Current through Register Vol. 46, No. 12, March 20, 2024
(a) Scope of
test. The scope of the lending test is as follows:
(1) The lending test evaluates a banking
institution's record of helping to meet the credit needs of its assessment
area(s) through its lending activities by considering a banking institution's
home mortgage, small business, minority- and women-owned business, small farm,
and community development lending. If consumer lending constitutes a
substantial majority of a banking institution's business, the Department will
evaluate the banking institution's consumer lending in one or more of the
following categories: motor vehicle, credit card, home equity, other secured,
and other unsecured loans. In addition, at a banking institution's option, the
Department will evaluate one or more categories of consumer lending, if the
banking institution has collected and maintained the data required by
Regulation BB of the Board of Governors of the Federal Reserve System ( 12 CFR
Part 228 ) for each category that the banking institution elects to have the
Department evaluate.
(2) The
Department considers originations and purchases of loans. The Department may
also consider any other loan data the banking institution may choose to
provide, including data on loans outstanding, commitments and letters of
credit.
(3) The Department may
consider loans originated or purchased by consortia in which the banking
institution participates or by third parties in which the banking institution
has invested.
(b)
Performance criteria. The Department evaluates a banking institution's lending
performance pursuant to criteria which may include the following:
(1) Lending activity. The number and amount
of the banking institution's home mortgage, small business, minority- and
women-owned business, small farm, and consumer loans, if applicable, in the
banking institution's assessment area(s).
(2) Geographic distribution. The geographic
distribution of the banking institution's home mortgage, small business,
minority- and women-owned business, small farm, and consumer loans, if
applicable, based on the loan location, including:
(i) the proportion of the banking
institution's lending in the banking institution's assessment
area(s);
(ii) the dispersion of
lending in the banking institution's assessment area(s); and
(iii) the number and amount of loans in low-,
moderate-, middle-, and upper-income geographies in the banking institution's
assessment area(s);
(3)
Borrower characteristics. The distribution, particularly in the banking
institution's assessment area(s), of the banking institution's home mortgage,
small business, minority- and women-owned business, small farm, and consumer
loans, if applicable, based on borrower characteristics, including the number
and amount of:
(i) home mortgage loans to
low-, moderate-, middle-, and upper-income individuals;
(ii) small business and small farm loans to
businesses and farms with gross annual revenues of $ 1 million or
less;
(iii) small business and
small farm loans by loan amount at origination;
(iv) loans to minority- and women-owned
businesses;
(v) consumer loans, if
applicable, to low-, moderate-, middle-, and upper-income individuals; and
(vi) the banking institution'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.
(4)
Community development lending. The banking institution's community development
lending, including the number and amount of community development loans, and
their complexity and innovativeness.
(5) Innovative or flexible lending practices.
The banking institution'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 , or minority- or women-owned businesses.
(c) Affiliate lending. Affiliate
lending will be considered as follows:
(1) At
a banking institution's option, the Department will consider loans by an
affiliate of the banking institution, if the banking institution provides data
on the affiliate's loans to the Department. The data provided should contain
the information specified in Section
228.42 of Regulation BB of the
Board of Governors of the Federal Reserve System ( 12 CFR Part 228 ).
(2) The Department 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 banking
institution elects to have the Department consider loans within a particular
lending category made by one or more of the banking institution's affiliates in
a particular assessment area, the banking institution shall elect to have the
Department consider all the loans within that lending category in that
particular assessment area made by all of the banking institution's
affiliates.
(3) The
Department does not consider affiliate lending in assessing a banking
institution's performance under subparagraph (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 banking institution participates or by a
third party in which the banking institution has invested:
(1) will be considered, at the banking
institution's option, if the banking institution reports to the Banking
Department the data specified in section
228.42 of Regulation BB of the
Board of Governors of the Federal Reserve System (12 CFR* part 228) pertaining
to these loans; and
(2) may be
allocated among participants or investors, as they choose, for purposes of the
lending test, except that no participant or investor:
(i) may claim a loan origination or loan
purchase if another participant or investor claims the same loan origination or
purchase; or
(ii) may claim loans
accounting for more than its percentage share (based on the level of its
participation or investment) of the total loans originated by the consortium or
third party.
[FN*] For information regarding the United States Code (USC
or U.S.C.), the Code of Federal Regulations (CFR) and the Federal Register, see
Supervisory Policy G 1.
[FN*] For information regarding the United States Code (USC
or U.S.C.), the Code of Federal Regulations (CFR) and the Federal Register, see
Supervisory Policy G 1.