(a) Alternative election. Pursuant to section 228.21, the Board
evaluates a bank’s record of helping to meet the credit needs
of its entire community under a strategic plan, if:
(1) The Board has approved the plan pursuant
to this section;
(2)
The plan is in effect; and
(3) The bank has been operating under an
approved plan for at least one year.
(b) Data requirements. The Board’s
approval of a plan does not affect the bank’s obligation, if
any, to collect, maintain, and report data as required by section
228.42.
(c) Plans in
general.
(1) Term. A plan may have a term of not more than five years.
(2) Performance
tests in plan.
(i) A bank’s plan must include
the same performance tests that would apply in the absence of an approved
plan, except as provided in paragraph (g)(1) of this section.
(ii) Consistent with paragraph
(g) of this section, a bank’s plan may include optional evaluation
components or eligible modifications and additions to the performance
tests that would apply in the absence of an approved plan.
(3) Assessment areas and other geographic areas.
(i) Multiple geographic areas. A bank may prepare a single plan or separate plans for its facility-based
assessment areas, retail lending assessment areas, outside retail
lending area, or other geographic areas that would be evaluated in
the absence of an approved plan.
(ii) Geographic areas not included
in a plan. Any facility-based assessment area, retail lending
assessment area, outside retail lending area, or other geographic
area that would be evaluated in the absence of an approved plan, but
is not included in an approved plan, will be evaluated pursuant to
the performance tests that would apply in the absence of an approved
plan.
(4) Operations subsidiaries and affiliates.
(i) Operations subsidiaries. The
loans, investments, services, and products of a bank’s operations
subsidiary must be included in the bank’s plan, unless the operations
subsidiary is independently subject to CRA requirements.
(ii) Affiliates.
(A) Optional inclusion of other affiliates’ loans, investments,
services, and products. Consistent with section 228.21(b)(3),
a bank may include loans, investments, services, and products of affiliates
of a bank that are not operations subsidiaries in a plan, if those
loans, investments, services, and products are not included in the
CRA performance evaluation of any other depository institution.
(B) Joint plans. Affiliated
depository institutions supervised by the same federal financial supervisory
agency may prepare a joint plan, provided that the plan includes,
for each bank, the applicable performance tests that would apply in
the absence of an approved plan. The joint plan may include optional
evaluation components or eligible modifications and additions to the
performance tests that would apply in the absence of an approved plan.
(C) Allocation. The
inclusion of an affiliate’s loans, investments, services, and
products in a bank’s plan, or in a joint plan of affiliated
depository institutions, is subject to the following:
(1) The loans, investments, services,
and products may not be included in the CRA performance evaluation
of another depository institution; and
(2) The allocation of loans, investments,
services, and products to a bank, or among affiliated banks, must
reflect a reasonable basis for the allocation and may not be for the
sole or primary purpose of inappropriately enhancing any bank’s
CRA evaluation.
(d) Justification
and appropriateness of plan election.
(1) Justification
requirements. A bank’s plan must provide a justification
that demonstrates the need for the following aspects of a plan due
to the bank’s business model (e.g., its retail banking services
and retail banking products):
(i) Optional evaluation components pursuant
to paragraph (g)(1) of this section;
(ii) Eligible modifications or additions
to the applicable performance tests pursuant to paragraph (g)(2) of
this section;
(iii)
Additional geographic areas pursuant to paragraph (g)(3) of this section;
and
(iv) The conclusions
and ratings methodology pursuant to paragraph (g)(6) of this section.
(2) Justification elements. Each justification
must specify the following:
(i) Why the bank’s business model
is outside the scope of, or inconsistent with, one or more aspects
of the performance tests that would apply in the absence of an approved
plan;
(ii) Why an
evaluation of the bank pursuant to any aspect of a plan in paragraph
(d)(1) of this section would more meaningfully reflect a bank’s
record of helping to meet the credit needs of its community than if
it were evaluated under the performance tests that would apply in
the absence of an approved plan; and
(iii) Why the optional performance components
and eligible modifications or additions meet the standards of paragraphs
(g)(1) and (2) of this section, as applicable.
(e) Public participation
in initial draft plan development.
(1) In general. Before submitting a draft plan to the Board for approval pursuant
to paragraph (h) of this section, a bank must:
(i) Informally
seek suggestions from members of the public while developing the plan;
(ii) Once the bank has
developed its initial draft plan, formally solicit public comment
on the initial draft plan for at least 60 days by:
(A) Submitting
the initial draft plan for publication on the Board’s website
and by publishing the initial draft plan on the bank’s website,
if the bank maintains one; and
(B) (1) Except as provided
in paragraph (e)(1)(ii)(B)(2) of this section, publishing notice
in at least one print newspaper of general circulation (if available,
otherwise a digital publication) in each facility-based assessment
area covered by the plan; and
(2) For a military bank, publishing
notice in at least one print newspaper of general circulation targeted
to members of the military (if available, otherwise a digital publication
targeted to members of the military); and
(iii) Include in the
notice required under paragraph (e)(1)(ii) of this section a means
by which members of the public can electronically submit and mail
comments to the bank on its initial draft plan.
(2) Availability of initial draft plan. During the period when the
bank is formally soliciting public comment on its initial draft plan,
the bank must make copies of the initial draft plan available for
review at no cost at all offices of the bank in any facility-based
assessment area covered by the plan and provide copies of the initial
draft plan upon request for a reasonable fee to cover copying and
mailing, if applicable.
(f) Submission of a draft plan. The bank must
submit its draft plan to the Board at least 90 days prior to the proposed
effective date of the plan. The bank must also submit with its draft
plan:
(1) Proof of notice publication
and a description of its efforts to seek input from members of the
public, including individuals and organizations the bank contacted
and how the bank gathered information;
(2) Any written comments or other public
input received;
(3)
If the bank revised the initial draft plan in response to the public
input received, the initial draft plan as released for public comment
with an explanation of the relevant changes; and
(4) If the bank did not revise the initial
draft plan in response to suggestions or concerns from public input
received, an explanation for why any suggestion or concern was not
addressed in the draft plan.
(g) Plan content. In addition to meeting the
requirements in paragraphs (c) and (d) of this section, the plan must
meet the following requirements:
(1) Applicable
performance tests and optional evaluation components. A bank
must include in its plan a focus on the credit needs of its entire
community, including low- and moderate-income individuals, families,
or households, low- and moderate-income census tracts, and small businesses
and small farms. The bank must describe how its plan is responsive
to the characteristics and credit needs of its facility-based assessment
areas, retail lending assessment areas, outside retail lending area,
or other geographic areas served by the bank, considering public comment
and the bank’s capacity and constraints, product offerings,
and business strategy. As applicable, a bank must specify components
in its plan for helping to meet:
(i) The retail lending needs
of its facility-based assessment areas, retail lending assessment
areas, and outside retail lending area that are covered by the plan.
A bank that originates or purchases loans in a product line evaluated
pursuant to the Retail Lending Test in section 228.22 or originates
or purchases loans evaluated pursuant to the Small Bank Lending Test
in section 228.29(a)(2) must include the applicable test in its plan,
subject to eligible modifications or additions specified in paragraph
(g)(2) of this section.
(ii) The retail banking services and retail banking products needs
of its facility-based assessment areas and at the institution level
that are covered by the plan.
(A) A large bank that maintains
delivery systems evaluated pursuant to the Retail Services and Products
Test in section 228.23(b) must include this component of the test
in its plan, subject to eligible modifications or additions specified
in paragraph (g)(2) of this section.
(B) A large bank that does not maintain delivery
systems evaluated pursuant to the Retail Services and Products Test
in section 228.23(b) may include retail banking products components
in section 228.23(c) and accompanying annual measurable goals in its
plan.
(C) A bank other
than a large bank may include components of retail banking services
or retail banking products and accompanying annual measurable goals
in its plan.
(iii) The community development loan
and community development investment needs of its facility-based assessment
areas, states, or multistate MSAs, as applicable, and the nationwide
area that are covered by the plan. Subject to eligible modifications
or additions as provided in paragraph (g)(2) of this section:
(A) A large bank
must include the Community Development Financing Test in section 228.24
in its plan.
(B) An intermediate
bank must include either the Community Development Financing Test
in section 228.24 or the Intermediate Bank Community Development Test
in section 228.30(a)(2) in its plan.
(C) A limited purpose bank must include the
Community Development Financing Test for Limited Purpose Banks in
section 228.26 in its plan.
(D) A small bank may include a community development loan or community
development investment component and accompanying annual measurable
goals in its plan.
(iv) The community development services
needs of its facility-based assessment areas served by the bank that
are covered by the plan.
(A) A large bank must include the Community
Development Services Test in section 228.25 in its plan, subject to
eligible modifications or additions as provided in paragraph (g)(2)
of this section, for each facility-based assessment area where the
bank has employees.
(B)
A bank other than a large bank may include a community development
services component and accompanying annual measurable goals in its
plan.
(2) Eligible
modifications or additions to applicable performance tests.
(i) Retail lending.
(A) For a bank that the Board would otherwise
evaluate pursuant to the Small Bank Lending Test in section 228.29(a)(2):
(1) A bank may omit, as applicable,
the evaluation of performance criteria related to the loan-to-deposit
ratio or the percentage of loans located in the bank’s facility-based
assessment area(s).
(2) A bank may add annual measurable goals for any aspect of the
bank’s retail lending.
(B) For a bank the Board would otherwise evaluate
pursuant to the Retail Lending Test in section 228.22:
(1) A bank may add additional loan
products, such as non-automobile consumer loans or open-end home mortgage
loans, or additional goals for major product lines, such as closed-end
home mortgage loans to first-time homebuyers, with accompanying annual
measurable goals.
(2) Where annual measurable goals for additional loan products
or additional goals for major product lines have been added pursuant
to paragraph (g)(2)(i)(B)(1) of this section, a bank may provide
different weights for averaging together the performance across these
loan products and may include those loan products in the numerator
of the Bank Volume Metric.
(3) A bank may use alternative weights for combining the borrower
and geographic distribution analyses for major product line(s) or
other loan products.
(ii) Retail banking services and
retail banking products.
(A) A large bank may add annual
measurable goals for any component of the Retail Services and Products
Test in section 228.23.
(B) A large bank may modify the Retail Services and Products Test
by removing a component of the test.
(C) A large bank may assign specific weights
to applicable components in paragraph (g)(2)(ii)(A) of this section
in reaching a Retail Services and Products Test conclusion.
(D) A bank other than a large
bank may include retail banking services or retail banking products
component(s) and accompanying annual measurable goals in its plan.
(iii) Community development loans and community development investments.
(A) A bank may specify annual measurable goals for community development
loans, community development investments, or both. The bank must base
any annual measurable goals as a percentage or ratio of the bank’s
community development loans and community development investments
for all or certain types of community development described in section
228.13(b) through (l), presented either on a combined or separate
basis, relative to the bank’s capacity and should account for
community development needs and opportunities.
(B) A bank may specify using assets as an
alternative denominator for a community development financing metric
if it better measures a bank’s capacity.
(C) A bank may specify additional benchmarks
to evaluate a community development financing metric.
(D) A small bank may include community development
loans, community development investments, or both, and accompanying
annual measurable goals in its plan.
(iv) Community development services.
(A) A bank may specify annual measurable goals for community development
services activity, by number of activity hours, number of hours per
full-time equivalent employee, or some other measure.
(B) A bank other than a large bank may include
a community development services component and accompanying annual
measurable goals in its plan.
(v) Weights for assessing performance
across geographic areas. A bank may specify alternative weights
for averaging test performance across assessment areas or other geographic
areas. These alternative weights must be based on the bank’s
capacity and community needs and opportunities in specific geographic
areas.
(vi) Test
weights. For ratings at the state, multistate MSA, and institution
levels pursuant to section 228.28(b) and paragraph g.2 of appendix
D to this part, as applicable:
(A) A bank may request an alternate
weighting method for combining performance under the applicable performance
tests and optional evaluation components. In specifying alternative
test weights for each applicable test, a bank must emphasize retail
lending, community development financing, or both. Alternative weights
must be responsive to the characteristics and credit needs of a bank’s
assessment areas and public comments and must be based on the bank’s
capacity and constraints, product offerings, and business strategy.
(B) A bank that requests
an alternate weighting method pursuant to paragraph (g)(2)(vi)(A)
of this section must compensate for decreasing the weight under one
test by committing to enhance its efforts to help meet the credit
needs of its community under another performance test.
(3) Geographic coverage of plan.
(i) A bank
may incorporate performance evaluation components and accompanying
annual measurable goals for additional geographic areas but may not
eliminate the evaluation of its performance in any geographic area
that would be included in its performance evaluation in the absence
of an approved plan.
(ii) If a large bank is no longer required to delineate a retail
lending assessment area previously identified in the plan as a result
of not meeting the required retail lending assessment area thresholds
pursuant to section 228.17, the Board will not evaluate the bank for
its performance in that area for the applicable years of the plan
in which the area is no longer a retail lending assessment area.
(iii) A bank that includes
additional performance evaluation components with accompanying annual
measurable goals in its plan must specify the geographic areas where
those components and goals apply.
(4) Confidential
information. A bank may submit additional information to the
Board on a confidential basis, but the goals stated in the plan must
be sufficiently specific to enable the public and the Board to judge
the merits of the plan.
(5) “Satisfactory” and “Outstanding”
performance goals. A bank that includes modified or additional
performance evaluation components with accompanying annual measurable
goals in its plan must specify in its plan annual measurable goals
that constitute “Satisfactory” performance and may specify
annual measurable goals that constitute “Outstanding”
performance.
(6) Conclusions and rating methodology. A bank
must specify in its plan how all elements of a plan covered in paragraphs
(g)(1) through (5) of this section, in conjunction with any other
applicable performance tests not included in an approved strategic
plan, should be considered to assign:
(i) Conclusions. Pursuant
to section 228.28 and appendix C to this part, the Board assigns conclusions
for each facility-based assessment area, retail lending assessment
area, outside retail lending area, state, and multistate MSA, as applicable,
and the institution. In assigning conclusions under a strategic plan,
the Board may consider performance context information as provided
in section 228.21(d).
(ii) Ratings. Pursuant to section 228.28 and paragraph f of
appendix D to this part, the Board incorporates the conclusions of
a bank evaluated under an approved plan into its state or multistate
MSA ratings, as applicable, and its institution rating, accounting
for paragraph g.2 of appendix D to this part, as applicable.
(h) Draft plan
evaluation.
(1) Timing. The Board seeks to act upon a draft plan within 90 calendar days
after the Board receives the complete draft plan and other materials
required pursuant to paragraph (f) of this section. If the Board does
not act within this time period, the Board will communicate to the
bank the rationale for the delay and an expected timeframe for a decision
on the draft plan.
(2) Public participation. In evaluating the
draft plan, the Board considers:
(i) The public’s involvement
in formulating the draft plan, including specific information regarding
the members of the public and organizations the bank contacted and
how the bank collected information relevant to the draft plan;
(ii) Written public
comments and other public input on the draft plan;
(iii) Any response by the bank to public
input on the draft plan; and
(iv) Whether to solicit additional public
input or require the bank to provide any additional response to public
input already received.
(3) Criteria
for evaluating plan for approval.
(i) The Board evaluates
all plans using the following criteria:
(A) The extent to which the
plan meets the standards set forth in this section; and
(B) The extent to which the plan
has adequately justified the need for a plan and each aspect of the
plan as required in paragraph (d) of this section.
(ii) The Board evaluates
a plan under the following criteria, as applicable, considering performance
context information pursuant to section 228.21(d):
(A) The extent
and breadth of retail lending or retail lending-related activities
to address credit needs, including the distribution of loans among
census tracts of different income levels, businesses and farms of
different sizes, and individuals of different income levels, pursuant
to sections 228.22 and 228.29, as applicable;
(B) The effectiveness of the bank’s
systems for delivering retail banking services and the availability
and responsiveness of the bank’s retail banking products, pursuant
to section 228.23, as applicable;
(C) The extent, breadth, impact, and responsiveness
of the bank’s community development loans and community development
investments, pursuant to sections 228.24, 228.26, and 228.30, as applicable;
and
(D) The number, hours,
and types of community development services performed and the extent
to which the bank’s community development services are impactful
and responsive, pursuant to sections 228.25 and 228.30, as applicable.
(4) Plan decisions.
(i) Approval. The Board may approve a plan after considering the criteria in paragraph
(h)(3) of this section and if it determines that the bank has provided
adequate justification for the plan and each aspect of the plan as
required in paragraph (d) of this section.
(ii) Denial. The Board may deny
a bank’s request to be evaluated under a plan for any of the
following reasons:
(A) The Agency determines that the bank has
not provided adequate justification for the plan and each aspect of
the plan as required pursuant to paragraph (d) of this section;
(B) The Board determines
that evaluation under the plan would not provide a more meaningful
reflection of the bank’s record of helping to meet the credit
needs of the bank’s community;
(C) The plan is not responsive to public comment
received pursuant to paragraph (e) of this section;
(D) The Board determines that the plan otherwise
fails to meet the requirements of this section; or
(E) The bank fails to provide information
requested by the Board that is necessary for the Board to make an
informed decision.
(5) Publication
of approved plan. The Board will publish an approved plan on
the Board’s website.
(i) Plan amendment.
(1) Mandatory
plan amendment. During the term of a plan, a bank must submit
to the Board for approval an amendment to its plan if a material change
in circumstances:
(i) Impedes its ability to perform at
a satisfactory level under the plan, such as financial constraints
caused by significant events that impact the local or national economy;
or
(ii) Significantly
increases its financial capacity and ability to engage in retail lending,
retail banking services, retail banking products, community development
loans, community development investments, or community development
services referenced in an approved plan, such as a merger or consolidation.
(2) Elective plan amendment. During the term
of a plan, a bank may request the Board to approve an amendment to
the plan in the absence of a material change in circumstances.
(3) Requirements for plan amendments.
(i) Amendment
explanation. When submitting a plan amendment for approval, a
bank must explain:
(A) The material change in circumstances necessitating
the amendment; or
(B) Why
it is necessary and appropriate to amend its plan in the absence of
a material change in circumstances.
(ii) Compliance requirement. An
amendment to a plan must comply with all relevant requirements of
this section, unless the Board waives a requirement as not applicable.
(j) Performance evaluation under a plan.
(1) In general. The Board evaluates a bank’s performance under an approved
plan based on the performance tests that would apply in the absence
of an approved plan and any optional evaluation components or eligible
modifications and additions to the applicable performance tests set
forth in the bank’s approved plan.
(2) Goal considerations. If a bank established annual measurable goals and does not meet
one or more of its satisfactory goals, the Board will consider the
following factors to determine the effect on a bank’s CRA performance
evaluation:
(i) The degree to which the goal was
not met;
(ii) The
importance of the unmet goals to the plan as a whole; and
(iii) Any circumstances
beyond the control of the bank, such as economic conditions or other
market factors or events, that have adversely impacted the bank’s
ability to perform.
(3) Ratings. The Board rates the performance of a bank under this section pursuant
to appendix D to this part.
