25088 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

FEDERAL FINANCIAL INSTITUTIONS

EXAMINATION COUNCIL

Community Reinvestment Act;

Interagency Questions and Answers

Regarding Community Reinvestment;

Notice

AGENCY: Federal Financial Institutions

Examination Council.

ACTION: Notice and request for comment.

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. We invite public comment

on the proposed question and answer,

as well as any of the new and revised

questions and answers and any other

community reinvestment issues that are

not addressed in these Interagency

Questions and Answers.

DATES: Effective date of amended

Interagency Questions and Answers on

Community Reinvestment: April 28,

2000. Comments on the proposed

questions and answers are requested by

June 27, 2000.

ADDRESSES: Questions and comments

may be sent to Keith J. Todd, Executive

Secretary, Federal Financial Institutions

Examination Council, 2000 K Street,

NW., Suite 310, Washington, DC 20006,

or by facsimile transmission to (202)

872–7501.

FOR FURTHER INFORMATION CONTACT:

OCC: Malloy Harris, National Bank

Examiner, Community and Consumer

Policy Division, (202) 874–4446; or

Margaret Hesse, Senior Attorney,

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;

James H. Mann, Attorney, (202) 452–

2412; or Kathleen C. Ryan, 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, Senior Fair

Lending Specialist, Division of

Compliance and Consumer Affairs,

(202) 942–3090; 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 12 CFR parts 25, 228,

345 and 563e, implementing 12 U.S.C.

2901 et seq. 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

May 3, 1999 (1999 Interagency

Questions and Answers). 64 FR 23618.

In addition to issuing the 1999

Interagency Questions and Answers, we

proposed three questions and answers

in the accompanying supplementary

information. These questions and

answers addressed: (1) Collection of

refinanced and renewed small business

and small farm loan data; (2) direct

benefit of community development

loans and services and qualified

investments to an institution’s

assessment area; and (3) consideration

as qualified investments of mortgagebacked securities backed by mortgages

originated or purchased primarily by the

investing institution. We specifically

requested comment addressing the

proposed questions and answers, as

well as general comments and questions

regarding the CRA regulations. 64 FR at

23624–26.

We received 86 letters in response to

our request for comments in the 1999

Interagency Questions and Answers.

Comments came from financial

institutions (55), community

organizations (10), financial institution

trade associations (8), federal entities

(5), state/local agencies (1), as well as

others (7). This document supplements,

revises, and republishes the 1999

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 two of the questions and answers

proposed in May 1999, along with a

conforming change to another existing

question and answer. We are also

reissuing for comment the third

question and answer proposed in May

1999 and proposing for comment a

conforming amendment to an existing

question and answer. In addition, we

are making slight revisions to four

existing questions and answers and

adding one new question and answer.

In this version of the Interagency

Questions and Answers, we have

deleted the ‘‘Table of Contents,’’ which

appeared in previous versions. In lieu of

the table of contents, we are adding, for

the first time, 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

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25089

§ll.26. In the few instances in which

the suffix in one of the regulations is

different, the specific citation for that

regulation is provided. In order to create

a meaningful index, we found it

necessary to devise a slightly new

question numbering system. The new

question numbering system consists of

the regulatory citation (as described

above) and a number, connected by a

dash. For example, the first question

addressing §ll.21(a) would be

identified as §ll.21(a)–1.

Adopting Questions and Answers

Proposed in May 1999

We are adopting two of the three

questions and answers that we proposed

in May 1999. We are also adopting a

conforming revision to an existing

question and answer to provide

consistency with a new question and

answer.

May an Institution Receive

Consideration Under the Investment

Test for Mortgage-Backed Securities

Backed by Home Mortgages That the

Same Institution Originated or

Purchased?

In May, we proposed a new question

and answer that stated that an

institution could not receive investment

test consideration for a mortgage-backed

security that is primarily or exclusively

backed by loans originated or purchased

by the same institution.

Twenty-seven of the 82 letters

submitted to the FFIEC addressed this

issue. In addition, four Federal Reserve

Banks wrote to the Board with

comments on this proposal.

Commenters were evenly divided on

this proposed question and answer.

Twelve financial institutions, two trade

associations and one federal entity (15

commenters) disagreed with the

proposed question and answer, while

six financial institutions, three

community organizations, two trade

associations, four federal entities (the

Federal Reserve Banks) and one other

commenter (an affiliate of a financial

institution) (16 commenters) agreed

with the proposed question and answer.

The Interagency Questions and

Answers currently state that mortgagebacked securities (MBSs) designed

primarily to finance community

development generally are qualified

investments. (§§ll.12(s) & 563.12(r)–

2.) This view was adopted based on

staff’s belief that, in allowing CRA

consideration for MBSs backed by

affordable housing loans, affordable

housing loan originators would have an

additional incentive to sell their

affordable housing loans. As a result,

they would be able to originate more

affordable housing loans with the

proceeds from the sale of their loans

through the MBS vehicle.

Commenters that opposed adoption of

the question and answer, which as

proposed would not have allowed an

institution to receive consideration for

MBSs that are primarily or exclusively

backed by loans originated or purchased

by the same institution, generally

stressed that securitizing affordable

housing loans had capital, liquidity, and

credit and interest rate risk advantages.

For example, the risk-based capital

required for MBSs may be lower than

for the corresponding loans held in

portfolio. If an MBS is guaranteed by a

government-sponsored enterprise (GSE),

such as Fannie Mae or Freddie Mac, the

risk-based capital requirement (on the

guaranteed portion) is 20 percent,

compared to a risk-based capital

requirement of 50 percent for one-tofour family mortgages held in portfolio.

(On the other hand, if the MBS is not

guaranteed by a GSE, the risk-based

capital requirement is 50 percent, the

same as the requirement for loans held

in portfolio.) Commenters also indicated

that MBSs could be used as collateral

against other borrowings, such as from

Federal Home Loan Banks, whereas

whole loans generally cannot be used as

this type of collateral.

Proponents of the proposed question

and answer generally argued, however,

that if an originator of affordable

housing loans securitizes its own loans

and buys back the security, these

transactions generally do not make

available proceeds with which to

originate additional affordable housing

loans. A typical securitization of this

type occurs as follows: An institution

originates the loans and holds the loans

on its books at cost. It then sells the

loans (at market value) either to a trust

that is established for the purpose of

holding the securitized loans or to

another entity, including Fannie Mae or

Freddie Mac. (The originating

institution could realize gain or loss on

the sale due to the difference between

cost and fair market value.) The security

is created. The institution then

purchases back either the entire

issuance or a portion thereof. The cost

of the security may be higher or lower

than the market value of the underlying

loans based upon market conditions.

Because no or limited funds are made

available to enable the institution to

originate more affordable housing loans,

the reasoning for allowing consideration

for the purchase of MBSs does not

apply. And, to the extent that any funds

are made available through the

securitization of loans and are used to

originate or purchase additional home

mortgage loans, institutions will receive

consideration under the lending test for

the additional home mortgage loans.

Furthermore, although the purchase of

the security and the origination of the

loans are separate transactions,

considering both would amount to

double counting, in contravention of

§ll.23(b).

After carefully considering both

positions of the commenters, we have

decided to adopt the question and

answer as proposed as §ll.23(b)–2.

Should Renewals and Refinancings of

Small Business and Small Farm Loans

Be Collected and Reported?

The fifth question and answer

addressing §ll.42(a), (§ll.42(a)–5),

originally adopted in October 1996,

provided that an institution should

report refinancings, but not renewals, of

small business and small farm loans. In

May 1999, we published for comment

two alternative revisions of §ll.42(a)–

5. ‘‘Alternative I’’ provided that an

institution would not collect or report

either renewals or refinancings of small

business or small farm loans, unless the

loan amount were increased.

‘‘Alternative II’’ provided that

institutions would collect and report

renewals and refinancings of small

business and small farm loans as

originations, subject to a limit of

reporting one origination per loan per

year, unless an increase in the loan

amount is granted, in which case the

amount of the increase would be

reported as a separate origination.

We received a total of 64 comments

on the issue of reporting small business

and small farm loans. Forty-nine of

these commenters appeared to support

Alternative II. Only five commenters

clearly supported Alternative I. Other

commenters, including some who stated

that they preferred Alternative II,

proposed other approaches to the issue

of small business and small farm loans,

including reporting these events

separately from originations, or

reporting them as originations but

without a one-origination-per-year limit.

Commenters in favor of Alternative II

believed that this approach would:

• Result in more accurate data—

renewals appear to be widely used as a

more cost-effective method for meeting

the credit needs of small businesses and

small farms;

• Help institutions serve credit needs

in their communities—financial

institutions will be encouraged to

maintain existing relationships with

small businesses and small farms;

• Reduce burden by eliminating the

current confusion over the meaning of a

refinancing versus a renewal;

25090 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

• Remove the incentive for

institutions to artificially structure small

business and farm transactions as

refinancings in order to enhance their

CRA performance;

• Prevent ‘‘gaming’’ by limiting

reporting to only one origination per

year; and

• Allow for better comparison of data

across financial institutions because all

would be subject to the one origination

per year limit.

In contrast, we found that the

comments in favor of Alternative I were

not as persuasive on the issues of

serving the community, reducing

burden, and ensuring data accuracy. A

few commenters maintained that

Alternative I would have better reflected

CRA performance because financial

institutions would only report

increases, or ‘‘new money generated

into the community.’’ However, as

stated, many others supported

Alternative II because the credit needs

of small businesses and farms are

apparently well served by renewals.

Although one commenter believed that

Alternative I was simply more clear and

concise than Alternative II, the

commenter did not elaborate. Another

commenter stated that Alternative I

would provide an incentive for financial

institutions to maintain customer

relationships because it counts

increases. However, many commenters

stated that Alternative II would go

further in providing this incentive,

because it would allow institutions to

report both renewals and refinancings

one time per year, as well as increases.

Based on the comments received, the

agencies believe that Alternative II

appears to better address the purpose of

CRA and the need to minimize burden

while enhancing data accuracy.

Therefore, we are revising §ll.42(a)–

5 consistent with proposed Alternative

II. Under revised §ll.42(a)–5, an

institution no longer needs to

distinguish between refinancings and

renewals, because it collects and reports

both as loan originations, subject to the

one-origination-per-year limitation set

forth in the revised question and

answer. Institutions will also collect and

report the amount of the increase as a

loan origination when they increase the

amount of a renewed or refinanced loan.

We recognize that adopting

Alternative II will require changes to

financial institutions’ data collection

and reporting procedures; however,

commenters appeared to agree that

either alternative would entail some

burden. Systems will have to be

changed to identify renewals as loan

originations because they were

previously not collected or reported as

originations. Further, systems will need

to be programmed to identify whether a

loan is made, refinanced or renewed

more than one time per year to prevent

reporting of more than one origination

per loan (absent an increase in the loan

amount). Any extra burden, however,

should result in more accurate, useful,

and consistent data regarding an

institution’s small business and small

farm lending performance. To minimize

the burden placed on institutions, the

revised question and answer becomes

effective for CRA data collected in 2001

and reported in 2002. Until January

2001, institutions may collect small

business and small farm loan data

according to the guidance published

most recently in May 1999.

Conforming Amendment to the Fourth

Question and Answer Addressing

§ll.42 Regarding Renewals of Lines

of Credit

In §ll.42–4, we previously stated

that renewals of lines of credit are not

collected and/or reported—consistent

with the treatment of loan renewals.

Because we are revising §ll.42(a)–5,

we are also amending §ll.42–4 so

that collection and/or reporting of lines

of credit for small business, small farm,

and consumer purposes is consistent

with the collection and/or reporting of

small business, small farm, and

consumer loans. Accordingly, renewals

of lines of credit for small business,

small farm, and consumer purposes

should be collected and reported, if

applicable, in the same manner as

renewals of small business or farm loans

as discussed in §ll.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. Revised §ll.42–4 also

becomes effective for CRA data

collected in 2001 and reported in 2002.

Until January 2001, institutions may

collect data on small business, small

farm and consumer lines of credit

according to the guidance published in

May 1999.

Proposing Again for Comment One

Question and Answer That Was

Proposed for Comment in May 1999

and One Conforming 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 §§ll.12(i) and 563e.12(h)

(§§ll.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 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 appeared to

favor the proposed revision, as it would

provide increased flexibility in engaging

in community development activities.

However, it appeared that a number of

commenters did not recognize the

revised answer as an expansion of

existing options for institutions to

engage in community development

activities outside an assessment area(s).

Accordingly, we are re-proposing for

public comment a revised question and

answer to ensure that the public

understands that the question and

answer expands the current guidance.

As revised for purposes of reproposal, the question and answer

contains two approaches to determine

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25091

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 currently stated, 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 lowand 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 may be useful

in explaining 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 text of the proposed question and

answer follows:

Proposed §§ll.12(i) & 563e.12(h)–5:

Must there be some 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 institution’s assessment area(s)?

Proposed 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 multistate 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).

Proposed Conforming Amendment to

§§ll.12(i) & 563e.12(h)–6

Consistent with expanded

consideration that would be granted

under proposed §§ll.12(i) &

563e.12(h)–5, we believe that

§§ll.12(i) & 563e.12(h)–6 must also

be modified 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. Accordingly, we are

proposing to amend §§ll.12(i) &

563e.12(h)–6 as follows to explain how

the institution’s performance will be

evaluated in these situations.

Proposed §§ll.12(i) & 563e.12(h)–6:

What is meant by the term ‘‘regional

area’’?

Proposed 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).

New Question and Answer

Consumer Income Data Collection

The agencies have received questions

from examiners and others about whose

income should be collected and

maintained in connection with

consumer loans that are made to more

than one borrower. We are adopting a

new question and answer

(§§ll.42(c)(1)(iv)–4) to clarify what

income should be reported when an

institution makes such a consumer loan.

The new question and answer provides

that an institution that chooses to have

consumer loans considered must collect

and maintain the income of all primary

obligors, including co-signers, to the

extent that the institution considered

the income of the primary obligors

when making the decision to extend

25092 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

credit. On the other hand, the

institution should not collect and

maintain the income of guarantors on

consumer loans, because guarantors are

only secondarily liable for the debt.

Revised Questions and Answers

Special Purpose Institutions

In 1995, all of the agencies except the

OTS adopted §ll.11(c)(3) of the

regulation, which addresses ‘‘special

purpose banks.’’ More recently, the OTS

added the provision to its regulation as

§ 563e.11(c)(2).

As a result of the OTS’s addition of

§ 563e.11(c)(2), we have made minor

technical corrections to the two Qs and

As addressing §ll.11(c)(3), to

substitute the term ‘‘institution,’’ rather

than ‘‘bank.’’ We have also amended the

heading and question and answer

numbers to include reference to OTS’s

new regulatory provision.

Business Revenue Data Collection and

Reporting in Connection With Sole

Proprietorships

Staff have received a number of

questions about what revenue

information an institution should

provide if it is collecting and reporting

data on a sole proprietorship and has

considered both the business’s revenue

and the sole proprietor’s income when

making the credit decision. We believe

that because the purpose of small

business data collection is to determine

whether an institution is serving

businesses of all sizes, an individual’s—

such as the sole proprietor’s—outside

income is irrelevant. Current

§ll.42(a)(4)–1 addresses this issue.

However, we are slightly amending that

question and answer to clarify our

position. We are amending the last

sentence of the answer to read:

‘‘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.’’

Affordable Housing

The question and answer,

§§ll.12(h)(1) & 563e.12(g)(1)–1,

finalized on May 3, 1999, discusses

whether a formulaic approach is

appropriate when determining whether

a project is ‘‘affordable housing for lowand moderate-income individuals,’’

thereby meeting the definition of

‘‘community development.’’ A typical

formula would only compare the cost of

ownership, rental, or borrowing to the

income levels in the area, regardless of

whether the users, likely users, or

beneficiaries of that affordable housing

are low- or moderate-income

individuals.

The answer currently states: ‘‘For

projects that do not yet have occupants,

and for which the income of the

potential occupants is not knowable in

advance, 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.’’ It then sets forth a variety

of these factors.

This sentence implies that the

question and answer addresses only

unoccupied or new affordable housing

projects that do not have occupants.

However, the preamble discussion (64

FR at 23620), based on staff discussions

at the time of drafting, states:

‘‘Institutions and others have asked how

to determine whether a housing

development will provide ‘affordable’

housing for low- and moderate-income

individuals, particularly in a new

project, or in other projects where the

income of renters cannot be verified.’’

As indicated by the preamble

discussion, we intended that

application of these other factors should

not be restricted to new projects. In fact,

examiners have applied them to other

projects during examinations in urban

areas for multifamily dwellings where

the income of occupants cannot be

verified. Therefore, we are slightly

amending the question and answer to

more clearly reflect the preamble

discussion and our intended

interpretation. The second sentence of

the answer is being changed to read:

‘‘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.’’

Community Development Loan

In May, we added a sentence to the

first question and answer addressing

§§ll.12(i) and 563e.12(h) to clarify

that the abatement of environmental

hazards could be a part of rehabilitating

affordable housing or community

facilities targeted to low- and moderateincome individuals. We received several

comments suggesting that we rephrase

the sentence to make clear that an

environmental hazard need only be

mitigated, rather than abated entirely.

We concur with these comments. We

are rephrasing the last sentence of the

answer to read: ‘‘The rehabilitation or

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’’.

Discussion of Other Comments

Received

As discussed previously, the FFIEC

received 82 letters commenting on the

May 1999 Interagency Questions and

Answers and the Board received four

letters from Federal Reserve Banks.

Although most of the commenters

limited their comments to issues

addressed in the questions and answers

that were proposed in May, some

commenters also raised other issues. We

are continuing to consider these other

issues and, to the extent that we believe

additional guidance is appropriate, we

expect to address them in the next

publication of the Interagency Questions

and Answers.

General Comments

In addition to the specific request for

comments on the proposed questions

and answers addressing §§ll.12(i)

and 563e.12(h) and §ll.23(a), we

invite public comment on the new and

revised questions and answers. We also

invite public comment on a continuing

basis on any issues raised by the CRA

and these Interagency Questions and

Answers. If, after reading the

Interagency Questions and Answers,

financial institutions, examiners,

community organizations, or other

interested parties have unanswered

questions or comments about the

agencies’ community reinvestment

regulations, they should submit them to

the agencies or the FFIEC. We will

consider addressing such questions in

future revisions to the Interagency

Questions and Answers.

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 58 FR 67478

(Dec. 21, 1993); 59 FR 51250 (Oct. 7,

1994). In response to public comment,

the agencies voluntarily prepared a final

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25093

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

§ll.11—Authority, Purposes, and

Scope

§ll.11(c) Scope

§ll.11(c)(3) & 563e.11(c)(2) Certain

special purpose institutions. §§ll.11(c)(3) & 563e.11(c)(2)–1: Is

the list of special purpose institutions

exclusive?

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. §§ll.11(c)(3) & 563e.11(c)(2)–2: To

be a special purpose institution, must

an institution limit its activities in its

charter?

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.

§ll.12—Definitions

§ll.12(a) Affiliate

§ll.12(a)–1: Does the definition of

‘‘affiliate’’ include subsidiaries of an

institution?

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.

§§ll.12(f) & 563e.12(e) Branch

§§ll.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?

A1. Yes. Staffed mobile offices that

are authorized as branches are

considered ‘‘branches’’ and mobile

ATMs and RSFs are considered ‘‘ATMs’’

and ‘‘RSFs.’’

§§ll.12(f) & 563e.12(e)–2: Are loan

production offices (LPOs) branches for

purposes of the CRA? 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. §§ll.12(h) & 563e.12(g) Community

Development §§ll.12(h) & 563e.12(g)–1: Are

community development activities

limited to those that promote economic

development? 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 communityor tribal-based child care, educational,

health, or social services targeted to

low- or moderate-income persons,

affordable housing for low- or moderateincome individuals, and activities that

revitalize or stabilize low- or moderateincome areas.

§§ll.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? 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 moderateincome 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 moderateincome persons) also qualify as

community development, even if the

activities are not located in these lowor 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.

§§ll.12(h) & 563e.12(g)–3: Does the

regulation provide flexibility in

considering performance in high-cost

areas?

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 middleincome 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.

§§ll.12(h)(1) & 563e.12(g)(1)

Affordable housing (including

multifamily rental housing) for low- or

moderate-income individuals.

§§ll.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?

A1. The concept of ‘‘affordable

housing’’ for low- or moderate-income

individuals does hinge on whether lowVerDate 27<APR>2000 18:09 Apr 27, 2000 Jkt 190000 PO 00000 Frm 00007 Fmt 4701 Sfmt 4703 E:\FR\FM\28APN2.SGM pfrm10 PsN: 28APN2
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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 moderateincome 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 moderateincome 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. §§ll.12(h)(3) & 563e.12(g)(3)

Activities that promote economic

development by financing businesses or

farms that meet certain size eligibility

standards.

§§ll.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? A1. No. To be considered as

‘‘community development’’ under

§§ll.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 or SBIC 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.

§§ll.12(i) & 563e.12(h) Community

Development Loan.

§§ll.12(i) & 563e.12(h)–1: What are

examples of community development

loans?

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.

§§ll.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 HMDAreportable 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?

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 §ll.42(b)(2)–

2.

§§ll.12(i) & 563e.12(h)–3: Do

secured credit cards or other credit card

programs targeted to low- or moderateincome individuals qualify as

community development loans?

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.’’

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25095

§§ll.12(i) & 563e.12(h)–4: The

regulation indicates that community

development includes ‘‘activities that

revitalize or stabilize low- or moderateincome geographies.’’ Do all loans in a

low- to moderate-income geography

have a stabilizing effect?

A4. No. Some loans may provide only

indirect or short-term benefits to low- or

moderate-income individuals in a lowor 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 moderateincome 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.

§§ll.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)?

A5. No. The regulations, for example,

recognize that community development

organizations and programs are

frequently 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 need not

receive an immediate or direct benefit

from the institution’s specific

participation in the broader organization

or activity, provided the purpose,

mandate, or function of the organization

or activity includes serving geographies

or individuals located within the

institution’s assessment area.

Furthermore, the regulations permit a

wholesale or limited purpose institution

to consider community development

loans, community development

services, and qualified investments

wherever they are located, as long as the

institution has otherwise adequately

addressed the credit needs within its

assessment area(s).

§§ll.12(i) & 563e.12(h)–6: What is

meant by a ‘‘regional area’’ in the

requirement that a community

development loan must benefit the

institution’s assessment area(s) or a

broader statewide or regional area that

includes the institution’s assessment

area(s)?

A6. A ‘‘regional area’’ may be as small

as a city or county or as large as a

multistate area. For example, the ‘‘midAtlantic states’’ may comprise a regional

area. When examiners evaluate

community development loans that

benefit a regional area that includes the

institution’s assessment area, however,

the examiners will consider the size of

the regional area and the actual or

potential benefit to the institution’s

assessment area(s). In most cases, the

larger the regional area, the more diffuse

the benefit will be to the institution’s

assessment area(s). Examiners may view

loans with more direct benefits to an

institution’s assessment area(s) as more

responsive to the credit needs of the

area(s) than loans for which the actual

benefit to the assessment area(s) is

uncertain or for which the benefit is

diffused throughout a larger area that

includes the assessment area(s).

§§ll.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?

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, lowor moderate-income persons, or

promoting economic development by

financing small businesses and farms

that meet the requirements set forth in

§§ll.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.

§§ll.12(j) & 563e.12(i) Community

Development Service

§§ll.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’’?

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.

§§ll.12(j) & 563e.12(i)–2: Are

personal charitable activities provided

by an institution’s employees or

25096 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

directors outside the ordinary course of

their employment considered

community development services?

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.

§§ll.12(j) & 563e.12(i)–3: What are

examples of community development

services?

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 lowand 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, homebuyer 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.

§§ll.12(k) & 563e.12(j) Consumer

Loan

§§ll.12(k) & 563e.12(j)–1: Are

home equity loans considered

‘‘consumer loans’’?

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.

§§ll.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?

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.

§§ll.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?

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.

§§ll.12(m) & 563e.12(l) Home

Mortgage Loan

§§ll.12(m) & 563e.12(l)–1: Does the

term ‘‘home mortgage loan’’ include

loans other than ‘‘home purchase

loans’’?

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.

§§ll.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?

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-, middleand upper-income geographies and the

degree to which the services are tailored

to meet the needs of those geographies.

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25097

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.

§§ll.12(n) & 563e.12(m) Income Level

§§ll.12(n) & 563e.12(m)–1: Where

do institutions find income level data

for geographies and individuals?

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 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 Bureaucalculated 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 ‘‘faxedback’’ 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/’.

§§ll.12(o) & 563e.12(n) Limited

Purpose Institution

§§ll.12(o) & 563e.12(n)–1: What

constitutes a ‘‘narrow product line’’ in

the definition of ‘‘limited purpose

institution’’?

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.

§§ll.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?

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?

§§ll.12(o) & 563e.12(n)–3: Do

‘‘niche institutions’’ qualify as limited

purpose (or wholesale) institutions?

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.

§§ll.12(s) & 563e.12(r) Qualified

Investment

§§ll.12(s) & 563e.12(r)–1: Does the

CRA regulation provide authority for

institutions to make investments?

A1. No. The CRA regulation does not

provide authority for institutions to

make investments that are not otherwise

allowed by Federal law.

§§ll.12(s) & 563e.12(r)–2: Are

mortgage-backed securities or

municipal bonds ‘‘qualified

investments’’?

A2. As a general rule, mortgagebacked 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 housingrelated. 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. Housingrelated bonds or securities must

primarily address affordable housing

(including multifamily rental housing)

needs in order to qualify. See also

§ll.23(b)–2.

§§ll.12(s) & 563e.12(r)–3: Are

Federal Home Loan Bank stocks and

membership reserves with the Federal

Reserve Banks ‘‘qualified investments’’?

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

§§ll.12(j) & 563e.12(i)–3.

§§ll.12(s) & 563e.12(r)–4: What are

examples of qualified investments?

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

25098 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

low-income or community development

credit unions) that primarily lend or

facilitate lending in low- and moderateincome areas or to low- and moderateincome 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 moderateincome areas for low- and moderateincome 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, homeownership, 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.

§§ll.12(s) & 563e.12(r)–5: Will an

institution receive consideration for

charitable contributions as ‘‘qualified

investments’’?

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.

§§ll.12(s) & 563e.12(r)–6: An

institution makes or participates in a

community development loan. The

institution provided the loan at belowmarket 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?

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.

§§ll.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?

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.

§§ll.12(t) & 563e.12(s) Small

Institution

§§ll.12(t) & 563e.12(s)–1: How are

the ‘‘total bank and thrift assets’’ of a

holding company determined?

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.

§§ll.12(t) & 563e.12(s)–2: How are

Federal and State branch assets of a

foreign bank calculated for purposes of

the CRA?

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 FDICinsured 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)).

§§ll.12(u)&563e.12(t)Small Business

Loan

§§ll.12(u)&563e.12(t)–1: Are loans

to nonprofit organiz ations considered

small business loans or are they

considered community development

loans?

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.

§§ll.12(u) & 563e.12(t)–2: Are

loans secured by commercial real estate

considered small business loans?

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.

§§ll.12(u) & 563e.12(t)–3: Are

loans secured by nonfarm residential

real estate to finance small businesses

‘‘small business loans’’?

A3. No. Loans secured by nonfarm

residential real estate that are used to

finance small businesses are not

included as ‘‘small business’’ loans for

Call Report and TFR purposes. The

agencies recognize that many small

businesses are financed by loans

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.’’

§§ll.12(u) & 563e.12(t)–4: Are

credit cards issued to small businesses

considered ‘‘small business loans’’?

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.

§§ll.12(w) & 563e.12(v) Wholesale

Institution

§§ll.12(w) & 563e.12(v)–1: What

factors will the agencies consider in

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25099

determining whether an institution is in

the business of extending home

mortgage, small business, small farm, or

consumer loans to retail customers?

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 §§ll.12(o) & 563e.12(n)–2.

§ll.21—Performance Tests,

Standards, and Ratings, in General

§ll.21(a) Performance Tests and

Standards

§ll.21(a)–1: Are all community

development activities weighted equally

by examiners?

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.

§ll.21(b) Performance Context

§ll.21(b)–1: Is the performance

context essentially the same as the

former regulation’s needs assessment? 

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.

§ll.21(b)(2) Information

maintained by the institution or

obtained from community contacts.

§ll.21(b)(2)–1: Will examiners

consider performance context

information provided by institutions? 

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.

§ll.21(b)(2)–2: Will examiners

conduct community contact interviews

as part of the examination process?

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.

§ll.21(b)(4) Institutional capacity

and constraints.

§ll.21(b)(4)–1: Will examiners

consider factors outside of an

institution’s control that prevent it from

engaging in certain activities?

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.

§ll.21(b)(5) Institution’s past

performance and the performance of

similarly situated lenders.

§ll.21(b)(5)–1: Can an institution’s

assigned rating be adversely affected by

poor past performance? 

A1. Yes. The agencies will consider

an institution’s past performance in its

overall evaluation. For example, an

institution’s past performance may

support a rating of ‘‘substantial

noncompliance’’ if the institution has

not improved performance rated as

‘‘needs to improve.’’

§ll.21(b)(5)–2: How will examiners

consider the performance of similarly

situated lenders? 

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.

§ll.22—Lending Test

§ll.22(a) Scope of Test

§ll.22(a)(1) Types of loans

considered.

§ll.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?

A1. Yes. The agencies will sample the

institution’s home mortgage loan files in

order to assess its performance under

the lending test criteria.

§ll.22(a)(1)–2: When will

examiners consider consumer loans as

part of an institution’s CRA evaluation?

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

25100 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

performance if consumer loans were

excluded.

§ll.22(a)(2) Loan originations and

purchases/other loan data.

§ll.22(a)(2)–1: How are lending

commitments (such as letters of credit)

evaluated under the regulation?

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.

§ll.22(a)(2)–2: Will examiners

review application data as part of the

lending test?

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.

§ll.22(a)(2)–3: May a financial

institution receive consideration under

CRA for modification, extension, and

consolidation agreements (MECAs), in

which it obtains loans from other

institutions without actually purchasing

or refinancing the loans, as those terms

have been interpreted under CRA?

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 to examiners

for consideration under the lending test

as ‘‘other loan data.’’

§ll.22(a)(2)–4: Do institutions

receive consideration for originating or

purchasing loans that are fully

guaranteed?

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.

§ll.22(b) Performance Criteria

§ll.22(b)–1: How will examiners

apply the performance criteria in the

lending test?

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.

§ll.22(b)(1) Lending activity.

§ll.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?

A1. Examiners will review closely

institutions with (1) a small number and

amount of home mortgage loans with an

unusually good distribution among lowand moderate-income areas and lowand 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 moderateincome 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.

§ll.22(b)(2) & (3) Geographic

distribution and borrower

characteristics.

§ll.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?

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.

§ll.22(b)(2) & (3)–2: Must an

institution lend to all portions of its

assessment area?

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 moderateincome 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 moderateincome 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).

§ll.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)?

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.

§ll.22(b)(2) & (3)–4: When will

examiners consider loans (other than

community development loans) made

outside an institution’s assessment

area(s)?

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

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25101

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).

§ll.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?

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 communitybased development organization has

developed a revitalization or

stabilization plan (such as a Federal

enterprise community or empowerment

zone) that includes attracting mixedincome 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.

§ll.22(b)(4) Community

development lending.

§ll.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?

A1. Yes. When evaluating the

institution’s record of community

development lending under

§ll.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 §ll.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 §ll.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.

§ll.22(b)(5) Innovative or flexible

lending practices.

§ll.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?

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 moderateincome 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.

§ll.22(c) Affiliate Lending.

§ll.22(c)(1) In general.

§ll.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?

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).

§ll.22(c)(2) Constraints on affiliate

lending.

§ll.22(c)(2)(i) No affiliate may

claim a loan origination or loan

purchase if another institution claims

the same loan origination or purchase.

§ll.22(c)(2)(i)–1: How is this

constraint on affiliate lending applied?

A1. This constraint prohibits one

affiliate from claiming a loan origination

or purchase claimed by another affiliate.

However, an institution can count as a

25102 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

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. §ll.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. §ll.22(c)(2)(ii)–1: How is this

constraint on affiliate lending applied?

A1. This constraint prohibits ‘‘cherrypicking’’ 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.

§ll.22(c)(2)(ii)–2: How is this

constraint applied if an institution’s

affiliates are also insured depository

institutions subject to the CRA?

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.

§ll.22(d) Lending by a Consortium or

a Third Party

§ll.22(d)–1: Will equity and equitytype investments in a third party receive

consideration under the lending test?

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. §ll.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. §ll.22(d)–2: How will examiners

evaluate loans made by consortia or

third parties under the lending test? 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.

§ll.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 §ll.22(d), may

the third party also receive

consideration for these loans?

A3. Yes, as long as the financial

institution and the third party are not

affiliates. The regulations state, at 12

CFR §ll.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

§ll.22(d).

§ll.23–Investment Test

§ll.23(a) Scope of Test

§ll.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?

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

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25103

statewide or regional area(s) that

includes the institution’s assessment

area(s).

§ll.23(b) Exclusion

§ll.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?

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. §ll.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?

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.

§ll.23(e) Performance criteria

§ll.23(e)–1: When applying the

performance criteria of §ll.23(e), may

an examiner distinguish among

qualified investments based on how

much of the investment actually

supports the underlying community

development purpose?

A1. Yes. Although §ll.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 mortgagebacked security with 100 percent of its

face value supported by affordable

housing loans to low- and moderateincome 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 §ll.23(e)(1), it will

also be evaluated with respect to the

qualitative performance criteria set forth

in §ll.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.

§ll.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? 

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 longterm qualified investments, the pay-in

schedule, and the amount of any cash

call, on the capacity of the institution to

make new investments.

§ll.24—Service Test

§ll.24(d) Performance Criteria—

Retail Banking Services

§ll.24(d)–1: How do examiners

evaluate the availability and

effectiveness of an institution’s systems

for delivering retail banking services?

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

25104 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

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 lowand moderate-income areas and

individuals.

§ll.24(d)–2: How do examiners

evaluate an institution’s activities in

connection with Individual

Development Accounts (IDAs)?

A2: Although there is no standard

IDA program, IDAs typically are deposit

accounts targeted to low- and moderateincome families that are designed to

help them accumulate savings for

education or job-training, downpayment 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 §ll.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.

§ll.24(d)(3) Availability and

effectiveness of alternative systems for

delivering retail banking services.

§ll.24(d)(3)–1: How will examiners

evaluate alternative systems for

delivering retail banking services?

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.

§ll.24(d)(3)–2: Are debit cards

considered under the service test as an

alternative delivery system?

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.

§ll.25 Community Development

Test for Wholesale or Limited Purpose

Institutions

§ll.25(d) Indirect Activities

§ll.25(d)–1: How are investments

in third party community development

organizations considered under the

community development test?

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 §§ll.22(d)

and ll.23(b).

§ll.25(e) Benefit to Assessment

Area(s)

§ll.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?

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).

§ll.25(f) Community Development

Performance Rating

§ll.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?

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.

§ll.26—Small Institution

Performance Standards

§ll.26(a) Performance Criteria

§ll.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?

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.

§ll.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?

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.

§ll.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?

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.

§ll.26(a)–4: Under the small

institution performance standards, will

examiners consider both loan

originations and purchases?

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25105

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.

§ll.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?

A5. The small institution performance

standards focus on lending and other

lending-related activities. Therefore,

examiners will consider only lendingrelated qualified investments for the

purposes of determining whether the

small institution receives a satisfactory

CRA rating.

§ll.26(a)(1) Loan-to-deposit ratio.

§ll.26(a)(1)–1: How is the loan-todeposit ratio calculated?

A1. A small institution’s loan-todeposit 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.

§ll.26(a)(1)–2: How is the

‘‘reasonableness’’ of a loan-to-deposit

ratio evaluated?

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.

§ll.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?

A3. No. Examiners will look at the

institution’s net loan-to-deposit ratio for

the whole institution, without any

adjustments.

§ll.26(a)(2) Percentage of lending

within assessment area(s).

§ll.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?

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.

§ll.26(a)(3) & (4) Distribution of

lending within assessment area(s) by

borrower income and geographic

location.

§ll.26(a)(3) & (4)–1: How will a

small institution’s performance be

assessed under these lending

distribution criteria?

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.

§ll.26(b) Performance Rating

§ll.26(b)–1: How can a small

institution achieve an ‘‘outstanding’’

performance rating?

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.’’

§ll.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)?

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 §§ll.12(i) & 563e.12(h)–6.

§ll.27–Strategic Plan

§ll.27(c) Plans in General

§ll.27(c)–1: To what extent will the

agencies provide guidance to an

25106 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

institution during the development of its

strategic plan?

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.

§ll.27(c)–2: How will a joint

strategic plan be reviewed if the

affiliates have different primary Federal

supervisors?

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.

§ll.27(f) Plan Content

§ll.27(f)(1) Measurable goals.

§ll.27(f)(1)–1: How should

‘‘measurable goals’’ be specified in a

strategic plan?

A1. Measurable goals (e.g., number of

loans, dollar amount, geographic

location of activity, and benefit to lowand 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.

§ll.27(g) Plan Approval

§ll.27(g)(2) Public participation.

§ll.27(g)(2)–1: How will the public

receive notice of a proposed strategic

plan?

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.

§ll.28—Assigned Ratings

§ll.28–1: Are innovative lending

practices, innovative or complex

qualified investments, and innovative

community development services

required for a ‘‘satisfactory’’ or

‘‘outstanding’’ CRA rating?

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.

§ll.28–2: How is performance

under the quantitative and qualitative

performance criteria weighed when

examiners assign a CRA rating?

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.

§ll.28(a) Ratings in General

§ll.28(a)–1: How are institutions

with domestic branches in more than

one state assigned a rating?

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.

§ll.28(a)–2: How are institutions

that operate within only a single state

assigned a rating?

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.

§ll.28(a)–3: How do the agencies

weight performance under the lending,

investment and service test for large

retail institutions?

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

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25107

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 for 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.

§ll.29—Effect of CRA Performance on

Applications

§ll.29(a) CRA Performance

§ll.29(a)–1: What weight is given to

an institution’s CRA performance

examination in reviewing an

application?

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.

§ll.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?

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.

§ll.29(b) Interested Parties

§ll.29(b)–1: What consideration is

given to comments from interested

parties in reviewing an application?

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.

§ll.29(b)–2: Is an institution

required to enter into agreements with

private parties?

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.

§ll.41—Assessment Area Delineation

§ll.41(a) In General

§ll.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?

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

§ll.41(e).

§ll.41(a)–2: If an institution elects

to have the agencies consider affiliate

lending, will this decision affect the

institution’s assessment area(s)?

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).

25108 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

§ll.41(a)–3: Can a financial

institution identify a specific ethnic

group rather than a geographic area as

its assessment area?

A3. No, assessment areas must be

based on geography.

§ll.41(c) Geographic Area(s) for

Institutions Other Than Wholesale or

Limited Purpose Institutions

§ll.41(c)(1) Generally consist of one

or more MSAs or one or more

contiguous political subdivisions.

§ll.41(c)(1)–1: Besides cities,

towns, and counties, what other units of

local government are political

subdivisions for CRA purposes?

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).

§ll.41(c)(1)–2: Are wards, school

districts, voting districts, and water

districts political subdivisions for CRA

purposes? 

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 §ll.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 moderateincome geographies.

§ll.41(d) Adjustments to Geographic

Area(s)

§ll.41(d)–1: When may an

institution adjust the boundaries of an

assessment area to include only a

portion of a political subdivision? 

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 moderateincome geographies or set boundaries

that reflect illegal discrimination.

§ll.41(e) Limitations on Delineation

of an Assessment Area

§ll.41(e)(3) May not arbitrarily

exclude low- or moderate-income

geographies.

§ll.41(e)(3)–1: How will examiners

determine whether an institution has

arbitrarily excluded low- or moderateincome geographies?

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 deposittaking 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.

§ll.41(e)(4) May not extend

substantially beyond a CMSA boundary

or beyond a state boundary unless

located in a multistate MSA. 

§ll.41(e)(4)–1: What are the

maximum limits on the size of an

assessment area? 

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.

§ll.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? 

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.

§ll.42—Data Collection, Reporting,

and Disclosure

§ll.42–1: When must an institution

collect and report data under the CRA

regulations? 

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 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:

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25109

Date

Institution’s

asset size (in

millions)

Data collection required for following calendar year?

12/31/94 ................................................................................................................................... $240 No.

12/31/95 ................................................................................................................................... 260 No.

12/31/96 ................................................................................................................................... 230 No.

12/31/97 ................................................................................................................................... 280 No.

12/31/98 ................................................................................................................................... 260 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.

§ll.42–2: Should an institution

develop its own program for data

collection, or will the regulators require

a certain format? 

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.

§ll.42–3: How should an

institution report data on lines of credit? 

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.

§ll.42–4: Should renewals of lines

of credit be collected and/or reported? 

A4. Applicable to data collected in

2000 and reported in 2001: No. Similar

to loan renewals, renewals of lines of

credit are not considered loan

originations and should not be collected

or reported.

A4. Applicable to data collected in

2001 and subsequent years: 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

§ll.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.

§ll.42–5: When should merging

institutions collect data?

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.

§ll.42–6: Can small institutions get

a copy of the data collection software

even though they are not required to

collect or report data?

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.

§ll.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?

A7. No. However, small institutions

must be prepared to identify those

loans, investments and services to be

evaluated under the community

development test.

§ll.42(a) Loan Information Required

To Be Collected and Maintained

§ll.42(a)–1: Must institutions

collect and report data on all

commercial loans under $1 million at

origination?

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 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.

§ll.42(a)–2: For loans defined as

small business loans, what information

should be collected and maintained?

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

25110 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

• 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.

§ll.42(a)–3: Will farm loans need

to be segregated from business loans?

A3. Yes.

§ll.42(a)–4: Should institutions

collect and report data on all

agricultural loans under $500,000 at

origination?

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 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.

§ll.42(a)–5: Should institutions

collect and report data about small

business and small farm loans that are

refinanced or renewed?

A5. Applicable to data collected in

2000 and reported in 2001: An

institution collects and reports

information about refinancings but does

not collect and report information about

renewals. A refinancing typically

involves the satisfaction of an existing

obligation that is replaced by a new

obligation undertaken by the same

borrower. When an institution

refinances a loan, it is considered a new

origination, and loan data should be

collected and reported, if otherwise

required. Consistent with HMDA,

however, if under the original loan

agreement, the institution is

unconditionally obligated to refinance

the loan subject to conditions within the

borrower’s control, the institution

should not report these events as

originations.

For purposes of CRA data collection

and reporting requirements, the

extension of the maturity of an existing

loan is a renewal, and is not considered

a loan origination. Therefore,

institutions should not collect and

report data on loan renewals.

A5. Applicable to data collected in

2001 and subsequent years: An

institution should collect information

about small business and small farm

loans that it refinances or renews as

loan originations. (A refinancing

generally occurs when the existing loan

obligation or note is satisfied and a new

note is written, while a renewal 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.

§ll.42(a)–6: Does a loan to the

‘‘fishing industry’’ come under the

definition of a small farm loan?

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.’’

§ll.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?

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.’’

§ll.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?

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.

§ll.42(a)–9: Is an institution that

has no small farm or small business

loans required to report under CRA?

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.

§ll.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?

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

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25111

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.

§ll.42(a)(2) Loan amount at

origination.

§ll.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?

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.

§ll.42(a)(2)–2: How should an

institution collect data about multiple

loan originations to the same business?

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.

§ll.42(a)(2)–3: How should an

institution collect data pertaining to

credit cards issued to small businesses?

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.

§ll.42(a)(3) The loan location.

§ll.42(a)(3)–1: Which location

should an institution record if a small

business loan’s proceeds are used in a

variety of locations?

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.

§ll.42(a)(4) Indicator of gross

annual revenue.

§ll.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?

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.

§ll.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?

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.

§ll.42(a)(4)–3: What gross revenue

should an institution use in determining

the gross annual revenue of a start-up

business?

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.

§ll.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?

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 §ll.42(a)(4)–2.)

§ll.42(b) Loan Information Required

To Be Reported

§ll.42(b)(1) Small business and

small farm loan data.

§ll.42(b)(1)–1: For small business

and small farm loan information that is

collected and maintained, what data

should be reported?

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,

25112 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

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).

§ll.42(b)(2) Community

development loan data.

§ll.42(b)(2)–1: What information

about community development loans

must institutions report?

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.

§ll.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?

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 §ll.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.

§ll.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?

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

§ll.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.

§ll.42(b)(3) Home mortgage loans.

§ll.42(b)(3)–1: Mustinstitutions

that are not required to collect home

mortgage loan data by the HMDA collect

home mortgage loan data for purposes

of the CRA?

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.

§ll.42(c) Optional Data Collection

and Maintenance

§ll.42(c)(1) Consumer loans.

§ll.42(c)(1)–1: What are the data

requirements regarding consumer loans?

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.

§ll.42(c)(1)(iv) Income of borrower.

§ll.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?

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.

§ll.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?

A2. Yes.

§ll.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?

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.

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25113

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.

§§ll.42(c)(1)(iv)–4: Whose income

does an institution collect when a

consumer loan is made to more than

one borrower?

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.

§ll.42(c)(2) Other loan data.

§ll.42(c)(2)–1: Schedule RC–C, Part

II of the Call Report and schedule SB of

the TFR do not allow financial

institutions to report loans for

commercial and industrial purposes

that are secured by residential real

estate. Loans extended to small

businesses with gross annual revenues

of $1 million or less may, however, be

secured by residential real estate. Is

there a way to collect this information

on the software to supplement an

institution’s small business lending data

at the time of examination? A1. Yes. If these loans promote

community development, as defined in

the regulation, the institution should

collect and report information about

these loans as community development

loans. Otherwise, at an institution’s

option, it may collect and maintain data

concerning loans, purchases, and lines

of credit extended to small businesses

and secured by residential real estate for

consideration in the CRA evaluation of

its small business lending. To facilitate

this optional data collection, the

software distributed free-of-charge by

the FFIEC provides that an institution

may collect this information to

supplement its small business lending

data by choosing loan type, ‘‘Other

Secured Lines/Loans for Purposes of

Small Business,’’ in the individual loan

data. (The title of the loan type, ‘‘Other

Secured Lines of Credit for Purposes of

Small Business,’’ which was found in

the instructions accompanying the 1996

data collection software, is being

changed to ‘‘Other Secured Lines/Loans

for Purposes of Small Business’’ in order

to accurately reflect that lines of credit

and loans may be reported under this

loan type.) This information should be

maintained at the institution but should

not be submitted for central reporting

purposes.

§ll.42(c)(2)–2: Must an institution

collect data on loan commitments and

letters of credit?

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.

§ll.42(c)(2)–3: Are commercial and

consumer leases considered loans for

purposes of CRA data collection?

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 §ll.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 §ll.42(c)(2) for

consideration under the lending test.

§ll.42(d) Data on Affiliate Lending

§ll.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?

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.

§ll.43—Content and Availability of

Public File

§ll.43(a) Information Available to the

Public

§ll.43(a)(1) Public Comments.

§ll.43(a)(1)–1: What happens to

comments received by the agencies? 

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.

§ll.43(a)(1)–2: Is an institution

required to respond to public

comments? 

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)

(§ll.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.

§ll.43(a)(1)–3: May an institution

include a response to its CRA

Performance Evaluation in its public

file? 

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.

§ll.43(b) Additional Information

Available to the Public

§ll.43(b)(1) Institutions other than

small institutions.

§ll.43(b)(1)–1: Must an institution

that elects to have affiliate lending

considered include data on this lending

in its public file? 

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.

25114 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

§ll.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? 

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

§ll.43(c)(2)(ii).

§ll.43(c) Location of Public

Information

§ll.43(c)–1: What is an institution’s

‘‘main office’’? 

A1. An institution’s main office is the

main, home, or principal office as

designated in its charter.

§ll.44—Public Notice by Institutions

§ll.44–1: Are there any placement

or size requirements for an institution’s

public notice? 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.

§ll.45—Publication of Planned

Examination Schedule

§ll.45–1: Where will the agencies

publish the planned examination

schedule for the upcoming calendar

quarter? 

A1. The agencies may use the Federal

Register, 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.

§ll.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? 

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 Partll—Ratings

Appendix A to Partll–1: Must an

institution’s performance fit each aspect of a

particular rating profile in order to receive

that rating? 

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 Partll—CRA Notice

Appendix B to Partll–1: What agency

information should be added to the CRA

notice form? 

A1. The following information should be

added to the form:

OCC-supervised institutions only: 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: ‘‘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

(404) 730–3833

Alabama, Florida, Georgia

Boston

(617) 424–0510

Connecticut, Maine, Massachusetts, New

Hampshire, Rhode Island, Vermont

Charlotte

(704) 344–6144

District of Columbia, Kentucky, North

Carolina, South Carolina, Tennessee,

Virginia

Chicago

(708) 562–1740

Illinois, Indiana, Wisconsin

Dallas

(214) 640–4470 or (800) 835–9752

Louisiana, Mississippi, Texas

Denver

(303) 969–7750

Arizona, Colorado, Nebraska, New Mexico,

North Dakota, South Dakota, Utah,

Wyoming

Detroit

(313) 259–1875

Michigan, Ohio, West Virginia

Kansas City

(913) 551–6711

Arkansas, Iowa, Kansas, Minnesota,

Missouri, Oklahoma

Los Angeles

(818) 904–6339

California

New York

(212) 264–4730

New York, Puerto Rico

Philadelphia

(215) 597–8313 or (215) 597–8312

Delaware, Maryland, New Jersey,

Pennsylvania

Seattle

(206) 728–5314

Alaska, Hawaii, Idaho, Montana, Nevada,

Oregon, Washington

INDEX

Keyword Q & A

Affiliate lending ......................................................................................................................................... §ll.22(b)(1)–1.

§ll.22(b)(2) & (3)–3.

§ll.22(c)(1)–1.

§ll.22(c)(2)(i)–1.

§ll.22(c)(2)(ii)–1.

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25115

INDEX—Continued

Keyword Q & A

§ll.22(c)(2)(ii)–2.

§ll.41(a)–2.

§ll.42(d)–1.

§ll.43(b)(1)–1.

Affiliates .................................................................................................................................................... §ll.12(a)–1.

§ll.27(c)–2.

Affordable housing ................................................................................................................................... §§ll.12(h) & 563e.12(g)–1.

§§ll.12(h) & 563e.12(g)–2.

§§ll.12(h)(1) & 563e.12(g)(1)–1.

§ll.42(b)(2)–3.

Alternative delivery systems .................................................................................................................... §ll.24(d)–1.

§ll.24(d)(3)–1.

§ll.24(d)(3)–2.

Applications, corporate ............................................................................................................................. §ll.29(a)–1.

§ll.29(a)–2.

§ll.29(b)–1.

Assessment area ..................................................................................................................................... §llb)(2) & (3)–2.

§ll.22(b)(2) & (3)–3.

§ll.22(b)(2) & (3)–4.

§ll.26(a)(2)–1.

§ll.41(a)–1.

§ll.41(a)–2.

§ll.41(a)–3.

§ll.41(c)(1)–1.

§ll.41(c)(1)–2.

§ll.41(d)–1.

§ll.41(e)(3)–1.

§ll.41(e)(4)–1.

§ll.41(e)(4)–2.

Assessment area, benefit to .................................................................................................................... §§ll.12(i) & 563e.12(h)–5.

§§ll.12(i) & 563e.12(h)–6.

§ll.25(e)–1.

§ll.26(b)–2.

Assets ....................................................................................................................................................... §§ll.12(t) & 563e.12(s)–1.

§§ll.12(t) & 563e.12(s)–2.

ATMs ........................................................................................................................................................ §§ll.12(f) & 563e.12(e)–1.

§ll.24(d)–1.

§ll.24(d)(3)–1.

§ll.41(e)(3)–1.

Borrower characteristics ........................................................................................................................... §ll.22(b)(2) & (3)–1.

§ll.22(b)(2) & (3)–5.

§ll.26(a)(3) & (4)–1.

§ll.42(c)(1)(iv)–3.

Branch ...................................................................................................................................................... §§ll.12(f) & 563e.12(e)–1.

§ll.28(a)–1.

§ll.41(e)(3)–1.

Brokerage ................................................................................................................................................. §§ll.12(m) & 563e.12(l)–2.

Charitable contributions or activities ........................................................................................................ §§ll.12(j) & 563e.12(i)–2.

§§ll.12(s) & 563e.12(r)–4.

§§ll.12(s) & 563e.12(r)–5.

Child care services ................................................................................................................................... §§ll.12(h) & 563e.12(g)–1.

Commercial loans .................................................................................................................................... §§ll.12(u) & 563e.12(t)–2.

§ll.42(a)–1.

§ll.42(c)(2)–1.

Commitments ........................................................................................................................................... §ll.22(a)(2)–1.

§ll.26(a)–4.

§ll.29(a)–2.

§ll.42(c)(2)–2.

Community contact interviews ................................................................................................................. §ll.21(b)(2)–2.

Community development ......................................................................................................................... §§ll.12(h) & 563e.12(g)–1.

§§ll.12(h) & 563e.12(g)–2.

§§ll.12(h)(3) & 563e.12(g)(3)–1.

§ll.42(b)(2)–3.

Community development activities .......................................................................................................... § _l.21(a)–1.

Community development loan ................................................................................................................. §§ll.12(i) & 563e.12(h)–1.

§§ll.12(i) & 563e.12(h)–2.

§§ll.12(i) & 563e.12(h)–3.

§§ll.12(i) & 563e.12(h)–4.

§§ll.12(i) & 563e.12(h)–5.

§§ll.12(i) & 563e.12(h)–6.

§§ll.12(i) & 563e.12(h)–7.

§§ll.12(s) & 563e.12(r)–6.

25116 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

INDEX—Continued

Keyword Q & A

§§ll.12(u) & 563e.12(t)–1.

§ll.22(b)(4)–1.

§ll.22(d)–3.

§ll.23(b)–1.

§ll.25(d)–1.

§ll.26(a)–1.

§ll.26(a)–3.

§ll.26(b)–2.

§ll.42(b)(2)–1.

§ll.42(b)(2)–2.

§ll.42(b)(2)–3.

Community development service ............................................................................................................. §§ll.12(i) & 563e.12(h)–5.

§§ll.12(i) & 563e.12(h)–7.

§§ll.12(j) & 563e.12(i)–1.

§§ll.12(j) & 563e.12(i)–2.

§§ll.12(j) & 563e.12(i)–3.

§§ll.12(s) & 563e.12(r)–7.

§ll.23(b)–1.

§ll.26(b)–2.

§ll.42(c)(2)–1.

Community development test .................................................................................................................. §ll.25(f)–1.

Community services ................................................................................................................................. §§ll.12(h) & 563e.12(g)–2.

§ll.25(d)–1.

Complexity ................................................................................................................................................ §ll.22(b)(5)–1.

§ll.23(e)–2.

§ll.28–1.

Consortia .................................................................................................................................................. §ll.22(d)–2.

§ll.26(a)–3.

Consumer loan ......................................................................................................................................... §§ll.12(k) & 563e.12(j)–1.

§§ll.12(k) & 563e.12(j)–2.

§§ll.12(k) & 563e.12(j)–3.

§ll.22(a)(1)–2.

§ll.42(c)(1)–1.

§ll.42(c)(1)(iv)–1.

§ll.42(c)(1)(iv)–2.

§§ll.42(c)(1)(iv)–4.

CRA disclosure statement ....................................................................................................................... §ll.43(b)(1)–2.

Credit cards .............................................................................................................................................. §§ll.12(i) & 563e.12(h)–3.

§§ll.12(u) & 563e.12(t)–4.

§ll.42(a)(2)–3.

Data collection .......................................................................................................................................... §ll.42–1.

§ll.42–2.

§ll.42–5.

§ll.42–7.

§ll.42(a)–1.

§ll.42(a)–2.

§ll.42(a)–4.

§ll.42(a)–5.

§ll.42(a)–8.

§ll.42(a)–10.

§ll.42(a)(2)–1.

§ll.42(a)(2)–2.

§ll.42(a)(2)–3.

§ll.42(a)(3)–1.

§ll.42(a)(4)–2.

§ll.42(a)(4)–4.

§ll.42(b)(1)–1.

§ll.42(b)(3)–1.

§ll.42(c)(1)–1.

§ll.42(c)(1)(iv)–1.

§ll.42(c)(1)(iv)–2.

§ll.42(c)(1)(iv)–3.

§ll.42(c)(2)–1.

§ll.42(c)(2)–2.

Data reporting .......................................................................................................................................... §ll.42–1.

§ll.42–3.

§ll.42–4.

§ll.42(a)–1.

§ll.42(a)–5.

§ll.42(a)–8.

§ll.42(a)–9.

§ll.42(a)–10.

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25117

INDEX—Continued

Keyword Q & A

§ll.42(a)(2)–1.

§ll.42(a)(4)–4.

§ll.42(b)(1)–1.

§ll.42(b)(2)–1.

§ll.42(b)(2)–2.

§ll.42(b)(2)–3.

Debit cards ............................................................................................................................................... §ll.24(d)(3)–2.

Economic development ............................................................................................................................ §§ll.12(h) & 563e.12(g)–2.

§§ll.12(h)(3) & 563e.12(g)(3)–1.

Educational services ................................................................................................................................ §§ll.12(h) & 563e.12(g)–1.

Employees’ charitable activities ............................................................................................................... §§ll.12(j) & 563e.12(i)–2.

Employees’ income .................................................................................................................................. §ll.42(c)(1)(iv)–2.

Examination schedule .............................................................................................................................. §ll.45–1.

§ll.45–2.

Federal branch ......................................................................................................................................... §§ll.12(t) & 563e.12(s)–2.

Federal Home Loan Bank ........................................................................................................................ §§ll.12(s) & 563e.12(r)–3.

Federal Reserve Bank membership reserves ......................................................................................... §§ll.12(s) & 563e.12(r)–3.

Financial services, provision of ................................................................................................................ §§ll.12(j) & 563e.12(i)–1.

Fisheries ................................................................................................................................................... §ll.42(a)–6.

Flexibility ................................................................................................................................................... §ll.22(b)(5)–1.

Forestries ................................................................................................................................................. §ll.42(a)–6.

Geographic distribution ............................................................................................................................ §ll.22(b)(2) & (3)–1.

§ll.22(b)(2) & (3)–2.

§ll.22(b)(2) & (3)–3.

§ll.22(b)(2) & (3)–4.

§ll.26(a)(3) & (4)–1.

Geography ................................................................................................................................................ §ll.41(d)–1.

Guaranteed loans ..................................................................................................................................... §ll.22(a)(2)–4.

Guarantor ................................................................................................................................................. §§ll.42(c)(1)(iv)–4.

Health services ......................................................................................................................................... §§ll.12(h) & 563e.12(g)–1.

High cost area .......................................................................................................................................... §§ll.12(h) & 563e.12(g)–3.

HMDA reporting ....................................................................................................................................... §§ll.12(i) & 563e.12(h)–2.

§ll.42(b)(3)–1.

Home equity line of credit ........................................................................................................................ §§ll.12(k) & 563e.12(j)–2.

§ll.42(a)–7.

Home equity loan ..................................................................................................................................... §§ll.12(k) & 563e.12(j)–1.

Home mortgage lending ........................................................................................................................... §ll.22(a)(1)–1.

§ll.42(d)–1

Home mortgage loan ............................................................................................................................... §§ll.12(m) & 563e.12(l)–1.

§§ll.12(m) & 563e.12(l)–2.

§ll.23(b)–2.

§ll.42(b)(2)–2.

§ll.42(b)(3)–1.

Income ...................................................................................................................................................... §ll.42(c)(1)(iv)–1.

§ll.42(c)(1)(iv)–2.

§ll.42(c)(1)(iv)–3.

Income level ............................................................................................................................................. §§ll.12(n) & 563e.12(m)–1.

Indirect investments ................................................................................................................................. §ll.23(a)–1.

Individual development accounts (IDAs) ................................................................................................. §ll.24(d)–2.

Innovativeness ......................................................................................................................................... §ll.22(b)(5)–1.

§ll.23(e)–2.

§ll.28–1.

Institutional capacity and constraints ....................................................................................................... §ll.21(b)(4)–1.

Leases ...................................................................................................................................................... §ll.42(c)(2)–3.

Lending activity ........................................................................................................................................ §ll.22(b)(1)–1.

Lending distribution .................................................................................................................................. §ll.26(a)(3) & (4)–1.

Lending within assessment area ............................................................................................................. §ll.22(b)(2) & (3)–3.

§ll.26(a)(2)–1.

§ll.26(a)(3) & (4)–1.

Letters of credit ........................................................................................................................................ §ll.22(a)(2)–1.

§ll.26(a)–4.

§ll.42(c)(2)–2.

Limited purpose institution ....................................................................................................................... §§ll.12(o) & 563e.12(n)–1.

§§ll.12(o) & 563e.12(n)–2.

§§ll.12(o) & 563e.12(n)–3.

§§ll.42–7.

Lines of credit ........................................................................................................................................... §ll.42–3.

§ll.42–4.

Loan amount ............................................................................................................................................ §ll.42(a)(2)–1.

Loan application activity ........................................................................................................................... §ll.22(a)(2)–2.

Loan location ............................................................................................................................................ §ll.42(a)–10.

§ll.42(a)(3)–1.

25118 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

INDEX—Continued

Keyword Q & A

Loan originations, multiple ....................................................................................................................... §ll.42(a)(2)–2.

Loan production office (LPO) ................................................................................................................... §§ll.12(f) & 563e.12(e)–2.

Loans, outside-assessment area ............................................................................................................. §ll.22(b)(2) & (3)–4.

Loan-to-deposit ratio ................................................................................................................................ §ll.26(a)(1)–1.

§ll.26(a)(1)–2.

§ll.26(a)(1)–3.

Main office ................................................................................................................................................ §ll.43(c)–1.

Measurable goals ..................................................................................................................................... §ll.27(f)(1)–1.

MECAs ..................................................................................................................................................... §ll.22(a)(2)–3.

Merging institutions .................................................................................................................................. §ll.42–5.

Mortgage-backed securities ..................................................................................................................... §§ll.12(s) & 563e.12(r)–2.

§ll.23(b)–2.

Multi-purpose loan .................................................................................................................................... §§ll.12(k) & 563e.12(j)–3.

§ll.42(a)–7.

Municipal bonds ....................................................................................................................................... §§ll.12(s) & 563e.12(r)–2.

National fund ............................................................................................................................................ §ll.25(e)–1.

Niche institution ........................................................................................................................................ §§ll.12(o) & 563e.12(n)–3.

Nonprofit organization .............................................................................................................................. §§ll.12(u) & 563e.12(t)–1.

Past performance ..................................................................................................................................... §ll.21(b)(5)–1.

Performance context ................................................................................................................................ §ll.21(b)–1.

§ll.21(b)(2)–1.

§ll.21(b)(2)–2.

§ll.21(b)(4)–1.

§ll.21(b)(5)–1.

§ll.21(b)(5)–2.

Performance criteria ................................................................................................................................. §ll.22(b)–1.

§ll.23(e)–1.

§ll.23(e)–2.

§ll.26(a)–1.

§ll.26(a)–2.

§ll.28–2.

Performance evaluation ........................................................................................................................... §ll.43(a)(1)–3.

Performance rating ................................................................................................................................... §ll.26(a)–2.

§ll.26(a)–5.

§ll.26(b)–1.

§ll.28–1.

§ll.28–2.

§ll.28(a)–1.

§ll.28(a)–2.

§ll.28(a)–3.

Appendix A to Part ll—1.

Political subdivision .................................................................................................................................. §ll.41(c)(1)–1.

§ll.41(c)(1)–2.

§ll.41(d)–1.

Primary purpose ....................................................................................................................................... §§ll.12(i) & 563e.12(h)–7.

§ll.42(b)(2)–3.

Public comment ........................................................................................................................................ §ll.27(g)(2)–1.

§ll.29(b)–1.

§ll.29(b)–2.

§ll.43(a)(1)–1.

§ll.43(a)(1)–2.

Public file .................................................................................................................................................. §ll.43(a)(1)–2.

§ll.43(a)(1)–3.

§ll.43(b)(1)–1.

§ll.43(b)(1)–2.

Public notice ............................................................................................................................................. §ll.44–1.

Appendix B to Part ll–1.

Qualified investment ................................................................................................................................. §§ll.12(i) & 563e.12(h)–5.

§§ll.12(i) & 563e.12(h)–7.

§§ll.12(s) & 563e.12(r)–1.

§§ll.12(s) & 563e.12(r)–2.

§§ll.12(s) & 563e.12(r)–3.

§§ll.12(s) & 563e.12(r)–4.

§§ll.12(s) & 563e.12(r)–5.

§§ll.12(s) & 563e.12(r)–6.

§§ll.12(s) & 563e.12(r)–7.

§ll.23(b)–1.

§ll.23(b)–2.

§ll.23(e)–1.

§ll.23(e)–2.

§ll.25(d)–1.

§ll.26(a)–1.

Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices 25119

INDEX—Continued

Keyword Q & A

§ll.26(a)–5.

§ll.26(b)–2.

Qualitative factors .................................................................................................................................... §ll.21(a)–1.

§ll.22(b)(4)–1.

§ll.22(b)(5)–1.

§ll.23(e)–1.

§ll.23(e)–2.

§ll.28–1.

§ll.28–2.

Ratings matrix .......................................................................................................................................... §ll.28(a)–3.

Refinancings ............................................................................................................................................. §ll.42(a)–5.

Regional area ........................................................................................................................................... §§ll.12(i) & 563e.12(h)–6.

Remote service facility (RSF). ................................................................................................................. §§ll.12(f) & 563e.12(e)–1.

Renewals .................................................................................................................................................. §ll.42–4.

§ll.42(a)–5.

Responsiveness ....................................................................................................................................... §ll.23(e)–2.

Retail banking services ............................................................................................................................ §ll.24(d)–1.

Revenue ................................................................................................................................................... §ll.42(a)(4)–1.

§ll.42(a)(4)–2.

§ll.42(a)(4)–3.

§ll.42(a)(4)–4.

Revitalize or stabilize ............................................................................................................................... §§ll.12(h) & 563e.12(g)–1.

§§ll.12(h) & 563e.12(g)–2.

§§ll.12(i) & 563e.12(h)–4.

SBIC or SBDC ......................................................................................................................................... §§ll.12(h)(3) & 563e.12(g)(3)–1.

Similarly situated lenders ......................................................................................................................... §ll.21(b)(5)–2.

Small business loan ................................................................................................................................. §§ll.12(u) & 563e.12(t)–1.

§§ll.12(u) & 563e.12(t)–2.

§§ll.12(u) & 563e.12(t)–3.

§§ll.12(u) & 563e.12(t)–4.

§ll.42(a)–2.

§ll.42(a)–3.

§ll.42(a)–5.

§ll.42(a)–8.

§ll.42(a)(2)–1.

§ll.42(a)(2)–3.

§ll.42(a)(3)–1.

§ll.42(a)(4)–1.

§ll.42(a)(4)–2.

§ll.42(a)(4)–4.

§ll.42(b)(1)–1.

§ll.42(b)(2)–2.

§ll.42(c)(2)–1.

Small farm loan ........................................................................................................................................ §ll.42(a)–3.

§ll.42(a)–4.

§ll.42(a)–5.

§ll.42(a)–6.

§ll.42(a)–8.

§ll.42(a)(2)–1.

§ll.42(a)(4)–2.

§ll.42(a)(4)–4.

§ll.42(b)(1)–1.

§ll.42(b)(2)–2.

Small institution ........................................................................................................................................ §§ll.12(t) & 563e.12(s)–1.

§§ll.12(t) & 563e.12(s)–2.

§ll.42–6.

§ll.42–7.

Small institution performance standards .................................................................................................. §ll.26(a)–1.

§ll.26(a)–2.

§ll.26(a)–3.

§ll.26(a)–4.

§ll.26(a)–5.

§ll.26(a)(3) & (4)–1.

§ll.26(b)–1.

§ll.26(b)–2.

Social services ......................................................................................................................................... §§ll.12(h) & 563e.12(g)–1.

Software for data collection and reporting ............................................................................................... §ll.42–2.

§ll.42–6.

§ll.42(c)(2)–1.

Special purpose institution ....................................................................................................................... §§ll.11(c)(3) & 563e.11(c)(2)–1.

§§ll.11(c)(3) & 563e.11(c)(2)–2.

State branch ............................................................................................................................................. §§ll.12(t) & 563e.12(s)–2.

25120 Federal Register / Vol. 65, No. 83 / Friday, April 28, 2000 / Notices

INDEX—Continued

Keyword Q & A

Strategic plan ........................................................................................................................................... §ll.27(c)–1.

§ll.27(c)–2.

§ll.27(f)(1)–1.

§ll.27(g)(2)–1.

Subsidiary ................................................................................................................................................. §ll.12(a)–1.

Third party investments ............................................................................................................................ §ll.22(d)–1.

§ll.22(d)–2.

§ll.22(d)–3.

§ll.25(d)–1.

§ll.26(a)–3.

Wholesale institution ................................................................................................................................ §§ll.12(o) & 563e.12(n)–2.

§§ll.12(w) & 563e.12(v)–1.

§ll.42–7.

End of text of the Interagency Questions

and Answers.

Dated: April 20, 2000.

Keith J. Todd,

Executive Secretary, Federal Financial

Institutions Examination Council.

[FR Doc. 00–10343 Filed 4–27–00; 8:45 am]

BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P;

6720–01–P