# FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

**Community Reinvestment Act; Interagency Questions and Answers
Regarding Community Reinvestment**

**AGENCY:** Federal Financial Institutions Examination Council.

**ACTION:** Notice.

**SUMMARY:** The Consumer Compliance Task Force (we) of the Federal
Financial Institutions Examination Council (FFIEC) is supplementing,
amending, and republishing its Interagency Questions and Answers
Regarding Community Reinvestment. The Interagency Questions and Answers
have been prepared by staff of the Office of the Comptroller of the
Currency (OCC), the Board of Governors of the Federal Reserve System
(Board), the Federal Deposit Insurance Corporation (FDIC), and the
Office of Thrift Supervision (OTS) (collectively, the agencies) to
answer frequently asked questions about community reinvestment. These
Interagency Questions and Answers contain informal staff guidance for
agency personnel, financial institutions, and the public.

**DATES:** Effective Date of Amended Interagency Questions and Answers
on Community Reinvestment: \[INSERT DATE OF PUBLICATION IN THE FEDERAL
REGISTER\].

**FOR FURTHER INFORMATION CONTACT:**

**OCC**: Karen Tucker, National Bank Examiner, Community and Consumer
Policy Division, (202) 874-4446; or Margaret Hesse, Special Counsel,
Community and Consumer Law Division, (202) 874-5750, Office of the
Comptroller of the Currency, 250 E Street, SW., Washington, DC 20219.

**Board**: Catherine M.J. Gates, Senior Review Examiner, (202) 452-3946;
or Kathleen C. Ryan, Senior Attorney, (202) 452-3667, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue, NW.,
Washington, DC 20551.

**FDIC**: Robert W. Mooney, Assistant Director, Division of Compliance
and Consumer Affairs, (202) 942-3378; Stephanie Caputo, Senior Fair
Lending Specialist, Division of Compliance and Consumer Affairs, (202)
942-3413; or A. Ann Johnson, Counsel, Legal Division, (202) 898-3573,
Federal Deposit Insurance Corporation, 550 17th Street, NW., Washington,
DC 20429.

**OTS**: Theresa A. Stark, Project Manager, Compliance Policy, (202)
906-7054; or Richard R. Riese, Director, Compliance Policy, (202)
906-6134, Office of Thrift Supervision, 1700 G Street, NW., Washington,
DC 20552.

**SUPPLEMENTARY INFORMATION:**

**Background**

In 1995, the agencies revised the Community Reinvestment Act (CRA)
regulations by issuing a joint final rule, which was published on May 4,
1995 (60 FR 22156). [See]{.underline} 12 CFR parts 25, 228, 345 and
563e, implementing 12 U.S.C. 2901 [et seq]{.underline}. The agencies
published related clarifying documents on December 20, 1995 (60 FR
66048) and May 10, 1996 (61 FR 21362).

The revised regulations are interpreted primarily through "Interagency
Questions and Answers Regarding Community Reinvestment," which provide
informal staff guidance for use by agency personnel, financial
institutions, and the public, and which are supplemented periodically.
We published our most recent guidance on April 28, 2000 (2000
Interagency Questions and Answers). 65 FR 25088. In addition to issuing
the 2000 Interagency Questions and Answers, we re-proposed revisions to
one question and answer, as well as a conforming amendment to another
question and answer, in the accompanying supplementary information. The
proposed revised question and answer addressed whether there must be a
direct benefit from community development loans and services and
qualified investments to an institution's assessment area. We
specifically requested comment addressing the proposed revised question
and answer, as well as general comments and questions regarding the CRA
regulations. 65 FR at 25090-92.

We received 17 letters in response to our request for comments in the
2000 Interagency Questions and Answers. Comments came from financial
institutions or financial institution holding companies (7), community
organizations (2), financial institution trade associations (4), one
state agency, and others (3). This document supplements, revises, and
republishes the 2000 Interagency Questions and Answers based, in part,
on questions and comments received from examiners, financial
institutions, and other interested parties, and on comments received in
response to our request for comments.

As discussed below, this document adopts the revisions to the question
and answer about whether there must be a direct benefit to an
institution's assessment area for an activity to benefit the assessment
area that we proposed in April 2000, along with conforming changes to
another existing question and answer, which addresses what is meant by a
"regional area." We are also making slight clarifying revisions to eight
existing questions and answers and adopting six new questions and
answers.

The Interagency Questions and Answers has an index to aid readers in
locating specific information in the document. The index contains
keywords, listed alphabetically, along with numerical indicators of
questions and answers that relate to that keyword. The list of questions
and answers addressing each keyword in the index is not intended to be
exhaustive. We welcome suggestions for additional entries to the index.
Further, when this new version of the Interagency Questions and Answers
is made available on the agencies' and the FFIEC's World Wide Web sites,
the index question and answer numbers will be linked by hypertext to the
questions and answers in the document to facilitate quick reference to
relevant information.

Questions and answers are grouped by the provision of the CRA
regulations that they discuss and are presented in the same order as the
regulatory provisions. The Interagency Questions and Answers employ an
abbreviated method to cite to the regulations. Because the regulations
of the four agencies are substantially identical, corresponding sections
of the different regulations usually bear the same suffix. Therefore,
the Interagency Questions and Answers typically cite only to the suffix.
For example, the small bank performance standards for national banks
appear at 12 CFR 25.26; for Federal Reserve System member banks
supervised by the Board, they appear at 12 CFR 228.26; for nonmember
state banks, at 12 CFR 345.26; and for thrifts, at 12 CFR 563e.26.
Accordingly, the citation in this document would be to § \_\_.26. In the
few instances in which the suffix in one of the regulations is
different, the specific citation for that regulation is provided. The
question numbering system consists of the regulatory citation (as
described above) and a number, connected by a dash. For example, the
first question addressing § \_\_.21(a) would be identified as §
\_\_.21(a) -- 1.

**Adopting Question and Answer Re-Proposed in April 2000 and Conforming
Revisions to One Question and Answer**

We are adopting the revisions that we re-proposed in April 2000 to the
question and answer about whether there must be a direct benefit to an
institution's assessment area for an activity to benefit the assessment
area. We are also adopting conforming revisions to another existing
question and answer to provide consistency with the amended question and
answer.

**Must there be some immediate or direct benefit to the institution's
assessment area(s) to satisfy the regulations' requirement that
qualified investments and community development loans or services
benefit an institution's assessment area(s) or a broader statewide or
regional area that includes the assessment area(s)?**

The fifth question and answer addressing §§ \_\_.12(i) and 563e.12(h)
(§§ \_\_.12(i) & 563e.12(h) -- 5) addresses whether there must be an
immediate or direct benefit to an institution's assessment area(s) to
satisfy the regulations' requirement that qualified investments and
community development loans or services benefit an institution's
assessment area(s) or a broader statewide or regional area that includes
the assessment area(s). This question and answer currently states that
an institution's assessment area(s) need not receive an immediate or
direct benefit from the institution's specific participation in the
broader statewide or regional organization or activity, provided the
purpose, mandate, or function of the organization or activity includes
serving geographies or individuals located in the assessment area(s).

In May 1999, we first proposed revising this question and answer to
permit consideration of support for community development organizations
or activities serving individuals or geographies located somewhere in
the broader statewide or regional area that includes the institution's
assessment area. This consideration would be given even if the
organization or activity did not have the purpose, mandate or function
of serving geographies or individuals within the institution's
assessment area(s). Most commenters responding to the 1999 proposal
appeared to favor the original proposed revision, as it would provide
increased flexibility in engaging in community development activities.
However, it appeared that a number of those commenters did not recognize
the revised answer as an expansion of existing options for institutions
to engage in community development activities outside their assessment
area(s). Therefore, we re-proposed for public comment a slightly revised
question and answer to ensure that the public understood that the
revised question and answer expands the current guidance.

The question and answer, as it was re-proposed in April 2000, contained
two approaches to determine whether qualified investments and community
development loans or services benefit an institution's assessment
area(s) or a broader statewide or regional area that includes the
institution's assessment area(s). First, as the agencies have always
maintained, if an activity supports an organization or program that
benefits the institution's assessment area or a broader statewide or
regional area that is larger than, but includes, the assessment area(s),
the activity will be considered if the purpose, mandate, or function of
the organization or activity includes serving the assessment area(s).
Second, if, in light of its performance context, an institution has
adequately addressed the community development needs of its assessment
area(s), examiners will consider community development activities that
benefit low- and moderate-income individuals or geographies somewhere in
the broader statewide or regional area that includes the assessment
area(s), even if those activities do not have a purpose, mandate, or
function of benefiting the institution's assessment area(s).

The following example explained the two approaches. An institution is
located in Chicago. Its assessment area is the Chicago metropolitan
area. Its community development activities include loans, investments,
and services in organizations and projects located in and benefiting
Chicago, its assessment area. These activities would be considered under
the first approach. The institution's community development activities
also include loans and investments in several projects that benefit the
entire state of Illinois, including Chicago. These activities also are
considered under the first approach. In addition, the institution
participated in a community development activity that benefits the
entire Great Lakes region, including the Chicago metropolitan area. This
activity would also be considered under the first approach. Assume that,
after considering its performance context, examiners have determined
that the institution has adequately addressed the community development
needs of its assessment area through loans, investments or services
considered under the first approach. Examiners then would also consider
the institution's investment in a community development organization
located in Decatur, IL, that will serve only the Decatur area -- with no
potential that it will ever benefit Chicago, the institution's
assessment area. Decatur, of course, is in the statewide area (Illinois)
that includes the institution's assessment area. The institution would
receive consideration for this activity under the second approach.

The agencies received 14 letters commenting on the proposed question and
answer. All of the commenters were generally in favor of the proposed
question and answer. As one financial institution commenter stated, "We
believe that community development organizations and programs that
operate on a local, statewide, or even multi-state basis ultimately
provide benefit to all surrounding areas. Such initiatives help
stabilize these markets and provide a ripple effect on neighboring
geographies. As the capacity of one area grows, it is possible to
leverage that effort to build community development momentum."

The agencies are adopting the amended question and answer, §§ \_\_.12(i)
& 563e.12(h) -- 5, as it was proposed in April 2000.

**What is meant by the term "regional area"?**

In addition, the agencies are also adopting the conforming amendment to
question and answer, §§ \_\_.12(i) & 563e.12(h) -- 6, which was also
proposed in April 2000. This revised question and answer is necessary so
that, in cases where an institution has already adequately addressed the
community development needs of its assessment area(s), examiner
discretion does not unduly impede the broader choice and judgment
permitted to institutions for performing community development
activities in the relevant statewide or regional area. This conforming
amendment clarifies that, if an institution has adequately addressed the
community development needs of its assessment area(s), examiners will
consider its community development activities that benefit geographies
or individuals located somewhere within the broader statewide or
regional area that includes the institution's assessment area(s), even
if those activities do not benefit its assessment area(s).

**New Questions and Answers**

The agencies are adopting six new questions and answers, which are
discussed below.

**Revitalize and stabilize low- and moderate-income areas**

Financial institutions and examiners have asked us about the types of
activities that are considered to revitalize and/or stabilize low- and
moderate-income areas. In response, the agencies are adopting a new
question and answer, §§ \_\_.12(h)(4) & 563e.12(g)(4) -- 1, which
provides guidance about such activities. It states that activities that
revitalize or stabilize a low- or moderate-income geography are
activities that help to attract and retain businesses and residents.
Examiners will presume that an activity revitalizes or stabilizes a low-
or moderate-income geography if the activity has been approved by the
governing board of an Enterprise Community or Empowerment Zone
(designated pursuant to 26 U.S.C. § 1391) and is consistent with the
board\'s strategic plan. They will make the same presumption if the
activity has received similar official designation as consistent with a
federal, state, local, or tribal government plan for the revitalization
or stabilization of the low- or moderate-income geography. To determine
whether other activities revitalize or stabilize a low- or
moderate-income geography, examiners will evaluate the activity's actual
impact on the geography, if information about this is available. If not,
examiners will determine whether the activity is consistent with the
community's formal or informal plans for the revitalization and
stabilization of the low- or moderate-income geography.

**Types of lending activities that may warrant favorable consideration
as activities responsive to the credit needs of an institution's
community**

Credit needs vary from community to community. However, there are some
lending activities that are likely to be responsive in helping to meet
the credit needs of many communities. The agencies are adopting a new
question and answer, § \_\_.22(a) -- 1, which identifies the following
activities as being responsive to the needs of an institution's
assessment area:

-   Providing loan programs that include a financial education component
    about how to avoid lending activities that may be abusive or
    otherwise unsuitable;

-   Establishing loan programs that provide small, unsecured consumer
    loans in a safe and sound manner (i.e., based on the borrower's
    ability to repay) and with reasonable terms;

-   Offering lending programs, which feature reporting to consumer
    reporting agencies, that transition borrowers from loans with higher
    interest rates and fees (based on credit risk) to lower-cost loans,
    consistent with safe and sound lending practices. Reporting to
    consumer reporting agencies allows borrowers accessing these
    programs the opportunity to improve their credit histories and
    thereby improve their access to competitive credit products.

Examiners may consider favorably such lending activities, which have
features augmenting the success and effectiveness of the institution's
lending programs.

## Indirect community development services

The agencies are adopting a new question and answer, § \_\_.24(e) -- 1,
that addresses the conditions under which an institution may receive
consideration for community development services offered by affiliates
or third parties. The guidance states that, at an institution's option,
the agencies will consider services performed by an affiliate or by a
third party on the institution's behalf under the service test if the
services provided enable the institution to help meet the credit needs
of its community. Indirect services that enhance an institution's
ability to deliver credit products or deposit services within its
community and that can be quantified may be considered under the service
test if those services have not been considered already under the
lending or investment test. For example, an institution that contracts
with a community organization to provide home ownership counseling to
low- and moderate-income home buyers as part of the institution's
mortgage program may receive consideration for that indirect service
under the service test. In contrast, donations to a community
organization that offers financial services to low- or moderate-income
individuals may be considered under the investment test, but would not
also be eligible for consideration under the service test. Services
performed by an affiliate will be treated the same as affiliate loans
and investments made in the institution's assessment area and may be
considered if the service is not claimed by any other institution.

## Credit card banks' activities

The agencies are adopting a new question and answer, § \_\_.25(a) -- 1,
that applies only to credit card banks that are exempt from the
definition of "bank" in the Bank Holding Company Act (BHCA), as amended
by the Competitive Equality Banking Act of 1987 (CEBA credit card
banks). This new guidance explains how a CEBA credit card bank (if
designated as a limited-purpose institution) can meet its community's
credit needs without losing its exemption from the definition of "bank."
This guidance memorializes a letter issued in 1996 by staff at the Board
of Governors of the Federal Reserve System to the president of the
Association of Financial Services Holding Companies. The guidance
clarifies that, although the BHCA restricts CEBA credit card banks to
credit card operations, a CEBA credit card bank can engage in community
development activities without losing its exemption under the BHCA. A
CEBA credit card bank could provide community development services and
investments without engaging in operations other than credit card
operations. For example, the bank could provide credit card counseling,
or the financial expertise of its executives, free of charge, to
community development organizations. In addition, a CEBA credit card
bank could make qualified investments, as long as the investments meet
the guidelines for passive and noncontrolling investments provided in
the BHCA and the Board's Regulation Y. Finally, although a CEBA credit
card bank cannot make any loans other than credit card loans, under § 
\_\_.25(d)(2) (community development test -- indirect activities), the
bank could elect to have part of its qualified passive and
noncontrolling investments in a third-party lending consortium
considered as community development lending, provided that the
consortium's loans otherwise meet the requirements for community
development lending. When assessing a CEBA credit card bank's CRA
performance under the community development test, examiners will take
into account the bank's performance context. In particular, examiners
will consider the legal constraints imposed by the BHCA on the bank's
activities as part of the bank's performance context in § \_\_.21(b)(4).

## Effect of evidence of other illegal credit practices

Section \_\_.28(c) of our regulations states that evidence of
discriminatory or other illegal credit practices adversely affects the
evaluation of an institution's performance. The agencies are adopting a
new question and answer addressing this provision. The new question and
answer, § \_\_.28(c) -- 1, discusses what is meant by "discriminatory or
other illegal credit practices." It explains that an institution engages
in discriminatory credit practices if it discourages or discriminates
against credit applicants or borrowers on a prohibited basis, in
violation, for example, of the Fair Housing Act or the Equal Credit
Opportunity Act (as implemented by Regulation B). Examples of other
illegal credit practices inconsistent with helping to meet community
credit needs include violations of:

-   The Truth in Lending Act regarding rescission of certain mortgage
    transactions and regarding disclosures and certain loan term
    restrictions in connection with credit transactions that are subject
    to the Home Ownership and Equity Protection Act;

-   The Real Estate Settlement Procedures Act regarding the giving and
    accepting of referral fees, unearned fees or kickbacks in connection
    with certain mortgage transactions; and

-   The Federal Trade Commission Act regarding unfair or deceptive acts
    or practices.

Examiners will determine the effect of evidence of illegal credit
practices as set forth in examination procedures and § \_\_.28(c) of the
regulations.

Violations of other provisions of the consumer protection laws generally
will not adversely affect an institution's CRA rating, but may warrant
the inclusion of comments in an institution's performance evaluation.
These comments may address the institution's policies, procedures,
training programs, and internal assessment efforts.

## Electronic public files

Some financial institutions have inquired whether it is acceptable to
maintain the required public file information electronically on an
intranet or the Internet. The agencies believe that an institution may
keep all or part of its public file on an intranet or the Internet,
provided that the institution maintains all of the information, either
in paper or electronic form, that is required in § \_\_.43 of the
regulations. An institution that opts to keep part or all of its public
file on an intranet or the Internet must follow the rules in
§ \_\_.43(c)(1) and (2) as to what information is required to be kept at
a main office and at a branch. The institution must also ensure that the
information required to be maintained at a main office and branch, if
kept electronically, can be readily downloaded and printed for any
member of the public who requests a hard copy of the information.

The agencies are adopting a new question and answer, § \_\_.43(c) -- 2,
which addresses maintaining public files on an intranet or the Internet.

# Revised Questions and Answers

The agencies are revising eight existing questions and answers, which
are discussed below.

**New Markets Venture Capital Companies**

The Consolidated Appropriations Act of 2001 (Pub. L. No. 106-554),
enacted December 21, 2000, included the New Markets Venture Capital
Program Act of 2000. The New Markets Venture Capital Program, which is
administered by the Small Business Administration (SBA), allows the SBA
to designate New Market Venture Capital companies (NMVCCs). NMVCCs are
investment funds that will promote economic development and create
wealth and job opportunities in low-income geographies and among
individuals living in such areas through equity-type investments in
smaller enterprises located in those low-income geographical areas.

Based on the statutory mandate for NMVCCs, the agencies will presume
that any loan to or lawful investment in NMVCCs will promote economic
development. Therefore, we are revising § \_\_.12(h)(3) -- 1 to reflect
this presumption.

**Reporting loans with a business purpose that are secured by
residential real estate**

The agencies are adopting revisions to two existing questions and
answers to accommodate the difference in treatment between the Call
Report and Thrift Financial Report (TFR) instructions concerning loans
secured by residential real estate that have a business purpose. Under
the Call Report instructions, loans secured by nonfarm residential real
estate that are used to finance small businesses must be reported as
"loans secured by real estate" unless the security interest in the
nonfarm residential real estate is taken only as an abundance of
caution. The TFR instructions, however, allow an institution to classify
a loan that meets the definition of a mortgage loan, but that is used to
finance small businesses, as a mortgage loan or as a nonmortgage loan
according to the purpose of the loan, at the option of the reporting
institution. As a result, institutions that file Call Reports and those
that file TFRs may treat loans secured by nonfarm residential real
estate, but that are for the purpose of financing a small business, in
different ways.

The agencies are revising §§ \_\_.12(u) & 563e.12(t) -- 3 and
§ \_\_.42(c)(2) -- 1 to be consistent with guidance provided in the Call
Report and TFR instructions. The agencies are bifurcating the answer to
§§ \_\_.12(u) & 563e.12(t) -- 3 to account for the different treatment
in the Call Report and TFR instructions. The guidance states that, for
banks filing Call Reports, loans secured by nonfarm residential real
estate to finance small businesses will typically not be included as
"loans to small businesses" for Call Report purposes, unless the
security interest in the property is taken only as an abundance of
caution. The agencies recognize that many small businesses are financed
by loans that would not have been made or would have been made on less
favorable terms had they not been secured by residential real estate. If
these loans have a primary purpose of community development, as defined
in the regulations, they may be reported as community development loans.
Otherwise, at an institution's option, the institution may collect and
maintain data separately concerning these loans and request that the
data be considered in its CRA evaluation as "Other Secured Lines/Loans
for Purposes of Small Business."

For institutions that file TFRs, depending on how a loan is classified,
it is possible that a loan secured by nonfarm residential real estate
that finances a small business will be reported as a "small business
loan." Loans secured by nonfarm residential real estate to finance small
businesses may be reported as small business loans if they are reported
on the TFR as nonmortgage, commercial loans. Otherwise, loans that meet
the definition of mortgage loans, for TFR reporting purposes, may be
classified as mortgage loans. These loans may be reported as community
development loans, if appropriate, or collected as "Other Secured
Lines/Loans for Purposes of Small Business."

The guidance provided in § \_\_.42(c)(2) -- 1 is being revised to be
applicable only to banks that file Call Reports. This question and
answer is inapplicable to thrifts that file TFRs. The question and
answer reiterates that banks that make loans to finance small
businesses, which are secured by nonfarm, residential real estate, and
for which the security interest was not taken only as an abundance of
caution, may either report the loans as community development loans, if
appropriate, or may collect and maintain loan information as "Other
Secured Lines/Loans for Purposes of Small Business."

Clarification of § \_\_.21(b)(5) -- 1 addressing assigned ratings being
adversely affected by poor past performance

The agencies are clarifying the wording of the answer to this question.
We intend no substantive change.

**Home mortgage loan modification, extension, and consolidation
agreements (MECAs)**

In several states, financial institutions use MECAs as an alternative to
refinancings for their customers. Existing guidance § \_\_.22(a)(2) -- 3
states that an institution may receive consideration under CRA as "other
loan data" for MECAs, in which it obtains loans from other institutions
without actually purchasing or refinancing the loans. The agencies are
clarifying this guidance to indicate that it applies only to home
mortgage loans.

## Reporting lines of credit

The agencies have received inquiries from examiners and our institutions
about how institutions should report increases to small business or
small farm lines of credit once the total line exceeds the \$1 million
or \$500,000 limit for reporting a loan to a small business or a loan to
a small farm, respectively, as described in the Call Report or TFR
instructions. Because the Call Report and TFR no longer consider lines
of credit that have exceeded the \$1 million or \$500,000 thresholds as
loans to small businesses or loans to small farms, respectively, such
lines would also no longer be considered small business or small farm
loans for CRA purposes.

The agencies are revising existing question and answer § \_\_.42 -- 3 to
clarify this view.

## Clarification of § \_\_.42(a) -- 5 addressing reporting data on refinancings and renewals of small business and small farm loans

In the 2000 Interagency Questions and Answers, the agencies adopted a
revised version of § \_\_.42(a) -- 5, which discusses collection and
reporting of data on small business and farm loans that are refinanced
or renewed. The 2000 guidance suggests that if a renewal of \$15,000 and
new money of \$5,000 are provided in connection with the same loan to
the same borrower, the two amounts should be reported separately as two
separate originations. In response to several communications from
institutions indicating that their data systems may not allow such a
transaction to be reported as two originations, the agencies are
clarifying that institutions may report the two originations (the
renewal and the increase in the line) together as a single origination.
In the example above, an institution may report one origination of
\$20,000.

We have also deleted from the answer to this question information that
was relevant to data collected in the year 2000 and reported in 2001.
Because this data should have been reported by March 1, 2001, this
portion of the answer is no longer pertinent. The remaining answer is
applicable beginning with data on small business and small farm
collected in 2000 and reported in 2001.

### Updating § \_\_.42 -- 4

Consistent with the deletion of the out-dated portion of the answer to
§ \_\_.42(a) -- 5, we are also deleting the part of the answer to
§ \_\_.42 -- 4 that was relevant only to data that was collected in 2000
and reported in 2001. The remaining answer is applicable beginning with
data about renewals of lines of credit collected in 2000 that will be
reported in 2001.

**Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)**

The SBREFA requires an agency, for each rule for which it prepares a
final regulatory flexibility analysis, to publish one or more compliance
guides to help small entities understand how to comply with the rule.

Pursuant to section 605(b) of the Regulatory Flexibility Act, the
agencies certified that their proposed CRA rule would not have a
significant economic impact on a substantial number of small entities
and invited public comments on that determination. [See]{.underline} 58
FR 67478 (Dec. 21, 1993); 59 FR 51250 (Oct. 7, 1994). In response to
public comment, the agencies voluntarily prepared a final regulatory
flexibility analysis for the joint final rule, although the analysis was
not required because it supported the agencies' earlier certification
regarding the proposed rule. Because a regulatory flexibility analysis
was not required, section 212 of the SBREFA does not apply to the final
CRA rule. However, in their continuing efforts to provide clear,
understandable regulations and to comply with the spirit of the SBREFA,
the agencies have compiled the Interagency Questions and Answers. The
Interagency Questions and Answers serve the same purpose as the
compliance guide described in the SBREFA by providing guidance on a
variety of issues of particular concern to small banks and thrifts.

The text of the Interagency Questions and Answers follows:

## Interagency Questions and Answers Regarding Community Reinvestment

**§ \_\_.11\--Authority, purposes, and scope**

[§ \_\_.11(c) Scope]{.underline}

[§§ \_\_.11(c)(3) & 563e.11(c)(2) Certain special purpose
institutions]{.underline}

[]{#_Hlk468460649 .anchor}§§ \_\_.11(c)(3) & 563e.11(c)(2) -- 1: [Is the
list of special purpose institutions exclusive?]{.underline}

A1. No, there may be other examples of special purpose institutions.
These institutions engage in specialized activities that do not involve
granting credit to the public in the ordinary course of business.
Special purpose institutions typically serve as correspondent banks,
trust companies, or clearing agents or engage only in specialized
services, such as cash management controlled disbursement services. A
financial institution, however, does not become a special purpose
institution merely by ceasing to make loans and, instead, making
investments and providing other retail banking services.

[]{#_Hlk468460962 .anchor}§§ \_\_.11(c)(3) & 563e.11(c)(2) -- 2: [To be
a special purpose institution, must an institution limit its activities
in its charter?]{.underline}

A2. No. A special purpose institution may, but is not required to, limit
the scope of its activities in its charter, articles of association or
other corporate organizational documents. An institution that does not
have legal limitations on its activities, but has voluntarily limited
its activities, however, would no longer be exempt from Community
Reinvestment Act (CRA) requirements if it subsequently engaged in
activities that involve granting credit to the public in the ordinary
course of business. An institution that believes it is exempt from CRA
as a special purpose institution should seek confirmation of this status
from its supervisory agency.

**§ \_\_.12\--Definitions**

[§ \_\_.12(a) Affiliate]{.underline}

[]{#_Hlk468461061 .anchor}§ \_\_.12(a) -- 1: [Does the definition of
"affiliate" include subsidiaries of an institution?]{.underline}

A1. Yes, "affiliate" includes any company that controls, is controlled
by, or is under common control with another company. An institution's
subsidiary is controlled by the institution and is, therefore, an
affiliate.

[§§ \_\_.12(f) & 563e.12(e) Branch]{.underline}

[]{#_Hlk468461167 .anchor}§§ \_\_.12(f) & 563e.12(e) -- 1: [Do the
definitions of "branch," "automated teller machine (ATM)," and "remote
service facility (RSF)" include mobile branches, ATMs, and
RSFs?]{.underline}

A1. Yes. Staffed mobile offices that are authorized as branches are
considered "branches" and mobile ATMs and RSFs are considered "ATMs" and
"RSFs."

[]{#_Hlk468461307 .anchor}§§ \_\_.12(f) & 563e.12(e) -- 2: [Are loan
production offices (LPOs) branches for purposes of the CRA?]{.underline}

A2. LPOs and other offices are not "branches" unless they are authorized
as branches of the institution through the regulatory approval process
of the institution's supervisory agency.

[§§ \_\_.12(h) & 563e.12(g) Community development]{.underline}

[]{#_Hlk468461365 .anchor}§§ \_\_.12(h) & 563e.12(g) -- 1: [Are
community development activities limited to those that promote economic
development?]{.underline}

A1. No. Although the definition of "community development" includes
activities that promote economic development by financing small
businesses or farms, the rule does not limit community development loans
and services and qualified investments to those activities. Community
development also includes community- or tribal-based child care,
educational, health, or social services targeted to low- or
moderate-income persons, affordable housing for low- or moderate-income
individuals, and activities that revitalize or stabilize low- or
moderate-income areas.

[]{#_Hlk468461509 .anchor}§§ \_\_.12(h) & 563e.12(g) -- 2: [Must a
community development activity occur inside a low- or moderate-income
area in order for an institution to receive CRA consideration for the
activity?]{.underline}

A2. No. Community development includes activities outside of low- and
moderate-income areas that provide affordable housing for, or community
services targeted to, low- or moderate-income individuals and activities
that promote economic development by financing small businesses and
farms. Activities that stabilize or revitalize particular low- or
moderate-income areas (including by creating, retaining, or improving
jobs for low- or moderate-income persons) also qualify as community
development, even if the activities are not located in these low- or
moderate-income areas. One example is financing a supermarket that
serves as an anchor store in a small strip mall located at the edge of a
middle-income area, if the mall stabilizes the adjacent low‑income
community by providing needed shopping services that are not otherwise
available in the low-income community.

[]{#_Hlk468461654 .anchor}§§ \_\_.12(h) & 563e.12(g) -- 3: [Does the
regulation provide flexibility in considering performance in high-cost
areas?]{.underline}

A3. Yes, the flexibility of the performance standards allows examiners
to account in their evaluations for conditions in high-cost areas.
Examiners consider lending and services to individuals and geographies
of all income levels and businesses of all sizes and revenues. In
addition, the flexibility in the requirement that community development
loans, community development services, and qualified investments have as
their "primary" purpose community development allows examiners to
account for conditions in high-cost areas. For example, examiners could
take into account the fact that activities address a credit shortage
among middle-income people or areas caused by the disproportionately
high cost of building, maintaining or acquiring a house when determining
whether an institution's loan to or investment in an organization that
funds affordable housing for middle-income people or areas, as well as
low- and moderate-income people or areas, has as its primary purpose
community development.

> [§§ \_\_.12(h)(1) & 563e.12(g)(1) Affordable housing (including
> multifamily rental housing) for low- or moderate-income
> individuals]{.underline}

[]{#_Hlk468461748 .anchor}§§ \_\_.12(h)(1) & 563e.12(g)(1) -- 1: [When
determining whether a project is "affordable housing for low- or
moderate-income individuals," thereby meeting the definition of
"community development," will it be sufficient to use a formula that
relates the cost of ownership, rental or borrowing to the income levels
in the area as the only factor, regardless of whether the users, likely
users, or beneficiaries of that affordable housing are low- or
moderate-income individuals?]{.underline}

A1. The concept of "affordable housing" for low- or moderate-income
individuals does hinge on whether low- or moderate-income individuals
benefit, or are likely to benefit, from the housing. It would be
inappropriate to give consideration to a project that exclusively or
predominately houses families that are not low- or moderate-income
simply because the rents or housing prices are set according to a
particular formula.

For projects that do not yet have occupants, and for which the income of
the potential occupants cannot be determined in advance, or in other
projects where the income of occupants cannot be verified, examiners
will review factors such as demographic, economic and market data to
determine the likelihood that the housing will "primarily" accommodate
low- or moderate-income individuals. For example, examiners may look at
median rents of the assessment area and the project; the median home
value of either the assessment area, low- or moderate-income geographies
or the project; the low- or moderate-income population in the area of
the project; or the past performance record of the organization(s)
undertaking the project. Further, such a project could receive
consideration if its express, bona fide intent, as stated, for example,
in a prospectus, loan proposal or community action plan, is community
development.

> [§§ \_\_.12(h)(3) & 563e.12(g)(3) Activities that promote economic
> development by financing businesses or farms that meet certain size
> eligibility standards]{.underline}

[]{#_Hlk468461813 .anchor}§§ \_\_.12(h)(3) & 563e.12(g)(3) -- 1:
["Community development" includes activities that promote economic
development by financing businesses or farms that meet certain size
eligibility standards. Are all activities that finance businesses and
farms that meet these size eligibility standards considered to be
community development?]{.underline}

A1. No. To be considered as "community development" under §§
\_\_.12(h)(3) and 563e.12(g)(3), a loan, investment or service, whether
made directly or through an intermediary, must meet both a size test and
a purpose test. An activity meets the size requirement if it finances
entities that either meet the size eligibility standards of the Small
Business Administration's Development Company (SBDC) or Small Business
Investment Company (SBIC) programs, or have gross annual revenues of \$1
million or less. To meet the purpose test, the activity must promote
economic development. An activity is considered to promote economic
development if it supports permanent job creation, retention, and/or
improvement for persons who are currently low- or moderate-income, or
supports permanent job creation, retention, and/or improvement either in
low- or moderate-income geographies or in areas targeted for
redevelopment by Federal, state, local or tribal governments. The
agencies will presume that any loan to or investment in a SBDC, SBIC, or
New Markets Venture Capital Company promotes economic development.

In addition to their quantitative assessment of the amount of a
financial institution's community development activities, examiners must
make qualitative assessments of an institution's leadership in community
development matters and the complexity, responsiveness, and impact of
the community development activities of the institution. In reaching a
conclusion about the impact of an institution's community development
activities, examiners may, for example, determine that a loan to a small
business in a low- or moderate-income geography that provides needed
jobs and services in that area may have a greater impact and be more
responsive to the community credit needs than does a loan to a small
business in the same geography that does not directly provide additional
jobs or services to the community.

[§§ \_\_.12(h)(4) & 563e.12(g)(4) Activities that revitalize or
stabilize low- or moderate-income geographies]{.underline}

[]{#_Hlk511462843 .anchor}§§ \_\_.12(h)(4) & 563e.12(g)(4) -- 1: [What
are activities that revitalize or stabilize a low- or moderate-income
geography?]{.underline}

A1. Activities that revitalize or stabilize a low- or moderate-income
geography are activities that help to attract and retain businesses and
residents. Examiners will presume that an activity revitalizes or
stabilizes a low- or moderate-income geography if the activity has been
approved by the governing board of an Enterprise Community or
Empowerment Zone (designated pursuant to 26 U.S.C. § 1391) and is
consistent with the board's strategic plan. They will make the same
presumption if the activity has received similar official designation as
consistent with a federal, state, local or tribal government plan for
the revitalization or stabilization of the geography. To determine
whether other activities revitalize or stabilize a low- or
moderate-income geography, examiners will evaluate the activity's actual
impact on the geography, if information about this is available. If not,
examiners will determine whether the activity is consistent with the
community's formal or informal plans for the revitalization and
stabilization of the low- or moderate-income geography. For more
information on what activities revitalize or stabilize a low- or
moderate-income geography, see §§ \_\_.12(h) & 563e.12(g) -- 2 and
§§ \_\_.12(i) & 563e.12(h) -- 4.

[§§ \_\_.12(i) & 563e.12(h) Community development loan]{.underline}

[]{#_Hlk468461901 .anchor}§§ \_\_.12(i) & 563e.12(h) -- 1: [What are
examples of community development loans?]{.underline}

A1. Examples of community development loans include, but are not limited
to, loans to:

• Borrowers for affordable housing rehabilitation and construction,
including construction and permanent financing of multifamily rental
property serving low- and moderate-income persons;

• Not-for-profit organizations serving primarily low- and
moderate-income housing or other community development needs;

• Borrowers to construct or rehabilitate community facilities that are
located in low- and moderate-income areas or that serve primarily low-
and moderate-income individuals;

• Financial intermediaries including Community Development Financial
Institutions (CDFIs), Community Development Corporations (CDCs),
minority- and women-owned financial institutions, community loan funds
or pools, and low-income or community development credit unions that
primarily lend or facilitate lending to promote community development.

• Local, state, and tribal governments for community development
activities; and

• Borrowers to finance environmental clean-up or redevelopment of an
industrial site as part of an effort to revitalize the low- or
moderate-income community in which the property is located.

The rehabilitation and construction of affordable housing or community
facilities, referred to above, may include the abatement or remediation
of, or other actions to correct, environmental hazards, such as
lead-based paint, that are present in the housing, facilities, or site.

[]{#_Hlk468462015 .anchor}§§ \_\_.12(i) & 563e.12(h) -- 2: [If a retail
institution that is not required to report under the Home Mortgage
Disclosure Act (HMDA) makes affordable home mortgage loans that would be
HMDA-reportable home mortgage loans if it were a reporting institution,
or if a small institution that is not required to collect and report
loan data under CRA makes small business and small farm loans and
consumer loans that would be collected and/or reported if the
institution were a large institution, may the institution have these
loans considered as community development loans?]{.underline}

A2. No. Although small institutions are not required to report or
collect information on small business and small farm loans and consumer
loans, and some institutions are not required to report information
about their home mortgage loans under HMDA, if these institutions are
retail institutions, the agencies will consider in their CRA evaluations
the institutions' originations and purchases of loans that would have
been collected or reported as small business, small farm, consumer or
home mortgage loans, had the institution been a collecting and reporting
institution under the CRA or the HMDA. Therefore, these loans will not
be considered as community development loans. Multifamily dwelling
loans, however, may be considered as community development loans as well
as home mortgage loans. [See also]{.underline} § \_\_.42(b)(2) --2.

[]{#_Hlk468462100 .anchor}§§ \_\_.12(i) & 563e.12(h) -- 3: [Do secured
credit cards or other credit card programs targeted to low- or
moderate-income individuals qualify as community development
loans?]{.underline}

A3. No. Credit cards issued to low- or moderate-income individuals for
household, family, or other personal expenditures, whether as part of a
program targeted to such individuals or otherwise, do not qualify as
community development loans because they do not have as their primary
purpose any of the activities included in the definition of "community
development."

[]{#_Hlk468462177 .anchor}§§ \_\_.12(i) & 563e.12(h) -- 4: [The
regulation indicates that community development includes "activities
that revitalize or stabilize low- or moderate-income geographies." Do
all loans in a low- to moderate-income geography have a stabilizing
effect?]{.underline}

A4. No. Some loans may provide only indirect or short-term benefits to
low- or moderate-income individuals in a low- or moderate-income
geography. These loans are not considered to have a community
development purpose. For example, a loan for upper-income housing in a
distressed area is not considered to have a community development
purpose simply because of the indirect benefit to low- or
moderate-income persons from construction jobs or the increase in the
local tax base that supports enhanced services to low- and
moderate-income area residents. On the other hand, a loan for an anchor
business in a distressed area (or a nearby area), that employs or serves
residents of the area, and thus stabilizes the area, may be considered
to have a community development purpose. For example, in an underserved,
distressed area, a loan for a pharmacy that employs, and provides
supplies to, residents of the area promotes community development.

[]{#_Hlk468462270 .anchor}§§ \_\_.12(i) & 563e.12(h) -- 5: [Must there
be some immediate or direct benefit to the institution's assessment
area(s) to satisfy the regulations' requirement that qualified
investments and community development loans or services benefit an
institution's assessment area(s) or a broader statewide or regional area
that includes the institution's assessment area(s)?]{.underline}

A5. No. The regulations recognize that community development
organizations and programs are efficient and effective ways for
institutions to promote community development. These organizations and
programs often operate on a statewide or even multi-state basis.
Therefore, an institution's activity is considered a community
development loan or service or a qualified investment if it supports an
organization or activity that covers an area that is larger than, but
includes, the institution's assessment area(s). The institution's
assessment area(s) need not receive an immediate or direct benefit from
the institution's specific participation in the broader organization or
activity, provided that the purpose, mandate, or function of the
organization or activity includes serving geographies or individuals
located within the institution's assessment area(s).

In addition, a retail institution that, considering its performance
context, has adequately addressed the community development needs of its
assessment area(s) will receive consideration for certain other
community development activities. These community development activities
must benefit geographies or individuals located somewhere within a
broader statewide or regional area that includes the institution's
assessment area(s). Examiners will consider these activities even if
they will not benefit the institution's assessment area(s).

[]{#_Hlk468462386 .anchor}§§ \_\_.12(i) & 563e.12(h) -- 6: [What is
meant by the term "regional area"?]{.underline}

A6. A "regional area" may be as small as a city or county or as large as
a multistate area. For example, the "mid-Atlantic states" may comprise a
regional area.

Community development loans and services and qualified investments to
statewide or regional organizations that have a bona fide purpose,
mandate, or function that includes serving the geographies or
individuals within the institution's assessment area(s) will be
considered as addressing assessment area needs. When examiners evaluate
community development loans and services and qualified investments that
benefit a regional area that includes the institution's assessment
area(s), they will consider the institution's performance context as
well as the size of the regional area and the actual or potential
benefit to the institution's assessment area(s). With larger regional
areas, benefit to the institution's assessment area(s) may be diffused
and, thus less responsive to assessment area needs.

In addition, as long as an institution has adequately addressed the
community development needs of its assessment area(s), it will also
receive consideration for community development activities that benefit
geographies or individuals located somewhere within the broader
statewide or regional area that includes the institution's assessment
area(s), even if those activities do not benefit its assessment area(s).

[]{#_Hlk468462480 .anchor}§§ \_\_.12(i) & 563e.12(h) -- 7: [What is
meant by the term "primary purpose" as that term is used to define what
constitutes a community development loan, a qualified investment or a
community development service?]{.underline}

A7. A loan, investment or service has as its primary purpose community
development when it is designed for the express purpose of revitalizing
or stabilizing low- or moderate-income areas, providing affordable
housing for, or community services targeted to, low- or moderate-income
persons, or promoting economic development by financing small businesses
and farms that meet the requirements set forth in §§ \_\_.12(h) or
563e.12(g). To determine whether an activity is designed for an express
community development purpose, the agencies apply one of two approaches.
First, if a majority of the dollars or beneficiaries of the activity are
identifiable to one or more of the enumerated community development
purposes, then the activity will be considered to possess the requisite
primary purpose. Alternatively, where the measurable portion of any
benefit bestowed or dollars applied to the community development purpose
is less than a majority of the entire activity's benefits or dollar
value, then the activity may still be considered to possess the
requisite primary purpose if (1) the express, bona fide intent of the
activity, as stated, for example, in a prospectus, loan proposal, or
community action plan, is primarily one or more of the enumerated
community development purposes; (2) the activity is specifically
structured (given any relevant market or legal constraints or
performance context factors) to achieve the expressed community
development purpose; and (3) the activity accomplishes, or is reasonably
certain to accomplish, the community development purpose involved. The
fact that an activity provides indirect or short-term benefits to low-
or moderate-income persons does not make the activity community
development, nor does the mere presence of such indirect or short-term
benefits constitute a primary purpose of community development.
Financial institutions that want examiners to consider certain
activities under either approach should be prepared to demonstrate the
activities' qualifications.

[§§ \_\_.12(j) & 563e.12(i) Community development service]{.underline}

[]{#_Hlk468462604 .anchor}§§ \_\_.12(j) & 563e.12(i) -- 1: [In addition
to meeting the definition of "community development" in the regulation,
community development services must also be related to the provision of
financial services. What is meant by "provision of financial
services"?]{.underline}

A1. Providing financial services means providing services of the type
generally provided by the financial services industry. Providing
financial services often involves informing community members about how
to get or use credit or otherwise providing credit services or
information to the community. For example, service on the board of
directors of an organization that promotes credit availability or
finances affordable housing is related to the provision of financial
services. Providing technical assistance about financial services to
community-based groups, local or tribal government agencies, or
intermediaries that help to meet the credit needs of low- and
moderate-income individuals or small businesses and farms is also
providing financial services. By contrast, activities that do not take
advantage of the employees' financial expertise, such as neighborhood
cleanups, do not involve the provision of financial services.

[]{#_Hlk468462687 .anchor}§§ \_\_.12(j) & 563e.12(i) -- 2: [Are personal
charitable activities provided by an institution's employees or
directors outside the ordinary course of their employment considered
community development services?]{.underline}

A2. No. Services must be provided as a representative of the
institution. For example, if a financial institution's director, on her
own time and not as a representative of the institution, volunteers one
evening a week at a local community development corporation's financial
counseling program, the institution may not consider this activity a
community development service.

[]{#_Hlk468462752 .anchor}§§ \_\_.12(j) & 563e.12(i) -- 3: [What are
examples of community development services?]{.underline}

A3. Examples of community development services include, but are not
limited to, the following:

• Providing technical assistance on financial matters to nonprofit,
tribal or government organizations serving low- and moderate-income
housing or economic revitalization and development needs;

• Providing technical assistance on financial matters to small
businesses or community development organizations, including
organizations and individuals who apply for loans or grants under the
Federal Home Loan Banks' Affordable Housing Program;

• Lending employees to provide financial services for organizations
facilitating affordable housing construction and rehabilitation or
development of affordable housing;

• Providing credit counseling, home-buyer and home-maintenance
counseling, financial planning or other financial services education to
promote community development and affordable housing;

• Establishing school savings programs and developing or teaching
financial education curricula for low- or moderate-income individuals;

• Providing electronic benefits transfer and point of sale terminal
systems to improve access to financial services, such as by decreasing
costs, for low- or moderate-income individuals; and

• Providing other financial services with the primary purpose of
community development, such as low-cost bank accounts, including
"Electronic Transfer Accounts" provided pursuant to the Debt Collection
Improvement Act of 1996, or free government check cashing that increases
access to financial services for low- or moderate-income individuals.

Examples of technical assistance activities that might be provided to
community development organizations include:

• Serving on a loan review committee;

• Developing loan application and underwriting standards;

• Developing loan processing systems;

• Developing secondary market vehicles or programs;

• Assisting in marketing financial services, including development of
advertising and promotions, publications, workshops and conferences;

• Furnishing financial services training for staff and management;

• Contributing accounting/bookkeeping services; and

• Assisting in fund raising, including soliciting or arranging
investments.

[§§ \_\_.12(k) & 563e.12(j) Consumer loan]{.underline}

[]{#_Hlk468462832 .anchor}§§ \_\_.12(k) & 563e.12(j) -- 1: [Are home
equity loans considered "consumer loans"?]{.underline}

A1. Home equity loans made for purposes other than home purchase, home
improvement or refinancing home purchase or home improvement loans are
consumer loans if they are extended to one or more individuals for
household, family, or other personal expenditures.

[]{#_Hlk468462905 .anchor}§§ \_\_.12(k) & 563e.12(j) -- 2: [May a home
equity line of credit be considered a "consumer loan" even if part of
the line is for home improvement purposes?]{.underline}

A2. If the predominant purpose of the line is home improvement, the line
may only be reported under HMDA and may not be considered a consumer
loan. However, the full amount of the line may be considered a "consumer
loan" if its predominant purpose is for household, family, or other
personal expenditures, and to a lesser extent home improvement, and the
full amount of the line has not been reported under HMDA. This is the
case even though there may be "double counting" because part of the line
may also have been reported under HMDA.

[]{#_Hlk468463002 .anchor}§§ \_\_.12(k) & 563e.12(j) -- 3: [How should
an institution collect or report information on loans the proceeds of
which will be used for multiple purposes?]{.underline}

A3*.* If an institution makes a single loan or provides a line of credit
to a customer to be used for both consumer and small business purposes,
consistent with the Call Report and TFR instructions, the institution
should determine the major (predominant) component of the loan or the
credit line and collect or report the entire loan or credit line in
accordance with the regulation's specifications for that loan type.

[§§ \_\_.12(m) & 563e.12(l) Home mortgage loan]{.underline}

[]{#_Hlk468463086 .anchor}§§ \_\_.12(m) & 563e.12(l) -- 1: [Does the
term "home mortgage loan" include loans other than "home purchase
loans"?]{.underline}

A1. Yes. "Home mortgage loan" includes a "home improvement loan" as well
as a "home purchase loan," as both terms are defined in the HMDA
regulation, Regulation C, 12 CFR part 203. This definition also includes
multifamily (five-or-more families) dwelling loans, loans for the
purchase of manufactured homes, and refinancings of home improvement and
home purchase loans.

[]{#_Hlk468463155 .anchor}§§ \_\_.12(m) & 563e.12(l) -- 2: [Some
financial institutions broker home mortgage loans. They typically take
the borrower's application and perform other settlement activities;
however, they do not make the credit decision. The broker institutions
may also initially fund these mortgage loans, then immediately assign
them to another lender. Because the broker institution does not make the
credit decision, under Regulation C (HMDA), they do not record the loans
on their HMDA-LARs, even if they fund the loans. May an institution
receive any consideration under CRA for its home mortgage loan brokerage
activities?]{.underline}

A2. Yes. A financial institution that funds home mortgage loans but
immediately assigns the loans to the lender that made the credit
decisions may present information about these loans to examiners for
consideration under the lending test as "other loan data." Under
Regulation C, the broker institution does not record the loans on its
HMDA-LAR because it does not make the credit decisions, even if it funds
the loans. An institution electing to have these home mortgage loans
considered must maintain information about all of the home mortgage
loans that it has funded in this way. Examiners will consider this other
loan data using the same criteria by which home mortgage loans
originated or purchased by an institution are evaluated.

Institutions that do not provide funding but merely take applications
and provide settlement services for another lender that makes the credit
decisions will receive consideration for this service as a retail
banking service. Examiners will consider an institution's mortgage
brokerage services when evaluating the range of services provided to
low-, moderate-, middle- and upper-income geographies and the degree to
which the services are tailored to meet the needs of those geographies.
Alternatively, an institution's mortgage brokerage service may be
considered a community development service if the primary purpose of the
service is community development. An institution wishing to have its
mortgage brokerage service considered as a community development service
must provide sufficient information to substantiate that its primary
purpose is community development and to establish the extent of the
services provided.

[§§ \_\_.12(n) & 563e.12(m) Income level]{.underline}

[]{#_Hlk468463238 .anchor}§§ \_\_.12(n) & 563e.12(m) -- 1: [Where do
institutions find income level data for geographies and
individuals?]{.underline}

A1. The income levels for geographies, i.e., census tracts and block
numbering areas, are derived from Census Bureau information and are
updated every ten years. Institutions may contact their regional Census
Bureau office or the Census Bureau's Income Statistics Office at (301)
763-8576 to obtain income levels for geographies. [See]{.underline}
Appendix A of these Interagency Questions and Answers for a list of the
regional Census Bureau offices. The income levels for individuals are
derived from information calculated by the Department of Housing and
Urban Development (HUD) and updated annually. Institutions may contact
HUD at (800) 245-2691 to request a copy of "FY \[year number, e.g.,
1996\] Median Family Incomes for States and their Metropolitan and
Nonmetropolitan Portions."

Alternatively, institutions may obtain a list of the 1990 Census
Bureau-calculated and the annually updated HUD median family incomes for
metropolitan statistical areas (MSAs) and statewide nonmetropolitan
areas by calling the Federal Financial Institution Examination Council's
(FFIEC's) HMDA Help Line at (202) 452-2016. A free copy will be faxed to
the caller through the "fax-back" system. Institutions may also call
this number to have "faxed-back" an order form, from which they may
order a list providing the median family income level, as a percentage
of the appropriate MSA or nonmetropolitan median family income, of every
census tract and block numbering area (BNA). This list costs \$50.
Institutions may also obtain the list of MSA and statewide
nonmetropolitan area median family incomes or an order form through the
FFIEC's home page on the Internet at \<http://www.ffiec.gov\>.

[§§ \_\_.12(o) & 563e.12(n) Limited purpose institution]{.underline}

[]{#_Hlk468463305 .anchor}§§ \_\_.12(o) & 563e.12(n) -- 1: [What
constitutes a "narrow product line" in the definition of "limited
purpose institution"?]{.underline}

A1. An institution offers a narrow product line by limiting its lending
activities to a product line other than a traditional retail product
line required to be evaluated under the lending test (i.e., home
mortgage, small business, and small farm loans). Thus, an institution
engaged only in making credit card or motor vehicle loans offers a
narrow product line, while an institution limiting its lending
activities to home mortgages is not offering a narrow product line.

[]{#_Hlk468463365 .anchor}§§ \_\_.12(o) & 563e.12(n) -- 2: [What factors
will the agencies consider to determine whether an institution that, if
limited purpose, makes loans outside a narrow product line, or, if
wholesale, engages in retail lending, will lose its limited purpose or
wholesale designation because of too much other lending?]{.underline}

A2. Wholesale institutions may engage in some retail lending without
losing their designation if this activity is incidental and done on an
accommodation basis. Similarly, limited purpose institutions continue to
meet the narrow product line requirement if they provide other types of
loans on an infrequent basis. In reviewing other lending activities by
these institutions, the agencies will consider the following factors:

• Is the other lending provided as an incident to the institution's
wholesale lending?

• Are the loans provided as an accommodation to the institution's
wholesale customers?

• Are the loans made only infrequently to the limited purpose
institution's customers?

• Does only an insignificant portion of the institution's total assets
and income result from the other lending?

• How significant a role does the institution play in providing that
type(s) of loan(s) in the institution's assessment area(s)?

• Does the institution hold itself out as offering that type(s) of
loan(s)?

• Does the lending test or the community development test present a more
accurate picture of the institution's CRA performance?

[]{#_Hlk468463443 .anchor}§§ \_\_.12(o) & 563e.12(n) -- 3: [Do "niche
institutions" qualify as limited purpose (or wholesale)
institutions?]{.underline}

A3. Generally, no. Institutions that are in the business of lending to
the public, but specialize in certain types of retail loans (for
example, home mortgage or small business loans) to certain types of
borrowers (for example, to high-end income level customers or to
corporations or partnerships of licensed professional practitioners)
("niche institutions") generally would not qualify as limited purpose
(or wholesale) institutions.

[§§ \_\_.12(s) & 563e.12(r) Qualified investment]{.underline}

[]{#_Hlk468463503 .anchor}§§ \_\_.12(s) & 563e.12(r) -- 1: [Does the CRA
regulation provide authority for institutions to make
investments?]{.underline}

A1. No. The CRA regulation does not provide authority for institutions
to make investments that are not otherwise allowed by Federal law.

[]{#_Hlk468463567 .anchor}§§ \_\_.12(s) & 563e.12(r) -- 2: [Are
mortgage-backed securities or municipal bonds "qualified
investments"?]{.underline}

A2. As a general rule, mortgage-backed securities and municipal bonds
are not qualified investments because they do not have as their primary
purpose community development, as defined in the CRA regulations.
Nonetheless, mortgage-backed securities or municipal bonds designed
primarily to finance community development generally are qualified
investments. Municipal bonds or other securities with a primary purpose
of community development need not be housing-related. For example, a
bond to fund a community facility or park or to provide sewage services
as part of a plan to redevelop a low-income neighborhood is a qualified
investment. Housing-related bonds or securities must primarily address
affordable housing (including multifamily rental housing) needs in order
to qualify. [See also]{.underline} § \_\_.23(b) -- 2.

[]{#_Hlk468463640 .anchor}§§ \_\_.12(s) & 563e.12(r) -- 3: [Are Federal
Home Loan Bank stocks and membership reserves with the Federal Reserve
Banks "qualified investments"?]{.underline}

A3. No. Federal Home Loan Bank (FHLB) stock and membership reserves with
the Federal Reserve Banks do not have a sufficient connection to
community development to be qualified investments. However, FHLB member
institutions may receive CRA consideration for technical assistance they
provide on behalf of applicants and recipients of funding from the
FHLB's Affordable Housing Program. [See]{.underline} §§ \_\_.12(j) &
563e.12(i) -- 3.

[]{#_Hlk468463742 .anchor}§§ \_\_.12(s) & 563e.12(r) -- 4: [What are
examples of qualified investments?]{.underline}

A4. Examples of qualified investments include, but are not limited to,
investments, grants, deposits or shares in or to:

• Financial intermediaries (including, Community Development Financial
Institutions (CDFIs), Community Development Corporations (CDCs),
minority- and women-owned financial institutions, community loan funds,
and low-income or community development credit unions) that primarily
lend or facilitate lending in low- and moderate-income areas or to low-
and moderate-income individuals in order to promote community
development, such as a CDFI that promotes economic development on an
Indian reservation;

• Organizations engaged in affordable housing rehabilitation and
construction, including multifamily rental housing;

• Organizations, including, for example, Small Business Investment
Companies (SBICs) and specialized SBICs, that promote economic
development by financing small businesses;

• Facilities that promote community development in low- and
moderate-income areas for low- and moderate-income individuals, such as
youth programs, homeless centers, soup kitchens, health care facilities,
battered women's centers, and alcohol and drug recovery centers;

• Projects eligible for low-income housing tax credits;

• State and municipal obligations, such as revenue bonds, that
specifically support affordable housing or other community development;

• Not-for-profit organizations serving low- and moderate-income housing
or other community development needs, such as counseling for credit,
home-ownership, home maintenance, and other financial services
education; and

• Organizations supporting activities essential to the capacity of low-
and moderate-income individuals or geographies to utilize credit or to
sustain economic development, such as, for example, day care operations
and job training programs that enable people to work.

[]{#_Hlk468463813 .anchor}§§ \_\_.12(s) & 563e.12(r) -- 5: [Will an
institution receive consideration for charitable contributions as
"qualified investments"?]{.underline}

A5. Yes, provided they have as their primary purpose community
development as defined in the regulations. A charitable contribution,
whether in cash or an in-kind contribution of property, is included in
the term "grant." A qualified investment is not disqualified because an
institution receives favorable treatment for it (for example, as a tax
deduction or credit) under the Internal Revenue Code.

[]{#_Hlk468463891 .anchor}§§ \_\_.12(s) & 563e.12(r) -- 6: [An
institution makes or participates in a community development loan. The
institution provided the loan at below-market interest rates or "bought
down" the interest rate to the borrower. Is the lost income resulting
from the lower interest rate or buy-down a qualified
investment?]{.underline}

A6. No. The agencies will, however, consider the innovativeness and
complexity of the community development loan within the bounds of safe
and sound banking practices.

[]{#_Hlk468463947 .anchor}§§ \_\_.12(s) & 563e.12(r) -- 7: [Will the
agencies consider as a qualified investment the wages or other
compensation of an employee or director who provides assistance to a
community development organization on behalf of the
institution?]{.underline}

A7. No. However, the agencies will consider donated labor of employees
or directors of a financial institution in the service test if the
activity is a community development service.

[§§ \_\_.12(t) & 563e.12(s) Small institution]{.underline}

[]{#_Hlk468464001 .anchor}§§ \_\_.12(t) & 563e.12(s) -- 1: [How are the
"total bank and thrift assets" of a holding company
determined?]{.underline}

A1. "Total banking and thrift assets" of a holding company are
determined by combining the total assets of all banks and/or thrifts
that are majority-owned by the holding company. An institution is
majority-owned if the holding company directly or indirectly owns more
than 50 percent of its outstanding voting stock.

[]{#_Hlk468464070 .anchor}§§ \_\_.12(t) & 563e.12(s) -- 2: [How are
Federal and State branch assets of a foreign bank calculated for
purposes of the CRA?]{.underline}

A2. A Federal or State branch of a foreign bank is considered a small
institution if the Federal or State branch has less than \$250 million
in assets and the total assets of the foreign bank's or its holding
company's U.S. bank and thrift subsidiaries that are subject to the CRA
are less than \$1 billion. This calculation includes not only
FDIC-insured bank and thrift subsidiaries, but also the assets of any
FDIC-insured branch of the foreign bank and the assets of any uninsured
Federal or State branch (other than a limited branch or a Federal
agency) of the foreign bank 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)).

[§§ \_\_.12(u) & 563e.12(t) Small business loan]{.underline}

[]{#_Hlk468464142 .anchor}§§ \_\_.12(u) & 563e.12(t) -- 1: [Are loans to
nonprofit organizations considered small business loans or are they
considered community development loans?]{.underline}

A1. To be considered a small business loan, a loan must meet the
definition of "loan to small business" in the instructions in the
"Consolidated Reports of Conditions and Income" (Call Report) and
"Thrift Financial Reports" (TFR). In general, a loan to a nonprofit
organization, for business or farm purposes, where the loan is secured
by nonfarm nonresidential property and the original amount of the loan
is \$1 million or less, if a business loan, or \$500,000 or less, if a
farm loan, would be reported in the Call Report and TFR as a small
business or small farm loan. If a loan to a nonprofit organization is
reportable as a small business or small farm loan, it cannot also be
considered as a community development loan, except by a wholesale or
limited purpose institution. Loans to nonprofit organizations that are
not small business or small farm loans for Call Report and TFR purposes
may be considered as community development loans if they meet the
regulatory definition.

[]{#_Hlk468464223 .anchor}§§ \_\_.12(u) & 563e.12(t) -- 2: [Are loans
secured by commercial real estate considered small business
loans?]{.underline}

A2. Yes, depending on their principal amount. Small business loans
include loans secured by "nonfarm nonresidential properties," as defined
in the Call Report and TFR, in amounts less than \$1 million.

[]{#_Hlk468464285 .anchor}§§ \_\_.12(u) & 563e.12(t) -- 3: [Are loans
secured by nonfarm residential real estate to finance small businesses
"small business loans"?]{.underline}

A3. []{#_Hlk468464344 .anchor}[Applicable to banks filing Call
Reports]{.underline}: Typically not. Loans secured by nonfarm
residential real estate that are used to finance small businesses are
not included as "small business" loans for Call Report purposes unless
the security interest in the nonfarm residential real estate is taken
only as an abundance of caution. ([See]{.underline} Call Report Glossary
definition of "Loan Secured by Real Estate.") The agencies recognize
that many small businesses are financed by loans that would not have
been made or would have been made on less favorable terms had they not
been secured by residential real estate. If these loans promote
community development, as defined in the regulation, they may be
considered as community development loans. Otherwise, at an
institution's option, the institution may collect and maintain data
separately concerning these loans and request that the data be
considered in its CRA evaluation as "Other Secured Lines/Loans for
Purposes of Small Business."

[Applicable to institutions that file TFRs]{.underline}*:* Possibly,
depending how the loan is classified for TFR purposes. Loans secured by
nonfarm residential real estate to finance small businesses may be
included as small business loans only if they are reported on the TFR as
nonmortgage, commercial loans. ([See]{.underline} TFR Q&A No. 62.)
Otherwise, loans that meet the definition of mortgage loans, for TFR
reporting purposes, may be classified as mortgage loans.

§§ \_\_.12(u) & 563e.12(t) -- 4: [Are credit cards issued to small
businesses considered "small business loans"?]{.underline}

A4. Credit cards issued to a small business or to individuals to be
used, with the institution's knowledge, as business accounts are small
business loans if they meet the definitional requirements in the Call
Report or TFR instructions.

[§§ \_\_.12(w) & 563e.12(v) Wholesale institution]{.underline}

[]{#_Hlk468464414 .anchor}§§ \_\_.12(w) & 563e.12(v) -- 1: [What factors
will the agencies consider in determining whether an institution is in
the business of extending home mortgage, small business, small farm, or
consumer loans to retail customers?]{.underline}

A1. The agencies will consider whether:

• The institution holds itself out to the retail public as providing
such loans; and

• The institution's revenues from extending such loans are significant
when compared to its overall operations.

A wholesale institution may make some retail loans without losing its
wholesale designation as described above in §§ \_\_.12(o) & 563e.12(n)
-- 2.

**§ \_\_.21\--Performance tests, standards, and ratings, in general**

[§ \_\_.21(a) Performance tests and standards]{.underline}

[]{#_Hlk468464486 .anchor}§ \_\_.21(a) -- 1: [Are all community
development activities weighted equally by examiners?]{.underline}

A1. No. Examiners will consider the responsiveness to credit and
community development needs, as well as the innovativeness and
complexity of an institution's community development lending, qualified
investments, and community development services. These criteria include
consideration of the degree to which they serve as a catalyst for other
community development activities. The criteria are designed to add a
qualitative element to the evaluation of an institution's performance.

[§ \_\_.21(b) Performance context]{.underline}

[]{#_Hlk468585194 .anchor}§ \_\_.21(b) -- 1: [Is the performance context
essentially the same as the former regulation's needs
assessment?]{.underline}

A1. No. The performance context is a broad range of economic,
demographic, and institution- and community-specific information that an
examiner reviews to understand the context in which an institution's
record of performance should be evaluated. The agencies will provide
examiners with much of this information prior to the examination. The
performance context is not a formal or written assessment of community
credit needs.

> [§ \_\_.21(b)(2) Information maintained by the institution or obtained
> from community contacts]{.underline}

[]{#_Hlk468585263 .anchor}§ \_\_.21(b)(2) -- 1: [Will examiners consider
performance context information provided by institutions?]{.underline}

A1. Yes. An institution may provide examiners with any information it
deems relevant, including information on the lending, investment, and
service opportunities in its assessment area(s). This information may
include data on the business opportunities addressed by lenders not
subject to the CRA. Institutions are not required, however, to prepare a
needs assessment. If an institution provides information to examiners,
the agencies will not expect information other than what the institution
normally would develop to prepare a business plan or to identify
potential markets and customers, including low- and moderate-income
persons and geographies in its assessment area(s). The agencies will not
evaluate an institution's efforts to ascertain community credit needs or
rate an institution on the quality of any information it provides.

[]{#_Hlk468585374 .anchor}§ \_\_.21(b)(2) -- 2: [Will examiners conduct
community contact interviews as part of the examination
process?]{.underline}

A2. Yes. Examiners will consider information obtained from interviews
with local community, civic, and government leaders. These interviews
provide examiners with knowledge regarding the local community, its
economic base, and community development initiatives. To ensure that
information from local leaders is considered -- particularly in areas
where the number of potential contacts may be limited -- examiners may
use information obtained through an interview with a single community
contact for examinations of more than one institution in a given market.
In addition, the agencies will consider information obtained from
interviews conducted by other agency staff and by the other agencies. In
order to augment contacts previously used by the agencies and foster a
wider array of contacts, the agencies will share community contact
information.

[§ \_\_.21(b)(4) Institutional capacity and constraints]{.underline}

[]{#_Hlk468585451 .anchor}§ \_\_.21(b)(4) -- 1: [Will examiners consider
factors outside of an institution's control that prevent it from
engaging in certain activities?]{.underline}

A1. Yes. Examiners will take into account statutory and supervisory
limitations on an institution's ability to engage in any lending,
investment, and service activities. For example, a savings association
that has made few or no qualified investments due to its limited
investment authority may still receive a low satisfactory rating under
the investment test if it has a strong lending record.

> [§ \_\_.21(b)(5) Institution's past performance and the performance of
> similarly situated lenders]{.underline}

[]{#_Hlk468585530 .anchor}§ \_\_.21(b)(5) -- 1: [Can an institution's
assigned rating be adversely affected by poor past
performance?]{.underline}

A1. Yes. The agencies will consider an institution's past performance in
its overall evaluation. For example, an institution that received a
rating of "needs to improve" in the past may receive a rating of
"substantial noncompliance" if its performance has not improved.

[]{#_Hlk468585794 .anchor}§ \_\_.21(b)(5) -- 2: [How will examiners
consider the performance of similarly situated lenders?]{.underline}

A2. The performance context section of the regulation permits the
performance of similarly situated lenders to be considered, for example,
as one of a number of considerations in evaluating the geographic
distribution of an institution's loans to low-, moderate-, middle-, and
upper-income geographies. This analysis, as well as other analyses, may
be used, for example, where groups of contiguous geographies within an
institution's assessment area(s) exhibit abnormally low penetration. In
this regard, the performance of similarly situated lenders may be
analyzed if such an analysis would provide accurate insight into the
institution's lack of performance in those areas. The regulation does
not require the use of a specific type of analysis under these
circumstances. Moreover, no ratio developed from any type of analysis is
linked to any lending test rating.

**§ \_\_.22\--Lending test**

[§ \_\_.22(a) Scope of test]{.underline}

[]{#_Hlk511463122 .anchor}§ \_\_.22(a) -- 1: [Are there any types of
lending activities that help meet the credit needs of an institution's
assessment area(s) and that may warrant favorable consideration as
activities that are responsive to the needs of the institution's
assessment area(s)?]{.underline}

A1. Credit needs vary from community to community. However, there are
some lending activities that are likely to be responsive in helping to
meet the credit needs of many communities. These activities include:

-   Providing loan programs that include a financial education component
    about how to avoid lending activities that may be abusive or
    otherwise unsuitable;

-   Establishing loan programs that provide small, unsecured consumer
    loans in a safe and sound manner (i.e., based on the borrower's
    ability to repay) and with reasonable terms;

-   Offering lending programs, which feature reporting to consumer
    reporting agencies, that transition borrowers from loans with higher
    interest rates and fees (based on credit risk) to lower-cost loans,
    consistent with safe and sound lending practices. Reporting to
    consumer reporting agencies allows borrowers accessing these
    programs the opportunity to improve their credit histories and
    thereby improve their access to competitive credit products.

Examiners may consider favorably such lending activities, which have
features augmenting the success and effectiveness of the institution's
lending programs.

[§ \_\_.22(a)(1) Types of loans considered]{.underline}

[]{#_Hlk468586704 .anchor}§ \_\_.22(a)(1) -- 1: [If a large retail
institution is not required to collect and report home mortgage data
under the HMDA, will the agencies still evaluate the institution's home
mortgage lending performance?]{.underline}

A1. Yes. The agencies will sample the institution's home mortgage loan
files in order to assess its performance under the lending test
criteria.

[]{#_Hlk468586764 .anchor}§ \_\_.22(a)(1) -- 2: [When will examiners
consider consumer loans as part of an institution's CRA
evaluation?]{.underline}

A2. Consumer loans will be evaluated if the institution so elects; and
an institution that elects not to have its consumer loans evaluated will
not be viewed less favorably by examiners than one that does. However,
if consumer loans constitute a substantial majority of the institution's
business, the agencies will evaluate them even if the institution does
not so elect. The agencies interpret "substantial majority" to be so
significant a portion of the institution's lending activity by number or
dollar volume of loans that the lending test evaluation would not
meaningfully reflect its lending performance if consumer loans were
excluded.

[§ \_\_.22(a)(2) Loan originations and purchases/other loan
data]{.underline}

[]{#_Hlk468586845 .anchor}§ \_\_.22(a)(2) -- 1: [How are lending
commitments (such as letters of credit) evaluated under the
regulation?]{.underline}

A1. The agencies consider lending commitments (such as letters of
credit) only at the option of the institution. Commitments must be
legally binding between an institution and a borrower in order to be
considered. Information about lending commitments will be used by
examiners to enhance their understanding of an institution's
performance.

[]{#_Hlk468586962 .anchor}§ \_\_.22(a)(2) -- 2: [Will examiners review
application data as part of the lending test?]{.underline}

A2. Application activity is not a performance criterion of the lending
test. However, examiners may consider this information in the
performance context analysis because this information may give examiners
insight on, for example, the demand for loans.

[]{#_Hlk468587508 .anchor}§ \_\_.22(a)(2) -- 3: [May a financial
institution receive consideration under CRA for home mortgage loan
modification, extension, and consolidation agreements (MECAs), in which
it obtains home mortgage loans from other institutions without actually
purchasing or refinancing the home mortgage loans, as those terms have
been interpreted under CRA and HMDA, as implemented by 12 CFR pt.
203?]{.underline}

A3. Yes. In some states, MECAs, which are not considered loan
refinancings because the existing loan obligations are not satisfied and
replaced, are common. Although these transactions are not considered to
be purchases or refinancings, as those terms have been interpreted under
CRA, they do achieve the same results. An institution may present
information about its MECA activities with respect to home mortgages to
examiners for consideration under the lending test as "other loan data."

[]{#_Hlk468587551 .anchor}§ \_\_.22(a)(2) -- 4: [Do institutions receive
consideration for originating or purchasing loans that are fully
guaranteed?]{.underline}

A4. Yes. The lending test evaluates an institution's record of helping
to meet the credit needs of its assessment area(s) through the
origination or purchase of specified types of loans. The test does not
take into account whether or not such loans are guaranteed.

[§ \_\_.22(b) Performance criteria]{.underline}

[]{#_Hlk468589388 .anchor}§ \_\_.22(b) -- 1: [How will examiners apply
the performance criteria in the lending test?]{.underline}

A1. Examiners will apply the performance criteria reasonably and fairly,
in accord with the regulations, the examination procedures, and this
Guidance. In doing so, examiners will disregard efforts by an
institution to manipulate business operations or present information in
an artificial light that does not accurately reflect an institution's
overall record of lending performance.

[§ \_\_.22(b)(1) Lending activity]{.underline}

[]{#_Hlk468589462 .anchor}§ \_\_.22(b)(1) -- 1: [How will the agencies
apply the lending activity criterion to discourage an institution from
originating loans that are viewed favorably under CRA in the institution
itself and referring other loans, which are not viewed as favorably, for
origination by an affiliate?]{.underline}

A1. Examiners will review closely institutions with (1) a small number
and amount of home mortgage loans with an unusually good distribution
among low- and moderate-income areas and low- and moderate-income
borrowers and (2) a policy of referring most, but not all, of their home
mortgage loans to affiliated institutions. If an institution is making
loans mostly to low- and moderate-income individuals and areas and
referring the rest of the loan applicants to an affiliate for the
purpose of receiving a favorable CRA rating, examiners may conclude that
the institution's lending activity is not satisfactory because it has
inappropriately attempted to influence the rating. In evaluating an
institution's lending, examiners will consider legitimate business
reasons for the allocation of the lending activity.

[§ \_\_.22(b)(2) & (3) Geographic distribution and borrower
characteristics]{.underline}

[]{#_Hlk468589667 .anchor}§ \_\_.22(b)(2) & (3) -- 1: [How do the
geographic distribution of loans and the distribution of lending by
borrower characteristics interact in the lending test?]{.underline}

A1. Examiners generally will consider both the distribution of an
institution's loans among geographies of different income levels and
among borrowers of different income levels and businesses of different
sizes. The importance of the borrower distribution criterion,
particularly in relation to the geographic distribution criterion, will
depend on the performance context. For example, distribution among
borrowers with different income levels may be more important in areas
without identifiable geographies of different income categories. On the
other hand, geographic distribution may be more important in areas with
the full range of geographies of different income categories.

[]{#_Hlk468589758 .anchor}§ \_\_.22(b)(2) & (3) -- 2: [Must an
institution lend to all portions of its assessment area?]{.underline}

A2. The term "assessment area" describes the geographic area within
which the agencies assess how well an institution has met the specific
performance tests and standards in the rule. The agencies do not expect
that simply because a census tract or block numbering area is within an
institution's assessment area(s) the institution must lend to that
census tract or block numbering area. Rather the agencies will be
concerned with conspicuous gaps in loan distribution that are not
explained by the performance context. Similarly, if an institution
delineated the entire county in which it is located as its assessment
area, but could have delineated its assessment area as only a portion of
the county, it will not be penalized for lending only in that portion of
the county, so long as that portion does not reflect illegal
discrimination or arbitrarily exclude low- or moderate-income
geographies. The capacity and constraints of an institution, its
business decisions about how it can best help to meet the needs of its
assessment area(s), including those of low- and moderate-income
neighborhoods, and other aspects of the performance context, are all
relevant to explain why the institution is serving or not serving
portions of its assessment area(s).

[]{#_Hlk468589854 .anchor}§ \_\_.22(b)(2) & (3) -- 3: [Will examiners
take into account loans made by affiliates when evaluating the
proportion of an institution's lending in its assessment
area(s)?]{.underline}

A3. Examiners will not take into account loans made by affiliates when
determining the proportion of an institution's lending in its assessment
area(s), even if the institution elects to have its affiliate lending
considered in the remainder of the lending test evaluation. However,
examiners may consider an institution's business strategy of conducting
lending through an affiliate in order to determine whether a low
proportion of lending in the assessment area(s) should adversely affect
the institution's lending test rating.

[]{#_Hlk468590126 .anchor}§ \_\_.22(b)(2) & (3) -- 4: [When will
examiners consider loans (other than community development loans) made
outside an institution's assessment area(s)?]{.underline}

A4. Consideration will be given for loans to low- and moderate-income
persons and small business and farm loans outside of an institution's
assessment area(s), provided the institution has adequately addressed
the needs of borrowers within its assessment area(s). The agencies will
apply this consideration not only to loans made by large retail
institutions being evaluated under the lending test, but also to loans
made by small institutions being evaluated under the small institution
performance standards. Loans to low- and moderate-income persons and
small businesses and farms outside of an institution's assessment
area(s), however, will not compensate for poor lending performance
within the institution's assessment area(s).

[]{#_Hlk468590206 .anchor}§ \_\_.22(b)(2) & (3) -- 5: [Under the lending
test, how will examiners evaluate home mortgage loans to middle- or
upper-income individuals in a low- or moderate-income
geography?]{.underline}

A5. Examiners will consider these home mortgage loans under the
performance criteria of the lending test, i.e., by number and amount of
home mortgage loans, whether they are inside or outside the financial
institution's assessment area(s), their geographic distribution, and the
income levels of the borrowers. Examiners will use information regarding
the financial institution's performance context to determine how to
evaluate the loans under these performance criteria. Depending on the
performance context, examiners could view home mortgage loans to
middle-income individuals in a low-income geography very differently.
For example, if the loans are for homes or multifamily housing located
in an area for which the local, state, tribal, or Federal government or
a community-based development organization has developed a
revitalization or stabilization plan (such as a Federal enterprise
community or empowerment zone) that includes attracting mixed-income
residents to establish a stabilized, economically diverse neighborhood,
examiners may give more consideration to such loans, which may be viewed
as serving the low- or moderate-income community's needs as well as
serving those of the middle- or upper-income borrowers. If, on the other
hand, no such plan exists and there is no other evidence of governmental
support for a revitalization or stabilization project in the area and
the loans to middle- or upper-income borrowers significantly
disadvantage or primarily have the effect of displacing low- or
moderate-income residents, examiners may view these loans simply as home
mortgage loans to middle- or upper-income borrowers who happen to reside
in a low- or moderate-income geography and weigh them accordingly in
their evaluation of the institution.

[§ \_\_.22(b)(4) Community development lending]{.underline}

[]{#_Hlk468590338 .anchor}§ \_\_.22(b)(4) -- 1: [When evaluating an
institution's record of community development lending, may an examiner
distinguish among community development loans on the basis of the actual
amount of the loan that advances the community development
purpose?]{.underline}

A1. Yes. When evaluating the institution's record of community
development lending under § \_\_.22(b)(4), it is appropriate to give
greater weight to the amount of the loan that is targeted to the
intended community development purpose. For example, consider two \$10
million projects (with a total of 100 units each) that have as their
express primary purpose affordable housing and are located in the same
community. One of these projects sets aside 40 percent of its units for
low-income residents and the other project allocates 65 percent of its
units for low-income residents. An institution would report both loans
as \$10 million community development loans under the § \_\_.42(b)(2)
aggregate reporting obligation. However, transaction complexity,
innovation and all other relevant considerations being equal, an
examiner should also take into account that the 65 percent project
provides more affordable housing for more people per dollar expended.

Under § \_\_.22(b)(4), the extent of CRA consideration an institution
receives for its community development loans should bear a direct
relation to the benefits received by the community and the innovation or
complexity of the loans required to accomplish the activity, not simply
to the dollar amount expended on a particular transaction. By applying
all lending test performance criteria, a community development loan of a
lower dollar amount could meet the credit needs of the institution's
community to a greater extent than a community development loan with a
higher dollar amount, but with less innovation, complexity, or impact on
the community.

[§ \_\_.22(b)(5) Innovative or flexible lending practices]{.underline}

[]{#_Hlk468590579 .anchor}§ \_\_.22(b)(5) -- 1: [What is the range of
practices that examiners may consider in evaluating the innovativeness
or flexibility of an institution's lending?]{.underline}

A1. In evaluating the innovativeness or flexibility of an institution's
lending practices (and the complexity and innovativeness of its
community development lending), examiners will not be limited to
reviewing the overall variety and specific terms and conditions of the
credit products themselves. In connection with the evaluation of an
institution's lending, examiners also may give consideration to related
innovations when they augment the success and effectiveness of the
institution's lending under its community development loan programs or,
more generally, its lending under its loan programs that address the
credit needs of low- and moderate-income geographies or individuals. For
example:

• In connection with a community development loan program, a bank may
establish a technical assistance program under which the bank, directly
or through third parties, provides affordable housing developers and
other loan recipients with financial consulting services. Such a
technical assistance program may, by itself, constitute a community
development service eligible for consideration under the service test of
the CRA regulations. In addition, the technical assistance may be
favorably considered as an innovation that augments the success and
effectiveness of the related community development loan program.

• In connection with a small business lending program in a low- or
moderate-income area and consistent with safe and sound lending
practices, a bank may implement a program under which, in addition to
providing financing, the bank also contracts with the small business
borrowers. Such a contracting arrangement would not, standing alone,
qualify for CRA consideration. However, it may be favorably considered
as an innovation that augments the loan program's success and
effectiveness, and improves the program's ability to serve community
development purposes by helping to promote economic development through
support of small business activities and revitalization or stabilization
of low- or moderate-income geographies.

[§ \_\_.22(c) Affiliate lending]{.underline}

> [§ \_\_.22(c)(1) In general]{.underline}

[]{#_Hlk468590773 .anchor}§ \_\_.22(c)(1) -- 1: [If an institution
elects to have loans by its affiliate(s) considered, may it elect to
have only certain categories of loans considered?]{.underline}

A1. Yes. An institution may elect to have only a particular category of
its affiliate's lending considered. The basic categories of loans are
home mortgage loans, small business loans, small farm loans, community
development loans, and the five categories of consumer loans (motor
vehicle loans, credit card loans, home equity loans, other secured
loans, and other unsecured loans).

> [§ \_\_.22(c)(2) Constraints on affiliate lending]{.underline}
>
> [§ \_\_.22(c)(2)(i) No affiliate may claim a loan origination or loan
> purchase if another institution claims the same loan origination or
> purchase]{.underline}

[]{#_Hlk468590967 .anchor}§ \_\_.22(c)(2)(i) -- 1: [How is this
constraint on affiliate lending applied?]{.underline}

A1. This constraint prohibits one affiliate from claiming a loan
origination or purchase claimed by another affiliate. However, an
institution can count as a purchase a loan originated by an affiliate
that the institution subsequently purchases, or count as an origination
a loan later sold to an affiliate, provided the same loans are not sold
several times to inflate their value for CRA purposes.

> [§ \_\_.22(c)(2)(ii) If an institution elects to have its supervisory
> agency consider loans within a particular lending category made by one
> or more of the institution's affiliates in a particular assessment
> area, the institution shall elect to have the agency consider all
> loans within that lending category in that particular assessment area
> made by all of the institution's affiliates]{.underline}

[]{#_Hlk468591014 .anchor}§ \_\_.22(c)(2)(ii) -- 1: [How is this
constraint on affiliate lending applied?]{.underline}

A1. This constraint prohibits "cherry-picking" affiliate loans within
any one category of loans. The constraint requires an institution that
elects to have a particular category of affiliate lending in a
particular assessment area considered to include all loans of that type
made by all of its affiliates in that particular assessment area. For
example, assume that an institution has one or more affiliates, such as
a mortgage bank that makes loans in the institution's assessment area.
If the institution elects to include the mortgage bank's home mortgage
loans, it must include all of mortgage bank's home mortgage loans made
in its assessment area. The institution cannot elect to include only
those low- and moderate-income home mortgage loans made by the mortgage
bank affiliate and not home mortgage loans to middle- and upper-income
individuals or areas.

[]{#_Hlk468594218 .anchor}§ \_\_.22(c)(2)(ii) -- 2: [How is this
constraint applied if an institution's affiliates are also insured
depository institutions subject to the CRA?]{.underline}

A2. Strict application of this constraint against "cherry-picking" to
loans of an affiliate that is also an insured depository institution
covered by the CRA would produce the anomalous result that the other
institution would, without its consent, not be able to count its own
loans. Because the agencies did not intend to deprive an institution
subject to the CRA of receiving consideration for its own lending, the
agencies read this constraint slightly differently in cases involving a
group of affiliated institutions, some of which are subject to the CRA
and share the same assessment area(s). In those circumstances, an
institution that elects to include all of its mortgage affiliate's home
mortgage loans in its assessment area would not automatically be
required to include all home mortgage loans in its assessment area of
another affiliate institution subject to the CRA. However, all loans of
a particular type made by any affiliate in the institution's assessment
area(s) must either be counted by the lending institution or by another
affiliate institution that is subject to the CRA. This reading reflects
the fact that a holding company may, for business reasons, choose to
transact different aspects of its business in different subsidiary
institutions. However, the method by which loans are allocated among the
institutions for CRA purposes must reflect actual business decisions
about the allocation of banking activities among the institutions and
should not be designed solely to enhance their CRA evaluations.

[§ \_\_.22(d) Lending by a consortium or a third party]{.underline}

[]{#_Hlk468594345 .anchor}§ \_\_.22(d) -- 1: [Will equity and
equity-type investments in a third party receive consideration under the
lending test?]{.underline}

A1. If an institution has made an equity or equity-type investment in a
third party, community development loans made by the third party may be
considered under the lending test. On the other hand, asset-backed and
debt securities that do not represent an equity-type interest in a third
party will not be considered under the lending test unless the
securities are booked by the purchasing institution as a loan. For
example, if an institution purchases stock in a community development
corporation ("CDC") that primarily lends in low- and moderate-income
areas or to low- and moderate-income individuals in order to promote
community development, the institution may claim a pro rata share of the
CDC's loans as community development loans. The institution's pro rata
share is based on its percentage of equity ownership in the CDC. §
\_\_.23(b) -- 1 provides information concerning consideration of an
equity or equity-type investment under the investment test and both the
lending and investment tests.

[]{#_Hlk468594471 .anchor}§ \_\_.22(d) -- 2: [How will examiners
evaluate loans made by consortia or third parties under the lending
test?]{.underline}

A2. Loans originated or purchased by consortia in which an institution
participates or by third parties in which an institution invests will
only be considered if they qualify as community development loans and
will only be considered under the community development criterion of the
lending test. However, loans originated directly on the books of an
institution or purchased by the institution are considered to have been
made or purchased directly by the institution, even if the institution
originated or purchased the loans as a result of its participation in a
loan consortium. These loans would be considered under all the lending
test criteria appropriate to them depending on the type of loan.

[]{#_Hlk468594666 .anchor}§ \_\_.22(d) -- 3: [In some circumstances, an
institution may invest in a third party, such as a community development
bank, that is also an insured depository institution and is thus subject
to CRA requirements. If the investing institution requests its
supervisory agency to consider its pro rata share of community
development loans made by the third party, as allowed under 12 CFR §
\_\_.22(d), may the third party also receive consideration for these
loans?]{.underline}

A3. Yes, as long as the financial institution and the third party are
not affiliates. The regulations state, at 12 CFR § \_\_.22(c)(2)(i),
that two affiliates may not both claim the same loan origination or loan
purchase. However, if the financial institution and the third party are
not affiliates, the third party may receive consideration for the
community development loans it originates, and the financial institution
that invested in the third party may also receive consideration for its
pro rata share of the same community development loans under 12 CFR §
\_\_.22(d).

**§ \_\_.23\--Investment test**

[§ \_\_.23(a) Scope of test]{.underline}

[]{#_Hlk468594818 .anchor}§ \_\_.23(a) -- 1: [May an institution receive
consideration under the CRA regulations if it invests indirectly through
a fund, the purpose of which is community development, as that is
defined in the CRA regulations?]{.underline}

A1: Yes, the direct or indirect nature of the qualified investment does
not affect whether an institution will receive consideration under the
CRA regulations because the regulations do not distinguish between
"direct" and "indirect" investments. Thus, an institution's investment
in an equity fund that, in turn, invests in projects that, for example,
provide affordable housing to low- and moderate-income individuals,
would receive consideration as a qualified investment under the CRA
regulations, provided the investment benefits one or more of the
institution's assessment area(s) or a broader statewide or regional
area(s) that includes one or more of the institution's assessment
area(s). Similarly, an institution may receive consideration for a
direct qualified investment in a nonprofit organization that, for
example, supports affordable housing for low- and moderate-income
individuals in the institution's assessment area(s) or a broader
statewide or regional area(s) that includes the institution's assessment
area(s).

[§ \_\_.23(b) Exclusion]{.underline}

[]{#_Hlk468595007 .anchor}§ \_\_.23(b) -- 1: [Even though the
regulations state that an activity that is considered under the lending
or service tests cannot also be considered under the investment test,
may parts of an activity be considered under one test and other parts be
considered under another test?]{.underline}

A1. Yes, in some instances the nature of an activity may make it
eligible for consideration under more than one of the performance tests.
For example, certain investments and related support provided by a large
retail institution to a CDC may be evaluated under the lending,
investment, and service tests. Under the service test, the institution
may receive consideration for any community development services that it
provides to the CDC, such as service by an executive of the institution
on the CDC's board of directors. If the institution makes an investment
in the CDC that the CDC uses to make community development loans, the
institution may receive consideration under the lending test for its
pro-rata share of community development loans made by the CDC.
Alternatively, the institution's investment may be considered under the
investment test, assuming it is a qualified investment. In addition, an
institution may elect to have a part of its investment considered under
the lending test and the remaining part considered under the investment
test. If the investing institution opts to have a portion of its
investment evaluated under the lending test by claiming a share of the
CDC's community development loans, the amount of investment considered
under the investment test will be offset by that portion. Thus, the
institution would only receive consideration under the investment test
for the amount of its investment multiplied by the percentage of the
CDC's assets that meet the definition of a qualified investment.

[]{#_Hlk468957884 .anchor}§ \_\_.23(b) -- 2: [If home mortgage loans to
low- and moderate-income borrowers have been considered under an
institution's lending test, may the institution that originated or
purchased them also receive consideration under the investment test if
it subsequently purchases mortgage-backed securities that are primarily
or exclusively backed by such loans?]{.underline}

A2. No. Because the institution received lending test consideration for
the loans that underlie the securities, the institution may not also
receive consideration under the investment test for its purchase of the
securities. Of course, an institution may receive investment test
consideration for purchases of mortgage-backed securities that are
backed by loans to low- and moderate-income individuals as long as the
securities are not backed primarily or exclusively by loans that the
same institution originated or purchased.

[§ \_\_.23(e) Performance criteria]{.underline}

[]{#_Hlk468595151 .anchor}§ \_\_.23(e) -- 1: [When applying the
performance criteria of § \_\_.23(e), may an examiner distinguish among
qualified investments based on how much of the investment actually
supports the underlying community development purpose?]{.underline}

A1. Yes. Although § \_\_.23(e)(1) speaks in terms of the dollar amount
of qualified investments, the criterion permits an examiner to weight
certain investments differently or to make other appropriate
distinctions when evaluating an institution's record of making qualified
investments. For instance, an examiner should take into account that a
targeted mortgage-backed security that qualifies as an affordable
housing issue that has only 60 percent of its face value supported by
loans to low- or moderate-income borrowers would not provide as much
affordable housing for low- and moderate-income individuals as a
targeted mortgage-backed security with 100 percent of its face value
supported by affordable housing loans to low- and moderate-income
borrowers. The examiner should describe any differential weighting (or
other adjustment), and its basis in the Public Evaluation. However, no
matter how a qualified investment is handled for purposes of §
\_\_.23(e)(1), it will also be evaluated with respect to the qualitative
performance criteria set forth in § \_\_.23(e)(2), (3) and (4) . By
applying all criteria, a qualified investment of a lower dollar amount
may be weighed more heavily under the Investment Test than a qualified
investment with a higher dollar amount, but with fewer qualitative
enhancements.

[]{#_Hlk468595432 .anchor}§ \_\_.23(e) -- 2: [How do examiners evaluate
an institution's qualified investment in a fund, the primary purpose of
which is community development, as that is defined in the CRA
regulations?]{.underline}

A2. When evaluating qualified investments that benefit an institution's
assessment area(s) or a broader statewide or regional area that includes
its assessment area(s), examiners will look at the following four
performance 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.

With respect to the first criterion, examiners will determine the dollar
amount of qualified investments by relying on the figures recorded by
the institution according to generally accepted accounting principles
(GAAP). Although institutions may exercise a range of investment
strategies, including short-term investments, long-term investments,
investments that are immediately funded, and investments with a binding,
up-front commitment that are funded over a period of time, institutions
making the same dollar amount of investments over the same number of
years, all other performance criteria being equal, would receive the
same level of consideration. Examiners will include both new and
outstanding investments in this determination. The dollar amount of
qualified investments also will include the dollar amount of legally
binding commitments recorded by the institution according to GAAP.

The extent to which qualified investments receive consideration,
however, depends on how examiners evaluate the investments under the
remaining three performance criteria \-- innovativeness and complexity,
responsiveness, and degree to which the investment is not routinely
provided by private investors. Examiners also will consider factors
relevant to the institution's CRA performance context, such as the
effect of outstanding long-term qualified investments, the pay-in
schedule, and the amount of any cash call, on the capacity of the
institution to make new investments.

**§ \_\_.24\--Service test**

[§ \_\_.24(d) Performance criteria -- retail banking
services]{.underline}

[]{#_Hlk468595785 .anchor}§ \_\_.24(d) -- 1: [How do examiners evaluate
the availability and effectiveness of an institution's systems for
delivering retail banking services?]{.underline}

A1. Convenient access to full service branches within a community is an
important factor in determining the availability of credit and
non-credit services. Therefore, the service test performance standards
place primary emphasis on full service branches while still considering
alternative systems, such as automated teller machines ("ATMs"). The
principal focus is on an institution's current distribution of branches;
therefore, an institution is not required to expand its branch network
or operate unprofitable branches. Under the service test, alternative
systems for delivering retail banking services, such as ATMs, are
considered only to the extent that they are effective alternatives in
providing needed services to low- and moderate-income areas and
individuals.

[]{#_Hlk468596673 .anchor}§ \_\_.24(d) -- 2: [How do examiners evaluate
an institution's activities in connection with Individual Development
Accounts (IDAs)?]{.underline}

A2. Although there is no standard IDA program, IDAs typically are
deposit accounts targeted to low- and moderate-income families that are
designed to help them accumulate savings for education or job-training,
down-payment and closing costs on a new home, or start-up capital for a
small business. Once participants have successfully funded an IDA, their
personal IDA savings are matched by a public or private entity.
Financial institution participation in IDA programs comes in a variety
of forms, including providing retail banking services to IDA account
holders, providing matching dollars or operating funds to an IDA
program, designing or implementing IDA programs, providing consumer
financial education to IDA account holders or prospective account
holders, or other means. The extent of financial institutions'
involvement in IDAs and the products and services they offer in
connection with the accounts will vary. Thus, subject to § \_\_.23(b),
examiners evaluate the actual services and products provided by an
institution in connection with IDA programs as one or more of the
following: community development services, retail banking services,
qualified investments, home mortgage loans, small business loans,
consumer loans, or community development loans.

> [§ \_\_.24(d)(3) Availability and effectiveness of alternative systems
> for delivering retail banking services]{.underline}

[]{#_Hlk468597137 .anchor}§ \_\_.24(d)(3) -- 1: [How will examiners
evaluate alternative systems for delivering retail banking
services?]{.underline}

A1. The regulation recognizes the multitude of ways in which an
institution can provide services, for example, ATMs, banking by
telephone or computer, and bank-by-mail programs. Delivery systems other
than branches will be considered under the regulation to the extent that
they are effective alternatives to branches in providing needed services
to low- and moderate-income areas and individuals. The list of systems
in the regulation is not intended to be inclusive.

[]{#_Hlk468597196 .anchor}§ \_\_.24(d)(3) -- 2: [Are debit cards
considered under the service test as an alternative delivery
system?]{.underline}

A2. By themselves, no. However, if debit cards are a part of a larger
combination of products, such as a comprehensive electronic banking
service, that allows an institution to deliver needed services to low-
and moderate-income areas and individuals in its community, the overall
delivery system that includes the debit card feature would be considered
an alternative delivery system.

[§ \_\_.24(e) Performance criteria -- community development
services]{.underline}

§ \_\_.24(e) -- 1: [Under what conditions may an institution receive
consideration for community development services offered by affiliates
or third parties?]{.underline}

A1. At an institution's option, the agencies will consider services
performed by an affiliate or by a third party on the institution's
behalf under the service test if the services provided enable the
institution to help meet the credit needs of its community. Indirect
services that enhance an institution's ability to deliver credit
products or deposit services within its community and that can be
quantified may be considered under the service test, if those services
have not been considered already under the lending or investment test
([see]{.underline} § \_\_.23(b) -- 1). For example, an institution that
contracts with a community organization to provide home ownership
counseling to low- and moderate-income home buyers as part of the
institution's mortgage program may receive consideration for that
indirect service under the service test. In contrast, donations to a
community organization that offers financial services to low- or
moderate-income individuals may be considered under the investment test,
but would not also be eligible for consideration under the service test.
Services performed by an affiliate will be treated the same as affiliate
loans and investments made in the institution's assessment area and may
be considered if the service is not claimed by any other institution.
[See]{.underline} §§ \_\_.22(c) and .23(c).

**§ \_\_.25 Community development test for wholesale or limited purpose
institutions**

[§ \_\_.25(a) Scope of test]{.underline}

[]{#_Hlk511463442 .anchor}§ \_\_.25(a) -- 1: [How can certain credit
card banks help to meet the credit needs of their communities without
losing their exemption from the definition of "bank" in the Bank Holding
Company Act (the BHCA), as amended by the Competitive Equality Banking
Act of 1987 (CEBA)?]{.underline}

A1. Although the BHCA restricts institutions known as CEBA credit card
banks to credit card operations, a CEBA credit card bank can engage in
community development activities without losing its exemption under the
BHCA. A CEBA credit card bank could provide community development
services and investments without engaging in operations other than
credit card operations. For example, the bank could provide credit card
counseling, or the financial expertise of its executives, free of
charge, to community development organizations. In addition, a CEBA
credit card bank could make qualified investments, as long as the
investments meet the guidelines for passive and noncontrolling
investments provided in the BHC Act and the Board\'s Regulation Y.
Finally, although a CEBA credit card bank cannot make any loans other
than credit card loans, under §  \_\_.25(d)(2) (community development
test -- indirect activities), the bank could elect to have part of its
qualified passive and noncontrolling investments in a third-party
lending consortium considered as community development lending, provided
that the consortium's loans otherwise meet the requirements for
community development lending. When assessing a CEBA credit card bank's
CRA performance under the community development test, examiners will
take into account the bank's performance context. In particular,
examiners will consider the legal constraints imposed by the BHCA on the
bank's activities, as part of the bank's performance context in
§ \_\_.21(b)(4).

[§ \_\_.25(d) Indirect activities]{.underline}

[]{#_Hlk468597373 .anchor}§ \_\_.25(d) -- 1: [How are investments in
third party community development organizations considered under the
community development test?]{.underline}

A1. Similar to the lending test for retail institutions, investments in
third party community development organizations may be considered as
qualified investments or as community development loans or both
(provided there is no double counting), at the institution's option, as
described above in the discussion regarding §§ \_\_.22(d) and
\_\_.23(b).

[§ \_\_.25(e) Benefit to assessment area(s)]{.underline}

[]{#_Hlk468597492 .anchor}§ \_\_.25(e) -- 1: [How do examiners evaluate
a wholesale or limited purpose institution's qualified investment in a
fund that invests in projects nationwide and which has a primary purpose
of community development, as that is defined in the
regulations?]{.underline}

A1. If examiners find that a wholesale or limited purpose institution
has adequately addressed the needs of its assessment area(s), they will
give consideration to qualified investments, as well as community
development loans and community development services, by that
institution nationwide. In determining whether an institution has
adequately addressed the needs of its assessment area(s), examiners will
consider qualified investments that benefit a broader statewide or
regional area that includes the institution's assessment area(s).

[§ \_\_.25(f) Community development performance rating]{.underline}

[]{#_Hlk468597745 .anchor}§ \_\_.25(f) -- 1: [Must a wholesale or
limited purpose institution engage in all three categories of community
development activities (lending, investment and service) to perform well
under the community development test?]{.underline}

A1. No, a wholesale or limited purpose institution may perform well
under the community development test by engaging in one or more of these
activities.

**§ \_\_.26\--Small institution performance standards**

[§ \_\_.26(a) Performance criteria]{.underline}

[]{#_Hlk468597830 .anchor}§ \_\_.26(a) -- 1: [May examiners consider,
under one or more of the performance criteria of the small institution
performance standards, lending-related activities, such as community
development loans and lending-related qualified investments, when
evaluating a small institution?]{.underline}

A1. Yes. Examiners can consider "lending-related activities," including
community development loans and lending-related qualified investments,
when evaluating the first four performance criteria of the small
institution performance test. Although lending-related activities are
specifically mentioned in the regulation in connection with only the
first three criteria (i.e., loan-to-deposit ratio, percentage of loans
in the institution's assessment area, and lending to borrowers of
different incomes and businesses of different sizes), examiners can also
consider these activities when they evaluate the fourth criteria --
geographic distribution of the institution's loans.

[]{#_Hlk468598135 .anchor}§ \_\_.26(a) -- 2: [What is meant by "as
appropriate" when referring to the fact that lending-related activities
will be considered, "as appropriate," under the various small
institution performance criteria?]{.underline}

A2. "As appropriate" means that lending-related activities will be
considered when it is necessary to determine whether an institution
meets or exceeds the standards for a satisfactory rating. Examiners will
also consider other lending-related activities at an institution's
request.

[]{#_Hlk468598366 .anchor}§ \_\_.26(a) -- 3: [When evaluating a small
institution's lending performance, will examiners consider, at the
institution's request, community development loans originated or
purchased by a consortium in which the institution participates or by a
third party in which the institution has invested?]{.underline}

A3. Yes. However, a small institution that elects to have examiners
consider community development loans originated or purchased by a
consortium or third party must maintain sufficient information on its
share of the community development loans so that the examiners may
evaluate these loans under the small institution performance criteria.

[]{#_Hlk468598474 .anchor}§ \_\_.26(a) -- 4: [Under the small
institution performance standards, will examiners consider both loan
originations and purchases?]{.underline}

A4. Yes, consistent with the other assessment methods in the regulation,
examiners will consider both loans originated and purchased by the
institution. Likewise, examiners may consider any other loan data the
small institution chooses to provide, including data on loans
outstanding, commitments and letters of credit.

[]{#_Hlk468598567 .anchor}§ \_\_.26(a) -- 5: [Under the small
institution performance standards, how will qualified investments be
considered for purposes of determining whether a small institution
receives a satisfactory CRA rating?]{.underline}

A5. The small institution performance standards focus on lending and
other lending-related activities. Therefore, examiners will consider
only lending-related qualified investments for the purposes of
determining whether the small institution receives a satisfactory CRA
rating.

[§ \_\_.26(a)(1) Loan-to-deposit ratio]{.underline}

[]{#_Hlk468598657 .anchor}§ \_\_.26(a)(1) -- 1: [How is the
loan-to-deposit ratio calculated?]{.underline}

A1. A small institution's loan-to-deposit ratio is calculated in the
same manner that the Uniform Bank Performance Report/Uniform Thrift
Performance Report (UBPR/UTPR) determines the ratio. It is calculated by
dividing the institution's net loans and leases by its total deposits.
The ratio is found in the Liquidity and Investment Portfolio section of
the UBPR and UTPR. Examiners will use this ratio to calculate an average
since the last examination by adding the quarterly loan-to-deposit
ratios and dividing the total by the number of quarters.

[]{#_Hlk468598703 .anchor}§ \_\_.26(a)(1) -- 2: [How is the
\"reasonableness" of a loan-to-deposit ratio evaluated?]{.underline}

A2. No specific ratio is reasonable in every circumstance, and each
small institution's ratio is evaluated in light of information from the
performance context, including the institution's capacity to lend,
demographic and economic factors present in the assessment area, and the
lending opportunities available in the assessment area(s). If a small
institution's loan-to-deposit ratio appears unreasonable after
considering this information, lending performance may still be
satisfactory under this criterion taking into consideration the number
and the dollar volume of loans sold to the secondary market or the
number and amount and innovativeness or complexity of community
development loans and lending-related qualified investments.

[]{#_Hlk468598749 .anchor}§ \_\_.26(a)(1) -- 3: [If an institution makes
a large number of loans off-shore, will examiners segregate the domestic
loan-to-deposit ratio from the foreign loan-to-deposit
ratio?]{.underline}

A3. No. Examiners will look at the institution's net loan-to-deposit
ratio for the whole institution, without any adjustments.

[§ \_\_.26(a)(2) Percentage of lending within assessment
area(s)]{.underline}

[]{#_Hlk468598845 .anchor}§ \_\_.26(a)(2) -- 1: [Must a small
institution have a majority of its lending in its assessment area(s) to
receive a satisfactory performance rating?]{.underline}

A1. No. The percentage of loans and, as appropriate, other
lending-related activities located in the bank's assessment area(s) is
but one of the performance criteria upon which small institutions are
evaluated. If the percentage of loans and other lending related
activities in an institution's assessment area(s) is less than a
majority, then the institution does not meet the standards for
satisfactory performance only under this criterion. The effect on the
overall performance rating of the institution, however, is considered in
light of the performance context, including information regarding
economic conditions, loan demand, the institution's size, financial
condition and business strategies, and branching network and other
aspects of the institution's lending record.

> [§ \_\_.26(a)(3) & (4) Distribution of lending within assessment
> area(s) by borrower income and geographic location]{.underline}

[]{#_Hlk468598939 .anchor}§ \_\_.26(a)(3) & (4) -- 1: [How will a small
institution's performance be assessed under these lending distribution
criteria?]{.underline}

A1. Distribution of loans, like other small institution performance
criteria, is considered in light of the performance context. For
example, a small institution is not required to lend evenly throughout
its assessment area(s) or in any particular geography. However, in order
to meet the standards for satisfactory performance under this criterion,
conspicuous gaps in a small institution's loan distribution must be
adequately explained by performance context factors such as lending
opportunities in the institution's assessment area(s), the institution's
product offerings and business strategy, and institutional capacity and
constraints. In addition, it may be impracticable to review the
geographic distribution of the lending of an institution with few
demographically distinct geographies within an assessment area. If
sufficient information on the income levels of individual borrowers or
the revenues or sizes of business borrowers is not available, examiners
may use proxies such as loan size for estimating borrower
characteristics, where appropriate.

[§ \_\_.26(b) Performance rating]{.underline}

[]{#_Hlk468599113 .anchor}§ \_\_.26(b) \-- 1: [How can a small
institution achieve an "outstanding" performance rating?]{.underline}

A1. A small institution that meets each of the standards for a
"satisfactory" rating and exceeds some or all of those standards may
warrant an "outstanding" performance rating. In assessing performance at
the "outstanding" level, the agencies consider the extent to which the
institution exceeds each of the performance standards and, at the
institution's option, its performance in making qualified investments
and providing services that enhance credit availability in its
assessment area(s). In some cases, a small institution may qualify for
an "outstanding" performance rating solely on the basis of its lending
activities, but only if its performance materially exceeds the standards
for a "satisfactory" rating, particularly with respect to the
penetration of borrowers at all income levels and the dispersion of
loans throughout the geographies in its assessment area(s) that display
income variation. An institution with a high loan-to-deposit ratio and a
high percentage of loans in its assessment area(s), but with only a
reasonable penetration of borrowers at all income levels or a reasonable
dispersion of loans throughout geographies of differing income levels in
its assessment area(s), generally will not be rated "outstanding" based
only on its lending performance. However, the institution's 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) may augment the institution's
satisfactory rating to the extent that it may be rated "outstanding."

[]{#_Hlk468599314 .anchor}§ \_\_.26(b) -- 2: [Will a small institution's
qualified investments, community development loans, and community
development services be considered if they do not directly benefit its
assessment area(s)?]{.underline}

A2. Yes. These activities are eligible for consideration if they benefit
a broader statewide or regional area that includes a small institution's
assessment area(s), as discussed more fully in §§ \_\_.12(i) &
563e.12(h) -- 6.

**§ \_\_.27\--Strategic plan**

[§ \_\_.27(c) Plans in general]{.underline}

[]{#_Hlk468608268 .anchor}§ \_\_.27(c) -- 1: [To what extent will the
agencies provide guidance to an institution during the development of
its strategic plan?]{.underline}

A1. An institution will have an opportunity to consult with and provide
information to the agencies on a proposed strategic plan. Through this
process, an institution is provided guidance on procedures and on the
information necessary to ensure a complete submission. For example, the
agencies will provide guidance on whether the level of detail as set out
in the proposed plan would be sufficient to permit agency evaluation of
the plan. However, the agencies' guidance during plan development and,
particularly, prior to the public comment period, will not include
commenting on the merits of a proposed strategic plan or on the adequacy
of measurable goals.

[]{#_Hlk468608312 .anchor}§ \_\_.27(c) -- 2: [How will a joint strategic
plan be reviewed if the affiliates have different primary Federal
supervisors?]{.underline}

A2. The agencies will coordinate review of and action on the joint plan.
Each agency will evaluate the measurable goals for those affiliates for
which it is the primary regulator.

[§ \_\_.27(f) Plan content]{.underline}

> [§ \_\_.27(f)(1) Measurable goals]{.underline}

[]{#_Hlk468608397 .anchor}§ \_\_.27(f)(1) -- 1: [How should "measurable
goals" be specified in a strategic plan?]{.underline}

A1. Measurable goals (e.g., number of loans, dollar amount, geographic
location of activity, and benefit to low- and moderate-income areas or
individuals) must be stated with sufficient specificity to permit the
public and the agencies to quantify what performance will be expected.
However, institutions are provided flexibility in specifying goals. For
example, an institution may provide ranges of lending amounts in
different categories of loans. Measurable goals may also be linked to
funding requirements of certain public programs or indexed to other
external factors as long as these mechanisms provide a quantifiable
standard.

[§ \_\_.27(g) Plan approval]{.underline}

> [§ \_\_.27(g)(2) Public participation]{.underline}

[]{#_Hlk468608484 .anchor}§ \_\_.27(g)(2) -- 1: [How will the public
receive notice of a proposed strategic plan?]{.underline}

A1. An institution submitting a strategic plan for approval by the
agencies is required to solicit public comment on the plan for a period
of thirty (30) days after publishing notice of the plan at least once in
a newspaper of general circulation. The notice should be sufficiently
prominent to attract public attention and should make clear that public
comment is desired. An institution may, in addition, provide notice to
the public in any other manner it chooses.

**§ \_\_.28\--Assigned ratings**

[]{#_Hlk468608791 .anchor}§ \_\_.28 -- 1: [Are innovative lending
practices, innovative or complex qualified investments, and innovative
community development services required for a "satisfactory" or
"outstanding" CRA rating?]{.underline}

A1. No. Moreover, the lack of innovative lending practices, innovative
or complex qualified investments, or innovative community development
services alone will not result in a "needs to improve" CRA rating.
However, the use of innovative lending practices, innovative or complex
qualified investments, and innovative community development services may
augment the consideration given to an institution's performance under
the quantitative criteria of the regulations, resulting in a higher
level of performance rating.

[]{#_Hlk468609617 .anchor}§ \_\_.28 -- 2: [How is performance under the
quantitative and qualitative performance criteria weighed when examiners
assign a CRA rating?]{.underline}

A2. The lending, investment, and service tests each contain a number of
performance criteria designed to measure whether an institution is
effectively helping to meet the credit needs of its entire community,
including low- and moderate-income neighborhoods, in a safe and sound
manner. Some of these performance criteria are quantitative, such as
number and amount, and others, such as the use of innovative or flexible
lending practices, the innovativeness or complexity of qualified
investments, and the innovativeness and responsiveness of community
development services, are qualitative. The performance criteria that
deal with these qualitative aspects of performance recognize that these
loans, qualified investments, and community development services
sometimes require special expertise and effort on the part of the
institution and provide a benefit to the community that would not
otherwise be possible. As such, the agencies consider the qualitative
aspects of an institution's activities when measuring the benefits
received by a community. An institution's performance under these
qualitative criteria may augment the consideration given to an
institution's performance under the quantitative criteria of the
regulations, resulting in a higher level of performance and rating.

[§ \_\_.28(a) Ratings in general]{.underline}

[]{#_Hlk468609686 .anchor}§ \_\_.28(a) -- 1: [How are institutions with
domestic branches in more than one state assigned a rating?]{.underline}

A1. The evaluation of an institution that maintains domestic branches in
more than one state ("multistate institution") will include a written
evaluation and rating of its CRA record of performance as a whole and in
each state in which it has a domestic branch. The written evaluation
will contain a separate presentation on a multistate institution's
performance for each metropolitan statistical area and the
nonmetropolitan area within each state, if it maintains one or more
domestic branch offices in these areas. This separate presentation will
contain conclusions, supported by facts and data, on performance under
the performance tests and standards in the regulation. The evaluation of
a multistate institution that maintains a domestic branch in two or more
states in a multistate metropolitan area will include a written
evaluation (containing the same information described above) and rating
of its CRA record of performance in the multistate metropolitan area. In
such cases, the statewide evaluation and rating will be adjusted to
reflect performance in the portion of the state not within the
multistate metropolitan statistical area.

[]{#_Hlk468609765 .anchor}§ \_\_.28(a) -- 2: [How are institutions that
operate within only a single state assigned a rating?]{.underline}

A2. An institution that operates within only a single state
("single-state institution") will be assigned a rating of its CRA record
based on its performance within that state. In assigning this rating,
the agencies will separately present a single-state institution's
performance for each metropolitan area in which the institution
maintains one or more domestic branch offices. This separate
presentation will contain conclusions, supported by facts and data, on
the single-state institution's performance under the performance tests
and standards in the regulation.

[]{#_Hlk468609835 .anchor}§ \_\_.28(a) -- 3: [How do the agencies weight
performance under the lending, investment and service test for large
retail institutions?]{.underline}

A3. A rating of "outstanding," "high satisfactory," "low satisfactory,"
"needs to improve," or "substantial noncompliance," based on a judgment
supported by facts and data, will be assigned under each performance
test. Points will then be assigned to each rating as described in the
first matrix set forth below. A large retail institution's overall
rating under the lending, investment and service tests will then be
calculated in accordance with the second matrix set forth below, which
incorporates the rating principles in the regulation.

**POINTS ASSIGNED FOR PERFORMANCE UNDER LENDING, INVESTMENT AND SERVICE
TESTS**

  ---------------------------------------------------------------------------
                               **Lending**    **Service**    **Investment**
  ---------------------------- -------------- -------------- ----------------
  Outstanding                  12             6              6

  High Satisfactory            9              4              4

  Low Satisfactory             6              3              3

  Needs to Improve             3              1              1

  Substantial Noncompliance    0              0              0
  ---------------------------------------------------------------------------

**COMPOSITE RATING POINT REQUIREMENTS**

**(Add points from three tests)**

  -----------------------------------------------------------------------
  **Rating**                          **Total Points**
  ----------------------------------- -----------------------------------
  Outstanding                         20 or over

  Satisfactory                        11 through 19

  Needs to Improve                    5 through 10

  Substantial Noncompliance           0 through 4
  -----------------------------------------------------------------------

**Note:** There is one exception to the Composite Rating matrix. An
institution may not receive a rating of "satisfactory" unless it
receives at least "low satisfactory" on the lending test. Therefore, the
total points are capped at three times the lending test score.

[§ \_\_.28(c) Effect of evidence of discriminatory or other illegal
credit practices]{.underline}

[]{#_Hlk511465425 .anchor}§ \_\_.28(c) -- 1: [What is meant by
"discriminatory or other illegal credit practices"?]{.underline}

A1. An institution engages in discriminatory credit practices if it
discourages or discriminates against credit applicants or borrowers on a
prohibited basis, in violation, for example, of the Fair Housing Act or
the Equal Credit Opportunity Act (as implemented by Regulation B).
Examples of other illegal credit practices inconsistent with helping to
meet community credit needs include violations of:

-   The Truth in Lending Act regarding rescission of certain mortgage
    transactions and regarding disclosures and certain loan term
    restrictions in connection with credit transactions that are subject
    to the Home Ownership and Equity Protection Act;

-   The Real Estate Settlement Procedures Act regarding the giving and
    accepting of referral fees, unearned fees or kickbacks in connection
    with certain mortgage transactions; and

-   The Federal Trade Commission Act regarding unfair or deceptive acts
    or practices.

Examiners will determine the effect of evidence of illegal credit
practices as set forth in examination procedures and § \_\_.28(c) of the
regulation.

Violations of other provisions of the consumer protection laws generally
will not adversely affect an institution's CRA rating, but may warrant
the inclusion of comments in an institution's performance evaluation.
These comments may address the institution's policies, procedures,
training programs, and internal assessment efforts.

**§ \_\_.29\--Effect of CRA performance on applications**

[§ \_\_.29(a) CRA performance]{.underline}

[]{#_Hlk468609981 .anchor}§ \_\_.29(a) -- 1: [What weight is given to an
institution's CRA performance examination in reviewing an
application?]{.underline}

A1. In cases in which CRA performance is a relevant factor, information
from a CRA performance examination of the institution is a particularly
important consideration in the applications process because it
represents a detailed evaluation of the institution's CRA performance by
its Federal supervisory agency. In this light, an examination is an
important, and often controlling, factor in the consideration of an
institution's record. In some cases, however, the examination may not be
recent or a specific issue raised in the application process, such as
progress in addressing weaknesses noted by examiners, progress in
implementing commitments previously made to the reviewing agency, or a
supported allegation from a commenter, is relevant to CRA performance
under the regulation and was not addressed in the examination. In these
circumstances, the applicant should present sufficient information to
supplement its record of performance and to respond to the substantive
issues raised in the application proceeding.

[]{#_Hlk468610039 .anchor}§ \_\_.29(a) -- 2: [What consideration is
given to an institution's commitments for future action in reviewing an
application by those agencies that consider such
commitments?]{.underline}

A2. Commitments for future action are not viewed as part of the CRA
record of performance. In general, institutions cannot use commitments
made in the applications process to overcome a seriously deficient
record of CRA performance. However, commitments for improvements in an
institution's performance may be appropriate to address specific
weaknesses in an otherwise satisfactory record or to address CRA
performance when a financially troubled institution is being acquired.

[§ \_\_.29(b) Interested parties]{.underline}

[]{#_Hlk468610094 .anchor}§ \_\_.29(b) -- 1: [What consideration is
given to comments from interested parties in reviewing an
application?]{.underline}

A1. Materials relating to CRA performance received during the
applications process can provide valuable information. Written comments,
which may express either support for or opposition to the application,
are made a part of the record in accordance with the agencies'
procedures, and are carefully considered in making the agencies'
decision. Comments should be supported by facts about the applicant's
performance and should be as specific as possible in explaining the
basis for supporting or opposing the application. These comments must be
submitted within the time limits provided under the agencies'
procedures.

[]{#_Hlk468612452 .anchor}§ \_\_.29(b) -- 2: [Is an institution required
to enter into agreements with private parties?]{.underline}

A2. No. Although communications between an institution and members of
its community may provide a valuable method for the institution to
assess how best to address the credit needs of the community, the CRA
does not require an institution to enter into agreements with private
parties. These agreements are not monitored or enforced by the agencies.

**§ \_\_.41\--Assessment area delineation**

[§ \_\_.41(a) In general]{.underline}

[]{#_Hlk468612671 .anchor}§ \_\_.41(a) -- 1: [How do the agencies
evaluate "assessment areas" under the revised CRA regulations compared
to how they evaluated "local communities" that institutions delineated
under the original CRA regulations?]{.underline}

A1. The revised rule focuses on the distribution and level of an
institution's lending, investments, and services rather than on how and
why an institution delineated its "local community" or assessment
area(s) in a particular manner. Therefore, the agencies will not
evaluate an institution's delineation of its assessment area(s) as a
separate performance criterion as they did under the original
regulation. Rather, the agencies will only review whether the assessment
area delineated by the institution complies with the limitations set
forth in the regulations at § \_\_.41(e).

[]{#_Hlk468612720 .anchor}§ \_\_.41(a) -- 2: [If an institution elects
to have the agencies consider affiliate lending, will this decision
affect the institution's assessment area(s)?]{.underline}

A2. If an institution elects to have the lending activities of its
affiliates considered in the evaluation of the institution's lending,
the geographies in which the affiliate lends do not affect the
institution's delineation of assessment area(s).

[]{#_Hlk468612789 .anchor}§ \_\_.41(a) -- 3: [Can a financial
institution identify a specific ethnic group rather than a geographic
area as its assessment area?]{.underline}

A3. No, assessment areas must be based on geography.

[§ \_\_.41(c) Geographic area(s) for institutions other than wholesale
or limited purpose institutions]{.underline}

> [§ \_\_.41(c)(1) Generally consist of one or more MSAs or one or more
> contiguous political subdivisions]{.underline}

[]{#_Hlk468612847 .anchor}§ \_\_.41(c)(1) -- 1: [Besides cities, towns,
and counties, what other units of local government are political
subdivisions for CRA purposes?]{.underline}

A1. Townships and Indian reservations are political subdivisions for CRA
purposes. Institutions should be aware that the boundaries of townships
and Indian reservations may not be consistent with the boundaries of the
census tracts or block numbering areas ("geographies") in the area. In
these cases, institutions must ensure that their assessment area(s)
consists only of whole geographies by adding any portions of the
geographies that lie outside the political subdivision to the delineated
assessment area(s).

[]{#_Hlk468612915 .anchor}§ \_\_.41(c)(1) -- 2: [Are wards, school
districts, voting districts, and water districts political subdivisions
for CRA purposes?]{.underline}

A2. No. However, an institution that determines that it predominantly
serves an area that is smaller than a city, town or other political
subdivision may delineate as its assessment area the larger political
subdivision and then, in accordance with § \_\_.41(d), adjust the
boundaries of the assessment area to include only the portion of the
political subdivision that it reasonably can be expected to serve. The
smaller area that the institution delineates must consist of entire
geographies, may not reflect illegal discrimination, and may not
arbitrarily exclude low- or moderate-income geographies.

[§ \_\_.41(d) Adjustments to geographic area(s)]{.underline}

[]{#_Hlk468612980 .anchor}§ \_\_.41(d) -- 1: [When may an institution
adjust the boundaries of an assessment area to include only a portion of
a political subdivision?]{.underline}

A1. Institutions must include whole geographies (i.e., census tracts or
block numbering areas) in their assessment areas and generally should
include entire political subdivisions. Because census tracts and block
numbering areas are the common geographic areas used consistently
nationwide for data collection, the agencies require that assessment
areas be made up of whole geographies. If including an entire political
subdivision would create an area that is larger than the area the
institution can reasonably be expected to serve, an institution may, but
is not required to, adjust the boundaries of its assessment area to
include only portions of the political subdivision. For example, this
adjustment is appropriate if the assessment area would otherwise be
extremely large, of unusual configuration, or divided by significant
geographic barriers (such as a river, mountain, or major highway
system). When adjusting the boundaries of their assessment areas,
institutions must not arbitrarily exclude low- or moderate-income
geographies or set boundaries that reflect illegal discrimination.

[§ \_\_.41(e) Limitations on delineation of an assessment
area]{.underline}

> [§ \_\_.41(e)(3) May not arbitrarily exclude low- or moderate-income
> geographies]{.underline}

[]{#_Hlk468613094 .anchor}§ \_\_.41(e)(3) -- 1: [How will examiners
determine whether an institution has arbitrarily excluded low- or
moderate-income geographies?]{.underline}

A1. Examiners will make this determination on a case-by-case basis after
considering the facts relevant to the institution's assessment area
delineation. Information that examiners will consider may include:

• Income levels in the institution's assessment area(s) and surrounding
geographies;

• Locations of branches and deposit-taking ATMs;

• Loan distribution in the institution's assessment area(s) and
surrounding geographies;

• The institution's size;

• The institution's financial condition; and

• The business strategy, corporate structure and product offerings of
the institution.

> [§ \_\_.41(e)(4) May not extend substantially beyond a CMSA boundary
> or beyond a state boundary unless located in a multistate
> MSA]{.underline}

[]{#_Hlk468613143 .anchor}§ \_\_.41(e)(4) -- 1: [What are the maximum
limits on the size of an assessment area?]{.underline}

A1. An institution shall not delineate an assessment area extending
substantially across the boundaries of a consolidated metropolitan
statistical area (CMSA) or the boundaries of an MSA, if the MSA is not
located in a CMSA. Similarly, an assessment area may not extend
substantially across state boundaries unless the assessment area is
located in a multistate MSA. An institution may not delineate a whole
state as its assessment area unless the entire state is contained within
a CMSA. These limitations apply to wholesale and limited purpose
institutions as well as other institutions.

An institution shall delineate separate assessment areas for the areas
inside and outside a CMSA (or MSA if the MSA is not located in a CMSA)
if the area served by the institution's branches outside the CMSA (or
MSA) extends substantially beyond the CMSA (or MSA) boundary. Similarly,
the institution shall delineate separate assessment areas for the areas
inside and outside of a state if the institution's branches extend
substantially beyond the boundary of one state (unless the assessment
area is located in a multistate MSA). In addition, the institution
should also delineate separate assessment areas if it has branches in
areas within the same state that are widely separate and not at all
contiguous. For example, an institution that has its main office in New
York City and a branch in Buffalo, New York, and each office serves only
the immediate areas around it, should delineate two separate assessment
areas.

[]{#_Hlk468613183 .anchor}§ \_\_.41(e)(4) -- 2: [Can an institution
delineate one assessment area that consists of an MSA and two large
counties that abut the MSA but are not adjacent to each
other?]{.underline}

A2. As a general rule, an institution's assessment area should not
extend substantially beyond the boundary of an MSA if the MSA is not
located in a CMSA. Therefore, the MSA would be a separate assessment
area, and because the two abutting counties are not adjacent to each
other and, in this example, extend substantially beyond the boundary of
the MSA, the institution would delineate each county as a separate
assessment area (so, in this example, there would be three assessment
areas). However, if the MSA and the two counties were in the same CMSA,
then the institution could delineate only one assessment area including
them all.

**§ \_\_.42\--Data collection, reporting, and disclosure**

[]{#_Hlk468613305 .anchor}§ \_\_.42 -- 1: [When must an institution
collect and report data under the CRA regulations?]{.underline}

A1. All institutions except small institutions are subject to data
collection and reporting requirements. A small institution is a bank or
thrift that, as of December 31 of [either]{.underline} of the prior two
calendar years, had total assets of less than \$250 million and was
independent or an affiliate of a holding company that, as of December 31
of either of the prior two calendar years, had total banking and thrift
assets of less than \$1 billion.

For example:

+-----------------------+-----------------------+-----------------------+
| ## Date               | ## Ins                | **Data collection     |
|                       | titution's asset size | required for          |
|                       |                       | following calendar    |
|                       |                       | year?**               |
+-----------------------+-----------------------+-----------------------+
| 12/31/94              | \$240 million         | No                    |
+-----------------------+-----------------------+-----------------------+
| 12/31/95              | \$260 million         | No                    |
+-----------------------+-----------------------+-----------------------+
| 12/31/96              | \$230 million         | No                    |
+-----------------------+-----------------------+-----------------------+
| 12/31/97              | \$280 million         | No                    |
+-----------------------+-----------------------+-----------------------+
| 12/31/98              | \$260 million         | Yes, beginning        |
|                       |                       | 1/01/99               |
+-----------------------+-----------------------+-----------------------+

All institutions that are subject to the data collection and reporting
requirements must report the data for a calendar year by March 1 of the
subsequent year. In the example, above, the institution would report the
data collected for calendar year 1999 by March 1, 2000.

The Board of Governors of the Federal Reserve System is handling the
processing of the reports for all of the primary regulators. The reports
should be submitted in a prescribed electronic format on a timely basis.
The mailing address for submitting these reports is:

Attention: CRA Processing

Board of Governors of the Federal Reserve System

1709 New York Avenue, N.W.

5th Floor

Washington, DC 20006

[]{#_Hlk468614538 .anchor}§ \_\_.42 -- 2: [Should an institution develop
its own program for data collection, or will the regulators require a
certain format?]{.underline}

A2. An institution may use the free software that is provided by the
FFIEC to reporting institutions for data collection and reporting or
develop its own program. Those institutions that develop their own
programs must follow the precise format for the new CRA data collection
and reporting rules. This format may be obtained by contacting the CRA
Assistance Line at (202) 872-7584.

[]{#_Hlk468614625 .anchor}§ \_\_.42 -- 3: [How should an institution
report data on lines of credit?]{.underline}

A3. Institutions must collect and report data on lines of credit in the
same way that they provide data on loan originations. Lines of credit
are considered originated at the time the line is approved or increased;
and an increase is considered a new origination. Generally, the full
amount of the credit line is the amount that is considered originated.
In the case of an increase to an existing line, the amount of the
increase is the amount that is considered originated and that amount
should be reported. However, consistent with the Call Report and TFR
instructions, institutions would not report an increase to a small
business or small farm line of credit if the increase would cause the
total line of credit to exceed \$1 million, in the case of a small
business line, or \$500,000, in the case of a small farm line. Of
course, institutions may provide information about such line increases
to examiners as "other loan data."

[]{#_Hlk468614707 .anchor}§ \_\_.42 -- 4: [Should renewals of lines of
credit be collected and/or reported?]{.underline}

A4. Renewals of lines of credit for small business, small farm or
consumer purposes should be collected and reported, if applicable, in
the same manner as renewals of small business or small farm loans.
[See]{.underline} § \_\_.42(a) -- 5. Institutions that are HMDA
reporters continue to collect and report home equity lines of credit at
their option in accordance with the requirements of 12 CFR part 203.

[]{#_Hlk468614831 .anchor}§ \_\_.42 -- 5: [When should merging
institutions collect data?]{.underline}

A5. Three scenarios of data collection responsibilities for the calendar
year of a merger and subsequent data reporting responsibilities are
described below.

• Two institutions are exempt from CRA collection and reporting
requirements because of asset size. The institutions merge. No data
collection is required for the year in which the merger takes place,
regardless of the resulting asset size. Data collection would begin
after two consecutive years in which the combined institution had
year-end assets of at least \$250 million or was part of a holding
company that had year-end banking and thrift assets of at least \$1
billion.

• Institution A, an institution required to collect and report the data,
and Institution B, an exempt institution, merge. Institution A is the
surviving institution. For the year of the merger, data collection is
required for Institution A's transactions. Data collection is optional
for the transactions of the previously exempt institution. For the
following year, all transactions of the surviving institution must be
collected and reported.

• Two institutions that each are required to collect and report the data
merge. Data collection is required for the entire year of the merger and
for subsequent years so long as the surviving institution is not exempt.
The surviving institution may file either a consolidated submission or
separate submissions for the year of the merger but must file a
consolidated report for subsequent years.

[]{#_Hlk468615358 .anchor}§ \_\_.42 -- 6: [Can small institutions get a
copy of the data collection software even though they are not required
to collect or report data?]{.underline}

A6. Yes. Any institution that is interested in receiving a copy of the
software may send a written request to:

Attn.: CRA Processing

Board of Governors of the Federal Reserve System

1709 New York Ave, N.W.

5th Floor

Washington, DC 20006

They may also call the CRA Assistance Line at (202) 872-7584 or send
Internet e-mail to CRAHELP@FRB.GOV.

[]{#_Hlk468616072 .anchor}§ \_\_.42 -- 7: [If a small institution is
designated a wholesale or limited purpose institution, must it collect
data that it would not otherwise be required to collect because it is a
small institution?]{.underline}

A7. No. However, small institutions must be prepared to identify those
loans, investments and services to be evaluated under the community
development test.

[§ \_\_.42(a) Loan information required to be collected and
maintained]{.underline}

[]{#_Hlk468616165 .anchor}§ \_\_.42(a) -- 1: [Must institutions collect
and report data on all commercial loans under \$1 million at
origination?]{.underline}

A1. No. Institutions that are not exempt from data collection and
reporting are required to collect and report only those commercial loans
that they capture in the Call Report, Schedule RC-C, Part II, and in the
TFR, Schedule SB. Small business loans are defined as those whose
original amounts are \$1 million or less [and]{.underline} that were
reported as either "Loans secured by nonfarm or nonresidential real
estate" or "Commercial and Industrial loans" in Part I of the Call
Report or TFR.

[]{#_Hlk468616263 .anchor}§ \_\_.42(a) -- 2: [For loans defined as small
business loans, what information should be collected and
maintained?]{.underline}

A2. Institutions that are not exempt from data collection and reporting
are required to collect and maintain in a standardized, machine readable
format information on each small business loan originated or purchased
for each calendar year:

• A unique number or alpha-numeric symbol that can be used to identify
the relevant loan file;

• The loan amount at origination;

• The loan location; and

**•** An indicator whether the loan was to a business with gross annual
revenues of \$1 million or less.

The location of the loan must be maintained by census tract or block
numbering area. In addition, supplemental information contained in the
file specifications includes a date associated with the origination or
purchase and whether a loan was originated or purchased by an affiliate.
The same requirements apply to small farm loans.

[]{#_Hlk468616384 .anchor}§ \_\_.42(a) -- 3: [Will farm loans need to be
segregated from business loans?]{.underline}

A3. Yes.

[]{#_Hlk468616434 .anchor}§ \_\_.42(a) -- 4: [Should institutions
collect and report data on all agricultural loans under \$500,000 at
origination?]{.underline}

A4. Institutions are to report those farm loans that they capture in the
Call Report, Schedule RC-C, Part II and Schedule SB of the TFR. Small
farm loans are defined as those whose original amounts are \$500,000 or
less [and]{.underline} were reported as either "Loans to finance
agricultural production and other loans to farmers" or "Loans secured by
farmland" in Part I of the Call Report and TFR.

[]{#_Hlk468616526 .anchor}§ \_\_.42(a) -- 5: [Should institutions
collect and report data about small business and small farm loans that
are refinanced or renewed?]{.underline}

A5. An institution should collect information about small business and
small farm loans that it refinances or renews as loan originations. (A
[refinancing]{.underline} generally occurs when the existing loan
obligation or note is satisfied and a new note is written, while a
[renewal]{.underline} refers to an extension of the term of a loan.
However, for purposes of small business and small farm CRA data
collection and reporting, it is no longer necessary to distinguish
between the two.) When reporting small business and small farm data,
however, an institution may only report one origination (including a
renewal or refinancing treated as an origination) per loan per year,
unless an increase in the loan amount is granted.

If an institution increases the amount of a small business or small farm
loan when it extends the term of the loan, it should always report the
amount of the increase as a small business or small farm loan
origination. The institution should report only the amount of the
increase if the original or remaining amount of the loan has already
been reported one time that year. For example, a financial institution
makes a term loan for \$25,000; principal payments have resulted in a
present outstanding balance of \$15,000. In the next year, the customer
requests an additional \$5,000, which is approved, and a new note is
written for \$20,000. In this example, the institution should report
both the \$5,000 increase and the renewal or refinancing of the \$15,000
as originations for that year. These two originations may be reported
together as a single origination of \$20,000.

[]{#_Hlk468616616 .anchor}§ \_\_.42(a) -- 6: [Does a loan to the
"fishing industry" come under the definition of a small farm
loan?]{.underline}

A6. Yes. Instructions for Part I of the Call Report and Schedule SB of
the TFR include loans "made for the purpose of financing fisheries and
forestries, including loans to commercial fishermen" as a component of
the definition for "Loans to finance agricultural production and other
loans to farmers." Part II of Schedule RC-C of the Call Report and
Schedule SB of the TFR, which serve as the basis of the definition for
small business and small farm loans in the revised regulation, capture
both "Loans to finance agricultural production and other loans to
farmers" and "Loans secured by farmland."

[]{#_Hlk468616670 .anchor}§ \_\_.42(a) -- 7: [How should an institution
report a home equity line of credit, part of which is for home
improvement purposes, but the predominant part of which is for small
business purposes?]{.underline}

A7. The institution has the option of reporting the portion of the home
equity line that is for home improvement purposes under HMDA. That
portion of the loan would then be considered when examiners evaluate
home mortgage lending. If the line meets the regulatory definition of a
"community development loan," the institution should collect and report
information on the entire line as a community development loan. If the
line does not qualify as a community development loan, the institution
has the option of collecting and maintaining (but not reporting) the
entire line of credit as "Other Secured Lines/Loans for Purposes of
Small Business."

[]{#_Hlk468616737 .anchor}§ \_\_.42(a) -- 8: [When collecting small
business and small farm data for CRA purposes, may an institution
collect and report information about loans to small businesses and small
farms located outside the United States?]{.underline}

A8. At an institution's option, it may collect data about small business
and small farm loans located outside the United States; however, it
cannot report this data because the CRA data collection software will
not accept data concerning loan locations outside the United States.

[]{#_Hlk468616814 .anchor}§ \_\_.42(a) -- 9: [Is an institution that has
no small farm or small business loans required to report under
CRA?]{.underline}

A9. Each institution subject to data reporting requirements must, at a
minimum, submit a transmittal sheet, definition of its assessment
area(s), and a record of its community development loans. If the
institution does not have community development loans to report, the
record should be sent with "0" in the community development loan
composite data fields. An institution that has not purchased or
originated any small business or small farm loans during the reporting
period would not submit the composite loan records for small business or
small farm loans.

[]{#_Hlk468616858 .anchor}§ \_\_.42(a) -- 10: [How should an institution
collect and report the location of a loan made to a small business or
farm if the borrower provides an address that consists of a post office
box number or a rural route and box number?]{.underline}

A10. Prudent banking practices dictate that an institution know the
location of its customers and loan collateral. Therefore, institutions
typically will know the actual location of their borrowers or loan
collateral beyond an address consisting only of a post office box.

Many borrowers have street addresses in addition to post office box
numbers or rural route and box numbers. Institutions should ask their
borrowers to provide the street address of the main business facility or
farm or the location where the loan proceeds otherwise will be applied.
Moreover, in many cases in which the borrower's address consists only of
a rural route number or post office box, the institution knows the
location (i.e., the census tract or block numbering area) of the
borrower or loan collateral. Once the institution has this information
available, it should assign a census tract or block numbering area to
that location (geocode) and report that information as required under
the regulation.

For loans originated or purchased in 1998 or later, if the institution
cannot determine the borrower's street address, and does not know the
census tract or block numbering area, the institution should report the
borrower's state, county, MSA, if applicable, and "NA," for "not
available," in lieu of a census tract or block numbering area code.

[§ \_\_.42(a)(2) Loan amount at origination]{.underline}

[]{#_Hlk468616983 .anchor}§ \_\_.42(a)(2) -- 1: [When an institution
purchases a small business or small farm loan, which amount should the
institution collect and report \-- the original amount of the loan or
the amount at purchase?]{.underline}

A1. When collecting and reporting information on purchased small
business and small farm loans, an institution collects and reports the
amount of the loan at origination, not at the time of purchase. This is
consistent with the Call Report's and TFR's use of the "original amount
of the loan" to determine whether a loan should be reported as a "loan
to a small business" or a "loan to a small farm" and in which loan size
category a loan should be reported. When assessing the volume of small
business and small farm loan purchases for purposes of evaluating
lending test performance under CRA, however, examiners will evaluate an
institution's activity based on the amounts at purchase.

[]{#_Hlk468617113 .anchor}§ \_\_.42(a)(2) -- 2: [How should an
institution collect data about multiple loan originations to the same
business?]{.underline}

A2. If an institution makes multiple originations to the same business,
the loans should be collected and reported as separate originations
rather than combined and reported as they are on the Call Report or TFR,
which reflect loans outstanding, rather than originations. However, if
institutions make multiple originations to the same business solely to
inflate artificially the number or volume of loans evaluated for CRA
lending performance, the agencies may combine these loans for purposes
of evaluation under the CRA.

[]{#_Hlk468617171 .anchor}§ \_\_.42(a)(2) -- 3: [How should an
institution collect data pertaining to credit cards issued to small
businesses?]{.underline}

A3. If an institution agrees to issue credit cards to a business'
employees, all of the credit card lines opened on a particular date for
that single business should be reported as one small business loan
origination rather than reporting each individual credit card line,
assuming the criteria in the "small business loan" definition in the
regulation are met. The credit card program's "amount at origination" is
the sum of all of the employee/business credit cards' credit limits
opened on a particular date. If subsequently issued credit cards
increase the small business credit line, the added amount is reported as
a new origination.

> [§ \_\_.42(a)(3) The loan location]{.underline}

[]{#_Hlk468617287 .anchor}§ \_\_.42(a)(3) -- 1: [Which location should
an institution record if a small business loan's proceeds are used in a
variety of locations?]{.underline}

A1. The institution should record the loan location by either the
location of the business headquarters or the location where the greatest
portion of the proceeds are applied, as indicated by the borrower.

> [§ \_\_.42(a)(4) Indicator of gross annual revenue]{.underline}

[]{#_Hlk468617423 .anchor}§ \_\_.42(a)(4) -- 1: [When indicating whether
a small business borrower had gross annual revenues of \$1 million or
less, upon what revenues should an institution rely?]{.underline}

A1. Generally, an institution should rely on the revenues that it
considered in making its credit decision. For example, in the case of
affiliated businesses, such as a parent corporation and its subsidiary,
if the institution considered the revenues of the entity's parent or a
subsidiary corporation of the parent as well, then the institution would
aggregate the revenues of both corporations to determine whether the
revenues are \$1 million or less. Alternatively, if the institution
considered the revenues of only the entity to which the loan is actually
extended, the institution should rely solely upon whether gross annual
revenues are above or below \$1 million for that entity. However, if the
institution considered and relied on revenues or income of a cosigner or
guarantor that is not an affiliate of the borrower, such as a sole
proprietor, the institution should not adjust the borrower's revenues
for reporting purposes.

[]{#_Hlk468617519 .anchor}§ \_\_.42(a)(4) -- 2: [If an institution that
is not exempt from data collection and reporting does not request or
consider revenue information to make the credit decision regarding a
small business or small farm loan, must the institution collect revenue
information in connection with that loan?]{.underline}

A2. No. In those instances, the institution should enter the code
indicating "revenues not known" on the individual loan portion of the
data collection software or on an internally developed system. Loans for
which the institution did not collect revenue information may not be
included in the loans to businesses and farms with gross annual revenues
of \$1 million or less when reporting this data.

[]{#_Hlk468617588 .anchor}§ \_\_.42(a)(4) -- 3: [What gross revenue
should an institution use in determining the gross annual revenue of a
start-up business?]{.underline}

A3. The institution should use the actual gross annual revenue to date
(including \$0 if the new business has had no revenue to date). Although
a start-up business will provide the institution with pro forma
projected revenue figures, these figures may not accurately reflect
actual gross revenue.

[]{#_Hlk468617660 .anchor}§ \_\_.42(a)(4) -- 4: [When collecting and
reporting the gross annual revenue of small business or farm borrowers,
do institutions collect and report the gross annual revenue or the
adjusted gross annual revenue of its borrowers?]{.underline}

A4. Institutions collect and report the gross annual revenue, rather
than the adjusted gross annual revenue, of their small business or farm
borrowers. The purpose of this data collection is to enable examiners
and the public to judge whether the institution is lending to small
businesses and farms or whether it is only making small loans to larger
businesses and farms.

The regulation does not require institutions to request or consider
revenue information when making a loan; however, if institutions do
gather this information from their borrowers, the agencies expect them
to collect and report the borrowers' gross annual revenue for purposes
of CRA. The CRA regulations similarly do not require institutions to
verify revenue amounts; thus, institutions may rely on the gross annual
revenue amount provided by borrowers in the ordinary course of business.
If an institution does not collect gross annual revenue information for
its small business and small farm borrowers, the institution would not
indicate on the CRA data collection software that the gross annual
revenues of the borrower are \$1 million or less. ([See]{.underline} §
\_\_.42(a)(4) -- 2.)

[§ \_\_.42(b) Loan information required to be reported]{.underline}

> [§ \_\_.42(b)(1) Small business and small farm loan data]{.underline}

[]{#_Hlk468617751 .anchor}§ \_\_.42(b)(1) -- 1: [For small business and
small farm loan information that is collected and maintained, what data
should be reported?]{.underline}

A1. Each institution that is not exempt from data collection and
reporting is required to report in machine-readable form annually by
March 1 the following information, aggregated for each census tract or
block numbering area in which the institution originated or purchased at
least one small business or small farm loan during the prior year:

• The number and amount of loans originated or purchased with original
amounts of \$100,000 or less;

• The number and amount of loans originated or purchased with original
amounts of more than \$100,000 but less than or equal to \$250,000;

• The number and amount of loans originated or purchased with original
amounts of more than \$250,000 but not more than \$1 million, as to
small business loans, or \$500,000, as to small farm loans; and

• To the extent that information is available, the number and amount of
loans to businesses and farms with gross annual revenues of \$1 million
or less (using the revenues the institution considered in making its
credit decision).

> [§ \_\_.42(b)(2) Community development loan data]{.underline}

[]{#_Hlk468617861 .anchor}§ \_\_.42(b)(2) -- 1: [What information about
community development loans must institutions report?]{.underline}

A1. Institutions subject to data reporting requirements must report the
aggregate number and amount of community development loans originated
and purchased during the prior calendar year.

[]{#_Hlk468617924 .anchor}§ \_\_.42(b)(2) -- 2: [If a loan meets the
definition of a home mortgage, small business, or small farm loan AND
qualifies as a community development loan, where should it be reported?
Can FHA, VA and SBA loans be reported as community development
loans?]{.underline}

A2. Except for multifamily affordable housing loans, which may be
reported by retail institutions both under HMDA as home mortgage loans
and as community development loans, in order to avoid double counting,
retail institutions must report loans that meet the definitions of home
mortgage, small business, or small farm loans only in those respective
categories even if they also meet the definition of community
development loans. As a practical matter, this is not a disadvantage for
retail institutions because any affordable housing mortgage, small
business, small farm or consumer loan that would otherwise meet the
definition of a community development loan will be considered elsewhere
in the lending test. Any of these types of loans that occur outside the
institution's assessment area can receive consideration under the
borrower characteristic criteria of the lending test. [See]{.underline}
§ \_\_.22(b)(2) & (3) -- 4.

Limited purpose and wholesale institutions also must report loans that
meet the definitions of home mortgage, small business, or small farm
loans in those respective categories; however, they must also report any
loans from those categories that meet the regulatory definition of
"community development loans" as community development loans. There is
no double counting because wholesale and limited purpose institutions
are not subject to the lending test and, therefore, are not evaluated on
their level and distribution of home mortgage, small business, small
farm and consumer loans.

[]{#_Hlk468618058 .anchor}§ \_\_.42(b)(2) -- 3: [When the primary
purpose of a loan is to finance an affordable housing project for low-
or moderate-income individuals, but, for example, only 40 percent of the
units in question will actually be occupied by individuals or families
with low or moderate incomes, should the entire loan amount be reported
as a community development loan?]{.underline}

A3. Yes. As long as the primary purpose of the loan is a community
development purpose, the full amount of the institution's loan should be
included in its reporting of aggregate amounts of community development
lending. However, as noted in § \_\_.22(b)(4) -- 1, examiners may make
qualitative distinctions among community development loans on the basis
of the extent to which the loan advances the community development
purpose.

> [§ \_\_.42(b)(3) Home mortgage loans]{.underline}

[]{#_Hlk468618170 .anchor}§ \_\_.42(b)(3) -- 1: [Must institutions that
are not required to collect home mortgage loan data by the HMDA collect
home mortgage loan data for purposes of the CRA?]{.underline}

A1. No. If an institution is not required to collect home mortgage loan
data by the HMDA, the institution need not collect home mortgage loan
data under the CRA. Examiners will sample these loans to evaluate the
institution's home mortgage lending. If an institution wants to ensure
that examiners consider all of its home mortgage loans, the institution
may collect and maintain data on these loans.

[§ \_\_.42(c) Optional data collection and maintenance]{.underline}

> [§ \_\_.42(c)(1) Consumer loans]{.underline}

[]{#_Hlk468618258 .anchor}§ \_\_.42(c)(1) -- 1: [What are the data
requirements regarding consumer loans?]{.underline}

A1. There are no data reporting requirements for consumer loans.
Institutions may, however, opt to collect and maintain data on consumer
loans. If an institution chooses to collect information on consumer
loans, it may collect data for one or more of the following categories
of consumer loans: motor vehicle, credit card, home equity, other
secured, and other unsecured. If an institution collects data for loans
in a certain category, it must collect data for all loans originated or
purchased within that category. The institution must maintain these data
separately for each category for which it chooses to collect data. The
data collected and maintained should include for each loan:

• A unique number or alpha-numeric symbol that can be used to identify
the relevant loan file;

• The loan amount at origination or purchase;

• The loan location; and

• The gross annual income of the borrower that the institution
considered in making its credit decision.

Generally, guidance given with respect to data collection of small
business and small farm loans, including, for example, guidance
regarding collecting loan location data, and whether to collect data in
connection with refinanced or renewed loans, will also apply to consumer
loans.

> [§ \_\_.42(c)(1)(iv) Income of borrower]{.underline}

[]{#_Hlk468618344 .anchor}§ \_\_.42(c)(1)(iv) -- 1: [If an institution
does not consider income when making an underwriting decision in
connection with a consumer loan, must it collect income
information?]{.underline}

A1. No. Further, if the institution routinely collects, but does not
verify, a borrower's income when making a credit decision, it need not
verify the income for purposes of data maintenance.

[]{#_Hlk468670913 .anchor}§ \_\_.42(c)(1)(iv) -- 2: [May an institution
list "0" in the income field on consumer loans made to employees when
collecting data for CRA purposes as the institution would be permitted
to do under HMDA?]{.underline}

A2. Yes.

[]{#_Hlk468671099 .anchor}§ \_\_.42(c)(1)(iv) -- 3: [When collecting the
gross annual income of consumer borrowers, do institutions collect the
gross annual income or the adjusted gross annual income of the
borrowers?]{.underline}

A3. Institutions collect the gross annual income, rather than the
adjusted gross annual income, of consumer borrowers. The purpose of
income data collection in connection with consumer loans is to enable
examiners to determine the distribution, particularly in the
institution's assessment area(s), of the institution's consumer loans,
based on borrower characteristics, including the number and amount of
consumer loans to low-, moderate-, middle-, and upper-income borrowers,
as determined on the basis of gross annual income.

The regulation does not require institutions to request or consider
income information when making a loan; however, if institutions do
gather this information from their borrowers, the agencies expect them
to collect the borrowers' gross annual income for purposes of CRA. The
CRA regulations similarly do not require institutions to verify income
amounts; thus, institutions may rely on the gross annual income amount
provided by borrowers in the ordinary course of business.

[]{#_Hlk468952943 .anchor}§§ \_\_.42(c)(1)(iv) -- 4: [Whose income does
an institution collect when a consumer loan is made to more than one
borrower?]{.underline}

A4. An institution that chooses to collect and maintain information on
consumer loans collects the gross annual income of all primary obligors
for consumer loans, to the extent that the institution considered the
income of the obligors when making the decision to extend credit.
Primary obligors include co-applicants and co-borrowers, including
co-signers. An institution does not, however, collect the income of
guarantors on consumer loans, because guarantors are only secondarily
liable for the debt.

> [§ \_\_.42(c)(2) Other loan data]{.underline}

[]{#_Hlk468671198 .anchor}§ \_\_.42(c)(2) -- 1: [Schedule RC-C, Part II
of the Call Report does not allow banks to report loans for commercial
and industrial purposes that are secured by residential real estate,
unless the security interest in the nonfarm residential real estate is
taken only as an abundance of caution. (]{.underline}See [§§ \_\_.12(u)
& 563e.12(t) -- 3.) Loans extended to small businesses with gross annual
revenues of \$1 million or less may, however, be secured by residential
real estate. May a bank collect this information to supplement its small
business lending data at the time of examination?]{.underline}

A1. Yes. If these loans promote community development, as defined in the
regulation, the bank should collect and report information about the
loans as community development loans. Otherwise, [at the bank's
option]{.underline}*,* it may collect and maintain data concerning
loans, purchases, and lines of credit extended to small businesses and
secured by nonfarm residential real estate for consideration in the CRA
evaluation of its small business lending. A bank may collect this
information as "Other Secured Lines/Loans for Purposes of Small
Business" in the individual loan data. This information should be
maintained at the bank but should [not]{.underline} be submitted for
central reporting purposes.

[]{#_Hlk468671312 .anchor}§ \_\_.42(c)(2) -- 2: [Must an institution
collect data on loan commitments and letters of credit?]{.underline}

A2. No. Institutions are not required to collect data on loan
commitments and letters of credit. Institutions may, however, provide
for examiner consideration information on letters of credit and
commitments.

[]{#_Hlk468671402 .anchor}§ \_\_.42(c)(2) -- 3: [Are commercial and
consumer leases considered loans for purposes of CRA data
collection?]{.underline}

A3. Commercial and consumer leases are not considered small business or
small farm loans or consumer loans for purposes of the data collection
requirements in 12 CFR § \_\_.42(a) & (c)(1). However, if an institution
wishes to collect and maintain data about leases, the institution may
provide this data to examiners as "other loan data" under 12 CFR §
\_\_.42(c)(2) for consideration under the lending test.

[§ \_\_.42(d) Data on affiliate lending]{.underline}

[]{#_Hlk468671452 .anchor}§ \_\_.42(d) -- 1: [If an institution elects
to have an affiliate's home mortgage lending considered in its CRA
evaluation, what data must the institution make available to
examiners?]{.underline}

A1. If the affiliate is a HMDA reporter, the institution must identify
those loans reported by its affiliate under 12 CFR part 203 (Regulation
C, implementing HMDA). At its option, the institution may either provide
examiners with the affiliate's entire HMDA Disclosure Statement or just
those portions covering the loans in its assessment area(s) that it is
electing to consider. If the affiliate is not required by HMDA to report
home mortgage loans, the institution must provide sufficient data
concerning the affiliate's home mortgage loans for the examiners to
apply the performance tests.

**§ \_\_.43\--Content and availability of public file**

[§ \_\_.43(a) Information available to the public]{.underline}

[§ \_\_.43(a)(1) Public comments]{.underline}

[]{#_Hlk468671530 .anchor}§ \_\_.43(a)(1) -- 1: [What happens to
comments received by the agencies?]{.underline}

A1. Comments received by a Federal financial supervisory agency will be
on file at the agency for use by examiners. Those comments are also
available to the public unless they are exempt from disclosure under the
Freedom of Information Act.

[]{#_Hlk468671570 .anchor}§ \_\_.43(a)(1) -- 2: [Is an institution
required to respond to public comments?]{.underline}

A2. No. All institutions should review comments and complaints carefully
to determine whether any response or other action is warranted. A small
institution subject to the small institution performance standards is
specifically evaluated on its record of taking action, if warranted, in
response to written complaints about its performance in helping to meet
the credit needs in its assessment area(s) (§ \_\_.26(a)(5)). For all
institutions, responding to comments may help to foster a dialogue with
members of the community or to present relevant information to an
institution's Federal financial supervisory agency. If an institution
responds in writing to a letter in the public file, the response must
also be placed in that file, unless the response reflects adversely on
any person or placing it in the public file violates a law.

[]{#_Hlk468671671 .anchor}§ \_\_.43(a)(1) -- 3: [May an institution
include a response to its CRA Performance Evaluation in its public
file?]{.underline}

A3. Yes. However, the format and content of the evaluation, as
transmitted by the supervisory agency, may not be altered or abridged in
any manner. In addition, an institution that received a less than
satisfactory rating during it most recent examination must include in
its public file a description of its current efforts to improve its
performance in helping to meet the credit needs of its entire community.
The institution must update the description on a quarterly basis.

[§ \_\_.43(b) Additional information available to the
public]{.underline}

[§ \_\_.43(b)(1) Institutions other than small institutions]{.underline}

[]{#_Hlk468671717 .anchor}§ \_\_.43(b)(1) -- 1: [Must an institution
that elects to have affiliate lending considered include data on this
lending in its public file?]{.underline}

A1. Yes. The lending data to be contained in an institution's public
file covers the lending of the institution's affiliates, as well as of
the institution itself, considered in the assessment of the
institution's CRA performance. An institution that has elected to have
mortgage loans of an affiliate considered must include either the
affiliate's HMDA Disclosure Statements for the two prior years or the
parts of the Disclosure Statements that relate to the institution's
assessment area(s), at the institution's option.

[]{#_Hlk468671842 .anchor}§ \_\_.43(b)(1) -- 2: [May an institution
retain the compact disc provided by the Federal Financial Institution
Examination Council that contains its CRA Disclosure Statement in its
public file, rather than printing a hard copy of the CRA Disclosure
Statement for retention in its public file?]{.underline}

A2. Yes, if the institution can readily print out from the compact disc
(or a duplicate of the compact disc) its CRA Disclosure Statement for a
consumer when the public file is requested. If the request is at a
branch other than the main office or the one designated branch in each
state that holds the complete public file, the bank should provide the
CRA Disclosure Statement in a paper copy, or in another format
acceptable to the requestor, within 5 calendar days, as required by §
\_\_.43(c)(2)(ii).

[§ \_\_.43(c) Location of public information]{.underline}

[]{#_Hlk468671926 .anchor}§ \_\_.43(c) -- 1: [What is an institution's
"main office"?]{.underline}

A1. An institution's main office is the main, home, or principal office
as designated in its charter.

[]{#_Hlk511465656 .anchor}§ \_\_.43(c) -- 2: [May an institution
maintain a copy of its public file on an intranet or the
Internet?]{.underline}

A2. Yes, an institution may keep all or part of its public file on an
intranet or the Internet, provided that the institution maintains all of
the information, either in paper or electronic form, that is required in
§ \_\_.43 of the regulations. An institution that opts to keep part or
all of its public file on an intranet or the Internet must follow the
rules in §§ \_\_.43(c)(1) and (2) as to what information is required to
be kept at a main office and at a branch. The institution also must
ensure that the information required to be maintained at a main office
and branch, if kept electronically, can be readily downloaded and
printed for any member of the public who requests a hard copy of the
information.

**§ \_\_.44\--Public notice by institutions**

[]{#_Hlk468672068 .anchor}§ \_\_.44 -- 1: [Are there any placement or
size requirements for an institution's public notice?]{.underline}

A1. The notice must be placed in the institution's public lobby, but the
size and placement may vary. The notice should be placed in a location
and be of a sufficient size that customers can easily see and read it.

**§ \_\_.45\--Publication of planned examination schedule**

[]{#_Hlk468672149 .anchor}§ \_\_.45 -- 1: [Where will the agencies
publish the planned examination schedule for the upcoming calendar
quarter?]{.underline}

A1. The agencies may use the [Federal Register]{.underline}, a press
release, the Internet, or other existing agency publications for
disseminating the list of the institutions scheduled to for CRA
examinations during the upcoming calendar quarter. Interested parties
should contact the appropriate Federal financial supervisory agency for
information on how the agency is publishing the planned examination
schedule.

[]{#_Hlk468672197 .anchor}§ \_\_.45 -- 2: [Is inclusion on the list of
institutions that are scheduled to undergo CRA examinations in the next
calendar quarter determinative of whether an institution will be
examined in that quarter?]{.underline}

A2. No. The agencies attempt to determine as accurately as possible
which institutions will be examined during the upcoming calendar
quarter. However, whether an institution's name appears on the published
list does not conclusively determine whether the institution will be
examined during that quarter. The agencies may need to defer a planned
examination or conduct an unforeseen examination because of scheduling
difficulties or other circumstances.

**APPENDIX A to Part \_\_ -- Ratings**

[]{#_Hlk468672301 .anchor}APPENDIX A to Part \_\_ -- 1: [Must an
institution's performance fit each aspect of a particular rating profile
in order to receive that rating?]{.underline}

A1. No. Exceptionally strong performance in some aspects of a particular
rating profile may compensate for weak performance in others. For
example, a retail institution that uses non-branch delivery systems to
obtain deposits and to deliver loans may have almost all of its loans
outside the institution's assessment area. Assume that an examiner,
after consideration of performance context and other applicable
regulatory criteria, concludes that the institution has weak performance
under the lending test criteria applicable to lending activity,
geographic distribution, and borrower characteristics within the
assessment area. The institution may compensate for such weak
performance by exceptionally strong performance in community development
lending in its assessment area or a broader statewide or regional area
that includes its assessment area.

**APPENDIX B to Part \_\_--CRA Notice**

[]{#_Hlk468672394 .anchor}APPENDIX B to Part \_\_ -- 1: [What agency
information should be added to the CRA notice form?]{.underline}

A1. The following information should be added to the form:

[OCC-supervised institutions only]{.underline}: The address of the
deputy comptroller of the district in which the institution is located
should be inserted in the appropriate blank. These addresses can be
found at 12 CFR § 4.5(a).

[OCC-, FDIC-, and Board-supervised institutions]{.underline}: "Officer
in Charge of Supervision" is the title of the responsible official at
the appropriate Federal Reserve Bank.

**APPENDIX A**

**REGIONAL OFFICES OF THE BUREAU OF THE CENSUS**

To obtain median family income levels of census tracts, MSAs, block
numbering areas and statewide nonmetropolitan areas, contact the
appropriate regional office of the Bureau of the Census as indicated
below. The list shows the states covered by each regional office.

+--------------------------------+----+--------------------------------+
| **Atlanta**                    |    | **Detroit**                    |
|                                |    |                                |
| \(404\) 730-3833               |    | \(313\) 259-1875               |
|                                |    |                                |
| [Alabama, Florida,             |    | [Michigan, Ohio, West          |
| Georgia]{.underline}           |    | Virginia]{.underline}          |
|                                |    |                                |
| **Boston**                     |    | **Kansas City**                |
|                                |    |                                |
| \(617\) 424-0510               |    | \(913\) 551-6711               |
|                                |    |                                |
| [Connecticut, Maine,           |    | [Arkansas, Iowa, Kansas,       |
| Massachusetts, New Hampshire,  |    | Minnesota, Missouri,           |
| Rhode Island,                  |    | Oklahoma]{.underline}          |
| Vermont]{.underline}           |    |                                |
|                                |    | **Los Angeles**                |
| **Charlotte**                  |    |                                |
|                                |    | \(818\) 904-6339               |
| \(704\) 344-6144               |    |                                |
|                                |    | [Southern California,          |
| [Kentucky, North Carolina,     |    | Hawaii]{.underline}            |
| South Carolina, Tennessee,     |    |                                |
| Virginia]{.underline}          |    | **New York**                   |
|                                |    |                                |
| **Chicago**                    |    | \(212\) 264-4730               |
|                                |    |                                |
| \(312\) 353-9747               |    | [New York, New Jersey --       |
|                                |    | selected counties]{.underline} |
| [Illinois, Indiana,            |    |                                |
| Wisconsin]{.underline}         |    | **Philadelphia**               |
|                                |    |                                |
| **Dallas**                     |    | \(215\) 656-7578               |
|                                |    |                                |
| \(214\) 655-3050               |    | [Delaware, District of         |
|                                |    | Columbia, Maryland, New Jersey |
| [Louisiana, Mississippi,       |    | -- selected counties ,         |
| Texas]{.underline}             |    | Pennsylvania]{.underline}      |
|                                |    |                                |
| **Denver**                     |    | **Seattle**                    |
|                                |    |                                |
| \(303\) 969-7750               |    | \(206\) 553-5835               |
|                                |    |                                |
| [Arizona, Colorado, Montana,   |    | [Alaska, Northern California,  |
| Nebraska, Nevada, New Mexico,  |    | Idaho, Oregon,                 |
| North Dakota, South Dakota,    |    | Washington]{.underline}        |
| Utah, Wyoming]{.underline}     |    |                                |
+--------------------------------+----+--------------------------------+

##  INDEX

+-----------------------------------+-----------------------------------+
| **Keyword**                       | **Q & A**                         |
+===================================+===================================+
| **Affiliate lending**             | [**§ \_\_.22(b)(1) --             |
|                                   | 1**](#_Hlk468589462)              |
|                                   |                                   |
|                                   | [§ \_\_.22(b)(2) & (3) --         |
|                                   | 3](#_Hlk468589854)                |
|                                   |                                   |
|                                   | [§ \_\_.22(c)(1) --               |
|                                   | 1](#_Hlk468590773)                |
|                                   |                                   |
|                                   | [§ \_\_.22(c)(2)(i) --            |
|                                   | 1](#_Hlk468590967)                |
|                                   |                                   |
|                                   | [§ \_\_.22(c)(2)(ii) --           |
|                                   | 1](#_Hlk468591014)                |
|                                   |                                   |
|                                   | [§ \_\_.22(c)(2)(ii) --           |
|                                   | 2](#_Hlk468594218)                |
|                                   |                                   |
|                                   | [§ \_\_.41(a) --                  |
|                                   | 2](#_Hlk468612720)                |
|                                   |                                   |
|                                   | [§ \_\_.42(d) --                  |
|                                   | 1](#_Hlk468671452)                |
|                                   |                                   |
|                                   | [§ \_\_.43(b)(1) --               |
|                                   | 1](#_Hlk468671717)                |
+-----------------------------------+-----------------------------------+
| **Affiliates**                    | [**§ \_\_.12(a) --                |
|                                   | 1**](#_Hlk468461061)              |
|                                   |                                   |
|                                   | [§ \_\_.27(c) --                  |
|                                   | 2](#_Hlk468608312)                |
+-----------------------------------+-----------------------------------+
| **Affordable housing**            | [**§§ \_\_.12(h) & 563e.12(g) --  |
|                                   | 1**](#_Hlk468461365)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(h) & 563e.12(g) --    |
|                                   | 2](#_Hlk468461509)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(h)(1) & 563e.12(g)(1) |
|                                   | -- 1](#_Hlk468461748)             |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(2) --               |
|                                   | 3](#_Hlk468618058)                |
+-----------------------------------+-----------------------------------+
| **Alternative delivery systems**  | [**§ \_\_.24(d) --                |
|                                   | 1**](#_Hlk468595785)              |
|                                   |                                   |
|                                   | [§ \_\_.24(d)(3) --               |
|                                   | 1](#_Hlk468597137)                |
|                                   |                                   |
|                                   | [§ \_\_.24(d)(3) --               |
|                                   | 2](#_Hlk468597196)                |
+-----------------------------------+-----------------------------------+
| **Applications, corporate**       | [**§ \_\_.29(a) --                |
|                                   | 1**](#_Hlk468609981)              |
|                                   |                                   |
|                                   | [§ \_\_.29(a) --                  |
|                                   | 2](#_Hlk468610039)                |
|                                   |                                   |
|                                   | [§ \_\_.29(b) --                  |
|                                   | 1](#_Hlk468610094)                |
+-----------------------------------+-----------------------------------+
| **Assessment area**               | [**§ \_\_.22(b)(2) & (3) --       |
|                                   | 2**](#_Hlk468589758)              |
|                                   |                                   |
|                                   | [§ \_\_.22(b)(2) & (3) --         |
|                                   | 3](#_Hlk468589854)                |
|                                   |                                   |
|                                   | [§ \_\_.22(b)(2) & (3) --         |
|                                   | 4](#_Hlk468590126)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a)(2) --               |
|                                   | 1](#_Hlk468598845)                |
|                                   |                                   |
|                                   | [§ \_\_.41(a) --                  |
|                                   | 1](#_Hlk468612671)                |
|                                   |                                   |
|                                   | [§ \_\_.41(a) --                  |
|                                   | 2](#_Hlk468612720)                |
|                                   |                                   |
|                                   | [§ \_\_.41(a) --                  |
|                                   | 3](#_Hlk468612789)                |
|                                   |                                   |
|                                   | [§ \_\_.41(c)(1) --               |
|                                   | 1](#_Hlk468612847)                |
|                                   |                                   |
|                                   | [§ \_\_.41(c)(1) --               |
|                                   | 2](#_Hlk468612915)                |
|                                   |                                   |
|                                   | [§ \_\_.41(d) --                  |
|                                   | 1](#_Hlk468612980)                |
|                                   |                                   |
|                                   | [§ \_\_.41(e)(3) --               |
|                                   | 1](#_Hlk468613094)                |
|                                   |                                   |
|                                   | [§ \_\_.41(e)(4) --               |
|                                   | 1](#_Hlk468613143)                |
|                                   |                                   |
|                                   | [§ \_\_.41(e)(4) --               |
|                                   | 2](#_Hlk468613183)                |
+-----------------------------------+-----------------------------------+
| **Assessment area, benefit to**   | [**§§ \_\_.12(i) & 563e.12(h) --  |
|                                   | 5**](#_Hlk468462270)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(i) & 563e.12(h) --    |
|                                   | 6](#_Hlk468462386)                |
|                                   |                                   |
|                                   | [§ \_\_.25(e) --                  |
|                                   | 1](#_Hlk468597492)                |
|                                   |                                   |
|                                   | [§ \_\_.26(b) --                  |
|                                   | 2](#_Hlk468599314)                |
+-----------------------------------+-----------------------------------+
| **Assets**                        | [**§§ \_\_.12(t) & 563e.12(s) --  |
|                                   | 1**](#_Hlk468464001)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(t) & 563e.12(s) --    |
|                                   | 2](#_Hlk468464070)                |
+-----------------------------------+-----------------------------------+
| **ATMs**                          | [**§§ \_\_.12(f) & 563e.12(e) --  |
|                                   | 1**](#_Hlk468461167)              |
|                                   |                                   |
|                                   | [§ \_\_.24(d) --                  |
|                                   | 1](#_Hlk468595785)                |
|                                   |                                   |
|                                   | [§ \_\_.24(d)(3) --               |
|                                   | 1](#_Hlk468597137)                |
|                                   |                                   |
|                                   | [§ \_\_.41(e)(3) --               |
|                                   | 1](#_Hlk468613094)                |
+-----------------------------------+-----------------------------------+
| **Borrower characteristics**      | [**§ \_\_.22(b)(2) & (3) --       |
|                                   | 1**](#_Hlk468589667)              |
|                                   |                                   |
|                                   | [§ \_\_.22(b)(2) & (3) --         |
|                                   | 5](#_Hlk468590206)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a)(3) & (4) --         |
|                                   | 1](#_Hlk468598939)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(1)(iv) --           |
|                                   | 3](#_Hlk468671099)                |
+-----------------------------------+-----------------------------------+
| **Branch**                        | [**§§ \_\_.12(f) & 563e.12(e) --  |
|                                   | 1**](#_Hlk468461167)              |
|                                   |                                   |
|                                   | [§ \_\_.28(a) --                  |
|                                   | 1](#_Hlk468609686)                |
|                                   |                                   |
|                                   | [§ \_\_.41(e)(3) --               |
|                                   | 1](#_Hlk468613094)                |
+-----------------------------------+-----------------------------------+
| **Brokerage**                     | [**§§ \_\_.12(m) & 563e.12(l) --  |
|                                   | 2**](#_Hlk468463155)              |
+-----------------------------------+-----------------------------------+
| **CEBA credit card banks**        | [**§ \_\_.25(a) --                |
|                                   | 1**](#_Hlk511463442)              |
+-----------------------------------+-----------------------------------+
| **Charitable contributions or     | [**§§ \_\_.12(j) & 563e.12(i) --  |
| activities**                      | 2**](#_Hlk468462687)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(s) & 563e.12(r) --    |
|                                   | 4](#_Hlk468463742)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(s) & 563e.12(r) --    |
|                                   | 5](#_Hlk468463813)                |
+-----------------------------------+-----------------------------------+
| **Child care services**           | [**§§ \_\_.12(h) & 563e.12(g) --  |
|                                   | 1**](#_Hlk468461365)              |
+-----------------------------------+-----------------------------------+
| **Commercial loans**              | [**§§ \_\_.12(u) & 563e.12(t) --  |
|                                   | 2**](#_Hlk468464223)              |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 1](#_Hlk468616165)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(2) --               |
|                                   | 1](#_Hlk468671198)                |
+-----------------------------------+-----------------------------------+
| **Commitments**                   | [**§ \_\_.22(a)(2) --             |
|                                   | 1**](#_Hlk468586845)              |
|                                   |                                   |
|                                   | [§ \_\_.26(a) --                  |
|                                   | 4](#_Hlk468598474)                |
|                                   |                                   |
|                                   | [§ \_\_.29(a) --                  |
|                                   | 2](#_Hlk468610039)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(2) --               |
|                                   | 2](#_Hlk468671312)                |
+-----------------------------------+-----------------------------------+
| **Community contact interviews**  | [**§ \_\_.21(b)(2) --             |
|                                   | 2**](#_Hlk468585374)              |
+-----------------------------------+-----------------------------------+
| **Community development**         | [**§§ \_\_.12(h) & 563e.12(g) --  |
|                                   | 1**](#_Hlk468461365)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(h) & 563e.12(g) --    |
|                                   | 2](#_Hlk468461509)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(h)(3) & 563e.12(g)(3) |
|                                   | -- 1](#_Hlk468461813)             |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(2) --               |
|                                   | 3](#_Hlk468618058)                |
+-----------------------------------+-----------------------------------+
| **Community development           | [**§ \_\_.21(a) --                |
| activities**                      | 1**](#_Hlk468464486)              |
+-----------------------------------+-----------------------------------+
| **Community development loan**    | [**§§ \_\_.12(i) & 563e.12(h) --  |
|                                   | 1**](#_Hlk468461901)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(i) & 563e.12(h) --    |
|                                   | 2](#_Hlk468462015)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(i) & 563e.12(h) --    |
|                                   | 3](#_Hlk468462100)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(i) & 563e.12(h) --    |
|                                   | 4](#_Hlk468462177)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(i) & 563e.12(h) --    |
|                                   | 5](#_Hlk468462270)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(i) & 563e.12(h) --    |
|                                   | 6](#_Hlk468462386)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(i) & 563e.12(h) --    |
|                                   | 7](#_Hlk468462480)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(s) & 563e.12(r) --    |
|                                   | 6](#_Hlk468463891)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(u) & 563e.12(t) --    |
|                                   | 1](#_Hlk468464142)                |
|                                   |                                   |
|                                   | [§ \_\_.22(b)(4) --               |
|                                   | 1](#_Hlk468590338)                |
|                                   |                                   |
|                                   | [§ \_\_.22(d) --                  |
|                                   | 3](#_Hlk468594666)                |
|                                   |                                   |
|                                   | [§ \_\_.23(b) --                  |
|                                   | 1](#_Hlk468595007)                |
|                                   |                                   |
|                                   | [§ \_\_.25(d) --                  |
|                                   | 1](#_Hlk468597373)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a) --                  |
|                                   | 1](#_Hlk468597830)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a) --                  |
|                                   | 3](#_Hlk468598366)                |
|                                   |                                   |
|                                   | [§ \_\_.26(b) --                  |
|                                   | 2](#_Hlk468599314)                |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(2) --               |
|                                   | 1](#_Hlk468617861)                |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(2) --               |
|                                   | 2](#_Hlk468617924)                |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(2) --               |
|                                   | 3](#_Hlk468618058)                |
+-----------------------------------+-----------------------------------+
| **Community development service** | [**§§ \_\_.12(i) & 563e.12(h) --  |
|                                   | 5**](#_Hlk468462270)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(i) & 563e.12(h) --    |
|                                   | 7](#_Hlk468462480)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(j) & 563e.12(i) --    |
|                                   | 1](#_Hlk468462604)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(j) & 563e.12(i) --    |
|                                   | 2](#_Hlk468462687)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(j) & 563e.12(i) --    |
|                                   | 3](#_Hlk468462752)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(s) & 563e.12(r) --    |
|                                   | 7](#_Hlk468463947)                |
|                                   |                                   |
|                                   | [§ \_\_.23(b) --                  |
|                                   | 1](#_Hlk468595007)                |
|                                   |                                   |
|                                   | [§ \_\_.26(b) --                  |
|                                   | 2](#_Hlk468599314)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(2) --               |
|                                   | 1](#_Hlk468671198)                |
+-----------------------------------+-----------------------------------+
| **Community development test**    | [**§ \_\_.25(f) --                |
|                                   | 1**](#_Hlk468597745)              |
+-----------------------------------+-----------------------------------+
| **Community services**            | [**§§ \_\_.12(h) & 563e.12(g) --  |
|                                   | 2**](#_Hlk468461509)              |
|                                   |                                   |
|                                   | [§ \_\_.25(d) --                  |
|                                   | 1](#_Hlk468597373)                |
+-----------------------------------+-----------------------------------+
| **Complexity**                    | [**§ \_\_.22(b)(5) --             |
|                                   | 1**](#_Hlk468590579)              |
|                                   |                                   |
|                                   | [§ \_\_.23(e) --                  |
|                                   | 2](#_Hlk468595432)                |
|                                   |                                   |
|                                   | [§ \_\_.28 -- 1](#_Hlk468608791)  |
+-----------------------------------+-----------------------------------+
| **Consortia**                     | [**§ \_\_.22(d) --                |
|                                   | 2**](#_Hlk468594471)              |
|                                   |                                   |
|                                   | [§ \_\_.26(a) --                  |
|                                   | 3](#_Hlk468598366)                |
+-----------------------------------+-----------------------------------+
| **Consumer loan**                 | [**§§ \_\_.12(k) & 563e.12(j) --  |
|                                   | 1**](#_Hlk468462832)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(k) & 563e.12(j) --    |
|                                   | 2](#_Hlk468462905)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(k) & 563e.12(j) --    |
|                                   | 3](#_Hlk468463002)                |
|                                   |                                   |
|                                   | [§ \_\_.22(a)(1) --               |
|                                   | 2](#_Hlk468586764)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(1) --               |
|                                   | 1](#_Hlk468618258)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(1)(iv) --           |
|                                   | 1](#_Hlk468618344)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(1)(iv) --           |
|                                   | 2](#_Hlk468670913)                |
|                                   |                                   |
|                                   | [§§ \_\_.42(c)(1)(iv) --          |
|                                   | 4](#_Hlk468952943)                |
+-----------------------------------+-----------------------------------+
| **CRA disclosure statement**      | [**§ \_\_.43(b)(1) --             |
|                                   | 2**](#_Hlk468671842)              |
+-----------------------------------+-----------------------------------+
| **Credit cards**                  | [**§§ \_\_.12(i) & 563e.12(h) --  |
|                                   | 3**](#_Hlk468462100)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(u) & 563e.12(t) --    |
|                                   | 4](#_Hlk468464344)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(2) --               |
|                                   | 3](#_Hlk468617171)                |
+-----------------------------------+-----------------------------------+
| **Data collection**               | [**§ \_\_.42 --                   |
|                                   | 1**](#_Hlk468613305)              |
|                                   |                                   |
|                                   | [§ \_\_.42 -- 2](#_Hlk468614538)  |
|                                   |                                   |
|                                   | [§ \_\_.42 -- 5](#_Hlk468614831)  |
|                                   |                                   |
|                                   | [§ \_\_.42 -- 7](#_Hlk468616072)  |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 1](#_Hlk468616165)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 2](#_Hlk468616263)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 4](#_Hlk468616434)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 5](#_Hlk468616526)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 8](#_Hlk468616737)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 10](#_Hlk468616858)               |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(2) --               |
|                                   | 1](#_Hlk468616983)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(2) --               |
|                                   | 2](#_Hlk468617113)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(2) --               |
|                                   | 3](#_Hlk468617171)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(3) --               |
|                                   | 1](#_Hlk468617287)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(4) --               |
|                                   | 2](#_Hlk468617519)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(4) --               |
|                                   | 4](#_Hlk468617660)                |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(1) --               |
|                                   | 1](#_Hlk468617751)                |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(3) --               |
|                                   | 1](#_Hlk468618170)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(1) --               |
|                                   | 1](#_Hlk468618258)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(1)(iv) --           |
|                                   | 1](#_Hlk468618344)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(1)(iv) --           |
|                                   | 2](#_Hlk468670913)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(1)(iv) --           |
|                                   | 3](#_Hlk468671099)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(2) --               |
|                                   | 1](#_Hlk468671198)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(2) --               |
|                                   | 2](#_Hlk468671312)                |
+-----------------------------------+-----------------------------------+
| **Data reporting**                | [**§ \_\_.42 --                   |
|                                   | 1**](#_Hlk468613305)              |
|                                   |                                   |
|                                   | [§ \_\_.42 -- 3](#_Hlk468614625)  |
|                                   |                                   |
|                                   | [§ \_\_.42 -- 4](#_Hlk468614707)  |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 1](#_Hlk468616165)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 5](#_Hlk468616526)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 8](#_Hlk468616737)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 9](#_Hlk468616814)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 10](#_Hlk468616858)               |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(2) --               |
|                                   | 1](#_Hlk468616983)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(4) --               |
|                                   | 4](#_Hlk468617660)                |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(1) --               |
|                                   | 1](#_Hlk468617751)                |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(2) --               |
|                                   | 1](#_Hlk468617861)                |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(2) --               |
|                                   | 2](#_Hlk468617924)                |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(2) --               |
|                                   | 3](#_Hlk468618058)                |
+-----------------------------------+-----------------------------------+
| **Debit cards**                   | [**§ \_\_.24(d)(3) --             |
|                                   | 2**](#_Hlk468597196)              |
+-----------------------------------+-----------------------------------+
| **Economic development**          | [**§§ \_\_.12(h) & 563e.12(g) --  |
|                                   | 2**](#_Hlk468461509)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(h)(3) & 563e.12(g)(3) |
|                                   | -- 1](#_Hlk468461813)             |
+-----------------------------------+-----------------------------------+
| **Educational services**          | [**§§ \_\_.12(h) & 563e.12(g) --  |
|                                   | 1**](#_Hlk468461365)              |
+-----------------------------------+-----------------------------------+
| **Employees' charitable           | [**§§ \_\_.12(j) & 563e.12(i) --  |
| activities**                      | 2**](#_Hlk468462687)              |
+-----------------------------------+-----------------------------------+
| **Employees' income**             | [**§ \_\_.42(c)(1)(iv) --         |
|                                   | 2**](#_Hlk468670913)              |
+-----------------------------------+-----------------------------------+
| **Examination schedule**          | [**§ \_\_.45 --                   |
|                                   | 1**](#_Hlk468672149)              |
|                                   |                                   |
|                                   | [§ \_\_.45 -- 2](#_Hlk468672197)  |
+-----------------------------------+-----------------------------------+
| **Federal branch**                | [**§§ \_\_.12(t) & 563e.12(s) --  |
|                                   | 2**](#_Hlk468464070)              |
+-----------------------------------+-----------------------------------+
| **Federal Home Loan Bank**        | [**§§ \_\_.12(s) & 563e.12(r) --  |
|                                   | 3**](#_Hlk468463640)              |
+-----------------------------------+-----------------------------------+
| **Federal Reserve Bank membership | [**§§ \_\_.12(s) & 563e.12(r) --  |
| reserves**                        | 3**](#_Hlk468463640)              |
+-----------------------------------+-----------------------------------+
| **Financial services, provision   | [**§§ \_\_.12(j) & 563e.12(i) --  |
| of**                              | 1**](#_Hlk468462604)              |
+-----------------------------------+-----------------------------------+
| **Fisheries**                     | [**§ \_\_.42(a) --                |
|                                   | 6**](#_Hlk468616616)              |
+-----------------------------------+-----------------------------------+
| **Flexibility**                   | [**§ \_\_.22(b)(5) --             |
|                                   | 1**](#_Hlk468590579)              |
+-----------------------------------+-----------------------------------+
| **Forestries**                    | [**§ \_\_.42(a) --                |
|                                   | 6**](#_Hlk468616616)              |
+-----------------------------------+-----------------------------------+
| **Geographic distribution**       | [**§ \_\_.22(b)(2) & (3) --       |
|                                   | 1**](#_Hlk468589667)              |
|                                   |                                   |
|                                   | [§ \_\_.22(b)(2) & (3) --         |
|                                   | 2](#_Hlk468589758)                |
|                                   |                                   |
|                                   | [§ \_\_.22(b)(2) & (3) --         |
|                                   | 3](#_Hlk468589854)                |
|                                   |                                   |
|                                   | [§ \_\_.22(b)(2) & (3) --         |
|                                   | 4](#_Hlk468590126)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a)(3) & (4) --         |
|                                   | 1](#_Hlk468598939)                |
+-----------------------------------+-----------------------------------+
| **Geography**                     | [**§ \_\_.41(d) --                |
|                                   | 1**](#_Hlk468612980)              |
+-----------------------------------+-----------------------------------+
| **Guaranteed loans**              | [**§ \_\_.22(a)(2) --             |
|                                   | 4**](#_Hlk468587551)              |
+-----------------------------------+-----------------------------------+
| **Guarantor**                     | [**§§ \_\_.42(c)(1)(iv) --        |
|                                   | 4**](#_Hlk468952943)              |
+-----------------------------------+-----------------------------------+
| **Health services**               | [**§§ \_\_.12(h) & 563e.12(g) --  |
|                                   | 1**](#_Hlk468461365)              |
+-----------------------------------+-----------------------------------+
| **High cost area**                | [**§§ \_\_.12(h) & 563e.12(g) --  |
|                                   | 3**](#_Hlk468461654)              |
+-----------------------------------+-----------------------------------+
| **HMDA reporting**                | [**§§ \_\_.12(i) & 563e.12(h) --  |
|                                   | 2**](#_Hlk468462015)              |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(3) --               |
|                                   | 1](#_Hlk468618170)                |
+-----------------------------------+-----------------------------------+
| **Home equity line of credit**    | [**§§ \_\_.12(k) & 563e.12(j) --  |
|                                   | 2**](#_Hlk468462905)              |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 7](#_Hlk468616670)                |
+-----------------------------------+-----------------------------------+
| **Home equity loan**              | [**§§ \_\_.12(k) & 563e.12(j) --  |
|                                   | 1**](#_Hlk468462832)              |
+-----------------------------------+-----------------------------------+
| **Home mortgage lending**         | [**§ \_\_.22(a)(1) --             |
|                                   | 1**](#_Hlk468586704)              |
|                                   |                                   |
|                                   | [§ \_\_.42(d) --                  |
|                                   | 1](#_Hlk468671452)                |
+-----------------------------------+-----------------------------------+
| **Home mortgage loan**            | [**§§ \_\_.12(m) & 563e.12(l) --  |
|                                   | 1**](#_Hlk468463086)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(m) & 563e.12(l) --    |
|                                   | 2](#_Hlk468463155)                |
|                                   |                                   |
|                                   | [§ \_\_.23(b) --                  |
|                                   | 2](#_Hlk468957884)                |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(2) --               |
|                                   | 2](#_Hlk468617924)                |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(3) --               |
|                                   | 1](#_Hlk468618170)                |
+-----------------------------------+-----------------------------------+
| **Illegal credit practices**      | [**§ \_\_.28(c) --                |
|                                   | 1**](#_Hlk511465425)              |
+-----------------------------------+-----------------------------------+
| **Income**                        | [**§ \_\_.42(c)(1)(iv) --         |
|                                   | 1**](#_Hlk468618344)              |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(1)(iv) --           |
|                                   | 2](#_Hlk468670913)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(1)(iv) --           |
|                                   | 3](#_Hlk468671099)                |
+-----------------------------------+-----------------------------------+
| **Income level**                  | [**§§ \_\_.12(n) & 563e.12(m) --  |
|                                   | 1**](#_Hlk468463238)              |
+-----------------------------------+-----------------------------------+
| **Indirect investments**          | [**§ \_\_.23(a) --                |
|                                   | 1**](#_Hlk468594818)              |
+-----------------------------------+-----------------------------------+
| **Individual development accounts | [**§ \_\_.24(d) --                |
| (IDAs)**                          | 2**](#_Hlk468596673)              |
+-----------------------------------+-----------------------------------+
| **Innovativeness**                | [**§ \_\_.22(b)(5) --             |
|                                   | 1**](#_Hlk468590579)              |
|                                   |                                   |
|                                   | [§ \_\_.23(e) --                  |
|                                   | 2](#_Hlk468595432)                |
|                                   |                                   |
|                                   | [§ \_\_.28 -- 1](#_Hlk468608791)  |
+-----------------------------------+-----------------------------------+
| **Institutional capacity and      | [**§ \_\_.21(b)(4) --             |
| constraints**                     | 1**](#_Hlk468585451)              |
+-----------------------------------+-----------------------------------+
| **Internet**                      | [**§ \_\_.43(c) --                |
|                                   | 2**](#_Hlk511465656)              |
+-----------------------------------+-----------------------------------+
| **Intranet**                      | [**§ \_\_.43(c) --                |
|                                   | 2**](#_Hlk511465656)              |
+-----------------------------------+-----------------------------------+
| **Leases**                        | [**§ \_\_.42(c)(2) --             |
|                                   | 3**](#_Hlk468671402)              |
+-----------------------------------+-----------------------------------+
| **Lending activity**              | [**§ \_\_.22(b)(1) --             |
|                                   | 1**](#_Hlk468589462)              |
+-----------------------------------+-----------------------------------+
| **Lending distribution**          | [**§ \_\_.26(a)(3) & (4) --       |
|                                   | 1**](#_Hlk468598939)              |
+-----------------------------------+-----------------------------------+
| **Lending within assessment       | [**§ \_\_.22(b)(2) & (3) --       |
| area**                            | 3**](#_Hlk468589854)              |
|                                   |                                   |
|                                   | [§ \_\_.26(a)(2) --               |
|                                   | 1](#_Hlk468598845)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a)(3) & (4) --         |
|                                   | 1](#_Hlk468598939)                |
+-----------------------------------+-----------------------------------+
| **Letters of credit**             | [**§ \_\_.22(a)(2) --             |
|                                   | 1**](#_Hlk468586845)              |
|                                   |                                   |
|                                   | [§ \_\_.26(a) --                  |
|                                   | 4](#_Hlk468598474)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(2) --               |
|                                   | 2](#_Hlk468671312)                |
+-----------------------------------+-----------------------------------+
| **Limited purpose institution**   | [**§§ \_\_.12(o) & 563e.12(n) --  |
|                                   | 1**](#_Hlk468463305)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(o) & 563e.12(n) --    |
|                                   | 2](#_Hlk468463365)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(o) & 563e.12(n) --    |
|                                   | 3](#_Hlk468463443)                |
|                                   |                                   |
|                                   | [§ \_\_.42 -- 7](#_Hlk468616072)  |
+-----------------------------------+-----------------------------------+
| **Lines of credit**               | [**§ \_\_.42 --                   |
|                                   | 3**](#_Hlk468614625)              |
|                                   |                                   |
|                                   | [§ \_\_.42 -- 4](#_Hlk468614707)  |
+-----------------------------------+-----------------------------------+
| **Loan amount**                   | [**§ \_\_.42(a)(2) --             |
|                                   | 1**](#_Hlk468616983)              |
+-----------------------------------+-----------------------------------+
| **Loan application activity**     | [**§ \_\_.22(a)(2) --             |
|                                   | 2**](#_Hlk468586962)              |
+-----------------------------------+-----------------------------------+
| **Loan location**                 | [**§ \_\_.42(a) --                |
|                                   | 10**](#_Hlk468616858)             |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(3) --               |
|                                   | 1](#_Hlk468617287)                |
+-----------------------------------+-----------------------------------+
| **Loan originations, multiple**   | [**§ \_\_.42(a)(2) --             |
|                                   | 2**](#_Hlk468617113)              |
+-----------------------------------+-----------------------------------+
| **Loan production office (LPO)**  | [**§§ \_\_.12(f) & 563e.12(e) --  |
|                                   | 2**](#_Hlk468461307)              |
+-----------------------------------+-----------------------------------+
| **Loans, outside-assessment       | [**§ \_\_.22(b)(2) & (3) --       |
| area**                            | 4**](#_Hlk468590126)              |
+-----------------------------------+-----------------------------------+
| **Loan-to-deposit ratio**         | [**§ \_\_.26(a)(1) --             |
|                                   | 1**](#_Hlk468598657)              |
|                                   |                                   |
|                                   | [§ \_\_.26(a)(1) --               |
|                                   | 2](#_Hlk468598703)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a)(1) --               |
|                                   | 3](#_Hlk468598749)                |
+-----------------------------------+-----------------------------------+
| **Main office**                   | [**§ \_\_.43(c) --                |
|                                   | 1**](#_Hlk468671926)              |
+-----------------------------------+-----------------------------------+
| **Measurable goals**              | [**§ \_\_.27(f)(1) --             |
|                                   | 1**](#_Hlk468608397)              |
+-----------------------------------+-----------------------------------+
| **MECAs**                         | [**§ \_\_.22(a)(2) --             |
|                                   | 3**](#_Hlk468587508)              |
+-----------------------------------+-----------------------------------+
| **Merging institutions**          | [**§ \_\_.42 --                   |
|                                   | 5**](#_Hlk468614831)              |
+-----------------------------------+-----------------------------------+
| **Mortgage-backed securities**    | [**§§ \_\_.12(s) & 563e.12(r) --  |
|                                   | 2**](#_Hlk468463567)              |
|                                   |                                   |
|                                   | [§ \_\_.23(b) --                  |
|                                   | 2](#_Hlk468957884)                |
+-----------------------------------+-----------------------------------+
| **Multi-purpose loan**            | [**§§ \_\_.12(k) & 563e.12(j) --  |
|                                   | 3**](#_Hlk468463002)              |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 7](#_Hlk468616670)                |
+-----------------------------------+-----------------------------------+
| **Municipal bonds**               | [**§§ \_\_.12(s) & 563e.12(r) --  |
|                                   | 2**](#_Hlk468463567)              |
+-----------------------------------+-----------------------------------+
| **National fund**                 | [**§ \_\_.25(e) --                |
|                                   | 1**](#_Hlk468597492)              |
+-----------------------------------+-----------------------------------+
| **New Markets Venture Capital     | [**§§ \_\_.12(h)(3) &             |
| Company**                         | 563e.12(g)(3) --                  |
|                                   | 1**](#_Hlk468461813)              |
+-----------------------------------+-----------------------------------+
| **Niche institution**             | [**§§ \_\_.12(o) & 563e.12(n) --  |
|                                   | 3**](#_Hlk468463443)              |
+-----------------------------------+-----------------------------------+
| **Nonprofit organization**        | [**§§ \_\_.12(u) & 563e.12(t) --  |
|                                   | 1**](#_Hlk468464142)              |
+-----------------------------------+-----------------------------------+
| **Past performance**              | [**§ \_\_.21(b)(5) --             |
|                                   | 1**](#_Hlk468585530)              |
+-----------------------------------+-----------------------------------+
| **Performance context**           | [**§ \_\_.21(b) --                |
|                                   | 1**](#_Hlk468585194)              |
|                                   |                                   |
|                                   | [§ \_\_.21(b)(2) --               |
|                                   | 1](#_Hlk468585263)                |
|                                   |                                   |
|                                   | [§ \_\_.21(b)(2) --               |
|                                   | 2](#_Hlk468585374)                |
|                                   |                                   |
|                                   | [§ \_\_.21(b)(4) --               |
|                                   | 1](#_Hlk468585451)                |
|                                   |                                   |
|                                   | [§ \_\_.21(b)(5) --               |
|                                   | 1](#_Hlk468585530)                |
|                                   |                                   |
|                                   | [§ \_\_.21(b)(5) --               |
|                                   | 2](#_Hlk468585794)                |
+-----------------------------------+-----------------------------------+
| **Performance criteria**          | [**§ \_\_.22(b) --                |
|                                   | 1**](#_Hlk468589388)              |
|                                   |                                   |
|                                   | [§ \_\_.23(e) --                  |
|                                   | 1](#_Hlk468595151)                |
|                                   |                                   |
|                                   | [§ \_\_.23(e) --                  |
|                                   | 2](#_Hlk468595432)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a) --                  |
|                                   | 1](#_Hlk468597830)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a) --                  |
|                                   | 2](#_Hlk468598135)                |
|                                   |                                   |
|                                   | [§ \_\_.28 -- 2](#_Hlk468609617)  |
+-----------------------------------+-----------------------------------+
| **Performance evaluation**        | [**§ \_\_.43(a)(1) --             |
|                                   | 3**](#_Hlk468671671)              |
+-----------------------------------+-----------------------------------+
| **Performance rating**            | [**§ \_\_.26(a) --                |
|                                   | 2**](#_Hlk468598135)              |
|                                   |                                   |
|                                   | [§ \_\_.26(a) --                  |
|                                   | 5](#_Hlk468598567)                |
|                                   |                                   |
|                                   | [§ \_\_.26(b) \--                 |
|                                   | 1](#_Hlk468599113)                |
|                                   |                                   |
|                                   | [§ \_\_.28 -- 1](#_Hlk468608791)  |
|                                   |                                   |
|                                   | [§ \_\_.28 -- 2](#_Hlk468609617)  |
|                                   |                                   |
|                                   | [§ \_\_.28(a) --                  |
|                                   | 1](#_Hlk468609686)                |
|                                   |                                   |
|                                   | [§ \_\_.28(a) --                  |
|                                   | 2](#_Hlk468609765)                |
|                                   |                                   |
|                                   | [§ \_\_.28(a) --                  |
|                                   | 3](#_Hlk468609835)                |
|                                   |                                   |
|                                   | [APPENDIX A to Part \_\_ \--      |
|                                   | 1](#_Hlk468672301)                |
+-----------------------------------+-----------------------------------+
| **Political subdivision**         | [**§ \_\_.41(c)(1) --             |
|                                   | 1**](#_Hlk468612847)              |
|                                   |                                   |
|                                   | [§ \_\_.41(c)(1) --               |
|                                   | 2](#_Hlk468612915)                |
|                                   |                                   |
|                                   | [§ \_\_.41(d) --                  |
|                                   | 1](#_Hlk468612980)                |
+-----------------------------------+-----------------------------------+
| **Primary purpose**               | [**§§ \_\_.12(i) & 563e.12(h) --  |
|                                   | 7**](#_Hlk468462480)              |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(2) --               |
|                                   | 3](#_Hlk468618058)                |
+-----------------------------------+-----------------------------------+
| **Public comment**                | [**§ \_\_.27(g)(2) --             |
|                                   | 1**](#_Hlk468608484)              |
|                                   |                                   |
|                                   | [§ \_\_.29(b) --                  |
|                                   | 1](#_Hlk468610094)                |
|                                   |                                   |
|                                   | [§ \_\_.29(b) --                  |
|                                   | 2](#_Hlk468612452)                |
|                                   |                                   |
|                                   | [§ \_\_.43(a)(1) --               |
|                                   | 1](#_Hlk468671530)                |
|                                   |                                   |
|                                   | [§ \_\_.43(a)(1) --               |
|                                   | 2](#_Hlk468671570)                |
+-----------------------------------+-----------------------------------+
| **Public file**                   | [**§ \_\_.43(a)(1) --             |
|                                   | 2**](#_Hlk468671570)              |
|                                   |                                   |
|                                   | [§ \_\_.43(a)(1) --               |
|                                   | 3](#_Hlk468671671)                |
|                                   |                                   |
|                                   | [§ \_\_.43(b)(1) --               |
|                                   | 1](#_Hlk468671717)                |
|                                   |                                   |
|                                   | [§ \_\_.43(b)(1) --               |
|                                   | 2](#_Hlk468671842)                |
|                                   |                                   |
|                                   | [§ \_\_.43(c) --                  |
|                                   | 2](#_Hlk511465656)                |
+-----------------------------------+-----------------------------------+
| **Public notice**                 | [**§ \_\_.44 --                   |
|                                   | 1**](#_Hlk468672068)              |
|                                   |                                   |
|                                   | [APPENDIX B to Part \_\_ \--      |
|                                   | 1](#_Hlk468672394)                |
+-----------------------------------+-----------------------------------+
| **Qualified investment**          | [**§§ \_\_.12(i) & 563e.12(h) --  |
|                                   | 5**](#_Hlk468462270)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(i) & 563e.12(h) --    |
|                                   | 7](#_Hlk468462480)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(s) & 563e.12(r) --    |
|                                   | 1](#_Hlk468463503)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(s) & 563e.12(r) --    |
|                                   | 2](#_Hlk468463567)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(s) & 563e.12(r) --    |
|                                   | 3](#_Hlk468463640)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(s) & 563e.12(r) --    |
|                                   | 4](#_Hlk468463742)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(s) & 563e.12(r) --    |
|                                   | 5](#_Hlk468463813)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(s) & 563e.12(r) --    |
|                                   | 6](#_Hlk468463891)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(s) & 563e.12(r) --    |
|                                   | 7](#_Hlk468463947)                |
|                                   |                                   |
|                                   | [§ \_\_.23(b) --                  |
|                                   | 1](#_Hlk468595007)                |
|                                   |                                   |
|                                   | [§ \_\_.23(b) --                  |
|                                   | 2](#_Hlk468957884)                |
|                                   |                                   |
|                                   | [§ \_\_.23(e) --                  |
|                                   | 1](#_Hlk468595151)                |
|                                   |                                   |
|                                   | [§ \_\_.23(e) --                  |
|                                   | 2](#_Hlk468595432)                |
|                                   |                                   |
|                                   | [§ \_\_.25(d) --                  |
|                                   | 1](#_Hlk468597373)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a) --                  |
|                                   | 1](#_Hlk468597830)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a) --                  |
|                                   | 5](#_Hlk468598567)                |
|                                   |                                   |
|                                   | [§ \_\_.26(b) --                  |
|                                   | 2](#_Hlk468599314)                |
+-----------------------------------+-----------------------------------+
| **Qualitative factors**           | [**§ \_\_.21(a) --                |
|                                   | 1**](#_Hlk468464486)              |
|                                   |                                   |
|                                   | [§ \_\_.22(b)(4) --               |
|                                   | 1](#_Hlk468590338)                |
|                                   |                                   |
|                                   | [§ \_\_.22(b)(5) --               |
|                                   | 1](#_Hlk468590579)                |
|                                   |                                   |
|                                   | [§ \_\_.23(e) --                  |
|                                   | 1](#_Hlk468595151)                |
|                                   |                                   |
|                                   | [§ \_\_.23(e) --                  |
|                                   | 2](#_Hlk468595432)                |
|                                   |                                   |
|                                   | [§ \_\_.28 -- 1](#_Hlk468608791)  |
|                                   |                                   |
|                                   | [§ \_\_.28 -- 2](#_Hlk468609617)  |
+-----------------------------------+-----------------------------------+
| **Ratings matrix**                | [**§ \_\_.28(a) --                |
|                                   | 3**](#_Hlk468609835)              |
+-----------------------------------+-----------------------------------+
| **Refinancings**                  | [**§ \_\_.42(a) --                |
|                                   | 5**](#_Hlk468616526)              |
+-----------------------------------+-----------------------------------+
| **Regional area**                 | [**§§ \_\_.12(i) & 563e.12(h) --  |
|                                   | 6**](#_Hlk468462386)              |
+-----------------------------------+-----------------------------------+
| **Remote service facility (RSF)** | [**§§ \_\_.12(f) & 563e.12(e) --  |
|                                   | 1**](#_Hlk468461167)              |
+-----------------------------------+-----------------------------------+
| **Renewals**                      | [**§ \_\_.42 --                   |
|                                   | 4**](#_Hlk468614707)              |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 5](#_Hlk468616526)                |
+-----------------------------------+-----------------------------------+
| **Responsiveness**                | [**§ \_\_.22(a) --                |
|                                   | 1**](#_Hlk511463122)              |
|                                   |                                   |
|                                   | [§ \_\_.23(e) --                  |
|                                   | 2](#_Hlk468595432)                |
+-----------------------------------+-----------------------------------+
| **Retail banking services**       | [**§ \_\_.24(d) --                |
|                                   | 1**](#_Hlk468595785)              |
+-----------------------------------+-----------------------------------+
| **Revenue**                       | [**§ \_\_.42(a)(4) --             |
|                                   | 1**](#_Hlk468617423)              |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(4) --               |
|                                   | 2](#_Hlk468617519)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(4) --               |
|                                   | 3](#_Hlk468617588)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(4) --               |
|                                   | 4](#_Hlk468617660)                |
+-----------------------------------+-----------------------------------+
| **Revitalize or stabilize**       | [**§§ \_\_.12(h) & 563e.12(g) --  |
|                                   | 1**](#_Hlk468461365)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(h) & 563e.12(g) --    |
|                                   | 2](#_Hlk468461509)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(h)(4) & 563e.12(g)(4) |
|                                   | -- 1](#_Hlk511462843)             |
|                                   |                                   |
|                                   | [§§ \_\_.12(i) & 563e.12(h) --    |
|                                   | 4](#_Hlk468462177)                |
+-----------------------------------+-----------------------------------+
| **SBIC or SBDC**                  | [**§§ \_\_.12(h)(3) &             |
|                                   | 563e.12(g)(3) --                  |
|                                   | 1**](#_Hlk468461813)              |
+-----------------------------------+-----------------------------------+
| **Similarly situated lenders**    | [**§ \_\_.21(b)(5) --             |
|                                   | 2**](#_Hlk468585794)              |
+-----------------------------------+-----------------------------------+
| **Small business loan**           | [**§§ \_\_.12(u) & 563e.12(t) --  |
|                                   | 1**](#_Hlk468464142)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(u) & 563e.12(t) --    |
|                                   | 2](#_Hlk468464223)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(u) & 563e.12(t) --    |
|                                   | 3](#_Hlk468464285)                |
|                                   |                                   |
|                                   | [§§ \_\_.12(u) & 563e.12(t) --    |
|                                   | 4](#_Hlk468464344)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 2](#_Hlk468616263)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 3](#_Hlk468616384)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 5](#_Hlk468616526)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 8](#_Hlk468616737)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(2) --               |
|                                   | 1](#_Hlk468616983)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(2) --               |
|                                   | 3](#_Hlk468617171)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(3) --               |
|                                   | 1](#_Hlk468617287)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(4) --               |
|                                   | 1](#_Hlk468617423)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(4) --               |
|                                   | 2](#_Hlk468617519)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(4) --               |
|                                   | 4](#_Hlk468617660)                |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(1) --               |
|                                   | 1](#_Hlk468617751)                |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(2) --               |
|                                   | 2](#_Hlk468617924)                |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(2) --               |
|                                   | 1](#_Hlk468671198)                |
+-----------------------------------+-----------------------------------+
| **Small farm loan**               | [**§ \_\_.42(a) --                |
|                                   | 3**](#_Hlk468616384)              |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 4](#_Hlk468616434)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 5](#_Hlk468616526)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 6](#_Hlk468616616)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a) --                  |
|                                   | 8](#_Hlk468616737)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(2) --               |
|                                   | 1](#_Hlk468616983)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(4) --               |
|                                   | 2](#_Hlk468617519)                |
|                                   |                                   |
|                                   | [§ \_\_.42(a)(4) --               |
|                                   | 4](#_Hlk468617660)                |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(1) --               |
|                                   | 1](#_Hlk468617751)                |
|                                   |                                   |
|                                   | [§ \_\_.42(b)(2) --               |
|                                   | 2](#_Hlk468617924)                |
+-----------------------------------+-----------------------------------+
| **Small institution**             | [**§§ \_\_.12(t) & 563e.12(s) --  |
|                                   | 1**](#_Hlk468464001)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(t) & 563e.12(s) --    |
|                                   | 2](#_Hlk468464070)                |
|                                   |                                   |
|                                   | [§ \_\_.42 -- 6](#_Hlk468615358)  |
|                                   |                                   |
|                                   | [§ \_\_.42 -- 7](#_Hlk468616072)  |
+-----------------------------------+-----------------------------------+
| **Small institution performance   | [**§ \_\_.26(a) --                |
| standards**                       | 1**](#_Hlk468597830)              |
|                                   |                                   |
|                                   | [§ \_\_.26(a) --                  |
|                                   | 2](#_Hlk468598135)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a) --                  |
|                                   | 3](#_Hlk468598366)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a) --                  |
|                                   | 4](#_Hlk468598474)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a) --                  |
|                                   | 5](#_Hlk468598567)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a)(3) & (4) --         |
|                                   | 1](#_Hlk468598939)                |
|                                   |                                   |
|                                   | [§ \_\_.26(b) \--                 |
|                                   | 1](#_Hlk468599113)                |
|                                   |                                   |
|                                   | [§ \_\_.26(b) --                  |
|                                   | 2](#_Hlk468599314)                |
+-----------------------------------+-----------------------------------+
| **Social services**               | [**§§ \_\_.12(h) & 563e.12(g) --  |
|                                   | 1**](#_Hlk468461365)              |
+-----------------------------------+-----------------------------------+
| **Software for data collection    | [**§ \_\_.42 --                   |
| and reporting**                   | 2**](#_Hlk468614538)              |
|                                   |                                   |
|                                   | [§ \_\_.42 -- 6](#_Hlk468615358)  |
|                                   |                                   |
|                                   | [§ \_\_.42(c)(2) --               |
|                                   | 1](#_Hlk468671198)                |
+-----------------------------------+-----------------------------------+
| **Special purpose institution**   | [**§§ \_\_.11(c)(3) &             |
|                                   | 563e.11(c)(2) --                  |
|                                   | 1**](#_Hlk468460649)              |
|                                   |                                   |
|                                   | [§§ \_\_.11(c)(3) & 563e.11(c)(2) |
|                                   | -- 2](#_Hlk468460962)             |
+-----------------------------------+-----------------------------------+
| **State branch**                  | [**§§ \_\_.12(t) & 563e.12(s) --  |
|                                   | 2**](#_Hlk468464070)              |
+-----------------------------------+-----------------------------------+
| **Strategic plan**                | [**§ \_\_.27(c) --                |
|                                   | 1**](#_Hlk468608268)              |
|                                   |                                   |
|                                   | [§ \_\_.27(c) --                  |
|                                   | 2](#_Hlk468608312)                |
|                                   |                                   |
|                                   | [§ \_\_.27(f)(1) --               |
|                                   | 1](#_Hlk468608397)                |
|                                   |                                   |
|                                   | [§ \_\_.27(g)(2) --               |
|                                   | 1](#_Hlk468608484)                |
+-----------------------------------+-----------------------------------+
| **Subsidiary**                    | [**§ \_\_.12(a) --                |
|                                   | 1**](#_Hlk468461061)              |
+-----------------------------------+-----------------------------------+
| **Third party investments**       | [**§ \_\_.22(d) --                |
|                                   | 1**](#_Hlk468594345)              |
|                                   |                                   |
|                                   | [§ \_\_.22(d) --                  |
|                                   | 2](#_Hlk468594471)                |
|                                   |                                   |
|                                   | [§ \_\_.22(d) --                  |
|                                   | 3](#_Hlk468594666)                |
|                                   |                                   |
|                                   | [§ \_\_.25(d) --                  |
|                                   | 1](#_Hlk468597373)                |
|                                   |                                   |
|                                   | [§ \_\_.26(a) --                  |
|                                   | 3](#_Hlk468598366)                |
+-----------------------------------+-----------------------------------+
| **Wholesale institution**         | [**§§ \_\_.12(o) & 563e.12(n) --  |
|                                   | 2**](#_Hlk468463365)              |
|                                   |                                   |
|                                   | [§§ \_\_.12(w) & 563e.12(v) --    |
|                                   | 1](#_Hlk468464414)                |
|                                   |                                   |
|                                   | [§ \_\_.42 -- 7](#_Hlk468616072)  |
+-----------------------------------+-----------------------------------+

**\[End of text of the Interagency Questions and Answers\]**

\[THIS SIGNATURE PAGE PERTAINS TO THE FFIEC'S NOTICE AND REQUEST FOR
COMMENT ENTITLED "Community Reinvestment Act; Interagency Questions and
Answers Regarding Community Reinvestment."\]

Dated:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Keith J. Todd

Executive Secretary

Federal Financial Institutions Examination Council

BILLING CODES:

OCC: 4810-33-P (25%)

FRB: 6210-01-P (25%)

FDIC: 6714-01-P (25%)

OTS: 6720-01-P (25%)