(a) Application of performance tests and strategic plans.
(1) Large banks. To evaluate the performance of a large bank, the Board applies the
Retail Lending Test in section 228.22, the Retail Services and Products
Test in section 228.23, the Community Development Financing Test in
section 228.24, and the Community Development Services Test in section
228.25.
(2) Intermediate banks.
(i) In
general. To evaluate the performance of an intermediate bank,
the Board applies the Retail Lending Test in section 228.22 and either
the Intermediate Bank Community Development Test in section 228.30(a)(2)
or, at the bank’s option, the Community Development Financing
Test in section 228.24.
(ii) Intermediate banks evaluated
under section 228.24. If an intermediate bank opts to be evaluated
pursuant to the Community Development Financing Test in section 228.24,
the Board evaluates the intermediate bank for the evaluation period
preceding the bank’s next CRA examination pursuant to the Community
Development Financing Test in section 228.24 and continues evaluations
pursuant to this performance test for subsequent evaluation periods
until the bank opts out. If an intermediate bank opts out of the Community
Development Financing Test in section 228.24, the Board reverts to
evaluating the bank pursuant to the Intermediate Bank Community Development
Test in section 228.30(a)(2), starting with the evaluation period
preceding the bank’s next CRA examination.
(iii) Additional consideration. An intermediate bank may request additional consideration pursuant
to section 228.30(b).
(3) Small banks.
(i) In general. To evaluate the
performance of a small bank, the Board applies the Small Bank Lending
Test in section 228.29(a)(2), unless the bank opts to be evaluated
pursuant to the Retail Lending Test in section 228.22.
(ii) Small banks evaluated
under the Retail Lending Test. If a small bank opts to be evaluated
pursuant to the Retail Lending Test in section 228.22, the following
applies:
(A) The Board evaluates the small bank using
the same provisions used to evaluate intermediate banks pursuant to
the Retail Lending Test in section 228.22.
(B) The Board evaluates the small bank for
the evaluation period preceding the bank’s next CRA examination
pursuant to the Retail Lending Test in section 228.22 and continues
evaluations under this performance test for subsequent evaluation
periods until the bank opts out. If a small bank opts out of the Retail
Lending Test in section 228.22, the Board reverts to evaluating the
bank pursuant to the Small Bank Lending Test in section 228.29(a)(2),
starting with the evaluation period preceding the bank’s next
CRA examination.
(iii) Additional consideration. A small bank may request additional consideration pursuant to section
228.29(b).
(4) Limited purpose banks.
(i) In general. The Board evaluates
a limited purpose bank pursuant to the Community Development Financing
Test for Limited Purpose Banks in section 228.26.
(ii) Additional consideration. A limited purpose bank may request additional consideration pursuant
to section 228.26(b)(2).
(5) Military
banks.
(i) In general. The Board evaluates
a military bank pursuant to the applicable performance tests described
in paragraph (a) of this section.
(ii) Evaluation approach for military
banks operating under section 228.16(d). If a military bank delineates
the entire United States and its territories as its sole facility-based
assessment area pursuant to section 228.16(d), the Board evaluates
the bank exclusively at the institution level based on its performance
in its sole facility-based assessment area.
(6) Banks operating under a strategic plan. The Board evaluates
the performance of a bank that has an approved strategic plan pursuant
to section 228.27.
(b) Loans, investments, services, and products of
operations subsidiaries and other affiliates.
(1) In general. In the performance evaluation of a bank, the Board considers the
loans, investments, services, and products of a bank’s operations
subsidiaries and other affiliates, as applicable, as provided in paragraphs
(b)(2) and (3) of this section, so long as no other depository institution
claims the loan, investment, service, or product for purposes of this
part or 12 CFR part 25 or 345.
(2) Loans, investments,
services, and products of operations subsidiaries. The Board
considers the loans, investment, services, and products of a bank’s
operations subsidiaries under this part, unless an operations subsidiary
is independently subject to the CRA. The bank must collect, maintain,
and report data on the loans, investments, services, and products
of its operations subsidiaries as provided in section 228.42(c).
(3) Loans, investments, services, and products of
other affiliates. The Board considers the loans, investments,
services, and products of affiliates of a bank that are not operations
subsidiaries, at the bank’s option, subject to the following:
(i) The affiliate is not independently subject to the CRA.
(ii) The bank collects,
maintains, and reports data on the loans, investments, services, or
products of the affiliate as provided in section 228.42(d).
(iii) Pursuant to the Retail
Lending Test in section 228.22, if a bank opts to have the Board consider
the closed-end home mortgage loans, small business loans, small farm
loans, or automobile loans that are originated or purchased by one
or more of the bank’s affiliates in a particular Retail Lending
Test Area, the Board will consider, subject to paragraphs (b)(3)(i)
and (ii) of this section, all of the loans in that product line originated
or purchased by all of the bank’s affiliates in the particular
Retail Lending Test Area.
(iv) Pursuant to the Retail Lending
Test in section 228.22, if a large bank opts to have the Board consider
the closed-end home mortgage loans or small business loans that are
originated or purchased by any of the bank’s affiliates in any
Retail Lending Test Area, the Board will consider, subject to paragraphs
(b)(3)(i) and (ii) of this section, the closed-end home mortgage loans
or small business loans originated by all of the bank’s affiliates
in the nationwide area when delineating retail lending assessment
areas pursuant to section 228.17(c).
(v) Pursuant to the Community Development
Financing Test in section 228.24, the Community Development Financing
Test for Limited Purpose Banks in section 228.26, the Intermediate
Bank Community Development Test in section 228.30(a)(2), or pursuant
to an approved strategic plan in section 228.27, the Board will consider,
at the bank’s option, community development loans or community
development investments that are originated, purchased, refinanced,
or renewed by one or more of the bank’s affiliates, subject
to paragraphs (b)(3)(i) and (ii) of this section.
(c) Community
development lending and community development investment by a consortium
or a third party. If a bank invests in or participates in a consortium
that originates, purchases, refinances, or renews community development
loans or community development investments, or if a bank invests in
a third party that originates, purchases, refinances, or renews community
development loans or community development investments, the Board
may consider, at the bank’s option, either those loans or investments,
subject to the limitations in paragraphs (c)(1) through (3) of this
section, or the investment in the consortium or third party.
(1) The bank must collect, maintain, and
report the data pertaining to the community development loans and
community development investments as provided in section 228.42(e),
as applicable;
(2)
If the participants or investors choose to allocate community development
loans or community development investments among themselves for consideration
under this section, no participant or investor may claim a loan origination,
loan purchase, or investment for community development consideration
if another participant or investor claims the same loan origination,
loan purchase, or investment; and
(3) The bank may not claim community development
loans or community development investments accounting for more than
its percentage share (based on the level of its participation or investment)
of the total loans or investments made by the consortium or third
party.
(d) Performance context information considered. When applying performance
tests and strategic plans pursuant to paragraph (a) of this section,
and when determining whether to approve a strategic plan pursuant
to section 228.27(h), the Board may consider the following performance
context information to the extent that it is not considered as part
of the performance tests as provided in paragraph (a) of this section:
(1) Any information regarding a bank’s
institutional capacity or constraints, including the size and financial
condition of the bank, safety and soundness limitations, or any other
bank-specific factors that significantly affect the bank’s ability
to provide retail lending, retail banking services and retail banking
products, community development loans, community development investments,
or community development services;
(2) Any information regarding the bank’s
past performance;
(3)
Demographic data on income levels and income distribution, nature
of housing stock, housing costs, economic climate, or other relevant
data;
(4) Any information
about retail banking and community development needs and opportunities
provided by the bank or other relevant sources, including, but not
limited to, members of the community, community organizations, state,
local, and tribal governments, and economic development agencies;
(5) Data and information
provided by the bank regarding the bank’s business strategy
and product offerings;
(6) The bank’s public file, as provided in section 228.43,
including any written comments about the bank’s CRA performance
submitted to the bank or the Board and the bank’s responses
to those comments; and
(7) Any other information deemed relevant by the Board.
(e) Conclusions and ratings.
(1) Conclusions. The Board assigns conclusions to a large bank’s
or limited purpose bank’s performance on the applicable tests
described in paragraph (a) of this section pursuant to section 228.28
and appendix C to this part. The Board assigns conclusions to a small
bank’s or intermediate bank’s performance on the applicable
tests described in paragraph (a) of this section pursuant to section
228.28 and appendices C and E to this part. The Board assigns conclusions
to a bank that has an approved strategic plan pursuant to section
228.28 and paragraph g of appendix C to this part.
(2) Ratings. The Board assigns an overall CRA performance rating to a bank in
each state or multistate MSA, as applicable, and for the institution
pursuant to section 228.28 and appendices D and E to this part.
(f) Safe and
sound operations. The CRA and this part do not require a bank
to originate or purchase loans or investments or to provide services
that are inconsistent with safe and sound banking practices, including
underwriting standards. Banks are permitted to develop and apply flexible
underwriting standards for loans that benefit low- or moderate-income
individuals, small businesses or small farms, and low- or moderate-income
census tracts, only if consistent with safe and sound operations.
