This appendix, based on requirements described in
sections 228.22 and 228.28, includes the following sections:
I.
Retail Lending Volume ScreenThe Board calculates
the Bank Volume Metric and the Market Volume Benchmark for a facility-based
assessment area and determines whether the bank has met or surpassed
the Retail Lending Volume Threshold in that facility-based assessment
area.
a. Bank Volume
Metric. The Board calculates the Bank Volume Metric for each
facility-based assessment area by:
1. Summing, over the years in the evaluation
period, the bank’s annual dollar volume of loans included in
the Bank Volume Metric (i.e., volume metric loans). The bank’s
annual dollar volume of volume metric loans is the total dollar amount
of all home mortgage loans, multifamily loans, small business loans,
small farm loans, and automobile loans originated or purchased by
the bank in the facility-based assessment area in that year. Automobile
loans are included in the bank’s annual dollar amount of volume
metric loans only if automobile loans are a product line for the bank.
2. Summing, over the
years in the evaluation period, the bank’s annual dollar volume
of deposits in the facility-based assessment area. For a bank that
reports deposits data pursuant to section 228.42(b)(3), the bank’s
annual dollar volume of deposits in a facility-based assessment area
is the total of annual average daily balances of deposits reported
by the bank in counties in the facility-based assessment area for
that year. For a bank that does not report deposits data pursuant
to section 228.42(b)(3), the bank’s annual dollar volume of
deposits in a facility-based assessment area is the total of deposits
assigned to facilities reported by the bank in the facility-based
assessment area in the FDIC’s Summary of Deposits for that year.
3. Dividing the result
of paragraph I.a.1 of this appendix by the result of paragraph I.a.2
of this appendix.
Example A-1: The bank has a three-year evaluation period. The bank’s annual
dollar amounts of volume metric loans are $300,000 (year 1),
$300,000 (year 2), and $400,000 (year 3). The sum of the bank’s
annual dollar amount of volume metric loans in a facility-based
assessment area, over the years in the evaluation period, is therefore
$1 million. The annual dollar volumes of deposits in the bank located
in the facility-based assessment area are $1.7 million (year 1), $1.6
million (year 2), and $1.7 million (year 3). The sum of the annual
dollar volume of deposits in the facility-based assessment area, over
the years in the evaluation period, is therefore $5 million. The Bank
Volume Metric for the facility-based assessment area would be $1 million
divided by $5 million, or 0.2 (equivalently, 20 percent).
Figure 1. DISPLAY EQUATION
$$ \frac{\textit{Bank Volume Metric Loans } ($1\textit{ million})}{\textit{Bank Deposits }($5\textit{ million})} = \textit{Bank Volume Metric }(20\%) $$
b. Market Volume
Benchmark. The Board calculates the Market Volume Benchmark for
the facility-based assessment area. For purposes of calculating the
Market Volume Benchmark, a benchmark depository institution for a particular year is a depository institution that, in that
year, was subject to reporting pursuant to section 228.42(b)(1), 12
CFR 25.42(b)(1) or 345.42(b)(1), or 12 CFR part 1003, and operated
a facility included in the FDIC’s Summary of Deposits data in
the facility-based assessment area. The Board calculates the Market
Volume Benchmark by:
1. Summing, over the years in the evaluation
period, the annual dollar volume of volume benchmark loans. The annual
dollar volume of volume benchmark loans is the total dollar volume
of all home mortgage loans, multifamily loans, small business loans,
and small farm loans in the facility-based assessment area in that
year that are reported loans originated by benchmark depository institutions.
2. Summing, over the
years in the evaluation period, the annual dollar volume of deposits
for benchmark depository institutions in the facility-based assessment
area. The annual dollar volume of deposits for benchmark depository
institutions in the facility-based assessment area is the sum across
benchmark depository institutions of: (i) for a benchmark depository
institution that reports data pursuant to section 228.42(b)(3) or
12 CFR 25.42(b)(3) or 345.42(b)(3), the total of annual average daily
balances of deposits reported by that depository institution in counties
in the facility-based assessment area for that year; and (ii) for
a benchmark depository institution that does not report data pursuant
to section 228.42(b)(3) or 12 CFR 25.42(b)(3) or 345.42(b)(3), the
total of deposits assigned to facilities reported by that depository
institution in counties in the facility-based assessment area in the
FDIC’s Summary of Deposits for that year.
3. Dividing the result of paragraph I.b.1
of this appendix by the result of paragraph I.b.2 of this appendix.
Example A-2: With reference to
example A-1 to this appendix, the annual dollar volume of volume benchmark
loans is $6 million (year 1), $7 million (year 2), and $7 million
(year 3). The sum of the annual dollar volume of volume benchmark
loans, over the years in the evaluation period, is therefore $20 million.
The annual dollar volume of deposits for benchmark depository institutions
is $17 million (year 1), $15 million (year 2), and $18 million (year
3). The sum of the annual dollar volume of deposits for benchmark
depository institutions, over the years in the evaluation period,
is therefore $50 million. The Market Volume Benchmark for that facility-based
assessment area would be $20 million divided by $50 million, or 0.4
(equivalently, 40 percent).
Figure 2. DISPLAY EQUATION
$$ \frac{\textit{Volume Benchmark Loans }($20\textit{ million})}{\textit{Aggregate Market Deposits }($50\textit{ million})} = \textit{Market Volume Benchmark }(40\%) $$
c. Retail Lending
Volume Threshold. For each facility-based assessment area, the
Board calculates a Retail Lending Volume Threshold by multiplying
the Market Volume Benchmark for that facility-based assessment area
by 0.3 (equivalently, 30 percent). A bank meets or surpasses the Retail
Lending Volume Threshold in a facility-based assessment area if the
Bank Volume Metric is equal to or greater than the Retail Lending
Volume Threshold.
Example A-3: Based on examples
A-1 and A-2 to this appendix, the Board calculates the Retail Lending
Volume Threshold by multiplying the Market Volume Benchmark of 40
percent by 0.3, equal to 0.12 (equivalently, 12 percent). The Bank
Volume Metric, 0.2 (equivalently, 20 percent), is greater than the
Retail Lending Volume Threshold. Accordingly, the bank surpasses the
Retail Lending Volume Threshold.
Figure 3. DISPLAY EQUATION
$$ \textit{Bank Volume Metric }(20\%)>\textit{Retail Lending Volume Threshold }[(40\%) × 0.3 = 12\%] $$
a. Retail Lending Test
Areas evaluated. A bank’s major product lines are evaluated
in its Retail Lending Test Areas, as provided in section 228.22(d)
and as described in paragraphs II.a.1 and 2 of this appendix.
1. Large banks exempt from evaluation
in retail lending assessment areas. Pursuant to section 228.17(a)(2),
a large bank is not required to delineate retail lending assessment
areas in a particular calendar year if the following ratio exceeds
80 percent, based on the combination of loan dollars and loan count
as defined in section 228.12:
i. The sum, over the prior
two calendar years, of the large bank’s home mortgage loans,
multifamily loans, small business loans, small farm loans, and automobile
loans if automobile loans are a product line for the large bank, originated
or purchased in its facility-based assessment areas; divided by
ii. The sum, over the
prior two calendar years, of the large bank’s home mortgage
loans, multifamily loans, small business loans, small farm loans,
and automobile loans if automobile loans are a product line for the
large bank, originated or purchased overall.
Example A-4: A large bank (for which automobile
loans are not a product line) originated or purchased 20,000 closed-end
home mortgage loans, small business loans, and small farm loans in
the prior two calendar years, representing $6 billion in loan dollars.
Of these loans, 18,000 loans, representing $4.5 billion in loan dollars,
were originated or purchased in the large bank’s facility-based
assessment areas. As such, the large bank originated or purchased
75 percent of closed-end home mortgage loans, small business loans,
and small farm loans ($4.5 billion / $6 billion) by loan dollars and
90 percent (18,000 / 20,000) of these loans by loan count within its
facility-based assessment areas. The combination of loan dollars and
loan count is 82.5 percent, or (75 + 90)/2. Thus, this large bank
is not required to delineate retail lending assessment areas pursuant
to section 228.17(a)(2) in the current calendar year because the 82.5
percent exceeds the 80 percent threshold.
2. Small banks and intermediate banks
evaluated in outside retail lending areas. Pursuant to section
228.18(a)(2), the Board evaluates the geographic and borrower distributions
of the major product lines of an intermediate bank, or a small bank
that opts to be evaluated under the Retail Lending Test, in the bank’s
outside retail lending area if either:
i. The bank opts to
have its major product lines evaluated in its outside retail lending
area; or
ii. The following
ratio exceeds 50 percent, based on the combination of loan dollars
and loan count as defined in section 228.12:
A. The sum, over
the prior two calendar years, of the bank’s home mortgage loans,
multifamily loans, small business loans, small farm loans, and automobile
loans if automobile loans are a product line for the bank, originated
or purchased outside of its facility-based assessment areas; divided
by
B. The sum, over the
prior two calendar years, of the bank’s home mortgage loans,
multifamily loans, small business loans, small farm loans, and automobile
loans if automobile loans are a product line for the bank, originated
or purchased overall.
b. Product lines and major
product lines. In each of a bank’s Retail Lending Test
Areas, the Board evaluates each of a bank’s major product lines,
as provided in section 228.22(d)(2) and as described in paragraphs
II.b.1 through 3 of this appendix.
1. Major product line standard for facility-based
assessment areas and outside retail lending areas. Except as provided
in paragraph II.b.1.iii of this appendix, a product line is a major
product line in a facility-based assessment area or outside retail
lending area if the following ratio is 15 percent or more, based on
the combination of loan dollars and loan count as defined in section
228.12:
i. The sum, over the years of the evaluation
period, of the bank’s loans in the product line originated or
purchased in the facility-based assessment area or outside retail
lending area; divided by
ii. The sum, over the years of the evaluation period, of the bank’s
loans in all product lines originated or purchased in the facility-based
assessment area or outside retail lending area.
iii. If a bank has not collected, maintained,
or reported loan data on a product line in a facility-based assessment
area or outside retail lending area for one or more years of an evaluation
period, the product line is a major product line if the Board determines
that the product line is material to the bank’s business in
the facility-based assessment area or outside retail lending area.
2. Major
product line standard for retail lending assessment areas. In
a retail lending assessment area:
i. Closed-end home mortgage
loans are a major product line in any calendar year in the evaluation
period in which the bank delineates a retail lending assessment area
based on its closed-end home mortgage loans as determined by the standard
in section 228.17(c)(1); and
ii. Small business loans are a major
product line in any calendar year in the evaluation period in which
the bank delineates a retail lending assessment area based on its
small business loans as determined by the standard in section 228.17(c)(2).
3. Banks
for which automobile loans are a product line.
i. If a
bank’s automobile loans are a product line (either because the
bank is a majority automobile lender or opts to have its automobile
loans evaluated pursuant to section 228.22), automobile loans are
a product line for the bank for the entire evaluation period.
ii. A bank is a majority
automobile lender if the following ratio, calculated at the institution
level, exceeds 50 percent, based on the combination of loan dollars
and loan count as defined in section 228.12:
A. The sum, over
the two calendar years preceding the first year of the evaluation
period, of the bank’s automobile loans originated or purchased
overall; divided by
B.
The sum, over the two calendar years preceding the first year of the
evaluation period, of the bank’s automobile loans, home mortgage
loans, multifamily loans, small business loans, and small farm loans
originated or purchased overall.
The Board calculates
the Geographic Bank Metric, the Geographic Market Benchmark, and the
Geographic Community Benchmark for low-income census tracts and for
moderate-income census tracts, respectively, as set forth in this
section. For each facility-based assessment area, retail lending assessment
area, and component geographic area of the bank’s outside retail
lending area, the Board includes either low-income census tracts or
moderate-income census tracts (i.e., designated census tracts) in the numerator of the metrics and benchmarks calculations for
a particular year. To evaluate small banks and intermediate banks
without data collection, maintenance and reporting requirements, the
Board will use data collected by the bank in the ordinary course of
business or through sampling of bank loan data.
a. Calculation of Geographic Bank Metric. The Board calculates the Geographic Bank Metric for low-income census
tracts and for moderate-income census tracts, respectively, for each
major product line in each Retail Lending Test Area. The Board calculates
the Geographic Bank Metric by:
1. Summing, over the years in the evaluation
period, the bank’s annual number of originated and purchased
loans in the major product line in designated census tracts in the
Retail Lending Test Area.
2. Summing, over the years in the evaluation period, the bank’s
annual number of originated and purchased loans in the major product
line in the Retail Lending Test Area.
3. Dividing the result of paragraph III.a.1
of this appendix by the result of paragraph III.a.2 of this appendix.
Example A-5: The bank has a three-year
evaluation period, and small farm loans are a major product line for
the bank in a facility-based assessment area (FBAA-1). The bank’s
annual numbers of originated and purchased small farm loans (i.e.,
the bank’s originated and purchased small farm loans) are 100
(year 1), 75 (year 2), and 75 (year 3) in FBAA-1. The sum of the annual
numbers of originated and purchased small farm loans is therefore
250 in the evaluation period. In the low-income census tracts within
FBAA-1, the bank originated and purchased 25 small farm loans (year
1), 15 small farm loans (year 2), and 10 small farm loans (year 3)
(a total of 50 small farm loans). In FBAA-1, the Geographic Bank Metric
for small farm loans in low-income census tracts would be 50 divided
by 250, or 0.2 (equivalently, 20 percent).
In the
moderate-income census tracts within FBAA-1, the bank originated and
purchased 30 small farm loans (year 1), 20 small farm loans (year
2), and 10 small farm loans (year 3) (a total of 60 small farm loans).
In FBAA-1, the Geographic Bank Metric for small farm loans in moderate-income
census tracts would be 60 divided by 250, or 0.24 (equivalently, 24
percent).
Figure 4. DISPLAY EQUATION
$$ \frac{\textit{Bank Loans in Low − Income Census Tracts }(50)}{\textit{Bank Loans }(250)} = \textit{Geographic Bank Metric }(20\%) $$
Figure 5. DISPLAY EQUATION
$$ \frac{\textit{Bank Loans in Moderate − Income Census Tracts }(60)}{\textit{Bank Loans }(250)} = \textit{Geographic Bank Metric }(24\%) $$
b. Calculation
of Geographic Market Benchmarks for facility-based assessment areas
and retail lending assessment areas. For each facility-based
assessment area and retail lending assessment area, the Board calculates
the Geographic Market Benchmark for designated census tracts for each
major product line, excluding automobile loans. The Board calculates
the Geographic Market Benchmark by:
1. Summing, over the years in the evaluation
period, the annual number of reported loans in the major product line
in designated census tracts in the facility-based assessment area
or retail lending assessment area originated by all lenders.
2. Summing, over the years
in the evaluation period, the annual number of reported loans in the
major product line in the facility-based assessment area or retail
lending assessment area originated by all lenders.
3. Dividing the result of paragraph III.b.1
of this appendix by the result of paragraph III.b.2 of this appendix.
Example A-6: The Geographic Market
Benchmarks for small farm loans in FBAA-1 use a three-year evaluation
period. Lenders that report small farm loan data originated 500 small
farm loans (year 1), 250 small farm loans (year 2), and 250 small
farm loans (year 3) within FBAA-1. The sum of the annual numbers of
originated small farm loans is therefore 1,000 in the evaluation period.
Lenders that report small farm loan data originated 200 small farm
loans (year 1), 100 small farm loans (year 2) and 100 small farm loans
(year 3) in low-income census tracts within FBAA-1. The sum of the
annual numbers of originated small farm loans in low-income census
tracts within FBAA-1 is therefore 400. The Geographic Market Benchmark
for small farm loans in low-income census tracts within FBAA-1 would
be 400 divided by 1,000, or 0.4 (equivalently, 40 percent).
Lenders that report small farm loan data originated 100
small farm loans (year 1), 100 small farm loans (year 2), and 100
small farm loans (year 3) in moderate-income census tracts within
FBAA-1. The sum of the annual numbers of originated small farm loans
in moderate-income census tracts within FBAA-1 is therefore 300. The
Geographic Market Benchmark for small farm loans in moderate-income
census tracts within FBAA-1 would be 300 divided by 1,000, or 0.3
(equivalently, 30 percent).
Figure 6. DISPLAY EQUATION
$$ \frac{\textit{Aggregate Market Loans in Low − Income Census Tracts }(400)}{\textit{Aggregate Market Loans }(1,000)} = \textit{Geographic Market Benchmark }(40\%) $$
Figure 7. DISPLAY EQUATION
$$ \frac{\textit{Aggregate Market Loans in Moderate − Income Census Tracts }(300)}{\textit{Aggregate Market Loans }(1,000)} = \textit{Geographic Market Benchmark }(30\%) $$
c. Calculation
of Geographic Community Benchmarks for facility-based assessment areas
and retail lending assessment areas. The Board calculates the
Geographic Community Benchmark for designated census tracts for each
major product line in each facility-based assessment area or retail
lending assessment area.
1. For closed-end home mortgage loans,
the Board calculates a Geographic Community Benchmark for low-income
census tracts by:
i. Summing, over the years in the evaluation
period, the annual number of owner-occupied housing units in low-income
census tracts in the facility-based assessment area or retail lending
assessment area.
ii.
Summing, over the years in the evaluation period, the annual number
of owner-occupied housing units in the facility-based assessment area
or retail lending assessment area.
iii. Dividing the result of paragraph
III.c.1.i of this appendix by the result of paragraph III.c.1.ii of
this appendix.
2. For closed-end home mortgage loans,
the Board calculates a Geographic Community Benchmark for moderate-income
census tracts by:
i. Summing, over the years in the evaluation
period, the annual number of owner-occupied housing units in moderate-income
census tracts in the facility-based assessment area or retail lending
assessment area.
ii.
Summing, over the years in the evaluation period, the annual number
of owner-occupied housing units in the facility-based assessment area
or retail lending assessment area.
iii. Dividing the result of paragraph
III.c.2.i of this appendix by the result of paragraph III.c.2.ii of
this appendix.
3. For small business loans, the Board calculates a Geographic Community
Benchmark for low-income census tracts by:
i. Summing, over the
years in the evaluation period, the annual number of non-farm businesses
in low-income census tracts in the facility-based assessment area
or retail lending assessment area.
ii. Summing, over the years in the evaluation
period, the annual number of non-farm businesses in the facility-based
assessment area or retail lending assessment area.
iii. Dividing the result of paragraph
III.c.3.i of this appendix by the result of paragraph III.c.3.ii of
this appendix.
4. For small business loans, the Board calculates a Geographic Community
Benchmark for moderate-income census tracts by:
i. Summing,
over the years in the evaluation period, the annual number of non-farm
businesses in moderate-income census tracts in the facility-based
assessment area or retail lending assessment area.
ii. Summing, over the years in the evaluation
period, the annual number of non-farm businesses in the facility-based
assessment area or retail lending assessment area.
iii. Dividing the result of paragraph
III.c.4.i of this appendix by the result of paragraph III.c.4.ii of
this appendix.
5. For small farm loans, the Board calculates a Geographic Community
Benchmark for low-income census tracts by:
i. Summing, over the
years in the evaluation period, the annual number of farms in low-income
census tracts in the facility-based assessment area.
ii. Summing, over the years in the evaluation
period, the annual number of farms in the facility-based assessment
area.
iii. Dividing
the result of paragraph III.c.5.i of this appendix by the result of
paragraph III.c.5.ii of this appendix.
6. For small farm loans, the Board calculates
a Geographic Community Benchmark for moderate-income census tracts
by:
i. Summing, over the years in the evaluation
period, the annual number of farms in moderate-income census tracts
in the facility-based assessment area.
ii. Summing, over the years in the evaluation
period, the annual number of farms in the facility-based assessment
area.
iii. Dividing
the result of paragraph III.c.6.i of this appendix by the result of
paragraph III.c.6.ii of this appendix.
7. For automobile loans, the Board calculates
a Geographic Community Benchmark for low-income census tracts by:
i. Summing, over the years in the evaluation period, the annual number
of households in low-income census tracts in the facility-based assessment
area.
ii. Summing,
over the years in the evaluation period, the annual number of households
in the facility-based assessment area.
iii. Dividing the result of paragraph
III.c.7.i of this appendix by the result of paragraph III.c.7.ii of
this appendix.
8. For automobile loans, the Board calculates a Geographic Community
Benchmark for moderate-income census tracts by:
i. Summing,
over the years in the evaluation period, the annual number of households
in moderate-income census tracts in the facility-based assessment
area.
ii. Summing,
over the years in the evaluation period, the annual number of households
in the facility-based assessment area.
iii. Dividing the result of paragraph
III.c.8.i of this appendix by the result of paragraph III.c.8.ii of
this appendix.
Example
A-7: The Geographic Community Benchmarks for small business loans
in FBAA-1 use a three-year evaluation period. There were 1,300 non-farm
businesses (year 1), 1,300 non-farm businesses (year 2), and 1,400
non-farm businesses (year 3) in FBAA-1. The sum of the number of non-farm
businesses in FBAA-1 is therefore 4,000 in the evaluation period.
In low-income census tracts within FBAA-1, there were 200 non-farm
businesses (year 1), 150 non-farm businesses (year 2), and 150 non-farm
businesses (year 3) (a total of 500 non-farm businesses). The Geographic
Community Benchmark for small business loans in low-income census
tracts within FBAA-1 would be 500 divided by 4,000, or 0.125 (equivalently,
12.5 percent).
In moderate-income census tracts
within FBAA-1, there were 400 non-farm businesses (year 1), 300 non-farm
businesses (year 2), and 300 non-farm businesses (year 3) (a total
of 1,000 non-farm businesses). The Geographic Community Benchmark
for small business loans in moderate-income census tracts within FBAA-1
would be 1,000 divided by 4,000, or 0.25 (equivalently, 25 percent).
Figure 8. DISPLAY EQUATION
$$ \frac{\textit{Non − Farm Businesses in Low − Income Census Tracts }(500)}{\textit{Businesses }(4,000)} = \textit{Geographic Community Benchmark }(12.5\%) $$
Figure 9. DISPLAY EQUATION
$$ \frac{\textit{Non − Farm Businesses in Moderate − Income Census Tracts }(1,000)}{\textit{Businesses }(4,000)} = \textit{Geographic Community Benchmark }(25\%) $$
d. Calculation
of Geographic Market Benchmarks for the outside retail lending area. For a bank’s outside retail lending area, the Board calculates
the Geographic Market Benchmark for each major product line, excluding
automobile loans, and for each category of designated census tracts
by taking a weighted average of benchmarks for each component geographic
area as follows:
1. Calculating a benchmark for each category
of designated census tracts and each major product line within each
component geographic area as described in section 228.18(b) using
the formula for the Geographic Market Benchmark described in paragraph
III.b of this appendix with the component geographic area in place
of the facility-based assessment area or retail lending assessment
area, as applicable.
2. Calculating the weighting for each component geographic area and
major product line as the percentage of the bank’s loans in
the major product line originated or purchased in the outside retail
lending area that are within the component geographic area, based
on loan count.
3. Calculating
the weighted average benchmark for the outside retail lending area
using the component geographic area benchmarks in paragraph III.d.1
of this appendix and associated weightings in paragraph III.d.2 of
this appendix.
e. Calculation of Geographic Community Benchmarks
for the outside retail lending area. For a bank’s outside
retail lending area, the Board calculates the Geographic Community
Benchmark for each category of designated census tract and for each
major product line by taking a weighted average of benchmarks for
each component geographic area as follows:
1. Calculating a benchmark for each category
of designated census tracts and each major product line within each
component geographic area as described in section 228.18(b) using
the formula for the Geographic Community Benchmark described in paragraph
III.c of this appendix with the component geographic area in place
of the facility-based assessment area or retail lending assessment
area, as applicable.
2. Calculating the weighting for each component geographic area and
major product line as the percentage of the bank’s loans in
the major product line originated or purchased in the outside retail
lending area that are within the component geographic area, based
on loan count.
3. Calculating
the weighted average benchmark for the outside retail lending area
using the component geographic area benchmarks in paragraph III.e.1
of this appendix and associated weightings in paragraph III.e.2 of
this appendix.
The Board calculates the Borrower Bank Metric, the Borrower Market
Benchmark, and the Borrower Community Benchmark for each category
of borrowers (i.e., designated borrowers), as set forth in
this section.
For closed-end home mortgage loans,
the Board calculates these metrics and benchmarks for each of the
following designated borrowers: (i) low-income borrowers; and (ii)
moderate-income borrowers.
For small business loans,
the Board calculates these metrics and benchmarks for each of the
following designated borrowers: (i) businesses with gross annual revenues
of $250,000 or less; and (ii) businesses with gross annual revenues
greater than $250,000 but less than or equal to $1 million.
For small farm loans, the Board calculates these metrics
and benchmarks for each of the following designated borrowers: (i)
farms with gross annual revenues of $250,000 or less; and (ii) farms
with gross annual revenues greater than $250,000 but less than or
equal to $1 million.
For automobile loans, the
Board calculates these metrics and benchmarks for each of the following
designated borrowers: (i) low-income borrowers; and (ii) moderate
income borrowers.
To evaluate small banks and intermediate
banks without data collection, maintenance and reporting requirements,
the Board will use data collected by the bank in the ordinary course
of business or through sampling of bank loan data.
a. Calculation of Borrower Bank Metric. The Board calculates the Borrower Bank Metric for each major product
line and category of designated borrowers in each Retail Lending Test
Area by:
1. Summing, over the years
in the evaluation period, the bank’s annual number of originated
and purchased loans in the major product line to designated borrowers
in the Retail Lending Test Area.
2. Summing, over the years in the evaluation
period, the bank’s annual number of originated and purchased
loans in the major product line in the Retail Lending Test Area.
3. Dividing the result
of paragraph IV.a.1 of this appendix by the result of paragraph IV.a.2
of this appendix.
Example A-8: The bank has a three-year evaluation period, and closed-end home
mortgage loans are a major product line for the bank in FBAA-1. The
bank’s annual numbers of originated and purchased closed-end
home mortgage loans (i.e., the bank’s originated and purchased
closed-end home mortgage loans) are 30 (year 1), 40 (year 2), and
30 (year 3) in FBAA-1. The sum of the annual numbers of originated
and purchased closed-end home mortgage loans is therefore 100 in the
evaluation period. In FBAA-1, the bank originated and purchased 10
closed-end home mortgage loans to low-income borrowers (year 1), 3
closed-end home mortgage loans to low-income borrowers (year 2), and
7 closed-end home mortgage loans to low-income borrowers (year 3)
(a total of 20 closed-end home mortgage loans to low-income borrowers).
In FBAA-1, the Borrower Bank Metric for closed-end home mortgage loans
to low-income borrowers would be 20 divided by 100, or 0.2 (equivalently,
20 percent).
In FBAA-1, the bank also originated
and purchased 12 closed-end home mortgage loans to moderate-income
borrowers (year 1), 5 closed-end home mortgage loans to moderate-income
borrowers (year 2), and 13 closed-end home mortgage loans to moderate-income
borrowers (year 3) (a total of 30 closed-end home mortgage loans to
moderate-income borrowers). In FBAA-1, the Borrower Bank Metric for
closed-end home mortgage loans to moderate-income borrowers would
be 30 divided by 100, or 0.3 (equivalently, 30 percent).
Figure 10. DISPLAY EQUATION
$$ \frac{\textit{Bank Loans to Low − Income Borrowers }(20)}{\textit{Bank Loans }(100)} = \textit{Borrower Bank Metric }(20\%) $$
Figure 11. DISPLAY EQUATION
$$ \frac{\textit{Bank Loans to Moderate − Income Borrowers }(30)}{\textit{Bank Loans }(100)} = \textit{Borrower Bank Metric }(30\%) $$
b. Calculation
of Borrower Market Benchmarks for facility-based assessment areas
and retail lending assessment areas. For each facility-based
assessment area and retail lending assessment area, the Board calculates
the Borrower Market Metric for each major product line, excluding
automobile loans, and for each category of designated borrowers by:
1. Summing, over the years in the evaluation
period, the annual number of reported loans in the major product line
to designated borrowers in the facility-based assessment area or retail
lending assessment area originated by all lenders.
2. Summing, over the years in the evaluation
period, the annual number of reported loans in the major product line
in the facility-based assessment area or retail lending assessment
area originated by all lenders.
3. Dividing the result of paragraph IV.b.1
of this appendix by the result of paragraph IV.b.2 of this appendix.
Example A-9: The Borrower Market
Benchmarks for closed-end home mortgage loans use a three-year evaluation
period. Lenders that report closed-end home mortgage loans originated
500 closed-end home mortgage loans (year 1), 275 closed-end home mortgage
loans (year 2), and 225 closed-end home mortgage loans (year 3). The
sum of the annual numbers of originated closed-end home mortgage loans
is therefore 1,000 in the evaluation period. Lenders that report closed-end
home mortgage loans originated 50 closed-end home mortgage loans to
low-income borrowers (year 1), 20 closed-end home mortgage loans to
low-income borrowers (year 2), and 30 closed-end home mortgage loans
to low-income borrowers (year 3) in FBAA-1. The sum of the annual
numbers of originated closed-end home mortgage loans to low-income
borrowers within FBAA-1 is therefore 100. The Borrower Market Benchmark
for closed-end home mortgage loans to low-income borrowers would be
100 divided by 1,000, or 0.1 (equivalently, 10 percent).
Lenders that report closed-end home mortgage loans originated
100 loans (year 1), 75 loans (year 2), and 25 loans (year 3) to moderate-income
borrowers. The sum of the annual numbers of originated closed-end
home mortgage loans to moderate-income borrowers within FBAA-1 is
therefore 200. The Borrower Market Benchmark for closed-end home mortgage
loans to moderate-income borrowers in FBAA-1 would be 200 divided
by 1,000, or 0.2 (equivalently, 20 percent).
Figure 12. DISPLAY EQUATION
$$ \frac{\textit{Aggregate Market Loans to Low − Income Borrowers }(100)}{\textit{Aggregate Market Loans }(1,000)} = \textit{Borrower Market Benchmark }(10\%) $$
Figure 13. DISPLAY EQUATION
$$ \frac{\textit{Aggregate Loans to Moderate − Income Borrowers }(200)}{\textit{Aggregate Market Loans }(1,000)} = \textit{Borrower Market Benchmark }(20\%) $$
c. Calculation
of Borrower Community Benchmarks for facility-based assessment areas
and retail lending assessment areas. The Board calculates the
Borrower Community Benchmark for each category of designated borrowers
for each major product line in each facility-based assessment area
or retail lending assessment area.
1. For closed-end home mortgage loans,
the Board calculates a Borrower Community Benchmark for low-income
borrowers by:
i. Summing, over the years in the evaluation
period, the annual number of low-income families in the facility-based
assessment area or retail lending assessment area.
ii. Summing, over the years in the evaluation
period, the annual number of families in the facility-based assessment
area or retail lending assessment area.
iii. Dividing the result of paragraph
IV.c.1.i of this appendix by the result of paragraph IV.c.1.ii of
this appendix.
2. For closed-end home mortgage loans,
the Board calculates a Borrower Community Benchmark for moderate-income
borrowers by:
i. Summing, over the years in the evaluation
period, the annual number of moderate-income families in the facility-based
assessment area or retail lending assessment area.
ii. Summing, over the years in the evaluation
period, the annual number of families in the facility-based assessment
area or retail lending assessment area.
iii. Dividing the result of paragraph
IV.c.2.i of this appendix by the result of paragraph IV.c.2.ii of
this appendix.
3. For small business loans, the Board calculates a Borrower Community
Benchmark for non-farm businesses with gross annual revenues of $250,000
or less by:
i. Summing, over the years in the evaluation
period, the annual number of non-farm businesses with gross annual
revenues of $250,000 or less in the facility-based assessment area
or retail lending assessment area.
ii. Summing, over the years in the evaluation
period, the annual number of non-farm businesses in the facility-based
assessment area or retail lending assessment area.
iii. Dividing the result of paragraph
IV.c.3.i of this appendix by the result of paragraph IV.c.3.ii of
this appendix.
4. For small business loans, the Board calculates a Borrower Community
Benchmark for non-farm businesses with gross annual revenues greater
than $250,000 but less than or equal to $1 million by:
i. Summing,
over the years in the evaluation period, the annual number of non-farm
businesses with gross annual revenues greater than $250,000 but less
than or equal to $1 million in the facility-based assessment area
or retail lending assessment area.
ii. Summing, over the years in the evaluation
period, the annual number of non-farm businesses in the facility-based
assessment area or retail lending assessment area.
iii. Dividing the result of paragraph
IV.c.4.i of this appendix by the result of paragraph IV.c.1.ii of
this appendix.
5. For small farm loans, the Board calculates a Borrower Community
Benchmark for farms with gross annual revenues of $250,000 or less
by:
i. Summing, over the years in the evaluation
period, the annual number of farms with gross annual revenues of $250,000
or less in the facility-based assessment area.
ii. Summing, over the years in the evaluation
period, the annual number of farms in the facility-based assessment
area.
iii. Dividing
the result of paragraph IV.c.5.i of this appendix by the result of
paragraph IV.c.5.ii of this appendix.
6. For small farm loans, the Board calculates
a Borrower Community Benchmark for farms with gross annual revenues
greater than $250,000 but less than or equal to $1 million:
i. Summing,
over the years in the evaluation period, the annual number of farms
with gross annual revenues greater than $250,000 but less than or
equal to $1 million in the facility-based assessment area.
ii. Summing, over the years
in the evaluation period, the annual number of farms in the facility-based
assessment area.
iii.
Dividing the result of paragraph IV.c.6.i of this appendix by the
result of paragraph IV.c.6.ii of this appendix.
7. For automobile loans, the
Board calculates a Borrower Community Benchmark for low-income borrowers
by:
i. Summing, over the years in the evaluation
period, the annual number of low-income households in the facility-based
assessment area.
ii.
Summing, over the years in the evaluation period, the annual number
of households in the facility-based assessment area.
iii. Dividing the result of paragraph
IV.c.7.i of this appendix by the result of paragraph IV.c.7.ii of
this appendix.
8. For automobile loans, the Board calculates a Borrower Community
Benchmark for moderate-income borrowers by:
i. Summing, over the
years in the evaluation period, the annual number of moderate-income
households in the facility-based assessment area.
ii. Summing, over the years in the evaluation
period, the annual number of households in the facility-based assessment
area.
iii. Dividing
the result of paragraph IV.c.8.i of this appendix by the result of
paragraph IV.c.8.ii of this appendix.
Example A-10: The Borrower Community Benchmarks
for closed-end home mortgage loans use a three-year evaluation period.
There were 1,300 families (year 1), 1,300 families (year 2), and 1,400
families (year 3) in FBAA-1. The sum of the number of families in
FBAA-1 is therefore 4,000 in the evaluation period. There were 300
low-income families (year 1), 300 low-income families (year 2), and
400 low-income families (year 3) (a total of 1,000 low-income families).
The Borrower Community Benchmark for closed-end home mortgage loans
to low-income families within the FBAA-1 would be 1,000 divided by
4,000, or 0.25 (equivalently, 25 percent).
There
were 350 moderate-income families (year 1), 400 moderate-income families
(year 2), and 450 moderate-income families (year 3) (a total of 1,200
moderate-income families). The Borrower Community Benchmark for closed-end
home mortgage loans to moderate-income families in FBAA-1 would be
1,200 divided by 4,000, or 0.3 (equivalently, 30 percent).
Figure 14. DISPLAY EQUATION
$$ \frac{\textit{Low − Income Families }(1,000)}{\textit{Families }(4,000)} = \textit{Borrower Community Benchmark }(25\%) $$
Figure 15. DISPLAY EQUATION
$$ \frac{\textit{Moderate − Income Families }(1,200)}{\textit{Families }(4,000)} = \textit{Borrower Community Benchmark }(30\%) $$
d. Calculation
of Borrower Market Benchmark for the outside retail lending area. For a bank’s outside retail lending area, the Board calculates
the Borrower Market Benchmark for each major product line, excluding
automobile loans, and for each category of designated borrowers by
taking a weighted average of benchmarks for each component geographic
area as follows:
1. Calculating a benchmark for each category
of designated borrowers and each major product line within each component
geographic area as described in section 228.18(b) using the formula
for the Borrower Market Benchmark described in section IV.b of this
appendix with the component geographic area in place of the facility-based
assessment area or retail lending assessment area, as applicable.
2. Calculating the weighting
for each component geographic area and major product line as the percentage
of the bank’s loans in the major product line originated or
purchased in the outside retail lending area that are within the component
geographic area, based on loan count.
3. Calculating the weighted average benchmark
for the outside retail lending area using the component geographic
area benchmarks in paragraph IV.d.1 of this appendix and associated
weightings in paragraph IV.d.2 of this appendix.
e. Calculation of Borrower
Community Benchmarks for the outside retail lending area. For
a bank’s outside retail lending area, the Board calculates the
Borrower Community Benchmark for each major product line and for each
category of designated borrowers in the bank’s outside retail
lending area by taking a weighted average of benchmarks for each component
geographic area as follows:
1. Calculating the benchmark for each category
of designated borrowers and each major product line within each component
geographic area as described in section 228.18(b) using the formula
for the Borrower Community Benchmark described in paragraph IV.c of
this appendix with the component geographic area in place of the facility-based
assessment area or retail lending assessment area, as applicable.
2. Calculating the weighting
for each component geographic area and major product line as the percentage
of the bank’s loans in the major product line originated or
purchased in the outside retail lending area that are within the component
geographic area, based on loan count.
3. Calculating the weighted average benchmark
for the outside retail lending area using the component geographic
area benchmarks in paragraph IV.e.1 of this appendix and associated
weightings calculated in paragraph IV.e.2 of this appendix.
The Board evaluates a bank’s Retail Lending Test
performance in each Retail Lending Test Area by comparing the bank’s
distribution metrics to sets of performance ranges determined by,
as applicable, the market and community benchmarks, as described in
this section.
a. Supporting
conclusions for categories of designated census tracts and designated
borrowers. For each major product line, excluding automobile
lending, the Board develops separate supporting conclusions for each
of the categories outlined in table 1 to this appendix.
Table 1—Retail
lending test categories of designated census tracts and designated
borrowers
| Major product line |
Designated census tracts |
Designated borrowers |
| Closed-end home mortgage loans |
Low-income census tracts |
Low-income borrowers |
| Moderate-income census tracts |
Moderate-income borrowers |
| Small business loans |
Low-income census tracts |
Non-farm businesses with gross annual revenues of $250,000 or less |
| Moderate-income census tracts |
Non-farm businesses with gross annual revenues greater than $250,000
but less than or equal to $1 million |
| Small farm loans |
Low-income census tracts |
Farms with gross annual revenues of $250,000 or less |
| Moderate-income census tracts |
Farms with gross annual revenues greater than $250,000 but less than
or equal to $1 million |
b. Geographic distribution
performance ranges. To evaluate a bank’s geographic distributions
for each major product line, excluding automobile lending, the Board
compares the relevant Geographic Bank Metric for each category of
designated census tracts to the applicable set of performance ranges.
The performance ranges are determined by the values of the Geographic
Market Benchmark and the Geographic Community Benchmark, as well as
the multipliers associated with each supporting conclusion category,
as follows:
1. The performance threshold
for an “Outstanding” supporting conclusion is the lesser
of either:
i. The product of 1.0 times the Geographic
Community Benchmark; or
ii. The product of 1.15 times the Geographic Market Benchmark.
The “Outstanding”
performance range is all potential values of the Geographic Bank Metric
equal to or above the “Outstanding” performance threshold.
2. The performance
threshold for a “High Satisfactory” Retail Lending Test
supporting conclusion is the lesser of either:
i. The
product of 0.8 times the Geographic Community Benchmark; or
ii. The product of 1.05
times the Geographic Market Benchmark.
The “High Satisfactory”
performance range is all potential values of the Geographic Bank Metric
equal to or above the “High Satisfactory” performance
threshold but below the Outstanding performance threshold.
3. The performance threshold
for a “Low Satisfactory” supporting conclusion is the
lesser of either:
i. The product of 0.6 times the Geographic
Community Benchmark; or
ii. The product of the 0.8 times the Geographic Market Benchmark.
The “Low Satisfactory”
performance range is all potential values of the Geographic Bank Metric
equal to or above the “Low Satisfactory” performance threshold
but below the High Satisfactory performance threshold.
4. The performance threshold
for a “Needs to Improve” supporting conclusion is the
lesser of either:
i. The product of 0.3 times the Geographic
Community Benchmark; or
ii. The product of 0.33 times the Geographic Market Benchmark.
The “Needs to
Improve” performance range is all potential values of the Geographic
Bank Metric equal to or above the “Needs to Improve” performance
threshold but below the “Low Satisfactory” performance
threshold.
5. The “Substantial Noncompliance” performance range
is all potential values of the Geographic Bank Metric below the “Needs
to Improve” performance threshold.
c. Geographic distribution supporting conclusions
and performance scores. The Board compares each Geographic Bank
Metric to the performance ranges provided in paragraphs V.b.1 through
V.b.5 of this appendix. The geographic distribution supporting conclusion
for each category of designated census tracts is determined by the
performance range within which the Geographic Bank Metric falls. Each
supporting conclusion is assigned a numerical performance score using
the following corresponding points values:
| Conclusion |
Performance score |
| Outstanding |
10 |
| High Satisfactory |
7 |
| Low Satisfactory |
6 |
| Needs to Improve |
3 |
| Substantial Noncompliance |
0 |
d. Borrower distribution
performance ranges. To evaluate a bank’s borrower distributions
for each major product line, excluding automobile lending, the Board
compares the relevant Borrower Bank Metric for each category of designated
borrowers to the applicable set of performance ranges. The performance
ranges are determined by the values of the Borrower Market Benchmark
and Borrower Community Benchmark, as well as the multipliers associated
with each supporting conclusion category, as follows:
1. The performance threshold for an “Outstanding”
supporting conclusion is the lesser of either:
i. The
product of 1.0 times the Borrower Community Benchmark; or
ii. The product of 1.15
times the Borrower Market Benchmark.
The “Outstanding” performance
range is all potential values of the Borrower Bank Metric equal to
or above the “Outstanding” performance threshold.
2. The performance threshold
for a “High Satisfactory” supporting conclusion is the
lesser of either:
i. The product of 0.8 times the Borrower
Community Benchmark; or
ii. The product of 1.05 times the Borrower Market Benchmark.
The “High Satisfactory”
performance range is all potential values of the Borrower Bank Metric
equal to or above the “High Satisfactory” performance
threshold but below the Outstanding performance threshold.
3. The performance threshold
for a “Low Satisfactory” supporting conclusion is the
lesser of either:
i. The product of 0.6 times the Borrower
Community Benchmark; or
ii. The product of 0.8 times the Borrower Market Benchmark.
The “Low Satisfactory”
performance range is all potential values of the Borrower Bank Metric
equal to or above the “Low Satisfactory” performance threshold
but below the High Satisfactory performance threshold.
4. The performance threshold
for a “Needs to Improve” supporting conclusion is the
lesser of either:
i. The product of 0.3 times the Borrower
Community Benchmark; or
ii. The product of 0.33 times the Borrower Market Benchmark.
The “Needs to Improve”
performance range is all potential values of the Borrower Bank Metric
equal to or above the “Needs to Improve” performance threshold
but below the “Low Satisfactory” performance threshold.
5. The “Substantial
Noncompliance” performance range is all potential values of
the Borrower Bank Metric below the “Needs to Improve”
performance threshold.
e. Borrower distribution supporting conclusions
and performance scores. The Board compares each Borrower Bank
Metric to the performance ranges provided in paragraphs V.d.1 through
V.d.5 of this appendix. The borrower distribution supporting conclusion
for each category of designated borrowers is determined by the performance
range within which the Borrower Bank Metric falls. Each supporting
conclusion is assigned a numerical performance score using the following
corresponding point values:
| Conclusion |
Performance score |
| Outstanding |
10 |
| High Satisfactory |
7 |
| Low Satisfactory |
6 |
| Needs to Improve |
3 |
| Substantial Noncompliance |
0 |
a. Supporting conclusions for categories
of designated census tracts and designated borrowers. For any
bank for which automobile lending is evaluated under section 228.22,
the Board develops separate supporting conclusions for each of the
categories outlined in table 2 to this appendix.
Table 2—Automobile
loans: Categories of designated census tracts and designated borrowers
| Major product line |
Designated census tracts |
Designated borrowers |
| Automobile lending |
Low-income census tracts |
Low-income borrowers |
| Moderate-income census tracts |
Moderate-income borrowers |
b. Geographic distribution. The Board develops the supporting conclusion for a bank’s
geographic distribution for automobile lending based on a comparison
of the Geographic Bank Metric for automobile lending in each category
of designated census tracts to the corresponding Geographic Community
Benchmark.
c. Borrower
distribution. The Board develops the supporting conclusion for
a bank’s borrower distribution for automobile lending based
on a comparison of the Borrower Bank Metric for automobile lending
in each category of designated borrowers to the corresponding Borrower
Community Benchmark.
d. Performance scores. Each supporting conclusion is assigned a
numerical performance score using the following corresponding point
values:
| Conclusion |
Performance score |
| Outstanding |
10 |
| High Satisfactory |
7 |
| Low Satisfactory |
6 |
| Needs to Improve |
3 |
| Substantial Noncompliance |
0 |
a. The Board determines a bank’s Retail Lending
Test performance conclusion for a major product line in a Retail Lending
Test Area by calculating a weighted performance score for each major
product line:
1. The Board develops a
weighted average performance score for each major product line in
each Retail Lending Test Area as follows:
i. The Board creates
a weighted average performance score across the categories of designated
census tracts (i.e., geographic distribution average) and a
weighted average performance score across the categories of designated
borrowers (i.e., borrower distribution average).
ii. For the geographic distribution
average of each major product line, the weighting assigned to each
category of designated census tracts is based on the demographics
of the Retail Testing Area as outlined in the following table:
Table 3—Retail
Lending Test: Geographic distribution average—weights
| Major product line |
Category of designated census
tracts |
Weight |
| Closed-end home mortgage loans |
Low-income census tracts |
Percentage of total number of owner-occupied housing
units in low- and moderate-income census tracts in the applicable
Retail Lending Test Area that are in low-income census tracts |
| Moderate-income census tracts |
Percentage of total number of owner-occupied housing
units in low- and moderate-income census tracts in the applicable
Retail Lending Test Area that are in moderate-income census tracts |
| Small business loans |
Low-income census tracts |
Percentage of total number of non-farm businesses in
low- and moderate-income census tracts in the applicable Retail Lending
Test Area that are in low-income census tracts |
| Moderate-income census tracts |
Percentage of total number of non-farm businesses in
low- and moderate-income census tracts in the applicable Retail Lending
Test Area that are in moderate-income census tracts |
| Small farm loans |
Low-income census tracts |
Percentage of total number of farms in low- and moderate-income
census tracts in the applicable Retail Lending Test Area that are
in low-income census tracts |
| Moderate-income census tracts |
Percentage of total number of farms in low- and moderate-income
census tracts in the applicable Retail Lending Test Area that are
in moderate-income census tracts |
| Automobile loans |
Low-income census tracts |
Percentage of total number of households in low- and
moderate-income census tracts in the applicable Retail Lending Test
Area that are in low-income census tracts |
| Moderate-income census tracts |
Percentage of total number of households in low- and
moderate-income census tracts in the applicable Retail Lending Test
Area that are in moderate-income census tracts |
In the case of a Retail Lending Test Area that
contains no low-income census tracts and no moderate-income census
tracts, the bank will not receive a geographic distribution average
for that assessment area.
Example A-11: A large bank’s closed-end home mortgage
loans constitute a major product line for the bank in a facility-based
assessment area. The bank’s geographic distribution supporting
conclusions for closed-end home mortgage loans in this facility-based
assessment area are “High Satisfactory” (performance score
of 7 points) for low-income census tracts and “Needs to Improve”
(performance score of 3 points) for moderate-income census tracts.
Owner-occupied housing units in moderate-income census tracts represents
20 percent of all owner-occupied housing units in the facility-based
assessment area, and owner-occupied housing units in low-income census
tracts represents 5 percent of all owner-occupied housing units in
the facility-based assessment area. Accordingly, the weight assigned
to the moderate-income geographic distribution performance score is
80 percent [20 percent / (20 percent + 5 percent) = 80 percent] and
the weight assigned to the low-income geographic distribution performance
score is 20 percent [5 percent / (20 percent + 5 percent) = 20 percent].
The bank’s geographic distribution average for closed-end home
mortgage loans in this facility-based assessment area is 3.8 [(7 points
× 0.2 weight = 1.4) + (3 points × 0.8 weight = 2.4)].
iii. For
the borrower distribution average of each major product line, the
weighting assigned to each category of designated borrowers is based
on the demographics of the Retail Lending Test Area as outlined in
the following table:
Table 4—Retail
Lending Test: Borrower distribution average—weights
| Major product line |
Categories of designated borrowers |
Weight |
| Closed-end home mortgage loans |
Low-income borrowers |
Percentage of total number of low-income and moderate-income
families in the applicable Retail Lending Test Area that are low-income
families |
| Moderate-income borrowers |
Percentage of total number of low-income and moderate-income
families in the applicable Retail Lending Test Area that are moderate-income
families |
| Small business loans |
Non-farm businesses with gross annual revenues of $250,000
or less |
Percentage of total number of non-farm businesses with
gross annual revenues of $250,000 or less and non-farm businesses
with gross annual revenues greater than $250,000 but less than or
equal to $1 million in the applicable Retail Lending Test Area that
are non-farm businesses with gross annual revenues of $250,000 or
less |
| Non-farm businesses with gross annual revenues greater
than $250,000 and less than or equal to $1 million |
Percentage of total number of non-farm businesses with
gross annual revenues of $250,000 or less and non-farm businesses
with gross annual revenues greater than $250,000 but less than or
equal to $1 million in the applicable Retail Lending Test Area that
are non-farm businesses with gross annual revenues greater than $250,00
but less than or equal to $1 million |
| Small farm loans |
Farms with gross annual revenues of $250,000 or less |
Percentage of total number of farms with gross annual
revenues of $250,000 or less and farms with gross annual revenues
greater than $250,000 but less than or equal to $1 million in the
applicable Retail Lending Test Area that are farms with gross annual
revenues of $250,000 or less |
| Farms with gross annual revenues greater than $250,000
and less than or equal to $1 million |
Percentage of total number of farms with gross annual
revenues of $250,000 or less and farms with gross annual revenues
greater than $250,000 but less than or equal to $1 million in the
applicable Retail Lending Test Area that are farms with gross annual
revenues greater than $250,000 but less than or equal to $1 million |
| Automobile loans |
Low-income borrowers |
Percentage of total number of low-income and moderate-income
households in the applicable Retail Lending Test Area that are low-income
households |
| Moderate-income borrowers |
Percentage of total number of low-income and moderate-income
households in the applicable Retail Lending Test Area that are moderate-income
households |
Example A-12: Building on example A-11 to this appendix, the bank’s borrower
distribution supporting conclusions for closed-end home mortgage loans
in this facility-based assessment area are “Outstanding”
(performance score of 10 points) for low-income borrowers and “Low
Satisfactory” (performance score of 6 points) for moderate-income
borrowers. Low-income families represent 14 percent of all families
in the facility-based assessment area and moderate-income families
represent 6 percent of all families in the facility-based assessment
area. Accordingly, the weight assigned to the low-income borrower
distribution performance score is 70 percent [14 percent / (14 percent
+ 6 percent) = 70 percent] and the weight assigned to the moderate-income
borrower distribution performance score is 30 percent [6 percent /
(14 percent + 6 percent) = 30 percent]. The bank’s borrower
distribution average for closed-end home mortgage loans in this facility-based
assessment area is 8.8 [(10 points × 0.7 weight = 7.0) + (6
points × 0.3 weight = 1.8)].
2. For each major product line, the Board
calculates the average of the geographic distribution average and
the borrower distribution average (i.e., product line score). If a bank has no geographic distribution average for a product
(due to the absence of both low-income census tracts and moderate-income
census tracts in the geographic area), the product line score is the
borrower distribution average.
Example
A-13: Based on examples A-11 and A-12 to this appendix, the bank’s
product line score for closed-end home mortgage loans is 6.3 [(3.8
geographic distribution average × 0.5 weight = 1.9) + (8.8 borrower
distribution average × 0.5 weight = 4.4)].
b. For each Retail Lending Test Area, the Board calculates a weighted
average of product line scores across all major product lines (i.e., Retail Lending Test Area Score). For each Retail Lending Test
Area, the Board uses a ratio of the bank’s loan originations
and purchases in each major product line to its loan originations
and purchases in all major product lines during the evaluation period,
based on the combination of loan dollars and loan count as defined
in section 228.12, as weights in the weighted average.
Example A-14: In addition to the product line
score of 6.3 for closed-end home mortgage loans in example A-13 to
this appendix, the bank has a product line score of 4.2 for small
business lending in the same facility-based assessment area. Among
major product lines, 60 percent of the bank’s loans in the facility-based
assessment area are closed-end home mortgages and 40 percent are small
business loans based upon the combination of loan dollars and loan
count. Accordingly, the weight assigned to the closed-end home mortgage
product line score is 60 percent and the weight assigned to the small
business product line score is 40 percent. The bank’s Retail
Lending Test Area Score for this facility-based assessment area is
5.46 [(6.3 closed-end home mortgage loan product line score ×
0.6 weight = 3.78) + (4.2 small business loan product line score ×
0.4 weight = 1.68)].
c. The Board then develops
a Retail Lending Test recommended conclusion corresponding with the
conclusion category that is nearest to the Retail Lending Test Area
Score, as follows:
| Recommended conclusion |
Retail Lending Test Area Score |
| Outstanding |
8.5 or more |
| High Satisfactory |
6.5 or more but less than 8.5 |
| Low Satisfactory |
4.5 or more but less than 6.5 |
| Needs to Improve |
1.5 or more but less than 4.5 |
| Substantial Noncompliance |
Less than 1.5 |
Example A-15: Based on example A-14
to this appendix, the bank’s Retail Lending Test Area Score
is associated with a “Low Satisfactory” conclusion, so
the bank’s Retail Lending Test recommended conclusion for this
facility-based assessment area is “Low Satisfactory.”
d. Once a recommended conclusion is determined for
a Retail Lending Test Area, the performance context information provided
in section 228.21(d) and the additional factors provided in section
228.22(g) inform the Board’s determination of the Retail Lending
Test conclusion for the Retail Lending Test Area. The agency assigns
a Retail Lending Test conclusion for the Retail Lending Test Area
of “Outstanding,” “High Satisfactory,” “Low
Satisfactory,” “Needs to Improve,” or “Substantial
Noncompliance.”
VIII.
Retail Lending Test Weighting and Conclusions for States, Multistate
MSAs, and the InstitutionThe Board develops
the Retail Lending Test conclusions for states, multistate MSAs, and
the institution as described in this section.
a.
The Board translates Retail Lending Test conclusions for facility-based
assessment areas, retail lending assessment areas, and as applicable,
the outside retail lending area into numerical performance scores,
as follows:
| Conclusion |
Performance score |
| Outstanding |
10 |
| High Satisfactory |
7 |
| Low Satisfactory |
6 |
| Needs to Improve |
3 |
| Substantial Noncompliance |
0 |
b. The Board calculates the weighted average
of Retail Lending Test Area performance scores for a state or multistate
MSA, as applicable, and for the institution (i.e., performance
score for the Retail Lending Test). For the weighted average for
a state or multistate MSA, the Board considers facility-based assessment
areas and retail lending assessment areas in the state or multistate
MSA pursuant to section 228.28(c). For the weighted average for the
institution, the Board considers all of the bank’s facility-based
assessment areas and retail lending assessment areas and, as applicable,
the bank’s outside retail lending area. Each Retail Lending
Test Area performance score is weighted by the average of the following
two ratios:
1. The ratio measuring
the share of the bank’s deposits in the Retail Lending Test
Area, calculated by:
i. Summing, over the years in the evaluation
period, the bank’s annual dollar volume of deposits in the Retail
Lending Test Area.
ii. Summing, over the years in the evaluation period, the bank’s
annual dollar volume of deposits in all Retail Lending Test Areas
in the state, in the multistate MSA, or for the institution, as applicable.
iii. Dividing the result
of paragraph VIII.b.1.i of this appendix by the result of paragraph
VIII.b.1.ii of this appendix.
For a
bank that reports deposits data pursuant to section 228.42(b)(3),
the bank’s annual dollar volume of deposits in a Retail Lending
Test Area is the total of annual average daily balances of deposits
reported by the bank in counties in the Retail Lending Test Area for
that year. For a bank that does not report deposits data pursuant
to section 228.42(b)(3), the bank’s annual dollar volume of
deposits in a Retail Lending Test Area is the total of deposits assigned
to facilities reported by the bank in the Retail Lending Test Area
in the FDIC’s Summary of Deposits for that year.
2. The ratio measuring the share of the
bank’s loans in the Retail Lending Test Area, based on the combination
of loan dollars and loan count, as defined in section 228.12, calculated
by dividing:
i. The bank’s closed-end home
mortgage loans, small business loans, small farm loans, and, if a
product line for the bank, automobile loans in the Retail Lending
Test Area originated or purchased during the evaluation period; by
ii. The bank’s
closed-end home mortgage loans, small business loans, small farm loans,
and, if a product line for the bank, automobile loans in all Retail
Lending Test Areas in the state, in the multistate MSA, or for the
institution, as applicable, originated or purchased during the evaluation
period.
c. The Board develops
a conclusion corresponding to the conclusion category that is nearest
to the performance score for the Retail Lending Test for the state,
the multistate MSA, or the institution, as applicable, as follows:
| Conclusion |
Retail Lending Test performance
score |
| Outstanding |
8.5 or more |
| High Satisfactory |
6.5 or more but less than 8.5 |
| Low Satisfactory |
4.5 or more but less than 6.5 |
| Needs to Improve |
1.5 or more but less than 4.5 |
| Substantial Noncompliance |
Less than 1.5 |
d. The agency considers relevant performance
context information provided in section 228.21(d) to inform the Board’s
determination of the bank’s Retail Lending Test conclusion for
the state, the multistate MSA, or the institution, as applicable.
Example A-16: A large bank operates in one
state only, and has two facility-based assessment areas and one retail
lending assessment area in that state and also engages in closed-end
home mortgage lending, small business lending, and small farm lending
(but not automobile lending, as it is not a product line for the bank)
in its outside retail lending area.
Additionally:
i. Facility-based assessment area 1 (FBAA-1) is associated with 75
percent of the deposits in all of the Retail Lending Test Areas of
the bank (based on dollar amount) and 10 percent of the bank’s
closed-end home mortgage loans, small business loans, and small farm
loans (based on the combination of loan dollars and loan count as
defined in section 228.12). The bank received a “Needs to Improve”
(3 points) Retail Lending Test conclusion in FBAA-1;
ii. Facility-based assessment area 2
(FBAA-2) is associated with 15 percent of the deposits in all of the
Retail Lending Test Areas of the bank and 20 percent of the bank’s
closed-end home mortgage loans, small business loans, and small farm
loans (based on the combination of loan dollars and loan count as
defined in section 228.12). The bank received a “Low Satisfactory”
(6 points) Retail Lending Test conclusion in FBAA-2;
iii. The Retail lending assessment area
is associated with 8 percent of the deposits in all of the Retail
Lending Test Areas of the bank and 68 percent of the bank’s
closed-end home mortgage loans, small business loans, and small farm
loans (based on the combination of loan dollars and loan count as
defined in section 228.12). The bank received an “Outstanding”
(10 points) Retail Lending Test conclusion in the retail lending assessment
area; and
iv. The
bank’s outside retail lending area, is associated with 2 percent
of the deposits in all of the Retail Lending Test Areas of the bank
and 2 percent of the bank’s closed-end home mortgage loans,
small business loans, and small farm loans (based on the combination
of loan dollars and loan count as defined in section 228.12). The
bank received a “High Satisfactory” (7 points) Retail
Lending Test conclusion in the outside retail lending area.
Calculating weights:
i. For
facility-based assessment area 1: weight = 42.5 percent [(75 percent
of deposits + 10 percent of closed-end home mortgage loans, small
business loans, and small farm loans)/2];
ii. For facility-based assessment area
2: weight = 17.5 percent [(15 percent of deposits + 20 percent of
closed-end home mortgage loans, small business loans, and small farm
loans)/2];
iii. For
the retail lending assessment area: weight = 38 percent [(8 percent
of deposits + 68 percent of closed-end home mortgage loans, small
business loans, and small farm loans)/2]; and
iv. For the outside retail lending area:
weight = 2 percent [(2 percent of deposits + 2 percent of closed-end
home mortgage loans, small business loans, and small farm loans)/2].
Institution Retail Lending Test Performance
Score and Conclusion: Using the relevant points values –
“Outstanding” (10 points); “High Satisfactory”
(7 points); “Low Satisfactory” (6 points); “Needs
to Improve” (3 points); “Substantial Noncompliance”
(0 points) – and based on the illustration in this example A-16,
the bank’s Retail Lending Test performance score for the institution
is 6.3 [(0.425 weight × 3 points in facility-based assessment
area 1) + (0.175 weight × 6 points in facility-based assessment
area 2) + (0.38 weight × 10 points in retail lending assessment
area) + (0.02 weight × 7 points in the outside retail lending
area)].
A performance score of 6.3 corresponds
with the conclusion category “Low Satisfactory,” so the
bank’s Retail Lending Test recommended conclusion at the institution
level is “Low Satisfactory.” Relevant performance context
information provided in section 228.21(d) may inform the Board’s
determination of the bank’s conclusion at the institution level.
Example A-17: An intermediate bank
operates in a single state, has two facility-based assessment areas,
and also engages in closed-end home mortgage lending, small business
lending, and small farm lending (but not automobile lending, as automobile
lending is not a product line for the bank) in its outside retail
lending area.
Additionally:
i. Facility-based assessment
area 1 (FBAA-1) is associated with 60 percent of the deposits in all
of the Retail Lending Test Areas of the bank and 30 percent of the
bank’s closed-end home mortgage loans, small business loans,
and small farm loans. The bank received an “Outstanding”
(10 points) Retail Lending Test conclusion in FBAA-1;
ii. Facility-based assessment area 2
(FBAA-2 is) associated with 40 percent of the deposits in all of the
Retail Lending Test Areas of the bank and 10 percent of the bank’s
closed-end home mortgage loans, small business loans, and small farm
loans. The bank received a “High Satisfactory” (7 points)
Retail Lending Test conclusion in FBAA-2; and
iii. The bank’s outside retail
lending area is associated with 0 percent of the deposits in all of
the Retail Lending Test Areas of the bank (the bank did not voluntarily
collect and maintain depositor location data, so all deposits in the
bank are attributed to its branches within facility-based assessment
areas) and 60 percent of the bank’s closed-end home mortgage
loans, small business loans, and small farm loans. The bank received
a “Needs to Improve” (3 points) Retail Lending Test conclusion
in the outside retail lending area.
Calculating weights:
i. For FBAA-1: weight =
45 percent [(60 percent of deposits + 30 percent of closed-end home
mortgage loans, small business loans, and small farm loans)/2];
ii. For FBAA-2: weight
= 25 percent [(40 percent of deposits + 10 percent of closed-end home
mortgage loans, small business loans, and small farm loans)/2]; and
iii. For the outside
retail lending area: weight = 30 percent [(0 percent of deposits +
60 percent of closed-end home mortgage loans, small business loans,
and small farm loans)/2].
Institution
Retail Lending Test Performance Score and Conclusion: Using the
relevant points values – “Outstanding” (10 points);
“High Satisfactory” (7 points); “Low Satisfactory”
(6 points); “Needs to Improve” (3 points); “Substantial
Noncompliance” (0 points) – and based on the illustration
in this example A-17, the bank’s recommended Retail Lending
Test performance score at the institution level is 7.2 [(0.45 weight
× 10 points in FBAA-1) + (0.25 weight × 7 points in FBAA-2)
+ (0.3 weight × 3 points in the outside retail lending area)].
A performance score of 7.2 corresponds with the conclusion
category “High Satisfactory,” so the bank’s Retail
Lending Test recommended conclusion at the institution level is “High
Satisfactory.” Relevant performance context information provided
in section 228.21(d) may inform the Board’s determination of
the bank’s conclusion at the institution level.
