[Federal Register Volume 86, Number 118 (Wednesday, June 23, 2021)]
[Rules and Regulations]
[Pages 32728-32734]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-12972]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Chapter III

RIN 3064-ZA19


Statement of Policy Regarding Minority Depository Institutions

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final statement of policy.

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SUMMARY: The FDIC is issuing its Statement of Policy Regarding Minority 
Depository Institutions. Section 308 of the Financial Institutions 
Reform, Recovery and Enforcement Act of 1989 established several goals 
related to encouraging, assisting, and preserving minority depository 
institutions. The FDIC has long recognized the unique role and 
importance of minority depository institutions and historically has 
taken steps to preserve and encourage minority-owned and minority-led 
financial institutions. The Statement of Policy updates, strengthens, 
and clarifies the agency's policies and procedures related to minority 
depository institutions.

DATES: The Statement of Policy is effective August 23, 2021.

FOR FURTHER INFORMATION CONTACT: Misty Mobley, Senior Review Examiner, 
Division of Risk Management and Supervision, (202) 898-3771, 
<a href="/cdn-cgi/l/email-protection#7c111511131e1019053c1a18151f521b130a"><span class="__cf_email__" data-cfemail="fc919591939e909985bc9a98959fd29b938a">[email protected]</span></a>; Lauren Whitaker, Senior Attorney, (202) 898-3872, 
<a href="/cdn-cgi/l/email-protection#a4c8d3cccdd0c5cfc1d6e4c2c0cdc78ac3cbd2"><span class="__cf_email__" data-cfemail="ea869d82839e8b818f98aa8c8e8389c48d859c">[email protected]</span></a>; Jason Pan, Senior Attorney, (202) 898-7272, 
<a href="/cdn-cgi/l/email-protection#b0dac0d1def0d6d4d9d39ed7dfc6"><span class="__cf_email__" data-cfemail="3a504a5b547a5c5e5359145d554c">[email protected]</span></a>; or Gregory Feder, Counsel, (202) 898-8724, 
<a href="/cdn-cgi/l/email-protection#4b2c2d2e2f2e390b2d2f2228652c243d"><span class="__cf_email__" data-cfemail="fe99989b9a9b8cbe989a979dd0999188">[email protected]</span></a>, Legal Division, Federal Deposit Insurance Corporation, 
550 17th Street NW, Washington, DC 20429. For the hearing impaired 
only, TDD users may contact (202) 925-4618.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. The Proposed Statement of Policy
    A. Proposed Revisions
    B. Comments
III. Final Statement of Policy Regarding Minority Depository 
Institutions
IV. Administrative Matters

I. Background

    Section 308 of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 (FIRREA) \1\ established several goals related 
to minority depository institutions (MDIs): (1) Preserving the number 
of MDIs; (2) preserving the minority character in cases of merger or 
acquisition; (3) providing technical assistance to prevent insolvency 
of institutions not now insolvent; (4) promoting and encouraging 
creation of new MDIs; and (5) providing for training, technical 
assistance, and education programs.
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    \1\ Public Law 101-73, title III, Sec.  308, Aug. 9, 1989, 103 
Stat. 353, as amended by Public Law 111-203, title III, Sec.  
367(4), July 21, 2010, 124 Stat. 1556, codified at 12 U.S.C. 1463 
note.
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    On April 3, 1990, the Board of Directors of the Federal Deposit 
Insurance Corporation (FDIC Board and FDIC, respectively) adopted the 
Policy Statement on Encouragement and Preservation of Minority 
Ownership of Financial Institutions (1990 Policy Statement). The 
framework for the 1990 Policy Statement resulted from key provisions 
contained in Section 308 of FIRREA. The 1990 Policy Statement provided 
information to the public and minority banking industry regarding the

[[Page 32729]]

agency's efforts in achieving the goals of Section 308.
    During the 1990s, many MDIs continued to underperform industry 
averages for profitability and experience failure rates that were 
significantly higher than those of the industry overall. In order to 
discuss the challenges that MDIs faced, and identify best practices and 
possible ways the regulatory agencies could promote and preserve MDIs, 
the FDIC and other banking regulatory agencies--with assistance from 
several minority bank trade associations--invited officers from 156 
MDIs to participate in a ``Bankers and Supervisors Regulatory Forum'' 
held in March of 2001. Approximately 70 bankers attended.
    The FDIC also formed an Interdivisional Working Group to consider 
measures to modernize the policies and procedures related to MDIs. The 
working group incorporated many suggestions from the March 2001 forum 
into a revised Policy Statement Regarding Minority Depository 
Institutions, issued by the FDIC, after notice and comment, in April of 
2002 (2002 Policy Statement).\2\ The FDIC issued the 2002 Policy 
Statement to provide additional information regarding the FDIC's 
initiatives related to Section 308. The 2002 Policy Statement provided 
a more structured framework that set forth initiatives of the FDIC to 
promote the preservation of, as well as to provide technical 
assistance, training, and educational programs for, MDIs by working 
with those institutions, their trade associations, and the other 
federal financial regulatory agencies.
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    \2\ 67 FR 18618 (Apr. 16, 2002).
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    Over the years, the FDIC has continued to modify and enhance its 
MDI program to better carry out the FDIC's efforts to meet the goals in 
Section 308 of FIRREA. The revisions in the proposed Statement of 
Policy are intended, in part, to strengthen and improve the various 
aspects of the MDI program and how each component of the MDI program is 
carried out by various responsible entities that are part of the MDI 
program. The proposed revisions to the 2002 Policy Statement reflected 
in the proposed Statement of Policy describe the FDIC's enduring and 
strengthened commitment to, and engagement with, MDIs in furtherance of 
its goal of preserving and promoting MDIs.
    In 2019, the FDIC established a new MDI Subcommittee of the 
Advisory Committee on Community Banking (CBAC). The MDI Subcommittee 
held its inaugural meeting in December 2019. There are nine executives 
serving as members of the MDI Subcommittee, representing African 
American, Native American, Hispanic American, and Asian American MDIs 
across the country. The MDI Subcommittee provides recommendations 
regarding the FDIC's MDI program to the CBAC for consideration. The MDI 
Subcommittee serves as a source of feedback with regard to the FDIC's 
efforts to fulfill its statutory goals to preserve and promote MDIs; 
provides a platform for MDIs to promote collaboration, partnerships, 
and best practices; and identifies ways to highlight the work of MDIs 
in their communities.
    The FDIC published, also in 2019, an MDI research study, which 
explores changes in MDIs, their role in the financial services 
industry, and their impact on the communities they serve.\3\ The study 
period covered 2001 to 2018 and looked at the demographics, structural 
change, geography, financial performance, and social impact of MDIs.
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    \3\ See FDIC MDI research study, published June 2019, Minority 
Depository Institutions: Structure, Performance, and Social Impact, 
https://www.fdic.gov/regulations/resources/minority/2019-mdi-study/full.pdf.
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    Additionally, to discuss the challenges that MDIs face, provide 
information on best practices, and collaborate on possible ways the 
regulatory agencies can promote and preserve MDIs, in June of 2019, the 
FDIC hosted the Interagency MDI and Community Development Financial 
Institution (CDFI) Bank Conference, Focus on the Future: Prospering in 
a Changing Industry, in collaboration with the Office of the 
Comptroller of Currency and the Board of Governors of the Federal 
Reserve System. More than 80 MDI and CDFI bankers, representing 61 
banks, attended the two-day conference.\4\
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    \4\ See Chairman Jelena McWilliams Keynote Remarks, MDI and 
Community Development Financial Institution bank conference, Focus 
on the Future: Prospering in a Changing Industry (Mar. 3, 2020), 
https://www.youtube.com/watch?v=o0H6Ko00qTk&feature=youtu.be.
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    All of these various efforts by the FDIC to enhance its MDI program 
have informed the proposed revisions to the Statement of Policy. The 
FDIC has received suggestions from bankers at outreach and trade 
association meetings as well as feedback from the June 2019 conference. 
The MDI Subcommittee has also provided feedback to the CBAC for 
consideration and recommendation to the FDIC. Many of these suggestions 
and feedback have been incorporated into the revised Statement of 
Policy. The following section summarizes the significant changes from 
the 2002 Policy Statement.

II. The Revised Policy Statement

A. Proposed Revisions

    On September 25, 2020, the FDIC published in the Federal Register 
proposed revisions to its MDI Policy Statement.\5\ The FDIC proposed 
changes in the following seven areas:
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    \5\ 85 FR 60466 (Sept. 25, 2020).
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    Technical assistance and other engagement. The proposed Statement 
of Policy clarified that technical assistance is not a supervisory 
activity and is not intended to present additional regulatory burden. 
Further, the proposed Statement of Policy stated that examination teams 
will not view requests for, or acceptance of, technical assistance 
negatively when evaluating institution performance or assigning 
ratings.
    FDIC outreach. The proposed Statement of Policy was updated to 
provide additional outreach opportunities, including with the 
Chairman's office and the National Director for Minority and Community 
Development Banking.
    MDI Subcommittee. The proposed Statement of Policy described the 
newly established FDIC MDI Subcommittee of the CBAC, which serves as 
source of feedback on FDIC strategies to fulfill statutory goals to 
preserve and promote MDIs. The MDI Subcommittee may also make 
recommendations or offer ideas to the CBAC for consideration and 
presentation to the FDIC. The MDI Subcommittee provides a platform for 
MDIs to promote collaboration, partnerships, and best practices. The 
MDI Subcommittee also identifies ways to highlight the work of MDIs in 
their communities.
    Definitions. The proposed Statement of Policy added definitions for 
terms used in the MDI program: Technical assistance; training and 
education; and outreach. Technical assistance is defined as individual 
assistance that a regulator will provide to a MDI in response to an 
institution's request for assistance in addressing specific areas of 
concern. The proposed Statement of Policy also noted that technical 
assistance is a tool to provide on-going support to institutions in an 
effort to facilitate timely implementation of recommendations, full 
understanding of regulatory requirements, and in some instances, the 
viability of the institution. Training and education programs consist 
of instruction designed to impart proficiency or skills related to a 
particular job, process, or regulatory policy. This training and 
education can be provided in person, through webinars or conference 
calls, or in a

[[Page 32730]]

conference setting. Outreach consists of FDIC representatives meeting 
with financial institutions with a primary focus of building 
relationships and open communication and providing information and 
resources. Outreach is generally offered by the FDIC and can include 
meetings between financial institution management and senior FDIC 
management.
    Reporting. The proposed Statement of Policy reflects updated 
reporting requirements applicable to the FDIC, including the Annual 
Report to Congress on the Preservation and Promotion of Minority 
Depository Institutions pursuant to Section 367 of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act of 2010 and Section 308 of 
FIRREA. The Section 367 requirements were enacted since the Statement 
of Policy was last updated in 2002.
    Measurement of effectiveness. The proposed Statement of Policy also 
established new requirements to measure the effectiveness of the MDI 
program. The National Director and the regional office staff will 
routinely solicit feedback from MDIs to assess the effectiveness of the 
FDIC's technical assistance, training and education, and outreach 
efforts and the MDI program in general. The FDIC will track instances 
of technical assistance, training and education, and outreach and 
solicit feedback on the effectiveness of these activities by 
administering periodic surveys and holding discussions with bank 
management.
    Examinations. The proposed Statement of Policy added a description 
of how the FDIC applies rating systems to examinations of MDIs. 
Specifically, the proposed Statement of Policy described how the 
Uniform Financial Rating System (UFIRS) and the Uniform Interagency 
Consumer Compliance Rating System (UICCR) are designed to reflect an 
assessment of the individual institution, including its size and 
sophistication, the nature and complexity of its business activities, 
and its risk profile rather than a comparison to peer institutions

B. Comments

    The FDIC sought comment generally on the proposed revisions to the 
Statement of Policy and asked six specific questions regarding aspects 
of the proposal. Seven comment letters were received.\6\ The comments 
came from an insured financial institution, a financial institution 
trade organization, a non-profit organization, a service provider that 
serves minority depository institutions, and individuals. Commenters 
generally supported the proposed revisions to the Statement of Policy, 
however, some commenters also made specific recommendations to the 
Statement of Policy. These comments are discussed in more detail below. 
The FDIC is making one change to the Statement of Policy in response to 
comments received.
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    \6\ See Comments received for proposed revisions to Statement of 
Policy Regarding Minority Depository Institutions, available at 
https://www.fdic.gov/regulations/laws/federal/2020/2020-statement-of-policy-minority-depository-institutions-3064-za19.html.
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    The FDIC received several comments on the methods described in the 
Statement of Policy that would be used to identify and provide useful 
engagement opportunities. One commenter suggested that additional 
technical assistance could be provided to MDIs in danger of failing. 
After consideration of this comment, the FDIC has decided not to make 
any related changes to the Statement of Policy. The FDIC already seeks 
to preserve the minority character of failing institutions before and 
during the resolution process, as required by Section 308 of FIRREA. 
Further, the FDIC provides ongoing supervisory oversight of 
institutions prior to failure through regular on-site examinations, 
visitations, off-site monitoring, and various offers to provide 
technical assistance.
    One commenter requested that the Statement of Policy more 
explicitly state that outreach will include national and state banking 
industry trade associations. Another commenter suggested that 
collaboration with state banking agencies might enhance program 
content, delivery, and reach. Such collaboration already is 
contemplated by the Statement of Policy, so no changes are necessary. 
However, the FDIC agrees that it would be useful to explicitly include 
national and state bankers associations among the various external 
organizations with whom the FDIC will discuss opportunities to 
collaborate, the challenges faced by MDIs, and other topics, and has 
made a change to the Statement of Policy to reflect such outreach.
    One group of academics suggested that MDI resources be centralized 
in a single location. This commenter further recommended that the 
burden of requesting services should be transferred from the MDIs to 
FDIC staff in Regional and Field offices. The FDIC suggests that the 
current structure of the MDI program, with a National Director and 
staff in the FDIC's Washington Office, Regional Coordinators in each of 
the FDIC's six Regional Offices, and additional staff in 82 Field 
Offices spread across the country, all available to respond to 
questions and to provide technical assistance, works well to provide 
resources to MDIs. The FDIC also assigns to every FDIC-supervised 
institution, of any size or ownership form, a case manager and a review 
examiner who are available for all supervisory activities or inquiries. 
The FDIC believes it is better to meet the needs of MDIs where they 
are, rather than in a central location, and has not made a change in 
response to these comments.
    The same commenter suggested more could be done to reach out to 
MDIs and those in the process of organizing de novo MDIs, specifically 
recommending an annual informational conference for entrepreneurs 
seeking to enter the industry. The FDIC has in place a number of 
initiatives to assist existing and potential future MDIs. Regional 
Directors and their staff work with MDI organizers to help them 
understand application requirements and processes, and provide 
technical assistance throughout the process. This work includes the 
National Director's office and senior Regional management in the MDI 
organizer's respective region, hosting conference calls with the 
organizer addressing questions regarding MDI designation and other 
topics. The FDIC currently is developing videos targeted at 
entrepreneurs and others seeking to establish an MDI. The Statement of 
Policy is intended to provide general principles and commitments from 
the FDIC regarding the MDI program. In order for the Statement of 
Policy to be a living document that allows the FDIC to prioritize 
different initiatives and to move away from unsuccessful efforts, the 
Statement of Policy does not include many details about specific 
initiatives. The FDIC takes notice of the commenter's suggestion, but 
has not revised the Statement of Policy.
    The FDIC received several comments on the definitions included 
within the Statement of Policy. Two commenters suggested that the FDIC 
should broaden MDI eligibility in the Statement of Policy to include 
women-led institutions. One of these commenters specifically 
recommended that the FDIC should consider implementing a requirement 
that in order for an institution to obtain MDI status, they must have 
at least a minimum of two women on their executive leadership boards. 
The FDIC, in response, notes that the Statement of Policy closely 
follows the statutory definitions of ``minority depository 
institution'' and ``minority'' set forth in Section 308 of FIRREA, 
which does not include

[[Page 32731]]

women-owned or women-led institutions. Minority depository institutions 
have very unique challenges and serve distinct communities. The primary 
purpose of the FDIC's MDI program is to promote and preserve these 
institutions and develop resources specific to the needs of these 
institutions.
    Another commenter recommended that the FDIC define the term 
``predominantly minority'' in the context of a community the 
institution serves. The FDIC has established MDI Designation Assessment 
Procedures, which will be published and included in the publicly 
available Application Procedures Manual. These procedures provide the 
criteria that must be met by institutions seeking the MDI designation. 
The procedures also describe the FDIC's process for assessing an 
institution's eligibility for the designation. These procedures include 
steps for performing an assessment of the community served by the 
institution, consisting partly of a review of the minority population 
in the institution's target area.
    The FDIC also received comments specifically relating to the 
definitions assigned to technical assistance, education, and outreach. 
One commenter recommended that the FDIC interpret as broadly as 
possible the specific instances within each category (technical 
assistance, training and education, outreach) which will likely benefit 
MDIs. In measuring the effectiveness of the MDI program, the FDIC 
regularly solicits comments from MDIs regarding the usefulness and 
quality of technical assistance, outreach, and education and training 
efforts of the FDIC. The FDIC thus has developed an understanding of, 
and will continue to assess, the most beneficial resources made 
available to institutions. The definitions in the Statement of Policy 
provide the FDIC with the flexibility to meet the evolving needs of the 
MDI program and will not be changed.
    Regarding the term ``technical assistance,'' the FDIC received a 
comment suggesting that the FDIC use the term ``professional 
consultation'' in place of ``technical assistance'' to encourage 
working relationships with MDI executives. The FDIC responds that the 
term ``technical assistance'' is widely used throughout the banking 
industry and specifically set forth in Section 308 of FIRREA. The FDIC 
has not received any comments from institutions indicating they have 
any concerns with the term itself. Many institutions use the technical 
assistance and other resources, such as outreach, made available by the 
FDIC and have found the resources beneficial as they address challenges 
or require clarification on supervisory recommendations and processes 
as well as laws and regulations.
    The same commenter noted that the proposed Statement of Policy 
provides a statement regarding the supervisory impact of requests for, 
or acceptance of, technical assistance. The commenter noted that, while 
its member institutions did not perceive a negative impact that served 
as a barrier to seeking technical assistance, the proposed 
clarification is laudable.
    One commenter recommended that the FDIC consider whether MDIs might 
benefit from a clearly stated supervisory impact from participating in 
outreach activities similar to the statement included in the technical 
assistance definition, noting that technical assistance is not a 
supervisory activity. The FDIC has not received any feedback from MDI 
management indicating any perceived reluctance to communicate freely 
during outreach activities. Further, the FDIC understands the 
importance of developing strong working relationships with institution 
management, the development of which requires open communication. The 
FDIC encourages participants of all outreach activities to communicate 
any recommendations, questions, or concerns without worry of 
repercussion.
    The FDIC received several comments on the types of information 
regarding the MDI program that would be useful to include in annual 
reports or the MDI program website. One commenter suggested, to 
encourage MDIs to use resources offered by the FDIC more fully, that 
the FDIC's annual report should highlight the FDIC's efforts in 
establishing new MDIs, success stories with growing MDIs, how the FDIC 
has assisted struggling MDIs, and, in the event of a failure, how the 
minority focus of the failed MDI has been retained by the acquiring 
institution. The FDIC does, and will continue to, highlight 
achievements made by MDIs within the Annual Report to Congress and 
other publications featuring the activities of MDIs. These publications 
will also capture supervisory activities promoting the creation of new 
MDIs, including the support provided during the de novo application 
process.
    One commenter suggested the FDIC research the potential impact of 
MDIs on rural areas and how to successfully scale MDIs in rural areas. 
While not described in the proposed Statement of Policy, the FDIC 
considers the most pertinent studies for MDIs and the banking industry 
as a whole, as well as the timing of such research. The commenter also 
suggested the FDIC's website organization should be designed for users 
such as entrepreneurs, new managers of MDIs, growing MDIs, and 
faltering MDIs. The FDIC is updating the MDI program website to expand 
the scope of information contained therein. The FDIC will develop 
informational videos promoting the creation of MDIs and providing 
education on applying for deposit insurance and obtaining the MDI 
designation. As noted above, the FDIC is developing videos specifically 
for entrepreneurs and other parties interested in establishing a de 
novo MDI.
    One commenter recommended the FDIC clarify whether the intended use 
of the results from periodic surveys and discussions with bank 
management will be shared with the MDI Subcommittee, the FDIC's Board, 
and the general public. The FDIC notes that the results of the 
effectiveness survey and comments provided by institution management 
informs the MDI program on key areas where the MDI program has been 
successful and areas where the FDIC can improve program delivery. These 
findings and discussions strengthen the MDI program by identifying key 
resources that have been or could be beneficial to institutions. The 
findings of the survey are shared with the MDI Subcommittee, CBAC, and 
the FDIC Board. The FDIC may consider including summary survey 
information in the Annual Report to Congress.
    The FDIC received comments on methods to identify and provide 
technical assistance, outreach, and training education and resources 
that would be beneficial to minority depository institutions. One 
commenter suggested expanding the training and educational programs 
portion of the Engagement with MDIs section of the Statement of Policy 
to specifically include virtual environments and the services of 
private organizations in order to ensure that MDIs have a wide variety 
of solutions to meet their needs. The FDIC develops training material 
on laws, regulations, and guidance pertinent to the financial 
institutions it supervises. Any private companies interested in 
providing training to MDIs can contact trade associations or 
institutions directly.

[[Page 32732]]

    One commenter suggested the FDIC facilitate training and education 
through written materials, such as manuals or whitepapers. The FDIC is 
evaluating options for additional training and education resources. The 
FDIC will engage the MDI Subcommittee to seek its ideas on topics and 
alternative methods of providing training and education material.
    Finally, one commenter urged the FDIC to play a larger role in 
addressing the challenges facing minority communities, including racial 
gaps in financial and economic opportunity. The Statement of Policy 
focuses on strategies to facilitate the viability of MDIs to enable 
MDIs to serve their communities. As noted above, the FDIC recognizes 
the importance of the broader societal issues and, indeed, is taking 
steps to address them, but revisions to the rules implementing the 
Community Reinvestment Act, enforcing the law against predatory 
lenders, and bank staff diversity are beyond the scope of the Statement 
of Policy.

III. Final Statement of Policy Regarding Minority Depository 
Institutions

    The text of the Statement of Policy follows:
    The FDIC has long recognized the importance of minority depository 
institutions in the financial system and their unique role in promoting 
the economic viability of minority and under-served communities. The 
FDIC historically has implemented programs to preserve and promote 
these financial institutions. This Statement of Policy describes the 
framework the FDIC has put into place and the initiatives the FDIC will 
undertake to fulfill its statutory goals with respect to minority 
depository institutions (MDI Program).

Statutory Framework

    In August 1989, Congress enacted the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 (FIRREA). Section 308 of FIRREA 
established the following goals:
    <bullet> Preserve the number of minority depository institutions;
    <bullet> Preserve the minority character in cases of merger or 
acquisition;
    <bullet> Provide technical assistance to prevent insolvency of 
institutions not now insolvent;
    <bullet> Promote and encourage creation of new minority depository 
institutions; and
    <bullet> Provide for training, technical assistance, and 
educational programs.

Definitions

    Section 308 of FIRREA defines ``minority depository institution'' 
as any federally insured depository institution where 51 percent or 
more of the voting stock is owned by one or more ``socially and 
economically disadvantaged individuals.'' ``Minority,'' as defined by 
Section 308 of FIRREA, means any ``Black American, Native American, 
Hispanic American, or Asian American.'' Therefore, for the purposes of 
this Statement of Policy, ``minority depository institution'' is 
defined as any federally insured depository institution where 51 
percent or more of the voting stock is owned by minority individuals. 
This includes institutions collectively owned by a group of minority 
individuals, such as a Native American tribe. Ownership must be by U.S. 
citizens or permanent legal U.S. residents to be counted in determining 
minority ownership. In addition to the institutions that meet the 
ownership test, for the purposes of this Statement of Policy, 
institutions will be considered minority depository institutions if a 
majority of the Board of Directors consists of minority individuals and 
the community that the institution serves is predominantly minority.

Identification of Minority Depository Institutions

    To ensure that all minority depository institutions are able to 
participate in the MDI program, the FDIC will maintain a list of 
federally insured minority depository institutions. Institutions that 
are not already identified as minority depository institutions can 
request to be designated as such by certifying that they meet the above 
definition. For institutions supervised directly by the FDIC, examiners 
will review the appropriateness of their inclusion on the list during 
the examination process. In addition, case managers in regional offices 
will note changes to the list while processing deposit insurance 
applications, merger applications, change of control notices, or 
failures of minority depository institutions. The FDIC will work 
closely with the other federal banking regulators to capture accurately 
on the list institutions not directly supervised by the FDIC. In 
addition, the FDIC will periodically provide the list to relevant trade 
associations and seek input regarding the accuracy of the list. 
Inclusion in the FDIC's MDI program is voluntary. Any minority 
depository institution not wishing to participate in the MDI program 
will be removed from the official list upon request.

Organizational Structure

    The FDIC has designated a national director for the FDIC's MDI 
program in the Washington Office and a regional coordinator in each 
Regional Office. The national director will consult with officials from 
the following FDIC Divisions to ensure appropriate personnel are 
involved and resources are made available with regard to MDI program 
initiatives: Division of Risk Management Supervision, Division of 
Depositor and Consumer Protection, Division of Resolutions and 
Receiverships, Division of Insurance and Research, Legal Division, and 
the Office of Minority and Women Inclusion. The national director will 
also consult with other organizations within the FDIC as appropriate.
    As the primary federal regulator for State nonmember banks and 
State savings associations, the FDIC will focus its efforts on minority 
depository institutions with those charters. However, the national 
director will meet periodically with the other federal banking 
regulators to discuss each agency's outreach efforts, to share ideas, 
and to identify opportunities where the agencies can work together to 
assist minority depository institutions. Representatives of other 
divisions and offices may participate in these meetings.

Engagement With Minority Depository Institutions

    The FDIC's MDI program will provide for continual engagement with 
minority depository institutions through ongoing interaction with the 
Washington, Regional, and Field Office staff. This interaction includes 
providing technical assistance to share information and expertise on 
supervisory topics, outreach initiatives to provide opportunities for 
open dialogue with senior FDIC staff, and training initiatives to offer 
opportunities to gain additional knowledge about specific regulatory 
requirements.
    Further, trade associations affiliated with minority depository 
institutions serve as a significant resource in identifying specific 
interests or concerns for those institutions. The national director 
will regularly contact minority depository institution trade 
associations to seek feedback on the FDIC's efforts under the MDI 
program, discuss possible training initiatives, and explore options for 
promoting and preserving minority depository institutions. The national 
director and the regional coordinators also will solicit information 
from trade associations, including national and state bankers'

[[Page 32733]]

associations, and other organizations about groups that may be 
interested in establishing new minority depository institutions. FDIC 
representatives will be available to address such groups to discuss the 
application process, the requirements of becoming FDIC insured, and the 
various programs supporting minority depository institutions. The 
regional coordinators will contact all new minority state nonmember 
banks and state savings associations identified through insurance 
applications, merger applications, or change in control notices to 
familiarize the institutions with the resources available through the 
MDI program.
Technical Assistance
    Technical assistance, as defined by the FDIC's MDI program, is 
individual assistance that a regulator will provide to a minority 
depository institution in response to an institution's request for 
assistance in understanding supervisory topics or findings. At any 
time, the FDIC will share information and expertise with bank 
management on various topics including, but not limited to, 
understanding bank regulations, FDIC policies, examination procedures, 
accounting practices, supervisory recommendations, risk management 
procedures, and compliance management procedures. In providing 
technical assistance, FDIC staff will not actually perform tasks 
expected of an institution's management or employees. For example, FDIC 
staff may explain Call Report instructions as they relate to specific 
accounts, but will not assist in preparing an institution's Call 
Report. FDIC staff may provide information on community reinvestment 
opportunities, but will not recommend a specific transaction.
    An institution can contact its field office representatives, case 
manager, or review examiner to request technical assistance. In 
addition, the regional coordinators and the institution's assigned case 
manager and review examiner are knowledgeable about minority bank 
issues and are available to answer questions or to direct inquiries to 
the appropriate FDIC office or staff member with expertise on the 
subject for response. Case managers can explain the application process 
and the type of analysis and information required for different 
applications. Field office representatives also serve as a significant 
resource to minority depository institutions by readily answering 
examination related questions and explaining regulatory requirements. 
Other staff members within the FDIC with expertise in various 
regulatory topics will also be available to share knowledge to assist 
minority depository institutions in complying with regulations or 
implementing supervisory recommendations.
    During examinations, the FDIC expects examiners to fully explain 
supervisory recommendations and offer to help management understand 
satisfactory methods to address such recommendations. At the conclusion 
of each examination of a minority depository institution directly 
supervised by the FDIC, the FDIC will be available to return to the 
institution to provide technical assistance by reviewing areas of 
concern or topics of interest to the institution. The purpose of return 
visits is to assist management in understanding and implementing 
examination recommendations, not to identify new problems.
    Technical assistance is a tool to provide on-going support to 
institutions in an effort to ensure timely implementation of 
recommendations, full understanding of regulatory requirements, and in 
some instances, the viability of the institution. Technical assistance 
is not a supervisory activity and is not intended to present additional 
regulatory burden. Further, examination teams will not view requests 
for, or acceptance of, technical assistance negatively when evaluating 
institution performance or assigning ratings.
Outreach
    Outreach, as defined by the FDIC's MDI program, consists of FDIC 
representatives meeting with financial institutions with a primary 
focus of building relationships and open communication and providing 
information and resources. Outreach is generally offered by the FDIC 
and can include meetings between financial institution management and 
senior FDIC management.
    The FDIC maintains an MDI Subcommittee of its Advisory Committee on 
Community Banking (CBAC) composed of executives of minority depository 
institutions. The MDI Subcommittee serves as a source of feedback on 
FDIC strategies to fulfill statutory goals to preserve and promote 
minority depository institutions. The MDI Subcommittee may also make 
recommendations or offer ideas to the CBAC for consideration and 
presentation to the FDIC. The MDI Subcommittee provides a platform for 
minority depository institutions to promote collaboration, 
partnerships, and best practices. The Subcommittee will also identify 
ways to highlight the work of minority depository institutions in their 
communities.
    Executives and staff in the FDIC's regional offices will 
communicate regularly with each minority depository institution to 
outline the FDIC's efforts to promote and preserve minority depository 
institutions; will offer annually to have a member of regional 
management meet with the institution's board of directors to discuss 
issues of interest, including through roundtable discussions and 
training sessions; and will seek input regarding any training or other 
technical assistance the institution may desire.
    The FDIC will explore opportunities to facilitate collaboration and 
partnering initiatives among minority depository institutions or 
between minority depository institutions and non-minority depository 
institutions. The FDIC recognizes that by facilitating these 
collaborative relationships, institutions can have opportunities to 
better meet the needs of their communities.
Training and Educational Programs
    Training and educational programs, as defined by the FDIC's MDI 
program, consist of instruction designed to impart proficiency or 
skills related to a particular job, process, or regulatory policy. The 
FDIC will work with other banking regulatory agencies and trade 
associations representing minority depository institutions to 
periodically assess the need for, and provide for, training and 
educational opportunities. The FDIC will partner with other federal 
banking agencies and trade associations to offer training programs. 
This training and education can be provided in person, through webinars 
or conference calls, or in a conference setting.

Reporting

    The regional coordinators will report regional office activities 
related to the MDI program to the national director quarterly. The 
national director will develop a comprehensive report on all MDI 
program activities and submit the report quarterly to the Chairman. The 
FDIC's efforts to preserve and promote minority depository institutions 
will also be highlighted in the FDIC's Annual Report and the Annual 
Report to Congress on the Preservation and Promotion of Minority 
Depository Institutions pursuant to Section 367 of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act of 2010 and Section 308 of 
FIRREA.

Measuring Program Effectiveness

    The national director and the regional office staff will routinely 
solicit

[[Page 32734]]

feedback from minority depository institutions to assess the 
effectiveness of the FDIC's technical assistance, outreach, and 
training/education efforts and the MDI program in general. The FDIC 
will track instances of technical assistance, outreach, and training 
and education and solicit feedback on the effectiveness of these 
activities by administering periodic surveys and holding discussions 
with bank management.

Examinations

    All insured institutions must be operated in a safe and sound 
manner, in accordance with FDIC's regulations. Likewise, all 
examinations must be conducted within the parameters of FDIC exam 
policies and should consistently measure the risk an institution poses 
to the FDIC's deposit insurance fund. Notwithstanding, and consistent 
with the Uniform Financial Institutions Rating System (UFIRS) and the 
Uniform Interagency Consumer Compliance Rating System (UICCR), 
examiners are expected to recognize the distinctive characteristics and 
differences in core objectives of each financial institution and to 
consider those unique factors when evaluating an institution's 
financial condition and risk management practices.
    Under the UFIRS and UICCR, each financial institution is assigned a 
composite rating based on an evaluation of specific components, which 
are also rated. For UFIRS, these component ratings reflect an 
institution's capital adequacy, asset quality, management capabilities, 
earnings sufficiency, liquidity position, and sensitivity to market 
risk (commonly referred to as the CAMELS ratings). Likewise, the UICCR 
is organized under broad components that assess the institution's board 
and management oversight, compliance program, violations of law, and 
consumer harm. The uniform rating systems and evaluation and rating 
criteria are specific to the examination types performed. Further, the 
assignment of the rating is based solely on the subject institution's 
individual performance under the specific components.
    Management practices, particularly as they relate to risk 
management, vary considerably among financial institutions depending on 
size and sophistication, the nature and complexity of business 
activities, and risk profile. Each institution must properly manage 
risks and have appropriate policies, processes, or practices in place 
that management follows and uses. Activities undertaken in a less 
complex institution engaging in less sophisticated risk-taking 
activities may need only basic management and control systems compared 
to the detailed and formalized systems and controls used for the 
broader and more complex range of activities undertaken at a larger and 
more complex institution.
    Peer comparison data are not included in the rating systems. The 
principal reason is to avoid over reliance on statistical comparisons 
to justify the component rating being assigned. Avoiding such 
overreliance is very important when evaluating minority depository 
institutions due to their unique characteristics. For example, many 
minority depository institutions were established to serve an otherwise 
under-served market. High profitability may not be as essential to the 
organizers and shareholders of the institution. Instead, community 
development, improving consumer services, and promoting banking 
services to the unbanked or under-banked segment of its community may 
drive many of the organization's decisions. The UFIRS allows for 
consideration of the characteristics by considering not only the level 
of an institution's earnings, but also the trend and stability of 
earnings, the ability to provide for adequate capital, the quality and 
sources of earnings, and the adequacy of budgeting systems.
    Examiners are instructed to consider all relevant factors when 
assigning a component rating. The rating systems are designed to 
reflect an assessment of the individual institution, including its size 
and sophistication, the nature and complexity of its business 
activities, and risk profile.

Failing Institutions

    The FDIC will attempt to preserve the minority character of failing 
institutions during the resolution process. In the event of a potential 
failure of a minority depository institution, the Division of 
Resolutions and Receiverships will contact all minority depository 
institutions nationwide that qualify to bid on failing institutions. 
The Division of Resolutions and Receiverships will solicit qualified 
minority depository institutions' interest in the failing institution, 
discuss the bidding process, and offer to provide technical assistance 
regarding completion of the bid forms. In addition, the Division of 
Resolutions and Receiverships, with assistance from the Office of 
Minority and Women Inclusion, will maintain a list of minority 
individuals and nonbank entities that have expressed an interest in 
acquiring failing minority depository institutions and have been pre-
approved by the Division of Risk Management Supervision and the 
chartering authority for access to the FDIC's virtual data room for 
online due diligence.

Internet Site

    The FDIC will maintain a website to promote the MDI program. Among 
other things, the website will describe the tools and resources 
available under the program. The website will include the name, phone 
number, and email address of the national director, each regional 
coordinator, and additional staff. The website will also contain links 
to the list of minority depository institutions, pertinent trade 
associations, and other federal agency programs. The FDIC will also 
explore the feasibility and usefulness of posting other items to the 
page, such as statistical information and comparative data for minority 
depository institutions. Visitors will have the opportunity to provide 
feedback regarding the FDIC's program and the usefulness of the 
website.

IV. Administrative Law Matters

    The Paperwork Reduction Act of 1995 (PRA) \7\ states that no agency 
may conduct or sponsor, and no respondent is required to respond to, an 
information collection unless it displays a currently valid Office of 
Management and Budget (OMB) control number.
---------------------------------------------------------------------------

    \7\ 44 U.S.C. 3501, et seq.
---------------------------------------------------------------------------

    The Statement of Policy Regarding Minority Depository Institutions 
does not create any new or revise any existing information collections 
pursuant to the PRA. Rather, any reporting, recordkeeping, or 
disclosure activities mentioned in the Statement of Policy Regarding 
Minority Depository Institutions are usual and customary and should 
occur in the normal course of business as defined in the PRA.\8\ 
Consequently, no submissions will be made to the OMB for review. No 
comments were received regarding PRA or other burdens.
---------------------------------------------------------------------------

    \8\ 5 CFR 1320.3(b)(2).

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Federal Deposit Insurance Corporation.

    By order of the Board of Directors.

    Dated at Washington, DC, on June 15, 2021.
James P. Sheesley,
Assistant Executive Secretary.
[FR Doc. 2021-12972 Filed 6-22-21; 8:45 am]
BILLING CODE 6714-01-P


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