This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

68257

Vol. 69, No. 226

Wednesday, November 24, 2004

DEPARTMENT OF THE TREASURY 

Office of Thrift Supervision 

12 CFR Part 563e 

[No. 2004–53] 

RIN 1550–AB48

Community Reinvestment Act—

Community Development, Assigned 

Ratings

AGENCY: Office of Thrift Supervision, 

Treasury (OTS).

ACTION: Notice of proposed rulemaking.

SUMMARY: In this notice of proposed 

rulemaking (proposal), OTS is 

proposing changes to, and soliciting 

comment on, its Community 

Reinvestment Act (CRA) regulations in 

two areas to reduce burden. 

First, OTS is proposing to revise the 

definition of ‘‘community development’’ 

to encourage all savings associations to 

increase their community development 

lending, qualified investments, and 

community development services in 

rural areas, with a particular focus on 

increasing these activities in 

underserved nonmetropolitan areas. The 

proposal also solicits comment on 

further encouraging savings associations 

to perform community development 

activities in any areas affected by 

natural or other disasters or other major 

community disruptions. 

Second, the proposal solicits 

comment on providing additional 

flexibility in assigning CRA ratings to 

encourage large retail savings 

associations to focus their community 

reinvestment efforts on the types of 

activities the communities they serve 

need, consistent with safe and sound 

operations. As an alternative, the 

proposal solicits comment on 

eliminating the investment test. 

Today’s proposed changes are 

designed to reduce burden to the extent 

consistent with safe and sound 

supervision of the industry. They would 

further the CRA burden reduction OTS 

began in its final rule published in the 

Federal Register on August 18, 2004, 

which revised the definition of ‘‘small 

savings association.’’ They would also 

further the burden reductions in the 

interim final rule published elsewhere 

in today’s Federal Register as part of 

OTS’s review of regulations under 

section 2222 of the Economic Growth 

and Regulatory Paperwork Reduction 

Act of 1996 (EGRPRA).

DATES: Comments must be received by 

January 24, 2005.

ADDRESSES: You may submit comments, 

identified by No. 2004–53, by any of the 

following methods: 

• Federal eRulemaking Portal: http://

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail address: 

regs.comments@ots.treas.gov. Please 

include No. 2004–53 in the subject line 

of the message and include your name 

and telephone number in the message. 

• Fax: (202) 906–6518. 

• Mail: Regulation Comments, Chief 

Counsel’s Office, Office of Thrift 

Supervision, 1700 G Street, NW., 

Washington, DC 20552, Attention: No. 

2004–53. 

• Hand Delivery/Courier: Guard’s 

Desk, East Lobby Entrance, 1700 G 

Street, NW., from 9 a.m. to 4 p.m. on 

business days, Attention: Regulation 

Comments, Chief Counsel’s Office, 

Attention: No. 2004–53. 

Instructions: All submissions received 

must include the agency name and 

docket number or Regulatory 

Information Number (RIN) for this 

rulemaking. All comments received will 

be posted without change to the OTS 

Internet site at http://www.ots.treas.gov/

pagehtml.cfm?catNumber=67&an=1,

including any personal information 

provided. 

Docket: For access to the docket to 

read background documents or 

comments received, go to http://

www.ots.treas.gov/

pagehtml.cfm?catNumber=67&an=1.

In addition, you may inspect 

comments at the Public Reading Room, 

1700 G Street, NW., by appointment. To 

make an appointment for access, call 

(202) 906–5922, send an e-mail to 

public.info@ots.treas.gov, or send a 

facsimile transmission to (202) 906–

7755. (Prior notice identifying the 

materials you will be requesting will 

assist us in serving you.) We schedule 

appointments on business days between 

10 a.m. and 4 p.m. In most cases, 

appointments will be available the next 

business day following the date we 

receive a request.

FOR FURTHER INFORMATION CONTACT:

Theresa A. Stark, Program Manager, 

Thrift Policy, (202) 906–7054; Richard 

Bennett, Counsel (Banking and 

Finance), Regulations and Legislation 

Division, (202) 906–7409, Office of 

Thrift Supervision, 1700 G Street, NW., 

Washington, DC 20552.

SUPPLEMENTARY INFORMATION: 

Introduction 

After considering the comments on a 

joint advance notice of proposed 

rulemaking (ANPR) published on July 

19, 2001 (66 FR 37602), and a joint 

notice of proposed rulemaking (NPR) 

published on February 6, 2004 (69 FR 

5729), OTS is proposing changes to, and 

soliciting comment on, its CRA 

regulations in two areas: (1) The 

definition of ‘‘community development’’ 

and (2) the assignment of ratings. These 

proposed changes are designed to 

reduce burden to the extent consistent 

with the safe and sound supervision of 

the industry. These changes would 

provide institutions with more 

flexibility to make their own 

determinations about how best to serve 

their communities. They would further 

the CRA burden reduction OTS began in 

its final rule published in the Federal 

Register on August 18, 2004, which 

revised the definition of ‘‘small savings 

association.’’ 69 FR 51155. They would 

also complement the burden reductions 

contained in OTS’s interim final rule 

published elsewhere in today’s Federal 

Register as part of OTS’s review of 

regulations under section 2222 of the 

EGRPRA (Pub. L. 104–208, Sept. 30, 

1996). The related EGRPRA rule is 

reducing regulatory burden on savings 

associations by updating and revising 

various application and reporting 

requirements. 

Community Development Proposal 

OTS is proposing to revise the 

definition of ‘‘community 

development.’’ The proposal is designed 

to encourage all savings associations to 

increase their community development 

lending, qualified investments, and 

community development services in 

rural areas, with a particular focus on 

increasing these activities in 

underserved nonmetropolitan areas. The 

proposal also solicits comment on 

68258 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

further encouraging savings associations 

to perform community development 

activities in any areas affected by 

natural or other disasters or other major 

community disruptions. OTS is 

considering these revisions to encourage 

more community development activities 

in rural areas, to cover the full range of 

activities that should receive favorable 

consideration in all areas, and to reduce 

burden by affording savings associations 

greater flexibility in serving their 

communities. 

The Current Rule 

Under the current definition in 

section 563e.12(f) of OTS’s regulation, 

‘‘community development’’ means: 

(1) Affordable housing (including 

multifamily rental housing) for low-or 

moderate-income individuals; 

(2) Community services targeted to 

low-or moderate-income individuals; 

(3) Activities that promote economic 

development by financing businesses or 

farms that meet the size eligibility 

standards of the Small Business 

Administration’s Development 

Company or Small Business Investment 

Company programs (13 CFR 121.301) or 

have gross annual revenues of $1 

million or less; or 

(4) Activities that revitalize or 

stabilize low-or moderate-income 

geographies. See 69 FR 41181, 41188 

(July 8, 2004) (redesignating the 

definition of ‘‘community development’’

as paragraph (f) of section 563e.12, 

among other changes).

The 2001 ANPR 

As discussed in the 2001 ANPR, 

‘‘[S]ome [commenters] indicate that 

many projects intended to revitalize or 

stabilize rural communities do not 

qualify under the current regulatory 

definition of community development 

because they are not located in low- or 

moderate-income geographies as 

defined in the regulations. Others assert 

that the definition does not adequately 

value activities benefiting communities 

or projects involving persons with a mix 

of incomes.’’ 66 FR at 37605. 

As explained in the preamble to the 

2004 NPR, commenters on the 2001 

ANPR were split over the 

appropriateness of the current definition 

of ‘‘community development.’’

Financial institutions asked the banking 

agencies to remove from the definition 

of ‘‘community development’’ the 

requirement that community 

development activities target primarily 

low- or moderate-income individuals or 

areas, and expand the definition to 

include community-building activities 

that incidentally benefit low- or 

moderate-income individuals or areas. 

For instance, several financial 

institutions contended that any activity 

that helps ‘‘revitalize and stabilize’’ an 

area (e.g., after a natural disaster or a 

steady economic decline) should be 

considered community development, 

even if the activity is not located in, or 

targeted to, low- or moderate-income 

communities. Other examples of 

activities for which they sought 

consideration included municipal 

bonds and grants to cultural 

organizations and other charities. In 

contrast, community organizations that 

expressed a view favored retaining the 

current definition of ‘‘community 

development’’ or narrowing it. For 

example, many community 

organizations sought to limit the 

‘‘economic development’’ component of 

the definition to financing minorityowned businesses or farms and 

businesses or farms in low- or moderateincome areas. 69 FR at 5733. 

The 2004 NPR 

The 2004 NPR did not propose to 

revise the definition of ‘‘community 

development.’’ Thus, it did not 

specifically solicit comment on this 

issue and commenters did not focus on 

it. But as noted in the preamble to OTS’s 

August 18th final rule, community 

organizations opposed to changing the 

definition of ‘‘small institution’’ were 

primarily concerned that reducing the 

number of institutions subject to the 

large retail institution test—and 

therefore, the investment test—would 

reduce the level of investment in lowand moderate-income urban and rural 

communities. 69 FR at 51157. Further, 

some in Congress submitted comments 

encouraging the banking agencies to 

expand the definition of ‘‘community 

development.’’ A few other commenters 

supported giving more weight to 

philanthropy in underserved markets. 

Today’s Proposal 

Today’s proposal on the definition of 

‘‘community development’’ would 

address rural areas as well as any areas 

affected by natural or other disasters or 

other major community disruptions. 

With respect to rural areas, the second 

and fourth paragraphs of the community 

development definition would be 

expanded. Thus, under the proposed 

expanded definition, community 

development would also include: (1) 

Community services targeted to 

individuals in rural areas; and (2) 

activities that revitalize or stabilize rural 

areas. Community development 

activities in rural areas would be 

covered even if the individuals or areas 

served are not low- or moderate-income. 

This would contrast with the current 

definition of ‘‘community 

development,’’ which focuses on 

activities that benefit low- and 

moderate-income individuals or 

geographies. 

OTS is proposing this change to 

reduce burden and provide greater 

flexibility. OTS is responding to 

concerns that competition for scarce 

CRA loans and investments in certain 

metropolitan areas not only 

disadvantages small institutions that 

cannot compete for quality CRA loans 

and investments, but also results in a 

largely urban CRA focus. OTS’s 

examination experience indicates that 

rural areas tend to be composed of 

mixed-income census tracts that may 

not qualify as low- or moderate-income 

areas. Expanding the definition of 

‘‘community development’’ as proposed 

would further encourage savings 

associations to engage in community 

development activities outside of their 

traditional CRA market—while still 

applying existing standards for 

consideration of activities inside or 

outside the assessment area(s)—and 

thereby encourage the extension of CRA 

and community development to 

currently underserved and overlooked 

rural communities. 

As explained in OTS’s August 18th 

final rule, even with respect to small 

savings associations, OTS already 

considers performance in making 

community development loans and 

qualified investments and providing 

community development services, at the 

savings association’s request, for 

purposes of raising a rating. 69 FR at 

51159. Thus, the proposed change to the 

definition of ‘‘community development’’

is designed to encourage all thrifts—

large and small—to increase their 

community development activities in 

rural areas, with a particular focus on 

increasing these activities in 

underserved nonmetropolitan areas.

OTS is not proposing a specific 

definition of ‘‘rural’’ at this time. 

However, it solicits comments on the 

appropriate definition below. 

The proposal also solicits comment 

below on further encouraging savings 

associations to perform community 

development activities in any areas 

affected by natural or other disasters or 

other major community disruptions. 

This portion of the proposal would not 

be limited to rural areas or activities 

targeted to low- or moderate-income 

individuals or low- or moderate-income 

geographies. OTS has not, however, 

included proposed rule text that would 

address this possible change. 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68259

Solicitation of Comment on Community 

Development Proposal 

OTS solicits comments on all aspects 

of this proposal. 

A. Solicitation of Comments on the 

Definition of ‘‘Community 

Development’’

1. Should the definition of 

‘‘community development’’ be 

expanded? If so, how? 

2. Does the proposed change to the 

community development definition 

encompass the full range of community 

development activity that benefits rural 

areas? Should the definition include a 

savings association’s demonstrated 

participation in other types of 

community activities? Should the 

regulation provide for the Director of 

OTS to determine that additional 

activities that benefit the public welfare 

constitute ‘‘community development?’’

3. OTS has indicated in the wake of 

natural disasters and the September 

11th terrorist attacks, that it would take 

into account an institution’s response to 

its community when evaluating the 

institution’s stabilization activities 

under CRA. Would it be appropriate for 

the definition of ‘‘community 

development’’ to expressly provide that 

community development also includes, 

in any area (rural or not, low- or 

moderate-income or not): (1) 

Community services targeted to 

individuals in areas affected by natural 

or other disasters or other major 

community disruptions; and (2) 

activities that revitalize or stabilize 

areas affected by natural or other 

disasters or other major community 

disruptions? What other types of major 

community disruptions should be 

covered (e.g., civil unrest, arson)? 

4. As proposed, OTS would not 

expand the first paragraph of the 

definition of ‘‘community development’’

to include affordable housing (including 

multifamily rental housing) for 

individuals in rural areas who are not 

low- or moderate-income. Would it be 

appropriate to cover such activities? Do 

such activities contribute to community 

development? If so, how? Are there 

difficulties with housing affordability 

and availability in rural areas (e.g., 

marketability on the secondary mortgage 

market) that could appropriately be 

addressed by revising the definition of 

‘‘community development?’’

5. As proposed, OTS would not 

expand the third paragraph of the 

definition of ‘‘community development’’

to include activities that promote 

economic development by financing 

businesses or farms in rural areas 

without regard to their size or gross 

annual revenues. Would it be 

appropriate to cover such activities? Do 

such activities contribute to community 

development? If so, how? Are there 

difficulties with financing business or 

farms of various sizes or gross annual 

revenues in rural areas that could 

appropriately be addressed by revising 

the definition of ‘‘community 

development?’’

6. What would be the impact of the 

proposed definitional change for 

purposes of the community 

development test for wholesale or 

limited purpose savings associations, 

the large retail institution test, the small 

savings association test, and any other 

provisions of the CRA regulation 

affected? 

B. Solicitation of Comment on the 

Definition of ‘‘Rural’’

1. Would a definition of ‘‘rural’’ be 

helpful? If so, how should ‘‘rural’’ be 

defined? 

2. Would the definition of 

‘‘nonmetropolitan area,’’ which is to be 

incorporated in section 563e.12(r) of 

OTS’s CRA regulation, be appropriate 

(i.e., any area that is not located in a 

metropolitan statistical area)? See 69 FR 

at 41188. This definition is derived from 

the Office of Management and Budget’s 

Standards for Defining Metropolitan and 

Micropolitan Statistical Areas. 65 FR 

82228 (December 27, 2000). However, 

OMB has indicated, ‘‘The Metropolitan 

and Micropolitan Statistical Area 

Standards do not equate to an urbanrural classification; many counties 

included in Metropolitan and 

Micropolitan Statistical Areas, and 

many other counties, contain both urban 

and rural territory and populations.’’

OMB Bulletin No. 04–03 (February 18, 

2004), available at, http://

www.whitehouse.gov/omb/bulletins/

fy04/b04–03.html. 

3. Are there other definitions that 

would be appropriate? For example: 

a. The U.S. Census Bureau classifies 

as ‘‘urban’’ all territory, population, and 

housing units located within an 

urbanized area (UA) or an urban cluster 

(UC). It delineates UA and UC 

boundaries to encompass densely 

settled territory, which consists of:

(1) Core census block groups or blocks 

that have a population density of at least 

1,000 people per square mile and (2) 

surrounding census blocks that have an 

overall density of at least 500 people per 

square mile. In addition, under certain 

conditions, less densely settled territory 

may be part of each UA or UC. The 

Census Bureau’s classification of ‘‘rural’’

consists of all territory, population, and 

housing units located outside of UAs 

and UCs. The rural component contains 

both place and nonplace territory. 

Geographic entities, such as census 

tracts, counties, metropolitan areas, and 

the territory outside metropolitan areas, 

often are ‘‘split’’ between urban and 

rural territory, and the population and 

housing units they contain often are 

partly classified as urban and partly 

classified as rural. See ‘‘Census 2000 

Urban and Rural Classification,’’

available at http://www.census.gov/geo/

www/ua/ua_2k.html. 

b. The U.S. Department of Agriculture 

(USDA) uses various definitions. 

i. One definition groups counties 

according to their official status as 

metropolitan or nonmetropolitan under 

OMB standards. It then applies 9 ruralurban continuum codes to further 

distinguish among metropolitan 

counties by size and nonmetropolitan 

counties by their degree of urbanization 

or proximity to metropolitan areas. 

Codes 1 through 3 are various types of 

metropolitan counties while codes 4 

through 9 are various types of 

nonmetropolitan. Within 

nonmetropolitan areas, Code 8 is a 

county that is completely rural or has 

less than 2,500 in urban population and 

is adjacent to a metropolitan area, while 

Code 9 is a county that is completely 

rural or has less than 2,500 in urban 

population and is not adjacent to a 

metropolitan area. See ‘‘What is Rural?’’

available at http://www.nal.usda.gov/

ric/faqs/ruralfaq.htm and ‘‘Measuring 

Rurality: Rural-Urban Continuum 

Codes,’’ available at http://

www.ers.usda.gov/briefing/rurality/

RuralUrbCon. 

ii. Another definition, contained in 

the Farm Security and Rural Investment 

Act of 2002, applies generally to the 

USDA’s Rural Community 

Advancement programs. It defines 

‘‘rural’’ and ‘‘rural area’’ generally to 

mean ‘‘any area other than a city or 

town that has a population of greater 

than 50,000 inhabitants; and the 

urbanized area contiguous and adjacent 

to such a city or town.’’ 7 U.S.C. 

1991(a)(13). 

iii. Another definition, applicable to 

the Rural Empowerment Zones and 

Enterprise Communities initiative, 

generally defines a ‘‘rural area’’ as 

consisting of any area that lies outside 

the boundaries of a Metropolitan Area, 

as designated by OMB, or an area that 

has a population density less than or 

equal to 1,000 persons per square mile, 

the land use of which is primarily 

agricultural. 7 CFR 25.503(a). 

Assigned Ratings Proposal 

OTS is soliciting comment on 

providing additional flexibility in the 

way that CRA ratings are assigned. This 

68260 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

change would reduce burden and 

encourage large retail savings 

associations to focus their community 

reinvestment efforts on the types of 

activities the communities they serve 

need, consistent with safe and sound 

operations. As an alternative way to 

reduce burden, the proposal solicits 

comment on eliminating the investment 

test. 

The Current Rule 

Under the CRA regulation at 12 CFR 

563e.28(b), OTS assigns ratings to 

savings associations assessed under the 

lending, investment, and service tests in 

accordance with the following three 

rating principles: 

(1) A savings association that receives 

an ‘‘outstanding’’ rating on the lending 

test receives an assigned rating of at 

least ‘‘satisfactory’’; 

(2) A savings association that receives 

an ‘‘outstanding’’ rating on both the 

service test and the investment test and 

a rating of at least ‘‘high satisfactory’’ on 

the lending test receives an assigned 

rating of ‘‘outstanding’’; and 

(3) No savings association may receive 

an assigned rating of ‘‘satisfactory’’ or 

higher unless it receives a rating of at 

least ‘‘low satisfactory’’ on the lending 

test. 

The Interagency Questions and 

Answers Regarding Community 

Reinvestment, 66 FR 36620 (July 12, 

2001), address how the banking 

agencies weight performance under the 

lending, investment, and service tests 

for large retail institutions. Q&A 28(a)–

3, 66 FR at 36639, provides: 

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.

The Q&A then sets forth the following 

matrices (66 FR at 36639–36640):

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. 

As reflected in the first matrix, 

currently approximately 50 percent 

weight is given to lending, and 

approximately 25 percent weight is 

given to services and investments each. 

Under section 563e.21(b) of OTS’s 

CRA regulation, OTS applies the tests in 

a performance context that considers the 

following: 

(1) Demographic data on median 

income levels, distribution of household 

income, nature of housing stock, 

housing costs, and other relevant data 

pertaining to a savings association’s 

assessment area(s); 

(2) Any information about lending, 

investment, and service opportunities in 

the savings association’s assessment 

area(s) maintained by the savings 

association or obtained from community 

organizations, state, local, and tribal 

governments, economic development 

agencies, or other sources; 

(3) The savings association’s product 

offerings and business strategy as 

determined from data provided by the 

savings association; 

(4) Institutional capacity and 

constraints, including the size and 

financial condition of the savings 

association, the economic climate 

(national, regional, and local), safety 

and soundness limitations, and any 

other factors that significantly affect the 

savings association’s ability to provide 

lending, investments, or services in its 

assessment area(s); 

(5) The savings association’s past 

performance and the performance of 

similarly situated lenders; 

(6) The savings association’s public 

file, as described in section 563e.43, and 

any written comments about the savings 

association’s CRA performance 

submitted to the savings association or 

the OTS; and 

(7) Any other information deemed 

relevant by the OTS. 

The CRA regulation has been 

implemented to consider factors outside 

of a savings association’s control that 

prevent it from engaging in certain 

activities. When the banking agencies 

promulgated the 1995 CRA rule, they 

specifically noted in the preamble:

Statutory limits on investment 

authority. Several thrift commenters had 

concerns about the application of the 

investment test to thrift institutions 

because of their limited investment 

authority. Rather than providing a 

blanket exemption from the investment 

test, the final rule modifies the 

‘‘capacity and constraints’’ section of 

the performance context to clarify that 

examiners should consider an 

institution’s investment authority in 

evaluating performance under the 

investment test. A thrift that has few or 

no qualified investments may still be 

considered to be performing adequately 

under the investment test if, for 

example, the institution is particularly 

effective in responding to the 

community’s credit needs through 

community development lending 

activities.

60 FR 22156, 22163 (May 4, 1995) 

(emphasis added). 

This flexible approach for evaluating 

the performance of savings associations 

was restated in the interagency CRA 

Qs&As. These Qs&As specifically 

acknowledge that limitations on 

institutional capacity and constraints 

will be considered in evaluating 

performance under the investment test. 

Q&A 21(b)(4)–1 asks, ‘‘Will examiners 

consider factors outside of an 

institution’s control that prevent it from 

engaging in certain activities?’’ 66 FR at 

36631. The answer provided states: 

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 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68261

investment authority may still receive a 

low satisfactory rating under the 

investment test if it has a strong lending 

record.

66 FR at 36631 (emphasis added).

The CRA regulation also emphasizes 

that the rating assigned reflects the 

savings association’s record of helping 

to meet the credit needs of its entire 

community, including low- and 

moderate-income neighborhoods, 

‘‘consistent with the safe and sound 

operation of the savings association.’’ 12 

CFR 563e.21(c). The CRA regulation 

goes on to elaborate in 12 CFR 

563e.21(d): 

Safe and sound operations. This part 

and the CRA do not require a savings 

association to make loans or 

investments or to provide services that 

are inconsistent with safe and sound 

operations. To the contrary, the OTS 

anticipates savings associations can 

meet the standards of this part with safe 

and sound loans, investments, and 

services on which the savings 

associations expect to make a profit. 

Savings associations are permitted and 

encouraged to develop and apply 

flexible underwriting standards for 

loans that benefit low- or moderateincome geographies or individuals, only 

if consistent with safe and sound 

operations. 

The 2001 ANPR 

The 2001 ANPR contained extensive 

discussion of the way performance of 

large retail institutions is assessed under 

the lending, investment, and service 

tests. It explained that the regulations 

attempt to temper their reliance on 

quantitative factors by requiring 

examiners to evaluate qualitative 

factors, because not all activities of the 

same numerical magnitude have equal 

impact or entail the same relative 

importance when undertaken by 

different institutions in different 

communities. It also indicated that 

institutions’ CRA ratings reflect the 

principle that lending is the primary 

vehicle for meeting a community’s 

credit needs. It noted that in the 

preamble to the 1995 CRA rule, the 

banking agencies published a ratings 

matrix for examiners to use when 

evaluating large retail institutions under 

the lending, investment, and service 

tests. Under this matrix, it is impossible 

for an institution to achieve a 

‘‘satisfactory’’ rating overall unless it 

receives at least a ‘‘low satisfactory’’

rating on the lending test. 66 FR at 

37604. 

In publishing the matrix in 1995, the 

banking agencies noted that they were 

not incorporating it into the CRA rule 

itself, to allow some flexibility to adjust 

the matrix to prevent unintended 

anomalies that may be found during the 

examination process. The preamble 

noted that if the banking agencies were 

to change the matrix in the future, the 

new matrix would be published for 

information, but not necessarily for 

comment, in the Federal Register. 60 FR 

at 22170. As discussed above, the matrix 

is currently published in Q&A 28(a)–3. 

With respect to the emphasis placed 

on each category of an institution’s 

activities under the large retail 

institution test, the 2001 ANPR 

indicated that some contended that 

lending should always be stressed, 

because they believe that deposits 

derived from communities should be 

reinvested in those communities 

through loans. Still others asserted that 

lending should be the only basis upon 

which institutions are evaluated. 66 FR 

at 37604.

In contrast, some questioned whether 

lending should be emphasized more 

than investments and services. Some 

asserted that a CRA evaluation should 

allow for adjustment of this emphasis in 

a manner that more nearly corresponds 

with the activities of the institution and 

the particular needs of its community. 

For example, some asserted, that if an 

institution does not significantly engage 

in retail lending and, therefore, makes 

few loans, the lending test should not 

receive more emphasis than the 

investment and service tests for that 

institution’s CRA evaluation. 66 FR at 

37604. 

Further, some argued that an 

institution’s record of providing services 

should be given more emphasis than it 

currently is given. Others asserted that 

providing services is not relevant to 

assessing whether an institution is 

meeting the credit needs of its 

community. 66 FR at 37604. 

The 2001 ANPR asked: ‘‘Do the 

regulations strike the appropriate 

balance between quantitative and 

qualitative measures, and among 

lending, investments, and services? If 

so, why? If not, how should the 

regulations be revised?’’ 66 FR at 37604. 

The 2001 ANPR also discussed, in 

detail, and solicited comment on, each 

of the component parts of the large retail 

institution test. With respect to the 

investment test, it explained that the 

banking agencies included the 

investment test in their CRA regulations 

in recognition that investments, as well 

as loans, can help meet credit needs. 

Some asserted, however, that the 

banking agencies should only consider 

investment activities to augment 

institutions’ CRA ratings. In their view, 

although investments may help an 

institution to meet the credit needs of its 

community, particularly in low- and 

moderate-income areas, CRA ratings 

should be based primarily on lending 

activity. Still others stated, however, 

that it is inappropriate for the banking 

agencies to evaluate investments under 

the CRA as a means of meeting credit 

needs. Yet others argued that 

investments by financial institutions are 

invaluable in helping to meet the credit 

needs of the institutions’ communities, 

particularly in low- and moderateincome areas. 66 FR at 37604–37605. 

The 2001 ANPR also noted that the 

availability of qualified investments has 

been an issue of concern to some. 

Although some observed that, since the 

1995 regulations went into effect, the 

market of available CRA-related 

investments has grown and continues to 

grow, others asserted that appropriate 

investment opportunities may not be 

available in their communities. Further, 

some of the retail institutions subject to 

the investment test indicated that, in 

some cases, it was difficult to compete 

for investment opportunities, 

particularly against much larger 

institutions. 66 FR at 37605. 

The 2001 ANPR asked: ‘‘Does the 

investment test effectively assess an 

institution’s record of helping to meet 

the credit needs of its entire 

community? If so, why? If not, how 

should the regulations be revised?’’ 66 

FR at 37605. 

With respect to the service test, the 

2001 ANPR discussed issues of concern 

on both evaluating retail services and 

community development services. It 

asked: ‘‘Does the service test effectively 

assess an institution’s record of helping 

to meet the credit needs of its entire 

community? If so, why? If not, how 

should the regulations be revised?’’ 66 

FR at 37605. 

In summarizing the comments on the 

2001 ANPR, the preamble to the 2004 

NPR indicated a majority of community 

organization commenters that addressed 

the weight given to the components of 

the three-part test believed that lending 

should continue to receive more weight 

than investments or services. Of 

financial institutions that addressed the 

issue, more than half agreed. The 

remainder of industry commenters 

generally believed either that the 

components should be weighted equally 

or that their weights should vary with 

performance context. Many financial 

institutions felt the investment test was 

weighted too heavily, while community 

organizations disagreed. 69 FR at 5732. 

The preamble also explained that 

although a small number of commenters 

objected to any consideration of 

investments under CRA, the comments 

revealed a general view that community 

68262 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

development-oriented investments 

(‘‘qualified investments,’’ under the 

regulations) should be considered to the 

extent they help meet community credit 

needs. Commenters, nonetheless, 

disagreed significantly about whether 

the current investment test effectively 

and appropriately assesses investments 

and about the extent to which 

assessment of investments should be 

mandatory or optional. 

As the preamble explained, financial 

institutions commented that the 

investment test is not sufficiently 

tailored to market reality, community 

needs, or institutions’ capacities. 

Several financial institutions said there 

are insufficient equity investment 

opportunities, especially for smaller 

institutions and those serving rural 

areas. Some noted that intense 

competition for a limited supply of 

community development equity 

investments has depressed yields, 

effectively turning many of the 

investments into grants; some claimed 

that institutions had spent resources 

transforming would-be loans into equity 

investments merely to satisfy the 

investment test; and some expressed 

concern that institutions were forced to 

worry more about making a sufficient 

number and amount of investments than 

about the effectiveness of their 

investments for their communities. 69 

FR at 5732–5733. 

To address these concerns, many 

financial institutions favored abolishing 

the stand-alone investment test and 

making investments optional to one 

degree or another. Only two financial 

institutions expressly supported 

retaining the separate investment test. 

Several financial institutions and most 

financial institution trade associations 

endorsed one or more of the following 

three alternatives: (1) Treat investments 

solely as ‘‘extra credit;’’ (2) make 

investments count towards the lending 

or service test; or (3) treat investments 

interchangeably with community 

development services and loans under a 

new community development test. 69 

FR at 5733. 

In contrast, the majority of 

community organization commenters 

urged the banking agencies to retain the 

investment test. Many of them claimed 

that the problem is more often a 

shortage of willing investors than an 

insufficient number of investment 

opportunities. Community organizations 

also contended that grants and equity 

investments are crucial to meeting the 

affordable housing and economic 

development needs of low- and 

moderate-income areas and individuals. 

They stated, for example, that 

investments support and expand the 

capacity of nonprofit community 

development organizations to meet 

credit needs. A few community 

organizations acknowledged a basis for 

some of the financial institutions’

complaints concerning the investment 

test, but most of those community 

organizations argued that refining, 

rather than restructuring, the large retail 

institution test would address such 

complaints. 69 FR at 5733.

The preamble to the 2004 NPR also 

discussed comments received on issues 

of concern under the service test. 69 FR 

at 5734–5735. 

The 2004 NPR 

The preamble to the 2004 NPR 

explained that the three-part large retail 

institution test places primary emphasis 

on lending performance, and secondary 

emphasis on investment and service 

performance. It explained in detail the 

reasons that the banking agencies, at 

that time, did not propose to eliminate 

the investment test, modify the service 

test, or change the weights given to the 

three tests under the large retail 

institution test. 69 FR at 5733–5735. 

Thus, it did not specifically solicit 

comments on these issues. Nor did the 

2004 NPR propose or specifically solicit 

comments on the possibility of retaining 

all three tests as part of the large retail 

institution test but providing additional 

flexibility in the way that CRA ratings 

are assigned. Thus, the comments 

received did not focus on these 

possibilities either. 

A few commenters on the 2004 NPR, 

however, indicated their continued 

support for creating a community 

development test that would 

incorporate all community development 

lending, community development 

investments, and community 

development services into a single test. 

A few commenters also urged the 

banking agencies to give more weight to 

certain types of services in the CRA 

rating. 

Today’s Proposal 

OTS is soliciting comment on 

providing additional flexibility in 

assigning CRA ratings. The purpose 

would be to reduce burden while 

encouraging large retail savings 

associations to focus their community 

reinvestment efforts on the types of 

activities the communities they serve 

need, consistent with safe and sound 

operations. Rather than mandating 

changes to the weights assigned to 

lending, investments, and services 

under the large retail institution test, 

OTS is soliciting comment on providing 

flexibility in those weights. 

This approach would serve to clarify 

and build upon the existing guidance 

currently contained in Q&A 21(b)(4)–1 

discussed above addressing the 

application of the investment test to 

savings associations. Notwithstanding 

the Q&A and the statement in the 1995 

preamble also discussed above, OTS has 

heard anecdotal evidence suggesting 

that further elaboration would be useful. 

The existing guidance reflects the 

unique statutory and regulatory 

structure applicable to savings 

associations. Savings associations 

remain home mortgage lenders, in part, 

because unlike banks, they must have at 

least 65% of their assets in the form of 

what are generally mortgages or 

mortgage-related loans in order to avoid 

the adverse consequences of failing to 

meet the qualified thrift lender test 

under the Home Owners’ Loan Act 

(HOLA). 12 U.S.C. 1467a(m). Savings 

associations are also subject to HOLA 

lending and investment limits, 

including limits on commercial loans 

and community development 

investments. 12 U.S.C. 1464(c)(2)(A) 

and (c)(3)(A); 12 CFR 560.30. See 69 FR 

at 51158. 

To bring further clarity to the issue, 

OTS is considering providing each 

savings association evaluated under the 

large retail institution test a choice, at 

its option, on the weight given to 

lending, investments, and services in 

assessing its performance. Consistent 

with the traditional and appropriate 

emphasis on lending, OTS would not 

allow less than a 50 percent weight to 

lending. The remaining 50 percent 

would weigh lending, investments, or 

services, or some combination thereof, 

based on the savings association’s 

election. As a result, each savings 

association could choose to have OTS 

weigh lending anywhere from 50% to 

100% for that association’s overall 

performance assessment, services 

anywhere from 0% to 50%, and 

investments anywhere from 0% to 50%. 

As under the existing ratings matrix, 

OTS would continue to allocate a total 

of 24 possible points among the three 

tests. OTS would allocate 12 of these 

possible points to lending. OTS would 

allocate the remaining 12 possible 

points to lending, services, investments, 

or some combination thereof based on 

the savings association’s weight 

election. For each test, the savings 

association would receive a percentage 

of the possible points it allocated to that 

test, with the percentage varying 

depending on the rating it received on 

that test as follows:

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68263

Rating on test 

Percent of points 

allocated to test 

association would 

receive 

Outstanding .................... 100 

High Satisfactory ............ 75 

Low Satisfactory ............. 50 

Needs to Improve ........... 25 

Rating on test 

Percent of points 

allocated to test 

association would 

receive 

Substantial Noncompliance ............................ 0 

For illustrative purposes, here are 

some examples: 

1. Lending 80% Weight, Service 10% 

Weight, Investment 10%. If a savings 

association chose to be evaluated by 

OTS giving 80% weight to lending, 10% 

weight to services, and 10% weight to 

investment, OTS would apply the 

following matrix:

POINTS ASSIGNED FOR PERFORMANCE UNDER LENDING, INVESTMENT AND SERVICE TESTS

Lending

(80%) 

Service

(10%) 

Investment

(10%) 

Outstanding ............................................................................................................................ 19.2 2.4 2.4 

High Satisfactory .................................................................................................................... 14.4 1.8 1.8 

Low Satisfactory .................................................................................................................... 9.6 1.2 1.2 

Needs to Improve .................................................................................................................. 4.8 .6 .6 

Substantial Noncompliance ................................................................................................... 0 0 0

2. Lending 50% Weight, Service 10% 

Weight, Investment 40%. If a savings 

association chose to be evaluated by 

OTS giving 50% weight to lending, 10% 

weight to services, and 40% weight to 

investment, OTS would apply the 

following matrix:

POINTS ASSIGNED FOR PERFORMANCE UNDER LENDING, INVESTMENT AND SERVICE TESTS

Lending

(50%) 

Service

(10%) 

Investment

(40%) 

Outstanding .............................................................................................................................. 12 2.4 9.6 

High Satisfactory ...................................................................................................................... 9 1.8 7.2 

Low Satisfactory ...................................................................................................................... 6 1.2 4.8 

Needs to Improve .................................................................................................................... 3 .6 2.4 

Substantial Noncompliance ..................................................................................................... 0 0 0 

3. Lending 50% Weight, Service 30% 

Weight, Investment 20%. If a savings 

association chose to be evaluated by 

OTS giving 50% weight to lending, 30% 

weight to services, and 20% weight to 

investment, OTS would apply the 

following matrix:

POINTS ASSIGNED FOR PERFORMANCE UNDER LENDING, INVESTMENT AND SERVICE TESTS

Lending

(50%) 

Service

(30%) 

Investment

(20%) 

Outstanding .............................................................................................................................. 12 7.2 4.8 

High Satisfactory ...................................................................................................................... 9 5.4 3.6 

Low Satisfactory ...................................................................................................................... 6 3.6 2.4 

Needs to Improve .................................................................................................................... 3 1.8 1.2 

Substantial Noncompliance ..................................................................................................... 0 0 0 

Under all of these alternatives, the 

composite rating matrix would remain 

essentially the same as currently 

provided except for taking into account 

the possibility of fractions of points. It 

would read as follows:

COMPOSITE RATING POINT

REQUIREMENTS

[Add points from tests as applicable] 

Rating Total points 

Outstanding .......... 20 or over. 

Satisfactory .......... 11 or more but less than 

20. 

COMPOSITE RATING POINT

REQUIREMENTS—Continued

[Add points from tests as applicable] 

Rating Total points 

Needs to Improve 5 or more but less than 

11. 

Substantial Noncompliance.0 or more but less than 

5. 

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.

Continuing to include the same note 

to the composite rating matrix as 

contained under the current matrix 

would have certain implications. For 

example, a savings association opting to 

allocate equal weight to lending as to 

the combination of services and 

investments could not receive a rating of 

‘‘satisfactory’’ overall if it received a 

‘‘needs to improve’’ or ‘‘substantial 

noncompliance’’ on its lending. 

If OTS were to offer this type of 

flexibility, a savings association 

evaluated under the large retail 

institution test could elect weights, 

much in the same way as it may 

currently elect consideration of lending 

68264 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

by an affiliate or consortium, or 

investments or services by an affiliate. 

See 12 CFR 563e.22(c)–(d), 563e.23(c), 

and 563e.24(c). The Preliminary 

Examination Response Kit (PERK) 

package could be revised to provide an 

opportunity for a savings association to 

opt for an alternative weight for lending, 

service, and investment. Through this 

process, a savings association could 

make a new weight election at the start 

of each CRA examination. A savings 

association that did not make an 

election would be evaluated under the 

existing matrix contained in Q&A 28(a)–

3. 

Conforming changes could be made 

section 563e.28 of the CRA rule. 

Additional text could be added to that 

section indicating that a savings 

association could, at its option, elect to 

have its rating assigned under 

alternative weights of lending, service, 

and investment so long as at least 50 

percent weight is given to lending. 

To the extent of any inconsistency 

between the three rating principles in 

section 563e.28(b) discussed above and 

the rating matrix generated from the 

savings association’s election, the 

standards set forth under the matrix 

selected would govern. Thus, for 

example, the principle referring to 

ratings on the service test and 

investment test would not apply to a 

savings association that chose not to 

have OTS give weight to either or both 

of those factors. 

Providing flexibility for a savings 

association to elect alternative weights 

would supplement the use of the 

performance context factors discussed 

above and serve many of the same 

functions. As discussed above, OTS 

already evaluates a savings association’s 

performance in the context of factors 

such as the savings association’s 

product offerings and business strategy, 

its institutional capacity and 

constraints, information about lending, 

investment, and service opportunities in 

the savings association’s assessment 

area(s), and demographic and other 

relevant data pertaining to a savings 

association’s assessment area. See 12 

CFR 563e.21(b). Likewise, providing 

weight alternatives would enable the 

savings association to have its 

performance evaluated in a manner 

most appropriately tailored to the 

lending, investment, and service 

opportunities its assessment area(s), 

demographic and other relevant data 

pertaining to its assessment area(s), its 

product offerings and business strategy, 

and its institutional capacity and 

constraints. This approach would be 

designed to encourage large retail 

savings associations to focus their 

community reinvestment efforts on the 

types of activities the communities they 

serve need, consistent with safe and 

sound operations. 

Solicitation of Comment on Assigned 

Ratings Proposal 

OTS solicits comments on all aspects 

of this proposal. 

C. Solicitation of Comment on 

Alternative Weights Election 

1. Would it be appropriate to provide 

the savings association flexibility in the 

way that CRA ratings are assigned by 

offering a choice of weights for the 

lending, service, and investment tests 

within the large retail institution test? If 

so, why? If not, why not? 

2. Are there ways OTS could make the 

process even more flexible than 

outlined in this proposal? 

3. What would be the impact on 

lending, investments, and services of 

offering alternative weights? 

4. Should OTS place limits on the 

savings association’s ability to opt for 

particular weights? How could OTS 

help ensure that a savings association 

would select weights that focus on the 

types of activities the communities it 

serves need? How could OTS take a 

savings association’s selection of a 

weight alternative into consideration as 

part of the performance context? Is there 

an appropriate role for public 

participation beyond existing 

opportunities for provision of 

information regarding the performance 

context and submission of comments 

about the savings association’s CRA 

performance? See 12 CFR 563e.21(b)(2), 

563e.21(b)(6), 563e.29(c) and 

563e.43(a)(1) and Q&A 21(b)(2)–2, 66 FR 

at 36631. 

5. What logistical and practical issues 

would have to be addressed in 

providing a choice of weights and how 

should these issues be addressed (e.g., 

timing and method of alternative 

selected)? 

6. Would it be useful for OTS to 

publish examples of weight alternatives 

in the preamble to the final rule or 

elsewhere? 

7. For ease of administrative 

implementation, would it be 

appropriate for OTS to limit the choice 

of weights to a list containing several 

options? If so, what options should be 

offered? Which options would a savings 

association be likely to choose? 

8. Would it cause confusion for 

savings associations, community 

organizations, or the public to allow 

customized weight combinations that 

might be selected by only one or a few 

institutions (e.g., lending 57%, service 

28%, and investment 15%)? 

9. Would it be appropriate for the 

alternative weights to require at least a 

50 percent weight to lending, as 

proposed? Why or why not? If a rating 

matrix that gives less than 50 percent 

weight to lending were to be offered, 

would that be consistent with the 

purposes of CRA?

10. Would it be appropriate to 

continue to ensure that a savings 

association may not receive a rating of 

‘‘satisfactory’’ unless it receives at least 

‘‘low satisfactory’’ on the lending test by 

capping total points at three times the 

lending test score as under the current 

composite rating matrix, as proposed? 

Why or why not? If a rating matrix that 

allowed a savings association to receive 

a rating of ‘‘satisfactory’’ without 

receiving at least ‘‘low satisfactory’’ on 

the lending test were offered, would that 

be consistent with the purposes of CRA? 

11. Is it appropriate to offer 

alternatives allowing less than a 25 

percent weight to services and less than 

25 percent weight to investments, as 

proposed? Why or why not? 

D. Solicitation of Comment on 

Eliminating the Investment Test 

1. Would a preferable alternative be to 

eliminate the investment test? If so, 

why? If not, why not? 

2. What would be the impact on 

investments of eliminating the 

investment test? 

3. If the investment test were 

eliminated as a mandatory separate 

component of the large retail institution 

test, should investments still be 

considered * * *

a. At a savings association’s option or 

to raise a rating? 

b. Within one of the other tests (e.g., 

under the lending test treated similarly 

to community development loans)? 

c. In some other fashion (e.g., treating 

investments interchangeably with 

community development services and 

loans under a new community 

development test)? 

4. If the investment test were 

eliminated as a mandatory separate 

component of the large retail institution 

test, what weight should be given to the 

remaining components of the test (e.g., 

weight lending 75% and service 25%, 

weight lending and service 50% each)? 

Regulatory Analysis 

Paperwork Reduction Act 

In accordance with the requirements 

of the Paperwork Reduction Act of 1995, 

OTS may not conduct or sponsor, and 

a respondent is not required to respond 

to, an information collection unless it 

displays a currently valid Office of 

Management and Budget (OMB) control 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68265

number. This collection of information 

is currently approved under OMB 

Control Number 1550–0012. This 

proposal would not change the 

collection of information. 

Regulatory Flexibility Act 

Pursuant to section 605(b) of the 

Regulatory Flexibility Act, OTS certifies 

that since the proposal would not have 

a significant economic impact on a 

substantial number of small entities. It 

would not impose any additional 

paperwork or regulatory reporting 

requirements. It would simply 

encourage savings associations to 

increase their community development 

lending, qualified investments, and 

community development services in 

rural areas, with a particular focus on 

increasing these activities in 

underserved nonmetropolitan areas, by 

expanding the definition of ‘‘community 

development.’’ The proposal also 

solicits comment on further encouraging 

savings associations to perform 

community development activities in 

areas affected by natural or other 

disasters or other major community 

disruptions. The other portions of the 

proposal relate only to the treatment of 

savings associations under the retail test 

mandated only for large institutions. 

Executive Order 12866 Determination 

OTS has determined that this 

proposal is not a significant regulatory 

action under Executive Order 12866. 

Unfunded Mandates Reform Act of 1995 

Determination 

Section 202 of the Unfunded 

Mandates Reform Act of 1995, Public 

Law 104–4 (Unfunded Mandates Act) 

requires that an agency prepare a 

budgetary impact statement before 

promulgating a rule that includes a 

Federal mandate that may result in 

expenditure by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any one year. If a budgetary impact 

statement is required, section 205 of the 

Unfunded Mandates Act also requires 

an agency to identify and consider a 

reasonable number of regulatory 

alternatives before promulgating a rule. 

OTS has determined that this rule 

would not result in expenditures by 

State, local, and tribal governments, or 

by the private sector, of $100 million or 

more. Accordingly, OTS has not 

prepared a budgetary impact statement 

nor specifically addressed the regulatory 

alternatives considered.

List of Subjects in 12 CFR Part 563e 

Community development, Credit, 

Investments, Reporting and 

recordkeeping requirements, Savings 

associations.

Office of Thrift Supervision

12 CFR Chapter V 

For the reasons outlined in the 

preamble, the Office of Thrift 

Supervision proposes to amend part 

563e of chapter V of title 12 of the Code 

of Federal Regulations as set forth 

below:

PART 563e—COMMUNITY 

REINVESTMENT 

1. The authority citation for part 563e 

continues to read as follows:

Authority: 12 U.S.C. 1462a, 1463, 1464, 

1467a, 1814, 1816, 1828(c), and 2901 through 

2907.

2. Revise § 563e.12(f)(2) and (4) to 

read as follows:

* * * * *

(f) Community development means:

* * * * *

(2) Community services targeted to 

low- or moderate-income individuals or 

to individuals in rural areas;

* * * * *

(4) Activities that revitalize or 

stabilize low- or moderate-income 

geographies or rural areas.

* * * * *

Dated: November 18, 2004.

By the Office of Thrift Supervision. 

James E. Gilleran, 

Director.

[FR Doc. 04–26011 Filed 11–23–04; 8:45 am] 

BILLING CODE 6720–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2004–19681; Directorate 

Identifier 2003–NM–184–AD] 

RIN 2120–AA64 

Airworthiness Directives; BAE 

Systems (Operations) Limited Model 

BAe 146 Series Airplanes

AGENCY: Federal Aviation 

Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: The FAA proposes to adopt a 

new airworthiness directive (AD) for all 

BAE Systems (Operations) Limited 

Model BAe 146 series airplanes. This 

proposed AD would require repetitive 

detailed inspections for cracking of the 

elevator ‘‘G’’ weight support structure, 

and repairs if necessary. This proposed 

AD also provides for an optional 

terminating action. This proposed AD is 

prompted by reported cracking of the 

elevator ‘‘G’’ weight support structure. 

We are proposing this AD to prevent 

failure of the elevator ‘‘G’’ weight 

support structure with possible 

consequent jamming of the right-hand 

elevator servo tab and reduced 

controllability of the airplane.

DATES: We must receive comments on 

this proposed AD by December 27, 

2004.

ADDRESSES: Use one of the following 

addresses to submit comments on this 

proposed AD. 

• DOT Docket Web site: Go to

http://dms.dot.gov and follow the 

instructions for sending your comments 

electronically. 

• Government-wide rulemaking Web 

site: Go to http://www.regulations.gov

and follow the instructions for sending 

your comments electronically. 

• Mail: Docket Management Facility, 

U.S. Department of Transportation, 400 

Seventh Street SW., Nassif Building, 

Room PL–401, Washington, DC 20590. 

• By fax: (202) 493–2251. 

• Hand Delivery: Room PL–401 on 

the plaza level of the Nassif Building, 

400 Seventh Street SW., Washington, 

DC, between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

You can get the service information 

identified in this proposed AD from 

British Aerospace Regional Aircraft 

American Support, 13850 Mclearen 

Road, Herndon, Virginia 20171. 

You may examine the contents of this 

AD docket on the Internet at http://

dms.dot.gov, or at the Docket 

Management Facility, U.S. Department 

of Transportation, 400 Seventh Street 

SW., Room PL–401, on the plaza level 

of the Nassif Building, Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Todd Thompson, Aerospace Engineer; 

International Branch, ANM–116, FAA, 

Transport Airplane Directorate, 1601 

Lind Avenue, SW., Renton, Washington 

98055–4056; telephone (425) 227–1175; 

fax (425) 227–1149.

SUPPLEMENTARY INFORMATION: 

Docket Management System (DMS) 

The FAA has implemented new 

procedures for maintaining AD dockets 

electronically. As of May 17, 2004, new 

AD actions are posted on DMS and 

assigned a docket number. We track 

each action and assign a corresponding 

directorate identifier. The DMS AD 

docket number is in the form ‘‘Docket 

No. FAA–2004–99999.’’ The Transport 

Airplane Directorate identifier is in the 

form ‘‘Directorate Identifier 2004–NM–

999–AD.’’ Each DMS AD docket also