copies,
either on paper or in another form
acceptable to the person making the
request, of the information in its public
file. The bank or savings association
may charge a reasonable fee not to
exceed the cost of copying and mailing
(if applicable).
(e) Updating. Except as otherwise
provided in this section, a bank or
savings association shall ensure that the
information required by this section is
current as of April 1 of each year.
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§ 25.44 Public notice by banks and
savings associations.
A bank or savings association shall
provide in the public lobby of its main
office and each of its branches the
appropriate public notice set forth in
appendix B of this part. Only a branch
of a bank or savings association having
more than one assessment area shall
include the bracketed material in the
notice for branch offices. Only an
insured national bank that is an affiliate
of a holding company shall include the
next to the last sentence of the notices.
An insured national bank shall include
the last sentence of the notices only if
it is an affiliate of a holding company
that is not prevented by statute from
acquiring additional banks. Only a
savings association that is an affiliate of
a holding company shall include the
last two sentences of the notices.
§ 25.45 Publication of planned
examination schedule.
The appropriate Federal banking
agency publishes at least 30 days in
advance of the beginning of each
calendar quarter a list of banks and
savings associations scheduled for CRA
examinations in that quarter.
Subpart D—Transition Provisions
§ 25.51
Consideration of Bank Activities.
(a) In assessing a bank’s CRA
performance, the appropriate Federal
banking agency will consider any loan,
investment, or service that was eligible
for CRA consideration at the time the
bank conducted the activity.
(b) Notwithstanding paragraph (a), in
assessing a bank’s CRA performance, the
appropriate Federal banking agency will
consider any loan or investment that
was eligible for CRA consideration at
the time the bank entered into a legally
binding commitment to make the loan
or investment.
§ 25.52
Strategic Plan Retention.
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A bank or savings association strategic
plan approved by the appropriate
Federal banking agency and in effect as
of December 31, 2021, remains in effect,
except that provisions of the plan that
are not consistent with this part in effect
as of January 1, 2022, are void, unless
amended pursuant to § 25.27.
Subpart E—Prohibition Against Use of
Interstate Branches Primarily for
Deposit Production
§ 25.61
Purpose and scope.
(a) Purpose. The purpose of this
subpart is to implement section 109 (12
U.S.C. 1835a) of the Riegle-Neal
Interstate Banking and Branching
Efficiency Act of 1994 (Interstate Act).
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(b) Scope. (1) This subpart applies to
any national bank that has operated a
covered interstate branch for a period of
at least one year, and any foreign bank
that has operated a covered interstate
branch that is a Federal branch for a
period of at least one year.
(2) This subpart describes the
requirements imposed under 12 U.S.C.
1835a, which requires the appropriate
Federal banking agencies (the OCC, the
Board of Governors of the Federal
Reserve System, and the FDIC) to
prescribe uniform rules that prohibit a
bank from using any authority to engage
in interstate branching pursuant to the
Interstate Act, or any amendment made
by the Interstate Act to any other
provision of law, primarily for the
purpose of deposit production.
§ 25.62
Definitions.
For purposes of this subpart, the
following definitions apply:
(a) Bank means, unless the context
indicates otherwise:
(1) A national bank; and
(2) A foreign bank as that term is
defined in 12 U.S.C. 3101(7) and 12 CFR
28.11(i).
(b) Covered interstate branch means:
(1) Any branch of a national bank, and
any Federal branch of a foreign bank,
that:
(i) Is established or acquired outside
the bank’s home State pursuant to the
interstate branching authority granted
by the Interstate Act or by any
amendment made by the Interstate Act
to any other provision of law; or
(ii) Could not have been established
or acquired outside of the bank’s home
State but for the establishment or
acquisition of a branch described in
paragraph (b)(1)(i) of this section; and
(2) Any bank or branch of a bank
controlled by an out-of-State bank
holding company.
(c) Federal branch means Federal
branch as that term is defined in 12
U.S.C. 3101(6) and 12 CFR 28.11(h).
(d) Home State means:
(1) With respect to a State bank, the
State that chartered the bank;
(2) With respect to a national bank,
the State in which the main office of the
bank is located;
(3) With respect to a bank holding
company, the State in which the total
deposits of all banking subsidiaries of
such company are the largest on the
later of:
(i) July 1, 1966; or
(ii) The date on which the company
becomes a bank holding company under
the Bank Holding Company Act;
(4) With respect to a foreign bank:
(i) For purposes of determining
whether a U.S. branch of a foreign bank
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is a covered interstate branch, the home
State of the foreign bank as determined
in accordance with 12 U.S.C. 3103(c)
and 12 CFR 28.11(n); and
(ii) For purposes of determining
whether a branch of a U.S. bank
controlled by a foreign bank is a covered
interstate branch, the State in which the
total deposits of all banking subsidiaries
of such foreign bank are the largest on
the later of:
(A) July 1, 1966; or
(B) The date on which the foreign
bank becomes a bank holding company
under the Bank Holding Company Act.
(e) Host State means a State in which
a covered interstate branch is
established or acquired.
(f) Host state loan-to-deposit ratio
generally means, with respect to a
particular host state, the ratio of total
loans in the host state relative to total
deposits from the host state for all banks
(including institutions covered under
the definition of ‘‘bank’’ in 12 U.S.C.
1813(a)(1)) that have that state as their
home state, as determined and updated
periodically by the appropriate Federal
banking agencies and made available to
the public.
(g) Out-of-State bank holding
company means, with respect to any
State, a bank holding company whose
home State is another State.
(h) State means state as that term is
defined in 12 U.S.C. 1813(a)(3).
(i) Statewide loan-to-deposit ratio
means, with respect to a bank, the ratio
of the bank’s loans to its deposits in a
state in which the bank has one or more
covered interstate branches, as
determined by the OCC.
§ 25.63
Loan-to-deposit ratio screen.
(a) Application of screen. Beginning
no earlier than one year after a covered
interstate branch is acquired or
established, the OCC will consider
whether the bank’s statewide loan-todeposit ratio is less than 50 percent of
the relevant host State loan-to-deposit
ratio.
(b) Results of screen. (1) If the OCC
determines that the bank’s statewide
loan-to-deposit ratio is 50 percent or
more of the host state loan-to-deposit
ratio, no further consideration under
this subpart is required.
(2) If the OCC determines that the
bank’s statewide loan-to-deposit ratio is
less than 50 percent of the host state
loan-to-deposit ratio, or if reasonably
available data are insufficient to
calculate the bank’s statewide loan-todeposit ratio, the OCC will make a
credit needs determination for the bank
as provided in § 25.64.
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§ 25.64
Credit needs determination.
(a) In general. The OCC will review
the loan portfolio of the bank and
determine whether the bank is
reasonably helping to meet the credit
needs of the communities in the host
state that are served by the bank.
(b) Guidelines. The OCC will use the
following considerations as guidelines
when making the determination
pursuant to paragraph (a) of this section:
(1) Whether covered interstate
branches were formerly part of a failed
or failing depository institution;
(2) Whether covered interstate
branches were acquired under
circumstances where there was a low
loan-to-deposit ratio because of the
nature of the acquired institution’s
business or loan portfolio;
(3) Whether covered interstate
branches have a high concentration of
commercial or credit card lending, trust
services, or other specialized activities,
including the extent to which the
covered interstate branches accept
deposits in the host state;
(4) The CRA ratings received by the
bank, if any;
(5) Economic conditions, including
the level of loan demand, within the
communities served by the covered
interstate branches;
(6) The safe and sound operation and
condition of the bank; and
(7) The OCC’s CRA regulations
(subparts A through D of this part) and
interpretations of those regulations.
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§ 25.65
Sanctions.
(a) In general. If the OCC determines
that a bank is not reasonably helping to
meet the credit needs of the
communities served by the bank in the
host state, and that the bank’s statewide
loan-to-deposit ratio is less than 50
percent of the host state loan-to-deposit
ratio, the OCC:
(1) May order that a bank’s covered
interstate branch or branches be closed
unless the bank provides reasonable
assurances to the satisfaction of the
OCC, after an opportunity for public
comment, that the bank has an
acceptable plan under which the bank
will reasonably help to meet the credit
needs of the communities served by the
bank in the host state; and
(2) Will not permit the bank to open
a new branch in the host state that
would be considered to be a covered
interstate branch unless the bank
provides reasonable assurances to the
satisfaction of the OCC, after an
opportunity for public comment, that
the bank will reasonably help to meet
the credit needs of the community that
the new branch will serve.
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(b) Notice prior to closure of a covered
interstate branch. Before exercising the
OCC’s authority to order the bank to
close a covered interstate branch, the
OCC will issue to the bank a notice of
the OCC’s intent to order the closure
and will schedule a hearing within 60
days of issuing the notice.
(c) Hearing. The OCC will conduct a
hearing scheduled under paragraph (b)
of this section in accordance with the
provisions of 12 U.S.C. 1818(h) and 12
CFR part 19.
Appendix A to Part 25—Ratings
(a) Ratings in general. (1) In assigning a
rating, the appropriate Federal banking
agency evaluates a bank’s or savings
association’s performance under the
applicable performance criteria in this part,
in accordance with §§ 25.21 and 25.28. This
includes consideration of low-cost education
loans provided to low-income borrowers and
activities in cooperation with minority- or
women-owned financial institutions and
low-income credit unions, as well as
adjustments on the basis of evidence of
discriminatory or other illegal credit
practices.
(2) A bank’s or savings association’s
performance need not fit each aspect of a
particular rating profile in order to receive
that rating, and exceptionally strong
performance with respect to some aspects
may compensate for weak performance in
others. The bank’s or savings association’s
overall performance, however, must be
consistent with safe and sound banking
practices and generally with the appropriate
rating profile as follows.
(b) Banks and savings associations
evaluated under the lending, investment, and
service tests—(1) Lending performance
rating. The appropriate Federal banking
agency assigns each bank’s or savings
association’s lending performance one of the
five following ratings.
(i) Outstanding. The appropriate Federal
banking agency rates a bank’s or savings
association’s lending performance
‘‘outstanding’’ if, in general, it demonstrates:
(A) Excellent responsiveness to credit
needs in its assessment area(s), taking into
account the number and amount of home
mortgage, small business, small farm, and
consumer loans, if applicable, in its
assessment area(s);
(B) A substantial majority of its loans are
made in its assessment area(s);
(C) An excellent geographic distribution of
loans in its assessment area(s);
(D) An excellent distribution, particularly
in its assessment area(s), of loans among
individuals of different income levels and
businesses (including farms) of different
sizes, given the product lines offered by the
bank or savings association;
(E) An excellent record of serving the
credit needs of highly economically
disadvantaged areas in its assessment area(s),
low-income individuals, or businesses
(including farms) with gross annual revenues
of $1 million or less, consistent with safe and
sound operations;
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(F) Extensive use of innovative or flexible
lending practices in a safe and sound manner
to address the credit needs of low- or
moderate-income individuals or geographies;
and
(G) It is a leader in making community
development loans.
(ii) High satisfactory. The appropriate
Federal banking agency rates a bank’s or
savings association’s lending performance
‘‘high satisfactory’’ if, in general, it
demonstrates:
(A) Good responsiveness to credit needs in
its assessment area(s), taking into account the
number and amount of home mortgage, small
business, small farm, and consumer loans, if
applicable, in its assessment area(s);
(B) A high percentage of its loans are made
in its assessment area(s);
(C) A good geographic distribution of loans
in its assessment area(s);
(D) A good distribution, particularly in its
assessment area(s), of loans among
individuals of different income levels and
businesses (including farms) of different
sizes, given the product lines offered by the
bank or savings association;
(E) A good record of serving the credit
needs of highly economically disadvantaged
areas in its assessment area(s), low-income
individuals, or businesses (including farms)
with gross annual revenues of $1 million or
less, consistent with safe and sound
operations;
(F) Use of innovative or flexible lending
practices in a safe and sound manner to
address the credit needs of low- or moderateincome individuals or geographies; and
(G) It has made a relatively high level of
community development loans.
(iii) Low satisfactory. The appropriate
Federal banking agency rates a bank’s or
savings association’s lending performance
‘‘low satisfactory’’ if, in general, it
demonstrates:
(A) Adequate responsiveness to credit
needs in its assessment area(s), taking into
account the number and amount of home
mortgage, small business, small farm, and
consumer loans, if applicable, in its
assessment area(s);
(B) An adequate percentage of its loans are
made in its assessment area(s);
(C) An adequate geographic distribution of
loans in its assessment area(s);
(D) An adequate distribution, particularly
in its assessment area(s), of loans among
individuals of different income levels and
businesses (including farms) of different
sizes, given the product lines offered by the
bank or savings association;
(E) An adequate record of serving the credit
needs of highly economically disadvantaged
areas in its assessment area(s), low-income
individuals, or businesses (including farms)
with gross annual revenues of $1 million or
less, consistent with safe and sound
operations;
(F) Limited use of innovative or flexible
lending practices in a safe and sound manner
to address the credit needs of low- or
moderate-income individuals or geographies;
and
(G) It has made an adequate level of
community development loans.
(iv) Needs to improve. The appropriate
Federal banking agency rates a bank’s or
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savings association’s lending performance
‘‘needs to improve’’ if, in general, it
demonstrates:
(A) Poor responsiveness to credit needs in
its assessment area(s), taking into account the
number and amount of home mortgage, small
business, small farm, and consumer loans, if
applicable, in its assessment area(s);
(B) A small percentage of its loans are
made in its assessment area(s);
(C) A poor geographic distribution of loans,
particularly to low- or moderate-income
geographies, in its assessment area(s);
(D) A poor distribution, particularly in its
assessment area(s), of loans among
individuals of different income levels and
businesses (including farms) of different
sizes, given the product lines offered by the
bank or savings association;
(E) A poor record of serving the credit
needs of highly economically disadvantaged
areas in its assessment area(s), low-income
individuals, or businesses (including farms)
with gross annual revenues of $1 million or
less, consistent with safe and sound
operations;
(F) Little use of innovative or flexible
lending practices in a safe and sound manner
to address the credit needs of low- or
moderate-income individuals or geographies;
and
(G) It has made a low level of community
development loans.
(v) Substantial noncompliance. The
appropriate Federal banking agency rates a
bank’s or savings association’s lending
performance as being in ‘‘substantial
noncompliance’’ if, in general, it
demonstrates:
(A) A very poor responsiveness to credit
needs in its assessment area(s), taking into
account the number and amount of home
mortgage, small business, small farm, and
consumer loans, if applicable, in its
assessment area(s);
(B) A very small percentage of its loans are
made in its assessment area(s);
(C) A very poor geographic distribution of
loans, particularly to low- or moderateincome geographies, in its assessment area(s);
(D) A very poor distribution, particularly in
its assessment area(s), of loans among
individuals of different income levels and
businesses (including farms) of different
sizes, given the product lines offered by the
bank or savings association;
(E) A very poor record of serving the credit
needs of highly economically disadvantaged
areas in its assessment area(s), low-income
individuals, or businesses (including farms)
with gross annual revenues of $1 million or
less, consistent with safe and sound
operations;
(F) No use of innovative or flexible lending
practices in a safe and sound manner to
address the credit needs of low- or moderateincome individuals or geographies; and
(G) It has made few, if any, community
development loans.
(2) Investment performance rating. The
appropriate Federal banking agency assigns
each bank’s or savings association’s
investment performance one of the five
following ratings.
(i) Outstanding. The appropriate Federal
banking agency rates a bank’s or savings
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association’s investment performance
‘‘outstanding’’ if, in general, it demonstrates:
(A) An excellent level of qualified
investments, particularly those that are not
routinely provided by private investors, often
in a leadership position;
(B) Extensive use of innovative or complex
qualified investments; and
(C) Excellent responsiveness to credit and
community development needs.
(ii) High satisfactory. The appropriate
Federal banking agency rates a bank’s or
savings association’s investment performance
‘‘high satisfactory’’ if, in general, it
demonstrates:
(A) A significant level of qualified
investments, particularly those that are not
routinely provided by private investors,
occasionally in a leadership position;
(B) Significant use of innovative or
complex qualified investments; and
(C) Good responsiveness to credit and
community development needs.
(iii) Low satisfactory. The appropriate
Federal banking agency rates a bank’s or
savings association’s investment performance
‘‘low satisfactory’’ if, in general, it
demonstrates:
(A) An adequate level of qualified
investments, particularly those that are not
routinely provided by private investors,
although rarely in a leadership position;
(B) Occasional use of innovative or
complex qualified investments; and
(C) Adequate responsiveness to credit and
community development needs.
(iv) Needs to improve. The appropriate
Federal banking agency rates a bank’s or
savings association’s investment performance
‘‘needs to improve’’ if, in general, it
demonstrates:
(A) A poor level of qualified investments,
particularly those that are not routinely
provided by private investors;
(B) Rare use of innovative or complex
qualified investments; and
(C) Poor responsiveness to credit and
community development needs.
(v) Substantial noncompliance. The
appropriate Federal banking agency rates a
bank’s or savings association’s investment
performance as being in ‘‘substantial
noncompliance’’ if, in general, it
demonstrates:
(A) Few, if any, qualified investments,
particularly those that are not routinely
provided by private investors;
(B) No use of innovative or complex
qualified investments; and
(C) Very poor responsiveness to credit and
community development needs.
(3) Service performance rating. The
appropriate Federal banking agency assigns
each bank’s or savings association’s service
performance one of the five following ratings.
(i) Outstanding. The appropriate Federal
banking agency rates a bank’s or savings
association’s service performance
‘‘outstanding’’ if, in general, the bank or
savings association demonstrates:
(A) Its service delivery systems are readily
accessible to geographies and individuals of
different income levels in its assessment
area(s);
(B) To the extent changes have been made,
its record of opening and closing branches
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has improved the accessibility of its delivery
systems, particularly in low- or moderateincome geographies or to low- or moderateincome individuals;
(C) Its services (including, where
appropriate, business hours) are tailored to
the convenience and needs of its assessment
area(s), particularly low- or moderate-income
geographies or low- or moderate-income
individuals; and
(D) It is a leader in providing community
development services.
(ii) High satisfactory. The appropriate
Federal banking agency rates a bank’s or
savings association’s service performance
‘‘high satisfactory’’ if, in general, the bank or
savings association demonstrates:
(A) Its service delivery systems are
accessible to geographies and individuals of
different income levels in its assessment
area(s);
(B) To the extent changes have been made,
its record of opening and closing branches
has not adversely affected the accessibility of
its delivery systems, particularly in low- and
moderate-income geographies and to lowand moderate-income individuals;
(C) Its services (including, where
appropriate, business hours) do not vary in
a way that inconveniences its assessment
area(s), particularly low- and moderateincome geographies and low- and moderateincome individuals; and
(D) It provides a relatively high level of
community development services.
(iii) Low satisfactory. The appropriate
Federal banking agency rates a bank’s or
savings association’s service performance
‘‘low satisfactory’’ if, in general, the bank or
savings association demonstrates:
(A) Its service delivery systems are
reasonably accessible to geographies and
individuals of different income levels in its
assessment area(s);
(B) To the extent changes have been made,
its record of opening and closing branches
has generally not adversely affected the
accessibility of its delivery systems,
particularly in low- and moderate-income
geographies and to low- and moderateincome individuals;
(C) Its services (including, where
appropriate, business hours) do not vary in
a way that inconveniences its assessment
area(s), particularly low- and moderateincome geographies and low- and moderateincome individuals; and
(D) It provides an adequate level of
community development services.
(iv) Needs to improve. The appropriate
Federal banking agency rates a bank’s or
savings association’s service performance
‘‘needs to improve’’ if, in general, the bank
or savings association demonstrates:
(A) Its service delivery systems are
unreasonably inaccessible to portions of its
assessment area(s), particularly to low- or
moderate-income geographies or to low- or
moderate-income individuals;
(B) To the extent changes have been made,
its record of opening and closing branches
has adversely affected the accessibility its
delivery systems, particularly in low- or
moderate-income geographies or to low- or
moderate-income individuals;
(C) Its services (including, where
appropriate, business hours) vary in a way
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that inconveniences its assessment area(s),
particularly low- or moderate-income
geographies or low- or moderate-income
individuals; and
(D) It provides a limited level of
community development services.
(v) Substantial noncompliance. The
appropriate Federal banking agency rates a
bank’s or savings association’s service
performance as being in ‘‘substantial
noncompliance’’ if, in general, the bank or
savings association demonstrates:
(A) Its service delivery systems are
unreasonably inaccessible to significant
portions of its assessment area(s), particularly
to low- or moderate-income geographies or to
low- or moderate-income individuals;
(B) To the extent changes have been made,
its record of opening and closing branches
has significantly adversely affected the
accessibility of its delivery systems,
particularly in low- or moderate-income
geographies or to low- or moderate-income
individuals;
(C) Its services (including, where
appropriate, business hours) vary in a way
that significantly inconveniences its
assessment area(s), particularly low- or
moderate-income geographies or low- or
moderate-income individuals; and
(D) It provides few, if any, community
development services.
(c) Wholesale or limited purpose banks.
The appropriate Federal banking agency
assigns each wholesale or limited purpose
bank’s or savings association’s community
development performance one of the four
following ratings.
(1) Outstanding. The appropriate Federal
banking agency rates a wholesale or limited
purpose bank’s or savings association’s
community development performance
‘‘outstanding’’ if, in general, it demonstrates:
(i) A high level of community development
loans, community development services, or
qualified investments, particularly
investments that are not routinely provided
by private investors;
(ii) Extensive use of innovative or complex
qualified investments, community
development loans, or community
development services; and
(iii) Excellent responsiveness to credit and
community development needs in its
assessment area(s).
(2) Satisfactory. The appropriate Federal
banking agency rates a wholesale or limited
purpose bank’s or savings association’s
community development performance
‘‘satisfactory’’ if, in general, it demonstrates:
(i) An adequate level of community
development loans, community development
services, or qualified investments,
particularly investments that are not
routinely provided by private investors;
(ii) Occasional use of innovative or
complex qualified investments, community
development loans, or community
development services; and
(iii) Adequate responsiveness to credit and
community development needs in its
assessment area(s).
(3) Needs to improve. The appropriate
Federal banking agency rates a wholesale or
limited purpose bank’s or savings
association’s community development
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performance as ‘‘needs to improve’’ if, in
general, it demonstrates:
(i) A poor level of community development
loans, community development services, or
qualified investments, particularly
investments that are not routinely provided
by private investors;
(ii) Rare use of innovative or complex
qualified investments, community
development loans, or community
development services; and
(iii) Poor responsiveness to credit and
community development needs in its
assessment area(s).
(4) Substantial noncompliance. The
appropriate Federal banking agency rates a
wholesale or limited purpose bank’s or
savings association’s community
development performance in ‘‘substantial
noncompliance’’ if, in general, it
demonstrates:
(i) Few, if any, community development
loans, community development services, or
qualified investments, particularly
investments that are not routinely provided
by private investors;
(ii) No use of innovative or complex
qualified investments, community
development loans, or community
development services; and
(iii) Very poor responsiveness to credit and
community development needs in its
assessment area(s).
(d) Banks and savings associations
evaluated under the small bank and savings
association performance standards—(1)
Lending test ratings. (i) Eligibility for a
satisfactory lending test rating. The
appropriate Federal banking agency rates a
small bank’s or savings association’s lending
performance ‘‘satisfactory’’ if, in general, the
bank or savings association demonstrates:
(A) A reasonable loan-to-deposit ratio
(considering seasonal variations) given the
bank’s or savings association’s size, financial
condition, the credit needs of its assessment
area(s), and taking into account, as
appropriate, other lending-related activities
such as loan originations for sale to the
secondary markets and community
development loans and qualified
investments;
(B) A majority of its loans and, as
appropriate, other lending-related activities,
are in its assessment area;
(C) A distribution of loans to and, as
appropriate, other lending-related activities
for individuals of different income levels
(including low- and moderate-income
individuals) and businesses and farms of
different sizes that is reasonable given the
demographics of the bank’s or savings
association’s assessment area(s);
(D) A record of taking appropriate action,
when warranted, in response to written
complaints, if any, about the bank’s or
savings association’s performance in helping
to meet the credit needs of its assessment
area(s); and
(E) A reasonable geographic distribution of
loans given the bank’s or savings
association’s assessment area(s).
(ii) Eligibility for an ‘‘outstanding’’ lending
test rating. A small bank or savings
association that meets each of the standards
for a ‘‘satisfactory’’ rating under this
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71353
paragraph and exceeds some or all of those
standards may warrant consideration for a
lending test rating of ‘‘outstanding.’’
(iii) Needs to improve or substantial
noncompliance ratings. A small bank or
savings association may also receive a
lending test rating of ‘‘needs to improve’’ or
‘‘substantial noncompliance’’ depending on
the degree to which its performance has
failed to meet the standard for a
‘‘satisfactory’’ rating.
(2) Community development test ratings for
intermediate small banks and savings
associations—(i) Eligibility for a satisfactory
community development test rating. The
appropriate Federal banking agency rates an
intermediate small bank’s or savings
association’s community development
performance ‘‘satisfactory’’ if the bank or
savings association demonstrates adequate
responsiveness to the community
development needs of its assessment area(s)
through community development loans,
qualified investments, and community
development services. The adequacy of the
bank’s or savings association’s response will
depend on its capacity for such community
development activities, its assessment area’s
need for such community development
activities, and the availability of such
opportunities for community development in
the bank’s or savings association’s
assessment area(s).
(ii) Eligibility for an outstanding
community development test rating. The
appropriate Federal banking agency rates an
intermediate small bank’s or savings
association’s community development
performance ‘‘outstanding’’ if the bank or
savings association demonstrates excellent
responsiveness to community development
needs in its assessment area(s) through
community development loans, qualified
investments, and community development
services, as appropriate, considering the
bank’s or savings association’s capacity and
the need and availability of such
opportunities for community development in
the bank’s or savings association’s
assessment area(s).
(iii) Needs to improve or substantial
noncompliance ratings. An intermediate
small bank or savings association may also
receive a community development test rating
of ‘‘needs to improve’’ or ‘‘substantial
noncompliance’’ depending on the degree to
which its performance has failed to meet the
standards for a ‘‘satisfactory’’ rating.
(3) Overall rating—(i) Eligibility for a
satisfactory overall rating. No intermediate
small bank or savings association may
receive an assigned overall rating of
‘‘satisfactory’’ unless it receives a rating of at
least ‘‘satisfactory’’ on both the lending test
and the community development test.
(ii) Eligibility for an outstanding overall
rating. (A) An intermediate small bank or
savings association that receives an
‘‘outstanding’’ rating on one test and at least
‘‘satisfactory’’ on the other test may receive
an assigned overall rating of ‘‘outstanding.’’
(B) A small bank or savings association that
is not an intermediate small bank or savings
association that meets each of the standards
for a ‘‘satisfactory’’ rating under the lending
test and exceeds some or all of those
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standards may warrant consideration for an
overall rating of ‘‘outstanding.’’ In assessing
whether a bank’s or savings association’s
performance is ‘‘outstanding,’’ the
appropriate Federal banking agency
considers the extent to which the bank or
savings association exceeds each of the
performance standards for a ‘‘satisfactory’’
rating and its performance in making
qualified investments and its performance in
providing branches and other services and
delivery systems that enhance credit
availability in its assessment area(s).
(iii) Needs to improve or substantial
noncompliance overall ratings. A small bank
or savings association may also receive a
rating of ‘‘needs to improve’’ or ‘‘substantial
noncompliance’’ depending on the degree to
which its performance has failed to meet the
standards for a ‘‘satisfactory’’ rating.
(e) Strategic plan assessment and rating—
(1) Satisfactory goals. The appropriate
Federal banking agency approves as
‘‘satisfactory’’ measurable goals that
adequately help to meet the credit needs of
the bank’s or savings association’s
assessment area(s).
(2) Outstanding goals. If the plan identifies
a separate group of measurable goals that
substantially exceed the levels approved as
‘‘satisfactory,’’ the appropriate Federal
banking agency will approve those goals as
‘‘outstanding.’’
(3) Rating. The appropriate Federal
banking agency assesses the performance of
a bank or savings association operating under
an approved plan to determine if the bank or
savings association has met its plan goals:
(i) If the bank or savings association
substantially achieves its plan goals for a
satisfactory rating, the appropriate Federal
banking agency will rate the bank’s or
savings association’s performance under the
plan as ‘‘satisfactory.’’
(ii) If the bank or savings association
exceeds its plan goals for a satisfactory rating
and substantially achieves its plan goals for
an outstanding rating, the appropriate
Federal banking agency will rate the bank’s
or savings association’s performance under
the plan as ‘‘outstanding.’’
(iii) If the bank or savings association fails
to meet substantially its plan goals for a
satisfactory rating, the appropriate Federal
banking agency will rate the bank or savings
association as either ‘‘needs to improve’’ or
‘‘substantial noncompliance,’’ depending on
the extent to which it falls short of its plan
goals, unless the bank or savings association
elected in its plan to be rated otherwise, as
provided in § 25.27(f)(4).
khammond on DSKJM1Z7X2PROD with RULES3
Appendix B to Part 25—CRA Notice
(a) Notice for main offices and, if an
interstate bank and savings association, one
branch office in each state.
Community Reinvestment Act Notice
Under the Federal Community
Reinvestment Act (CRA), the [Office of the
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Comptroller of the Currency (OCC) or Federal
Deposit Insurance Corporation (FDIC), as
appropriate] evaluates our record of helping
to meet the credit needs of this community
consistent with safe and sound operations.
The [OCC or FDIC, as appropriate] also takes
this record into account when deciding on
certain applications submitted by us.
Your Involvement is Encouraged
You are entitled to certain information
about our operations and our performance
under the CRA, including, for example,
information about our branches, such as their
location and services provided at them; the
public section of our most recent CRA
Performance Evaluation, prepared by the
[OCC or FDIC, as appropriate]; and comments
received from the public relating to our
performance in helping to meet community
credit needs, as well as our responses to
those comments. You may review this
information today.
At least 30 days before the beginning of
each quarter, the [OCC or FDIC, as
appropriate] publishes a nationwide list of
the banks and savings associations that are
scheduled for CRA examination in that
quarter. This list is available from the [OCC
or FDIC, as appropriate], at [address]. You
may send written comments about our
performance in helping to meet community
credit needs to [name and address of official
at bank or savings association] and to the
[OCC or FDIC, as appropriate], at [address].
Your letter, together with any response by us,
will be considered by the [OCC or FDIC, as
appropriate] in evaluating our CRA
performance and may be made public.
You may ask to look at any comments
received by the [OCC or FDIC, as
appropriate]. You may also request from the
[OCC or FDIC, as appropriate] an
announcement of our applications covered
by the CRA filed with the [OCC or FDIC, as
appropriate]. We are an affiliate of [name of
holding company], a [bank holding company
or savings and loan holding company, as
appropriate]. You may request from the [title
of responsible official], Federal Reserve Bank
of [_] [address] an announcement of
applications covered by the CRA filed by
[bank holding companies or savings and loan
holding companies, as appropriate].
(b) Notice for branch offices.
Community Reinvestment Act Notice
Under the Federal Community
Reinvestment Act (CRA), the [Comptroller of
the Currency (OCC) and Federal Deposit
Insurance Corporation (FDIC), as appropriate]
evaluates our record of helping to meet the
credit needs of this community consistent
with safe and sound operations. The [OCC or
FDIC, as appropriate] also takes this record
into account when deciding on certain
applications submitted by us.
Your Involvement is Encouraged
You are entitled to certain information
about our operations and our performance
PO 00000
Frm 00028
Fmt 4701
Sfmt 9990
under the CRA. You may review today the
public section of our most recent CRA
evaluation, prepared by the [OCC or FDIC, as
appropriate], and a list of services provided
at this branch. You may also have access to
the following additional information, which
we will make available to you at this branch
within five calendar days after you make a
request to us: (1) A map showing the
assessment area containing this branch,
which is the area in which the [OCC or FDIC,
as appropriate] evaluates our CRA
performance in this community; (2)
information about our branches in this
assessment area; (3) a list of services we
provide at those locations; (4) data on our
lending performance in this assessment area;
and (5) copies of all written comments
received by us that specifically relate to our
CRA performance in this assessment area,
and any responses we have made to those
comments. If we are operating under an
approved strategic plan, you may also have
access to a copy of the plan.
[If you would like to review information
about our CRA performance in other
communities served by us, the public file for
our entire [bank or savings association, as
appropriate] is available at [name of office
located in state], located at [address].]
At least 30 days before the beginning of
each quarter, the [OCC or FDIC, as
appropriate] publishes a nationwide list of
the banks and savings associations that are
scheduled for CRA examination in that
quarter. This list is available from the [OCC
or FDIC, as appropriate] at [address]. You
may send written comments about our
performance in helping to meet community
credit needs to [name and address of official
at bank or savings association, as
appropriate] and to the [OCC or FDIC, as
appropriate] at [address]. Your letter, together
with any response by us, will be considered
by the [OCC or FDIC, as appropriate] in
evaluating our CRA performance and may be
made public.
You may ask to look at any comments
received by the [OCC or FDIC, as
appropriate]. You may also request from the
[OCC or FDIC, as appropriate] an
announcement of our applications covered
by the CRA filed with the [OCC or FDIC, as
appropriate]. We are an affiliate of [name of
holding company], a [bank holding company
or savings and loan holding company, as
appropriate]. You may request from the [title
of responsible official], Federal Reserve Bank
of [_], [address], an announcement of
applications covered by the CRA filed by
[bank holding companies or savings and loan
holding companies, as appropriate].
Michael J. Hsu,
Acting Comptroller of the Currency.
[FR Doc. 2021–27171 Filed 12–14–21; 8:45 am]
BILLING CODE 4810–33–P
E:\FR\FM\15DER3.SGM
15DER3
]]>Agencies
[Federal Register Volume 86, Number 238 (Wednesday, December 15, 2021)]
[Rules and Regulations]
[Pages 71328-71354]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-27171]
[[Page 71327]]
Vol. 86
Wednesday,
No. 238
December 15, 2021
Part III
Department of the Treasury
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Office of the Comptroller of the Currency
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12 CFR Part 25
Community Reinvestment Act Regulations; Final Rule
Federal Register / Vol. 86 , No. 238 / Wednesday, December 15, 2021 /
Rules and Regulations
[[Page 71328]]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 25
[Docket No. OCC-2021-0014]
RIN 1557-AF12
Community Reinvestment Act Regulations
AGENCY: Office of the Comptroller of the Currency, Treasury.
ACTION: Final rule.
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SUMMARY: The Comptroller of the Currency is adopting a final Community
Reinvestment Act (CRA) rule that is based largely on the 1995 CRA
rules, as revised, that were issued by the Office of the Comptroller of
the Currency (OCC), Board of Governors of the Federal Reserve System
(Board), and Federal Deposit Insurance Corporation (FDIC). This final
rule applies to national banks and savings associations. This action
rescinds the CRA final rule published by the OCC on June 5, 2020, and
facilitates the OCC's planned future issuance of updated interagency
CRA rules with the Board and FDIC.
DATES: This final rule is effective on January 1, 2022. The compliance
date for Sec. Sec. 25.43 and 25.44 is April 1, 2022. The compliance
date for the remainder of the rule is January 1, 2022.
FOR FURTHER INFORMATION CONTACT: Emily Boyes, Counsel, Karen McSweeney,
Special Counsel, Heidi Thomas, Special Counsel, or Kevin Behne, Senior
Attorney, Chief Counsel's Office, (202) 649-5490; or Vonda Eanes,
Director for CRA and Fair Lending Policy, or Karen Bellesi, Director
for Community Development, Bank Supervision Policy, (202) 649-5470,
Office of the Comptroller of the Currency, 400 7th Street SW,
Washington, DC 20219.
SUPPLEMENTARY INFORMATION:
I. Background
Congress enacted the Community Reinvestment Act (CRA) \1\ in 1977
to encourage insured depository institutions (IDI) \2\ to help meet the
credit needs of their entire communities, including low- and moderate-
income (LMI) neighborhoods, consistent with the safe and sound
operation of the IDIs.\3\ Specifically, Congress found 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.'' \4\
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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\ The CRA uses the term ``regulated financial institution,''
which it defines to mean an ``insured depository institution'' as
defined in 12 U.S.C. 1813(c)(2). See 12 U.S.C. 2902(2).
\3\ 12 U.S.C. 2903(a)(1). Congress enacted the CRA to promote
access to credit by encouraging IDIs to serve their entire
communities. During this period, Congress also enacted fair lending
laws to address fairness and access to housing and credit. For
example, in 1968, Congress passed a law that later became known as
the Fair Housing Act to prohibit discrimination in renting or buying
a home. See 42 U.S.C. 3601 et seq. (as amended). In 1974, Congress
passed the Equal Credit Opportunity Act to prohibit creditors from
discriminating against an applicant on the basis of race, color,
religion, national origin, sex, marital status, or age. See 15
U.S.C. 1691 et seq. (as amended). These fair lending laws provide a
legal basis for prohibiting discriminatory lending practices, such
as redlining. See Interagency Fair Lending Examination Procedures,
p. iv (Aug. 2009), available at https://www.ffiec.gov/PDF/fairlend.pdf.
\4\ 12 U.S.C. 2901(a).
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The Office of the Comptroller of the Currency (OCC or Agency),\5\
Board of Governors of the Federal Reserve System (Board), and Federal
Deposit Insurance Corporation (FDIC) (collectively, Agencies),\6\ along
with the Federal Home Loan Bank Board, first issued rules to implement
the CRA in 1978.\7\ The Agencies, along with the Office of Thrift
Supervision (OTS), significantly revised and clarified the CRA rules in
1995 (1995 Rules).\8\ On September 5, 2018, the OCC published an
Advance Notice of Proposed Rulemaking (ANPR) as part of its renewed
efforts to update the CRA regulatory framework.\9\ On January 9, 2020,
the OCC and FDIC published a joint CRA Notice of Proposed
Rulemaking,\10\ and on June 5, 2020, the OCC adopted the rule in final
form (June 2020 Rule).\11\ The June 2020 Rule applied to national
banks, Federal savings associations, and State savings associations
(collectively, banks).\12\
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\5\ The OCC is the primary regulator for national banks and
Federal savings associations.
\6\ In addition to the Agencies, Congress also charged the
Office of Thrift Supervision (OTS) and its predecessor agency, the
Federal Home Loan Bank Board, with implementing the CRA. The OTS had
CRA rulemaking and examination authority for all savings
associations. The OTS's rulemaking authority for CRA transferred to
the OCC in Title III of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, Public Law 111-203, 124 Stat. 1376, 1522
(2010) (Dodd-Frank Act). See also 12 U.S.C. 2905. With respect to
CRA examination authority, the OCC examines Federal savings
associations, and the FDIC examines State savings associations. See
Sec. 312(b) of the Dodd-Frank Act.
\7\ 43 FR 47144 (Oct. 12, 1978).
\8\ 60 FR 22156 (May 4, 1995). As used herein, the term ``1995
Rules'' refers to the regulatory framework adopted by the Agencies
and the OTS in 1995 and any revisions the Agencies and OTS made to
that regulatory framework (e.g., 70 FR 44256 (Aug. 2, 2005) and 75
FR 61035 (Oct. 4, 2010)), except for the changes made by the OCC in
the June 2020 Rule. The 1995 Rules were codified in 12 CFR parts 25,
563e (recodified as 195), 228, and 345.
\9\ The OCC worked with the Board and FDIC on this ANPR. 83 FR
45053.
\10\ 85 FR 1204.
\11\ 85 FR 34734.
\12\ As used herein, the term ``bank'' or ``banks'' also
includes uninsured Federal branches that result from an acquisition
described in section 5(a)(8) of the International Banking Act of
1978. 12 U.S.C. 3103(a)(8).
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The June 2020 Rule took effect October 1, 2020, although several of
its more material components had compliance dates of either January 1,
2023, or January 1, 2024.\13\ To implement certain provisions of the
June 2020 Rule with a compliance date of January 1, 2023, the OCC
published a Notice of Proposed Rulemaking on December 4, 2020,
(December 2020 NPR), which proposed an approach to determine the
benchmarks, thresholds, and minimums in the June 2020 Rule's
performance standards.\14\ In connection with the December 2020 NPR,
the OCC also published a CRA information collection survey (Information
Collection) \15\ to obtain the data necessary to calibrate the June
2020 Rule's performance standards.
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\13\ 12 CFR 25.01(c)(4).
\14\ 85 FR 78258.
\15\ 85 FR 81270 (Dec. 15, 2020).
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On May 18, 2021, the OCC announced that it was reconsidering the
June 2020 Rule.\16\ At the same time, the OCC announced that it did not
plan to finalize the December 2020 NPR and was discontinuing the
Information Collection.\17\ Collectively, these actions have enabled an
orderly reconsideration of the June 2020 Rule and provided banks with
the flexibility to deploy resources in response to the COVID-19
pandemic.
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\16\ See OCC Bulletin 2021-24, Community Reinvestment Act:
Implementation of the June 2020 Final Rule, available at https://www.occ.gov/news-issuances/bulletins/2021/bulletin-2021-24.html.
\17\ Id.
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Although the OCC issued the June 2020 Rule independently, the
Agencies' joint CRA regulatory reform efforts have spanned the past
decade.\18\ In 2018, the
[[Page 71329]]
Agencies engaged with stakeholders, including civil rights
organizations, community groups, members of Congress, academics, and
IDIs, to obtain their perspectives and feedback on the CRA and
potential improvements to the CRA regulatory framework. Separately, the
Board explored ways to modernize the CRA regulatory framework to
address changes in the banking industry, which culminated with the
Board's publication of an ANPR on October 19, 2020 (Board ANPR).\19\
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\18\ For example, in 2014, pursuant to the Economic Growth and
Regulatory Paperwork Reduction Act of 1996 (EGRPRA), the Agencies
began a decennial review of all of their rules, with input from the
public, to identify outdated, unnecessary, or unduly burdensome
rules and to consider how to reduce regulatory burden on IDIs, while
at the same time ensuring the safety and soundness of these
institutions and the financial system. Public Law 104-208, 110 Stat.
3009 (1996) (codified at 12 U.S.C. 3311). In 2017, the Agencies
issued a report to Congress that included a summary of the public
comments and recommendations received during the EGRPRA review,
including those that addressed the CRA regulatory framework. See
Federal Financial Institutions Examination Council, Joint Report to
Congress. Economic Growth and Regulatory Paperwork Reduction Act,
pp. 41-48 (Mar. 3, 2017), available at https://www.ffiec.gov/pdf/2017_FFIEC_EGRPRA_Joint-Report_to_Congress.pdf.
\19\ 85 FR 66410.
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Throughout all of the Agencies' CRA modernization efforts,
stakeholders have repeatedly stressed the importance of the Agencies
issuing a single set of CRA rules applicable to all IDIs. On July 20,
2021, after considering (1) the disproportionate impacts of the
pandemic on LMI communities, (2) the comments provided on the Board
ANPR, and (3) the OCC's experience with implementation of the June 2020
Rule, the OCC announced it would propose to rescind the June 2020
Rule.\20\ On the same day, the Agencies announced that they are working
together to strengthen and modernize the rules implementing the
CRA.\21\ This final rule is an important step in this interagency
process because it reestablishes generally uniform rules that apply to
all IDIs. Thus, it better positions the Agencies to identify joint
solutions to the common issues affecting IDIs and the communities they
serve.
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\20\ NR 2021-76, OCC Statement on Rescinding its 2020 Community
Reinvestment Act Rule, available at https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-76.html.
\21\ NR 2021-77, Interagency Statement on Community Reinvestment
Act Joint Agency Action, available at https://www.occ.gov/news-issuances/news-releases/2021/nr-ia-2021-77.html.
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II. Proposed Rule
On September 8, 2021, the OCC issued its proposal to rescind the
June 2020 Rule and replace it with rules for banks largely based on the
1995 Rules (Proposal or Proposed Rule).\22\ The Proposal would have
aligned the OCC's CRA rules with the Board's and FDIC's CRA rules,
thereby reinstituting the regulatory uniformity for IDIs that existed
prior to the June 2020 Rule and facilitating the ongoing interagency
work to modernize the CRA rules. The OCC explained in the Proposal that
any future interagency CRA rules would replace any final rule(s) the
Agency issues pursuant to the Proposal.\23\
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\22\ NR 2021-94, OCC Issues Proposal to Rescind its 2020
Community Reinvestment Act Rule (Sept. 8, 2021), available at
https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-94.html. See also 86 FR 52026 (Sept. 17, 2021).
\23\ 86 FR 52026, 52027.
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The purpose of the Proposed Rule was to (1) create consistent and
transparent CRA rules for banks; (2) limit CRA-related burden on banks,
banks' communities, and examiners; and (3) ensure that the OCC
continues to encourage banks to help meet the credit needs of their
entire communities, including LMI neighborhoods, consistent with safe
and sound operations. A description of the Proposal and the comments
the OCC received is set forth below.
A. Overview
The Proposed Rule would have provided different performance tests
and standards for banks of different sizes, structures, and operations.
Specifically, the Proposed Rule would have provided an assessment
method for (1) small banks that would be streamlined and would
emphasize lending performance; (2) intermediate small banks (ISB) that
would consider lending and community development (CD) activities (i.e.,
loans, investments, and services); (3) large, retail banks that would
focus on lending, investment, and service performance; and (4)
wholesale and limited purpose banks that would be based on CD
activities. The Proposed Rule also would have given any bank,
regardless of its size or business strategy, the option for the
appropriate Federal banking agency to evaluate it under a strategic
plan.\24\
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\24\ As noted previously, the OCC has CRA examination authority
for Federal savings associations, and the FDIC has CRA examination
authority for State savings associations. See supra note 6.
References in this final rule to ``appropriate Federal banking
agency'' are intended to reflect this distinction.
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Under the proposed performance tests and standards, the appropriate
Federal banking agency would have considered a bank's performance
context in assessing its CRA performance. Specifically, the Agency
would have reviewed (1) demographic and economic data about the bank's
assessment area(s) and information about its local economic conditions;
(2) the bank's major business products and strategies; and (3) its
financial condition, including its capacity and ability to lend or
invest in its community. The Agency also would have reviewed any
information a bank chose to provide about lending, investment, and
service opportunities in its assessment area(s). Performance context
also would have included any other information the appropriate Federal
banking agency deemed relevant.
The Proposed Rule would have required a bank to identify one or
more assessment area(s) where the appropriate Federal banking agency
would evaluate its CRA performance. In most cases, the Proposed Rule
would have required a bank to delineate as its assessment area(s) the
town, city, county, or other political subdivision or a metropolitan
statistical area (MSA) where (1) its main office, branch(es), and
deposit-taking automated teller machines (ATMs) are located and (2) a
substantial portion of its loans are made. A bank's assessment area(s)
would not have needed to coincide with the boundaries of one or more
political subdivisions or MSAs so long as the assessment area(s) was
one that (1) the bank reasonably could have served; (2) satisfied
applicable regulatory requirements; (3) did not reflect illegal
discrimination; and (4) did not arbitrarily exclude LMI geographies
(i.e., census tracts).
Under the Proposed Rule, large banks \25\ (and in some
circumstances, other banks) would have needed to collect, maintain, and
report certain data related to the proposed performance tests and
standards. The OCC would have made this data available through
individual and aggregate disclosure statements. In addition, banks
would have made CRA-related information available in their public files
and posted CRA notices in specified locations.
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\25\ The term ``large banks'' is used in CRA guidance related to
the 1995 Rules to describe banks that exceed the ISB asset-size
threshold.
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For a more detailed description of the 1995 Rules, on which the
Proposed Rule was largely based, see the Supplemental Information
sections of the Federal Register documents in which the 1995 Rules were
issued.\26\
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\26\ See supra note 8.
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B. Summary of Key Provisions
The following is a summary of key provisions of the Proposed Rule.
1. Performance Tests and Standards.\27\
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\27\ The proposed performance tests and standards applicable to
a bank would have been based on the bank's asset size. The proposed
asset-size thresholds for determining whether a bank would be a
large bank, ISB, or small bank under the Proposed Rule would have
been adjusted annually and aligned with the current asset-size
thresholds in the Board's and FDIC's rules. See 12 CFR parts 228 and
345.
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[[Page 71330]]
[cir] Small bank \28\ performance standards would have included a
retail lending test for assessing CRA performance. The small bank
lending test could also have included consideration of CD loans.
Qualified investments and CD services could have been considered at the
bank's option for an ``outstanding'' rating, but only if the bank met
or exceeded the lending test criteria in the small bank performance
standards.
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\28\ Under the Proposed Rule, ``small bank'' means a bank that,
as of December 31 of either of the prior two calendar years, had
assets of less than $1.322 billion. ``ISB'' means a small bank with
assets of at least $330 million as of December 31 of both of the
prior two calendar years and less than $1.322 billion as of December
31 of either of the prior two calendar years. See 12 CFR 25.12(u),
of the Proposed Rule.
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[cir] The ISB \29\ performance standards would have included an
assessment of CRA performance under the small bank retail lending test
and a CD test. Under the ISB CD test, the appropriate Federal banking
agency would have evaluated all CD activities together.
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\29\ Id.
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[cir] Large bank (i.e., banks that exceed the ISB asset-size
threshold) \30\ lending and service tests would have considered both
retail and CD activity, while the large bank investment test would have
focused on qualified investments as defined in the Proposed Rule.
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\30\ Id.
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[cir] The appropriate Federal banking agency would have evaluated
wholesale and limited purpose banks under a CD test that considered
activities (1) within a bank's broader statewide or regional area(s)
that includes a bank's assessment area(s) as activities that benefit
the bank's assessment area(s) and (2) outside of the bank's broader
statewide or regional area that includes a bank's assessment area(s) if
the bank had been responsive to needs in its assessment area(s).
[cir] Any bank could have elected to be evaluated under a strategic
plan that set out measurable goals for lending, investment, and
services, as applicable, to achieve a ``satisfactory'' or
``outstanding'' rating. The bank would have developed its strategic
plan with community input, and the appropriate Federal banking agency
would have needed to approve the bank's plan.
2. Discriminatory or Other Illegal Credit Practices (DOICP). Under
the Proposal, the appropriate Federal banking agency's evaluation of a
bank's CRA performance would have been adversely affected by evidence
of DOICPs, including violations of the Equal Credit Opportunity Act;
\31\ Fair Housing Act; \32\ Homeownership and Equity Protection Act;
\33\ the prohibition against unfair or deceptive acts or practices in
section 5 of the Federal Trade Commission Act; \34\ section 8 of the
Real Estate Settlement Procedures Act; \35\ and the Truth in Lending
Act.\36\ The list of discriminatory or other illegal credit practices
in the Proposal was not exhaustive, and the OCC also would have
considered credit-related violations of the Military Lending Act (MLA)
and Servicemembers Civil Relief Act (SCRA) \37\ based on guidance that
predates the June 2020 Rule.\38\
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\31\ 15 U.S.C. 1691 et seq.
\32\ 42 U.S.C. 3601 et seq.
\33\ Public Law 103-325, 108 Stat. 2190 (1994) (codified at 15
U.S.C. 1601-02; 15 U.S.C. 1639-41).
\34\ 15 U.S.C. 45.
\35\ 12 U.S.C. 2607.
\36\ 15 U.S.C. 1601-1667f (as amended).
\37\ See 10 U.S.C. 987 and 50 U.S.C. 3901 et seq., respectively.
\38\ See OCC PPM 5000-43, Impact of Evidence of Discriminatory
or Other Illegal Credit Practices on Community Reinvestment Act
Ratings (Aug. 15, 2018).
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3. Retail and CD Activities. The appropriate Federal banking agency
would have evaluated banks' CRA performance based on (1) retail lending
(i.e., home mortgage loans, small business loans, small farm loans, and
consumer loans, as applicable) and CD loans; (2) qualified investments;
and (3) CD services, as each of these terms would have been defined in
the Proposed Rule and considered in the applicable performance tests
and standards.
4. Assessment Area(s).
[cir] A bank would have delineated assessment area(s) that
generally--
[ssquf] Included the geographies where the bank has its main
office, branch(es), and deposit-taking ATMs (as applicable), as well as
any surrounding geographies where the bank has originated or purchased
a substantial portion of its loans; and
[ssquf] Consisted of one or more MSAs, metropolitan divisions, or
political subdivisions with a bank permitted to adjust the boundaries
of its assessment area(s) to include only the portion of the political
subdivision that the bank could reasonably be expected to serve.
[cir] Assessment area(s) would have been required to:
[ssquf] Consist of whole geographies;
[ssquf] Not reflect illegal discrimination;
[ssquf] Not arbitrarily exclude LMI geographies; and
[ssquf] Not extend substantially beyond an MSA or State boundary
unless the bank's assessment area(s) was in a multistate MSA.
5. Data Collection, Recordkeeping, and Reporting.
[cir] Banks, other than small banks, would have collected,
maintained, and reported certain data related to small business loans,
small farm loans, CD loans, and assessment areas. Banks, other than
small banks, that are subject to the Home Mortgage Disclosure Act of
1975 (HMDA) reporting requirements \39\ also would have reported
certain information related to home mortgage lending outside of the
MSA(s) where a bank has a home or branch office (or outside any MSA).
The Proposed Rule also would have included certain optional data
collection and reporting provisions.
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\39\ 12 U.S.C. 2801 et seq.
---------------------------------------------------------------------------
[cir] The Proposed Rule would have reinstated requirements
regarding the content and location of the public file and public
notices that were revised or eliminated in the June 2020 Rule.
6. Ratings. The appropriate Federal banking agency would have
determined a bank's CRA rating as provided in proposed appendix A.
7. Integration of National Bank and Savings Association Rules. The
Proposed Rule would have reinstated separate rules for national banks
(at 12 CFR part 25, subparts A through E and appendices A and B) and
savings associations (at 12 CFR part 195, subparts A through C and
appendices A and B). The June 2020 Rule integrated these rules in 12
CFR part 25.
8. Transition Period. The Proposed Rule would have required banks
to comply with the final rule as of the effective date with no option
to follow any provisions in the June 2020 Rule during the period
between when the OCC would adopt the Proposed Rule in final form and
the Agencies would adopt updated interagency CRA rules in final
form.\40\ The Proposal discussed whether the OCC should address certain
transition considerations in the final rule.
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\40\ The period of time between the effective date of this final
rule and the effective date of final updated interagency CRA rules
is referred to herein as the ``interim period.''
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III. Comments on the Proposed Rule
The OCC received 62 comment letters on the Proposed Rule, the
majority of which generally supported rescinding the June 2020 Rule and
the ongoing interagency effort to issue updated CRA rules. These
comments addressed a wide range of issues and came from a variety of
stakeholders and interested parties, including the banking industry,
community and other advocacy groups, State and local governments, and
the general public. The discussion below
[[Page 71331]]
identifies the significant issues raised by these commenters and
explains how the OCC addresses these issues in the final rule. This
final rule will provide certainty to stakeholders, eliminate burden
associated with continuing to transition to the June 2020 Rule, and
better position the OCC to engage in an interagency rulemaking process
to update and modernize the CRA rules.
Transition Provisions. The OCC proposed to replace the June 2020
Rule with rules for banks based on the 1995 Rules. The Proposed Rule
included a description of several transition considerations that the
OCC was contemplating to provide for a smooth transition from the June
2020 Rule. Although commenters generally supported rescission of the
June 2020 Rule, they expressed opposing views on replacing the June
2020 Rule with rules based on the 1995 Rules. Community groups and
other commenters generally supported the Proposal for reasons including
(1) the OCC should not have independently promulgated the June 2020
Rule; (2) there would be confusion and inconsistent CRA evaluations if
there were different CRA regulatory regimes applicable to different
types of IDIs; (3) the June 2020 Rule is not yet fully effective, which
lessens the impact of its rescission; (4) uniformity of CRA rules for
all IDIs during the interim period would facilitate the ongoing
interagency rulemaking process; and (5) the June 2020 Rule both failed
to ensure that banks meet their local communities' banking needs and
disincentivized investment in LMI communities and communities of color.
One commenter suggested that the final rule should return banks to the
1995 Rules but include certain innovations from the June 2020 Rule,
including deposit-based assessment areas and the list of qualifying
activities.
In contrast, industry and trade associations generally opposed
transitioning back to the 1995 Rules. Some of these commenters stated
that banks have already changed their CRA programs to comply with the
June 2020 Rule and another transition would be burdensome. They
requested that the OCC balance the benefits of interagency uniformity
with the need to minimize the disruption--for both banks and their CRA
reinvestment partners--that will result if the OCC adopts the Proposed
Rule. Similarly, others asserted that implementing the Proposed Rule
would be disruptive, wasteful, and confusing. They recommended that the
OCC minimize the number of regulatory transitions, the burden, and the
confusion that would result from multiple rule changes.\41\
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\41\ One commenter also expressed concern that reinstatement of
the 1995 Rules could lead to regressive financial policies in low-
income communities and suggested that the OCC consider lessons from
the financial crisis and solicit feedback from the most affected
communities.
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Several of these commenters requested that, during the interim
period, the OCC (1) retain the provisions of the June 2020 Rule with a
compliance date of October 1, 2020, and (2) revert to the 1995 Rules
only for provisions of the June 2020 Rule with a compliance date of
January 1, 2023, or January 1, 2024. Several commenters also requested
that the OCC provide banks with flexibility to continue to utilize
aspects of the June 2020 Rule or the 1995 Rules during the interim
period, including by (1) providing consideration for all activities
that qualify under either the June 2020 Rule or the 1995 Rules and (2)
allowing banks that were in the process of transitioning to the June
2020 Rule to retain the CRA programs they have in place as long as
their programs comply with either the 1995 Rules or the June 2020 Rule.
After considering the comments on transition issues, the OCC is
adopting the final rule largely without modification from the Proposed
Rule and with a delayed compliance date for two provisions: All banks
will need to comply with the rule by January 1, 2022, with the
exception of the public file and public notice provisions (Sec. Sec.
25.43 and 25.44 of the final rule). As discussed below, banks will need
to comply with Sec. Sec. 25.43 and 25.44 by April 1, 2022.
Notwithstanding commenters' concerns regarding the burden for banks to
transition back to a rule based on the 1995 Rules, it is the view of
the OCC that this burden will be limited because the June 2020 Rule has
only been partially implemented. Further, the alternatives suggested by
the commenters would create confusion. For example, allowing banks the
flexibility to elect to operate under either the June 2020 Rule or the
1995 Rules would create confusion for stakeholders regarding which
regulatory framework applied during banks' CRA evaluations. It also
would undermine the goal of a consistent set of rules for all IDIs and
could delay the issuance of the Agencies' updated interagency CRA rule.
For example, creating a hybrid regulatory framework that leverages
aspects of both the June 2020 Rule and the 1995 Rules could increase
the supervisory burden and draw OCC resources away from the interagency
CRA rulemaking efforts.
By finalizing this rule with an effective date of January 1, 2022,
and a compliance date of April 1, 2022, for Sec. Sec. 25.43 and 25.44,
all IDIs will be subject to the same general regulatory framework at
the earliest reasonable date, which will facilitate the Agencies'
issuance of updated interagency CRA rules. To address concerns
regarding the burden associated with this decision, the OCC will afford
banks the implementation flexibility permitted by the transition
provisions of the final rule and the Interagency Questions and Answers
Regarding Community Reinvestment (Q&As) for the 1995 Rules \42\ and
other CRA guidance, including the application of performance context.
For example, in evaluating a bank's performance from October 1, 2020,
through the interim period, the OCC will consider the impact that
regulatory changes had on the bank's ability to engage in qualifying
activities as part of its performance context. In addition, the final
rule's delayed compliance date of April 1, 2022, for the public file
and public notice provisions will ease burden associated with this
final rule.
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\42\ 81 FR 48506 (July 25, 2016).
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Qualifying Activities. The Proposed Rule would have replaced the
qualifying activities criteria in the June 2020 Rule with the 1995
Rules' home mortgage loan, small business loan, small farm loan,
consumer loan, and CD definitions. The Proposed Rule also would have
replaced the definitions related to the qualifying activities criteria
in the June 2020 Rule with the applicable definitions under the 1995
Rules. The Proposed Rule would have eliminated June 2020 Rule
definitions that did not exist in the 1995 Rules.
The Proposal also explained that banks would receive consideration
in their CRA examinations for activities that met the qualifying
activities criteria or definitions in effect at the time that the banks
conducted the activities.\43\ Under the final rule, as was also the
case under the June 2020 Rule, a CRA activity may include a legally
binding
[[Page 71332]]
commitment to lend or invest. A legally binding commitment will be
considered to have been conducted on the date that the commitment is
legally binding on the bank. This practice is consistent with the OCC's
longstanding treatment under the 1995 Rules of legally binding
commitments.\44\ Therefore, under the final rule, a legally binding
commitment to lend or invest will be considered under the CRA
regulatory framework that was in effect at the time the commitment
became legally binding on the bank.
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\43\ For example, if a bank originated a loan or entered into a
legally binding commitment to lend on December 20, 2021, to build a
charter school in which 40 percent of the students received free or
reduced price school lunch, that loan would receive consideration in
a bank's CRA examination even if the CRA examination took place
after the effective date of the final rule (January 1, 2022) because
this activity is a qualifying activity under the June 2020 Rule. See
June 2020 Rule, 12 CFR 25.04(c)(5)(i). However, if the bank made the
same loan or entered into the same legally binding commitment to
lend on January 20, 2022, that loan or commitment would not qualify
under the CD definitions in the final rule, and, therefore, would
not receive consideration in a future CRA examination. See 12 CFR
25.12(g) and (h) of this final rule.
\44\ See 12 CFR 25.21-27 of this final rule. See also Q&A Sec.
__.23(e); Q&A Sec. __.26(b)-4.
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The OCC asked whether its proposal to consider activities based on
whether they qualified at the time the bank (1) conducted the
activities or (2) entered into a legally binding commitment to conduct
the activities was a reasonable approach to address the proposed
changes to the activities that would receive consideration in CRA
examinations.
Many commenters supported the elimination of the June 2020 Rule's
qualifying activities criteria in the final rule and returning to the
definitions in the 1995 Rules.\45\ Other commenters advocated retaining
the June 2020 Rule's qualifying activities criteria, asserting that
their elimination would negatively affect banks' communities. For
example, one commenter asserted that the broader definition of
qualifying activities in the June 2020 Rule provides an incentive for
banks to engage in activities that benefit communities, including LMI
and underserved persons, and that this result is consistent with the
CRA's intent.\46\ Another commenter suggested that retaining the June
2020 Rule's approach for qualifying activities would minimize
disruptions in ongoing investment decisions. Other commenters supported
retaining the current framework because of the burdens associated with
changing regulatory regimes. One commenter suggested that the OCC give
CRA consideration to any activity that qualifies under either the 1995
Rules or June 2020 Rule.
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\45\ One commenter suggested that, if legally permissible, the
OCC should retroactively discount the expanded activities under the
June 2020 Rule, particularly if done in the normal course of
business, and all expanded activities should be re-evaluated to
assess whether they benefitted the intended beneficiaries of the
CRA.
\46\ One of these commenters specifically objected to
reinstating the 1995 Rules' CD services definition, asserting that
there are many CRA volunteer services that provide tremendous
benefits to banks' communities but do not focus on providing
financial services to these communities.
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Many commenters expressed support for the proposal to provide
consideration for activities based on whether they qualified at the
time the activities were conducted or subject to a legally binding
commitment, with some commenters describing this approach as both
reasonable and appropriate. One community group stated that it would be
unfair to revoke consideration for activities that qualified at the
time that the activities were conducted.
After considering the comments, the OCC is adopting the retail
lending, CD, and related definitions as proposed and adopts the
proposed treatment of consideration for activities under the CRA. This
outcome ensures that, going forward, (1) banks will receive
consideration for activities that the Agencies have collectively
recognized help to meet community credit needs; (2) consistent rules
will apply to all IDIs; (3) banks will receive credit for dollars that
are already legally committed; and (4) the OCC is likely to be able to
more effectively work with the Board and the FDIC to determine the
types of activities that should receive consideration under an updated
interagency CRA rule. The final rule includes a provision in subpart D
that explains when activities qualify for CRA consideration in CRA
examinations based on the rule in effect at the time that the
activities were conducted.
Confirmation Process. The June 2020 Rule included a confirmation
process for qualifying activities that permits banks and other
interested parties to request OCC confirmation that a loan, investment,
or service is consistent with that rule's qualifying activities
criteria prior to engaging in the activity. Under the Proposed Rule,
the OCC would have removed the qualifying activities confirmation
process from the rule and replaced it with OCC procedures that would be
operationally similar to the June 2020 Rule's confirmation process, but
the OCC would have adapted the substance to conform to the 1995 Rules.
The OCC requested comment on this approach.
Both industry and community group commenters expressed support for
retaining a confirmation process. One industry commenter noted that,
regardless of whether the process is included in the final rule,
retaining a confirmation process would be the least disruptive outcome
for banks and interested parties. A community organization noted that
any confirmation process should be equally accessible to community-
based organizations and banks. Another community group stated that any
OCC delay in issuing guidance on the final rule's confirmation process
should not affect banks' responsibilities to comply with the rule as of
its effective date.
Given the broad support for a confirmation process in general and
the clarity provided by the June 2020 Rule's confirmation process, the
OCC is adopting the proposed approach and will provide guidance on the
scope and mechanics of this CD activity confirmation process.\47\
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\47\ As of January 1, 2022, confirmation letters issued under
the June 2020 Rule for qualifying activities that a bank has not yet
engaged in, or entered into a legally binding commitment for, would
no longer serve as OCC confirmation that an activity qualifies for
CRA consideration. Nonetheless, the activity may still receive CRA
consideration if it meets the CD definitions and other requirements
of the final rule.
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Illustrative List. The June 2020 Rule provided an illustrative list
of examples of CRA qualifying activities. The OCC indicated in the
Proposal that it would maintain this list on its website to help banks
determine whether activities conducted while the June 2020 Rule was in
effect are eligible for CRA consideration. While the OCC received few
comments on this topic, all of those who commented supported the
proposed approach of continuing to maintain the list of examples.\48\
The OCC believes that it may be useful to banks and other interested
parties to continue to have access to the June 2020 Rule's illustrative
list; therefore, the OCC will continue to make the list available on
the Agency's website. After January 1, 2022, banks that newly engage in
the activities on the illustrative list will only receive CRA
consideration if the activities also meet the retail or CD definitions
in the final rule.
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\48\ One commenter requested that the OCC preserve the four
illustrative examples of qualifying activities that involve access
to digital services as part of any amended guidance on CRA
qualifying activities. These examples will remain on the
illustrative list; however, new activities consistent with these
examples that are conducted after January 1, 2022 will only receive
consideration to the extent that they also are consistent with the
retail or CD definitions in the final rule.
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Bank Asset-Size Thresholds. The June 2020 Rule increased the bank
asset-size thresholds for determining small, intermediate, and general
performance standards banks from the thresholds for determining small,
ISB, and large banks under the 1995 Rules.\49\ This increase
[[Page 71333]]
changed some banks' asset-size categories (e.g., certain banks that
were ISBs under the 1995 Rules are small banks under the 2020 Rule, and
certain banks that were large banks under the 1995 Rules became
intermediate banks under the June 2020 Rule). Under the Proposed Rule,
the OCC would have reinstated the bank asset-size thresholds of the
1995 Rules.\50\ For banks that would have transitioned from small banks
to ISBs as a result of this, under the Proposal, the OCC would have
considered this change in assessing the bank's performance context.
Although the proposed reinstatement of bank asset-size thresholds would
have applied as of January 1, 2022, the Proposal described a transition
period for the new data collection, recordkeeping, and reporting
requirements for intermediate banks that would return to being
designated as large banks or newly become designated as large banks,
which is addressed in more detail below.
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\49\ Prior to the enactment of the June 2020 Rule, (1) small
banks were banks with less than $326 million in assets; (2) ISBs
were banks with assets between $326 million but less than $1.305
billion; and (3) large banks were banks with assets of $1.305
billion and above. Under the June 2020 Rule, (1) small banks are
banks with assets up to $600 million; (2) intermediate banks are
banks with assets of greater than $600 million and up to $2.5
billion; and (3) general performance banks (referred to as large
banks under the 1995 Rules' framework) are banks with greater than
$2.5 billion in assets. As proposed, (1) small banks would have been
banks of less than $330 million in assets; (2) ISBs would have been
banks with assets between $330 million and less than $1.322 billion;
and (3) large banks would have been banks with assets of $1.322
billion and above.
\50\ The bank asset-size thresholds in this final rule reflect
the adjusted thresholds issued by the Board and FDIC on December 17,
2020, effective January 1, 2021. See, e.g., FDIC PR 140-2020,
Agencies Release Annual CRA Asset-Size Threshold Adjustments for
Small and Intermediate Small Institutions, available at https://www.fdic.gov/news/press-releases/2020/pr20140.html. The Agencies
make annual adjustments to the bank asset-size thresholds based on
the 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. The adjusted thresholds are
typically available mid- to late-December and are effective January
1 of the following year. Once the Agencies determine the annual
adjustment for calendar year 2022, the OCC will publicize the
updated bank asset-size thresholds.
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The OCC received several comments on the proposed changes to the
bank asset-size thresholds. Generally, industry commenters did not
support the proposed changes, noting that banks recently adjusted their
CRA programs to satisfy the June 2020 Rule and that the Proposed Rule
would require another set of adjustments and associated burden (e.g.,
small banks that become ISBs would be subject to a CD test;
intermediate banks that become large banks would be subject to separate
lending, investment, and service tests and to new or reinstated data
collection, recordkeeping, and reporting requirements).
Commenters also noted that reinstating the 1995 Rules' bank asset-
size thresholds and then revising them again in a future interagency
rulemaking would both be wasteful and burdensome, in part due to
institutions' limited staff. One commenter also asserted that the
asset-size thresholds under the 1995 Rules were too low, do not reflect
the current banking industry, and should not be reinstated. Another
commenter noted that the proposed asset-size thresholds are problematic
because many banks now have inflated balance sheets due to government
programs related to the COVID-19 pandemic.
Other commenters stated that an immediate effective date for the
reinstated asset-size thresholds would require banks to quickly modify
their current procedures and processes (e.g., purchasing CRA software;
educating specific lines of business about the new requirements;
updating job aids; and implementing new requirements and testing
processes). Several commenters suggested that banks that would have to
comply with new standards or tests under a final rule (e.g., the ISB
performance standards or large bank lending, investment, and services
tests) should be provided with additional time to comply. One commenter
supported a transition period for banks that were below the 1995 Rules'
large bank asset-size threshold prior to the June 2020 Rule's effective
date but now exceed the proposed large bank asset-size threshold. This
commenter suggested a one-year transition, a two-year transition, or
retaining the June 2020 Rule's bank asset-size thresholds for the
duration of the interim period.
Community groups and other commenters generally supported the
Proposal to revert to the 1995 Rules' asset-size thresholds. These
commenters suggested that it should not be overly burdensome for banks
to transition back to their former bank types because many banks likely
retained their reporting infrastructure and software programs.
After considering these comments, the OCC is adopting the Proposed
Rule's bank asset-size thresholds without modification. Therefore, any
shift by banks to a new bank type (i.e., small bank, ISB, or large
bank) will be based on the final rule's definitions and effective
January 1, 2022. Reinstating the 1995 Rules' asset-size thresholds is
one way that the final rule establishes a consistent rule applicable to
all IDIs, which, as discussed elsewhere in this preamble, will likely
facilitate the interagency CRA rulemaking process. The final rule's
consideration of performance context should provide sufficient
flexibility to address commenters' concerns about the burden associated
with being evaluated under new tests and standards. For example, the
OCC will consider a bank's need to change its CRA procedures and
processes (e.g., reallocating staff and other resources; initiating or
increasing its CD activities; or purchasing new software) when
evaluating the bank under the final rule's applicable performance tests
and standards. Furthermore, as discussed below, the OCC will provide
banks that will be large banks for the first time under the final rule
with additional time to comply with the rule's data requirements.
Data Collection, Recordkeeping, and Reporting Requirements for
Banks Transitioning from Intermediate Banks to Large Banks. Under the
June 2020 Rule, banks with assets between $1.305 billion and $2.5
billion changed bank type from large bank (their classification under
the 1995 Rules) to intermediate bank. As a result, these banks were no
longer subject to large bank data collection and recordkeeping
requirements starting in 2021, and, under the June 2020 Rule, they
would not have been subject to large bank data reporting requirements
in 2022.
Under the Proposed Rule, the OCC would have (1) treated banks that
exceeded the ISB asset-size threshold \51\ as large banks and (2)
applied the large bank data requirements to banks that were designated
as intermediate banks under the June 2020 Rule beginning one year from
the final rule's effective date (one-year proposed grace period).\52\
This treatment is consistent with the OCC's general practice under the
1995 Rules.
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\51\ See supra note 28.
\52\ Under the June 2020 Rule, banks that exceeded the
intermediate bank threshold remained subject to the 1995 Rules' data
collection, recordkeeping, and reporting requirements, and,
therefore, the Proposed Rule would not have imposed new requirements
on these banks.
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As discussed above, industry commenters generally objected to the
proposed changes to the bank asset-size thresholds largely because of
the burden associated with the data requirements for the banks subject
to new data requirements (e.g., purchasing new software to comply with
the applicable data requirements). Several commenters recommended that
the OCC retain the June 2020 Rule's bank asset-size thresholds for the
interim period. Others requested additional transition time to comply
with the Proposed Rule's data requirements, or flexibility from the OCC
when assessing an affected bank's data integrity. For example, one
commenter suggested that the OCC apply a ``good faith'' standard in
evaluating CRA performance during the interim period, including by (1)
not issuing a ``Needs to Improve'' rating based on inaccuracies or
deficiencies in
[[Page 71334]]
an affected bank's data if the bank demonstrates its program was
developed and administered in good faith and (2) giving the bank a
reasonable period of time to correct inaccuracies or deficiencies prior
to issuing the bank's final performance evaluation rating.
Conversely, community groups generally supported the immediate
reinstatement of the 1995 Rules' large bank data requirements for all
large banks as of the effective date of the final rule. One commenter
noted that this data is critical for assessing whether the bank is
meeting community needs, and there should be no delay in providing it
to the public. The OCC also received a comment suggesting different
treatment for those banks that were large banks prior to the June 2020
Rule (redesignated large banks) and those banks that would, under the
Proposal, be large banks for the first time (newly designated large
banks).\53\
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\53\ As of September 30, 2021, approximately 36 OCC-regulated
redesignated large banks and 31 OCC-regulated newly designated large
banks would exceed the ISB threshold of the final rule and,
therefore, be considered large banks under the final rule.
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Because redesignated large banks have prior experience with the
data requirements in the 1995 Rules, it does not appear to be necessary
to provide them with a grace period for compliance with the large bank
data collection, recordkeeping, and reporting requirements. The OCC
notes that, although the final rule requires redesignated large banks
to report calendar year 2022 data by March 1, 2023--a period of 14
months from the final rule's effective date--it contains no specific
date during 2022 by which redesignated large banks must actually
commence the applicable data collection and recordkeeping. Therefore, a
redesignated large bank does not need to have its data collection and
recordkeeping systems in place by January 1, 2022, to be in compliance
with the final rule.\54\
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\54\ The OCC is not requiring data reporting for calendar year
2021 for any redesignated or newly designated large banks. OCC
guidance provided that intermediate banks under the June 2020 Rule
that were formerly large banks under the 1995 Rules were exempt from
data collection and recording requirements for calendar year 2021
and reporting requirements for calendar year 2022. See OCC Bulletin
2020-99, Community Reinvestment Act: Key Provisions of the June 2020
CRA Rule and Frequently Asked Questions (Nov. 9, 2020), available at
https://www.occ.gov/news-issuances/bulletins/2020/bulletin-2020-99.html. Therefore, although one commenter expressed an interest in
having redesignated large banks report 2021 data, it would be
unreasonable for banks expressly exempt from data collection and
recordkeeping requirements in calendar year 2021 to be expected to
report that data by March 1, 2022. This approach is consistent with
the 1995 Rules, which did not require banks that were small banks or
ISBs in the prior calendar year to report data.
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In addition, the OCC intends to work with these redesignated large
banks over the next year to ensure they are on track to report calendar
year 2022 data by March 1, 2023, and to provide them with any necessary
flexibility in terms of missing information or other limited error
tolerances for calendar year 2022 data. However, the error tolerances
afforded these banks will only last one year and the data collection,
recordkeeping, and reporting systems and processes of redesignated
large banks must be fully functional by January 1, 2023, including with
respect to data integrity. This approach should provide a sufficient
transition period to appropriately balance the need for CRA data from
redesignated large banks under the final rule with the practical
challenges these banks may encounter.
In contrast, the OCC has determined it is appropriate to apply the
proposed grace period approach to newly designated large banks. These
banks do not have the same prior experience with the data collection,
recordkeeping, and reporting requirements under the 1995 Rules, and it
is reasonable to provide them with additional time to establish the
systems and processes necessary to comply with the final rule's data
requirements. Therefore, the OCC is providing these banks with a one-
year grace period during which they will not be subject to the final
rule's data requirements. Specifically, the OCC will require these
banks to comply with the large bank data collection and recordkeeping
requirements beginning on January 1, 2023, and report calendar year
2023 data consistent with the large bank reporting requirements by
March 1, 2024. Additionally, the OCC will evaluate these banks under
the final rule's ISB lending and CD tests until they report the data
necessary to evaluate them under the rule's large bank lending,
investment, and service tests.
Affiliate Activities. The June 2020 Rule does not specifically
address how the CRA activities of bank affiliates are treated but
states that only activities conducted by a bank qualify for CRA
consideration. In January 2021, the OCC issued an interpretive letter
that limited the consideration of affiliate activities (IL 1177).\55\
Under the Proposed Rule, the OCC would have considered a bank's
affiliate's CRA activities consistent with the affiliate treatment
provisions in the 1995 Rules, which permitted banks to elect to include
affiliate activities in their CRA evaluations, subject to certain
limitations.\56\ As explained in the Proposal, the OCC also would have
rescinded IL 1177.
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\55\ The policy announced in that interpretive letter was set to
take effect April 1, 2022, and provided that a bank would not have
received CRA consideration for affiliate activities (including
activities conducted by the nonbank parent and sister companies of
the bank) unless the bank could demonstrate that it provided
financing for or otherwise supported the qualifying activities of
the affiliates. See IL 1177, OCC Senior Deputy Comptroller and Chief
Counsel's Interpretation: Community Reinvestment Act Qualifying
(CRA) Activities Conducted by a National Bank's or Savings
Association's Subsidiaries and Affiliates, Including Nonbank Parent
and Sister Companies of a National Bank or Savings Association Under
Certain Circumstances, Can Receive CRA Credit Under the June 2020
CRA Final Rule (Jan. 4, 2021), available at https://www.occ.gov/topics/charters-and-licensing/interpretations-and-actions/2021/int1177.pdf.
\56\ See Sec. Sec. 25.22(c), 25.23(c), 25.24(c), 25.25(d), and
25.27(c)(3) of the Proposed Rule. See also Q&A Sec. __.22(c)(2)(i)-
1; Q&A Sec. __.22(c)(2)(ii)-1; Q&A Sec. __.22(c)(2)(ii)-2; Q&A
Sec. __.24(e)-1; and Q&A Sec. __.26-1.
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Commenters that addressed affiliate activities generally supported
the OCC's proposed treatment of these activities, and the OCC adopts
the Proposed Rule as final on this issue. This decision should be
generally nondisruptive relative to the alternatives because it (1)
enables banks to retain their existing business models for engaging in
CRA activities; (2) ensures that banks receive consideration for CRA-
qualifying activities; and (3) promotes banks' continued efforts to
serve their communities. Consequently, as of January 1, 2022, this
final rule supersedes IL 1177, and banks may receive consideration for
affiliate activities as provided for in the final rule.\57\
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\57\ Consistent with this statement, the OCC will officially
rescind IL 1177 as of January 1, 2022.
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Strategic Plans. As explained in the Proposal, the June 2020 Rule
revised the requirements for strategic plans by, among other things,
permitting banks to include target market assessment areas in their
strategic plans. The OCC proposed to allow banks to maintain strategic
plans that the Agency had approved under the June 2020 Rule, including
plans that contained target market assessment areas.\58\ Although not
addressed in the Proposal, the OCC
[[Page 71335]]
had provided in guidance regarding the June 2020 Rule that banks could
establish goals for CRA-qualifying activities conducted outside of
their assessment areas.\59\
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\58\ The OCC stated in the Proposal that permitting strategic
plan banks to maintain their target market assessment areas was not
inconsistent with proposed 12 CFR 25.41 and would cause the least
disruption during the transition from the OCC's June 2020 Rule to
any future interagency final rules. The OCC notes that there are
currently no banks with strategic plans, or strategic plans pending
OCC approval by December 31, 2021, that include goals established
for target market assessment areas. As a result, the remaining
discussion of strategic plan transition issues focuses on issues
other than target market assessment areas.
\59\ Pursuant to OCC Bulletin 2020-99, a bank operating under an
approved strategic plan could receive consideration for qualifying
activities conducted outside of its assessment area(s) by
establishing a separate goal for those activities. The OCC would
judge the goal for outside qualifying activities independently of
the goals established for delineated assessment area(s). These
outside activities could elevate bank performance from satisfactory
to outstanding but could not compensate for less than satisfactory
overall performance inside a bank's assessment area(s). Poor
performance in one area could not be offset by performance that
exceeds plan goals in another area.
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Several commenters supported maintaining strategic plans approved
under the June 2020 Rule with one commenter generally advocating for
maintaining the status quo for portions of the June 2020 Rule. One
commenter supported maintaining these plans but only if the strategic
plan period is already in effect. A few commenters expressed concern
about how these strategic plans would be affected if the final rule
rescinds the June 2020 Rule's qualifying activities criteria, with some
recommending that affected banks be permitted to continue to rely on
those criteria while the plan is in effect.\60\ In contrast, a
community group commenter suggested that the OCC work with banks to
modify strategic plans including target market assessment areas. The
commenter noted that although this would put additional burden on the
OCC and banks, it would not be unreasonable considering the
circumstances and that it is not wholly sensible that banks would
utilize strategic plans based on a rule that no longer applies.
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\60\ The challenges associated with meeting strategic plan goals
w
