I. introduction
The Final Rule makes changes in four areas of the Community Reinvestment Act (“CRA”) regulatory framework. Specifically, the Final Rule: (1) clarifies and expands the bank lending, investment, and services that receive CRA credit; (2) updates how banks delineate their assessment areas; (3) provides additional methods to make CRA performance evaluation more consistent and objective; and (4) requires timely and transparent reporting.
The Final Rule applies only to OCC-regulated institutions. The Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System have declined to adopt the OCC’s amended Final Rule at this time.
NOTE: The OCC has proposed to rescind its Community Reinvestment Act (CRA) Rule issued on June 5, 2020.
A. Rescission of OCC June 2020 CRA Rule - FAQs
The Office of the Comptroller of the Currency (OCC) has issued responses to Frequently Asked Questions (FAQ) about a notice of proposed rulemaking soliciting comments on the proposal to rescind the OCC’s Community Reinvestment Act (CRA) Rule issued on June 5, 2020 (June 2020 CRA Rule). The notice proposes that the June 2020 CRA Rule largely be replaced with rules adopted jointly by the OCC, the Board of Governors of the Federal Reserve System, and Federal Deposit Insurance Corporation in 1995, as revised.
The FAQ provide information on the rulemaking process in the OCC's consideration of potential CRA issues during any transition from the June 2020 CRA Rule to a rule largely based on the rules adopted jointly by the OCC, the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation in 1995, as revised. The FAQs may be viewed at https://www.occ.treas.gov/news-issuances/bulletins/2021/bulletin-2021-50.html.
To ease the transition, the OCC proposed a transition plan to replace certain aspect of the June 2020 CRA Rule, which it summarizes in a chart on pages 38-42 of the proposed rule which may be viewed at https://www.occ.gov/news-issuances/federal-register/2021/nr-occ-2021-94a.pdf .
II. Compliance Dates
III. CRA “Qualifying Activities”
The modernized framework sets forth criteria for qualifying activities that capture the activities that currently receive CRA consideration and as support community reinvestment and development—retail banking activities and Community Development (“CD”) activities. The qualifying activities criteria also capture activities consistent with the CRA’s statutory purpose, but that generally may not receive credit, such as:
(1) activities in identified areas of need beyond (low and moderate income) LMI areas (i.e., underserved areas, distressed areas, disaster areas, Indian country, and other tribal and native lands); and (2) a limited set of activities that benefit a whole community, while maintaining an appropriate focus on LMI neighborhoods. Where appropriate, the criteria exclude activities that may have qualified for CRA consideration in the past, like loans to middle- and upper-income borrowers in LMI census tracts, to emphasize activities that support LMI populations and areas and other communities of need.
The non-exhaustive, illustrative list of “qualifying activities,” may be found at https://occ.gov/topics/consumers-and-communities/cra/cra-illustrative-list-of-qualifying-activities.pdf. A. CD Investments
The OCC replaces the term “qualified investment” with “CD investment” to allow for consistent terminology for loans, investments, and services with a CD purpose. Activities that currently receive CRA consideration as qualified investments and activities that meet the new qualifying activities criteria will receive CRA consideration as CD investments. B. Consumer loans
The Final Rule includes consumer loans (not including credit cards and overdraft products) provided to LMI individuals and in Indian country or other tribal or native lands in the qualifying activities criteria. C. Home Mortgage Loans
“Home mortgage loans” are defined by reference to the Call Report. The agency clarified that construction loans for 1-4 family residential properties to builders and consumers are home mortgage loans for CRA purposes if reported on Item 1.a.(1) of Schedule RC-C of the Call Report. Home mortgage loans to LMI individuals and families, and those provided in Indian country, are qualifying activities. A geographic distribution test applies to the home mortgage loan product line for all banks, consistent with the current framework, and addresses concerns that home mortgage lending to middle- and upper-income individuals and families in LMI census tracts might be eliminated with these changes.
D. Small Loans to Businesses and Small Loans to Farms Retail Lending
The Final Rule sets the loan size threshold at $1.6 million. The threshold will be adjusted for inflation once every five years. The Final Rule defines small loans to businesses by reference to the Call Report. However, the agency will consider qualitative aspects of qualifying activities as part of the performance context. This change in the threshold will result in the corresponding Call Report codes no longer capturing all loans that qualify for CRA credit. The bank will want to address this as it structures its data collection and reporting systems.
The OCC clarified that when a bank has a loan that meets the criteria for both a CD loan and a small loan to a business or a farm, it must choose the category for which it will receive CRA credit (i.e., the dollar value can only be counted once). If a bank elects to consider a small loan to a business or a farm as a CD loan for purposes of the CRA evaluation measures and CD minimums, the bank must include all loans that meet the retail loan criteria in the retail lending distribution tests.
E. Commitments to Lend
The Final Rule defines the type of commitments to lend that qualify as CD activities as “a legally binding commitment to extend credit.” It provides that legally binding commitments to lend, such as standby letters of credit, that can provide needed credit enhancements for qualifying activities to commence or continue, are quantified based on the dollar value of the commitment. Other general commitments to lend are quantified based on the on-balance-sheet funded portion of the credit line because that value most accurately reflects the bank’s CRA commitment.
F. Affordable Housing
The OCC replaced the term “benefit” with the more specific phrase “inhabited by” in the affordable housing criterion to clarify that affordable housing must be likely to or be inhabited by LMI individuals or families. The OCC explained that affordable housing activities include owner-occupied housing purchased, refinanced, or improved by or on behalf of LMI individuals or families, except for home mortgage loans provided directly to individuals or families. The Final Rule adopted the proposed rule’s clarification that affordable housing encompasses naturally occurring affordable housing (e.g., unsubsidized rental housing with rents affordable to LMI individuals and families). Median rents must not or project to not exceed 30% of 80% of the area’s median income at the transaction time.
G. Community Support Services
The proposed rule defined community support services as activities, such as childcare, education, health services, and housing services, that partially or primarily serve or assist LMI individuals or families. The Final Rule adopts those and also revises the definition to expressly include workforce development and job training programs to make clear that banks will receive credit for financing or supporting those types of programs for LMI individuals.
H. Economic Development
After some back and forth, CD activities in the Final Rule include those that finance or support economic development, which means activities that provide financing for or support:
(1) federal, state, local, or tribal government programs, projects, or initiatives that partially or primarily serve “small businesses or small farms” as the programs, projects, or initiatives define those terms;
(2) job creation or job retention partially or primarily for LMI individuals;
(3) retaining existing, or attracting new, businesses, farms, or residents to LMI census tracts, underserved areas, distressed areas, designated disaster areas consistent with a disaster recovery plan, or Indian country and other tribal and native lands;
(4) a Small Business Administration Certified Development Company, a Small Business Investment Company (“SBIC”), a New Markets Venture Capital company, a qualified Community Development Entity, or a U.S. Department of Agriculture (“USDA”) Rural Business Investment Company; or
(5) technical assistance and supportive services, such as shared space, technology, or administrative assistance for businesses or farms that meet the size eligibility standards of the SBIC.
I. Essential Community Facilities
Essential community facilities projects must partially or primarily benefit or serve LMI individuals or families, LMI census tracts or other identified areas of need to receive CRA credit. Under the Final Rule, banks will receive full credit for activities that primarily benefit or serve these communities and pro-rata credit for activities that partially benefit or serve these communities. The OCC will accept reasonable methods for calculating the benefit to LMI populations and other identified communities of need.
J. Essential Infrastructure
The Final Rule includes a CD criterion for funding the construction of essential infrastructure. “Essential infrastructure” means:
(1) Public infrastructure, including, but not limited to, public roads, bridges, tunnels; and
(2) Essential telecommunications infrastructure, mass transit, water supply and distribution, utilities supply and distribution, sewage treatment and collection, and industrial parks.
Essential infrastructure activities must partially or primarily serve (1) LMI individuals or families, or (2) LMI census tracts, distressed areas, underserved areas, disaster areas consistent with a disaster recovery plan, or Indian country or other tribal and native lands. The OCC will accept reasonable methods for calculating the portion of an activity that benefits or serves LMI individuals, small businesses, small farms, LMI census tracts, or the identified communities of need. The OCC will consider qualitative aspects of a bank’s CRA activities as part of the performance context, including how responsive the essential infrastructure projects are to the communities they serve.
K. Family Farms Banks will receive credit for CD activities that finance or support a family farm’s:
(1) Purchase or lease of farmland, equipment, and other farm-related inputs;
(2) Receipt of technical assistance and supportive services, such as shared space, technology, or administrative assistance through an intermediary; or
(3) Sale and trade of family farm products.
The Final Rule limits the qualifying criteria to activities that finance or support a family farm’s own production, including the sale and trade of its own products. Activities other than production do not qualify—for example, a family farm with capacity for buying and warehousing crops produced by others and subsequently selling and trading them on the open market.
L. Federal, State, Local, or Tribal Government Programs, Projects, and Initiatives
Activities that finance or otherwise support federal, state, local, or tribal programs, projects, or initiatives may qualify for CD credit. The activities must benefit or serve LMI individuals or families, small businesses or small farms, or LMI census tracts or other identified areas of need. The OCC declined to clarify and more clearly define what it includes in government programs, projects, or initiatives. It recommends banks and interested parties that have questions about activities should reference the CRA illustrative list or utilize the qualifying activity confirmation process in the Final Rule.
M. Financial Literacy
Banks will receive credit for all financial literacy and education or homebuyer counseling activities, regardless of the income level of the beneficiary of the activity.
N. Indian Country
Banks may receive CRA credit for certain activities in Indian country. The Final Rule defines “Indian country” by reference to 18 U.S.C. 1151 and adds Census Bureau-designated Tribal Census Tracts, Oklahoma Tribal Statistical Areas, Tribal Designated Statistical Areas, American Indian Joint-Use Areas, and Alaska Native Village Statistical Areas. The Final Rule also includes other tribal and native lands as a new defined term, which includes Hawaiian Home Lands and State Designated Tribal Statistical Areas. Activities that qualify in Indian country will also qualify in other tribal and native lands.
O. Opportunity Zones
The Final Rule gives credit for qualified opportunity funds that benefit LMI qualified opportunity zones, which are areas the federal government has identified as needing economic development and job creation. Whether an activity benefits an LMI qualified opportunity zone will depend on the facts and circumstances of the activity, including whether it is responsive to the needs of LMI individuals, families, and communities in the opportunity zone.
P. Sports Stadiums
The OCC stated that banks have long received CRA credit for loans and other financing involving athletic facilities that increase opportunities for economically disadvantaged individuals and areas. To address the confusion caused by an example in the proposed rule, the agency provided a new example to reflect better the type of athletic facilities that have qualified for CRA credit in the past.
Ventures Undertaken in Cooperation with Minority Depository Institutions, Women’s Depository Institutions, Community Development Financial Institutions (“CDFI”), or Low-Income Credit Unions
A bank may receive credit when it partners with a minority depository institution, women’s depository institution, CDFI, or low-income credit union. The ventures must help meet the credit needs of the communities in which these institutions are chartered, including by promoting the sustainability and profitability of those institutions themselves. The agency says that it intends the term “ventures” to broadly encompass, for example, deposits, loans, and other financial and nonfinancial support.
Q. Underserved Areas, Distressed Areas, and CRA Deserts
The OCC proposed redefining “distressed nonmetropolitan middle-income area” and “underserved nonmetropolitan middle-income area.” The Final Rule did not do this.
The Final Rule adopts a definition of “CRA desert” and provides multipliers for qualifying activities in these areas. A CRA desert is an area that has been confirmed by the agency to be a CRA desert because of significant unmet CD or retail lending needs and where:
(1) few banks have branches or non-branch deposit-taking facilities;
(2) there is less retail or CD lending than would be expected based on demographic or other factors; or
(3) the area lacks community development organizations or infrastructure.
The agency will maintain an illustrative list of CRA deserts and includes a process for banks to obtain confirmation that an area meets the definition of a CRA desert. A bank that seeks to use a multiplier for an activity in a CRA desert must have the OCC confirm that the geography is or continues to be a CRA desert.
R. Federal Housing Administration (FHA) Loan Products
The OCC has revised the examples on its Illustrative list to clarify that FHA-guaranteed loans to LMI individuals or families qualify for CRA consideration.
S. Persons with Disabilities
The OCC confirmed that activities that benefit or serve LMI individuals with disabilities would meet several of the qualifying activities criteria. The initial CRA illustrative list also includes examples of activities that support persons with disabilities.
T. Affiliate Activities
The Final Rule limits consideration of CRA activities to those conducted directly by a bank, departing from the OCC’s initial proposal. Although the Final Rule does not provide an option for banks to consider their affiliates’ activities, the OCC will consider qualifying activities conducted by the bank, even if the transaction involves an intermediary.
U. CRA Illustrative List and OCC Confirmation of Qualifying Activity
The OCC will maintain a publicly available, nonexhaustive, illustrative list of examples of qualifying activities that meet the rule’s qualifying activities criteria. The list will also include examples of activities that the agency has determined, in response to specific inquiries, do not qualify. The agency plans to update the CRA illustrative list on an annual basis. The Illustrative list will be published in the Federal Register every five years. Under the new framework, the OCC will respond to an online request to confirm whether a bank has a qualifying activity. The Final Rule provides for a 60- day approval process, with the option of a 30-day extension.
V. Retail Banking Services and CD Services
The new changes remove the service test, which is used under the current framework to evaluate banks’ retail banking services and delivery systems and CD services. The OCC will account for these services quantitatively and qualitatively.
The agency will account for retail banking services and delivery systems qualitatively as part of the performance context. The Final Rule also retains the branch distribution component of the CRA evaluation measure. It also enhances the amount of credit that a bank may receive for branches in LMI census tracts and other identified areas of need. The Final Rule quantifies CD services based on the standard figure for the median hourly compensation value for the banking industry, based on Call Report data. The current number is $38, based on 2019 Call Report data. The quantified dollar value of CD services will also be adjusted by multipliers, as applicable.
W. Purchases of Qualifying Activities
If a bank purchases a loan or investment that was a qualifying activity, it remains so unless the agency determines before the sale that it is no longer a qualifying activity (i.e., banks do not have to requalify purchased activities based on the facts at the time of purchase by, for example, obtaining the current income of a borrower who was LMI when the loan was originated).
X. Quantifying a Bank’s Qualifying Activities, General
Except for retail loans sold within 90 days of origination and activities that a bank does not hold its balance sheet, the OCC’s proposed rule would have generally quantified qualifying activities based on their average month-end on-balance-sheet value. A bank that sold a retail loan within 90 days of origination could only receive credit for 25% of the origination value. The OCC removed the retail loan exception from the Final Rule. A bank will receive full credit for retail loan originations sold within 365 days.
Y. Quantifying A Bank’s Qualifying Activities, Pro-Rata Credit
The OCC is expanding the circumstances in which banks receive pro-rata credit for qualifying activities beyond those activities that receive credit under the current framework. Under the current framework, only activities involving mixed-income housing that includes a set-aside required by federal, state, or local government for affordable housing for LMI individuals receive pro-rata credit.
Under the new system, in quantifying the value of CD activities, certain CD activities that provide some benefit to, but do not primarily benefit, specified populations, entities, or areas would receive pro-rata credit equal to the partial benefit provided. The agency will accept reasonable methods for calculating the pro-rata share of a qualifying activity. For example, the construction of a new rail line that goes through 10 census tracts and serves four LMI tracts with multiple stations would clearly benefit LMI tracts. In this scenario, the pro-rata credit could reasonably be 40% of the amount of a construction loan for the project because 4/10 of the census tracts are LMI.
Z. Qualifying Activities Value, General
The Final Rule makes several changes to the proposed quantification of the qualifying activities included in banks’ qualifying activities value and assessment area qualifying activities values. The Final Rule also clarifies that a bank’s qualifying activities value and assessment area qualifying activities values include the quantified dollar value of all qualifying activities originated, made, performed, or on the bank’s balance sheet during the year. The rule also removes language related to the consideration of affiliate activities.
AA. Qualifying Activities Value, Multipliers
The OCC made many revisions to multipliers in the Final Rule.
• A bank is not eligible for multipliers until the quantified dollar values of its current period CD activities are approximately equal to the quantified dollar values of CD activities considered in its prior evaluation period.
• The Final Rule adds retail loans generated by branches in LMI census tracts and CD services to the list of activities eligible for a 2x multiplier.
• There is a 2x multiplier for a qualifying activity that involves minority depository institutions, women’s depository institutions, or low-income credit unions.
• The Final Rule includes an additional 2x multiplier for qualifying activities in CRA deserts. The CRA desert multiplier applies to all qualifying activities conducted in a CRA desert. It would be in addition to the multipliers that apply based on the type of qualifying activity or whether a branch in an LMI census tract generated it. A bank must request that the OCC confirm that an area is a CRA desert before receiving the CRA desert multiplier. The Final Rule includes a process for confirming that a geographic area is a CRA desert where multipliers would apply to banks’ qualifying activities.
Under the Final Rule, the agency may determine that because of the responsiveness, innovativeness, or complexity of certain qualifying activities eligible for a multiplier, the activities should receive an increased multiplier of up to four times their quantified dollar value. A bank may request a determination that an activity is eligible for an increased multiplier as part of the qualifying activity confirmation process or during a CRA evaluation. In addition to multipliers that may apply to these activities, the OCC will consider the impact of these activities on the LMI community, and other identified areas of need, as part of the performance context.
BB. Qualifying Activities Value, Calculation
Under the Final Rule, a bank will calculate its qualifying activities value and assessment area qualifying activities values by taking the sum of the quantified dollar value of all qualifying activities, adjusted by any applicable multiplier, as follows:
[Qualified value of CD Loans and Retail Loans on balance sheet for at least 365 days, and CD Investments on balance sheet] + [100% of the origination value of Retail Loans sold within 365 days of origination] + [CD Services, Monetary Donations, and in-kind donations] IV. Assessment Area
As they do currently, a bank must generally delineate one or more assessment areas within which the OCC can evaluate the bank’s record of helping to meet the credit needs of its community. The OCC has created a new category of assessment area to address the prevalence of Internet banking and banks that have a majority of their deposits outside of their existing assessment area.
The first category of assessment area is the “facility-based” assessment area. This area must encompass each location where the bank maintains a main office, a branch, or a non-branch deposit-taking facility that is not an ATM. The “facility-based” assessment area also includes the surrounding locations in which the bank has originated or purchased a substantial portion of its qualifying retail loans. The geographic levels for delineation of facility-based assessment areas could be any of the following: one MSA; the whole nonmetropolitan area of a state; one or more whole, contiguous MDs in a single MSA; or one or more whole, contiguous counties or county equivalents in one MSA or nonmetropolitan area. A facility-based assessment area may not extend beyond an MSA or state boundary unless the assessment area exists in a multistate MSA. If a bank serves a geographic area that extends beyond a state boundary, the bank must delineate separate assessment areas for the areas in each state. If a bank serves a geographic area that extends beyond an MSA boundary, the bank must delineate different assessment areas for the areas inside and outside the MSA. The Final Rule also provides that banks may, but are not required to, delineate facilities-based assessment areas around deposit-taking ATMs.
If a bank receives 50% or more of its total retail domestic deposits (deposits of individuals, partnerships, and corporations reported in the Call Report as RCE, item 1) from areas outside of its facility-based assessment areas, it must delineate separate, non-overlapping, “deposit-based” assessment areas. The bank may delineate these deposit-based assessment areas at any geographical level where the bank receives 5% or more of its domestic retail deposits. With limited exceptions, an assessment area delineation can only change once per year and must not change within the annual period used to determine an assessment area CRA evaluation measure.
Small banks, intermediate banks, wholesale banks, and limited purpose banks would follow the same proposed rules on assessment area delineation as other banks. Military banks would have the entire United States and its territories as their assessment area.
For banks choosing the option of a strategic plan, the plan must include a delineation of the bank’s assessment areas(s) that meets the requirements of § 25.09(a)-(d). The plan may include assessment area delineations that reflect its target geographic market as defined by the bank in its strategic plan. For a de novo bank, the assessment area delineations should include the projected location of its facilities, retail domestic deposit base, and lending activities.
V. Objective Method to Measure CRA Performance
One of the key goals of the new CRA framework was to set out general performance standards to provide a more objective method of assessing CRA performance. As proposed, these general performance standards would have evaluated banks’ CRA activities in an assessment area by evaluating:
(1) the distribution of the number of qualifying retail loans to LMI individuals, CRA-eligible farms, CRA-eligible businesses, and LMI geographies in a community as measured through the retail lending distribution tests; (2) whether the quantified dollar value of a bank’s qualifying activities met specific rating thresholds; and
(3) whether the bank engaged in a specified minimum level of CD lending and investments.
To judge a bank under the performance standards, examiners will evaluate the banks’ CRA activities throughout the country by assessing:
(1) the rating a bank received in a significant portion of its assessment areas and also in assessment areas representing a significant portion of its deposits; (2) the impact of a bank’s qualifying activities; and
(3) whether the bank engaged in a minimum level of CD lending and investments.
A. Bank Categorization
The Final Rule preserves the current categorization of banks: small ($600 million threshold), intermediate small ($2.5 billion threshold, renamed “intermediate banks”), and large banks. Some small banks that were previously intermediate small banks will no longer have express CD requirements in the Final Rule. However, the OCC will continue to evaluate such banks’ CD lending activities as a part of the CRA evaluation. In the Final Rule, banks with greater than $2.5 billion in assets are subject to the general performance standards. Banks with less than $2.5 billion in assets can opt into the general performance standards. Small and intermediate banks will also be subject to the Final Rule’s clarified qualifying activities criteria. The assessment area provisions, including the requirement to delineate a deposit-based assessment area if a bank receives more than 50% of its deposits from areas outside of its facility-based assessment areas, also apply to small and intermediate banks. Wholesale or limited purpose banks have the same definition and are subject to the same CD test as under the current regulations.
B. CD Minimums
The OCC’s Final Rule establishes CD minimums for both the bank and the assessment area presumptive ratings. Banks subject to the general performance standards must engage in a minimum level of CD loan and investment activities in both their assessment areas and at the aggregate bank level. For a bank to be eligible to receive a presumptive CRA rating of “satisfactory” or “outstanding,” it must exceed a specific ratio of total CD loans and CD investments, over the average of its domestic deposits. The OCC will issue a future rule to define the threshold for this ratio.
C. Retail Distribution Tests
The new framework introduces a series of retail distribution tests to evaluate the credit distribution of a bank’s “major retail lending product lines” within its assessment areas.
To determine its major retail lending product lines, a bank calculates those lines that compose at least 15% of its dollar volume of total retail loan originations and pick the top two. The bank bases its calculation on its originations in the first two years of the evaluation period. OCC examiners will be responsible for performing these calculations based on data obtained by the OCC.
The retail distribution tests include “borrower distribution tests” and “geographic distribution tests”:
• Under the “borrower distribution tests,” a bank will compare both its home mortgage origination rate and its origination rate of loans in other “major retail lending lines” to LMI individuals and families. Comparing these values to its peers generates a “peer comparator.” Comparing them to the demographics of the assessment area yields a “demographic comparator.”
• The “geographic distribution test” compares the bank’s origination rate of small business loans in LMI neighborhoods to a peer comparator and a demographic comparator. The retail lending distribution tests are pass/fail, and banks must pass all applicable retail lending distribution tests in a given area to be eligible to receive a presumptive rating of “satisfactory” or “outstanding.”
D. Presumptive Ratings
The OCC has not finalized numerical thresholds for achieving a presumptive CRA rating. However, the Final Rule provides details for the percentage of assessment areas that must achieve a rating of “satisfactory” or “outstanding” to receive that overall presumptive rating at the bank level:
• A bank with six assessment areas must receive a given rating (e.g., Outstanding or Satisfactory) in
(i.) 80% or more of its assessment areas, and (ii.)in assessment areas from which the bank receives 80% or more of its retail domestic deposits that it receives from its assessment area.
• A bank with five or fewer assessment areas, a bank must receive at least the corresponding rating in
(i.) 50% of its assessment areas, and
(ii.)in the assessment areas from which it receives at least 80% of its retail domestic deposits received from its assessment areas.
The Final Rule does not contain benchmarks for the overall CRA evaluation measure, a specific community development minimum, or thresholds for the retail lending distribution tests. Instead, the rule states that the OCC will gather more data, conduct further analysis, and issue another Notice of Proposed Rulemaking before calibrating the benchmarks, thresholds, and minimums.
VI. Data Collection, Recordkeeping, and Reporting Requirements
A bank evaluated under the general performance standards or a strategic plan must collect and maintain performance standards data. This data includes the bank’s retail lending distribution test ratios, the bank’s CRA evaluation measure and each assessment-area CRA evaluation measure, the bank’s CD minimum and each assessment-area level CD minimum, and the bank’s presumptive ratings. The bank must also collect and maintain the supporting documentation. Banks must report the distribution test ratios and presumptive ratings at the end of the evaluation period, whereas, banks must report the CRA evaluation measure on an annual basis. For all qualifying retail and CD loans, CD investments, and CD services, banks will be required to collect and maintain data including, but not limited to: the location of the loan, investment, or service; an indicator of whether a multiplier applies to the loan, investment or service; and the qualifying activities criteria that the loan, investment, or service satisfies. On an annual basis, these banks must report the quantified dollar value of qualifying retail loans, CD loans, CD investments, and CD services.
The Final Rule also requires these banks to collect and maintain data for originations of non-qualifying home mortgage loans, small loans to businesses, small loans to farms, and consumer loans made by the bank. The annual reports for home mortgage loans include, among other things: the total number of retail loans (home mortgage loans, small loans to a business, small loans to a farm, or consumer loan) that the bank originates during the annual period; the number of these loans that the bank originates in low- and moderate-income census tracts at the county or county-equivalent level; the number of home mortgage and consumer loans originated to low- and moderate-income borrowers; and the number of small loans to businesses and small loans to farms the bank originates to CRA-eligible businesses and farms, respectively.
For grandfathered qualifying activities, banks evaluated under the general performance standards or a strategic plan must maintain and collect data on, among other things a description of the activity and a statement certifying that the activity would have received positive CRA consideration on the day before the effective date and is on a bank’s balance sheet on the effective date. For wholesale and limited purpose banks, the Final Rule requires that these banks collect and maintain information about qualifying CD loans, investments, and services, including, but not limited to, the qualifying activity criteria that the loan, investment, or service satisfies. These banks must also collect and maintain data regarding assessment areas and deposit-taking facilities. Wholesale and limited purpose banks must also provide the certification described above for grandfathered qualifying activities. They also must report on an annual basis the value of CD loans and investments as well as their assessment area data, among other things.
Under the Final Rule, all banks must collect and maintain the value of each retail domestic deposit account and the physical address of each depositor. Annually, banks evaluated under the general performance standards or a strategic plan must report their average quarterly retail domestic deposits as of the close of business on the last day of each quarter. These banks, as well as wholesale and limited purpose banks, must also report performance context information before the beginning of their CRA performance evaluation.
All banks must keep the data they are required to collect in a machine-readable form as prescribed by the OCC. Banks must continue to maintain a public file. The public file must include, among other things: written comments related to assessment area needs, a copy of the public section of the bank’s most recent performance evaluation, and for banks approved to be assessed under a strategic plan, a copy of that plan. Finally, as in the current rule, banks must make available to the public a notice explaining to customers that they are entitled to certain information.
VII. NOTE: COMMUNITY REINVESTMENT ACT – OCC TO RECONSIDER FINAL RULE
The Office of the Comptroller of the Currency (OCC) issued a final rule on June 5, 2020, (See NBA Compliance Handbook, Vol. I, Public Disclosure tab) to modernize the agency’s regulations under the Community Reinvestment Act (CRA). The OCC has determined that it will reconsider the June 2020 rule. While this reconsideration is ongoing, the OCC will not object to the suspension of the development of systems for, or other implementation of, provisions with a compliance date of January 1, 2023, or January 1, 2024, under the 2020 CRA rule. At this time, the OCC also does not plan to finalize the December 4, 2020, proposed rule that requested comment on an approach to determine the CRA evaluation measure benchmarks, retail lending distribution test thresholds, and community development minimums under the June 2020 rule.
The OCC will continue to implement the provisions of the June 2020 CRA rule that had a compliance date of October 1, 2020. The OCC interpreted and explained these provisions in OCC Bulletin 2020-99. These implementation efforts include:
* issuance of OCC Bulletin 2021-5 providing bank type determinations, lists of distressed and underserved areas, and the median hourly compensation value for community development service activities;
*deployment of the CRA Qualifying Activities Confirmation Request process for banks and other stakeholders to request confirmation whether an activity meets the qualifying criteria under the June 2020 CRA rule; and
*provision of training on provisions of the June 2020 rule with the October 1, 2020, compliance date in a series of webinars for examiners and bankers.
Banks are reminded to maintain appropriate documentation for CRA examination purposes required under OCC Bulletin 2020-99. Such documentation includes the qualifying criteria met by the activity, the area(s) served by the activity, and the date and amount of the activity (including the basis for full or partial consideration). Certain banks previously subject to data collection and reporting under the 1995 CRA framework will continue to report large bank CRA data during the transition period, as specified in OCC Bulletin 2020-99.
NOTE: Portions of this article have been reprinted with permission of Compliance Alliance.